BULLETIN: SEC Moves To Block Virginia Man From Intervening In Profitable Sunrise Case; Appointment Of Receiver Will Depend On Success Of Efforts To Repatriate Assets To United States

BULLETIN: The SEC has asked a federal judge not to permit a Virginia man to intervene in the Profitable Sunrise HYIP fraud case, saying that the man’s self-filed pleading “would open the floodgates for other investors to file similar motions.”

In late April, James Paul Schilling of Mechanicsville effectively asked U.S. District Judge Thomas W. Thrash Jr. of the Northern District of Georgia to unfreeze $57,300 sent to Profitable Sunrise via wire in a series of transfers in January and February. In early April, the SEC described Profitable Sunrise as a pyramid scheme that may have collected tens of millions of dollars while operating through a “mail drop” in England and using other companies to gather the funds.

Money from the scheme was directed at entities in several countries, the SEC said.

Profitable Sunrise was targeted at U.S. residents, the SEC said in April. One of the claimed “plans” of Profitable Sunrise was bizarrely dubbed the “Long Haul” and purported to pay 2.7 percent a day.

“In this case, permitting S[c]hilling to intervene and retrieve money commingled with funds deposited by thousands of other investors would open the floodgates for other investors to file similar motions, which would create an unnecessary strain on this Court’s resources thereby delaying the proceedings and, ultimately, any distribution of funds to investors,” the SEC argued.

The agency said in its opposition to Schilling’s motion that it was contemplating asking the court to appoint a receiver, but any decision to ask for the appointment would depend on whether the SEC’s “efforts to repatriate funds are successful.

“A Receiver could best administer a process to return funds to defrauded investors pursuant to a plan of distribution approved by the Court,” the SEC said.

In April, the SEC said that “Hungarian law enforcement authorities” had frozen an account holding $11.3 million connected to the scheme as part of an “investigation of suspected money laundering.”

Whether that money will be returned to the United States is unclear. Also unclear is whether Profitable Sunrise funds that may be held in other countries ever will be returned. Among other things, the Profitable Sunrise case demonstrates the dangers of doing business with murky enterprises, regardless of where an investor lives. Investors by the thousands could be left holding the bag.

Profitable Sunrise was promoted on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. Although promoters claimed “Roman Novak” was running Profitable Sunrise, it remains unclear whether he actually exists. The scheme spread through an MLM-style network of promoters hoping to glean commissions.

The SEC is asking Thrash to summarily deny Schilling’s motion or “in the alternative, order that Shilling support the motion with admissible evidence and provide citation to the legal authorities that he claims support his motion.”

Despite the murkiness of Profitable Sunrise, former pitchman John Schepcoff is telling YouTube viewers that he’s identified another venture that is “1,000 percent better” than Profitable Sunrise and Zeek Rewards. In August, the SEC described Zeek as a $600 million Ponzi and pyramid scheme, saying it duped people into believing a return of about 1.5 percent a day was legitimate.

The Profitable Sunrise “Long Haul” plan offered about double the purported returns of Zeek.

NOTE: Our thanks to the ASD Updates Blog.