SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans
A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.
VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.
A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.
Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.
“Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.
The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.
From the SEC’s ViziNova complaint (italics added/light editing performed):
Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.
In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .
Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.
ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.
Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.
“There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”
The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.
Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.
In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.
Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.
Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.