An Australian fella who made bank from thousands of military veterans and retirees through a 21-step “proven system” of internet marketing must cough up £12m ($16m) in settlements – and is banned from selling any similar programs in future.
These arrangements were announced this week following an initial ruling against My Online Business Education (MOBE) back in June 2018, when a US watchdog noted that the company was charging a £38 ($49) entry fee for the program, which consisted of a series of videos and endorsements from happy members. In short, MOBE was accused of fraud.
Those who signed up were then bombarded with sales pitches for membership packages that costs much more – sometimes into the thousands – but would walk them through the remaining advanced steps of the "educative" program.
At the end of the process, and having handed over as much as £23,000 ($30,000), the system was eventually revealed – like a bad TV pilot – to be the exact one they had just gone through. Customers were then encouraged to start selling the self-same scheme to others, on commission.
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MOBE took out a vast number of online ads, extensively used social media, and ran live events in its bid to target independent would-be entrepreneurs and banked hundreds of millions as part of the scheme, with that money transferred to offshore bank accounts, America's Federal Trade Commission discovered.
The scheme involved at least 18 corporate shell companies in Australia, Costa Rica, Fiji, Hong Kong, Malta, and the United States. All the US entities involved were payment processor companies that shifted funds from Americans to accounts in the other countries.
The main company, we're told, was based in Malaysia and run by Australian Matthew Lloyd McPhee. McPhee agreed to pay $16m from his personal and company accounts, and to surrender real estate he owns: Bounty Island in Nadi Bay, Fiji; the Sunset del Mar Resort in Costa Rica; and two apartments in Kuala Lumpur.
He is set to be permanently banned from selling business coaching programs and investment opportunities in the US. Another $1.3m will come from the estate of his deceased partner-in-crime Russell Whitney.
In December 2018, the trade commission also settled with another MOBE executive, Susan Zanghi, in which she turned over £25,600 ($33,400) in frozen assets and any funds held under in corporate bank accounts. She is also banned from selling or marketing business coaching or investment opportunities in future.
The watchdog estimates that McPhee and friends made more than £230m ($300m) from the alleged scam – there has been no admission of guilt by any party nor any conviction – and the full total against him is said to be $318,512,336. He is expected to provide investigators with full details of any other accounts and assets he possesses, and if he fails to do so, there will be consequences. A judge still has to sign off on McPhee's settlement [PDF] which was approved by the FTC 5-0 on Thursday.
As ever, folks are warned not to sign up to get-rich-quick schemes because they are, generally speaking, always – but always – too good to be true. ®