BREAKING NEWS: FBI Serves Papers On Stanford For SEC; Antigua Calls For Calm; BizAdSplash Asks Customers For More Money, Promotes 100 Percent ‘Matching’ Bonus Program

FBI agents today located financier R. Allen Stanford in Virginia and served papers on him at the behest of the Securities and Exchange Commission. Stanford was not taken into custody.

The SEC issued a statement:

“At the request of the SEC, Special Agents of the Federal Bureau of Investigation’s Richmond Division today located and identified Stanford Financial Group chairman Allen Stanford in the Fredericksburg, Va., area. The agents served Mr. Stanford with court orders and documents related to the SEC’s civil filing against him and three of his companies. The SEC very much appreciates the outstanding assistance of the FBI in this matter.”

Stanford and three of his companies were accused Tuesday of running a fraudulent, multibillion dollar investment scheme.

His companies include Stanford International Bank (SIB) of Antigua; Houston-based broker-dealer and investment adviser Stanford Group Co. (SGC), and investment adviser Stanford Capital Management.

Also charged were SIB Chief Financial Officer James Davis and Stanford Financial Group Chief Investment Officer Laura Pendergest-Holt.

Meanwhile, the government of Antigua and banking officials in Antigua appealed for calm after customers flooded banks and tried to withdraw cash. The government of Antigua released two extraordinary statements urging customers not to panic.

Read the statement from the Bank of Antigua.

Read the statement from the Antigua & Barbuda Bankers Association.

Elsewhere, the governments of at least five Latin America countries are investigating Stanford banking or securities outlets. At least one Stanford outlet in Venezuela was seized, and two in Ecuador were seized. Banking authorities in Panama also seized a Stanford outlet.

Attorneys in the United States are investigating Stanford for running a Bernard Madoff-like Ponzi scheme through his network of companies.

Regional Autosurf Ties

AdSurfDaily Inc., a U.S. company accused of operating a $100 million Ponzi scheme, had at least $1 million on deposit in Antigua, according to court filings. At the same time, other firms involved in the autosurf business have been promoting their offshore locations in country’s such as Panama and Uruguay as a key selling point.

Today, BizAdSplash, one of the surfs, told members about a special deal it was offering. BizAdSplash says it is registered in Uruguay; its servers resolve to Panama.

Despite all the upheaval in the financial world — despite the alleged Madoff Ponzi, the alleged AdSurfDaily Ponzi, the alleged egregious financial abuses of Allen Stanford — BizAdSplash today encouraged customers to give it even more money.

One promoter called the BizAdSplash news an “EXCITING MAJOR ANNOUNCEMENT!!!!: 100% Match Week.”

Here is the deal BizAdSplash promoted today (italics added):

Over the past week we have had a number of you contact us about your initial deposit and that you only purchased a small amount of Ad Packages just to test the system. Now you are ready to make a larger purchase. Your question is can we get the 100% match or discount on the cost of a larger Ad Package. Biz Ad Splash has agreed to open a small window for this 100% additional match. Any new purchases made from outside the system will be given the same benefit as your initial purchase and will be given the 100% match along with the sponsor match. This is only on purchases made on February 23 through February 28. This is a tremendous opportunity for all our Biz Ad Splash advertisers.

Thank you for your patience while we are in our beta launch. We value your participation in Biz Ad Splash and we look forward to exceeding your expectations.

The Biz Ad Splash Team

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18 Responses to “BREAKING NEWS: FBI Serves Papers On Stanford For SEC; Antigua Calls For Calm; BizAdSplash Asks Customers For More Money, Promotes 100 Percent ‘Matching’ Bonus Program”

  1. Ah, a direct to scam business model. They already have trouble making the daily nut, so offer a bonus to attract fresh cash flow (notice it only covers new money brought into the system, you cannot use your earnings to pay for it). Of course, these new dollars have to be paid out at double the usual rate, so it increases what economists call ‘velocity’ which is how fast the money turns over, or in the case of a ponzi, how much more you need to feed the beast. Look for them to have problems soon, problems with the web site, DDOS attacks, perhaps something will come up that requires them to ‘audit’ all accounts and of course, no payouts can happen during this process… Then look for a rogue hacker from mongolia to break in and steal the money, sorry, honest mistake, thanks for the help!

    How many times have I seen this movie….

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  2. Hi Gregg,

    It really does look like “direct to scam,” as you put it. Nice phrasing.

    I noticed how BizAdSplash made it a “you” pitch:

    * we have had a number of YOU contact us about YOUR initial deposit
    * YOU only purchased a small amount of Ad Packages
    * Now YOU are ready to make a larger purchase
    * YOUR question is can we get the 100% match

    So, BizAdSplash is doing it all for you.

    It looks like they’re starved for cash and are trying to get the machine oiled just to keep going.

    Patrick

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  3. I have no doubt that the rallys ASD had were the last gasp to maintain the cash flow. I wrote something yesterday that hit me as very profound after I wrote it, for how simple it was. A Ponzi scheme demands that the money be in motion, as soon as you stop the movement of the cash, the ponzi is evident pretty quickly.

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  4. Hi Gregg,

    Gregg Evans: A Ponzi scheme demands that the money be in motion, as soon as you stop the movement of the cash, the ponzi is evident pretty quickly.

    This is a compelling view because it reduces the complexities almost to something that is self-evident. In ASD’s case, this was glaringly obvious.

    Another thing it demonstrates is the madness of the “rebates aren’t guaranteed” defense. In effect, Bowdoin divined private legislation that gave him a special exception for running a Ponzi scheme.

    In other words, “Even if you stop the movement of the cash and the snapshot that emerges shouts Ponzi, it’s OK because I can fall back on ‘rebates aren’t guaranteed.'”

    Patrick

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  5. Gregg,

    Definitely profound, and related to the concept of slow vs fast Ponzi’s. Slow Ponzi’s offer FAR lower fictitious “rates of return” than fast Ponzi’s, and as a result can grow MUCH larger (see Madoff). The closer the return is to, say, the equities market rate of return, the less likely people are to say “this is too good to be true” and the longer things can drag on. I am guessing that there is a way to quantify the relationship between promised rate of return, speed of growth of the Ponzi, and how big the Ponzi eventually gets, with other variables including opaqueness of the business model, affinity aspects, and “investor” behaviors regarding withdrawals (the Madoff victims probably were long-term invest-and-hold types; certainly the foundations were. Ergo, no runs on the Madoff bank, and the Madoff Ponzi lives on and on and on…) ASD is somewhat interesting in that it is a fast Ponzi, but obfuscated enough to make enough people not see right away that it was unsustainable. As you say though, stop the musical chairs and it is easy to see that the people without the chairs are the last entrants, i.e. it’s a Ponzi.

    Gregg Evans: I have no doubt that the rallys ASD had were the last gasp to maintain the cash flow. I wrote something yesterday that hit me as very profound after I wrote it, for how simple it was. A Ponzi scheme demands that the money be in motion, as soon as you stop the movement of the cash, the ponzi is evident pretty quickly.

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  6. Entertained,

    Your post above demonstrates your command of these issues. Man, it’s like a clinic. Thanks for sharing.

    One thing I’d add is a word or two about semantics. I generally agree with your assessment that ASD was a “fast Ponzi” — but it might be important to note that it was relatively slow compared to other surfs. MegaLido was, I’m thinking, 12 percent a day for 12 days. It flamed out in weeks, thus minimizing (though not eliminating) losses of spectacular sums.

    The ASD advocates argue that Bowdoin was a genius for advertising “only” 1 percent a day and that ASD couldn’t possibly be a Ponzi scheme because of the relative slowness of the payouts, compared to 12DailyPro or MegaLido, for example.

    But as you correctly point out — and the prosecutors point out — the relative slowness enabled ASD to become even more dangerous because of its ability to suck in huge sums for a longer period of time.

    In the real world, ASD would be viewed as an utterly ridiculous and obvious Ponzi that paid 30 percent a month. But in the autosurf world, a figure of 30 percent a month actually may look small. Some surfs advertise 144 percent over 12 days.

    I’ve been inclined to describe ASD as a “relatively slow-motion Ponzi” when compared to, say, MegaLido. But that’s only true in the surf world. In the real world, ASD would be viewed exactly as you described: a decidedly “fast Ponzi.”

    Patrick

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  7. Patrick,

    The limits of credibility are strained further when you read of the “ridiculously low” payouts being paid by Noobing during its current (hopefully) death throes. The disappointed members were bemoaning daily payouts of “only” 0.1% per day or 0.05% per day. Problem is, those “low” payouts amount to an annual payout of almost 30% (at .1% per day) or almost 14% (at .05% per day), still WAY to high for believability for those of us who live in the real world……esp. in today’s economy.

    I suppose ASD is a slow Ponzi compared w/Megalido, but WAY faster than Madoff.

    All HYIP’s are scams. They can’t have rates of return that exceed the market rates by anywhere near as much as they do…..

    admin: Entertained,I generally agree with your assessment that ASD was a “fast Ponzi” — but it might be important to note that it was relatively slow compared to other surfs. MegaLido was, I’m thinking, 12 percent a day for 12 days. It flamed out in weeks, thus minimizing (though not eliminating) losses of spectacular sums.The ASD advocates argue that Bowdoin was a genius for advertising “only” 1 percent a day and that ASD couldn’t possibly be a Ponzi scheme because of the relative slowness of the payouts, compared to 12DailyPro or MegaLido, for example.But as you correctly point out — and the prosecutors point out — the relative slowness enabled ASD to become even more dangerous because of its ability to suck in huge sums for a longer period of time.In the real world, ASD would be viewed as an utterly ridiculous and obvious Ponzi that paid 30 percent a month. But in the autosurf world, a figure of 30 percent a month actually may look small. Some surfs advertise 144 percent over 12 days.I’ve been inclined to describe ASD as a “relatively slow-motion Ponzi” when compared to, say, MegaLido. But that’s only true in the surf world. In the real world, ASD would be viewed exactly as you described: a decidedly “fast Ponzi.”Patrick

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  8. Entertained,

    Entertained: The limits of credibility are strained further when you read of the “ridiculously low” payouts being paid by Noobing during its current (hopefully) death throes. The disappointed members were bemoaning daily payouts of “only” 0.1% per day or 0.05% per day. Problem is, those “low” payouts amount to an annual payout of almost 30% (at .1% per day) or almost 14% (at .05% per day), still WAY to high for believability for those of us who live in the real world……esp. in today’s economy.

    It really is stunning, isn’t it? Thirty percent a year is considered small.

    These “customers” have been conditioned to expect far more, when even far less demonstrates the Ponzi nature of these operations.

    I didn’t hear too many Noobing complaints when it was brand new and making a name for itself by paying out at up to 3 percent. Now promoters are crying the blues and getting angry because “incentives” weren’t guaranteed which, of course, is the Bowdoin argument.

    Patrick

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  9. wait a sec, the Noobing 30% per year is wrong,,,took me a second to work it out, but that 30% is without the return of original investment, so it works out to a 30% discount on the advertising.

    That’s an honest and decent buisness model for Noobing were it a real advertising site, but it’s not. One fo the hings I see the asutosurf crowd say over and over is how the model is to build a large captive audience to see see the ads, so a big company, say Coke or Wal Mart will pay real money to get into the rotator, the iea being that is the money they all “revenue share”. The problem with that is, even the biggest auto surf had somewhat less than 200,000 members, and big advertisors like those they mention want to deal in millions, and millions who would potentially buy something, too.

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  10. I’m beginning to think my typing was better when I was taking painkillers…..I’m back in all my diabetic neuropathetic glory now…

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  11. Hi Gregg,

    Noobing could have started out as a standard traffic exchange, but instead dangled the rebates. The professional Ponzi pushers gave it a nudge, and members say Noobing paid up to 3 percent for a while.

    Then came the payout cut and the reliance on the “rebates aren’t guaranteed” contract language. After that came the public statement that rebates were slashed because of an unclear ruling in the ASD case, along with hot talk against the government.

    It may look bad for Noobing if a probe is opened because of what it dangled at the beginning, the fact some people got more than others, and its very public acknowledgment that it was monitoring the ASD case and made business decisions based on it. Those issues were in play before Noobing even launched, and it obviously gathered money as a result of the Ponzi boards, which are now booing Noobing loudly.

    It had a choice of not dangling the rebates, and still chose to dangle them, so I’m not sure how effectively it can argue against a potential challenge.

    Most people would agree, I think, that garden-variety traffic exchanges that pay commissions on sales but don’t play the rebate game are fine. It’s not great traffic in many contexts, but Ponzi allegations aren’t part of the mix.

    Given Noobing’s tech skills, it easily could entered the arena as a traffic exchange only, and perhaps even cleaned up on the existing exchanges.

    It’s possible that someone may ask why it didn’t simply do that. It’s a straightforward business. Noobing drew attention to itself even by citing ASD, and also pitched itself to deaf people.

    A good number of deaf people have sign-language promos for Noobing on YouTube, and it looks as though they were early entrants.

    All of the potential challenges could have been taken off the table with simple clarity of purpose.

    Patrick

    P.S. Stay off the tooth drugs and don’t worry about your typing. My Mom had neuropathy and it was no picnic. My sister is getting it now.

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  12. Gregg,

    You’re right, 30% w/o return of principle, and 260 business days (or so). Great point about the principle. I’d say people who do get their principle back are extremely lucky…..

    Every company I have worked with agrees with you that 100,000 or 200,000 pairs of eyeballs is not very valuable. People/promoters who claim otherwise frankly have never played in the Major Leagues. P&G, Bud, Ford, Coke, you name it — people who pay $2MM for a Superbowl spot (and many watch it the game for the ads) get 50-100MM viewers for their $2MM for twice as long as the ASD “advertisers” got from the 6 year olds clicking through the rotator.

    gregg evans: wait a sec, the Noobing 30% per year is wrong,,,took me a second to work it out, but that 30% is without the return of original investment, so it works out to a 30% discount on the advertising.That’s an honest and decent buisness model for Noobing were it a real advertising site, but it’s not. One fo the hings I see the asutosurf crowd say over and over is how the model is to build a large captive audience to see see the ads, so a big company, say Coke or Wal Mart will pay real money to get into the rotator, the iea being that is the money they all “revenue share”. The problem with that is, even the biggest auto surf had somewhat less than 200,000 members, and big advertisors like those they mention want to deal in millions, and millions who would potentially buy something, too.

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  13. Noobing may have had a business model in TE, and not all of that is commission driven. My private company when Search Engine Optimization was still new paid for hits to get us higher in searches, I seem to recall I paid $25 for 5,000 hits and I think I could have paid twice as much for half as many “unique hits” which were seen as more valuable as they made you list higher in Yahoo, or so it was said. This was before Google even existed…
    Anyhow, I had a background in autosurfs before there were such things as autosurfs. In the book I have spent 7500 words explaining what a surf is and the history of them.

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  14. Ok forgive my ignorance but I don’t understand why all of these sites like ASD, Bizadsplash, etc are labeled ponzi schemes. The key reason I dont understand is because they do offer a service and require members to look at websites. This provides guaranteed traffic to your website depending on how much you spend. This is similar to buy ads from any medium, the more you spend the more visability you get. Then the company splits up the monies coming in and pays them back as commissions to encourage the members to surf the pages on the site. They are still taking money for the business operations and for profit like any company would. We dont blame Walmart for taking money from customers and giving it to employees for their work and call it a ponzi scheme. Money will continue to come in to these companies because the provide a service that is valuable and that is advertising. Please understand that I am not affiliated with any of these companies but am strongly considering joining one for the exposure to my other work from home business. Obviously the commissions are an enticement too as long as I spend the time doing what is required for me to earn those commissions. Thanks for any input you all have.

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  15. Matt,

    It is in the math. The basic ASD business model that was pitched was: Send us a dollar for one ad pack. We’ll keep 50 cents for our profit and expenses. We’ll then send you a rebate for $1.25 after you surf a bit. That is not a sustainable business model. Where does that extra 75 cents come from? New members’ money! It can work once, twice, perhaps 100,000 times, but eventually runs into a wall. That’s why ASD was a Ponzi. It was unsustainable AND paid off old members with new members’ money.

    The primary issues are: 1) A business cannot excessively pay old members with new members’ money. If there are to be rebates, they need to be equal to all members in proportion to what they paid in in a given time. Failure to do so results in an extremely high risk of a Ponzi scheme. You cannot, as ASD did, create wealthy people exclusively from the first group of entrants into the program. That’s the pyramid nature, and is illegal. 2) Inflow of funds needs to exceed the outflow of funds on an ongoing basis. Please see my post on the Black Box modelling of businesses such as ASD (and AVG and others). ASD DID NOT have inflows equal to outflows, or at least future liabilities. Their future liabilities guaranteed they would go under of their own accord. 3) SUBSTANTIAL external sources of income need to be present in order to achieve sustainability. If a company had, for example, five times as much external income (from real advertisers like P&G) as it garnered from member “ad pack” purchases, one could build a legal, sustainable business (why such large advertisers would not want the same rebates as the little guys has NEVER been addressed by the ASD promoters…). Occasionally companies (like AVG) will claim external revenue, but can never prove it. As an example, had ASD been able to show that their rebates were fueled by substantial external revenue (as opposed to new members’ money), the charges would have been dropped in a heartbeat. Instead of showing such evidence, the founder of ASD agreed to forfeit $93MM. I guess he didn’t have the external revenue after all.

    Please do extensive due diligence before sinking your money into the various ASD clones that have arisen (such as AVG). I strongly urge you to read my Black Box post here on this site, or at Eagle Research Associates.

    Matt: Ok forgive my ignorance but I don’t understand why all of these sites like ASD, Bizadsplash, etc are labeled ponzi schemes. The key reason I dont understand is because they do offer a service and require members to look at websites. This provides guaranteed traffic to your website depending on how much you spend. This is similar to buy ads from any medium, the more you spend the more visability you get. Then the company splits up the monies coming in and pays them back as commissions to encourage the members to surf the pages on the site. They are still taking money for the business operations and for profit like any company would. We dont blame Walmart for taking money from customers and giving it to employees for their work and call it a ponzi scheme. Money will continue to come in to these companies because the provide a service that is valuable and that is advertising. Please understand that I am not affiliated with any of these companies but am strongly considering joining one for the exposure to my other work from home business. Obviously the commissions are an enticement too as long as I spend the time doing what is required for me to earn those commissions. Thanks for any input you all have.

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  16. Matt,

    One more thing. Take a look at the criminal histories of the founders and advisors of such enterprises as ASD and AVG. You’ll find a number of people with felony convictions for fraud in their background (Bowdoin for ASD, Karl Dahlstron for AVG, Busby, et al.) Sam Walton was never convicted of felony fraud….

    Matt: I don’t understand why all of these sites like ASD, Bizadsplash, etc are labeled ponzi schemes….

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  17. Could any of you provide concrete information if Busby is a convicted felon or has any felony charges pending please? I thought this RICO was the only thing pending and I read the first 17 pages of the court docs on that and found it to be rubbish.

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  18. Roy Grant Hill: Could any of you provide concrete information if Busby is a convicted felon or has any felony charges pending please?I thought this RICO was the only thing pending and I read the first 17 pages of the court docs on that and found it to be rubbish.

    Litigation Release No. 15760 / May 28, 1998 http://www.sec.gov/litigation/litreleases/lr15760.txt

    Litigation Release No. 15494 / September 15, 1997 http://classaction.findlaw.com/cases/securities/sec/sec1/files/1997/lr15494.html

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