Get Rid of Your Money Problems for Once and All - Earn 25%
Pinnacle Ads Escaped Vetting By Publications, according to the Wall Street Journal.
The Pinnacle advertisements appeared in four out five of the most widely read US publications, "USA Today, The Wall Street Journal, the Washington Post and the Los Angeles Times -- four of the five most widely read newspapers in the country."
Pinnacle advertised a 25% return in 60 days on your investment, but naturally had not registered with the SEC to sell securities.
The SEC alleges, in its complaint, "that, from October 2005 through the present, Pinnacle and O'Neal have operated a Ponzi scheme and raised at least $30 million from more than 2,000 investors located in thirty-three states and two foreign countries. Specifically, the complaint alleges that Pinnacle fraudulently offered and sold interests in real estate development partnerships through a nationwide advertising campaign. Pinnacle also sold notes to some investors. According to the complaint, Pinnacle promised investors a 25% return in 45 (or later 60) days and a second 25% return, and the return of investor capital, after 90 days."
Apparently the way to get rid of your money problems, in Pinnacle fashion, was simply to get rid of your money. No problem.
The SEC complaint, which alleges that the scheme was a Ponzi, can be read here.
Zachary Seward, the Wall Street Journal reporter, also interviewed Mitchell Zuckoff, who wrote on Charles Ponzi. Zuckoff argues that "There's a compact of trust between publications and their readers," says Mr. Zuckoff, who wrote a biography of Charles Ponzi, namesake of the scheme. "I trust the article that runs right next to the ads, right? I should be able to trust the ads as well."
Is it too much to expect that for the purchase of a $2,00 publication that the publication has vetted the investment ads? Does it matter that the publications made millions of dollars on these ads? Should the investor place no confidence with the publication?
The advertising law in the United States and Canada differ on this issue. In the United States, the FTC which could regulate publishers who make money from fraudulent ads has declined to do so.
The FTC's authority is grounded in Section 5 of the FTC Act, which regulates deceptive practices. Here is the FTC's advertising policy, which is aimed at advertisers and not publishers. Although, "FTC has taken action against both the manufacturer or marketer of a product and the company that produced the infomercial."
If the FTC will charge the company that produced a misleading infomercial, then shouldn't the advertising company who drafted Pinnacle's ads be a legitimate target?
In Canada, the appropriate regulatory body is the Competition Bureau. Misleading advertising is regulated both criminally, under section 52, and civilly under section 74 of the Competition Act.
The important difference between the United States and Canada is that section 74.07, civil remedies for misleading advertising, provides that publishers of misleading advertisements are not liable if: a) they obtained and recorded the name and address of other person, and b) accepted the representation in good faith for printing, publishing, or other dissemination in the ordinary course of that person's business. (This provision was formely known as 60(1) of the Competition Act)
What remains unclear is whether the Canadian distribution of USA Today, The Wall Street Journal, the Washington Post and the Los Angeles Times contained the Pinnacle ads and if so whether the Competition Bureau will take any action against those publications.
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