WASHINGTON D.C.
The CEO/founder of Titanium Blockchain Infrastructure Services Inc. (TBIS) was sentenced to four years and three months in prison for his role in a cryptocurrency fraud scheme, officials announced this week.
The fraud scheme involved TBIS’s initial coin offering (ICO) that raised approximately $21 million from investors in the United States and overseas.
According to court documents, Michael Alan Stollery, 54, of Reseda, California, touted TBIS – a purported cryptocurrency investment platform – as a cryptocurrency investment opportunity, luring investors to purchase “BARs,” the cryptocurrency token or coin offered by TBIS’s ICO, through a series of false and misleading statements.
Although he was required to do so, Stollery did not register the ICO regarding TBIS’s cryptocurrency investment offering with the U.S. Securities and Exchange Commission (SEC).
He did not have a valid exemption from the SEC’s registration requirements.
To entice investors, Stollery falsified aspects of TBIS’s white papers.
This purportedly offered investors and prospective investors an explanation of the cryptocurrency investment offering.
It also included the purpose and technology behind the offering, how the offering was different from other cryptocurrency opportunities, and the prospects for the offering’s profitability, officials stated.
Stollery also planted fake client testimonials on TBIS’s website and falsely claimed that he had business relationships with the Federal Reserve and dozens of prominent companies to create the false appearance of legitimacy.
Stollery did not use the invested money as promised but instead commingled the ICO investors’ funds with his funds, using at least a portion of the offering proceeds for expenses unrelated to TBIS, such as credit card payments and the payment of bills for his Hawaii condominium, officials stated.
The FBI Los Angeles Field Office and the Federal Reserve Board OIG Western Region, San Francisco Office investigated the case.
Trial Attorneys Tian Huang and Andrew Tyler of the Criminal Division’s Fraud Section prosecuted the case.