The Securities and Exchange Commission announced charges Friday against the California-based company eAdGear for running an international pyramid scheme and issued a temporary restraining order and asset freeze against the firm.
A federal court in San Francisco charged eAdGear Inc.; its Hong Kong entity, eAdGear Holdings Ltd.; CEO Charles S. Wang, 52; his wife, Qian Cathy Zhang, 52; and Chief Financial Officer Francis Y. Yuen, 53. Laurata Chan, the company's accounting manager, is named as a relief defendant, according to an SEC statement.
The company was running primarily in the U.S., China and Taiwan, and it raised more than $129 million from investors worldwide, the SEC said.
The company claimed to be a successful internet marketing firm. However, the SEC complaint said that eAdGear used 99% of the funds received from new investors to pay off the early investors.
The operators pocketed some of that money to repay a personal loan and purchased million-dollar homes for themselves.
"eAdGear and its operators falsely claimed that they were running a profitable Internet marketing company when in reality, they were operating a Ponzi and pyramid scheme that preyed on Chinese communities and caused investors to lose millions of dollars," said Jina L. Choi, director of the SEC's San Francisco Regional Office, in a statement.
The company has been running since 2010. Its website describes the company mission as "global advertising" and states that it "provide[s] vital internet tools to small and midsize companies who market their products and/or services online."
