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SEC halts pyramid scheme being promoted on Facebook and Twitter
by Joseph Earnest March 5, 2014
Newscast Media WASHINGTON— The Securities and Exchange Commission today announced an emergency enforcement action to stop a fraudulent pyramid scheme by phony companies masquerading as a legitimate international investment firm.
The SEC has obtained a federal court order to freeze accounts holding money stolen from U.S. investors by Fleet Mutual Wealth Limited and MWF Financial – collectively known as Mutual Wealth. The SEC alleges that Mutual Wealth has been exploiting investors through a website and social media accounts on Facebook and Twitter, falsely promising extraordinary returns of 2 to 3 percent per week for investors who open accounts with the firm.
Mutual Wealth purports to invest customer funds using an "innovative" high-frequency trading strategy that allows "capital to be invested into securities for no more than a few minutes." In classic pyramid scheme fashion, Mutual Wealth encourages existing investors to become "accredited advisors" and recruit new investors in exchange for a referral fee or commission.
According to the SEC's complaint filed in U.S. District Court for the Central District of California, almost nothing that Mutual Wealth represents to investors is true. The company does not purchase or sell securities on behalf of investors, and instead merely diverts investor money to offshore bank accounts held by shell companies.
Mutual Wealth's purported headquarters in Hong Kong does not exist, nor does its purported "data-centre" in New York. Mutual Wealth also lists make-believe "executives" on its website, and falsely claims in e-mails to investors that it is "registered" or "duly registered" with the SEC. Approximately 150 U.S. investors have opened accounts with Mutual Wealth and collectively invested a total of at least $300,000.
Click here to read or download SEC complaint. (pop-up)
The SEC’s complaint charges Mutual Wealth with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. For the purposes of recovering investor money in their possession, the complaint names several relief defendants linked to offshore accounts to which investor funds were diverted from the scheme: Risort Partners Inc., Hullstar Capital LLP, Camber Alliance LLP, Kimrod Estate LLP, and Midlcorp Trade LTD.
The SEC's investigation, which is continuing, has been conducted by H. Norman Knickle and Mark M. Oh and supervised by Conway T. Dodge. The SEC's litigation will be led by Melissa Armstrong and Mr. Knickle. Add Comments>>
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