US authorities spearhead global Ponzi regulation efforts
Late last year and just only a few months before the DoJ and SEC would take down the billion dollar Ponzi scheme TelexFree, US attorney general issued a stern warning to Ponzi admins and participants:
“We will continue to work with our law enforcement partners to take down greedy scam artists who think nothing of stealing the savings of hard working people,” said U.S. Attorney Tompkins.
“As today’s technology continues to evolve, cybercriminals use these advances and enhancements to perpetrate an expanding range of crimes,” said Secret Service Assistant Director of Investigations Paul Morrissey.
“As we have seen with this case, even with the increasing complexity of online Ponzi schemes, it remains difficult for criminals to remain anonymous.
The Secret Service continues to seek new and innovative ways to combat emerging cyber threats.
In the nine months preceding, it’s easy to lose sight of the above message. MLM Ponzi schemes still launch to a global audience with relative frequency and those involved in past scams continue to ply their trade openly.
Still, in the five or so years I’ve been covering MLM – it does feel that this year some real judicial progress has been made (see coverage of the ongoing TelexFree and Zeek Rewards cases).
With every regulatory action against the industry the grey shrinks, and the speed with which regulators react increases.
So much so that as of right now, I’d be hard pressed to name a remaining MLM Ponzi scheme that operates with the reach and magnitude of either Zeek or TelexFree.
Evidently work continues in the MLM regulatory arena behind the scenes. So what have the authorities been up to these past eight months?
The Boston Globe writes,
US regulatory and law-enforcement authorities are engaged in discussions about how to stop the worldwide spread of Internet pyramid schemes.
The talks involve creating a coalition of federal and state securities regulators, as well as law-enforcement agencies, who would in turn reach out to their counterparts abroad, according to two US officials with knowledge of the effort.
The Department of Justice is among the parties participating in the process.
No doubt these efforts will be billed as totalitarian interference by the MLM underbelly we’ve come to know and love, but I do think it’s high-time co-operation between regulators in different jurisdictions is addressed.
Officials say today’s online Ponzi schemes can expand so rapidly they make Bernard Madoff’s brand of financial fraud look quaint by comparison. No longer does it take years to attract assets through word-of-mouth referrals.
Fraudulent startups barely need an office, never mind banks of telemarketers like those in the boiler rooms of corrupt brokers in the 1980s. Launching an online money scheme appears to require merely basic Web skills, a target audience, and a few slick YouTube videos.
“Obviously, the days of securities regulation being done by jurisdiction, based on a geographical area — it doesn’t work any more,’’ said William F. Galvin, Massachusetts’ secretary of state and head of its Securities Division.
That a Ponzi scheme maintains its bank accounts, website hosting, admins and promoters in separate countries is no excuse for the scheme to not go unpunished. Ditto those running and promoting it.
Some might argue that different laws mean global regulation efforts are pointless, but surely even the most paper-thin economies can agree on the devastating consequences Ponzi and pyramid schemes inflict on the public each year?
Recognizing wholesale financial fraud goes hand in hand with maintaining economic reputation and international banking channels for even the smallest of countries.
Ultimately what regulators in the US and their counter-parts globally come up with remains to be seen. But for now at least it seems things are heading in the right direction.
Who knows, maybe one day I’ll finally find myself covering more of the legit in the industry over the opposite. Here’s hoping.