The alleged mastermind of multi-million-dollar crypto frauds who purportedly faked his own disappearance to avoid angry investors is now facing charges from U.S. authorities.

The U.S. Department of Justice (DoJ) announced that a California man, John DeMarr, was arrested and charged in a U.S. federal court with conspiracy to commit securities fraud in connection with unregistered crypto trading.

The U.S. Securities and Exchange Commission (SEC) also charged DeMarr for his role in two “fraudulent and unregistered digital asset securities offerings” that allegedly duped retail investors out of US$11 million.

In its complaint, the SEC alleged that between December 2017 through May 2018, DeMarr and Kristijan Krstic, the founder of Start Options and Bitcoiin2Gen (B2G), “fraudulently induced investors to buy digital asset securities” and promoted an unregistered initial coin offering (ICO) by B2G.

Last year, the SEC settled with action movie star Steven Seagal for failing to disclose that he was paid to tout B2G’s ICO.

Without admitting or denying the SEC’s findings, Seagal agreed to pay US$157,000 in disgorgement and a US$157,000 penalty. He also agreed not to promote any securities for three years.

The DoJ alleged that in addition to hiring Seagal to tout the B2G ICO, Start Options used the name and likeness of a professional athlete without the athlete’s consent to endorse the firm.

The DoJ also said that DeMarr attempted to fake his disappearance “to avoid facing disgruntled B2G investors.”

“DeMarr directed others to release statements claiming that DeMarr had been assaulted and was missing in Montenegro,” when, in fact, he was living in California, the DoJ said.

The SEC’s complaint alleges that Krstic and DeMarr violated securities laws, and a third person was charged with aiding and abetting the antifraud violations. The regulator is seeking disgorgement, penalties and an officer-and-director ban against Krstic and DeMarr.

None of the regulator’s allegations has been proven.

“The conduct alleged in this action was a blatant attempt to victimize those interested in digital asset technology,” said Kristina Littman, chief of the SEC enforcement division’s cyber unit. “In reality, we allege, these ventures were fraudulent enterprises aimed simply at misappropriating funds from investors.”

“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,” said FBI assistant director-in-charge, Kristi Koons Johnson. “Mr. DeMarr is now in custody and no longer spending his victims’ money, nor hiding from justice by faking his own disappearance.”