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Thanks to the administrator at Sulit Forum for this information. Posted on Tuesday, July 03, 2007 10:58 pm
- SEC Charges Operators of Phoenixsurf.com Web Site With Conducting a Massive Internet Ponzi Scheme
Washington, D.C., July 24, 2007 - The Securities and Exchange Commission today filed securities fraud charges against the operators of an Internet-based Ponzi scheme that raised $41.9 million in just four months from more than 20,000 investors worldwide.
The Commission's action, filed in U.S. District Court in Los Angeles, alleges that from Feb. 22, 2006, through May 21, 2006, four defendants operated a Web site — Phoenixsurf.com — that offered investors a 120% return in just eight days on investments ranging from $8 to $6,000 in a purported "traffic exchange program." Full story at: http://www.sec.gov/news/press/2007/2007-141.htm
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What are Ponzi Schemes?
Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.
Decades later, the Ponzi scheme continues to work on the "rob-Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.
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