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SEC Enforcement Chief References Investor Alert On ‘Pyramid Schemes Posing As Multi-Level Marketing Programs’ In Congressional Testimony Today, Says ‘Coordinated Effort’ To Disrupt Them Under Way

“The staff also has recently seen what appears to be an increase in pyramid schemes . . . under the guise of ‘multi-level marketing’ and ‘network marketing’ opportunities . . . These schemes often target the most vulnerable investors, and social media has expanded their reach. The Division is deploying resources to disrupt these schemes through a coordinated effort of timely, aggressive enforcement actions along with community outreach and investor education. We are also using new analytic techniques to identify patterns and common threads, thereby permitting earlier detection of potential fraudulent schemes.” — Andrew Ceresney, SEC Enforcement Division director, March 19, 2015

3RD UPDATE 6:09 P.M. EDT U.S.A. Bad news for “program” scammers and their willfully blind enablers: Andrew Ceresney, the director of the SEC’s Divison of Enforcement, told lawmakers on Capitol Hill today that scams using an MLM or network-marketing business model are on the radar.

In fact, according to written testimony Ceresney delivered to the House Capital Markets and Government Sponsored Enterprises subcommittee, they are enforcement “priorities” — right up there with insider trading, microcap fraud and other forms of securities fraud.

“The Division is deploying resources to disrupt these schemes through a coordinated effort of timely, aggressive enforcement actions along with community outreach and investor education,” Ceresney told the panel.

New Jersey Republican Rep. Scott Garrett chairs the panel. Rep. Carolyn B. Maloney, a New York Democrat, is ranking member.

In October, an SEC official attending a symposium sponsored by the Federal Trade Commission on the subject of how fraud affects communities told the audience that the SEC has a “newly established pyramid-scheme task force.”

Ceresney didn’t reference the task force in his prepared remarks today. However, the agency already has filed two actions against MLM or network-marketing schemes this year. In February, the agency sued the “Achieve Community,” alleging it was a Ponzi- and pyramid scheme that had gathered about $3.8 million and had spread on social media. One or more criminal probes related to the SEC’s Achieve investigation are believed to be under way, amid concerns Achieve was funneling scam proceeds offshore.

Also in February, the SEC sued a “program” known as Wings Network, alleging it was targeting Latino communities and that its promoters “used Facebook to publicize ‘business meetings’ that took place at hotels and other locations in Connecticut, California, Florida, Massachusetts, Pennsylvania, Texas, Georgia, and Utah.

“The promoters also set up storefronts or ‘training centers’ to lure investors into attending Wings Network presentations,” the agency charged. “For example, one promoter used a storefront in downtown Philadelphia to make presentations to prospective investors, and another promoter rented office space in Pompano Beach, Fla., and spread the word in the local Latino community to attract prospective investors to come in and hear presentations.”

Wings appears to have gathered at least $23.5 million.

In addition to targeting vulnerable population groups, Wings Network tried to sanitize itself by falsely trading on the name of the Direct Selling Association, the SEC said in court filings. Wings has been tied to two companies that used the name Tropikgadget.

Both ostensibly operated from Portugal through business entities set up in Madeira, a Portuguese island in the North Atlantic, and through Sharjah, a city in the United Arab Emirates, the SEC alleged.

Court records suggest Wings had a strong presence in Marlborough, Mass., the town from which the TelexFree MLM scheme was based. In April 2014, the SEC described TelexFree as a massive Ponzi- and pyramid scheme largely targeting immigrant populations. A court-appointed trustee says TelexFree may have gathered $1.8 billion through its pyramid scheme in about two years.

Participants hailed from dozen of countries. A partial list of U.S. participants shows many names that appear to be Latino. Trustee Stephen B. Darr said in court filings that the full list of worldwide participants “contains 1,894,940” names and spans “35,110 pages.”

A list of alleged “winners” in the 2012 Zeek Rewards scheme broken up the SEC and the U.S. Secret Service also appears to include a disproportionate share of Latino names or names from other vulnerable population groups. Zeek is estimated to have rounded up $897 million in less than two years and to have affected on the order of 800,000 victims.

Zeek’s name (through parent Rex Venture Group LLC) was referenced in a footnote and related link in today’s written testimony by Ceresney.

So was the name of CKB168, a “program” that allegedly targeted members of Asian-American communities in New York and California and was taken down by the SEC in 2013. The alleged haul was pegged at at least $20 million.

The footnote pointed to an SEC investor alert dated Oct. 1, 2013, and titled, “Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs.” The alert, which has been translated into Chinese, Spanish, Portuguese, Vietnamese and Creole, has been updated to include information on “programs” such as TelexFree and Wings Network.

Though not referenced specifically in the October 2013 alert, “programs” such as eAdGear, Zhunrize and WCM777 also have encountered SEC actions. All three appear to have affected Asian population groups. WCM777 also clearly affected Latino groups and has emerged as one of the strangest MLM schemes of all time.

Court filings suggest that $750,000 in WCM777 money was siphoned off and provided to one or more lobbying firms. On March 13, the PP Blog reported that more than $400,000 in proceeds allegedly were directed to a former CIA operative who once worked as a political fundraiser and has two felony convictions.

Some WCM777 promoters had claimed that $14,000 sent to the California-based “program” returned $500,000 in 52 weeks. WCM777 appears to have gathered more than $80 million in about a year, with the proceeds from the MLM “program” diverted to purchase golf courses, real estate and more. Tens of millions of dollars appear to have been diverted to Hong Kong.

The alleged haul of eAdGear was $129 million. Two persons have been charged criminally.

Zhunrize, the SEC said, gathered about $105 million.

Today’s Congressional testimony took place against the backdrop of continuing clashes between Herbalife and activist investor Bill Ackman, an Herbalife short-seller who has accused the MLM program of being a pyramid scheme that targets Latinos.

Herbalife, which was not referenced in today’s testimony, denies it is a pyramid scheme and says it is proud of its appeal to Latinos and serves the community honorably. (Ackman also isn’t mentioned in the testimony.)

Responding on web forums such as Seeking Alpha, fans of Herbalife have accused Ackman of pandering to enforcement agencies, members of Congress and Latino groups as part of a scheme to inspire investigations that would line his pockets by driving down Herbalife’s stock price.

In media accounts, Ackman has said he won’t keep personal profits if his Herbalife short pays off. At the same time, he asserts he is pursuing profit for his hedge-fund investors through a strategy that also delivers social justice.

Perhaps the only thing clear right now is that MLM, no stranger to controversy, never before has been under a light this intense.

The Capital Markets and Government Sponsored Enterprises subcommittee is under the House Financial Services Committee. The committee is chaired by Rep. Jeb Hensarling, a Texas Republican. Rep. Maxine Waters, a California Democrat, is ranking member.

Read Ceresney’s written, footnoted testimony.

Mar 19, 2015
Network-Marketing Pitchman Camps Out At SEC Website, Produces Commercial For Achieve Community, Unison Wealth And Trinity Lines; ‘They’re Passive . . . You Just Kind Of Put Your Money Down’ And Receive Payouts

EDITOR’S NOTE: The screen shots below show that Rodney Blackburn ends his “Unison Wealth” promo at the 8:29 mark of a 14:27 video. At the 8:30 mark, the website of the SEC becomes the feature and remains so for nearly the next six minutes as Blackburn touts Achieve Community, Unison Wealth and Trinity Lines, Ponzi-board “programs” one and all. It is Saturday. The PP Blog did not immediately hear back from the SEC on a request for comment.

1. From ‘Unison Wealth’ . . .

2. . . . To The SEC

“We’re leaving the markets of these crazy MLM companies, and there are people like the Achieve Community, Trinity Lines, Unison Wealth, many of these other companies are coming out. And they are making programs that are very simplistic, they’re passive, they’re residual incomes. They’re just so simple you just kind of put your money down.” — Rodney Blackburn, Jan. 9, 2015.

A 14:27 YouTube video from an “Achieve Community” member now promoting at least two other Ponzi-board schemes includes nearly six minutes of continuous footage from the website of the U.S. Securities and Exchange Commission.

The latest promo by Rodney Blackburn focuses on “Unison Wealth” and has a publication date of Jan. 9, 2015. It is titled “Network Marketing & MLM Programs Are Getting Better!!!” The promo suggests that ordinary MLM creates an environment in which 97 percent of participants lose and that new, smarter, better schemes are emerging to replace them.

“You don’t have to do any marketing, for the most part,” he says of the purported new way of network marketing. “You don’t have to jump through any hoops and recruit people. You don’t have to go through any of these things.”

In short, Blackburn says, in the new way of network marketing, participants “just kind of put [their] money down” and payouts flow back to them. What’s more, he implies, the SEC doesn’t have jurisdiction, despite mountains of evidence to the contrary, including several concurrent active prosecutions involving network-marketing or MLM schemes with passive components.

Blackburn even dares individuals to complain to the SEC about the “programs” he’s promoting.

“There’s people on here who think that the SEC can shut companies down,” Blackburn says as part of his narration. “Guys, [the] SEC is designed for, again, Securities and Exchange Commission, what they do — it shows it right here in back and white.”

Blackburn proceeds to click on an “ABOUT” tab and a “What We Do” subtab at the SEC website. He then cherry-picks a quote from the agency’s site, wholly ignoring sections on SEC enforcement that detail various cases brought against network-marketing or MLM schemes.

“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets,” Blackburn says, reading from the SEC site.

That’s true, of course — but the cherry-picking ignores the much larger whole.

Had Blackburn simply typed “MLM” into the search box in the upper-right corner of the SEC site, he’d have gained instant access to information that undermines his jurisdiction theory.

Without perusing the enforcement section that has information on recent schemes such as Zeek Rewards, TelexFree, WCM777, eAdGear, Zhunrize, CKB168 and others, Blackburn switches back to his personal narrative.

“Guys, it’s about investors,” Blackburn continues, apparently concluding that the SEC would have no interest in the schemes he’s promoting. “It’s about efficient markets. If others of you who want to complain to your governments about these companies that are out there — you know what, go right ahead. It’s not going to do any good, unless they’re doing illegal activity. Unless you have substantial, proven evidence that any of these companies — any of them, OK — are doing anything illegal, it’s futile. You’re just blowing fear out there to the rest of us, OK, because it’s not going to do any good. Come up with something better. Come up with a fact.”

It is a fact that the SEC, on Oct. 1, 2013, issued an “Investor Alert” titled “Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs.” As part of its outreach, the SEC warned about schemes with “Promises of high returns in a short time period” and “Easy money or passive income.”

Meanwhile, it is a fact that Achieve Community has been positioned as a “passive” program with an 800 percent ROI in as few as 55 days. It’s also a fact that a Dec. 27, 2014, promo for Unison Wealth published on YouTube by Blackburn is titled, “Unison Wealth – Review 100% Passive Automated Play for just $40!”

Blackburn’s Jan. 9 video appears to be a compendium of two, with the first 8:29 focused on Unison Wealth. When Blackburn’s Unison pitch ends, the scene shifts abruptly to the SEC website. SEC visuals appear continuously for nearly the next six full minutes as Blackburn discuses his “programs.”

Even as Blackburn tries to make the case that the “programs” are outside the purview of the SEC, he tells his audience that he prefers “passive” programs.” Somehow lost by Blackburn in all of this is that the passivity of a scheme and how it behaves in practice are what confer jurisdiction on the SEC.

This has been the law in the United States since at least 1946.

Less than a year ago — on Feb. 28, 2014 — the court appointed receiver in the Zeek Rewards Ponzi- and pyramid case as brought by the SEC in a highly publicized action in August 2012 — alleged that “ZeekRewards succeeded be cause it promoted a lucrative ‘compensation plan,’ offering large amounts of passive income to entice individuals to participate in the scheme.”

Kenneth D. Bell, the receiver, is suing thousands of individuals for the return of hundreds of millions of dollars, saying their “winnings” came from hundreds of thousands of victims defrauded by Zeek.

Resources

Aug. 17, 2012, SEC News Release on Zeek action. (Headline: “SEC Shuts Down $600 Million Online Pyramid and Ponzi Scheme.”)

Oct. 17, 2013, SEC News Release on CKB168 action. (Headline: “SEC Halts Pyramid Scheme Targeting Asian-American Community.”

April 17, 2014, SEC News Release on TelexFree action. (Headline: “SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants.”

March 28, 2014, SEC News Release on WCM777 action. (Headline: “SEC Halts Pyramid Scheme Targeting Asian and Latino Communities.”

Sept. 26, 2014, SEC News Release On eAdGear/Zhunrize actions. (Headline: “SEC Announces Cases Targeting International Pyramid Scheme Operators.”

Jan 10, 2015
CKB/CKB168, WCM777 And TelexFree Prosecutions Make SEC’s 2014 Highlight Reel; Agency Says Its Job In MLM Sphere Isn’t Done

The prosecutions of the CKB/CKB168, WCM777 and TelexFree “programs” made the SEC’s highlight reel for fiscal year 2014, which began on Oct. 1, 2013 and ended on Sept. 30 of this year.

In a statement today, the SEC said “new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.”

Noting the FY 2014 pyramid-scheme actions against the MLM or direct-sales firms included allegations that the “programs” used social media and targeted immigrant communities, the SEC said its work wasn’t done.

“The Enforcement Division will continue to root out pyramid and Ponzi schemes that prey on vulnerable investors,” the agency said.

Not specifically noted in the agency’s statement today were the actions against the eAdGear and Zhunrize “programs” announced just prior to the close of the 2014 fiscal year. The eAdGear case was announced on Sept. 26; the Zhunrize case was announced on Sept. 23.

Since the Zeek Rewards action in 2012, it has become clear that MLM HYIP schemes have tapped participants for spectacular sums. The Zeek scheme alone gathered on the order of $850 million. Filings suggest TelexFree may have gathered on the order of $1.2 billion.

CKB/CKB168 appears to have gathered at least $20 million. WCM777 gathered on the order of $80 million. Zhunrize gathered on the order of $105 million, and eAdGear gathered on the order of $129 million, according to court filings.

Zeek receiver Kenneth D. Bell, who is managing Zeek-related cases that involve hundreds of thousands of victims across the world, described Zeek this week as an attempt to put lipstick on a pig.

It’s a description that could apply across the MLM HYIP sphere. The cross-border, murky nature of the “programs” raise concerns about both economic security and national security.

On Sept. 21, the PP Blog reported that a small sampling of data from 95-self-identified victims of TelexFree shows they lost an average of $27,578 each. TelexFree potentially created 1 million victims or more.

The SEC has broad responsibilities across the securities industry and its sectors — from Wall Street to Main Street.

From the SEC’s statement today (italics added):

The Securities and Exchange Commission today announced that in fiscal year 2014, new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.

In the fiscal year that ended in September, the SEC filed a record 755 enforcement actions covering a wide range of misconduct, and obtained orders totaling $4.16 billion in disgorgement and penalties, according to preliminary figures. In FY 2013, the Commission filed 686 enforcement actions and obtained orders totaling $3.4 billion in disgorgement and penalties. In FY 2012, the Commission filed 734 enforcement actions and obtained orders totaling $3.1 billion in disgorgement and penalties.

The agency’s enforcement actions also included a number of first-ever cases, including actions involving the market access rule, the “pay-to-play” rule for investment advisers, an emergency action to halt a municipal bond offering, and an action for whistleblower retaliation.

“Aggressive enforcement against wrongdoers who harm investors and threaten our financial markets remains a top priority, and we brought and will continue to bring creative and important enforcement actions across a broad range of the securities markets,” said SEC Chair Mary Jo White. “The innovative use of technology – enhanced use of data and quantitative analysis – was instrumental in detecting misconduct and contributed to the Enforcement Division’s success in bringing quality actions that resulted in stiff monetary sanctions.”

“Time and again this past year, the Division’s staff applied its tremendous energy and talent, uncovered misconduct, and held accountable those who were responsible for wrongdoing,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “I am proud of our excellent record of success and look forward to another year filled with high-impact enforcement actions.”

Oct 16, 2014
TelexFree Website Will Not Load

The website of TelexFree will not load this afternoon. Whether this signals a development in the TelexFree Ponzi, pyramid and bankruptcy cases was not immediately clear.

EDITOR’S NOTE ADDED 1:32 P.M. EDT SEPT. 28 U.S.A. TelexFree.com appears to be back online. At this time, why the landing page wouldn’t load remains a mystery. Our earlier story is below . . .

The website of TelexFree, alleged in April by the SEC and the Massachusetts Securities Division to have operated a billion-dollar pyramid and Ponzi scheme across state and national borders, will not load. Nor will the domain return a ping.

This condition appears to have surfaced in recent hours. The site previously included TelexFree-authored words written in April or May that suggested TelexFree somehow could emerge from bankruptcy. Stephen B. Darr, a court-appointed trustee, is now administering TelexFree. He has said he has no intention of reorganizing or reactivating the company.

Websites involved in Ponzi schemes sometimes are seized by court order or voluntarily surrendered by the operators. Receivers and trustees later sometimes use the URLs for the domains to publish news that concerns investors.

Why TelexFree.com won’t load is unclear. The office of U.S. Attorney Carmen Ortiz, which is leading the criminal prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, did not immediately respond to a request for comment.

Merrill and Wanzeler have been charged with wire fraud and wire-fraud conspiracy. U.S. prosecutors have called Wanzeler a fugitive who ducked out of the United States through Canada under cover of darkness — and later flew to Brazil.

Like their U.S. counterparts in April, Brazilian federal police conducted TelexFree-related raids in July.

The SEC yesterday filed a pyramid-scheme action against a “program” known as Zhunrize that also allegedly operated across state and national borders.

Sep 24, 2014
ANOTHER MLM PR DISASTER: Zhunrize, Alleged Worldwide Pyramid Scheme That Gathered $105 Million, Was Presented As A ‘Plan B’

From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.

2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”

The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.

In 2012, Zeek and ASD figure Keith Laggos pushed the Lyoness “program” as a “Plan B.”

Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”

Lyoness is now under investigation in Australia, amid pyramid-scheme allegations.

“Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”

Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.

MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.

WCM777, meanwhile, collapsed in March 2014 after interventions by the SEC and state-level securities regulators. WCM777 purportedly was a “cloud computing” company that allegedly gathered more than $80 million. In April 2014, another MLM HYIP scheme — TelexFree — collapsed. The SEC and the Massachusetts Securities Division said it was conducting a billion-dollar, cross-border securities swindle. TelexFree positioned itself as a “VOIP” company that also was in the apps, cellphone and credit-repair businesses.

The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.

The SEC yesterday announced fraud charges against the Zhunrize MLM scheme, accusing it of selling unregistered securities and operating a massive international pyramid scheme.

The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.

“Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.

In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”

One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.

Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.

In court filings, Zeek receiver Kenneth D. Bell has suggested that MLM may have a problem with “serial” participants in fraud schemes who tout purported “revenue-sharing” plans.

Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.

If someone pitches you on an MLM “Plan B,” run like the wind.

Sep 24, 2014
URGENT >> BULLETIN >> MOVING: SEC Calls Zhunrize MLM Company Worldwide ‘Pyramid Scheme’ That Gathered More Than $100 Million

URGENT >> BULLETIN >> MOVING: (8th Update 6:56 p.m. EDT U.S.A.) The SEC has gone to federal court in the Northern District of Georgia, alleging that the Atlanta-based “Zhunrize” MLM program is a pyramid scheme that operates globally and has gathered $105 million from 77,000 investors.

The Zhunrize “program” has been charged with fraud. It is at least the third MLM targeted by the SEC since March. The agency filed charges against WCM777 in March. In April, it filed charges against TelexFree.

Zhunrize CEO Jeff Pan, 52, of Suwanee, Ga., also has been charged with fraud, the SEC said. A federal judge has issued an asset-freeze order.

All three of the MLM schemes operated online and allegedly affected tens and tens of thousands of people.

Zhunrize has been operating since 2012, the same year the SEC took down the Zeek Rewards MLM scheme, alleging a fraud that had gathered hundreds of millions of dollars.

From a statement by the SEC on the Zhunrize case (italics added):

According to the Commission’s complaint, Zhunrize purports to be a legitimate multi-level marketing business by which members purchase online stores and then sell merchandise through them, while earning commissions on products purchased by their customers and through store sales to other members and hosting fees paid by those members. In fact, the company is operating as a pyramid scheme because its commission structure is based on the continual recruitment of new members, with the most lucrative returns dependent on the downline recruitment of other members through store sales irrespective of any product sales. To date, the company has taken in approximately $105 million from approximately 77,000 investors since 2012.

The Commission’s complaint further alleges that in its promotional materials, Zhunrize touts the ability to earn commissions from the sale of products, both through the owner’s store and through downstream owners’ stores. For example, a Zhunrize promotional video differentiates Zhunrize from other on-line multi-level marketing plans, claiming that Zhunrize has “sustainability.” According to the video, the Zhunrize “model will sustain itself because we will have millions more customers than distributors.” Later, the narrator in the video claims “we have the Vendor Relationships, the Logistics, the Payment Gateways to reach millions of new customers each month.”

The Commission’s complaint also alleges that Zhunrize does not disclose, however, that to date substantially all of its revenue has comes from the sale of memberships (referred to as stores) and the corresponding monthly internet hosting fees associated with operating those stores, rather than the sale of products. Indeed, both Pan and a Zhunrize vice-president testified that the company currently derives 80-90% of its revenue from selling online stores and the monthly internet hosting fees for them, as opposed to actual products from these stores. Thus, contrary to the representations to potential investors, Zhunrize is actually a fraudulent pyramid scheme.

Like other MLM schemes before it, Zhunrize appears to have traded on the names of famous companies outside the MLM realm. The PP Blog today, for instance, observed a promo for Zhunrize in Spanish that referenced an “online store” known as “ZHunCity” and dropped the names of Ebay, Amazon, Wal-Mart, Target and Best Buy.

It is common for fraud schemes to drop the names of famous companies as a means of sanitizing the purported MLM ‘opportunities.” Offering materials for WCM 777, which allegedly gathered tens of millions of dollars, dropped the names of hundreds of famous brands while also dropping the names of famous businesspeople and famous politicians.

WCM appears to have taken in on the order of $80 million, according to court records in the case. The Massachusetts Securities Division has alleged that TelexFree may have gathered more than $1.2 billion in a little better than two years. WCM77 made its $80 million haul in about one year.

TelexFree and WCM both engaged in affinity fraud by targeting specific population groups, according to court filings. There may be promos for Zhunrize in languages other than Spanish and English. The PP Blog observed a Zhunrize promo today that was simply labeled “Brazil,” which may mean Portuguese-speaking populations were targeted.

That was the case with both WCM777 and TelexFree.

Sep 23, 2014