SEC Halts Colorado-Based Pyramid Scheme

By Patricia Uceda, Spring 2015 Graduate Research Assistant

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The SEC recently stopped a Colorado-based pyramid and Ponzi scheme that allegedly raised more than $3.8 million in less than a year. Kristine L. Johnson and Troy A. Barnes ran the company called “The Achieve Community” which used YouTube videos, social media, and websites to entice investors into buying positions in their company.

Johnson and Barnes allegedly did this by claiming to have perfected a “triple algorithm” investment formula that would promise investors returns of 700%. They claimed that a seasoned programmer came up with this “triple algorithm” investment formula that was guaranteed to generate these extraordinary returns. They used online videos to tell investors they would receive a $400 payout on the purchase of a $50 position within three to six months.

Although Johnson and Barnes claimed that their program was not a pyramid scheme, according to the SEC, their company had no legitimate business operations and the SEC determined that they were paying purported investment returns to earlier investors from the funds received from new investors. In addition, the two operators allegedly made cash withdrawals for themselves and used the money to buy new cars and pay credit card bills.

Johnson and Barnes have been charged with violating federal securities law, and their assets have been frozen. This investigation is still ongoing.

To learn more about protecting yourself from Ponzi schemes, check out this post.