News Desk: Get-rich-quick scheme Traffic Monsoon stinks to high hell, one worried investor told me when I reported on it in January.
The man behind Traffic Monsoon is Charles Scoville, an American “entrepreneur” with a history of similar schemes.
Before running my article in January, I gave him the chance to respond to criticisms, the most obvious being that it was a pyramid or Ponzi scheme.
I put a simple question to him: What is Traffic Monsoon’s main source of revenue?
Scoville never replied, but elsewhere has claimed that members make money by buying “AdPacks”, which earn revenue from online advertising.
But now we know the true answer to my question: almost all the revenue came from fees paid by people who joined.
“In reality, Traffic Monsoon’s advertising business is an illusion designed to obscure the fact that it is offering and selling a pure Ponzi scheme,” alleges the regulator, the Securities and Exchange Commission, in papers filed in court in Salt Lake City.
“Over 99% of Traffic Monsoon’s revenue comes from the sale of AdPacks. The company has virtually no other revenue from any other source. All payments to investors are made out of these funds.”
The SEC alleges that Traffic Monsoon violates anti-fraud laws and has frozen its assets.
Everyone who joined and bought AdPacks at $50 each (£38) was required to click on 50 banner adverts each day, staying on each for five seconds.
It’s this online traffic that members were told would generate income.
My colleague Antonia Paget went to a Traffic Monsoon seminar in London in January that was full of overblown claims, with one speaker reckoning more than half the world’s population had joined, and another insisting that it would be “the easiest grand you’ll ever make”.
One of the most damning details in the court papers is that PayPal notified Scoville that his business had the hallmarks of a Ponzi scheme – such as very rapid growth and few chargeback requests.
On January 11, PayPal told Scoville it was blocking further transfer of funds out of the account.
But for a month he kept this hidden from investors, who continued to pour in money, unaware it could not be withdrawn.
The PayPal freeze ended on July 11, and since then Scoville has made 256 withdrawal requests, taking out more than £19million, according to the SEC.
“For those of you who read the report and wonder why I moved funds from the business account to my personal…it truly was to protect those funds,” he posted on his Facebook page this week.
He is also insisting that Traffic Monsoon was not an investment scheme but an advertising business.
Amazingly, some people still don’t seem to accept what’s happening – one posting on Facebook: “I Believe in my Heart, Traffic Monsoon will overcome this bump in the road and be the top leader in the on-line advertising industry!”
A petition has even been launched on Change.org to raise money for Scoville.
It asks members to donate $1 each, adding: “Any donations higher will be very much appreciated by Charles.”
I bet they will.