A North Carolina woman and her two companies settled federal charges that she operated a classic Ponzi scheme that generated $50 million on
her paid “autosurf” Web site.
Autosurf sites are a form of online advertising that generate revenue by
automatically rotating advertised Web sites in a viewer’s browser.
Advertisers pay the host Web sites, which in turn pay their members to view
the rotated Web sites.
According to the Securities and Exchange Commission (SEC), Charis Johnson,
33, and her Web site, 12dailypro.com, moved beyond that business model to
sell upgraded site memberships offering $6 “units” with a maximum investment
of 1,000 units.
Johnson promised to pay each upgraded member 12 percent of his or her
membership fee per day for 12 days. According to the scheme, at the end of
12 days the member would earn 144 percent of the membership fee, 44 percent
of which would be profit.
The SEC claims that Johnson’s sale of membership units constituted a
fraudulent and unregistered sale of securities. In addition, according to
the SEC, Johnson used new investor monies to pay promised returns to
existing investors — a typical Ponzi scheme.
Johnson’s settlement agreement with the SEC imposes a freeze on her assets
and prohibits the destruction of documents. Johnson also accepted a
permanent receiver over the assets of 12dailypro.com.
The SEC is also seeking repayment to victims and civil money penalties.
Johnson consented to the order without admitting or denying guilt.