Bank Says RICO Plaintiffs’ Claims Have ‘Fatal Deficiencies’; Argues That Prosecutors Have Records On ASD Winners

UPDATED 10:23 A.M. EDT (U.S.A.) A federal judge should grant Bank of America’s motion to stay a case in which the bank is alleged to have aided and abetted a racketeering scheme because the plaintiffs already have a remedy and their argument is fatally deficient, the bank argued yesterday.

Moreover, the bank argued, the government is in possession of certain information about AdSurfDaily Inc. — information outside the scope of the bank’s relationship with ASD — and that a stay is appropriate because prosecutors in a forfeiture case separate from the RICO lawsuit are compiling information.

“[I]n addition to seizing all of ASD’s assets, the Government seized evidence as well, and thus a brief stay is necessary until resolution of the Forfeiture Proceeding to avoid compromising the proceedings here,” the bank said.

“[T]he DOJ is currently in the process of determining who among the former ASD members have losses,” the bank said.

And, Bank of America suggested, there may be reason to believe that a restitution pool envisioned by the government could increase as its probe into ASD continues.

Federal prosecutors have seized about $80 million to date, according to records.

“It is also entirely plausible that some former ASD members made money from the alleged scheme and the DOJ’s individualized claims process under the civil forfeiture laws is the best venue to investigate and address such issues,” the bank argued, using bold type to highlight the words “made money.”

“Accordingly, a brief stay is necessary to permit the process to run its course,” the bank argued.

The bank said the government already has announced a process by which it intends to provide restitution to alleged victims of ASD.

“Plaintiffs do not (and cannot) dispute that the DOJ’s asset distribution process in connection with the Forfeiture Proceeding aims to accomplish the same result as the purported claims in this litigation — i.e., to reimburse Mike Collins, Frank Greene, Natures Discount, Inc. and others for money allegedly lost as a result of their involvement with ASD,” the bank said.

“If the named Plaintiffs in this case have no damages, then they cannot pursue their claims here, let alone act as lead plaintiffs for a class of other similarly situated plaintiffs,” the bank said.

Bank of America was not named a RICO defendant in the case. Rather, the plaintiffs alleged the bank aided and abetted ASD President Andy Bowdoin, ASD attorney Robert Garner and others in a fraudulent scheme.

Bowdoin has not responded to the RICO complaint, which was filed in January and amended in April.

Both the RICO case, which was brought by private litigants, and the forfeiture case, which was brought by the government, are being argued in U.S. District Court for the District of Columbia.

Judge Rosemary Collyer is presiding over both cases.

Read the bank’s answer to the RICO plaintiffs.

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15 Responses to “Bank Says RICO Plaintiffs’ Claims Have ‘Fatal Deficiencies’; Argues That Prosecutors Have Records On ASD Winners”

  1. “Accordingly, a brief stay is necessary to permit the process to run its course,”

    I’m not sure that’s a valid argument for the bank. The bank is not a defendant in the other case, and the accusations are different. Here the bank is accused of aiding and abetting a racketeering scheme, the other case is about some property being forfeited. I haven’t read the banks answer yet but I suspect they will need to convince the court that one case is dependant on the other. I think this will be difficult for them to demonstrate because the both charges and the defendants are different.

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  2. If half the town is quitting their poultry jobs and doubling their wages by going to work for ASD, you can bet the managers at all the banks (and every other institution in town) knew about it. The population of Quincy is listed as 6300 in the 2000 Census. I lived close to a town of that size and when appliance store hired 2 people everyone knew and it was discussed.

    In this case ASD was the elephant in town. I would really be skeptical if the local BofA management (or any other bank in town) says that they had no clue. If so, it would be nice if someone would loan me a couple of hundred million so I could run it through a few branches in my old town and see if anyone notices….and asks questions.

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  3. Tony H:
    I’m not sure that’s a valid argument for the bank. The bank is not a defendant in the other case, and the accusations are different. Here the bank is accused of aiding and abetting a racketeering scheme, the other case is about some property being forfeited. I haven’t read the banks answer yet but I suspect they will need to convince the court that one case is dependant on the other. I think this will be difficult for them to demonstrate because the both charges and the defendants are different.

    I couldnt agree more with you Tony, and sincerely hope that the Judge is not blinded by these spurious arguments either.

    One issue has nothing to do with the other. The Government seized ASD assets. The RICO prosecution is doing what Judge Collyer actually indirectly suggested in her latest judgement – suing those involved in fraudulently taking in money for ASD from members. They are saying that, by their actions, Bank of America aided and abettted the RICO defendants. They are asking for damages for their actions in aiding and abetting.

    Any Government action to achieve forfeiture of ASD assets is irrelevant to these charges, as BoA’s attorney’s probably know.

    And, too right DB, in a town the size of Quincy, you scratch your nose and everyone knows. Run a multi million dollar business and see who knows what, whatever they pretend afterwards.

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  4. It’s a joke, Andy had a chamber of commerce Luncheon in his honor!!! Andy flew Robert Fava down from Iowa to explain the business model to the busniess leaders of Quincy. Rober showned the power point using the 2% a day return. I would bet money that not only the local BOA manager was there but I bet the top brass from BOA Tallahsee attend the lucheon.
    Here’s another bet, I bet at that luncheon the local Capital bank manager was there, and he was just waiting for Andy to open an account at this bank so he could blow the whisle on this scam.
    BoA has blood on there hands and they know it.

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  5. I don’t think BofA is really culpable, but if they don’t get a dismissal I would bet they reach a settlement. And that would be a travesty. I dunno where and I wish I had saved it, but I have read a post from one of the plaintiffs bragging on a forum how much he had made on his adpacks. Look for this, BofA is gonna get the records and if they find that any of the plaintiffs are in fact in profit, or were promoters, they’ll get the dimsissal.
    Another thing I don’t think the plaintiffs have considered is that if they do get a settlement from the bank, they still have downlines who can then sue THEM and take it away, it’s really a no win situation for the plaintiffs, if you ask me. If I was in their downline, I’d be getting a case prepared and filed now, because if they get any money from this case, it’s recoverable by anyone who joined under them.

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  6. I think I should explain that a little better, both the opening premise and the final statements.

    First, I’m pretty positive that Bank of America did follow the law, and it’s not their responsibility to know what their depositors business is. Up until the rallys, the amount of money ASD was depositing was on the scale of a mid sized Burger King franchise, and not nearly as much of it in cash at that. The deposit slips that were pre filled out are standard practice, I have them for my business, although I don’t send them to my customers, it’s likely they were made and paid for by ASD and not from the bank directly (banks of course do it, but it’s much cheaper to get them yourself) and that activity didn’t take place at the branch in Quincy. You also have to consider that if a bank had taken much more action that required by law, ASD could have raised a lot of a fuss about them violating their rights (okay, ASD woulnd’t have, but a legitimate business with an identical deposit profile would have, and rightly so) We also don’t know if Bank of America did take any actions to investigate the scam, and if that possible action came to any conclusions or if it may have been in progress. I have yet to see any evidence that they broke any laws, and if the customer involved was legitimate and they had done more they would likely been a bit of trouble themselves.

    As for the last. If BofA decides to greenmail the case, a decent bet I think if their current motion fails, that money will be paid over to the plaintiffs fairly quickly, and if they have any sense, they’ll hide that money almost the same day. However, if cases are at the time pending against the plaintiffs for their promotion, the settlement could be held up by the court until all pending legal actions are settled. So if you file a case now (no need to go to DC, you can do it in your own Judicial District, see a local lawyer to pursue this), you can at least keep the only likely new money besides the money the DOJ has in play. And no matter what happens, money refunded by the government is at least a year or more away from being paid. In the Rico Case, Bank of America almost certainly has a dollar amount set aside now, and if they can’t get the case tossed, that money will be offered when they determine it’s less than the cost of defending themselves further. They are not going to pay out millions, but they may offer ten ground and eventually settle for anything from that to maybe $50,000. I think it would be a terrible shame if the plaintiffs in this case were to get that money ahead of any of the real victims.

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  7. The observation that banks are “caught between a rock and a hard place” when it comes to their involvement (or not) in deliberate frauds of the nature of ASD, is often made.

    Not only are banks required to fulfill the requirements of The Bank Secrecy Act(See: http://www.irs.gov/compliance/enforcement/article/0,,id=113003,00.htm) which requires the bank/s to:

    “Procedures for Monitoring BSA Compliance – 12 CFR 21.21 requires every national bank to have a written, board approved program that is reasonably designed to assure and monitor compliance with the BSA. The program must, at a minimum: 1) provide for a system of internal controls to assure ongoing compliance; (2) provide for independent testing for compliance; (3) designate an individual responsible for coordinating and monitoring day-to-day compliance; and (4) provide training for appropriate personnel. In addition, the implementing regulation for section 326 of the PATRIOT Act requires that every bank adopt a customer identification program identification program as part of its BSA compliance program”

    but also have to conform to the additional requirements introduced as part of the infamous Patriot Act: http://www.fincen.gov/statutes_regs/files/hr3162.pdf

    which, in turn can and does result in such events as freezing bank accounts of elderly nuns: http://www.washingtontimes.com/news/2006/mar/20/20060320-115725-9791r/ with all the resultant negative publicity.

    Now, as Gregg so rightly points out, BoA is being forced into the position of being forced to defend itself against allegations of impropriety being leveled against it. Most of them based on hearsay, and some of them being made by the very people alleged to have carried out the fraud.

    AND, all of this while being unable to publicly defend itself, prevented from doing so by the legislation itself and abandoned by the very agencies with which it is REQUIRED to liase.

    IM(very)HO, this redirection of focus from where it belongs, on the fraudsters themselves, on to third parties such as BoA, the prosecutors and the Government itself, is, in fact, an integral part of the “playas” strategy.

    It was done with Stormpay and credit card companies following the collapse of 12Daily Pro (without a single prosecution) and Bryan Marsden of P.I.P.S. fame was a past master at claiming bank interference with his business.

    That anyone would continue to believe ANYTHING that comes out of the “other side” of this sorry saga after all that has been revealed says a great deal more about the skill and understanding of human psychology of the fraudsters than it does about reality and “truth”

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  8. First, I’m pretty positive that Bank of America did follow the law, and it’s not their responsibility to know what their depositors business is. Up until the rallys, the amount of money ASD was depositing was on the scale of a mid sized Burger King franchise, and not nearly as much of it in cash at that.

    I disagree with you on this one Gregg. I strongly suspect that, by the time they did start to look into it and/or report it, the Quincy branch had knowingly or negligently been aiding and abetting this scheme. The amounts coming into Quincy were, even before the rallies, very large sums of money for such a small town in poor economic shape. I live in a town a little smaller than Quincy and next to one a lot larger. Everyone knows what businesses there are, who is employing and what they do – and more often than not, they know a great deal more than is officially told. When you speak about the rallies, I would imagine you were talking about the large ones that “hit the press”, but before that there were lots of small ones that did not receive the same publicity but raised a couple of millin dollars each. This was big stuff for Quincy. Nope – if they reported ASD, it was more likely too little too late. Reporting it in its moment at the beginning of its growth when only millions were involved would have saved a lot of heartache.

    And no I dont believe that ASD would have sued or protested too vigorously, if their accounts had been closed down early in 2008 – they could never have afforded the publicity.

    I will make an educated guess and suggest that one of the superior offices of BoA caught Quincy out, as well as ASD and heads have rolled internally because of the excessive length of time that BoA supported ASD’s business transactions.

    So if the plaintiffs were also promoters, so what? Let the BoA assume its responsibilities. The Government will be watching the situation. If they win, great, let the Government include those gains from the ASD business in the clawbacks that they will make from large promoters. All the more for the victims.

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  9. I’m not buying it. The town where I live most of the time is population 630, yes, less than 1,000 people. My business runs several million a year through my bank and no one has ever questioned me about what I’m doing.
    Andy lied to the bank, just like he lied to everyone else, what would you have them do? They said they were an advertising company, a dot.com at that, and that phrase in this country has a powerful implication, one that in little towns like Quincy will cover a lot of questions. They had employees, real estate, money was coming in…I can perfectly see how the bank wouldn’t catch it. The one thing that makes them look bad is that another bank DID catch it and turned Andy away. That is why all those cashiers checks were in a box in the office, they were afraid to deposit them. That amount itself was almost half of their cash on hand. If it went to a bench trial, Bank of America would win, hands down. A jury is an uncertain thing and that’s why I think they’ll settle.

    And I don’t want to see them every get the money, look at the CEP settlements, people like Shad Foss are getting away with repaying a pittance of what they took out. People who made $50,000 or more are settling for $5,000 or like amounts. If that money is ever paid out, it’s gone. For me, I say go after the crooks who broke the law. What next, is someone going to sue Ford because Andy drove a Lincoln?

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  10. Ok – we’ll have to agree to disagree on this one. The truth is probably somewhere between the two, but until real information comes out, we wont know.

    Whilst I am in agreement that, morally, no winning “players” should be benefiting from lawsuits, the many thousands of normal citizens who were duped and who were influenced by the presence of BoA, do have some reason to complain.

    One small point, ASD, however much money went through their TEN dba accounts, had a very high public profile, even before the rallies, and the work for ASD was very labour intensive, so maybe comparing it with your own business is not comparing like with like.

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  11. But the bank has no way of knowing that. The bank’s only contact was someone coming in every few days and dropping off a deposit, its not like the tellers went over the the flower shop and watched them.

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  12. With the greatest respect, alasycia, might I ask:

    * how many frauds of this type you have followed from go to whoa ???

    * how many BSA reporting cycles have you observed ???

    * in your experience, what is the lag time between a US based financial institution filing a Suspicious Activity Report and said report being acted upon ???

    * similarly, in your experience, how many SARs are filed with the appropriate authorities and then reported to the public ???

    * have you actually read and understood the entire Bank Secrecy Act of 1970 (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) particularly with regard to the rights and responsibilities and non disclosure restrictions of US based financial institutions ???

    * are you aware, for example, that finCEN itself makes the following observation with regard to closure of suspicious accounts:

    “The closure of a customer account as the result of the identification of suspicious activity is a determination for an organization to make in light of the information available to the organization. A filing of a SAR, on its own, should not be the basis for terminating a customer relationship. Rather, a determination should be made with the knowledge of the facts and circumstances giving rise to the SAR filing, as well as other available information that could tend to impact on such a decision. It may be advisable to include the organization’s counsel, as well as other senior staff, in such determinations. (12/2000)” http://www.fincen.gov/statutes_regs/bsa/bsa_faqs.html

    finCEN also makes the observation that, should the suspicious activity/s continue AFTER filing a SAR, financial institutions should continue to file subsequent SARs at least every 90 DAYS.

    It could be said finCEN is completely aware of the time frame required for the completion of any investigation.

    * are you suggesting that BoA, as distinct from its’ employees, was willing to risk:

    “Failure to file a suspicious activity report may lead to civil and criminal penalties. A civil penalty may apply FOR EACH willful violation of the reporting requirements. The amount of the penalty is not to exceed the greater of the amount involved in the transaction (not to exceed $100,000), or $25,000. Any person who willfully violates the reporting requirements may be subject to criminal penalties, including a fine as great as $250,000 or five years imprisonment”

    for the sake of a mere pittance (in comparison)in fees earnable from ASD/Bowdoin ???

    * Further, are you aware: “MSBs and their employees are prohibited from disclosing to a person involved in the transaction that a suspicious activity report has been filed. Further, each MSB or MSB employee is protected from civil liability for any SAR that they file” and that, even on being served a civil subpoena, MSBs are specifically prevented from even confirming or denying the existence of a Suspicious Activity Report.

    * In fact, to again quote finCEN: even receipt of a GRAND JURY SUBPOENA also does not alter the standards for filing a SAR.

    * are you aware that, by law, BoA has in place an “automated monitoring systems that can assess suspicious activities using customer profile information”

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  13. Gregg Evans: But the bank has no way of knowing that.The bank’s only contact was someone coming in every few days and dropping off a deposit, its not like the tellers went over the the flower shop and watched them.

    The bank had enormous numbers of small deposits coming in from all over the US and eall over the world, through the BoA system. Even for a small branch it would have attracted attention as it would hve been very labour intensive dealing with all the work. In addition 10 accounts in one name were opened for the same business. The Head of the Branch would undoubtedly been aware of this and it must have thrown up a lot of red flags. THAT was the time to make a report and ask questions. Other banks did it and one closed a pretty small account.

    And Gregg yu say you have a multi million dollar account with a bank in a very small town. Well you might have no trouble, because your business if undoubtedly legal, but I’ll bet the person in charge of the bank is very well aware of what your business is and where your money comes from. It goes with the job.

    LRM, I understand your point, and am also aware that suspicious activity reports are not made know to the public. I am also aware that there are ocassions that the Government asks the bank concerned to continue with their business while investigations take place.

    No I dont know what the time scale after filing an SAR is and it may well be longer than one would wish. However, with the enormous amount of money involved, with pòssible wire fraud and money laundering taking place and with the known risk of money leaving the US shores, I find it difficult to believe that the Governmetn nor BoA would have let it ride for too long.

    My suspicion is that it was reported far too late.

    Equally you talk about a “mere pittance” earned from ASD. For an ASD member, and I understand that some of the bank staff (dont know about the Branch Manager) were members of ASD, the earnings promised would easily match a bank clerk’s salary and more.Lots of people are willing to take chances on schemes they dont really understand when it looks as if it is going to bring them a windfall.

    But as I said before, we do not know WHEN BoA reported ASD, if indeed they did, which is most likely. Having seen a couple of frauds at local level in banks here, one of which involved the Branch Manager who DID take the risk (and of course later went to prison and lost his job) I know these things do happen.

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  14. Gregg Evans: The bank’s only contact was someone coming in every few days and dropping off a deposit,

    According to the court filings the bank had much more contact than that. From memory, it was alleged that several bank employees were “moonlighting” – also employed by ASD. Also it was alleged that a VP met Uncle Andy & viewed the business.

    One of the anti-money laundering statutes is Know Your Customer. The several million flowing through your accounts are probably OK because your bank has got to know their customer. If not then they may have been negligent.

    The BoA should have got to know their customer, and the allegations are that they did get to know their customer. The bank may have reported the suspicious behaviour but I find it doubtful that any authority would OK opening 10 bank accounts.

    From the wording of one of the filings, I got the impression that it was a class action suit. Perhaps any fine given to the BoA could be included in the restitution fund. That way if any of the plaintiffs profited from ASD they will be treated equally.

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  15. Tony H: According to the court filings the bank had much more contact than that. From memory, it was alleged that several bank employees were “moonlighting” – also employed by ASD. Also it was alleged that a VP met Uncle Andy & viewed the business.

    Tony,

    IM(very)HO the current discussion re any BoA involvement in the ASD saga does more to illustrate the “skills” of the fraudsters than it does in implicating BoA in the fraud.

    Consider why it is, after all the revelations of the past few months, otherwise normal and rational, self confessed “victims” of the ASD fraud are STILL accepting what comes out of ANYONE associated with the “other side” as being even vaguely accurate.

    Consider the source of your “it is alleged” statements. Alleged by whom ??? Someone you’d normally trust ??? Someone who has previously demonstrated high levels of honesty and integrity ??

    Consider: if you were trying to divert attention away from your own complicity in a fraud by accusing someone else, would you choose Mother Theresa or a big, bad, universally hated entity such as a bank or “da ebil Gubmint”????

    Whether casual observers want or choose to believe it, ASD was not solely the brainchild of Unca Andy and a few accomplices, and the defrauding most certainly didn’t stop with the civil forfeiture complaint/s.

    Anyone who has observed these HYIP ponzi “games” for any length of time will point out these post collapse finger pointing exercises are just part of the script and “deja vu all over again”

    Blame, should it be helpful to apportion, belongs squarely on the shoulders of the fraudsters themselves.

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