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Tag: money laundering

  • SEC Seeks Contempt Order Against Trevor Cook; Minnesota Man Said To Have Bought Two-Person ‘Submarine’ With Ponzi Proceeds

    ponziblotterTrevor Cook, the Minnesota man implicated with Christian radio host Pat Kiley in a Ponzi and currency-trading scheme that collected at least $190 million, already has taken the 5th Amendment in a civil case brought by the SEC.

    The SEC now is seeking a contempt ruling against Cook, amid allegations he violated the asset freeze and receivership orders entered by a federal judge last month.

    A hearing on the contempt allegations began Dec. 11, but was continued to Jan. 5. The SEC said Cook, whom investors said bought a submarine on eBay for $40,000 and used it to access a private island he bought in Canada, hid assets from the court “by using an undisclosed credit card to make thousands of dollars of retail purchases.”

    Screen shot: Deposition in the Trevor Cook case.
    Screen shot: Deposition in the Trevor Cook case.

    Chief U.S. District Judge Michael Davis ordered Cook to surrender his passport.

    The Star Tribune of Minneapolis – St. Paul, which finds itself covering at least three major Ponzi scheme cases in the state, reported that Cook bought “gift cards” after the asset freeze.

    An attorney for the SEC argued that the gift cards smack “of money laundering,” the newspaper reported.

    The gift-card purchases occurred after the asset freeze was ordered, the SEC said. The agency also alleged that Cook failed “to turn over assets to the Court appointed receiver, to repatriate assets held in foreign countries, and to produce an accounting of investor funds.”

  • Yet Another Senior Citizen Guilty In Ponzi Scheme That Targeted Fellow Seniors; Crime Was ‘Ruthlessly’ Executed, NJ Attorney General Anne Milgram Says

    A New Jersey financial adviser who created a sham company and operated it for 17 years has pleaded guilty to five felony counts of mail fraud, federal prosecutors said.

    Separately, state prosecutors announced a guilty plea to a felony charge of money-laundering.

    Maxwell B. Smith, 69, of Fairhaven, operated a Ponzi scheme that consumed more than $9 million, said U.S. Attorney Paul J. Fishman of the District of New Jersey.

    Smith faces a maximum sentence in the federal case of 100 years in prison and a maximum fine of $1.25 million. He will be sentenced Feb. 26 and remains free on bail of $1 million.

    Senior citizens were among the victims of a Ponzi scheme operated by a senior citizen, prosecutors said. New Jersey Attorney General Anne Milgram, whose office brought the companion money-laundering prosecution, described the crime as ruthless.

    milgram“This defendant ruthlessly preyed on elderly investors, targeting longtime clients who trusted him to look out for their interests,” Milgram said. “Instead, Smith deceived them and stole their money, in some instances depriving retired investors of their life savings.”

    Part of the deception was to operate the scheme out of a Mail Boxes Etc. “mail drop leased by Smith,” prosecutors said.

    Prosecutors said Smith worked for financial-services companies in Millburn and Tinton Falls, and admitted he created a sham entity known as Health Care Financial Partners (HCFP) in 1992. HCFP purported to be an investment fund with more than $300 million in assets under management, consisting of loans to healthcare facilities such as nursing homes.

    “Using his relationships with his investor clients, Smith admitted that he sold debt securities in HCFP through sham bond offerings ranging in prices from $25,000 to $300,000 per investment,” prosecutors said. “Smith induced individual investors by creating a phony investment prospectus falsely stating that the total value of HCFP’s holdings exceeded $300 million. To further induce individuals to invest in HCFP, Smith falsely claimed that their money would earn yearly dividend interest of between 7.5 and 9 percent, and that the returns on their investments would be tax-free, similar to municipal bonds.”

    Smith duped investors by lulling them into “thinking their investments were legitimate and earning returns” by using their money “to purchase bank checks, which he then sent
    to investors as purported earnings on their investments,” prosecutors said.

    But Smith told U.S. District Judge Mary L. Cooper that, instead of investing the funds as promised, he diverted the investments to his own bank accounts where he used the investors’ money for his personal expenses.”

    Smith spent client funds on dining, entertainment, gambling and international travel, “defrauding HCFP investors out of more than $9 million, prosecutors said.

    He also was charged under state law with money-laundering by Milgram. Smith pleaded guilty in the state case last week, and state prosecutors recommended a sentence of 15 years. The state sentencing is scheduled for March 5 in Morris County. Superior Court Judge Thomas V. Manahan will preside.

    “This investment broker stole millions of dollars from elderly clients, callously betraying the trust they placed in him as their longtime financial advisor,” said Milgram. “In pleading guilty to these charges, Smith faces a lengthy prison sentence and must pay full restitution to his victims.”

  • Defendant In $50 Million Texas Ponzi Taken Into Custody

    A previous encounter with the Securities and Exchange Commission and a $50,000 fine did not stop Benny Lee Judah from selling unregistered securities, and now Judah has been taken into federal custody.

    Judah, 50, of Lubbock, Texas, pleaded guilty today to one count of money laundering and one count of sale and delivery after sale of unregistered securities. He faces up to 20 years in prison and a fine of up to $250,000 on the money-laundering charge, and up to five years in prison and a $250,000 fine on the count of selling and delivering unregistered securities.

    Although his formal sentencing is scheduled later, Judah was taken into immediate custody by federal agents. His company, Excel Lease Fund Inc., already is in receivership. Judah’s assets have been frozen since April, when the SEC sued him for the second time this decade for selling unregistered securities.

    Both Judah and Excel were previously sued in 2001. He was fined and put on notice not to break securities laws. In 2005, however, he again began to sell unregistered securities, collecting at least $50 million, but Judah actually was running a Ponzi scheme and lying to investors that his company was profitable, investigators said.

    “As part of his scheme, Judah misrepresented the viability of Excel by failing to disclose the true and actual use of investor funds, and the true financial condition of Excel, thus allowing him to conceal, disguise and convert investor monies for unauthorized purposes,” prosecutors said. “He generated false documents consisting of prospectuses, balance sheets, income statements and interest accrual letters that were represented to be true in order to perpetuate the image of a successful company. He mailed these fraudulent documents to investors and received approximately $50,162,707. He represented to investors that Excel was profitable, when it was not, and grossly overstated the value and nature of Excel’s assets.”

    Restitution in the case was pegged at more than $48 million, according to records.

  • BERNIE’S ‘STING’: Frank DiPascali Jr. Pleads Guilty In Madoff Case; Officials Say He Developed Phony Computer Platform That Appeared To Reflect Real Trading

    In the movie “The Sting,” accomplice J.J. Singleton read from a surplus tickertape wire into a microphone to create the  impression that horse races that already were over were being run live on the radio.

    J.J.’s bogus radio calls from the back room helped Henry Gondorff and Johnny Hooker fleece Doyle Lonnegan of $500,000 in an elaborate scheme.

    The movie won seven Oscars.

    The Securities and Exchange Commission now says Bernard Madoff had a back room of his own — and that Frank DiPascali made sure it was staffed in an elaborate bid to sustain the world’s largest Ponzi scheme should customers or regulators ever drop by unexpectedly.

    “Madoff and DiPascali even went so far as to develop a phantom computer trading platform that would appear to reflect real trading,” the SEC said. “In the event of a surprise visit from outsiders requesting to observe real-time trading activity, one BMIS employee was to enter trades on a computer screen and another employee was to go into an office nearby and play the role of a counterparty trader in Europe.”

    The SEC filed numerous civil charges for securities fraud against DiPascali, Madoff’s chief financial officer, yesterday.

    And DiPascali, 52, pleaded guilty yesterday in New York to numerous criminal charges brought in a separate complaint by the FBI, the IRS and other agencies. He faces up to 125 years in prison.

    DiPascali pleased guilty to conspiracy, securities fraud, investment adviser fraud, falsifying records of a broker-dealer, falsifying records of an investment adviser, mail fraud, wire fraud, international money laundering, perjury and attempting to evade federal income taxes.

    Unlike Gondorff, Hooker, Singleton and other fictional characters in “The Sting,” it did not pay in the end to be an accomplice of Madoff, prosecutors said.

    “[DiPascali] also subject to mandatory restitution and faces criminal fines up to twice the gross gain or loss derived from the offense,” prosecutors said. “Additionally, the criminal information to which DiPascali pleaded guilty includes forfeiture allegations that would require DiPascali to forfeit the proceeds of the charged crimes, as well as all property involved in the money laundering offenses and all property traceable to such property.”

    In the SEC case, the agency said DiPascali “helped generate bogus annual returns of 10 to 17 percent by fabricating backdated and fictitious trades that never occurred.”

    To sustain the deception, which dated back to the 1980s, “DiPascali helped Madoff cover up the fraud by preparing fake trade blotters, stock records, customer confirmations, Depository Trust Corporation (DTC) reports and other phantom books and records to substantiate the non-existent trading.”

  • BREAKING NEWS: Criminal Probe Under Way Into Practices Of Regenesis 2×2 Matrix; Secret Service Executed Search Warrants In Washington State Amid Ponzi And Wire Fraud Concerns

    The U.S. Secret Service is conducting yet-another investigation into the practices of an Internet-based business amid Ponzi allegations. Agents have seized computers and business records from Regenesis Marketing Corp., which operates online as Regenesis 2×2 at this website.

    A felon on federal probation was an integral part of the company, according to court records. Meanwhile, federal agents said they found the personal records of customers in a Dumpster.

    Regenesis 2×2 sells what it calls “commission centers” for $325 and touts itself as “THE ECONOMIC STIMULUS PLAN FOR YOU.”

    Seized were envelopes containing credit cards, debit cards and financial statements; 13 Priority Mail envelopes and 10 First Class Mail envelopes; and various computers, computer equipment and business records.

    Screen shot of Regenesis 2x2 video
    Screen shot of Regenesis 2×2 video

    In court documents, the Secret Service revealed Regenesis 2X2 had been under surveillance for five weeks prior to the government applying for multiple search warrants, which were approved by a federal magistrate judge July 17.

    The case has featured surveillance at multiple locations, including a UPS Store in Kirkland, Wash., that the company used as a mailing address. Business actually was conducted elsewhere in Washington state, including the town of Snoqualmie, according to court filings.

    No charges have been filed and the website continues to resolve to a server. The Secret Service, however, laid out allegations of an elaborate fraud involving multiple individuals, multiple bank accounts, multiple addresses and multiple company names, including a firm known as Streamline Media of both Reno, Nev. and Kirkland.

    Agents observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance. Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising, according to court filings.

    In one case in which agents were observing one of the adult principals in the case, they observed a youth described as a teenager exiting a vehicle and “struggling with a large arm full of opened business and UPS Priority Mail envelopes,” the Secret Service said in court filings.

    The juvenile entered a building and “then immediately came back outside and discarded the materials into an alley [D]umpster,” agents said.

    Agents identified the adult under surveillance as a person “arrested by the Internal Revenue Service out of Las Vegas, Nevada[,] for felony violations related to Illegal Money Laundering from Securities Fraud and Wire Fraud” in a previous case.

    The subject under surveillance was on federal probation, agents said.

    Assisting the Secret Service in the probe are the Federal Trade Commission, the Seattle Police Department, the Kirkland Police Department, and the Washington state Department of Revenue, Employment Security Department and Department of Licensing.

  • News And Notes: Surf’s Up Poster Calls For ‘Militia’ To Rise Against Government; BizAdSplash Urges Members Not To Contact MasterCard Vendors

    NEWS: A member of the Pro-AdSurfDaily Surf’s Up forum says he is willing to “Bear Arms in line with the Bill of Rights” and storm Washington, D.C., if a “militia” can be formed.

    In a separate thread, the poster said the government ruined his life last year when it seized assets tied to the Florida autosurf firm and that he is ready to fight to the “DEATH.”

    “If anyone from the US Government reads this,” the poster said, “yes[,] look out because you are now my enemy. May God Bless Andy [Bowdoin] and all ASD members. I’m done with working within the system. I will destroy the entire US Government if that is what it takes to serve justice for ASD members.”

    The incendiary remarks were contained in two threads, one of which was titled “Letter from Andy.” A poster within the thread had criticized Bowdoin for not conducting a conference call he had promised nearly three months ago in a letter to members published at Surf’s Up, opining that Bowdoin should get “jail time.”

    In response to the post critical of Bowdoin, yet another poster appealed to the Surf’s Up Mods to cleanse the forum of “rats.” A Mod assured the poster that, if the purported rat again posted “negative garbage” about Bowdoin, the offending post would be deleted.

    The Mod said nothing about the “militia” post.

    NOTE: In court filings in a racketeering lawsuit against Bowdoin, ASD attorney Robert Garner and Golden Panda Ad Builder President Clarence Busby, one of Busby’s pleadings defines him as a minister of 30 years’ standing and uses the abbreviation “Rev.” at least 120 times.

    Golden Panda has ceded to the government more than $14 million it had gathered in only days last summer as the so-called “Chinese” version of ASD. In the months that followed, a new, Busby-connected surf known as BizAdSplash (BAS) opened, touting an offshore location.

    Early promoters identified Busby as the owner, but others defined him as a consultant.

    As a marketing proposition, identifying Busby in any capacity of authority at BAS was odd regardless of any title he held, in no small part because he consented to the forfeiture of Golden Panda’s assets in September, saying he had relied on ASD’s assertions that the program was legal.

    Only in the incongruous world of the autosurf could a man responsible for a stunning, $14 million loss of investor funds be positioned as a marketing plus.

    Work-around?

    One seized Golden Panda account contained precisely $6 million, according to federal prosecutors.

    Choosing his words carefully in a sworn court filing in August, Busby said none of the Golden Panda money came from Bowdoin or ASD, that Busby had provided an unspecified amount of “seed” capital from his real-estate business and that Golden Panda “obtained all other start up money from 34 founders.”

    Amounts Busby provided personally or obtained from the “founders” weren’t disclosed in Busby’s filing.

    Busby’s filing, however, did not rule out the possibility that one or more “founders” provided capital from “profits” paid to them by ASD and deposited in their individual bank accounts and that “profits” then were forwarded to Golden Panda.

    Nor does it rule out the possibility that Golden Panda seed money from one or more “founders” flowed to the company after the “founders” deposited checks from individual ASD downline members in the “founders’” private bank accounts, shifted a corresponding amount of “ad-packs” to ASD downline members by using ASD’s internal system, and then forwarded the desposit amount or portion thereof to Golden Panda, instead of ASD.

    Busby said a prosecution claim that a “majority” of Golden Panda’s funds came from ASD was “false.”

    There have been numerous reports that ASD prospects paid sponsors directly for ad-pack purchases, that the sponsors deposited the money in their individual checking accounts at their local banks and then used ASD’s internal system to transfer ad-packs to the individual prospects.

    The approach was pitched as a work-around, because ASD was having trouble posting payments from individual members and getting them started in the “rebate” program, which was purported in advertisements to pay 1 percent a day or 30 percent a month.

    Given this scenario, it is possible that huge sums paid by ASD “rally” attendees were deposited into the private bank accounts of individual ASD promoters and that the deposits were routed directly to Golden Panda, instead of ASD.

    “Neither Bowdoin nor ASD provided any capital,” Busby said.

    Busby’s claim about Golden Panda’s seed money would be true — at least in a technical sense — if any of Golden Panda’s “founders” also were ASD promoters who deposited money from ASD downline members directly in the promoters’ back accounts, transferred a corresponding amount of ad-packs to the members using ASD’s internal system, and then forwarded the funds to Golden Panda, instead of ASD.

    It is known that at least one of Golden Panda’s “founders” was a highly visible ASD promoter who helped the company organize rallies at which millions of dollars were collected. It also is known that some ASD prospects who attended the rallies paid sponsors directly for “ad-pack” purchases and that the sponsors deposited the money in their individual checking accounts and transferred a corresponding amount of “ad-packs” to the prospects by using ASD’s internal system.

    It is possible that a significant chunk of the money seized from Golden Panda originated with one or more “founders” who initiated private ad-pack transactions with individual ASD downline members, deposited the sums in their personal checking accounts and forwarded the funds to Golden Panda.

    ‘Chief Consultant’

    Busby now has officially been declared the “Chief Consultant” of BAS, in a news released marked a “must read” at the BAS website.

    Unlike Busby’s court filings in the RICO case, the BAS news release does not identify him as a minister or use an abbreviation such as “Rev.” It simply identifies him as “Clarence Busby.”

    Busby was enjoined by a federal judge in the 1990s from breaking securities laws, after he was implicated in three prime-bank schemes by the Securities and Exchange Commission. The government took mercy on Busby, waiving certain financial penalties and not interfering in a bankruptcy petition he filed.

    In the BAS news release, Busby assured members that BAS had “spent a tremendous amount of time and thousands of dollars on economists, attorneys and other professionals and with their advice have built this company in a very responsible manner.”

    Busby did not identify the economists, attorneys or other professionals. Nor did he mention the past encounter with the SEC or the current litigation involving ASD and Golden Panda Ad Builder. Busby did, however, provide an inspirational quotation from auto tycoon Henry Ford.

    Mum’s The Word

    Elsewhere on the news pages of BAS, the company urged members not to contact vendors associated with its use of MasterCard with any questions about the BAS program. The information appeared under a bright red headline titled, “URGENT INFORMATION FOR MASTERCARD USERS.”

    “At Biz Ad Splash, we have worked very hard to develop great relationships with some of the finest international banking services available,” BAS said. “We continually strive to maintain a good standing with these institutions in order to provide the best services possible to the Customer/Associates of Biz Ad Splash.”

    Last year, ASD announced that it was finalizing a deal with a company known as Praebius Communications that would result in a cash infusion of $200 million. ASD withdrew the news release after members responded by contacting Praebius in a bid to confirm or deny the deal.

    Some ASD members were infuriated that other members actually questioned the claim, describing even rational doubts as an act of disloyalty.

    In its MasterCard news release, BAS openly discouraged members from contacting any vendors to get answers to questions.

    “[W]e strongly urge our Biz Ad Splash Customer/Associates not to contact these vendors with questions concerning withdrawal requests or Biz Ad Splash card deposits,” BAS said.

  • AdViewGlobal Promoter Says Prospects Can Bypass Company And Purchase Ad-Packs Directly From Sponsors To Ensure They Get Credited With 200 Percent Match Before Deadline

    An AdViewGlobal (AVG) promoter has shared a strategy that potentially could cause a legal calamity for individual AVG promoters and members. The member posted his strategy on an AdViewGlobal forum set up by some Mods and members of the Pro-ASD Surf’s Up forum.

    AVG, which purports to be headquartered in Uruguay and also is known as AVGA, launched a new website Monday, redefining itself as a full-fledged advertising company with a host of services. Within hours, the surf firm announced that a 200 percent, matching-bonus program would end June 5, not June 29 as originally advertised.

    AVG prospects and existing members expressed concern that they would not be able to get their accounts credited with purchases or the bonus before the June 5 deadline. The new deadline shaved 24 days off the original deadline.

    One AVG promoter, however, said there was a workaround by which established program sponsors could serve as a conduit for AVG.

    Under the workaround, established sponsors could gather money from individual prospects, deposit it in the sponsors’ local banks and then send a check by overnight mail to international payment processors in Canada and Panama.

    Alternatively, the sponsors could use their local bank’s wire facility to wire money to the processors, the promoter explained.

    Once the offshore payment processors credited the sponsors’ accounts, the sponsors could transfer the money to AVG and use AVG’s internal system to transfer ad packs to the prospects’ accounts in the amounts they desired to purchase, ensuring that the matching bonuses also would be credited by the June 5 deadline.

    “Many new members may or may not be able to become verified AND have their account funded in time to qualify for the match,” the promoter said. “So as a sponsor what you can do is bank wire or overnight your payment processor ([SolidTrustPay] or [StrictPay]).

    “You are guarantee[d] to have it into your account by Friday. Once it hit[s] your account, log into backoffice and ‘Fund your AVGA account’. This will bring the money into your cash balance. Once it’s in your cash balance, then you can INSTANTLY transfer it to your members. Once money hits their account, they can make a purchase and “BAM” get[] the 200% match.

    “You can have your members wire you their funds or whatever the 2 of you decide upon,” the promoter continued.

    “Unless [there] is a direct wire to AVGA for funding, this is probably the best way that I can see that you can help all your present AND new members get the 200% match,” the promoter said.

    Such an approach potentially brings many issues into play at the individual level, including mail fraud, wire fraud, money-laundering, tax evasion, selling unregistered securities and acting as a securities broker-dealer without a license.

    Some members of AdSurfDaily, a Florida company accused of wire fraud, selling unregistered securities and operating a Ponzi scheme, also gathered money directly from prospects and used ASD’s internal system to transfer credits.

    ASD’s internal laxity and inability to post purchases in timely fashion led to assertions that individual promoters could use the company to make tax-free side deals with prospects. If a promoter already was in “profit” and had a stockpile of ad-packs on the books, he or she could sell the ad-packs at a discount to prospects, transfer the ad-packs to prospects using ASD’s internal system and pocket the cash.

    The prospects would “earn” at ASD’s advertised rate, even though they paid less than others for ad-packs by purchasing through sponsors and bypassing the company. Other ASD members who had paid full price through ASD would inherit the burden of paying for the discounted ad-packs and their full “earning” potential.

    Collecting money from prospects and transferring ad-packs using AVG’s internal system may be problematic even if the ad-packs aren’t offered at a discount. The government views the autosurf business model as foundationally corrupt, and makes no secret that participants are subject to prosecution under securities, wire-fraud, mail-fraud, money-laundering and racketeering statutes.

  • Stanford/Bowdoin: ‘A Tapestry Of Believable Lies’

    andybowdoinbw.gifHats off to Houston Chronicle writer Loren Steffy, who explained economically why cons work.

    A con, Steffy explained, works because the con weaves “a tapestry of believable lies.” It’s a pointed, short, highly memorable line that deserves special mention because it puts readers “right there.”

    Steffy detailed some of disgraced financier Allen Stanford’s lies in this column. Lots of things in the column reminded us of the Andy Bowdoin case. Bowdoin is the head of AdSurfDaily Inc., a Quincy, Fla.-based company accused of operating a $100 million Ponzi scheme.

    Here are some Stanford/Bowdoin parallels:

    Friends in high places. Stanford went around saying he’d been knighted by Prince Phillip. Bowdoin went on a tour to showcase a special award he’d received for business acumen from President Bush. It turned out that Buckingham Palace called Stanford on his lie; in fact, he’d been given the title of “Sir” by the prime minister of Antigua, a Caribbean Island nation of 85,000 known for lax banking standards and money-laundering.

    In Bowdoin’s case, the U.S. Secret Service called Bowdoin on his friends-in-high-places lie. It turned out that the award he received was an award for writing checks to the National Republican Congressional Committee. Basically, Bowdoin wrote a check for banquet tickets and called it a special honor from the President of the United States. Bowdoin, by the way, had more than $1 million on deposit in Antigua. The Sunday Times reports today that $8 billion is missing from Stanford’s bank and that regulators suspect a Ponzi scheme.

    Charities and sports. Stanford “sold” clients on his benevolence. So did Bowdoin, who once gifted 100,000 ASD “ad packs” to a charity. Stanford was big on sports sponsorships. Bowdoin told his faithful that ASD soon would become a sponsor for professional auto racing. Members claimed ASD would have a car in the Indy 500.

    Holes in the resume: Stanford claimed to be related to the founders of Stanford University. The school exposed the lie and sued him for trademark infringement. Bowdoin claimed to have operated a string of highly successful businesses. Turned out that one of his highly successful enterprises was at the center of a securities-fraud investigation in Alabama and that Bowdoin and co-scammers had fleeced investors out of hundreds of thousands of dollars. He pleaded guilty to a felony, was sentenced to a year in prison, but the sentence was suspended when he agreed to make restitution.

    In August 2008, he still owed the Alabama victims $45,000. Just a month before, he paid $50,000 for a new Lincoln. In June, ASD cash was used to retire the $157,000 mortgage of his wife’s son and daughter-in-law, and about $28,000 was used to buy them a new car. At the time, Bowdoin owed his ex-wife more than $162,000.

    Nothing out of the ordinary. As Stanford’s empire was collapsing, he told investors that the SEC investigation they were reading about in the newspaper was a “routine” look into the business. He also said he was cooperating fully, which the SEC said was a lie when it later alleged a multibillion-dollar, international fraud scheme.

    Bowdoin told members that his business had been approved by regulators and was perfectly compliant. It turned out that ASD didn’t even have a compliance attorney and knew in 2007 — months before it started gathering tens of millions of dollars from members at company “rallies” — that the business was illegal. In the hours after the August seizure of ASD’s assets by the government, people with close ties to Bowdoin sought to assure members that the matter was a temporary blip that would be settled within days.

    For good measure, Bowdoin later told ASD members that Ponzi allegations against ASD hand been dropped in Florida. People flooded forums to share the good news — except it wasn’t true. As recently as last week, some ASD members continued to make the claim that Ponzi allegations had been dropped, despite the fact that the office of Florida Attorney General Bill McCollum specifically refuted the claim months ago.

  • Our Theory Of The AdSurfDaily Case: Steroidal Puppeteers

    UPDATED 4:30 PM EST (U.S.A.) We believe the AdSurfDaily case never has been as complex as it sounds. The root of it is Andy Bowdoin’s greed and instinct to scam. He has no more control over it than he does the color of his own eyes.

    Andy Bowdoin is not a brilliant or gifted man. Like many con men, he excels at the niceties and can spout phrases by rote that serve as a substitute for wisdom he doesn’t possess. People easily can invest in false wisdom, words that sound prophetic or inspirational. An example of such a phrase can be found at the Surf’s Up site:

    “No more prizes for predicting rain. Prizes only for building arks.”

    Such phrases are key tools of people inclined to separate other people from their money by using linguistic sleight-of-hand. The phrases sound nice, but their purpose is to minimize dissension and discourage questioning.

    The Target Audience

    Andy Bowdoin’s target audience is people less intelligent than he or of equal intelligence; he can reel in “average people” — fundamentally honest average people — by the thousands. But the problem is that his net is so wide that it also reels in people who are much more intelligent than Bowdoin and are his equals or superiors in terms of dishonesty.

    Like Bowdoin, some of them have criminal intelligence, only theirs is on steroids. They can see how to make even more money by adding additional layers of deception, and they take their ideas to Bowdoin.

    The folks who possess steroidal criminal intelligence are smart enough to make Bowdoin do their bidding. They behave like spouses who know how to get what they want by planting an idea and letting their spouses take credit for it. Credit for the idea is what fuels Bowdoin and gives him oxygen for the stage. The steroidal criminals understood this right away. Bowdoin was the face of the organization, the stage presence, the charming spokesman. They were the puppeteers.

    This is another thing they knew right away: Bowdoin was stupid enough to attach his own name to the autosurf business, which prosecutors abhor. Bowdoin’s public presence insulated the master puppeteers from detection while setting the stage for the organization to become a cash cow by ramping up the criminality.

    The master puppeteers, however, made a serious miscalculation: ASD pulled in so much money that it had no real place to put it without drawing unwanted attention. Bowdoin wasn’t smart enough to manage a criminal operation at this level. ASD died the very day a banker closed an ASD-connected account, citing Ponzi fears.

    Checks Led To Checkmate For ASD

    Checks backed up in ASD’s office not because they couldn’t be recorded promptly; they backed up because Bowdoin knew that depositing them made them subject to seizure. It was the classic dilemma money-launderers encounter, and the precise situation that money-laundering, wire-fraud and mail-fraud laws contemplate.

    In some ways, the checks are the best evidence of criminality. No legitimate company sits on tens of millions of dollars of undeposited checks.

    ASD died the very day last summer a banker said “Ponzi scheme.” It is likely that Bowdoin compounded the problem by continuing to collect money — even as he knew there was no place to put it.

    A CEP Tie

    Based on our research, we believe Andy Bowdoin was a member of the CEP Ponzi scheme and borrowed heavily from the model. He was smart enough to see what a cash cow the business could become, and began to contemplate owning his own autosurf. He likely was a low-level player in CEP and other surfs, saw the criminal beauty of the model, and didn’t take the clue when the Feds began to shut down surfs while using phrases such as “Ponzi scheme” and “unregistered security.”

    CEP had its own payment processor, something Bowdoin imagined himself having. And there were claims online that CEP was investing in real estate.

    Bowdoin registered a corporation called “World Payment Systems Inc.” in December 2006, about two months after founding ASD. Before the lights went out at ASD, the company started buying real estate and talking about its vision of owning an interest in a bank, but the purchases themselves only weighted the Ponzi more heavily against rank-and-file ASD members.

    Insiders, including members with steroidal criminal intelligence and Bowdoin family members, were extracting disproportionate shares of proceeds at virtually the instant big money began to roll into ASD. Only the true insiders knew the real truth. Bowdoin sustained the deception after the August seizure because he still needed something from the members he’d just fleeced: testimonials to submit to the court.

    The testimonials did not persuade either the prosecutor or the judge of ASD’s legitimacy, but Bowdoin still had to demonstrate he was “fighting” for the members.

    We believe that, as part of this “demonstration,” Bowdoin or others closely connected with ASD and with knowledge of other autosurfs to come, offered an incentive for certain suporters to stay loyal. These people were co-opted by greed into becoming racketeers because they had visions of prospering in AdViewGlobal or other autosurfs.

    They now find themselves in the impossible position of defending Bowdoin despite everything that has happened — and some of them are doing it for “consideration.” The consideration could be anything from free “ad packs” to a guaranteed return on ASD funds seized by the government.

    The true ASD braintrust is busy trying to port the model to Central America and South America. All three of the new surfs were registered after the ASD seizure:

    Aug. 18, 2008: Domain name for AdGateWorld registered.
    Sept. 22, 2008: Domain name for AdViewGlobal registered.
    Nov. 7, 2008: Domain name for BizAdSplash registered.

    All three surfs have members and promoters in common; ASD and AdViewGlobal have management in common. During a conference call, Bowdoin made the claim that something had happened to the ASD database, that perhaps the government had erased it. We think it likely that the ASD database was stolen or provided to insiders, and that Bowdoin was trying to cover his tracks by suggesting that government tricksters somehow had a role in the disappearance of the database.

    For good measure, he added that ASD had a back-up in a secret location.

    There is no way these things amount to a coincidence. And it’s also no coincidence that ASD gave its official endorsement to the “Surf’s Up” forum on Nov. 27, just prior to the launch dates of the new surfs.

    Want to ask the AdViewGlobal members of Surf’s Up a question? Ask them to disclose if they received a “consideration” of any type. If they deflect, ask them why. If they deny, ask them why they’re pushing a model that is targeting U.S. customers and plainly is selling unregistered securities to U.S. customers — the same thing ASD is accused of doing.

    And then ask them why there are no more prizes for predicting rain — and only prizes for building arks.

    These are the people of equal or lesser intelligence than Andy Bowdoin and the same criminal leanings. The honest people are long gone. The people with steroidal criminal gifts are nowhere to be found, but they’re still pulling the puppet strings.