 |
wwsnforums.com
Official Forum of the WWSN
|
| View previous topic :: View next topic |
| Author |
Message |
Ekid
Inquisitor
Joined: 11 Nov 2005
Posts: 8012
|
 Posted: Mon Oct 15, 2007 5:49 am Post subject: |
 |
|
| Yes...once again Staff at EBLing failed to pay attention to the SMALL details..and as you can see the canoes have been taken ..but they forgot the paddles..hence they are up **** creek without a paddle |
|
| Back to top |
|
 |
Ekid
Inquisitor
Joined: 11 Nov 2005
Posts: 8012
|
| Posted: Mon Oct 15, 2007 8:24 am Post subject: |
|
|
| Craig Jolly...does he have a JOB...and what was his last JOB ? |
|
| Back to top |
|
|
Phoenix
Inquisitor
Joined: 12 Dec 2005
Posts: 792
|
| Posted: Mon Oct 15, 2007 2:37 pm Post subject: |
|
|
| dairy wrote: | | You won't here from me anymore. |
You're the second scammer in the last few days that's said that, allinvain being the first one.
I say good riddance to you! |
|
| Back to top |
|
|
Phoenix
Inquisitor
Joined: 12 Dec 2005
Posts: 792
|
| Posted: Mon Oct 15, 2007 2:41 pm Post subject: |
|
|
EBL now only accept funds by cheque and bankwire. Isn't accepting cheques via the mail, mail fraud.
Would the US postal service be interested in EBL ... Abe? |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Tue Oct 16, 2007 3:43 pm Post subject: |
|
|
| Phoenix wrote: | EBL now only accept funds by cheque and bankwire. Isn't accepting cheques via the mail, mail fraud.
Would the US postal service be interested in EBL ... Abe? |
Sure it is and money laundering too. Here are a few few snippets that should apply to both EBL and Hot Pepper.
| Quote: | SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 231, 241, 271, 276
(Release Nos. 33-7516, 34-39779, IA-1710, IC-23071)
International Series Release No. 1125
STATEMENT OF THE COMMISSION REGARDING USE OF INTERNET WEB SITES TO OFFER SECURITIES, SOLICIT SECURITIES TRANSACTIONS OR ADVERTISE INVESTMENT SERVICES OFFSHORE
AGENCY: Securities and Exchange Commission
ACTION: Interpretation
SUMMARY: The Securities and Exchange Commission is publishing its views on the application of the registration obligations under the U.S. federal securities laws to the use of Internet Web sites to disseminate offering and solicitation materials for offshore sales of securities and investment services.
EFFECTIVE DATE: March 23, 1998
FOR FURTHER INFORMATION CONTACT: Paul Dudek, Chief, and Rani Doyle, Attorney, Office of International Corporate Finance at 202-942-2990 (with respect to Securities Act issues); Paula Jenson, Deputy Chief Counsel, Division of Market Regulation, at 202-942-0073 (with respect to broker-dealer registration issues), Elizabeth King, Senior Special Counsel, Division of Market Regulation, at 202-942-0140 (with respect to exchange registration issues); and Karrie McMillan, Assistant Chief Counsel, Sarah A. Wagman, Special Counsel, and Brendan C. Fox, Attorney, Division of Investment Management, at 202-942-0660 (with respect to matters relating to investment companies and investment advisers).
This interpretation does not address the anti-fraud and anti-manipulation provisions of the securities laws, which will continue to reach all Internet activities that satisfy the relevant jurisdictional tests. 5 Even in the absence of sales in the United States, we will take appropriate enforcement action whenever we believe that fraudulent or manipulative Internet activities have originated in the United States or placed U.S. investors at risk. Further, we are not addressing the circumstances under which a U.S. court could exercise personal jurisdiction over a non-U.S. person with respect to that person’s offshore Internet offer.
A. The Global Reach of the Internet
The development of the Internet presents numerous opportunities and benefits for consumers and investors throughout the world. It also presents significant challenges for regulators charged with protecting consumers and investors. Regulators in many countries are attempting to administer their respective laws to preserve important protections provided by their regulatory schemes without stifling the Internet’s vast communications potential. 6 We share this goal in our administration of the U.S. securities laws. 7
B. Regulation of Offers
Many registration requirements under the U.S. securities laws are triggered when an offer of securities or financial services, such as brokerage or investment advisory services, is made to the general public.
Under the Securities Act, absent an exemption, an issuer that offers or sells securities in the United States through use of the mails or other means of interstate commerce must register the offering with the Commission. 10 An offering of securities may be exempt from registration if it is conducted as a "private placement," without any general solicitation of investors. 11
Under the Investment Company Act, a foreign investment company may not use the mails or other means of interstate commerce to publicly offer its securities in the United States or to U.S. persons unless the investment company receives an order from the Commission permitting it to register under the Investment Company Act. 12 A foreign investment company may, however, make a private offer of its securities in the United States or to U.S. persons in reliance on one of the exclusions from the definition of "investment company" under the Investment Company Act. 13
Under the Advisers Act, an adviser is prohibited from using the mails or other means of interstate commerce in connection with its business as an investment adviser, unless the adviser is registered with the Commission, or is exempted or excluded from the requirement to register. 14
Under the Exchange Act, a broker or dealer generally must register with the Commission if it uses the mails or any means of interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale of, any security. 15
Under the Exchange Act, an exchange generally must register with the Commission if it uses the mails or any means of interstate commerce for the purpose of using its facilities to effect any transaction in a security or to report any such transaction. 16
The posting of information on a Web site may constitute an offer of securities or investment services for purposes of the U.S. securities laws. 17 Our discussion of these issues will proceed on the assumption that the Web site contains information that constitutes an "offer" of securities or investment services under the U.S. securities laws. 18 Because anyone who has access to the Internet can obtain access to a Web site unless the Web site sponsor adopts special procedures to restrict access, the pertinent legal issue is whether those Web site postings are offers in the United States that must be registered.
III. OFFSHORE OFFERS AND SOLICITATIONS ON THE INTERNET
A. General Approach
Some may argue that regulators could best protect investors by requiring registration or licensing for any Internet offer of securities or investment services that their residents could access. As a practical matter, however, the adoption of such an approach by securities regulators could preclude some of the most promising Internet applications by investors, issuers, and financial service providers.
The regulation of offers is a fundamental element of federal and some U.S. state securities regulatory schemes. Absent the transaction of business in the United States or with U.S. persons, however, our interest in regulating solicitation activity is less compelling. 19 We believe that our investor protection concerns are best addressed through the implementation by issuers and financial service providers of precautionary measures that are reasonably designed to ensure that offshore Internet offers are not targeted to persons in the United States or to U.S. persons. 20
B. Procedures Reasonably Designed to Avoid Targeting the United States
When offerors implement adequate measures to prevent U.S. persons from participating in an offshore Internet offer, we would not view the offer as targeted at the United States and thus would not treat it as occurring in the United States for registration purposes. What constitutes adequate measures will depend on all the facts and circumstances of any particular situation. We generally would not consider an offshore Internet offer made by a non-U.S. offeror as targeted at the United States, however, if:
The Web site includes a prominent disclaimer making it clear that the offer is directed only to countries other than the United States. For example, the Web site could state that the securities or services are not being offered in the United States or to U.S. persons, or it could specify those jurisdictions (other than the United States) in which the offer is being made; 21 and
The Web site offeror implements procedures that are reasonably designed to guard against sales to U.S. persons in the offshore offering. For example, the offeror could ascertain the purchaser’s residence by obtaining such information as mailing addresses or telephone numbers (or area code) prior to the sale. This measure will allow the offeror to avoid sending or delivering securities, offering materials, services or products to a person at a U.S. address or telephone number.
These procedures are not exclusive; other procedures that suffice to guard against sales to U.S. persons also can be used to demonstrate that the offer is not targeted at the United States. Regardless of the precautions adopted, however, we would view solicitations that appear by their content to be targeted at U.S. persons as made in the United States. Examples of this type of solicitation include purportedly offshore offers that emphasize the investor’s ability to avoid U.S. income taxes on the investments. 22 We are concerned that the advice that we provide to assist those who attempt to comply with both the letter and spirit of the securities laws will be used by others as a pretext to violate those laws. Sham offshore offerings or procedures, or other schemes will not allow issuers or promoters to escape their registration obligations under the U.S. securities laws.
C. Effect of Attempts by U.S. Persons to Evade Restrictions
We recognize that U.S. persons may respond falsely to residence questions, disguise their country of residence by using non-resident addresses, or use other devices, such as offshore nominees, in order to participate in offshore offerings of securities or investment services. Thus, even if the foreign market participant has taken measures reasonably designed to guard against sales to U.S. persons, a U.S. person nevertheless could circumvent those measures.
In our view, if a U.S. person purchases securities or investment services notwithstanding adequate procedures reasonably designed to prevent the purchase, we would not view the Internet offer after the fact as having been targeted at the United States, absent indications that would put the issuer on notice that the purchaser was a U.S. person. This information might include (but is not limited to): receipt of payment drawn on a U.S. bank; provision of a U.S. taxpayer identification or social security number; or, statements by the purchaser indicating that, notwithstanding a foreign address, he or she is a U.S. resident. Confronted with such information, we would expect offerors to take steps to verify that the purchaser is not a U.S. person before selling to that person. 23 Additionally, if despite its use of measures that appear to be reasonably designed to prevent sales to U.S. persons, the offeror discovers that it has sold to U.S. persons, it may need to evaluate whether other measures may be necessary to provide reasonable assurance against future sales to U.S. persons.
D. Third-Party Web Services
An issuer, underwriter or other type of offshore Internet offeror may seek to have its offering materials posted on a third-party’s Web site. In that event, if the offeror uses a third-party Web service that employs at least the same level of precautions against sales to U.S. persons as would be adequate for the offshore Internet offeror to employ, we would not view the third-party’s Web site as an offer that is targeted to the United States. 24
When an offeror, or those acting on its behalf, uses a third-party’s Web site to generate interest in the Internet offer, more stringent precautions by the offeror than those outlined in Section III.B. may be warranted. These precautions may include limiting access to its Internet offering materials to persons who can demonstrate that they are not U.S. persons. For example, additional precautions may be called for when the Internet offeror:
Posts offering or solicitation material or otherwise causes the offer to be listed on an investment-oriented Web site that has a significant number of U.S. clients or subscribers, or where U.S. investors could be expected to search for information about investment opportunities or services; or
Arranges for direct or indirect hyperlinks from a third-party investment- oriented page to its own Web page containing the offering material.
IV. ADDITIONAL ISSUES UNDER THE SECURITIES ACT
Our Securities Act analysis assumes that the information posted on a Web site would, were we to deem it to occur in the United States, constitute an "offer" within the meaning of Section 5(c) of the Securities Act and Regulation S, a "public offering" prohibited under Section 4(2) of the Act, a "general solicitation or general advertising" prohibited under Rule 502(c) of Regulation D, 25 and a "directed selling effort" prohibited under Regulation S. 26 The focus of our analysis, then, is under what circumstances should we deem offshore Internet offers to which U.S. persons can gain access not to occur in the United States.
A. Offshore Offerings by Foreign Issuers
1. Regulation S
When a foreign issuer is making an unregistered offshore Internet offer and does not plan to sell securities in the United States as part of the offering, it should implement the general measures outlined in Section III.B. to avoid targeting the United States. Assuming that the offering is made pursuant to Regulation S, the offering must comply with all of the applicable requirements under that regulation, including the requirement that all offers and sales be made in "offshore transactions." 27
2. U.S. Exempt Component
Foreign issuers commonly make offshore offerings concurrently with private offerings to U.S. institutional buyers. An offering exempt under Section 4(2) of the Securities Act may not involve "any public offering." Regulation D specifically prohibits the offer or sale of securities through a "general solicitation or general advertising." Publicly accessible Web site postings may not be used as a means to locate investors to participate in a pending or imminent U.S. offering relying on those provisions. If a Web site posting would be inappropriate for a U.S. private placement, an issuer should not attempt to accomplish the same result indirectly through the posting of an offshore Internet offer.
In addition to implementing the type of precautionary measures previously discussed, foreign issuers could implement other procedures to prevent their offshore Internet offers from being used to solicit participants for their U.S.-based exempt offerings, including:
The Internet offeror could allow unrestricted access to its offshore Internet offering materials, but not permit persons responding to the offshore Internet offering to participate in its exempt U.S. offering, even if otherwise qualified to do so. In that situation, the offeror would keep a record of all persons responding over the Internet and all persons who otherwise indicate that they are responding to the offshore Internet offering; 28 or
The Web site offeror could ensure that access to the posted offering materials is limited to those viewers who first provide their residence information and, in doing so, do not provide information such as a U.S. area code or address that indicates that they are a U.S. person. 29 Thus, U.S. persons could obtain access only by misrepresenting their residence information. 30
Read it all here. http://www.sec.gov:80/rules/interp/33-7516.htm |
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Tue Oct 16, 2007 4:10 pm Post subject: |
|
|
You will also notice that some of the regulations could and do apply to third party websites that specificially offer Private Placement Programs, without complying with this regulation.
Foreign issuers commonly make offshore offerings concurrently with private offerings to U.S. institutional buyers. An offering exempt under Section 4(2) of the Securities Act may not involve "any public offering." Regulation D specifically prohibits the offer or sale of securities through a "general solicitation or general advertising." Publicly accessible Web site postings may not be used as a means to locate investors to participate in a pending or imminent U.S. offering relying on those provisions. If a Web site posting would be inappropriate for a U.S. private placement, an issuer should not attempt to accomplish the same result indirectly through the posting of an offshore Internet offer.
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
littleroundman
Inquisitor
Joined: 16 Nov 2005
Posts: 164
|
| Posted: Tue Oct 16, 2007 4:15 pm Post subject: |
|
|
You'd have to sorta feel sorry, in a perverse sort of way, for young "dairy"
He must be shi****g bricks right about now.
Of course he's young and inexperienced and he could possibly attempt to claim he's had a snow job par excellence done on him by a couple of old hands in Cappy Picard and Jolly Craig.
Or he could stay close to type and use the old "who cares what the SEC or USPS says, I'm in Victoria and their crappy rules don't apply here"
Whatever he's thinking, I'll bet the word "fear" has a particularly personal ring to it at the minute.
_________________
The only thing necessary for the triumph of evil is for good men to do nothing. |
|
| Back to top |
|
|
littleroundman
Inquisitor
Joined: 16 Nov 2005
Posts: 164
|
| Posted: Tue Oct 16, 2007 4:22 pm Post subject: |
|
|
Speaking of the 3 Stooges, Cappy, dairy and Jolly, isn't that Google cache an excellent service ???
Learn to use it right, and almost any deleted page becomes instantly accessible again.
Listening to that Jolly Craig interview again tonight made me wonder which one of the Australian EBL'ers was playing the straight man as Jollys' "impartial interviewer"
Maybe EBL should run a guessing game with first prize like a free "loan" and, as second prize: 2 free "loans"
_________________
The only thing necessary for the triumph of evil is for good men to do nothing. |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Tue Oct 16, 2007 4:42 pm Post subject: |
|
|
| Abe wrote: | You will also notice that some of the regulations could and do apply to third party websites that specifically offer Private Placement Programs, without complying with this regulation.
Foreign issuers commonly make offshore offerings concurrently with private offerings to U.S. institutional buyers. An offering exempt under Section 4(2) of the Securities Act may not involve "any public offering." Regulation D specifically prohibits the offer or sale of securities through a "general solicitation or general advertising." Publicly accessible Web site postings may not be used as a means to locate investors to participate in a pending or imminent U.S. offering relying on those provisions. If a Web site posting would be inappropriate for a U.S. private placement, an issuer should not attempt to accomplish the same result indirectly through the posting of an offshore Internet offer. |
Just substitute the current schemer's name and it all works out the same.
| Quote: | An offering of securities may be exempt from registration if it is conducted as a "private placement" without any general solicitation of investors [Section 4(2) of the Securities Act, 15 U.S.C. 77d(2); Regulation D (17 CFR 230.501-508)]. However, publicly accessible website postings may not be used as a means of locating investors to participate in such schemes. For example (although related things apply to other 'schemes') it is demonstrably true that PIPS, Reality Millions and many other "prime bank schemes" members have been encouraged by people like Marsden and Midas themselves to use various website facilities to locate new investors, with no restriction whatsoever on recruitment in the USA. As such, it is difficult to imagine that the "private placement" argument would convince the SEC (or State securities commissions) that no registration is required. A number of very recent Enforcement Actions at State level confirm this. In order to rely instead on Section 3(c)(1), a fund must meet the following two requirements: (i) it must have no more than 100 beneficial owners of its securities or interests (the "100 investor test"), and (ii) it must not be making or proposing to make a "public offering" of its securities or interests. This is unlikely to sit well with the use of publicly accessible websites to locate potential investors. A fund relying on Section 3(c)(1) must continuously monitor the number of beneficial owners of its securities to ensure that it meets the 100 investor test. A fund issuing its securities through a private placement in reliance on Section 3(c)(7) does not have to meet the 100 investor test of Section 3(c)(1) if its beneficial owners are limited exclusively to persons, who at the time of their acquisition of such securities, meet the financial criteria of a "qualified purchaser". Simply CALLING someone 'qualified' (as at PIPS or RM, where the only REAL test is that the investor wants to part with their money is not sufficient).
So keep on sending your money on blind faith if you choose but as for myself I want proof that the people that I deal with are on the up and up. |
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
Phoenix
Inquisitor
Joined: 12 Dec 2005
Posts: 792
|
| Posted: Tue Oct 16, 2007 10:07 pm Post subject: |
|
|
| littleroundman wrote: | You'd have to sorta feel sorry, in a perverse sort of way, for young "dairy"
He must be shi****g bricks right about now.
|
epayday, real name Brian Zelenak, is the major promoter of this scam. He is the one who claims that Pensco did DD on EBL, and that EBL passed their DD.
Everybody else, even jlpickard, are merely repeating his claims. |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Sat Oct 27, 2007 1:45 pm Post subject: |
|
|
The "Questions" regarding selling securities without registration...here is the law ('Regulations')...
| Quote: | Registration Under the
Securities Act of 1933
Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:
To require that investors receive financial and other significant information concerning securities being offered for public sale; and
To prohibit deceit, misrepresentations, and other fraud in the sale of securities.
Not all offerings of securities must be registered with the SEC. The most common exemptions from the registration requirements include:
Private offerings to a limited number of persons or institutions;
Offerings of limited size;
Intrastate offerings; and
Securities of municipal, state, and federal governments.
By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public.
Exemptions
Your company may be exempt from these registration and reporting requirements.
Are There Legal Ways To Offer and Sell Securities Without Registering With the SEC?
Yes! Your company's securities offering may qualify for one of several exemptions from the registration requirements. We explain the most common ones below. You must remember, however, that all securities transactions, even exempt transactions, are subject to the antifraud provisions of the federal securities laws. This means that you and your company will be responsible for false or misleading statements, whether oral or written. The government enforces the federal securities laws through criminal, civil and administrative proceedings. Some enforcement proceedings are brought through private law suits. Also, if all conditions of the exemptions are not met, purchasers may be able to obtain refunds of their purchase price. In addition, offerings that are exempt from provisions of the federal securities laws may still be subject to the notice and filing obligations of various state laws. Make sure you check with the appropriate state securities administrator before proceeding with your offering.
Private Offering Exemption
Section 4(2) of the Securities Act exempts from registration "transactions by an issuer not involving any public offering." To qualify for this exemption, the purchasers of the securities must:
have enough knowledge and experience in finance and business matters to evaluate the risks and merits of the investment (the "sophisticated investor"), or be able to bear the investment's economic risk;
have access to the type of information normally provided in a prospectus; and agree not to resell or distribute the securities to the public.
In addition, you may not use any form of public solicitation or general advertising in connection with the offering.
The precise limits of this private offering exemption are uncertain. As the number of purchasers increases and their relationship to the company and its management becomes more remote, it is more difficult to show that the transaction qualifies for the exemption. You should know that if you offer securities to even one person who does not meet the necessary conditions, the entire offering may be in violation of the Securities Act.
Rule 506, another "safe harbor" rule, provides objective standards that you can rely on to meet the requirements of this exemption. Rule 506 is a part of Regulation D, which we describe more fully on page 24.
Regulation D
Regulation D establishes three exemptions from Securities Act registration. Let's address each one separately.
Rule 504
Rule 504 provides an exemption for the offer and sale of up to $1,000,000 of securities in a 12-month period. Your company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act reporting requirements. Like the other Regulation D exemptions, in general you may not use public solicitation or advertising to market the securities and purchasers receive "restricted" securities, meaning that they may not sell the securities without registration or an applicable exemption. However, you can use this exemption for a public offering of your securities and investors will receive freely tradable securities under the following circumstances:
You register the offering exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;
You register and sell in a state that requires registration and disclosure delivery and also sell in a state without those requirements, so long as you deliver the disclosure documents mandated by the state in which you registered to all purchasers; or,
You sell exclusively according to state law exemptions that permit general solicitation and advertising, so long as you sell only to "accredited investors," a term we describe in more detail below in connection with Rule 505 and Rule 506 offerings. Even if you make a private sale where there are no specific disclosure delivery requirements, you should take care to provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information you provide to investors must be free from false or misleading statements. Similarly, you should not exclude any information if the omission makes what you do provide investors false or misleading.
Rule 505
Rule 505 provides an exemption for offers and sales of securities totaling up to $5 million in any 12-month period. Under this exemption, you may sell to an unlimited number of "accredited investors" and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions. Purchasers must buy for investment only, and not for resale. The issued securities are "restricted." Consequently, you must inform investors that they may not sell for at least a year without registering the transaction. You may not use general solicitation or advertising to sell the securities.
An "accredited investor" is:
a bank, insurance company, registered investment company, business development company, or small business investment company;
an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; a charitable organization, corporation or partnership with assets exceeding $5 million;
a director, executive officer, or general partner of the company selling the securities;
a business in which all the equity owners are accredited investors;
a natural person with a net worth of at least $1 million;
a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
a trust with assets of at least $5 million, not formed to acquire the securities offered, and whose purchases are directed by a sophisticated person.
It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well. You must also be available to answer questions by prospective purchasers.
Here are some specifics about the financial statement requirements applicable to this type of offering:
Financial statements need to be certified by an independent public accountant; If a company other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the company's balance sheet, to be dated within 120 days of the start of the offering, must be audited; and
Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish audited financial statements prepared under the federal income tax laws.
Rule 506
As we discussed earlier, Rule 506 is a "safe harbor" for the private offering exemption. If your company satisfies the following standards, you can be assured that you are within the Section 4(2) exemption:
You can raise an unlimited amount of capital;
You cannot use general solicitation or advertising to market the securities;
You can sell securities to an unlimited number of accredited investors (the same group we identified in the Rule 505 discussion) and up to 35 other purchasers. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated - that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well;
You must be available to answer questions by prospective purchasers;
Financial statement requirements are the same as for Rule 505; and
Purchasers receive "restricted" securities. Consequently, purchasers may not freely trade the securities in the secondary market after the offering.
http://www.sec.gov/answers/regis33.htm |
For more information on becoming legal see:
http://www.sec.gov/info/smallbus/qasbsec.htm#eod6
http://www.sec.gov/info/smallbus/qasbsec.htm
Never let it be said that I was unwilling to give a drowning man a glass of water.
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Tue Oct 30, 2007 9:00 pm Post subject: |
|
|
The finix theory advocated by members of EBL!
| Quote: | | "I do not want to loose my IRA money that I have risked because some nut needs to think he's saving me from myself." |
See my previous posts regarding the laws on this type of schemes. Also as I have posted before it is illegal to participate or promote these type of Ponzi/Pyramid schemes. 
| Quote: | It's really a law, although rarely enforced... but I have seen several cases where it has been enforced.
http://www.ftc.gov/speeches/other/dvimf16.shtm
Sections 6, 9, 10, and 20 of the Federal Trade Commission Act, 15 U.S.C. §§ 46, 49, 50 and 57b-1, as amended; FTC Procedures and Rules of Practices, 16 C.F.R. Part 1.1 et seq. and supplements thereto.
Portions of which make it illegal to INVEST in a ponzi scheme, or encourage anyone else to invest in any illegal investment scheme. And they don't give much credit for "I thought it was legit", in the precendent case the standard of due diligence was considered negligent soley on the basis of the investment not being listed in the SEC Edgar Database or wth any State regulatory agency. |
| Quote: | PREPARED STATEMENT OF
DEBRA A. VALENTINE, GENERAL COUNSEL FOR
THE U.S. FEDERAL TRADE COMMISSION
on
"PYRAMID SCHEMES"
presented at the
INTERNATIONAL MONETARY FUND'S
SEMINAR ON CURRENT LEGAL ISSUES AFFECTING CENTRAL BANKS
Washington, D.C.
May 13, 1998
I would like to thank you for the opportunity to speak about the growing international problem of pyramid schemes. What is striking about these schemes is that while they are very old forms of fraud, modern technology has vastly multiplied their potential for harming our citizens. The Internet in particular offers pyramid builders a multi-lane highway to world-wide recruits in virtually no time.
Introduction
First, let me tell you about the Federal Trade Commission.(1) The Commission is an independent government agency that Congress established in 1914. We perform a core function of government -- ensuring that free markets work. This requires competition among producers and accurate information in the hands of consumers in order to generate the best products at the lowest prices, spur efficiency and innovation, and strengthen the economy. For competition to thrive, consumers must be knowledgeable about available products and services. Our Consumer Protection Bureau ensures that consumer information in the marketplace is not deceptive or misleading. A free market also means that consumers have a choice among products and services at competitive prices. Our Competition Bureau ensures that the marketplace is free from anti-competitive mergers and other unfair business practices such as price-fixing or placing floors on retail prices.
With the exception of a few areas like air travel and insurance, the Commission has broad law enforcement authority over virtually every sector in our economy. Unfortunately, we now see pyramid schemes invading many of the sectors that we oversee.
What is a Pyramid Scheme and What is Legitimate Marketing?
Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company's incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company's distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.
A Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no product to sell and pays no commission to investors who recruit new "members." Instead, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program. In English, there is an expression that nicely summarizes this scheme: It's called "stealing from Peter to pay Paul." In fact some law enforcement officers call Ponzi schemes "Peter-Paul" scams. Many of you may be familiar with Ponzi schemes reported in the international financial news. For example, the MMM fund in Russia, which issued investors shares of stock and suddenly collapsed in 1994, was characterized as a Ponzi scheme.(2)
Both Ponzi schemes and pyramids are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. Yet, both pyramid and Ponzi schemes are illegal because they inevitably must fall apart. No program can recruit new members forever. Every pyramid or Ponzi scheme collapses because it cannot expand beyond the size of the earth's population.(3) When the scheme collapses, most investors find themselves at the bottom, unable to recoup their losses.
Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing. Multilevel marketing programs are known as MLM's,(4) and unlike pyramid or Ponzi schemes, MLM's have a real product to sell. More importantly, MLM's actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM's may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.
How Pyramid Schemes Operate
Let's look at how a pyramid scheme operates from three points of view: the potential investor, the promoter or con artist, and the victim. Many pyramid schemes will present a payout formula or matrix much like this one:
# Payment of $500
Level 1 $150 x 3 = $450
# # #
Level 2 $30 x 9 = $270
# # # # # # # # #
Level 3 $30 x 27 = $810
# # # # # # # # # # # # # # # # # # # # # # # # # # #
Level 4 $30 x 81 = $2430
etc. # # # # # # # # # # # # # # # # # # # # # # # # # # #etc.
--------
$3960
This example illustrates what is known as a three by four matrix. Each investor pays $500 to the promoter and is told to build a "downline" by recruiting three new members, who then each should recruit three more members. The investor is told that he will be paid $150 for each of the three members whom he enlists at the first level. The investor is also promised a $30 commission for each recruit at the next three levels. Thus, the investor should receive commissions for four levels of recruits below him, each of whom must recruit three more members, hence the name -- a three by four matrix.
To the potential investor/recruit this may look like a very appealing opportunity. The pyramid promoter is likely to persuade the investor that he is "getting in early" and that he should consider himself at the top of the matrix. From this perspective, it appears that he can earn $3,960 on an investment of $500, a whopping 792 percent return. You can do the math easily: $150 from the first level of 3 recruits is $450; $30 from the next 3 levels of recruits is $270 ($30 x 9), plus $810 ($30 x 27), plus $2,430 ($30 x 81). Not a bad deal.
Yet, consider the matrix from the promoter/con artist's point of view. He is the person at the top of the pyramid but in fact looks at the scheme from the bottom. He views each new investor as a predicable set of revenues and expenses, with the revenues flowing down to him. The con artist receives $500 for each new member, and at most he will have to pay $240 in commissions to earlier investors in the new recruit's "upline," i.e. those people responsible for bringing him into the system. So when an investor joins the system in the last level, the promoter will receive $500, but he will pay only $150 to the person who recruited the new investor, and $30 each to three longer-standing members in the new investor's "upline," for a total of $240. Thus, the con artist will keep over half of every $500 membership fee paid.
Let's assume that this scheme collapses after the fourth level of recruits is filled. The con artist will have made $500 from the first investor in the pyramid ($500 with no commissions paid out), $350 from the 3 at the next level ($500 minus commission of $150), $320 from the 9 at the next level ($500 minus commissions of $150 + $30), $290 from the 27 at the next level ($500 minus $150 + $30 + $30), and $260 from the 81 newest investors ($500 minus commissions of $150 + $30 + $30 + $30). The simple math -- $33,320 flowed down to the con artist -- and all he did was attract one investor!
Now consider the pyramid from the investor/victim's perspective -- after the entire scheme has collapsed around him. The victim, like the first investor, thought of himself at the top of the pyramid but suddenly realizes that he is actually at the bottom, unable to find people interested in the program to build out his downline. He is not alone because mathematics shows that MOST investors will find themselves at the bottom of the pyramid when it collapses. The very structure of this matrix dictates that whenever the collapse occurs, at least 70 percent will be in the bottom level with no means to make a profit. They all will be out $500. In our example, even those people one level above the bottom will not have recouped their investment. They each will have paid a membership fee of $500 and collected commissions of $150 for each of three recruits, leaving each investor in the second-from-the-bottom tier at least $50 shy of his break-even point. In short, when the pyramid collapses all the investors in the bottom two levels will be losers. Adding together the number of victims from these bottom two levels shows that 89 percent of all the pyramid's participants (108 of 121 investors) are doomed to lose money.
A Ponzi scheme could yield even worse results for investors, because it does not pay out any commissions at all. This can have disastrous consequences, as exemplified by Charles Ponzi's infamous fraud in the 1920's. Charles Ponzi, an engaging ex-convict, promised the Italian-American community of South Boston that he would give them a 50 percent return on their money in just 45 to 90 days.(5) Mr. Ponzi claimed that he could pay such a high rate of return because he could earn 400 percent by trading and redeeming postal reply coupons. These coupons had been established under the Universal Postal Convention to enable a person in one country to pre-pay the return postage on a package or letter sent back from another country. For a short time after World War I, fluctuations in currency exchange rates did create a disparity between the cost and redemption value of postal reply coupons among various countries. However, Mr. Ponzi discovered that he could only make a few cents per coupon and that handling large volumes of coupons cost more than they were worth. He stopped redeeming any coupons but continued to collect investors' money. When he actually paid a 50 percent return to some early investors, his reputation soared and more money flowed in from around the country. Mr. Ponzi bought a stylish house in the best part of town and purchased a large minority interest in his local bank, the Hanover Trust Company.
Eventually his scheme began to unravel, bringing ruin to the bank and thousands of investors. When Mr. Ponzi began to overdraw his accounts at Hanover Trust, the Massachusetts Banking Commissioner ordered Hanover Trust to stop honoring Ponzi's checks. The bank refused and even issued back-dated certificates of deposit to cover Mr. Ponzi's overdrafts. A few days later, the Banking Commission took over Hanover Trust, and Mr. Ponzi was arrested for mail fraud. In the end, Charles Ponzi owed investors over $6 million, an enormous sum of money for that time. He was convicted of fraud in both state and federal court and served ten years in prison.(6)
Law Enforcement Partners
The legacy of Mr. Ponzi lives on as pyramid and Ponzi schemes continue to plague us and challenge the law enforcement community. Fortunately, in the U.S., the Federal Trade Commission is just one among many agencies that have the authority to file suit to stop this type of fraud. The Securities and Exchange Commission also pursues these schemes, obtaining injunctions against so-called "financial distribution networks" which in fact sell unregistered "securities."(7) The U.S. Department of Justice, in collaboration with investigative agencies like the FBI and the U.S. Postal Inspection Service, prosecutes pyramid schemes criminally for mail fraud, securities fraud, tax fraud, and money laundering.(
State officials independently file cases in state court, often under specific state laws that prohibit pyramids. California defines pyramids as "endless chains" and prohibits them under its laws against illegal lotteries.(9) In a slightly different vein, Illinois classifies pyramid schemes as criminal acts of deception directed against property.(10) Some states like Georgia prohibit pyramid schemes under a statutory framework that regulates business opportunities and multilevel marketing.(11)
At the Commission, we bring cases against pyramid schemes under the FTC Act, which broadly prohibits "unfair or deceptive acts or practices in or affecting commerce."(12) That Act allows the Commission to file suit in federal court and seek a variety of equitable remedies, including injunctive relief, a freeze over the defendants' assets, a receivership over the defendants' business, and redress or restitution for consumers.
FTC Precedent from the 1970's
The Commission took its first concerted action against pyramid schemes in the 1970's during a boom in home-based business and MLM or direct selling. One-on-one marketing became common for many consumer items -- from cosmetics to kitchenware, and Tupperware™ parties became an icon of the era. Unfortunately, the rise in legitimate multilevel marketing was accompanied by a surge in pyramid schemes. Those schemes played off the popularity of MLM or network sales but paid more attention to networking than to selling actual goods. Pyramid schemes became so notorious that then-Senator Walter Mondale sponsored a federal anti-pyramiding bill. It passed the United States Senate twice in the 1970's, but never became law.(13)
One of the Commission's first cases was In re Koscot Interplanetary, Inc.,(14) which involved a company that offered the opportunity to become a "Beauty Advisor" and sell cosmetics. The company's incentive structure really did not encourage retail sales. Instead, it encouraged people to pay $2000 for the title of "Supervisor" and purchase $5400 in Koscot cosmetics, and then to earn bonuses by recruiting others to make the same investments.(15) The Commission found that Koscot operated an illegal "entrepreneurial chain" and articulated a definition of illegal pyramiding that our agency and the federal courts continue to rely on.(16) The Commission found that pyramid schemes force participants to pay money in return for two things. First is "the right to sell a product", second is "the right to receive, in return for recruiting other participants into the program, rewards which are unrelated to sale of the product to ultimate users. (emphasis added)"(17) The Commission explained that paying bonuses for recruiting:
. . . will encourage both a company and its distributors to pursue that side of the business, to the neglect or exclusion of retail selling. The short-term result may be high recruiting profits for the company and select distributors, but the ultimate outcome will be neglect of market development, earnings misrepresentations, and insufficient sales for the insupportably large number of distributors whose recruitment the system encourages."(1
In In re Amway Corp.,(19) another landmark decision from the 1970's, the FTC distinguished an illegal pyramid from a legitimate multilevel marketing program. At the time, Amway manufactured and sold cleaning supplies and other household products. Under the Amway Plan, each distributor purchased household products at wholesale from the person who recruited or "sponsored" her. The top distributors purchased from Amway itself. A distributor earned money from retail sales by pocketing the difference between the wholesale price at which she purchased the product, and the retail price at which she sold it. She also received a monthly bonus based on the total amount of Amway products that she purchased for resale to both consumers and to her sponsored distributors.(20)
Since distributors were compensated both for selling products to consumers and to newly-recruited distributors, there was some question as to whether this was a legitimate multilevel marketing program or an illegal pyramid scheme. The Commission held that, although Amway had made false and misleading earnings claims when recruiting new distributors,(21) the company's sales plan was not an illegal pyramid scheme. Amway differed in several ways from pyramid schemes that the Commission had challenged. It did not charge an up-front "head hunting" or large investment fee from new recruits, nor did it promote "inventory loading" by requiring distributors to buy large volumes of nonreturnable inventory. Instead, Amway only required distributors to buy a relatively inexpensive sales kit. Moreover, Amway had three different policies to encourage distributors to actually sell the company's soaps, cleaners, and household products to real end users. First, Amway required distributors to buy back any unused and marketable products from their recruits upon request. Second, Amway required each distributor to sell at wholesale or retail at least 70 percent of its purchased inventory each month -- a policy known as the 70% rule. Finally, Amway required each sponsoring distributor to make at least one retail sale to each of 10 different customers each month, known as the 10 customer rule.(22)
The Commission found that these three policies prevented distributors from buying or forcing others to buy unneeded inventory just to earn bonuses. Thus, Amway did not fit the Koscot definition: Amway participants were not purchasing the right to earn profits unrelated to the sale of products to consumers "by recruiting other participants, who themselves are interested in recruitment fees rather than the sale of products."(23)
Pyramid Schemes in the 1990's
The 1990's first brought an important refinement in the law. As the Commission pursued new pyramid cases, many defendants proclaimed their innocence, stating that they had adopted the same safeguards -- the inventory buy-back policy, the 70% rule, and the 10 customer rule -- that were found acceptable in Amway. However, an appellate court decision called Webster v. Omnitrition Int'l, Inc.,(24) pointed out that the Amway safeguards do not immunize every marketing program. The court noted that the "70% rule" and "10 customer rule" are meaningless if commissions are paid based on a distributor's wholesale sales (which are only sales to new recruits), and not based on actual retail sales.(25) The court also noted that an inventory buy-back policy is an effective safeguard only if it is actually enforced.(26)
While new cases were refining the law in the 1990's, radical changes were underway in the marketplace. Pyramid schemes came back with a vengeance. Like most economic activity, fraud occurs in cycles, and new pyramid schemes exploited a new generation of consumers and entrepreneurs that had not witnessed the pyramid problems of the 1970's. Also, the globalization of the economy provided a new outlet for pyramiding. Pyramids schemes found fertile ground in newly emerging market economies where this type of fraud had previously been scarce or unknown.(27) In Albania, for example, investors poured an estimated $1 billion into various pyramid schemes -- a staggering 43% of the country's GDP.(2
In the U.S., probably nothing has contributed to the growth of pyramid schemes as much as Internet marketing. The introduction of electronic commerce has allowed con artists to quickly and cost-effectively target victims around the globe. After buying a computer and a modem, scam artists can establish and maintain a site on the World Wide Web for $30 a month or less, and solicit anyone in the world with Internet access. Pyramid operators can target specific audiences by posting messages in specialized news groups (e.g., "alt.business.home" or "alt.make.money.fast"). In addition, through unsolicited e-mail messages -- known on the Internet as "spam" -- pyramid operators can engage in cheap one-on-one marketing. Whereas it might cost hundreds or thousands of dollars to rent a mailing list and send 10-cent post cards to potential recruits, it costs only a fraction of that to send out similar e-mail solicitations. On the Internet, you can acquire one million e-mail addresses for as little as $11 and spend nothing on postage.(29)
The Federal Trade Commission's current law enforcement efforts reflect this new wave in pyramiding. The Commission has brought eight cases against pyramid schemes in the last two years,(30) and six of those have involved Internet marketing.(31) One recent case, FTC v. FutureNet, Inc., is particularly instructive because it starkly reflects the potential for abuse in hi-tech and newly deregulated industries. FutureNet allegedly claimed that, for payment of $195 to $794, investors could earn between $5000 and $125,000 per month as distributors of Internet access devices like WebTV. The FTC filed suit, charging that FutureNet's earnings claims were false because the company really operated an illegal pyramid scheme. Near the time of filing, FTC investigators discovered that FutureNet had begun to sell electricity investments as well, riding a wave of speculation in advance of the deregulation of California's electricity market. The Commission obtained a TRO and an asset freeze over the defendants' assets and eventually reached a $1 million settlement with the corporate defendants and two individual officers. The settlement requires the defendants to pay $1 million in consumer redress, bars them from further pyramiding activity of any kind, requires them to post a bond before engaging in any network marketing, and requires them to register with state utility officials before engaging in the sale of electricity. The Commission continues to litigate its case against three non-settling individual defendants.(32)
The Impact of Pyramids on Banking
Pyramid schemes not only injure consumers. In many cases, they affect the daily operations of banks and taint the banking industry's overall reputation for safety and soundness. Many pyramid promoters disparage the bank industry and promote their own program as a superior alternative to traditional banking and investment. Melvin Ford, a defendant in the SEC's recent case against International Loan Network, stated that his company's bonus program was "the most powerful financial system since banking."(33) At the height of his popularity, Charles Ponzi actually proclaimed that he would form a new banking system and divide profits equally between depositors and shareholders.(34)
In FTC v. Cano,(35) the Commission observed first-hand the impact of pyramid schemes on the banking system and individual banks. In that case, the Commission targeted an alleged Internet pyramid scheme that operated under the name Credit Development International ("CDI"). For an initial payment of $130 and subsequent monthly payments of $30, consumers could join CDI's "Platinum Infinity Reward Program" and become a participant in its "3x7 Forced Matrix" -- a structure that promised commissions going seven layers deep and that required each participant to recruit just three new members. CDI represented that participants could earn more than $18,000 per month in this program.
Besides the promise of high profits, the real attraction of CDI was its offer of an unsecured Visa or MasterCard, with a $5000 credit limit and a low 6.9% annual financing rate. This offer was especially attractive to consumers with poor credit histories, to whom CDI advertised saying "Guaranteed Approval, No Security Deposit! No Credit Check, No Income Verification and Bankruptcies No Problem!"(36)
CDI representatives claimed that they could offer such attractive terms because they had a special marketing relationship with a large overseas bank, the Banque Nationale de Paris (BNP). According to the transcript of a taped sales meeting, CDI hinted that a broad conspiracy prevented U.S. banks from offering such favorable terms. A CDI representative claimed, "normal banks do not want people to know that they could have a 6.9 [percent] credit card."(37) In the same meeting, CDI painted itself an alternative to a regular bank and said "our whole concept is to have the largest membership credit union in the world."(3 "We're the bank."(39)
In fact, according to the Commission's evidence, CDI had no business relationship with Visa, MasterCard, or BNP, and no relationship with any bank willing to issue credit cards to CDI members. Our evidence also showed that the defendants likely misled the one bank with which they did have a relationship. When investors paid by credit card to join CDI, the defendants apparently processed these payments, not through CDI but through a different "front" company with a VISA merchant account. Consequently, the defendants put their own merchant bank at risk for any charge backs that VISA might credit to angry investors.
In the end, CDI members never received their credit cards, and according to a Commission economist, at least 89 percent of them would never have made enough money to recoup their initial investment. Last autumn, the Commission obtained a temporary restraining order and a preliminary injunction against the CDI defendants, as well as a freeze over their assets. The Commission estimates that over the five-month life of CDI, more than 30,000 consumers from the U.S., Europe, Australia, and Southeast Asia lost $3 to $4 million dollars in this alleged scam. The matter is still in litigation; the Commission is now seeking to amend its complaint and name additional defendants.
In the largest pyramid case brought by the Commission in the 1990's, we witnessed how pyramid operators often try to use the international banking system to hide their assets. In FTC v. Fortuna Alliance,(40) the defendants allegedly promised consumers that, for a payment of $250, they would receive profits of over $5,000 per month. The program spawned numerous web sites on the Internet and victimized thousands of investors across 60 different countries. Although the defendants initially operated out of the United States, the Commission discovered they had secreted millions of dollars to offshore bank accounts in Antigua. But international cooperation saved the day. With the aid of the courts and banks in Antigua, the Commission obtained an order against the defendants, requiring them to repatriate over $2 million in offshore assets and pay approximately $7 million in redress to consumers from 60 countries.
Consumer Education
Law enforcement is the cornerstone of the Commission's fight against pyramid schemes; however, we also try to educate the public so that they can protect themselves. In our educational efforts, we have tried to take a page from the con artists' book and use new online technology to reach consumers and new entrepreneurs. For example, on the agency's web site at "www.ftc.gov", the Commission has posted several alerts regarding pyramid schemes and multilevel marketing problems. The Commission records over 2 million "hits" on its home page every month and receives several thousand visitors on its pyramid and multilevel marketing pages.
The staff of the Commission also has posted several "teaser" web sites, effectively extending a hand to consumers at their most vulnerable point -- when they are surfing areas of the Internet likely to be rife with fraud and deception. The "Looking for Success" site is one example. It advertises a fake pyramid scheme. The home page of "Looking for Success" promises easy money and talks in glowing terms about achieving "financial freedom." On the second page, the consumer finds a payout plan common to pyramid schemes, as well as typical buzz words like "forced matrix," "get in early," and "downline." Clicking through to the third and final page in the series, however, brings the consumer to a sobering warning: "If you responded to an ad like this one, you could get scammed." The warning page provides a hyper-text link back to FTC.GOV, where consumers can learn more about how to avoid pyramid schemes.
Business Education
In an effort to provide information to new entrepreneurs, especially those who may unwittingly violate the law, the Commission has conducted a number of "Surf Days" on the Internet. The first Surf Day, conducted in December 1996, focused on pyramid schemes. Commission attorneys and investigators enlisted the assistance of the SEC, the U.S. Postal Inspection Service, the Federal Communications Commission, and 70 state and local law enforcement officials from 24 states. This nationwide ad hoc task force surfed the Internet one morning, and in three hours, found over 500 web sites or newsgroup messages promoting apparent pyramid schemes. The Commission's staff e-mailed a warning message to the individuals or companies that had posted these solicitations, explaining that pyramid schemes violate federal and state law and providing a link back to FTC.GOV for more information. In conjunction with the New York Attorney General's Office and the Interactive Service Association, the Commission announced the results of Internet Pyramid Surf Day at a televised press conference in New York City. A month later, the Commission's investigative staff revisited web sites or newsgroups identified as likely pyramids during Surf Day and found that a substantial number had disappeared or improved their representations and claims made to consumers.
More recently in October 1997, the Commission helped coordinate the first "International Internet Surf Day." Agencies from 24 countries joined this effort and targeted "get-rich-quick" schemes on the Internet, including pyramid schemes.(41) Australia's Competition and Consumer Commission oversaw the world-wide effort while the FTC led the U.S. team consisting of the SEC, the Commodities Futures Trading Commission ("CFTC") and 23 state agencies.
In February of this year, the Commission announced yet another innovative use of the Surf Day concept, this time targeting deceptive e-mail solicitations. The Commission collects unsolicited commercial e-mail from annoyed consumers and other sources. A large percentage of these e-mails contain apparent chain letters or pyramid schemes. The Commission searched its e-mail database, topic by topic, and along with the Postal Inspection Service sent a warning letter to over 1000 individuals or companies identified as potentially responsible for promoting pyramids or other get-rich-quick schemes.
Looking Ahead
Unfortunately, pyramid schemes are likely to continue to proliferate both here and abroad in the near future. However, we can all help stem the tide by working together. Members in the the banking or financial sector can help law enforcement agencies in several ways. First, if your country does not have a law that makes pyramid schemes illegal, you should encourage your government to enact the necessary legislation and provide sufficient resources for enforcers to pursue pyramid schemes. Associations of reputable bankers or insurers, whose businesses can be jeopardized by the illicit schemes of unlicensed insurers or securities dealers, can be effective allies. Recent history in Eastern Europe makes it only too clear that pyramid schemes exploit the absence of a fully-functioning market, adequate supervision, and/or an effective legal infrastructure. Second, you can report any suspect investment programs or potential pyramid schemes. Any information can help, and you may be able to provide valuable insight into who is operating a pyramid, how it works, and whom it victimizes. In the Cano case, it was the substantial assistance of financial fraud investigators at VISA that enabled the Commission to develop and bring its case. Third, help us and others foreign enforcers to identify and freeze defendants' assets located in your countries. Understandably, banks must observe their privacy laws, but to the extent it is legally possible for you to provide assistance in tracing and freezing the assets of pyramid operators, you will benefit all our citizens. This is often the only way to halt an illegal scheme and return money to victims. We hope that the Fortuna Alliance case signals the beginning of a trend in obtaining valuable help from foreign courts and banks.
Finally, you can encourage the relevant officials in your countries to combat pyramid schemes by educating consumers and businesses about how to recognize and avoid this type of fraud. This can be particularly important in emerging markets, where experience with investment opportunities may be scarce.
Here are some tips that consumers and business might find helpful.
1. Beware of any plan that makes exaggerated earnings claims, especially when there seems to be no real underlying product sales or investment profits. The plan could be a Ponzi scheme where money from later recruits pays off earlier ones. Eventually this program will collapse, causing substantial injury to most participants.
2. Beware of any plan that offers commissions for recruiting new distributors, particularly when there is no product involved or when there is a separate, up-front membership fee. At the same time, do not assume that the presence of a purported product or service removes all danger. The Commission has seen pyramids operating behind the apparent offer of investment opportunities, charity benefits, off-shore credit cards, jewelry, women's underwear, cosmetics, cleaning supplies, and even electricity.
3. If a plan purports to sell a product or service, check to see whether its price is inflated, whether new members must buy costly inventory, or whether members make most "sales" to other members rather than the general public. If any of these conditions exist, the purported "sale" of the product or service may just mask a pyramid scheme that promotes an endless chain of recruiting and inventory loading.
4. Beware of any program that claims to have a secret plan, overseas connection or special relationship that is difficult to verify. Charles Ponzi claimed that he had a secret method of trading and redeeming millions of postal reply coupons. The real secret was that he stopped redeeming them. Likewise, CDI allegedly represented that it had the backing of a special overseas bank when no such relationship existed.
5. Beware of any plan that delays meeting its commitments while asking members to "keep the faith." Many pyramid schemes advertise that they are in the "pre-launch" stage, yet they never can and never do launch. By definition pyramid schemes can never fulfill their obligations to a majority of their participants. To survive, pyramids need to keep and attract as many members as possible. Thus, promoters try to appeal to a sense of community or solidarity, while chastising outsiders or skeptics. Often the government is the target of the pyramid's collective wrath, particularly when the scheme is about to be dismantled. Commission attorneys now know to expect picketers and a packed courtroom when they file suit to halt a pyramid scheme. Half of the pyramid's recruits may see themselves as victims of a scam that we took too long to stop; the other half may view themselves as victims of government meddling that ruined their chance to make millions. Government officials in Albania have also experienced this reaction in the recent past.
6. Finally, beware of programs that attempt to capitalize on the public's interest in hi-tech or newly deregulated markets. Every investor fantasizes about becoming wealthy overnight, but in fact, most hi-tech ventures are risky and yield substantial profits only after years of hard work. Similarly, deregulated markets can offer substantial benefits to investors and consumers, but deregulation seldom means that "everything goes," that no rules apply, and that pyramid or Ponzi schemes are suddenly legitimate.
Conclusion
As we continue to pursue pyramid schemes, we would be delighted to coordinate our efforts with law enforcement in your countries. It is only too evident that the expansion of fraud across borders and on the World Wide Web means that no one agency or country can work effectively on its own. We must be collectively vigilant in order to protect the integrity of our marketplaces and the pocketbooks of our consumers.
1. The views I give, of course, are my own and do not reflect the official views of the Commission or any particular Commissioner.
2. Barbara Rudolph, Poof Go the Profits . . ., Time, Aug. 8, 1994 at 44.
3. Assume a pyramid scheme in which each person recruits 10 new people. There would be one person at the top, 10 beneath her, 100 beneath them, 1,000 beneath them and so forth. The pyramid would involve everyone on earth in just 10 layers of people with one con artist on top. The bottom layer would have more than 4.5 billion people. The Skeptic's Dictionary at "http://wheel.vcdavis.edu/nbtcarrol/skeptic/pyramid.html"
4. Some people also refer to multilevel marketing as direct selling or network selling.
5. See Mark C. Knutson, "The Ponzi Scheme," published online at "http://www.usinternet.com/users/mcknutson/pscheme.htm".
6. Id.
7. See e.g., SEC v. Int'l Load Network, Inc., 770 F. Supp. 678 ( D.D.C 1991), aff'd, 968 F.2d 1304 (D.C. Cir. 1992)..
8. See e.g. U.S. v. Crowe, 4:95CR-13-C (W.D. Ky. 1995) (charging an alleged pyramid promoters with mail fraud under 18 U.S.C. § 1341; securities fraud under 15 U.S.C. § § 78j(b), 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2; and money laundering under 18 U.S.C. § § 2, 1957.)
9. Cal. Penal Code § 327 (Deering 1996)
10. 720 Ill. Compiled Stat. Ann. 5/17-7 (Michie 1997) (formerly Ill. Rev.
Stat., ch. 38, para. 17/7 (1993))
11. Ga. Code Ann. § 10-1-410 (1997)
12. 15 U.S.C. § 45 (1997)
13. See Thomas P. Rowan, Report, Confronting the Pyramid Hazard in the United States 15 (submitted to Prof. Robert Vaughn, Wash. College of Law, Am. U.) (1998) (citing Joseph N. Mariano & Mario Brossi, Multilevel Marketing: A Legal Primer 29 (2d ed. 1997)).
14. 86 F.T.C. 1106 (1975), aff'd sub. nom. Turner v. FTC, 580 F.2d 701 (D.C. Cir. 1978).
15. Id. at 1108-110 (complaint).
16. See e.g., Webster v. Omnitrition Int'l, Inc., 79 F.3d 776, 781-82 (9th Cir. 1996), cert. denied, 117 S. Ct. 174, __ U.S. __ (1996).
17. Koscot 86 F.T.C. at 1180.
18. Id. at 1181.
19. 93 F.T.C. 618 (1979)
20. Id. at 710-14.
21. Id. at 729-33.
22. Id. at 715-17
23. Id. See Rowan at 18-21 (analyzing the Amway decision).
24. 79 F.3d 776, 781-82 (9th Cir. 1996), cert. denied, 117 S. Ct. 174, __ U.S. __ (1996).
25. Id. at 783.
26. Id. at 783-84.
27. Tom Hundley, Always Poor, Albanians Go for Broke, Chicago Tribune, Feb. 11, 1997 at 18.
28. Id. For an analysis of the effect of pyramid and Ponzi schemes on Eastern Europe's insurance market, see Int'l Chamber of Commerce, Pyramid sales of insurance policies condemned, Business World, July 9, 1997 at "http://www.iccwbo.org/html/pyramid.htm".
29. Ram Avrahami, FTC Workshop on Consumer Information Privacy, Transcript of June 12, 1997 at 107.
30. See FTC v. Affordable Media, LLC, Civil Action No. CV-S-98-00669-LDG) (D. Nev. filed April 23, 1998); FTC v FutureNet, Inc., No. 98-1113 FHK (AIJx) (C.D. Cal. filed Feb. 17, 1998); FTC v. Cano, No. (C.D. Cal. filed Oct. 29, 1997); FTC v. Jewelway Int'l Inc., No. CV-97-383 TUC JMR (D. Ariz. filed June 24, 1997); FTC v. World Class Network, Inc., No. SAV-97-162 AHS (Ebx) (C.D. Cal. filed Feb. 28, 1997); FTC v. Mentor Network, Inc., No. SACV 96-1104 LHM (Eex), (C.D. Cal. filed Nov. 5, 1996); FTC v. Global Assistance Network for Charities, No. CIV 96-2494 PHX RCB (D. Ariz. filed Nov. 5, 1996); FTC v. Fortuna Alliance, L.L.C., No. C96-799M (W.D. Wash. filed May 23, 1996).
31. Based on complaints the FTC has filed, the Internet was a major recruiting tool used in FutureNet, Cano, World Class Network, Mentor Network, Global Assistance Network for Charities, and Fortuna Alliance.
32. See, FTC, FutureNet Defendants Settle FTC Charges: $ 1 Million in Consumer Redress for "Distributors", Apr. 8, 1998 at "/opa/9804/futurenet.htm" (press release).
33. Int'l Loan Network, 770 F. Supp. at 678.
34. Knutson, supra, note 5.
35. Cano, supra, note 30.
36. Exhibits in Support of Motion for TRO and Asset Freeze, Ex. 2, Attachments 2, 7, Cano, supra, note 30.
37. Exhibits in Support of Motion for TRO and Asset Freeze, Ex. 2, Attachment 5 at 141, Cano, supra, note 30 (transcript of sales presentation) [hereafter "Transcript"].
38. Id. at 86.
39. Id. at 110.
40. Fortuna Alliance, supra, note 30.
41. International participants included Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Hungary, Ireland, Jamaica, Japan, Korea, Mexico, New Zealand, Norway, the Philippines, Poland, Portugal, South Africa, Spain, Sweden, Switzerland, and the United Kingdom.
http://www.ftc.gov:80/speeches/other/dvimf16.shtm |
For the Facts on the Legality of Trust and Tax implications involved in situation such as these, see these links.
http://wwsnforums.com/phpBB2/viewtopic.php?t=238http://wwsnforums.com/phpBB2/viewtopic.php?t=238
http://wwsnforums.com/phpBB2/viewtopic.php?t=238&postdays=0&postorder=asc&start=15
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
Ekid
Inquisitor
Joined: 11 Nov 2005
Posts: 8012
|
| Posted: Sun Dec 09, 2007 8:43 pm Post subject: |
|
|
The latest Earnbyloaning registration info:
| Quote: | Whois Record
Registrant:
Quest Holdings Inc.
po box 239
Airway Heights, Washington 99001
United States
Registered through: OrderYourName
Domain Name: EARNBYLOANING.COM
Created on: 04-Feb-06
Expires on: 04-Feb-17
Last Updated on: 20-Aug-07
Administrative Contact:
Jolly, Craig
Quest Holdings Inc.
po box 239
Airway Heights, Washington 99001
United States
15093625089 Fax --
Technical Contact:
Jolly, Craig
Quest Holdings Inc.
po box 239
Airway Heights, Washington 99001
United States
15093625089 Fax --
Domain servers in listed order:
NS1.HANDSFREEBIZ.COM
NS2.HANDSFREEBIZ.COM |
|
|
| Back to top |
|
|
Ekid
Inquisitor
Joined: 11 Nov 2005
Posts: 8012
|
| Posted: Sun Dec 09, 2007 8:50 pm Post subject: |
|
|
Registrant Search: "Quest Holdings Inc." owns about 4 other domains
Email Search: admin@earnbyloaning.com is associated with about 2 domains |
|
| Back to top |
|
|
Ekid
Inquisitor
Joined: 11 Nov 2005
Posts: 8012
|
| Posted: Tue Dec 11, 2007 8:49 pm Post subject: |
|
|
| Quote: | “Craig Jolly”
Latest Filing: 9/12/07 as Signatory
As: Signatory (Director, Officer, Attorney, Accountant, Banker, Agent, etc.)
List All Filings as Signatory
Search Recent Filings (as Signatory) for “Craig Jolly”
“Craig Jolly” has been a Signatory for/with the following 2 Registrants:
• IntelliCapital/Inc
• Mountain States Capital Inc
“Craig Jolly” has/had a Signatory interest in the following Registrant:
• IntelliCapital/Inc |
|
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Sat May 10, 2008 10:40 pm Post subject: The Sky is falling now |
|
|
It seem that the cash cow that was at least part of the source to generate those huge returns for Jolly's EBL scheme was Legisi. And how do I know that, picard told me so indirectly.
Why Legisi is in the "Scam" folder here makes no sense at all. Like I said, they are doing just fine. There are obviously some non-members making false accusations.
Here is a screen shot of my last withdrawal:
The main reason I came here was because someone was referencing a post in this forum that simply was not true. BTW, Legisi is not in the scam folder on Talk Gold nor on noBSnetwork nor on MMG.
I guess the evidence criteria here is a little different...
www.earnbyloaning.com
--------------------------------------------------------------------------------
Originally Posted by ScamDetector who claimed that EBL had screwed him out of $2000.00.
| Quote: | Can you post the info and proof? What is your EBL username? PM if you want it private...... Did you try resolving the problem with JLP? So far there had been a lot of fictitious claims of being scammed, I mean it doesn't really help if people would just start posting false accusations to reliable programs and on the otherhand, cheer unto those programs who are clearly shady. Not that I am calling you a liar but we just want a concrete evidence with regards to your plight. Hope this will not be another case of "Legisi-is-a-scam syndrome" - smear campaigns flooded Legisi but until now it is still up and going.... and going strong.... Paying big time.... maybe a lot thought wrong that it is a scam, aye?!
No, they haven't contacted me.
Googlesearch and talkgold (though I think I know who you are...) feel free to e-mail me at: golf4enlightenment@yahoo.com or pm me or post here with your username and specifics about your issue and I will look into your them personally.
I'm a mod in the EBL forum and help folks routinely. I'll help any person claiming to have an issue with EBL. In spite of this offer, no one who made such a claim has ever yet followed up with me.
Also, without exception, people who make claims of not being paid by EBL never provide a username. This should not surprise anyone because they can't. If they were real members, they would want help, but these folks don't seem to behave like folks who want help.
The simple facts are: This program has been around and paying religiously since Feb 2006. I've been a member since June 2007, so my first 120-day loan will come due in mid-October. I'll be happy to send anyone a scanned copy of my first check if they e-mail the above address in late October (takes 2 weeks to get one's check). I've also personally met Craig Jolly in late June of this year and have gotten to know the rest of the support staff (Troy and Kerry). You won't find better support anywhere IMHO.
BTW, your observation on Legisi is spot on. I've been with them for over a year and half and it was one of my better decisions.
--------------------------------------------------------------------------------
Last edited by picard : 09-01-2007 at 12:20 AM. |
Sure make me wonder why Greg McKnight would be sending picard a check for interest earned from EBL and Legis. See memo at bottom left on check.
Maybe they would be interested in Legis complaint
http://www.4shared.com/file/46828811/85481038/Complaint.html
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
Phoenix
Inquisitor
Joined: 12 Dec 2005
Posts: 792
|
| Posted: Sun May 11, 2008 12:15 pm Post subject: |
|
|
I'm not sure, but I think that EBL has finally bitten the dust. I'll make some
enquiries.
Pickard's real name is Michael Szczepaniak
And his address is
950 Southridge Greens #7
Fort Collins, Colorado 80525
United States
(970) 207-9808
I suspect that he and Craig Jolly are/were running the EBL scam together. |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Sun May 11, 2008 4:57 pm Post subject: |
|
|
| Phoenix wrote: | I'm not sure, but I think that EBL has finally bitten the dust. I'll make some
enquiries.
Pickard's real name is Michael Szczepaniak
And his address is
950 Southridge Greens #7
Fort Collins, Colorado 80525
United States
(970) 207-9808
I suspect that he and Craig Jolly are/were running the EBL scam together. |
It does seem to have been closed.
| Quote: | Comment by Alan
2008-05-05 17:08:12
That is true. EBL is now officially closed. I cannot mention the precise reason but a refund process in being put into effect. So far those who have loaned using e-bullion have been refunded.
All I can say about this is that it would’ve continued had it not been for a certain outside influence.
Happy investing to you all.
http://www.destyonline.com/a-curious-investment-opportunity/ |
My bet is on that certain outside influence being most of their money was in Legisi. Read the Legisi complaint I posted along with the check above. Greg Mcknight has been indicted and assets frozen. Watch the refunds trickle to a stop. EBL was almost an exact replication of Legisi.
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/
Last edited by Abe on Sun May 11, 2008 6:20 pm; edited 2 times in total |
|
| Back to top |
|
|
Phoenix
Inquisitor
Joined: 12 Dec 2005
Posts: 792
|
| Posted: Sun May 11, 2008 5:40 pm Post subject: |
|
|
| Hahaha, I like it ... a scammer (Craig Jolly) being scammed by another scammer (Greg McKnight). |
|
| Back to top |
|
|
littleroundman
Inquisitor
Joined: 16 Nov 2005
Posts: 164
|
| Posted: Mon May 12, 2008 10:21 am Post subject: |
|
|
How interesting.
Those poor EBL members,
not only has their darling collapsed and been mentioned in connection with Legisi, but they've been arguing for months with someone using the "littleroundman" nick, and it wasn't even me.
What a waste,
all that vitriol and insults directed at "littleroundman" and I didn't know a thing about it.
http://nobsnetwork.net/specific-hyip-discussion/392-earnbyloaning-com-33.html#post9112
_________________
The only thing necessary for the triumph of evil is for good men to do nothing. |
|
| Back to top |
|
|
littleroundman
Inquisitor
Joined: 16 Nov 2005
Posts: 164
|
| Posted: Mon May 12, 2008 11:27 am Post subject: |
|
|
Curiouser and curiouser,
it appears the name of "traderj" has also been taken in vain on NOBS,
Given the fact the SEC presented pages from downloaded in May last year from NOBS in evidence presented in the Legisi case, one would certainly hope nobody gets sufficiently annoyed to present further evidence of collusion and take things further.
_________________
The only thing necessary for the triumph of evil is for good men to do nothing. |
|
| Back to top |
|
|
Abe
Inquisitor
Joined: 12 Nov 2005
Posts: 6260
Location: Fair Play Every Day
|
| Posted: Wed Feb 11, 2009 6:08 pm Post subject: Jolly In Deep Sh*t |
|
|
SEC Accuses Investment Site Of $4M Ponzi Scheme
Securities Law 360 (subscription) - New York,NY,USA
... US Securities and Exchange Commission alleging that its Web site, EarnByLoaning.com, defrauded investors of more than $4 million through a Ponzi scheme. ...
See all stories on this topic
SEC Accuses Investment Site Of $4M Ponzi Scheme
Law360, New York (February 10, 2009) -- Online investment firm Quest Holdings Inc. is facing a lawsuit from the U.S. Securities and Exchange Commission alleging that its Web site, EarnByLoaning.com, defrauded investors of more than $4 million through a Ponzi scheme.
The complaint, filed on Monday in the U.S. District Court for the Eastern District of Washington, alleges that Quest and its CEO, Craig T. Jolly, promised investors monthly returns of...
Site, is subscripton but wouldn't take my email address.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20890 / February 9, 2009
Securities and Exchange Commission v. Craig T. Jolly and Quest Holdings, Inc., Case No. CV-09-38-EFS (E.D. Wash. filed February 9, 2009)
The Securities and Exchange Commission today filed securities fraud and other charges against Quest Holdings, Inc. and its principal, Craig T. Jolly, of Spokane, Washington, for operating an internet-based Ponzi scheme promising monthly returns of up to 19.5 percent.
According to the complaint, defendants Quest and Jolly raised approximately $4 million from more than 200 investors, located throughout the country and abroad, through the issuance of short-term securities promising monthly interest rates as high as 19.5 percent. Jolly raised funds by offering and selling Quest securities through Quest's website, EarnByLoaning.com. As set forth in the complaint, Jolly claimed to be active in the investment community and financial markets and falsely assured investors that Quest had a reserve fund to ensure that they would be repaid.
In reality, the Commission alleges, Jolly invested only about one-third of the investor funds he received, on which he suffered hundreds of thousands of dollars in trading losses. The complaint also alleges that defendants operated a Ponzi scheme and repaid purported profits to investors from funds provided by later investors, not from earnings on Quest's investment activities. In addition, the Commission alleges that Jolly misappropriated at least $628,000 of investor funds, which he used for his own stock trading and to pay for his vehicles, medical bills and other personal expenses.
The Commission's complaint, filed in federal district court for the Eastern District of Washington, charges Quest and Jolly with violating the antifraud and registration provisions of the federal securities laws, and seeks entry of an order for an asset freeze, injunctions, an accounting, disgorgement, and civil penalties.
The Commission's litigated action against Jolly and Quest charges both with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, an accounting, appointment of a receiver, an asset freeze, disgorgement with prejudgment interest, and civil monetary penalties.
SEC Complaint in this matter
http://www.sec.gov/litigation/litreleases/2009/lr20890.htm
_________________
Yes all HYIPS are SCAMS. Click Here and watch this. http://www.bornagainamerican.org/ |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
Powered by phpBB © 2001, 2005 phpBB Group
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
