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Auto-surf Ponzi Scheme and a “Storm” of Controversy
In yet another blow to the all too reputable area of “get paid to surf” sites, the SEC just shut down 12DailyPro.com for bilking $50 Million from about 300,000 users in less than a year. Since the scheme used online payment processor StormPay, they too have been brought into the ugly mess.
They promised members 44 percent returns for surfing a dozen Web sites for a total of five minutes per day for 12 days. Despite claiming to raise money from “multiple streams” including advertising and off-site investments, at least 95 percent of the money 12dailypro’s returns came from member fees — “almost a pure Ponzi scheme,” the SEC complaint said.
The scheme required users to buy $6 “units”, up to a maximum of 1,000 units, and to view advertisements from what were described as paying advertisers. Charis Johnson and her companies, 12daily Pro and LifeClicks LLC, agreed to settle the charges without admitting or denying guilt. They agreed to stop seeking further investors, to freeze assets and to accept a court appointed receiver over corporate assets.
This is where it gets interesting. To recover the money, they need to find that $50 million, and according to the SEC Ms. Johnson only has $1.9 million. According to Johnson’s attorney, Noell Tin, credit card payment processor StormPay.com “is holding about $50 million of 12dailypro.com’s money” and Johnson has already returned $1.4 million to 12DailyPro.com members.
There is no word from StormPay about this, but this will surely hurt them. Between the financial hit of not getting the fees they would expect on this money and the reputation problems from being associated with this, it’s no wonder they aren’t talking.
According to a February 7 Better Business Bureau of Middle Tennessee statement StormPay.com “generated more complaints to the BBB than any other Middle Tennessee or Southern Kentucky business” during the first six weeks of 2006. The statement adds that the “BBB has received 18,926 inquiries from consumers around the world checking on the reliability of StormPay.com” over the previous week.
StormPay has a statement of their own, acknowledging that they have money in accounts for victims of the scheme, but that they “can confirm that there will not be enough money available to get everybody reimbursed but we are formulating an orderly plan to reimburse victims to the limited extent that may be possible.”
While Johnson’s attorney says that StormPay is holding $50 million, it only makes sense that the early “investors” withdrew the “earnings” paid for by later “investors”, and any money in the system really belongs to the ones who paid 12DailyPro. There are victims with frozen accounts that may include their “earnings”, in which case some of the money they think is already theirs should go back towards restitution. StormPay says that they are “currently undergoing an audit, near completion, and done with our absolute and complete cooperation, which will show that every penny of money we have ever had control of can and has been accounted for.”
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The thing I really find fascinating is that “get paid to surf” sites are still around. I thought they went extinct years ago.
Amazingly enough, they are still here. Try searching for “auto surf”, “autosurf”, and “paid to surf” and check out the sites in the results - as well as the paid ads.
Whatever happened to the old saying “If it sounds too good to be true, it probably is…”?
I am always amazed at how many people STILL fall victim to these type of schemes. Even the people that know better figure they can get in and get out before the cards fall. What a shame.
Everybody continues to focus in on the victims who were scammed by 12DailyPro. What no-one acknowledges is the damage 12dailyPro has done to the AutoSurf industry and low budget advertising companies everywhere. I run http://www.AutoSurfMe.com and I dont pay anyone to surf they surf in exchange for free advertising, the way AutoSurf was ment to be. However when I sell advertising on third party sites people give me grief when they hear its an AutoSurf as AutoSurf programs are associated with fraud and ponzi schemes all thanks to the scumbags at 12Dailypro, its ashame they arent pursued criminally.