GSPartners “global fraud scheme” C&D from Wisconsin
GSPartners has received a securities fraud cease and desist order from Wisconsin’s Department of Financial Institutions (DFI).
As per a November 16th notice filed by DFI’s Securities Division, GSPartners
has been engaging in an international scheme to illegally sell fraudulent investments.
Its scheme is being driven by an international confederation of multilevel marketers that have collectively earned around
$11 million in commissions.
DFI states their cease and desist order has been filed to “stop (GSPartners) from inflicting immediate and irreparable public harm.”
GSPartners is an MLM cryptocurrency investment scheme, operated from Dubai by owner Josip Heit (right).
As detailed in their order, DFI summarizes GSPartners as
a multilevel marketing program that promises the payment of lavish commissions for recruiting new investors and selling investments.
An accompanying DFI press-release describes GSPartners as an “alleged global fraud scheme”.
The Wisconsin Department of Financial Institutions (DFI) today announced an enforcement action to stop an ongoing international fraud scheme.
The action accuses GSB Gold Standard Bank LTD, doing business as GSPartners, of offering and selling fraudulent certificates tied to digital assets and foreign currency exchanges, as well as investments in staking pools in a proprietary metaverse.
Although he’s not named as a respondent, DFI’s November 16th order singles out Paul J. DeRenzo, a resident of Pennsylvania, as a GSPartners promoter.
Earlier this year DeRenzo (right) was named as a promoter of NovaTech FX. A DFI fraud order filed on April 4th fined the Ponzi scheme $50,000.
DeRenzo promoted NovaTech FX on Craigslist. DFI’s GSPartners order cites one Wisconsin resident who responded to one of DeRenzo’s NovaTech FX ads.
On or about November 11, 2022, DeRenzo posted an advertisement on Craigslist.
The heading stated: “We Trade For You-Get Paid Every Week.”
On or about February 2, 2023, Wisconsin resident ME responded to DeRenzo’s Craigslist advertisement by email and began corresponding to get more information about the investment opportunity.
The investment opportunity DeRenzo advertised on Craigslist was for NovaTech FX.
On or about February 2, 2023, during a phone call between Wisconsin resident ME and DeRenzo, DeRenzo claimed he had a better investment opportunity for ME which would be safer called GS Partners.
Upon information and belief, there are at least 44 additional Wisconsin investors who purchased metacertificates and other investment opportunities from GSPartners.
Under Wisconsin law, which with respect to securities is materially no different to federal US law,
The metacertificates issued by GSPartners are investment contract securities pursuant to Wis. Stat. § 551.102(28)(d)(1), because investors funds are to be invested in a common enterprise and managed and traded by GSPartners and its affiliates to generate profits from trades executed on its blockchain and through trading foreign currency without any active involvement by investors.
This is in essence the Howey Test, which is used at the federal level to establish the existence of an investment contract.
If an investment contract is found, the opportunity constitutes a securities offering.
DFI’s order continues;
Pursuant to Wis. Stat. § 551.301, it is unlawful for a person to offer or sell a security in Wisconsin unless the security is a federal covered security, the security, transaction, or offer is exempted from registration under Ch. 551, or the security is registered under Ch. 551.
Pursuant to Wis. Stat. § 551.402(4) it is unlawful for an issuer engaged in offering, selling, or purchasing securities in Wisconsin, to employ or associate with an agent who transacts business in Wisconsin on behalf of issuers unless the agent is registered under Wis. Stat. §551.402(1) for the issuer or exempt from registration under Wis. Stat. § 551.402(2).
GSPartners violated Wis. Stat. § 551.301 by offering securities in Wisconsin which were not federally covered, exempted from registration under Ch. 551, or registered under Ch. 551.
GSPartners violated Wis. Stat. § 551.402(4) by employing or associating with an agent, DeRenzo, who transacts business in Wisconsin on behalf of issuers without DeRenzo being registered under Wis. Stat. § 551.402(1) for the issuer or exempt from registration under Wis. Stat. § 551.402(2).
Interestingly, DFI also claim DeRenzo violated Wisconsin law by
- falsely claiming Canada “shut down cryptocurrency” in response to GSPartners investor withdrawal delays; and
- lying about trading firm BDSwiss’ involvement with GSPartners (BDSwiss publicly denied any involvement earlier this year).
GSPartners is also cited for multiple disclosure failings;
GSPartners violated Wis. Stat. § 551.501(2) when in connection with the offer of securities in Wisconsin omitted material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, including but not limited to:
Investors had not been able to withdraw funds from their accounts and the fact that GSPartners were not registered to offer or sell securities, and GSPartners’ concealment of key information from the public, including information relevant to its capitalization, its use of principal, and the way it actually generates sufficient revenue to pay profits and cover compensation.
GSPartners violated Wis. Stat. § 551.501(3) when in connection of the offer of securities in Wisconsin, GSPartners engaged in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person when they make misrepresentations about the reasons for delayed withdrawals from accounts, the role of BDSwiss conducting foreign currency transactions for GSPartner’s investors, failing to disclose that GSPartners is not registered to offer or sell securities, and GSPartner’s concealment of key information from the public, including information relevant to its capitalization, it’s use of principal, and the way it actually generates sufficient revenue to pay profits and cover compensation.
As a result of multiple violations of Wisconsin law, DFI has ordered GSPartners to
cease and desist from making or causing to be made to any person or entity in Wisconsin any further offers or sales of securities … until such securities qualify as covered securities or are registered.
DFI’s order effecitvely bans promotion of and operation of GSPartners in Wisconsin. It is also a violation of Wisconsin law for GSPartners to not provide a copy of DFI’s order to its existing and potential investors.
DFI warns GSPartners that failing to adhere to the order constitutes a criminal offense under Wisconsin law.
PLEASE TAKE FURTHER NOTICE that this Order is effective on the date it is issued.
GSPARTNERS are advised that any willful violation of an Order issued by the Division under Ch. 551 is a criminal offense punishable under the provisions of Wis. Stat. § 551.508.
GSPartners has thirty days from November 16th to respond to DFI’s order and refute their claims.
Should GSPartners fail to respond or defend itself in Wisconsin, DFI is looking to impose a $100,000 fine and recover legal costs.
BehindMLM also recently confirmed ongoing CFTC and SEC investigations into GSPartners.
As part of a joint operation with their US counterparts, earlier this week the British Columbia Securities Commission took further action against three GSPartners promoters.
Given the scope of GSPartners’ fraud across the US and involvement of federal regulators, it’s highly likely the DOJ are also building a criminal case.
To date neither Josip Heit or any GSB executives have addressed GSPartners regulatory enforcement actions.