PatrickPretty.com

Day: May 4, 2010

  • FLASHBACK: Year Ago Today, AdViewGlobal Announced Offshore Wire Facilitator — On Same Day Obama Announced Crackdown On International Fraud

    One year ago today, President Obama announced a crackdown on international fraudsters. On the same day, the AdViewGlobal autosurf announced a new, offshore wire facilitator. By November, the president had created the interagency Financial Fraud Enforcement Task Force.

    Longtime readers of the PP Blog may scarcely believe a year has passed since the AdViewGlobal (AVG) autosurf announced a new, offshore wire facilitator — on the same day President Obama announced a crackdown on international fraud.

    Obama delivered his remarks at 11:37 a.m. By 5:54 p.m., a member of an AVG forum operated by some of the Mods and members of the Pro-AdSurfDaily Surf’s Up forum announced that AVG members could wire money offshore from the United States after the company’s bank account had been mysteriously suspended earlier in the year.

    AVG highlighted its purported “offshore” location in sales promos.

    The date of the wire announcement — May 4, 2009 — was an important one in the history of the PP Blog. In the following weeks, the Blog came under attack by advocates for autosurf Ponzi schemes. In the months that followed, however, one autosurf scheme after another came crashing down — including AVG.

    Not even the collapse of one autosurf Ponzi scheme and HYIP scheme after another, however, has caused serial promoters to renounce these sordid pursuits. Too much money is involved. Why fret over the national-security implications if a downline commission is on the line in this shadowy and unseemly pocket of reprehensible commerce populated by greedsters, MLM hucksters and just plain criminals and racketeers?

    In this seedy world of constantly expanding rationalizations for criminal conduct and personal profit, the bomb or missile probably will land on a neighborhood that deserves to be destroyed. Right? Longtime readers of the PP Blog know the Ponzi advocates reshape their stories whenever the need arises. Any fanciful, made-up reality will do.

    Some of the Blog’s readers — and the Blog itself — came under near-ceaseless attacks last spring and summer from people who desire to legalize Ponzi schemes. Although the proposition itself is absurd, it was championed by the Blog’s Kool-Aid-drinking critics. Indeed, some of them believe, for example, that all commerce should be legal.

    Some of them are so out-of-touch that they appear not to recognize they are advancing the argument not only for economic misery and the steady supply of drugs for the schoolchildren of America, but also for slavery and human bondage. Their argument is one that would set Bernard Madoff free if society placed any credence in it at all. Madoff victims would be out billions of dollars, 80-year-old people fleeced of their pensions and savings would be forced to reenter the workforce because “that’s the breaks” of capitalism — and yet Madoff would be set loose to run a brand-new scheme of his choosing.

    No part of that vision for America computes. It is a desperate argument of convenience advanced by people who are willing to embrace crime as long as some people make money. In short, it’s the delusional argument for Enron-style capitalism applied to Ponzi schemes. The scalding irony is that some of the very same people who championed Andy Bowdoin of AdSurfDaily did not do the same for Madoff. The hypocrisy — the disconnect — is stunning. If the basis of a pro-Ponzi argument is that all commerce should be legal and that the government wields too big a stick, then both Madoff and Bowdoin should be equally championed — victims be damned.

    So what if Grandma, 92, is greeting customers at Walmart because Madoff needed another big house? And so what if Enron employees and stockholders lost jobs and what they believed to be their financial security? That’s the breaks. Right? It’s much better to follow the lead of some AdSurfDaily members in calling for the prosecutors to be jailed and the judges to be brought up on charges for violating their oaths? Right?

    Today the PP Blog invites readers to visit its archives.

    You’ll see a story about the announcement of AVG’s purported new, offshore wire facility here. You’ll find a related story here.

    In this story, you’ll find a tie between KINGZ Capital Management — AVG’s purported offshore facilitator — and the Trevor Cook Ponzi scheme in Minnesota.

    Here you’ll find a comment from a purported attorney who advised the PP Blog that it might be stepping on too many toes by publishing stories about AVG. Our response is here.

    You’ll find a story about the collapse of AVG here. The collapse occurred about 23 days after we received the note from the purported attorney. As a side note, the story about the collapse also points out that AVG threatened its own members.

    Here you’ll find a story about AVG’s name being mentioned in a racketeering lawsuit against AdSurfDaily, which has close ties to AVG. (Take time to read the comments from readers below the story.)

    In this earlier story, we provided plenty of reasons for people not to join AVG.

    We also recommend you read this story and the accompanying comments. Weighed by a number of factors beyond page views, it is the “most popular” story in the history of the PP Blog.

    Finally, we encourage you to read this story. It’s one of a number of stories we’ve done on  what the President of the United States is doing to combat the insidious amount of financial fraud.

  • Another Ponzi Halted In New York; SEC Says Matthew J. Ryan Targeted Senior Citizens In Scheme Involving Company That Existed In Name Only

    American Integrity Financial Co. existed in name only, the SEC said today. Its operator, Matthew J. Ryan, 45, of Troy, N.Y., used the bogus company to fleece senior citizens in a Ponzi scheme by telling them they’d earn “guaranteed” return rates of  3.85 percent to 9 percent each year.

    It was the second Ponzi scheme to rock the Albany area — and the third major case of financial fraud in New York state — in the past two weeks.

    “Ryan obtained these investments by fostering the false impression that American Integrity is a legitimate, substantial financial services firm, with numerous employees and for which he was merely an employee,” the SEC charged.

    ‘Phony Manhattan Address’

    “To perpetrate this fraud, Ryan used devices such as a phony Manhattan address, and fictitious names and titles of purported American Integrity employees, and he misrepresented to investors that their investments were safe and insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC) and that American Integrity was qualified to offer IRAs and other tax-deferred investments,” the SEC charged.

    American Integrity was a “classic Ponzi scheme,” the SEC said.

    ‘Merely The Name On A Bank Account’

    The firm “is not even an entity, let alone an operating financial company and investments in it are not in any way insured,” the SEC said. “It is merely the name on a bank account that Ryan opened and controls. Ryan simply took investors’ money and deposited the money into the bank account. When he needed money to pay investors the returns he had promised or principal amounts they sought to withdraw, Ryan simply withdrew funds from the same bank account.

    Investor funds were used to pay Ryan’s lenders “and to pay for his own personal expenses, including luxury cars,” the SEC said. “As of March 31, 2010, it appears that American Integrity owed investors at least $3.5 million, while it had less than $8500 in cash on hand.”

    Recent New York Frauds

    Just days ago, the SEC charged McGinn, Smith & Co. of Albany in a fraud case investors said was a Ponzi scheme. Separately, the SEC charged Gryphon Holdings Inc. in a bizarre stock-tips scheme. Five people were arrested by federal agents in the Gryphon Holdings case.

    Gryphon “touted offices on Wall Street and around the world while, in reality, defrauding investors from a strip mall on Staten Island,” David Rosenfeld, associate director of the SEC’s New York Regional Office, said on the day the complaint was filed.

    The SEC said Gryphon was a “sham designed to separate clients from their money.”

  • TERROR SUSPECT CAPTURED: Faisal Shahzad Arrested At JFK Airport While Attempting To Flee To Dubai; Vehicle Involved In Failed Times Square Attack Reportedly Bought In All-Cash Deal On Craigslist

    Attorney General Eric Holder briefs reporters on the Times Square bomb plot.

    A naturalized U.S. citizen born in Pakistan was arrested at JFK Airport in New York late last night after he was removed from a flight bound for Dubai, authorities said.

    U.S. Attorney General Eric Holder announced the arrest of Faisal Shahzad in an extraordinary news conference in the middle of the night. President Obama was informed about the arrest at 12:05 a.m., the White House said.

    The arrest was made by the FBI and officers of the New York Police Department, authorities said.

    Shahzad is suspected of packing a Nissan Pathfinder purchased through craigslist from a seller in Connecticut with propane tanks, fertilizer, firecrackers and gasoline to make an alarm-clock triggered bomb that would detonate in Times Square when it was filled with people.

    The New York Daily News reported that the craigslist transaction was an all-cash deal.

    A disposable cell phone also was part of the planned terror attack. Investigators were able to link the cell phone to Shahzad, according to reports.

    Here is Holder’s early statement on Shahzad’s arrest (italics added):

    Earlier this evening, Faisal Shahzad was arrested in connection with the attempted car bombing in New York on Saturday.  Mr. Shahzad, an American citizen, was taken into custody at JFK Airport in New York as he attempted to board a flight to Dubai.

    Since this plot was first uncovered on Saturday night, the FBI, prosecutors and intelligence lawyers in the National Security Division of the Justice Department and the U.S. Attorneys Offices in Manhattan and Connecticut, along with the NYPD have worked night and day to find out who was responsible for what would have been a deadly attack had it been successful.  Over the course of the day today, we have gathered significant additional evidence that led to tonight’s arrest, which was made by agents from Department of Homeland Security’s Customs and Border Protection.

    This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads.  But it’s clear that the intent behind this terrorist act was to kill Americans. 

    FBI agents are working with their state and local counterparts in New York, Connecticut and other jurisdictions to gather evidence and intelligence related to this case.  We are also coordinating with other members of the President’s national security team to ensure we use every resource available to the United States to bring anyone responsible to justice.

    We continue to gather leads in this investigation, and it’s important that the American people remain vigilant.  The vehicle in Times Square was first noticed on Saturday by a citizen who reported it to authorities, and, as always, any American who notices suspicious activity should report it to the appropriate law enforcement agencies.

    This investigation is ongoing, it is multi-faceted, and it is aggressive.  As we move forward, we will focus on not just holding those responsible for it accountable, but also on obtaining any intelligence about terrorist organizations overseas.

    Because of the fast-moving nature of this investigation, I am not able to make any further information public at this time.  But the American people should know that we are deploying every resource available, and we will not rest until we have brought everyone responsible to justice.

    Here is a special statement issued by U.S. Attorney Preet Bharara of the Southern District of New York, FBI Special Agent-in-Charge George Venizelos, and New York City Police Commissioner Raymond W. Kelly (italics added):

    At approximately 11:45 p.m., Faisal Shahzad was taken into custody. Agents of the Federal Bureau of Investigation and detectives of the New York City Police Department arrested Shahzad for allegedly driving a car bomb into Times Square on the evening of May 1, 2010.

    Shahzad, a naturalized U.S. citizen born in Pakistan, was taken into custody at John F. Kennedy International Airport after he was identified by the Department of Homeland Security’s U.S. Customs and Border Protection while attempting to take a flight to Dubai.

    The defendant will appear in Manhattan federal court (500 Pearl Street, 5th Floor, New York, N.Y.) tomorrow [meaning today] at a currently undetermined time to be presented on formal charges. No further details are available at this time.

    We applaud the collective work of the New York Joint Terrorism Task Force and the prosecutors and investigators in the Southern District of New York, who have worked around-the-clock for the last two days in this investigation. We would also like to recognize the diligent work of the Customs and Border Protection agents and the U.S. Attorney’s Office for the District of Connecticut.

    EDITORIAL ASIDE: The PP Blog writes about Ponzi schemes, including “autosurf” Ponzi schemes and their close cousins: HYIP frauds.

    These schemes are pushed by serial promoters and routinely defended as legitimate businesses, despite the fact that the purveyors do not have a clue about the motives of the operators or the identities of their autosurfing or HYIP neighbors.

    Tremendous sums of money pass through the schemes, which mostly operate in the shadows and rely heavily on offshore-payment processors, debit cards and what the FBI describes as a “shadow” banking system.

    Someone tried to detonate a bomb in New York City Saturday to kill people and destroy property. That the bomb did not “go off” is not the point.

    The point is that the bomb could have gone off and that the source of funding for the bomb-making materials is unknown. The money has to come from somewhere. From the terrorist’s point of view, the less traceable the source, the better.

    If you are participating in an autosurf or an HYIP, it is possible you are funding terrorism. This is the only reason you should need to say no — even if you know some of the people involved in the autosurf/HYIP, even if it “pays,” even if the payments you’ve received have improved your quality of life, even if the payments you’ve received are the only things that are keeping the wolf from your door. The purveyors want to play on your greed and/or desperation.

    What will it take to get you to stop promoting these filthy, miserable, dangerous businesses that operate in the shadows? A successful detonation? (And what will you think of next to defend your downline commissions in these frauds if people are blown to bits?)

    This Blog is well aware that many autosurf/HYIP participants want to feel “good” about what they are doing. We are equally well aware that some autosurf/HYIP participants believe that shutting down such schemes is an abuse of government power and some perceived affront to the Constitution.

    Our view is that participants should not feel “good” at any time and that the purported abuse of government power in the autosurf/HYIP context is a red herring and, in some cases, code to recruit people who’d prefer the government not regulate any form of commerce.

    This Blog has not arrived at its view in a vacuum. It has assessed all the contrarian points of view and views them as arguments that should be accorded no weight at all. In many cases, the arguments have been revealed to be the ravings of people so out of touch with the realities of the various cases — and often so out of touch with reality itself — that they’d advance any argument if they deemed it as helpful to their “cause.”

  • THE MODERN PONZI: Federal Judge Orders Parties Not To ‘Harass’ Receiver In Mantria/Speed Of Wealth Case; Dozens Of Companies Now Ensnared In Litigation

    Mantria CEO Troy Wragg in a music video by ICEBLOC.

    A federal judge has issued an order that effectively puts a court-appointed receiver in control of dozens of entities related to Mantria Corp. and Speed of Wealth LLC in a search for “recoverable assets.”

    One of the receiver’s duties is to determine if fraudulent transfers occurred between or among companies, according to the order.

    The order, which is designed to prevent the dissipation of assets and maneuvering to hide or transfer money, is breathtaking because it covers not only Mantria and Speed of Wealth, but also “all of their subsidiaries, parent companies, and. . .  interests in any affiliated entities of any kind.”

    All in all, the order applies to a staggering total of at least 55 entities, a figure that demonstrates the enormous task of unraveling a modern-day fraud amid a maze of corporations.

    The SEC sued Mantria and Speed of Wealth in November, amid allegations that Mantria was running a “green” Ponzi scheme that focused on biochar and a “carbon negative” housing community in rural Tennessee  that purported to be environmentally friendly. Speed of Wealth allegedly helped Mantria get investment clients.

    Appointed receiver in the case was John Paul Anderson of Alvarez & Marsal Dispute Analysis & Forensic Services LLC.

    U.S. District Judge Christine M. Arguello listed dozens of names, perhaps signaling that the order could become even broader by noting that it was “not limited to” the names on the initial list. She also ordered Anderson to come up with a liquidation plan and warned the entities and their agents not to meddle in receivership affairs.

    Anderson was granted the authority to seek the court’s permission to place the entities in bankruptcy if the circumstances warrant such an approach. Arguello minced no words when ordering parties not to meddle. She specifically warned them not to “harass” Anderson or interfere in his duties as receiver (italics/bold added).

    “The Receivership Defendants and all persons receiving notice of this Order by personal service, facsimile or otherwise, are hereby restrained and enjoined from directly or indirectly taking any action or causing any action to be taken, without the express written agreement of the Receiver, which would:

    A. Interfere with the Receiver’s efforts to take control, possession, or management of any Receivership Property; such prohibited actions include but are not limited to, using self-help or executing or issuing or causing the execution or issuance of any court attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any Receivership Property;

    B. Hinder, obstruct or otherwise interfere with the Receiver in the performance of his duties; such prohibited actions include but are not limited to, concealing, destroying or altering records or information;

    C. Dissipate or otherwise diminish the value of any Receivership Property; such prohibited actions include but are not limited to, releasing claims or disposing, transferring, exchanging, assigning or in any way conveying any Receivership Property, enforcing judgments, assessments or claims against any Receivership Property or any Receivership Defendant, attempting to modify, cancel, terminate, call, extinguish, revoke or accelerate (the due date), of any lease, loan, mortgage, indebtedness, security agreement or other agreement executed by any Receivership Defendant or which otherwise affects any Receivership Property; or

    D. Interfere with or harass the Receiver, or interfere in any manner with the exclusive jurisdiction of this Court over the Receivership Estates.

    Here is the initial list of entities covered under Arguello’s order:

    1. Mantria Realty LLC
    2. Mantria Communities Inc.
    3. Mantria Real Estate Opportunities Group LLC
    4. Mantria Investments LLC
    5. Mantria Financial LLC
    6. Mantria Capital Advisors LLC
    7. Mantria Industries LLC
    8. Carbon Diversion Inc.
    9. Mantria Records LLC
    10. The Mantria Foundation Inc.
    11. Mantria Realty FL LLC
    12. Mantria Communities LP
    13. Mantria Real Estate Opportunities Group I LP
    14. KITN Investments LLC
    15. The Mantria Renewable Energy Fund LP
    16. The Mantria Place Renewable Energy Site Development LP
    17. The Mantria Industries Hohenwald Tennessee Eco-Industrial Center Site Development L.P.
    18. Earth Mate Technologies LLC
    19. Clean Energy Components LLC
    20. EternaGreen Capital LLC
    21. The EternaGreen International Carbon Economy Network LLC
    22. EternaGreen University
    23. EternaGreen Global Corporation
    24. C&M Industrial Center LLC
    25. Mantria Industries II LLC
    26. Carbon Diversion Carlsbad New Mexico Manufacturing Plant LLC
    27. Indian Trail Estates LLC
    28. Mantria Village LLC
    29. Mantria Bluffs LLC
    30. IronBridge Properties LLC
    31. Legacy Ridge LLC
    32. Iris Village LLC
    33. Mantria Place LLC
    34. The Mantria Group LLC
    35. Mantria Indian Trail Development LLC
    36. Indian Trail Estates Phase I LLC
    37. Indian Trail Estates Phase II LLC
    38. Indian Trail Estates Phase III LLC
    39. Indian Trail Estates Homeowners Association Inc.
    40. Legacy Ridge Homeowners Association Inc.
    41. The Mantria Place Homeowners Association Inc.
    42. SOW Trust Deed LLC
    43. SOW Hard Money Loans Investment Club LLC
    44. SOW Hard Money Loans II LLC
    45. SOW Trust Deed Group II LLC
    46. Trust Deed Group I LLC
    47. SOW Hard Money 50 Economic Stimulus Investment Club LLC
    48. SOW Mantria Income LLC
    49. SOW Mantria Diversification LLC
    50. SOW Mantria 5% LLC
    51. SOW Mantria Place 25% LLC
    52. SOW Mantria 25% LLC
    53. Speed of Wealth Investments Gold Club LLC
    54. Trust Deed 3.0 LLC
    55. SOW MI 25% Sale of Systems LLC

    Arguello said she recognized “that not all of Speed of Wealth, LLC’s assets and/or business may be related, directly or indirectly, to the conduct alleged in the Commission’s Complaint.”

    Named individual defendants in the alleged $30 million fraud by the SEC in November were Mantria CEO Troy Wragg and Mantria COO Amanda Knorr, along with the company itself. Also named defendants were Speed of Wealth and its principals, Wayde and Donna McKelvy, formerly husband and wife.

    One of the companies under the Mantria umbrella was Mantria Records LLC, which purportedly promoted a hip-hop duo known as ICEBLOC.

    Two months after Troy Wragg accepted a kudo from former President Bill Clinton for environmentally friendly business practices, Wragg was implicated by the SEC in an alleged "green" Ponzi scheme. The Financial Industry Regulatory Authority (FINRA) later issued an Investment Alert warning the public about a relatively new form of fraud: “green energy investments” that trade on investors’ affinity for keeping the planet clean.

    The case became notable for reasons beyond its size and scope. Wragg, for instance, appeared alongside former President Bill Clinton at the 5th Annual Meeting of the Clinton Global Initiative (CGI) in New York Sept. 25.

    CGI had lauded Mantria in part for helping to “mitigate global warming” through its business practices. Just two months later Mantria and Speed of Wealth were accused of a colossal fraud.

    After the CGI event in New York, Mantria and Speed of Wealth seized on Clinton’s name and the names of prominent individuals who attended the event to produce marketing materials used to entice investors.

    Even after the SEC brought the charges, reporters who tried to contact Speed of Wealth received email pitches to join money-making opportunities.

    Video promotions by Mantria and Speed of Wealth were notable for dropping the names of President Obama, former U.N. Secretary General Kofi Annan, President Laurent Gbagbo of the Ivory Coast, Mike Duke, CEO of Wal-Mart, Muhtar Kent, CEO of the Coca-Cola Co. and actor Matt Damon.

    Leeching off the names of celebrities, famous businesspeople and politicians to sell fraudulent financial schemes is a common tactic among multilevel marketing (MLM) and Ponzi scammers. By implying that prominent people endorse a product or service, the fraudsters hope to turn skeptics into clients.

    Claims were made in the AdSurfDaily Ponzi scheme case, for example, that ASD President Andy Bowdoin had received an award from President George W. Bush for a lifetime of business achievement. The award proved to be the so-called Congressional “Medal of Distinction,” which is given for campaign contributions to the National Republican Congressional Committee and signifies only the ability to write a check for the purchase of banquet tickets.

    In an SEC case last month, the agency alleged that a Staten Island investment-advisory business known as Gryphon Holdings Inc. told clients that famed businessman George Soros backed the company. A purported “testimonial” from Soros was fraudulent, the SEC said.