Herman Ronnie Young shuts down Race Cycler, settles with SEC
Race Cycler launched in 2014 and offered affiliates participation in a $230 matrix cycler. Upon reviewing Race Cycler, BehindMLM concluded it was a pyramid scheme.
At the time we suspected Kent Brown was behind the scheme, however further research a week later led us to believe Ronnie Young was running the show.
Young (full name Herman Ronnie Young) was behind TNT Rotator, the precursor to Race Cycler.
Unbeknownst to us, the SEC contacted Young in early 2015. Shortly thereafter, Young shut Race Cycler down.
As per an SEC complaint filed on January 26th, 2017, Race Cycler was a $1.3 million dollar pyramid and Ponzi scheme.
Under the guise of a legitimate business, Young operated an online pyramid and Ponzi scheme from August 2014 until February 2015 called “Race Cycler.”
Thousands of individuals from the United States and abroad collectively invested over $1.3 million through the Race Cycler website.
As is typical of MLM pyramid and Ponzi scheme pseudo-compliance, Young attached a worthless collection of e-books to his offering.
Young promoted Race Cycler as a legitimate enterprise selling e-books, but
operated it like a classic pyramid/Ponzi scheme.
Individuals invested in Race Cycler by paying a “membership fee” and earned money for recruiting others to join the program.
All of Race Cycler’s payouts to early investors were made using the funds received from later investors.
There was no source of revenue for Race Cycler other than “membership fees.”
Race Cycler did not offer the e-books on a retail basis.
The products Race Cycler purported to sell were practically valueless and existed only to give the illusion of a legitimate enterprise.
One of the myths of the MLM underbelly is that if you attach a product or service to a fraudulent business model, the business model is somehow legitimized.
Time and time again this is proven to be false.
In the case of Race Cycler, Young (right) purchased the PLR collection for less than $300.
Through the activities alleged in this Complaint, Young has violated the registration and antifraud provisions of the federal securities laws.
Unless restrained and enjoined, Defendant is likely to engage in future violations of the federal securities laws.
Of the $1.3 million Race Cycler took in, $542,000 was paid out in commissions.
At no time during Race Cycler’s operation did Defendant disclose on the Race
Cycler website or otherwise that the program was a pyramid and Ponzi scheme that was mathematically certain to collapse, leaving the late-coming investors without the funds to earn reward payments.
After the SEC contacted him in February, 2015, Young knew the gig was up. In March, 2015 he voluntarily froze what was left of Race Cycler’s funds and placed them into escrow.
The SEC’s complaint alleged three violations of the Securities and Exchange Act and requests a permanent injunction against Young.
As per a January 27th press-release, Young has settled with the SEC.
In doing so Young has agreed to a $342,510 disgorgement payment ‘based on his sworn statement of financial condition.‘
The judgment does not impose a civil penalty based on Young’s cooperation with the SEC.
As far as I can tell, other than the half million paid out as commissions what was left in the Race Cycler kitty was recovered.
Young’s disgorgement strips him of what he personally made (sounds like most of the $542,000 paid out), with the total putting us at $1.12 million out of $1.32 million recovered.
Presumably at some point the SEC will work towards distributing the $1.12 million recovered to victims of the scheme. No word on if and when that will happen.