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A multi-million dollar pyramid scheme involving e-commerce lessons and cryptocurrency results in an SEC injunction

They thought they were getting an education in how to start an e-commerce business, but many of the 20,000 people who subscribed to IPro, and its clever add-on inducements, lost their money. The Securities and Exchange Commission (SEC) filed an injunctive action against Daniel Pacheco of San Clemente, California, the sole member of IPro Solutions, LLC, and IPro Network, LLC, on May 23, 2019, to stop what they allege is a multi-million-dollar pyramid scheme.

It seems to be a turbulent time in the world of financial investing and potential harm to investors is increasing especially when they don’t do their research with whom they are investing with.

The SEC complaint details this multilevel marketing enterprise (MLM) pyramid scheme, which began in January 2017, when Pacheco commenced selling “IPro packages,” which were an educational offering designed to teach subscribers how to operate a profitable e-commerce business.1 For an additional $50 annual activation fee, purchasers of IPro packages could also become “active members” of IPro, with the potential to become independent sales associates or premium independent sales associates of IPro.

There were actually five levels of membership in the iPN Compensation Plan for recruiting new members, which started at $100 for a membership and included $500, $1500, $2500 and $5500 levels. According to the SEC complaint, most of the 20,000 people who purchased IPro educational packages paid the $50 activation fee, allowing them to earn recruitment bonuses through the iPN Compensation Plan.2

Points were awarded as a rebate if you purchased an IPro e-commerce instructional package. Both cash commissions and additional points were also awarded if you recruited others to purchase an IPro package. These points could then be converted into a new cryptocurrency offered by IPro, called PRO Currency. IPro marketing materials claimed that Pacheco was developing an ecommerce platform in which vendors and suppliers would engage in the sale of goods and services with consumers through transactions paid for with PRO Currency coins.

From January 2017 through March 2018, IPro raised at least $26.5 million through the sale of its packages and add-ons. The SEC complaint alleges that Pacheco’s offer and sale of IPro instructional packages constituted an unregistered sale of securities because the IPro instructional packages involved an investment in a pyramid scheme and/or investment in the PRO Currency digital asset. Daniel Pacheco and his IPro companies were not registered with the SEC.3

Pacheco misallocated and misappropriated substantial amounts of investor funds to buy a $150,000 Rolls Royce, a $2.5 million luxury home, and also transferred approximately another $4 million to other companies he owned.4 IPro ceased operations in March 2018. The SEC also charged seven relief defendants in order to recover any investor proceeds that are legally recoverable.

If you believe you have been a victim of investment fraud such as the IPro Pyramid Scheme, it is important that you contact an experienced investment fraud attorney. With over 20 years’ experience in investment and securities fraud cases, the Law Offices of Peter C. Rageas can help. Deceptive investments can affect anybody and as an investor you have rights. Contact us today for a case evaluation.

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1,2, 4 Complaint, Case No. 5:19-cv-958, Securities and Exchange Commission, Plaintiff, vs. Daniel Pacheco, Defendant
Link: https://www.sec.gov/litigation/complaints/2019/comp-pr2019-74.pdf

3 SEC Sues Alleged Perpetrator of Fraudulent Pyramid Scheme Promising Investors Cryptocurrency Riches, www.sec.gov, 5-23-2019
Link: https://www.sec.gov/news/press-release/2019-74