[snipped] http://www.nytimes.com/2001/07/03/business/03PONZ.html?pagewanted=1 # # July 3, 2001 # # U.S. Charges Internet Operation Was a Huge Scam # # By KURT EICHENWALD # # OKLAHOMA CITY - By last September, life was getting rough for # Donald A. English. # # An unemployed single father, Mr. English was almost out of cash. # His family was threatened with eviction. Collection agencies # were at the door. His credit cards were mostly tapped out. # # With the walls closing in, Mr. English, 53, decided to grab for # a distinctly modern solution to his crumbling finances: He started # his own dot-com. # # But this was no ordinary Internet company. Instead, government # investigators said, it was the centerpiece of a huge scam. With # it, they said, this down-and-outer from Midwest City, Okla., # established one of history's fastest frauds, conning tens of # thousands of small investors out of as much as $50 million in # a matter of weeks, until the scheme collapsed early this year # in scandal. # [snip] # # Investigators have stumbled across imaginary banks hawking # nonexistent "digital" certificates of deposit, illusory # trillion-dollar government obligations and bogus business deals # to "lease" millions of dollars in cash. # [snip] # # In the case of EE-Biz, court records show, investors who signed # up opened an account with a legitimate company that functioned # like a bank, using an Internet currency known as e-gold. Then, # they transferred dollars in e-gold - a transaction known as a # spend, involving as little as $20 or as much as several thousand # - to an e-gold account, controlled by someone else. The early # investors received double their money back, with no explanation # of how it was done. As word spread of the payouts, investors # flocked to the site to participate. # # Mr. English himself had been a victim of a number of similar # schemes and decided to open up his own, according to transcripts # of chat room conversations. Those transcripts indicate that Mr. # English himself may not have completely understood the bogus # nature of the plan. # [snip]