Pleading the fifth in the Achieve Community Ponzi case
As reported yesterday, February 24th saw a hearing on the issue of preliminary injunctions against Kristi Johnson, Work With Troy Barnes and Achieve Community International LLC take place.
If granted, the injunctions would see the continuation of the asset freeze in place, as well as barring the defendants from committing and further acts of fraud.
Yesterday saw a preliminary injunction granted against Troy Barnes, with the same injunction granted against Kristi Johnson later in the day (after we published our article).
With neither Barnes or Johnson bothering to set up legal representation for either Achieve Community International LLC or Work With Troy Barnes, yesterday’s hearing was just eleven minutes long.
After hearing arguments from the SEC, Judge Blackburn took the matter under advisement. He later granted a preliminary injunction against Work With Troy Barnes.
At the time of publication a decision regarding Achieve Community International is still pending. It’s expected an injunction will be granted sometime tomorrow.
Meanwhile the fifth amendment reared its head again, with Kristi Johnson filing a response to a paragraph in the preliminary injunction granted against her.
Paragraph 5 of the injunction granted against Johnson
requires Defendant Kristine L. Johnson, and others, to provide a sworn accounting of various matters relating to specified transactions and accounts at banks, financial institutions, or brokerage firms.
Basically she has to provide the SEC with detailed accounting records involving her transactions related to Achieve Community.
This is to track exactly how much she invested in the scheme, how much she withdrew and where those funds are.
The SEC has already put together a reasonably detailed account of Johnson’s financial transactions with respect to Achieve, but on the off-chance there’s more they’re not aware of, Johnson was ordered to provide them a complete brief.
She doesn’t want to though.
Ms. Johnson respectfully declines to provide the accounting required by the Court’s Order for to do so would violate Ms. Johnson’s privilege under the Fifth Amendment to the Constitution of the United States to not act as a witness against herself in any proceeding involving a fine, penalty, or forfeiture, which privilege Ms. Johnson now asserts.
How delicious!
Now I’ve got nothing against the fifth amendment, but I do think some shenanigans are going on here.
First and foremost the question of how Johnson’s lawyers are being paid needs to be addressed.
We’ve pretty much figured that both Johnson and Barnes are facing a criminal investigation which will no doubt lead to criminal charges being filed against the pair (if they haven’t already been filed under seal).
And we know they don’t want to incriminate themselves in that particular case, even if that means they weaken their civil defense. Fair enough, the civil case won’t result in jail time – which the criminal case most certainly will.
The issue as I see it is, at least with respect to Troy Barnes, that he had no independent source of income outside of Achieve Community during the running of the scam or for a considerable amount of time prior.
Johnson I’m not sure about, but I wouldn’t be surprised if she was in the same boat as Barnes. That is she hasn’t been employed (generating income outside of Achieve Community) for some time.
The big tell is Johnson’s withdrawal of $80,000 of stolen Achieve Community investor funds on February 6th.
I’m guessing that was also around the time Johnson was made aware of the criminal investigation into her. Supporting this is the fact that Johnson ceased her social media communications to Achieve Community investors on January 31st.
The status of the $80,000 Johnson withdrew is currently not publicly known, but I don’t believe the SEC has seized them. Otherwise I believe they would have said so in their request for a preliminary injunction (and supporting exhibits).
Johnson obviously doesn’t want to tell the agency what she did with the funds, hence the pleading of the fifth.
$80,000 would make a nice retainer for legal representation though… no?
As I understand it you can’t use proceeds of a crime to fund legal representation to defend yourself against legal action pertaining to said crime.
The crime in this specific case is the running of the Achieve Community Ponzi scheme., and the funds in question are directly derived from the proceeds of said crime.
Can you run a multi-million dollar Ponzi scheme, find out you’re being criminally investigated, withdraw almost a hundred thousand dollars, maybe transfer that money to a lawyer and then plead the fifth when someone asks you where the money went?
Doesn’t sound right to me…
Johnson’s pleading comes right off the back of Barnes and Johnson informing the SEC that should they be deposed, they would also plead the fifth.
As a result the planned depositions were cancelled.
No doubt questions regarding their personal finances would have arisen had either Barnes of Johnson been deposed.
Footnote: Our thanks to Don@ASDUpdates for providing a copy of Judge Blackburn’s preliminary injunction order and Kristi Johnson’s objection.
Update 26th February 2015 – A preliminary injunction has now also been granted against Achieve Community International LLC.
I really hope that at some point criminal charges are filed against this pair and any heavy promoters of the scheme.
I realize Achieve was pretty rinky-dink in the greater scheme of things however, people were hurt and at some point law enforcement needs to make an example of those who callously perpetrate these fraudulent schemes.
I sense a certain snarly tone in regards to the 5th.
I have absolutely no sympathy for any of the creators OR the participants; survival of the fittest and all. But Oz is a bit nonchalant, perhaps he prefers the old ways of pressing a defendant with stones to force a plea.
Viritoolongtotypeout, your spidey-sense is broken.
I’m asking if it’s legit to plead the fifth in order to (temporarily) mask you paying your legal defense with stolen Ponzi funds.
Otherwise what’s going to happen is once the criminal case catches up, lawyers are going to have to return their funds (waste more time) and we’ll just wind up going through what should be happening now (Johnson providing an exact accounting detail of her dealings with Achieve).
I’m not a fan of wasting time, which is what I believe the fifth is being manipulated for to achieve here (no pun intended).
apparently it’s legit.
point 3, clearly gives troy/kristi, the right to remain silent, as they are facing criminal charges, and anything they divulge, may be used against them. of course they are manipulating the fifth, but how far will it get them?
anyway, the criminal case is more important, it will take precedence over the civil case, much like telexfree.
What I find interesting is that Kristi is pleading the 5th from supplying all financial records, which is not asking her to testify against herself.
Going to be interesting to see if the court allows her to do so when the information requested is not her testifying or being deposed.
pleading the fifth :
1] it is ‘very rare’ for a judge to refuse a defendant his privilege of the pleading the fifth.
2] just because defendant refuses to depose/testify/provide information, does not mean prosecution cannot discover and use, the information themselves [in this case, the 80.000$ cash withdrawal by kristi. check her pillowcase. she’s daft]
3] pleading the fifth, cannot be used against you in a criminal trial.
4] pleading the fifth, however can be a death blow in a civil trial- ” pleading the Fifth in a civil case in federal court is never helpful, is rarely harmless, and is typically very damaging — indeed, it’s often fatal to the party’s claims or defenses.”
so, kristi/troy have pretty much destroyed their civil case, and will probably make a settlement with the SEC there, to take over all frozen monies and distribute it to net losers.
they may lose all their properties, cars, cash etc and also get a fine, on top of it all.
Barnes/Johnson can take the Fifth against providing “sworn accounting of various matters relating to specified transactions and accounts at banks, financial institutions, or brokerage firms.” That’s well within the standard.
What they can’t do is take the Fifth against production of documents.
The government likely already has the documents subpoenaed from the various banks, financial institutions and brokerage firms, and is simply asking Barnes/Johnson to go on record to explain it.
If they don’t explain it, the government can present a case based on circumstantial evidence, e.g. “the $80k withdrawn by Barnes was intended for personal use. Here is the activity from Barnes personal bank accounts.”
If Barnes refuses to testify to explain what legitimate business purpose the transactions could have been used for, they lose the case.
If they make up some BS explanation (which is what the government is trying to nail them to with this request), then the government can show why it’s BS.
In other words, no way Barnes/Johnson can win. They either cop up to it now, or make some lame excuse and potentially be liable for perjury/obstruction of justice, or take the Fifth and lose anyways by staying silent.
Remember the government can subpoena anyone else, such as family members, neighbors, brokers, merchants, etc. They are just trying to get things done faster with the sworn statements.
I plea a 5th of whiskey thinking that these 2 criminals could even be allowed to play duck N hide with the money they stole.
They both formed achieve to fuel their lack of jobs to better them selves knowingly that other investers would LOSE their money.
Any theft like that 80 or 90 grand she took for sure GUARANTEED others will LOSE their money. sad and shame.
$80,000 in CASH?? How did she manage to withdraw such a huge amount of cash from the bank? WOW
Its a shame all the hearts broken by this ponzi but people need to wake up, fools and their money are easily parted.
What makes me laugh is people are blaming you OZ the number one dreamstealer!!!!!!!!!!!
It just absolutely amazes me, how could someone think achieve is anything but a ponzi.
It doesn’t necessarily means she walked out with a briefcase of bills. it may just mean it was transferred to her personal account, and from there dispersed to who knows where, which is why she plead 5th.
Authorities just have to subpoena her bank account, and bank account of all her friends and relatives. 😉
If she withdrew it by writing a check on the account to “cash” its considered a cash withdrawal.
We already know that on some occasions Kristi did this from the statements in the complaint.
It will also be interesting to see how the Attorneys handle this. The last thing they will want is to anger a judge.
Professional sanctions may come into play if it can be shown they were aware payments were from ponzi proceeds.
kristi J apparently still has control of the funds in the ipayDNA account amounting to 800.000$, and in concert with the SEC wants to bring these funds back to the US ,in a pre-agreed account.
and this interesting news:
asdupdates.com/wordpress/archives/category/achieve-community
Ah, that confirms the DOJ are involved then. No doubt Johnson’s lawyers are trying to bargain a deal on the return on the funds.
And this, ladies and gentlemen, is why if your MLM company even hints at switching to a payment processor in China you run for the hills.
I wonder if iPayDNA are playing ball or if the DOJ is going to have to assert pressure to get their business accounts and relationships shut down.
And bit of a shame that the proceedings are likely go under seal now. They don’t seem to want Troy Barnes to have further knowledge of the criminal case filings so we all miss out.
I’m guessing he’s not interested in making a deal and is looking to fight the DOJ and SEC.
It’s probably a bit more of a DOJ strongarming, i.e. “if you return the funds so it goes into legal escrow we’ll consider go easy on you. Else, if you try to transfer it somewhere else, and we’ll know if you do, we’ll throw many books at you, as well as at ANYONE who ever got a penny from you.”
right, but why DOJ, north carolina?
usually criminal charges are brought in the place of business, eg zeek, or telexfree. i would have expected the criminal charges to be framed in colorado? since kristi and her bank accounts are located there?
Not sure why NC are leading the charge, but it’s a federal investigation so I imagine the DOJ will file the eventual charges where they deem appropriate.
Why not North Carolina ??
Achieve was an international fraud and not all the accounts were in Colorado as has been proven by the latest court filings
AdSurfDaily was a Florida based fraudulent scheme, yet the prosecution was carried out by the Washington DC US Attorneys’ Office
I don’t see what is more convenient for the accused being a deciding factor when the decision was made as to which office handled the prosecution.
It could be something as simple as which office received the most or earliest complaints
i’m just saying that in a two bit fraud like ‘achieve’, why have three states involved? creates room for trampling and delays.
Since when did we become so blase that 3.5 million dollars is a “two bit” amount ??
As has been said repeatedly, there is a definite change in the way internet fraud is being handled in the USA, ESPECIALLY when said fraud is being carried out over international boundaries and involves shifting large amounts into offshore accounts
compared to zeek, telexfree, apostelos, wings network, it is a two bit fraud. ‘relatively speaking’.
i cannot see how having civil and criminal matters of the same two bit fraud, in different district courts can be ‘helpful’.
you haven’t provided a reason either except to say ‘definite change’, which is an observation and not a reason.
So, wouldn’t it be smart to knock off the small ones.
Then there wouldn’t be any big ones
Not being the SEC or DoJ I don’t know the reason, nor do I claim to.
How many reasons can you come up with as to why it happened that way ??
More to the point:
If the DoJ had decided to prosecute via its’ Colorado office, would you then be asking why an international fraud had been relegated to a relatively small DoJ office ??
absolutely, nobody’s arguing that. trinity lines committed suicide after the achieve action.
these small guys can be scared to death easily. so, a few actions against these small fries will clear up the market big time.
how would i know? brownie points?? i’ve seen that happen with state investigators in india.
the point is, its not efficient. at some point the DOJ, NC, will make its press announcement, and maybe we will know the reason then. presently, it just seems a bit odd.