A California Man Charged with Securities Fraud in Cryptocurrency Scam
A California man, John DeMarr, has recently been charged with securities fraud for allegedly deceiving cryptocurrency investors and using actor Steven Seagal to promote a fake company. The complaint was filed in the Eastern District of New York, accusing DeMarr of conspiring with others to defraud victims of $11.4 million by convincing them to invest in fraudulent companies.
Deceptive Practices
Between 2017 and 2018, DeMarr and his associates allegedly made false and misleading representations about two companies, Start Options and B2G. Start Options was touted as an online investment platform offering cryptocurrency mining and trading services, while B2G was marketed as an ecosystem for trading digital assets and traditional currencies.
Investors were promised significant profits after a specified contract period, but their funds were actually redirected to accounts controlled by DeMarr and his co-conspirators. The money was used for extravagant purchases like luxury cars, jewelry, and home renovations, instead of being invested as promised.
Celebrity Endorsements and ICO
To attract investors, the scammers invented celebrity endorsements for Start Options, including a professional athlete whose name and image were used without permission. As the end of a Start Options contract approached, investors were encouraged to roll over their accounts into an Initial Coin Offering (ICO) for B2G.
Notably, Steven Seagal was recruited to promote B2G, with false claims of an 8000% return on investment within a year. Seagal’s involvement in the ICO ended in March 2018. DeMarr and his accomplices went to great lengths to deceive investors, even staging DeMarr’s disappearance to avoid facing repercussions.
Legal Consequences
Steven Seagal settled with the FTC last year for his role in the ICO scam, while DeMarr is now facing charges of securities fraud for his part in the fraudulent schemes. The Department of Justice (DoJ) has been actively investigating these activities to hold the perpetrators accountable for their actions.
DeMarr’s case serves as a warning to potential investors to exercise caution and conduct thorough research before investing in any financial opportunity, especially in the volatile world of cryptocurrency. It also highlights the importance of regulatory oversight to prevent fraudulent schemes and protect investors from falling victim to such scams.
Stay informed and vigilant to safeguard your investments and financial well-being in an increasingly digital and complex financial landscape.