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Mindset 24 Global has been sued by the SEC.

According to the regulator, the now-defunct organization operated as a Ponzi scheme.

Mindset 24 Global was established in 2017. The corporation was situated in Kentucky, USA.

Co-founders Brian McLane (right) and Paul Anthony Nash led Mindset 24 Global (CTO).

According to the SEC;

Defendants ran an online pyramid and Ponzi scam through Mindset 24 Global, LLC (“Mindset 24”), a multilevel marketing firm (“MLM”) that they owned and controlled, from no later than July 2017 through at least May 2018.

Defendants raised almost $1 million from hundreds of people in the United States and across the world during that time period via the unregistered offer and sale of securities in Mindset 24.

Furthermore, in connection with the offer and sale of such securities, Defendants engaged in a plan to mislead investors as well as actions that functioned as fraud or deception on those investors.

While we didn’t call it a Ponzi scheme directly, BehindMLM highlighted a lack of retail emphasis in our published Mindset 24 Global evaluation (August 2017).

This confirmed our suspicions that Mindset 24 Global was not functioning legally.

Despite Defendants’ representation of Mindset 24 as a legitimate enterprise, no Series Packages were sold to real retail consumers; rather, all sales were to Participants, and all Mindset 24 reimbursements to early Participants were paid using cash received from later Participants.

As a result, Defendants ran Mindset 24 as a classic pyramid and Ponzi scam.

Ironically, retail revenues were included in the original draft of Mindset 24 Global’s compensation plan.

McClane and Nash obtained a legal opinion on a new version of Mindset 24 Global’s compensation plan one month before BehindMLM’s evaluation.

In July 2017, shortly after the final version of the Compensation Plan was completed… The defendants sought legal counsel on the plan’s legality from a well-known MLM attorney, who furnished them with a formal legal opinion dated July 21, 2017.

The legal opinion instructed Defendants, among other things, to make specific changes to Mindset 24 to function as a legitimate MLM firm rather than an unlawful pyramid scheme.

The legal opinion specifically supported a retail sales requirement in the Pay Plan, highlighting that genuine MLMs rely largely on considerable retail sales for compensation purposes, whereas pyramid schemes focus on recruiting and selling to other participants.

Indeed, the view identified areas where Mindset 24 ran the potential of becoming a pyramid scheme, citing the Compensation Plan as driving “purchase to qualify” behavior and aggressive recruiting of participants rather than retail consumers.

Furthermore, the view warned of the unsustainable nature of pyramid schemes.

McClane and Nash ignored the legal advice and created Mindset 24 Global using the retail absent model.

From mid-2017 to early 2018, Mindset 24 Global raised over a million dollars in funding, the majority of which was paid in bitcoin.

Mindset 24 Global went bankrupt in or around April 2018.

Because the funds from Series Package sales came from Participants who recruited new Participants, the Compensation Plan payouts were based purely on contributions from the subsequent Participants.

Defendants knew or were careless in not knowing, that they were conducting a classic Ponzi scheme by utilizing later investments to pay earlier Participants.

Defendants allegedly knew or were careless in not knowing, that Mindset 24 was an unlawful pyramid scheme rather than a genuine MLM.

McLane and Nash had both founded and run MLMs before Mindset 24. They had incorporated retail sales incentives in the first draft of the Compensation Plan, but they were eventually removed from the planned final form.

The total Mindset 24 Global investor losses, according to the SEC, are “at least $1,028,620.”

The great majority of those who took part lost money. 92% of the at least 735 Participants who purchased a Series Package lost money, with an average loss of $1,168.

If you asked the 8% of Mindset 24 Global affiliates who earned money, they’d tell you that Mindset 24 Global was a genuine business since they made money.

Despite pointing out that the vast majority of Ponzi investors lose money, BehindMLM is frequently confronted with the claim that a Ponzi scheme paying out implies credibility.

The SEC charges McLane and Nash on five counts.

issuing unregistered securities in violation of the Securities Act; engaging in securities fraud in violation of the Securities Act, and engaging in securities fraud in violation of the Exchange Act
The SEC sought a preliminary injunction against McLane and Nash as part of their August 31st, 2020 lawsuit.

As of October 2020, no ruling on the proposed injunction had been made.

Paul Nash requested an indefinite stay of proceedings on October 27th while he participated in “good faith settlement negotiations” with the SEC.

On October 30th, the court refused Nash’s motion.

According to a Joint Status Report issued on December 3rd;

Before the filing of the Complaint, the SEC and the Defendants attempted to negotiate an agreement but were unable to do so.

Furthermore, since the filing of the Complaint, the SEC and Nash have participated in additional settlement conversations but have yet to reach an agreement.

As the matter advances, the parties are ready to engage in future settlement negotiations in good faith.

Two court-ordered settlement sessions were held between March and May.

Then, according to an August 18th minute entry,

The idea of a settlement was brought up.

Following the court-mediated settlement meeting, the parties have not had any direct settlement negotiations.

No agreement had been reached as of October 21st. The parties are still working through different discovery concerns.

I’ve scheduled a hearing for the SEC’s Mindset 24 Global case. Stay tuned for more information as we continue to investigate the matter.

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