This is a links post:
Visit the website of the Seattle Post-Intelligencer to read a story on indictments of “sovereign citizens” in Washington state amid allegations of threats against public officials.
Visit the website of The World of Coos Bay, Ore., to read a story on the “indictment” of a sitting district attorney by sovereign citizens. Read a companion story on a purported bid to undermine a local prosecution.
BULLETIN: The Ponzi scheme trial of AdSurfDaily President Andy Bowdoin is scheduled to begin on Sept. 24, 2012, 11 months from today, the PP Blog has learned.
A status hearing on the case was held in the District of Columbia Friday. U.S. District Judge Rosemary Collyer presided.
Bowdoin is charged with wire fraud, securities fraud and selling unregistered securities. He was arrested in December 2010 and freed on bail.
Collyer laid out the following schedule, the Blog has learned:
Pretrial motions are due by Aug. 1, 2012. Responses are due two weeks later, on Aug. 15, 2012. A pretrial conference is scheduled a week after that, on Aug. 22, 2012. The actual trial is slated to begin a little more than a month later, on Sept. 24, 2012.
How many days or weeks the trial is expected to last was not immediately clear. Bowdoin, 76, claimed in court filings to have more than 100 witnesses. How many witnesses he’ll actually call is unclear.
Prosecutors have claimed to be in possession of hundreds of thousands of pages of evidentiary material.
Depending on when the trial ends next year, Bowdoin may be 78 before he hears a jury verdict.
In August 2008 — in the earliest days of the ASD case — some analysts predicted that the litigation could consume three or more years. The trial date, as it stands, reflects that the ASD-related litigation will have entered its fifth year when a jury is impaneled. The seizures of ASD-related assets began on Aug. 1, 2008, a date parts of the Northern Hemisphere were experiencing a total eclipse of the sun.
By coincidence, the date for pretrial motions — Aug. 1, 2012 — is the fourth anniversary of the seizures. When that date passes, the litigation will enter its fifth year.
Some ASD members claimed in August 2008 that ASD would be cleared and that matters would be settled by the Wednesday following the Friday seizures. Just days after the quick-settlement claims were made, Bowdoin described federal prosecutors and the U.S. Secret Service as “Satan.”
The ASD case has featured many bizarre claims.
UPDATED 3:35 P.M. EDT (U.S.A.) There are no listings in a state database for either the Asteria Philanthropic Foundation or the Asteria Foundation, the Virginia Department of Agriculture and Consumer Services said this morning.
The agency, which did not respond immediately to a request for additional comment on Club Asteria-related matters, oversees charitable entities in the state.
An undated “press release” on the Asteria Foundation .org site uses a dateline of Reston, Va. An FAQ’s page on the site claims the foundation “is a charitable, tax-exempt 501©(3) organization. Contributions are tax deductible in accordance with IRS rules and regulations.”
Why the copyright symbol — as opposed to the lowercase letter “c” — is used in the IRS claim on the site is unclear. Like the state of Virginia, the IRS database of charitable entities appears to have no listing for either the Asteria Philanthropic Foundation or the Asteria Foundation.
Separately, a state database in Maryland that tracks charities had no listing today either for the Asteria Philanthropic Foundation or the Asteria Foundation. Web-domain registration data for the .org site list an address in Maryland.
The foundation is an offshoot of Club Asteria, according to the .org site. Claims about Club Asteria came under fire in May by CONSOB, the Italian securities regulator. Separately, the American Red Cross said last week that it was opening a probe into claims Club Asteria had a tie-in with the Red Cross.
The Red Cross logo and name have been used in repeated promos for Club Asteria and the purported foundation. The foundation’s .org site lists a street address in Hong Kong and a fax number in Virginia.
Last week, the Virginia State Corporation Commission, which oversees the Virginia Division of Securities & Retail Franchising, declined to say whether a probe into the business activities of Club Asteria was under way.
However, the state did say that neither Club Asteria nor Asteria Corp. — Club Asteria’s apparent parent company — were registered in Virginia state to sell securities.
Club Asteria was popularized in part by promos on well-known Ponzi scheme forums. Members claimed the firm paid out up to 10 percent weekly. Club Asteria first slashed payouts, and then eliminated them. Those acts followed on the heels of the CONSOB probe and the suspension of Club Asteria’s PayPal account.
Multiple Club Asteria promoters were promoting multiple “programs” on the Ponzi boards, leading to questions about whether the firm had come into possession of fraud proceeds.
UPDATED 4:14 P.M. EDT (U.S.A.) Club Asteria, the offshoot of Virginia-based Asteria Corp. and the apparent braintrust behind an emerging entity known as the Asteria Philanthropic Foundation, is not registered to sell securities in Virginia, the state said Thursday.
Neither is Asteria Corp., according to state records.
Citing confidentiality laws, the state declined to say Friday whether it was aware that CONSOB, the Italian Securities regulator, had opened a probe into Club Asteria-related matters earlier this year. The state also declined to say whether it had launched its own Club Asteria probe.
“We cannot confirm or deny that an investigation is being conducted due to the prohibitions in Section 13.1-518 of the Code of Virginia,” said Katha Treanor, a spokeswoman for the State Corporation Commission (SCC). The commission oversees the Virginia Division of Securities & Retail Franchising.
Among other things, the statute cited by Treanor forbids the state from disclosing publicly whether a probe is under way while empowering it to issue subpoenas, compel attendance at hearings and share information with other law-enforcement agencies.
Club Asteria, which announced a cash crunch in June after it acknowledged in May that its PayPal account had been suspended, has described itself as a “cause” marketing company. A PowerPoint presentation for Club Asteria claimed the program offered a 25 percent “matching bonus,” along with”passive” income for Gold and Silver members that was “100% GUARANTEED.”
Ponzi forum promos for Club Asteria claimed payouts came via wire from a Hong Kong entity known as Asteria Holdings Limited. Club Asteria, which claimed to be a revenue-sharing program, has traded on the name of the World Bank.
The news in Virginia developed as the General Counsel’s Office of the American Red Cross said it was opening a probe into the potential misuse of the Red Cross logo and name by the Asteria Philanthropic Foundation, which also is known as the Asteria Foundation and has issued at least one undated “press release” with a dateline of Reston, Va.
Andrea Lucas, Club Asteria’s managing member, was quoted in the release. Among the oddities in the release is that the foundation announced its launch “today” — without putting a date on the release. Visitors to the site could form the impression that “today” literally meant the day they visited the site, regardless of the day of the week.
Although the foundation has its own website at a .org domain and Club Asteria claimed in its October emagazine that the Red Cross was a “partner,” the Red Cross said Thursday that it had been unable “to confirm a [Club Asteria] link to the Red Cross.”
If that continues to hold true, Club Asteria will receive a cease-and-desist order, the Red Cross said, noting that individuals do not have to go through Club Asteria to donate to the Red Cross. Earlier this year, Club Asteria encouraged members to recruit more affiliates willing to pay Club Asteria a fee to enable the company to provide earthquake relief in Japan.
Last month, Club Asteria removed content from its emagazine that suggested that actor Will Smith had endorsed the purported business opportunity. Club Asteria did not explain why it had reconfigured the publication to remove Smith-related content. The removal occurred after the PP Blog sought comment from Smith’s publicist on whether the actor was aware his name and image were being used by Club Asteria.
In the October issue of Club Asteria’s emagazine, a button that leads to a registration page for Club Asteria was placed inside a quotation from Mahatma Gandhi. Gandhi, the slain Indian civil-rights champion, was assassinated in 1948. Club Asteria misspelled Gandhi’s name in the publication, which is the firm’s recruitment organ. The Red Cross logo appears both inside the publication and on the foundation’s .org site.
It was unclear yesterday whether the foundation, which uses a Hong Kong address in a passage on its .org domain and a fax number with a Virginia area code, was registered as a charitable entity in Virginia. Charitable entities in the state are overseen by the Virginia Office of Consumer Affairs, a branch of the Virginia Department of Agriculture and Consumer Services. (The PP Blog contacted the Office of Consumer Affairs on Friday to determine if the foundation is registered in Virginia, and expects to hear back Monday.)
Among the claims on the .org domain was that the foundation has “tax exempt” status with the IRS, but a database maintained by the IRS appears to have no listing either for the Asteria Philanthropic Foundation or the Asteria Foundation.
Records in Virginia show that two corporate business registrations for an entity known as Asteria Corp. were “terminated” — one on Nov. 2, 2009, another on May 4, 2010. The reasons behind the terminations and the registration details of the corporations were not immediately clear.
On May 31, 2010, Asteria Corp. — using the services of a law firm — sent a check for $325 to the state via overnight courier (FedEx). The fee included $100 for expedited service, and the registration as a business entity was restored on June 8, 2010, according to records.
Club Asteria was popularized in part by posts on Ponzi boards such as TalkGold and MoneyMakerGroup, both of which are listed in federal court filings as places from which Ponzi schemes are promoted. A TalkGold thread shows that the first promo for Club Asteria was posted on April 5, 2010. The thread, which has been moved to the TalkGold scams folder, ultimately grew to 139 pages — with 10 posts per page.
Meanwhile, on MoneyMakerGroup, the first Club Asteria post was dated May 29, 2010 — while Asteria Corp.’s corporate registration was listed as “terminated” in Virginia. That thread ultimately grew to 221 pages — with 15 posts per page.
Two days later — on May 31, 2010 — Asteria Corp. sent $325 to the state and asked for expedited service to restore the firm’s corporate registration.
Well-known Ponzi board hucksters such as “Ken Russo,” “10BucksUp” and “manolo” were among the Club Asteria cheerleaders. “Ken Russo” also is known as “DRdave.”
Scores of Club Asteria promoters described the program as a “passive” investment opportunity that paid out anywhere from 3 percent to 10 percent a week. Earnings were described as guaranteed, and some promoters lured recruits by offering to return a portion of their monthly fees. The Ponzi forum promos and pitches by Club Asteria members on Blogs and websites led to questions about whether Club Asteria was selling unregistered securities and whether the firm had come into receipt of proceeds tainted by other schemes pitched on the Ponzi boards.
CONSOB announced in May that it had blocked Club Asteria promos in Italy. Club Asteria acknowledged during the same month that its PayPal account had been suspended, blaming the development on members and later claiming it was experiencing a cash crunch.
Weekly payouts to members first were slashed, and later were eliminated. Ponzi forum promoters remained busy, turning their attention to other purported programs, some of which have collapsed or are in a classic state of Ponzi decay. One of the programs with members in common with Club Asteria — JustBeenPaid — claimed it was moving to “offshore” servers and forced members to affirm they were not government spies or media lackeys.
Frederick Mann, the purported braintrust behind JustBeenPaid, was a promoter for AdSurfDaily, the Florida firm the U.S. Secret Service said in 2008 was operating an international Ponzi scheme. JustBeenPaid is trading on the names of Warren Buffett and Oprah Winfrey — and even has an ad banner with an image of Mr. Spock,” the fictional spaceman from the Star Trek series.
Hank Needham, who appears in Club Asteria videos and has been described as an owner of the company, also was an AdSurfDaily promoter, according to a 2008 promo for ASD.
BULLETIN: The Office of the General Counsel of the American Red Cross in Washington, D.C., has opened a probe into the potential misuse of the Red Cross logo and name by Club Asteria and an entity known as the Asteria Philanthropic Foundation or the Asteria Foundation.
Depending on how the investigation evolves in the coming days, Club Asteria could be on the receiving end of a cease-and-desist order, said Red Cross spokeswoman Anne Marie Borrego.
“The case has been sent to the Office of General Counsel,” Borrego said.
The Red Cross logo appears on a domain known as Asteria-Foundation.org. Meanwhile, the Red Cross logo also appears on the inside front cover (Page 2) of Club Asteria’s October house organ, which the purported business “opportunity” uses as a recruitment tool.
“So far, no one has been able to confirm a [Club Asteria] link to the Red Cross,” Borrego said.
Club Asteria claims in the electronic publication that the Red Cross is a “partner.”
Last month, Club Asteria produced a story in the house organ that used an image of actor Will Smith. Club Asteria later removed both the image of Smith and a purported “interview” with him, reconfiguring the publication to remove any reference to the “Independence Day” star.
Prior to the removal, the image of Smith was directly above a Club Asteria “JOIN NOW” button.
There appears to be no entry for the Asteria Philanthropic Foundation in a database maintained by the IRS, even though the Asteria-Foundation.org domain makes this claim — using the copyright symbol as opposed to a lowercase “c.”
“The Asteria Foundation is a charitable, tax-exempt 501©(3) organization. Contributions are tax deductible in accordance with IRS rules and regulations.”
An undated “press release” on the site with a dateline of Reston, Va., claims the foundation “was launched today and signals a crucial step in the organization’s fight against poverty around the world.”
The undated release quotes Club Asteria’s Andrea Lucas. (Verbatim from release; indent added by PP Blog.)
“Funds raised by Club Asteria are donated by The Asteria Foundation to a variety of different organizations that have the same goal and vision as we do,” said Club Asteria Founder Andrea Lucas. “Basically, we want to eliminate poverty around the world by getting funds into the hands of those who need them the most.”
Separately, the Asteria-Foundation.org domain claims the foundation uses a Hong Kong address, but a fax number associated with the entity uses an area code in Virginia.
Earlier this year, Club Asteria encouraged members to spend money on the firm’s purported services and to work harder on recruiting as a means of helping earthquake victims in Japan.
Borrego said today that people who wanted to donate money to the Red Cross could do so directly at the Red Cross website.
Questionable entities trading on the name of the Red Cross “happens all the time” because of the power of the Red Cross name, Borrego said.
In May, CONSOB, the Italian securities regulator, opened a probe into claims made about Club Asteria. Club Asteria acknowledged that its PayPal account had been frozen, later saying the firm was experiencing a cash crunch.
Club Asteria blamed members for the developments. The purported “opportunity” was widely promoted on boards associated with Ponzi schemes.
Authorities in Virginia were checking this afternoon to determine if Club Asteria was registered to sell securities, the PP Blog has learned. Ponzi forum posters claimed Club Asteria paid out up to 10 percent a week before suspending cashouts earlier this year.
The Asteria-Foundation.org website was registered on May 19, 2011.
In the face of thousands of affiliate claims that Club Asteria was a “passive” investment program that provided a weekly payout, Club Asteria denied it was an issuer of securities.
In a case that drew comparisons to AdSurfDaily because of recidivism, undisclosed bankruptcies and ties to Utah, the three principal figures of the Philip R. Lochmiller Sr. real-estate Ponzi scheme in Colorado will be going to federal prison.
Lochmiller Sr., 63, was found guilty in July after a 10-day trial in which the jurors returned the verdicts in three hours. He will be sentenced after a final computation of losses is completed. The case involved a company known as Valley Mortgage Inc. The case involved about $30 million.
Lochmiller Sr. was found guilty of conspiracy, money laundering conspiracy, money laundering and mail fraud.
His stepson, Philip R. Lochmiller Jr., 38 when charged, has been sentenced to eight years in federal prison for conspiracy to commit securities and mail fraud and money laundering. Business associate Shawnee N. Carver, 33 when charged, has been sentenced to two years for conspiracy to commit securities and mail fraud.
Prosecutors announced the sentences imposed on Lochmiller Jr. and Carver yesterday.
“Philip Lochmiller Jr. helped orchestrate an investment scheme which defrauded over 400 victims out of more than $30 million,” said James Yacone, special agent in charge of the Denver FBI office. “Several elderly victims were financially devastated. [The] sentencing sent a strong message that white collar criminals will not be tolerated. The FBI will continue to aggressively investigate and seek prosecution against the groups and individuals who defraud unwitting victims out of their earnings.”
Lochmiller Sr. was sentenced to three years in a California state prison in the 1980s after he was charged with 60 counts of securities fraud and pleaded guilty to about half of them. Investors in his new scheme at Valley Mortgage were not told of his history as a securities swindler, federal prosecutors in Colorado said.
Federal prosecutors in the District of Columbia said the same thing about ASD President Andy Bowdoin, who was charged with felonies in Alabama in a securities scheme in the 1990s.
Meanwhile, Lochmiller Sr.’s investors also were not told that both Lochmiller Sr. and Jr. had bankruptcies on their records. Federal prosecutors in the District of Columbia alleged in August 2008 that ASD members and members of a companion autosurf known as Golden Panda Ad Builder were not told about the bankruptcy of Golden Panda President Clarence Busby.
Nor were they immediately told that Busby had a run-in with the SEC in the 1990s and was accused of purveying three prime-bank swindles, according to records.
The Lochmiller case also has a tie to Vernal, Utah, a community to which ASD also has a tie. The Lochmiller case was in part about real estate in Vernal. Vernal is the community in which the so-called “Arby’s Indians” got their start.
ASD mainstay Curtis Richmond was a member of the bogus “tribe” based in Vernal. The tribe, which used the address of a Vernal doughnut shop as the address of its purported “Supreme Court” and was ruled a “complete sham” by a federal judge, got its derisive name because it once held a meeting at an Arby’s restaurant in Provo.
Richmond went on to become a pro se litigant in the ASD Ponzi case, accusing the judge overseeing the case in the District of Columbia of “TREASON” and operating a kangaroo court. Richmond claimed the judge overseeing an unrelated case in Utah owed him $30 million. Other ASD figures later claimed government officials owed them sums ranging from the millions of dollars to the trillions.
Another parallel between the ASD case and the Lochmiller case is the presence of the IRS. ASD’s early deceptions were uncovered by a U.S. Secret Service/IRS Task Force operating in Florida, according to court filings.
“Investment fraud is like a ‘house of cards’; the underlying structure can fall apart at any time leaving many investors in financial ruin,” said Sean Sowards, a top IRS agent working the Lochmiller case.
Sowards is the special agent in charge of the IRS-Criminal Investigation unit in Denver.
“These sentences should remind us that defrauding investors is a serious offense and those who do will be held accountable,” Sowards said.
Both Lochmiller Jr. and Carver testified at the Lochmiller Sr. trial, prosecutors said.
One of the enduring myths of the Ponzi boards — “offshore equals safe” — has been shattered again. The Los Angeles County Sheriff’s Department says it got its man — with help from the government of Thailand, the U.S. Marshals Service and U.S. Immigration and Customs Enforcement (ICE).
Ponzi scheme suspect John Chiyuan Lee became a fugitive in November 2006, when he fled Greater Los Angeles for Thailand after being identified as a thief. Victims emerged from at least four California counties — Los Angeles, Orange, Ventura and Santa Clara — and at least one victim resided in St. George, Utah, authorities said.
INTERPOL published a “Wanted” notice on Lee, according to records.
The case was assigned to Los Angeles Sheriff’s Det. Simeon Plyler, who discovered at least 29 victims and used passport records and worked with ICE to track Lee to Thailand.
“ICE agents enlisted the assistance of Thailand authorities who were able to locate and arrest him in Pataya, Thailand, on October 4, 2011,” the Sheriff’s Department said. “Deputies with the U.S. Marshals Service assisted in the case by transporting Lee back to the United States from Thailand to face criminal charges.”
Lee, 40, was arrested at Los Angeles International Airport and taken to the Los Angeles County Jail. Bail was set at $1.869 million, according to jail records. He remains jailed.
Victims’ losses ranged from $3,000 to $425,000, authorities said.
Residents of California communities such as Culver City, Hancock Park, Hollywood, Hollywood Hills, Huntington Beach, Lakewood, Los Angeles, Marina del Rey, Morgan Hill, San Pedro, Shadow Hills, Sherman Oaks, Studio City, Thousand Oaks, Valley Village, Van Nuys, Ventura, West Hollywood, West Los Angeles and Westwood were among the victims, authorities said.
Patch.com is reporting that Lee was a trainer at a Culver City gym — and all of his victims worked out at the facility.
UPDATE: The PP Blog reported here that Warren Buffett had become an unknowing pitchman for the global JustBeenPaid Ponzi scheme whose promoters also pushed the AdSurfDaily Ponzi scheme on the public.
Meanwhile, the Blog reported here that Oprah Winfrey had met the same fate at the hands of the JustBeenPaid henchmen.
The Blog now is reporting that “Mr. Spock,” one of the fictional characters on the Star Trek television and movie series, also has become an unknowing Just Been Paid pitchman. Spock was portrayed by Leonard Nimoy.
The images of “Mr. Spock” and Winfrey are hosted on JustBeenPaid’s server, the Blog has confirmed. Each photo file has a separate name. The files are contained within publicly accessible folders on the JustBeenPaid website. The images of Buffett are hosted on YouTube.
JustBeenPaid’s website also houses an image of American icon Benjamin Franklin. The image is in the same publicly accessible folder that serves the images of Winfrey and “Mr. Spock.” The server for JustBeenPaid appears to be located in Texas, although the domain registration uses a street address in South Africa.
Frederick Mann is listed as the registrant contact for JustBeenPaid.
Earlier today, the PP Blog reported that the purported Club Asteria “program” was using a quote by the assassinated Indian leader Mahatma Gandhi to drive traffic to the Club Asteria scheme. An image of famed businessman Richard Branson also appears in this month’s Club Asteria house organ.
>> BULLETIN >> MOVING: Cheng Yi Liang, the FDA chemist accused in March of mining the agency’s database for drug approvals or denials and using the information to make insider trades, has pleaded guilty to securities fraud and failing to disclose illicit profits.
Liang, 57, of Gaithersburg, Md., faces a maximum term of 25 years in federal prison. Sentencing is scheduled for Jan. 9. The case was one that embarrassed the FDA and its employees, but one that exposed the corruption of a federal worker who used the tools of government to line his own pockets.
The SEC simultaneously charged Liang civilly in March, opening up a second litigation front.
As part of a plea agreement in the Feds’ criminal case, Liang will forfeit $3.7 million, a home and condominium in Maryland and funds in 10 bank or investment accounts, federal prosecutors said.
The FDA is a branch of the U.S. Department of Health and Human Services (HHS).
“Profiting based on sensitive, insider information is not only illegal, but taints the image of thousands of hard-working government employees,” said Elton Malone, special agent in charge of the HHS-Office of Inspector General Special Investigations Branch. “We will continue to insist that federal government employee conduct be held to the highest of standards.”
“Mr. Liang used inside information about pharmaceutical companies — information he had access to solely because of his position at the FDA — to pocket millions in illicit profits,” said Assistant Attorney General Lanny Breuer. “In a shocking abuse of trust, Mr. Liang exploited his position as a chemist in the FDA’s Office of New Drug Quality Assessment to cash in, using the accounts of relatives and acquaintances to hide his illegal trading. Now, like many others on Wall Street and elsewhere, he is facing the significant consequences of trading stocks on inside information.”
Breuer is head of the Justice Department’s Criminal Division.
While employed at FDA, Liang “was required to file a Confidential Financial Disclosure form disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200.,” investigators said. “During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using the controlled accounts or his income from the illicit securities trading.”
The FBI participated in the criminal probe.
“Those who use privileged and valuable information for personal gain, break the trust placed in them as a government employee and the integrity of the research they conduct on behalf of the U.S. government,” said James W. McJunkin, assistant director in charge of the agency’s Washington Field Office.
Keith Epstein, 56, told senior citizens they could trust him with their money. Some of his investors believed him — and they liquidated legitimate holdings and gave the cash to Epstein.
But Epstein, of Farmington Hills, Mich., was running a $4 million Ponzi scheme, the FBI said.
He took the cash from his victims, spending it on gambling and to support “multiple exotic dancers,” investigators said.
Some investors received Ponzi payments, investigators said. Epstein plied his marks in part by visiting their homes, participating in their family functions and by putting “money toward[] charitable causes important to clients,” the FBI said.
Epstein, who’d been held in the Macomb County lockup for violating state laws and writing a bad check, now is on his way to an unspecified federal prison. He was sentenced yesterday by U.S. District Judge Nancy G. Edmunds to 97 months for the Ponzi scheme.
“We hope to send a message to investment advisors that we will aggressively prosecute those who steal from the elderly and other small investors,” U.S. Attorney Barbara McQuade of the Eastern District of Michigan said.
“Many of his victims’ retirement funds have been completely eviscerated, leaving them with nothing after lifetimes of saving and hard work,” the FBI said.
Edmunds ordered Epstein to make resitution of $4.1 million to victims.