ASD: Spending Spree Coincided With 2-for-1 Las Vegas Rally

Less than two weeks after a May 31 AdSurfDaily rally concluded in Las Vegas, ASD funds were used to retire a $157,000 mortgage. Another $62,000 was used to purchase two cars — a 2008 Honda CRV and a 2009 Acura, federal prosecutors said.

The beneficiaries of the mortgage retirement and the Honda were George and Judy Harris. George Harris is the son of Edna Faye Bowdoin, the wife of ASD President Andy Bowdoin.

On June 10, Edna Faye Bowdoin worked with her son to establish an account at Capital City Bank. More than $177,000 in ASD funds were transferred from Bank of America and deposited into the Capital City account, prosecutors said.

On June 23, George Harris used $157,216 of the money to pay off the mortgage. Earlier, on June 11, an ASD check for $28,607 was used to purchase the Honda. The vehicle was registered in the names of George and Judy Harris, prosecutors said.

On June 10 and June 11 alone, prosecutors said, almost $240,000 in ASD funds were used for personal purchases by Bowdoin family members or friends, the home and two cars included.

The timing of this is important. In December 2007, only six months prior to the Las Vegas rally, ASD was struggling. Within days of the conclusion of the Las Vegas rally, however, company funds were used to go on a buying spree and the company was scurrying to find ways to hide assets, prosecutors said.

ASD used matching bonuses to lure prospects to Las Vegas. Some prospects excidedly talked about spending $35,000 at the rally and emerging with 70,000 “ad packs.”

Two-for-one deals, of course, put even more strain on Ponzis because $35,000 now has the compounding power of $70,000, and $50,000 has the compounding power of $100,000.

Give ASD $50,000. Receive a matching bonus, effectively doubling the power of your spend. Emerge with the purported capacity to earn $1,000 a day (1 percent of $100,000) by clicking on ads.

People saw a way to turn their $50,000 spend into a $365,000-a-year job — a job that required only minutes a day and computes to $7,260 an hour in paper “profit.”

That’s what Bernard Madoff allegedly did — showed people “profits” on paper to keep them coming back for more. Bowdoin showed the “profits” electronically, in members’ back offices.

It was always absurd. It was absurd from Day One. It can be dressed up to seem plausible, even smart, but it is always and forever absurd.

“Rebates aren’t guaranteed” sanitizes none of this; it’s just a way for an autosurf operator to live very well while money is flowing in and to license himself to keep all the cash when when the enterprise begins to collapse.

Coupled with hundreds of thousands of dollars that were exiting ASD for personal purchases by family members — and profits taken by other insiders — ASD was adding new layers of impossibility to its already-impossible mathematical structure.

And rank-and-file members were shouldering the burden — first for additional deficits created by two-for-one deals, and later for personal purchases and rewards given insiders.

A review is in order (emphasis added):

“Mr. Bowdoin and associates issued ad packages to friends and family (who  paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said.

“Mr. Bowdoin, and others working with or associated with ASD, also gave ad packages to employees/workers as compensation for services performed for ASD,” prosecutors said.

“These individuals also were able to pull out considerable funds from the so-called rebate program even though in many cases they put little, if any, of their own money into the scheme,” prosecutors said.

“For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,” prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.”

In their December forfeiture complaint, prosecutors told the stories of some ASD insiders. One of the claims was about a claim Andy Bowdoin made about Russian hackers stealing $1 million from ASD. He didn’t report the theft to police, even though a tremendous sum allegedly had been stolen from the company.

But Andy Bowdoin did sponsor rallies, after seeing how well they worked in Iowa. And after the rally concluded in Las Vegas, hundreds of thousands of dollars left ASD and was used for personal purchases by family members, prosecutors said.

And when rallies in Chicago, Miami and Tampa concluded, they added, a $50,000 Lincoln was purchased with ASD funds. Bowdoin had found a way to make up an alleged $1 million theft and buy lots of new things — a boat and jet skis included.

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16 Responses to “ASD: Spending Spree Coincided With 2-for-1 Las Vegas Rally”

  1. Something I haven’t seen mentioned before is the part of the forfeiture doc (page 19 para 53), where Andy talks about his participation in another Ponzi AutoSurf, 12 DailyPro. It says that Andy told some people that he had lost money in that scam.

    To me this shows two things: 1. He has had experience with AutoSurfs, and therefore must have known exactly what he was doing. He must have seen the money that scam generated and saw how it would profit him. And 2. the money he lost could have been the incentive for him to create this scam.

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  2. Hi Tony,

    We covered this on the old Blog — although the mentions of 12DailyPro in the Dec. 19 forfeiture complaint (to which you refer above) are a bit more specific than the allegations from August.

    The Feds said in the Dec. 19 complaint that Bowdoin actually told two Secret Service agents — as opposed to just one — that he modeled ASD after 12DailyPro, adding that he had not participated in 12DailyPro.

    But people the Feds interviewed told them that Bowdoin advised them that he’d “actually lost money” as a participant in 12DailyPro.

    Bowdoin famously said during a conference call that he’d been “tricked” by the Secret Service

    There also is evidence online that ASD once advertised it accepted payments from CEP Trust, the failed payment processor operated by the principals in the CEP Ponzi scheme.

    This is why claims ASD was an exciting, new business model are absurd. The creation of LaFuenteDinero and Golden Panda also point out the absurdity of the claim. Autosurfs routinely invest in other autosurfs to create churn.

    CEP, for instance, had money in 26 separate autosurfs/HYIPs.

    This prattle all comes from the same playbook.

    The combined “take” in the CEP/12DailyPro scams was in excess of $62 million, certainly not chump change — and certainly enough to let potential autosurf operators worldwide know it was possible to gather enormous sums by playing the game.

    We got a note from a reader today about the birth of a new surf, which appears to be a hybrid surf/HYIP.

    Here’s an outtake from one of the pitches:

    “At 8% daily for 26 days, your money grows very fast. In less than 6 months, a $100 would have grown to over $7,200.”

    Yes, 8 percent daily for 26 days. Maximum buy-in is $20,000.

    I saw one the other day where a guy said $6 could fetch $5 million.

    Thanks for the note, Tony.

    Patrick

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  3. Hey Patrick,

    Think there will be criminal charges following? Like in the CEP case where the receiver went after I think the top 14 earners.

    $300,000 for $10,000 is a hefty amount. In the CEP case I don’t think I saw it get over the $60,000 level.

    With Gratitude

    Bob

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  4. Hi Bob,

    Thanks for the note. It can’t be said with certainty if criminal charges will follow.

    What is known is that ASD records were subpoenaed in a grand jury proceeding. It also is known that ASD’s own lawyers said Andy Bowdoin was the target of a criminal probe, which became the rationale for taking the 5th at the evidentiary hearing.

    It also is known that investigators didn’t stop after the August forfeiture complaint was filed. In the earliest days, some members seemed to believe that the probe ended with the filing of the forfeiture complaint.

    That, of course, was not the case. It is clear from the December forfeiture complaint that the agents have looked under lots of rocks. They had receipts and canceled checks, for instance.

    It is possible that criminal charges will follow. The August forfeiture complaint alleged ASD was operating a criminal enterprise and engaging in a conspiracy.

    Agents and prosecutors knew there were insiders before they even peeled back layers of the onion. There are always insiders and side-dealers in autosurfs.

    William Perkins, the CEP receiver, said full recovery was out of the question because the insiders/winners spend the money. This is a memorable line from his website:

    “Unfortunately, it is typical that over 8 to 12 months that 95% of the defendants in the CEP cases have spent the money they’ve received from CEP. That’s why settlement is so difficult—the money is never sitting in T-bills earning interest and waiting for me to take it back.”

    Thanks for the note, Bob.

    Patrick

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  5. About Maddie…..I’m not the slightest bit surprised she wasn’t interested in a dress. I don’t think she would like overalls, either. Dogs associate such foolishness with humans; they prefer to live the way God made them. However, they do think clothes make great toys, so its not a total loss. A great, wiry coat like Maddie’s needs no enhancement from human accouterments. Your sister can make it up to her on her birthday. Dog’s have one every day.

    But about you article: Brilliant. Now over on that other site they are going to say as long as he spent less than 50% it’s fine with them, because that part was “his money.” They hold some incredibly strange notions over there, sometimes at great cost to themselves.

    I read the Federal banking laws with regard to reporting requirements and they don’t equivocate when it comes to the investigation of suspicious activities and reporting requirements imposed on the banks. ASD’s transfer of funds from account to account, and then out to Capital City National Bank (CCNB), as I read the law, should have triggered an investigation by BOA. The transfer of funds into CCNB, and immediately out in large sums should have caused CCNB institute an investigation. The banks are legally required to train their employees to detect suspicious behavior (think Elliot Spitzer) and if 20 months of ASD’s banking didn’t arouse suspicions at BOA, then an Arab wearing a keffiyeh could walk in the BOA in Quincy and ask to be paid in dinars without raising any red flags.

    I would be willing to bet you l00 ad packs that there is (or at least has been) an investigation of the Quincy Branch of Bank of America and perhaps CCNB. I mean a federal investigation not just that Natures Way (or whatever) RICO lawsuit. It blasts BOA, it’s true, but I have a hard time cheering for a company who was dumb enough to buy into ASD in the first place.

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  6. Marci,

    I think you’re being a little hard on BoA.

    If you read the reporting laws which govern financial institutions, you’ll find they leave the institutions caught between the proverbial “rock and a hard place”

    The relevant act/s demand 2 things of the banks:

    1) “suspicious” transactions are reported

    2) The financial institution is prevented by law from revealing its’ suspicions or actions to anyone(especially the source of the transactions)

    In the 12DP case, for example, the payment processor, Stormpay, came under constant vicious criticism. Yet was unable to defend itself publicly because of the mandatory secrecy requirements. It was only months after the saga was forgotten that it was revealed as being one of the sources of the original complaints which lead to the eventual closures.

    I would suggest BoA and the other banks named in the complaint found themselves in a similar situation.

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  7. LRM,

    Well, I can’t go all the way with you on your sympathy for the banks, or even very far. Were they too shy to hire lobbyist to get the law changed, if it was unworkable? And absent getting the law changed, they are obligated to follow it. In the early days, perhaps you’re right. But within a few months it’s incomprehensible to me that they didn’t know something was very much amiss.

    I admit I only read the laws once so I’m no expert (and you sound like you are). But I really doubt that it was fear that kept BOA in Quincy from taking any action against Andy; it’s possible but what is probable is greed. Banks can report ALL suspicious activity to the Feds, and if the Feds are overwhelmed with the number of reports of suspicious activities due to an over-broad or ill defined definition of “suspicious,: what do the banks care? According to the DOJ’s original complaint, one bank had already closed one of Andy’s accounts due to suspicions of operating a Ponzi, so unless that bank broke the law why didn’t BOA do the same? Andy and Faye had been doing their “personal” banking at BOA’s Quincy branch, and suddenly in June and July 2008 they opened new accounts at Capital City National Bank (a home grown, family owned bank headquartered in Tallahassee) and immediately began moving hundreds of thousands of dollars out of BOA to a “Family Trust.” No red flags there? Doubtful.

    Have you ever been to Quincy? It is one of the least prosperous towns in Florida; Gadsden County is the only majority African-American county in the entire state. One hundred million dollars churned between accounts (nota bene: generating float and fees), and large payouts to previously low income Andy Bowdoin should have set off alarms. Either it did and they were ignored for reasons stated above or the bank isn’t even marginally capable of dealing in large sums in this era of reporting requirements associated with the war on terror. If only Eliott Spitzer had known to use the Quincy branch of BOA to “structure” his recreational payments to remain under $l0,000 he’d be governor of New York today. I bet he is bummed.

    As to criminal charges, my money is on income tax evasion charges against the entire organization, but especially Andy, Faye, Judy and George (Jetson?). There are some powerful weapons in the IRS arsenal. Remember Al Capone? And back then there were no FICA or SECA taxes to underpay for not pay at all (that’s an FDR initiative) and since they couldn’t pay their employees FICA in ad packs, it’s likely they didn’t pay it at all. It wouldn’t surprise me if ASD informed all their employees that they were considered independent contractors (I bet they even put it in a “Terms of Employment” thereby making it perfectly legal) and never withheld FICA or income tax. And if they did withhold income tax and FICA, on what amounts? All of their income, including “ad packs” or just the wink-wink-nod-nod “salary” they drew from ASD?

    The prison time associated with tax evasion is significant and the payroll records lay out the entire case quite well. I’m not an expert in this area at all, but I don’t think that “intent” in the criminal sense applies at all. It might mitigate the total prison time and fines, but unless he attempted to pay taxes that equaled his “out go” (and just got it wrong) the whole lot of are headed to prison. Maybe the Jetson’s prison will be Uruguay — nothing against the country only that they will be stuck there, unable to return to the US.

    You may be right but for the sake of argument lets assume you’re wrong,, and drop it. (That’s from a New Yorker magazine cartoon by Mankoff, and one of by lifelong favorites.)

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  8. Marci,

    I don’t have any idea of how long it takes any government instrumentality in the USA to react, but from past experience of watching these things unfold, the lag time between the bureaucracy of BoA passing on their suspicions from branch to headquarters, then to the authorities and then the bureaucracy of the government reacting, investigating and issuing the complaint/s is at least 6 months, if not more.

    Remember, the official complaint indicates SS/IRS action in July 2008 and the agencies indicated they had been informed by the bank/s prior to that date.

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  9. Quick note:

    BOA was named a defendant — along with Andy Bowdoin, Clarence Busby and Robert Garner — in a case filed in the Northern District of Florida.

    The case was filed in November by Nature’s Discount, a former ASD customer, and is U.S. District Court for the Northern District of Florida. It is contemplated as a class-action.

    No attorneys have filed appearance notices for any of the defendants.

    http://patrickpretty.com/2008/12/15/bowdoin-busby-garner-still-no-attorneys-in-rico-case/

    Bowdoin, Busby and Garner are named RICO defendants. BOA is not named a RICO defendant. Instead, the plaintiff alleged that the bank “aided and abetted” the scheme.

    Patrick

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  10. There were transactions well over 10,000 during most of 2008 and often up to 300,000$ for an individual. I agree with Marci that it is not necessary to be so generous with the BoA. It is not normal to have that kind of money going through a branch account IN A DAILY BASIS for months. The Bank Director at least is meant to be able to do some math and had access to the ToC of ASD and was quite capable of finding out what the business was all about. And the 10,000 reporting requirement is not negotiable anyway.

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  11. Whatever Bowdoin did , he did..Whoever, he is ..he is..
    What matters now ,is we all get our money back, as soon as possible.
    ASD MEMBERS/PANDA MEMBERS..Call and Email Our Government Officials!
    Let Us Move Foward!

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  12. The Department of Justice has issued a press release giving the current state of play regarding Ad Surf Daily (or AdCashGenerator), La Fuente Dinero or
    Golden Panda Ad Builder,and giving the process required to initiate petitions for remission or mitigation of the forfeiture/s with the Department of Justice.

    As has been previously speculated upon here and on other forums, the DoJ have decided to NOT go down the same SEC/sale of securities path with these prosecution/s as was done in previous “autosurf” cases.

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  13. The full DoJ release can be found here: http://www.usdoj.gov/usao/dc/Victim_Witness_Assistance/files/January%2023,%202009%20-%20civil%20forfeiture%20proceedings%20update.pdf

    The DoJ is handling “refunds”: “The Department will endeavor to contact members with information about how they may properly file petitions for remission or mitigation with the Department (in writing and under oath”

    or members may verify their information by filling out the “information submission” form at http://www.usdoj.gov/usao/dc/Victim_Witness_Assistance/adsurfdaily.html

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  14. Star Sher
    January 23, 2009 at 8:54 am | Permalink
    Whatever Bowdoin did , he did..Whoever, he is ..he is..
    What matters now ,is we all get our money back, as soon as possible.
    ASD MEMBERS/PANDA MEMBERS..Call and Email Our Government Officials!
    Let Us Move Foward!

    Quote

    She is a genuis!

      (Quote)

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