Court-appointed receiver Beattie B. Ashmore sold this party bus and other property from the "3 Hebrew Boys" Ponzi scheme to raise money for victims.
UPDATED 12:52 P.M. EDT (U.S.A., MAY 18): In an unusually large recovery by a court-appointed receiver, victims of the “3 Hebrew Boys” Forex Ponzi scheme and fraud caper in South Carolina will receive back about 46 cents on the dollar, according to filings in federal court.
The Post and Courier of Charleston is reporting this afternoon that it has confirmed the recovery figure with the office of U.S. Attorney Bill Nettles.
On April 25, according to the website of receiver Beattie B. Ashmore, the receiver filed a distribution plan showing that 3,842 court-approved claimants had been identified. The document also cites the figure of 46 cents. Ashmore has sold real estate, cars, a party bus and other property linked to the caper, which gathered $82 million and also acquired a Gulfstream jet.
Tony Pough, Joseph Brunson and Timothy McQueen — the “3 Hebrew Boys” — are serving combined prison terms of 84 years. The sentences handed down by U.S. District Judge Margaret B. Seymour were the longest Ponzi sentences ever handed down in South Carolina.
In 2009, Brunson declared himself “sovereign” and accused then-U.S. Attorney Walt Wilkens of treason, saying Wilkens had no authority over him.
“Sovereign citizens” have an irrational belief that laws to not apply to them. It is somewhat common for purported “sovereigns” to become involved in financial-fraud schemes.
The “3 Hebrew Boys” scam positioned itself as a debt-relief ministry. The “3 Hebrew Boys” name is taken from a biblical tale of believers who escaped a furnace by relying on their faith. The caper also presented a form of affinity fraud.
BULLETIN: A Maryland man has been indicted and arrested on charges of filing a false lien for more than $1.3 billion against a federal prosecutor who had successfully prosecuted him for filing a bogus income-tax return in 2007.
Andrew Isaac Chance also has been charged with filing false tax returns for an entity known as “Andrew I. Chance Trust” in 2007, 2008 and 2009. He faces up to 25 years in prison and a fine of up to $1 million if convicted on the new charges.
In 2007, Chance was sentenced to 27 months in federal prison for filing a false tax claim for an entity known as “ANDREW CHANCE TRUST.” Chance sought a refund of $306,753 in that case, and refunds of $300,000 for each of the three years cited in the new case, prosecutors said.
He is currently on federal probation — and now faces the new charges.
Prosecutors said he placed a false lien of “$1.313 billion against the property” of the federal prosecutor in the earlier case. The prosecutor was an assistant U.S. Attorney, according to the U.S. Department of Justice and the IRS.
A federal grand jury in Greenbelt, Md., returned the new indictments, the Justice Department and the IRS said.
Bizarre paperwork attacks against prosecutors and other federal employees have occurred elsewhere in the United States. In July, a California man was indicted in Nevada on charges of filing 22 false liens ranging from $25 million to $300 million against the officials, prosecutors said.
Thanh Viet Jeremy Cao also sought $20 billion in fraudulent tax refunds, prosecutors charged.
In June, Ronald James Davenport of Deer Park, Wash., was charged with filing false liens against federal officials in Washington state.
Davenport, who described himself as a “sovereign” being, sought the spectacular sum of nearly $5.2 billion from each of the officials, including U.S. Attorney James McDevitt of the Eastern District of Washington, an assistant U.S. attorney, a court clerk and an IRS agent, according to court records.
Prosecutors in the Chance case in Maryland described him as a “tax defier.”
Members of the AdSurfDaily autosurf — an alleged Ponzi scheme — have been associated with schemes to file liens or threats to file liens against judges, prosecutors and members of law enforcement.
Some ASD members have described themselves as “sovereign” beings. Elsewhere, the three principal figures in the “3 Hebrew Boys” Ponzi case in South Carolina also described themselves as sovereign.
The sentences handed out to the “3 Hebrew Boys” defendants were the longest in any federal Ponzi scheme case in South Carolina history, prosecutors said earlier this week. The sentences totaled 84 years — 27 years each for two defendants, and 30 years for a third.
The 3 Hebrew Boys' party bus. (Screen shot from for-sale ad by Beattie B. Ashmore, the court-appointed receiver. The bus, a Prevost XLII 68988 VIP/Executive Coach, is marked "SOLD.")
UPDATED 4:16 P.M. ET (U.S.A.) Yesterday U.S. District Judge Margaret B. Seymour of the District of South Carolina sentenced the “3 Hebrew Boys” — Tony Pough, Joseph Brunson and Timothy McQueen — to a combined total of 84 years in federal prison for a massive Forex fraud and Ponzi scheme.
Today the region’s top prosecutor said the fraud sentences handed down by Seymour were the “highest” in the history of the South Carolina federal district. Seymour also ordered the men to pay $82 million in restitution to victims of the colossal scam.
“As U.S. Attorney, especially in this time of economic hardship, I will continue to seek out and aggressively prosecute those who prey on their fellow citizens and deprive them of their hard-earned savings,” said U.S. Attorney Bill Nettles. “I hope that those who would defraud their neighbors, friends, and associates hear this message loud and clear.”
McQueen, 52, and Brunson, 47, each received sentences of 27 years. Pough, 47, was sentenced to 30 years because he had a prior conviction, Nettles said.
The men purchased a $5 million Gulfstream jet and a $900,000 “party bus” as part of their caper, prosecutors said. They also bought expensive cars, real estate and luxury suites at the NFL stadiums of the Carolina Panthers and Atlanta Falcons.
People of faith and members of the military were among the victims, prosecutors said.
“These schemes wrecked the lives of thousands of people,” Nettles said, pointing out that South Carolina fraudster Al Parish had been sentenced to 24 years in a separate case that involved $66 million.
Beattie B. Ashmore, the court-appointed receiver, has recovered about $20 million so far for victims, prosecutors said.
In a case that features elements remarkably similar to the AdSurfDaily litigation, a federal judge in South Carolina has sentenced three defendants in the “3 Hebrew Boys” fraud case to a combined total of 84 years in prison.
Joseph Brunson, Tim McQueen and Tony Pough were jailed immediately after their convictions a year ago in an $82 million, foreign-currency fraud and Ponzi scheme case that traded on religion. The men, who called their business a debt-relief ministry, accused former U.S. Attorney Walt Wilkens of “treason” last year and of committing acts of war against them.
The sentencing occurred today, with U.S. District Judge Margaret Seymour giving Pough 30 years and Brunson and McQueen 27 years each. The office of U.S. Attorney William N. Nettles of the District of South Carolina did not immediately return a call from the PP Blog for comment. The Associated Press first reported on the lengths of the sentences tonight, noting that the terms were “so harsh in part because the judge found they tried to obstruct justice at every turn.”
Brunson, McQueen and Pough became known as “3 Hebrew Boys” after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.
In 2007, the men filed a court document that described their investment program as an effort to free people from government “bondage” and referred to the investigation as “Satan’s handiwork.”
A year later, in 2008, AdSurfDaily President Andy Bowdoin described the case against his purported Florida “advertising” firm as the work of “Satan,” comparing it to the 9/11 terrorist attacks.
Bowdoin, 76, was indicted earlier this month on Ponzi scheme charges.
The 3 Hebrew Boys’ operation sought to chill law enforcement, regulators and members of the media from scrutinizing operations, prosecutors said.
In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.
A court-appointed receiver published documents that listed an astonishing array of luxury purchases made by the 3 Hebrew Boys schemers with investors’ money. Among the items were a Gulf Stream jet, a Prevost Motorcoach and automobiles with famous names such as Mercedes, Lexus, BMW, Saab, Cadillac and Lincoln.
In the “3 Hebrew Boys” case, Brunson filed documents that appear to have asserted immunity from prosecution on the grounds of purported sovereignty. The documents appear to have been designed to force Wilkens, then the U.S. Attorney, to default on a contact to which he never had agreed. The approach sometimes is referred to as “paper terrorism” or “mailbox arbitration.”
A similar approach has been used by litigants in the ASD case.
Screen shot: Joseph Brunson declared last year that then-U.S. Attorney Walt Wilkens was guilty of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.
Brunson wrote in a court filing he described as a “Bill of Peace” that Wilkens had a duty to appear before a notary public and acknowledge Brunson’s assertion of sovereignty in “red ink.” The document demanded that Wilkens use his “Christian name” in his response to Brunson.
A refusal by Wilkens to carry out the demands within three days, Brunson said, would result in a contractual agreement that Wilkens was “an enemy of One and the [U]nited States of America and the people, Constitution, and Government thereof.”
Sign of the apocalypse? The headquarters of the “3 Hebrew Boys” Ponzi scheme in Columbia, S.C., was gutted in a fire Monday and Tuesday. Firefighters spent 19 hours over two days battling the blaze, but the “building and all contents . . . were completely destroyed,” according to Beattie B. Ashmore.
Ashmore is the court-appointed receiver in the case. Proof-of-claim forms for victims of the $80 million Ponzi swindle became available April 15, only 11 days before the fire broke out. The cause of the fire is under investigation, and the building was an asset of the receivership estate.
“All computers and documents have been stored off-site since the Receiver took possession of the building in October 2007,” Ashmore said. “The building was being managed by a reputable property management company, fully insured and continuously monitored by a security company. The Receiver will make a claim immediately with the Hartford Insurance Company for the full value of the building with the insurance proceeds going to the benefit of the victims.”
The 3 Hebrew Boys case is one of the strangest in the United States, drawing comparisons to the alleged AdSurfDaily Ponzi scheme owing to elements of affinity fraud and antigovernment rhetoric.
Joseph Brunson, Tim McQueen and Tony Pough were convicted in November of swindling tens of millions of dollars in a bogus debt-relief “ministry.” The purported aim of the program was to free people from government “bondage,†and the investigation was referred to as “Satan’s handiwork.â€
In the earliest days of the 3 Hebrew Boys case, more than 100 people protested on behalf of the scheme at a rally in Columbia, saying the government did not understand the program, had overreached in its prosecutorial efforts, refused to deny it was wrong and had chosen to move forward with the case in a bid to save face.
In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.
AVG, which has close ties to ASD, morphed into a “private association†in February 2009. Members were scolded for sharing information and calling the autosurf an “investment†program. As the company appeared to be collapsing in May and June, members were threatened with copyright-infringement lawsuits for sharing information published by the firm.
Brunson, McQueen and Pough are jailed awaiting sentencing. After they were found guilty of 174 counts mail fraud, money-laundering and transporting stolen goods, the men filed documents accusing former U.S. Attorney Walt Wilkins of treason and committing acts of war by prosecuting them.
The men became known as “3 Hebrew Boys†after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.
Minnesota Ponzi Sentencing
A Ponzi scheme operator in Rosemount, Minn., has been sentenced to 117 months in prison and ordered to pay $21.8 million in restitution to victims.
Charles “Chuck†E. Hays, 56, has been detained since his arrest in February 2009. He pleaded guilty last year to one count of mail fraud, one count of wire fraud and one count of structuring transactions to avoid financial reporting requirements.
Among the items seized in the case was a $3 million yacht acquired with investors’ money. Hays operated a firm known as Crossfire Trading LLC and bilked investors out of more than $20 million by operating a Ponzi scheme.
“Hays told potential investors he was a day trader in stock index futures and other futures contracts,” federal prosecutors said.
Investors plowed money into the scheme based on lies told by Hays, and he “admitted he diverted and converted those funds for his personal use and other unauthorized purposes,” prosecutors said.
The sentencing judge in the case was U.S. District Judge Donovan Frank.
California Ponzi Sentencing
Milton Retana, 46, of Huntington Park, was sentenced to 25 years in prison for a $62 million Ponzi scheme that bilked mostly Spanish-speaking investors out of at least $33 million.
The case became known as the “Best Diamond case.” Retana operated a purported real-estate investment company known as Best Diamond Funding. It was yet another instance another in which the name of a precious metal or mineral was used in a Ponzi scheme.
Evidence of the fraud was hidden in the back of a religious bookstore operated by Retana’s wife, prosecutors said. When investigators searched the bookstore, they found millions of dollars in cash. Best Diamond was located next door to the bookstore.
The scheme — like many other Ponzi schemes — featured an appeal to religion, prosecutors said.
“Best Diamond Funding solicited money through advertisements in Spanish-language magazines, on the Internet, and during weekly investment seminars at locations across Los Angeles. The raucous investment seminars often had as many as 300 potential investors and incorporated religious messages,” prosecutors said.
“Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit,” prosecutors said. “However, records obtained by federal investigators showed that Retana used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money.”
The sentencing judge in the case was U.S. District Judge R. Gary Klausner.
UPDATED 5:45 P.M. EDT (U.S.A.) A federal judge has issued a bench warrant for Michael Derrick Peninger after Peninger did not show up for sentencing yesterday in a $7 million, Ponzi-scheme case in South Carolina.
Peninger, 50, of Charleston, was convicted in October of eight counts of mail fraud and one count of making a false statement to an FBI agent, the CFTC said.
The Post and Courier newspaper of Charleston is reporting that prosecutors argued last fall that Peninger should have been kept in jail upon conviction because he posed a flight risk.
Peninger was released until his sentencing date after his 72-year-old mother appealed to U.S. District Judge P. Michael Duffy to permit her son to leave jail to assist with the care of her husband, who has Alzheimer’s disease.
Duffy permitted Peninger to assist his mother and stepfather, ordering him to wear an ankle monitor. The judge now has dispatched the U.S. Marshals Service to locate and arrest Peninger, the Post and Courier is reporting.
Just days ago a judgment of more than $3.9 million was placed against Peninger in a fraud case brought by the CFTC in 2008. The judgment was ordered by U.S. District Judge C. Weston Houck.
Peninger was charged criminally in January 2009. Prosecutors said he operated three companies: Cooper River Group Inc., CSA Trading Group Inc., and Daniel Island Builders LLC.
“[A]t least 20 investors provided Peninger and others with funds to invest on their behalf, but . . . Peninger and others misappropriated the money to pay personal expenses, to pay employees, to fund unauthorized business ventures, and to pay previous investors in a manner akin to a Ponzi scheme,” prosecutors said.
Peninger faced a maximum penalty of nearly two decades in prison.
South Carolina has had some unusual Ponzi cases, including the curious case of the “3 Hebrew Boys.â€
In that case, convicted Ponzi schemer Joseph B. Brunson of Hopkins declared himself “sovereign” and therefore immune from U.S. law. The claim was reminiscent of claims made by Curtis Richmond, a mainstay, pro se litigant in the AdSurfDaily Ponzi scheme case.
In the 3 Hebrew Boys case, Brunson declared that former U.S. Attorney Walt Wilkens was guilty of treason, insurrection and conspiracy to overthrow the U.S. government in his successful efforts to prosecute Brunson.
Richmond argued in the ASD case that U.S. District Judge Rosemary Collyer was guilty of treason.
Defining himself as “One,” a South Carolina man convicted Friday of operating an $82 million Ponzi scheme with two colleagues has filed a series of pleadings declaring himself “sovereign” and accusing a federal prosecutor of committing treason against the United States.
The convicted schemer, Joseph B. Brunson of Hopkins, appears to trying to bolster his claim he is sovereign by constructing an argument that he is immune from prosecution because the United States is insolvent and has no jurisdiction over him. The pleadings were filed on the same day a jury found him guilty of mail fraud, money-laundering and transporting stolen goods and issued a special verdict for forfeiture of $82 million — the proceeds of the Ponzi scheme.
Brunson is one of the so-called “3 Hebrew Boys” who operated a website with the same name. The name is taken from a biblical tale of believers who escaped a furnace by relying on their faith.
Bond Revoked
Upon the jury verdicts, prosecutors moved to revoke the bond of Brunson and co-defendants Tim McQueen and Tony Pough, asking a federal judge to jail them immediately, pending sentencing.
Judge Margaret B. Seymour granted the request, pointing to a Brunson pleading that accused U.S. Attorney Walt Wilkins of treason.
Screen shot: Joseph Brunson declares that U.S. Attorney Walt Wilkens is guilty of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.
‘Pembina’ Tie
Web references connect Brunson to The Little Shell Pembina Band of North America, a reputed splinter group of a legitimate tribe of Native Americans in Montana. WIS News 10, the news arm of a TV station in South Carolina, reported in 2007 that Brunson was stopped by police for driving with illegal tribal license plates while out on bond after being charged by state authorities in the “3 Hewbrew Boys” case.
“Members of the group claim that they belong to a ‘sovereign’ Native American tribe and therefore are not subject to laws and regulations,” ADL reports.
Activities of the splinter group range from “driving with bogus license plates to perpetrating insurance fraud schemes [and] tax evasion,” ADL reports.
ADL notes that the Little Shell Band of Montana is a legitimate tribe, but is not recognized by the federal government. It has no connection to extremism or to the Little Shell Pembina Band of North America, according to ADL.
Bizarre Filings In Securities Cases
Brunson’s filings in the South Carolina case are similar to pro se pleadings in the alleged AdSurfDaily Ponzi scheme case in the District of Columbia. Filings in both cases have included wild arguments, using words directed at prosecutors or judges such as “treason” and “conspiracy” in bids to short-circuit the government’s efforts to prosecute Ponzi and securities cases.
Screen shot: Joseph Brunson asserts his purpurted sovereignty in the '3 Hebrew Boys' Ponzi scheme case.
Curtis Richmond, a mainstay pro se litigant in the ASD case, has been associated in court filings with a version of the Pembina tribal name and the name of a separate Utah tribe a federal judge ruled a “complete sham.” The purported Utah tribe filed enormous financial judgments against prosecutors and members of law-enforcement, and was successfully sued under federal racketeering and mail-fraud statutes.
Richmond was among a group of litigants ordered to pay more than $108,000 in damages and costs for their roles in harassing members of the Utah law-enforcement community with vexatious legal filings. In a separate case, Richmond was found guilty in California of contempt of court for harassing federal judges.
Despite the RICO ruling that went against him and his contempt conviction, members of the AdSurfDaily autosurf and a closely associated surf known as AdViewGlobal hailed Richmond a “hero.”
ASD is implicated in an alleged $100 million Ponzi scheme. Federal prosecutors are attempting to force the forfeiture of tens of millions of dollars in the case, which includes two other autosurfs: Golden Panda Ad Builder and LaFuenteDinero. “LaFuenteDinero” means the “fountain of money,” and the surf was the purported Spanish arm of ASD. Golden Panda was the purported Chinese arm.
For more than a year — at least since May 2008 — various operators or participants in alleged Ponzi schemes have claimed to be immune from U.S. law because they were “sovereign” beings or members of a “sovereign” Indian tribe.
Screen shot: Joseph Brunson he is 'One' and that U.S. Attorney Walt Wilkins is engaged in acts of war against 'One.'
The arguments have been both bizarre and implausible. Gold Quest International (GQI), an alleged multimillion Ponzi scheme operating out of Las Vegas, claimed Panamanian registration and immunity from U.S. law because it was associated with a North Dakota Indian tribe.
GQI attempted unsuccessfully to sue the SEC for the spectacular sum of $1.7 trillion for bringing the prosecution. The company reportedly relied on the services of a nonattorney as its “attorney general” and a nonnotary as its notary public to certify documents.
“You are in an imaginary world where you belong to an unrecognized Indian group,†a federal judge advised Robert Neilson Baker, the nonnotary notary.
In the “3 Hewbrew Boys” case, Brunson filed documents that appear to have been designed to force Wilkens, the U.S. Attorney, to default on a contact to which he never had agreed. The approach sometimes is referred to as “paper terrorism” or “mailbox arbitation.”
A similar approach was used by litigants in the ASD case.
Brunson wrote in a court filing he described as a “Bill of Peace” last week that Wilkens had a duty to appear before a notary public and acknowledge Brunson’s assertion of sovereignty in “red ink.” The document demanded that Wilkens use his “Christian name” in his response to Brunson.
A refusal by Wilkens’ to carry out the demands within three days, Brunson said, would result in a contractual agreement that Wilkens was “an enemy of One and the [U]nited States of America and the people, Constitution, and Government thereof.”
Read a statement by acting U.S. Attorney Jeffrey Sloman on Audie Watson, a Florida man found guilty of selling bogus memberships in a “Pembina” tribe for $1,500 to illegal aliens.
Three men found guilty in South Carolina last week of operating an $82 million Ponzi scheme accused a federal prosecutor of treason on the same day the jury returned its verdict, the FBI said.
A treason claim also was made in the federal forfeiture proceeding against assets tied to Florida-based AdSurfDaily, an alleged Ponzi scheme involving $100 million.
U.S. District Judge Margaret B. Seymour cited the treason claim in the “3 Hebrew Boys” case as a reason to send Joseph Brunson, Tim McQueen and Tony Pough to jail immediately to await sentencing.
“After the jury’s verdict, Judge Seymour was asked to allow the men to remain free on bond until their sentencing,” the FBI said. “She denied the request after noting that all three men filed documents [Friday] accusing U.S. Attorney Walt Wilkins of treason and committing acts of war by prosecuting them.”
Brunson, McQueen and Pough became known as “3 Hebrew Boys” after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.
Wilkens said the scheme targeted people of faith and members of the military.
U.S. Attorney W. Walter Wilkins
“By calling themselves the Three Hebrew Boys, these con men tried to disguise their Ponzi scheme as a religious, charitable program of debt elimination in order to gain the trust of unsuspecting investors,” Wilkins said. “Unfortunately many people were victimized by these men, including many in our armed forces.â€
In the ASD case, the treason claim was made against U.S. District Judge Rosemary Collyer. ASD is known to have members who identify with the so-called sovereignty movement.
California resident Curtis Richmond, a pro se litigant in the ASD case, identified himself in court documents in a separate case as a “sovereign” being who enjoyed diplomatic immunity from prosecution and answered only to Jesus Christ.
Richmond is associated with a Utah “Indian” tribe ruled a “complete sham” last year by U.S. District Judge Stephen Friot. On the eve of a civil RICO trial last year, Richmond attempted to have Friot removed from the case by claiming he owed Richmond $30 million.
Friot refused to step down in Utah, as did Collyer in the District of Columbia. Richmond accused Collyer earlier this year of operating a “Kangaroo Court” and violating her judicial oath. Collyer is presiding over the ASD civil-forfeiture case. Other filings in the ASD case suggested Collyer was guilty of as many as 60 felonies, and that an effort had been made by at least one ASD member to start a process to collect $120 million from Collyer, two federal prosecutors and a court clerk for “Interference With Commerce.”
Screen shot: Section of a pro se filing in the ASD case.
Such bizarre claims have been popping up more and more in litigation involving securities.
Gold Quest International (GQI), a company accused by the SEC last year of operating a Ponzi scheme from Las Vegas, claimed it was part of a North Dakota Indian tribe and was immune from U.S. law.
After the SEC brought the charges against GQI in May 2008, Michael Howard Reed, the purported “attorney general” of the tribe, tried to sue the SEC for $1.7 trillion. The sought-after amount would have exceeded the total of federal income tax paid by individual U.S. filers last year by about $575 billion.
U.S. District Judge Kent J. Dawson struck a series of pleadings by Reed from the record.
Meanwhile, Dawson jailed John Jenkins, one of the defendants implicated in the Ponzi scheme, for contempt. Dawson also dispatched the U.S. Marshals Service to arrest David Greene, also known as “Lord David Greene,†in part for violating orders to repatriate money offshore to the United States.
Despite Richmond’s behavior, he was labeled a hero on the Pro-ASD Surf’s Up forum. Over the weekend, Surf’s Up reinforced an earlier announcement that it would not permit discussion about the AdViewGlobal (AVG) autosurf.
“[P]lease don’t expect any information that concerns AVGA,” a forum Mod said Saturday. “[I]t doesn’t belong on this forum.”
Another Mod reinforced the ban on AVG discussion today.
“In the beginning days of AVG we made it clear this is not an AVG forum and it still will not be,” the Mod said.
Surf’s Up members repeatedly have said they wanted to discuss AVG, which has close connections to ASD. Their requests have been consistently rebuffed. Some of the Surf’s Up Mods were among the founding members of the AVG surf, which came to life after a major court ruling went against ASD last year.
AVG purported to be a “private association” that operated offshore. Members used the “offshore” angle as a key selling point, saying the surf’s purported country of operation — Uruguay — insulated it from prosecution.
Like the “3 Hebrew Boys” operation, AVG sought to prevent members from discussing the company outside the confines of areas it controlled. AVG members were scolded for sharing information and calling the autosurf an “investment†program.
As AVG was in failure mode in May and June, members were threatened with copyright-infringement lawsuits. Critics were told AVG would contact their ISPs to file abuse reports and suspend service.
In yet another case that may cause widespread unease in the autosurf world, three men accused of defrauding participants in a bogus debt-relief “ministry” have been found guilty of 174 counts of mail fraud, money-laundering and transporting stolen goods.
Parts of the case against “3 Hebrew Boys” were remarkably similar to events engulfing the AdSurfDaily autosurf. In 2007, for example, the defendants filed a court document that described their investment program as an effort to free people from government “bondage” and referred to the investigation as “Satan’s handiwork.”
In 2008, AdSurfDaily President Andy Bowdoin described the case against his purported Florida “advertising” firm as the work of “Satan,” comparing it to the 9/11 terrorist attacks. Prosecutors said ASD was selling unregistered securities, while engaging in wire fraud, money laundering and operating a $100 million Ponzi scheme.
In 2007 and 2008, prosecutors brought essentially the same charges against “3 Hebrew Boys” — Joseph Brunson, Tim McQueen and Tony Pough.
About 100 supporters of the “3 Hebrew Boys” rallied in Columbia, S.C., in the early days of the probe, to demand that investigators leave them alone. Participants told reporters that the government did not understand the program, had overreached in its prosecutorial efforts and refused to deny it was wrong, choosing to move forward with the case in a bid to save face.
Prosecutors said the “3 Hebrew Boys” scam was targeted at churchgoers and members of the military from South Carolina and North Carolina, and also from other states. The scam got its name from the company’s website name, which was based on a biblical tale of believers who escaped a furnace by relying on their faith.
At least $82 million was consumed in the scheme, prosecutors said.
The company attempted to chill law enforcement, regulators and members of the media from scrutinizing operations, prosecutors said.
In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.
AVG, which has close ties to ASD, morphed into a “private association” in February 2009. Members were scolded for sharing information and calling the autosurf an “investment” program. As the company appeared to be collapsing in May and June, members were threatened with copyright-infringement lawsuits. Critics were told AVG would contact their ISPs to file abuse reports and suspend service.
Not only did the plan to force secrecy and mute criticism not work in the “3 Hebrew Boys” case, it resulted in intense scrutiny by federal prosecutors, the FBI, the IRS and other agencies. It also resulted in intense scrutiny on the state level.
South Carolina Attorney General Henry McMaster filed civil and criminal charges, posting all the documents in the case on his website.
A court-appointed receiver also published documents, listing an astonishing array of luxury purchases made by the schemers with investors’ money. Among the items were a Gulf Stream jet, a Prevost Motorcoach and automobiles with famous names such as Mercedes, Lexus, BMW, Saab, Cadillac and Lincoln.
Some of the luxury items are missing, meaning they cannot be sold to compensate victims.
Brunson, McQueen and Pough were found guilty yesterday. The jury in the case, which was heard in Columbia, S.C., returned the verdict in less than three hours, after listening to testimony for weeks.
Separately, Lee Otis Fluker was charged with perjury and convicted in 2008 for lying about his knowledge of the scheme. He was sentenced to a year in prison.
Brunson, McQueen and Pough face decades in prison and fines in the millions of dollars.
Last month, Beattie B. Ashmore, the court-appointed receiver in the case, warned victims about “companies [that] claim to offer professional services for recovering losses associated with your involvement with CCG,” one of the companies associated with the “3 Hebrew Boys” scheme.
“Please note that you are not required to respond to these letters in order to be considered for a distribution from the Receiver,” Ashmore said on the receiver’s website. “In addition, the Receiver takes no position as to any consequential effect filing a claim and recovering funds in this case may have upon any action you have taken or may take with Fraud Recovery Group or any similar type company.
“Therefore, it is strongly recommended that you seek professional legal and tax advice from a trusted advisor, and that you properly research any professional advice before acting upon it,” Ashmore said.
