THEY’RE GUMBY, DAMMIT! Purported ASD ‘Flexible’ Plan Now So Flexible It Changes With Every Argument
Gumby: From Wikipedia
UPDATED 12:35 P.M. EDT (U.S.A.)
They’re Gumby, dammit!
Some AdSurfDaily supporters now claim that the company could not have been operating as a Ponzi scheme — and therefore cannot be guilty of wire fraud and other crimes — because it had a “flexible” business plan.
Under this theory, “flexible,” in part, means ASD did not guarantee rebates. It also means that ASD planned to build a membership base, and then use that base to become attractive to Main Street, big-budget advertisers that would find people who were being paid to click on ads an attractive audience.
Prosecutors anticipated this argument in August 2008, and refuted it in the original seizure complaint filed Aug. 5, 2008, more than a year ago. ASD later asked for an evidentiary hearing to demonstrate it was not a Ponzi scheme.
Prosecutors viewed the “flexible” business-plan argument as a bid for ASD to insulate itself from scrutiny by regulators and law-enforcement agencies — in short, a bid to legalize Ponzi schemes by calling them something else.
The hearing was held Sept. 30-Oct. 1. ASD did not produce an audited balance sheet, thus failing to take advantage of an opportunity to blow the prosecution’s case out of the water. Nor did the surf produce a witness to support claims that it was operating with government approval.
Nor did ASD produce a major corporate advertiser to explain how it possibly could derive any benefit from having its brand associated with a fraudster-led firm that was using a garden-variety autosurf script that had been used by other surf companies destroyed by the government.
Imagine if such a major corporate witness existed — and if such a witness extolled the virtues of the autosurf universe on direct examination by the ASD side.
Now, imagine the witness being cross-examined by the government. If the witness said pitching its product to ASD members was good enough and that the company did not intend to participate in ASD’s rebate plan that implied a return of 365 percent a year was possible, the government then could ask why the company was shirking its duty to stockholders to become more profitable.
If ASD truly was a dynamic advertising service, there would be no reason not to participate in all three facets of the earning spectrum — profits derived from advertising, profits derived from recruiting and profits of 365 percent a year derived from surfing.
Not to participate in all three would be the height of corporate irresponsibility to stockholders. In fact, the government could ask the major advertiser on the witness stand why it was not recruiting its own stockholders to join ASD, thus bolstering the advertiser’s bottom line and the bottom lines of individual stockholders.
Any corporate stockholder who joined the corporate advertiser’s downline in ASD would have more money to invest in stock, more money to invest in other companies, more money to jumpstart the world economy, buy cars and real estate and gifts for family and friends — and more money to set aside for retirement.
NBC, which was claimed in a promo for ASD to have been one of the major advertisers, could have been summoned to testify. Why didn’t NBC show up to defend the model? Why didn’t USA Today, another claimed advertiser, show up? Why didn’t Google or Starbucks or Kodak or Toshiba or Macy’s or Farmer’s Insurance show up? All of them (and more) were claimed to have been ASD advertisers.
Any chance they weren’t really ASD advertisers and that the claims about them were made up?
No matter. Some of ASD’s current Gumby apologists would have you believe the advertisers would have shown up one day — had the government not interfered with ASD’s “flexible” plan.
What’s most flexible about the plan is the ASD advocates’ ability to spin it, even though ASD President Andy Bowdoin himself no longer is doing the same.
A federal judge ruled Nov. 19 that ASD had not demonstrated it was a legal business and not a Ponzi scheme. The judge said evidence ASD presented conflicted with “come on” statements on its own website.
Moreover, the judge said testimony by an ASD expert witness that ASD was not a Ponzi scheme was not credible because it conflicted with observable information, the testimony of other ASD witnesses and relied exclusively on information ASD provided, not an independent investigation.
In January, ASD President Andy Bowdoin submitted to the forfeiture, thus taking a trial against the money and property off the table. Bowdoin has acknowledged multiple times that ASD was operating illegally.
A scheduling conference that had been set for Jan. 30 was canceled because of Bowdoin’s request to a federal judge to release his individual and corporate claims to the seized money and property.
Regardless, the “flexibility” arguments cited above continue to surface — even though Bowdoin no longer is protesting his innocence. Bowdoin, rather, has attacked prosecutors, his own attorneys and, now, a “group” of members from whom he accepted legal advice and embarked on a strategy of pro se legal filings.
A federal judge has rejected three of Bowdoin’s four pro se arguments, which sought to cast him a criminal defendant in a civil case against money and property. Bowdoin was not arrested in August: The money and property were.
A ruling is pending on Bowdoin’s fourth pro se argument — that he should be permitted to change his mind about submitting to the forfeiture, after previously asking the judge to release his claims “with prejudice,” meaning he would not assert them again.
Bowdoin’s new counsel, retained only after Bowdoin had embarked on a pro se strategy that put him at odds with his previous claims, has supplemented his client’s motion, and Bowdoin has filed two affidavits to support his bid to renew claims he once released.
It’s a strange case, indeed. Bowdoin has been the equivalent of Gumby in his court filings — and ASD advocates have been even more flexible, bending their views to support fact sets that even Bowdoin himself no longer is challenging in the civil case.
I was thinking yesterday about his desperate filing and how scared he sounds to be put into prison. My question then is why in the hell did he make that “Paperless Access” video and offer a VOIP “gift” to the “members.”
What a jackass.
Bowdoin supporters are now using the same sort of tortured logic as in the nonsensical childrens’ conundrum “If your uncle Bob was a female, wouldn’t that mean he is your aunt, not your uncle ??”
“if the business plan were sustainable, wouldn’t that mean there was no fraud and therefore no money laundering or conspiracy ??”
and
“if we got real cheques and surfed real sites, doesn’t that mean ASD was an real advertising company and not a fraud”
Love a good Gumby reference.
As an advertising platform, ASD never could approach a mass market. No matter how many members they had, there were only 1865 page impressions per member, so that any individual member with more than $1865 at stake may have been able to get rebates over their initial investment, (until the money ran out) they were not able to get the views they paid for, and this before any potential “non member” advertiser added their purchases into the rotation.
So even if you were only able to get rebates up to your purchase balance, the model was still mathematically impossible, and adding outside revenue only made that problem worse. AS for the “we’re going to get profitable later” argument, that is in itself legal, but only if the people who wet it up capitolized the business to pay these rebates from their own intial investment, it was using new members payments to transfer money to older members that made it illegal. Andy was free, as is any business, to give away as much money as he wanted to, as long as it was his money to give, and not the money from participating customers. The problem with that, of course, is that there were no appreciable number of non participating members. The only ones who sent Andy money were the ones hoping he’d send back more than they sent.
Autosurfs and HYIPs rely on participants who don’t know much about business, but are impressed by a psuedo business lexicon easily impressed by a pitch that sounds good, but ultimately doesn’t stand up to analysis by people who know how real businesses operate.
Patrick,
You wrote: “Under this theory, “flexible,†in part, means ASD did not guarantee rebates.”
http://www.thejoyluckclub.com/headed_LM.pdf
Do they understand, I wonder, that Judge Rosemary Collyer has already ruled that the rebates WERE promised, or else no one would have participated? She specifically states that the “rebates not guaranteed” lie ASD told in the TOS was “contradicted by come-on statements on the same website.” Nothing could be clearer than that Judge Collyer didn’t believe the rebate lies when she made a ruling back in November of 2008, as shown on page 17 (and other pages)in the document linked above. What the Gumbyites call a flexible business plan Judge Collyer called “a confluence of payment schemes” unknown even to their own expert witness, Gerald Nehra.
She even used Nehra’s words against on another issue: ASD sold ad packs to buyers, and then paid the same universe of buyers to view the ads. No demonstrable cadre of “true customers” means ASD was a Ponzi. She didn’t say that ASD hadn’t appeared successful so far, but she pointed out that the success of a Ponzi like ASD actually guaranteed its demise (page 12)since every sale of an ad pack actually increased ASD’s liabilities.
There’s a lot more, and I know you know all this – I just wonder how long they can keep morale up with this same “rebates weren’t guaranteed” lie.
Now that things are so slow, a new batch of lies would be a welcome event!
Gregg,
1865 page impressions. I am eternally grateful to you for having calculated the maximum number of views one could have ever received (with the 120,000 membership I suppose) for the ads purchased. I know that noone paying much more than 1000$ ever received the number of views to match the credits they had, but you have clearly been able to calculate exactly how many of the ad credits bought by members that were wasted.
Because the majority of the ads of the high investors were never actually seen, it makes a mathematical nonsense of the advertising argument. The price alone and the relatively small number of captive, but untargetted viewers, together with the absence of non member viewers already made a clear and logical argument against any possibility of ASD having a real viable advertising product, but it is good to have the math to back it up.
Hi Marci,
On multiple occasions, I have published links to the government exhibit filed Aug. 5, 2008, and quoted from it. These were not prosecutor’s words — they were ASD’s own words: (Emphasis added.)
“Advertisers WILL be paid rebates until they receive 125% of their
ad purchases.”
And I have published Andy’s own words, also in a government exhibit:
“I’ve asked the question, time and time again — “Andy, are you ever going to reduce rebates?” Folks, this is what’s built the company. It’s a very unique concept we have here, and rebates is what makes it happen. This is what creates the members, that creates the interest for the national advertisers.”
Basically, Andy told a group of hundreds of people at the Miami rally that he was selling unregistered securities. Among the attendees were undercover agents from a Secret Service/IRS Task Force. The undercover agents asked questions at the rally and were told by incoming members that they joined for the advertised money-making opportunity, including the 50 percent rally bonus, not the advertising.
So, the short answer to your question, I suppose, is that some ASD advocates will attempt to keep morale up with this same “rebates weren’t guaranteed†lie approximately forever.
Or until it becomes convenient to argue that rebates really were guaranteed, which the “flexible” plan folks also have done.
They’ve also argued a straightforward version of “rebates aren’t guaranteed,” apparently on the theory that one can insulate himself or herself from fraud or theft claims by pretending liabilities can be wiped away by fiat.
There is nothing “real world” about the argument because it effectively creates a license to steal: Suggest a rebate and even pay it. Then, when you’ve met a secret target or simply no longer want to worry about the Ponzi math or can’t afford to pay, you pull the plug on rebates and hide behind “rebates aren’t guaranteed.”
AVG did that. And ADV4U appears to be doing that right now.
Regards,
Patrick
Marci,
Another quick note on the subject of rebates:
Some members found a way to guarantee their own rebates by selling ad packs directly to sponsors, depositing the money in their individual bank accounts and transferring the ad packs to the customers via ASD’s in-house system.
Think of the devilment that creates:
* Off-the-books sales for cash, with the burden of paying for the rebates passed to the rank-and-file.
* Discounted ad-packs — if a person had enough ad packs, he or she could sell them at a discount to family members and friends, and pass the entire burden of paying for them to people who paid full price.
* Strategic cash sales — using downline members’ money to purchase ad packs for yourself to qualify for rally bonuses, transferring ad packs from your existing supply to the members by using the in-house system, and then passing what effectively is a double burden to the rank-and-file, compounded by the bonus amounts.
Patrick
What do any of these comments have to do with Gumbi???
(No, I’m not joe, really)
Commenting on your last post, Patrick (and Marci I am not joe either or anyone related to him. lol)
It was becoming known that there were an enormous amount of member scams within ASD, and a hundred and one “special relationships” with the ASD office of people who were not the official “insiders” that were also bleeding off cash from the main operation.
It is highly likely that ASD brought in their new “Compliance Officer” Don Peterson, shortly before the raid, for exactly that reason – to sort out the out of control inside member dealing operations by non approved insiders. He was not there to ensure members advertised correctly or to see that ASD was compliant, as publicly anounced. The same probably goes for the appointment of Hays Amos, the CFO. They were surely there to look for Andy Bowdoin’s lost money and stop these cash leaks and for no other reason.
And as for flexible business plans – any member who listened to the live conference calls will have heard Bowdoin assure the membership that the rebates were a permanent on many occasions. The “flexible business” crowd, simply suffer from “selective hearing”
Hi alasycia,
One of the cash leaks, according to prosecutors, was an ASD check for $33,450.30, written to Proctor Motor Co. Inc., for the purchase of a 2009 Acura TXS for Hays Amos.
The check was signed by Juan Fernandez, and the vehicle was registered in the name of Amos, not ASD. The check was written June 11, 2008, less than two weeks after the Las Vegas rally.
Also on June 11 — and also with ASD funds from the same account used to purchase the car for Amos — George and Judy Harris received a 2008 Honda CRV for $28.607.67. The car was registered in their names, not the name of ASD.
On August 8, 2008, less than two months later, Judy Harris borrowed $5,000 from her aunt, who placed a lien against the car at Judy’s instruction to guarantee repayment.
Less than two weeks before that, ASD money was used to purchase a 2009 Lincoln MKS for Bowdoin/Harris Enterprises, at a cost of $48,244.03.
This was a little more than a month after ASD money was used to retire the personal mortgage of $157.216.79 on the home of George and Judy Harris. These funds were taken from an opening deposit of $177,900.12 in a new bank account established by Edna Faye Bowdoin, Andy’s wife, and George Harris.
The new account was opened June 10, 2008, less than two weeks after the Las Vegas rally, at which Andy famously said, “And I always say, ‘Thank you, God, for developing me into a money magnet.’ And I see myself as a money magnet in attracting money and, I say, attracting large sums of money.â€
As Bowdoin was uttering those words, his ex-wife and the victims of his Alabama securities scheme in the 1990s were owed more than $200,000 combined.
Between June 28 and July 1, 2008, ASD money was used to purchase $43,951.98 in marine equipment — what critics have derided as the “water toys.” That amount alone almost would have been enough to retire the restitution due the Alabama victims for more than 10 years. The money spent on the new Lincoln would more than have retired the Alabama restitution.
All of these things were a matter of public record before AVG even launched, and yet in December 2008 — the same month prosecutors filed the forfeiture complaint that named George and Judy Harris and Edna Faye Bowdoin as beneficiaries of ASD’s illegal gains, the prelaunch spin for AVG began:
https://patrickpretty.com/2008/12/22/ad-view-global-new-advertising-program-debuts/
If you have a moment, read the comments in the thread above.
One poster said, “I applaud AVG’s defiance of the U.S. Attorney’s & Fed. Judge’s lack of confidence in our Free enterprise system, and the ability of ASD to progressively acquire sustaining back up revenues, thus a ‘Ponzi.’
“AVG, fortunately, is located in a country that favors free enterprise, and does NOT sabotage its own citizens in that quest.”
The “Social Security is a Ponzi” argument also was trotted out.
While all this was happening, a poster on another board rallied the troops by predicting AVG would become a $1 billion company in 2009:
https://patrickpretty.com/2009/02/02/adviewglobal-touted-as-billion-dollar-company/
“Most if not all of your leaders are joining,†he counseled.
I remember laughing out loud at the time because the statement was so matter-of-fact — and yet so utterly devoid of any sense of the historic events at ASD that had thrust both the Secret Service and the IRS into the case — that it almost was like saying there was nothing to worry about because the maximum arbiters, “your leaders,” were joining.
And not just some of them, but “most if not all” of them.
As I mentioned a few days ago, it sometimes is hard not to laugh, even though the misery caused by the surf industry is not funny at all.
Patrick
Yes, Pstrick, those were the “approved insiders”. My guess is that the two people mentioned above were hired to sort out the money drain to the “non approved member” scams. There is no way that I was suggesting that they were interested in upsetting the “approved insider” deals
Indeed, prosecutors do say there were approved insiders, including Andy’s son and former daughter-in-law, who were gifted into the program by Bowdoin. In the son’s case, Andy paid an employee to surf for the son, who took money out without having put any in and performed no work.
Here’s a link to a story that ran here Jan. 15, more than two weeks prior to the AVG launch:
https://patrickpretty.com/2009/01/15/breaking-news-more-asd-connected-assets-seized-bowdoin-blamed-company-troubles-on-russian-hackers/
And here is a snippet from the story:
“It is clear from the new forfeiture complaint that investigators have interviewed many people, including Bowdoin relatives, and spent considerable time chasing paper. The brackets in the quoted passages below are emphasis we added.
“Mr. Bowdoin and associates [note the use of the plural] 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 [note the plural] 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 [note the use of the word “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.â€
Patrick