The U.S. Securities and Exchange Commission (SEC) charged 11 individuals for their roles in the fraudulent crypto pyramid and Ponzi scheme Forsage, which allegedly raised more than $300 million from millions of retail investors worldwide, including in the U.S. The charge includes the four Forsage founders living in Russia, the Republic of Georgia, and Indonesia, as well as three U.S.-based promoters endorsing Forsage on its website and social media platforms, and several members of the Crypto Crusaders.
According to the SEC’s complaint, in January 2020, Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov launched Forsage (Forsage.io), a website that allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains. However, Forsage was a pyramid scheme in which investors earned profits by recruiting others into the scheme. Forsage also used assets from new investors to pay earlier investors in a typical Ponzi structure.
Despite cease-and-desist actions against Forsage for operating as a fraud in September 2020 by the SEC of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.
In addition to charging the four founders, the complaint, filed in United States District Court in the Northern District of Illinois, also charges the U.S. residents Cheri Beth Bowen, Ronald R. Deering, Samuel D. Ellis, Mark F. Hamlin, Carlos L. Martinez, Alisha R. Shepperd, and Sarah L. Theissen, with violating the registration and anti-fraud provisions of the federal securities laws. The SEC’s complaint seeks injunctive relief, disgorgement, and civil penalties.
Without admitting or denying the allegations, two defendants, Samuel D. Ellis and Sarah L. Theissen, agreed to settle the charges and be permanently enjoined from future violations of the charged provisions and certain other activity. Additionally, Ellis agreed to pay disgorgement and civil penalties, and Theissen will be required to pay disgorgement and civil penalties as determined by the court. Both settlements are subject to court approval.
