The Securities and Exchange Commission has accused Daniel Pacheco of operating a multimillion-dollar cryptocurrency pyramid scheme.

In a complaint, filed in U.S. District Court for the Central District of California, regulators alleged Pacheco of conducting a fraudulent, unregistered offering of securities through two California-based companies he controls, IPro Solutions and IPro Network. From January 2017 through March 2018, IPro raised more than $26 million from investors by selling instructional packages that provided lessons on e-commerce.

“We allege that Pacheco hid an old fraud under the guise of cutting-edge technology,” said Michele Wein Layne, director of the SEC’s Los Angeles regional office. “He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme.”

The SEC said Pacheco spent the funds fraudulently, including making a $2.5 million all-cash purchase of a home in Redlands and buying a Rolls Royce. “Pacheco’s misappropriation accelerated the rate at which IPro became unable to pay the commissions and bonuses due its investors,” the SEC said in a statement.

Purchasers of IPro packages could pay a $50 annual activation fee to become “active members” after which they could become “independent sales associates” or “premium independent sales associates.”

The complaint notes an investor presentation in 2017 where Pacheco is quoted saying, “Crypto right now is a new thing that people like. And from a marketing standpoint, it gives … a little bit of a sizzle that nobody else has.”

The complaint said Pacheco’s scheme attracted 20,000 members in less than a year and a half.

The SEC is seeking civil penalties for defrauding investors and failing to register securities. The complaint names seven “relief defendants” but does not allege wrongdoing.

The investigation was run by Peter Del Greco, Eric Shu, and Maria Rodriguez, and supervised by Marc Blau of the Los Angeles office.

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