Troy Barnes plea agreement filed, hearing on November 4th
It’s increasingly looking like Troy Barnes will plead guilty, following a sealed plea agreement filed on October 25th.
Initially Barnes maintained his innocence and opted to go to trial. This appears to have been dropped, with news last week that he was looking to strike a plea deal.
The specifics of the filed plea agreement are under seal and unfortunately I don’t have access to the filing. What I can share though is information from an accompanying “factual basis” filing made on the same day.
The factual basis filing puts forth the facts as they stand up until Barnes indictment.
It is important to note that, as a condition of his plea agreement, Barnes has agreed that what’s in the filing is “true and accurate”.
From in or about April 2014 through in or about February 2015, defendant Troy Barnes, co-conspirator Kristi Johnson, and others ran a “Ponzi” scheme through a sham internet company called “The Achieve Community” (TAC).
Barnes convinced victims to invest in TAC by falsely claiming that they would receive a bogus 700% return on investment when, in truth and fact, TAC operated as a fraudulent Ponzi scheme whereby Barnes and his co-conspirator used monies from later victim-investors to pay returns to earlier victim-investors and to personally enrich themselves.
As a result of the scheme and artifice to defraud, over 10,000 victims worldwide, including those in the Charlotte, North Carolina area, sustained losses totaling millions of dollars.
Through written blogs and videos posted on the internet, Barnes touted TAC as a “lifetime income plan.”
Barnes convinced victim-investors to purchase ‘positions” in TAC for $50 each and promised that each position would produce exactly $400 in return.
Barnes knew, however, from the beginning that the scheme was unsustainable.
In August 2014, Barnes and his co-conspirator discussed TAC’s inevitable short fall.
Barnes knew that TAC did not have sufficient funds to cover weekly payouts, much less operating expenses.
From in or about January 2014 through in or about February 2015, Barnes, Johnson and others engaged in a scheme and artifice to defraud victims by making a series of fraudulent representations, omissions of material facts and deceptive half-truths.
In order to prolong and sustain the scheme, Barnes encouraged victim-investors to repurchase positions, stating:
“Keep Re-purchasing, you control your own destiny,” thereby reducing the amount of money needed to pay out to early victim-investors and enabling the co-conspirators to prolong the scheme.
As the scheme grew in size and scope, Barnes and Johnson concealed the true nature of the scheme from financial entities, regulators, potential victim-investors and others through multiple misrepresentations and omissions.
By the dissolution of the scheme in February 2015, the co-conspirators owed victim-investors at least $51 million in purported investment returns, yet Barnes and Johnson and TAC had only approximately $2.6 million, or approximately 4% of such total liability available.
Barnes was personally enriched by at least $140,000 in victim-investor funds.
The amount of loss that was known to or reasonably foreseeable by Barnes as a result of his fraudulent investment scheme was in excess of$1,500,000 but less than $3,500,000, resulting in a 16 level enhancement under U.S.S.G 2B1.1(H).
Barnes’ illegal scheme involved 10 or more victims and was committed through mass-marketing, resulting in a two level enhancement under U.S.S.G. 2B1.1(b)(2)(A).
2B in the US Sentencing Guidelines pertains to basic economic offenses. Specifically, theft, embezzlement, receipt of stolen property, property destruction and offenses involving fraud or deceit.
A plea hearing has been scheduled for November 4th, after which we’ll have an update on whether Barnes plea has been accepted or not.
Update November 5th 2016 – Following a hearing on November 4th, Troy Barnes’ guilty plea has been accepted.