PatrickPretty.com

Month: September 2013

  • BULLETIN: SEC Sanctions Troy Dooly For Zeek-Related Work; MLMHelpDesk Blogger Ordered To Pay More Than $6,000 In Disgorgement, Penalties And Interest

    breakingnews72BULLETIN: (UPDATED 9:04 P.M. EDT (U.S.A.) The SEC has sanctioned MLMHelpDesk Blogger Adam “Troy” Dooly, amid allegations he accepted money from the Zeek Rewards MLM “program” operated by Rex Venture Group LLC without disclosing to Blog readers and radio listeners that Rex “was paying him” to publicize the Zeek venture.

    Section 17(b) of the Securities Act “prohibits publishing, giving publicity, or circulating ‘any notice, circular, advertisement . . . or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer . . . without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof,’” the SEC said.

    Zeek has been described by the SEC in court papers (August 2012) as a $600 million Ponzi- and pyramid fraud that was selling unregistered securities as investment contracts. Dooly consented to the sanctions and an accompanying cease-and-desist order without admitting or denying wrongdoing.

    “In each instance of public relations or promotion in various media outlets, Dooly failed to disclose to his readers and listeners that RVG was paying him for such publicity,” the SEC asserted in an administrative filing dated today. “Dooly believed that, pursuant to a non-disclosure agreement, RVG maintained the exclusive right to determine whether or not to disclose Dooly’s consulting agreement and the amount of compensation. Because RVG did not authorize such disclosure, Dooly declined to reveal his compensation and, in at least one instance, Dooly denied (or misled his audience about) receiving compensation from RVG (apart from reimbursement of expenses) when asked about his compensation during a public radio program.

    Dooly, 49, has settled with the SEC by agreeing to pay disgorgement of $3,000, prejudgment interest of $98.81, and civil penalties of $3,000 to the court-appointed receiver in the case. The receiver is Kenneth D. Bell, who is in the process of preparing lawsuits against Zeek winners and insiders.

    From the SEC (italics added):

    2. From at least April 2012 until August 2012, Dooly served as a paid consultant to Rex Venture Group, LLC (“RVG”), the parent company of ZeekRewards.com (“ZeekRewards”), the self-described “affiliate advertising division” for a penny auction website known as Zeekler.com. ZeekRewards operated as a multi-level marketing program offering subscription memberships to affiliates who then recruited new affiliates and bought and gave away as samples, or sold, bid packages for the penny auction website. Rather than promoting penny auctions, however, RVG primarily marketed ZeekRewards to investors as an opportunity to earn passive income indefinitely through their participation in the program.

    3. Under two successive contracts, RVG agreed to pay Dooly $6,000 per month to provide various consulting and public relations services that included, among other things, responding to negative press about RVG and ZeekRewards; providing live reporting from company events; conducting video chat interviews to “promote company, founders, officers, products and culture”; and providing media exposure to facilitate market penetration and improve public perception. In furtherance of the foregoing, Dooly promoted ZeekRewards on his website, MLMHelpdesk.com; posted blog entries and youtube.com videos giving publicity to ZeekRewards; and conducted at least one radio interview promoting the company.

    4. Dooly provided the agreed services until ZeekRewards was shut down by the SEC in August 2012 for operating an illegal pyramid and Ponzi scheme. For all his services, Dooly earned $24,000 in consulting fees, but he never received the last $6,000 payment because the company’s assets were frozen (thus receiving only $18,000). Of that total, $3,000 or approximately 17% was attributed to public relations or promotion in various media outlets.

    See “EDITORIAL: A Friday Evening In MLM Radio La-La Land” from the PP Blog on June 10, 2012.

    The SEC moved against Zeek a little more than two months after Dooly interviewed then-Zeek executive Dawn Wright-Olivares on ACES Radio Live.

    Read the SEC order against Dooly.

     

     

  • BULLETIN: Florida Woman Sued Civilly, Charged Criminally In Alleged Ponzi- And Affinity-Fraud Scheme Targeted At Colombian-Americans

    breakingnews72BULLETIN: The SEC has sued a Florida woman, amid allegations she swindled Colombian-Americans and other Colombians in a $4 million Ponzi scheme that duped investors into believing her purported “immigration bail bonds” program was backed by the FDIC and an “investment broker” later blamed for payout delays.

    The woman — Jenny E. Coplan of Tamarac — also has been charged criminally by federal prosecutors in the Southern District of Florida, the SEC said.

    Coplan’s age is listed as 54.

    “Coplan deliberately misled investors into believing their investments were safe and secure when in reality she was lining her own pockets,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.  “Her predatory scheme exploited the trust and friendship of members of her own community by using empty promises to convince them to trust her with their hard-earned savings.”

    All in all, the SEC said, Coplan “raised approximately $4 million from more than 90 investors in Florida, California, Georgia, Texas, Canada, and Colombia.”

    Records cited by the SEC show that Coplan controlled at least four Florida LLCs, all of which used the word “Immigration” in their names. All of the entities have been dissolved.

    Elements of the case are similar to elements of the $119 million AdSurfDaily Ponzi scheme case brought by the U.S. Secret Service in 2008. Like Coplan, ASD operator Andy Bowdoin was associated with various dissolved business entities in Florida. And as is the case in the allegations against Coplan, some ASD promoters claimed ASD was backed by the FDIC, suggesting money sent to the enterprise by insured.

    Some promoters of TelexFree — a current HYIP scheme operating in Brazil and the United States — also have claimed that money sent to their “program” was insured, purportedly making it impossible for participants to lose money. TelexFree may be an affinity-fraud scheme initially targeted at Brazilian-Americans and Brazilians in general. The scheme now has entered many countries.

    From the SEC’s complaint against Coplan (italics added):

    16. Coplan, who is herself a member of the Colombian-American community, developed relationships with other Colombian-Americans and Colombian immigrants through a business she operated providing immigration services. Coplan then offered individuals the opportunity to invest in Immigration Services and the bail bond program.

    17. In about June 2009, Coplan told at least one investor that this was an investment opportunity she offered to her friends and family initially, and then later opened it to everyone. Coplan also told prospective investors she wanted to help them achieve financial stability. To cultivate potential investors, Coplan sometimes mingled with investors’ friends and family members at their social gatherings. A large number of at least one investor’s friends and family members invested.

    “Coplan never placed investor funds with any investment broker, and their money was never FDIC insured,” the SEC alleged.  “Instead, she paid supposed profits to earlier investors using funds from newer investors in classic Ponzi fashion, and she stole approximately $878,000 of investor money for her own personal use.”

    From a statement by the SEC (italics added):

    The SEC alleges that Coplan created fictitious investor statements that she disseminated to hide her misuse of the money and lead investors to believe their investments were growing.  Furthermore, Coplan e-mailed one investor two purported FDIC statements reflecting insured balances of $107,000 and $250,000, lulling the investor to think the investment was particularly safe.  When her scheme began to unravel in 2011, Coplan blamed the purported investment broker for the delay in interest payments to investors, telling them the broker held the investors’ funds to cover deficiencies because Coplan had failed to meet certain monthly investment quotas.  Even though Immigration General Services had virtually no funds in its bank accounts and was unable to honor investors’ increasing redemption requests, Coplan tried in late 2011 to create a false appearance that the company was back to business as usual.  She issued non-sufficient fund checks to investors purporting to be their monthly profits.  Through her continued misstatements, Coplan was able to raise another $578,000 from new investors before the scheme collapsed entirely.

    Coplan’s investors were told they’d fetch returns of between “60 to 108 percent annually,” the SEC charged.

  • BREAKING BAD: Already-Convicted Narcotics/Firearms Felon With Peripheral Tie To AdSurfDaily And Zeek Ponzi Cases Pleads Guilty In ‘Commodities Online’ Caper After Saying He Approved Another Felon’s Request To Transfer More Than $5 Million To Mexico On Heels Of SEC Subpoena

    EDITOR’S NOTE: In case you haven’t seen the series finale, there are no spoilers in this post. “Breaking Bad” ended its original run on AMC, and America said goodbye (or good riddance) to Walter White, the money-launderer next door, last night. The fictional White, of course, had been pursuing clandestine wealth, recklessly disregarding the safety of his family, destroying the lives of people who got in the way of his self-consuming greed and risking U.S. national security for five TV seasons. (At one point, he’d amassed at least $80 million in cash — enough to equip a small army of thugs or terrorists had they found its hiding place. Lo and behold, a group of neo-Nazi racketeers/murderers in part supplying Czech narcotics traffickers through a Houston-based methylamine supplier and upstart meth manufacturer did find it. Put another way, a white-supremacist group that openly shot at cops and murdered a bicycle-riding child to prevent him from tattling about the heist of a train carrying a meth precursor gained unwarranted economic power in the tens of millions of dollars.)

    Like the world of narcotics traffickers, the HYIP world is filled with Walter White-types, the wire fraudsters and money-launderers next door. Beyond that, claims of great faith in God and miraculous money-making systems often accompany HYIP schemes. If you’re repeatedly joining murky HYIP schemes or pushing them, you’re engaging in the same sort of self-indulgence and self-deception chronicled each week on “Breaking Bad,” a program whose greed- and desperation-driven central character — Walter White — openly defies the U.S. government, helps crime thrive in the United States, Mexico and (now) Europe, sets the stage for political instability and for hostilities to develop among friendly nations, and rationalizes it as a necessary means of making money for his family.

    The MLM equivalent of a Walter White could be in your upline or downline. Such a figure also could be very close to the money flow, staying out of sight but positioning himself to influence or even extort the public face of the scheme.

    White broke bad when he morphed from a mild-mannered, noble but financially struggling chemistry teacher and family man into a brutal and conniving meth kingpin after his cancer diagnosis — on the theory that manufacturing and selling meth would help him pile up some cash to provide for his family after his death. Bodies in Mexico and the United States have piled up around him ever since, including the bodies of 167 people who perished when two planes collided over Albuquerque after an air-traffic controller who couldn’t concentrate on work accidentally directed them into each other because he’d been reduced to emotional rubble by his daughter’s drug-related death. (She asphyxiated on her own vomit; the airplane death toll in Albuquerque was only one less than the real-life Oklahoma City domestic-terrorist attack in 1995, which killed 168 when the Alfred P. Murrah Federal Building was bombed by Timothy McVeigh.)

    Another body was that of White’s own brother-in-law, a DEA agent murdered by a neo-Nazi White had hired to kill his business partner (and onetime chemistry student) Jesse Pinkman, the boyfriend of the woman who drown in her own puke. Yet-another body (actually a body part) was that of a DEA informant’s head mounted on a turtle after being severed by a Mexican cartel to send a message. The head and turtle were booby-trapped with explosives that detonated, killing a DEA agent. Still-another body was that of Gus Fring, a Chilean national, New Mexico drug kingpin and onetime White boss who laundered funds through chicken restaurants, pretended to be a supporter of the DEA and was killed by a wheelchair bomb planted by White in the nursing home in which Fring’s enemy Hector Salamanca, a onetime cartel enforcer, resided.

    White’s form of money-laundering was the classic car wash. But the writers easily could have provided him a different front, perhaps that of respected teacher who’d gravitated to the commodities field and relied on MLM-style pitchmen and boiler rooms to drum up business for the side operation and help clean up the cash.

    ** _______________________________ **

    James C. Howard III
    James C. Howard III

    Court documents in the Commodities Online Ponzi caper describe “purported” purchases of “iron ore” and “related equipment” by the Florida-based firm in Mexico. The documents also point out that the enterprise was led by two individuals previously convicted of narcotics crimes in the United States and that more than $5 million mysteriously was wired to “accounts in Mexico” in March 2011 after one of the felons approved the wiring “directions” of the other — this after the first felon had received an SEC subpoena and the second had found out about it.

    Separately, the court-appointed receiver in the case says that, “after substantial investigation, including extensive interviews, depositions, and on-site investigation conducted both in the United States and Mexico, the Receiver concluded that the Defendants had no recoverable iron ore or related equipment in Mexico.”

    What they did have in Mexico, if anything, remains unclear. Also unclear is how much of the money sent to Mexico will be recoverable

    More than two years after the SEC moved against Commodities Online, the precise nature of its business remains murky. As noted above, one of the things that is known is that two of the firm’s managers were associated with narcotics earlier in their lives and had criminal records for felonies and and yet somehow had managed to become investment executives.

    Now, one of those felons — James Clark Howard III — has pleaded guilty to mail- and wire-fraud conspiracy for his role in the Commodities Online scam.

    And, according to Howard’s proffer in the criminal side of the case, he approved the “directions” of fellow felon Louis N. Gallo III to wire millions of dollars to Mexico after Howard had been subpoenaed by the SEC.

    Gallo was in Mexico, according to the proffer — and that’s an oddity because he was on U.S. federal probation at the time. The Sun Sentinel newspaper reported in 2012 that “Gallo was sentenced in 2008 in New Jersey for bank fraud, intent to distribute cocaine and transmitting a threat to injure.”

    And, according to the proffer, Howard was one of the controllers of an enterprise known as SSH2 Acquisitions Inc., which has been sued amid allegations it, too, was conducting a Ponzi scheme. Howard also has been implicated in a separate Ponzi scheme targeting Haitian-Americans in Florida.

    Terralynn Hoy, who has not been accused of wrongdoing, is listed in Nevada as a onetime director of SSH2. SSH2 sued Howard, alleging he was conducting a Ponzi scheme.

    Hoy earlier had been a cheerleader for AdSurfDaily, which proved to be a $119 million Ponzi scheme. After that, she became a cheerleader for AdViewGlobal, a 1-percent-a-day Ponzi scheme federal prosecutors linked to ASD President Andy Bowdoin, now serving a 78-month sentence in federal prison for the ASD scam. Hoy later was listed by Zeek Rewards as an “employee.” In August 2012, the SEC described Zeek as a $600 million Ponzi and pyramid scheme.

    Bowdoin, like Howard, was a convicted felon, according to court records.

    AdViewGlobal launched in 2009, even as ASD was the subject of a major federal investigation. Zeek, whose business model strongly resembled the models of ASD and AVG, launched after both ASD and AVG had collapsed. With two convicted felons linked to the narcotics business at the helm, Commodities Online appears to have gathered more than $20 million.

  • REPORTS: TelexFree Members Targeted In Hacking, Phishing Bids

    telexfreelogoAfter similar reports in July, there are new reports today that members of the TelexFree MLM “program” have been targeted in hacking and phishing schemes. Such fraud bids often accompany HYIP schemes. One such report appeared on Facebook, where a self-identified member of TelexFree claimed she had two TelexFree accounts and that both had been hacked. The poster further claimed her email account had been compromised and that she was having trouble contacting TelexFree.

    Separately, the Blog of TelexFree pitchwoman Faith Sloan is reporting on “FAKE EMAILS / PHISHING EMAILS” apparently associated with a bogus domain that marries the name of one of TelexFree’s payment processors to that of TelexFree to form a dotcom.

    In the email, TelexFree members are advised to click on a link to “enable” a new payout system.

    The email is fake, according to FaithSloan.com.

    “DO NOT CLICK ON ANY OF THE LINKS! DO NOT DO IT!” the site advises.

    In mid-August, TelexFree affiliates excitedly announced the firm was using Global Payroll Gateway (GPG) to process payouts due members. By Sept. 22, there were reports that TelexFree had dumped GPG (or the other way around) and that TelexFree was switching to I-Payout. Coinciding with these reports were reports that TelexFree was filing for bankruptcy, but a court in Brazil rejected the filing.

    Faith Sloan purportedly is spearheading an effort to popularize TelexFree in Peru. The “program” is under investigation in Brazil and is alleged to be a massive pyramid scheme. Sloan previously was associated with Zeek Rewards, alleged by the SEC last year to be a $600 million Ponzi scheme and pyramid fraud. She also has been associated with “Profitable Sunrise,” a “program” the SEC said earlier this year was conducting a massive international swindle. Other Sloan “programs” included Noobing, part of the business mix of Affiliate Strategies Inc., alleged by the FTC to have conducted a large-scale government-grants swindle. Noobing in part was aimed at people with severe hearing impairments.

    Despite the investigations in Brazil and reports of death threats aimed at a judge and prosecutor involved in the TelexFree case, some members — including Sloan — continue to sing the praises of the “program.” Some affiliates claim that $15,125 sent to TelexFree fetches at least $42,075 in a year.

    Members have been encouraged online to make deposits in TelexFree accounts at Bank of America and TD Bank, although competing reports have suggested that TelexFree has pulled out of Bank of America. These reports were attributed to “Steve Labriola, Director of Marketing for Telex FREE, Boston.”

    TD Bank recently agreed to pay $52.5 million to settle claims it was acting as a facilitator for Scott Rothstein’s epic Ponzi scheme in Florida. Rothstein, a former attorney, is a convicted racketeer serving a 50-year prison sentence for his $1.2 billion Ponzi scheme.

    TelexFree has U.S. arms in Massachusetts and Nevada. Some affiliates have claimed they can speed the flow of money to the firm and have encouraged prospects to make copies of deposit slips and banking information and email them to sponsors for “expedited” service. Affiliates of the $119 AdSurfDaily Ponzi scheme in 2008 pitched their downlines in similar fashion. At a minimum, the practice puts followers at risk of identity theft. It also may set the stage for money-laundering and other crimes to occur between and among TelexFree members.

    There was a claim on Facebook yesterday in which New Zealand and Australian prospects of TelexFree were told that an “australian and new zealand group . . . can help sponsor others in there and pay them in through our back office easy to transfer cash there.”

    In July, there were reports that TelexFree had blocked members’ access to their back offices because hackers had attempted an intrusion.

  • URGENT >> BULLETIN >> MOVING: SEC: Las Vegas-Based Ponzi Scheme Targeted Japanese Investors, Gathered At Least $800 Million, Planned To Have New Marks Prop Up The Massive Swindle — And Started In 1998

    breakingnews72URGENT >> BULLETIN >> MOVING: (SECOND UPDATE 4:28 P.M. EDT (U.S.A.) The SEC says Edwin Fujinaga and his company MRI International Inc. were operating a Ponzi scheme from 1998 onward that gathered at least $800 million and targeted Japanese and other investors.

    After MRI received a letter in March 2013 from the SEC instructing it not to destroy evidence, the SEC said, “a truck from a “document shredding company . . . picked up boxes of documents from MRI.”

    An MRI executive assistant “made several telephone calls to prevent the pickup,” the SEC charged, alleging that “Fujinaga called her and said, ‘Why are you concerned about this?’”

    “MRI fired the executive assistant because of her efforts to prevent the document destruction,” the SEC charged.

    Fujinaga is 66. He resides in Las Vegas, the SEC said. Part of the scam featured “tours” of MRI’s offices in Las Vegas. The alleged scam is evoking images of Bernard Madoff’s colossal Ponzi scheme, in the sense it appears to have gone undetected for years.

    At the same time, the alleged Fujinaga/MRI fraud is reminiscent of the epic Trevor Cook Ponzi scheme in Minnesota, in the sense that investors appear to have been lulled into a false sense of security because the company had a physical presence. It is somewhat common for fraudsters to tout a brick-and-mortar presence as “proof” no fraud scheme is occurring, even though case after case has demonstrated that the frauds may be buried deep inside an enterprise that at first glance appears to be legitimate.

    MRI investors “were told that their money would be used to buy accounts from U.S. medical providers with outstanding balances to collect from insurance companies,” the SEC said. “Fujinaga and MRI falsely represented that they purchased the accounts at a discount so they could recover the full amount and turn a profit for investors. They purchased no such accounts in reality, and merely used investor money to pay the principal and interest due to earlier investors in typical Ponzi fashion.”

    Similar to other Ponzi schemers whose operations are on the verge of collapse, Fujinaga appeared in 2012 to be preparing to double-down on his fraud, the SEC complaint suggests.

    In a memo, the SEC charged, Fujinaga “proposed to resolve the delinquencies by doubling the amount of money raised from new investors.”

    The SEC alleged that Fujinaga wrote: “I propose that we reinstate our consultants to fund raise for MRI to secure a larger base of consultants soliciting funds and possibly double the amount off funds raised on a monthly basis.”

    Cooperation between the United States and Japan was instrumental in exposing the massive international swindle, the SEC said, noting that the “Financial Services Agency of Japan (JFSA) and the Japanese Securities and Exchange Surveillance Commission (SESC)” exchanged “documents and other evidence critical to the case.”

    “Cross-border cooperation can successfully halt fraudsters who attempt to use international boundaries to avoid prosecution,” said Gerald W. Hodgkins, associate director in the SEC’s Division of Enforcement. “The close coordination between the SEC and Japanese regulators was critical to freezing Fujinaga’s assets and foiling his scheme.”

    From a statement by the SEC (italics added):

    According to the SEC’s complaint, the Ponzi scheme began in October 1998. Fujinaga, who lives in Las Vegas, operated from there but also had a sales office in Tokyo. MRI and Fujinaga hosted Japanese investors in the U.S. for solicitation presentations and tours of MRI’s Las Vegas offices. They told investors they could invest in either U.S. dollars or Japanese yen, and promised returns ranging from 6 to 10.32 percent depending on the size and duration of the investment. Fujinaga and MRI falsely represented that they used investor money solely and exclusively to buy medical accounts receivable. Besides misappropriating money between investors, Fujinaga illicitly transferred investor money to MRI’s operating accounts, where it was used to pay for general operating expenses instead of medical accounts. He also transferred money to other entities he owned that were not in the business of collecting medical account receivables. Investor funds also were siphoned to another company owned by Fujinaga called The Factoring Company, which bought Fujinaga’s cars and paid his bills.

    Here is a section from the SEC’s complaint, which was filed under seal two weeks ago (italics added):

    As all Ponzi schemes eventually do, the fraudulent enterprise perpetrated by Fujinaga and MRI collapsed. Since at least 2011, MRI has been in default on the payments it is obligated to pay investors. More than 8,000 people invested in MRI and, as of 2012, MRI’s investments totaled approximately $813 million. Notwithstanding MRI’s defaults to investors, this is an ongoing Ponzi scheme, in which Fujinaga and MRI have planned to make up their losses by enlisting new investors for the same treatment suffered by existing investors.

    Investors in places other than Japan also were targeted, the SEC said. Those countries included Canada, Malaysia and New Zealand.

  • HUFFINGTON POST, VIA THE CANADIAN PRESS: Purported ‘Sovereign Citizen’ (Freeman On The Land) Declares Alberta Woman’s Home His ‘Embassy’ And Files Lien For $17,000

    The Huffington Post, via The Canadian Press, is reporting that a purported freeman on the land has filed a lien against the property of an Alberta pensioner and declared her home his “embassy.”

    Rebekah Caverhill, the property owner, has been reduced to tears in her dealings with Andreas Pirelli, according to the report.

    Meanwhile, government officials have expressed sympathy for Caverhill, but apparently are viewing the matter as a civil dispute between a landlord and tenant, according to the report.

    From the report (italics added):

    No one came to the door at the home when The Canadian Press sought comment from Pirelli earlier this month.

    A black Chevrolet Yukon with tinted windows was parked in front. A decal on the rear window said “No Weapons. No Agents. No Foreign Weapons within 3 metres of a Diplomat of a Foreign Nation.”

    Many strange and unsettling events have surrounded purported “sovereign citizens” or “freemen on the land” in the United States and Canada. The schemes sometimes have focused on so-called “squatters” who divine paperwork constructions that flummox real-estate owners and litigation opponents, cloud property titles or transfer the ownership or control of property without the consent of the owners.

    In the United States, there have been instances in which purported sovereigns have been charged with burglary after allegedly exercising unlawful control over real estate. Whether Canada’s burglary statute could be used in the matter reportedly pertaining to Caverhill and Pirelli was not immediately clear.

    Some “sovereigns” have claimed government, diplomatic or royal titles and diplomatic immunity from prosecution. Others have sought to chill reporting on their schemes by divining constructions by which anyone who reports on such matters will be sued for trademark infringement or suffer other financial penalties.

    Alberta’s Justice Minister reportedly told The Canadian Press he’d been sued for “$1,000 quadrillion.” A single quadrillion is one-thousand trillion. The U.S. Gross Domestic Product in 2012 was estimated to be about $16.3 trillion, a tiny fraction of the sum for which the Alberta minister reportedly was sued.

    A tearful Caverhill reportedly told the Press she was concerned that the purported freeman was “taking away my rights as a Canadian citizen.”

     

  • MODERN MLM PR: TelexFree Rep’s Blog On Loss Of Payment-Processing Firm: ‘We Killed Them’

    The FaithSloan Blog bizarrely announces that TelexFree has "killed" GPG, a payment processor.
    The FaithSloan Blog bizarrely announces that TelexFree has “killed” GPG, a payment processor.

    If continuing to recruit during multiple pyramid-scheme probes even as a judge and prosecutor reportedly had been threatened in Brazil with death were not enough, another MLM PR disaster is unfolding: The Blog of Faith Sloan, late of Zeek Rewards and Noobing, an HYIP Ponzi scheme that ripped off people with hearing impairments, wants TelexFree members to know why the alleged pyramid scheme no longer is using Global Payroll Gateway (GPG).

    “We killed them,” FaithSloan.com reports flatly on the fate of GPG.

    Meanwhile, there are competing reports that GPG had given the boot to TelexFree, not the other way around.

    No so, according to FaithSloan.com, which is claiming TelexFree “killed” GPG because it “Could not handle the 50,000 accounts that came into their system.”

    TelexFree now has turned to “ipayout’s globalewallet,” according to FaithSloan.com.

    Whether TelexFree planned to “kill” IPayout if any hiccups developed in its purported processing of money for TelexFree was not disclosed in the undated post announcing that TelexFree had “killed” GPG. The apparent message in the TelexFree branch of MLM La-La Land, however, is that affiliates will ignore or downplay unsettling events in Brazil such as the pyramid probes and reported death threats and will blame any company that fails to find favor with TelexFree and its international army of cross-border pitchmen.

    TelexFree appears to have sought to transition to GPG in mid-August, with affiliates trumpeting the firm on the web as the answer to TelexFree’s troubles. But problems developed within weeks (if not days), and TelexFree affiliates then announced the firm was switching to IPayout. In about a month, GPG went from the penthouse to the doghouse in the minds of certain TelexFree promoters. Now, IPayout apparently has been given the chance to occupy the penthouse in the incongruous world of TelexFree. Will it slip into the TelexFree doghouse and perhaps be “killed” by the firm, like rival GPG before it?

    Within days of the announcement that TelexFree had brought IPayout aboard after the purported failure of GPG, TelexFree executive Carlos Costa announced that TelexFree was seeking bankruptcy protection in Brazil. While making the announcement, Costa curiously waved the flags of Portugal and Mediera. Like former AdSurfDaily President Andy Bowdoin, Costa also suggested God was on the company’s side.

    Bowdoin is serving a 78-month prison sentence in the United States. His ASD “program” was a $119 million Ponzi scheme. Among other things, Bowdoin claimed a 2008 raid on his “program” that promised a precompounding payout of 1 percent a day was the work of “Satan.”

    Some TelexFree affiliates claim that $15,125 sent to the company fetches a profit of at least $42,075 in a year. Images of Jesus Christ have been used in TelexFree promos.

    Noobing was an autosurf HYIP scheme pushed by former ASD pitchmen that tanked in 2009 after its parent company was implicated by the FTC in a government-grants scheme that led to combined judgments totaling more than $54 million. The scam even was discussed at a Senate hearing.

    A court-appointed receiver determined that Noobing was impossibly upside-down. Affiliate Strategies Inc., the U.S.-based parent company, registered several corporations offshore, including Noobing, formed in the Caribbean island of Nevis; ASI Management Inc., formed in Belize on March 24, 2009; Landmark Publishing Group LLC, formed in Nevis on March 25, 2009; Landmark Publishing LLC, formed in Nevis on March 25, 2009; International Research and Writing Group LLC, formed in Nevis on July 1, 2009; and International Publishing Group LLC, formed in Nevis on July 1, 2009.

    All in all, the receiver said in 2009, “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.” The receiver proposed a plan by which all assets tied to Noobing’s parent would be sold — right down to a stainless-steel wastebasket in the women’s restroom.

    In 2010, the PP Blog interviewed a 64-year-old woman with a profound hearing loss. The interview was conducted through the woman’s interpreter. The woman told the PP Blog she has lost $5,300 in Noobing and could not sleep at night. Noobing later was added as a receivership defendant. The receiver said that Noobing and 14 other companies under the ASI umbrella had become the subjects of “numerous inquiries” from “tax authorities,”  creditors and “former independent contractors.”

    TelexFree has U.S. footprints in Massachusetts and Nevada. The firm also now purports to be operating in England. TelexFree is the subject of multiple pyramid-scheme probes in Brazil, where it operates through an entity known as Ympactus Comercial Ltd.

    There have been reports that at least one judge and one prosecutor involved in the Brazil probe have been threatened with death.

    HYIP fraud schemes spread in part because promoters engage in serial disingenuousness and ignore red flags such as unusually consistent returns, claims of guaranteed payouts and the circuitous flow of money. Some TelexFree affiliates have provided ASD-like coaching tips to prospects on how to speed the flow of money to the firm.

     

  • TelexFree Says It Seeks Bankruptcy

    Carlos Costa displays the flag of Medeira while announcing TelexFree is seeking bankruptcy protection.
    Carlos Costa displays the flag of Madeira while announcing TelexFree is seeking bankruptcy protection.

    UPDATED 7:21 A.M. ET Jan. 21, 2013, to correct misspelling. With pyramid-scheme probes under way in multiple Brazilian states and affiliates also filing actions against the company, TelexFree says it is seeking bankruptcy protection in Brazil. Early details are sketchy.

    Here’s TelexFree executive Carlos Costa making the announcement while waving the flags of Portugal and Madeira and referencing God:

    TelexFree operates in Brazil through Ympactus Comercial Ltd. The firm has U.S. arms in Massachusetts and Nevada. Affiliates appear to have established TelexFree-related firms in Florida and California.

  • ‘Growing Sophistication And Frequency Of Cyberattacks Is A Cause For Concern,’ U.S. Comptroller Of Currency Says

    “The denial of service attacks that began in 2012 and continue today drew the attention of our largest financial institutions. While they have been only minimally disruptive so far, we know that these types of attacks are just one of the many cyber threats that our financial system faces. The growing sophistication and frequency of cyberattacks is a cause for concern, not only because of the potential for disruption, but also because of the potential for destruction of the systems and information that support our banks. These risks, if unchecked, could threaten the reputation of our financial institutions as well as public confidence in the system. The financial services industry isn’t alone in facing the threat of cyberattacks. Almost every business sector, from newspapers to power utilities, faces similar threats. But the financial services industry is one of the more attractive targets for cyberattacks, and, unfortunately, the threat is growing, for several reasons.” — Thomas J. Curry, U.S. Comptroller of the Currency, Sept. 18, 2013

    Thomas J. Curry
    Thomas J. Curry

    At a speech in Washington today before the Exchequer Club, U.S. Comptroller of the Currency Thomas J. Curry said cyberattacks have the potential to disrupt operations at banks large and small and that the “threat is growing.”

    Among the problems is that the costs of carrying out such attacks are going down, while the “resources needed to identify, monitor, and mitigate against vulnerabilities and potential attacks are increasing,” Curry said.

    “First, hackers have easy access to the necessary tools and infrastructure,” Curry said. “The global nature of the Internet means they can conduct their activity from almost anywhere, including in countries with regimes that, at worst, sponsor attacks and, at a minimum, act as criminal havens by turning a blind eye toward criminal behavior.”

    Speaking to the whack-a-mole nature of the Internet, Curry said criminals are apt to switch their focus from larger to smaller institutions as the larger institutions bolster their security.

    “As our largest institutions improve their defenses, it is very likely that hackers will turn their attention to community banks,” he said. “These smaller institutions can provide a point of access into the system, and they may have less sophisticated defenses than large banks. For the most part, they depend upon third-party providers for their IT services, including security. That’s understandable, but they still have to be able to assure themselves that these service providers have adequate controls and solid processes in place to protect them and their customers. This can be particularly problematic for community banks and thrifts that may not have the resources or specialized expertise needed to identify and mitigate these vulnerabilities.

    “So, we’re devoting more resources to cybersecurity — at all of our institutions, but especially at community banks and thrifts,” he said.

    Read Curry’s remarks as prepared for delivery today.

    Also see Oct. 25, 2012, PP Blog story on cybersecurity remarks by Lisa Monaco, then Assistant Attorney General for National Security. Monaco is now President Obama’s chief counterterrorism adviser.

    In 2011, U.S. Attorney General Eric Holder said a “staggering volume” of money was being stolen online.

  • WREG (CBS/Memphis): City Of Memphis Rescinds ‘Moorish American Week’ Proclamation That Suggested ‘Sovereign Theocratic Government’ Independent Of Existing Governments In The Americas Had Been Formed

    Memphis has rescinded this 2012 proclamation that suggests a "sovereign theocratic government" independent of the existing governments of the Americas had been formed.
    Memphis has rescinded this 2012 proclamation that suggests a “sovereign theocratic government” independent of the existing governments of the Americas had been formed. (Source: screen shot.)

    UPDATED 10:55 A.M. EDT (U.S.A.) The city of Memphis, Tenn., has joined the city of Fayetteville, N.C., in rescinding a 2012 “Moorish American Week” proclamation that apparently was rubber-stamped before the context of the proclamation was understood.

    Among other things, the proclamations in both cities claimed a “sovereign theocratic government” had been formed inside the United States. But the Memphis proclamation appears to have gone one step farther than the document heralded last year in Fayetteville. Indeed, the Memphis proclamation appears to suggest a  “sovereign” Moorish” government independent of the existing governments of North America, Central America and South America had been formed.

    Fayetteville rescinded its proclamation in February 2012.

    Now, Memphis has followed suit, according to WREG:

    From a statement by the office of Memphis Mayor A C Wharton, as reported by WREG (italics added):

    The proclamation in question was presented to Mayor Wharton for his signature. Mayors from other major cities have signed the same proclamation from this group which demonstrates that most mayors’ offices do not routinely investigate every group or individual that requests this document.  We did not issue a proclamation to this group in 2013.

    Some purported “Moorish Americans” claim the laws of the United States do not apply to them, even though they live in the country. This has led to bizarre confrontations with police in (at least) Illinois, Maryland, Georgia  and Tennessee.

  • Legisi HYIP Ponzi Pitchman Matthew John Gagnon Is In Federal Custody

    Matthew John Gagnon
    Matthew John Gagnon

    Will it be the shot heard ’round the HYIP world — or will serial Ponzi-board and social-media fraudsters continue to pretend it is meaningless?

    Matthew John Gagnon, a 45-year-old pitchmen for the $72 million Legisi HYIP Ponzi scheme and other online fraud schemes, is listed as an inmate at Federal Correctional Institution (FCI) in Sheridan, Ore.

    In July, Gagnon was sentenced to 60 months in prison, ordered to pay $4.4 million in restitution and further ordered to serve three years’ supervised probation after his prison release. He was permitted to self-report to prison. That appears to have occurred yesterday.

    Gagnon colleague and Legisi operator Gregory N. McKnight was sentenced to a prison term of more than 15 years. McKnight’s age is listed as 53. He was sentenced last month and was ordered taken into custody immediately. He is listed as an inmate at the FCI in Milan, Mich. McKnight was ordered to pay more than $48.9 million in restitution and further ordered to serve three years’ supervised probation after his prison release.

    Legisi was promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. In 2007, Legisi became the subject of an undercover investigation by state regulators in Michigan and the U.S. Secret Service. Both criminal and civil charges followed.

    In court filings on June 6, Legisi receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through e-Bullion.

    e-Bullion is a now-defunct processor. One-time e-Bullion operator James Fayed is on California’s death row after being convicted of ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him.

    AdSurfDaily, a $119 million Ponzi scheme also promoted on the Ponzi forums, also accepted money from e-Bullion, according to court filings.

    Legisi’s Terms of Service read like an invitation to join an international financial conspiracy. Members had to affirm they were not associated with the SEC, the IRS, the FBI and the CIA — along with “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office.