nd.gov - The Official Portal for North Dakota State Government
North Dakota: Legendary. Follow the trail of legends

Karen Tyler

Commissioner
ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Fraud Alerts

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On March 7, 2013, an Amended Information identifying additional charges related to securities fraud and sale of unregistered securities were filed in Cass County against Robert H. Medhus.

On March 14, 2013 the North Dakota Securities Department issued a Cease and Desist Order against Profitable Sunrise.

These recent enforcement actions and other enforcement actions over the past year show that Ponzi Schemes continue to be one of the top frauds perpetrated on the residents of North Dakota.  The violations identified in the criminal action taken against Robert Medhus are an example of a Ponzi Scheme being operated at the state level.  While the Cease & Desist Order issued against Profitable Sunrise on March 14, 2013, is an example of a Ponzi Scheme being operated at the national and world wide level.  Profitable Sunrise not only exhibits the signs of a Ponzi Scheme it is also displaying the characteristics of a High Yield Investment Program (HYIP) scheme.

We have heard a lot about Ponzi Schemes during the last few years with the Madoff Ponzi scheme.  A Ponzi scheme is a fraudulent investment program that uses the money invested from new investors to pay a return to previous investors.  A Ponzi scheme needs a never ending supply of new investors to continue its fraudulent operation.  There is no profit earned by the operation and the Ponzi scheme will eventually collapse with only a small fraction of the initial investors receiving any money. The operators of these schemes usually use the funds obtained from investors (victims) to fund a lavish lifestyle.

High Yield Investment Programs (HYIP’s) were investment schemes that were heavily pushed and advertised on the internet 10 to 15 years ago.  Although HYIP’s have never gone away, these schemes are making a strong come back with the rise of Profitable Sunrise and its numerous offshoots, along with numerous other HYIP’s schemes being promoted through the internet.

HYIP’s are a type of Ponzi Scheme generally set up using a website offering an investment program promising high returns as much  6% a day with little or no risk.  Little or no detail is disclosed about the program, management, location, or even how the money is invested.  A number of HYIP’s are also referred to as Prime Bank Schemes, and operate under the guise of being an actual bank program.  These HYIP’s promote the trading of financial instruments between the “prime banks” for high yield with little or no risk.  These are bogus programs.

For additional information concerning these and other current frauds, please contact the North Dakota Securities Department.