CEO of Titanium Blockchain Infrastructure Services Inc. (TBIS) pleaded
guilty Friday for his role in a cryptocurrency fraud scheme involving
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, was the CEO and founder of TBIS, a purported cryptocurrency
investment platform, and touted TBIS 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), nor did he have
a valid exemption from the SEC’s registration requirements.
Stollery admitted that, to entice investors, he falsified aspects of
TBIS’s white papers, which purportedly offered investors and prospective
investors an explanation of the cryptocurrency investment offering,
including the purpose and technology behind the offering, how the
offering was different from other cryptocurrency opportunities, and the
prospects for the offering’s profitability. 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 further
admitted that he 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 the payment of bills for Stollery’s
Stollery pleaded guilty to one count of securities fraud. He is
scheduled to be sentenced on November 18 and faces up to 20 years in
prison. A federal district court judge will determine any sentence after
considering the U.S. Sentencing Guidelines and other statutory
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice
Department’s Criminal Division; Assistant Director Luis Quesada of the
FBI’s Criminal Investigative Division; and Acting Special Agent in
Charge Cory Nootnagel of the Office of Inspector General for the Board
of Governors of the Federal Reserve System and the Bureau of Consumer
Financial Protection, Western Region, made the announcement.
The FBI’s Los Angeles Field Office and the Federal Reserve Board’s
Federal Reserve Board’s OIG Western Region San Francisco Office are
investigating the case.
Fraud Section Trial Attorneys Kevin Lowell, Tian Huang, and Andrew Tyler are prosecuting the case.