Feb. 22 (UPI) — A federal grand jury on Wednesday charged the founders of Forsage with running a sophisticated multi-hundred-million-dollar international Ponzi scheme under the guise of a decentralized cryptocurrency investment platform.
The indictment returned in the District of Oregon charges each of the company’s four Russian founders — Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov — with conspiracy to commit wire fraud. If convicted, they could face a maximum of 20 years’ imprisonment.
“These individuals are alleged to have used trendy technology and opaque language to swindle investors out of their hard-earned cash,” Special Agent in Chard Ivan Arvelo of Homeland Security Investigations, New York, said in a statement. “But, as the indictment alleges, all they were doing was running a classic Ponzi scheme.
“The technology may change but the scams remain the same, and with the collaboration amongst all our partners, we’re able to see through the phony promises and bring the schemes to light.”
A Ponzi scheme as defined by the U.S. Securities and Exchange Commission is an investment fund where returns to existing investors come from new victims.
Court documents state that the Forsage platform presented itself as a decentralized matrix project based on so-called smart contracts, which are self-executing contracts on a shared ledger that records transactions known as the blockchain.
However, investigators pouring through the platform’s coding found that it was actually programmed so that when an investor invests in the fund, through purchasing a so-called slot in a Forsage smart contract, that money is diverted to earlier investors.
Federal prosecutors accuse the Russian quartet of extensively advertising their platform on social media as a low-risk investment, generating some $340 million from victims worldwide.
Investors in Forsage are being encouraged to identify themselves to the Justice Department as potential victims and gain more information about their rights, including the ability to submit a victim impact statement.
In August, the SEC charged 11 people, including the four Russians, for their roles in the alleged Ponzi and pyramid scheme.
The document states Okhotnikov’s last known residence was Tbilisi, Georgia. Oblamska, who was identified by the Lola Ferrari alias, was last known to be living in Bali, Indonesia, while Sergeev and Maslakov were believed to be in Moscow.