In a Dallas court on Tuesday the Securities and Exchange Commission filed a civil suit against internet company, Le Club Prive. The SEC has described the company as a fraudulent pyramid scheme that disguised itself as an internet investment club, which has secured over $5.6 million from nearly 2000 investors.
According to the SEC, Le Club Prive charged $1,495 for membership plus $149 a month in return for the opportunity to earn commissions by recruiting further members to the club. Investors were informed that for each new member recruited investors would earn themselves $500. Potential members were enticed with promises of access to the club's internet 'backroom', which provided investment recommendations as well as offers of shares in domestic and offshore mutual funds with, of course, huge returns of as much as 40 per cent.
Investors will be shocked to discover that their cash was in fact diverted by Le Club Prive's operators for their own benefit. SEC's investigators have found over $3.4 million was used by the company's staff for other businesses they operate. The three people known to control Le Club Prive are Canadian Ron A Mendelson, who resides in Costa Rica; Zdenek Kieslich, believed to be a resident of Costa Rica also; and Eugene G Chusid of New Jersey.
Although Le Club Prive represents itself as a Panamanian corporation, and its business address is in the Netherlands, it has no known physical location. The SEC discovered that company officers and directors are not registered to do business anywhere in the US.
It is no surprise, therefore, that District Administrator for the SEC in Texas, Hal Dagenhardt, said the SEC had some difficulty in tracking down the whereabouts of two of the defendants in order to serve them with court papers. For that reason a federal judge allowed the SEC to take the unusual step of e-mailing the defendants the legal documents. Mr Degenhardt continued: 'The judge recognized that they were trying to make it as difficult as could be for us to make effective service ... the moral is that if you want to hide behind the Internet, then you can be served by the Internet.'
The very nature of the World WideWeb allows unscrupulous finance and investment companies to operate anonymously - Le Club Prive is simply the latest in a long line of internet fraudsters to whom investors have lost millions. Degenhardt said: 'these individuals clearly sought to hide behind the internet,' and it is an ongoing battle for watchdog agencies such as the SEC to monitor on-line investment fraud because it has the potential for being so widespread not only through websites but also through junk e-mails, on-line newsletters, and chat rooms.
A temporary restraining order has now been placed on Le Club Prive, and assets, amounting to around $12 million, of the defendants in question have been frozen.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment