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A settled SEC enforcement action describes an alleged interesting social media fraud.  Two defendants that reside in India were alleged to have been behind the fraud.

According to the SEC the scheme was an online high-yield securities offering fraud through which the defendants solicited investments in a so-called pooled investment fund that would purportedly yield guaranteed profits. Profits Paradise offered three investment plans, each with a term of 120 business days. The first purportedly yielded 1.5% daily interest on investments of $10 to $749, the second purportedly yielded 1.75% daily interest on investments of $750 to $3,499, and the third purportedly yielded 2% daily interest on investments of $3,500 and above. The Website and related social media sites described the profits as “huge,” “lucrative,” “handsome,” and “guaranteed,” and they characterized the risk as “minimal.”

The defendants registered a domain name using a false name and U.S. address and phone number.  They then allegedly went about creating content for the fraudulent website and arranged for an on-line payment processor.  They also created related Facebook, YouTube, Twitter and GooglePlus sites.

According to the SEC, the main Website attracted 4,000 visitors a day, with 200 per day being from the U.S., and the Facebook page had more than 3,000 “Likes.”

The SEC stated U.S. jurisdiction existed because use of the false U.S. address, “$” sign, American English and American spelling content were aimed at drawing U.S. investors.

There were no allegations any U.S. investor invested money.

No civil penalties were levied against the defendants because of their financial condition.  The defendants did not admit or deny the SEC’s findings.


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