USI-Tech Ponzi abandons US & Canada, confirms SEC investigation?
In a move that is unlikely to have surprised anybody, USI-Tech has severed ties with the US and Canada.
Rather than operate legally in the US and Canada and register with the appropriate regulatory bodies, USI-Tech has instead elected to abandon its legal obligations and focus on scamming investors elsewhere in the world.
USI-Tech faced increasing pressure to prove it wasn’t a Ponzi scheme following a securities fraud cease and desist issued in Texas last month.
It is the Texas cease and desist however that, from a regulatory perspective, was of the most significance.
In order to operate legally in Texas (and the US in general), USI-Tech had until January 20th to provide evidence of external revenue being used to pay affiliate ROIs.
The company has been promising to provide this to its affiliate since last June.
US and Canadian investors who perhaps hoped the company would finally prove to the world it wasn’t a Ponzi scheme, instead woke to a backoffice message from USI-Tech informing them they’d been dumped.
In what USI-Tech is calling an “extraordinary termination of distributor agreement”, the Ponzi scheme attempted to blame its outing as a scam on its affiliates.
We were utterly dismayed to learn that a large number of our sales partners extensively advertise our services on their own websites as well as on social media in a manner which is a breach of contract as well as illegal, and which gives the appearance that our service portfolio violates both US and Canadian law.
Despite the measures which we have already initiated, this behavior has even intensified in recent weeks and months.
This has already resulted in actions by the respective authorities against various distributors, as well as the first preliminary injunctions in response to this advertising behavior.
Now to make it clear right off the bat, while the Texas cease and desist did target two investors with respect to promotion of USI-Tech, it also demanded USI-Tech register its securities offering and provide evidence it was not operating as a Ponzi scheme.
This is something USI-Tech does not address in its “blame the affiliates” termination letter.
The next paragraph in the termination agreement is significant, as it suggests the SEC itself has launched legal proceedings against USI-Tech.
The initiation of the above-mentioned official action and the court-ordered preliminary injunctions has also inevitably placed our company in a legally problematic situation.
This is due to the fact that, in the event of any doubt, it cannot be ruled out that this illegal advertising by the distributors involved will cause the relevant authorities to suspect that our company itself is promoting this type of advertising activity, or at least tolerates it.
This type of alarming view by the authorities would lead to unforeseeable damage for our company as well as our sales partners who observe applicable laws.
We cannot subject our company or our reputable sales partners to this danger.
Again the “blame the affiliates” line of defense is baloney. Everyone in and out of USI-Tech knows it’s promoted as a 140% ROI scheme globally.
What’s more important is mention of a “preliminary injunction”.
The Texas cease and desist is an official notice attached to a thirty-one day timer that expires on January 20th.
If USI-Tech elected not to register itself with the Texas Securities Board and prove it wasn’t a Ponzi scheme, the Texas Securities Commissioner would enter an order declaring USI-Tech illegal in the state of Texas.
A preliminary injunction is something the SEC would file. At the time of publication I’m unaware of an SEC investigation into USI-Tech.
In the past we’ve seen preliminary injunctions filed against MLM Ponzi schemes under seal, as it gives authorities time to freeze invested funds while the operators of the scams are none the wiser.
It’s not until bank accounts and assets are frozen that targets of a preliminary injunction filed under seal realized the gig is up.
Whether this has happened with USI-Tech or not is at of this time unclear.
There’s no connection between a preliminary injunction and the Texas cease and desist though, so either the SEC are now involved or USI-Tech has bodged their termination notice.
Regardless, USI-Tech are blaming affiliates for the companies non-compliance in the US and failure to prove external ROI revenue.
Consequently, we have decided to immediately discontinue our business activities as well as our sales in the US and Canada.
Unfortunately, this also has a direct consequence for you as a sales partner since the cessation of our marketing operations means that we are forced to immediately terminate our contractual relationship with you.
US and Canadian affiliates have purportedly been blocked from their USI-Tech backoffices.
Whether the termination applies to US and Canadian investors who have signed up through offshore shell companies, as I’m sure many have, is unclear.
With respect to invested funds, USI-Tech will pay out backoffice commission balances up to two weeks from now – with catches.
The catches are any affiliates they’re aware of that have multiple accounts will have “unlawful payments” across those accounts deducted.
Any affiliates USI-Tech deems to have advertised the company for what it is, a 140% ROI Ponzi scheme, won’t be getting any of their money back.
In fact USI-Tech even goes so far as to assert it might go after these affiliates with “claims for damages” (hahahahahahaha!).
In a move that appears to be an attempt to scrub the internet of evidence for present and future regulatory investigations, USI-Tech also requires affiliates to
destroy and/or take offline all websites, landing pages, social media sites/chat groups (e.g., Facebook, YouTube, Instagram, WhatsApp, Telegram pp.) or other online or offline advertising materials relating to direct sales of our goods, software, other services and/or our direct sales concept.
Those that don’t comply are unlikely to see any of their money back.
So where to from here?
In abandoning the US USI-Tech finds itself in the company of well-known MLM Ponzi schemes. Both My Advertising Pays and OneCoin pulled the same stunt to avoid triggering a US regulatory investigation.
Both scams have since collapsed, resulting in widespread investor losses.
According to USI-Tech’s Master Distributor Dan Hunt, the termination has caught US investors off-guard.
In a livestream held shortly after USI-Tech terminated US and Canadian affiliates, Hunt stated:
This announcement came as an absolute surprise to all of us.
I have talked to several leaders around the country, none of those leaders had any idea that this action was going to be taken.
Hunt went on to urge USI-Tech investors to delete any publicly available evidence of their involvement in the scam and to “lay low”.
As I write this Alexa peg the US as easily the largest source of traffic to the USI-Tech website (45%). Nigerian princes come in a distant second at 12%.
Gutting invested US funds from USI-Tech will likely collapse the Ponzi outright, so I’d estimate the majority of US investors aren’t going to get their money back.
Rather than comply with USI-Tech’s request to scrub evidence to assist its owners stealing your money, if I was an investor in the US and Canada I’d be filing a complaint with the relevant authority.
For USI-Tech investors in the rest of the world, with respect to USI-Tech being a Ponzi scheme – you now have your answer.
At a base level the US and Canadian termination is going to wreak havoc on USI-Tech’s ROI reserve of invested funds. Get your money out now or be left holding the bag.
Only the scummiest of scammers will continue to promote USI-Tech in light of confirmation it’s a Ponzi scheme.
Anyone who claims it isn’t only need be reminded of USI-Tech’s failure to register itself in Texas and provide evidence to the contrary.
I had a hunch the SEC was only going to show its hand after the January 20th Texas deadline.
With USI-Tech referencing a preliminary injunction I’m not sure if that’s still the case.
I’ve checked Pacer but for now nothing is coming up. If the SEC has filed a lawsuit and won an injunction, it’s still under seal.