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Tag: SEC Office of Investor Education and Advocacy

  • UPDATE: SEC Declines To Comment On Pitchman’s Video Promo For ‘Achieve Community’ And 2 Other Ponzi-Board ‘Programs’ That Used Footage From Agency’s Website

    achievelogoThe U.S. Securities and Exchange Commission declined this morning to comment on a Jan. 9 YouTube pitch from an “Achieve Community” promoter who mixed nearly six minutes of footage from the SEC website into a pitch for Achieve and two other Ponzi-board “programs.”

    Rodney Blackburn implied in the 14:27 production that the SEC did not have jurisdiction over “programs” such as Achieve, Unison Wealth and Trinity Lines. Parts of the Blackburn promo were recorded inside his back office of Unison Wealth.

    “[D]ecline comment,” the SEC succinctly said today.

    Achieve purports that $50 sent to the “program” fetches back $400. Members reportedly were permitted to buy multiple $50 “positions” and to roll a percentage of “earnings” back into the “program,” a straight-line money-cycling scheme.

    A similar rollback feature was an element in the Zeek Rewards scheme shut down by the SEC in 2012.

    Blackburn says he prefers “passive” programs. The SEC and state-level regulators have a history of acting against such ventures. Zeek, for example, was promoted as a “passive” scheme.

    At about the 0:51 mark of Blackburn’s Jan. 9 video, ads for “programs” called “Paradox Cash” and “GlobalAdShare” appear, meaning that people such as Blackburn who sign up for Unison Wealth are being shown promos for still-other Ponzi-board schemes.

    “GET PAID DAILY FOR DOING NOTHING,” the ad for GlobalAdShare blares.

    Blackburn’s Jan. 9 video is at least the second confirmation that Unison Wealth is beaming ads for other HYIPs.

    On Dec. 12, the office of then-U.S. Attorney Timothy J. Heaphy of the Western District of Virginia had no immediate comment on an Achieve Community call in which Blackburn was a host. The call demonstrated that Achieve was driving business by reaching across state lines and that one or more senior citizens had signed up, including a woman who claimed her 86-year-old husband of 53 years had been “in the hospital for a full year and six months in the nursing home.”

    Achieve reportedly suspended payouts to members more than two months ago after losing its ability to conduct business through Payoneer. Although it announced a purported deal with Global Cash Card on Dec. 18 to resume payouts, that deal appears to have fallen through.

    The “program” said last week that it would resume payouts on an unspecified date through a “temporary” processor. The “temporary” processor was not named.

    The SEC’s Office of Investor Education and Advocacy recently has dialed up its efforts to educate the public about scams that spread on social-media platforms such as YouTube, Facebook and Twitter. Achieve and its promoters have or had a presence on all three.

     

  • BULLETIN: SEC: Now, A Bitcoin Ponzi Scheme Operated By Trendon T. Shavers — AKA ‘Pirate’ And ‘pirateat40’

    breakingnews72BULLETIN: The SEC has gone to federal court in the Eastern District of Texas, charging Trendon T. Shavers of McKinney in an alleged Bitcoin Ponzi scheme that gathered more than $4.5 million before collapsing in August 2012.

    Bitcoins are a digital currency that has “no single administrator, or central authority or repository,” the SEC said.

    Investors with at least 50 bitcoins were told that they’d receive “up to 1% interest daily,” the SEC charged, alleging that Shavers used the moniker “pirateat40” at an online forum to pitch the scheme.

    The “program” operated through an unincorporated entity known as BTCST, formerly known as First Pirate Savings & Trust, the SEC said.

    “Ponzi scheme operators often claim to have a tie to a new and emerging technology as a lure to potential victims,” said Lori J. Schock, director of the SEC’s Office of Investor Education and Advocacy.  “Investors should understand that regardless of the type of investment, a promise of high returns with little or no risk is a classic warning sign of fraud.”

    Shavers is 30, the SEC said. The agency did not reveal when its investigation began or how it determined the online identities of Shavers.

    From a statement today by the SEC (italics added):

    The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST’s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin “off the radar” in quick fashion or large quantities.  In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments.  Shavers also diverted investors’ Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay his personal expenses.

    And from an Investor Alert issued today by the SEC (italics added):

    Virtual currencies, such as Bitcoin, have recently become popular and are intended to serve as a type of money. They may be traded on online exchanges for conventional currencies, including the U.S. dollar, or used to purchase goods or services, usually online.

    We are concerned that the rising use of virtual currencies in the global marketplace may entice fraudsters to lure investors into Ponzi and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions. The fraud may also involve an unregistered offering or trading platform.

    These schemes often promise high returns for getting in on the ground floor of a growing Internet phenomenon. Fraudsters may also be attracted to using virtual currencies to perpetrate their frauds because transactions in virtual currencies supposedly have greater privacy benefits and less regulatory oversight than transactions in conventional currencies. Any investment in securities in the United States remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements.

    Prior to the collapse of the scheme, Shavers denied to forum questioners he was operating a Ponzi. Along the way, however, he slashed the purported payout from 7 percent a week to 3.9 percent a week and changed the rules about who could invest, the SEC said.

    As the scheme was collapsing, the SEC charged, “Shavers made preferential redemptions to friends and longtime BTCST investors.”

    The scheme began “at least” by September 2011, the SEC said.

  • SEC And FINRA Say ‘Pump And Dump’ Spam Increasing Sharply; McAfee Says ‘Botnet-Creating Malware’ Was Being Sold Through Liberty Reserve

    From a first-quarter 2013 security analysis by McAfee Labs. Red highlight by PP Blog.
    From a first-quarter 2013 security analysis by McAfee Labs. Red highlight by PP Blog.

    DISCLOSURE: The PP Blog uses McAfee security software. The Blog is not compensated for its use of the software.

    UPDATED 10:23 A.M. (JUNE 15, U.S.A.) The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) have issued an Investor Alert warning about a sharp increase in spam linked to “pump-and-dump” stock schemes.

    The warning points to a threats analysis for 2013’s first quarter published by McAfee Labs, an arm of McAfee, the Intel Corp.-owned Internet-security company. The same document reports that “botnet-creating malware” was being sold via Liberty Reserve, the now-shuttered payment processor purportedly based in Costa Rica that was charged in the United States last month with orchestrating a $6 billion money-laundering conspiracy.

    One of the “products” was described as “Vector Bot, for €1,000, payable via Liberty Reserve.”

    Various bots and malware kits are sold on the Internet — and not always in English. At least two of the malware pitches reproduced in the McAfee report appear to be in Russian or Slavic derivatives. One of the products pitched from a forum was called “Dump Memory Grabber,” which reportedly was designed to steal “payment card information from several US banks, including Chase, Capital One, Citibank, and Union Bank of California,” McAfee reports.

    “The malware’s author, who appears to have links to a Russian cybercrime gang, asks for US$2,000,” McAfee reports.

    ‘Pump-And-Dump’ Spam

    “Spam e-mail is the bait used to lure people into making bad investment decisions,” said Cameron Funkhouser, executive vice president of FINRA’s Office of Fraud Detection and Market Intelligence. “No one should ever make an investment based on the advice of an unsolicited email.”

    “Investors should always be wary of unsolicited investment offers in the form of an e-mail from a stranger,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy. “The best response to investment spam is to hit delete.”

    Similar to an HYIP warning issued by FINRA in 2010, the new SEC/FINRA Alert on pump-and-dump schemes advises investors that “[t]hese false claims could also be made on social media such as Facebook and Twitter as well as on bulletin boards and chat room pages.”

    On May 2, the PP Blog published a story about a pitch for a purported “opportunity” known as UPrivateBanking, a “program” pitched at victims on the alleged Profitable Sunrise HYIP scheme. The pitch appeared on Facebook and triggered a McAfee security warning. The website for UPrivateBanking triggers a “Phishing” warning.

    Later, on June 2, the PP Blog reported that a “program” known as AdHitProfits that also was targeted on Facebook at Profitable Sunrise victims also was triggering a McAfee security warning. Like the Profitable Sunrise and UPrivateBanking schemes, AdHitProfits has a presence on well-known Ponzi-scheme forums such as TalkGold and MoneyMakerGroup.

     

     

  • SEC Issues Investor Alert: ‘Be On The Lookout For Investment Scams Related To Hurricane Sandy,’ Agency Says

    Hurricane Sandy pounded New Jersey, New York and other parts of the eastern United States this week. The New York Daily News, via the Associated Press, reported today that the storm’s death toll has reached 74 in the United States.  Reuters is reporting the death toll in “North America” has reached “at least 82.” The storm also reportedly killed at least 69 people in the Caribbean.

    In some areas, the storm knocked out power, heat, phone service, public transportation and gas stations — services that affect the lives of millions of people. It also caused devastating floods and fires. Some people do not have homes or businesses to go back to, and businesses that provide vital services to neighborhoods may be closed or inaccessible.

    Looting has occurred in some areas, and now the SEC is warning about flood-related theft of a different stripe: Scammers lining up to steal insurance proceeds from those left with little or nothing in Sandy’s wake — and investment-fraud schemes, Ponzi schemes and spam capers designed to separate people from their money whether they are storm victims or not.

    From an Investor Alert by the SEC today (italics added):

    Hurricanes, floods, oil spills, and other disasters often give rise to investment scams. These scams can take many forms, including promoters touting companies purportedly involved in cleanup efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors’ money is used to pay money promised to earlier investors. Some scams are circulated through spam email, promising high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts. For example, the SEC brought a number of enforcement actions against individuals and companies who made false and misleading statements about alleged business opportunities in light of the damage caused by Hurricane Katrina. Some of those cases involved pump-and-dump scams where fraudsters use fake “news” to pump up the stock price of small companies so they can sell shares they own at artificially high prices. We also heard about fraudsters targeting individuals receiving compensation from insurance companies. Individuals, including those receiving lump sum insurance payouts, should be extremely wary of potential investment scams related to Hurricane Sandy.

    Read the full Investor Alert, issued by the SEC’s Office of Investor Education and Advocacy.

     

  • ALERT: International Con Artists Target Madoff Victims; Regulatory Agencies, Receiver In Cook/Kiley Ponzi Case Go On Guard For Copycats

    An individual or group of individuals believed to be operating internationally created a website that mimicked the website of the U.S. Securities Investor Protection Corp. (SIPC) “in an apparent attempt to target [Bernard] Madoff victims” in a fraud scheme, SIPC said.

    SIPC and the SEC issued warnings immediately, as did the court-appointed receiver in the alleged Trevor Cook/Pat Kiley Ponzi scheme in Minnesota. There is no suggestion that a similar effort is under way by con artists to fleece Cook/Kiley investors, but R.J. Zayed, the receiver in the Cook/Kiley case brought by the SEC and the CFTC, urged Cook/Kiley investors to pay attention.

    “You should use caution when giving personal information to third parties,” Zayed said on the receivership website. “Before giving anyone your information you should verify that the agency you are communicating with exists and that the individual (or system) purporting to represent that agency actually does so.”

    SIPC maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms such as Madoff’s. A scam site appeared online that used SIPC’s initials in its name, preceded by the letter “I” and a hypen, to form the domain name “I-SIPC.com.”

    The site purported to be the “International Securities Investor Protection Corporation.”

    Visitors to the bogus domain were told that the purported organization “collaborated with Interpol to recover $1.3 billion in Madoff money from a hideout in Malaysia,” SIPC said.

    Meanwhile, visitors were shown “a photo of a huge stack of U.S. currency,” SIPC said, noting a bogus “testimonial” from a purported Madoff victim who was happy with the fraudulent entity appeared on the site.

    The I-SIPC.com domain listed a registration address in Nigeria and was registered on Aug. 20, 2009, according to the registration data. It is unclear if the site was registered by a Nigerian or a person posing as a Nigerian. The site appears to be using shared hosting with 597 other domains on the same server, according to web records.

    Nigeria has an international reputation for online fraud, and some scammers — recognizing Nigeria’s reputation — have posed as Nigerians to perpetrate fraud and to cover their tracks. Such scammers could be located anywhere in the world.

    For its part, the SEC called the I-SIPC.com site a “fictitious entity.”

    “The ‘ISIPC’ Web site bears a certain likeness to the Securities Investor Protection Corporation’s (SIPC) Web site, mimicking its look, feel, and content in an attempt to achieve an aura of authenticity with Madoff victims,” the SEC said. “The ‘ISPIC’ Web site claims to partner with several governments including the United States, and links to actual government Web sites to signify an affiliation. ‘ISIPC’ also falsely claims to be sponsored by the United Nations, the International Monetary Fund, and the World Bank.”

    SIPC said it was investigating misuse of its trademark and “will seek to have the violator prosecuted to the extent the law allows.”

    “We know from information provided to us by individuals that this bogus group is already attempting to obtain funds and confidential financial information from investors in the U.S.,” said SIPC President Stephen Harbeck.

    “SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source. We intend to use every available means to shut down this illicit operation.”

    The bogus site now is loading a message that says, “THIS SITE IS TEMPORALLY CLOSED.”

    “Investors who lose money in widely publicized schemes are often targeted by con artists looking to cash in on the victim’s desire to recover losses,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy. “Victims of fraudulent schemes should be aware that such refund schemes commonly exist, and can be perpetrated through copycat Web sites that appear similar to those of actual regulators or other organizations.”