Michael Faust, a figure repeatedly linked to fraudulent schemes, has threatened legal action against BusinessForHome and its owner, Ted Nuyten. The threat follows BusinessForHome’s publication of an article scrutinizing Faust’s latest venture, Silverstar Live. Faust’s statement, posted on the article’s Facebook feed, directly warned Nuyten of an impending lawsuit.
The BusinessForHome article appeared shortly after BehindMLM published its own assessment of Silverstar Live. Reports indicate the BusinessForHome piece closely summarized the points raised in the BehindMLM review, though BehindMLM received no credit. A central concern with Silverstar Live’s multi-level marketing structure is its offering of an unregistered security to US residents. Participants pay a fee for access to a forex auto-trading bot that generates passive returns.
Details about the bot’s operation and an audited trading history are conspicuously absent. These omissions are considered secondary violations of securities fraud statutes. Faust contends that Silverstar Live does not offer a security because the company itself is not trading on behalf of participants. Instead, he claims users license the software and conduct their own trading within their personal brokerage accounts.
This argument fails to address the core issue. The passive nature of the returns generated for customers and affiliates is what classifies Silverstar Live’s investment opportunity as a security, regardless of the internal mechanics of how those returns are produced. The method used to generate passive income is secondary to the fact that passive income is being offered.
Faust’s legal threat is notable given his own history with securities fraud. He was a prominent investor in the USI-Tech Ponzi scheme, operating under the "Digital Tycoon" branding. USI-Tech initially presented itself as a forex trading platform before pivoting to cryptocurrency, all while operating as a classic Ponzi scheme that used new investors' money to pay earlier participants. USI-Tech collapsed in December 2017 following a cease and desist order for securities fraud. Neither USI-Tech’s principals nor its top investors like Faust have faced prosecution to date.
Following the USI-Tech collapse, Faust directed his Digital Tycoon network to Ormeus Global, another trading bot Ponzi scheme. Ormeus Global has failed twice since its inception and now operates as IQ Chain. The Digital Tycoon brand has since been repurposed to promote Silverstar Live. Earlier promotional activities linked to Faust include Wenyard, which operated a Ponzi scheme five years ago using its internal WFO virtual currency.
SEC guidance on investment contracts, established in the Howey test, defines an investment contract as a transaction where a person invests money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. Silverstar Live’s model, offering passive returns from a trading bot managed by the company, fits this definition, irrespective of Faust’s claims about licensing software. Those seeking to understand their rights concerning unregistered securities or investment fraud can consult the U.S. Securities and Exchange Commission's investor education resources.