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Cross-border online 'advertising' firm nailed for fraud scheme

2014/10/27 21:59

Taipei, Oct. 27 (CNA) Ministry of Justice (MOJ) agents, working with police in the United States and Hong Kong, said Monday that they have cracked the Taiwan branch of a cross-border company that collected NT$150 million (US$5 million) in "investment" under false pretenses.

Agents of the ministry's Investigation Bureau in Taipei, Taoyuan and Taichung raided 12 "offices" of, the online advertising company in which people were persuaded to invest, and arrested several employees on charges of violating Taiwan's Banking Act, a bureau spokesman said.

The spokesman said the company was not authorized to collect investment as required under Article 29 of the Banking Act.

According to the bureau, staff began soliciting investment in Taiwan in August 2012, telling investors that they only needed to invest US$2,000 (NT$60,000) in the U.S.-based online company to get a monthly return of up to 15.5 percent.

The "investors" were told to go online and click on 30 ads a day to accumulate "points" that would become daily bonuses within a few months of between US$8 and US$10 -- equal to a monthly investment return of up to 15.5 percent.

Prior to Taiwan's crackdown on the online company, the United States Securities and Exchange Commission (SEC) filed charges in late September against eAdGear branches in Hong Kong and the U.S.

Describing the company as operating a pyramid scheme that raised more than US$129 million from investors worldwide, the SEC's complaint alleged that eADGear did not generate revenue from products or services but instead used money from new investors to pay earlier investors.

Taiwanese investigators said they had been informed by Hong Kong police that a U.S. court had issued an injunction for four senior executives of the company in the U.S. and Hong Kong and had frozen its assets in the two places at the SEC's request.

Because the majority of "investors" in the Taiwan branch of are Taiwanese, bureau officials said they will seek U.S. and Hong Kong assistance to seize the online company's illicit gains.

(By Page Tsai and S.C. Chang)Enditem/ls