U.S. SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. Tropikgadget FZE, et al., No. 1:15 cv 10543-ADB (D. Mass.)
SEC Obtains Final Judgments Against Company Officers and Promoters of Pyramid Scheme Targeting Latino CommunitiesOn August 31, 2016, a federal court in Boston, Massachusetts, entered final judgments by default against five defendants in an ongoing enforcement action filed by the Securities and Exchange Commission in February 2015. The SEC charged two Portuguese companies operating under the name Wings Network, along with three company officers and 12 promoters behind an international pyramid scheme targeting Latino communities in the U.S.
The judgments obtained by the Commission on August 31, 2016 were against the three company officers and two of the promoters of the scheme. Final judgments were entered against Sergio Henrique Tanaka of SÃ£o Paulo, Brazil and Davie, Florida; Carlos Luis da Silveira Barbosa of Lisbon, Portugal; Claudio de Oliveira Pereira Campos of Lisbon, Portugal; Viviane Amaral Rodrigues of Clinton, Massachusetts; and Wesley Brandao Rodrigues of Marlborough, Massachusetts.
The judgments enjoin the three company officers, Tanaka, Barbosa, and Campos, from future violations of Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and enjoin the two promoters, Viviane and Wesley Rodrigues, from future violations of Sections 5 of the Securities Act. The judgments also order Tanaka to pay a total of $1,944,147, Barbosa to pay a total of $300,284, Campos to pay a total of $150,000, Viviane Rodrigues to pay a total of $462,732, and Wesley Rodrigues to pay a total of $162,404 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty. Finally, the judgments also permanently restrain and enjoin all the defendants from offering, operating, or participating in any marketing or sales program in which a participant is compensated or promised compensation solely or primarily (1) for inducing another person to become a participant in the program, or (2) if such induced person induces another to become a participant in the program.
The SEC's complaint alleged that two companies with the name Tropikgadget, operating under the name Wings Network, claimed to run a multi-level marketing company that offered digital and mobile solutions to customers, including apps and cloud storage. However, as alleged, Tropikgadget's revenues actually came solely from selling Wings Network memberships to investors, not from the sale of any products. The SEC alleged that the company relied upon the recruitment of new members, and commissions were paid to earlier investors with money received from later investors. According to the SEC's complaint, the scheme raised at least $23.5 million from thousands of investors, including many in Brazilian and Dominican immigrant communities in Massachusetts.
The SEC's litigation in this matter continues against the remaining promoters of the Wings Network pyramid scheme, and the other relief defendants.
The SEC's investigation was conducted by Scott R. Stanley, Dawn Edick, John McCann, Deena Bernstein, and Amy Gwiazda of the SEC's Boston Regional Office. The SEC's litigation is being led by Ms. Bernstein and David London.