*SEC Regulators Seek to Stop Alleged Internet Ponzi Scheme
Dow Jones Newswires
WASHINGTON -- A federal judge issued a temporary restraining order Wednesday freezing the assets of an Internet investor site and Donald Allen English after the Securities and Exchange Commission charged them with securities fraud and losing at least $8.8 million on investors' money.
The SEC moved without warning in this case, said Harold Degenhardt, District Administrator of the SEC's Fort Worth office. "Because of the type of fraud and that it targeted Main Street., we thought we had to move quickly to protect documents from disappearing and money from being wired away," he added.
The SEC alleges that Mr. English created and organized an Internet Ponzi scheme through which at least 22,000 investor accounts have lost at least $8.8 million. Mr. Degenhardt said the losses occurred in the past four months, "meaning [Mr. English] actually raised much more money in that time." According to SEC records, more than $50 million had been raised from investors as of Wednesday.
Mr. English allegedly solicited investors through two Web sites under the name E-Biz Ventures, which claimed it was a "Christian-based humanitarian organization" which could provide "very large, long-term, monthly income with virtually no effort." Mr. English and E-Biz promised investors returns of as much as 40% to 100% in as little as seven to 10 days, the SEC said.
In addition, the agency alleged that Mr. English and E-Biz falsely claimed to be in "total compliance with the laws and regulatory agencies," used investor funds to repay earlier investors and spent about $276,562 "to purchase thousands of dollars of personal items, including electronic equipment, vehicles, appliances and furniture."
Mr. English recently quit paying returns to investors and began to tell them that the government halted E-Biz's operations, but that refunds would be sent starting on Valentine's Day, the SEC said.
Mr. Degenhardt said a formal hearing will take place in 10 to 20 days, at which time the SEC will seek a continuance to the emergency asset freeze, a preliminary injunction against Mr. English barring him from committing further securities violations, disgorgement of ill-gotten gains, an order prohibiting the movement, alteration and destruction of books and records, fines and the appointment of a receiver over his assets.
Mr. Degenhardt added he usually makes referrals to criminal authorities in these types of cases, although he refused to comment specifically about this case.
Mr. English couldn't be reached for comment. |
