The Securities and Exchange Commission (SEC) has filed charges against Forsage and eleven individuals alleging a cryptocurrency ponzi scam that is said to have pilfered over $300 million from retail investors.
According to the SEC’s complaint, in 2020, Vladimir Okhotnikov, Jane Doe aka – Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov launched Forsage.io, which enabled individuals to enter into transactions, apparently via smart contracts, anywhere in the world. The smart contracts utilized the Ethereum, Binance, and Tron blockchains. The Forsage founders enlisted the assistance of individuals in the US to help promote the offering. These individuals include: Samuel D. Ellis, Mark F. Hamlin, and Sarah L. Theissen, and later, Carlos L. Martinez, Ronald R. Deering, Cheri Beth Bowen, and Alisha R. Shepperd.
The SEC alleges the defendants engaged in the unregistered sales of securities on Forsage, which operated as a “textbook” pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme. To participate in the program, investors created a wallet and then purchased “slots” on Forsage, which gave them the ability to earn compensation in the form of others who were recruited in the ploy. When a person purchased a “slot” the individual that recruited the investor received a cut of the proceeds.
Carolyn Welshhans, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, commented on the enforcement action:
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors. Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”
Filed in the United States District Court in the Northern District of Illinois, alonsdie the four founders the SEC has charged Cheri Beth Bowen, of Pelahatchie, Miss., Ronald R. Deering, of Coeur d’ Alene, Idaho, Samuel D. Ellis, of Louisville, Ky., Mark F. Hamlin, of Henrico, Va., Carlos L. Martinez, of Chicago, Ill., Alisha R. Shepperd, of Dunedin, Fla., and Sarah L. Theissen, of Hartford, Wis., with violating the registration and anti-fraud provisions of the federal securities laws.
The SEC’s complaint seeks injunctive relief, disgorgement, and civil penalties.
Ellis and Theissen have agreed to settle the charges without admitting or denying the allegations and to be permanently enjoined from future violations of the charged provisions and certain other activity. Ellis has agreed to pay disgorgement and civil penalties, and Theissen will be required to pay disgorgement and civil penalties as determined by the court.
The founders were last known to be living in Russia, the Republic of Georgia, and Indonesia.