Federal Judge Delays Ruling In INetGlobal Case, Saying Attorney May Be ‘Primary Fact Witness’; Sends Case Back To Magistrate Judge

UPDATED 8:29 A.M. EDT (APRIL 18, U.S.A.) Despite Internet and email claims yesterday and today by supporters of INetGlobal that the company had won a key battle with prosecutors, that the case was “over” and that news about the litigation engulfing the company “is better than anything we expected,” an order and memorandum by a federal judge suggests that celebrations could be premature.

U.S. District Judge Donovan W. Frank yesterday sent the case back to Magistrate Judge Franklin L. Noel for the “limited” purpose of “maintaining the status quo” while clarifying elements of the case and seeing if there was a way to forge a settlement of at least some of the issues. (See subhead below.)

As things stand, Frank said, certain issues on which INetGlobal owner Steve Renner and his affiliated companies are awaiting rulings “could be rendered moot” if Renner is “indicted or otherwise charged with one or more criminal offenses.”

Renner has asked the court to return about $26 million and business records seized by the U.S. Secret Service in a Ponzi scheme, wire-fraud and money-laundering probe. Renner also wants Frank to conduct an evidentiary hearing.

For its part, the prosecution has said it opposes Renner’s requests because a “major fraud and money laundering investigation is under way bearing serious criminal consequences” and because Renner’s filings were a “thinly veiled attempt to force the government to reveal facts relating to an on-going criminal investigation.”

The money is “evidence,” and its release would mean “the money will be spent, and will be unavailable for future return to victims” should the government prevail, prosecutors said.

In his memo, Frank said he was not prepared yesterday to rule on critical issues, given the procedural history of the case and recent filings by both the INetGlobal side and the prosecution.

“Inter-Mark Corporation and its subsidiaries, without notice to the Court, filed a notice joining in the motion of Steven Renner,” Frank said. “That motion was filed by Mark J. Kallenbach, who is now the subject of a motion to be disqualified by the United States, given his 20-page, 81-paragraph affidavit filed on behalf of Steven Renner . . .”

Prosecutors filed a motion 10 days ago that asked Frank to disqualify Kallenbach as an attorney for INetGlobal and related companies, saying Kallenbach had “made himself a necessary witness” by conducting an “investigation” and filing an affidavit prior to entering his notice of appearance as INetGlobal’s attorney.

Kallenbach was trying to be both an attorney and a witness in the same case, prosecutors claimed.

Jon Hopeman, an attorney for Renner, disputed the government’s contention about Kallenbach earlier this week, and Kallenbach joined in the brief.

Although Frank delayed ruling on the issue, the order and memorandum he issued yesterday spoke to the dispute.

“The Court reserves the right, pending receipt of Magistrate Judge Noel’s report, to rule on the motion of the United States to disqualify attorney Mark J. Kallenbach, although the Court would observe that, given the 20-page, 81-paragraph affidavit submitted on behalf of Steven Renner, it would appear that attorney Kallenbach is a primary fact witness in the above-entitled matter, absent stipulation of the parties.”

A “fact witness,” according to the Federal Judicial Center, the education and research agency for the federal courts, is “a person with knowledge about what happened in a particular case who testifies in the case about what happened or what the facts are.”

The order and memorandum may signal that, based on the current record of the case, Frank may be inclined to view Kallenbach as a witness subject to both cross examination by the prosecution and direct examination by the Renner/INetGlobal side.

Judge Frank Orders Parties To Schedule Conference With Magistrate Judge Noel

Frank ordered both sides to schedule a settlement conference with Magistrate Judge Noel. The order does not mean the case is “over” or that either side has won or lost.

The conference will be “limited in scope,” Frank ordered.

Among the issues to be determined (note: these are verbatim, from Frank’s order):

  • “The amount of money necessary to provide wages and health insurance coverage to the current employees maintaining a portion or portions of the business of Inter-Mark Corporation and its subsidiaries.”
  • “The amount of money presently being held by the Court, if any, in the event the parties agree that it is necessary to continue aspects of Inter-Mark Corporation, and its subsidiaries, pending resolution of the motion before the Court, pending completion of the investigation, be it civil or criminal, or both, by the United States.”
  • “Items seized by the United States by means of a search warrant, including, but not limited to, computers and other property necessary to the operation of the business.”
  • “Discussion of any items alleged to be attorney-client privileged items seized by the Government pursuant to the search warrants executed at Steven Renner’s companies on or about February 23, 2010, and thereafter.”

Frank said the conference with Noel, absent an agreement by the parties, “shall be limited to maintaining the status quo, on a limited basis, pending the Court granting or denying an evidentiary hearing.”

“The focus of the Status-Settlement Conference before Magistrate Judge Noel, absent agreement of the parties to broaden the scope and focus of the conference, will be the return of some portion of the money so that Steven Renner and the associated business entities can maintain the status quo of their business, including the maintenance of a skeletal crew of employees and the insurance for those employees,” Frank said.

“The Court has conferred with Magistrate Judge Noel with respect to the purpose and limited scope of the conference,” Frank said.

He added that he may defer ruling on Renner’s motion for an evidentiary hearing until after the settlement conference is conducted and the court had received Noel’s report on the status of the case.

And Frank said the court “reserves the right, pending receipt of Magistrate Judge Noel’s
report, to rule on the motion of the United States to disqualify attorney Mark J. Kallenbach, although the Court would observe that, given the 20-page, 81-paragraph affidavit submitted on behalf of Steven Renner, it would appear that attorney Kallenbach is a primary fact witness in the above-entitled matter, absent stipulation of the parties.”

Spinning It As An INetGlobal ‘Win’

As was the case in the AdSurfDaily autosurf Ponzi prosecution, some INetGlobal members are reporting to downline members that the prosecution’s case may be in the process of disintegrating.

Despite the frequent claims in the ASD case, a federal judge went on to issue three orders of forfeiture totaling more than $80 million, handing ASD one shattering loss after another.

One INetGlobal member sent an email to downline members yesterday that claimed “the indication is that we may have a huge win,” a member of his downline said.

This email from the member was followed by another one with a five-exclamation point headline titled “Major News !!!!!”

“The Judge has ordered a ‘Status Settlement Conference’ between both parties,” the sender advised members of his INetGlobal downline. “This news is better than anything we expected.

“We thought a hearing would be set for 30 days plus from now and release of some money,” the sender continued. “This was to be a ‘evidential (sic) hearing’ to present a full days (sic) evidence about our business and hear from the Federal authorities on their side.

“Also we were looking for some funds to be release (sic) for general operations of the business,” the sender wrote. “But today’s ruling is an acknowledgment of the facts of the case that this (sic) not at (sic) clear ‘Ponzi’ business and which therefore would apply to the Federal ‘Forfeiture Laws.’

“This may lead to a negotiated deal with the government,” the sender wrote. “Also in the meantime we are much likely (sic) to get operational sooner than we ever thought.”

Contrary to the email claim, nothing in Frank’s order and memorandum suggested that any of the facts of the case had been determined. Moreover, no “acknowledgment” was made by the judge or the government that INetGlobal was not operating as a Ponzi scheme. The judge has issued no orders pertaining to forfeiture because the government — as the record of the case stood yesterday — had filed neither a criminal nor a civil action against Renner or INetGlobal-connected assets that seeks forfeiture of property.

The sender conceded that “my details and interpretation could be off,” according to the email, parts of which were republished on the Internet.

It is indeed true that Frank referenced a Status-Settlement Conference, but the email sent by the INetGlobal member did not outline any details of the conference, including the fact it had been scheduled for a limited purpose.

At the same time, the email made no reference to the fact that Frank said the case could take another turn and render some of the current issues moot if the government proceeds with an indictment.

On April 2, the prosecution described the case as a “major fraud and money laundering investigation,” noting that the IRS had joined the U.S. Secret Service in the probe.

A separate claim by an apparent INetGlobal supporter that the case was “over” was published today in the comments section of the Hospitalera Blog.

“Inetglobal case is over!” the comment read in part. The commentator described the information as a claim made by his upline.

“At the end of this afternoon, court has not received further evidence from government to accuse Inetglobal of Ponzy (sic) Scam in the period of time,” the comment read in part. “Judge made decision that the case could not be established. The written document from court will be released on Monday.”

Frank made no such decision that a “case could not be established.”

The Hospitalera Blog said in February that it had been targeted in a lawsuit for calling INetGlobal a “scam” in Sepember 2009. Some INetGlobal members have attacked the Blog for its point of view on INetGlobal.

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22 Responses to “Federal Judge Delays Ruling In INetGlobal Case, Saying Attorney May Be ‘Primary Fact Witness’; Sends Case Back To Magistrate Judge”

  1. Good reporting Patrick! Just one little correction, it was in a comment that these claims were made, not in a blog post (see http://hospitalera.com/inetglobal-scam/ Page 8 of comments). Whilst I have always allowed people to express different opinions to mine in the comment section, I have a stricter policy in whom I let write blog posts on my blog ;-) I would therefor be thankful, if you could change post / poster in your last paragraph to comment / commentator. At the moment it reads a bit like I have changed sites and joined the Inetglobal supporters, something that has not happened. Thanks, SY

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  2. hospitalera: I would therefor be thankful, if you could change post / poster in your last paragraph to comment / commentator. At the moment it reads a bit like I have changed sites and joined the Inetglobal supporters, something that has not happened.

    Hello SY,

    Given a previous assertion by an INetGlobal supporter that Hospitalera had “apologized” for calling INetGlobal a scam — and your statement that the Blog never apologized and that a news release announcing the purported apology had been fabricated — I have updated the story above to clarify elements near the bottom of the story.

    The intent of the change was to distinguish a “post” by you from a “comment” by a reader.

    Some readers of the PP Blog may wish to see these stories:

    http://patrickpretty.com/2010/03/07/website-of-spokesman-for-renner-entity-claims-government-leaking-info-to-pp-blog-about-inetglobal-ponzi-probe-didnt-happen-ever-blog-says-meanwhile-a-bogus-apology-claim/

    http://patrickpretty.com/2010/02/28/blogger-in-czech-republic-who-called-inetglobal-a-scam-last-summer-says-she-was-threatened-with-lawsuit-bloggers-name-means-prophetess-or-oracle/

    Patrick

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  3. Thanks Patrick, much appreciated! SY

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  4. Thanks Tony,

    Another kettle of lies & deception brought to us by that noted Ponzi promoter, Donald Allen……as usual, Mr. allen’s prose is full of holes. How can he really say that a primary reason, perhaps even THE primary reason, that iNetGlobal was shut down was that the majority of the members were Chinese? (“Upon filing this case, part of the government’s argument toward the company as being illegal was because most of the members were Chinese.”) Oh well, I guess the truth has never actually come between Mr. Allen and his writing……

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  5. It’s funny what pops up on google sometimes. Looking for things linked to Donald Alan, I found this:
    http://www.scribd.com/doc/14257935/Russia-Mafia-Foreign-Terrorist-Investments-1996-2003-
    The report is dated 2002 and includes this passage:

    Electronic fund transaction facilitators (aka) “exchange providers” have been, to name just a few, BUSINESS EXPRESS [ Mr. S. Jim Davidson ( Texas ) ], BECORP INTERNATIONAL INC. (aka) BE-CA$H LTD. [ Dean Gutch, 3303 Merchant Court, Wilmington, North Carolina 28405, USA, TEL: (910) 794-9889 ], CASH CARDS INTERNATIONAL LTD. (aka) V-CASH (aka) V-CARD (aka) ROYAL KUPUNA EXCHANGE [ Steve Renner, 250 Second Avenue South, Suite # 145, Minneapolis, Minnesota 55401, USA, TEL: (612) 332-6025; Honolulu, Hawaii, USA; Japan; Basseterre, St. Kitts, British West Indies ( BWI ); and, West Africa ]; VERTORO GOLD [ Mr. S. Jim Davidson & Bruce Wilkerson ( Colorado, USA ) ], and others. See, reference(s): http://www.indymedia.org/en/2006/11/874085.shtml , http://www.indymedia.org/en/2008/01/899091.shtml .

    The mention of Steve Renner in a report about Russian Mafia & Terrorism is interesting. Another name I recognise is Mr S Jim Davidson – I believe this is the same person who produces/produced “The Indomitus Report”. He describes himself as “a sovereign individual”. I *think* Jim Davidson was also a customer of Wayne Hicks’ ICIS operation which was mentioned the other day.

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  6. I looked at Steve Keough’s picture. From what I can see, he is a perfidious man, a tool of Satan. Satan is jealous of us because of our success, he wants us killed and destroyed by using any means including the government of USA. He even whispered to Judge Frank that he can’t really decide on this matter because to do so it would be inconsiderate towards the victims! We are the victims, Satan is the accuser and he uses the legal system to destroy us. he will not prevail because God’s Word has already condemned Satan to Hell for all Eternity! Read John 10:10 where Jesus says, “The thief (Satan) comes only to steal, and kill and destroy”

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  7. Quick note:

    There is a duplicate post at 7:20 p.m. from Jesus is the Way, Truth & The Life. It was intended for this thread:

    http://patrickpretty.com/2010/04/10/prosecutors-ask-judge-for-order-to-disqualify-inetglobal-attorney-saying-they-may-wish-to-cross-examine-him-as-witness-in-ponzi-case/

    I declined to publish it.

    Patrick

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  8. Interesting Scribd link Tony H, thanks for posting. The name ROYAL KUPUNA EXCHANGE jumped out to me so a little poking around finds the following:

    –“This is a tale of money, controversy and international intrigue, including a link to a faraway Caribbean island.

    It involves a planned sale of $1 billion in tax-free Hawaiian bonds, backed by gold held in Switzerland.

    Or so says the marketing pitch.

    But these aren’t bonds to be sold in the usual fashion, through a Wall Street brokerage or investment firm on behalf of a government or private business.

    These investments supposedly will be sold by an organization that isn’t registered to sell securities in Hawaii, isn’t even registered to do business here, lists a mail drop at a Honolulu high-rise as an address and has no published phone number.”–

    –“A search of registration records for the site indicated it was created in October 2001 and lists Steve Renner, a Minneapolis businessman, as a contact. He could not be reached for comment.

    Renner is founder of Cash Cards International, a company based in the Caribbean island of St. Kitts, part of a twin island federation known for its strict confidentiality laws pertaining to financial transactions and other matters.

    People who sign up as members of Royal Kupuna are linked to Cash Cards, which has an online system for conducting financial transactions worldwide.

    According to the Royal Kupuna Web site, a “Kupuna Action Council” on Jan. 17 — the 109th anniversary of the overthrow — met to officially resurrect the kingdom and kingdom law.”–

    http://www.angelfire.com/hi2/hawaiiansovereignty/perezfraudkingdombonds.html

    Link to Archive.org snapshot of Steve Renner’s royalkupuna.com website from 2002:

    http://web.archive.org/web/20021010221744/www.royalkupuna.com/home.html

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  9. why was v-cash and Steve Renner allowed to keep going after 2002? Patrick I asked last week if the feds released the $1,000,000 to inetglobal? you said that maybe the answer would come this week. any more info?

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  10. The feds did not release the 1,000,000 dollars. That money was borrowed. The feds will soon release some funds. Thats what the magistrate is for.

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  11. GlimDropper: Interesting Scribd link Tony H, thanks for posting. The name ROYAL KUPUNA EXCHANGE jumped out to me

    Did you read the two reports on the IndiMedia site? Quite a few name may jump out of you from those reports. There’s Jim Davidson sending money to James Gregory “Zig” Ziegler using Steve Renner’s CASH CARDS INTERNATIONAL.

    There’s the CYBERFRONTIER GROUP of companies – owner/operator of a ponzi friendly web host and ponzi friendly payment processor, c-gold (mentioned here a few weeks ago).

    Buried in the document is “Mario Pino” – I believe this to be Mario A Pino, sentenced to 12 months last June for failing to file a tax return.

    In the 2008 report, there is Harold F. Harris (any relation to the Bodoin-Harris family?), who had problems with the SEC in 2005.

    These were the type of people who were using e-gold and Renner’s Cash Cards Int. The Dominion Of Melchizedek make “Honest” Andy’s sovereign Arby Indians group look like a bunch of amateurs.

    Jesus is the Way, Truth & The Life: I looked at Steve Keough’s picture. From what I can see, he is a perfidious man, a tool of Satan.

    I wonder if he was a “tool of Satan” when this picture was taken:
    http://www.homesquadcities.net/wp-content/uploads/2009/11/steve-keough.jpg

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  12. [Admin Note: A comment was deleted from this thread after a spam pattern developed using the same domain name, three email addresses with a common extension and multiple IPs.]

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  13. To All – I am not a “Ponzi Promoter” nor am I really concerned about what the Fed’s are doing to iNetGlobal. My concern is that the employees are getting screwed. I understand the “products” – the only thing is, I can’t recall ever selling a press release to a Chinese member of iNetGlobal. My yearly budget was in-part based on iNetGlobal members buying a press release from V-Newswire – hasn’t happened yet (2008-YTD). I’m starting to wonder why. Some of the staff will eventually (including me) break off an start a “real” Internet Marketing company with products and services that work and are essential for small business.

    A few things went wrong at iNetGlobal. First off, no one listened. The Chinese membership came in full force and learned they could make money “surfing the web” and bringing people on, in their downlines to increase personal revenue streams. Without enforcement of compliance, all we had was a REAL BIG BOX to make money. Americans or english speaking people were hesitant to join, hence, over 85% Chinese membership, less than 1% Black, maybe 7% Hispanic-Latino and the rest divided among the UK and Russia.

    Yes, I have to agree with PP – but my concern now is with the employees that are not working, the Chinese support staff working daily and a sense of “process” that has lost it way.

    If this company truly did care about the services and products – the website builders, V-Newswire staffers, V-Webcast services would have been focused on, rather than keeping the Chinese support staff.

    The US Government has frozen the assets – the only way you can sign-up is being a free surfer (10k+ since raid).

    The stories I write are in support of the staff members that need their paychecks. The humor in all is, I couldn’t pass up a chance to publish a letter to President Obama from a group that are not even US Citizens…Come work with me on this…

    I will probably be asked to leave today after posting this comment on PP – but you know what, I don’t care. The next story I write on The Independent Business News Network will be an absolute tell-all that will rock the whole investigation. I am not a disgruntle employee – just a person who knows what is right and wrong. I’m sick of the BS.

    To your success!

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  14. Donald,

    We look forward to your comments. Unfortunately for Renner he can’t unring the bell. Unfortunate as well are the employees who got mixed up in this….

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  15. Donald, I understand what your saying about no one was listening. two months before the raid. I was talking to a promoter who was in from the start Aug 08. This is what he said to me. “I just sponsored a money man (finanical expert) he told me, you put as much money in as possible, sponsor your mother and her dog so you can move a gold position and surf and make big money just like ASD!!!! Don’ worry about the other products. If the one gal from Toronto with connections from China did not work the program Inet would not be here right now.

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  16. Sorry, just wanted to add. Donald just tell the truth, you will be glad you did.

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  17. I want to make it perfectly clear. I DID leave the comments on this blog. I have gotten several emails saying the PP-Blog fabricated my comment PP did not “make up” this comment by me.

    I have received several calls saying, “How could you?” My answer to them is:

    1. How could Steve hire his 27 year old kid, pay him $98K+ and an AMEX card and still make me beg for $250 a week.

    2. Why was it okay to spend over $250k on the V-Local $50,000 cash give-away and less than 20,000 people signed up. How is it that thousands of dollars are spent on billboards in Flushing, New York for V-Local and the URL is non-exsistant? (Note: Ask for a list of the winners – I bet you a buck, no one has it….Mmmm. Who won the money? How much was given away? Why wasn’t the PR department kept updated every time someone won? (I know why…)

    3. Why was Matt able to hire at will without a process?

    4. Why didn’t the Global News Service get the same treatment – we were the best product in the building.

    I apologize to vent – but when I was going up, my Dad made my earn every penny.

    To iNetGlobal members that just want to “surf” and make money without buying essential tools for business – NO – and remember, “A wounded animal is the most dangerous.”

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  18. Donald W.R. Allen II: To iNetGlobal members that just want to “surf” and make money without buying essential tools for business – NO – and remember, “A wounded animal is the most dangerous.”

    Mr.Allen, I’m pretty sure you realize that of all the things you posted THAT is by far the most damaging to iNetGlobal. It seems that the “company line” is steering toward denying that it was ever possible to just buy AdPacs, surf and make money, or at least it no longer will be. Not like that bell can be unrung but surely you understand that this is why iNetGlobal stands accused.

    You have guts my man, surf programs facing prosecution circle their wagons so tight that anyone falling out of line gets run over. If you need any proof of this fact you’ll find it in your e-mail inbox very soon. I hope I’m wrong but you should expect to have your motives and integrity not only questioned but outright slandered. Best of luck and remember, sunlight is the best disinfectant.

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  19. Inet will come back with you can’t make money just by surfing. This is way the wink and nod comes ” sponsor your mother and her dog” Now you can make money when you surf!!!!! And I believe that if you paid over $2,000.00 you could get paid at a “makeing money surfing” even if you have not sponsor anyone.
    Stay strong Donald.

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  20. Seems Donalds website is down, not sure how that happens but the who.is record http://who.is/whois/ibnn.org/ shows now that the website was registered by somebody in Hong Kong???? I am pretty sure that when I looked it up some time ago it was registered in the US and hosted in the US. Anybody knows what is going on? SY

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  21. hospitalera: Seems Donalds website is down, not sure how that happens but the who.is record http://who.is/whois/ibnn.org/ shows now that the website was registered by somebody in Hong Kong???? I am pretty sure that when I looked it up some time ago it was registered in the US and hosted in the US. Anybody knows what is going on? SY  

    The host server is still in the US:

    P Address: 207.67.5.19 (ARIN & RIPE IP search)
    IP Location: US(UNITED STATES)-MINNESOTA-MINNEAPOLIS
    Record Type: Domain Name
    Server Type: Apache
    WebSite Status: Active
    DMOZ no listings
    Y! Directory: see listings
    WebSite Title: Independent Business News Network
    Secure: No
    Ecommerce: No
    Traffic Ranking: Not available
    Data as of: 22-Apr-2008

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