SEC settles with men accused of Web Ponzi scheme

WASHINGTON - The Securities and Exchange Commission said on Tuesday it settled fraud charges with two men accused of operating an Internet-based Ponzi scheme that raised $41.9 million in four months.

The agency said Jonathan Mikula and Gabriel Frankewich agreed to pay more than $200,000 in disgorgement and interest without admitting or denying the charges.

The SEC accused the men of operating a Web site called from February to May 2006 that offered investors a 120-percent return in eight days on investments ranging from $8 to $6,000.

The investors had to buy advertising and view at least 15 Web pages of advertising per day during the eight-day period to receive the return on their investment, the SEC said.

The SEC said Mikula and Frankewich operated Phoenixsurf.com as a Ponzi scheme.

A ponzi scheme is a swindle in which new investor funds are used to pay quick returns to existing investors, often while enticing investors to take greater risks.

The SEC said Mikula and Frankewich paid investors $36.7 million, mostly from new investor funds.

An attorney for Mikula declined to comment, and an attorney for Frankewich could not be reached for comment.

(Reporting by Karey Wutkowski)

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