SEC Halts “Paid Autosurf” Internet Ponzi Scheme that Raised Over $50 Million from 300,000 Investors Worldwide

FOR IMMEDIATE RELEASE

2006-26

Washington D.C., Feb.27, 2006 — The Securities and Exchange Commission today announced the filing of securities fraud charges against the operators of www.12dailypro.com, a “paid autosurf program” that in fact was a massive Ponzi scheme which raised more than $50 million from over 300,000 investors worldwide by offering a 44% return on investment in just 12 days. As a result of the SEC’s charges, the defendants, Charis Johnson, age 33, of Charlotte, N.C., and her companies, 12daily Pro and LifeClicks, LLC, ceased their solicitation of investors and agreed to a freeze of all their assets and the appointment of a receiver who will take control of the companies’ operations.

According to the Commission’s complaint, which was filed last week in federal district court in Los Angeles, Calif., www.12dailypro.com claimed to be a paid autosurf program — a form of online advertising program that purportedly generates advertising revenue by automatically rotating advertised websites into a viewer’s Internet browser. Advertisers purportedly pay “hosts,” which in turn pay their members to view the rotated websites. The Commission’s complaint alleges that 12daily Pro’s sale of membership units constituted the fraudulent and unregistered sale of securities under the federal securities laws. The Commission also today posted to its Web site an investor alert concerning autosurf programs. The alert can be viewed at www.sec.gov/investor/pubs/autosurf.htm.

Randall R. Lee, Regional Director of the Commission’s Pacific Regional Office, said, “Paid autosurf programs have become an enormous industry on the Internet. When these schemes depend on attracting new members in order to pay returns to current members, they are destined to collapse. The promise of guaranteed, double-digit returns in a matter of days should raise a red flag. We urge the public to be aware that paid memberships in these schemes may be a form of investment, and to exercise extreme caution before investing in any get rich quick scheme.”

According to the Commission’s complaint, the 12daily Pro website, recently ranked as the 352nd most heavily trafficked website, solicited investors to become “upgraded members” by buying “units” for a “fee” of $6 per unit, with a maximum of 1,000 units. 12daily Pro promised to pay each upgraded member 12% of his or her membership fee per day for 12 days. At the end of 12 days, the member purportedly would have earned a total of 144% of his or her original membership fee, 44% of which would be profit on the membership fee. To receive the promised payment, a member purportedly must view at least 12 web pages per day during the 12 day period. The amount of returns that 12daily Pro would pay its members, however, was in fact dependent solely on the amount of each member’s investment, not on the amount of website-viewing or any other services rendered.

The Commission alleges that the defendants defrauded investors by operating 12daily Pro as almost a pure Ponzi scheme — using new investor monies to pay the promised returns to existing investors — in violation of the federal securities laws. The defendants falsely represented that upgraded members’ earnings “are financed not only [by] incoming member fees, but also with multiple income streams including advertising, and off-site investments.” In fact, at least 95% of 12daily Pro’s revenues have come from new investments in the form of membership fees from new or existing members. The other “multiple income streams” from advertising revenues or off-site investments touted by the defendants were either negligible or non-existent. In addition, undisclosed to investors, Johnson transferred more than $1.9 million in investor funds to her personal bank account since mid-2005.

Johnson and her companies have consented to the entry of a court order that permanently enjoins them from future violations of the antifraud provisions of the federal securities laws, imposes a freeze on their assets, prohibits the destruction of documents, and appoints Thomas F. Lennon as permanent receiver over the assets of 12daily Pro and LifeClicks, LLC. The order is subject to approval by United States District Judge Nora M. Manella. Johnson and her companies consented to the order without admitting or denying the allegations in the complaint. The Commission’s complaint also seeks repayment of ill-gotten gains and civil money penalties; the amounts to be sought will be determined at a later date.

The Commission’s complaint alleges that the defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5© of the Securities Act.

This matter was referred to the Commission in early February by several members of the public. Complaints and tips from the public are vital to the Commission’s mission to protect investors, and the Commission staff reviews each and every complaint it receives.

For further information contact:

Randall R. Lee
Regional Director
Pacific Regional Office
(323) 965-3807

Michele Wein Layne
Associate Regional Director
Pacific Regional Office
(323) 965-3850

Kelly Bowers
Assistant Regional Director
Pacific Regional Office
(323) 965-3924

You can read a copy of the complaint here: http://www.sec.gov/litigation/complaints/comp19579.pdf

just read but you should post in general topic

Oh no, OUR money!!! $$$

Geat, leave it to the Government to things up!

The only reason the government is doing this is because there is no accurate way for them to tax autosurfs. Since they cant make any money from it, they shut it down.

Sounds like communism to me.

Kinda my point. Those greedy in ds Sorry but stuff like that just pisses me off. Everyone knew what they were getting into and yet they act like they just saved everyone from ruin. So what if Charis was making money off of it, look at how much she had made FOR some people. Many more if this wouldn't have happened. Even though $1.9million is a little much

Will SEC file lawsuit against Google too for giving money to publishers in exchange for clicks to Adsense ads?

Whatever Charis made from the program, it's all gone now.

I also like how they tried to make it look like she was skimming since she had to use her personal account to transfer funds because StormDrain doesn't do merchant accounts.

I read thier info on autosurfs.

http://www.sec.gov/investor/pubs/autosurf.htm

But what the heck does this mean at the bottom?

We have provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

Modified: 02/27/2006

Not good neews for autosurf industry

Yeah, this could be bad. The American government is an unstopable communist beast.

Yeah, but look at how huge internet gambling is and that is illegal in the US too.

If you check the 12dp thread, the judge today denied the SEC complaint in court.

So what does that mean?



Probably a member of 12DP.lol

this scares me! AT, blackgold, wiredsurf, isurf2.....are all based in the US.

Typical US government......guess everyone has to go offshore!!! Sure glad stormysurf is not run in the USA !

Doesn't matter what country is involved according to Charis owner of 12daily.

Please also be aware that any autosurf claiming to be exempt from SEC investigations and sanctions because of registering a company offshore or tweaking their terms is fooling themselves.

The SEC has jurisdiction for any company doing business with US citizens or unidentified people that could be US citizens, regardless of what country the company is registered or incorporated in.

Also, the SEC could care less about a site's terms of service or disclaimers that something is not an investment.

We were only the first. All the rest are soon to follow. You have to make the choice as to whether you money to place your money somewhere that could be shut down by the government at any moment.


oh well

What thread in 12dp did you see this?
please post the link



so it sounds like all they can do is ban them from doing business in the US, how will they control the intenet?

i saw it in[b"LIES AND OMMISION"

Not the 12dp forum, the link is 12dp here at MMG, at the On Hold section.

Sounds like the SEC did not go thru the proper channels.

More info from 12d forum:

There is a copy of the judge's ruling on MMG (anyone seen this?) and basically she is saying that the SEC did not provide Charis' attorneys with proper notice that they would be filing their complaint.

So she denied all their requests and told them either to refile with proper notice or give her a good reason why they did not need to give notice.

It was an ambush by the SEC. Perhaps an attempt to pressure a settlement.

SEC's power is limited to US businesses and citizens only. How can it force offshore companies to cease and desist if US government has no authority in other countries? (Maybe they have some in the slavery countries fighting in Iraq with US) Of course, country like Malta will never honor legal request from SEC and US government for things related to gamling.

I dont know Charis blah blah but to find out that i lost $125.00 in back charges in storm, and then see the 1.9 million?
Makes me furious.
Good at least Charis cant run off.
Wonder how many others lost a few buxcks while one was trying to run.
Doesnt it say she transfered 1.9 MIL to her bank account?
Why?

The SEC is probably working off information supplied to them my StormPay. Who knows anymore.

oh my god

Guys, guys guys.... lets all just calm down and think for a sec ok? This is how I interpret this situation. Charis and 12 Daily Pro have been charged, not the Autosurf industry. The reason Charis has been charged is due to the Stormpay scam bringing attention to 12Daily Pro. Yes this does bring attention to the industry as a whole, but as of now the only "action" being taken is with 12DP. More than likely, any regulations to the industry will more than likely come only after the trial and who know how long that will take. Also, who knows how long it will take to implement those regulations. So, if nothing else at least we have time to make some more money before this happens. But, even when regs. do come, I don't think the gov't will destroy autosurfing b/c there is so much money involved they will want a cut. And maybe it won't be so bad considering that it will run off pure ponzi's. Besides, based on my take after reading the SEC's I thought they were basically telling people to join at their own risk. Same as on the homepage as just about every AS. Anyhow, just my thoughts on this. I do hope that big brother does not take my new found game away

Is Charis going to get charged for anything? Or just have her site shut down...

We need to wait..

So this means that 12dp were the bad people and not stormpay?

No, it means "Big Brother" who knows what is best for all of us has stuck his nose in where it is not wanted or needed ... again. These government people need to be forced to get a real job and their salaries distributed back to the taxpayers. Don't get me started.

I'm with you on this.

Oh most definately, but I believe it won't necessarily lead to a complete shutdown of this industry though. What it does mean is that you guys "eventually " will get your money.

It means after the government finishes taking all the money that they want we will eventually get something, maybe.

Get real, folks..We ain't gonna get no dime..It went straight down the drain.

how do you think she transfered money to their EMO account? magic? SP doesnt have merchant accounts so she had to use and account that was in her name.

What it means is unless you are hard core bold and defiant, uncle sassy...(sam) will get ya.
To the wise, keep it up and support online enterprise cause it will be till your death due you part before anyone can stop us.
Sammy only takes in multitudes of millions, sammy can only take whats worth thier while.
Keep it low and fast

She was apparently moving money to EMO in order to comeplete e-gold to EMO transfer payouts. Supposedly they had a large reserve in SP and needed more money in EMO.

This sums it up pretty good !!
12dailypro was maybe too big.

Yup... Going straight to fund the "war on terror"...

i dont understand this sec press release........why all of a sudden are they coming down on this autosurf stuff.... is it cause 1 person was becoming to successful running an autosurf i.e. charis johnson 12dp..the real reason is there worried that this is potentially a billion dollar industry....how can the government allow casinos to be legal and horse racing to be legal or the stock market to be legal its the same thing isnt it?????? these thing are worse off than autosurf'.....i believe if u want to risk your money with any online internet business it should be up to you and you only...no outside people should intervene because at the end of the day everything is a risk anyway!!!!!!!!!! we shouldnt be told how to run a internet business... people who join up programs on the internet already read the faq's and know the consequences so why do government officials or other higher authorities get involved why are they so concerned about our finances... if they are so concerned about our business i.e. autosurf industry why dont they come up with better ways online to earn money and a good livng......

one final thing..i believe what charis johnson has done for the autosurf industry is remarkable and with out a doubt deserves credit for what she has done...people who lost money thru this stormpay fiasco my heart goes out to you... i am one of them but!!!! people should have expect the absolute worse from day 1.... invest what you can afford to lose!!! rather than rely on any program on the internet for eva....nothing is for eva!!!!

The things you just mentioned are all taxed by the United States government (and taxed HEAVILY).

The United States government does not care about autosurfs or how they work - its just that there is no way for them to tax autosurfs. So instead of letting all of us people make lgitimate money, the government throws a hissy fit and shuts the place down becuase they cant get their "piece of the pie."

Make sense?

SCREW YOU U.S. GOVERNMENT

I live in Ohio, btw.

You know exactly what they are thinking, if they can't get rich with taxing the out of it then nobody else is going to get rich from it either. Now they will probably keep all the money because it was through a ponzi. I'm from Canada and the government here always follows what the US does so you couldn't start an autosurf here either, they would just do the same thing.

how are HYIP games still run in america? those are truly ponzi and everyone knows the bottom guy is going to lose.

This is basically all about 12DP. Please keep all the 12DP conversation in that thread. There are way too many threads on this already.