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Tag: Profits Paradise

  • India’s Central Bank Issues MLM Caution

    It didn’t take long for MLM to get some bad press in 2015. The Reserve Bank of India, the nation’s central bank, cautioned the public “against Multi Level Marketing Activities” on the first day of the new year.

    RBI issued the statement less than a month after police in Bangalore arrested four individuals associated with a “program” known as YOBSN (Your Own Branded Social Network). In November, the U.S. Securities and Exchange Commission alleged an India-based “program” known as “Profits Paradise” was a fraud.

    Some Ponzi analysts are questioning whether an emerging cycler scheme known as Unison Wealth may be Indian in origin. Unison Wealth is lauded by promoters of the Achieve Community scheme. (See K. Chang comment at PP Blog and thread below this Dec. 9 Unison Wealth Story at BehindMLM.com.)

    At least one previous MLM scheme — Club Asteria — traded on the venerated name of Mahatma Gandhi. A recent scheme known as 8Elos that may have ties to TelexFree Ponzi-scheme hucksters has traded on the venerated name of Abraham Lincoln.

    Here is RBI’s full statement (italics added):

    The Reserve Bank of India has cautioned the public against Multi-level Marketing (MLM) activities so that investors do not fall prey to unscrupulous entities.

    Explaining the functioning of these entities, the Reserve Bank stated that MLM/Chain Marketing/Pyramid Structure schemes promise easy or quick money upon enrolment of members. Income under such schemes majorly comes from enrolling more and more members from whom hefty subscription fees are taken rather than from the sale of products they offer. It is incumbent upon all members to enroll more members, as a portion of the subscription amounts so collected is distributed among the members at the top of the pyramid. Any break in the chain leads to the collapse of the pyramid, and the members lower down in the pyramid are the ones that are affected the most.

    The Reserve Bank has advised that members of public should not to be tempted by promises of high returns offered by entities running Multi-level Marketing/Chain Marketing/Pyramid Structure Schemes. The Reserve Bank has reiterated that falling prey to such offers can result in direct financial losses and they, in their own interest, should refrain from responding to such offers in any manner.

    The Reserve Bank has also said that acceptance of money under Money Circulation/Multi-level Marketing/Pyramid structures is a cognizable offence under the Prize Chit and Money Circulation (Banning) Act 1978. Members of public coming across such offers should immediately lodge a complaint with the State Police.

    Alpana Killawala
    Principal Chief General Manager

  • North American Securities Administrators Association Publishes Warning On HYIP Frauds: ‘Ponzi Schemes Sold By Unlicensed Individuals,’ International Group Says

    Don’t get fleeced by HYIP scammers and commission-based promoters who push such fraud schemes on the Internet, the North American Securities Administrators Association (NASAA) says in a new warning.

    From the warning (italics added):

    Have you ever seen an ad on the Internet or a posting on a social media site promising too-good-to-be-true rates of return in short periods of time? Then you may have encountered an advertisement for a high-yield investment program, sometimes referred to as an HYIP.

    HYIPs are Ponzi schemes sold by unlicensed individuals. In the past, con artists relied on word of mouth to lure investors into these investments. Now they rely on the Internet and social media buzz to quickly popularize their schemes before the fraud is discovered.

    recommendedreading1NASAA’s membership consists of “67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico,” the group says.

    The association’s member-agencies were instrumental last year in making sure the word got out about the “Profitable Sunrise” scheme that traded on social media and used Bible verse as a lure. Some individual NASAA member-agencies filed actions against Profitable Sunrise, as did the U.S. Securities and Exchange Commission.

    Both the Financial Industry Regulatory Authority and the U.S. Securities and Exchange Commission have published warnings on HYIP scams similar to this month’s warning by NASAA.

    On Nov. 12, 2014, the SEC charged an HYIP known as “Profits Paradise” that allegedly was operating from India while duping people into believing it was operating from the United States.

    The first Profits Paradise “plan purportedly yielded daily interest of 1.5 percent on investments of $10 to $749,” the SEC said. “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.’”

    NASAA’s HYIP warning notes that some HYIP scammers are switching to cryptocurrencies. With many HYIPs already operating in an environment of secrecy, ones that use payment vessels such as Bitcoin may intensify risk to investors.

    From an April 2014 NASAA warning on risks associated with virtual currencies (italics added):

    Some common concerns and issues you should consider before investing in any product containing virtual currency include:

    • Virtual currency is subject to minimal regulation,susceptible to cyber-attacks and there may be no recourse should the virtual currency disappear.
    • Virtual currency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to $250,000.
    • Investments tied to virtual currency may be unsuitable for most investors due to their volatility.
    • Investors in virtual currency will be highly reliant upon unregulated companies that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
    • Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect their e-Wallets from theft.

  • 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.