Feb. 14, 2006
Pyramid Scheme Alert president, Robert FitzPatrick was recently contracted by the Fraud Discovery Institute of San Diego, California, to evaluate a large "auto-surfing" scheme known as 12Daily Pro. The scheme, which is based in Charlotte, North Carolina, had enrolled 300,000 people and claimed to pay 12% for 12 consecutive business days on investments from $6 to $6,000.
Like many other schemes of this type, 12 Daily Pro claimed the payments were compensation for the work of passively viewing pre-determined websites for approximately 5 minutes a day for 12 days.
Fraud Discovery Institute, founded by Barry Minkow, a nationally recognized expert on Ponzi schemes and other forms of white collar fraud, launched an investigation. Mr. Minkow asked PSA to evaluate whether the payments were in fact compensation for viewing sites or were a disguise for transferring money from later investors to earlier ones as part of a classic Ponzi scheme. Fraud Discovery Institute presented the FBI with its evaluation including the analysis by Pyramid Scheme Alert. This information has led to an official investigation by the FBI and the SEC. The investigations and information about the operations of 12DailyPro and other similar schemes were reported on the front page of the Wall Street Journal on Feb. 10, 2006
A week later, after Pyramid Scheme Alert notified the local news media of the scheme's offices and operations in Charlotte, NC, the Charlotte Observer reported that the scheme's promoters are launching a new scheme, similar to 12DailyPro and conducting a trade show in Charlotte to promote yet more such schemes.
These types of "auto-surfing" schemes, which claim to offer exorbitant payments for just passively viewing other websites, are common on the internet now. Many are disguised pyramid schemes or bogus multi-level marketing scams.
As in many Ponzi and MLM schemes, the actual source of the funds for payments is the new investors who are lured in. The "auto-surfing" business is a bogus disguise to cover up the fact that the scheme is just a money transfer scam. MLM scams claim that their payments are based on "direct selling" when, in fact, virtually no one in the scheme ever "direct sells" anything. All the participants recruit other salespeople in an endless chain. The investments of each new salesperson (investor) provide the income stream. If the recruitment slows down, the scheme runs short of money for paying off the earlier investors.