- Claim:
- That there was no way to tell in advance. It is the most common thing said after a passive-income vehicle collapses, usually by people with a real grievance, and this site has now published 21 autopsies against which it can be tested.
- Scope:
- Nine of the 21 autopsies on this site, read against their primary documents
- Share of a $22 million raise that reached actual mining, alleged
- 13%
- Median Amway total bonuses before expenses, 2023 records, alleged
- $139
- Franchisor's own all-59-studios average, first-party disclosure
- $315,850
- RAD annual losses in 2022 while marketing on profitability, alleged
- at least $31 million
- Finding:
- partly wrong, and the split matters more than the headline. Nine of the case files turn on the same four questions. In three of them the disqualifying number was already published, by the company, in a document a prospect was handed or could download. In the other six the question was askable in advance and the answer was not: it became public only when a regulator filed. So the four questions are a real screen, and for most of this docket they would have produced a refusal to answer rather than an answer, which is a weaker signal than the advice industry implies.
- Confidence:
- high on the documents, low on the counterfactual. Every figure below was re-read out of its primary document on 27 October 2026. What nobody can test is whether asking these questions would have changed any individual decision, and this post does not claim it would.
- Docket:
- Case 2:26-cv-03474-JNW
- Source:
- alleges
Inconclusive: the documents cannot settle the claim yet. What would change this verdict
Verdict: Inconclusive
The claim
“Nobody could have known” is a claim about information, and it is testable against a docket. Either the facts that later mattered were discoverable at the time or they were not.
We went back through the 21 autopsies on this site and asked a narrower question than “what went wrong”: which single piece of information, had the investor or recruit held it on day one, would have made the pitch fall apart. In nine cases there is a clean answer, and the nine answers collapse into four questions.
The four are not a checklist and they are not original. What is new here is that each one is tied to a specific case file and a specific primary document, so you can see what the answer looked like when it finally arrived.
The evidence
Question one: who sets the price of the thing you own?
If a vehicle sells you units and also tells you what they are worth, the valuation is marketing. Two case files turn on exactly this.
RAD Diversified sold shares in a real-estate fund. The SEC alleges the share price was set in-house, with the involvement of the chief executive’s brother, rather than by an independent appraisal, and that the fund raised approximately $152 million from more than 5,500 investors between November 2019 and March 2024. The same complaint says the company’s own internal financial records show annual losses of at least $31 million in 2022 and $22 million in 2023, over the period it was marketing on the basis of profitability. The matter is untried. On 23 October 2026 the SEC filed an unopposed motion to approve a consent judgment as to the entity alone; the individual defendants’ responses were due on 4 November 2026. Full case file: Real Estate Done For You.
Linqto sold special-purpose vehicles holding pre-IPO shares. The SEC’s complaint of 9 October 2026 states that “from 2021 to 2024, Liquidshares sold over $430 million of SPVs to thousands of retail investors located in the Northern District of California and throughout the United States, generating more than $160 million in total revenue”, and that the company’s “contemporaneous internal analyses showed that almost all its offerings were priced higher than fair value”. On the mechanics it is specific: “until late May 2023, Linqto personnel continued to set prices manually.” The Department of Justice separately alleges that the platform drew over $450 million from more than 13,000 customers on markups that in some cases exceeded 200%. William Sarris is charged and presumed innocent. Joseph Endoso pleaded guilty on 27 August 2026 to four counts arising from the same scheme. Full case file: Pre-IPO Access, $450 Million.
What a prospect could have established in advance, in both cases, is narrow and real: who performs the valuation, what their credentials are, and whether any party independent of the seller signs it. Neither the brother nor the manual pricing was public. The absence of a named independent appraiser was.
Question two: who can suspend your exit?
A yield is only a yield if you can leave. Two case files turn on a suspension.
Celsius paid interest on deposited cryptocurrency. The New York Attorney General’s complaint alleges the withdrawal freeze of 12 June 2022 and the bankruptcy filing of 13 July 2022, and alleges that in four of the six weeks before the freeze Celsius “paid more in interest to its EIA investors than it generated through investments of their cryptocurrency”. Alex Mashinsky pleaded guilty on 3 December 2024 to one count of commodities fraud and one count of securities fraud, and was sentenced to 144 months on 8 May 2025. Whether a judge has signed the separate New York civil settlement announced this month is something we could not verify today, and we are not asserting it either way. Full case file: The $35 Million Is Not in the Document.
RAD Diversified appears again. The SEC’s complaint states the fund froze redemptions on 2 February 2024, that the freeze had not been lifted, and that at least $3 million of redemption requests were outstanding.
This is the question with the best advance answer available anywhere on this docket, because the power to suspend is almost always written into the offering documents a prospect is given. It is a clause, not a secret. Reading it tells you who holds the switch and under what conditions, and in both of these cases the switch was held by the people whose own numbers were deteriorating.
Question three: where does the money paid out come from?
The original version of this question, as one of these case files itself poses it, asks whether audited financial statements show a profit consistent with the distribution being paid. We are dropping the word audited, because it would misdescribe this docket. Not one of the 21 autopsies turns on an audited statement. What they turn on is a flow of funds reconstructed afterwards by a regulator, which is not a document a prospect can request.
Mining Automatic sold crypto-mining contracts on a promise of recurring passive income. The SEC’s complaint alleges that of roughly $22 million raised from more than 380 investors, about 13% was paid to the third-party mining vendor, about $1.8 million went back to investors as returns, and the real mining generated about $1.1 million of revenue. Consent judgments were entered on 4 September 2026, with findings waived. Full case file: 13 Cents on the Dollar.
What the SEC alleges happened to roughly $22 million raised on a promise of recurring passive income
Ideal Financial sold notes on the stated basis that the returns were funded by borrowers’ loan payments. The Department of Justice states that “by at least 2019, Ideal was generating little to no revenue from lending and instead relied almost entirely on money raised from new investments”, and that Massachusetts had revoked the licences that made those loans in 2014. Barbara A. Hirshfield pleaded guilty on 3 September 2026 to five counts of wire fraud, with losses of approximately $10,930,940 to approximately 204 victims. Sentencing has not occurred. Full case file: The Licences That Made the Loans Were Revoked in 2014.
The licence revocation is the interesting item here, because it is the one fact in this group that was a matter of public record for eleven years before the notes stopped selling. A state licence register is checkable by anyone. That is the exception on this docket rather than the pattern.
Question four: who verified the track record?
A performance history is an assertion until someone outside the seller has checked it. Three enforcement matters and two first-party disclosures sit here, and they divide the docket cleanly.
Mining Automatic’s marketing cited annual returns of 51.5% for 2021 and 46.2% for 2022. The SEC’s complaint alleges the company “was not in operation in 2021 or 2022”, so there was no period from which those returns could have been calculated. A prospect could not have known the company’s incorporation date was later than its track record without checking a registry against the marketing, which is a fifteen-minute job and almost nobody does it.
Amway is the sharpest pair of numbers on the docket. The FTC and the State of Washington allege in a complaint filed on 17 September 2026 that Amway-approved recruiting presentations put an Independent Business Owner’s earnings at about $40,000 a year, while Amway’s own 2023 records showed median total bonuses before expenses of $139, with fewer than 1,600 IBOs out of more than 241,000 reaching $40,000. A stipulated order was signed and entered on 13 October 2026, in Case 2:26-cv-03474-JNW. Full case file: The Training Promised $40,000 a Year.
The earnings figure the complaint says recruiting presentations used, against the median in the company's own 2023 records
Premier Martial Arts is the case where the answer was handed to the prospect. The FTC’s complaint reproduces one table from the franchisor’s own 2022 franchise disclosure document containing both $548,345, the average for the top 15 studios, and $315,850, the average for all 59 in the same table. What the FTC alleges is the use of the first figure on the homepage as the average, with the qualifier in a footnote. The proposed orders remain unsigned and we found no record of entry. Full case file: The Homepage Said $548,345.
And two companies answered this question in public, correctly, before anyone joined. PlanNet Marketing publishes an income disclosure, and read against the fee line on the same page the average representative in the largest rank paid the company more than the company paid them. Botanic’s own income disclosure statement says it lacks the operating history to calculate typical earnings, expenses or profits, while its compensation plan advertises rank bonuses from $500 to $50,000. Both documents are accurate and neither is hidden. Full case files: PlanNet Calls Its Own Disclosure a Marketing Tool and The Income Disclosure Statement That Discloses It Has No Income Data.
What the evidence supports and does not
It supports the claim that four questions recur. Nine of 21 case files turn on one of them, and in every one of those nine the question is answerable in principle from a document rather than from a judgement call about character or plausibility.
It supports the much narrower claim that three of the nine were catchable at the time by a prospect with no special access: Premier Martial Arts, PlanNet and Botanic all published the disqualifying material themselves. In those three, “nobody could have known” is simply false.
It does not support the claim that the other six were catchable. In RAD, Linqto, Celsius, Mining Automatic, Ideal Financial and Amway, the figure that settles the question came out of an investigation. A prospect asking who sets the share price would have been told something; the complaint’s account of who actually set it arrived years later. The honest version of the lesson is about the response to the question rather than its answer: a seller who will not name an independent valuer, will not show the exit clause, or will not say where distributions originate has told you something, and that is a weaker instrument than a number.
It does not support any claim about outcomes. Six of the nine matters are untried, consented to without findings, unsigned, or involve no enforcement action at all. Where a court has acted, we say so.
And it says nothing about the 12 case files not discussed here. They were excluded because they turn on other things, not because they contradict this.
Cause of death
The pitches on this docket did not usually die of a lie about returns. They died at the point where one party controlled both sides of a number: the valuation and the sale, the redemption right and the liquidity, the distribution and the record of what funded it, the track record and its verification.
Each of the four questions is a test for that single structural condition. They are not four risks. They are one risk with four places to look for it.
What would change this verdict
A fourth first-party case would strengthen it. If the next few autopsies keep finding the disqualifying number already published by the company, the ratio of three in nine moves and the practical advice gets stronger.
A counterexample would weaken it: a case file where all four questions were answered satisfactorily, by independent parties, in advance, and the vehicle failed anyway. We have not published one. Nothing on this docket rules it out, and a method that cannot fail is not a method.
The most useful thing anyone could add is a tested denominator. We can say what nine failures had in common. We cannot say how many vehicles answered these questions well and worked, because nobody collects that, and without it the four questions remain a screen of unknown precision rather than a measured one.
Frequently asked questions
What are the four questions?
Who sets the price of the thing you own, who can suspend your exit, where the money paid out comes from, and who verified the track record. Each one is tied in the post to specific case files and primary documents.
Could investors have known in advance?
Partly. In three of the nine case files the disqualifying number was already published in a document a prospect was handed or could download. In the other six the question was askable but the answer only became public when a regulator filed.
Is any of this a new allegation?
No. The post says nothing in it is a new allegation and most of it is untested. Of the nine matters, none has gone to trial, three rest on guilty pleas and two involve no enforcement action at all.
Which case files involve no enforcement action?
Two of the nine, PlanNet Marketing and Botanic, because the companies published the numbers themselves. Premier Martial Arts also published its disqualifying figure in its own disclosure document, but the FTC has filed a complaint over how its homepage used that figure.
Does the post claim these questions would have changed anyone's decision?
No. The post says its confidence is high on the documents and low on the counterfactual, and it does not claim that asking the questions would have changed any individual decision.
Sources
SEC, Complaint, SEC v. RAD Diversified REIT, Inc., Brandon Mendenhall, Amy Vaughn, No. 8:26-cv-02186 (M.D. Fla.), filed 29 July 2026, comp26596.pdf, for the in-house share pricing, the approximately $152 million from more than 5,500 investors between November 2019 and March 2024, the internal records showing annual losses of at least $31 million in 2022 and $22 million in 2023, and the redemption freeze of 2 February 2024 with at least $3 million outstanding.
SEC, Complaint against William Sarris and Joseph Endoso, filed 9 October 2026, comp26672.pdf, for the over $430 million of SPVs sold from 2021 to 2024, the more than $160 million in total revenue, the internal analyses on pricing above fair value, and the manual price-setting until late May 2023.
Department of Justice, U.S. Attorney’s Office for the Southern District of New York, press release 26-250, 2 September 2026, for the over $450 million drawn from more than 13,000 customers, the markups in some cases exceeding 200%, Sarris being charged, and Endoso’s guilty plea of 27 August 2026.
New York Attorney General, Complaint, The People of the State of New York v. Alex Mashinsky, filed 5 January 2023, mashinsky_complaint.pdf, for the 12 June 2022 withdrawal freeze, the 13 July 2022 bankruptcy filing, and the interest-exceeding-returns allegation covering four of the six weeks before the freeze.
Department of Justice, U.S. Attorney’s Office for the Southern District of New York, press release of 3 December 2024, for Mashinsky’s guilty plea to one count of commodities fraud and one count of securities fraud, and press release 25-109, 8 May 2025, for the sentence of 12 years.
SEC, Complaint, SEC v. Zan Shaikh and Bright Vision Distribution LLC d/b/a Mining Automatic, No. 1:26-cv-13301 (D. Mass.), filed 20 July 2026, comp26590.pdf, for the roughly $22 million raised from more than 380 investors, the about 13% paid to the mining vendor, the about $1.8 million paid out as returns, the about $1.1 million of mining revenue, the marketed annual returns of 51.5% for 2021 and 46.2% for 2022, and the allegation that the company was not in operation in 2021 or 2022.
Department of Justice, U.S. Attorney’s Office for the District of Massachusetts, press release of 3 September 2026, for the guilty plea to five counts of wire fraud, the little-to-no lending revenue by at least 2019, the 2014 licence revocation, and losses of approximately $10,930,940 to approximately 204 victims.
FTC and the State of Washington, Complaint, No. 2:26-cv-03474 (W.D. Wash.), filed 17 September 2026, Amway-Complaint.pdf, for the about $40,000 a year in recruiting presentations, the median total bonuses before expenses of $139 in Amway’s own 2023 records, and the fewer than 1,600 IBOs out of more than 241,000 reaching $40,000; and the entered stipulated order, signed 13 October 2026.
FTC, Complaint, FTC v. Premier Franchising Group, LLC and Franchise Fastlane, LLC, No. 3:26-cv-00487 (E.D. Tenn.), filed 5 October 2026, PFG-Complaint.pdf, for the $548,345 top-15 average and the $315,850 all-59 average in one table of the franchisor’s own 2022 disclosure document.
PlanNet Marketing, Income Disclosure, and Botanic, Income Disclosure Statement and Compensation Plan, for the three first-party disclosures. All three were published by the companies themselves and were available before anyone joined.
Correction
Correction, 12 November 2026: an earlier version described Alex Mashinsky’s conviction as the outcome of a trial, and the tally above counted his case as adjudicated after trial-level proceedings. He pleaded guilty on 3 December 2024, so none of the nine matters has gone to trial and three rest on guilty pleas. The same tally said three matters involve no enforcement action; the correct number is two, because the FTC has filed a complaint against the franchisor of Premier Martial Arts. The tally above has been updated.