Judging by a
Fraudulent, Unregistered Offering of Securities
The SEC complaint reads that in the period of January 2017 to March 2018, Pacheco conducted a fraudulent, unregistered offering of securities through his California based companies. IPro Solutions LLC and IPro Network LLC raised more than $26 million from investors “by selling instructional packages that provided lessons on e-commerce. Investors also received “points” that could be converted into a digital asset known as PRO Currency. Investors who contributed additional funds could earn a mixture of cash commissions and additional convertible points by recruiting new investors into the IPro network,” reads the SEC press release.
The SEC also provided the original complaint, and it alleges that Pacheco’s IPro institutional packages consisted of an unregistered sale of securities. “Because the IPro instructional packages involve (i) an investment in a pyramid scheme; and/or (ii) an investment in the PRO Currency digital assets, and therefore must be registered with the SEC unless an exemption applies,” says the SEC. Needless to say that Pacheco didn’t have a registered exemption that would apply to his institutional packages.
According to the press release, Pacheco used the investors’ funds to secure his luxury lifestyle. He purchased a house for $2.5 million in cash, a Rolls-Royce and other expensive things. Of course, this fraudulent use of investors’ funds, led the company to a indefinite collapse. IPro became unable to pay out all the commissions and bonuses that were granted to its investors.
However, the scheme went on for a while. For about a year and a half, IPro managed to reach approximately 20,000 users raising around $26,5 million. IPro sold e-commerce lessons on how to generate profits with an online store. The plan also consisted of a recruitment-based compensation plan which enabled users to exchange IPro points into their native cryptocurrency ProCurrency.
Not to mention that
Trying to Get the Money Out
Daniel Pacheco transferred $1.9 million to Accept Success Corporation, which is owned by his daughter but still managed by himself. Another $2 million were moved to E Profit Systems LLC, a limited liability company also controlled by Pacheco. From the $2 million he kept $600,000 worth of IPro funds for himself without any justified reason.
However, the compensation plan of IPro had to give out a recruitment bonus between 58 and 65 percent of all its revenue from the company’s packages. Also, according to the SEC, 30% of the recruitment bonuses were given out in Pro Currency-convertible points, leaving the company to allocate between 41.5 and 45.5 percent of all its profit for its members’ bonuses and commissions.
Moreover, IPro started paying out less than 30% between January 2017 and August 2018, which led to the inevitable collapse of the company, forcing it to close its services in March 2018.
“We allege that Pacheco hid an old fraud under the guise of cutting-edge technology. He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme,”
said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.
When looking at the statistics that CoinMarketCap provides us, we can see, that
Photo by Wikimedia Commons.