The government’s “knowingly presented” false data accusation is not unfounded; it is proven by the data, its admissions throughout the trial, its appeal answer, and the very words of its own FBI agents, McClelland and Sauber.
In McClelland’s testimony, he stated that Reynolds’ records indicated that $40 million had been paid in commissions to distributors. He provided an example where Reynolds’ records showed that Jason Syn earned $3 million, but he could not trace where that money went in Syn’s bank account. This raises questions about McClelland’s understanding of the situation, suggesting he may not have taken the time to learn how the i2G compensation system worked before referring the case to the government for prosecution.
However, McClelland did subpoena the “gift certificate” purchase records from the defendants, indicating that he had considerable knowledge of the matter. He retrieved Syn’s commission records and discovered that Syn had only withdrawn $180,000 from GPG, representing just 6% of Syn’s total commissions. This indicates that GPG did not document 94% of his commissions, proving that GPG withdrawal records did not accurately reflect “total gains”. McClelland knew this.
So, why would McClelland knowingly misrepresent i2G gains for everyone in the company by relying solely on GPG records? He was aware that GPG omitted 94% of Syn’s commissions. If he had engaged with Reynolds to understand how distributors used commission payments to cover their purchases or assist new distributors with their startup costs, he would have quickly realized that a 97% loss rate was impossible, as he claimed in his summary charts.
Did Agent McLelland and Prosecutor Madison Sewell display “deliberate ignorance”? Sewell fervently presented this accusation to the judge during bench conferences, arguing that it was the appropriate charge for Hosseinipour because she “remained with the company.” Isn’t this a case of the pot calling the kettle black, especially considering they had commission records that they chose to ignore?
If Agent McClelland and Prosecutor Madison Sewell did engage with Reynolds but chose to misrepresent losses or conceal these significant “gains” by a staggering 80% in his summary charts, it would indicate a deliberate attempt to commit fraud against the Court, which should be considered a criminal act.
McClelland affirmed that commission records showed 40 million in paid commissions. McClelland would have recognized the importance of including the $28 million in “commission gains” or deducting it from “commission losses” in his misleading summary chart, Exhibit 232. The ineffective assistance provided by Hosseinipour’s counsel, who did not understand the data, cannot justify the government’s deliberate attempt to inflate these figures significantly. These summary charts and spreadsheets were presented as key evidence to prove a “pyramid scheme” offense with losses that surpass what is typical in any multi-level marketing (MLM) company.
If the Government’s key evidence is provably false, how can a conviction based on that evidence stand?
In reality, the positive earnings statistics for i2G were far better than those for the average MLM, where up to 99% of distributors reportedly “lose money,” according to the FTC’s website. Dr. Keep, the government expert, reported a similar loss average of greater than 87.5% and into the nineties. The fact that the false summary charts and spreadsheets were “critical evidence” to prove a pyramid scheme mandated an honest prosecutor to come forward to inform the court about the significant miscalculations of commission data. Rule 702 of the Federal Rules of Evidence and the Daubert Standard require that every piece of data analyzed by an expert be reliable at every stage; otherwise, the entire data set or testimony cannot be deemed credible.
FBI Agent Sauber succeeded McClelland after his retirement, just before the case went to trial. Sauber lacked a background in multi-level marketing (MLM) and, because of the short time of his involvement, may not have fully understood how the commissions were utilized as “gift certificates” for purchasing startup packages. However, Prosecutor Sewell was well aware of how these “gift certificates” functioned, as he questioned Reynolds about them at trial. He had also ordered the relevant “gift certificate” records from the defendants.
FBI Agent Sauber acknowledged several inconsistencies in the 101i data that significantly inflated the losses by millions of dollars during Maike’s sentencing hearing (see list below). The defendants later raised these same conceded issues in their arguments against the inflated restitution amount. Hosseinipour urged both her “ineffective” attorney and her new sentencing attorney to address the “false evidence” issues in her motion to overturn the verdict and in her motion for a new trial, as she believed they were critically important. However, she could not convince her attorney to include them in her filings, which further demonstrates the attorney’s ineffectiveness.
Later, she collaborated with Doyce Barnes’s attorney, Kenyon Meyer, from the Louisville office of Dinsmore and Shohl, whom she later hired as her appeal attorney. Meyer recognized the significance of her findings regarding the false commission data. He raised these issues during Maike’s sentencing and obtained significant concessions from Agent Sauber, effectively sealing the prosecutorial misconduct as part of the official record.
Attorney Kenyon Meyer successfully filed the 7240 document, revealing $38 million in commissions paid. He also included 1099 records from i2G that documented $14 million in paid commissions for 2014 alone. The government’s “Top Earners” list indicated that 256 distributors in i2G earned over $10,000 each, totaling over $20 million in paid commissions for these distributors alone. These accurate representations starkly contrasted with McClelland’s misleading summary charts and the government’s 101i representations of total gains and losses.
Meyer’s filing (7240) reveals that $38 million was paid out in commissions, highlighting the misleading representation of i2G’s total earnings as just $7.5 million in their 101i report, which was presented throughout the trial. Meyer included an affidavit from Reynolds confirming that commissions were “filtered” out of the 101i. Additionally, Meyer submitted new data from Reynolds that documented all commissions paid to emperor purchasers, affirming the falsity of 101i. He also provided documentation of fast-start and pool cash payments from Reynolds, which were not included in the 101i report.
Meyer submitted an email from Angela Leonard to Susan Anzalone regarding the Xtg1 launch, which indicates that the program was active leading up to October 2015. This evidence demonstrates that the government was aware of Xtg1 and underscores the contamination issues with the database, which contained two years of Xtg1 data. Although this data was claimed to belong to i2G, it is important to note that i2G closed in 2015. Furthermore, all of the government spreadsheets included Xtg1 data, which operated until March 2017 and corresponded with their spreadsheets.
Meyer elaborated on these issues in the joint defendant’s arguments against the inflated restitution. He cited specific examples that validated Reynolds’s affidavit regarding the “filtered” commission data and funds transferred to other distributors for their “purchases”, which exceeded $28 million. His examples highlighted the serious misconduct and false evidence issues he later raised in Hosseinipour’s appeal.
I have attached a copy of the restitution arguments below. Notably, Judge Stivers had conceded during the oral arguments phase that if the 7240 data demonstrated that distributors did not pay the “gross purchase” amounts, but a “lesser” amount, accounting for these commissions, then those amounts must be deducted from the restitution total. Judge Stivers told Prosecutor Sewell that Sewell did not like the 7240 data because it did not provide “information that was helpful ” to him.
Notably, at the end of the oral argument, Stivers stated that he had done his best by the defendants and believed he had made the right decisions; however, if he were mistaken, he would issue an apology.
Despite Meyer presenting significant evidence of inflated losses in the subsequent written arguments concerning the 7240 data, the Court ultimately sided with the government despite Judge Stivers’s previous statement that the “used commissions” should be deducted. Instead, he “trusted” the government and that the 7240 data was unverified, despite Meyer providing an affidavit from Reynolds validating the data.
FBI Agent Sauber admitted to data inconsistencies in 101i that accounted for millions of dollars in inflated losses.
At Maike’s sentencing, FBI Agent Sauber conceded the following under Meyer’s cross-examination:
1.) Knowledge of “Gifted” packages which inflated losses in 101i by millions of dollars. For instance, the “gifted” packages associated with Jason Syn alone were depicted as $1.3 million in losses in 101i despite the government’s claims that he earned millions of dollars as a named defendant. In an affidavit the government produced, Syn admitted to earning in excess of 2 million.
2.) $800,000 in waived auto-ships were reflected as losses in 101i. Testimony from the government’s witness, Anzalone, affirmed that Maike waived all the emperor purchaser auto-ships, and they were never charged.
3.) $600,000 in refunds that were not deducted from 101i. Reynolds provided this list.
4.) There were unpaid credit card fraud instances that were not processed and thus could not be counted as “losses.” These instances also amounted to millions of dollars, depicted as losses in 101i.
5.) The inclusion of Rick Maike’s new company, XTG1, which had over 4000 XTG1 distributors whose gains or losses up to 2 years AFTER I2G was closed, could not be included in “loss calculations” for I2G. Data from 101B was referenced during the sentencing, demonstrating an additional $4 million after the indictment period ended, attributed to Xtg1 sales.
6.) corporate positions and “test” positions set up by the corporate that did not receive commission and therefore could not be calculated as losses.
7.) There were 2650 “customer” packages at $19.95 portrayed as independent losses. Customers got precisely what they paid for, so they could not be considered losses. This equalled an additional $52,867.50, which should have been subtracted from loss representations.
In addition to these significant admissions, 101i excluded millions of dollars in earnings by “filtering” out fast start bonuses, pool cash, and “leadership bonuses.” For this reason, not a single Emperor purchase amount could be considered valid or reliable.
Prosecutor Sewell misled the court by claiming these factors would not influence the loss findings. However, the fact that losses were inflated by 28 to 32 million dollars makes this a non-credible and dishonest statement.
The restitution exhibits attached below provide extensive evidence directly from Jerry Reynold’s system, challenging nearly every distributor loss that the government presented to justify a total restitution of $4 million. The government only sought $4 million after alleging a $40 million pyramid scheme, claiming that 97% of participants lost money. This discrepancy suggests that they knew their loss representations were significantly exaggerated. It is important to remember that all mlm average a loss rate above 90%, which is undoubtedly higher in its first 18 months.
After seven years of witness tampering, which included written and email FBI fraud notices from I2Gfraud@fbi.ic.com, over 60 “Victim notifications” to the distributor base, and direct solicitation calls by FBI Agent Sauber after the trial, the total claims submitted by I2G distributors amounted to less than $1.5 million. This outcome even surprised the judge, who said he expected the claims to be much higher.
The Court’s decision to side with the prosecution even after Attorney Kenyon Meyer presented such an abundance of information to dispute the loss amounts can only be viewed as what the judge described as “trust” in the prosecution.
However, I liked Judge Stivers very much. Like everyone else, I felt he was misled, and I look forward to his note of apology promised below.
THE COURT: No. I mean, honestly, you-all,
I appreciate the way you-all — I appreciate your professionalism.
I thought you-all did a wonderful job of expressing
collegiality. And sometimes I maybe — may have had a lapse or
two myself in that regard.
But, yeah, it is good to see you-all. It was — it’s been a
very interesting case. I hope — I hope I did the right thing.
I think I did. And if I didn’t, then I’ll write a note of
apology to the defendants, okay?
(Doc 718 #11385)
I have attached the restitution transcript. You can easily find information about 7240 by pressing Control + F and typing in “7240.” This will bring up a detailed discussion regarding this matter.
Prosecutor Sewell objected to document 7240, arguing that the defense could not interpret it. He stated that only Jerry Reynolds could provide an accurate interpretation and offered to obtain an affidavit from Reynolds. However, the affidavit that Attorney Meyer received from Reynolds confirmed the reliability of 7240 and proved the government’s actions to filter out commission data exactly as the defense correctly interpreted it.