FBI Director Again References ‘Shadow Banking System’ In Congressional Testimony; Warns About ‘Homegrown Violent Extremists’ And ‘Lone Actor’ Terrorists

EDITOR’S NOTE: Still selling autosurfs and HYIPs? Quick! Name your autosurfing neighbor, his or her neighbors, the source of their funding — and describe their intent. Do you even know the names of the program owners, the venues from which they operate and the sources of their funding? How many companies do they own? How many bank accounts do they control? How do they keep their books? Do they truly know their own customers? Has your need to believe you could not possibly be doing business with criminals affected your ability to think things through clearly?

Getting paid via a debit card or an offshore processor? Ever ask why? Has your “due diligence” ever gone beyond parroting what you’ve been told by others? Have you ever really peeled back layers of the onion, looked for connections to other schemes and performed anything other than cursory research? How many “bad apples” do you think you might find in a barrel of tens of thousands of members, especially if the barrel exists in a business universe already infamous for shadowy practices? Think that some of the participants may live in the dimmest corners of the nation and world and have secret agendas?

What if their agenda is to do the unthinkable in the United States or elsewhere? What if they’re a “lone wolf” — a lone actor waiting for the perfect time? And what if you’re helping them?

The FBI has been advising Congress about the nexus between white-collar crime and the potential for terrorism. Some very strange things have been happening in the United States as a result of what FBI Director Robert Mueller III described as the emergence of a “shadow banking system” and an increasing reliance on “shell corporations” to commit crimes and hide from investigators. Some of the crimes have been elaborate, using multiple companies, domestic and offshore venues and selling multiple “services” such as tax-avoidance schemes and “debt-elimination” services.

Although Mueller did not mention AdSurfDaily and other “autosurf” companies in Congressional testimony yesterday, the Justice Department did outline a separate case against several companies and individuals who offered “services” similar to the “services” offered by some ASD members.

Longtime PP readers know that ASD and a closely connected autosurf known as AdViewGlobal have been linked to racketeering allegations and tax-avoidance and debt-elimination schemes similar to the cases encapsulated below. Some members of ASD also associated themselves with militia and tax-denial movements, underground “associations” and credit-repair organizations. Some of them associated themselves with wild conspiracy theories — the kind that would cause you to lose friends and cause your family to distance itself from you if you ever associated yourself with the theories.

Find yourself attacking the messenger or spinning impossible yarns because the truth you fear is just downright uncomfortable and you are not ready to confront it yet? Have you generally supported law enforcement throughout your life — and yet now find yourself condemning the very agencies whose efforts have permitted you to rest comfortably at night since birth? Is it really you constructing a theory that the agents mysteriously somehow had become a sort of hybrid that mixes Nazism and Communism and that the hybrids have made it their business to destroy your entrepreneurial spirit?

Here, now, a story about a mysterious and perhaps increasingly dangerous world that largely exists outside of public view . . .

UPDATED 7:49 P.M. EDT (U.S.A.) Returning to a theme voiced last month, FBI Director Robert Mueller III appeared before another Congressional panel yesterday and warned lawmakers about a “shadow banking system” and a troubling increase in certain areas of U.S. white-collar crime, including mortgage fraud, securities fraud and money-laundering.

Meanwhile, cross-border crime also is producing a dangerous cocktail, Mueller said.

“[T]he potential for terrorism-related activities associated with criminal enterprises is increasing due to the following: alien smuggling across the southwest border by drug and gang criminal enterprises; Columbian based narco-terrorism groups influencing or associating with traditional drug trafficking organizations; prison gangs being recruited by religious, political, or social extremist groups; and major theft criminal enterprises conducting criminal activities in association with terrorist-related groups or to facilitate funding of terrorist-related groups,” Mueller said.

“There also remains the ever-present concern that criminal enterprises are, or can, facilitate the smuggling of chemical, biological, radioactive, or nuclear weapons and materials,” he said.

But Mueller said it would be a mistake to view terrorism as a uniquely international problem and look at it only through the narrow lens of traditional threats and the post-9/11 threat posed by al Qaeda.

“Homegrown violent extremists also pose a very serious threat,” Mueller told the Senate Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies.

Beware The ‘Lone Actor’

“Homegrown violent extremists are not clustered in one geographic area, nor are they confined to any one type of setting — they can appear in cities, smaller towns, and rural parts of the country,” Mueller said. “This diffuse and dynamic threat — which can take the form of a lone actor — is of particular concern.

“While much of the national attention is focused on the substantial threat posed by international terrorists to the homeland, the United States must also contend with an ongoing threat posed by domestic terrorists based and operating strictly within the United States,” he said. “Domestic terrorists, motivated by a number of political or social issues, continue to use violence and criminal activity to further their agendas.”

Mueller’s testimony took place against the backdrop of a order by a federal judge in Arkansas that effectively banned a “private banking system” from operating.

Judge Shutters ‘Private Banking System’

Wayne Hicks and his company, My Icis Inc., gathered about $100 million between 2003 and 2006 and helped customers avoid taxes by shielding their identities and other financial transactions from the Internal Revenue Service (IRS), the Justice Department said yesterday. Hicks and My Icis consented to an injunction that barred the system from operating.

Hicks already is serving five years in federal prison after pleading guilty to conspiracy to defraud the United States in a related criminal case. Although the agency did not raise the issue of terrorism yesterday, the case underscores the sensitivity of the United States to banking practices that are hard to monitor and may involve thousands of people whose identities are murky or unknown.

My Icis “helped customers set up purportedly anonymous bank accounts to hide their identities, income and other financial transactions, including deposits, wire transfers and bill payments,” the Justice Department said. “Hicks admitted in his criminal case that My Icis helped customers ‘get out’ of the traditional banking system and successfully shield their financial transactions from the government, more specifically the IRS, and thereby avoid paying federal income taxes.”

The scheme was promoted through websites, seminars in Mexico and online newsletters, the Justice Department said.

To recruit customers, Hicks promoted his banking system at Pinnacle Quest International (PQI) seminars in 2005 in the Mexican resorts of Cancun and Ixtapa, the Justice Department said.

Eight people associated with PQI were convicted in Florida last month of wire-fraud, money-laundering and tax charges by a federal jury following a weeks-long trial in Pensacola.

Investigators said PQI, which also was known as Quest International, was operating a “fraudulent tax and debt elimination scheme.” My Icis was one of its vendors, and the PQI scheme crossed U.S. borders and ventured into Panama, a hotbed for financial fraud.

“PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams,” the Justice Department said. “Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion.

“For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama,” the Justice Department said. “Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a purported ‘reliance defense’ that consisted of a paper trail of frivolous correspondence [that] a client could allegedly use as evidence of good faith if the client were prosecuted.”

My Icis “operated as a sophisticated, computerized ‘warehouse bank,'” the Justice Department said. “[It] was a single bank account in which customers pooled their money. [My Icis] was promoted to PQI’s clients as a method to hide their assets from the IRS as a result of the pooled nature of the account.”

The company had 3,000 clients, the Justice Department said of My Icis. PQI, meanwhile, had more than 11,000 members “throughout the United States.”

Prosecutors established that Arthur Merino, who operated a company known as Financial Solutions and sold a scheme to eliminate credit-card debt, “charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt.

“The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy,” the Justice Department said.

Convicted in the PQI case were Claudia Constance Hirmer and Mark Steven Hirmer of Niceville, Fla. They were found guilty of conspiracy to defraud the United States, conspiracy to commit wire fraud, conspiracy to commit money laundering and tax evasion.

Eugene “Gino” Joseph Casternovia of Ashland, Ore., Arnold Ray Manansala of Renton, Wash., Dover Eugene Perry of Renton, Wash., and Michael Guy Leonard of Troy, N.Y., were convicted of conspiracy to defraud the United States, conspiracy to commit wire fraud and conspiracy to commit money laundering.

Meanwhile, Mark Daniel Leitner of Fairport, N.Y., and Merino, who lives in Renton, Wash., were convicted of conspiracy to defraud the United States and conspiracy to commit wire fraud.

“The use of abusive trust schemes and fraudulent debt elimination tactics intended to conceal income from the IRS isn’t tax planning; it’s criminal activity,” said Victor S.O. Song, chief of the IRS Criminal Investigation division. “There is no secret formula that can eliminate a person’s tax obligations.”

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7 Responses to “FBI Director Again References ‘Shadow Banking System’ In Congressional Testimony; Warns About ‘Homegrown Violent Extremists’ And ‘Lone Actor’ Terrorists”

  1. Wayne Hicks and his company, My Icis Inc., gathered about $100 million between 2003 and 2009

    Yes I remember Wayne Hicks. Was it up to 2009? I thought his operation was under investigation or was shut down a few years earlier? Maybe not.

    I seem to remember that he basically set up shop in a one-horse town & started throwing money around. I think he bought a cinema and/or a radio station and/or a recording studio, and other businesses. I think there was also a restaurant. A bit like the way “Honest” Andy was buying buildings in Quincy, but Andy was too incompetent & only bought one or two buildings. “Wild” Wayne Hicks was much better organised.

    I have a suspicion that some of the clients of ICIS were also behind or profited from some of the larger ponzi schemes in the last few years. I’ve had a suspicion for some time that some of the “steroidal ponzi puppeteers” were also large customers of ICIS, Liberty Dollar, EGold, EMO Corp, EBullion etc.

    I’m trying to remember if there was a connection between “Wild” Wayne Hicks and/or ICIS and egold or the Liberty Dollar or EMO Corp. I think there was a (now defunct) web site with a similar name. Or maybe they were just shut down at about the same time.

    “Hicks admitted in his criminal case that My Icis helped customers ‘get out’ of the traditional banking system and successfully shield their financial transactions from the government, more specifically the IRS, and thereby avoid paying federal income taxes.”

    If I remember correctly he initially denied everything and claimed that it was all a misunderstanding, everything was OK, it was just an audit etc. Similar to the way the ASD supporters initially played down the prosecution case.

  2. Anytime a Ponzi/scam company gets raided, the owner/admin’s first claim is: “It is all a great big misunderstanding. Once they can explain to the authorities what they are truly about, all the charges will be dropped, and things will get back to normal. This is just a bump in the road, and above all be ‘PATIENT’.”

    Then they tell their major promoter’s to start “blaiming the government,” and getting all the members riled up against the government and pledge their loyalty to the program and the owner/admin. None of the members ever stop to think the government just might be right, and they were part of an illegal criminal enterprise. Then no-one wants to believe they are part of a criminal enterprise, so they must believe it is all a big mistake as claimed. Thus the gullible will follow any direction given by the major players in the scam/Ponzi.

    The indoctrination starts when they join the prgram. They warn them not to believe those who will try to put the program down as being illegal because they: 1. Are afraid to take risks, 2. Are losers, 3. Can’t think outside the box, 4. Are jealous, and 5. Are afraid of something that is new and different.

    God forbid anyone who dares challenge the program or the admin, for they are the devil. The intimidation starts, the name-calling, and then the playbook mantra character assination is set in motion against them.

    When all the dust settles, the naysayers were right, again, but the major players have long gone and moved on tho their next big scam/Ponzi. They could care less about those left behind they have financially ruined.

    This is the game that is played over and over again in these scams/Ponzi’s, and until they all stop, will continue to be played out. The good news is some actually learn from the experience, but sadly far too many don’t. They will fall for the next one, and the next one, and the next one all thinking this will be the one that will make them rich.

    Hopefully the authorities are now waking up to these facts, and are finally taking action to put a stop to them. From all the recent flurry of arrests, I believe they have woke up. The only problem is there are 10’s of thousands of these scams out there, and they are playing catch-up. But at least they are now playing catch-up.

  3. Tony H: Yes I remember Wayne Hicks. Was it up to 2009? I thought his operation was under investigation or was shut down a few years earlier? Maybe not.

    Hi Tony,

    You are correct about this; it was 2006, and I made the change above.

    Thank you.


  4. There’s this fluff piece on Wayne Hicks from 2006. Some of the comments are interesting. It describes some of the businesses he bought:

    And this one mentions his connection to the Liberty Dollar:

    Something else is coming back to me now – the ICIS operation was a “digital check” service (Digital Money Order), very similar to what EMO Corp was doing. I think there was some dispute between the owner/operator of EMO and Wayne Hicks (or his son). I think there was an allegation that one party stole some software, or wasn’t paying royalties.

    EMO Corp became under scrutiny at least in part because it was a payment processor for 12DailyPro and other “autosurfs” at the time.

  5. Wayne Hicks originally became involved in the money laundering biz when he formed the “Americans for Lawful Financial Independence and Information” (ALFII) group.

    Many of its’ members at the time where members of so called “Patriot Movement and were anti Government and anti tax.

    Hicks claimed he originally “didn’t know” the implications of the scheme/s he organized and was dealing with a “bunch of crazies” for some time before he came to recognize the illegality of what he was doing ( a claim,BTW, rejected by the presiding judge at his trial)

    Hicks received his mandatory 5 year sentence in 2009 and was ordered to repay between $7 million and $20 million as well as being left with a $400,000 and $1 million in unpaid personal federal income taxes debt.

    Prior to be shutdown by the Texas Attorney Generals’ office, Wayne Hicks was listed by “emocorp” as being an alternative contact

    An (unsubstantiated) report detailing the events of the time and the tangled web woven by Hicks can be read here: http://www.talkgold.com/forum/showpost.php?p=1804174&postcount=28

  6. Small world…LOL….We did all their work in Panama setting up Offshore corporations, foundations and bank accounts….Panama Offshore Services International (POSI or POLS)

    PS SORCE was also our biggest reseller for US clients.

  7. […] The FBI, for just one example, has been warning for years about securities fraud, the “shadow banking system” and the use of shell companies to disguise fraud proceeds. The director has testified repeatedly on Capitol Hill  about the subject, while simultaneously warning about debit cards that are being used in nefarious ways and the dangers posed by lone wolves and “home-grown, violent extremists.” […]