Herding Sheep

An internet site promised easy money. It was a high-tech take on an age-old scam.

12DailyPro Stormclicks Internet Pyramid Scheme
Angela Irizarry bought into a pyramid scheme that stretched from here to China. - Jared  Klaus
Angela Irizarry bought into a pyramid scheme that stretched from here to China.
Angela Irizarry fits the profile.

She's a young stay-at-home mom. Before she had her son 10 months ago, she worked a dead-end job in a lawyer's office. Her periwinkle eyes, fanned by batting eyelashes, lead a full face that smiles by default. She would trust anybody who gave her permission.

Back in December, Irizarry sold a laptop on eBay. An ad on her electronic payment processor, Stormpay, directed her to a sister service called Stormclicks. The site promised to pay her just for surfing websites. Irizarry signed up.

"I probably made a dollar to two dollars a day just clicking on links," she says. "It wasn't much, but it paid for my cigarettes."

Then Irizarry started looking more closely at what she was clicking. One site was 12DailyPro. It too promised to pay her for visiting websites, only this time, she'd be making real money -- 44 percent of whatever she deposited in an account, anywhere from $6 to $6,000.

It was called "autosurfing," because she didn't even need to be at her computer to do it. As soon as she logged in, the program would automatically cycle through the sites.

She started slow, just $6. It worked. Twelve days later, she had $8.64. So she let it ride. She kept flipping it until she had more than $200 in credit.

Irizarry started diversifying, investing in other sites on Stormclicks. On one, which billed itself as an offshore investment company, Irizarry watched $5 grow into more than $300 in a month's time. She was like a day trader, spending long hours in front of her computer. When she wasn't autosurfing, she'd trade tips in the Stormpay chat room. Pretty soon, she thought, she'd be cashing checks for thousands.

But something happened on the way to the penthouse. Stormpay, which handled the payments for 12DailyPro, froze the company's account and wouldn't let Irizarry withdraw her earnings. When she called Stormpay, she got a recording.

Irizarry isn't alone. More than 300,000 autosurfers worldwide, some with tens of thousands invested, are cut off from their money.

It turns out that 12DailyPro was a classic pyramid scheme, with a twist. By using the internet to market itself, it had a much wider audience. Members stretched from Hong Kong to the Netherlands and all the way to Irizarry's home in West Park. A lawyer for the company estimates that since 12DailyPro started up last spring, its members have "earned" $300 million, $50 million of which has been frozen by Stormpay.

The investors at the top lived off the fruits of new members. Some early users had as many as 2,600 people beneath them, technically called their "downline," says Kathleen Calligan, who heads the Better Business Bureau in Nashville, near Clarksville, where Stormpay is headquartered. Calligan says she heard from one man who cashed out with $60,000 in profits.

"He's out, he's gone, and he feels all the happier and better for it," Calligan says.

But not everyone was so lucky, which is why the Securities and Exchange Commission got involved. The SEC filed suit against 12DailyPro and its founder, Charis Johnson, of Charlotte, North Carolina, alleging securities fraud. The company's assets were frozen, and a receiver was appointed to sift through its books. The FBI is also investigating.

Johnson wouldn't return repeated calls from Scene, but she told the Charlotte Observer that she never meant any harm. "I think it's important for people to understand there was no ill intent," she said.

She doesn't need to convince her customers of her altruism. Despite Better Business Bureau alerts in Cleveland and nationwide, many members are still drinking the company Kool-Aid. On the forum section of the 12DailyPro site, now shut down, most of the messages praised Johnson. Many even offered prayer.

"Pray for everyone who you think has caused your blessing streams to cease . . . We will triumph and rise higher and stronger," writes someone with the screen name "Alpha."

Calligan says that a 100-member church group that got bilked in the scam traveled all the way from Georgia to Clarksville to confront Stormpay for freezing their accounts. As for 12DailyPro, however, their faith remained unshaken. "No one's going to say the cow's got horns," says Calligan.

Stormpay claims that it had nothing but honest intentions when it froze 12DailyPro's account after finding out it was a pyramid scheme. Its decision would seem reasonable -- except that Stormpay itself was slapped with a cease-and-desist order by the state of Tennessee in 2003 for operating its own pyramid scheme.

Even more troubling is the e-mail that Stormpay sent to members just after the accounts were frozen. If they complained to anyone, Stormpay told them, they'd never see a dime. Stormpay's president, Steve Girsky, didn't return repeated calls from Scene.

Nashville's Calligan suspects that Stormpay and 12DailyPro were working in concert. Before the SEC froze 12DailyPro's assets in February, the companies could have been earning a fortune in interest or by investing the money in the stock market, she says. "It's a match made in heaven for an electronic online pyramid scheme."

In West Park, Irizarry is still holding onto her dreams of easy money. She still occasionally makes a buck on Stormclicks. As she gets her son's lunch ready, her boyfriend, Vance Gannon, shakes his head.

"I'm sure people made some decent money when it first started," he says, holding the baby. "We just hopped on it too late."

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