Traffic Monsoon preliminary injunction hearing rescheduled for 23 Sep
Earlier today a joint stipulation was filed by the SEC and Charles Scoville, requesting the upcoming August 5th preliminary injunction hearing be rescheduled.
The parties also requested the current TRO in place be extended until the rescheduled hearing.
An order passed a few hours after the filing granted the request, with the preliminary injunction rescheduled until September 23rd.
The TRO has also been extended till then. The Receiver remains in control of Traffic Monsoon and Charles Scoville’s assets as ordered on the 27th.
No reason for the request for a reschedule is provided in the joint-filing. Of note is Scoville personally signed the joint-filing, suggesting he has yet to acquire legal representation in the matter.
In an Facebook post published less than an hour ago, Scoville has given his version of events:
I’ve had a very positive and constructive conversation with the SEC today, and they explained to me they have every intention to work out resolution with me without having to go through litigation.
They said this is their experience almost all the time. They’ve moved the hearing until 23 Sept 2016 to give us plenty of time to work out settlement resolution.
I stressed with them my priority at this point is to make sure that the people who have purchased the adpacks get the money that’s owed to them.
They told me that we’ll sort out the plan for accomplishing that, and I’ll work with the receiver to make sure everyone gets paid what is due through the resolution as quickly as possible.
I outlined a plan for determining amounts to be paid. I told them that speed in getting this done is important, and to place urgency in carrying out this step.
I know people want to get paid as soon as possible, so I even suggested a plan I believe this could be carried out nearly immediately.
The next step is making sure the business can move forward from here without a revenue sharing position, still providing quality services, and still create a way for people to earn money by surfing ads.
There are naturally a few problems with Scoville’s post.
First and foremost is that if a settlement agreement is reached between now and September, Traffic Monsoon will not restart in any way shape or form.
Given Traffic Monsoon is a $207 million dollar Ponzi scheme, that Scoville will face criminal charges at some point is almost certain.
That said, the SEC have filed a civil lawsuit, they can’t bring about criminal charges. Criminal charges against Scoville will likely only be made public following an arrest abroad or when he returns to the US.
Regarding money owed to Traffic Monsoon investors, what has been recovered and is still to be recovered will eventually be distributed out to Traffic Monsoon’s victims.
Currently Traffic Monsoon and Charles Scoville have about $60 million in frozen funds, with $207 or so invested into the scheme. The $147 million dollar deficit makes it impossible to pay everyone what they initially invested.
As for Ponzi ROI liability, Traffic Monsoon racked up $812.35 million. Even if Traffic Monsoon hadn’t paid anything out and had access to the full $207 million invested, that’s still only about 25% of the Ad Pack ROI liability.
The Receiver and Scoville meanwhile will be working together but this will have nothing to do with restarting Traffic Monsoon. The Receiver has been given control of Scoville’s assets, including Traffic Monsoon.
Communications between the two parties will be limited to the Receiver securing Scoville’s assets (including offshore bank accounts).
The bottom-line is busted $207 million dollar Ponzi schemes don’t get “restructured”.
Traffic Monsoon affiliates were already purportedly getting paid to view other affiliate’s ads. This is more of the same and ignores the fact that Traffic Monsoon was a Ponzi scheme because newly invested funds were used to pay off existing investors.
The SEC, who have shut down Traffic Monsoon to protect its victims, are not about to let Scoville re-open and continue to steal more funds.
In addition to that there’s also the TRO in place, which explicitly prohibits Scoville from soliciting any funds from Traffic Monsoon affiliates.
A few hours ago the SEC published a press-release, again reaffirming their position that Traffic Monsoon is a Ponzi scheme:
The Securities and Exchange Commission today announced that it has obtained an asset freeze against the operator of a Utah-based international Ponzi scheme that raised more than $207 million from investors worldwide, primarily in the U.S., India and Russia.
In a complaint filed in federal court in Salt Lake City on July 26, the SEC alleges that Traffic Monsoon LLC and Charles Scoville, the company’s only member operated an Internet-based Ponzi scheme that they falsely represented to investors was an advertising company.
The SEC’s complaint alleges that Traffic Monsoon and Scoville violated Sections 5(a), 5(c) and 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder.
Among other things, the SEC’s complaint seeks permanent injunctions, prohibiting further violations of the laws charged, disgorgement of ill-gotten gains plus prejudgment interest and civil penalties from Traffic Monsoon and Scoville.
My thoughts going forward are that any settlement between the SEC and Scoville won’t change the shutdown or see Traffic Monsoon return.
Rather, they’ll be geared towards building cooperation towards a plea bargain when criminal charges are eventually filed.