The SEC has charged an Internet-based investment company with securities fraud for soliciting millions from U.S. investors and promising them guaranteed returns of 1.2% per day, while in reality siphoning the funds into foreign bank accounts and not paying a single penny back to investors.  An emergency court order was obtained, freezing the assets of Imperia Invest IBC, which allegedly raised over $7 million 14,000 investors worldwide.  More than half the funds were collected from U.S. investors who are members of the Deaf community.

On its Web site, Imperia offered investors an opportunity to turn a $50 investment into a $134,000 return in 6 months.  To participate and access their profits, investors told the had to purchase a Visa debit card from Imperia for a several hundred dollars - although, Imperia has no relationship with Visa and was using the Visa name without authorization.  On its Web site, Imperia also listed fake business addresses in both the Bahamas and Vanuatu.  Imperia also made numerous excuses on its Web site about why promised returns had not been paid.

"Imperia's operators concealed their identity by using an anonymous browser to host its website, communicating with all investors via e-mail, and taking their payments through off-shore PayPal-style bank accounts." 

    Traded Endowment Policies (TEP).    Investors purchased TEP's, the British term for viatical settlements.  A TEP or viatical settlement involves the sale of an insurance policy by the policy owner before the policy matures, and policies are sold at a discount from face value in an amount greater than the current CSV, or cash surrender value.  Imperia's website stated that an initial $50 investment would allow the investor to obtain an $80,000 loan from an unnamed foreign bank that would be used by Imperia to purchase a TEP.

Imperia alleged it would then trade the TEPs and pay the investor a guaranteed return of 1.2% per day.  No TEP purchases or trading appeared to take place.

    Use of Funds.   Once the funds were collected through one of 3 PayPal-type entities - in Costa Rica, Panama, and the BVI's - Imperia apparently funneled these amounts and additional investor funds to bank accounts located in Cyprus and New Zealand.  Meanwhile, investors did not receive any returns.

- Examples.  (i) an investor invested $150  and received account statements showing he had earned more than $36 million within a 2-year time frame.  (ii) another individual invested $500 in July 2007 and received statements showing his account had grown to nearly $44 million as of May 2010.

However, Imperia never paid out the returns, and made a range of excuses about why investors had not received the astronomical returns they were promised.  First, it claimed it could start paying investors only when it had at least 10,000 investors - a number that already been surpassed.  Then Imperia claimed to have computer server problems during its "relocation" from the Bahamas to Vanuatu.  They also said their computer system had been hacked.

The SEC seeks to collect disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.   [SEC PR 10-184, 10/7]