Wings Network announced a suspension of its US operations within the last 12 hours, following an investigation by the Massachusetts Securities Division. This move mirrors previous actions by alleged Ponzi schemes facing regulatory scrutiny in the United States.
The Massachusetts Securities Division had begun investigating Wings Network less than a week before the company's announcement. Secretary of State William F. Galvin confirmed his office attended a Wings Network event. He stated his office heard from investors concerned about the company, especially after the $1 billion TelexFree Ponzi scheme bust.
Galvin's office likely holds concerns over Wings Network's business model. The company operates under the guise of cloud-services, charging affiliates $299 to $1499 for positions. These affiliates receive recruitment commissions, but only if they bring new participants into the scheme.
Wings Network issued a statement acknowledging its business model may conflict with US pyramid scheme laws. "We recommend for all members within the United States to postpone all further meetings until advised otherwise," the company stated. "It will be necessary to temporarily suspend the registration of new members in the United States." The company claimed it is "fully committed to operating legally in this country" and conducting its "own internal investigation" to ensure compliance with state and federal laws.
This regulatory action echoes a similar case involving WCM777, a California-based scheme. In October 2013, WCM777 shut down its US operations, but did not disclose it faced a US regulatory investigation. Massachusetts shut down WCM777 the following month, revealing its own investigation began in September 2013. WCM777 then admitted it operated illegally in the US in November 2013. California issued a cease and desist order against the company in January 2014. The Securities and Exchange Commission filed a Ponzi scheme lawsuit against WCM777 in March 2014.
The Massachusetts Securities Division spearheaded investigations into both WCM777 and now Wings Network. This suggests a likely path forward for Wings Network. The company has two primary options. It could dismantle its pyramid scheme, which would alienate top recruiters and likely collapse the business. Or, it could cosmetically cease US operations, as WCM777 did. This second option would almost certainly lead to cease-and-desist orders and formal regulatory charges.