PatrickPretty.com

Day: February 23, 2012

  • BULLETIN: 4 More Indictments In Alleged North Carolina Ponzi Caper; New Charges Follow On Heels Of 7 Previous Convictions And Criminal Allegations That Bank Turned A Blind Eye To Fraud Scheme

    BULLETIN: With seven defendants already convicted of Ponzi-related crimes and a North Carolina bank accused of turning a blind eye to the fraud, four new criminal defendants have been named in the Black Diamond Capital Solutions probe.

    A federal grand jury in Charlotte has returned an indictment against Jonathan D. Davey, 47, of Newark, Ohio; Jeffrey M. Toft, 49, of Oviedo, Fla.;  Chad A. Sloat, 33, of Kansas City, Mo.; and Michael J. Murphy, 51, of Deep Haven, Minn., the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina said.

    It was a case that married a conspiracy to a series of lies and ultimately was unraveled by the FBI and the IRS, prosecutors said. Among the key new allegations is that a second Ponzi scheme emerged to replace one that had collapsed earlier.

    Davey, a CPA, organized a Belize company known as Divine Circulation Services Ltd. that assisted now-convicted Black Diamond felon Keith F. Simmons in pulling off the $40 million scam, according to federal records.

    Other corporate entities identified in a 2011 CFTC civil complaint as having links to the alleged scam also used names that conjured images of religion and safety. Davey also was at the helm of a Belize firm known as Sovereign Grace Inc., a firm that benefited from the scam, the CFTC said last year.

    “The indictment also charges Davey with tax evasion for claiming to the IRS on his 2008 tax return that $810,000 that Davey stole from victims was a ‘loan,’” federal prosecutors said today. “In reality, the indictment charges, Davey stole that $810,000, plus approximately $500,000 in 2009, from victims to build Davey’s personal mansion.”

    All four of the new criminal defendants are charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to commit money-laundering, prosecutors said.

    Elements of the case as outlined in the CFTC’s civil complaint last year read like a work of impossible fiction. Regulators and other law-enforcement agencies increasingly have been squaring off against bizarre fraud schemes that seek to mask themselves behind shell companies both domestic and offshore. The schemes often feature appeals to greed and faith, amid claims of fantastic earnings.

    Read the announcement about the new indictments on the FBI website, which also lists the names of individuals already convicted in the scheme.

  • URGENT >> BULLETIN >> MOVING: FTC Gains Spectacular Judgment Of $359 Million In Alleged Cross-Border Fraud Involving Continuity Billing; Case Features Elements Similar To Allegations Against Jeremy Johnson

    David Vladeck of the FTC

    URGENT >> BULLETIN >> MOVING: In a case that featured elements similar to the allegations against U.S.-based Internet Marketer Jeremy Johnson, the FTC has gained a $359 million consent judgment against alleged Canadian scammer Jesse Willms and other defendants.

    The agency sued Willms in May 2011, about six months after it sued Johnson. Wiilms now has settled without acknowledging wrongdoing, but the settlement appears to be a straight-line win for the agency, which lauded the Canada Competition Bureau, Service Alberta, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud, the Edmonton Better Business Bureau and the BBB of Southern Nevada for assisting in the cross-border probe.

    “The fact that almost four million consumers fell prey to the lure of these ‘free trial’ offers is a stark reminder that ‘free’ offers can come at a huge price,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

    Without referencing Johnson or the case against him, IWorks Inc. and scores of other defendants when commenting on the Willms’ judgment, Vladek said this:

    “The FTC has stopped about $1 billion in online marketing fraud during the past two years by shutting down operations like this. But consumers still need to beware, because scam artists are constantly coming up with new ways to deceive people online.”

    Johnson has denied wrongdoing on both the civil and criminal fronts. Federal prosecutors said last month that they anticipate Johnson will face criminal charges in addition to a single count of mail fraud he currently faces. And a court appointed receiver in the FTC’s civil case issued a report earlier this month that described a massive fraud scheme that crossed international borders and cloaked assets.

    The alleged scams of Willms and Johnson pulled in at least $700 million, according to court filings.

    A federal judge must approve the Willms’ consent order, which requires the surrender of bank account funds and “proceeds from the sale of his house, personal property, and corporate assets, including a Cadillac Escalade, fur coat, and artwork, the FTC said.

    “International collaboration is increasingly important for enforcement agencies combating deceptive practices online,” said Lisa Campbell, deputy commissioner of Competition for the Canada Competition Bureau.

    Part of the Willms’ scheme falsely traded on the names of Oprah Winfrey and Rachael Ray while also making false claims of cancer cures and weight loss, the FTC charged last year. In fact, the FTC said, Winfrey sued Willms.

    In addition to using the names of Winfrey and Ray, the Willms’ scheme also traded on the famous names of CNN, USA Today, CBS, the “60 Minutes” television show and other brands, the FTC said last year.

    News about the Willms’ settlement came on the same day affiliates of JSS Tripler/JustBeenPaid were using the name and image of actress Lindsay Lohan in a YouTube promo. JSS Tripler/JustBeenPaid affiliates also have traded on the names and likenesses of Winfrey and Warren Buffett.

    JSS Tripler/JustBeenPaid purports to be an investment scheme that pays annualized returns of 730 percent. The “program” operates online and is purportedly the braintrust of Frederick Mann.

  • BULLETIN: Feds Say Bo Beckman, Trevor Cook Ponzi Scheme Figure, Tried To Dupe National Hockey League In Bid To Acquire Interest In Minnesota Wild — And Used Funds Stolen From Elderly Couple And Others To Do It

    BULLETIN: A new indictment has been returned in the case of Jason Bo-Alan Beckman, Gerald Durand and Pat Kiley — all figures in the Trevor Cook Ponzi scheme that allegedly gathered $194 million and one was of the largest financial crimes in Minnesota history.

    Among the stunning new allegations is that Beckman tried to inflate his net worth to dupe the National Hockey League in a bid to acquire an ownership interest in the NHL’s Minnesota Wild franchise and that money stolen from investors — including senior citizens now in their nineties — was used in Beckman’s unsuccessful effort to gain a share of the team.

    Cook, now serving a 25-year prison sentence for ruining investors in his colossal Ponzi caper, provided Beckman $5 million in commingled funds of investors duped by his currency-trading scheme for “use in his bid for ownership in the Minnesota Wild,” according to the indictment.

    During his 2008 bid, Beckman retained local counsel in Minnesota and the services of certified public accountants to assist him in preparing materials for the NHL.

    Beckman’s own attorney, according to the indictment, warned him that the currency program was “riddled with illegalities,” including “the illegal sale of unregistered securities, inadequate or misleading disclosure to [victim investors], both about the products and about the fees, and transactions by unlicensed persons and entities,” according to the indictment.

    The attorney further warned that the currency program needed to be discontinued and that investors’ funds needed to be returned, according to the indictment.

    Regardless, Beckman pressed on, according to the indictment.

    His activities to dupe the NHL have led to two mail-fraud charges for mailings in May and October of 2008, according to the indictment.

    In December 2011, the PP Blog reported that federal prosecutors asserted that Beckman had sought to address a whopping shortfall in a trading account and prop up the monumental fraud by stealing about $3.9 million from the elderly couple.

    The indictment returned yesterday alleges that money belonging to those two victims was part of a commingled pool of funds used to trick the NHL.

    Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged in December.

    The woman had suffered a stroke, resides with her husband at an assisted-living facility and suffers from partial paralysis on her left side, prosecutors alleged in December.

    Beckman’s theft of about $3.9 million from the elderly couple also led to a charge of income-tax evasion, according to the indictment.

    The accused schemer knew the money he stole constituted income, but he channeled it through various entities and ignored advice from a tax-return preparer to file return for the 2008 tax year — the same year he tried to dupe the NHL, according to the indictment.

    The indictment also alleges that Beckman filed a false return in 2009 that claimed a Ponzi-scheme loss of nearly $1.5 million.

    Just a year after he was trying to impress the NHL with his purported financial worth and using stolen funds to do it, Beckman claimed his 2009 income was “-6.607,” according to the indictment.

  • UPDATE: JSS Tripler/JustBeenPaid Promoters Now Trading On The Name And Image Of Actress Lindsay Lohan; Video Promo Appears After Earlier YouTube Removals — And Even As CONSOB Probe Under Way In Italy

    After earlier trading on the names of Warren Buffett and Oprah Winfrey and even fictional spaceman “Mr. Spock,” promoters of JSS Tripler/JustBeenPaid now are trading on the name of actress Lindsay Lohan.

    A 1:14 YouTube promo for JSS Tripler/JustBeenPaid dated Feb. 14, 2012 — Valentine’s Day — flashes images of Lohan throughout the video. The promo is titled “Sexy Lindsay Lohan.”

    Below the video, seven links appear for JSS Tripler/JustBeenPaid-related sites. The links are accompanied by a text pitch.

    Here is one claim from the text pitch. (Italics added):

    “Basically, You Earn 2% per Day or 60% per Month! No sponsoring Requirements. Use Daily Compounding to Increase Your Earnings! Make Daily Withdrawals to Get Your Money Out! This may be one of the easiest and best ways to earn money you’ve ever seen!

    “Sponsor People to Earn 10% Referral Bonuses on the First Level and 5% on the Second! Withdraw this Money Daily, or Use It to Further Compound and Increase Your Earnings!

    “You Can Start with Just $10 and Turn It into a Fortune!”

    Here is another. (Italics added):

    “75 DAY GET RICH PLAN!
    “Day 1:
    “Add Money
    “Days 2 — 75:
    “100% Reinvest your daily earnings
    “Day 76:
    “Balance now 340% bigger after Day 1 Investment deducted!
    “Day 76 onwards:
    “Conservative: Reinvest 70% of daily earnings and cashout the remaining 30%.
    “Aggressive: Reinvest 80% of daily earnings and cashout the remaining 20%.
    “RESULT: Ever Increasing Earnings and Daily Cashout Amounts!”

    Incongruously, the text pitch ends with these words:

    “Never join ptc and other scam sites.”

    Neither the video nor the accompanying text pitch explained how JSS Tripler/JustBeenPaid, which purportedly is operated by Frederick Mann, could pay an annualized rate of return that is between 48 and 73 times higher than rates touted by imprisoned Ponzi schemer Bernard Madoff.

    The YouTube promo trading on Lohan’s name and images was posted less than a month after CONSOB, the Italian securities regulator, announced that it had opened a probe into the actions of certain JSS Tripler promoters.

    Within days of the announcement, certain U.S.-based websites with links to JSS Tripler/JustBeenPaid mysteriously went missing. Those sites remain inaccessible in the United States, although the reason they no longer are accessible is unclear.

    It is common for hucksters to trade on the names of famous people to sanitize fraud schemes.

    YouTube earlier removed some promos for JSS Tripler/JustBeenPaid, although others remained.

    One Ponzi-forum promoter claimed in October 2011 that a YouTube ban would pose only a temporary problem.

    “No sweat, I own over 500 Youtube accounts, so I’ll just keep making videos like normal, plus I can always use Viddler and Windows movie maker and facebook video as well,” a MoneyMakerGroup poster poster claimed.