MORRISON ORDERS ILLEGAL PYRAMID SCHEME TO SHUT DOWN
Nevada-based “Quadra Pay” using real estate ploy to lure investors
Montana State Auditor John Morrison ordered the shut-down of a comprehensive illegal pyramid scheme aimed at Montanans. Morrison issued a Cease and Desist Order prohibiting Quadra Pay Land LLC of Nevada from promoting and offering real estate options for sale in Montana.
“Protecting Montanans from fraud and scams is my highest priority,” said Morrison. “The swift action my office has taken to shut down this illegal activity should serve as a warning to con artists looking to prey on Montanans; victimizing our citizens will not be tolerated.”
Morrison issued the order against Quadra Pay Land and its four general partners, Edith and Michael Eavenson and Charles and William Kuhn, for the alleged sales in Montana of options on “one square foot of land" located on the Kentucky-Tennessee border at a cost of $600 per option. The company promised that the options would be worth $2,400 at maturity, according to the company's "Accelerated Value Appreciation" scale, which claims to have four stages that culminate in a 400% return. Individuals purchasing the $600 “option” were required to open an account with Quadra Pay and make payments through its online payment service StormPay.com. At least 45 Montanans from all across the state are known to be involved in the program, but most participants were recruited from Bozeman, Belgrade, Billings, Polson, Lakeside and Helena.
"Montana law prohibits pyramid schemes because they inevitably result in the enrichment of the few individuals who got in early at the expense of those who got in later," Morrison said. "Pyramid schemes are like ‘musical chairs with money.’ When the music stops, those still playing will lose their hard-earned dollars.”
Quadra Pay allegedly also provided an incentive to recruit others into the program. According to its web site, Quadra Pay promises that if an investor recruits another person to buy an option, they would be placed in the same tracking system as the recruiter. So the more participants that a person recruited, the faster their own options would mature.
The “real estate options” promoted by Quadra Pay are investment contracts that meet the definition of a security under the Montana Securities Act. However, Quadra Pay has not submitted an application to the Securities Department to register the investment offering.
“In addition to being a suspected pyramid scheme, Quadra Pay is an illegal securities offering,” said Morrison. “Before making any investment, Montanans are urged to check with the State Auditor’s Office to confirm that both the broker and product are properly registered in the state of Montana. The allure of easy money sometimes gets in the way of good research and a little common sense, but this one small step could save you a big headache in the end."
Persons found in violation of the Montana law that prohibits pyramid promotional schemes face administrative penalties of up to $10,000 per violation. This can include anyone who recruits others to participate in the “program”.
The Oklahoma and Alabama securities departments have taken action against Quadra Pay for promoting similar illegal pyramid schemes in their states.
If you have been contacted, or have information concerning any of these entities, please contact the State Auditor’s Office at 1-800-332-6148.