If a scammer sells a virtual forest, do the locking handcuffs make a sound? As it turns out, yes. This announced this week by the Indiana Secretary of State:
An investigation by Indiana Secretary of State Connie Lawson’s Prosecution Assistance Unit led to the arrest of Josh Bills of Pennsylvania for allegedly selling virtual land investments in an online game called Second Life. Bills was arrested in Pennsylvania over the weekend to face criminal charges in Morgan County.
“Real estate schemes are some of the most common forms of investment fraud that come across my desk, but this is the first time we’ve seen a virtual land scam,” said Secretary Lawson. “I hope this case serves as a reminder to check with my office to ensure the investment is registered before investing... The investigation began when the Secretary of State’s office received a complaint about Bills. In the complaint, it stated that a loan agreement was made with Bills for $53,500 for the purposes of expanding his online real estate company. Bills was to use the money to purchase land that he would manage through his company, within the game Second Life, in exchange for a promissory note that would pay $10,000 for the investment within 24 months.
Much like the man recently imprisoned for not reporting his Second Life income to the IRS, it looks like the clincher here was not the virtual land scam per se, but doing so while running afoul of registration regulations:
Real estate schemes are some of the most common forms of investment fraud that come across my desk, but this is the first time we’ve seen a virtual land scam,” said Secretary Lawson. “I hope this case serves as a reminder to check with my office to ensure the investment is registered before investing... Neither Bills nor the product he offered were licensed in the State of Indiana. All Securities professionals and investment products must be licensed.
Which brings up an interesting ontological point: If virtual land doesn't exist, can it be registered -- or just the physical servers it's on?
Image via Shea Marquis. Hat tip: Reddit's /secondlife.
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The fact that it was virtual land was meaningless. He was selling an investment in his business.
Posted by: Amanda Dallin | Friday, April 17, 2015 at 04:30 PM
In " it looks like the clincher here was the virtual land scam per se," you left out "not". It should be
" it looks like the clincher here was not the virtual land scam per se,"
Posted by: Chuck Baggett | Friday, April 17, 2015 at 05:08 PM
The Indiana authorities don't know what they are talking about. Second Life "land" is not real estate at all, it's the rental of server space.
Which is not to say that the man's scam wasn't a scam. It just wasn't a LAND scam.
Posted by: Lindal Kidd | Friday, April 17, 2015 at 07:56 PM
The Indiana Secretary of State's page says that land in SL is server space.
"The game Second Life appears as virtual land. As explained in its advertising, Second Life virtual land is like a 3D website: a blank space where you can make anything happen and it is accessible 24/7 by other players. Players can purchase, develop and sell the land to other players. Although it appears as land, this virtual land is actually storage space on a server."
The issue wasn't land it was the selling of an "investment product" without a license. He also did not use the investment in the manner he agreed too. The fact that SL was involved was really incidental. If he lived in another country rather than another state then it would be much more difficult to bring charges but the amount of money involved could be enough they would seek extradition.
Posted by: Amanda Dallin | Saturday, April 18, 2015 at 06:22 PM