It was just a matter of time before one of the state securities commission would take a closer look at the Pathway-2-Prosperity network. The question now is how much longer will they stay online? Do not think for a moment that this is an isolated investigation.
If the ND Securities believes that P2P is operating illegally in their state, other states will follow suit if there are investors within their borders promoting the program. Some will say the U.S. SEC has no jurisdictions on a Canadian company. While this may be true, there are partnerships between securities regulators of differing countries.
It is in the best interest of each country to enforce compliance on businesses that are violating the laws of a partner country. In return for example, the U.S. would shut down a business in it’s own country if the Canadian SEC deems that it is violating or operating illegally in Canada.
The dominoes may have started to fall, however, no one can be sure what the outcome of the investigation by the ND SEC will amount to. The only facts that we know is that Pathway-2-Prosperity is operating illegally and not registered in North Dakota. It is also stated that those that are promoting the program in North Dakota are also breaking the securities laws.
Will this be enough to start a panic among its membership causing a mass withdrawal? If so, then the death knell for P2P has been rung. Here is the complete warning from the North Dakota Securities Commission in its entirety.
SECURITIES COMMISSIONER WARNS OF INTERNET FRAUD
Posted: August 6, 2008
Bismarck, ND – North Dakota Securities Commissioner Karen Tyler announced today that the Securities Department is actively investigating a Canadian-based, internet fraud scheme currently being promoted in several communities in North Dakota, including Bismarck and Jamestown. “Pathway-2-Prosperity” or “P-2-P Network” promises returns of 1.5% to 2.67% per day. An example hyped in its website of $100 invested in the “60 Day Plan” would return over $260 in just two months. “This has all the earmarks of a classic Ponzi scheme with money from later investors used to pay unrealistically high returns to early investor/promoters, who then bring in their family members, friends and co-workers for a ‘referral fee’,” said Tyler.
The scam claims to be a legal, private investment club and not subject to state and federal securities laws. This is completely false. “P-2-P Network” is not registered with the North Dakota Securities Department and offering for sale an unregistered, non-exempt security to a North Dakota resident is a direct violation of the North Dakota Securities Act. Local investors encouraging the scheme and referring others to invest for a fee are also violating the Securities Act as unregistered agents of the foreign promoter and could expose themselves to civil or criminal liability. Commissioner Tyler warned that investor money is leaving the country and when the scheme collapses, as they always do, it will be almost impossible to recover any part of it.
“The key to avoid getting harmed by an investment scam is to make sure you understand the product being offered and thoroughly check both the salesperson and the product with our Department,” said Commissioner Tyler. “Remember, if it sounds too good to be true, it usually is.” The investigation by the Securities Department is ongoing and individuals with information concerning this activity are encouraged to contact the North Dakota Securities Department at (800) 297-5124 or 328-2929 (Bismarck local).
As if that was not enough, more undue publicity about the warnings from the ND SEC hit the Associated Press and mentioned on an affiliated MSNBC site as well. Here is the blurb:
State Warns Of Internet Investment Scam
By Associated Press
KVLY-TV
updated 2:46 a.m. CT, Thurs., Aug. 7, 2008
Investigators are warning the public about a Canadian-based internet fraud scheme that’s popped up in Jamestown and Bismarck.
The Pathway 2 Prosperity Network website says $100 invested into a 60-Day plan could return more than $260 in two months.
North Dakota Securities Commissioner Karen Tyler says the P-2-P is operating illegally in the state and investors who recruit more people into the scam could face criminal charges.
So there you have it folks, this “investment” is starting to not sound like an investment but an illegal scam.
