“Defendants fraudulently sold investment contracts for a diagnostic medical device, deceptively claiming that the device was manufactured by one or more of the Biogenic Entities and would be placed in doctors’ offices to generate substantial ‘passive income’ for investors.”

💡 This shows defendants built the entire fraud on a fundamental lie about who made the devices and how they would generate returns.

“Defendants lied about the number of devices they had placed in doctors’ offices. Defendants claimed to have over 1,400 devices earning money for existing investors when, in reality, they had purchased fewer than 70 devices.”

💡 The defendants inflated device numbers by 2,000 percent to create false legitimacy and attract new investors.

“Doctors seldom, if ever, used the devices, often storing them or returning them to the Defendants. No investor ever received money from the use of a device.”

💡 This proves the entire business model was fiction and no legitimate revenue was ever generated from device usage.

“Julie Youssef or Zach Cargnino created phony usage reports and billing invoices in the name of medical providers purporting to show that the devices were being used and/or that investors would soon receive usage revenues.”

💡 Defendants systematically manufactured fake financial documents to maintain the illusion of a functioning business.

“Zach Cargnino or Susann Cargnino made usage revenue payments to investors using money from new investors. In at least one instance, an investor received usage revenue payments from money the investor had paid to purchase additional investment contracts.”

💡 This describes textbook Ponzi scheme mechanics where investors unknowingly funded their own fake returns.

“Defendants used investor proceeds to pay for residential properties, jet skis, jewelry, vacation rentals, home improvements, and to extinguish nearly $100,000 in pre-existing bankruptcy debt, among other things.”

💡 While investors lost millions, defendants spent stolen funds on luxury items and personal debt relief.

“In or around June 2018, Susann Cargnino used approximately $675,000 of investor proceeds to purchase residential property located at 9182 Cherry Point Road, Manitou Beach, Michigan. That property was later re-titled to Zach Cargnino.”

💡 This shows how defendants converted stolen investor money into tangible real estate assets and shuffled ownership.

“When public allegations of misconduct or fraud surfaced, Zach Cargnino and his team would change the name of the operative Biogenic entity and all email addresses associated with the Biogenic Entities.”

💡 Defendants systematically obscured their identities and corporate connections to evade accountability and continue defrauding new victims.

“Gary Youssef went by ‘Gary Joseph,’ Julie Youssef went by ‘Julie Joseph’ or ‘Julie Ann,’ and Zachari Alan Cargnino went by ‘Zach Alan.’ Susann Cargnino used her middle and maiden names, ‘Susann Walker’ or ‘Ashley Walker,’ on company filings and other public documents.”

💡 The coordinated use of pseudonyms across multiple individuals shows a deliberate conspiracy to hide true identities from investors and regulators.

“No registration statement has been filed with the Commission or is in effect with respect to the offers and sales of investment contracts described herein, and no exemption from registration applies.”

💡 Defendants operated completely outside securities law, denying investors the protections that registration provides.

“From in or around June 2017 through at least March 2021, Defendants defrauded more than 55 investors of approximately $6.8 million through a scheme involving the fraudulent offer and sale of investment contracts.”

💡 This quantifies the massive scale of harm inflicted on dozens of victims over nearly four years of fraud.

“Defendants promised investors that they would receive $250 each time the device was used by a doctor and projected that investors would earn over $10,000 per month in ‘totally passive income.'”

💡 These specific dollar promises induced investors to hand over $150,000 per device based on fabricated income projections.

“On or about March 26, 2021, after the Defendants had been served with Commission subpoenas, the 9194 Cherry Point Rd. property was listed for sale. On or about May 26, 2021, that property was sold for $500,000.”

💡 Defendants immediately moved to liquidate fraud-purchased assets once they knew regulators were investigating.

“Defendants claimed to offer ‘accounting services and support’ for which they would charge a monthly ‘service fee.’ However, Defendants did not establish separate checking accounts for collecting revenues, and investors were never billed for the service fee.”

💡 Even the promised support services were entirely fictitious, showing the fraud extended to every aspect of the business model.

“The Biogenic Entities did not manufacture any devices. Instead, they acquired devices from a third party at a fraction of the roughly $150,000 paid by investors for each device.”

💡 Defendants charged investors $150,000 for devices they bought cheaply from suppliers, pocketing the massive difference as pure profit from deception.