Newsmakersng’s story on alleged Ponzi Scheme aided by PayPal has drawn a long reaction from the founder of Traffic Monsoon, Charles Scoville.
Two Nigerians, Kingsley Ezeude and Chukwuka Obi, had led other victims of the alleged Ponzi Scheme to institute a class action against PayPal in a US federal court, accusing it of aiding and abetting an elaborate fraud that swindled about 162,000 investors of $207 million.
The plaintiffs said PayPal processed hundreds of thousands of transactions for Monsoon Traffic, despite knowing that Scoville had perpetrated Ponzi-scheme frauds previously and was aware he was doing so again.
They claimed “PayPal provided substantial assistance to the Traffic Monsoon scheme by allowing Traffic Monsoon to use its services in an extraordinary and atypical manner.”
A federal judge in Utah had, consequently, frozen the assets of Scoville and his company, after the Security and Exchanges Commission (SEC) began investigating his business that purported to be a “successful internet advertising-services company.”
But, Scoville posted his defence of the scheme on Newsmakersng’s facebook wall, on Wednesday, blaming PayPal entirely for the failure of his business.
His reaction reads in full: “The reason Traffic Monsoon had instant withdrawals for any amount you wanted to take from your account balance is because the money rewarded for surfing only came from money the company already received in sales of an advertising service. So that’s the reason why there was more money available in the payment processors than existed on member account balances.
“Since no investment was offered, no amount of surf rewards promised, and the offer was for ad service and a non-investment – there is no ponzi that exists within Traffic Monsoon. It doesn’t matter which service was sold the most – sales revenue is sales revenue, and it was only from real money the company already had received in sales of its services that it rewarded the surfers. Commissions were only paid from real sales.
“When PayPal limited Traffic Monsoon, they said it was because of a sudden spike in sales. They actually tried to get Traffic Monsoon moved over to “Braintree,” which I believe is because they wanted to make Braintree more popularly used and they saw that Traffic Monsoon was a big merchant. They probably simply wanted to add a big merchant to Braintree because of the turn-over involved with Traffic Monsoon. That’s how companies like Braintree make money – the turn-over.
“I wouldn’t use Braintree because of what PayPal had done to my business, and the impact it had on my members – I told members money was being held by PayPal and would be released in 6 months, and their limitation was because of a spike in sales. PayPal decided to turn against me because I wouldn’t use braintree. They made members believe there was no money being held inside PayPal, and instructed members that Traffic Monsoon didn’t have money to pay them – and therefore made members believe that Traffic Monsoon was a Ponzi.
“They instructed callers how to complain to the SEC and FBI. They told members as well as the SEC that their limitation came because they suspected Traffic Monsoon was operating as a Ponzi. However, why would they have kept sales turned on for 30 days but turn off payouts during that initial period? If they thought I was doing something illegal, wouldn’t they have turned off all pay-ins? If they thought I was doing something terrible, why did they try to get me setup with Braintree?
“Attached is an email from Jason Gardner, my PayPal account manager at the time, where is indicated he was working hard to get me setup with Braintree on the same day they just told me they were going to transition Traffic Monsoon away from using PayPal by first turning off payouts but keeping payments in turned on for 30 days.
“Court documents in the SEC case confirm that PayPal truly was holding onto the money, and there currently is more money being held in receivership than is owed on member account balances. So is there really a Ponzi? No, of course not. We did not depend upon new sales in order to cover current member account balances or withdraw requests. Money was already there.
“So the SEC have simply twisted some facts, and made it appear as though Traffic Monsoon was offering an investment, even though we weren’t – and are trying to make it appear as though surf rewards are returns on investment, even though they are not. Even though $55 is a maximum and not a guaranteed amount of rewards anyone would receive, the SEC is trying to paint a picture that this amount is guaranteed and promised, and therefore a liability – it actually is not a liability.
“The company is not in debt or owing anything to anyone other than their current account balance, and the services they had paid for – which the company can fully deliver if it weren’t for this crazy lawsuit, and the unjust PayPal limitation.
“The impact on members has been so hard – and it’s hard to see through the pain to see where the pain is coming from – and it truly is directly from what PayPal has done, and the SEC picking up on a case which shouldn’t have ever been filed.”
Below is the link to the original story:
http://www.newsmakersng.com/2017/05/09/two-nigerians-others-sue-paypal-for-abetting-207m-ponzi-scheme-fraud/
0