Federal Agency Dismantles Pyramid Scheme Operated Out Of Colorado
DENVER (CBS4) – The federal government has dismantled a multi-million dollar pyramid scheme operating out of Colorado. It appears thousands of people worldwide have been scammed out of millions of dollars.
CBS4 has obtained a formal complaint filed by the federal Securities and Exchange Commission which alleges that Kristine Johnson of Aurora, Colo. and Troy Barnes of Riverview, Mich. have raised more than $3.8 million since April 2014 from investors in the online "Achieve Community."
Johnson and Barnes are now facing federal civil actions.
In a series of internet videos, the Achieve Community described itself as a "lifetime income plan." For $50, investors were sold a position in a matrix with the promise of a $400 return on each position, or an 800 percent return on investment. Investors were told they could invest as often as they wanted to make as much money as they wanted and live a life of luxury.
"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.
The SEC says Johnson and Barnes siphoned off investors' money to buy new cars, pay off their credit card bills and make a $10,000 contribution to Johnson's church.
On Valentine's Day, the SEC shutdown the Achieve Community, freezing its assets. As the news of the collapse started trickling down to investors, Pastor Daniel Duncan of Inman, South Carolina posted a video to the 20,000 members on the Achieve Community Facebook page.
"I was supposed to quit my two part-time jobs and provide for my family," Duncan said.
He said he purchased 140 positions for $7,000.
"I'm sick of it. I've been lied to I don't know what to believe no more," Duncan said.
CBS4 also spoke with a mother from Castle Rock who invested $7,000 in the Achieve Community.
"I hope they can sleep at night," she said. "They ruined so many people's lives and so many people trusted what they said and believed the lies that they told."
In addition to her own investment, she also made investments for her adult children who were immediately skeptical.
"Get your money out right now!" she recalled her son's advice. "That is a scheme. They are stealing everybody's money."
Fortunately, she has been able to work with her bank to stop payments on some of her investments, but the majority of her money has not been retrieved yet.
Denver Securities lawyer James Thomaidis says it's no surprise how the Achieve story is ending.
"A near-term rate of return like what you are describing is impossible for me to accept as reality," Thomaidis said in an interview in December months before the SEC filing.
"In order for that to be successful indefinitely it requires exponential growth and there are not enough investors to maintain that exponential growth forever."
Thomaidis says pyramid schemes never continue on forever, "I don't think in the course of human history it's occurred yet."
CBS4 has made numerous attempts to contact Kristi Johnson and Troy Barnes but so far our calls have been unreturned.
ADDITIONAL RESOURCES:
SEC Complaint Against Kristi Johnson and Troy Barnes:
http://www.sec.gov/litigation/complaints/2015/comp-pr2015-35.pdf
SEC- How to spot a Pyramid Scheme:
SEC Complaint form: http://www.sec.gov/complaint.shtml
Written for cbsdenver.com by CBS4 Investigative Producer Mark Ackerman
