The final ruling
A cryptocurrency promoter who used actor Steven Seagal to endorse a fraudulent scheme has received a five-year prison sentence. A federal judge in Brooklyn handed down the sentence to John DeMarr on Tuesday for the part he played in the $11m fraudulent scheme. He also has to pay a forfeiture of $3.5m.
the defendant did not accept responsibility
US District Judge LaShann DeArcy Hall explained the reasons behind the ruling. She said the defendant did not accept responsibility, instead vehemently arguing against a lengthy sentence.
The 58-year-old DeMarr, who was previously a private detective in California, pleaded guilty in 2021 to conning investors through a cryptocurrency company called Bitcoiin2Gen and crypto trading platform Start Options.
Movie star power
DeMarr, a California resident, was originally arrested in early 2021. He told investors Bitcoiin2Gen was the next generation of Bitcoin, which allowed them to invest at a more reasonable price point. DeMarr promised investors would get an 8,000% return in just one year. Instead of using invested funds to build out the token, DeMarr spent it buying expensive jewelry, a Porsche, and significant home renovations.
Seagal had to pay a $314,000 settlement
The scheme used fake endorsements from celebrities and made-up promotional material to garner attention. DeMarr also claimed that Steven Seagal had taken part in the Bitcoiin2Gen initial coin offering as an investor when he actually paid the actor to promote the token. As he didn’t disclose to his social media fan base that it was an endorsement deal, Seagal had to pay a $314,000 settlement with the US Securities and Exchange Commission (SEC). DeMarr promised the actor $750,000 worth of Bitcoiin2Gen tokens and $250,000 in cash for the endorsement.
DeMarr tried to shift a lot of the blame on his co-conspirators during the trial. This includes Serbian national Kristijan Krstic. DeMarr claimed Krstic’s men assaulted him before throwing him into a ditch during a visit to Montenegro in 2018.
According to the Department of Justice, DeMarr’s legal team spent almost two hours objecting to aspects of the case during his hearing, including a claim that DeMarr sent investors fake press releases. Judge Hall ultimately deemed these objections groundless and decided to not give DeMarr the leniency that a person usually gets for pleading guilty.
The judge also took into account the financial impact of the fraudulent scheme, with over 400 investors harmed. Five years is the max sentence that DeMarr could have received considering his plea for a single count of securities fraud conspiracy. After the sentencing, the US Attorney for the Eastern District of New York Breon Peace said: “The victims ultimately lost everything, so it is appropriate that DeMarr lose his freedom for concocting this fraud.”