BULLETIN: Massachusetts Charges Purported Top 20 Shaklee MLM Distributor, Amid Allegations He Drafted Downline Members Into $10.4 Million Ponzi Scheme He Ran Through His Private Companies
BULLETIN: (UPDATED 5:03 P.M. EDT (U.S.A.) The office of Massachusetts Secretary of State William Galvin has alleged that a man who described himself as a Top 20 distributor for Shaklee Corp. — a multilevel marketing firm — drafted members of his 50,000-strong downline into a $10.4 million Ponzi scheme and promissory-notes scam that he was operating through his private companies.
John William “Jack” Cranney, 70, of Belmont, Mass., has been named in a cease-and-desist order that alleges the sale of unregistered securities and a fraud scheme affecting at least 36 people in 14 states through at least five businesses he created. The scheme was targeted at people Cranney got to know through Shaklee — and senior citizens were among the victims, Galvin’s office said in a complaint.
Cranney had been a Shaklee rep for 45 years, and the “Cranney family brought the Shaklee business to New England,” investigators said.
Investigators identified the businesses as Cranney Capital I LLC, Cranney Capital I Employee Stock Ownership Trust, Cranney Capital II LLC, Cranney Capital III Inc., and Cranney Industries, d/b/a Belmont Industries.
“Cranney used his affiliation with family, friends and colleagues at Shaklee Corporation . . . many of whom he has known for fifteen (15) to twenty (20) years . . . to gain their trust and solicit investments,” investigators charged. “The majority of Cranney’s victims are affiliated with Shaklee and many are senior citizens.”
And Cranney, according to investigators, falsely told his Shaklee victims that he was a “financial advisor and/or investment fund manager.”
In reality, investigators said, Cranney was at the helm of a scam that began in 2002 and “enticed unsuspecting victims with promises of high returns on safe investments.”
Some victims believed they were investing in a retirement plan, investigators said.
Named in the complaint as a “related party” but not charged was Howard Musin, whom investigators said was the registered agent of three of the Cranney companies.
“Musin has prepared tax returns for Cranney and his related corporate entities and other distributors for Shaklee up until 2011. In July of 2011, a federal court permanently barred Musin, his wife Jill Schwartz-Musin, and their three companies (SSC Services Inc., M-S Services Inc. and Schwartz’s Systems Corporation) from preparing tax returns for others after engaging in misconduct and fraud in preparing tax returns,” investigators said.
That fraud, according to investigators, involved the fabrication of “deductible business expenses” for clients, including Shaklee distributors.
Musin was in Cranney’s Shaklee downline, investigators said.
Read the complaint.