False (Video) Promises: YouTube Videos at the Center of FL-Based Ponzi Scheme

Director's-BoardAn important and pervasive online tool has been used to lure investors to a new Ponzi scheme, according to the Securities and Exchange Commission (“SEC”). In a press release dated April 8, 2014, the SEC alleges that Joseph Signore of JCS Enterprises, Inc. and Paul L. Schumack II of T.B.T.I., Inc. colluded to use YouTube videos as promotional devices for selling investments in their proposed high-return product virtual concierge machines (“VCM”s). These VCMs, the videos purported, would be “ATM-like machines that businesses could use to advertise products and services via touch screen and printable tickets or coupons,” and would be accessible at hotels, airports and stadiums, with revenue supposedly generated through businesses advertising in the VCMs. Promising a “300 to 500 percent return within 4 years,” investor’s funds in upwards of $40 million (from 2011 to 2014) were instead used to pay returns to earlier investors and, according to the SEC, these investors “aren’t enjoying the riches touted on YouTube” from the VCMs.

The VCM YouTube video, in fact, aided heavily in perpetuating the “prosperous business” illusion of VCM ownership. Displaying “investors” polishing Cadillac’s and showing friends a new pool (see video here), the Virtual Concierge was touted as a promising return generator that could be placed in key advertising areas and monitored by password by their investors once placed. In reality, however, these machines were “not placed anywhere near the rate of those purchased by investors,” and their activity could therefore also not be monitored, or the machines located. The Ponzi scheme behind the false business model – which diverted funds in the millions to Signore and Schumack – was exposed when new investor funds “dried up”. The SEC and U.S. Attorney’s Office for the Southern District of Florida are pursuing charges, with the SEC seeking disgorgement of ill-gotten gains, prejudgment interest, a temporary restraining order and a temporary asset freeze, among other financial charges. Investors should always be aware: if the opportunity sounds too good to be true, it probably is.

For further information on this and other related subjects, please contact us at info@jackolg.com  or (619) 298-2880.

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