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$13 Million Internet Ponzi Scheme Alleged

MANHATTAN (CN) - Federal prosecutors say David Copeland Reed defrauded 66,000 people of $13 million in a "Gold Unit" Ponzi scheme, through his companies, OSGold, OSOpps and Ecommerce Exchange. Reed claimed his "Internet banking services" were backed by "gold bullion reserves," and promised 45% annual returns, prosecutors said. He had co-conspirators in Latvia and Mexico, according to the indictment.

Prosecutors say Reed ran his scheme from March 2001 through June 2002. After one sucker complained that Reed would not let him withdraw $10 million, Reed fled the USA to Mexico with his wife, according to the indictment.

It states: "Prior to leaving for Mexico, Reed and his wife, a co-conspirator not named herein, withdrew large amounts of cash from the ECX bank accounts which they intended to secret, among other ways, in duffel bags and clothing in order to transport that cash to Mexico. Millions of dollars of the investors' and depositors' money, including principal, was never returned. No gold bullion reserves associated with OSGold have been located."

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