SECRET SERVICE: INetGlobal Forced Members To Keep Money In The Company With ‘Automatic Repurchasing’ Scheme; Undercover Agent Sent Email To Support, Which Verified Repurchase Was Mandatory

UPDATED 11:07 A.M. ET (U.S.A.) One of the undercover Secret Service agents who joined INetGlobal discovered that the company had implemented an “automatic repurchasing” program by default and that the program could not be switched off, thus distancing participants — many of whom may not have understood English — from their money.

Although it is unclear when the automatic-repurchasing program began, it was in operation in the weeks after INetGlobal owner Steve Renner was convicted on Dec. 8, 2009, of four felony counts of income-tax evasion, according to court filings.

Other filings show that another Renner company — Cash Cards International (CCI), a money-transmission business  — was upside down by more than $2.5 million when a court-appointed receiver in a Ponzi scheme case sought to convert electronic credits to cash to compensate victims of the scheme.

Beginning on Feb. 1, the Secret Service agent — a woman — repeatedly tried to turn off INetGlobal’s automatic-repurchasing feature, but it “came back on” each time. The agent, who speaks and writes in English, attempted to disable the feature “several times on different days,” failing each and every time, according to an affidavit for a search warrant filed in the case.

INetGlobal had a high concentration of Chinese members who did not speak English, according to the affidavit. How they even could understand the automatic-repurchasing scheme or fully comprehend INetGlobal’s operations and English-language website is far from clear, and has led to questions about whether the company deliberately was targeting members who could not understand what they were purchasing and would have both a language and a geographic disadvantage when seeking explanations or filing complaints with authorities.

The company generated “at least” 87 percent of its revenue from the sale of memberships to members “residing in China,” according to an analysis referenced in the affidavit. The analysis was performed by an unnamed INetGlobal employee.

On Feb. 17, the undercover agent sent an email to INetGlobal customer service, asking if the feature could be turned off.

“Customer service replied in the negative,” the agent said, suggesting that the automatic-repurchasing feature was forcing participants to keep at least 40 percent of their money in the company.

In the affidavit, the Secret Service said a “high level iNetGlobal member” from Nevada was becoming increasingly frustrated by an inability to withdraw funds. The member complained to management that “for over one week [in January] they had been unable to get a money order payment from the company for value they are owed.”

“The victim contacted iNetGlobal’s customer service on several occasions only to get excuses,” the Secret Service said.

Eventually, the victim spoke with former InetGlobal CEO Steven Keough.

Keough, according to the Secret Service, told the victim on Jan. 11 to “cash out” of the system.

“We can’t cash out,” the victim said. “[I]t is not possible, due to mandatory repurchasing built into the system.”

On the very next day — Jan. 12 — Keough, an attorney and former naval officer, met with the Secret Service. He had contacted federal prosecutors Jan. 8 to express concerns about the company’s business practices. His first contact occurred only two months after he was appointed CEO on Nov. 7, 2009, according to the affidavit.

Steve Renner’s Tax Convictions, Link To Previous Ponzi Scheme

Renner was found guilty Dec. 8 of four felony counts of federal income-tax evasion.

Prosecutors said he “diverted substantial funds” from CCI between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments.

CCI, which once served as a money-transmitter for a California Ponzi scheme known as “Learn Waterhouse,” used the same office facility in Minneapolis as INetGlobal, the Secret Service said.

When a court-appointed receiver in the Learn Waterhouse case attempted to get Renner to return money due Ponzi scheme victims, he explained that he could not do so because it had been “invested,” according to the affidavit.

Thomas Lennon, the receiver in the Learn Waterhouse case, met with Renner, who “provided . . . financial statements indicating that the assets of Cash Cards and Renner are insufficient to cover all outstanding vcredit balances and obligations to other creditors.

“Specifically, the statements show that Cash Cards and Renner have assets with an estimated value of $2,946,000 and an outstanding v-credit liability of $5,450,000,” Lennon said in court filings in 2007. “Renner has also informed the Receiver that he is currently being audited by federal and state taxing authorities which may result in large additional liabilities and liens on his property.”

Lennon’s name is well-known among victims of financial crimes. He also was the court-appointed receiver in the 12DailyPro autosurf Ponzi scheme.

Repurchasing programs, which autosurf operators employ to minimize the outflow of cash, are one of the oldest tricks in the Ponzi book. “Trainers” for Florida-based AdSurfDaily, implicated in a $100 million Ponzi scheme, routinely pushed a so-called “80-20” program whereby members would remove no more than 20 percent of money they were due and plow 80 percent back into the surf.

In June 2009, AdViewGlobal, an autosurf with close family, management and promotional ties to ASD, announced it was ceasing payouts and making an 80/20 program mandatory should payouts ever resume. AdViewGlobal promptly crashed and burned.

In January, according to the affidavit, Keough told investigators that he could not make sense out of what was going on inside INetGlobal and had observed instances in which Renner appeared to be gaming the payout system.

“Keough said he was concerned that large amounts of money were flowing through bank accounts related to iNetGlobal and that unusual system manipulation was being conducted by . . . Renner,” the Secret Service said. “Keough had recently been fired by Renner. Keough believed he had been fired because he continually questioned iNetGlobal’s business practices.”

On Jan. 20, according to the Secret Service, the agency received information that TCF National Bank was closing the accounts of a Renner entity known as Inter-Mark Corp. after an investigation by the bank led to “suspicions that the activity in the accounts might be money laundering,” according to the affidavit.

“TCF Bank had given notice to Renner that the accounts were going to be closed,” the Secret Service said. It is unclear if Renner ever advised INetGlobal members that the bank had closed the accounts, citing suspicions they were being used to commit crimes.

TCF prepared a cashier’s check for “for a little over $5 million,” presenting it to a Renner employee.

Later that day, the check was deposited into Bremer Bank, which also held Renner-connected accounts, according to the Secret Service.

Balances in Renner-connected accounts began “moving up sharply in August 2008,” the Secret Service said.

August 2008 was the month in which the Secret Service raided the headquarters of ASD — and the month in which Renner’s autosurf was coming onto the stage. Golden Panda Ad Builder, a surf that is part of the ASD litigation, positioned itself as a company that sought to cater to Chinese members.

Golden Panda’s operator — Clarence Busby — was implicated by the SEC in a prime-bank investment scheme in the 1990s, the same sort of scheme that engulfed Learn Waterhouse and later resulted in the determination that Renner’s CCI money-services business was impossibly upside down because he had used customers’ money to make personal purchases.

INetGlobal issued a statement yesterday that acknowledged the Secret Service probe, but did not mention Renner’s tax conviction in December or the trouble he encountered when he could not fund a payment to the Learn Waterhouse receivership estate in the Ponzi case.

“iNetGlobal offices will remain open to provide support to our 1,000’s of customers from around the world,” the company said. “iNetGlobal will continue to provide the level of quality service our customers have come to expect now and into the future.

“We would like to thank all of our Members and Customers for their support and well wishes in this trying time,” the company said.

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12 Responses to “SECRET SERVICE: INetGlobal Forced Members To Keep Money In The Company With ‘Automatic Repurchasing’ Scheme; Undercover Agent Sent Email To Support, Which Verified Repurchase Was Mandatory”

  1. It’s a shame they already appointed a receiver. I’m betting the RLG could have done it much better and with less “administrative costs”, much like his plans for the ASD forfeited monies. Oh well…

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  2. Don: t’s a shame they already appointed a receiver

    Hi Don,

    As a point of clarification, no receiver has been appointed in the INetGlobal case.

    The receiver referenced above — Thomas Lennon — was a receiver in an SEC Ponzi case in which a determination was made that CCI, a Steve Renner-operated business, had provided money-transmission services for the Ponzi scheme and that Renner had spent customers’ money as though it were his own, thus reducing the amount of compensation victims of the Ponzi scheme could receive.

    It’s worth mentioning again that Lennon also was the receiver in the 12DailyPro Ponzi scheme case and that both ASD and 12DailyPro are referenced in the INetGlobal case — and that the various schemes were promoted by people who were members of all of the schemes.

    They continued to promote even after the earlier schemes were busted or collapsed.

    Looking at it as a map, it would look something like this:

    12DailyPro >> PhoenixSurf >> CEP >> ASD et. al. >> AdPacs (precursor to INetGlobal) >> INetGlobal >> Megalido >> Noobing >> AdViewGlobal.

    Patrick

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  3. admin: Looking at it as a map, it would look something like this:

    12DailyPro >> PhoenixSurf >> CEP >> ASD et. al. >> AdPacs (precursor to INetGlobal) >> INetGlobal >> Megalido >> Noobing >> AdViewGlobal.

    I think you can insert egold in there at some point.

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  4. Oops, I misread it.. But, still… Bob could always do a better job than anyone else. Just ask him.

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  5. Tony H: I think you can insert egold in there at some point.

    Hi Tony,

    And maybe BizAdSplash and AdGateWorld, too — and others. Some of the ASD/Golden Panda people are promoting Narc Thar Car and Data Network Affiliates.

    Patrick

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  6. And Regenesis2x2, too.

    Patrick

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  7. Interesting that the payment processor mentioned was insolvent to the tune of almost half their liabilities. Kind of makes you wonder how much processors like Solid Trust Pay and Strict Pay have compared to how much their members have on account with them, don’t you think? I may be wrong, but E-Gold is the ONLY gold game payment processor I can think of that has ever been investigated by authorities that actually did have enough money in the till to p[ay everyone off who had an account.

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  8. as of this writing the site is still down, but Patrick, I will point out that at the upper right hand top of the page is a translator button. I beleive the site can be converted over to Chinese, Russian, English and Spainish. After you posted this thread, I check and pushed the Chinese link and the site did convert to Chinese I think? Also, I believe Inetglobal, did have a local number in China, that would connected to the home office in Minneapolis for Customer service.

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  9. just sick of it: as of this writing the site is still down,

    just sick of it,

    The site appears to be back up now — and I do see the translator button.

    I can’t translate Chinese, so I don’t know what it says and I don’t know what Chinese viewers would see if they logged into INetGlobal.

    Patrick

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  10. Quick note:

    I clicked on the “Surf Demo” tab on the site in Chinese. First ad that loaded was in English. My unofficial count was that eight of the 10 ads I viewed on the Chinese site were in English, which made me wonder if U.S. advertisers were receiving any value from ads viewed by INetGlobal members who could not read or speak English.

    It also made me wonder what value Chinese members received if English-only viewers could not read the ads in Chinese.

    I did not see a button that Chinese members could use to translate the English ads into Chinese or English members could translate into Chinese — but I could have missed it.

    After viewing the first 10 ads, I viewed a few more. One was an ad in English for INetGlobal itself, and another appeared to be a repeat of an English-language ad that ran in the first 10, and there was an ad in Russian.

    Some of the issues raised by the Secret Service in the INetGlobal filing are similar to issues raised in the AdSurfDaily filing, with respect to the value of the advertising.

    The Secret Service also pointed out that only two people among a crowd that mostly consisted of Chinese at an INetGlobal function raised their hands when asked if they had a business.

    That reminded me of the ASD case, because the prosecutors can use such information in a bid to demonstrate the company was not a real “advertising” company — but instead was selling an investment program.

    Patrick

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  11. Great article Pat, once again you sort it all out. Thanks for the info.

    Mark

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  12. I’m posting my message everywhere, On every blog, on every thread, on every webpage I can find… So no one else will get scammed like me and my friend and my family and my room mates… And all my downlines…

    DO NOT JOIN INETGLOBAL!!! DO NOT JOIN INETGLOBAL!!!! DO NOT JOIN INETGLOBAL!!!!!

    It’s a scam, 100%!!!! I wish I never joined them. When me and my friend first joined, we were promised big bucks for just clicking on a few ads a day. At least $8 US minimum, plus whatever our downlines click. You know how much we are getting a day? Take a wild guess!!!! $1 to $2 a day, plus we have to pay back $40 per month from their stupid automated repurchasing plan!!!!! That means we make pretty much $0 dollars a month!!!!

    Inetglobal is B.S. I hope they’re found guilty. It’s been 4 months now, And I have not received my V-Cash card, nor have I seen a single penny. 4 MONTHS ok??!!!! How long does it take to send something from the states? A week or 2? What a waste of my $2060. I hope that Steve Renner guy rots in jail because that’s where he belongs. I just hope the FBI will use the money they froze from his account to pay us something back.

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