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):
â€œMr. Bowdoin and associates issued ad packages to friends and family (whoÂ paid nothing for the ad packages) as free investment, and compensation programs,â€ prosecutors said.
â€œMr. Bowdoin, and others working with or associated with ASD, also gave ad packages to employees/workers as compensation for services performed for ASD,â€ prosecutors said.
â€œThese 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,â€ prosecutors said.
â€œFor 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,â€ prosecutors said. â€œOne ASD promoter pulled out almost $100,000 after putting in less than $1,000.â€
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.