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From Drunk’s World article, Global Online Depository is under SEC Investigation now. As Leo mentioned, it doesn’t really come as a surprise to me either on the scale that they’re raising funds for their business.
In the official SEC complaint pdf , the SEC has issued the owners of GOD a “cease and desist” from offering to sell unregistered securities in both North Dakota and Pennsylvania. With the SEC involved, chances are likely that this will not go in the way of its investors.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20073 / April 9, 2007
SEC v. Global Online Direct, Inc., Bryant E. Behrmann, and Larry “Buck” E. Hunter, Civil Action No 1:07-CV-0767 (N.D. Ga., filed April 5, 2007).
The Securities and Exchange Commission announced today that it has filed a Complaint in the United States District Court for the Northern District of Georgia to halt the sale of unregistered securities by Global Online Direct, Inc. (Global), a Nevada corporation headquartered in Union, Oregon, and its principals, Bryant E. Behrmann (Behrmann), of Henderson, Nevada, and Larry “Buck” E. Hunter (Hunter), of La Grande, Oregon.In the Complaint, the Commission charges that, since at least October 2005, Global, Behrmann and Hunter have conducted an unregistered offering of securities through the provision of interests in Global’s “Secured Profit Inventory Program” (SPIP). The Complaint alleges that Global, Behrmann and Hunter primarily promoted Global’s SPIP through the internet and solicited investors to “loan” Global funds for a term of one-year in exchange for promised daily interest payments. The greater the amount of the purported loan, the greater the interest payments Global offered to investors. Global initially offered daily interest rates to investors of 0.20% per day for amounts up to $100, which it referred to as the “Start-Up” plan, and for investors willing to invest $10,000 or more, they could participate in Global’s “Big Dawgs Club” and receive 1.00% daily interest. Global further offered investors the ability to lock-up access to their interest payments for one-year in exchange for 100% daily compounding on all interest payments. Global therefore offered investors effective annual rates of return of more than 1,100%. In order to generate revenue sufficient to pay investors their promised returns, Global claimed to pool investor proceeds to purchase discounted and low-cost inventory, which Global then purported to resell through various online auction websites, including Ebay and Yahoo! Auctions, as well as through flea markets, street sales and retail storefronts. From October 2005 through March 2007, the Complaint alleges that Global raised approximately $15 million from more than 8,000 investors.
The Commission’s Complaint alleges that Global, Behrmann and Hunter violated the securities registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 and seeks preliminary and permanent injunctions, an accounting, a partial asset freeze against Global, disgorgement of ill-gotten gains, prejudgment interest and civil penalties against Global, Behrmann and Hunter, and the appointment by the Court of an independent corporate monitor to oversee Global’s ongoing business operations.
Without admitting or denying the allegations of the Complaint, Global, Behrmann and Hunter consented to the Commission’s request for preliminary injunctive relief, a partial asset freeze against Global, and the appointment of a corporate monitor to oversee Global’s ongoing business operations. On April 5, 2007, on the basis of Defendants’ consent, the Court issued an Order Granting Preliminary Injunction and Ordering Other Ancillary Relief.
The litigation remains pending as to all parties.
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Good grief – the SEC must be powerful if even God is subject to their Cease and Desist Order!!!!!! I personally would have been quite happy if it had just been Bush.
Reading this situation with GOD and SEC, may I understand that any investment program accepting e-currencies and without being registered as a company is illegal?.
Because many reliable programs are in that situation. Is there any solution without being registered as a company?
Can someone explain a little more about this?.
Thanks
HI Jose,
As I understand it, it is not the e-currencies. The SEC has jurisdiction over the selling of securities across state lines. G.O.D. was selling securities and they offered it in all 50 states, as well as globally. They secured the loans with inventory and promised an interest on the loan. Therefore, the loans were secured interest loans, which makes them a security.
As you already know, I’m not a lawyer, so the above is just my interpertation and may not be complete or accurate.
JMO,
Sharon
Thanks sharon,
what I mean is that I have been informed (but I am not totally sure) that it’s illegal to open an investment program accepting money from people without being registered as a financial company, and so SEC could do something against these unregistered programs, and so much more if it’s by e-currencies.
You can send and receive money using e-currencies to your family, friends… but not from people to trade that money. You need to be registered as a financial company. That’s what i have been told. Is is true?
But opening a reliable program it’s easier and faster with e-currencies and setting up a financial company costs a lot of money, that’s why many people try to register a financial company through a foundation in other country: it’s cheaper and you avoid taxes.
What I don’t know is if you advice in your program that you don’t accept money from USA people then you will avoid SEC or not.
If that’s true it can be very dangerous to many reliable programs where we are investing now
Yes, I understand the difference with GOD now, thanks sharon, but I would like to know many more about all of this.
HI Jose,
E-currencies that are precious metals, like e-gold and ebullion, are not considered to be money transmission. Companies that accept US dollars for a product, service or as a loan, are not considered money transmittors.
According to the FinCEN (yet another US alphabet commission), money transmitters fit a specific criteria and G.O.D. doesn’t fit as a money transmitter. Here is their ruling: http://www.msb.gov/pdf/fincenruling2004-1.pdf
JMO,
Sharon
Thanks a lot sharon
This is interesting information that I came across on the Legisi thread at scam.com. It’s from the Treasury Department…
“In the leading opinion, the Supreme Court of the United States, held that the definition of a security includes an investment contract, which is “a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third party…” Designating such instruments as “loans” does not alter their legal status as securities. SEC v. W.J. Howey Co., et. al, 328 U.S. 293, 66 S. Ct.1100, 90 L.Ed. 1244 (1946).”
- Sharon