Three years.
When you’re questioning how lengthy it’d take the SEC to meet up with your multi-million greenback MLM Ponzi scheme… three years.
Eric J. Dalius launched the Saivian Ponzi scheme in 2015.
Probably resulting from his previous indictment and conviction for wire and mail fraud, for the primary 12 months of Saivian’s operation Dalius hid within the background.
John Sheehan, who had no precise management over Saivian or administration involvement, was offered to buyers as the corporate’s President.
With out rationalization, Dalius got here out of the shadows to interchange Sheehan as Saivian’s President in October 2016.
Regardless of principally flopping within the US, Saivian picked up steam in China.
In mid 2017 Chinese language authorities cracked down on Saivian and made a number of arrests.
Dalius and different key Saivian executives escaped arrest as they solely traveled to China to advertise the corporate.
After the Chinese language crackdown Dalius stayed put within the US.
Having misplaced its major supply of latest funding, in October 2017 Saivian formally collapsed.
Having extracted tens of thousands and thousands of {dollars} from gullible Chinese language buyers, life was good for Dalius.
In a unprecedented exhibiting of his new-found wealth, Dalius used stolen Saivian investor funds to buy a $16.5 million greenback mansion in Miami earlier this 12 months.
On October third the legislation lastly caught up with Dalius, following the submitting of a civil grievance by the SEC.
The SEC describes Saivian as a “multi-million greenback Ponzi and pyramid scheme”.
Named defendants within the SEC’s lawsuit are
- Eric J. Dalius (proper), proprietor of Saivian and associated companies
- Skilled Realty Enterprises, INC., a Pennsylvania company, of which Dalius was the licensed signatory and thru which the Saivian web site was registered
- Saivian LLC, a Delaware LLC owned by Skilled Realty Enterprises used to open financial institution accounts to launder cash via
- Financial savings Community APP LLC, a Delaware LLC owned by Skilled Realty Enterprises used to open financial institution accounts to launder cash via
- Financial savings Community APP Restricted, a Hong Kong firm used to contract out the Saivian Cashback app
- Saivian Worldwide Restricted, a Hong Kong LLC owned by Dalius and used to handle Saivian’s investor database
- Saivian INT Restricted, a UK company owned by Dalius
- Realty Share Community LLC, a Delaware LLC used to open a checking account Dalius was the licensed signatory for, to launder investor funds via
Aid defendants named are Kimberly A. Dalius (Eric Dalius’ spouse) and a collection of LLCs Dalius created to buy actual property with stolen Saivian investor funds via.
The ruse behind Saivian noticed buyers deposit $125 a month and ship the corporate receipts.
Saivian provided 20% cashback on receipts despatched to it via a cellular app (the Map Program), in addition to a return of as much as $3000 a day based mostly on investor recruitment.
Following an investigation into Saivian, the SEC concluded Saivian’s advertising claims had been fully false.
Opposite to their claims, Saivian didn’t generate any income from the sale of POS receipts.
In reality, Saivian by no means had any advertising companions (or promoting companions) and by no means made any critical efforts to promote or in any other case monetize the info in its Cashback Members’ POS receipts.
Furthermore, whereas membership funds from the MAP Program contributed some income to the enterprise — lower than 100 thousand {dollars}, it was nowhere close to ample to fund the cashback funds that Saivian promised or made to its Cashback Members.
As an alternative, Saivian’s income was generated virtually completely from membership gross sales to Cashback Members themselves.
Like a traditional Ponzi scheme, Saivian happy promised returns to some buyers — within the type of 20% cashback on purchasing purchases — via the investments of different buyers fairly than any underlying, authentic, business exercise.
BehindMLM reviewed Saivian in November 2015. Not surprisingly, we concluded a lot the identical because the SEC and had been among the many first to sound the Ponzi alarm bell.
Having laid out the Ponzi nature of Saivian, the SEC then clarify the pyramid part.
Saivian was additionally a pyramid scheme that required the fixed inflow of latest buyers to stay solvent.
To maintain the scheme afloat, Saivian urged members to change into “Associates” and promote Cashback Memberships to others, which Saivian declare would offer the Associates with substantial monetary advantages.
However whereas Saivian did pay out some buyers, as with most MLM Ponzi schemes nearly all of invested funds went to these working it.
Within the case of Saivian, the buck stopped with Eric J. Dalius.
Between October 26, 2015 and September 1, 2017, Saivian raised thousands and thousands of {dollars} from Cashback Members in america and overseas.
Most of this was misappropriated by Dalius to help a lavish life-style for himself and his household.
When precisely the SEC started investigating Saivian and Dalius is unclear. Courtroom filings reveal the SEC first deposed former Saivian workers in December 2016.
What we do know nevertheless is that, upon being made conscious he was below investigation, Dalius seemingly believed he was above the legislation.
In investigative testimony earlier than the SEC, Dalius refused to reply any substantive questions concerning the Saivian scheme on the grounds that his solutions could incriminate him.
Considerably, he refused to reply whether or not he has spoken to witnesses that testified earlier than the SEC in its investigation and refused to reply whether or not he had destroyed any paperwork that the SEC subpoenaed from him.
Dalius refused to supply data subpoenaed from him and Saivian LLC that mirror the magnitude of his fraud, significantly paperwork associated to Saivian’s gross sales to individuals outdoors america, and paperwork associated to Dalius’ receipt and disposition of digital property (primarily Bitcoin) via which he obtained a good portion of Members’ funding.
Like just about each different MLM underbelly scammer lately, Dalius was elbows deep within the cryptocurrency area of interest.
Dalius additionally fought to dam the SEC’s entry to related data, together with data that mirror the character of the scheme and his position in it.
For instance, Dalius tried to strain a third-party vendor who maintained the database of Saivian’s transactions from producing the database to the SEC.
Finally, the hassle to forestall the seller from producing the database failed.
Though an actual determine will possible be made official sooner or later, I imagine at current we don’t understand how large the Saivian Ponzi scheme truly was.
On the cash aspect of issues although, right here’s what we do know;
Dalius used many of the Saivian’s sufferer’s cash to fund a lavish and splendid life-style for himself and his household.
Dalius used roughly 70% of the $10.7 million in income deposited in Saivian’s home financial institution accounts for his personal profit.
Along with the $10.7 million … Dalius transformed sufficient Bitcoin obtained from buyers to appreciate … deposits of greater than $165 million, most of which went to his private profit.
For instance, Dalius transformed over $36 million of Bitcoin that he collected from the scheme to buy properties in California, New York and Florida.
These purchases included a $16.5 million mansion in Miami Seashore, and a $10.3 million townhouse within the Higher East Aspect of Manhattan.
Dalius additionally transformed $31.1 million of Bitcoin that he collected from the Saivian scheme and transferred it to brokerage buying and selling accounts he managed to funds inventory purchases.
And Dalius transformed thousands and thousands of {dollars} of Bitcoin that he collected from the scheme to fund personal jet journey, luxurious holidays, sporting and leisure occasion tickets, and the acquisition of an unique sports activities automotive.
Examples of those purchases embody a brand new Lamborghini for nearly half one million {dollars}, and greater than $181,000 for a 5 night time trip to the Bahamas to rejoice his daughter’s twenty first birthday – together with premium lodge lodging, poolside cabanas, and constitution jet transportation for seven passengers from Los Angeles.
With neither Saivian, Dalius or any of his shell firms registered to supply securities, the SEC are alleging securities fraud.
All up the SEC have sued Dalius and the Saivian defendants for violations of the Securities Act and Securities and Change Act, over seven causes of motion.
An eight reason behind motion seeks disgorgement, from each Dalius, the named Saivian defendants and reduction defendants.
The SEC’s lawsuit was filed below seal in California on October third.
A requested ex-parte Momentary Restraining Order and asset freeze towards Dalius was denied on October eleventh.
The first cause for the denial was a scarcity of supplied proof exhibiting that, with no granted TRO and asset freeze, there can be ‘“speedy and irreparable harm, loss, or harm” earlier than Defendants will be heard in opposition.‘
Studying between the strains, had the SEC of acted sooner (say for instance properly earlier than Saivian collapsed)they may have gotten their ex-parte TRO and freeze.
Now, virtually a 12 months after the actual fact they’ve been denied. A request for expedited discovery, pertaining to subpoenaed Saivian data, was additionally denied.
I don’t know who’s accountable but it surely appears, no less than as far their Saivian investigation goes, somebody over on the SEC dropped the ball on this one.
If depositions started in late 2016, the investigation needed to of commenced prior.
Saivian collapsed virtually a 12 months in the past, not withstanding the Chinese language arrests that occurred six months prior.
Why has it taken so lengthy for the SEC to file go well with?
Because it stands a summons was issued towards Saivian, Dalius and the remainder of the defendants on October twenty third.
Whereas it’s possible the SEC will likely be granted a preliminary injunction later down the highway, it’s a little bit of a disgrace they botched the ex-parte TRO by taking so lengthy to file go well with.
I’ve added the SEC’s Saivian lawsuit to our listing of tracked instances, so keep tuned for updates as we obtain them.
Replace sixteenth October 2019 – Ryan Evans has been added as a defendant to the SEC’s lawsuit.
Replace eighth February 2023 – The SEC sued Eric Dalius in 2018, alleging Saivian was a $165 million greenback plus Ponzi scheme.
Dalius settled the SEC’s fraud allegations in February 2023. As a part of the settlement, Dalius and Saivian LLC had been ordered to pay $24 million.