PatrickPretty.com

Tag: CCI

  • BULLETIN: Company That Did Business With Steve Renner’s Cash Cards International Charged In Massive Forex Swindle; Case Against MXBK Group S.A. De CV Grew Out Of Cooperative Probe Among SEC, CFTC, FBI And IRS; SEC Charges Pitchmen With Blindly Promoting Scam, Even After Collapse

    BULLETIN: UPDATED 9:18 A.M. ET (U.S.A., DEC. 8.)

    A Mexican company listed as a customer of Steve Renner’s Cash Cards International (CCI) in a 2005 scam known as MegaFund now has been charged by the CFTC with running a massive Forex fraud scheme that gathered at least $28 million from more than 800 U.S. customers.

    Named defendants by the CFTC were MXBK Group S.A. de CV, a private Mexican financial services holding company, and its Forex trading division, MBFX S.A. Court records show that MXBK Group S.A. de CV formerly was known as MexBank Group SA de CV or MexBank.

    Separately, the SEC has charged three men with fraud for blindly pitching the MexGroup program and raising “tens of millions” of dollars in the process. Charged in Utah federal court were Clifton K. Oram, Don C. Winkler and William R. Michael.

    “Beyond the fact that none of the defendants understood how the Forex market or Forex trading functioned, neither Oram, Winker or Michael took any significant steps to investigate MexGroup, its principals, or the viability of the investment,” the SEC charged. “Instead, they blindly accepted MexGroup’s representations about its background, veracity, and track record.

    “Further, Michael and his company used MexGroup’s purported performance numbers on his company’s website and made misleading representations and omissions regarding their own Forex trading experience,” the SEC continued. “Even more egregious, Winkler and Oram continued to offer and sell the MBFX offering even after the November 2008 collapse.”

    Renner, the operator of both CCI and the INetGlobal autosurf, currently is serving an 18-month prison sentence for tax evasion. In February 2010, the U.S. Secret Service alleged that Renner was operating a Ponzi scheme through INetGlobal.

    Renner has denied the Ponzi allegations.

    The CFTC case against the Mexican companies and the SEC case against the promoters were brought as a result of a joint cooperative investigation among the regulators, the FBI and the IRS, officials said.

    Read the CFTC complaint, which alleges the MXBK Group Forex scam began in 2005.

    Here is a snippet:

    “U.S. customers sign up to participate in the Defendants’ forex trading enterprise by completing forms electronically on the Defendants’ internet website. However, when completing their customer applications, U.S. customers are required to designate certain U.S. individuals or entities, sometimes called ‘resellers’ or ‘introducers,’ who in turn act as liaisons for U.S. customers with Defendants’ operations in Mexico. The resellers or introducers receive rebates described as ‘PIPs,’ which are purportedly based upon the volume of trading.”

    (NOTE: The full complaint is highly recommended reading if you follow HYIP and Forex fraud schemes.)

  • Prosecution, INetGlobal Strike Interim Agreement That Frees Money To Pay Employees, Insurance Under Court Supervision

    UPDATED 6:14 P.M. ET (U.S.A., JAN. 20, 2011.)

    Employees of an Internet company under federal investigation amid allegations it was operating a Ponzi scheme have received some good news: a sum of $125,000 has been released to pay their past-due salaries and $25,000 has been released to pay their past-due healthcare benefits.

    Meanwhile, $200,000 per month will be released to pay the “ordinary and necessary operating expenses” of INetGlobal and affiliated companies as the probe into their business practices continues.

    News for commission-based affiliates of INetGlobal was not good. No money has been released to pay them.

    Dubbed an “interim agreement,” the release of funds was negotiated by attorneys for both INetGlobal and the government. It will be in effect “until such time as the government files an indictment or information containing forfeiture provisions, a civil forfeiture complaint against the funds seized on February 23, 2010 and in later days, or determines that there shall be no prosecution or forfeiture complaint,” according to the terms.

    The agreement does not mean that INetGlobal no longer is in legal jeopardy.

    A separate action against a San Diego property the government alleged was acquired with fraud proceeds has been suspended under the terms of the agreement. The case against the San Diego property has not vanished; under the terms of the agreement, it is being placed on hold “until the related criminal case or investigation is resolved or, in the event that the government determines that there shall be no prosecution, until the government either files a separate civil forfeiture complaint against the funds which were seized on February 23, 2010 and in later days, or determines that there shall be no prosecution or forfeiture complaint.”

    In February, the U.S. Secret Service said it believed INetGlobal operator Steve Renner was running an international Ponzi scheme. About $26 million was seized in the case.

    Companies covered under the agreement include INetGlobal, Inter-Mark Corp. of Nevada,
    Virtual Payments Systems LLC of Wisconsin, V-Media Marketing LLC of Minnesota, Cash Cards International LLC of Minnesota and SMR Investments #1 LLC of Minnesota.

    NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.

    SteveRenner.com described the agreement with the prosecution as “an incredible turn of events,” reporting it was “worth millions.” The website also reported that the firm has become “the 1st company ever” targeted in a government investigation to receive money back.

    Prosecutors told the Star Tribune of Minneapolis-St. Paul that the government agreed to the release of funds so employees could get paid. (See link to Star Tribune story below.)

    Payments will be administered under court supervision by a court-appointed attorney, according to the agreement. The agreement calls for the IRS to receive “up to” $650,000 and the Minnesota Department of Revenue to receive “up to” $150,000 for tax payments delayed by the probe. Renner will receive $151,484.75 upon providing “proof that Inter-Mark Corporation and/or V-Media Marketing, LLC and/or Cash Cards International, LLC” owe him that sum.

    Renner, 55, was listed last week as in the custody of the U.S. Marshals Service and “in transit” to a federal detention facility to begin serving an 18-month sentence for income-tax evasion. He was convicted in December 2009 and sentenced in May for actions that occurred prior to the INetGlobal Ponzi scheme investigation.

    Renner-related companies have ties to at least four other Ponzi or investment-fraud cases, according to records.

    Read the Star Tribune story on the interim agreement.

  • KABOOM! Agents Tie Alleged ‘Evolution Market Group’ Ponzi And HYIP Fraud Scheme To Narcotics Case In Arizona; Tens Of Millions Of Dollars Seized; Firms Promoted On ASA Monitor, TalkGold Forums

    Kaboom! It has happened again. Explosive court filings by the government show that kneejerk apologists and defenders of High Yield Investment Programs (HYIPs) and autosurfs are quickly running out of cover when they assert that anything is noble or even real about the programs they relentlessly push for their share of purported profits from introducing others to the schemes.

    A law-enforcement task force consisting of the U.S. Secret Service, the IRS and veteran investigators from other agencies that specialize in reverse-engineering complex money-laundering networks have tied funds from a widely promoted online HYIP to the international narcotics trade and a murky money-services business. Research shows that the program and offshoots could have gathered between $100 million and $200 million before the wanton criminality was exposed after exhaustive investigations. The program was advertised as lucrative and harmless on the Ponzi-friendly ASA Monitor and TalkGold forums.

    Research by the PP Blog suggests the purported investment program was so sordid that promoters even claimed some of the funds were being used for the “humanitarian” purpose of assisting kidnapping victims in Colombia. In a sickening display of marketing theatrics, a claim was made that investors could “adopt” kidnapping victims for a payment of $1,000 and that the company would set aside $500 in corporate funds for each victim so that their families could have bright futures if the victims ultimately were released by their captors.

    The HYIP scheme allegedly was associated with an entity known as Evolution Market Group (EMG), which purportedly had a Forex component known as FinanzasForex. Investigators alleged in January  that there were schemes within schemes in a tangled web of domestic and international deception that featured dozens of bank accounts, shell companies and various fronts for money-laundering enterprises, including companies purportedly in businesses such as real estate and car washes.

    The scheme was so corrupt, according to court filings, that some investors were told that, in order to leave the program whole, they had to recruit new investors, have the new investors pay them directly — and use the proceeds from the new investors to “recover” their initial outlays.

    Members of the same Florida-based task force also are involved in the AdSurfDaily autosurf Ponzi scheme investigation. In the ASD case, records show that the company once advertised a debit card federal prosecutors in Connecticut say was offered by a Dallas-based firm that laundered money for a narco business in Medellin, Colombia. The Dallas firm, known as Virtual Money Inc. (VM), also agreed to launder purported drug proceeds in the Dominican Republic, according to court filings.

    Robert Hodgins, the operator of VM, is now an international fugitive wanted by INTERPOL.

    ASA and TalkGold are infamous for promoting international financial frauds, with posters routinely describing the programs as legitimate. The very first post about the alleged EMG scheme at ASA referenced yet another Ponzi scheme — 12DailyPr0 — and informed prospects that they could earn commissions by introducing the alleged Forex component of EMG to others.

    “I have been in internet business for 3 years now and in autosurf industry from 12dailypro,” an ASA poster began, while promoting EMG’s Finanzas Forex arm, which investigators now say was part of a grandiose scheme with tentacles in Central America, South America and Europe.

    “And the (sic) you can earn also money from people under you if you want, you get 0,5% (sic) from every one that you bring (0,5% (sic) from his investment),” the poster said in April 2008.

    Court filings in the EMG case paint a picture of an incredibly elaborate maze of companies and bank accounts set up to confuse both investors and law enforcement. At least 59 bank accounts, 294 bars of gold and nine luxury vehicles have been seized in the case. One of the cars was a 2008 Lamborghini Murcielago valued at more than $430,000.

    The EMG allegations are explosive because they showcase the now-undeniable fact that people who promote programs such as HYIPs and autosurfs because such programs may pay “commissions” to recruit new members may be operating as fronts or conduits for international drug dealers and money-launderers.

    Although ASD is not mentioned in a Task Force affidavit in the EMG case, forfeiture complaints against assets tied to both companies include similar allegations of wanton, relentless fraud. Compellingly, EMG allegedly sponsored “rallies” of members, an allegation in common with allegations in the ASD case. At the same time, research suggests that EMG touted offshore events in exotic locations.

    AdViewGlobal, an autosurf with close ties to ASD, also touted offshore venues and once sponsored at least one meeting on a ship at sea, according to members.

    Meanwhile, research suggests that both EMG and ASD went to great lengths to mask the schemes just prior to interventions by law enforcement and that both schemes had ties to narcotics traffickers and professional money-launderers.

    Both the alleged EMG and ASD schemes were operating during the same general time period, roughly between 2006 and 2008, according to court filings. Each of the schemes had components of investment fraud that targeted people who spoke Spanish or English. Task Force agents have been investigating entities and individuals linked to EMG since June 1, 2008, including a mysterious entity known as DWB Holding Co.

    “The conspiracy to commit wire fraud offenses that gives rise to this action is an international Ponzi/Pyramid scheme operated by Evolution Market Group (EMG) d/b/a Finanzas Forex, DWB Holding Company (DWB), Superior International Investments Corporation (SIIC), German Cardona (Cardona), Daniel Fernandez Rojo Filho (Rojo Filho), Pedro Benevides (Benevides) and others in which investors have been defrauded out of millions of dollars,” federal prosecutors said.

    Federal agencies, including the U.S. Drug Enforcement Administration (DEA), seized “financial accounts” in DWB’s name during a drug investigation in Arizona, according to court filings in Florida. One account seized during the drug probe contained more than $24 million. The money was seized on Aug. 22 and Aug. 26, 2008, about three to four weeks after agents seized more than $80 million in the ASD case.

    A section of U.S. law referenced in the EMG forfeiture complaint refers to “cocaine” and “marihuana,” among other drugs.

    As the investigation progressed, agents established additional money-laundering links — and other bank accounts were seized, according to court filings. The precise mechanism by which purported investment money ended up in accounts seized in the drug case was not immediately clear.

    Shameful Behavior By HYIP And ‘Surf Advocates

    Still promoting autosurfs and HYIPs? Still selling yourself on the delusional theory that they’re harmless and that only “Socialists” or “Nazis” would support the government’s efforts to destroy them? Still arguing that journalists who write about the cases are “liberal” lackeys, have no understanding of the “real” issues and won’t be pleased until every single American entrepreneur is assigned an individual bureaucrat to make their lives miserable?

    Still calling for federal prosecutors and Secret Service agents to be investigated because you love your downline commissions gleaned from Ponzi proceeds and the sale of unregistered securities, don’t want to part with them and figure that, if only you scream loudly enough and long enough, you’ll be able to persuade your fellow Americans that the cops are the real crooks?

    In August 2009, the PP Blog reported that members of ASD, which is implicated in an autosurf  Ponzi scheme involving tens of millions of dollars, advertised that the company used the debit-card services of VM in Dallas. Research suggests that Hodgins or a VM designate attended an ASD function in Florida shortly after ASD’s launch in late 2006.

    Prosecutors said that VM helped the Colombian drug operation offload at least $7.1 million in illegal proceeds at automated teller machines in Medellin. Medellin once was home base of the infamous Medellin Cartel, operated by drug lord and terrorist Pablo Escobar. Escobar was killed by Colombia National Police in 1993.

    Escobar was implicated in the assassination of Colombian presidential candidate Luis Carlos Galán and the bombing of Avianca Flight 203 over Colombia, which killed 110 people.

    Autosurf and HYIP promoters long have claimed that participation in the illegal enterprises is harmless. The indictment against VM — and the allegations that it laundered money for a Colombian drug organization — demonstrates the dangers of participating in murky businesses in which participants have no way of knowing what is in the hearts and minds of other participants.

    It was not immediately clear how long ASD used the VM debit card, which was heavily promoted in early 2007 when ASD said it was having cash-flow problems. By 2008, ASD said it was generating tens of millions of dollars of revenue per week. Some members said they observed huge sums of cash and brief cases full of cashier’s checks at ASD rallies in Florida cities.

    Two Colombian conspirators “directed their agents in the United States to provide proceeds of sales of controlled substances to agents of VIRTUAL MONEY, INC. to be sent to Colombia so the proceeds could be made available to the clients,” according to the indictment against Hodgins.

    VM “stored value cards were used by the members of the conspiracy to make available at a Daviviendo Bank ATM in Medellin, Colombia the peso equivalent of US $2,430,810.24 in April 2006; US $2,437,023.53 in June 2006; and US $2,257,761.45 in August 2006,” prosecutors charged.

    VM and its president, Robert Hodgins, were indicted under seal in 2008 in a case brought by the DEA. The seal was lifted in September 2008, a month after the U.S. Secret Service seized 15 bank accounts in the ASD case.

    ASD was accused by the Secret Service of operating an international Ponzi scheme.

    One of the alleged components of the ASD scheme was an autosurf named LaFuenteDinero, which targeted people who spoke Spanish. Records show that one of the Secret Service agents involved in the ASD investigation formerly was a member of a DEA Task Force in Florida and was experienced in “investigating large criminal organizations that distributed and sold controlled substances.”

    In November 2009, the PP Blog reported that the Secret Service expressed a fear in court documents originally filed under seal that ASD President Andy Bowdoin had become aware of scrutiny into his business affairs in 2008 and planned to flee the United States.

    “Based [on] ASD’s indication that it intends to cease accepting funds into [Bank of America] at the end of July 2008, Bowdoin’s indication that he has relinquished his interest in Golden Panda [Ad Builder], and an indication that Bowdoin intends to establish his offshore presence, and the recent complaints governmental authorities have received, I believe that Bowdoin is aware of increasing scrutiny and that he intends to move himself, his proceeds, and, until it collapses possibly his operation, offshore,” the Secret Service wrote in an affidavit.

    Golden Panda was the purported “Chinese” arm of ASD, according to court filings.

    The agency said Bowdoin had moved millions of dollars into Canada just prior to the seizure of his assets.

    Read a warrant originally issued under seal Aug. 1, 2008, by U.S. Magistrate Judge Alan Kay, who ordered the U.S. Department of Homeland Security to seize a Bowdoin bank account that contained more than $31.6 million. The entire sum was in an account under Bowdoin’s name. Agents eventually seized at least nine other Bowdoin accounts that, in the aggregate, contained more than $34.2 million.

    In recent days, the PP Blog  reported that the alleged INetGlobal autosurf Ponzi scheme in Minnesota, which allegedly targeted Chinese prospects,  had ties to at least three other Ponzi cases, including ASD and a separate Florida case in which it was alleged that the same debit-card company that provided services for INetGlobal provided services for a company implicated in a $22 million Ponzi scheme with ties to Panama.

    Some INetGlobal members provided Chinese prospects instructions on how to offload profits onto debit cards that could be used to withdraw cash at ATM machines, according to promotional material for INetGlobal. About $26 million has been seized in the INetGlobal case.

    INetGlobal-related entities such as Cash Cards International (CCI) and V-Cash now have been linked to a fourth financial-fraud scheme known as Megafund. In the $13 million Megafund case, it was alleged that CCI and V-Cash provided services for certain participants in the Megafund HYIP scheme. At least $175,000 purportedly transferred by a mysterious entity known as MexBank S.A. de C.V. passed through CCC and V-Cash, according to court filings.

    The money was described in court filings as commission payments for the Megafund scheme. Authorities later determined that MexBank was “neither a bank nor a legitimate financial institution licensed” in Mexico, despite its official-sounding name.

    Bradley C. Stark, one of the defendants in the Megafund case, was convicted in 2003 of possessing counterfeit government securities. He was released from prison and was on probation while participating in the Megafund scheme, according to court records. The scheme targeted Christians, and investors were told money was being directed to humanitarian causes.

    Forbes magazine wrote about the Megafund case in July 2005, in a story titled “Too Good To Be True.”

    Less than four years later, the AdViewGlobal autosurf sent an email to members that included Forbes’ logo in a sales pitch. Research showed that the logo had been hotlinked from Forbes’ website and that AdViewGlobal members were attempting to create the appearance that the famous publishing company had endorsed the autosurf scheme. Like the Megafund and EMG schemes, participants in AdViewGlobal were told a portion of the money was devoted to humanitarian causes, including a purported fund devoted to preserving the rainforest.

    In the AdSurfDaily case, members said the company touted a contribution of 100,000 “ad packs” to a charity. The donation was used by promoters to position Bowdoin as a benevolent human being.

    At an ASD rally in Las Vegas in 2008, Bowdoin asserted that he thanked God daily for making him a “money magnet,” and he implored members to imagine themselves coming into large sums of money through rebates on ASD advertising purchases that not only would return 100 percent of the cost of the members’ advertisements, but also pay them at least 25 percent beyond that — more if they rolled over a percentage of their purchases.

    The payment-processing arm of INetGlobal also has been tied to a Ponzi scheme known as Learn Waterhouse, which purportedly advertised a presence in Mexico, according to court filings. Four people have been sentenced to lengthy prison terms in the Learn Waterhouse case, some of the underpinnings of which led to the successful prosecution of INetGlobal operator Steve Renner for income-tax evasion in December 2009.

    Filings in the Learn Waterhouse case assert that Renner, who operated both CCI and V-Cash, used customers’ funds as though they were his own.

    When the Learn Waterhouse receiver tried to reclaim the funds to make Ponzi victims as whole as possible, the money was not available because Renner had spent it on personal purchases, according to court filings.

    If you are playing the HYIP and autosurf games, the PP Blog suggests you read these documents from the alleged EMG Ponzi case.

    Task Force affidavit.

    Amended Forfeiture Complaint in U.S. District Court in Orlando.

    Still want to cheer for the HYIPs and autosurfs?

  • BULLETIN: Steve Renner, Operator Of INetGlobal Autosurf, Sentenced To 18 Months In Federal Prison In Tax Case Tied To His Money-Services Business

    Steve Renner

    UPDATED 6:57 P.M. EDT (U.S.A.) The operator of the INetGlobal autosurf has been sentenced to 18 months in federal prison for income-tax evasion.

    Steve Renner also was ordered by U.S. District Judge Donovan Frank to cooperate with the IRS “in the assessment and payment of taxes still due,” federal prosecutors said.

    Renner was convicted in December of four felony counts of tax evasion after a six-day jury trial. The case stemmed from his operation of Cash Cards International (CCI), a payment processing company.

    He was not taken into immediate custody after today’s sentencing and perhaps has “several weeks” before he is scheduled to report to prison, said Jeanne Cooney, a spokeswoman for U.S. Attorney B. Todd Jones.

    Cooney added that the IRS is in the process of determining how much money Renner still owes to the government, which is why Donovan ordered him to cooperate with the agency.

    Even with his sentencing today, Renner’s legal troubles are not over. In February, the U.S. Secret Service said there was probable cause to believe he was operating an international Ponzi scheme through INetGlobal and affiliated companies.

    Federal prosecutors have seized about $26 million in a probe into INetGlobal’s business practices. Renner has not been charged in the case, which prosecutors described as a “major” money-laundering investigation.

    In the tax case, prosecutors said Renner diverted customers’ money held by CCI “to pay his living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments.

    “He also used client funds to promote his blues-rock band, ‘Stevie Renner and the Renegades,’” prosecutors said.

  • Spokesman For Renner-Related Company Did Not Disclose Tie In Opinion Piece That Attacked Star-Tribune Newspaper; Name Is Referenced In Secret Service Affidavit; Declines To Answer Questions From PP Blog

    UPDATED 2:25 P.M. ET (March 2, U.S.A.) The vice president and director of public relations for V-Newswire — a company in Steve Renner’s INetGlobal family — authored an opinion piece lambasting a Minnesota newspaper’s coverage of a Secret Service raid at INetGlobal’s Minneapolis offices last week on his personal Blog, but did not disclose his tie to the firm.

    Donald W.R. Allen II operates a Blog known as The Independent Business News Network (IBNN). Allen did not disclose his INetGlobal tie when authoring an editorial titled, “Minneapolis’ Star Tribune newspaper’s bias reporting causes defamatory speculation at Internet marketing firm.”

    The piece began, “If the Star Tribune newspaper can use its ‘power’ to taint a company’s image prior to investigation by authorities, whose (sic) to say the news you get is true and accurate?”

    The Star-Tribune was among the first media outlets to report that federal agents believed INetGlobal was operating a Ponzi scheme.

    Information gleaned during the federal probe led to allegations that INetGlobal also was engaging in wire fraud and money-laundering.

    Allen, whose name is referenced in a search-warrant application in the INetGlobal case, now says he should have disclosed the tie in the IBNN editorial.

    “I will give full disclosure on the iNetGlobal piece today because I have 3 more follow up stories,” he said this morning. He asserted that the IBNN domain, which is registered in Renner’s name under the organization of V-Webs LLC, “has nothing to do with iNetGlobal other than being registered by the company as part of my employment agreement.”

    Allen defined the IBNN Blog as a “Civil Rights, Politics and News Blog for mostly the Twin Cities area.” IBBN’s site content includes an endorsement of the Tea Party Movement in the United States and a “Declaration of Tea Party Independence.”

    Allen emailed the PP Blog Sunday after appearing at the Blog, posting comments and using the IBNN URL, not a URL associated with the Renner companies. He dismissed the Blog as “minor league,” writing it was engaging in a “witch hunt.” The Blog responded to Allen’s email by asking him to comment on a number of issues concerning INetGlobal and inquiring why he was using the IBNN URL if he was a spokesman for a Renner entity.

    Later in the day, Allen responded to the Blog’s questions by saying he would answer questions about his role at V-Newswire, but he did not address the questions the Blog asked previously.

    The Blog then resubmitted the questions, adding several more questions to a list of four it previously had asked. Allen responded to the email, but chose not to answer a number of questions.

    Among the questions Allen declined to answer was whether INetGlobal, in the aftermath of the Ponzi scheme allegations, believed it should inform members about Steve Renner’s December conviction on four felony counts of income-tax evasion. Allen also declined to answer a question on whether INetGlobal had a duty to inform members that Cash Cards International (CCI) — a payment processing firm once operated by Renner — could not return money to Ponzi scheme victims in a case brought by the SEC against a California company known as Learn Waterhouse because Renner had spent the customers’ money.

    Allen did say he saw “nothing illegal with V-Newswire or the V-News Network.”

    The Blog asked Allen whether he was the “Donny Allen” referred to in an INetGlobal news release and the “Donald Allen” referred to in a Secret Service affidavit that alleged “Donald Allen” provided confusing information to a person who attended an INetGlobal function in New York.

    Allen did not answer the question, which the Blog posed twice.

    Undercover Secret Service agents also attended the New York function, according to the affidavit.

    The PP Blog also asked Allen whether he believed he should disclose his tie to INetGlobal when responding to Blog and forum posts. He declined to answer the question, which was posed twice.

    He also declined to answer a question about how it served INetGlobal’s PR ends to dismiss as “minor league” Blogs that report the serious allegations against the company.

    AdSurfDaily, a Florida company implicated in a $100 million Ponzi scheme, employed a similar PR approach. The ASD case is referenced in the Secret Service affidavit, amid allegations that an ASD member described INetGlobal as a wink-nod enterprise and attempted to have an undercover Secret Service agent participate in a three-way call with the ASD members’ sponsor for the purpose of recruiting the agent into INetGlobal.

    Allen also declined to answer a question on whether he was the author of an INetGlobal news release after the raid that said federal agents had arrived at Renner’s offices “looking for something to substantiate their claim that illegal activity was occurring in the business.”

    The news release used Allen’s email address, which he described as temporary in an email to the PP Blog, but did not mention Renner’s income-tax conviction and the allegations that Renner had spent money belonging to CCI customers.

  • SECRET SERVICE: INetGlobal Forced Members To Keep Money In The Company With ‘Automatic Repurchasing’ Scheme; Undercover Agent Sent Email To Support, Which Verified Repurchase Was Mandatory

    UPDATED 11:07 A.M. ET (U.S.A.) One of the undercover Secret Service agents who joined INetGlobal discovered that the company had implemented an “automatic repurchasing” program by default and that the program could not be switched off, thus distancing participants — many of whom may not have understood English — from their money.

    Although it is unclear when the automatic-repurchasing program began, it was in operation in the weeks after INetGlobal owner Steve Renner was convicted on Dec. 8, 2009, of four felony counts of income-tax evasion, according to court filings.

    Other filings show that another Renner company — Cash Cards International (CCI), a money-transmission business  — was upside down by more than $2.5 million when a court-appointed receiver in a Ponzi scheme case sought to convert electronic credits to cash to compensate victims of the scheme.

    Beginning on Feb. 1, the Secret Service agent — a woman — repeatedly tried to turn off INetGlobal’s automatic-repurchasing feature, but it “came back on” each time. The agent, who speaks and writes in English, attempted to disable the feature “several times on different days,” failing each and every time, according to an affidavit for a search warrant filed in the case.

    INetGlobal had a high concentration of Chinese members who did not speak English, according to the affidavit. How they even could understand the automatic-repurchasing scheme or fully comprehend INetGlobal’s operations and English-language website is far from clear, and has led to questions about whether the company deliberately was targeting members who could not understand what they were purchasing and would have both a language and a geographic disadvantage when seeking explanations or filing complaints with authorities.

    The company generated “at least” 87 percent of its revenue from the sale of memberships to members “residing in China,” according to an analysis referenced in the affidavit. The analysis was performed by an unnamed INetGlobal employee.

    On Feb. 17, the undercover agent sent an email to INetGlobal customer service, asking if the feature could be turned off.

    “Customer service replied in the negative,” the agent said, suggesting that the automatic-repurchasing feature was forcing participants to keep at least 40 percent of their money in the company.

    In the affidavit, the Secret Service said a “high level iNetGlobal member” from Nevada was becoming increasingly frustrated by an inability to withdraw funds. The member complained to management that “for over one week [in January] they had been unable to get a money order payment from the company for value they are owed.”

    “The victim contacted iNetGlobal’s customer service on several occasions only to get excuses,” the Secret Service said.

    Eventually, the victim spoke with former InetGlobal CEO Steven Keough.

    Keough, according to the Secret Service, told the victim on Jan. 11 to “cash out” of the system.

    “We can’t cash out,” the victim said. “[I]t is not possible, due to mandatory repurchasing built into the system.”

    On the very next day — Jan. 12 — Keough, an attorney and former naval officer, met with the Secret Service. He had contacted federal prosecutors Jan. 8 to express concerns about the company’s business practices. His first contact occurred only two months after he was appointed CEO on Nov. 7, 2009, according to the affidavit.

    Steve Renner’s Tax Convictions, Link To Previous Ponzi Scheme

    Renner was found guilty Dec. 8 of four felony counts of federal income-tax evasion.

    Prosecutors said he “diverted substantial funds” from CCI between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments.

    CCI, which once served as a money-transmitter for a California Ponzi scheme known as “Learn Waterhouse,” used the same office facility in Minneapolis as INetGlobal, the Secret Service said.

    When a court-appointed receiver in the Learn Waterhouse case attempted to get Renner to return money due Ponzi scheme victims, he explained that he could not do so because it had been “invested,” according to the affidavit.

    Thomas Lennon, the receiver in the Learn Waterhouse case, met with Renner, who “provided . . . financial statements indicating that the assets of Cash Cards and Renner are insufficient to cover all outstanding vcredit balances and obligations to other creditors.

    “Specifically, the statements show that Cash Cards and Renner have assets with an estimated value of $2,946,000 and an outstanding v-credit liability of $5,450,000,” Lennon said in court filings in 2007. “Renner has also informed the Receiver that he is currently being audited by federal and state taxing authorities which may result in large additional liabilities and liens on his property.”

    Lennon’s name is well-known among victims of financial crimes. He also was the court-appointed receiver in the 12DailyPro autosurf Ponzi scheme.

    Repurchasing programs, which autosurf operators employ to minimize the outflow of cash, are one of the oldest tricks in the Ponzi book. “Trainers” for Florida-based AdSurfDaily, implicated in a $100 million Ponzi scheme, routinely pushed a so-called “80-20” program whereby members would remove no more than 20 percent of money they were due and plow 80 percent back into the surf.

    In June 2009, AdViewGlobal, an autosurf with close family, management and promotional ties to ASD, announced it was ceasing payouts and making an 80/20 program mandatory should payouts ever resume. AdViewGlobal promptly crashed and burned.

    In January, according to the affidavit, Keough told investigators that he could not make sense out of what was going on inside INetGlobal and had observed instances in which Renner appeared to be gaming the payout system.

    “Keough said he was concerned that large amounts of money were flowing through bank accounts related to iNetGlobal and that unusual system manipulation was being conducted by . . . Renner,” the Secret Service said. “Keough had recently been fired by Renner. Keough believed he had been fired because he continually questioned iNetGlobal’s business practices.”

    On Jan. 20, according to the Secret Service, the agency received information that TCF National Bank was closing the accounts of a Renner entity known as Inter-Mark Corp. after an investigation by the bank led to “suspicions that the activity in the accounts might be money laundering,” according to the affidavit.

    “TCF Bank had given notice to Renner that the accounts were going to be closed,” the Secret Service said. It is unclear if Renner ever advised INetGlobal members that the bank had closed the accounts, citing suspicions they were being used to commit crimes.

    TCF prepared a cashier’s check for “for a little over $5 million,” presenting it to a Renner employee.

    Later that day, the check was deposited into Bremer Bank, which also held Renner-connected accounts, according to the Secret Service.

    Balances in Renner-connected accounts began “moving up sharply in August 2008,” the Secret Service said.

    August 2008 was the month in which the Secret Service raided the headquarters of ASD — and the month in which Renner’s autosurf was coming onto the stage. Golden Panda Ad Builder, a surf that is part of the ASD litigation, positioned itself as a company that sought to cater to Chinese members.

    Golden Panda’s operator — Clarence Busby — was implicated by the SEC in a prime-bank investment scheme in the 1990s, the same sort of scheme that engulfed Learn Waterhouse and later resulted in the determination that Renner’s CCI money-services business was impossibly upside down because he had used customers’ money to make personal purchases.

    INetGlobal issued a statement yesterday that acknowledged the Secret Service probe, but did not mention Renner’s tax conviction in December or the trouble he encountered when he could not fund a payment to the Learn Waterhouse receivership estate in the Ponzi case.

    “iNetGlobal offices will remain open to provide support to our 1,000’s of customers from around the world,” the company said. “iNetGlobal will continue to provide the level of quality service our customers have come to expect now and into the future.

    “We would like to thank all of our Members and Customers for their support and well wishes in this trying time,” the company said.

  • Secret Service, FBI, IRS Raid Steve Renner’s INetGlobal Operations In Minneapolis; Scene Resembled AdSurfDaily Raid In Florida

    UPDATED 10:40 A.M. ET (U.S.A.) Federal and state agents have raided the Minneapolis offices of Inter-Mark Corp., seeking evidence of a Ponzi scheme, the Star Tribune of Minneapolis/St. Paul is reporting.

    Inter-Mark Corp. is operated by Steve Renner, who also operates a purported “advertising” service known as INetGlobal. In a scene that resembled the August 2008 raid at the headquarters of Florida-based AdSurfDaily, agents in Minnesota were seen carting boxes of documents and computers.

    ASD was implicated in a $100 million Ponzi scheme.

    Renner has been under investigation for at least 17 months and likely longer. He was indicted on charges of tax evasion in September 2008, about a month after the ASD raid. He was convicted in December 2009 of evading more than $332,000 in taxes between 2002 and 2005.

    Renner, 54, “diverted substantial funds from his business, Cash Cards International (CCI), between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments,” prosecutors said in December.

    He also used CCI funds to promote his musical band, “Stevie Renner and the Renegades,” prosecutors said.

    “From 2001 to 2006, Renner owned CCI, an Internet-based stored-value card and money
    transmission business, with locations in Minnesota, South Dakota, and Hawaii,” prosecutors said. “Although he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to file his income tax returns with the Internal Revenue Service for tax years 2002 through 2004 until March 5, 2006, the date on which he also filed his 2005 federal income tax return.”

    “Tax evasion is not a victimless crime,” said Julio La Rosa of the IRS, upon Renner’s conviction.

    “Honest, hardworking taxpayers pay the price when others choose to evade their tax obligations,” La Rosa said. “As this verdict shows, those that cheat will get caught.”

    Renner faces up to 20 years in federal prison in the tax case.

    Renner also is associated with a domain known as AdPacs.com, which is throwing a server error. It is believed that AdPacs promoters also promoted the AdViewGlobal (AVG) autosurf, which had close ties to ASD.

    Affiliates of Steve Renner's AdPacs.com pushed AdViewGlobal just prior to its February 2009 launch. This screen shot of search result that appeared online more than a year ago lists the name of Juan Fernandez, the CEO of AdSurfDaily. ASD is implicated in a $100 million Ponzi scheme. AVG launched AFTER the federal seizure of tens of millions of dollars in the ASD case. Like ASD President Andy Bowdoin, Fernandez took the 5th Amendment at an evidentiary hearing in September 2008. Now, Renner's company is the subject of a major federal probe. ASD sold "ad-packs." AVG referred to its version of "ad-packs" as "viewer impressions" after the phrase "ad-packs' became radioactive.

    As was the case with the ASD raid in Florida, local media caught the events at Renner’s office yesterday on video. Minnesota has been plagued by Ponzi schemes. Some ASD members from Minnesota have been among the loudest advocates for ASD President Andy Bowdoin.

    The Minnesota Financial Crimes Task Force assisted in the raid.

    Earlier this month, the Secret Service announced the formation of an Electronic Crimes Task Force (ECTF) based in Memphis. The agency also has ECTFs in St. Louis, Kansas City, New Orleans and Europe.

    “One of the top priorities for the Secret Service continues to be combating the computer
    related crimes perpetrated by domestic and international criminals that target the U.S.
    financial infrastructure,” said Secret Service Director Mark Sullivan.

    “The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by working closely with experts from all affected sectors to constantly refresh and adapt our investigative methodologies.”

    Read the Star-Tribune’s coverage of the Steve Renner raid.