FOR IMMEDIATE RELEASE

Tuesday, January 31, 2023

BROOKLYN, NY – Earlier today in Brooklyn federal court, John DeMarr was sentenced by United States District Judge LaShann DeArcy Hall to 60 months in prison for his involvement in a securities and cryptocurrency fraud scheme. The Court also ordered DeMarr to pay $3,513,305.41 in forfeiture. In July 2021, DeMarr pleaded guilty to one count of conspiracy to commit securities fraud.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite Jr., Assistant Attorney General, Criminal Division, Department of Justice, Donald Alway, Assistant Director in Charge, Federal Bureau of Investigation, Los Angeles Field Office (FBI), and Tyler Hatcher, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Los Angeles (IRS-CI), announced the sentence.

“DeMarr took advantage of those who trusted him, persuading them to double down on their investments when he knew his cryptocurrency companies and dubious celebrity endorsements were scams used to finance his lavish lifestyle,” stated US Attorney Peace. “The victims ultimately lost everything, so it’s only fitting that DeMarr lose his freedom for concocting this fraud.”

“Cryptocurrency schemes are on the rise. The Internal Revenue Service Criminal Investigation and our law enforcement partners are working diligently to identify and investigate the criminals perpetrating these schemes, such as John DeMarr,” said Hatcher, Special Agent in Charge of IRS-CI. “DeMarr, a promoter of various companies related to digital assets, conspired with others to defraud victims and made misleading statements for significant gains. DeMarr siphoned funds into accounts he controlled and spent the money to maintain a lavish lifestyle. Those who line their pockets with the profits from these schemes should know that they will not go unnoticed and will be held to account.”

According to court documents, DeMarr, a promoter of several companies related to digital assets, conspired with others to defraud victim investors by inducing them to invest in his companies, “Start Options” and “B2G”, based on materially false and misleading representations. Start Options purported to be an online investment platform that provided cryptocurrency digital asset mining, trading and trading services. Supposedly, B2G was an “ecosystem” that would allow users to trade B2G tokens, provide digital wallet staking, and exchange digital and fiat currencies “on a secure and comprehensive platform.” However, both Start Options and B2G were fraudulent.

DeMarr and others falsely claimed that investor funds would be invested in digital asset mining and trading platforms that would generate massive profits for them. The funds were never actually invested and instead were diverted to accounts controlled by DeMarr and others and used for various personal expenses, including the purchase of a Porsche, jewelry, and remodeling of DeMarr’s California home.

Start Options also purported to feature celebrity endorsements to promote its stock offerings. For example, a professional athlete allegedly endorsed Start Options and his name and likeness were used without his consent. Based on this and other fraudulent promotional materials, investors sent millions of dollars worth of Bitcoin, Ethereum, and fiat currency to financial accounts, including crypto wallets, controlled by DeMarr and others in the United States and abroad. In late January 2018, instead of allowing Initial Option investors to withdraw money from their accounts after the required period of time, DeMarr and others asked investors to transfer their accounts to an “initial coin offering” or ICO, not registered, from B2G. Investors never actually received digital tokens and the funds from the offering were not used to develop the B2G platform.

In addition, DeMarr and others also paid various promoters, including an actor famous for martial arts movies made in the 1980s and 1990s, to serve as celebrity promoters and spokespersons, falsely claiming that B2G could generate an “8,000 dollar return.” %” for investors a year from now. year, and who was a participant in the ICO. DeMarr and others also created bogus press releases and whitepapers about B2G, fabricated B2G account statements, and refused to allow investors to withdraw their money.

This case was investigated by the FBI and IRS-CI. Assistant United States Attorneys Kaitlin T. Farrell, Hiral D. Mehta, David C. Pitluck, Antoinette N. Rangel, and Special Agent Martin Sullivan of the Eastern District of New York and Trial Attorney Kevin Lowell of the Fraud Section of the Criminal Division they are processing the case. Assistant US Attorney Claire Kedeshian of the Office’s Asset Recovery Section is in charge of forfeiture matters.