By Hal M. Bundrick
NEW YORK (MainStreet) ¿ An international pyramid scheme targeting Asian-Americans has been shuttered by the Securities and Exchange Commission. The business, offering educational courses for children under the business names of Cyber Kids Best Education Limited, or "CKB" and "CKB168," uses Internet videos, promotional materials and seminars to create the appearance of a legitimate enterprise, according to the SEC.
"CKB had little or no real-world consumer sales to generate the extraordinary returns promised to investors," the SEC complaint says. "In fact, CKB has no apparent source of revenue other than money received from new investors."
Three executives and eight promoters are charged with violations of the antifraud and securities registrations provisions of federal securities laws. Nine of the individuals are charged with violating the broker-dealer registration provisions.
Bank records show that the bulk of the money raised in the scheme was paid to accounts controlled by CKB executives, and as commissions to promoters of the pyramid scheme.
"CKB's operators and promoters profited by abusing relationships of trust within the Asian-American community and promising investors they can earn more money by recruiting other investors instead of selling actual products," said Antonia Chion, an associate director in the SEC's Division of Enforcement. "What CKB really sells is the false promise of easy wealth."
The company is comprised of five entities based in Hong Kong, Canada and the British Virgin Islands. The SEC says at least 400 investors in New York, California and other areas with large Asian-American communities were hustled of more than $20 million. Millions more were taken from investors in Canada, Taiwan, Hong Kong and other countries in Asia.