United States of America v. Richard G. Maike, G. Barnes, and Faraday Hossenpour

Owensboro, Kentucky criminal defense lawyers represented the Defendant charged with fraud.



The defendants here were leading figures in a company called Infinity 2 Global, which the FBI later concluded was a pyramid scheme. The company extracted some $34 million from investors who paid to join the scheme, nearly all of whom lost money. After a 25-day trial, a jury convicted Richard Maike, Doyce Barnes, and Faraday Hosseinipour of both conspiracy to commit mail fraud and conspiracy to commit securities fraud. These defendants now offer some three dozen reasons to reverse their convictions.



By way of background, this case is about a fraudulent scheme, specifically a pyramid scheme. The nature of a pyramid scheme is to consume its own participants. These schemes usually take the form of a "multilevel marketing” organization, which can be a legitimate business arrangement. See, e.g., In re Amway Corp., 93 F.T.C. 618 (1979). But a pyramid

scheme lacks sufficient outside revenue—say, from product sales—to repay the investments of most participants. Its revenue, rather, comes mostly from within, in the form of payments by recruits to participate in the scheme itself. See In re Koscot Interplanetary, 86 F.T.C. 1106 (1975). Participation often brings the right to sell various products—music, jewelry, software—which are usually mediocre and overpriced. United States v. Gold Unlimited, 177 F.3d 472 (6th

Cir. 1999); FTC v. BurnLounge, Inc., 753 F.3d 878 (9th Cir. 2014). Those are a feint, meant to deceive recruits and regulators alike. Koscot, 86 F.T.C. at *58. More important is the right to earn rewards for recruiting new participants—and thus to receive a share of the scheme's primary source of revenue. These schemes survive only as long as their recruitment revenue does; and so their incentives always emphasize recruitment over product sales. Gold Unlimited,

177 F.3d at 480. Yet the scheme's architects invariably seek to conceal its nature, in part by the façade of product sales, in part by elaborate systems of tiers, fees, and bonuses—what the district ourt in one case called "a labyrinth of obfuscation.” BurnLounge, 753 F.3d at 883. Pyramid schemes are thus merely a subset of what federal law calls schemes to defraud.

B.

Affirmed