WASHINGTON–US regulators have charged two companies and three individuals with operating a pyramid scheme that made some US$129 million from preying on investors in China, Taiwan and the US.
The Securities and Exchange Commission announced the civil fraud charges Friday against eAdGear Holdings Ltd, based in Hong Kong; California-based eAdGear Inc; and Charles Wang, Qian Cathy Zhang and Francis Yuen. A federal court in San Francisco authorised the SEC's request to freeze the defendants' assets and bar them from soliciting investors.
The SEC said eAdGear claimed to be a successful online marketing company, but nearly all its revenue came from investors, not products or services. Starting in December 2010, the company sold "memberships" and "business packages," opening accounts with tens of thousands of mostly Chinese investors. The scheme targeted investors in China and Taiwan and in Chinese communities in the US, according to the SEC.
AP