URGENT >> BULLETIN >> MOVING: SEC Charges Alleged HYIP Operators Who Ran ‘Profits Paradise’ From India; Scammers Allegedly Used Fake Names And Engaged In Wanton Deception

From an SEC exhibit in the Profits Paradise complaint.

From an SEC exhibit in the Profits Paradise complaint.

URGENT >> BULLETIN >> MOVING: (Updated 9:33 p.m. ET U.S.A.) The SEC has charged two Indian nationals with running an HYIP scheme known as “Profits Paradise” that reached into the United States and offered “extraordinary” returns of up to 480 percent in 240 days, plus “compounding.”

As is typical in HYIP schemes, the “program” gained a head of steam on social media, the SEC charged. (A quick Google search shows that ProfitsParadise also had a presence on well-known Ponzi forums such as TalkGold and MoneyMakerGroup.)

ProfitsParadise operated between April 2013 and early February of 2014 and offered “guaranteed” payouts, the SEC alleged.

The scam “invited investors to deposit funds that supposedly would be pooled with money from other investors and traded on foreign exchanges as well as in stocks and commodities,” the SEC alleged.

Pitches on Facebook, YouTube and Twitter were “pervasive” and resulted in investors being exploited, the SEC charged.

The named respondents are Pankaj Srivastava of Mumbai and Nataraj Kavuri of Hyderabad. They also are accused of promoting the scam through Google Plus.

Srivastava “used the pseudonym “Paul Allen,” the SEC charged. Kavuri called himself “Nathan Jones.”

It was not immediately clear from the complaint whether the HYIP scammers intended to trade on the name of Microsoft co-founder Paul Allen. HYIP schemes, however, are infamous for trading on the names of prominent individuals.

“Srivastava and Kavuri used excessive secrecy in their effort to swindle investors through social media outreach and a website that attracted as many as 4,000 visitors per day,” said Stephen Cohen, associate director of the SEC’s Division of Enforcement.  “Our investigation stopped the constant solicitations once the website disappeared, and successfully tracked down the identities of the perpetrators behind those fraudulent solicitations.”

Bogus names also were used to register websites, the SEC charged.

Srivastava caused the Profits Paradise website to be registered through GoDaddy in the name of “Jane Roe” of Seattle, the SEC charged.

“Jane Roe is a fictitious name, and there is no connection between Profits Paradise and the dwelling at 300 Boylston Ave E., in Seattle, Washington, or its residents,” the SEC charged. “The telephone number provided to GoDaddy is a toll-free number for a conference call center that is unrelated to Profits Paradise,” the SEC charged.

Meanwhile, a Gmail email address linked to the supposed Seattle street address was associated with IPs “located in India, not Seattle,” the SEC charged.

At the same time, the agency charged, “Kavuri disguised Profits Paradise’s physical location by providing the false ‘whois’ data, indicating that Profit Paradise’s operations were within the United States when they were not.”

From the SEC’s civil administrative complaint (italics added):

“The phony name and address served a dual purpose. In addition to concealing the fact that Srivastava and Kavuri were behind the Website, the domain name registration to Jane Roe at a Seattle address was meant to attract American investors. Additionally, to create the illusion that mainly American investors were visiting the Profits Paradise Website, Srivastava instructed the web designer to ensure that the ‘Alexa detail’ showed the Website’s ‘rank in the United States’ rather than its ‘rank in India.’ “Alexa” refers to a website (www.alexa.com) that ranks other websites, by country, based on the amount of Internet traffic directed to the website.”

Also typical of HYIP scams, payment processors such as Liberty Reserve, PerfectMoney and EgoPay were used. Dates cited in the SEC complaint suggest Profits Paradise opened its Liberty Reserve account just prior to federal prosecutors bringing criminal charges against Liberty Reserve in May 2013.

Liberty Reserve has been described by prosecutors as a $6 billion money-laundering operation that propped up HYIPs and other frauds.

Srivastava, in 2005, worked for Quixtar.com in Minneapolis, but returned to India in 2007, the SEC said.

Read the SEC complaint,  which alleges the Profits Paradise scheme also was “structured so that under certain conditions investors could never recover their principal investments.”

The SEC also has updated its Investor Alert on fraud schemes that trade on social media.

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6 Responses to “URGENT >> BULLETIN >> MOVING: SEC Charges Alleged HYIP Operators Who Ran ‘Profits Paradise’ From India; Scammers Allegedly Used Fake Names And Engaged In Wanton Deception”

  1. From a statement by the SEC:

    ______________________________________

    The SEC appreciates the assistance of the Securities and Exchange Board of India as well as the Autorité des Marchés Financiers in Quebec, the Ontario Securities Commission, and the Securities and Futures Commission in Hong Kong.

    Source: http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543409188#.VGP49clNePQ

    ______________________________________

    Patrick

      (Quote)

  2. Also from the SEC statement:

    ______________________________________

    Srivastava and Kavuri used the Profits Paradise website and YouTube videos to detail three investment plans with terms of 120 business days. The first plan purportedly yielded daily interest of 1.5 percent on investments of $10 to $749. The second plan purportedly yielded 1.75 percent on investments of $750 to $3,499. And the third plan purportedly yielded 2 percent on investments of $3,500 and above. Postings on Profit Paradise’s Facebook page promised investors they could “Enjoy Hassle Free Income” and advertised a “5% Referral Commission.”

    ______________________________________

    Patrick

      (Quote)

  3. Srivastava “used the pseudonym “Paul Allen,” the SEC charged. Kavuri called himself “Nathan Jones.”

    This is why when I see obviously fake anglo-saxon names I usually just assume Indians.

    I’m surprised they didn’t go the British certificate route.

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  4. Quick note: Looks as though Srivastava also was associated with a 2012-era HYIP known as “UnitedPaycheck” and perhaps was shilling as “Paul Allen” for that one, too.

    Among the claims: “UnitedPayCheck is a new program. Completely legal and in the main edition. 1.5% daily returns for 100 days. 5% direct referral commission and 10% binary referral commission. Any one can start with a very little investment of $20 (1 adport). Additional maturity bonus $120 per 4 adport (4×20=$80). This will be one of the best-paid programs. The main and most efficient part of this program is it gives unlimited depth commission.”

    One person leading cheers for United Paycheck called himself “Liberty Smith” and appears to have a Facebook site styled “LibertyHYIP.” It appears to be a site from which various HYIP scams are pitched.

    Something called “unichange.me” is pitched from the Facebook site.

    “VERIFIED MONEY EXCHANGE SITE! Bitcoin, PM, EgoPay, PayPal, Litecoin, OKPay, WesternUnion, Moneygram, Bank transfer, cards”

    The unichange.me site appears not to be loading, at least not from the United States. unichange.me has a paid sticky at the TalkGold Ponzi forum.

    The “Jane Roe” email address associated with Srivastava also is associated with a domain styled “ambinetconsulting.com,” which offers something called “MLM Solution.”

    This appears to be software for:

    * BINARY PLAN
    * BOARD PLAN
    * MATRIX PLAN
    * GENERATION PLAN
    * DIFFERENTIAL PLAN
    * UNILEVEL PLAN

    Patrick

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  5. Oz: This is why when I see obviously fake anglo-saxon names I usually just assume Indians.

    Sometimes a similar tactic is used. The Cambodian scammers behind WMDS/1UOL hired Christian Rochon based on their calculation he had an “American face.”

    From the case files:

    “A high-school graduate, Rochon became president (in name only, though) for one reason, and one reason only: [James] Bunchan wanted an ‘American face’ for his companies, and his neighbor Rochon (a Caucasian of Canadian decent) apparently fit the bill. And after renting Rochon a suit jacket and taking him to a professional photographer, Bunchan had Rochon’s photo plastered all over the companies’ promotional pamphlets.”

    WMDS/1UOL, which targeted Cambodians, operated in TelexFree land in Massachusetts. The scheme also memorably blamed Hurricane Katrina for payout delays. The court called these tales “out-and-out lies.”

    http://patrickpretty.com/2012/03/27/appeals-court-upholds-20-year-prison-sentence-of-seng-tan-mercedes-driving-pyramid-schemer-who-blamed-hurricane-katrina-for-payment-delays-and-told-members-that-the-gods-had-sent-her-to-make-them/

    Patrick

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  6. The mention of ‘Jane Roe’ reminds me of the caution needed because scammers know people are more likely to be trusting of females or female names.

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