The I2G case may eventually be viewed as the most fraudulently litigated case in US history.
The entire I2G trial was a fraud on the court, as the government presented knowingly altered and false data throughout the trial. These data were critical to proving the offense charged. Radically inflated loss figures were presented as valid evidence through key expert witnesses, including two FBI agents. These high loss figures were central to their claims of a pyramid scheme and securities violations. For the government’s case to succeed, victims must have lost money beyond the statistical average of ninety percent of multi-level marketing (MLM) participants. In reality, the government tried to criminalize the standard practices of all MLMs but emphasized a 97% I2G loss rate as the central basis of its case.
However, substantial evidence the government subpoenaed seven years before trial disproved the assertions. The US 7240 tracked all I2G commissions and transactions data, indicating that many I2G distributors were earning significant commissions. This data revealed that I2G paid over $38 million in commissions, over 28 million greater than the government represented. The list of top earners showed that 256 individuals earned over $10,000 in commissions. Additionally, 1099 records indicated 1,100 distributors made commissions exceeding $600 in 2014 alone. This “truthful” data held by the government sharply contrasted with the summary charts presented by Agent McClelland, which displayed a 97% loss rate. It also contrasted sharply with 101i representations by Keep, FBI Agent Sauber, and the government.
Moreover, the government manipulated data in “US 101i Total I2G Gains and Losses,” created just one week before the trial, contradicting the actual earnings data. McClelland’s summary charts were based solely on his calculations without supporting underlying data. McClelland testified that Jerry Reynolds’ records indicated that as much as $40 million had been paid in commissions. Instead of clarifying how these commissions were calculated with Reynolds, McClelland ignored the relevant data and relied only on GPG commission withdrawal records. This approach excluded $28 million in commissions that were the source of the alleged “victim investor” product purchases, rendering his summary charts invalid and leading to radically inflated loss figures.
“US 101i” was quickly created one week before the trial to replace the “7240” truthful commission data, contradicting their 97% loss rate claims. Prosecutor Madison Sewell informed the court and the defense that the original data had “problems,” according to Reynolds. However, after the trial, Reynolds provided an affidavit stating that the “7240” document was accurate and affirmed that the government filtered out significant commissions from “101i.” During the trial, “101i” was labeled as “ALL I2G Gains and Losses” and depicted its vastly inflated loss rate by omitting 80% of the earned commissions, totaling over $28 million. These commissions were used as “gift certificates” to fund their distributor packages.
Moreover, the government and FBI agents inaccurately represented gross purchase amounts as losses without deducting the $28 million in commission payments the “alleged victims” used for their actual purchases. False loss data was presented as accurate with nearly every witness. Improper hearsay was introduced from non-witnesses relying on gross product purchase figures and hiding the significant commissions earned, withdrawn, or used for purchases by these distributors. For example, a non-witness named Pepito, whom the court viewed as a “poor lady who got suckered out of a ton of money,” showed $150,000 in commissions and withdrawals in the “7240” data. Every alleged emperor distributor loss presented to the jury was inflated.
The data was further inflated by millions of dollars by misrepresenting “gifted” packages, $600,000 in refunds, and $800,000 in waived auto-ships as losses. “101i” also represented two years of data from an entirely separate company, XTG1, which launched only after I2G was closed; this data did not belong to I2G! The extensive and substantial use of false data, endorsed by key experts and FBI agents, to drive home misleading loss statistics may make the I2G trial one of the most fraudulently litigated trials in history.