Maasen, Noble, Jeppesen & Mascola settle BitConnect fraud

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On June 1st the SEC tabled three proposed judgments against BitConnect defendants Joshua Jeppesen, Ryan Maasen and Laura Mascola.

A partial judgment was tabled for Michael Noble.

Each of the proposed judgments were consented to by the defendants.

On June 3rd the SEC was directed to make an additional filing, explaining why the judgments were

“fair and reasonable” and (how) the “public interest would not be disserved” by the included injunctive relief.

The SEC filed its brief on June 11th. On June 23rd a hearing was scheduled for July 7th to discuss the proposed judgments.

The hearing went ahead as scheduled but unfortunately there hasn’t been a case docket update reflecting any decision.

I was hoping something would turn up so I waited a day before reporting.

In any event, the SEC’s proposed judgments pertain to Joshua Jeppesen, Ryan Maasen and Laura Mascola.

In their brief the SEC writes;

The proposed judgments as to Defendants Jeppesen and Maasen and Relief Defendant Mascola would fully resolve the SEC’s claims against them.

On the money side of things, if approved the judgments will see:

  • Joshua Jeppesen pay $2.66 million in disgorgement, pay 190 bitcoin in disgorgement, $370,983 in prejudgment interest and a $150,000 civil penalty
  • Ryan Maasen pay $477,408 in disgorgement, $38,550 in prejudgment interest and a $10,000 civil penalty
  • Michael Noble disgorge ill-gotten gains, pay prejudgment interest and a civil penalty, in amounts to be determined by the court
  • Laura Mascola pay $506,011 in disgorgement and $70,347 in prejudgment interest

Jeppesen’s, Maasen’s and Noble’s judgments also bar them from committing further acts of securities fraud and participating in pyramid schemes.

In justifying the disgorgement amounts, the SEC writes;

The disgorgement amount in each proposed judgment is based solely on the amount of illegal net profits Jeppesen, Maasen, and Mascola obtained, as alleged in the Complaint.

Specifically, Maasen’s disgorgement of $477,408 represents the amount Maasen earned from BitConnect in “referral commissions” and “development funds” for his promotion of the Lending Program, minus certain business expenses.

Jeppesen’s disgorgement of $2,668,502 represents the amount BitConnect paid him for his services as the “Continental Promoter,” the “development fund” commissions BitConnect paid him, and the 10 Bitcoin he kept of the 200 Bitcoin he received from BitConnect to pay for legal services, minus the amount he transferred to Mascola and the amount he invested in the Lending Program.

Moreover, the remaining 190 Bitcoin that Jeppesen received from BitConnect, remain at an address on the Bitcoin blockchain, and the proposed surrender of ownership of those 190 Bitcoin therefore represents a surrender of Jeppesen’s ill-gotten gains.

Finally, Mascola’s disgorgement represents the $506,011 Jeppesen transferred to her from his BitConnect payments, while she provided nothing of value to Jeppesen in return and has no legitimate claim to the funds, as the Complaint alleges.

Funds clawed back from the defendants will be placed into a “fair fund”, to be used “for later distribution to injured investors”.

Pending approval of the submitted judgments, stay tuned…

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