FBI CHIEF: ‘Major Threats’ Emerging From ‘Stored Value’ Debit Cards And ‘Shell Corporations’; ‘Shadow Banking System’ Has Exploited Vulnerabilities

EDITOR’S NOTE: Autosurf or HYIP promoter? White-collar fraudster of another stripe? Fan of “stored value” debit devices used in the context of well-publicized,  fraudulent business models? Owner of a “shell” company used to disguise the ownership of funds? Figure you’re smarter than the cops and that you’ve perfected your form of deceit as you pocket commissions and other payments based on that deceit?

The director of the Federal Bureau of Investigation was talking about you in his testimony Wednesday before the House Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies. He said you were making it harder for the FBI to do its job and making it easier on people who might want to do harm to the country’s financial system and the country itself.

He didn’t mention your name, of course. But Robert Mueller III did ask for an additional budget outlay of $306.6 million next year as a means of neutralizing you before you could cause any more damage to the financial system and the national security of the United States.

And here, all along, you thought he didn’t know, that the agents who serve under him didn’t know.

They know. Call it anything you like — an “advertising” business, a financial “game,” a nontraditional investment that yields a high return, a new form of “gambling” or “arbitrage,” a multifaceted, multilevel-marketing program that pays a return based on visiting websites and recruiting other participants, a program for “good Christians” — and they still know.

Tell your prospects that the government doesn’t understand either the program or the technology in use — and they still know.

The reason they know is because they’ve seen it all before, watched it evolve, watched the changing explanations and terminology, watched the testimonials, watched the attempts to purify the “opportunities.” What they didn’t know, perhaps, was how devoted you were to your own criminality, how willing you were to put lipstick on a pig, how willing you were to be willfully blind to the obvious financial and security dangers to your neighbors because the money was just too good.

They know now, though — and they also know about your criminal cousins who conduct equally vile businesses and perhaps have ties to the Mob and other groups of organized criminals, perhaps even terrorist organizations.

Quick! Name your autosurfing or HYIP neighbor! What does he do at 3 a.m., when you’re sleeping? Are your commissions worth the risk he potentially poses to the security of the banking system and to the United States itself? What if he’s a [fill in the blank]? What if he’s amassing money to buy [fill in the blank?] What if he’s using the ATM machine to [fill in the blank?]

Is the Cadillac you bought with commissions from a [fill in the bank] worth it? Will it be worth it when it gets seized as the proceeds of a criminal enterprise — and your neighbors wonder aloud how you ever became involved in a criminal enterprise? Will it ring hollow when you try to explain that you didn’t know you were involved in a criminal enterprise — or will it look like an attempt to mask your criminality?

Mueller proposed an additional $232.8 million for salaries and expenses and $73.9 million for construction. If approved, the outlay would create 812 new positions, including 276 special agents, 187 intelligence analysts and 349 professional staff.

Why is the agency seeking a larger outlay? Because the “additional resources will allow the FBI to improve its capacities to address threats in the priority areas of terrorism, computer intrusions, weapons of mass destruction, foreign counterintelligence, white collar crime, violent crime and gangs, child exploitation, and organized crime. Also included in this request is funding for necessary organizational operational support and infrastructure requirements; without such funding, a threat or crime problem cannot be comprehensively addressed.”

The FBI, Mueller said, “saw an unprecedented rise in the identification of Ponzi and other high yield investment fraud schemes, many of which each involve thousands of victims and staggering losses — some in the billions of dollars.”

New threats such as “stock market manipulation via cyber intrusion” also are emerging, Mueller said.

Here, below, is the verbatim statement of Mueller when he was talking about you and other fraudsters. Note that he described you as a criminal, not a vastly misunderstood business person in an exciting, new arena that only few people understand. We have added the emphasis . . .

Robert Mueller III“Money laundering allows criminals to infuse illegal money into the stream of commerce, thus manipulating financial institutions to facilitate the concealing of criminal proceeds; this provides the criminals with unwarranted economic power.

“The FBI investigates money laundering cases by identifying the process by which criminals conceal or disguise the proceeds of their crimes or convert those proceeds into goods and services. The major threats in this area stem from emerging technologies, such as stored value devices, as well as from shell corporations, which are used to conceal the ownership of funds being moved through financial institutions and international commerce.

“Recent money laundering investigations have revealed a trend on the part of criminals to use stored value devices, such as pre-paid gift cards and reloadable debit cards, in order to move criminal proceeds. This has created a “shadow” banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers.

“This has impacted our ability to gather real time financial intelligence, which is ordinarily available through Bank Secrecy Act filings. Law enforcement relies on this intelligence to identify potential money launderers and terrorist financiers by spotting patterns in the transactions conducted by them.

“The void caused by the largely unregulated stored value card industry deprives us of the means to collect this vital intelligence. Moreover, stored value cards are often used to facilitate identity theft. For example, a criminal who successfully infiltrates a bank account can easily purchase stored value cards and then spend or sell them. This readily available outlet makes it much more unlikely that the stolen funds will ever be recovered, thus costing financial institutions and their insurers billions of dollars each year.”

Here is another snippet from Mueller talking about you . . .

“The FBI focuses its efforts in the securities fraud arena on schemes involving high yield investment fraud (to include Ponzi schemes), market manipulation, and commodities fraud. Due to the recent financial crisis, the FBI saw an unprecedented rise in the identification of Ponzi and other high yield investment fraud schemes, many of which each involve thousands of victims and staggering losses — some in the billions of dollars.

“With this trend and the development of new schemes, such as stock market manipulation via cyber intrusion, securities fraud is on the rise. Over the last five years, securities fraud investigations have increased by 33 percent.”

We’ll close this column with a question or two for you: Did you really think that agencies such as the FBI and the U.S. Secret Service were going to sit back and watch you do this forever?

Did you really think that you had no exposure as a promoter because you always could blame it on your upline and engage in willful blindness as you proceeded from program to program to program, dragging your downline with you from pig to pig to pig as you demonstrated your relentless willingness to paint with lipstick?

Final note: They also know that some of you are penny-stock manipulators, tax-deniers, “sovereigns” and underground “credit-repair” specialists. Just a guess on our part, but we figure Andy Bowdoin’s lasting legacy to the “industry” will be as the man responsible for its long-overdue destruction.

Records show that Bowdoin formed company after company, established corporate shells potentially with co-conspirators,  and that ASD and other knockoff autosurfs used “stored value” debit cards, unregulated or lightly regulated payment processors and money-services businesses, and other means to immerse themselves in the shadow banking system.

The destruction of these miserable and dangerous “industries” is not going to happen overnight — but it is happening. The FBI, the U.S. Secret Service, the Justice Department, the SEC, the CFTC, the FTC, the U.S. Postal Inspection Service, the IRS and other agencies at the federal, state and local levels are going to make it happen.

It’s going to happen because it has to happen. There never has been a worse time to be a white-collar criminal. The public at large wants to put you in jail and will not turn you into a folk hero as it did for Bonnie and Clyde and John Dillinger.

You remind the public of Bernard Madoff, and it — the “it” being comprised of the vast majority of Americans and citizens of other countries who celebrate common decency and support the rule of law — simply is not willing to cut you any slack when you’re picking the pockets of your neighbors or the fellow congregants at your place of worship.

Indeed, the public has seen all it is willing to take, and could not care less that you got your money without the benefit of a gun.  To the public, you’re worse than Bonnie and Clyde, worse than Dillinger himself, who robbed in the plain light of day.

Robert Mueller wants to hire 276 more G-men and G-women  and 187 intelligence analysts — just to come after you and your criminal cousins.

About the Author

16 Responses to “FBI CHIEF: ‘Major Threats’ Emerging From ‘Stored Value’ Debit Cards And ‘Shell Corporations’; ‘Shadow Banking System’ Has Exploited Vulnerabilities”

  1. While I am in complete agreement with Mr Muellers’ observations, I fear it will not be acted upon with any conviction by his political masters until their hands are forced by the exposure of a large scale financial pipeline between a “major” criminal or terrorist organization and HYIP ponzi frauds.

    I have, for a long time felt that the major obstacle to more effective policing of the rapidly growing ‘net fraud “industry” could be defined as a lack of political will, rather than any shortcoming/s within investigative agencies.

    Long term observers of the “scene” have often pointed out the number of repeat offender “usual suspects” who have blatantly operated with impunity in full public view for years. This despite the growing number of highly profile “busts”

      (Quote)

  2. Patrick:

    Superior piece as always. It is gratifying to know at long last the agencies are taking this crime wave seriously. No longer do we have an uninterested ear when informing these agencies about the scams that are operating. While it will take time for them to ramp up to handle a lot more cases than they can at present; they are ramping up. Many still will get away with their crimes compared to those they stop, but the gap is closing.

    Conmen are for the most part sociopaths. They don’t think what they are doing is wrong. While you want to believe this news will send a chill down the spine of these criminals, alas it will not. Instead this news will have little or no effect on them to stop what they are doing, or from starting new scams. This is good news for instead of them going away, we can put them away; and hopefully for a long, long time.

    What hopefully will happen with this news is the “promoter’s” of these scams will take this to heart, not be such a willing participant and going from scam to scam as they do now. At least they have been warned.

      (Quote)

  3. the FBI saw an unprecedented rise in the identification of Ponzi and other high yield investment fraud schemes, many of which each involve thousands of victims and staggering losses — some in the billions of dollars.

    Someone forgot to tell IC3. Their estimate went from about $200 million to $500 million….which does not square with losses in the billions (even excluding Madoff).

      (Quote)

  4. littleroundman: Long term observers of the “scene” have often pointed out the number of repeat offender “usual suspects” who have blatantly operated with impunity in full public view for years.

    Here’s a good example of that –
    http://www.ecommerce-journal.com/news/11437_lr

    Liberty Reserve is one of the ponzi friendly payment processors who have filled the gap left by egold when it was investigated a few years back. Some have speculated that Vladimir Kats aka Ragnar Danneskjöld is the owner of Liberty Reserve.

      (Quote)

  5. littleroundman: I have, for a long time felt that the major obstacle to more effective policing of the rapidly growing ‘net fraud “industry” could be defined as a lack of political will, rather than any shortcoming/s within investigative agencies.

    Hi LRM,

    I largely agree with your analysis — and not just the part I quoted above.

    If I were a sitting on a barstool sandwiched between barstools occupied by President Obama and GOP Leader Sen. Mitch McConnell and sharing a bowl of peanuts with them, I’d advise them that the merciless destruction and dismantling of Ponzis and HYIPs in both traditional and Web-based forms would give both parties a political win — a win for the entire country.

    The climate is right; the issue is “safe,” and there is no Third Rail. Only the fringe elements on the extreme far right or extreme far left or extreme Libertarians would see it any other way. The only constituency of the extremist thinkers is their fellow fringers and, in a strange way, people who aren’t really extremists but come off that way because it’s too painful for them to admit they’ve been conned, so they conflate an extreme reality.

    Most of those folks eventually came back to earth, I believe.

    If I were advising the Top Dogs of either party, I’d tell them to run away at top speed from anyone who constructs a bizarre theory that all commerce is lawful and that surf/HYIP Ponzi schemes are OK because “Social Security is a Ponzi scheme.”

    Meanwhile, I’d tell them to run away at top speed from anyone who constructs a bizarre theory that people who fly planes into buildings to kill IRS agents or start spraying gunfire at courthouses and museums have to be understood in context.

    The public on both sides of the political divide is fed up with fraud. Spotlighting these cases and going after the fraudsters is a bipartisan undertaking that gives the public something to cheer about while providing the agencies an opportunity to shine.

    The PR risk to both parties is in this question: Why wasn’t it done before things got out of hand?

    My view is that the public will concern itself less with that question if it is shown how to connect the dots and starts seeing taxpayer-financed results; I’d be tempted to put the results all under one roof — a special website designed for the singular purpose of letting the agencies showcase fraud arrests/indictments/lawsuits and other actions.

    The Financial Fraud Enforcement Task Force does not seem to have its own, singular website or brand identity. Or, if it does, the public doesn’t know about it. I think it would be good to make it one of the most important government brands — and give it an easy-to-remember URL that will become a “destination” site.

    Something simple: FraudForce.gov. Hell, it might motivate the TV people to turn it into a crime drama with storylines ripped from the headlines.

    The agencies that comprise the Task Force can announce the news on their own websites — while at once publicizing the link to the Task Force site, which would have a unique news release on the same case.

    Now — while I’m talking about a perfect-world approach — I’d like to add a suggestion:

    The agencies need to go lighter on agency jargon and start presenting the news in the first paragraph of their news releases.

    I’ve seen Justice Department releases from U.S. Attorneys that spend the first one or two paragraphs announcing who is announcing the news, rather than leading with the news and then identifying the key players and wrapping in their comments.

    Reporters are accustomed to wading through all of that, of course. But the web audience in general is not. The government buries the lede in far too many cases. It doesn’t matter what party is in charge of the White House. Both major U.S. political parties bury the lede when their person is running things. :-)

    As for the agencies: The SEC, for example, produces good news releases. They can be improved, however, by excising the jargon.

    Here is an example from today of the SEC actually leading with the news — it almost always does — but then getting caught up in jargon that is meaningless to the public at large:

    “The SEC’s complaint alleges that McAdams and Freeman have violated the antifraud provisions of the federal securities laws, Sections 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s complaint seeks (i) a permanent injunction against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of financial penalties.”

    Scrap that. Put it in plain language — just like the rest of news release, which relates compelling information. No need to get into “thereunders” and “Sections” and the numbers and subsections of “Sections.” It’s not a legal brief; it’s a news release.

    Here is an example from the U.S. Attorney from the Southern District of New York of the same thing. Mind you, I’m a big fan of Preet Bharara, and his office seems to be doing exceptional work and has an amazing mix of cases.

    I wish, however, that his writers — who put out otherwise impressive stuff — would bag this style of lede:

    “PREET BHARARA, the United States Attorney for the
    Southern District of New York, NEIL M. BAROFSKY, the Special
    Inspector General for the Troubled Asset Relief Program
    (“SIGTARP”), JAMES T. HAYES, JR., the Special Agent-in-Charge of
    the New York Office of the Department of Homeland Security Bureau
    of Immigration and Customs Enforcement (“ICE”), RICHARD H.
    NEIMAN, the Superintendent of the Banks of New York (“NYSBD”),
    GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the
    New York Office of the Federal Bureau of Investigation (“FBI”),
    and JON T. RYMER, Inspector General of the Federal Deposit
    Insurance Corporation (“FDIC-OIG”), announced the arrest this
    morning of CHARLES J. ANTONUCCI, SR., the former President and
    Chief Executive Officer of The Park Avenue Bank, on allegations
    of self-dealing, bank bribery, embezzlement of bank funds, and
    fraud, among others. ANTONUCCI also was alleged to have
    attempted to fraudulently obtain more than $11 million worth of
    taxpayer rescue funds from the Troubled Asset Relief Program, or
    TARP. ANTONUCCI is the first defendant ever charged with
    attempting to defraud TARP.”

    Me? I would have led with the crimes alleged and Antonucci’s name. He was the news.

    I understand why they lay it out this way and, as a longtime reporter, I expect to see it that way. But plenty of people who visit the Justice website are not reporters. The presentation will weigh them down, and they may not get beyond the announcement of who was announcing the news before feeling fatigued.

    I’m aware, of course, that my criticism is minor in the grand scheme of things and, in all fairness, the news release about Antonucci was very, very good in other ways.

    But I do think the public has a high appetite for news about fraud, but needs a little more help in understanding the issues. To me, it’s a bipartisan, political “winner” in the sense that it has currency among both Dems and Republicans and allows both sides to claim victory. It’s also the right time in history to get downright medieval on these scammers.

    The opportunity here for both parties is to usher in a new age of trust for government. Lead with the news; not the credit. Distribute the credits throughout the news releases and lay it out for the reporters who don’t specialize in reporting on highly complex fraud schemes. They’ll do a better job of informing their readers. Many — if not most — of these cases are highly complex.

    Both political parties can gain from favorable PR by just pounding the daylights out of the fraudsters. (No, I don’t mean beating the fraudsters with rubber hoses or causing them phyisical harm; I mean keeping them in the headlines.) The fraudsters only constituency is other fraudsters and/or crackpots, including the folks who are only temporary crackpots, not true delusionals.

    It’s my hope that the GOP is not afraid of giving Obama the opportunity to look good in ANY context, as the parties engage in warfare in the usual political trenches. I’d feel the same way if a Republican were in the White House; I would worry that the Dems were afraid to give him credit in any context.

    If George W. Bush mispronounced a word, it was treated as though it were a national scandal; if Obama postpones a trip to Indonesia because he wants to be close to home during the Health Care vote, it’s treated as though it were a national scandal.

    These HYIP and Ponzi messes need to be punished by the legal equivalent of flame and then doused, with the media present to report on the embers, smoke and ruins.

    Let both parties do it — and let both parties take credit for doing it.

    The GOP should do it if, for no other reason, than not to look soft on crime or blissfully ignorant while Rome is burning.

    And the Dems should do it if, for no other reason, than to demonstrate that they actually do understand Big Numbers.

    Politicians from both parties should not erect roadblocks that affect the agencies’ abilities to go out and clean up Dodge. Dodge needs cleaned up in the worst sort of way.

    Patrick

      (Quote)

  6. These ponzis and the like are small time compared to financial institutions actually aiding true criminals such as these:

    http://www.dslreports.com/forum/r19620593-Ebook-websites-fraud-charges-DevbillDigitalAgePluto

    What exactly is the US going to do to the russian mob and the like that are perpetrating the above?

    That’s where these ‘stored value devices’ are used the most.

      (Quote)

  7. Whip: These ponzis and the like are small time compared to financial institutions actually aiding true criminals such as these:

    That’s a commonly held view with which I would disagree most strongly.

    Catching out a big bank a Bowdoin or a Madoff may be more newsworthy and provide more PR opportunities, but, IM(very)HO, the amounts involved will pale into insignificance if and when the true extent of the ‘net fraud “biz” and “playas” come to light.

    In my experience, the HYIP ponzi “industry” is light years ahead of regulators in deliberately remaining “under the radar”

    Even the most casual long term observer of the “scene” knows the shortcomings of ic3 and similar agencies.

    Further to Patricks’ excellent observations above on the Gobbledygook which masks the true criminal nature of these enterprises, consider the opening paragraph on “ic3s” own website:

    “IC3’s mission is to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime. The IC3 gives the victims of cyber crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. For law enforcement and regulatory agencies at the federal, state, local and international level, IC3 provides a central referral mechanism for complaints involving Internet related crimes”

    HYIP ponzi “playas” know only too well that “ic3” and similar facilities operate primarily as databases whose “red flag” mechanisms are normally only triggered when 1)a predetermined money value being exceeded 2) A predetermined number of complaints is received.

    Which is why “smart” playas will run 20, 30 or 40 scams at a time, each raking in <$10,000 rather than single $10,000+ scams.

    Any computer savvy teenaged "playa" operating from his or her bedroom could make a very tidy income with virtual impunity as things stand.

    With that said, the potential for large scale hard core criminal and/or terrorist activity is almost too frightening to consider.

      (Quote)

  8. Great article as usual Pat. From your point of view the info and facts are excellent, tragic but excellent stuff. I’ve recently dropped Pecunix and c-gold from our magazine because of too many ponzis. Nothing to do with Law Enforcement, just got sick of associating my web with such business.
    http://www.dgcmagazine.com/blog/index.php/2010/02/18/e-gold-is-quiet-but-the-investment-scams-and-fraud-continue/

    Your quote: “The reason they know is because they’ve seen it all before, watched it evolve, watched the changing explanations and terminology, watched the testimonials, watched the attempts to purify the “opportunities.” What they didn’t know, perhaps, was how devoted you were to your own criminality, how willing you were to put lipstick on a pig, how willing you were to be willfully blind to the obvious financial and security dangers to your neighbors because the money was just too good.”

    Wow, right on the money, I got chills reading that one. It’s black and white to me, either you are a big fat scammer….or you are not. We’ve all seen this shit before.

    Great article.
    Mark

      (Quote)

  9. I’ve recently dropped Pecunix and c-gold from our magazine because of too many ponzis. Nothing to do with Law Enforcement, just got sick of associating my web with such business.

    Great news Mark. Every little bit helps

      (Quote)

  10. Thank God for The Shadow Economy and Shadow Banking System!

    Good summary, Pat. It really makes you think. We pretty much had the same set of issues when I was the CEO at HushMail. Many scammers and crooks would use the encrypted email service to hide their tracks and we responded to about 125 government subpoenas per week. Political prisoners in Tibet were also the users of HushMail so I felt good about providing a liberating service to many in the world.

    What many people fail to realize, however, is that financial privacy is just as fundamental as communication/email privacy. Look at the Jews under Hitler. It is a right (and not to be taken lightly). It matters not that other miscreants use the service because we are just laying the rails. Scammers and crooks use the telephones and mail, but we don’t blame the phone companies or the US Post Office. Also, the underground economy is full of people using Bernanke’s Fed Reserve notes but we don’t blame the Fed for the kidnappers, drug dealers and child pornographers dealing in paper $100 bills.

    Anonymous, untraceable digital cash is a fundamental right of financial privacy. RESIST DIGITAL MONEY…Unless it’s anonymous.

    —Jon
    http://themonetaryfuture.blogspot.com

      (Quote)

  11. Here’s an article introducing c-gold from 2007 when it first started operating. Authored by someone called “Mark” (no surname).
    http://www.everyjoe.com/articles/introducing-c-gold-digital-gold-currency-162/

    Mark Herpel: I’ve recently dropped Pecunix and c-gold from our magazine because of too many ponzis.

    Yes every little bit helps. I remember seeing assurances from “Robert” (the person behind c-gold) that he would not allow illegal activity on c-gold. Did the ponzi scammers/operators start using c-gold after all?

    Pecunix – that was one of the entities named in the OsGold law suit, along with ponzi friendly payment processor operator, Graham Kelly of GoldNow.

    Mark Herpel: just got sick of associating my web with such business.

    I don’t know how long c-gold has allowed ponzi operators, but the ponzi lawsuit against Pecunix was several yeas ago. Why did it take so long to stop associating with such businesses?

    Something that has puzzled me for a while – back in about 2004 or so, a “Mark Herpel” identified himself with an operation called the Phoenix Dollar. Are you the same person? If so, were you happy then to associate yourself with a ponzi friendly operation?

    The Phoenix Dollar was attempting to be a ponzi friendly payment processor and was owned by someone sometimes called Gordon Hayes. Gordon also owns Katz Global which at the time was the ponzi HYIP web host of choice. Gordon eventually changed his mind, Katz stopped actively hosting ponzi HYIPs, Phoenix Dollar didn’t take off.

      (Quote)

  12. Jon Matonis: Scammers and crooks use the telephones and mail, but we don’t blame the phone companies or the US Post Office. Also, the underground economy is full of people using Bernanke’s Fed Reserve notes but we don’t blame the Fed for the kidnappers, drug dealers and child pornographers dealing in paper $100 bills.

    That argument is another old, common one. However there are web hosts and payment processors that actively allow ponzi HYIPs to use their services. There are some that advertise their services to the ponzi HYIP operators on ponzi friendly web sites. They are actively encouraging and profiting from fraud and should be prosecuted as such.

      (Quote)

  13. Tony H, good observation:
    (Tony) Did the ponzi scammers/operators start using c-gold after all?
    Yes, it appears so, after much to do about not permitting scams, I was finding them through Google keyword alerts. So I made a personal decision to drop them from the magazine.
    (Tony) Why did it take so long to stop associating with such businesses?[regarding Pecunix]
    They are not a company which issues 3-5 press releases a week and supports chat or a wiki.I don’t read the HYIP BBs or forums. It’s VERY hard to reach the operators for comments, statements or insight. We don’t communicate with them on a regular basis. My information on “who” they are doing business with is 100% from Google’s alerts. I’ll point you to my blog:
    http://www.dgcmagazine.com/blog/?s=pecunix&submit-2=go
    March 4th, 2009 Pecunix Scam Warning Screen, http://www.scribd.com/doc/12979560/PecunixWarningScreenJanuary08 this is an article from January 2008 where the company[Pecunix] created a screen that pops up if you are making a spend to an identified Pecunix account which may be a scam. They were taking a pro-active approach and giving consumers a head-up about possible scams. In our world, where I agree with Jon, anon digital currency is our right, that move by Sidd was enough to for me to show that they did not side with the ponzis. These DGC operators don’t have to do anything for me except give me the finger, I mean they more often than not– never even return my email. As Pecunix has been for years one of the absolute best Digital Gold Currency businesses in the world and continues to be so today, it is very hard for me to cut them out. However, I recognize just what Patrick has said and I agree “we’ve heard it all before”. If your business is a considered a scam in America, 99.999% chance it’s a scam in another country. I don’t want the magazine to be associated with scams. Let me make it real clear, the magazine is free, it does not generate income or profit from any of the businesses show in it, there are no referral links in it either. If you look, there was only two other posts in the past past year on my blog and one of them is a warning to Pecunix.http://www.dgcmagazine.com/blog/index.php/2010/01/02/trouble-ahead-for-pecunix/
    It’s not my job to watch each account, company or action to sort out fraud. Situations around the world change, laws change and my opinion may also change with the time.
    I get the Google Keywords alerts for Pecunix and all DGCs. Up until e-gold went dark, Pecunix was not showing any real ponzi participation. Now if you want to mention some previous lawsuit from I don’t know how many years ago, that is your right or your opinion, but each day for the past many years, I’ve read each and everyone of the Google “Pecunix” alerts and as compared to say “Liberty Reserve” which is the currency king of ponzis, Pecunix has VERY FEW alerts until recently. Hence my change in attitude.

    Phoenix dollar? Yes, that was me and I’m proud to say I supported the Phoenix Dollar, I like Gordon and still today have my original silver piece. Now, you know so much about the Phoenix dollar, Gordon and Katz please supply us with one or more Civil lawsuits claiming fraud, Criminal Charges against Gordon, Phoenix or Katz, or anything of a law enforcement theme showing Phoenix Dollar was ever even accused of a crime by any law enforcement organization? Isn’t Katz still in operation today?

    Tony’s quote below:
    “…However there are web hosts and payment processors that actively allow ponzi HYIPs to use their services. There are some that advertise their services to the ponzi HYIP operators on ponzi friendly web sites. They are actively encouraging and profiting from fraud and should be prosecuted as such. ”
    I absolutely agree with you here Tony and I’ve said something similar for years now. Unfortunately, as you well know, if your scam operation did not get too big, you slide under the Law Enforcement pole. That seems to be changing as gov regs catch up with the technology. I’ve always told agents, operators and retailers to turn away from scams and ponzis.
    Mark

      (Quote)

  14. Mark Herpel: I was finding them through Google keyword alerts. So I made a personal decision to drop them from the magazine.

    Perhaps you need to change your method of researching the companies you write about in your magazine. This is a fluff piece written in June 2009:
    http://www.americanchronicle.com/articles/view/106882
    After what happened at e-gold I would have expected some questions on how they handle HYIP ponzis using their services. But I guess c-gold were not showing up any google alerts back in June.

    Mark Herpel: I don’t read the HYIP BBs or forums.

    That is understandable. When viewing posts at talkgold etc, it’s like trawling through a sewer.

    Mark Herpel: I’ll point you to my blog

    Thanks for the link. I found this story interesting:
    http://www.dgcmagazine.com/blog/index.php/2008/12/23/adding-more-layers-to-the-feds-ponzi/

    Fed up with the Fed? Try Pecunix digital gold currency or Webmoney.

    Do you still believe that Pecunix is a better alternative to the “Fed”? Or was it Google alerts that changed your mind again?

    Mark Herpel: I don’t want the magazine to be associated with scams.

    That is good to hear. I hope that you do not make the same mistakes that you appear to have made in the past. For example, the Phoenix Dollar was going to be the payment processor of choice for two obvious ponzi schemes. However, the schemes collapsed or went “private” before it took off, and then Gordon announced that ponzi HYIPs were not allowed.

    Mark Herpel: Now, you know so much about the Phoenix dollar, Gordon and Katz please supply us with one or more Civil lawsuits claiming fraud, Criminal Charges against Gordon, Phoenix or Katz, or anything of a law enforcement theme showing Phoenix Dollar was ever even accused of a crime by any law enforcement organization?

    The Phoenix Dollar didn’t really take off, and Gordon seems to have cleaned up his act with regard to Katz. However, law enforcement seems to have been concentrating on the ponzi operators like Bowdoin & Renner, or the payment processors like e-gold, e-bullion and emocorp. Unfortunately the ponzi friendly web hosts seem to be flying below the radar at the moment.

    Mark Herpel: I’ve always told agents, operators and retailers to turn away from scams and ponzis.

    Did you tell this to Gordon in 2004? Back then he was well aware of the fact that HYIPs are scams and he was willing to profit from them.
    http://www.mail-archive.com/e-gold-list@talk.e-gold.com/msg14995.html

    From our experience, we have seen a lot of hyip scams and some that payout on time. We have put up stronger pricing enforcement for such sites becasue of the people who hit and run on our servers.

      (Quote)

Leave a Reply