Editorial: ASD Prosecutors, Secret Service Acted Appropriately
Saturday, September 27, 2008
The government can and does make mistakes, but bringing the AdSurfDaily case was not one of them. The case now is in federal court -- precisely where it needs to be.
No number of vexatious complaints by ASD members to the Inspector General for the Justice Department or members of Congress can make the troubling questions and incongruities of this case go away.
Today we'll write about only a few of the many legitimate concerns raised by this case, a case that includes the government seizure of tens of millions of dollars and the freezing of multiple Bank of America accounts amid concerns the accounts were being used to launder money and sustain three illegitimate "autosurfing" businesses: ASD, LaFuenteDinero ("The Fountain of Money"), and Golden Panda Ad Builder.
No person should take the seizure of property lightly. But the U.S. Secret Service and federal prosecutors have acted appropriately in seizing these highly questionable assets and bringing this matter before the courts.
Here's an allegation from the government's Aug. 5 forfeiture complaint (emphasis added):
"A[n] [IRS-Secret Service Task Force member] also learned that earlier in July 2008, a bank other than [Bank of America (BOA)] closed the last account that was controlled by Bowdoin or family members after that bank determined, and explained to them, that an investigation by the bank determined that Bowdoin appeared to be operating a Ponzi scheme. Bowdoin indicated that he purchased, or was seeking to purchase, a home in another country."
Here are the key assertions about this specific allegation:
- ASD President Andy Bowdoin or family members had an an account at a bank other than BOA. It was described as the "last" Bowdoin account at the bank.
- This non-BOA account became the subject of an internal investigation by the bank.
- The bank told "them" -- Bowdoin or family members -- that it believed he might be operating a Ponzi scheme.
- The bank closed the account.
- The bank advised them of this "earlier in July," prior to the Aug. 1 freezing of the BOA accounts.
- Bowdoin told the bank he purchased or was seeking to purchase a home outside the United States.
The government's assertions outlined above have not yet been proven, of course.
But if the allegations are true, it means that, from the moment the non-BOA bank advised Bowdoin "earlier in July" of the account closure amid Ponzi concerns, Bowdoin would have known that the BOA accounts also were at supreme risk of closure or seizure. The BOA accounts weren't frozen until Aug. 1.
In other words, Bowdoin soon might have no place to deposit incoming money, putting the enterprise in danger of collapse, and making it necessary to wire large amounts of money offshore before he lost control of the accounts.
Sometime during the last two weeks of July, ASD moved "several million" dollars from BOA into Canada, according to the complaint. Members have speculated that this was because Bowdoin simply was adding a convenient, new means of paying them and receiving payment.
The "convenience" argument is plausible, given a note on the ASD website that Solid Trust Pay, a Canadian payment processor, was becoming the preferred method of sending and receiving money.
But that doesn't explain the non-BOA bank's alleged Ponzi concerns or the assertion Bowdoin was seeking to buy a house outside the United States. It is equally plausible that Bowdoin wanted to get the money outside the United States because he feared ASD was about to have its BOA accounts closed or seized.
The Incongruities
Bowdoin and ASD allegedly collected tens of millions of dollars in July. ASD allegedly even used "volunteers" to help gather cashier checks and money orders from customers standing in line at company rallies to pay for "advertising" purchases. Prosecutors believe that ASD actually is an unregistered securities business masked as an advertising firm.
Let's stop here for a second: What kind of company engaged in private business uses volunteers to collect money? Were these volunteers bonded? Would a professional company use volunteers to collect millions of dollars? Would a professional company use unbonded volunteers with this much money on the line? Was the company itself bonded?
Incoming members, as a whole, were handing over millions of dollars. This is not to suggest the volunteers were dishonest; our presumption is that they simply wanted to help. But why were volunteers even needed?
Now, let's pause to think about the incongruities, the parts of the picture that do not make sense. People standing in line by the hundreds to hand over money to pay for "advertising" is incongruous enough. But volunteers collecting money for a multimillion-dollar company that describes itself as a professional advertising firm? These things are supremely incongruous.
Business just isn't done this way.
More Questions
Let's go back to the allegation that the non-BOA bank closed a Bowdoin account "earlier in July," citing Ponzi fears.
What does "earlier in July" mean? The answer to this question could be important.
If "earlier in July" means earlier than July 19, the date of the Chicago ASD rally, or earlier than July 12, the date of the Miami rally, it means Bowdoin was collecting huge sums of money with one bank account already closed amid allegations of a Ponzi scheme.
If this account was closed prior to the rallies, did Bowdoin tell customers or did he let them hand over money without saying anything? Would you have turned over money if you'd known a bank had closed a Bowdoin account, citing Ponzi fears?
And even if the alleged account closure took place after the July 19 Chicago rally, it was clear that Bowdoin knew trouble already was brewing. At the July 12 Miami rally, Bowdoin talked about the Securities and Exchange Commission (SEC), blaming bad publicity the company was getting on jealous MLMers and people who were "slandering" him.
Bowdoin, in fact, said a $750,000 legal fund had been established. If ASD had $750,000 to devote to a legal fund, why was it using volunteers to collect cashier checks and money orders?
It appears as though Bowdoin himself could have prevented customers a lot of grief by simply not taking any money from them while this firestorm was brewing and until these matters were settled.
Now let's go to the Secret Service News Release. There is a very interesting line in that news release, a quote from Michael Merritt, assistant director of investigations (emphasis added):
"Cooperation among investigators, including the private sector partners who brought this case to our attention, allows us to combine not only our resources, but also our expertise in order to more effectively address evolving criminal methods, such as these online schemes," Merritt said.
Note his use of the phrase "private sector partners who brought this case to our attention."
Who are "private sector partners" of the Secret Service? Could it be the bank that closed the Bowdoin account "earlier in July," citing Ponzi concerns? Could it be BOA? Could it be both banks?
It is the duty of the Secret Service to protect the banking system from pollution -- and it appears as though at least one bank -- and perhaps two -- were worried that Bowdoin was using them to warehouse proceeds from an illegal enterprise and dutifully reported their concerns.
If Bowdoin knew "earlier in July" that a bank closed an account amid Ponzi concerns, why was ASD still collecting money from customers while this matter was unresolved?
Why were deposits allegedly backing up at ASD? Well, it's possible there simply were too many checks for ASD's staff to record. But it's also possible that Bowdoin didn't want to deposit the checks in volume because he believed his BOA accounts might be on the verge of being closed or seized.
This case is in federal court, exactly where it needs to be.
posted by Patrick Pretty @ 10:14 AM,
