Hyip weekly report: Hyip world and law

Do you still remember a big scam back in the year 2005? A hyip called Legisi Holdings ripped over $70 million off over 3,000 investors from all over the world. Legisi Holdings operated at the same ‘season’ like other big and famous scams such as vascoinvestment and solidinvestment, but the difference was rather than offering daily low rate of returns. Legisi Holdings had offered a fixed monthly rate of 15%. The good news is the US Securities and Exchange Commission had frozen all assets of Legisi Holdings, the owner of Legisi Holdings, Gregory McKnight, as well as of other related companies.

You can read full details of the legal case of Legisi Holdings which was filed on May 5th, 2008 below:

“U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20563 / May 8, 2008

SEC v. Gregory N. McKnight, et al, Case No. 08-11887 (E.D. Michigan, filed May 5, 2008)

The Securities and Exchange Commission announced that on May 5, 2008, the Honorable Judge Paul V. Gadola of the United Stated District Court for the Eastern District of Michigan issued an Asset Freeze Order against Gregory N. McKnight (McKnight) and Legisi Holdings, LLC (Legisi Holdings) as defendants, and against Legisi Marketing, Inc. (Legisi Marketing), Lido Consulting, LLC (Lido Consulting), Healthy Body Nutraceuticals (HBN), and Lindenwood Enterprises, LLC (Lindenwood) as relief defendants. The Asset Freeze Order froze all assets of McKnight, Legisi Holdings, Legisi Marketing, Lido Consulting, HBN, and Lindenwood. In addition, Judge Gadola issued an Order Appointing a Receiver over all assets of McKnight, Legisi Holdings, Legisi Marketing, Lido Consulting, HBN, and Lindenwood.

The SEC's complaint, filed May 5, 2008, alleged that McKnight and Legisi Holdings conducted a fraudulent, unregistered offering of securities in which, between December 2005 and at least November 2007, they raised approximately $72 million from more than 3,000 investors in all 50 states and several foreign countries through the Legisi website at www.legisi.com. According to the SEC's complaint, McKnight represented that he would invest the offering proceeds in foreign currencies, commodity futures, stocks and real estate and promised to pay interest of as much as 15 percent per month from the profits from his investments. The SEC's complaint further alleges that throughout the period of the offering, McKnight represented to investors that his investments were profitable and were generating the promised returns. The complaint charges that, contrary to these representations, McKnight invested only approximately $33 million of the offering proceeds and that, rather than earning profits, these investments resulted in millions of dollars in losses. The SEC's complaint further charges that Defendants used approximately $27.5 million of the offering proceeds to make payments of purported profits to prior investors and were, thus, operating a Ponzi scheme, and that McKnight used $2.2 million of investor funds to pay for his personal expenses and to make payments to his relatives, Jennifer McKnight, Danielle Burton, and Theresa Burton. The SEC's complaint charges that Defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

In addition to the emergency relief already obtained, the Complaint seeks preliminary and permanent injunctions against McKnight and Legisi Holdings. The Complaint also seeks disgorgement of ill-gotten gains from the defendants and relief defendants and the imposition of civil penalties against McKnight and Legisi Holdings. A Hearing on whether a preliminary injunction should be issued against the Defendants is scheduled for May 19, 2008 at 2:00 p.m.”

Did you remember last month e-gold won appeals for hearing on asset seizure from The United States Court of Appeals for the District of Columbia Circuit? However, this month e-gold lost in a trial court in the District of Columbia, being charged for money laundering, conspiracy, and operating an unlicensed money transmitting business. Read full details below:

“A trial court in the District of Columbia, 2008 U.S. Dist. LEXIS 37602, UNITED STATES OF AMERICA v. E-GOLD, LTD, et al., for violation of 18 USC 1960 which makes it a crime to operate an unlicensed money transmitting business. According to the trial court, a business can clearly engage in money transmitting without limiting its transactions to cash or currency and would commit a crime if it did so without being licensed. ” The Court rejected the claim that 18 USC 1960 does not apply to their operations because they never deal in cash or currency.

Last year, the DOJ announced Indictment of E-Gold as follows: “A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today. The four-count indictment, handed down on April 24, 2007, and unsealed today, charges E Gold Ltd; Gold & Silver Reserve, Inc.; and their owners Dr. Douglas L. Jackson, of Satellite Beach, Fla.; Reid A. Jackson, of Melbourne, Fla.; and Barry K. Downey, of Woodbine, Md., each with one count of conspiracy to launder monetary instruments, one count of conspiracy to operate an unlicensed money transmitting business, one count of operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law.”

The US Securities and Exchange Commission seems to seriously want to play an important role in monitoring and regulating investment companies worldwide. A meeting which was held in Washington DC discussed the possibility of SEC to take over regulators from all over the world.

So, what do you think? Would SEC in the future have authority to charge any scam hyips regardless in which countries they are based in? Read the full details below:

“SEC Hosts Meeting of Takeover Regulators From Around the World

FOR IMMEDIATE RELEASE

2008-93

Washington, D.C., May 20, 2008 — The Securities and Exchange Commission announced today's conclusion of an international meeting of regulators to discuss cross-border takeovers of public companies. The meeting was attended by more than 40 officials (from 28 countries) who are responsible for regulating transactions related to attempts to gain control of public companies by acquiring outstanding shares held by investors. The primary goal of the two-day meeting at the SEC's Washington, D.C., headquarters was to identify ways to increase the effectiveness of the role of regulators in takeover transactions implicating more than one regulatory scheme. Topics discussed at the meeting included ways to increase the inclusion of U.S. and non-U.S. investors in global takeover transactions and steps that can be employed to identify abusive takeover practices.

John White, Director of the SEC's Division of Corporation Finance, said, "Following prior meetings in Australia and South Africa, we are very pleased to have had the opportunity to host this meeting and to communicate with our fellow regulators on issues we commonly face. As our securities markets become increasingly globalized, such contacts become increasingly important as a means to meet our goals of protecting U.S. investors and promoting best practices for effective cross-border transaction oversight."

The meeting follows the May 6 publication by the SEC of proposed rules applicable to cross-border business combination transactions. The proposed rule amendments are intended to facilitate participation by U.S. investors in cross-border business combination transactions.

Jurisdictions represented at the meeting were Austria, Australia, Belgium, Brazil, Canada, Chile, Colombia, Denmark, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, The Netherlands, New Zealand, Norway, Peru, Portugal, Spain, Switzerland, South Africa, Thailand, Trinidad and Tobago, United States and United Kingdom.”