Scoville files opposition to Traffic Monsoon preliminary injunction
As expected, a response in opposition to a preliminary injunction against Traffic Monsoon and Charles Scoville is pretty much more of the same.
The Court should deny the SEC’s motion in its entirety for more fundamental reasons: AdPacks are not “securities;” AdPack buyers are not and were not “investors;” and Traffic Monsoon is not a “Ponzi Scheme.”
A new argument not previously raised however, suggests the SEC should abandon Ponzi regulation if the majority of scamming takes place outside of the US.
Scoville’s September 23rd filing describes the court-approved Temporary Restraining Order granted to the SEC as “overreaching”.
As the SEC notes in its Complaint and Motion, “approximately 90%” of Traffic Monsoon’s customers reside outside the United States.
This fact is devastating to the SEC’s case.
Even if the advertising services Traffic Monsoon sold (“AdPacks”) are securities, where the AdPacks are not listed on a U.S. Exchange and do not involve domestic transactions, the U.S. securities laws do not apply.
Thus, the 90% of AdPack purchases by individuals outside the United States are beyond the purview of the SEC.
Seriously, this from the new lawyer who’s supposed to better versed in securities regulation?
Pretty much every major online Ponzi bust over the past few years has had a major international component.
TelexFree was huge in Brazil and the Dominican Republic, WCM777 and USFIA targeted Chinese victims. Zeek Rewards scammed primarily in the US but nonetheless also had a significant international following.
With respect to Ponzi litigation filed by the SEC, where investors are located has never factored into whether US securities laws apply.
If a scam is tied to the US (Scoville is a US citizen, Traffic Monsoon solicited investment from US citizens and used US bank accounts), the SEC are able to shut it down.
Testament to the fact the popular theory that hiding out in another country protects you from US regulators, Scoville also tries to rely on his hiding out in the UK.
Scoville resided outside the United States as well.
That means that both the seller and the purchaser of the AdPacks were outside of the United States when the transactions were completed.
The SEC knew this to be true because an attorney for the SEC had phone conversations with Scoville while he was in the United Kingdom.
What that has to do with Traffic Monsoon committing Ponzi fraud within the US I have no idea.
As opposed to being prohibited from scamming people entirely, Scoville offers up an alternative proposal;
Even if the Court finds that AdPacks are securities, it should enter, at most, an order enjoining “Defendants from soliciting, accepting, or depositing any monies obtained from actual or prospective investors, individuals, customers, companies, and/or entities, who are located within the United States.
How Scoville expects a Judge, who’s aware a granted injunction would prevent the continued scamming of victims, to pass any such order in good conscience is beyond me.
Another proposal Scoville puts forth, in light of a preliminary injunction being granted, is to order a refund US Traffic Monsoon investors.
This proposal would see funds remaining unfrozen and transferred back into Scoville’s bank account.
Basically Scoville seems to think that a preliminary injunction prohibiting from scamming should be localized to the US. I’ve personally never seen a restriction like this put in place in any of the major Ponzi busts I’ve covered.
In his broader defense of Traffic Monsoon not being a Ponzi scheme, Scoville offers up a fatally flawed comparison to Google.
Traffic Monsoon markets its advertising products in a unique way.
However, neither its advertising products nor its promotion is significantly different from technology companies like Google and Facebook, who also charge for advertising.
Like Traffic Monsoon with AdPacks, more than 90% of Google’s overall corporate revenue comes from a single advertising product AdWords.
Google AdWords clicks can cost advertisers as much as $50 for each customer who clicks on an advertisement.
Traffic Monsoon offers clicks at a much more economical rate.
The “unique way” Traffic Monsoon markets its advertising product is precisely why it’s a Ponzi scheme.
For each AdPack purchased, Traffic Monsoon set a rebate-commission limit of $55.
Google doesn’t make such an offering, rendering any comparison between the two irrelevant.
And for the record, Scoville’s description of the $55 ROI Traffic Monsoon paid out is flawed. The word rebate, when used as a noun, is defined as ‘a return of part of the original payment for some service or merchandise; partial refund.‘
$55 back on a $50 deposit is not a “partial refund”. It’s a return in excess of the sum initially deposited, otherwise known as an investment.
Despite this, Scoville’s attorney goes on to compare Traffic Monsoon’s $55 ROI on a $50 deposit to ‘marketing efforts used for companies like PayPal and credit card companies offering frequent flier miles.‘
Again, how a $55 ROI on a $50 deposit is similar to anything PayPal or a credit card company offers I have no idea.
In a related filing, Scoville has also asked that the court-appointed Receivership be set aside.
Cited reasons in favor of setting aside the Receivership include:
- the Receivership Order abrogates many of Scoville’s constitutional rights
- the court’s order taking all of Scoville’s real property effectively
eliminates his right to be free from unreasonable searches in his
house, papers, and effects - the order eliminates Scoville’s right to be free of unreasonable
searches in his papers and effects - the order obligates Scoville to provide information to the Receiver in
violation of his fifth amendment right and - the order affects Scoville’s right to due process
Scoville has asked the court to liquidate the Receivership or in the alternative, unfreeze some of his financial assets.
A reply from the SEC is expected sometime next week, with a decision made on the requested stay of the Receivership made before November 1st.
Stay tuned…
traffic monsoon was registered in utah, USA, as a ‘domestic’ LLC. it was not a ‘foreign’ company registered to do business in the USA but a company ‘domiciled’ in the US.
if TM had been structured like say herbalife international, which is registered in the caymans, with herbalife doing business in the USA under a local US company herbalife international of america, then scoville’s argument may have had some merit. the FTC was limited to restraining herbalife only in the US and not internationally.
vemma on the other hand was domiciled in the US, and the FTC action was therefore applicable to vemma’s operations worldwide.
so the argument of scoville that the SEC action be limited to TM’s operations in the US, is silly and doesn’t stand a chance.
scoville’s argument that he lived in the UK and not in the US while conducting TM business is likewise silly because he is a US citizen, registered to do business in the US, and his business transactions were mainly in US banks.
whether he traveled outside the US or stayed out for periods of time does not affect the fact that he is an american conducting business via an american company.
at the Very Most, i foresee that the court may note some Limited Value in the service provided by TM, and may allow scoville to continue selling the adpacks without any revenue share.
this would be meaningless in itself as it is a foregone conclusion that TM would die off in a matter of weeks anyway.
He claimed this sort of stuff in the SEC interview too. Its biggest flaw is that not everyone can charge the rate google or facebook charge.
People go to google and facebook and get a service of some sort, normally for free. Google and facebook gather large amounts of demographic data so try to target ads to give a better chance of a “sale” from the ad.
People go to traffic monsoon for what reason exactly, what discrimination did TM do to increase the chance of an ad generating a sale?
People pay huge amounts of money to post adverts on advertising hoardings on buildings, if I erect such a hoarding in my garden only visible to me and my family, I can’t imagine I’d get many takers.
The $50 per click ads are from very specific segments of the market who will pay to gain clients – it’s not just any old ad from any old person. How many of the $50 clients had signed up for TM for their much cheaper advertising? I don’t know by I can have a pretty good guess.
And now we go through the years of dog and pony chasing (hope the analogy is correct) where a lawyer will do anything to slow something down despite knowing that they haven’t got a chance in hell of succeeding. But they don’t care about that.
They just care about the money they are getting to play this game. Doesn’t everyone think the world would be a much simpler place without crooked lawyers and politicians?
Scoville keeps going on about being broke and having his own mother plead for money for legal representation when anyone with half a functioning brain knows that inside this web of deceit he was actually paying himself in this ponzi and he wasn’t just taking the operating costs and a little to live off.
He was taking enough to purchase 3 properties (in London, Manchester and Utah) and even paying a whole years rent on each, a land rover valued at over $100k in the UK, a Nissan (price not reported) in the US and countless flights around the world under the veil of setting up a bank in Dubai (that one was hilarious).
Then he has the audacity to call them HIS assets? Paying people off in a ponzi is near impossible when you don’t skim that much off the top to fund your own lifestyle. God only knows how much he actually took for himself then he wants the court to release those funds so he can refund his investors?
Does anyone really believe those are his intentions?
Well if he could return the money and make all of this go away I am sure he would.
As things stand now, he’s lost control of the money anyway and potentially stands to lose a lot more via forfeitures, penalties, legal fees, and a host of additional consequences resulting from a criminal conviction.
And waiting in the wings is the IRS. Remember, Charles only reported over $2 Million Dollars on his 2015 taxes, yet stated on his FB page he earned $80 Million Dollars, but of course being the magnanimous person he is paid it all to his members.
Only one itsy-bitsy, teenie-weenie problem Charles. If you ‘earned’ $80 Million, you have to report it, and then you fill out the proper schedules to report what you did with the money. Big no-no to earn it and not report it.
Personally I hope Charles goes to court and does not do a plea deal on his civil charges. Otherwise the members are not going to know what he was doing with the money and how they got screwed until his criminal trial, and that could be years away.
Even a civil trial won’t be until next year. And until then all we will hear is how crooked the justice system is or he would have won the hearing, but going to trail he will prevail.
Is it possible that $2 million represented taxable earnings on $80 Million of gross income (revenue)
He reported it as gross earnings on his 2015 Tax From, not as taxable earnings. You only arrive at the figure after you show your gross, and then all your deductions to reach the taxable earnings.
He said he gave it to his members, but he is restricted on how much he can give per person as a gift. If he gave it as a gift, he had to tell the person he gave it to it was a gift or they would have to file it on their taxes as income.
There is no way in hades that he “gifted” away $78 Million Dollars when he said he paid it to them, meaning it was income to his members not a gift. Besides, his tax return would have consumed 5 trees in attached gifting schedules.
The only problem is since we all know Charles lies, is this another one of his lies trying to make himself out to be more magnanimous than he is and his false narrative about how humble and charity driven he is.
He didn’t even tell his members that he had an account and paid himself over $1.2 million dollars, and that is the account the Receiver is after that was offshore.
As I said, when all of this is exposed at trial, his members are going to be shocked to the core at how they were lied to and cheated.
One thing that is interesting is that he is now claiming that 90% of the members and income into TM came from outside the US.
How does he know? He admitted he didn’t keep any financial records. Just more blowing smoke and froth and bubbles from Charles.
Wouldn’t his payment processor (Paypal for example) be able to furnish this information?
why would they be doing the books for an alleged business that is not theirs? I use Square for my credit card processing. They are not responsible for my record keeping or lack thereof.
nor has he yet told them he had a business account for monsoon set up in a bank but decided to siphon 23 mil into his personal account and not use the business account to pay the members.
Morning amusement courtesy of Sunil Patel (who evidently is now being personally investigated by the SEC and/or Receiver):
(Ozedit: video 404 as of March 2020)
Patel claims he didn’t get to withdraw any money from Traffic Monsoon, hence the angry ranting.
He’s all over the place and ignores:
a. He himself promoted Traffic Monsoon as an investment
b. Traffic Monsoon used newly invested funds to pay off existing investors, making it a Ponzi scheme
c. There is no innocence and guilt in a civil lawsuit
I did not suggest that Paypal was “doing” TM’s books or had any responsibility to do so.
I only think that Paypal with its sophisticated metrics and Anti money Laundering protocols) should be able to determine the source of incoming funds… and could if appropriate, share that information with its client.
You say you’re a client of Square. What information can they provide you? If you asked?
So don’t characterize money paid out as gifts. Instead characterize it as dividends, or profit share, “interest, or “whatever you want.”
$80 Million vs $2 Million in 2015 is a very big lie.
customer’s name, transaction number, last 4 of card, gross of sale, whatever fee applied, and amount sent to account
Well if that’s all Paypal has the Receiver is going to have a devil of time figuring this mess out.
Patel – says he is innocent. Well look at his background and you will find some benefits fraud where he was found guilty:
getwestlondon.co.uk/news/local-news/fraudster-claimed-benefits-despite-having-5964359
really oz, you are so very Brave to be merely amused by sunil patel’s speech!
i am pretty much incapacitated by Fear at this point. i mean, did you Really hear what he said?
his huge following in india are now boycotting facebook, youtube and american businesses!
patel is so pissed at the US and its SEC that he wont be taking his business there no more! his ‘consortium’ was just about to create 100 jobs in florida, but y’all can just forget about that now!
the SEC’s shutting down of TM has caused animosity between the US and india and china! 196 countries around the world are now ‘enemies’ of the US!
we have woken up today to a world changed forever! the end is nigh, the end is nigh!
the only hope we have now, is that though the banks and govt’s and what not have all let us down, sunil patel will NEVER let us down. phew!
He seems like a snivelling rat.
So Sunil Patel’s whole life as we know it was “centered” around Traffic Monsoon that he dropped everything else.
He “invested” his whole life money and energy into growing Traffic Monsoon.
So now he can’t move on to do anything legal?
At this point – shame on you Sunil Patel for wasting all of our time with such nonsense.
Sunil is really good at contradicting himself. He can’t decide if he wants nothing back or he deserves every single cent back.
mama scoville has hinted that the nov 1st hearing date may be pushed forward:
Shirley Scoville, 22 hrs ago, FB:
If she’s basing that on the baloney that a US regulator should turn a blind eye to a US citizen committing Ponzi fraud against US citizens, she’s in for a rude shock.
I imagine criminal charges will be fined after the preliminary injunction is granted and that’ll be the end of it. I can’t see the DOJ letting this one slip through.
Charles Scoville could be caught with his penis halfway up an elephant and he would still try and spin it that he’s innocent.
I’m experiencing deja vu all over again, because this looks like a replay of Trudy Gilmond and Sorkin’s strategy of challenging the SEC’s standing in the Zeek case by arguing there are no securities.
Perhaps we’ll see the judge defer answering until Scoville has been accorded a chance to have a “trial on the merits.”
I’m pretty sure I’ve already seen this movie.
Sunil is an especially nasty little character. While he struts around showing everyone his pig-nosed nostrils he sends out vile, profane, and threatening private messages to people who get on his wrong side.
I have been the recipient of one such message and am quite surprised that Oz has not!
What else can he do ????
After all, he’s spent the past two years very publicly promoting and defending a multi million dollar (busted) ponzi scheme,
Now he’s been caught with his pants down and whatever reputation he imagines he had ruined forever.
With some of the amounts he claims have been sunk into Traffic Monsoon by his victims, he’ll probably be glad if nasty PMs are all he gets.
Lisa Parker if Sunil has been threatening you via a private message on Facebook send that a copy of that message to Facebook with a complaint, and they’ll deal with it. You should consider sending a copy to the police also.