Both the SEC and defendant Daniel Pacheco have had their motions for summary judgment denied.
Both parties sought to get the upper hand via the filings, made in July 2021.
As per an April 4th order, the court found;
Although the SEC presents a strong case, a showing has not been made that the issues are purely legal and determinable on summary judgment.
Pacheco’s motion was filed on the basis iPro Network and its Pro Currency investment scheme wasn’t a securities offering.
Pacheco argued in opposition that PRO Currency was not an investment contract because it was given freely as a reward when customers bought “real products with real value”.
The court disagreed.
Material fact disputes exist as to whether Pro Currency or the I-Pro Network constituted securities.
Looking forward, should the case progress to trial we’ll have the “bundling a product or service to our Ponzi scheme makes it not a Ponzi scheme” ruse put before a jury.
I honestly don’t see that happening, as it’s practically a guaranteed loss for Pacheco (right).
Whether consumers were motivated by the PRO Currency or the educational materials should be a factual question reserved for a jury.
Pacheco also argued that consumers were motivated by the I Pro Mall, which, though admittedly never actually was accessible to consumers, purportedly was set to include $4 million worth of products that could be exchanged for the “reward” PRO Currency.
Finally, Pacheco asserted that there was a growing list of over 200 vendors that had interest in accepting PRO Currency as tender.
While the SEC has strong and persuasive arguments, the only way to address the material disputes of fact is to delve far into the particular details of the chronology of events and to discount Pacheco’s declarations, both of which do not seem to be questions of law to be addressed on summary judgment.
Put more simply, though the SEC’s case appears well-supported and logical, it does not appear that the triable issues of material fact have crossed the line from factual into legal such that a grant of summary judgment is appropriate here.
While it might not be suitable for summary judgment, Howey Test case law with respect to investment contracts and securities is pretty established.
Pacheco’s arguments about “products and services” are easily demolished by ringing up how many people invested in PROC outside of the MLM opportunity.
The answer is 0%, because PROC wasn’t available through iPro Network outside of the attached Ponzi/pyramid scheme.
As per an order made back in January, the iPro Network trial is scheduled for August 9th, 2022.
Update 24th June 2022 – Following a Joint Cast Management Statement filed on May 12th, the court rescheduled the August trial for January 17th, 2023.
Update 23rd December 2022 – Daniel Pacheco has settled his iPro Network fraud case with the SEC.