The Securities and Exchange Commission says it has busted a South Florida-based Ponzi scheme targeting investors through YouTube videos.
The SEC says JCS Enterprises Inc. and T.B.T.I. Inc., operated by two businessmen, sold investments in a product dubbed virtual concierge machines, or VCMs, that would purportedly generate guaranteed returns of 300 to 500 percent in four years.
In a parallel action Tuesday, the U.S. Attorney’s Office for the Southern District of Florida announced criminal charges against Joseph Signore of West Palm Beach and Paul L. Schumack II of Pompano Beach.
In a release by the SEC out of Washington, the agency said, investors supposedly needed to do nothing to earn returns on their investment in a VCM, which would purportedly be placed at such locations as hotels, airports and stadiums where they would gain revenue from the businesses paying to advertise through them.
However, instead of advertising revenue serving as the driving force behind the returns paid to investors, the two men and their companies paid returns to earlier investors using money from newer investors.
Signore and Schumack also diverted millions of dollars in investor funds for their personal use and other unrelated expenses, the SEC said.
“Signore and Schumack touted VCMs as a revolutionary enterprise and fail-safe investment based on a stream of advertising revenue that would generate the guaranteed returns paid to investors,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “However, the advertising revenue was virtually non-existent, and investors aren’t enjoying the riches touted on YouTube.”