Internet Law News

SEC Halts “Paid Autosurf” Internet Ponzi Scheme that Raised Over $50 Million from 300,000 Investors Worldwide

Washington D.C., Feb.27, 2006 — The Securities and Exchange Commission today announced the filing of securities fraud charges against the operators of 12dailypro.com,  a “paid autosurf program” that in fact was a massive Ponzi scheme which raised more than $50 million from over 300,000 investors worldwide by offering a 44% return on investment in just 12 days. As a result of the SEC’s charges, the defendants, Charis Johnson, age 33, of Charlotte, N.C., and her companies, 12daily Pro and LifeClicks, LLC, ceased their solicitation of investors and agreed to a freeze of all their assets and the appointment of a receiver who will take control of the companies’ operations.

According to the Commission’s complaint, which was filed last week in federal district court in Los Angeles, Calif., 12dailypro.com claimed to be a paid autosurf program — a form of online advertising program that purportedly generates advertising revenue by automatically rotating advertised websites into a viewer’s Internet browser. Advertisers purportedly pay “hosts,” which in turn pay their members to view the rotated websites. The Commission’s complaint alleges that 12daily Pro’s sale of membership units constituted the fraudulent and unregistered sale of securities under the federal securities laws. The Commission also today posted to its Web site an investor alert concerning autosurf programs. The alert can be viewed at sec.gov.

Randall R. Lee, Regional Director of the Commission’s Pacific Regional Office, said, “Paid autosurf programs have become an enormous industry on the Internet. When these schemes depend on attracting new members in order to pay returns to current members, they are destined to collapse. The promise of guaranteed, double-digit returns in a matter of days should raise a red flag. We urge the public to be aware that paid memberships in these schemes may be a form of investment, and to exercise extreme caution before investing in any get rich quick scheme.”

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	Did You Know?
	Computer invasion of privacy laws exist Any person who uses a computer or computer network with the intention of examining any employment, medical,salary, credit, or any other financial or personal data relating to any other person with knowledge that such examination is without authority shall be guilty of the crime of computer invasion of privacy.