Following the indictment of Neil S. Chandran in June 2022 (see United States v. Chandran, No. 4:22-CR-3077 (D. Neb. filed June 14, 2022), in a case brought by the U.S. Department of Justice in the U.S. District Court for the District of Nebraska, the Securities and Exchange Commission (SEC) filed a complaint in January 2023 against Chandran and his co-conspirators and various related entities alleging various federal securities law violations, including conducting an unregistered securities offering. See United States Securities and Exchange Commission v. Chandran, No. e 2:23-cv-10017 (E.D. Mich. filed Jan. 4, 2023). The complaint has made additional details about the alleged fraud available to the public. The scheme, the complaint alleges, involved investments in a fictitious, trillion-dollar artificial intelligence and blockchain-related company whose sale was promised to return hundreds of billions of dollars to unsuspecting investors.
The complaint was filed against Chandran, Garry J. Davidson, Michael T. Glaspie, Linda C. Knott, Amy S. Mossel, AEO Publishing Inc., Banner Co-Op, Inc., and BannersGo, LLC for their alleged involvement in soliciting investments in a fictitious artificial intelligence and blockchain-related company referred to as “CoinDeal.” The scheme, the SEC alleges, involved raising more than $45 million from more than 10,000 investors over four years to support a “company involved with cryptocurrency and artificial intelligence that was pending sale.” The sale, the defendants claimed, was to be for trillions of dollars to a group of billionaires. According to the complaint, neither CoinDeal nor the potential sale ever existed. The funds, therefore, were allegedly simply misappropriated by the co-conspirators.
Initially conceived by Chandran, a convicted felon, the scheme allegedly involved a wide-ranging multi-level marketing campaign to raise money from unsuspecting investors. Given his prior legal issues, including publicly known violations of various securities laws, Chandran allegedly approached Davidson, an individual who had been a victim in one of Chandran’s prior schemes, to communicate on his behalf. Davidson then recruited Glaspie, who had apparently been successful in various online multi-level marketing programs in the past, to help him.
For years, the complaint alleges, the co-conspirators promoted the “imminent” sale of CoinDeal for trillions of dollars, sending prospective investors charts showing astronomical return amounts directly tied to specific investment amounts. The alleged promises and lies communicated by the defendants, according to the complaint, are shocking. For example, the defendants allegedly promised increasingly higher returns throughout the scheme, all the way up to $56.25 billion (in addition to a Bentley GT) in return for an investment of $100,000. The defendants allegedly went even further than promising sky-high returns, promising a 7 percent return if the transaction did not go through, therefore claiming this was a risk-free investment.