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Friday, February 10, 2006

12DailyPro vs Stormpay: CNN & Wall Street Take Notice!

12DailyPro vs. Stormpay - When the Wall Street Journal and CNN take notice, perhaps it's time to take our heads out of the sand:

WALL STREET JOURNAL

FBI, SEC Probe Web Sites Offering
Large Returns for Looking at Ads
By MARK MAREMONT
February 10, 2006; Page A1


Last spring, a Web site called 12dailyPro began offering viewers an amazing financial deal: a 12% daily return on membership fees.

All they needed to do was to view a dozen advertisements a day on the Web site, the company said. The site would then pay returns to visitors based on how much they invested in membership "upgrades."

Now federal and state authorities are investigating 12dailyPro and sites making similar offers as possible Internet-era variations on a classic Ponzi scheme. Named for Charles Ponzi, an Italian immigrant to the U.S. who gained notoriety early in the 20th century, a Ponzi scheme is a fraud that promises outsize returns to investors but pays them with money from subsequent investors, rather than revenue generated by business.

The 12dailyPro site is among the largest of the dozens of what are called "autosurf" Web sites that have cropped up on the Internet. With names like Auto.ExchangeTrade.com and vegasurf.com, the sites piggyback on a legitimate trend -- the surge in Internet advertising -- by promising generous returns to members who agree to view their ads.

The pitch on one such Web site, SurfCityAutoSurf.com, is typical. "Yes, it's true," says a message on its home page, "you can actually earn up to $100.00 Daily or $3,200 Monthly simply by autosurfing [watching websites]."

On 12dailyPro, visitors were allowed to become members free. To earn cash, they had to "upgrade" their membership in increments of $6, with a maximum investment at any one time of $6,000.

The sites have drawn scrutiny amid a widening law-enforcement focus on Internet crimes. The Federal Bureau of Investigation has made Internet fraud the agency's third-highest priority, after counterterrorism and counterintelligence, and says its Internet Crimes Complaint Center received 207,000 complaints in 2004, the most recent year for which figures are available, up 66% from the prior year.

The agency says only a small percentage of those were investment frauds, but that people fleeced out of small amounts may not report alleged fraud to authorities.

"We are definitely seeing a bunch more scams" on the Internet, which allows criminals a measure of anonymity and the ability to operate from anywhere, said Peter Norell, a securities-fraud supervisor at the FBI's Los Angeles office. Autosurfing sites can in theory be legitimate, he said, but often are "straight ripoffs. Who can deliver 12% per day?"

The 12dailyPro site is under investigation by the FBI, the Securities and Exchange Commission and at least two states, said people familiar with the investigation. In recent days, amid those probes, the main payment processor for 12dailyPro, StormPay Inc., has frozen the funds it was supposed to pay to members.

One law-enforcement official involved in the probe said "a significant number of people" likely lost millions of dollars in the aggregate. The site recently claimed it had 300,000 members from around the world, some putting in $6,000 at a time. The Web site of 12dailyPro still was operating as of yesterday.

Based in Charlotte, N.C., 12dailyPro is run by a woman named Charis Johnson, who managed the site through a North Carolina-registered company she also operated called LifeClicks LLC.

In a statement issued yesterday through her attorney, Ms. Johnson blamed a commercial dispute with StormPay for the unavailability of funds owed to 12dailyPro members. Ms. Johnson said StormPay demanded it be the exclusive provider of payment services for 12dailyPro, then soon after froze the accounts and funds after "falsely accusing us of misrepresenting our business model."

She said 12dailyPro had never missed a payment to members until the problems with StormPay arose. LifeClick's lawyers are "evaluating our legal options," she said, adding that the company is "cooperating fully with all investigations."

StormPay officials said they cut off payments after being alerted to possible fraud at 12dailyPro. In a recent interview, StormPay Chief Executive Steve Girsky said, "We have done nothing wrong." Asked if he believed 12dailyPro was a legitimate operation, he said his company initially had no reason to question it, but "upon further investigation we had a hard time making these returns work."

On its site, 12dailyPro states that earnings to members are financed in part with "incoming member fees," as well as advertising and unspecified "off-site investments." On a recent visit, most of the advertisers seemed to be small, little-known Internet companies, including other autosurf sites.

Several members said that although 12dailyPro promised 12% daily returns, the actual returns were far less, since the amount returned by the company included the initial fee paid by members. A member who invested $600, for instance, would be credited 12 days later with $864. Because $600 of that included the original investment, the actual return was $264, or 44% over the 12-day period, 3.67% a day on average -- still more than any bank would pay.

One customer of the site was Mike Wing, an unemployed bookkeeper in Grand Ledge, Mich., who said he heard about 12dailyPro from a business contact in December and decided to give it a spin. "I was chasing a dream," he said. "I was looking at making $700 to $1,000 a week."

Tapping into his Individual Retirement Account, Mr. Wing said, he initially put in $1,000, then added $1,000 a week later. After getting paid his return on the first investment, he plowed in more and eventually recruited 10 Internet acquaintances to join 12dailyPro. The site promises members who recruit others a share of the newcomers' earnings.

Mr. Wing said he worried that "something was not quite right" about the high interest rate but was attracted by the stories of big payouts to others. Then, last week, a $1,700 payment he was expecting didn't come through. A few days later, 12dailyPro announced its funds had been frozen.

"I feel like an idiot," he said. "I won't ever get back into the autosurf" business.

Another investor, Ryan Hartman, a Houston lawyer, sent LifeClicks a threatening letter on Feb. 7 demanding $1,432.24 -- what he said was his $996 initial investment made in late December plus 44% interest over 12 days, based on the returns offered by the site -- or he would commence a lawsuit.

A third investor, Matt White of Great Britain, said he joined the site in October. He said he was partly convinced by postings on various Web bulletin boards, with one member claiming he earned $50,000 in one month, he said.

Mr. White said he was putting in the maximum $6,000 at a time, and when his account was frozen he and his wife together were owed more than $30,000. Even so, he said, he figures he still is about $10,000 ahead.

Asked if he thought the gains were too good to be true, Mr. White said, "I suppose there was a possibility it was a Ponzi scheme. You always had that at the back of your mind." He added: "144% in 12 days? You don't get that from your bank."

A key figure in spotlighting the site was Barry Minkow, a former carpet-cleaning executive convicted of running a Ponzi scheme in the 1980s who has turned to helping regulators and investigators unravel fraud.

Mr. Minkow said he launched his own investigation of 12dailyPro in December after receiving a complaint about the site, and contacted the FBI. Mr. Minkow also contacted StormPay, the processing company, which is based in Clarksville, Tenn.

**************
CNN

Feds probe Web sites offering big paydays
Report: FBI, SEC are investigating offers of generous payments in return for viewing Internet ads.
February 10, 2006: 9:22 AM EST

NEW YORK (CNNMoney.com) - Federal and state authorities are investigating Web sites that promise to generate generous returns to viewers who look at their ads, according to a report published Friday.

These so-called "auto surf" sites are Internet versions of a classic Ponzi scheme, a type of fraud that promises vast returns to investors but pays them with money from subsequent investors instead of revenue generated by business, the Wall Street Journal said.

One of the largest such sites, 12dailyPro, attracts visitors by offering them free memberships. But in order to earn cash, members have to "upgrade" their membership in $6 increments, with a maximum investment at any one time of $6,000, the newspaper said.

These sites, which piggyback on the surge in Internet advertising, have drawn scrutiny as law enforcement authorities focus more on Internet crimes, the report said.

The 12dailyPro site, which recently claimed it had 300,000 members from around the world, is being investigated by the FBI, the Securities and Exchange Commission and at least two states, the newspaper said, citing people familiar with the matter.

The FBI's Internet Crimes Complaint Center received 207,000 complaints in 2004, the latest numbers available, up 66 percent from the previous year, but the agency says only a small percentage of those were related to investment fraud, according to the newspaper."

Sam Freedom
PS. Make sure to check out my other blog:
Sam Freedom's Internet Marketing Controversy Blog
and the home page of The Coolest Guy on the Planet!


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6 comments:

Anonymous said...

Sam,

Before you post these reports to enhance your "coolest guy" image,
please check the facts and the real issue:

The real issue is Stormpay frost these companies account,perform illegal chargebacks of personal accounts by "apparently" returning to the auto-surf companies and AT THE SAME TIME denying these companies access to funds which are rightfully theirs on the grand pretext that they are illegal.

BIG QUESTION: Where are the monies?
$1/2 billion of them.
ONLY STORMPAY HAS THE ANSWERS!!!!

What is at stake is NOT some illegal programs in the auto-surf industry scamming innocent people.

What is at stake is the very foundation of online business when
a assigned payment processor can unilaterally manipulated personal and corporate accounts.

Can you imagine you deposit $5k with Bank Of America and you discovered it just disappeared and all these while, the only party who has complete access to it is you and Bank Of America. You have not transferred the money else where and the money is gone!!

Can anyone trust anyone to transact any online business when a payment
processor(Stormpay)does that under all kind of pretext.....etc.

This is potentially the 911 of online business.

For goodness sake, get the facts:
Please go to the forum at www.moneymakergroup.com
You can also get the reports from 12dailpro website.

Stormpay fraudulantly manipulated and erased nearly $5000 from my personal SP account.And there is nothing I can do about it and I live on the other side of the globe.

Out of desperation,I have just filed a FBI complaint which i can copy to you if you need.

Thank you

michael tan
Singapore

Sam Freedom said...

Michael,

Please remember you're a guest on my blog. I'm open to discussion about things but if you believe I've misrepresented the situation, then it serves no purpose to represent me as trying only to enhance my "coolest guy" image.

Obviously you feel wronged by Stormpay and anyone that doesn't support your line of reasoning, it seems, becomes associated with your enemy and therefore worthy of your scorn.

Anyways, I knew something wasn't quite right from the beginning, but I went the extra length to take on the viewpoints of people like yourself, and wrote an article called, The Case for a Sustainable 12DailyPRO. I held open the possibility that were it properly managed, it could very well be viable.

But I was finally awakened.

It isn't Stormpay... It isn't 12DailyPRO... it isn't you, it isn't me... it is the fact that we are born WEAK.

Take sea turtle babies as an example: some are eaten by birds before they even hatch. Some that hatch are eaten by birds as they race towards the water. Those that reach the water are eaten by all kinds of creatures that are waiting for them in the shallows. And some that make it to the depths are eaten by bottom feeders but at least they have a better chance down there.

No doubt, persons too challenged to think things through and realize that no middle-aged woman in an apartment in North Carolina is going to be adequately running a multi-million dollar auto surf without any lawyer on staff, or safeguards in place, will find my example too "ridiculous" to comprehend.

I posted those articles so that people could see what was being said in the news. But otherwise, I am not your mouthpiece, nor the mouthpiece of others similarly disenchanted. In fact, if anything, I should continue to be some kind of voice of reason. But if you read up on psychology, you'll see that those beseiged by victim mentality often, in the absence of the perpetrator of said crime, often become violent towards those who don't rally around them and support their victimhood.

I think you'll be surprised at how all of this turns out. But in the meanwhile, try not to continue the cycle of violence by shaming, or attempting to silence, those who do not agree with your version of events. And try no to scorn those who don't see you as a victim but rather as gullible.

Some would say, "You play, you pay." Did you really think you could earn 3.6% of your money every day just by clicking a button? Really?

Best of luck recovering your funds,
Sam

Anonymous said...

I hear a bunch of BS about sea turtles and victims and see people trying to be psycologists, but nothing of real value. Im not nor have ever been a victim, and was always paid on time everytime from 12DP until ScamPay...oops, StormPay, and authorities decided to make an ordeal of everything because of a bunch of idiots complaining because they have nothing better to do. But it makes me sick to see so called "news", with such an obvious opinion to one side. It doesnt surprise me that CNN is mentioned on this site preceding such a moronic, one sided, censored response.

Sam Freedom said...

As you can see, Anonymous, I don't censor. As for what you read being bs or psychology, which you can't even spell, that's just your opinion and thank you for it.

You're obviously very emotionally invested in this whole thing and that's where I draw the line. When things like this start to affect people to get all emotional, like you, it's time to steer clear.

I'll continue to dabble in autosurf, but what you should be more concerned about is that a company, 12DP, that was handling over $50,000,000 (allegedly) of peoples money had absolutely no safeguards in place.

People cry out that Stormpay had been caught in their own Ponzi, well, why didn't 12DP do their due diligence and know that before giving our money to a place known for Ponzis.

It cuts both ways.

Sam
Kick My Balls Stormpay, Please?

kevinw said...

Greetings,

This is to answer questions about 12Daily Pro Inc and LifeClicks LLC

My name is Kevin Wessell. I am the CEO of Companies Incorporated.

We establish corporations and limited liability companies for clients. Click here [url=http://www.companiesinc.com]Incorporate[/url] and you will see www.companiesinc.com. We establish thousands of companies yearly.

We received an order from a client for us to form companies named 12Daily Pro Inc and LifeClicks LLC.

We shipped the companies to the client as required. Naturally, we do not have anything to do with the operation of this company. These are simply two of the many thousands companies we have formed for clients.

We have been receiving telephone inquiries regarding these companies, so we have posted a statement on our website: [url=http://www.companiesinc.com/12dailypro/]12Daily Pro Inc and LifeClicks LLC[/url].

I hope this helps.

Sincerely,
Kevin Wessell

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