A private detective scammed hundreds of investors in a cryptocurrency fraud, then faked his own disappearance to make off with millions that he blew on jewelry, home improvements, and a Porsche, a newly unsealed criminal complaint alleges.
John DeMarr was arrested Monday morning by the FBI in Santa Ana, California. Federal authorities say that he and two associates pocketed more than $11 million in ill-gotten gains.
According to the complaint, DeMarr convinced retail investors to buy into “Bitcoiin,” a now-defunct cryptocurrency also known as “Bitcoiin2Gen” or “B2G.” The bizarre case involves C-list actor and martial artist Steven Seagal, who briefly served as a celebrity pitchman for B2G but is not charged with any crimes.
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DeMarr, 55, who billed himself as B2G’s “Director of North American Operations,” began working with the fledgling company in November 2017 and was paid on commission for bringing in new customers. Two of his alleged co-conspirators included a disbarred lawyer and a former cop.
“When dealing with the wild west that is cryptocurrency in 2018, a good general rule: Everything is a scam unless you can prove otherwise,” a CNET article warned in 2018. “Excessive marketing is a red flag. But perhaps the biggest red flag of all? Hiring Steven Seagal to be your worldwide brand ambassador. But that’s precisely what Bitcoiin2Gen (B2G) has done.”
At DeMarr’s direction, prosecutors allege, a co-conspirator “fabricated most of the detailed information about Bitcoiin” by plagiarizing materials issued by another cryptocurrency firm that had a successful offering in 2013.
Seagal, who is identified in the filing not by name but as a “celebrity spokesperson” for B2G, “falsely claimed on social media that B2G could generate an 8000% return for investors within one year,” according to the complaint. Seagal “also falsely claimed he or she was a ‘participant’ in the ICO, a misrepresentation that DeMarr repeated to other investors in press releases and on webinars to induce them to invest in the B2G ICO. In fact, [Seagal] never invested in the B2G ICO and only served as a paid promoter.”In reality, almost none of the investors’ money was invested, and virtually all of it went to the principals of B2G, including DeMarr, the feds say.
In March 2018, Seagal decided to part ways with Bitcoiin. When his departure was announced, multiple investors tried to unwind their B2G positions but were blocked from cashing out by DeMarr.
At this point, one of the B2G partners disappeared with $7 million in investor funds and stopped responding to all communications, the complaint says. DeMarr allegedly promised investors they could recoup some of their money through a “bulk sale” of their B2G holdings, and said he was headed to Hong Kong to close the deal. Instead, DeMarr flew to Podgorica, Montenegro, where he pretended to have disappeared rather than face his angry clients.
“DeMarr instructed [an unnamed co-conspirator] to release statements asserting that DeMarr had been assaulted and went missing in Montenegro, and telling B2G investors to stop attempting to contact DeMarr or his family regarding their inability to have their investment in B2G returned,” says the complaint, which explains that another B2G exec emailed investors claiming that DeMarr had been robbed of $25 million worth of B2G tokens.
DeMarr subsequently went dark, ceasing all contact with investors, according to the filing.
But DeMarr was actually living comfortably in Orange County, California, the whole time, say prosecutors. He spent the money on himself, prosecutors allege, and his purchases included a Porsche..
“Mr. DeMarr created an elaborate cryptocurrency scheme, complete with high profile endorsements and incredibly large returns that proved to be a mirage costing investors millions,” FBI Assistant Director in Charge Kristi K. Johnson said in a statement. “Mr. DeMarr is now in custody and no longer spending his victims' money, nor hiding from justice by faking his own disappearance.”
Thomas Sjoblom, DeMarr’s lawyer, claimed his client “was unfairly swept into this whole thing” by two other associates, a Serbian-Australian national living in the Philippines and an individual from Montenegro.
“We are going to do all we can to make sure that these people from various countries outside the United States are brought to justice,” he told The Daily Beast. “As I understand it, its operations were outside the United States, and we’re going to help the government catch them.”
He added that DeMarr will be “released forthwith,” following a Monday hearing.
Although Seagal is not facing any charges related to the alleged scam, he agreed last year to pay the SEC more than $300,000—without admitting or denying wrongdoing—for his role in having previously touted B2G.
