Ponzi Fraud: Colonendparenthesis.net
Shortly after I posted about why regulators should not post the rate of return allegedly being offered in a Ponzi scam, The Securities and Exchange Commission announced that it has filed a complaint seeking emergency relief in the United States District Court for the Eastern District of North Carolina against CEP Holdings, Inc. d/b/a www.colonendparenthesis.net (CEP), Colon End Parenthesis Trust, LLC (CEP Trust), and its owners and operators, Trevor Reed (Reed) and Clayton Kimbrell (Kimbrell).
"The Commission alleges that since approximately November 2005, Reed and Kimbrell, through CEP, have fraudulently sold approximately $12 million worth of securities in unregistered transactions to approximately 5,000 investors, promising returns of 2% per day.
The Commission alleges that Reed and Kimbrell solicited investors to purchase CEP memberships with a minimum investment of $20 through CEP's Internet website. On the homepage of this site, CEP claimed that investors could make the "% of an auto-surf without surfing." In order to invest in CEP, investors were required to open and fund an account at CEP Trust, which was also owned and controlled by Reed and Kimbrell. Reed, Kimbrell, and CEP falsely claimed to use the funds to invest in safe, "brick and mortar" type businesses, such as travel agencies and real estate. In fact, Reed and Kimbrell invested most of the money CEP raised in other high-risk, online schemes, including auto-surf programs. Reed and Kimbrell omitted to disclose to CEP investors that CEP had no record of its investments and that neither CEP nor CEP Trust have reliable financial records. Moreover, Reed and Kimbrell, through CEP, made numerous other misrepresentations and omissions of material facts concerning (1) the safety and rate of return of the investment; (2) the nature and merits of the investment; (3) CEP's compliance with Commission regulations; and (4) the size and scope of CEP's overall membership program."
Much hilarity ensured over at Naked Shorts, which reported on the story as follows.
"The world's first punctuation scam
You. cannot. make. this. stuff. up. From yesterday's edition of the US Securities and Exchange Commission naughty boys (and occasionally girls) page, the tale of something called colonendparenthesis.net. A cunning little scheme that, in just over 20 months, scammed some $12 million--at $20 a throw--out of 5,000 people, all sharing the common trait of being too stupid to have money, by promising returns of 2 percent a day."
A review of the complaint filed by the SEC reveals a different type of mystery. The 2% daily return is not the hype -it is the guarantee of getting the return of all your money back in three months, as if you were simply loaning the money.
Now here is they mystery, as Charles Ponzi explained it, how can something which is quite unsound as an investment nevertheless be made attractive as a gamble, but to essentially risk adverse individuals? The individual investors must be risk adverse if they it is important that funds were used to "invest in safe, "brick and mortar" type businesses, such as travel agencies and real estate."
It is important to understand this, if we are to effectively regulate these schemes -which schemes are essentially gambles or lotteries, and which are investments? If we want to cut down on auto-surf fraud programs, then I suggest that we simply provide the necessary lotteries as a federal level instead of treating these schemes as "unregistered investments". They aren't investments, the attractive is to a gamble -which needs to be made more transparent, without losing the attraction for consumers.
Comments
You should all rot in hell. These people are wonderful people who only tried to help those in need. They DID NOT scam these people. The only reason people stopped getting their money is because the hellbound SEC stepped in and told him he HAD to, because the government did not like people making so much money. Maybe you should talk to some of the people who invested and received almost $12 million themselves by investing. A person involved received $9 million from investing. Why would he give SO many people SO much money and just not take it all? Make sense? I didn't think so. Trevor is a stand up guy with nothing to hide, which is why he hasn't been. Maybe instead of being "too stupid" to waste your life bringing other people down you should try doing something that makes you useful and maybe even half as good as Trevor and Clayton.
Posted by: Lindsay Reed | July 23, 2007 5:22 PM
If you rob Peter to pay Paul, you can always count on the support of Paul.
I take it that you are a Paul supporter.
Posted by: michael webster
|
July 23, 2007 8:45 PM
I think the first poster's last name tells it all. LOL These people are scammers. Did you see who got the MOST out of CEPT? FREDERICK DAMRON of Kentucky - $443,000+.
Do a little research on Fred Damron and see what you discover:
www.bewareoffreddamron.blogspot.com
He's a known affinity scammer. He was involved in the Irrevocable Life Insurance Trust scam this year and The Dollar Trust scam in 2005.
His known associates are: Paul Hiram Chappel, Ginger Hagerman, Charles Spradlin, Robert Earl Palm...
That should say enough.
Posted by: Sophia | September 16, 2007 5:58 PM
The two sites Sophia talks about are:
http://www.bewareoffreddamron.blogspot.com/
and
http://colonendparenthesis.blogspot.com/2007/05/affinity-fraud-by-trevor-e-reed.html
Posted by: Michael Webster | September 17, 2007 10:43 AM