In a court trial, a judge is not permitted to express an opinion regarding the guilt or innocence of the defendants before the jury begins its deliberations. However, this principle was violated in this case. Prior to the jury starting its deliberations, the judge referred to the list of distributors as “victim investors.” Additionally, the written instructions described the largely non-testifying distributors as “victim investors” and referred to their purchases as “securities,” even though the defendants were not given the opportunity to confront this hearsay since the distributors did not testify.
Furthermore, data records indicate that the same distributors earned significant commissions concealed from the jury. The defendants had the constitutional right to cross-examine these non-witnesses presented as victims about their substantial commission earnings. Complicating matters further, when a jury question arose, the judge confirmed that a “securities” purchase, as described in the instructions, had occurred within the statute of limitations. The list included “gross purchase” amounts from non-witnesses, excluding the significant commissions the distributors received and withdrew or used for their product purchases. Notably, these purchases were all outside the statute of limitations. By affirming that a “securities” purchase had occurred within the statute of limitations, the court effectively instructed the jury to convict.
The jury instructions failed to include crucial affirmative defenses the defendants were entitled to present. These defenses would have clarified the fine line between “illegal pyramid schemes” and legitimate multi-level marketing (MLM) companies. The court did not permit the instruction that such a “fine line” exists, which was essential for ensuring a fair trial. The defendants’ request for an “anti-saturation” instruction and their own expert witness to explain the concept of anti-saturation within the i2G plan was denied, despite evidence showing $1.5 million in customer transactions directly paid distributor rewards or commissions.
Additionally, the jury was not instructed on “internal consumption” as a legitimate form of sales, even though this is the legal standard for all legitimate MLM companies. This aspect was vital in exonerating Neora from the same pyramid scheme accusations made by the FTC. Thus, the jury could only rely on the government’s instructions, which stated that only retail sales are considered legitimate. This guidance improperly defined a pyramid scheme by citing statistics that apply to every legitimate MLM model. The jury did not receive proper instruction on the Koskot test standard to assess whether MLM purchases were related to distributor rewards, which was the case in i2G.
Every bet at the i2G casino or fantasy sports transaction earned 25% bonus volume (BV) towards binary, matching, and leadership bonuses, demonstrating a clear interconnectivity that disproved the existence of a pyramid scheme. Furthermore, the jury was not adequately instructed on mens rea, meaning the defendants needed to understand that their participation constituted involvement in a pyramid scheme and that it was a criminal act. Notably, federal law does not define participating in a pyramid scheme as a crime, particularly not unknowingly.
Finally, the jury received a vague definition suggesting that the structure of the MLM plan itself determined whether it was a pyramid scheme and asked them to make assumptions about the motivations of individuals joining I2g. The Neora Court refused to assume the motivations of every distributor joining an mlm. The definition stated that participants were motivated by recruiting rewards; however, every government witness testified that they joined with a lack of interest in recruiting. Furthermore, FBI Agent McClelland testified on improper hearsay from non-witnesses that distributors had no interest in multi-level marketing or recruiting.
The jury instructions would have rendered any legitimate MLM a pyramid scheme. The court failed to correct the prosecution’s misrepresentation of the law or provide proper guidance on determining what constitutes a pyramid scheme. Injustice for one is injustice for all. Jury instructions form the basis for evaluating an offense. When the instructions misrepresent definitions, are overly vague, or omit mens rea and vital affirmative defenses, a fair trial becomes impossible.