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Tag: Alabama Securities Commission

  • DEVELOPING STORY: Thai Police Bust ‘UFunClub,’ Yet Another Cross-Border Network-Marketing Program; Case May Involve $307 Million

    ufunclubUPDATED 9:10 A.M. EDT U.S.A. It’s whack-a-mole via MLM or network marketing — again.

    There are reports in Thai media about a major pyramid/Ponzi bust involving a cross-border “program” known as “UFunClub.” (See links below.)

    No American suspects appear to have been arrested or named so far, but Americans have promoted UFunClub. One of them, according to BehindMLM.com, is Jamison Palmer.

    On Feb. 19, 2015, the PP Blog contacted the Alabama Securities Commission for comment after it observed a promo online for “UFunClub” attributed to Melton McClanahan, an American implicated in the cross-border “Profitable Sunrise” scheme broken up by state regulators and the U.S. Securities and Exchange Commission in 2013.

    Even as McClanahan was pitching UFunClub, he was pitching “Unison Wealth,” a Ponzi-board “program” pushed by Achieve Community huckster Rodney Blackburn. Achieve Community was taken down by the SEC in February 2015.

    ASC did not respond to the request for comment on UFunClub and Unison Wealth, and it is unclear whether they are under investigation in the United States. What is clear is that McClanahan was issued a cease-and-desist order by ASC for his alleged role in pushing Profitable Sunrise. He also was subpoenaed by the SEC in the Profitable Sunrise case.

    It’s also clear that some network marketers are moving from scheme to scheme to scheme in an ongoing and insidious environment of whack-a-mole. Schemes using a common network of promoters are feeding off each other.

    From a Bangkok Post story on UFunClub (italics added):

    Deputy Prime Minister Prawit Wongsuwon instructed police to investigate the case and quickly hunt down and arrest the suspects.

    Police have been working alongside the Consumer Protection Police Division, the Office of The Consumer Protection Board and the Anti-Money Laundering Office in the investigation. The company’s operating licence was revoked.

    Like other schemes, UFunClub spread in part on social media, according to a report at Nationmultimedia.com (italics added):

    OCPB secretary-general Amphon Wongsiri said the U-Fun group mobilised investments through the website www.u-fun-u-token.com, www.youtube.com and many other avenues including via direct contact by its agents.

    Recent whack-a-mole schemes include TelexFree, Wings Network, Zeek Rewards, eAdGear, iFreeX and EmGoldEx.

  • INVESTOR ALERT: Statement From Alabama Securities Commission On High-Yield ‘Opportunities,’ Bitcoin, Iraqi Dinars — And More

    EDITOR’S NOTE: This statement from the Alabama Securities Commission is dated March 12, 2014. The PP Blog has applied in-house formatting elements to the statement. Other than that, the statement is verbatim.

    INVESTOR ALERT – Understanding high-risk investments
    What you don’t know CAN hurt you!

    MONTGOMERY, ALABAMA (March 12, 2014) As our state’s and the country’s economy slowly improves, Alabama citizens could still be at risk for losing their hard-earned money to high-risk investment products that guarantee or promote unrealistically high rates of return with little or no exposure to loss. The Alabama Securities Commission (ASC) receives numerous inquiries about exotic-sounding, high-yield investment “opportunities” that, in many cases, are revealed to be unregistered investments touted by unlicensed individuals who employ vague or unrealistic trading strategies.

    And, with the rapid evolution and marketing potential of social media and the internet, investors may be lured by the illusion that most such opportunities are legitimate. The ASC alerts Alabama investors about two current, high-profile, high-risk investment opportunities that have the potential to seriously compromise their personal financial assets if not investigated thoroughly and carefully.

    BITCOIN issues

    Virtual or digital currencies, such as Bitcoin, have recently become popular as an alternative to cash or traditional lines of credit. Bitcoin and numerous other “crypto-currencies,” may be traded on online exchanges for conventional currencies, including the U.S. dollar, or used to purchase goods and services, usually online.

    Unlike traditional currencies, virtual currencies’ value can fluctuate radically according to user demand. In some cases, investors who trade on virtual currency exchanges have experienced trouble redeeming the digital currency or in cashing-out. The potential for fraudsters to use crypto-currencies to perpetrate financial scams is enticing due to the currencies not being issued by a governmental authority or financial institution, and having less regulatory oversight than transactions in conventional currencies.

    “The increasing prevalence of Bitcoin and other digital currencies has provided a fertile environment for financial criminals to make money on the increasing popularity and acceptance of these products,” said ASC Director, Joseph Borg. “The value of Bitcoin and other crypto-currencies can be highly volatile and investors should be aware that investments that incorporate ambiguous money systems can lead to very real risks, including the potential to lose one’s money!”

    Iraqi Dinar issues

    The Iraqi dinar “investment opportunity” is a scam that has existed for more than a decade and has regained some of its former popularity. As with many foreign exchange currency trading frauds, the dinar investment opportunity is often pitched as a “can’t miss” method by which the interested investor can profit from a severely undervalued Iraqi currency that is “certain” to appreciate in value in just a short time.

    Fraudsters engaging in the dinar scam promise that extravagant profits can be realized if the investor buys the dinar at today’s values, typically 1,000 or more dinars to one U.S. dollar. The investor then exchanges the dinars for dollars at a later date, once the dinar exchange rate has improved.

    ASC Director Borg cautions that foreign exchange currency trading is very risky for main street investors.

    “Often, promoters of foreign exchange currency trading schemes, such as those involving the Iraqi dinar, lure investors with the promise of “control” over a large amount of foreign currency with a relatively small initial outlay. Fraudsters often predict inevitable increases in the currencies’ value, which will supposedly lead to huge returns over a short time, with little or no downside risk.”

    According to Borg, investors should not be fooled by the promise of easy money.

    “As with any traded commodity, investing in foreign currencies can be extremely risky and generally unsuitable for all but the most seasoned investors who can afford the high risk.”

    Commodity trading platforms are subject to federal and state regulations; potential investors may contact the U.S. Commodity Futures Trading Commission (CFTC) at www.cftc.gov for more information; check registration status and disciplinary history of commodities at the National Futures Association (http://www.nfa.futures.org/) or call NFA at 800-676-4632; and contact the ASC at www.asc.alabama.gov or call 1-800-222-1253 to determine if an investment opportunity and the person making the office are properly registered.

    What you can do

    The Alabama Securities Commission encourages all Alabama citizens to learn and incorporate
    sound and proven investment techniques as a means to grow and safeguard their personal financial assets:

    • Check and verify. Before you buy, always independently verify with state and federal regulators who you are dealing with and whether the seller of the investment opportunity and the product is properly registered.
    •  Exercise skepticism. Be aware that many individuals who offer strategies for getting rich quickly make their money on the sales of their books or seminars. Ask yourself why they’re sharing their secrets with you instead of keeping it to themselves.
    • Beware of guarantees. Be suspect of anyone who promises or guarantees an investment will perform a
    • predictable way or will generate consistent or unreasonable returns.
    • Be suspect of complex strategies. Avoid any investment opportunity that touts complex or exotic-sounding techniques to achieve unusual success. Investors should be able to clearly discern what kind of opportunity is being offered; who is offering it; how does it make money; what is required to get your money out of the investment; and what are the risks.

    Avoid pushy salespeople and claims of urgency. No reputable financial professional should pressure you or insist that you “act now” when considering an investment opportunity. If it is such a good deal today, it will be a good deal tomorrow—after you have had a chance to check and verify.

    Contact the ASC with inquiries concerning securities broker-dealers, agents, investment advisers, investment adviser representatives, financial planners, registration status of securities or debt management programs, to report suspected fraud or to obtain consumer information. The ASC provides free investor education and fraud prevention materials in print, on our website and through educational presentations upon request.
    # # #

  • YouTube Video Pitchmen For Profitable Sunrise Hit By Subpoenas From SEC

    John Schepcoff says he potentially lost more than $193,000 in Profitable Sunrise but that a new “program” is “1,000 percent” better.
    John Schepcoff says on YouTube that he potentially lost more than $193,000 in Profitable Sunrise but that a new “program” operating from Hong Kong is “1,000 percent” better.

    EDITOR’S NOTE: Much remains murky about Profitable Sunrise, the alleged purveyor of five HYIP “plans,” including one bizarrely dubbed the “Long Haul” that purported to pay a preposterous 2.7 percent a day. The “Long Haul” payoff was dubbed the “Easter Gift.” Investors were told it would arrive April 1 — but it never materialized.

    One thing that is abundantly clear is that Profitable Sunrise potentially has created legal exposure and inconvenience for individual pitchmen, even though purported operator “Roman Novak” appears to be gone like a thief in the night.

    Still pushing HYIP schemes?

    _____________________________

    At least three Profitable Sunrise pitchmen — including at least two who pushed the “program” on YouTube — have been subpoenaed by the SEC to appear at depositions this month. The agency’s move is occurring in the aftermath of the depositions of at least two other Profitable Sunrise figures in Florida and Utah in April.

    In July 2010, the PP Blog reported that the Financial Industry Regulatory Authority (FINRA) warned investors worldwide “to stay away from HYIPs,” saying that they use social-media sites such as YouTube, Twitter, Facebook and online forums and “rating” sites to spread Ponzi misery globally.

    At least two of the men named in the new round of subpoenas went on to push other purported “opportunities” after the SEC described Profitable Sunrise in April as a murky HYIP that had used a “mail drop” in England and a series of offshore bank accounts in multiple countries to scam investors potentially of tens of millions of dollars.

    A subpoena was docketed yesterday in federal court in Atlanta for John Schepcoff of Carmichael, Calif. Schepcoff also is known as James Schepcoff, according to the SEC. His deposition has been scheduled for June 12 at 10 a.m. in San Francisco.

    After pitching Profitable Sunrise on YouTube prior to its March collapse amid especially murky circumstances, Schepcoff returned to YouTube in late April and began pitching yet another murky “program” purportedly operating from Hong Kong. Although the identity of the Hong Kong “program” was unclear, records suggest it was a Zeek Rewards-like “opportunity” known as “Better-Living Global Marketing.”

    In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid scheme that had pushed unregistered securities on hundreds of thousands of people and duped them into believing they were receiving a legitimate return of about 1.5 percent a day. The U.S. Secret Service also said it was investigating Zeek.

    A subpoena also was docketed in Atlanta yesterday for video pitchman Melton McClanahan of Fairfield, Calif. McClanahan was identified in a March order by the Alabama Securities Commission (ASC) as a Profitable Sunrise agent. McClanahan then posted a YouTube video denying he was an agent and yet claiming the information he passed along to lure prospects “was given to me.”

    McClanahan’s deposition is scheduled for June 11 at 10 a.m. in San Francisco.

    An SEC subpoena also was docketed yesterday in Atlanta for Don Gillette of Miami. Gillette reportedly told members of his Profitable Sunrise downline that he was turning to a new “program” that “must have a realistic earning potential of at least $500 a day or more,” according to a post at the RealScam.com antiscam forum.

    Details about the scheduling of Gillette’s deposition are unclear.

    As part of its ongoing Profitable Sunrise probe, the SEC also has subpoenaed records at PayPal and at Societe Generale in New York, according to the docket of U.S. District Judge Thomas W. Thrash Jr. in Atlanta. Whether Profitable Sunrise or its members were using the companies to move money is unclear.

    One of the problems with HYIP schemes is that they may cause laundered funds or proceeds of criminal enterprises to pass through or be placed on deposit at legitimate financial institutions.

    News of the new round of Profitable Sunrise subpoenas follows on the heels of the takedown last month of Liberty Reserve, amid allegations it had orchestrated a $6 billion money-laundering conspiracy. Liberty Reserve was popular with HYIP scammers and other criminals.

    NOTE: Thanks to the ASD Updates Blog.

     

  • Joe Borg Of Alabama Securities Commission Tells WSFA That Profitable Sunrise Worked Because People ‘Kind Of Glossed Over The Mathematics’

    Joe Borg of the Alabama Securities Commission. From: WSFA news report.
    Joe Borg of the Alabama Securities Commission. From: WSFA news report.

    EDITOR’S NOTE: Alabama was one of the first U.S. states to take action against the Profitable Sunrise HYIP “program,” issuing both an Investor Alert and a cease-and-desist order last month. The C&D lists two alleged “agents” of Profitable Sunrise, demonstrating that a “program” can create problems for pitchmen, perhaps even as the “program” operators make a getaway or disappear into the darkest corners of the Internet.

    Profitable Sunrise had at least five purported investment plans, including one dubbed the “Long Haul” that promised a payout of 2.7 percent a day.

    Whether the bizarrely named “Long Haul” plan was a deliberate taunt at regulators and possibly even the pitchmen who helped the scheme gain a head of steam remains unclear.

    Listed as agents in the Alabama order were Melton McClanahan and Adam York. “An investigation of the company’s actions revealed that the men allegedly promoted at least five different ‘investment plans’ through a website used to promote Profitable Sunrise investment program and disseminate information to potential investors regarding the company’s various investment opportunities,” the Alabama Securities Commission said in the order.

    Also listed in the order were purported Profitable Sunrise operators Roman Novak and Radoslav Novak. In a complaint last week, the SEC said that “Profitable Sunrise operates for the benefit of unknown individuals and/or organizations doing businesses through companies formed in the Czech Republic and using bank accounts in the Czech Republic, Hungary, Latvia, and China, among other places.”

    ____________________________________

    Joe Borg of the Alabama Securities Commission (ASC) has dealt with massive fraud schemes that traded on faith, including the Greater Ministries International Church caper in the 1990s that led to criminal convictions against five individuals.

    Back in 1999, ASC and the Ohio Division of Securities filed a joint complaint in federal court in Florida to shut GMI down. The purported “opportunity” took in more than $550 million by touting “divinely-inspired investments in the foreign currency market and gold, silver and diamond mines in Africa and the Caribbean,” ASC said at the time.

    Now, Borg and other state and provincial regulators are tacking the Profitable Sunrise scheme, which traded on faith and promised absurd returns.

    “I think because they used a per-day percentage, people kind of glossed over the mathematics,” Borg told WSFA.

    WSFA.com: News Weather and Sports for Montgomery, AL.

  • BULLETIN: Alberta Securities Commission Issues Warning On ‘Profitable Sunrise’ After First Calgary Financial Observes ‘Trend’ Of ‘Suspicious’ Overseas Transactions

    breakingnews72BULLETIN: The Alberta Securities Commission (ASC) has issued a warning on the Profitable Sunrise “program.” The Canadian agency’s move followed on the heels of reports from First Calgary Financial that “several of its Calgary customers have attempted to withdraw significant amounts of funds from their accounts for wire transfers to the Czech Republic,” ASC said.

    “Albertans should be aware that Profitable Sunrise and its agents are not registered to sell securities in Alberta,” the agency said.

    ASC is Alberta’s securities regulator. The agency noted that the Securities Division of the North Carolina Secretary of State issued a cease-and-desist order to Profitable Sunrise last month, amid allegations that the “program” was selling unregistered securities.

    “It’s important for investors to know that there is no such thing as a high return, no risk investment,” said Bill Rice , chair and CEO of the ASC. “If you are persuaded to send money overseas, it may be difficult, if not impossible to get it back if something goes wrong.”

    The United Kingdom’s Financial Services Authority issued a warning on Profitable Sunrise last week. So did the Alabama Securities Commission in the United States.

    First Calgary is Canada’s ninth-largest credit union. A First Calgary executive said the company contacted ASC after observing unusual transactions.

    “Our front-line employees are trained to identify suspicious transactions by members so that we may be able to stop them from becoming the possible victims of an investment scam,” said Debbie Pratt, vice president of retail banking for First Calgary Financial.  “In this case, we noticed a trend and a quick call to the ASC allowed us to alert our members.”

    Profitable Sunrise lists a business address in the United Kingdom. Regardless, the enterprise is soliciting funds to be sent to Raiffeisenbank AS in the Czech Republic, according to North Carolina investigators. An entity known as Melland Company SRO was listed in Profitable Sunrise wiring instructions as the beneficiary, according to the North Carolina order.

    A credit union used by a North Carolina-based Profitable Sunrise investor blocked at least one transaction directed toward the Czech bank, citing suspicions of fraud, according to the order.

    Among other claims, Profitable Sunrise purported to offer a “Long Haul” plan that paid 2.7 percent a week with an Easter payout. The Profitable Sunrise “program” is being pitched on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup.

    Zeek Rewards, which the SEC in August 2012 called a $600 million Ponzi- and pyramid scheme, was promoted in part from the same forums. Some individuals have promoted both Zeek and Profitable Sunrise.

     

  • URGENT >> BULLETIN >> MOVING: Alabama Issues Warning On ‘Profitable Sunrise’

    breakingnews72URGENT >> BULLETIN >> MOVING: The state of Alabama has issued a warning on Profitable Sunrise. The move follows on the heels of a cease-and-desist order issued last week by North Carolina.

    The warning comes in the form of an “investor alert” issued by the office of Joseph Borg, the director of the Alabama Securities Commission.

    “We want to make our citizens aware of the potential perils of web-based investment marketing,” said Borg. “As with all investment opportunities, investors should thoroughly scrutinize any offer, especially if it comes from a foreign country,” Borg said. “Most investment offerings, as well as the person making an investment offering, must be registered with the Alabama Securities Commission. This is a critical first step in protecting the public from con artists and investment fraud.”

    Borg urged “anyone in Alabama who has invested with Profitable Sunrise to contact the ASC’s Enforcement Division at 1-800-222-1253.”

    From ASC (italics added):

    An investigation of Roman Novak, Radoslav Novak and their company, Inter Reef, Ltd., doing business as Profitable Sunrise, revealed that the men allegedly promoted at least five different “investment plans” through a website that offered rates of return ranging from 1.6% per business day to 2.7% per business day for periods of from between 180 to 240 business days. Investors were told that their money would be used to fund short-term, “risk-free” loans to businesses, and that “all funds deposited with us are insured against loss” by a leading investment bank. Further investigation revealed that victims had been instructed to wire money to financial institutions in Eastern Europe, including one bank identified as being in the Czech Republic. ASC records revealed that neither of the men, nor the company they represent, are registered to conduct securities business in Alabama, as required by the Alabama Securities Act.

    Read the ASC warning.

  • BULLETIN: Florida Man, 71, Booked Into Alabama Jail On Theft Charges; James Leonard Craft Is Subject Of Probe By Alabama Securities Commission Into Purported ‘South American’ Railroad Cross Ties; Some Strange Parallels To ASD Case Emerge

    James Leonard Craft booking photo: Source: Etowah County Sheriff's Office.

    BULLETIN: The cavalcade of senior citizens implicated in alleged securities schemes continues. James Leonard Craft has been taken from a jail cell in Florida and placed in one in Alabama to answer felony charges that he was at the helm of a securities swindle.

    Craft, 71, of Milton, Fla., originally was arrested in Florida Sept. 23 on an out-of-state fugitive warrant. He was held at a Santa Rosa County detention facility until yesterday, when he was transported to Etowah County Jail in Alabama to face charges. Bond was set at $30,000, according to records.

    In October 2010, the Alabama Securities Commission (ASC) named Craft in a cease-and-desist order. The agency alleged that Craft, beginning in 2008, was selling unregistered securities for a purported lumber business that produced or sold railroad ties.

    The securities were offered through LLCs known as Universal Wood Products LLC, Century Lumber and Land LLC and Milton Timber LLC, according to the ASC order.

    An Alabama resident told investigators he was introduced to the opportunity by a “business associate and missionary residing in Tennessee,” according to ASC records. Whether ASC suspects affinity fraud was not immediately clear.

    NorthEscambia.com is reporting that Craft was part of an October 2010 ribbon-cutting ceremony for an upstart business that the struggling Florida small town of Century expected would create 500 jobs. Those jobs never materialized, the site reported. More than 3,000 applications for employment were received.

    ASC records claim that at least two Alabama residents were told that the purported lumber firms could make money because Craft and a business partner bought railroad ties in “South America” and sold them to U.S. railroad companies “suffering from a shortage of the lumber product.”

    Alabama investors directed at least $180,000 to a promissory-notes scheme involving Craft, according to ASC.

    Precisely how the Craft case had morphed into a criminal prosecution was not immediately clear today. Etowah County Jail records show that Craft is being held for another “agency,” but the name of the agency was not listed.

    In Alabama, county-level prosecutors and ASC work together on securities cases.

    The emerging Craft case has bizarre coincidences and parallels to the AdSurfDaily case. ASD was operated by Andy Bowdoin, a senior citizen in the small Florida town of Quincy, which is situated in Gadsden County. Craft, himself a senior citizen, also operated from a small town in Florida. By coincidence, the jail in which he’s currently lodged is in Gadsden, Ala.

    Andy and Faye Bowdoin at a July 2008 Chamber of Commerce photo op. The small town of Quincy was pleased that ASD had created jobs, but the ASD story took a sour turn when the U.S. Secret Service accused Andy Bowdoin of operating an international Ponzi swindle a month after this photo was taken. Some ASD employees were getting paid in "ad packs," according to court records.

    In the case of ASD, the Gadsden County Chamber of Commerce announced in 2008 it was pleased that ASD had made its home in Quincy and was creating jobs. The Century Area Chamber of Commerce appears to have felt the same way about the Craft-related  firms. The NorthEscambia.com story linked to above shows a Chamber banner at the Craft ribbon-cutting ceremony. Craft appears in the photo alongside people who appear to be genuinely pleased and proud that a jobs-creator had come to the small town.

    Like Craft, ASD’s Andy Bowdoin was implicated in an Alabama securities swindle. Bowdoin’s Alabama caper occurred in the 1990s, according to records.

     

     

  • RECOMMENDED READING/VIEWING: Washington Post/Bloomberg Report On ‘The Ponzi Schemer Next Door’; FINRA/AARP Share Tale Of Purported ‘Bank President’ Who Lured Victims While ‘Craving Cocaine’ At Pay Phones From Which He Set Up Marks

    This man purported to be a bank president. In reality, he was an investment fraudster who used pay phones to lure people into scams as he was craving cocaine, according to a remarkable video airing on the Internet and PBS stations.

    The Washington Post and Bloomberg published Bob Carden’s story about how smart people get sucked into investment scams. The story is titled, “Investment fraud isn’t relegated to Wall Street: Beware the Ponzi schemer next door.”

    Carden produced the video “Tricks of the Trade: Outsmarting Investment Fraud.” Editor John Warnock assembled the package, which shows some of the things FINRA and AARP are doing to educate the public about the plague of fraud schemes and how to avoid them.

    Read the story here.

    And make sure you set aside some time to watch Carden’s pointed video (below), which is running on New Hampshire Public Television and elsewhere. The video shows footage of actual scammers talking about how they plied their trade and includes audio of scammers making pitches, including rude ones. You’ll learn about the buttons they push, the manipulation tactics they employ and how people who would seem to know better get duped.

    The video features commentary from psychologist Robert Cialdini, commentary from fraud victims, commentary from fraud perpetrators and commentary from fraud-busters, including Joe Borg of the Alabama Securities Commission.

    Borg, among other things, is famous for prosecuting the case against Greater Ministries International, a colossal Ponzi scheme that traded on faith and operated from Florida.

    Among the many interesting things in the video is footage from the old Candid Camera TV show in which passersby were persuaded the entire state of Delaware was “closed.”

    Watch the full episode. See more Making Sense New England.

  • A NEW WORLD SPEED RECORD? Alabama Jury Takes Only 28 Minutes To Convict Man Of Selling Unregistered Securities; Scott Frye Initially Fled To Philippines, But Small U.S. Community Wouldn’t Be Denied Justice

    Want to mess with Alabamans in the securities fraud era? Don’t do it in Coffee County. A jury there took just 28 minutes to convict Scott Frye on five counts of selling unregistered securities or causing them to be sold.

    That’s an average of 5.6 minutes of deliberations per count. The case was prosecuted by Coffee County District Attorney Tom Anderson and the Alabama Securities Commission.

    Frye, who faces court action elsewhere in Alabama, initially avoided prosecution by fleeing to the Philippines. But he was arrested there after the United States revoked his passport and he became an undocumented alien on foreign soil, and Coffee County — which has a population of less than 47,000 — sent an investigator to bring him back from the Western Pacific to face trial.

    Enterprise, the small Alabama city in which Frye’s two-day trial was conducted, is nearly 9,000 miles away from Manila, where Frye was arrested in 2009.

    The Dothan Eagle reported on the 28-minute verdict. Other local media outlets such as WDHN have kept communities informed about the Frye case and have shown Frye being led from the courthouse in handcuffs.

    Frye has been dubbed “the father of Internet fraud” — and it may be a richly deserved title. Though only in his early 40s upon his Alabama conviction this week, Frye’s name surfaces in SEC records dating back to 1995, when he was just 27.

    One of the early pioneers of online fraud, Frye initially hatched a scheme that promised “riskless profits”  from “investments in two Costa Rican enterprises,” the SEC said 16 years ago. The scam proved to involve what has been described as “coconut chips.”

    Frye also was linked by Pennsylvania authorities to a securities scheme involving a device that purportedly would permit jewelers “to determine the exact quality and value of any gemstone.”

    The Internet was so new back then that law enforcement felt the need to explain to judges what it was, and there was no general agreement about how the word best was presented in court documents. The SEC initially used an uppercase “N” in the third syllable.

    “Frye has posted numerous messages on the InterNet, a decentralized web of computers, accessible to millions of potential investors across the country and world-wide, in which Frye has solicited funds from investors,” the SEC wrote in the 1995 Frye case.