The SEC Will Prevail Against Charles Scoville And Traffic Monsoon

The SEC in July of 2016 stepped in and asked for a temporary restraining order against Traffic Monsoon. They claimed it was a Ponzi scheme that took in $207 million from more than 160,000 investors around the world.

In reality, Traffic Monsoon’s advertising business is an illusion designed to obscure the fact that it is offering and selling a security in a pure Ponzi scheme. Over 99% of Traffic Monsoon’s revenue comes from the sale of AdPacks. The company has virtually no other revenue from any other source. All payments to investors are made out of these funds. – Source SEC

Charles Scoville claimed he was going to stand up to the SEC.

Here is what the court had to say:


Traffic Monsoon operated as a web traffic exchange that sold several different products designed to deliver “clicks” or “visits” to the websites of its customers. The exclusive method of purchasing these services was through the website.

These purchased visits are of value to website owners because they make the website appear more popular than it actually is. Because search engines such as Google employ algorithms that prioritize more frequently visited websites over less frequently visited websites, these paid visits tended to result in a higher ranking on a search engine query.

Traffic Monsoon’s most popular product by a large margin, however, was the Banner AdPack (AdPack). AdPacks, which could be purchased for $50, bundled 1,000 website visits and 20 clicks to the member’s banner ad. What set this product apart (and justified the additional cost for identical services that could be purchase à la carte for just $10.95) is that the AdPack permitted the purchaser to share in the revenues of Traffic Monsoon by receiving credits in the member’s account up to a maximum amount of $55 per AdPack.

To qualify for this AdPack revenue sharing, the member had to click on a number of websites each day. The number of required clicks increased over time, but the member was ultimately obligated to click on 50 ads and remain on each website for five seconds. This took the member a little over four minutes per day. The member’s obligation to click on 50 ads for five seconds each did not scale with the number of AdPacks purchased. Whether the member owned 1 or 1,000 AdPacks, he or she was obligated to click on only 50 ads per day and remain on the website to which the member was directed for five seconds each in order to participate in revenue sharing.

99% of AdPack buyers qualified for some portion of revenue sharing after their purchase of an AdPack.

Traffic Monsoon members also were entitled to a 10% commission on all products— including AdPacks—that were purchased by individuals whom the member referred to Traffic Monsoon. This 10% commission was paid on all future purchases made by the referred member, including when the referred member rolled over revenues from existing AdPacks to purchase new AdPacks.

Mr. Scoville kept no accounting records for Traffic Monsoon. So there are no readily available documents that describe precisely how the money was distributed. After the receiver in this case conducted a preliminary investigation of how Traffic Monsoon distributed the money it received, she expressed some doubt as to whether the funds were distributed in the exact manner that Mr. Scoville described. Rather, it appeared that the money coming into Traffic Monsoon was simply pooled together and then paid out as needed.

Approximately 90% of the Traffic Monsoon members who purchased AdPacks reside outside of the United States and presumably purchased the AdPacks while located in their home countries.

By Traffic Monsoon’s own description, it has delivered only 1.6 billion website visits out of the 17.5 billion that have been purchased by Traffic Monsoon members. In other words, it has delivered only 10% of the web traffic purchased by members through the sale of AdPacks. It would cost Traffic Monsoon tens of millions of dollars to acquire and deliver the billions of web visits it owes to its members.

Members typically did not cash out an AdPack when it matured. Instead, they rolled over the money deposited in their accounts by purchasing another AdPack. In order to maximize their returns, members purchased dozens or hundreds of AdPacks. They would then use the revenue from the existing AdPacks to purchase new AdPacks as soon as they had enough money in their account to do so. Thus, members that owned hundreds of AdPacks, which could return thousands of dollars in shared revenues, typically had relatively little money in their account because the members would continually reinvest it by purchasing new AdPacks.

Out of the $175.9 million total paid into Traffic Monsoon by its members, approximately $88.4 million has been paid back out to its members, leaving a difference of $87.4 million between what has been paid in by members and what they have taken out.

In January, 2016, PayPal became concerned about the enormous growth in the volume of transactions between Traffic Monsoon and its members, and it froze Traffic Monsoon’s account.

The PayPal freeze significantly reduced the amount of money that was flowing into Traffic Monsoon. Traffic Monsoon then began to transition to other electronic payment processors such as Payza, Allied Wallet, and SolidTrustPay. With the introduction of these new payment processors, AdPack transactions began to rise again.

Traffic Monsoon’s resurgence was halted on July 26, 2016, when this court froze its assets and appointed a receiver.

The current combined account balance of Traffic Monsoon members is $34.2 million. If the outstanding AdPacks currently owned by Traffic Monsoon members had matured, the account balance would swell by an additional $243.9 million, for a combined balance of $278.1 million.

The receiver currently has between $50-$60 million in frozen Traffic Monsoon assets.


The SEC alleges in its complaint that Traffic Monsoon’s sale of AdPacks constituted an illegal Ponzi scheme that violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5(a) and (c) promulgated thereunder. The SEC also alleges that Traffic Monsoon violated Section 17(a)(1) and (3) of the Securities Act of 1933 (Securities Act).


The SEC has made a clear showing that it will prevail and that Mr. Scoville will continue to violate the law by operating a Ponzi scheme absent an injunction. The court therefore grants the SEC’s request for a preliminary injunction.


This is the end of Traffic Monsoon.