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.
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.
Update 26th February 2015 – A preliminary injunction has now also been granted against Achieve Community International LLC.