U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19592 / March 7, 2006
Securities And Exchange Commission v. Charis Johnson, LifeClicks, LLC, and 12daily Pro, Civil Action No. CV 06-01018 NM (PLAx) (C.D. Cal.)
Court Enters Order Permanently Enjoining and Freezing Assets of Defendants in 12daily Pro "Autosurf" Internet Ponzi Scheme, and Appointing Permanent Receiver
The Honorable Nora M. Manella, United States District Judge for the Central District of California, today entered an order permanently enjoining defendants Charis Johnson, LifeClicks, LLC, and 12daily Pro from violating the antifraud and securities registration provisions of the federal securities laws. In addition to the permanent injunctions, the order freezes the defendants' assets, appoints a permanent receiver over LifeClicks and 12daily Pro, prohibits the destruction of documents by the defendants, and requires accountings from the defendants. The defendants consented to the entry of the order without admitting or denying the allegations in the complaint.
The Court appointed Thomas F. Lennon, Inc. as the permanent receiver over the assets of LifeClicks and 12daily Pro. The receiver is in the process of creating a website devoted to providing investors with information relating to the receivership; the website address is: www.tlennonfor12dailypro.com. In addition, the receiver can be reached by telephone at (619) 464-6691.
The Securities and Exchange Commission ("Commission") filed its action against the defendants on February 21, 2006, alleging that their purported "paid autosurf program" was in fact a massive Ponzi scheme that had raised more than $50 million from over 300,000 investors worldwide by offering a 44% return on investment in just 12 days. To receive the promised payment, a member purportedly was required to view at least 12 web pages per day during the 12 day period. The Commission alleged 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. In fact, at least 95% of 12daily Pro's revenues came from new investments in the form of membership fees from new or existing members. The 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. 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.