URGENT >> BULLETIN >> MOVING: Legisi HYIP Ponzi Pitchman Sentenced To 60 Months In Federal Prison, Ordered To Pay $4.4 Million In Restitution

Matthew John Gagnon

Matthew John Gagnon

URGENT >> BULLETIN >> MOVING: Legisi HYIP Ponzi-scheme pitchman Matthew John Gagnon has been sentenced to 60 months in federal prison, ordered to pay $4.4 million in restitution and further ordered to serve three years’ supervised probation after his prison release, the office of U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan said.

Legisi, a $72 million Ponzi scheme pushed on fraud forums such as TalkGold and MoneyMakerGroup, was operated by Gregory N. McKnight, who faces sentencing in August. Gagnon’s five-year sentence was the maximum under a plea agreement with prosecutors, who’ve recommended McKnight serve 15 years.

Gagnon pushed Legisi and other fraud schemes through Mazu.com, the SEC said in 2010. The name of MoneyMakerGroup appears in evidence exhibits in the Legisi Ponzi case.

Gagnon will be permitted to self-report to prison, prosecutors said.

The Legisi case — perhaps particularly events involving Gagnon — has been closely watched because it shows that MLM-style HYIP pitchmen can be held accountable criminally for pushing scams. The SEC called Gagnon a threat to the investing public, describing him as a serial fraud pitchman who lacked licenses to sell securities and pushed the unregistered securities of multiple fraud schemes.

In civil charges announced yesterday in Ohio, prosecutors effectively made the same claims against promoters of the alleged Profitable Sunrise pyramid scheme. Included among them was Nanci Jo Frazer, who allegedly also promoted the $119 million AdSurfDaily Ponzi scheme and the $600 million Zeek Rewards Ponzi- and pyramid scheme.

The Legisi case began as an undercover probe by state securities regulators in Michigan and the U.S. Secret Service.

Legisi’s Terms of Service sought to make members affirm they were not an “informant, nor associated with any informant” of the IRS, FBI, CIA and the SEC, among other agencies, according to documents filed in federal court.

Current scams such as Profit Clicking have published similar terms, which read like an invitation to join an international financial conspiracy. Ohio prosecutors said they believed Frazer also pushed ProfitClicking, in addition to Zeek, ASD and Profitable Sunrise.

McKnight, prosecutors have said, tried to sanitize Legisi by calling it a “loan” program and engaging in semantic obfuscation. Any number of HYIP scams have employed similar linguistic sleight-of-hand, with ProfitClicking bizarrely arguing that neither itself nor affiliates can be held accountable.

Gagnon argued in court that he’d been duped by McKnight, but a federal judge didn’t buy it.

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10 Responses to “URGENT >> BULLETIN >> MOVING: Legisi HYIP Ponzi Pitchman Sentenced To 60 Months In Federal Prison, Ordered To Pay $4.4 Million In Restitution”

  1. Ken Russo? Ken Russo? Please check your messages…..

    It’s about time law enforcement started going after the promoters of HYIP ponzi schemes.

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  2. Gregg Evans:
    Ken Russo?Ken Russo?Please check your messages…..

    The SEC has just released a statement on Gagnon’s criminal conviction. This is the headline:

    “Serial Fraudster Matthew J. Gagnon Sentenced to Five Years in Prison”

    See statement:

    http://www.sec.gov/litigation/litreleases/2013/lr22749.htm

    Patrick

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  3. @ Gregg: “Serial Fraudster” Ken Russo (DRdave) is currently missing in action from the cheerleading pit at TalkGold for six days.

    Wouldn’t it be delightful to find out that there was enough dark suits to go around to where one of them finally paid him a visit?

    SD

    .

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  4. Quick note: The AP is reporting that Jeffrey J. Kinseth, a friend of Gagnon’s, has pleaded guilty in Iowa to wire fraud in a Forex Ponzi scheme.

    http://www.kcrg.com/news/local/Man-Pleads-Guilty-to-Fraud-in-Ponzi-Scheme-215154351.html

    Here is what the SEC said in its Gagnon complaint in 2010:

    “Gagnon then laid low for a year. He resurfaced in April 2009, when he began promoting a fraudulent offering of interests in a purported Forex trading venture in which his friend Kinseth would trade on behalf of investors. Among other things, Gagnon guaranteed that Kinseth would generate returns of 2% a month or 30% a year for his investors. Gagnon’s claims were false, and Gagnon had no basis for making the claims.”

    Here is what the CFTC said about Kinseth in 2012:

    “The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Jeffrey J. Kinseth of Cedar Rapids, Iowa, and his Iowa-based company, Virtual Vision Inc., for fraudulently soliciting individuals to participate in a pooled investment vehicle, misappropriation of investor funds, and issuance of false statements to conceal trading losses and fraud. Kinseth is not registered with the CFTC.

    “The CFTC’s order requires Kinseth and Virtual Vision jointly and severally to pay a $575,000 civil monetary penalty and restitution of $574,936. The order also permanently prohibits Kinseth and Virtual Vision from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC.

    “The order finds that between March 2008 and September 2009 Virtual Vision, by and through Kinseth acting as its director and president, fraudulently solicited and accepted about $975,360 from approximately 11 individuals to trade commodity futures contracts and leveraged or margined off-exchange foreign currency contracts through Virtual Vision, a pooled investment vehicle.

    “Kinseth and Virtual Vision misappropriated the majority of the funds, over $800,000, to make payments to other investors and for Kinseth’s personal use, according to the order. Of the funds traded, Kinseth and Virtual Vision consistently sustained losses and concealed their trading losses and misappropriation by creating and issuing false account statements to investors that reflected purported trading profits, the order finds.”

    So, Kinseth and Gagnon both were sued civilly and charged criminally for their fraud schemes.

    Patrick

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  5. SD: “Serial Fraudster” Ken Russo (DRdave) is currently missing in action from the cheerleading pit at TalkGold for six days.

    Hi SD,

    You think maybe he fell off his pile of ill-gotten gains and perhaps is faking a neck injury — and is trying to hire “Breaking Bad” lawyer “Saul Goodman” to help with his whiplash claim?

    Saul would be exquisite if “Russo” ever got charged. (Too bad Liberty Reserve fell in May. Had that not happened, “Russo” could have paid old Saul through Liberty Reserve, making it a moment of almost perfect fraud symmetry. In any event, Saul almost certainly takes Perfect Money.)

    Patrick

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  6. Hi Patrick.
    Breaking Bad reference = awesome.

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  7. Whip: Hi Patrick.
    Breaking Bad reference = awesome.

    Thanks, Whip. Breaking Bad is a great show, and old Saul is an interesting character. I’ll miss the show when it goes off the air.

    Patrick

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  8. It depends on what all “Ken Russo” was into. Liberty Reserve got taken down, and it was the premier way to buy or sell child pornography, drugs or to launder dirty money. Now it’s all about Western Union and Bitcoin, the latter of which is inconsistent because it’s just a pump and dump which can drop from being worth $100 to $75 overnight. We don’t know who “Ken” is or what all he’s into. It’s possible he was into other sorts of illegal things what with his loose morals and willingness to turn a blind eye to any details that don’t involve him making money.

    All it takes is for his account to have been in his real name (or any of these HYIP guys) and for them to have bought something illegal from one of the bigger guys who got caught (for drugs or kiddie stuff). Then you’ve got a big bust on your hands and a lot of people are getting arrested. Or, someone else potentially got caught and could have decided to flip on him in exchange for a better deal. Now that the cops have their hands on Liberty Reserves’ documents, a lot of people who used real named and direct bank transfers are going to be in a lot of trouble.

    Those documents are a massive liability for everyone involved. It gives the cops a foundation for literally thousands of potential investigations. Here’s hoping “Ken Russo”/DrDave is one of them.

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  9. I have personally met Ken Russo so he is a real person and that is his real name.

    Ken is a list owner with no web site mainly into the the latest and greatest HYIP, whatever that may be at the time. These could be short term high risk ‘get in first’types, or gifting games or Zeek Rewards type ventures.

    The industry will move from one thing to another. What was fashionable
    2 years ago will again become fashionable again. AD programs are back in
    vogue now but in a few months it will be something else.

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