The government informed the I2G court that anyone who “promoted” I2G was an unindicted “co-conspirator.” This effectively meant that every distributor involved with I2G was an “unindicted co-conspirator.” However, the government’s case could not progress without “victims.” As a result, the government determined that some “promoters” of I2G must also be classified as “victims,” despite the lack of a significant difference between the two categories other than the level of success with the program. Notably, The success of any individual in an MLM program is directly tied to the success of their team members downline.
The government provided a list of non-witness individuals labeled “victim investors,” using only their initials. This list inaccurately categorized gross product purchase amounts as “securities.” Additionally, the total purchase amounts did not include the substantial commissions earned by the same distributors, as evidenced by original commission documents (7240). The government misled the court and defense by claiming that the original commission data had “problems,” according to their data expert. After the trial, however, Reynolds confirmed the accuracy of the data and signed an affidavit stating that the government had “filtered out these commissions.”
The list of “alleged victims” included “promoters” from I2G who earned significant commissions but could not be confronted as required by the Constitution’s confrontation clause. Notable individuals on this list included Michelle Kim, Queyenne Pepito, and Sheon Jeong, all involved in a Ponzi scheme called “Better Living” and promoting questionable “front-load” strategies.
False Data from 101i stripped out the commissions used as the “source” of their emperor product purchases, creating the illusion of “net losers” contradicted by the “truthful” commission data. This false data 101i filtered out $28 million in commission payments to alleged victims. The dramatic inflation of losses fabricated victims who would fit the government’s description of “unindicted co-conspirators.”
In reality, Pepito, Kim, and Shin Jeong were I2G “promoters” and “net-winners.” They also had a history of promoting Ponzi schemes, having all transitioned to I2G from the “Better Living” scheme.
Unlike i2G, where distributor rewards were directly linked to actual “product usage,” programs like Better Living offered participants a guaranteed return on investment without requiring any product engagement. Jason Syn and Steven Yu were the top-earning distributors in Better Living. Many distributors followed them to i2G, quickly making them the highest earners in i2G. Yu, a million-dollar earner with i2G, was not targeted by Chuck King and thus avoided government scrutiny despite his significant earnings.
Syn and Yu instructed their teams on strategies to purchase large quantities of products up-front, known as “front-loading” through formations of 3-pack, 7-pack, and 12-pack purchases to take advantage of the substantial leadership bonuses. Distributors were encouraged to sell the product packages after receiving multiple leadership bonuses, utilizing the same sales volume. For instance, the sales volume required to qualify for $10,000, $25,000, $50,000, or $100,000 leadership bonuses for a single entity was used to qualify two or more entities.
In essence, Syn and Yu taught methods that enabled distributors to exploit the system, resulting in the company reaching its maximum payout, or “capping out,” weekly. This practice harmed the company and the other distributors, who experienced significant commission losses when the company hit its cap.
Michelle Kim was one of the alleged victims who received a $10,000 silver bonus through these practices. Although the government was aware of this information, it chose to present Kim as a victim who could not be cross-examined. This strategy sheds light on why the alleged victims purchased multiple emperor packages. This behavior contrasts with the explanation given by FBI agent McClelland and other government witnesses, who testified that the sole reason for these multiple purchases was the hope of earning “casino profits.” This reveals another myth propagated by the government, which failed to thoroughly investigate the facts of the case, including King’s motivations in targeting the defendants.
After being informed that I2G was “capping out” because of this manipulation, Hosseinipour offered to postpone her receipt of leadership bonuses her team earned to ensure that distributor commissions were not at risk. In contrast, Syn and Devorin refused to forfeit their leadership bonuses. Ultimately, Hosseinipour was never paid her leadership bonus, a complaint she voiced after the company closed in 2015.
Most distributors who joined Jason Syn and Steven Yu transitioned from “Better Living,” which promised a 1% daily return on investment that was similar to Zeek Rewards. Michelle Kim and Queyenne Pepito also transitioned to i2G from “Better Living.” Michelle Kim acknowledged her connection to “Better Living” in a statement to Agent McClelland, as noted in her 302 report.
The “Better Living” program was frequently mentioned on an MLM hate blog, often visited by government pyramid scheme expert William Keep. William Keep, who donated to the site, bragged in the comments that he represented the government in the I2G case. However, he defended I2G as not having the characteristics of “security.” Although the blog’s author is not an authoritative source, is biased, and has a financial motive for posting negative reviews, it is essential to note that, unlike I2G, participants in the “Better Living” program were offered a guaranteed daily return of 1% on their investment over 100 days.
Jason Syn and Steven Yu were the top earners at Better Living and successfully led large teams to i2G after Better Living collapsed. Syn is of Korean descent, while Yu is of Chinese descent. Asian teams are particularly attracted to the binary compensation plan. The list of non-witness “alleged victims” consisted primarily of direct teams under Syn and Yu. Many of these distributors participated in the “return on investment” programs Better Living and WCM777. These plans conflicted with i2G’s plan, which aimed to attract genuine customers for the products and did not ever promise any return on investment. Instead, I2G offered a reward for driving customers to the overseas online casino.
Many individuals identified as victims in the i2G case promised guaranteed returns to others through Better Living. However, Pepito, Kim, and others labeled “alleged victims” did not testify. Consequently, they could not be cross-examined regarding their previous involvement in Ponzi schemes or their “actual” significantly higher commissions than represented at trial in 101i, as reflected in the commission data from exhibit 7240. Instead, their earned commissions were “filtered” out of exhibit 101i, which inflated I2G loss representations by 28 million dollars.
I have attached copies of the Silver and Gold Lists from September to December 2013. Notably, Michelle Kim is listed as having received a silver bonus. The alleged victim, Shin Jeong, also received a silver bonus. Another alleged victim, Eb Inc., was awarded a silver bonus as well. Additionally, Beetna Lee earned two silver bonuses and one gold bonus. She is listed on the government’s Top Earners list with I2G, having earned over $289,000 with just one of her entities. Despite this, during restitution hearings, the government insisted that Beetna Lee was a victim.
To understand how the compensation plan was manipulated to earn substantial leadership bonuses, we can examine the bonuses received by Steven Yu, who is also known by the surname Wing Kwan. In September and October, Steven received 10 leadership bonuses from 10 different entities, all based on the same volume. Additionally, he earned two more leadership bonuses from two entities in December.
Similar patterns can be observed with Jason Syn, Christina Um, David Park, and Suk Bae. While strategizing to maximize compensation is not illegal, it indicates that the primary motivation for these large purchases was the financial rewards tied to lucrative leadership bonuses rather than speculative profits from potential casino activities.
Rick Maike made a significant managerial error by failing to anticipate or control this type of manipulation. However, his oversight weakens the government’s argument that misrepresentations about casino profits influenced these purchases. The government’s most substantial evidence was Maike’s claim that $100,000 in casino profits could be split among 5,000 emperors, which meant a $20 payment to emperor purchasers. While this was indeed what the emperors received, it is unlikely that this was a motivating factor for joining the company.
Furthermore, the government opposed Maike’s effort to opine on purchasers’ motivations in his appeal to refute the existence of a pyramid scheme. Similarly, the government could not judge the independent motivations of all business operators when assessing their purchases.
The government’s Top Earners List identifies 265 individuals or entities that earned over $10,000 through I2G. Among these top earners are I2G promoters, who the government presented as victims during the trial and restitution calculations. This information is based on their data, which still fails to discount “commissions paid”, which were used as the “source” of their emperor purchases.
The Top 25 Earners list, which includes all commissions, shows that 25 individuals or entities earned over $200,000. According to this government document, Beetna Lee earned $292,931.84 in commissions. A key point is that the alleged victims were clearly “promoters” in the same way that everyone in the company was. There is no fair way to distinguish the defendant distributors from the alleged victim distributors.
One individual, a million-dollar earner named KRoss, who was not charged, recruited Jason Syn and conducted meetings in the Los Angeles area. However, each individual promoted the business to others, which is typical in every MLM (multilevel marketing) structure. Since the government classified a list of non-witnesses as “alleged victims,” the defendants had a constitutional right to cross-examine these individuals about their involvement with Better Living, their actual commissions, and how they promoted the business to others.
In multi-level marketing (MLM), the income you earn reflects the success of those on your team. Your earnings are directly tied to your team’s sales, and only through their success can you achieve significant rewards. This is the essence of MLM and our merit-based society. Should the most successful individuals in the MLM profession be considered conspirators simply for helping others succeed? The government misled the Court about the alleged victims’ success, misrepresenting it as 28 million dollars less than claimed to the jury.
The individual I2G “promoters” below earned significant commissions but were classified as “victim investors” in the government’s restitution filings. The commissions listed below from government documents do not account for the earnings that were used to finance their own and other emperor purchases. Therefore, their total commissions are much higher. All of these individuals were part of Jason Syn’s team, most of whom followed him and participated in the “Better Living” scheme. They adhered to his teachings, self-sponsoring themselves in 3, 7, or 12 packs to maximize their volume for the highest payouts and leadership bonuses. None of these “alleged victims” appeared at the trial.
1.) Beetna Lee $115,358.92
2.) Eb Inc $54003.30
3.) Shin Ja Jeong $35,372.68
4.) Adelaida Pineda in excess of $115k
5.) Elizabeth Dong $17,631.96
6.) Diane Lee $17,375.44
7.) Jesus Garcia $12476.06
8. Cris Bayani $10,085.82