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Tag: Dennis Bolze

  • AP (VIA YAHOO NEWS): Zeek’s Paul Burks Says Participants At Fault For Losing Money In Alleged $600 Million Ponzi Scheme

    The Associated Press is reporting that Zeek Rewards operator Paul R. Burks claims that he is not at fault and that Zeek participants are to blame if they lost money.

    From the AP (via Yahoo News/italics added):

    “I never told anyone to invest more money than they could afford,” Burks snapped. “I didn’t tell them to do that. Never.”

    He said if they lost money, “it’s their fault. Not mine. Don’t blame me.”

    Read the full story.

    recommendedreading1Zeek rose in part through promotions on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. In August, the SEC alleged that Zeek was a $600 million Ponzi- and pyramid scheme operating from Lexington, N.C.  Court records suggest the SEC’s Zeek probe began at least in April 2012.

    Serial hucksters on the Ponzi boards often rationalize Ponzi train wrecks by claiming that no one advised participants to spend more than they could afford to lose.

    Convicted Ponzi schemer Dennis Bolze — one of the original so-called “mini-Madoffs” — tried a version of the “don’t invest more than you can afford to lose” rationalization in an unsuccessful bid to reduce his 27-year prison sentence for his brick-and-mortar scheme. A judge applied a sentencing enhancement in the Bolze case because senior citizens were among the victims.

    As the PP Blog reported on Jan. 12, 2012 (italics added):

    Bolze used a similar argument for a sentencing reduction, asserting that his victims invested only “discretionary money.”

    He further argued that age alone was  not sufficient to justify the enhancement “and that the present poor financial condition of his victims is not relevant to whether they were unusually vulnerable at the time they invested their money with him,” according to the 6th Circuit.

    Meanwhile, Bolze “denied that he forced anyone to invest” and claimed “that he did not know” certain investors “because his associate dealt with them.”

    The panel rejected each of those arguments.

    Burks, 66, has not been charged criminally. The SEC sued Burks and Zeek parent Rex Venture Group LLC last year.

    Ponzi-board hucksters have promoted numerous Internet-aided scams. AdSurfDaily, a $119 million Ponzi scheme opearting from Florida, had a presence on the boards. So did Legisi, a $72 million Ponzi scheme operating from Michigan. So did Pathway to Prosperity, a $70 million scam alleged to have penetrated 120 countries. So did Imperia Invest IBC, a shadowy entity that stole millions of dollars by targeting people with hearing impairments.

    The most recent Ponzi-board scam to make major news is Profitable Sunrise, another shadowy entity purportedly operated by “Roman Novak.” Profitable Sunrise purported to pay interest of 2.7 percent a day through its bizarrely named “Long Haul” plan targeted at Christians. Members were due a purported “Easter gift” on Monday, April Fool’s Day.

    The Profitable Sunrise website has been missing for more than two weeks. At least 34 U.S. states or provinces in Canada have issued Investor Alerts or cease-and-desist orders against Profitable Sunrise. The United Kingdom and New Zealand also have issued warnings.

    Research shows that Profitable Sunrise had members in common with ASD and Zeek.

  • Ponzi Schemer Arthur Nadel Dies; One Of The Original ‘Mini-Madoffs’ Succumbs At 80 At Same Prison Facility That Houses Madoff

    Arthur Nadel

    Arthur G. Nadel, the Florida fund manager and Ponzi schemer who briefly went on the lam in the weeks after Bernard Madoff’s even-greater caper imploded, has died. Nadel was 80, according to the Federal Bureau of Prisons.

    Nadel, sentenced in 2010 to 14 years in an elaborate fraud that operated between 1999 and 2009, died at the Butner Federal Correctional Complex, the same North Carolina facility that houses Madoff.

    With America still largely unacquainted with the word “Ponzi” and trying to come to grips in late 2008 and early 2009 with the staggering dollar volume of Madoff’s crime, Nadel went missing from Sarasota.

    Like Madoff, he was in his senior years and secretly had been presiding over a long-running, monumental fraud. The ages of the lead figures in the individual schemes and the combined dollar amounts — Madoff’s was in the billions and Nadel’s was in the hundreds of millions — caused investors nationwide to wonder if their trusted brokers and financial advisers were running scams.

    Nadel emerged as one of the earliest of the so-called “mini-Madoffs,” as did Tennessee’s Dennis Bolze, who also went missing after the Madoff scheme collapsed. Bolze, then 60, later was arrested in Pennsylvania.

    In January 2009, Nadel surrendered to the FBI. Investigators said he caused investors to suffer losses of $162 million.

    “Through his massive Ponzi scheme, Arthur Nadel greased his own pockets and financed his lavish lifestyle, using money his clients relied on him to invest,” said U.S. Attorney Preet Bharara of the Southern District of New York, after Nadel was formally sentenced in October 2010. “He cheated his elderly and unwitting victims out of their retirement savings and consigned others to poverty.”

    In its story about Nadel’s death, the Sarasota Herald-Tribune quoted Nadel’s former lawyer.

    “Dying behind prison walls is a very hard way for anyone to leave this world,” Mark Gombiner told the paper. “Arthur had a troubled life, but he took responsibility for his actions and he faced his punishment with dignity.”

  • T2’s ‘Dave’ Suggests Police Stood ‘Idly By’ As Trouble Engulfed His ‘Program’ That Advertises Daily Return Of 2 Percent; MoneyMakerGroup Suspends T2 Naysayers After Poster Claims Mod Pitched Dozens Of ‘Programs’ Now In Scams Folder

    EDITOR’S NOTE: Our first reference to JSS Tripler 2 (T2), which is trading on the name of an obvious fraud scheme known as JSS Tripler, is here. JSS Tripler is part of a larger fraud scheme known as JustBeenPaid, which was pushed by members of the alleged AdSurfDaily Ponzi scheme and any number of Ponzi-forum scammers. ASD President Andy Bowdoin was indicted 13 months ago for wire fraud, securities fraud and selling unregistered securities. He faces a maximum term of 125 years in federal prison, if convicted on all counts of a seven-count indictment.

    We published a T2 follow-up here, and an update to the follow-up here. We also published a story on a decision last week by the U.S. Court of Appeals for the Sixth Circuit that upheld the 27-year prison sentence of Tennessee-based Ponzi schemer Dennis Bolze, whose operation recruited senior citizens and resulted in a two-level “vulnerable victim” sentencing enhancement for Bolze.

    Online Ponzi purveyors and forum fraudsters may be particularly susceptible to the vulnerable-victim enhancement. Indeed, their “programs” cast with a wide net, gain a head of steam through willful blindness and practiced, serial disingenuousness on Ponzi boards and within the purveyor and promotional ranks — and often mushroom to involve thousands of participants, thus increasing the odds they’ll recruit vulnerable members of society into their schemes  . . .

    “Dave,” the purported operator of an increasingly bizarre HYIP that advertises a daily payout rate that projects to an annualized return of 730 percent, appears now to be blaming an unidentified law-enforcement agency for standing “idly by” as trouble engulfed his “program” after a onetime business partner’s AlertPay account was frozen.

    Oddly, though, “Dave” now appears to be grateful his business partner was not arrested on “Dave’s” word, asserting that the partner “is working with us to put this situation back on track.”

    At the same time, “Dave” asserts T2 is implementing a restructuring plan amid reality-bending claims it is “NOT in a weak position” despite a “month of no withdrawals” caused by “Chris,” the onetime business partner whose AlertPay account apparently was used to gather funds for T2 and now cannot be accessed.

    T2 members have been left in the lurch for weeks.

    The T2 “program” purportedly will restart on Feb. 1 with a new “algorithm” and a new name: T2MoneyKlub. The name change, according to a T2 members’ update, will occur because the program “no longer wish[ed] to be confused with Justbeenpaid.com.”

    Claims about “algorithms” and other mathematical magic frequently accompany fraud schemes. So do name changes at mid-stream. AdSurfDaily, for example, allegedly changed its name to ASD Cash Generator after a Ponzi collapse and did not inform incoming members that their funds were being used to pay back investors scammed when the original iteration collapsed.

    Ponzi collapses can be brought on by theft, account closures or seizures by banks and payment processors or by actions by law-enforcement to freeze accounts to stop a scheme from mushrooming. Details surrounding AlertPay’s apparent decision to freeze the account of “Chris” are unclear.

    “Dave’s” move to change the program’s name is in stark contrast to earlier, mind-bending claims that trading on the name of JustBeenPaid’s JSS Tripler arm somehow was appropriate. The T2MoneyKlub domain was registered Jan. 12 — as T2 members were publicly fretting about not getting paid.  The new domain is being powered by servers that use JSS Tripler 2’s name, according to records.

    Existing T2 Members May Face New Risk

    Even now, according to “Dave’s” members’ update, the program is taking advantage of an “SEO” strategy to expand its audience. If true, the program could be expanding its own risk of attracting vulnerable investors.

    “We will be setting up a quantity of forums and blogs, and each one will need to receive page views from the members, also there will be blog commenting tasks and forum posting tasks,” “Dave” asserts.

    “This is to build up a high alexa rank with a massive amount of original content and high pageview count which sets a great foundation for SEO and advertising revenue etc,” he continues in the members’ update. “We will give attention to each website for approx one month for forums and 2 weeks per blog.”

    Separately posting on the MoneyMakerGroup Ponzi forum as “Peakr8,” “Dave” painted himself a man of considerable business experience who’d been condemned unduly by the media and left twisting in the wind by an unidentified “police” agency.

    ‘Police Standing Idly By’

    “Yes we have had a few problems both technical and the [AlertPay] problem,” “Dave” conceded as “Peakr8” in a post yesterday on MoneyMakerGroup. “[T]his is not unlike any business offline or online, apart from it’s like trying to run your business with a mob walking up and down outside your business premises waving banners screaming ‘scam, scam, scam’ and also the newspapers saying you are a liar and a cheat with absolutely no evidence to back up their claims… when you have done nothing wrong and the police standing idly by saying that they are allowed to do it.”

    “Dave” has not identified the police agency to which he allegedly complained about “Chris” and apparently now is complaining about. He earlier asserted that his complaint would result in the arrest of “Chris.”

    “Dave’s” public complaint on MoneyMakerGroup followed on the heels of his apparent decision to block the public from the T2 forum and a separate claim by “Dave” that he would “viciously” oppose a T2 member who declared the program a “SCAM,” encouraged fellow members to file an AlertPay dispute and said he’d try to get his money back from SolidTrustPay, another payment processor used by T2.

    Whether the member “Dave” claimed he’d oppose “viciously” for trying to get back his money and complaining about the program planned to file a consumer complaint with any of the world’s law-enforcement agencies is unclear.

    What is clear is that it is common for fraud purveyors and their forum shills to discourage members from filing payment disputes amid claims that such complaints harm a “program” and its members.

    MoneyMakerGroup Doles Out Suspensions To Naysayers

    Separately, MoneyMakerGroup announced it had suspended some members who’d raised questions about T2. Those suspensions were attributed to “mmgcjm,” a “Global Moderator.”

    “Dave,” who purports to be posting from Thailand after jetting from England several days ago while T2 members were clamoring for their cash, appears to have approved of the suspensions.

    “Isn’t it nice here[?],” he crowed. “Should have been done months ago and they also ought to get a life ban for their dreadful behaviour.”

    T2 sells “dream positions” and “dream matrices” amid claims that even “passive” members can earn returns of 2 percent a day over the course of 75 days. The “program” has asserted it has “multiple income streams,” and “Dave” has preemptively denied T2 was operating a cross-border Ponzi scheme. T2 says its has 8,838 members, a claim that leads to troubling questions about whether vulnerable victims were reeled in by T2’s wide net on the web.

    “Chris,” a onetime business partner of “Dave,” is responsible for the “program’s” troubles, according to “Dave,” who earlier asserted that “Chris” would be arrested.

    If a police investigation actually ensues, it almost certainly would lead to questions about the extent of T2’s purported income streams, whether those purported ventures were profitable enough to sustain themselves — let alone T2’s (precompunding) annualized return of 730 percent on top of referral commissions — and whether Dave’s public pleas for members not to file AlertPay disputes were designed to keep a Ponzi scheme intact.

    Another possible area of inquiry is whether “Dave” — who appears to have closed the T2 forum to public viewing even as he suggests on MoneyMakerGroup that people who file disputes with SolidTrustPay will be opposed “viciously” — is trying to chill his own members.

    The MoneyMakerGroup suspensions of T2 doubters attributed to “mmgcjm” appear to involve at least three members and were carried out after a poster asserted that “[a]lmost 3 dozen opportunities” that mmgcjm “promoted as being “good”, “Great”, “Fantastic” and so on in 2011″ are now in the SCAM/CLOSED folder.”

    “mmgcjm” justified the suspensions by asserting that, under the guidelines of the MoneyMakerGroup forum, “programs” in the folder were not necessarily scams.

    As an advertisment on the right side of the T2 thread at MoneyMakerGroup lured readers with a suggestion that another program known as “Moon Fund” paid 8,850 percent “After 24 Hours,” “mmgcjm” claimed that the T2 critic was posting “false information.”

    The suspensions followed a short time later, with a prompt from “mmgcjm” for the T2 naysayers to “Enjoy your vacations!”

     

  • EDITORIAL: Recruiting Seniors Into Your Downline? Why Ponzi-Forum Purveyors And Pimps Should Pay Attention To Dennis Bolze’s Failed Bid To Have His 27-Year-Prison Sentence Reduced

    EDITOR’S NOTE: The U.S. Court of Appeals for the Sixth Circuit yesterday rejected the bid of convicted Tennessee fraudster and Ponzi schemer Dennis Bolze to have his 27-year prison sentence reduced. Although Bolze did not operate the sort of HYIP typically promoted on Ponzi boards such as TalkGold and MoneyMakerGroup, he advanced some of the arguments/rationalizations that often appear on the forums.

    A three-judge appeals panel from the 6th Circuit yesterday reduced those arguments to ruin . . .

    Dennis Bolze’s Ponzi scheme operated for more than six years, gathered $21 million, created more than 100 victims in the United States and Europe and caused millions of dollars in losses.

    Bolze, 63, was sentenced in 2010 to 327 months in federal prison — in other words, more than 27 years. If he survives the lengthy term, he’ll be nearly 90 years old when released.

    U.S. District Judge Thomas A. Varlan of the Eastern District of Tennessee sentenced Bolze, applying a “a two-level vulnerable victim enhancement.”

    Here is why Ponzi purveyors and their forum pimps need to pay attention: They may be recruiting senior citizens and other vulnerable populations into their schemes. In doing so, they risk significant sentencing enhancements if indicted and convicted. This may be particularly true in cases of Internet fraud in which purveyors and their pimps cast exceptionally wide nets.

    Following the advisory guidelines, Varlan could have sentenced Bolze under the facts of the case to as little as 252 months, according to the 6th Circuit. But the judge chose the upper term of 327 months — in effect, six-plus more years — because vulnerable victims were ensnared in the scheme.

    Bolze claimed his enhanced sentence was “substantively unreasonable.” The appeals court disagreed, siding with Varlan.

    “We conclude that the vulnerable victim enhancement was properly applied and that the sentence at the top of the advisory guideline range was substantively reasonable,” the 6th Circuit ruled.

    And the three-judge panel pointed out that “a person who is a victim of the offense of conviction qualifies as a ‘vulnerable victim’ if that person ‘is unusually vulnerable due to age, physical or mental condition, or . . . is otherwise particularly susceptible to the criminal conduct.’”

    It often is the case on the Ponzi boards that purveyors and pimps of fraud schemes argue that disclaimers such as “do not invest more than you can afford to lose” insulate them from prosecution.

    Bolze used a similar argument for a sentencing reduction, asserting that his victims invested only “discretionary money.”

    He further argued that age alone was  not sufficient to justify the enhancement “and that the present poor financial condition of his victims is not relevant to whether they were unusually vulnerable at the time they invested their money with him,” according to the 6th Circuit.

    Meanwhile, Bolze “denied that he forced anyone to invest” and claimed “that he did not know” certain investors “because his associate dealt with them.”

    The panel rejected each of those arguments. It also rejected a contention by Bolze that only victims who appeared in court at his sentencing proceeding and offered testimony under oath could be counted against him for the purposes of sentencing.

    Varlan was within his discretion when he considered victim-impact statements to fashion a sentence for Bolze, the panel ruled. (Emphasis added).

    “A sentencing court is not limited to consideration of sworn testimony,” the panel ruled, adding that “The Crime Victims’ Rights Act gave the district court express authority to consider victim impact statements.”

    If Ponzi purveyors and their forum pimps still find themselves committed to robbing people on the Internet, other parts of the appeals-panel ruling could give them pause.

    “Additionally” the panel ruled, “we will not disturb the district court’s choice to believe the victims’ statements over Bolze’s testimony.

    “Many victims reported that Bolze convinced them to invest by assuring them that their money would be safe, contrary to Bolze’s assertion that his investors were ‘simply willing to take on more risky investments,” the panel continued. “And many victims did not invest ‘discretionary money’ as Bolze claimed, but funds ‘they intended to use for their basic needs and to provide them with an income on which to live in their retirement.”

    But the news gets even worse for the committed felons on the Ponzi boards, perhaps particularly the hucksters-in-chief who are deliberately targeting seniors and retirees and may have individuals in their organizations doing the same thing. A Bolze claim that he “didn’t know” vulnerable populations were being targeted was summarily rejected by the panel. (Emphasis added.)

    “Furthermore,” the panel ruled, “the preponderance of the evidence supports the district court’s determination that Bolze knew or should have known that victims of his offense were unusually vulnerable to his fraudulent scheme. The district court found that Bolze knew ‘several of the victims were in or about to enter retirement,’ that Bolze ‘had personal dealings with the victims, going so far as to bring them to his home,’ and that Bolze expressly told investors that ‘the investment strategies he was advocating were ideal for people of their situation[.]’”

    If you’re a Ponzi board huckster — and if you’re recruiting downlines through presentations in your home, other homes or through webinars and conference calls — the ruling by the 6th Circuit provides compelling reasons why you should stop.

    Now.

    This is perhaps particularly true if you’re involved in a scheme that has gained a head of steam and you’re telling recruits that all is OK because the authorities would have moved by now if anything was amiss. Such tortured constructions frequently appear on the Ponzi forums.

    Importantly, Bolze’s scheme lasted for more than six years. The longer a scheme lasts, the higher the odds that that senior citizens and other vulnerable populations will become investors — a situation that sets the stage for a sentencing enhancement.

    In rejecting Bolze’s arguments, the 6th Circuit pointed to the experience of “H.H.,” a 76-year old widow living in the Mediterranean region of Europe who’d met with Bolze personally and was the subject of an invitation to his home.

    “When the Ponzi scheme collapsed, H.H. lost her investment,” the appeals panel recounted. “Among other adverse impacts, she could no longer afford private health insurance . . . She is now forced ‘to live on a very small state pension of approximately $175 per week’ and spend the equity in her home on basic necessities.”

    If none of this so far has given pause to the Ponzi purveyors and their forum pimps, perhaps a line buried in the appeals-panel ruling will emerge as a difference-maker for some. (Emphasis added.)

    “The [sentencing] enhancement applies if the Government proves that one victim of the Ponzi scheme was unusually vulnerable.”

    That’s a low bar indeed, considering that the Ponzi purveyors and their forum pimps reach into all corners of the world on the Internet. Their reach alone, coupled with their practiced, serialized disingenuousness, puts them at great risk of recruiting a person such as “H.H.” into their fraud scheme — and persons such as “H.H.” have great sway with judges.

    Still planning that personal pitch or webinar or mass email? Still telling folks not to invest more than they can afford to lose and claiming you never forced anyone to invest? Still turning a blind eye to what you knew or should have known.

    If so, the 6th Circuit just told you it isn’t going to work and that a sentencing enhancement might be in your future, as it was for Dennis Bolze, a purported day-trader who briefly went on the lam after the Bernard Madoff Ponzi scheme was exposed.

  • Dennis Bolze, Tennessee Ponzi Schemer Who Fled After Fraud Was Exposed, Sentenced To 27 Years In Federal Prison

    Dennis Bolze, a fraudster who silently bolted from Tennessee during the same month Bernard Madoff provided a glimpse of how a shocked nation would come to view Ponzi schemers, has been sentenced to 327 months in federal prison.

    Bolze, 61, was arrested in Pennsylvania on March 12, 2009, about three months after news of Madoff’s Ponzi scheme broke and Bolze’s own scheme collapsed. Even as Bolze was fleeing his Ponzi after it was exposed in a bankruptcy proceeding, Florida Ponzi schemer Arthur Nadel also went missing. For days, America’s attention was riveted on the sudden reality of massive Ponzi schemes — and much of the world wondered how many other shoes would drop as crimes that had been hidden for years or even decades were exposed.

    Nadel and Bolze were among the earliest of the so-called “mini-Madoffs,” Ponzi schemers who orchestrated spectacular frauds that would dominate headlines for weeks were in not for the staggering size of Madoff’s $65 billion fraud. Nadel went missing from Sarasota Jan. 14, 2009, a little more than a month after Madoff’s scheme was exposed. He surrendered to the FBI in Tampa on Jan. 27, 2009.

    After his arrest in Pennsylvania, Bolze — once the toast of Gatlinburg, Tenn. — became reviled. His 16,000-sq.-ft.  mansion in the mountains and three-story tall Christmas tree became the symbols of wretched excess.

    Bolze positioned himself as a successful day trader, but he was really just a scam artist who took $21.5 million from clients and paid back $9.6 million in bogus “returns” to keep the scheme operating, prosecutors said.

    In reality, Bolze invested only $1.6 million and operated the scheme between April 2002 and December 2008. His dash from Tennessee coincided with the Madoff headlines.

    While jailed,  Bolze asked for an opportunity to recoup the money he had fleeced from victims. All he needed, he argued, was the Internet, a computerized program — and a little time.

    Senior citizens and people of faith were among Bolze’s victims, prosecutors said.