Is it the maximum case of Kaboom! — coupled with the maximum case of denial?

The government of South Africa hit Maritjie Prinsloo with a whopping 122,000 counts of fraud, racketeering and money-laundering in a pyramid-scheme case that involved an estimated $205 million. (R1.5 billion.)

Prinsloo was found guilty last month. South African media now are reporting that she is blaming the government and an accounting firm for interfering in her business affairs while at once insisting she could have turned things around.

It was not immediately clear if the filing of 122,000 counts established a record. Prinsloo has been referred to in local reports as the “Pyramid Scheme Queen” and the “Krion swindler.” Members of her family also have been implicated in the scheme.

It is not unusual for Ponzi and pyramid schemers to blame the government for their legal predicaments and to claim the government made matters worse by taking action to stop a scheme before it could consume even greater sums of money. Online Ponzi forums, for example, are filled with claims that operators can turn things around if given more time, and victims routinely are discouraged, ridiculed and threatened with banishment by operators and their shills for contacting authorities and filing complaints.

A psychologist told the the Pretoria High Court that Prinsloo believes she did nothing wrong and could have turned around the business had the government not filed charges, according to this account in the Daily Dispatch.

Prinsloo was charged with more counts than there are seconds in a day (122,000 counts/86,400 seconds in a day). Had she been charged in the United States — and had she not waived the reading of the complaint — the court official tasked with the duty of ticking off the counts would have left voiceless.

Had the judge ordered one count read per second — and had the employee magically been able to comply with the order — the employee would have consumed 24 straight hours in reading the counts and still been left 35,600 counts short of finishing the job. The job then would have carried over to consume almost 10 straight hours of a second day, at one count per second.

During the first 24 hours of the reading of the complaint at the impossible rate of one count per second, the world’s population would have increased by about 220,000, according to estimates.

In the often bizarre and incongruous world of Ponzi and pyramid schemes, the fact that the world’s birth rate exceeds its death rate has been seized upon by some advocates as purported “proof” that it is impossible to operate such schemes and the government therefore cannot “prove” that a Ponzi or pyramid scheme exists.

Such claims were made by at least one member of AdSurfDaily, which the U.S. Secret Service described as a Ponzi scheme. Some members of ASD defended the firm by claiming that no Ponzi existed and that the government was interfering with commerce.

ASD President Andy Bowdoin, meanwhile, told members that the government had seized their money. In court filings, however, he told the presiding federal judge that the money belonged to him.

Prosecutors called Bowdoin “delusional.”

BULLETIN: Yet-another bizarre paperwork attack on U.S. law enforcement has occurred.

A California man has been charged with filing “false liens” in Nevada against federal officials and employees of the SEC, the Secret Service, the IRS, four federal judges and staff members of the U.S. Attorney’s Office for the Southern District of California, federal prosecutors said.

Thanh Viet Jeremy Cao was indicted by a federal grand jury in Las Vegas on charges of filing 22 false liens ranging from $25 million to $300 million against the officials, prosecutors said.

He also sought $20 billion in fraudulent tax refunds, prosecutors charged.

Cao resides in Orange County, Calif. If convicted on all counts, he faces up to 223 years in prison and a fine of up to $5.75 million.

“Cao corruptly obstructed the administration of the federal tax laws, by, among other things, filing retaliatory false liens against IRS employees, filing and attempting to file with the IRS false Forms 1099-OID (Original Issue Discount) that claimed fictitious income tax withholdings, filing and attempting to file false tax returns that claim fraudulent refunds totaling approximately $20 billion, and preparing at least five false tax returns for third parties that claimed fraudulent income tax refunds totaling in excess of $1.1 million based upon fictitious income tax withholdings,” prosecutors said.

In June, Ronald James Davenport of Deer Park, Wash., was charged with filing false liens against federal officials in Washington state.

Davenport 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 described Davenport as a “tax defier.” Davenport has described himself in court filings as a “sovereign.”

Some members of the alleged AdSurfDaily autosurf Ponzi scheme and other HYIP schemes have been linked to tax-deniers and the so-called “sovereign” movement.

See earlier story that references the Davenport action. (The story also provides some background on court filings and other actions by ASD members.)

In a civil case that preceded the criminal indictment against Davenport, Senior U.S. District Judge Justin L. Quackenbush ruled in May that the liens “were filed to retaliate against the officers for their good-faith efforts to enforce the tax laws against Mr. Davenport.”

Quackenbush struck the liens, which were filed in the form of UCC Financing Statements with the Washington State Department of Licensing, according to records. The liens not only were fraudulent, but also contained “sensitive personal information” that violated privacy laws, the judge ruled.

Davenport also filed instruments dubbed “Notice[s] of Claim of Maritime Lien” with the Spokane County Auditor’s Office, according to records. Those, too, were struck.

The act of filing false liens or sending “demand” letters to officials or litigation opponents in a bid to hamstring civil and criminal prosecutions has been referred to as “paper terrorism” and “mailbox arbitration.”

Ronald Paul Shade: Source: Interpol

EDITOR’S NOTE: The PP Blog has covered a number of stories in which U.S. residents living overseas were extradited to the United States to face Ponzi charges. The case against Ronald Paul Shade is another one — and it’s one that demonstrates that an extradition can occur even if a defendant is not charged with a federal offense.

Indeed, the warrant for Shade’s arrest was issued by a state-level Superior Court judge in California, according to Interpol. Shade’s case is instructive because it defeats some of the myths propagated on Ponzi boards such as MoneyMakerGroup, ASAMonitor, TalkGold and MyCashForums. Among the myths is that “offshore” equals “safe” for both investors and Ponzi perpetrators.

Don’t tell that to Shade, now jailed in California after being extradited from Bangkok by local — as opposed to federal — prosecutors in California. His bail was set at $3.9 million.

And don’t tell it to Jeffrey Lane Mowen, extradited from Panama to face federal Ponzi charges in Utah and later indicted in an alleged murder-for-hire plot. Here’s a quick side note on the Mowen case: If you like the recruitment fees paid by HYIP, autosurf and corrupt MLM or commission-based investment programs and make claims about the “due diligence” you’ve performed and try to impress prospects with your insider knowledge, your willful blindness may put you at great risk.

Mowen had three prior convictions in Utah for securities fraud and two for theft, according to records. Despite Mowen’s criminal record and history as a fraudster, promoters still did business with him. Their faith drained millions of dollars from investors, the SEC said. Using language apt to cause unease in the Ponzi-promoting world, the SEC said at least one promoter “either knew or was reckless in not knowing that Mowen had multiple recent felony convictions involving crimes of dishonesty.”

Indeed, the SEC said, the promoter learned in approximately late June 2007 that Mowen had been convicted of securities fraud . . . [but] “continued to solicit new investor funds for several months while failing to disclose Mowen’s criminal history to any of the Promoters or their investors.” Downstream promoters who entrusted the promoter “conducted virtually no due diligence in connection with [his] purported investment opportunities, but transferred investor money to [him] without any documentation or limitation on his use of the funds,” the SEC said.

Perhaps the biggest myth exposed by the Ronald Paul Shade case is that going offshore takes state attorneys general and local prosecutors totally out of play. Longtime PP Blog readers will remember that the “offshore” pitch was pivotal in promotions for AdViewGlobal, AdGateWorld, MegaLido and other autosurfs that surfaced in the aftermath of the seizure of tens of millions of dollars by the U.S. Secret Service in the AdSurfDaily Ponzi scheme case. Some ads claimed that the “offshore” surfs neutralized state-level investigators.

Shade, however, was brought back to the United States at the request of the San Bernardino County District Attorney’s Office in California to face state charges filed by local investigators.

Still promoting investment-fraud schemes on the Ponzi boards and supplementing your pitches with myths about “safety” and how the overseas schemes are insulated from prosecution? Perhaps this story on the dramatic extradition of Colombian national David Murcia to the United States will help you snap out of your delusion that Ponzi and pyramid businesses cause no harm and represent “freedom” of choice. Perhaps this story on Robert Hodgins, who goes to bed at night knowing he’s wanted by Interpol, will help you shape your thinking.

The cases of John and Marian Morgan, U.S. residents extradited from Sri Lanka, also are instructive.

Finally, it’s worth noting that, after the United States charged Canadian national Nicholas Smirnow in May with operating an HYIP Ponzi scheme, a MyCashForums poster was quick to claim that “the USA has no extridition (sic) agreement ion (sic) place with the Phillipines (sic) . . . “

The claim was false. Federal prosecutors said they are seeking Smirnow’s extradition. He was accused of operating a $70 million, international fraud known as Pathway to Prosperity (P2P).

Here, now, the story of Ronald Paul Shade’s extradition . . .

A California man living in Thailand was extradited to the United States to face charges he ripped off senior citizens in a real-estate Ponzi scheme, authorities said.

Ronald Paul Shade, 39, formerly of Riverside, was arrested by local detectives Friday at Los Angeles International Airport. He was charged by investigators from the San Bernardino District Attorney’s Office with 29 felonies, including financial elder abuse, filing forged documents with the County Recorder’s Office and grand theft.

San Bernardino County District Attorney Michael A. Ramos, who also is the president of the California District Attorneys’ Association, led the probe.

Among the detectives involved in the Shade probe was Michael Leibrich, a senior investigator with the DA’s office.

“From 2006 to 2008, Shade solicited money from numerous investors for his company, Orange Crest Realty,” investigators said. “Investors were promised a high rate of return for a short-term investment. Elderly victims later discovered that their life’s savings were being used to further a Ponzi scheme.”

Shade had been living in Thailand for about two years, investigators said.

In 2008, the California Department of Corporations issued a “desist and refrain” order against Shade and his company after alleging that they were selling unregistered securities and recruiting prospects  by urging them to “Get 18% APR Today” through the company’s “wonderful” investment.

Shade and the company used a now-defunct website known as OCRFunding.com to pitch the purported program, authorities said.

Among the misleading claims made to investors, according to authorities, were these:

• That Orange Crest Realty was founded in 1993. (Authorities said Orange Crest Realty was not incorporated until June 2004.)
• That Orange Crest Realty is a “registered investment advisor.” (Authorities said neither Shade nor the company and its associates were registered.)
• That each investment was secured by actual title to specific existing real property. (Authorities said that “each investment was not secured by real property.”)
• That a Deed of Trust And Assignment of Rents in the Property would be recorded with the Office of the County Assessor/Recorder and the investor would be provided with the recorded deed.  (Authorities said a deed promised an investor who sent in $50,000 was not recorded and the “investor never received a recorded deed.”)
• That the investor would receive regular monthly interest payments. (Authorities said “payments ceased shortly after the investment was purchased.”)

San Bernardino County investigators were assisted in the extradition by the Southwest Regional Fugitive Taskforce of the U.S. Marshals Service.

The scheme, which allegedly gathered $14 million, also fleeced investors who responded to newspaper ads, investigators said.

Source: FBI.

UPDATED 4:51 P.M. EDT (U.S.A.) A convicted felon who emerged from prison and almost immediately launched a $1 million fraud scheme known as PPSN threatened to prosecute and sue a consumer who had filed an online complaint, federal prosecutors said.

Although the threat caused the consumer to withdraw the complaint against Philip Pestrichello, Pestrichello’s bid to rattle the consumer’s nerves ultimately backfired because he included a “fake lawsuit number” in a letter to the consumer. Prosecutors used the letter and Pestrichello’s checkered past to persuade a federal judge to deny him bail. He has been jailed since his February arrest, and now faces up to 20 years behind bars after entering a guilty plea in the case.

In the threatening letter, Pestrichello advised the complainant that “we will proceed by filing a lawsuit against you in The State of New York and you will be subject to prosecution, fines and penalties including monetary damages,” prosecutors said.

Pestrichello also threatened “victim-consumers who lodged on-line complaints warning others that PPSN was a scam,” prosecutors said.

The Federal Trade Commission and the U.S. Postal Inspection Service worked together in the Pestrichello case, which was brought in February as one of the undertakings of President Obama’s Financial Fraud Enforcement Task Force.

Pestrichello was running a scam enterprise known variously as “Preferred Platinum Services Network LLC” ; “PPSN LLC”; “Home Based Associate Program”;  and the “Postcard Processing Program,” prosecutors said. They added that he had been running scams since the early 1990s and had been sentenced to three years in prison in 2003 after being convicted of mail fraud in a work-at-home scheme known as “IMXT & Co.”

His most recent scam began in 2007 while Pestrichello was on federal probation after serving his time for the 2003 mail-fraud conviction, prosecutors said.

“For nearly 20 years, Philip Pestrichello has preyed on the especially vulnerable — the economically disadvantaged, the unemployed, the disabled, or elderly individuals — who are trying to supplement their income by working from home,” said U.S. Attorney Preet Bharara. “Pestrichello even began committing his work-at-home scam within one year from his release from prison for a prior scam. If Pestrichello thought he was unstoppable, he was wrong.”

Pestrichello, 38, of Bayville, N.J., now has pleaded guilty to mail fraud in the PPSN case. He faces up to 20 years in prison when sentenced by U.S. District Judge Kimba Wood on Oct. 26. A fraud case against Pestrichello’s wife, Rosalie Florie, is pending, prosecutors said.

It is common for fraudsters to threaten to sue customers, critics and journalists. Such threats were present in the $1.2 billion Ponzi scheme case of disgraced Florida attorney Scott Rothstein, who eventually was disbarred. He repeatedly threatened to sue a reporter who questioned his business practices in the weeks leading up the the exposure of the scheme.

Threats against customers and journalists also were part of the alleged AdSurfDaily Ponzi scheme case. ASD President Andy Bowdoin, according to August 2008 court filings, told customers that he had set aside $750,000 to sue critics.

“These people that are making these slanderous remarks, they are going to continue these slanderous remarks in a court of law defending about a 30 to 40 million dollar slander lawsuit,” Bowdoin said, according to federal prosecutors. “Now, we’re ready to do battle with anybody. We have a legal fund set up. Right now we have about $750,000 in that legal fund. So we’re ready to get everything started and get the ball rolling.”

Less than a month after Bowdoin allegedly issued the threat in July 2008, the U.S. Secret Service raided ASD’s Florida headquarters. Prosecutors said the company was operating a $100 million Ponzi scheme and engaging in wire fraud and money-laundering.

Even after the raid, some ASD members continued to threaten Bowdoin’s detractors. One ASD member suggested Bowdoin’s critics would be dragged off in handcuffs for speaking out against the autosurf firm, publishing his version of lyrics from the television program “COPS” to put a chill on the purported slanderers.

“Bad Boys, Bad Boys, Whatcha Gonna Do?” he chanted on the now-defunct AdSurfZone forum, a predecessor site to the Pro-ASD Surf’s Up forum. “Whatcha Gonna Do>WHEN<THEY COME FOR YOU ?!!!”

In June 2009, while the AdViewGlobal (AVG) autosurf was failing, members were threatened with lawsuits for sharing information that purportedly was “copyrighted.” Members also were told that they risked losing their Internet service for questioning the firm in public. Journalists who published information about AVG were threatened with lawsuits.

When the Pathway To Prosperity HYIP scheme was collapsing in 2008, members were threatened with “expulsion,” according to court filings.

“When complaints were made externally to service providers or supposed payment agents,
scathing rebukes were made to the ‘members,’” according to court filings.

In February 2010, Hospitalera.com Blogger Sybille Yates announced she had been threatened with a lawsuit for calling the INetGlobal autosurf a “scam” in September 2009.

On Feb. 23, the U.S. Secret Service raided INetGlobal’s Minneapolis offices. An affidavit by the U.S. Secret Service described the company as operating an international Ponzi scheme. A federal probe into INetGlobal’s business practices is ongoing.

On Oct. 29, 2008, Andy Bowdoin's AdSurfDaily Inc. announced a purported $200 million joint venture with Praebius Communications. During that same month, Praebius' penny stock was part of a "Fraudulent Touting" scheme operated by Songkram Roy Sahachaisere of Huntington Beach, Calif., the SEC says.

A California man and his company have been accused by the SEC of running a “Fraudulent Touting” scheme that pumped the penny stock of Praebius Communications, a company the alleged AdSurfDaily Ponzi scheme once claimed would generate $200 million for its coffers through a joint “advertising” venture.

Charged by the SEC with fraud were Songkram Roy Sahachaisere and InvestSource Inc. of Huntington Beach. The Praebius stock was pumped by Sahachaisere as part of what the SEC described as a “massive” email and newsletter scam.

“Between January 1, 2008 and March 31, 2009, InvestSource sent nearly 450 email messages to over 24 million recipients,” the SEC charged.

Praebius was one of seven InvestSource clients whose stock was pumped and dumped to generate illegal profits of more than $276,000, the SEC charged.

The timing of the alleged touting scheme, according to records, coincided with dates in October 2008 in which ASD, an autosurf company, was announcing a purportedly lucrative  joint venture with Praebius. ASD announced the prospective deal on Oct. 29, 2008. During the same time period, ASD was awaiting a key court ruling on whether it had demonstrated at an evidentiary hearing earlier in October that it was operating lawfully. Using a headline of “ASD-Praebius Venture” on its now-defunct Breaking News website while awaiting the ruling, ASD said it expected to garner revenues of about $200 million “over the first several years” from Praebius.

Announcement of prospective $200 million deal with Praebius Communications on ASD’s Breaking News website. The announcement was removed after some members questioned it.

The SEC now says Sahachaisere and InvestSource were pitching Praebius stock during the same month, declaring their business practices to be “Fraudulent Touting” because they “failed to disclose that they were selling the very securities they were recommending investors buy.”

Sahachaisere and InvestSource received 4.1 million shares of Praebius stock between Oct. 2, 2008, and Nov. 25, 2008, the SEC charged.

The scheme involving Praebius netted $49,215 for Sahachaisere and InvestSource, the SEC said.

Five of the seven stocks — including Praebius — experienced “significant increases in trading volume during InvestSource’s promotions,” the SEC said.

ASD’s name is not referenced in the SEC complaint, and Praebius was not listed as a defendant in the case. Praebius is referenced in the case as a client that paid InvestSource and Sahachaisere in stock “to provide investor relations services.”

One of the issues in the ASD Ponzi case was whether the company had revenue streams adequate enough to pay “rebates” to members of 1 percent a day or 365 percent a year for viewing “advertising.” During the evidentiary hearing, ASD never produced audited, certified financial statements to prove it could sustain the rebates. Prosecutors described the company as catastrophically insolvent and reliant on revenue from new members to pay “rebates” to older members in classic Ponzi scheme fashion.

Less than a month after an evidentiary hearing concluded on Oct. 1, 2008, ASD announced the purported joint venture with Praebius. Critics immediately questioned both the $200 million figure quoted by ASD and the timing of the announcement because Praebius did not publish verifiable financial data and ASD was described by federal prosecutors in the Ponzi scheme case as hopelessly under water.

Although ASD purported to be a professional communications firm, its announcement of the purported $200 million deal did not quote executives of either ASD or Praebius. The announcement led to questions about why Praebius would knowingly associate its name with a company suspected of operating a massive, international Ponzi scheme while it allegedly also engaged in wire fraud and money-laundering while selling unregistered securities.

Some ASD critics saw the announcement as a cynical means of instilling hope in ASD members that all was not lost while signaling to a federal judge that ASD had a major, new client that single-handedly could wipe away the firm’s alleged insolvency. Even as critics were voicing concerns that ASD was advancing yet-another story that was too good to be true, members of the now-defunct Pro-ASD Surf’s Up forum were cheerleading ASD’s purported revenue infusion from Praebius.

Some ASD members sprinted to forums to announce the news, but the information could not be verified. ASD later removed the announcement from its website.

According to the SEC’s complaint against Sahachaisere and InvestSource, nearly 4.5 million shares of Praebius traded hands between Oct. 7, 2008, and Jan. 27, 2009, generating less than $50,000 in revenue.

ASD never explained how Praebius, which did not publish verifiable financial data, could generate the $200 million ASD cited in the announcement.

Less than a month after ASD issued the Praebius announcement, a federal judge ruled ASD had not demonstrated at the evidentiary hearing that it was operating lawfully and was not a Ponzi scheme. By Dec. 19, 2008, federal prosecutors had filed a second forfeiture case against ASD-connected assets, again citing Ponzi allegations.

Even as prosecutors were filing the second Ponzi complaint, Surf’s Up members were claiming that the government secretly had admitted ASD was not a Ponzi scheme.

From the SEC "Fraudulent Touting" court case against Songkram Roy Sahachaisere and InvestSource Inc. The highlight in red shows the alleged illegal touting of Praebius stock.

EDITOR’S NOTE: It has become increasingly clear that regulators and the law-enforcement community are rallying around a common theme that web-based promoters are using discussion forums and social-networking sites in bids to sanitize HYIP Ponzi schemes by positioning them as attractive investment opportunities and even a thrilling form of gambling that pays commissions.

Today the Financial Industry Regulatory Authority (FINRA) launched an awareness campaign aimed at taking the lipstick off financial pigs and exposing them for the economy-killing, filthy hogs they are. FINRA did not mince words, calling the HYIP universe a “bizarre substratum of the Internet.”

Here, now, the story . . .

The Financial Industry Regulatory Authority (FINRA) has launched a public-awareness campaign and issued an investor alert on HYIP schemes that use social-media sites such as YouTube, Twitter, Facebook and online forums and “rating” sites to spread Ponzi misery globally.

“HYIPs are old-fashioned Ponzi schemes dressed up for a Web 2.0 world,” said John Gannon, FINRA’s senior vice president. “Some of these schemes encourage people to bring in new victims, while others entice investors to ‘ride the Ponzi’ by attempting to get in and get out before the scheme collapses.”

FINRA is supplementing its educational campaign with an advertising campaign.

“By using Google AdWords, we are hoping to reach anyone searching the Internet for HYIPs before they fall into the hands of con artists,” Gannon said.

FINRA’s campaign occurs against the backdrop of remarkable law-enforcement actions against the alleged Legisi Ponzi scheme pushed by Matt Gagnon of Mazu.com, the alleged Pathway To Prosperity (P2P) Ponzi scheme pushed on forums such as ASA Monitor, MoneyMakerGroup, Talk Gold and MyCashForums, and the collapse of an HYIP known as Genius Funds.

It also occurs against the backdrop of “prelaunch” buzz surrounding a mysterious program known as WebsiteTester.biz, which is spreading virally on the Internet through electronic news releases, references on promoters’ websites and daily updates on Twitter.

Promoters’ advertising is heavy for WebsiteTesterBiz, despite the fact the company’s domain name is registered behind a proxy, its purported parent company’s domain name is registered behind a proxy and there is a paucity of any verifiable information about either firm.

FINRA specifically referenced the alleged P2P Ponzi in its educational materials. It also provided a link to information published about the collapsed Genius Funds HYIP by the British Columbia Securities Commission. Alarmingly, FINRA said the Genius Funds’ fraud costs investors a staggering $400 million.

Federal prosecutors who filed criminal charges against P2P operator Nicholas Smirnow declared in May that “[a] large percentage, if not all, HYIPs, are Ponzi schemes.”

In its resource material, FINRA is building on that theme.

“[V]irtually every HYIP we have seen bears hallmarks of fraud,” FINRA said. “We are issuing this alert to warn investors worldwide to stay away from HYIPs.”

P2P gathered more than $70 million. Legisi also gathered more than $70 million, according to court records.

Separately, the alleged AdSurfDaily autosurf Ponzi scheme gathered at least $80 million and perhaps $100 million or more, according to records. Autosurfing is a form of HYIP fraud. The U.S. Secret Service acted against ASD in August 2008.

In February 2010, an autosurf known as INetGlobal also came under investigation by the Secret Service. The SEC has acted against autosurfs known as 12DailyPro, PhoenixSurf and CEP, which gathered tens of millions of dollars combined — fueled by online promotions.

Citing FBI statistics, FINRA said “the number of new HYIP investigations during fiscal year 2009 increased more than 100 percent over fiscal year 2008.”

The regulator specifically warned about websites that “Rank the latest programs and provide details of ‘payout options.’” At the same time, it warned about sites that “Allow web designers to buy ready-made HYIP templates and set up an ‘instant’ HYIP.” Meanwhile, it warned about sites that “Blog, chat and ‘teach’ about HYIPs.”

“Some HYIP ‘investors’ proffer strategies for maximizing profits and avoiding losses — everything from videos showing how to ‘make massive profits’ in HYIPs and ‘build a winning HYIP portfolio’ to an eBook on how to ‘ride the Ponzi’ and get in and out before a scheme collapses,” FINRA said.

“Other HYIP forums discuss how to enter ‘test spends,’ how to identify new HYIPs to maximize one’s chances of being an early stage payee and even how to check when a HYIP’s domain name expires so you can guess how long it might pay returns before shutting down,” FINRA noted.

One of the tips offered by FINRA was to be on the look out for “typos and poor grammar” in sales pitches.

“This is often a tip-off that scammers are at work,” FINRA said.

FINRA said HYIP scammers often don’t share critical information with investors.

“HYIP operators cloak themselves in secrecy regarding who manages investor money, where the company is located or where to go to get additional information,” FINRA said.

Claims about being “offshore” also are made, FINRA said.

“Be aware that generally persons or firms offering securities to U.S. residents must be licensed by FINRA and registered with the SEC,” FINRA said.

The sky often is positioned as the limit in the HYIP universe, which often relies on “online payment systems” — some of which “have been tied in recent years to criminal activity, including money laundering, identity theft and other scams,” FINRA warned.

“High-yield investment programs (HYIPs) are unregistered investments created and touted by unlicensed individuals,” FINRA said. “Typically offered through slick (and sometimes not-so-slick) websites, HYIPs dangle the contradictory promises of safety coupled with high, unsustainable rates of return — 20, 30, 100 or more percent per day—through vague or murky trading strategies.”

Read FINRA’s warning on HYIPs. (Make sure you click on the links in the body of the warning.)

Read a PP Blog story about an alleged penny-stock scheme that was operated on Facebook and Twitter. Read a PP Blog story on P2P, and also one on Genius Funds and others.

Read more about P2P. Read more about Legisi.

UPDATED 12:39 P.M. EDT (U.S.A.) An upstart autosurf pushed by members of the alleged AdSurfDaily Ponzi scheme has announced a confusing tweak in a confusing manner.

In its announcement, AdPayDaily (APD) quoted 12 words from an attorney — and the quotation did not appear to be on the subject of legality. Rather, it appeared to be a general statement that all companies need sales to survive.

Separately, a multilevel-marketing (MLM) company that claimed churches have a “MORAL OBLIGATION” to tell congregants about its $1,500 mortgage-reduction program that pays commissions 10 levels deep now is asking members to participate in an imaginary relaunch.

Prospects willing to pay Data Network Affiliates (DNA) a fee to qualify for “Pro” status earn up to a “100% Matching Bonus” in the mortgage-reduction program, DNA said.

In an email to members, DNA did not explain why it was lecturing churches on their purported moral duty to hawk an MLM program or instruct the churches on how to overcome sales objections if a minister, pastor or priest used a worship service or church facility to preach the gospel of DNA.

DNA also did not explain if the clergy of non-Christian faiths had the same moral duty to flog a $1,500 MLM program targeted at people who could be on the verge of losing their homes.

DNA supplemented the email with yet another email, asking members to imagine the company, which launched in March after missing at least two launch dates in February, was only now launching.

“We are asking and calling on all DNA Leaders to FOCUS ON THE FUTURE… Make believe that July 26th, 2010 is the LAUNCH DATE for DNA…” the company said.

In an apparent bid to drive home its point that an imaginary launch can be as effective as an actual launch, DNA again has added what it called a “NEW COUNTDOWN CLOCK” to its website.

“OFFICIAL LAUNCH 7/26/2010,” DNA roared on its site. “Earn Up To $4500 Per Sale. LOCK IN YOUR POSITION NOW.”

The message may be confusing to website visitors stopping at DNA’s site for the first time because it flatly states a launch is under way despite the fact DNA actually launched in March.

A graphic that once advertised DNA Cellular, the company’s purported cell-phone arm, has been removed from the main page of the site. In April, DNA declared “GAME OVER — WE WIN” when it announced its purported cell-phone business that hawked a free phone with unlimited talk and text for $10 a month.

The company later acknowledged that it studied cell-phone pricing only after announcing it had become the world’s pricing leader. It then withdrew the $10 offer, but members continue to promote it.

In an email yesterday, DNA said it had learned “a lot of NOT TO DO kind of things” since it has been in business. It did not describe what it had learned not to do, choosing instead to inform members that “we have every guest you can have on tonight’s webinar” and urging members to focus on “the area of COMMISSIONS.”

A previous guest on DNA’s conference calls has suggested that churches were wonderful places for members to record the license-plate numbers of congregants for entry into the company’s purported database. The same guest also recommended that DNA members record plate numbers at doctors’ offices.

DNA has said its database could be used to locate abducted children.

APD Tweaks Autosurf Pitch

Saying it was relying on the advice of counsel, APD has tweaked its offer. In an announcement to members, the upstart surf provided a threadbare quote purportedly from its lawyer to explain the tweak.

Here are the only words attributed to the attorney:

“Every company needs new sales for survival and growth of the business.”

And here is how APD explained the tweak after providing the 12-word quote:

“To remain active and continue to earn commissions and viewing payments each month, all Reps are required to attract at least one new advertiser who makes a minimum purchase from outside funds of at least $100 or as an alternative an Advertiser/Rep can make a purchase of $100 from outside funds to qualify and remain active,” the company said.

APD then pitched members on an 80/20 program.

“[If] a Rep attracts a new advertiser who make (sic) a minimum purchase of $250 or more and the Rep rolls over at least 80% of the funds in their Cash account each month, they will earn a 20% commission for all additional sales in that month,” the company said. “10% of the commission will be paid with the sale and the remaining 10% will be paid on or before the 15th of the following month, assuming you qualify. Failure to qualify for two consecutive months will result in the deactivation of a Reps (sic) account.”

In the past, private attorneys who have sued autosurfs have described so-called 80/20 or “rollover” programs as an effort to mask the true nature of the programs by minimizing the outflow of cash — in effect, trapping money in the system to achieve the mirage of sustainability.

When the AdViewGlobal (AVG) autosurf announced a suspension of payouts in June 2009, it said that an 80/20 program would become mandatory if it ever dug itself out of the trench it created. Purported ASD “trainers” routinely promoted an 80/20 program.

See earlier stories on APD here and here. See earlier story on DNA here.

EDITOR’S NOTE: We were researching an unrelated matter last night, and came across this gem (outlined below). In 2008, a number of autosurfs that became popular in the aftermath of the seizure of tens of millions of dollars from the personal bank accounts of AdSurfDaily President Andy Bowdoin tanked just prior to Christmas. One of them was Daily Profit Pond. The story below illustrates the fractured thinking that dominates the autosurf landscape — and the role promoters and autosurf “experts” play in spreading spectacular frauds virally on the Internet.

As incredible as it sounds, an autosurf Ponzi known as Daily Profit Pond (DPP) said it was a legitimate business but warned prior to its collapse during the 2008 holiday season that its advertised payout rate of 12 percent a day might be unsustainable.

Why promoters and members even had to ponder whether a Ponzi existed or the sustainability of an enterprise that advertised a 144 percent return in 12 days when there was no verifiable source of revenue beyond members’ funds was left to the imagination.

But ponder it they did . . .

In a missive to members, DPP described itself as thoughtful company that had listened to the input of unidentified “leaders” before making a decision to slash the advertised payout rate.

“A few of our members got scarced (sic) and have contacted us that they want such a fine program like DPP to be here in the long run,” DPP said. “We have listen (sic) to these leaders and have decided to make some changes that will ensure the longterm success of DPP.”

How did DPP address the sustainability issue?

“[T]he management of DPP have decided to change the 12% daily plan which pays 144% in 12 days to a more realistic plan of 150% earnings in 30 days.”

Yep. DPP suggested 144 percent in 12 days was too much, but added that 150 percent in 30 days was “more realistic.” DPP did not explain precisely how it had arrived at the conclusion that its new, 150 percent plan was a winner, but it noted (italics added):

“The DPP administration are expects (sic) in the digital currency business and advertising business. This is where we intend to invest our members (sic) funds and the profit we generate will be used to substain (sic) our members payouts. This new strategy will enable DPP to be there in the long run when all other sites have closed and vanished into the (sic) thin air.”

And like an overnight infomercial eager to add a free can of snake oil to the deal, DPP shrieked, “But Wait!” (Italics added):

“How does this work, you may ask?

“Henceforeth (sic), Our (sic) members will start earning 150% of their profit spots in 30 days. Ref. commission for upgraded members remains 12% down through 3rd levels (sic). 6% commission on level one, 3% ref commission on level two and three.”

One promoter cheered DPP’s business acumen.

“Well, I’m glad to see that someone at Daily Profit Pond is paying attention to the accounting,” he said. “They realize that their liability to their existing members is higher than the cash that is flowing in. You don’t have to be a math expert to realize that when you have more money going out than you have coming in, that you are going to run into cash problems pretty fast.

“For the people who are upset by this change, I can understand where you are coming from but you have got to look at the alternative.

“Would you rather keep earning 12% per day of virtual money that you will NEVER receive? Or would you rather earn 5% per day of money that you will actually be able to cash out? The choice is obvious.”

Records suggest that DPP’s site vanished a week prior to Christmas in 2008. One ad viewed by the PP Blog prior to the collapse of DPP said it was possible to start with $12 and turn it into $12,000.

Just days earlier DPP had lamented surf sites that vanish into “thin air.”

Surfs such as DPP and MegaLido, which also went missing prior to the 2008 Holiday season, were particularly noxious. Members of AdSurfDaily and Golden Panda Ad Builder, whose assets were seized by the U.S. Secret Service in August 2008, cynically promoted DPP and MegaLido to other members of ASD, suggesting these miserable enterprises provided a way for people who lost money in ASD and Golden Panda to get it back quickly.

Good grief: 144 percent in 12 days — later slashed to a “more realistic” 150 percent in 30 days.

There was an earnings “calculator,” of course.

A 67-year-old fraudster who did not listen to his attorney and embarked on a bizarre legal strategy was sentenced to a longer prison term as a result, the AP is reporting.

Meanwhile, the AP is reporting that Neville Solomon met several other defendants in jail and shared his strategy, resulting in longer sentences for inmates who followed his advice, which cited the Uniform Commercial Code (UCC) and religious passages.

One of the prongs of Solomon’s strategy was to repeatedly say, “I accept your offer and return it for value,” according to the AP.

Read the AP story, which quotes a federal judge as saying a “whole bunch of people wound up in prison for a lot longer time than they should have” as a result of relying on improper defenses. At the same time, the story quotes a federal prosecutor who lamented the “crazy defense ideas out there.”

Some of the legal notions advanced by Solomon are similar to the notions advanced by AdSurfDaily President Andy Bowdoin.

Bowdoin, acting has his own attorney, advised a federal judge in 2009 that the mere filing of a pro se court document accomplished his objective of reversing a decision he made to surrender tens of millions of dollars in a Ponzi scheme forfeiture case “as a matter of law.”

U.S. District Judge Rosemary Collyer disagreed, ordering the forfeiture of more than $65.8 million from Bowdoin’s bank accounts.

The Solomon strategy also was reminiscent of a legal approach advocated by ASD member Curtis Richmond, a member of a Utah “Indian” tribe a federal judge ruled a complete “sham” in 2008. The “tribe” relied on fraudulent UCC claims in a bid to extort members of law enforcement, according to court filings.

Elsewhere, a federal judge in Washington state ordered bogus UCC liens filed against government officials to be struck last month.

Bogus liens filed by Ronald James Davenport of Deer Park 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 described Davenport as a “tax defier.” Davenport has described himself in court filings as a “sovereign.”

Davenport now has been charged criminally with filing false liens. If convicted, he faces up to 40 years in prison.

In February, a federal jury found Solomon guilty of money laundering. Prosecutors said he and an associate, Frederick W. Keiser Jr. of Minot, N.D., “promoted a scheme to fraudulently obtain money from potential investors by inducing them to wire money to a company called MidChina Capital Management” in Las Vegas.

“The phony investment promoted by Solomon and Keiser involved a fictitious bank trading or bank guarantee program in which bank instruments were to be obtained,” prosecutors said. “Solomon and Keiser convinced their victims that the bank instruments would generate exorbitant yields which would be used to fund other income-generating projects for MidChina, which in turn would result in investors gaining enormous returns.”

Solomon now has been sentenced to 86 months in federal prison and ordered to forfeit $2,043,235 — the proceeds of the fraud scheme.

“The sentence received by Mr. Solomon shows that investors who get defrauded like this will sit quietly waiting for their great returns for only so long,” said Assistant U.S. Attorney Brett Shasky. “If the promised return isn’t forthcoming and the investment isn’t returned, they will be heard. Persons choosing to promote such schemes should beware. The day will come when the price they pay for their greed will be great.”

The pro se notions advanced by Solomon also are reminiscent of approaches used by defendants in the infamous 3 Hebrew Boys Ponzi scheme in South Carolina. They’re also similar to notions advanced in the Gold Quest International (GQI) Ponzi and securities-fraud case in Nevada.

WANTED BY U.S. POSTAL INSPECTION SERVICE: Charles Robert Smith

The Atlanta Journal Constitution and the Florida Times Union are reporting that three Jacksonville-area residents have been charged in an alleged $425 million fraud scheme involving mass solicitations for the renewal of dubious “Yellow Pages” listings.

Separately, the brother of one of the defendants is listed as an international fugitive by the U.S. Postal Inspection Service in his own alleged Yellow Pages scheme.

Charged in federal court in Atlanta were Mark Stuart Smith, Christopher Jon Gregory and Marian Phelan. The defendants were associated with a company known as United Directories, the newspapers reported.

Smith’s brother, Charles Smith, was indicted last year in Atlanta on similar charges, the Times Union reported. The U.S. Postal Inspection Service (USPIS) has published a “Wanted” poster on Charles Smith, whose full name is Charles Robert Smith. Charles Smith also uses the alias of  Joseph Austin Smith, according to the USPIS.

Charles Smith, according to the USPIS, is believed to have passports and Florida driver’s licenses in both names. He is described as an international fugitive possibly living in Tanzania, and is believed to travel extensively in Europe and Africa.

Postal inspectors and state attorneys general have battled several variants of Yellow Pages scams over the years. Charles Smith, according to records, has been implicated in such scams for at least two decades.

The Federal Trade Commission, among other agencies, has issued warnings about Yellow Pages scams. So has the state of North Dakota.

Selling “Yellow Pages” listings on the Internet to create the impression that customers have purchased an ad in well-known, local print publications is one variant of the scam.

Another variant is to send businesses a bogus bill for “Yellow Pages” listings. Because firms frequently purchase such listings and associate the “walking fingers” logo with legitimate print and online publishers, they often pay the bill without looking.

Yet another variant of the scam is to send what appears to be a small “refund” check to businesses for overpayment of a “Yellow Pages” bill. When recipients endorse the checks, they actually are entering into a contract and agreeing to be automatically billed for advertising purchases.

On May 26, 2009, the PP Blog reported that the AdViewGlobal (AVG) autosurf, which had close ties to the alleged AdSurfDaily Ponzi scheme operated from Florida, appeared to be in the process of launching a purported Yellow Pages directory service. Whether AVG planned to offer the purported service independently or through a partnership with a vendor was unclear.

With great fanfare in May 2009, AVG announced that it was launching a new website and offering a new suite of purported services. The launch ultimately failed — but not before AVG had published a “walking fingers” logo to which the acronym “AVGA” had been added.

Read the early story on the charges against Mark Stuart Smith, Christopher Jon Gregory and Marian Phelan in the Atlanta Journal Constitution.

Read the story in the Florida Times Union.

Visit the USPIS website to view the “Wanted” poster of Charles Robert Smith.

Search for “Smith” in this USPIS document to get additional background.

In the alleged Charles Smith scheme, “More than 10,000 victims lost an estimated $10 million,” USPIS said. Some of the money allegedly ended up in a Swiss bank account.

During the course of the Charles Smith probe, “[i]nspectors and agents also found documents indicating that Charles Robert Smith was trying to liquidate funds in a brokerage account and several other bank accounts by purchasing one-ounce gold coins from dealers across the United States,” USPIS said.

“Charles Smith had also recently placed a $42,000 deposit on a $1.2 million jet from Epic Air in Las Vegas, Nevada. Inspectors used information from the documents to obtain seizure warrants for the following items: – $323,793 from a brokerage account at Investscape. – 690 one-ounce American Eagle gold coins valued at $293,940. – 545 one-ounce Austrian Philharmonic gold coins valued at $228,900. – $42,000 down payment for the purchase of the jet, which had been converted into $30,000 worth of airplane parts and $12,000 in cash.”