The SEC’s 2006 case against 12daily Pro turned on a sharp difference between the program’s paid-autosurf explanation and the agency’s allegations: the site said members earned money by viewing websites, while the SEC said payouts depended on membership fees and were funded largely by other members’ money. The defendants later consented to a court order without admitting or denying the allegations.
What was 12daily Pro?
12daily Pro presented itself as a paid autosurf program. Advertised websites were automatically rotated through a member’s browser, and the program said members could earn money by viewing them. The SEC filed its action on February 21, 2006, and announced securities-fraud charges on February 27. It said the program had raised more than $50 million from over 300,000 investors worldwide. SEC announcement, February 27, 2006
How did the promised 44% return work?
According to the SEC’s complaint, members paid $6 per unit and could purchase up to 1,000 units. The program allegedly promised to pay 12% of a membership fee each day for 12 days. That schedule amounted to a purported payout of 144% of the original fee: the original amount plus 44% profit. Members were allegedly required to view at least 12 pages daily. SEC announcement and complaint
Why did the SEC call it a Ponzi scheme?
The SEC alleged that the promised earnings were tied to how much a member invested, not to website viewing or services performed. It further alleged that at least 95% of the program’s revenues came from new or existing members’ membership fees, while revenue from advertised websites and off-site investments was negligible or nonexistent. In the agency’s account, new investor money funded payments to existing members. These were allegations in the SEC’s complaint, not findings admitted by the defendants. SEC announcement; SEC complaint
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The complaint also alleged that Charis Johnson transferred more than $1.9 million in investor funds to her personal bank account. The SEC’s Pacific Regional Office director, Randall R. Lee, cautioned: “The promise of guaranteed, double-digit returns in a matter of days should raise a red flag.” SEC announcement
What did the court order?
On March 7, 2006, U.S. District Judge Nora M. Manella entered an order permanently enjoining the defendants from violating securities laws, freezing assets, requiring accountings, and appointing Thomas F. Lennon, Inc. as permanent receiver. The SEC said the defendants consented to the order without admitting or denying the complaint’s allegations. The complaint pleaded violations of Securities Act Sections 17(a), 5(a), and 5(c), Exchange Act Section 10(b), and Rule 10b-5. SEC litigation release, March 7, 2006
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the case establishes—and what it does not
The SEC’s account describes a program that marketed returns as payment for browsing but allegedly relied chiefly on membership fees to fund payouts. The figures commonly associated with the case—more than $50 million raised, over 300,000 investors, a 44% promised return, at least 95% of revenue from membership fees, and more than $1.9 million allegedly transferred—come from the SEC’s 2006 announcement and allegations. They are not independent estimates or current statistics. The cited official records concern this enforcement action; they do not establish broader statistics about the autosurf market.
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