Colorado man sentenced for role in pyramid scheme which cost victims $23M
A Fort Collins man determined to be one of three founding members of a nation-wide pyramid scheme that took more than $23 million from its investors was sentenced recently to prison time and millions in asset forfeiture.
Brian Kaplan, 53, was ordered to serve 22 months in federal prison and surrender $2,838,700 in personal funds. Joining Kaplan before U.S. District Court of Colorado Judge Charlotte N. Sweeney were co-defendants Alex Dee, 50, and Jerrold Mauer, 58. Dee was sentenced to 36 months and $1,845,600, Mauer to 22 months and $1,545,500.
Kaplan and his colleagues ran 8 Figure Dream Lifestyle from January 2017 through March 2109. The limited liability company was registered in Wyoming. Incidentally, the trio had also started a second pyramid scheme named Online Entrepreneur Academy in November 2018.
More than 2,800 people paid into their multi-level marketing operation, per federal prosecutors. Each person paid between $2,000 and $22,000 for the right to recruit other members. Those new members would pay their recruiters directly as part of the plan. To attract recruits, all members were sold access to training videos, call lists, and automated "robocall" systems by the three administrators, as explained by court documents.
A very small number of participants sold memberships, as stated in those documents. Rather, virtually all of them, took on additional debt in the form of loans and credit card withdrawals in order to take part in the scheme.
"In marketing the 8FDL memberships," the U.S. Department of Justice stated in a press release, "Dee, Kaplan, and Maurer falsely represented to the public that typical members with no prior skills or experience would make substantial sums in a short period of time, including earning more than $10,000 within 60-90 days. In fact, the vast majority of 8FDL members never made a single sale."
The scheme often targeted older Americans, per prosecutors. As described in a court document, Mauer claimed during a webinar that a 72-year-old participant member made $44,000 in her first seven weeks even though she had no prior marketing skills. The group also circulated an advertisement claiming a 69-year-old retiree had "already made $21,500 in his first 45 days with us using our unlimited lead sources and simple automated system," and that a webinar will explain how he did it, as stated in the court document.
Additionally, the initial complaint against the three men which the Federal Trade Commission filed in California in 2019 mentioned an audio recording of Dee's voice. In it, Dee addressed 8FDL participants: "[Y]ou'll have a system that will call those leads to find people interested in our opportunity. This system can call thousands of people each week, and it will consistently find two to three buyers for you per week that will put anywhere from $2,000 to $22,000 in your pocket each time."
All three men conducted the pyramid schemes personally and through companies they owned; Kaplan through Fort Collins-based Kappy Enterprises and Millionaire Mind Enterprises, Dee through Spirit Consulting in Texas, and Mauer through JL Net Bargains, Inc., of New York.
Dee, formerly known as Alex Dowlatshahi, failed to notify the victims of the pyramid schemes of his prior federal prosecution, as claimed in court documents. Dee, along with other partners, misrepresented facts to investors regarding a purported gold mining operation which, authorities learned, didn't have proper permitting to do any mining. Federal authorities called it an $8.6 million Ponzo scheme. For his part in it, Dee was ordered to repay $800,000 in 2011.
In the recent cases, Dee, Kaplan and Maurer each pleaded guilty to a single count of conspiracy to commit wire fraud.
Victims of the 8 Figure Dream Lifestyle program have received $1.1 million in restitution through the FTC. Victims of the second scheme have recovered $84,000.
Judge Sweeney ordered Kaplan to report to prison and begin serving his term no later than Feb. 28.
