The Beauty Queen, The Russian, And The Missing Millions
“The attorneys representing the defendants have withdrawn as counsel,” said attorney Donald Enright, who represents plaintiffs in this crypto-fueled legal dispute. Enright added the defendants “defaulted” by failing to appear in court and respond to the claims.
The Northern District of California decided in the infamous initial token offering (ICO) case Davy v. Paragon Coin, Inc. that token buyers trying to sue the project’s founders may qualify as a class to pursue a collective case.
The lawsuit claims the token sale was an illegal securities offering and that buyers are entitled to a refund of their investment or compensatory damages. The defendants’ former counsel, attorney Howard Schiffman, declined to comment other than to say his law firm hasn’t worked with or heard from the accused in “years.”
His counterpart, Enright, said that doesn’t mean the case is over.
“Once we have the class certified we will then seek default judgment on behalf of the entire class for all of their damages,” he said, “for the full value of the Paragon ICO.”
Paragon raised roughly $12 million in digital assets during the token sale, according to litigation filings from the U.S. Securities and Exchange Commission (SEC).
The legal saga underscores the lasting hangover of 2017’s initial coin offering (ICO) craze, at a time when token sales are again surging in popularity.
The project appears to have been helmed by Jessica VerSteeg, a former beauty queen from Iowa who went on to appear in reality TV, and her husband, Russian entrepreneur Egor Lavrov.
But the defendants listed in court documents also include a hip-hop star.
Jayceon Terrell Taylor, aka “The Game,” who promoted the Paragon ICO on social media, was also named in the suit. Also named are technologists Eugene Bogorad, Alex Emelichev, Gareth Rhodes and Vadym Kurylovich. Most of the above-mentioned defendants could not be reached for comment by press time.
“Paragon offers everything from a cryptocurrency (ParagonCoin, traded as PRG) to a blockchain solution (ParagonChain) designed to expedite and digitize the marijuana supply chain,” a Forbes contributor wrote in July 2018. “Now, VerSteeg’s latest venture is Paragon Space, Los Angeles’ first cannabis co-working space set to open on September 1.”
It’s unclear if any of the project’s stated plans would have materialized had it not been for legal action from the SEC in 2018.
One of Paragon’s early contributors, who spoke on condition of anonymity, said he’s not concerned about future lawsuits because the team already obeyed the SEC by paying a penalty fee. It’s unclear whether the full fee was paid because, as of November 2019, the Wall Street Journal reported the Paragon team missed some of the deadlines to pay these fines.
Both of the interviewed defendants from the Paragon case were not U.S.-based and said they weren’t concerned about being named in any ongoing lawsuit. As for American defendants and former legal counsel, aside from the above-mentioned Schiffman, their offices were closed due to COVID-19 or they did not otherwise respond to emails and voicemails by press time. In fact, VerSteeg and Lavrov haven’t been heard from since last year.
“As far I know, Egor is not responding to any messages and that’s all I know,” Bogorad, the project’s former chief strategy officer said, having only heard about legal trouble through the press. “I went back to Moscow. October 2017 was the last time I saw him. We were actually asking him [in 2018] about our tokens.”
The couple was still promoting Paragon throughout 2018, although they were rarely responsive to their former colleagues. The SEC fined the entrepreneurs in early 2019. Most of the couple’s old websites and social media accounts haven’t been active since mid-2019, when they posted on Instagram in July from Kiev, Ukraine.
“I think they’re together and disappeared together,” Bogorad said. “Last we heard from them they were visiting the development team near Kiev.”