A U.S. citizen residing in Canada has been indicted for allegedly orchestrating a multimillion-dollar pyramid scheme that deceived hundreds of victims across the country, the U.S. Department of Justice announced yesterday. The defendant, Alex Dee, also known as Alex Dowlatshahi, 49, of Maple Ridge, British Columbia, is accused of running the fraudulent operation under the name 8 Figure Dream Lifestyle LLC (8FDL). His co-conspirators, who participated in the scheme, also pleaded guilty to charges related to the scam, which operated from 2017 to 2019.
In 2019, the Federal Trade Commission (FTC) sued 8 Figure Dream Lifestyle LLC and nine co-defendants for operating fraudulent money-making schemes. The defendants used illegal robocalls, live calls, text messages, social media, and events to promote their programs, falsely claiming that consumers could earn significant income. In reality, most consumers lost their investments, often incurring large debts. As part of a settlement in 2023, the defendants agreed to cease selling business coaching or money-making programs and were banned from using robocalls for most marketing purposes. Additionally, three defendants were barred from selling investment opportunities. The FTC has refunded over $483 million to consumers in 2020.
According to court documents unsealed this week, Dee, along with his co-founders Brian Kaplan, 52, of Fort Collins, Colorado, and Jerrold Maurer, 58, of North Bellmore, New York, ran 8FDL as a pyramid scheme designed to prey on unsuspecting individuals seeking to make money through online marketing.
From January 2017 through June 2019, Dee and his associates are accused of promoting 8FDL as a legitimate online marketing business that promised high earnings for members who joined. The business model was built around the sale of “memberships” to new participants, with the promise of significant financial returns. Members could earn money by recruiting others into the program and selling memberships. The more recruits they signed up, the higher their earnings—creating a structure typical of pyramid schemes.
The scheme’s members, who paid fees ranging from $2,000 to $21,000 for their memberships, were encouraged to recruit new members in exchange for a portion of the fees paid by the recruits. However, the indictment alleges that the bulk of the money generated from these sales did not come from actual products or services, but rather from the ongoing cycle of recruitment. In other words, money flowed upwards to those at the top of the pyramid, while the vast majority of participants saw little or no financial return.
False Advertising and Misleading Claims
To attract victims, Dee, Kaplan, Maurer, and others used a variety of deceptive tactics, including mass marketing emails, robocalls, social media posts, and webinars. According to the indictment, the marketing materials made false promises of easy wealth and success. For example, potential recruits were told that they could earn between $5,000 and $10,000 within 10 to 14 days of joining the program, with claims that most new members were making two to three sales within their first 30 to 45 days.
In reality, however, the vast majority of people who joined 8FDL did not make money. The indictment states that a very small number of participants ever made a single sale, and even fewer earned the amounts touted in the promotional materials.
Moreover, the marketing materials failed to disclose the substantial ongoing costs required to remain part of the scheme. These additional expenses included purchasing lead lists, automated dialing services, and marketing copy, which could add thousands of dollars to the initial membership fees. Participants were also required to pay an administrative fee, ranging from $395 to $1,495, depending on their membership level.
The Downfall of 8FDL and the Creation of OEA
By late 2018, as complaints about 8FDL mounted and its reputation became increasingly tarnished, Dee and his co-conspirators rebranded the operation as “OEA.” Despite the change in name, the structure and deceptive practices of the business remained largely the same. Kaplan and others involved in the scheme were accused of continuing to operate OEA under the same pyramid model until it ceased operations in mid-2019.
The indictment alleges that the shift from 8FDL to OEA was an attempt to evade the negative publicity and growing scrutiny surrounding the original scheme. The conspirators filed corporate documents to formally establish OEA, but ultimately, the new entity also faced the same allegations of fraud and deceit.
Alex Dee was arrested on Tuesday, December 12, 2023, at the U.S.-Canada border while attempting to enter Washington state from British Columbia. He appeared before a magistrate judge in the Western District of Washington on Wednesday. Dee faces serious charges, including one count of conspiracy to commit wire fraud and four counts of wire fraud. If convicted, he could face up to 20 years in prison on each count.
Brian Kaplan and Jerrold Maurer, both of whom were co-founders of 8FDL and later pleaded guilty to their roles in the scheme, also face legal consequences. Kaplan and Maurer are each charged with one count of conspiracy to commit wire fraud, and each faces a maximum penalty of five years in prison. Sentencing for both defendants is pending.
The 8FDL pyramid scheme targeted individuals looking to make money through online marketing, preying on their hopes of financial independence. By using fraudulent advertising and high-pressure sales tactics, the conspirators amassed millions of dollars from victims, while leaving the vast majority of participants empty-handed.
In addition to the criminal charges, victims of the scheme may be eligible to seek restitution as part of the broader efforts to address the damage caused by this fraudulent enterprise.
A Cautionary Tale for Investors
The 8FDL scheme relied on an old formula—promising huge returns with little effort—coupled with a marketing blitz designed to mislead and manipulate. The Justice Department’s ongoing investigation into the case highlights the government’s commitment to cracking down on fraudulent schemes that prey on vulnerable individuals seeking legitimate ways to improve their financial futures.
As authorities continue to pursue justice for the victims, the case underscores the importance of recognizing the red flags of pyramid schemes, including unrealistic promises of wealth, heavy recruitment-focused business models, and hidden costs.
The investigation into the 8FDL scam is still ongoing, and authorities urge anyone who believes they may have been a victim to come forward.
