SEC sues DollarMonster matrix cycler Ponzi admin
Unexpected regulatory action today with the news that the SEC has sued James Evans, admin of the Ponzi scheme DollarMonster.
Operating from the domain “cashflowbot.com”, DollarMonster launched in late 2010 and saw affiliates invest $2 on the promise of an advertise $4 ROI.
When you invest $2.00, your payment is entered into our system, when someone else makes a spend, you’ll receive $4.00 back. Your $2.00 will always be in the system until it is paid.
Since we don’t promise to pay you 200-300% a day, this site won’t disappear overnight like 95% of other sites.
DollarMonster collapsed shortly after launch, with Evans relaunching the scheme in 2012 as a multi-line cycler.
Subsequent reboots of the scheme would collapse even faster, with DollarMonster relaunching in late 2013 and again in again early 2014.
It was these relaunches that caught the interest of the SEC, with the agency alleging the DollarMonster took in $1.15 million dollars.
The ruse behind DollarMonster was that funds invested were deposited with ‘a hedge fund that purchased stocks on behalf of investors
in the fund‘.
Beginning m late 2013, the DollarMonster website misrepresented to investors that DollarMonster was a “financial advisor” with more than 120 management teams and $3 8 million in assets under management.
A later iteration of the website misrepresented to investors that DollarMonster was a “private Holding Company” that invested in assets such as gold, silver, real estate, stocks and bonds.
The reality however was a story we’re all too familiar with;
Between January 2012 and April 2014, Defendant Evans operated Dollar Monster as a Ponzi scheme.
The underlying mechanics of the DollarMonster scheme were simple: investors deposited funds into their Solid Trust accounts and then transferred those funds to a Solid Trust account controlled by Defendant Evans.
Defendant Evans then transferred a portion of the funds to his personal bank account, and also redistributed funds to investors’ Solid Trust accounts as purported investment returns.
All that crap about hedge funds, management teams, gold, silver, real estate, stocks and bonds?
Just the typical Ponzi smoke and mirrors we see day in and day out here at BehindMLM.
The DollarMonster website did not disclose anywhere that if investors stopped placing funds into the “Investment Pool,” the scheme would collapse and investors could suffer a complete loss of investment.
To the contrary, the website misrepresented that operators ofDollarMonster would keep the system going by contributing their own associated profits, stating that DollarMonster “invests its own profits in the program in order to keep the fund/system going.”
Those profits were purportedly represented to be James Evan’s own funds, however that appears to have been misrepresentation.
Of the $1.13 million dollars Evan took in from DollarMonster investors, he skimmed only $30,000 or so off the top.
The last relaunch of DollarMonster took place in February of 2014, with the SEC issuing Evans a subpoena in July of that same year.
The subpoena formed part of the SEC’s investigation into the DollarMonster, with Evans pulling the plug on the scheme shortly after becoming aware he was the subject of a regulatory investigation.
That wasn’t the end of Evan’s career in scamming people though.
Shortly after Defendant Evans shut down the DollarMonster website, his home address was used anonymously with the same domain registrar to establish a new website using the domain name Theinvestorsexchange.com.
Theinvestorsexchange purports to match investors looking for an investment return with individuals and companies that need capital.
One of the advertisements is linked to Defendant Evans, and reads as follows:
“I am seeking serious investors only for a new business venture I am working on.
I am working on a new club (i own a few already) in New York, NY. And I am looking for investors for this. Serious only please [sic].”
For his operation of the DollarMonster Ponzi scheme and ongoing engagement in scamming investors, the SEC have now charged with five counts of fraud. These counts include violations of the Securities Act (4 counts) and Exchange Act (1 count).
The SEC have also asked the court to
- find Evans guilty of the five counts of fraud leveled against him
- expedite discovery for the purpose of ascertaining whether or not Evans is still actively engaged in investment fraud
- issue a permanent injunction against Evans prohibiting from committing any further acts of securities fraud
- provide detailed accounting as to the funds Evan fraudulently obtained
- order Evans to return all funds he illegally obtained through securities fraud and
- impose a civil penalty against Evans, to be determined at a later date
Like I said at the start of this review, didn’t see this one coming but it’s good to see another Ponzi scammer bite the dust.
Who knows what else might be coming down the pipeline…
If SEC is going after HYIPs, that’s a fundamental shift in the SEC enforcement policy.
right, the HYIP weeds are springing up on a continuous basis, fertilized mainly by the same large group of ponzi players.
but, a permanent injunction against these people wont work. we know these injunctions are used by ponzi players, for toilet paper. any infraction of these injunctions should be strictly penalized, to have any affect.
still, this should put a scare in the ponzi community!
with swift action in ‘the achieve community’, we know the SEC is gunning for the small players, who end up hurting a lot of people. that’s a great shift in SEC policy.
Does this mean if The DollarMonster instead told their “investors” the oppurtunity was a standard Ponzi scheme, the “investor” can lose some or all of their principle “investment”; they would be legal?
Thus getting no attention from the SEC because they were honest about it?
No. Ponzi schemes are still illegal.
The excerpt you quoted is to demonstrate the intentional deception behind the fraud.
no, it just means ponzi admins should not lie.
if dollarmonster had announced that they were a ponzi scheme many investors would have avoided them. they misrepresented their business. that’s fraud.
attention from the SEC, for running a ponzi scheme, has nothing to do with dollarmonsters honesty. ponzi schemes are illegal under securities laws. they are felony frauds.
Nope, they’d STILL be “illegally offering securities”. See SEC vs. Howey case. That’s illegal too.
Could a Ponzi scheme that doesn’t misrepresent their business as legitimate, register with the SEC?
@Paul No.
Because how you represent your business doesn’t matter. It’s whether or not you are offering unregistered securities that does.
That’s determined by your business model, not how you present your business (pseudo-compliance).
It’s probably a method to “limit the scope of the case”, e.g. to prevent the defendant from using certain types of defense arguments.
The defendant CAN claim that the participants knew perfectly well that they participated in some type of “illegal business”, and that they can’t expect to be compensated for any losses they have experienced. “They were all part of the team”.
“Misrepresentation” is a necessary element for mail fraud and wire fraud charges. How the scheme operated in reality is also a part of the factual information needed to describe the case correctly. It’s relevant information, so they can’t exclude it (they can’t “cherry pick” information).
So could a money-game admin who represents his business as a stock Ponzi business model, register with the SEC so they can sell legal Ponzi “securities”.
I can not make ends meet, I would love to play an “honest” Ponzi scheme to pull some extra currency. I would know that I “win” some, I “lose” some. As long as I am pulling a “profit”.
I have no intention to participate in a dishonest Ponzi scheme. I have no intention to start a dishonest Ponzi scheme. I desire a gambling oppurtunity with a 30% or so chance of “winning” (paid out more than I paid in).
Of course I know when I “lose” at least other people just like me are able to make ends meet.
C’mon I need to pull some money. Jobs are scarce, prices rise & the economy SUCKS! When can I play an “honest” Ponzi scheme?
Can you read?
Ponzi schemes are illegal, you can’t legally operate or participate in them.
play rummy or something.
ponzi schemes are illegal.
by solid trust accounts does the SEC mean the payment processor solid trust pay [STP]?
shouldn’t STP also be in trouble for enabling the ponzi? the SEC must be well aware of STP’s ‘history’ as a favorite ponzi processor. this is such a good opportunity to take STP down!
Solid Trust is Solid Trust Pay.
US regulators are obviously well aware of the dodgy processors, but none of them are based in the US. As we saw with the takedown of Liberty Reserve, it takes a boatload of time and resources to shut them down.
I think over the next five years or so we’ll see a continued clamp down on the processors. Either from regulators or the financial institutions they do business with.
Putting aside the obvious illegality of ponzi schemes, you’re living in Fantasyland if you believe there is such a thing as a HYIP ponzi “game” that enables the average player to make a 30% margin on his / her investment.
Such games exist only in folklore from a mythical time when HYIP ponzi operators played to a formula where they took 10% of the income for expenses, 10% profit and paid out the remaining 80% to members.
It simply doesn’t happen that way.
Well I guess I better go start one then. If I do, I intend to be fully legal; registering my scheme as an online gambling business with the US state with least gambling regulations, licensing and most importantly start-up costs.
Players will have to check two boxes every time they do a pay-in,
One of them I drafted here: I understand that my pay-in is going towards previous players pay-outs. I can lose some or all of my pay-in. Tip: Don’t play with money you can not afford to lose!
When players recieve their pay-outs, they will have to check a box conveying this message: I understand my pay-out above my principal pay-in is fully derived from pay-ins from other players, people who may not recieve a pay-out due to the pyrimidal matrix structure.
I have the feeling an gambling Ponzi scheme will be so powerful for the people, a means to wager several dollars with the very fat chance of doubling their money. And not just for the early players either.
Rummy takes work, this is what is wrong with the system. We have the technology to enable forms of passive income for everyone, yet we have day-traders toiling stocks for example.
Think of the “you must be active” mindset like a desk fan that is running while wrapped up in a thin cloth, it still pushes some air towards you however most of the energy is wasted.
what is so wrong about a Honest passive Ponzi scheme where all players agree it’s a gamble?
A Ponzi gamble with waaaaayyyy better “odds” of “winning” than buying lottery tickets. I am not saying Ponzi schemes masqureading as legitimate operations should be legal, because that is fraud.
How and why would a gambling Ponzi scheme be illegal?
Could it be a gambling Ponzi scheme would be so powerful for the people (the 90%-99%), that it would give many players a financial hand up(big or small), while forming economic activity both by the “losers” and “winners”?
Son, a Ponzi by definition is fraudulent because of the returns offered (they do not exist unless subsequent investment is received).
Gambling is another story, you can’t mix the two.
Stealing funds from Ponzi victims != gambling winnings.
There is no other type of Ponzi scheme.
if you think playing cards is ‘work’ then you are one big lazy bum!
technology cannot enable passive income for everyone. technology just means that ponzi schemes can go viral online and suck up money and investors very fast, and crash just as faster. technology is just ensuring larger and larger numbers of people get burnt by ponzi schemes.
ponzi schemes can NEVER ensure passive income for everyone only the top early joiners make money, MOST[over 90%] lose money. this is a mathematical surety.
best of luck with getting your ponzi scheme registered, 🙂 let us know how that goes!
but, why have you wrapped the desk fan with a thin cloth? are you a fan of ‘inefficiency’?
Ponzi schemes are per se fraud. There is no such thing as a “legal” Ponzi scheme via disclaimer.
See Salt Lake Tribune’s coverage of the Dee Randall case:
HEADLINE (March 27, 2015): Utah judge rules that ‘legal’ Ponzi scheme, targeted to Mormons, was still just fraud
SNIPPET:
sltrib.com/news/2339728-155/utah-judge-rules-that-legal-ponzi
PPBlog
I write these posts so fast it’s difficult to be clear sometimes.
Over the long term, everybody gets a turn at “winning” in a gambling Ponzi scheme. Much faster and with much higher odds than the lottery.
The “win” rate is dependent on the way the scheme is structured. So if you had a Ponzi like a 1×2 matrix, it would only take two pay-ins to satify a doubled pay-out.
Somebody pays-in $10, waits until two people put in two $10 pay-ins, then somebody gets a $20 pay-out. Of course this is discounting scheme expenses and the admins cut (in my case i’ll take 5%).
Use a single digit multiplication wheel with the number 1 in the center with the numbers 2, 3, 4, 5, 6, 7, 8, 9 circling number 1.
1×2 is the smallest Ponzi multiplication possible, Doubling each level set will exhaust the player pool the slowest, and ensure the most people “win” as possible.
inefficiency is the goal of the current social economic system. With no action taken to shut down or suspend this economic scheme, the only way this will end is when the economy collapses. If you draw parellels in the way the economy has grown, and a Ponzi scheme; they are very similar.
If you draw parellels in the way three US government programs are modelled; Social(ized In)Security, US Treasury Bonds, and the Wall Street Derivatives market with Ponzi schemes, they are scaringly similar.
Our systems are set up like a desk fan wrapped up in a thin cloth. The same analogy is a car which is spinning it’s tires and going three miles per hour.
The mindset is to build a desk fan with more speed while thickening the cloth, therefore getting a little bit more net effect. Instead of removing the cloth completely. This is due to corporate greed and cabalism.
What I meant is we have technology to provide everybody with pennies of passive income a day, yet people are made to work for those pennies just to make the system inefficient. I never specified how much passive income could be provided to everybody, so what I mean by that is pennies.
Didn’t think of what to say before I submitted my last comment, of this:
He only told some investors. I believe had he told all of his investors he was going to use their money to pay what was due to earlier investors, it would not be fraud.
I don’t think you should invent rules like that. They don’t exist in reality, so a court will probably not believe in them.
“Some” or “all” is immaterial. Ponzi schemes are per se fraud. Their aim is fraud.
Telling “all” investors only creates more opportunities for civil clawback actions or even criminal actions. It is inviting participants to participate in a conspiracy to commit theft/fraud.
PPBlog
@Paul
No they don’t, because mathematically you cannot pay out more than you receive.
If you represented the above in your marketing efforts, you’d be committing fraud (the same as every other Ponzi scheme out there).
If he’d have told all the investors the scheme would have collapsed long before it was shut down.
Ponzi schemes rely on fraud and deception otherwise there’s nobody to steal funds from. Telling your early investors (buddies) this is happening makes no difference.
What I mean is everybody would get a turn at receiving a pay-out, the same way everybody gets a turn at winning something from the lottery (even $1). Players may not pull a net profit, however everybody will receive a pay-out at some point.
There is a casino near El Paso, TX advertising via a billboard next to Interstate 10, going eastbound; says “Winners Exit Here”. In your context, the casino is committing fraud by misrepresenting the odds of winning.
The billboard is conveying the message that everybody who exits the freeway and gambles at their casino will be a winner. Obviously not, as the house is the biggest winner.
How would a gambling Ponzi scheme be illegal?
But at least all investors would know before they invested they were paying into a Ponzi scheme.
In that case, it’s not like they’re being deceived into thinking the investment is a legitimate operation. How would this be fraudulent?
You’re talking about a zero-sum game.
If the net-result is $0, why bother?
In a Ponzi scheme the earlier recipients of money don’t pay out the later investors.
Don’t waste my time with bullshit like this. If you wish to discuss gambling do it elsewhere, I’ve already explained Ponzi schemes are not gambling.
Nobody is going to invest if they’re told they’re mathematically guaranteed to lose money.
like this:
You forgot the fact that only a government is allowed to run a lottery. Ponzi scheme is NOT comparable to a lottery.
inefficiency is not the ‘goal’ of the current socio economic system, it is a ‘drawback’. that our systems are not ‘perfect’ is not an ‘excuse’ for crime like ponzi schemes.
there’s is no requirement for doomsday prophecies like ‘unless it’s all shut down, the economy will collapse’. the world is getting along okay, much before you and i appeared on the scene, and will continue well after we’re gone.
instead of promoting gambling and ponzi schemes as the manna which will save the world, how about promoting ‘improving the system’. but you seem too lazy for that, you want your quickfix.
actually, ponzi schemes are the most ‘inefficient’ system for distribution of wealth, because most people will ‘lose money’.
There would be players who drop off, lose interest, and so forth. Their pay-ins would help other people chance of “winning”.
Of course not. Earlier recipients of money don’t pay out the later investors. But my scheme would be a gamble. Even if 10% of the players “win”, it’s still much better odds than the lottery. This alone will attract a lot of players into the Ponzi gambling house.
You don’t buy a lottery ticket, be told you’re guaranteed to win tonights jackpot; then subsequently lose.
People who play the lottery know they’ll most likely lose, and people who would play my Ponzi gambling scheme do not expect to win every single time. People would play for the chance to win, because you can’t win if you do not play.
Of course, I never said it was OK to cheat people. A legal fraud sounds like a oxymoron until you dig deeper. We have legal frauds in the system… Wait.
Were still on the Utah case where he tells some of his later investors their money is going to satisy the payments to earlier investors???
That doesn’t count towards the discussion pertaining to a Ponzi gambling scheme.
Also, I shouldn’t call it a scheme anymore, since a Ponzi gamble not designed to defraud people.
A lottery takes money from ticket sales, then pays a sliver of it to the .01% of players who do win.
No there wouldn’t. Nobody is investing funds in your scam and then “dropping off”.
No it wouldn’t. Earlier investors (those who are paid first) aren’t going to reinvest. They’ll just run and those at the bottom will get scammed, the same as every other Ponzi scheme.
Your rose-tinted MLM underworld fairy tale scenario where everybody plays by the rules for $0 net-gain is a crock of shit.
I do not expect players who recieve pay-outs to re pay-in. People would treat it as a gamble, a few will drop off just like any other type of gambling.
I haven’t even delved into the mechanics of my Ponzi gambling idea, and you’re already calling it a scam. There is no scam when players know what they’re getting into.
There are no “investors”, “investments” or “scam” in a Ponzi gambling game.
BTW, Does anybody know what MMM is? From what I hear they are an “honest” ponzi scheme (Ozedit: No such thing. Offtopic derail attempt removed.)
Well mathematically you can’t pay out more than you take in. So somebody is going to get scammed, just like every other Ponzi scheme.
What kind of dumbass logic is that? By rights the top investors of any Ponzi scheme never participated in a scam then, because they knew what they were doing all along.
A business model defines whether or not an opportunity is a Ponzi scheme, not whether you and your buddies knowingly knew you were ripping off people.
A Ponzi scheme is not gambling.
Look, if you want to open up a casino go and discuss it elsewhere. Anything further about gambling will be marked offtopic.
whether participants are in the know or not, is besides the point.
the point is, that however you dress up your ponzi idea, it remains illegal.
get ponzi’s legalized first, then come back and we can discuss the nitty gritties of your ponzi gambling scheme.