FROM COURT FILINGS: TelexFree Promoter Faith Sloan To SEC: ‘Why Are You Picking On Me?’

Faith Sloan. From YouTube.

Faith Sloan. From YouTube.

(3nd Update 9:16 A.M. EDT, May 11, 2014 U.S.A.) When contacted by the U.S. Securities and Exchange Commission April 17 by phone, alleged TelexFree promoter and securities swindler Faith Sloan shot back, “Why are you picking on me? There are bigger promoters than me.”

The assertion is contained in new SEC filings dated yesterday in the agency’s Ponzi- and pyramid case against TelexFree, which filed for bankruptcy protection April 13 and was sued by state and federal regulators on April 15.

Sloan, whom the SEC says is 51 and lives in Chicago, is a former promoter of the Zeek Rewards “program” (1.5 percent a day, not including “compounding”), and Profitable Sunrise (up to 2.7 percent a day, not including “compounding”). She also promoted the collapsed Noobing HYIP scheme that became popular after the collapse of the AdSurfDaily HYIP Ponzi scheme (1 percent a day) in 2008.

In 2012, the SEC shut down Zeek, alleging a combined Ponzi- and pyramid scheme that had collected hundreds of millions of dollars and potentially had affected hundreds of thousands of people. In 2013, the SEC filed charges against Profitable Sunrise, effectively alleging it was being operated by a ghost from a “mail drop” in England and had used a pyramid scheme to defraud thousands of people potentially out of tens of millions of dollars. Money allegedly was diverted on a cross-continental basis, with investors left holding the bag.

The Federal Trade Commission (FTC) effectively shut down Noobing in 2009, after alleging a related firm under an umbrella company had orchestrated a government-grants swindle. Noobing in part was targeted at people with hearing impairments. The enterprise was based in Kansas, and had an offshoot in Nevis. [May 11, 2014, edit.]

Like TelexFree and other schemes, Noobing had a strong presence on YouTube. The SEC says in court filings that it has watched lots of TelexFree promos on YouTube.

Any number of HYIP fraud-scheme promoters wrongly have believed that no individual liability can attach as a result of their participation in such schemes. The TelexFree case — like the Legisi HYIP case before it — demonstrates the falsity of the belief. Legisi promoter Matthew John Gagnon first was sued by the SEC. He later was charged criminally by the U.S. Secret Service and federal prosecutors in Michigan.

Like the AdSurfDaily HYIP Ponzi case, the Legisi case was initiated in 2008 and began with an undercover probe in which government agents interacted with participants and kept notes of the contacts. Gagnon, who had a secret deal with Legisi’s operator to promote the scheme, was sentenced to five years in federal prison. Legisi operator Gregory McKnight was sentenced to 15 years.

It is known that there is a parallel criminal investigation into the activities of TelexFree. The mechanics of that probe and whether it dovetailed with state and federal civil investigations into TelexFree are unclear.

What is clear is that Sloan was not pleased when an SEC investigator informed her by phone on April 17 that she’d been charged with fraud, according to court filings by the SEC.

Sloan first wanted to know if the investigator was state [Massachusetts Securities Division] or federal [SEC]. When the investigator informed Sloan he was with the SEC, she responded that the agency was “picking on” her and implied it should go after bigger fish.

Eight TelexFree managers or promoters (including Sloan) have been sued, according to SEC filings.

“Sloan then asked where she could find the complaint,” the SEC investigator asserted in an affidavit. “I walked her through the SEC website and to the location of the press release and the complaint.”

Sloan then said, “I need to speak to my lawyers,” according to the affidavit.

The SEC investigator then asked Sloan if she had counsel. “Sloan did not respond” to the question, according to the affidavit.

Whether TelexFree will provide Sloan a lawyer is unclear. Any number of accused fraud promoters over the years have been left in the lurch by “management” or “corporate” when “programs” have been sued.

The SEC investigator asked Sloan for her home and email addresses, according to the affidavit. Sloan refused to provide them.

“You just sued me,” she responded, according to the affidavit. “You must know everything about me so you can figure it out.”

It remained unclear this morning whether Sloan had hired counsel or responded to the complaint, which charged her with securities fraud and selling unregistered securities.

But in the HYIP sphere, the small fish are what create the bigger fish — and “small” appears no longer to provide much cover in HYIP-related prosecutions and lawsuits.

Kenneth D. Bell, the court-appointed receiver in the Zeek case, has filed lawsuits against thousands of Zeek winners. The lawsuits are in the form of a class-action, with the threshold for being sued set at only $1,000, according to court filings.

NOTE: Our thanks to the ASD Updates Blog.

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11 Responses to “FROM COURT FILINGS: TelexFree Promoter Faith Sloan To SEC: ‘Why Are You Picking On Me?’”

  1. Maybe she should read the suicide note left by the people in Dominican republic

    http://www.noticiassin.com/2014/04/desaparece-hombre-porque-perdio-un-millon-con-telexfree-dice-se-suicidara/

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  2. Her ignorance just opened a can of worms for her no doubt. You can almost guarantee they are researching her name now.

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  3. Quick note: In a separate filing yesterday, the SEC alleged that Sloan “effectively dared” the agency “to find her and serve her.”

    Patrick

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  4. admin:
    Quick note: In a separate filing yesterday, the SEC alleged that Sloan “effectively dared” the agency “to find her and serve her.”

    Patrick

    I think she too that from the T Lamont Silver playbook…

    Jerry

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  5. Quick note: A few of the more interesting allegations against alleged TelexFree promoters Randy Crosby and Santiago De La Rosa from SEC filings yesterday:

    * They continued to promote TelexFree after the Brazilian Court imposed an asset freeze and suspended the TelexFree operations in that country.

    * They “knew or were reckless in not knowing” that the TelexFree ad-placement scheme was a crock.

    * They “very likely” knew or should have known that the “vast majority” of money paid in their TelexFree network was for the purchases of the “AdCentral” securities, not the purchase of the VOIP product.

    * De La Rosa had an entity known as “Magica Media” into which $1.2 million was deposited at Bank of America. De La Rosa wrote more than $140,000 in checks to himself, withdrew more than $20,000 in cash, paid $100,000 to an entity known as SMC Partners, and also made regular payments to BMW, apparently for an automobile. In addition, $215,000 more was transferred from De La Rosa accounts to “two other unidentified bank accounts.” The balance in the De La Rosa accounts the SEC has identified to date is “zero.” [PP Blog note: Some of the Zeekers appear to have deposited proceeds from that scheme into bank accounts held by their businesses or shell companies.]

    * On March 12, 3 days after TelexFree changed its comp plan, Crosby closed two accounts at JPMorgan Chase Bank. On April 9, just four days before the TelexFree bankruptcy filing, another Crosby account at Chase was closed. The SEC, to date, has been unable to identify the banks to which any money that remained in the Chase accounts was transferred.

    It is very clear from the filings that the SEC is paying close attention to the YouTube claims of TelexFree promoters.

    Beyond that, it is clear that the SEC knows that some recruits were paying their sponsors directly, rather than paying TelexFree directly — and that a system of debits took place inside the TelexFree back office. This same situation occurred with the Zeek and ASD Ponzi schemes and can open the door to all kinds of abuses.

    Patrick

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  6. Implying you should not be said to have done wrong because others did it more, is not a logical response.

    But if it were, promoter Scott Miller might made more than Faith Sloan. Just a guess, could be wrong.

    There are a lot of “little fish” who make a few thousand on Telexfree and now migrating to Clickprime8. When told they could lose their money do this, they reply that would be ok, it’s just what they made on Telexfree, they aren’t counting on it. As if so say, it’s almost like gambling money they got on the side and can be risky with it, like some spend on state lotteries or something such thing.

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  7. LuvNLife: I think she too that from the T Lamont Silver playbook…

    If she did, let’s hope her next move isn’t to acquire accommodations in the Dominican Republic or Costa Rica. I’m not sure if T. LeMont has repatriated either himself or the money he scored in Zeek. He might have scored some in the OneX scam, too. He was an Andy Bowdoin co-star in that one.

    And, of course, T. LeMont also joined in the campaign to poison the well against the Zeek receiver in advance of the lawsuits against insiders and winners. His co-stars included ASD and fellow Zeek promoter Todd Disner. T LeMont then practically sprinted into two other HYIPs. Both of those “programs” ended up suing each other.

    Good to hear from you, LuvNLife.

    Patrick

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  8. Quick note. Looks as though there is a TelexFree criminal investigation under way in the Dominican Republic and that the authorities there might seek to block the website if TelexFree itself doesn’t block it.

    http://www.dominicantoday.com/dr/local/2014/4/25/51267/Complaints-prompt-TelexFree-ponzi-scheme-criminal-probe-Official

    Patrick

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  9. Hi,
    If the Bankruptcy application is not approved by the court, what happens next to Telexfree?
    I just invested $15000 into the Telexfree new complan and 2 weeks later it was shutdown. Will SEC sell off Telexfree assets and liquid cash to pay compenation to worldwide victims like us from Nigeria?
    Any time SEC.wants to pay people, they should ask Telexfree to return full service of their website so that Promoters will log-in into their Back Office and transfer their money to e-wallet from their to their Bank account. This will make us still believe in the American Law! They want to dent Americas integrety.
    Thank

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  10. If anyone is not already familiar with:

    1. How long Faith Sloan has been ripping people off.
    2. How passionately she will defend an obvious Ponzi SCAM.

    here is a good example from 2004:

    http://www.talkgold.com/forum/showthread.php?t=142675&p=1558772#post1558772

    SD

    .

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  11. I don’t know which is funnier…….a Nigerian trying to lecture us on American law or slug sloan trying to justify illegal activities. Guarantee you she plays the race card soon.

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