CEO of Titanium Blockchain Convicted for $21M Cryptocurrency Fraud Scheme | OPA

The CEO and founder of Titanium Blockchain Infrastructure Services Inc. (TBIS) was sentenced today to four years and three months in prison for his role in a cryptocurrency fraud scheme involving TBIS’ initial coin offering (ICO) that raised approximately $21 million from investors in the United States and abroad.

According to court documents, Michael Alan Stollery, 54, of Reseda, Calif., designated TBIS — a purported cryptocurrency investment platform — as a cryptocurrency investment opportunity, luring investors to buy “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’ cryptocurrency investment offering with the US Securities and Exchange Commission (SEC), nor did he have a valid exemption from the SEC’s registration requirements.

To lure investors, Stollery falsified aspects of TBIS’s white papers, which allegedly provided investors and potential investors with an explanation of the cryptocurrency investment offering, including the purpose and technology behind the offering, how the offering differed from other cryptocurrency opportunities, and the prospects for the offering’s profitability. Stollery also planted false customer testimonials on TBIS’s website and falsely claimed he had business relationships with the Federal Reserve and dozens of prominent companies to create a false impression of legitimacy. Stollery did not use the invested money as promised, but instead commingled the ICO investors’ funds with his personal funds, using at least a portion of the offering proceeds for expenses unrelated to TBIS, such as credit card payments and paying bills for his Hawaii condominium.

Assistant Attorney General Kenneth A. Polite, Jr. from the Department of Justice’s Criminal Division; Assistant Director Luis Quesada of the FBI’s Criminal Investigation Division; and Acting Special Agent Cory Nootnagel of the Office of Inspector General (OIG) for the Board of the Federal Reserve System and the Consumer Financial Protection Bureau, Western Region, made the announcement.

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.