Two US government agencies have started to return $55 million (£35.36 million) in forfeited funds from a web-based operation accused by investigators of being a massive Ponzi scheme, the US Department of Justice and US Secret Service announced yesterday.
The two agencies are returning the funds to about 8,400 people who joined AdSurfDaily, an operation the agencies accused of being a Ponzi scheme disguised as an online advertising company. AdSurfDaily, through YouTube videos and other promotional efforts, and company founder Thomas "Andy" Bowdoin Jr promised to pay investors for visiting each other's websites, according to court documents.
AdSurfDaily operated at various websites, including Adsurfdaily.com, Adcashgenerator.com and Lafuentedinero.com, the DOJ said.
Attorney vows to 'recover every penny'
"We are putting $55 million back into the pockets of innocent victims of this online Ponzi scheme," said Ronald Machen Jr, US attorney for the District of Columbia, in a statement. "As we did in this case, we will continue to work with our law enforcement partners to recover every penny we can find for victims of financial fraud."
Bowdoin, indicted in November 2010, is facing five counts of wire fraud, one count of securities fraud, and one count of unlawful sale of unregistered securities in US District Court for the District of Columbia. Bowdoin's operation, in business from about September 2006 to August 2008, collected about $110 million (£71 million) from investors, and paid out $31 million (£20 million) to early members, with 98% of the money coming from other members, according to the indictment.
Bowdoin, of Quincy, Florida, has pleaded not guilty and is awaiting trial.
Mike McDonnell, a lawyer for Bowdoin, called the DOJ's allegations "gross distortion of the facts."
But business 'offered no guarantees', says defence
There were no victims, said McDonnell, with McDonnell Trial Law and Dispute Resolution in Naples, Florida. "Not a single person lost a dime until the government shut down the business," he said. "These customers bought advertising on the 'Net. They were not investors."
McDonnell said that AdSurfDaily was not a Ponzi scheme because it offered no guarantees. "The business had independent income," he said. "The business model ensured that the business remained viable since the payouts were based on a function of revenue and advertiser efforts."
In August 2008, the US Attorney's Office for the District of Columbia seized more than $65 million (£43 million) from bank accounts holding AdSurfDaily members' money, the indictment said. Also seized were property, luxury vehicles and watercraft, the DOJ said.