SEC silences $50 million Internet Ponzi scheme
Regulators charge owner of Web site 12dailypro with securities fraud, say she pocketed $1.9 million since mid-2005.
NEW YORK (CNNMoney.com) - An Internet company that bilked investors out of more than $50 million dollars was charged with securities fraud by federal regulators on Monday.
The Securities and Exchange Commission charged Charis Johnson, 33 of Charlotte, N.C. and her companies 12daily Pro and LifeClicks LLC in the federal district court of Los Angeles, Calif. The agency said that she defrauded investors through the Web site 12dailypro.com.
Johnson's Web site, which raised more than $50 million from over 300,000 investors worldwide, claimed to be a "paid autosurf program" that would generate money through Internet advertising, according to the SEC.
Johnson's company was considered by regulators to be a sizeable Ponzi scheme where investors are promised vast returns but are paid with money from subsequent investors instead of revenue generated by business.
The SEC said 12dailypro.com allegedly lured in investors with promises of 44 percent returns just after 12 days.
"Paid autosurf programs have become an enormous industry on the Internet," Randall Lee, the regional director of the SEC's pacific regional office said in a statement. "When these schemes depend on attracting new members in order to pay returns to current members, they are destined to collapse. We urge the public...to exercise extreme caution before investing in any get rich quick scheme."
Johnson allegedly funneled over $1.9 million in investor money into her personal bank account since mid-2005, according to the SEC, while advertising revenues generated by 12daily Pro and LifeClicks were either negligible or non-existent.
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