Paul Burks, the 70-year-old operator of the Zeek Rewards Ponzi scheme, now is listed as prisoner No. 29723-058 at FMC Lexington. The facility is an administrative security federal medical center with an adjacent minimum security satellite camp in Lexington, Ky.
After being sentenced in February to more than 14 years, Burks was ordered to report to the facility no later than yesterday. He reportedly is suffering from significant medical issues.
Burks has become the third and senior-most Zeek executive sent to jail. Dawn Wright-Olivares and Daniel Olivares earlier began serving respective terms of 7.5 years and two years.
U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina was the sentencing judge in all of the cases against the Zeek braintrust.
Zeek’s operations were similar to the AdSurfDaily Ponzi scheme, which sent ASD President Andy Bowdoin to federal prison in 2012. Bowdoin, now 82, is scheduled to be released in February 2018. He is listed as a prisoner at Butner Medium FCI in Butner, N.C. The Butner prison also has a medical facility. Bowdoin, like Burks, had health issues prior to sentencing.
Like ASD, Zeek was a Ponzi-board “program.”
Troy Barnes, one of the principals of “The Achieve Community” (TAC) scam, was sentenced in April to 33 months in prison. TAC also was a Ponzi-board “program.”
Barnes’ Achieve colleague Kristi Johnson was sentenced to 21 months.
From a 2014 YouTube promo for The Achieve Community. Authorship is unclear.
Still promoting your securities scam on YouTube?
As the PP Blog reported on Oct. 3, YouTube promos for the alleged DFRF Enterprises’ Ponzi scheme were cited in two of three wire-fraud counts against accused operator Daniel Fernandes Rojo Filho. Filho, allegedly at the helm of a fraud that gathered tens of millions of dollars, has been in federal custody since his July 21 arrest in Boca Raton, Fla.
It turns out that YouTube videos also are playing a role in the criminal prosecution for wire fraud and wire-fraud conspiracy of Troy Barnes of The Achieve Community — or TAC. That prosecution was announced Nov. 3 by the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
Among other things, the indictment against Barnes alleges that “YouTube communications” played a role in duping Achieve participants and therefore constituted part of a wire-fraud conspiracy.
Barnes, 53, resided in Riverview, Mich. He is free on bond, pending trial. In addition to the conspiracy count against him, Barnes also faces three counts of wire fraud for three transactions in 2014 involving the purchase of Achieve “positions” by victims, according to the indictment.
“By the time the scheme collapsed in February 2015, the conspirators had defrauded over 10,000 investors in the Charlotte-area and worldwide, and owed victim-investors at least $51 million in purported investment returns, yet only had available approximately $2.6 million,” prosecutors said. “According to court records, over the course of the scheme, Barnes used over $140,000 of the victims’ money for his own enrichment.”
Barnes co-conspirator was Kristi Johnson, 60, who resided in Aurora, Colo., prosecutors said. She has already pleaded guilty to wire-fraud conspiracy and is scheduled for sentencing Nov. 19, before U.S. District Judge Max O. Cogburn Jr.
Achieve offered a 700 percent ROI, according to the SEC and federal prosecutors. Barnes and Johnson also face a civil action by the SEC.
In December 2014, the PP Blog reported that Achieve boosters parroting each other were circulating a YouTube 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.”
Said Rose’s office on Tuesday: “According to court filings, as the scheme grew in size and scope, Barnes and his 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.’”
Scammers from AdSurfDaily in 2008 tried the same tactic. It backfired, as it later would do with Achieve and other “programs,” including Zeek Rewards.
Among other things, Achieve claimed $50 turned into $400. The U.S. Secret Service brought the Achieve criminal case and the ASD prosecution. ASD was a 1-percent-a-day “program.”
UPDATE 7:22 P.M. ET U.S.A. Scheduled for sentencing Nov. 19, Kristi Johnson today asked the court for a sentencing delay. Specifics were filed under seal. This is from a motion on the public record (italics added):
1. Pursuant to Local Rule of Criminal Procedure 55.1, Ms. Johnson respectfully requests this Court to seal the Joint Motion to Continue Sentencing because it contains sensitive information regarding a criminal investigation.
2. Public dissemination of the Joint Motion to Continue Sentencing may interfere with the administration of justice. Therefore, there is good cause for the Court to seal said motion.
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.
In 2013, MPB Today operator Gary Calhoun was sentenced to a term in Florida state prison on a racketeering charge. MPBToday operated a cycler in which it was claimed a $200 purchase could result in free groceries and gasoline for life.
Now, a promoter of “The Achieve Community” cycler has recorded a commercial at an ATM of an FDIC-insured bank in Hawaii. The 0:51 promo is posted on YouTube and is titled, “Proof that my Payoneer debit card from the Achieve Community works!”
Achieve appears to have lost its ability to gather money through Payoneer only days later, although it is unclear whether the ATM video played any role.
Some promoters have positioned Achieve as a retirement plan. Others have claimed payouts are guaranteed and that no one has to sell anything.
In the Achieve YouTube promo with a publication date of Oct. 16, 2014, a man walks up to an American Savings Bank “Money Express” machine apparently in Kauai, displays an ATM card, inserts it in the machine and presses some buttons. The machine then dispenses a $20 bill, which the man shows to the audience.
“It works,” he says smiling, and giving the audience a “thumbs up” sign. “All right. [Aloha.]”
Text below the video reads, “Just wanted to show everyone that ACHIEVE + PAYONEER equals a True Lifetime Income Plan!”
It is very early morning in Hawaii. American Savings Bank, an FDIC member as noted above, did not respond immediately to a request for comment.
Regulators have issued repeated warnings about Ponzi- and pyramid schemes spreading on social media and also about affinity fraud.
Paul Burks, the 70-year-old operator of the Zeek Rewards Ponzi scheme, now is listed as prisoner No. 29723-058 at FMC Lexington. The facility is an administrative security federal medical center with an adjacent minimum security satellite camp in Lexington, Ky.
