Hi Debbi
Of course Clark Howard was right

http://www.sec.gov/news/press/2006-26.htm

FOR IMMEDIATE RELEASE
2006-26

Washington D.C., Feb.27, 2006 — The Securities and Exchange Commission today announced the filing of securities fraud charges against the operators of www.12dailypro.com, a “paid autosurf program” that in fact was a massive Ponzi scheme which raised more than $50 million from over 300,000 investors worldwide by offering a 44% return on investment in just 12 days. As a result of the SEC’s charges, the defendants, Charis Johnson, age 33, of Charlotte, N.C., and her companies, 12daily Pro and LifeClicks, LLC, ceased their solicitation of investors and agreed to a freeze of all their assets and the appointment of a receiver who will take control of the companies’ operations.

According to the Commission’s complaint, which was filed last week in federal district court in Los Angeles, Calif., www.12dailypro.com claimed to be a paid autosurf program — a form of online advertising program that purportedly generates advertising revenue by automatically rotating advertised websites into a viewer’s Internet browser. Advertisers purportedly pay “hosts,” which in turn pay their members to view the rotated websites. The Commission’s complaint alleges that 12daily Pro’s sale of membership units constituted the fraudulent and unregistered sale of securities under the federal securities laws. The Commission also today posted to its Web site an investor alert concerning autosurf programs. The alert can be viewed at www.sec.gov/investor/pubs/autosurf.htm.

Randall R. Lee, Regional Director of the Commission’s Pacific Regional Office, said, “Paid autosurf programs have become an enormous industry on the Internet. When these schemes depend on attracting new members in order to pay returns to current members, they are destined to collapse. The promise of guaranteed, double-digit returns in a matter of days should raise a red flag. We urge the public to be aware that paid memberships in these schemes may be a form of investment, and to exercise extreme caution before investing in any get rich quick scheme.”

According to the Commission’s complaint, the 12daily Pro website, recently ranked as the 352nd most heavily trafficked website, solicited investors to become “upgraded members” by buying “units” for a “fee” of $6 per unit, with a maximum of 1,000 units. 12daily Pro promised to pay each upgraded member 12% of his or her membership fee per day for 12 days. At the end of 12 days, the member purportedly would have earned a total of 144% of his or her original membership fee, 44% of which would be profit on the membership fee. To receive the promised payment, a member purportedly must view at least 12 web pages per day during the 12 day period. The amount of returns that 12daily Pro would pay its members, however, was in fact dependent solely on the amount of each member’s investment, not on the amount of website-viewing or any other services rendered.

The Commission alleges that the defendants defrauded investors by operating 12daily Pro as almost a pure Ponzi scheme — using new investor monies to pay the promised returns to existing investors — in violation of the federal securities laws. The defendants falsely represented that upgraded members’ earnings “are financed not only [by] incoming member fees, but also with multiple income streams including advertising, and off-site investments.” In fact, at least 95% of 12daily Pro’s revenues have come from new investments in the form of membership fees from new or existing members. The other “multiple income streams” from advertising revenues or off-site investments touted by the defendants were either negligible or non-existent. In addition, undisclosed to investors, Johnson transferred more than $1.9 million in investor funds to her personal bank account since mid-2005.

Johnson and her companies have consented to the entry of a court order that permanently enjoins them from future violations of the antifraud provisions of the federal securities laws, imposes a freeze on their assets, prohibits the destruction of documents, and appoints Thomas F. Lennon as permanent receiver over the assets of 12daily Pro and LifeClicks, LLC. The order is subject to approval by United States District Judge Nora M. Manella. Johnson and her companies consented to the order without admitting or denying the allegations in the complaint. The Commission’s complaint also seeks repayment of ill-gotten gains and civil money penalties; the amounts to be sought will be determined at a later date.

The Commission’s complaint alleges that the defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act.

This matter was referred to the Commission in early February by several members of the public. Complaints and tips from the public are vital to the Commission’s mission to protect investors, and the Commission staff reviews each and every complaint it receives.

For further information contact:

Randall R. Lee
Regional Director
Pacific Regional Office
(323) 965-3807

Michele Wein Layne
Associate Regional Director
Pacific Regional Office
(323) 965-3850

Kelly Bowers
Assistant Regional Director
Pacific Regional Office
(323) 965-3924

Hello - I was one of the 300,000 members of 12DailyPro. I read with interest, the above letter posted by ferret. I'd like to point out some inaccuracies in the SEC press release.

[[The Commission’s complaint alleges that 12daily Pro’s sale of membership units constituted the fraudulent and unregistered sale of securities under the federal securities laws.]]

The terms of use that each and every member had to agree to before joining clearly stated that 12dailypro was in no way offering securities or investments of any kind. They were offering an advertising service and made it clear that the monies spent by members constituted membership fees that allowed members to purchase advertising, and to be paid to provide traffic to other members. Again, in no way was it presented as a security or investment of any kind.

[[To receive the promised payment, a member purportedly must view at least 12 web pages per day during the 12 day period. The amount of returns that 12daily Pro would pay its members, however, was in fact dependent solely on the amount of each member’s investment, not on the amount of website-viewing or any other services rendered.]]

From personal experience I can tell you the fact is that the amount of the commissions received DID depend on website-viewing. If I had "upgraded" my account with any amount of money from $6.00 to $6000.00 and then had NOT logged into my account for the next 12 consecutive days and viewed a minimum of 12 ads daily, I would have received ZERO commissions and lost the entire amount spent on the account upgrade. The commissions were paid to members based directly on the number of days that viewing was done, accumulating each viewing day until the 12 day maturity was completed. If I missed one day of the 12 and did not view any ads that day, I would lose 12 percent of the earnings for that 12 day cycle. Missing 2 days of the 12 would reduce the earnings 24 percent, and so on...


[[According to the Commission’s complaint, the 12daily Pro website, recently ranked as the 352nd most heavily trafficked website]]

This viewing of websites was in fact the service rendered by the members. 12dailypro was indeed in the top 400 most visited websites as was verified by the traffic monitoring site alexa.com. Website traffic was what 12dailypro was about at the core of its business concept. Internet advertising at it's best is what 12dailypro tapped into. I have yet to see an internet advertising company that could produce more traffic as affordably. It is a shame that the SEC has absolutely no idea of what it is doing in these matters. It reminds me of the anti-trust trials involving Microsoft. The judge sitting on the trial was completely computer illeterate... and totally unqualified to make judgments on the matters at hand.

I felt the need to comment because of all the flagrant lies and inaccurate spins that have been painted onto 12dailypro. In closing I'd like to say that 12dailypro never missed one payment to me, nor were they late on paying me within their terms of use, until StormPay.com froze their account making it impossible to do business. I would certainly like to see more attention given to StormPay in this matter, as I feel that they are illegally holding tens of millions of dollars that should have been directed to 12dailypro members.

Sincerely,

Hi Howard,

Thanks for commenting. It's always good to get both sides to a story.

Would have been interesting to see what would have happened if StormPay hadn't pulled that stunt, but now we'll never know.

Feel free to stop on by and comment anytime!

Debbi