Daniel Pacheco has filed a hilarious reply to the SEC’s lawsuit in opposition to him and his firm iPro Community.
He’s additionally going after the regulator by equally amusing counterclaims.
Daniel Pacheco (proper) launched iPro Community again in early 2017. The scheme was fast to exit-scam through public itemizing of its PROC shitcoin, after which PROC went nowhere and inevitably dumped.
In the present day PROC is “price” $0.00074.
In a lawsuit filed in Might, the SEC accused Daniel Pacheco of working a $26 million greenback securities fraud pyramid scheme.
Pacheco filed his response to the lawsuit on August thirteenth. And it reads a lot as you’d count on, principally denials, till you get to affirmative defenses.
In his response, Pacheco asserts the SEC can’t sue him as a result of;
- a statute of limitations applies;
- “the SEC didn’t undergo any precise damages”; and
- Pacheco “might have extra defenses present unknown to (him)”.
Pacheco doesn’t state what statute of limitations he’s referring to. Nor am I conscious of any that apply to securities fraud and/or pyramid scheme regulatory lawsuits.
It form of appears like Pacheco is attempting to “phrases and situations” the SEC, which is bonkers hilarious.
Equally bonkers hilarious is Pacheco placing forth that the SEC can’t sue him, as a result of he didn’t particularly rip-off the regulator itself.
Cuz y’know, that’s how the regulation works. Steal from whoever you need… so long as you don’t steal from the SEC, they’ll’t come after you.
Keep in mind at this stage Pacheco is merely submitting a required response to the SEC’s lawsuit. What he places in his reply doesn’t need to make sense, however hilarious nonsense isn’t a very good look.
As a part of his reply, Pacheco can be countersuing the SEC.
In accordance with Pacheco, in early 2017 iPro Community found “quite a few accounting discrepancies” with its processing service provider Fintact.
Fintact Cost Options LLC and Fintact Options Group LLC, each run by Matthew Lopez, are additionally defendants within the SEC’s iPro Community lawsuit.
Pacheco claims assessment by a forensic accountant revealed discrepancies in Fintact’s data, in addition to a 2% overcharge on processing charges.
After a number of weeks, and after a lot expense by iPro, the forensic accountant efficiently corrected the discrepancies created by Fintact.
Nevertheless, because of the harm that had been attributable to Fintact’s negligence, iPro now not desired to make the most of Fintact’s providers.
Due to this fact iPro determined to immediately course of all funds itself.
By the October 2017, iPro Community was processing its funds internally.
In November 2017 iPro Community
verbally terminated the connection with Fintact and requested that it return the stability of all monies that was held in belief.
This quantity is believed to be in extra of $5,000,000, which incorporates each iPro’s earnings, and monies that had been to be dispersed to iPro’s distributors as commissions.
Fintact refused the request, prompting iPro to file a Texas District lawsuit in opposition to them in January 2018.
Durign the course of their Texas lawsuit, iPro Community realized that Matthew Lopez had break up iPro Community’s funds between himself and three different entities.
This prompted one other California State lawsuit by iPro Community in November 2018.
In accordance with Pacheco’s counter-claim in opposition to the SEC, their foundation iPro Community is a pyramid scheme is as a result of “iPro was unable to pay commissions owed to its distributors”.
Earlier than we get into why that’s folly, right here’s the guts of Pacheco’s counterclaims in opposition to the SEC.
On info and perception, and unbeknownst to Pacheco, ever since iPro first requested the Trusted Funds from Fintact … the SEC had been endeavor efforts to thwart iPro’s skill from ever recovering these monies.
Particularly, when iPro demanded a return of its Trusted Funds so it might payout commissions, the SEC instructed Fintact to not flip over the monies by falsely representing to Fintact that iPro was working a fraudulent pyramid scheme.
On info and perception, the SEC threatened Fintact that if it did flip over the Trusted Funds, that Fintact would topic itself to potential legal responsibility for aiding and abetting iPro’s alleged pyramid scheme.
Because of this, Fintact refused to show over the Trusted Funds, which hindered iPro’s skill to pay commissions.
The reality, nonetheless, is that the SEC had no proof that iPro was working a fraudulent pyramid scheme, and due to this fact undertook efforts to make it seem as if iPro was working such a scheme.
Pacheco asserts the SEC created a situation whereby iPro Community couldn’t pay its associates, to suit their pyramid scheme narrative. Which Pacheco additionally asserts has no different foundation.
So naturally Pacheco is looking for to have the SEC legal responsibility claims in opposition to him transferred to Fintact.
I don’t know to what extent Pacheco’s attorneys are accustomed to securities regulation, however that is hilariously reachy.
Whereas iPro Community not with the ability to pay out (i.e. having collapsed) is cited by the SEC, no matter whether or not a Ponzi pyramid scheme will pay out or not, it’s nonetheless unlawful.
That appears to be a degree misplaced on Pacheco in launching his campaign in opposition to the SEC.
And what concerning the alleged securities fraud (the Ponzi facet of the enterprise)?
The SEC’s securities fraud allegations don’t simply dissolve as a result of $5 mill was successfully frozen by a cost processor.
iPro Community was a pyramid scheme as a result of it marketed nothing to retail clients. All commissions paid out had been tied to recruitment of latest buyers.
iPro Community dedicated securities fraud by working a passive funding scheme it did not register with the SEC.
Stated passive funding scheme was a Ponzi scheme by means of newly invested funds getting used to pay current buyers.
None of that’s addressed in Pacheco’s reply – however as acknowledged it’s early days but.
I for one can’t wait to learn the SEC’s response to Pacheco’s nonsense.
And given Pacheco appears headstrong about having finished nothing mistaken, hopefully there’s tons extra popcorn to come back!