BULLETIN: (2nd updated 8:54 p.m. EDT U.S.A.) The office of Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina has published a webpage for victims of the “Achieve Community” scam. Victims are asked to “submit information concerning the amount of your losses to the U.S. Probation Office,” which is compiling a “presentence” report on convicted Achieve Ponzi- and pyramid scammer Kristine Louise Johnson.
Achieve participants know her as Kristi Johnson.
Directions on how to submit information are provided on the victims’ site.
Troy Barnes and Kristine Johnson operated a fraudulent Pyramid/Ponzi scheme through Work With Troy Barnes, Inc. (WWTB), an entity they founded and which did business as “The Achieve Community” (TAC). Between April 2014 and February 2015 TAC generated more than $6.8 million. Through online video blogs and written promotional materials on the website, both Barnes and Johnson enticed victim-investors to buy “positions” in TAC and earn extraordinary investment returns of 700 percent. More than 10,000 people invested. Barnes and Johnson repeatedly assured listeners who bought $50 “positions” that they would “cycle” through the matrix and receive $400 in return for each $50 position. There was no requirement that investors do anything. Success depended entirely on sufficient new investors to “retire” early investors positions. The scheme ended when the SEC executed a temporary restraining order (TRO) on February 13, 2015. When it was forced to cease operations due to the TRO, TAC had $2.6 million on deposit but owed more than $50 million to investors.
The defendant, Kristine Johnson, pled guilty on June 30, 2015 and was released on bail. The case is in the presentence stage of the criminal justice process. The United States Probation Office has been assigned to complete a presentence report.
Achieve was a Ponzi-board scam that also spread on social media. The reach potentially created thousands of victims. When online scams cast a wide net, it potentially can led to sentencing enhancements.
URGENT >> BULLETIN >> MOVING: (13th Update 1:43 p.m. EDT U.S.A.) After an investigation by the U.S. Secret Service, Kristi Johnson (Kristine Louise Johnson) of the “Achieve Community” has been charged criminally with wire-fraud conspiracy and has agreed to plead guilty, federal prosecutors said.
“By the time the scheme collapsed in February 2015, the conspirators owed victim-investors at least $51 million in purported investment returns, yet Johnson, her conspirators and TAC had available only 4% or approximately $2.6 million,” the office of Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said.
The SEC charged Johnson, 60, civilly in February 2015 with operating a combined Ponzi- and pyramid scheme that allegedly had gathered at least $3.8 million. She resided in Aurora, Colo., the agency said. The securities regulator also charged Troy A. Barnes, 52, of Riverview, Mich.
Barnes disclosed in February that he was a target of a federal criminal investigation. A charge sheet (known as an “information”) filed by prosecutors yesterday against Johnson described an alleged co-conspirator as “CC#1.” The information also suggested there were other co-conspirators “known and unknown to the United States Attorney.”
These individuals were not named.
The conspiracy prosecution brought by the Secret Service and federal prosecutors appears to have upped the Ponzi dollar sum to $6.8 million. Prosecutors said Achieve “defrauded more than 10,000 investor victims” worldwide.
Prosecutors called Achieve a “sham internet company.” The case against Johnson was brought in the venue — the Western District of North Carolina — that is the center of action in the 2012 Zeek Rewards’ Ponzi- and pyramid scheme.
Achieve and Zeek are known to have had promoters in common. Both schemes instructed prospects and recruits not to call the respective programs “investment” programs in bids to skirt securities laws. Such disingenuousness dates back to at least 2008 and the AdSurfDaily Ponzi scheme, also broken up by the Secret Service.
According to court filings, as the scheme grew in size and scope, Johnson and her conspirators concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term “investment” would draw scrutiny from regulators, they instructed victim-investors that “We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.”
According to court records, Johnson and her conspirators also lied about the company’s “business model” to the third-party payment processors which processed TAC’s money transactions. When one payment processor concluded that TAC was operating a Ponzi scheme and terminated TAC as a client, court records show that Johnson and her conspirators falsely told victim investors that it was because the payment processor was unable to handle the large amount of money TAC paid to its investors.
As indicated in court documents, the investment scheme began to crumble when payment processors stopped processing the Ponzi payments to victim-investors. By the time the scheme collapsed in February 2015, the conspirators owed victim-investors at least $51 million in purported investment returns, yet Johnson, her conspirators and TAC had available only 4% or approximately $2.6 million.
Prosecutors said “a signed plea agreement was also filed [Thursday], and Johnson is expected to appear before a U.S. Magistrate judge in the coming days to formally accept the plea. The wire fraud charge carries a maximum of 20 years in prison and a $250,000 fine. As part of her plea agreement, Johnson has agreed to pay restitution, the amount of which will be determined by the Court.”
In December 2014, the PP Blog reported that Achieve boosters were parroting each other and circulating a promo that read, “We are not investing in a stock or buying shares in a company. We are using our God given universal right to spend our money the way we want. We choose not to sell out to the banking system for their tiny little 1% annual return.”
Prosecutors described Achieve’s purported 700 percent return as “bogus.” The SEC described Achieve as a “pure Ponzi and pyramid scheme” whose revenue “has consisted entirely of investor-contributed funds.”
Claims of that a “triple algorithm” made such outsized returns possible also were bogus, authorities said.
From an Achieve promo playing on YouTube. Masking by PP Blog.
Achieve offered a 700 percent ROI, according to the SEC and federal prosecutors.
BULLETIN: (3rd Update 3:44 p.m. EDT U.S.A.) The Colorado Division of Securities has issued a cease-and-desist order to “Achieve Community” and accused the network-marketing “program” of securities fraud and selling unregistered securities while conducting “a pure Ponzi and pyramid scheme.”
The order applies to Achieve, Achieve International LLC, Work with Troy Barnes Inc. and Achieve founders Troy Barnes of Michigan and Kristine “Kristi” Johnson of Colorado, the Division said.
Achieve was known in shorthand as TAC.
Johnson already has settled without admitting or denying the allegations, the Division said.
Barnes did not respond to the action, the Division said.
It added that the first complaints against Achieve were submitted to the state in October 2014. The state confirmed publicly in January that Achieve was under investigation.
“Given the location of Achieve in Colorado, we believe that it is important to address this fraudulent activity on a local level and ensure that state investors are protected by barring any further illegal sale or solicitation of these securities by the respondents in this state,” said Colorado Securities Commissioner Gerald Rome.
Colorado’s action is believed to be the first state-level action brought against Achieve, which the U.S. Securities and Exchange Commission charged with fraud in February 2015. A federal judge imposed an asset freeze in the SEC case.
From a statement today by the Division (italics added):
Complainants alleged that they had bought shares in TAC after information on the company’s website promised 800-percent returns on “positions” in the TAC “matrix” costing $50 each.
According to an official complaint compiled by the Division, Barnes and Johnson both allegedly appeared in videos promising that investors would receive an unlimited 800-percent return on positions based on the funds of others who obtained new positions. Further, the founders stated that TAC was “a lifetime income plan,” that members could make “as much as you like with us, as often as you like with us,” and expressly claimed that they were not operating a pyramid or Ponzi scheme.
The Division alleged, however, that the respondents committed securities fraud because the business was, in fact, a pure Ponzi and pyramid scheme. Unlike lawful multi-level marketing businesses, TAC did not sell a product. The proceeds paid to investors and to Johnson and Barnes were derived from funds obtained from later participants in the TAC matrix.
The Division asserts that, despite acting as broker dealers in order to sell the positions, neither Barnes nor Johnson were licensed with the state, as required by the Colorado Securities Act. Furthermore, respondents violated the Act with the sale of unregistered securities products in the form of the $50 positions.
The PP Blog reported on April 20 that an order to show cause had been issued against Achieve and that a cease-and-desist order appeared to be pending.
UPDATED 6:17 A.M. EDT APRIL 21 U.S.A. The Colorado Division of Securities has directed an “Order to Show Cause” to “Achieve Community,” alleged in February 2015 by the U.S. Securities and Exchange Commission to be a combined Ponzi- and pyramid scheme that gathered at least $3.8 million.
Colorado’s order cites a “Division Case No.” of “XY 15-CD-08.” This may mean the Division has filed a crease-and-desist order against Achieve. Details were not immediately clear, but a hearing was scheduled for April 17.
“We do expect to issue orders in Achieve community this week,” said Lillian Alves, Colorado’s Deputy Securities Commissioner.
And, she noted, “We plan on doing a statement later this week.”
Based on information on Colorado’s website, the Show Cause order applies to “The Achieve Community; Achieve International, LLC; Work with Troy Barnes, Inc.; Kristine Johnson ( Also known as Kristi Johnson).”
Johnson, of Colorado, and Barnes, of Michigan, were the alleged operators of Achieve Community.
The SEC complaint described Achieve Community as a “pure Ponzi and pyramid scheme” whose revenue “has consisted entirely of investor-contributed funds.”
Achieve International, an entity named a relief defendant in the SEC’s case, has been tied by the SEC to Johnson. At noted above, Achieve International likewise is cited in Colorado’s state-level proceeding.
The action at the state level shows that scams using an MLM or network-marketing business model also may face local trouble — in addition to the trouble they encounter through actions filed by federal agencies such as the SEC.
Some Achieve Community promoters pushed multiple HYIP schemes simultaneously. Some of them, including “Bring The Bacon Home” and “Trinity Lines,” appear already to have gone belly-up. RockFeller.biz, also pushed by some Achieve Community hucksters, may be experiencing payout delays, a source told the PP Blog last week.
Payout delays typically are a sign of doom in the HYIP sphere.
Americans and other peoples of the world who push HYIP schemes may be helping criminal networks gain size — and therefore the ability to steal larger and larger sums of money.
Some Americans are known to have pushed “UFunClub,” a scheme now under investigation in Thailand. Arrests have been made overseas in the UFunClub case, and the dollar volume involved may be in the hundreds of millions of dollars.
The PP Blog reported yesterday that a veiled reference to UFunClub was made last week in a conference call for a “program” known as “SVM Global Initiative.” This may suggest the two cross-border “programs” have promoters in common.
Some of the language on the SVM call was reminiscent of language used by “sovereign citizens,” groups of individuals that — though perhaps loosely connected — may push scams and engage in antigovernment extremism.
EDITOR’S NOTE: The personnel information in the first section below is gleaned from public records in the SEC’s pyramid- and Ponzi case against the “Achieve Community” and alleged principals Kristi Johnson and Troy Barnes. Some of the numbered points include additional notes by the PP Blog. These notes are based on public records or information in the public domain, including a Feb. 18 statement by the SEC.
**___________________**
The U.S. Securities and Exchange Commission announced on Feb. 18 it had filed a pyramid- and Ponzi complaint that alleged securities fraud against “Achieve Community” and that a federal judge had granted an emergency asset freeze.
Supporting documents filed by the SEC paint a picture of significant legwork that took place at the agency as it studied how Achieve had evolved from its alleged start in April 2014 through the days immediately prior to the freeze. This column focuses on human assets, the public servants who played a role in stopping the harm caused by Achieve by applying their individual specialties.
The SEC assigned (at least) the following individuals to the case prior to filing a complaint under seal against Achieve and requesting an emergency asset freeze on Feb. 12:
1.)An IT specialist assigned to the Division of Enforcement in Washington, D.C. This person performed website/video-capture duties involving public sections of two Achieve sites (TheAchieveCommunity.com and ReadyToAchieve.com) and at least one YouTube video. (Longtime readers will recall the 2012 Zeek Rewards probe that led to spectacular allegations of pyramid-and Ponzi fraud also involved website capture.)
2.)A senior paralegal employed by the Division of Enforcement and assigned to the SEC’s Denver Regional Office. This person reviewed and transcribed 11 Achieve-related public video files and one public audio file. Some of the video files were on the Achieve sites. Others were on YouTube. The audio file was on the Achieve site. (A segment of a transcript shown a federal judge from the audio file shows “Rodney” serving up softball questions to Kristi Johnson and Troy Barnes, Achieve’s accused operators. The segment was on the topic of Achieve’s purported “triple algorithm.” It is referenced in “Exhibit D.” The screen shot that introduces this column is from a pdf of Exhibit D. More from Exhibit D appears in the form of a screen shot below.)
3.)An attorney/investigator employed by the Division of Enforcement at the SEC’s Denver Regional Office. This attorney reviewed web sources of information on Achieve, bank statements and source material provided by Achieve vendors, including FirstBank and Payoneer. He filed a 28-page declaration in advance of the asset freeze. This document distilled key pieces of evidence from Achieve sales pitches and financial records, calculating that investors had directed at least $3.829 million to Achieve and that Johnson and Barnes had taken “a minimum” of $336,975 “of investor funds.” (That’s roughly 9 percent, a circumstance that suggests Achieve’s Ponzi was digging a deeper and deeper hole.)
4.Two other SEC attorneys assigned to the Denver office. These attorneys brought the 17-page complaint against Achieve that alleged Achieve had “no legitimate business operations” and that “the sole source of repayments to earlier investors is funds contributed by newer investors.” (Though not referenced on the court docket of the Achieve case, the SEC, in a Feb. 18 public statement, confirmed a fourth agency attorney is involved in the probe.)
5.An SEC staff accountant employed by the Division of Enforcement and assigned to the Denver office. This person has been with the SEC for 20 years and examined and summarized records from at least five Achieve-related bank accounts, including “underlying detail” such as account-opening forms, statements, checks, wire transfers and deposit slips. (No criminal wrongdoing has been alleged and it is unclear if a criminal investigation is under way, but this information shows that the SEC, in part, halted Achieve the same way Internal Revenue halted Al Capone: with an accountant’s skill and experience in understanding numbers and tracking money flow. The same SEC accountant was involved in the memorable prosecution of recidivist con man Larry Michael Parrish, accused in 2011 of going to a Colorado hospital room to swindle a man dying of cancer.)
6.An SEC financial economist who holds a Ph.D in economics from the Massachusetts Institute of Technology. (This individual also studied in Chile and the Dominican Republic. She is a native speaker of Spanish, is fluent in English and also understands French. Based on her CV, I wouldn’t describe her as a secret weapon. But I do note that her international experience in areas that know poverty is a bonus, given that so many HYIP/Ponzi-board scams are targeted at people of limited means or people desperate for a positive economic result. Her MIT dissertation was titled, “Essays on Entrepreneurship” and was based in part on “survey data on the portfolios of U.S. families to study the tightness of borrowing constraints for entrepreneurs.” This may be important in context, because some Achievers already are making the absurd claim the SEC stands in opposition to entrepreneurship. One Achiever has claimed the agency’s Achieve action was a “systemic destroy tactic.” The same person has suggested the 9/11 terrorist attacks were a “false flag set up,” repeating a conspiracy theory that bizarrely accompanies just about any action that U.S. government takes against an HYIP scheme.)
Friends, Ponzi schemes are fraud per se — that is, they exist for no other reason than to commit fraud by theft. In the Internet Age in the network-marketing sphere, they have become organized schemes to defraud that are capable of involving thousands, hundreds of thousands or even millions of people. There is no such thing as a benevolent Ponzi scheme or a Ponzi scheme with “good intentions.”
Creating legions of victim-investors is only part of the problem.
The SEC’s supporting documentation suggests Achieve itself polluted the commerce stream at at least nine points of contact: three banks, one credit union, four payment processors and one brokerage firm. This number does not take into account the fact that some Achieve participants were issued debit cards onto which their “earnings” were loaded, thus putting any number of financial institutions in the position of becoming either dispensaries or warehouses for fraud proceeds.
At least one Achieve promoter recorded a video of himself offloading Achieve money at an ATM in Hawaii. The SEC says bank records indicate Johnson gave $10,000 to a church, a circumstance that suggests the church came into possession of tainted funds.
Prior to filing the Achieve action, the SEC says in supporting filings, the agency did not contact “any” Achieve investors. Nor did it subpoena Achieve for information or personally view information in the private areas of Achieve’s websites.
Why not?
Because there was a “need to not alert Defendants of the investigation,” the SEC said in supporting materials. Beyond that, the agency said, “if investors were alerted to the SEC’s investigation, they would quickly disseminate that information to other TAC investors, as well as Defendants, which could risk additional dissipation or misappropriation of investor funds.”
An Outtake From The Paralegal’s Transcription
Image source: pdf from U.S. court filings by the SEC.
The next section of the PP Blog’s Special Report seeks to anticipate and then answer questions Achieve members may have. The answers are gleaned from supporting documents the SEC provided a federal judge as part of the process of bringing the Achieve complaint and seeking an emergency asset freeze. This section includes some commentary/analysis by the PP Blog.
Q: When did the SEC open its investigation into Achieve?
A: At least by January 2015. The specific date is unclear.
Q: Did the SEC receive tips about the operations of Achieve?
A: Yes. The number of tips and the identities of persons who provided them are not disclosed.
Q: Prior to the Feb. 12 asset freeze, did Achieve know it was under investigation by the SEC?
A: The agency said it did not advise Achieve of the probe. However, Kristi Johnson knew at least by Jan. 13 that the Colorado Division of Securities, the state-level regulator, was asking questions about Achieve, according to the SEC. On that date, the Division learned in an “interview” with Johnson that Achieve did its banking at FirstBank. The Division shared this information with the SEC. By Feb. 2, the SEC had obtained Achieve’s banking records. The SEC accountant then began to examine the records, sharing information with the SEC attorney/investigator.
Moreover, the SEC has alleged Johnson is a former “registered representative.” With experience in the securities industry and with Achieve already under investigation by a state regulator, Johnson must have contemplated that the SEC was hot on the Achieve trail. The SEC alleges she lives in Aurora, Colo. That’s only about 25 minutes away from the agency’s regional headquarters in Denver. It goes without saying that the SEC is particularly unfriendly to Ponzi schemes, perhaps particularly ones operating in its own back yard.
Q: Why the asset freeze?
A: Direct quote from SEC filings: “In light of the egregiousness of Defendants’ conduct, the ongoing and active Ponzi scheme, Defendants’ increasingly desperate attempts to make Ponzi payments and misappropriate investor funds, and the concern that Defendants will dissipate or misappropriate the remaining investor funds if they become aware of this action prior to the entry of the requested order, the Commission respectfully requests that the Court grant ex parte relief freezing the assets of Defendants and Relief Defendant, prohibiting them from soliciting additional investors or otherwise continuing their fraudulent scheme, and ordering other relief to ensure a prompt, fulsome, and fair hearing on Plaintiff’s motion for a preliminary injunction.
“Absent an order granting such emergency ex parte relief, there is no reason to think Defendants’ fraudulent scheme, and their misappropriation and dissipation of the remaining investor funds, will cease, or that there will be any funds available to compensate investor victims at the conclusion of this litigation.”
Q: What did the SEC accountant discover?
A: Plenty, including banking records pertaining to this Achieve International LLC check for $90,000 made payable to “Cash” on Jan. 8, 2015. (Note: The check is dated Jan. 8, 2014, but that’s a new-year mistake. The banking records themselves note the correct date. The black redactions appear in a pdf of an SEC evidence exhibit. The PP Blog added the red redaction in this screen shot from the pdf. The $90,000 allegedly ended up in Kristi Johnson’s personal account at the Credit Union of Colorado.)
An SEC attorney/investigator who reviewed the accountant’s work across multiple Achieve-related bank accounts alleged in a declaration to the court that the “bank records indicate that on at least thirteen occasions, Johnson went to a FirstBank branch and withdrew cash in the form of currency, or cash in the form of a check written to ‘cash.’ Virtually all of thee funds ended up in an account at the Credit Union of Colorado . . . that is Johnson’s personal account.” Such transactions involved $153,300.
Q: Will I get my money back or a percentage of it from Achieve?
A: Possibly. How that would occur is unclear. No receiver has been appointed. The SEC investigation is ongoing.
A: Too soon to tell. The SEC investigation is ongoing. An ongoing investigation sometimes means an amended complaint or additional complaints will be filed that names additional defendants or “relief defendants” — those in alleged possession of ill-gotten gains.
Q: I’ve read online that the best practice with these programs is to throw in my stake with affiliates promoting them on YouTube and Facebook. These purported experts also say not to risk more than I can afford to lose and to quickly remove my “seed money” to create a situation that I’m only playing with “house money” — “profits” from the scheme. What am I to believe?
URGENT >> BULLETIN >> MOVING: (17th update 3:07 p.m. ET U.S.A.) The U.S. Securities and Exchange Commission has charged “Achieve Community” (as Work With Troy Barnes Inc.) and alleged operators Troy A. Barnes and Kristine L. Johnson with operating a combined pyramid- and Ponzi scheme that raised more than $3.8 million. A federal judge in Colorado has ordered an asset freeze and granted a temporary restraining order.
“Johnson and Barnes allegedly claim to be operating a successful investment program when in fact they are taking funds from new investors to pay phony profits to earlier investors,” said Julie Lutz, director of the SEC’s Denver Regional Office.
Achieve’s internal structure is part of the probe.
“Johnson is one of the two founders of TAC, and handles the majority of TAC’s finances,” the SEC charged. “Johnson is an authorized agent of WWTB and has acted as the sole signatory on at least three bank accounts that she opened in the name of WWTB.”
Meanwhile, the Colorado Division of Securities confirmed minutes ago that it was working with the SEC on the Achieve probe.
“We continue to have our own open investigation regarding possible violations of the Colorado Securities Act,” said Lillian Alves, Colorado’s Deputy Securities Commissioner. “The factual basis of our investigation parallels that of the SEC case.”
In a 17-page complaint that was filed under seal on Feb. 12, the SEC described the Achieve Community as a “pure Ponzi and pyramid scheme” whose revenue “has consisted entirely of investor-contributed funds.”
“Johnson and Barnes have made no effort to generate profits from any legitimate business operations from which they could repay earlier investors,” the SEC charged. “Instead, the sole source of repayments to earlier investors is funds contributed by newer investors.”
The Feb. 12 filing date likely means that Achieve still was trying to raise money even as the SEC was in court to request an emergency asset freeze. On Feb. 12, a Barnes-narrated video appeared on YouTube. The 11:06 video was titled “Thursday Update 2 12.” The video provided Achieve members instructions on how to register for a purported new payment processor.
By Feb. 14, Achieve members were quoting a forum post attributed to Barnes that Achieve’s assets had been frozen. Whether a criminal probe is under way is unclear.
Barnes is 52. He resides in Riverview, Mich., according to the complaint. Johnson, known as “Kristi,” is 60. She resides in Aurora, Colo.
Johnson also is associated with an entity known as “Achieve International LLC,” which has been named a relief defendant as an alleged recipient of funds from the fraud.
“Johnson formed Achieve International as a Colorado entity, is an authorized agent of Achieve International, and, on information and belief, is the sole member, and managing member, of Achieve International,” the SEC said. “Johnson has acted as the sole signatory on at least one bank account that she opened in the name of Achieve International. Johnson is a former registered representative, and was last associated with a registered entity in 1996.”
Some Achieve members have described Johnson as a “former stockbroker.” The SEC’s allegation that she is a former registered representative may be particularly problematic for her, leading to troubling questions about whether she simply ignored the very real possibility that the SEC would do exactly what it did: charge her with securities fraud and allege she and Barnes made “material misrepresentations and omissions” about the nature of Achieve.
The SEC accuses both Johnson and Barnes of misappropriating funds sent in by Achieve investors.
From the complaint (italics added/light editing performed):
In addition to making Ponzi payments to investors, Defendants have misappropriated investor funds for Johnson and Barnes’ own personal use.
On more than a dozen occasions, Johnson made significant cash withdrawals or wrote checks to “Cash” from the WWTB and Achieve International accounts, and made corresponding cash payments to her personal accounts.
Johnson used these investor funds to pay her personal expenses, including paying nearly $35,000 in cash for a new car, and making personal credit card payments.
To date, Johnson has misappropriated at least $150,000 in investor funds.
Similarly, Barnes has misappropriated investor funds. Using thirteen separate transfers reflected on WWTB bank statements as “Visa Paypal *Troy Barnes,” Johnson transferred approximately $40,000 to Barnes.
The seal on the complaint was lifted yesterday afternoon in Colorado federal court. Achieve’s websites went offline yesterday. Whether the outage was related to the TRO was not immediately clear.
What is clear is that the SEC wasn’t impressed by Achieve’s claims that a “triple algorithm” somehow made a 700-percent ROI possible. It’s also clear that the SEC spent plenty of time listening to and transcribing recordings used to sell the scheme.
Johnson said this in a conference-call pitch, the SEC alleged: “I thought, what can I do, what can I make, what can I design, that has only what works and none of what doesn’t, and one day, honestly this is what happened, I just saw it. I just saw it in my head. This matrix is 3D, which is why we can’t put it on paper. It’s a triple algorithm. And I can’t for the life of me tell you why I could figure that out in my head. But I could.”
Barnes claimed he hired a programmer “who spent three months perfecting the ‘triple algorithm’ investment formula,” the SEC said.
The trouble, the agency said, was that Achieve had “no legitimate business operations; the only available funds to pay the promised investment returns come from new investors lured into the scheme.”
With their “triple algorithm” cover story, Johnson and Barnes went on to fleece Achieve members, the SEC said.
“In a short video on TAC’s website, again narrated by Johnson, Johnson encourages investors to repurchase new ‘positions’ with their investment returns rather than taking money out of TAC,” the SEC alleged. “Johnson explains that by purchasing one $50 ‘position,’ and then using the $400 investment return to repurchase 8 positions, the investor would earn $3,200. Johnson goes on to explain that, if the investor used the repurchase strategy again, she would then have 64 positions worth more than $25,000. Johnson states that this strategy will ‘give you the same income over and over again, forever.’”
She was hardly alone, the SEC charged.
“Barnes makes similar statements about TAC’s ‘Re-Purchase’ strategy,” the agency alleged. “For example, in a video posted online touting TAC, Barnes states that investors can repurchase more ‘positions’ to make more money. In another online video, Barnes claims that, with the ‘Re-Purchase’ strategy, it is ‘very easy to make six figures.’”
The SEC said its investigation was ongoing. Johnson is the only person alleged in the Feb. 12 complaint to have hauled $100,000 or more out of Achieve.
Johnson and Barnes are charged with securities fraud. And despite claims online that Achieve wasn’t selling an investment or a security and therefore the SEC would have little or nothing to say on the matter, the filing of the complaint shows those claims were a crock.
Achieve’s “positions” are “securities under federal law,” the agency charged.
U.S. District Judge Robert E. Blackburn granted the TRO and asset freeze.
The SEC is seeking an order “that each of the Defendants and the Relief Defendant disgorge any and all ill-gotten gains, together with pre-judgment and post-judgment interest, derived from the activities set forth in this Complaint.”
At the same time, the agency is seeking “civil money penalties.”
Achieve had a presence on well-known Ponzi-scheme forums such as MoneyMakerGroup and TalkGold. Some Achieve promoters created YouTube videos and have moved to other Ponzi-board scams.
3RD UPDATE 4:02 P.M. ET U.S.A. The “Achieve Community,” an 800-percent ROI Ponzi-board “program” apparently hamstrung by problems with payment processors, now is serving up a spectacle in which confusion and delay are the only consistent themes.
BehindMLM.com reported late last night (or early today, depending on your time zone) that the office of Michigan Attorney General Bill Schuette had confirmed an “open investigation” into Achieve involving the Attorney General’s Consumer Protection Division.
The PP Blog this morning sought comment from Schuette’s office.
“We don’t comment on investigations,” said Andrea Bitely, the Attorney General’s communications director and press secretary.
The response appears to confirm the report on BehindMLM.com that Achieve is under investigation in Michigan.
Because the Colorado Division of Securities has confirmed a probe into Achieve, the PP Blog sought comment yesterday from Michigan’s Corporations, Securities & Commercial Licensing bureau on whether Achieve was under investigation in that state. The bureau referred the Blog to the communications division of its parent agency, the Michigan Department of Licensing and Regulatory Affairs (LARA).
A LARA spokeswoman said only that the bureau neither confirms nor denies investigations.
But if the bureau is working with the Attorney General’s office, it would mean that Achieve might have two types of trouble in Michigan: consumer fraud and securities fraud — and at the same time it faces the Colorado investigation.
Given information on two websites linked to Achieve, the “program” appears to operate through a Delaware corporation known as Work With Troy Barnes Inc. Barnes is a Michigan resident, and the two websites linked to Achieve list a Riverview, Mich., address for the “program.” Although Work With Troy Barnes Inc. appears in Delaware records as a company domiciled in that state, there appears to be no corresponding registration as a foreign corporation in Michigan.
Precisely how Achieve is operating through Work With Troy Barnes is unclear. The two Achieve websites — ReadyToAchieve.com and The Achieve Community.com — have Korean lettering near the bottom. IP addresses for the web properties resolve to Iceland.
Any number of Achieve members have shown blind faith in Achieve. Some “defenders” of the “program” have spoken of faith in God and Jesus Christ. Achieve, though, appears repeatedly to have encountered struggles with payment processors after reportedly losing its ability to do business through Payoneer in late October or early November.
And this brings us to today . . .
Instructional Video Goes Missing
Barnes — along with Kristi Johnson of the Denver area — are the purported operators of Achieve.
At some point yesterday (Feb. 12), a Barnes-narrated video appeared on YouTube. The 11:06 video was titled “Thursday Update 2 12.” The video provided Achieve members instructions on how to register for a purported new payment processor.
This video now mysteriously has gone missing, amid concerns expressed by some Achievers that even registering for the processor might open the door to identity theft. What’s more, the identity of the processor itself, how it is operating and where it is operating from are murky.
The now-missing Troy Barnes’ video for Achieve showed fields soliciting notarized passport and driver’s license photo identification and other sensitive information, raising the specter of identity theft.
The narration by Barnes was disjointed, at once advising members they had to submit all information requested in the information fields but backtracking to insist certain information was optional.
In the video, fields requesting standard identification such as name and address were shown. But there also was a field that requested the submission of notarized color copies of a passport or driver’s license with a signature, “OR an un-notarized copy of one of the previous AND a copy front and back of a valid credit card OR another type of government issued picture identification which shows a signature and birth date.”
There also were fields that solicited information on income and a letter from the employer of an Achieve member addressed “To Whom it May Concern” to verify employment.
With respect to the field soliciting an employment-verification letter, Barnes said this: “Don’t even worry about this. You don’t need it, all right. This is going to disappear off of here. For now, it’s there. Don’t worry about it.”
Despite those words, Barnes also said, “Remember: When you submit, everything’s gotta be filled out. Everything.”
He also said, “If you have a PO Box and you’re in the United States, so, you’re [going to] need to go to the bank. Take your driver’s license. Any bank will do this. Tell them you [want to] get your driver’s license notarized. They’ll take it and make a copy of your driver’s license. I understand your mail may go to a PO Box, but your address should have your driver’s license on it [sic]. And that’s it. Just upload it here, and you’re all set.”
About a field soliciting address verification, Barnes said this: Address verification is “very important. A utility bill. Anything that has your address on it that you’re billed for. You need to upload that here.”
Barnes described a field soliciting information on estimated annual total deposits in this fashion: “You know: What do you think you’re gonna make [through Achieve?] Put whatever you want. It doesn’t matter. You know, for me, I put a hundred thousand. So, put whatever.”
At a minimum, the video suggested Achievers who successfully submitted information would receive some sort of debit card to offload profits — perhaps in a couple of weeks. Achieve appears not have have made a payout for more than three months while at once engaging in payment-processor roulette.
The FBI has warned for years that certain types of debit cards and shell companies can be used for the purposes of money-laundering, handing economic strength to criminals or worse.
Some Achievers have joined other Ponzi-board schemes and published YouTube promos for the schemes.
BULLETIN: (2nd updated 8:54 p.m. EDT U.S.A.) The office of Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina has published a webpage for victims of the “Achieve Community” scam. Victims are asked to “submit information concerning the amount of your losses to the U.S. Probation Office,” which is compiling a “presentence” report on convicted Achieve Ponzi- and pyramid scammer Kristine Louise Johnson.
