Prosecution, INetGlobal Strike Interim Agreement That Frees Money To Pay Employees, Insurance Under Court Supervision

UPDATED 6:14 P.M. ET (U.S.A., JAN. 20, 2011.)

Employees of an Internet company under federal investigation amid allegations it was operating a Ponzi scheme have received some good news: a sum of $125,000 has been released to pay their past-due salaries and $25,000 has been released to pay their past-due healthcare benefits.

Meanwhile, $200,000 per month will be released to pay the “ordinary and necessary operating expenses” of INetGlobal and affiliated companies as the probe into their business practices continues.

News for commission-based affiliates of INetGlobal was not good. No money has been released to pay them.

Dubbed an “interim agreement,” the release of funds was negotiated by attorneys for both INetGlobal and the government. It will be in effect “until such time as the government files an indictment or information containing forfeiture provisions, a civil forfeiture complaint against the funds seized on February 23, 2010 and in later days, or determines that there shall be no prosecution or forfeiture complaint,” according to the terms.

The agreement does not mean that INetGlobal no longer is in legal jeopardy.

A separate action against a San Diego property the government alleged was acquired with fraud proceeds has been suspended under the terms of the agreement. The case against the San Diego property has not vanished; under the terms of the agreement, it is being placed on hold “until the related criminal case or investigation is resolved or, in the event that the government determines that there shall be no prosecution, until the government either files a separate civil forfeiture complaint against the funds which were seized on February 23, 2010 and in later days, or determines that there shall be no prosecution or forfeiture complaint.”

In February, the U.S. Secret Service said it believed INetGlobal operator Steve Renner was running an international Ponzi scheme. About $26 million was seized in the case.

Companies covered under the agreement include INetGlobal, Inter-Mark Corp. of Nevada,
Virtual Payments Systems LLC of Wisconsin, V-Media Marketing LLC of Minnesota, Cash Cards International LLC of Minnesota and SMR Investments #1 LLC of Minnesota.

NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.

SteveRenner.com described the agreement with the prosecution as “an incredible turn of events,” reporting it was “worth millions.” The website also reported that the firm has become “the 1st company ever” targeted in a government investigation to receive money back.

Prosecutors told the Star Tribune of Minneapolis-St. Paul that the government agreed to the release of funds so employees could get paid. (See link to Star Tribune story below.)

Payments will be administered under court supervision by a court-appointed attorney, according to the agreement. The agreement calls for the IRS to receive “up to” $650,000 and the Minnesota Department of Revenue to receive “up to” $150,000 for tax payments delayed by the probe. Renner will receive $151,484.75 upon providing “proof that Inter-Mark Corporation and/or V-Media Marketing, LLC and/or Cash Cards International, LLC” owe him that sum.

Renner, 55, was listed last week as in the custody of the U.S. Marshals Service and “in transit” to a federal detention facility to begin serving an 18-month sentence for income-tax evasion. He was convicted in December 2009 and sentenced in May for actions that occurred prior to the INetGlobal Ponzi scheme investigation.

Renner-related companies have ties to at least four other Ponzi or investment-fraud cases, according to records.

Read the Star Tribune story on the interim agreement.

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6 Responses to “Prosecution, INetGlobal Strike Interim Agreement That Frees Money To Pay Employees, Insurance Under Court Supervision”

  1. One thing that puzzles me you write, and I have no reason to doubt that information, “Renner, 55, was listed last week as in the custody of the U.S. Marshals Service and “in transit” to a federal detention facility to begin serving an 18-month sentence for income-tax evasion.” but also “SteveRenner.com described the agreement with the prosecution as “an incredible turn of events,” reporting it was “worth millions.” and I read the blog post there myself. Does that mean that Mr. Renner was allowed to take his laptop or similar to jail? Does somebody posts in his name (obscuring the fact that he is in jail and can’t post himself)? Or has he still not arrived in jail? Just wondering and being puzzled about the US system, SY

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  2. hospitalera: One thing that puzzles me you write, and I have no reason to doubt that information, “Renner, 55, was listed last week as in the custody of the U.S. Marshals Service and “in transit” to a federal detention facility to begin serving an 18-month sentence for income-tax evasion.” but also “SteveRenner.com described the agreement with the prosecution as “an incredible turn of events,” reporting it was “worth millions.” and I read the blog post there myself. Does that mean that Mr. Renner was allowed to take his laptop or similar to jail? Does somebody posts in his name (obscuring the fact that he is in jail and can’t post himself)? Or has he still not arrived in jail? Just wondering and being puzzled about the US system, SY

    Hello SY,

    At the moment, I don’t have the answer to your questions. Perhaps an INetGlobal member will stop by the PP Blog and enlighten readers.

    The “worth millions” comment on the Renner site struck me as odd. The agreement appears to make available about $1.76 million of the roughly $26 million seized and has a provision to release more in $200,000 monthly increments, if needed.

    So, roughly $24.24 million (about 95 percent) of the money still is in control of the government.

    How long the agreement will remain in place is indefinite because the government could decide to file criminal charges or a forfeiture complaint at any time. It also has the option not to prosecute.

    The government said in April that a “major fraud and money laundering investigation is under way bearing serious criminal consequences,” describing the probe as in its early stages.

    In April, Judge Frank sought clarification of the money issues. He sent the case back to Judge Noel, and the interim agreement appears to have been fashioned from framework laid down by Judge Frank that would give INetGlobal a minimal amount of operating capital while the investigation proceeded.

    http://patrickpretty.com/2010/04/17/federal-judge-delays-ruling-in-inetglobal-case-saying-attorney-may-be-primary-fact-witness-sends-case-back-to-magistrate-judge/

    “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 ordered, in April.

    That’s why the “worth millions” comment on the Renner Blog struck me as odd. The agreement preserves about 95 percent percent of the seized money and places about 5 percent in the control of a court-appointed attorney to preserve the status quo at INetGlobal.

    These are serious legal issues. To say the agreement is “worth millions” is to interject marketing fluff into a solemn process — and ignores the reality that there are other legal issues on the table.

    When people attend a wedding, they want to focus on the bride and groom. If someone in the wedding party is wearing muddy shoes, guests might be distracted by them, thus taking their focus off the main event.

    To me, the “worth millions” claim in the context of the INetGlobal case is like those muddy shoes. It distracts from the serious legal issues, which are the main event.

    Patrick

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  3. Patrick,

    This sounds a lot like when Andy Bowdoin told everyone on a conference call that the state of Florida had dropped the Ponzi charges against ASD. The problem was, there never were any Ponzi charges. We are dealing with professional prevaricators, adept in equivocation. They could provide the Earth with an unending supply of fertilizer with the amount of BS that they spew.

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  4. It reminds me of when the mods,and others, on the Surf’s Up forum claimed that the US Attorney had admitted in private that ASD was not a Ponzi, but needed a way to save face before dropping the charges. It was utter BS and spin just like this statement made by the iNetGlobal people.

    You are right Patrick, it is nothing more than a diversion to the members of iNetGlobal from the serious issues and crimes. They are trying to give them false hope this will all soon be over and they will be back to business as usual shortly. They are following the ASD template, although not as bizarre as the ASD people; At least not yet.

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  5. I find the release of any funds to be quite surprising. How will it be determined that any funds released are not the product of any criminal activity? It is even more surprising to read from the story:

    Renner will receive more than $150,000 in seized funds that the companies owe him.

    So he is/might be behind bars and yet he can still “earn” $150K of what might be money from a ponzi scheme? Something sounds very wrong with this decision. I don’t suppose the relevant court documents are available to read anywhere.

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  6. Inetglobal reopen the same business on July 26th. Why does FBI allow this Ponzi scheme run again after 5 month investigation? Something wrong?

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