Andy Bowdoin

UPDATED 11:57 A.M. EDT (U.S.A.) Federal prosecutors have won the second forfeiture case against assets tied to Florida-based AdSurfDaily, meaning the government now holds title to 100 percent of the money and assets seized in the autosurf Ponzi scheme, wire fraud and money-laundering investigation.

U.S. District Judge Rosemary Collyer issued a final order of forfeiture March 30 in a case brought in December 2008. On Jan. 4, Collyer issued a final order of forfeiture in a case brought in August 2008. The government now has control over more than $80 million seized in the cases, along with real estate, cars, marine equipment, computers and other property.

But that may not be the big news.

Grand Jury Probe

Indeed, the big news may be that a hidden legal drama is playing out behind the scenes. Appeal documents filed by attorneys for ASD President Andy Bowdoin in the August 2008 case reference two separate matters filed “under seal” and say that attorneys for unnamed “defendants” were called to testify before a grand jury.

The filings suggest — but do not state plainly — that prosecutors subpoenaed at least two attorneys involved in the defense of ASD-related property to testify and that a federal judge ordered the attorneys to comply.

Charles A. Murray, an attorney for ASD President Andy Bowdoin, referenced two sealed court cases when informing the appeals court about litigation “related” to ASD.

“Only one case related to this matter is currently pending before this Court, an interlocutory appeal alleging that the court below erred in ordering the defendant’s attorneys to testify before a grand jury,” Murray wrote.

Murray identified the case as “Grand Jury Subpoena, Case No. 09-3118 (Under Seal).”

“This related appeal arose from an ongoing grand jury investigation, In re: Possible Violations of Title 18, United States Code, Sections 1341, 1343, and 1349, Misc. No. 09-270 (Under Seal),” Murray wrote.

The sections of federal law cited in Murray’s appeal brief pertain to mail-fraud, wire-fraud and conspiracy statutes. The attorneys are not named, and the brief does not identify the targets of the grand-jury probe.

Details Unclear

Why the attorneys were called to testify is unclear. Also unclear are the identities of the attorneys’ clients, the nature of the information the government sought from the attorneys, whether the attorneys sought to invoke attorney-client privilege and whether they actually testified before the interlocutory appeal filed under seal was brought.

An interlocutory appeal is an appeal to a higher court of a ruling by a lower court that is made before the trial in the lower court has concluded.

Such appeals, which higher courts are reluctant to entertain, may be filed when a party believes a lower court’s ruling is severely prejudicial and turns to an appeals court to stop it in its tracks, instead of following the customary procedure of waiting for the case to conclude before filing an appeal.

Racketeering Case Cited

Murray also identified as a “related” matter a racketeering lawsuit filed against Bowdoin and ASD attorney Robert Garner by three ASD members in January 2009. The racketeering lawsuit, which alleges ASD was a criminal enterprise as defined under federal statutes, has been placed on hold until issues in the federal case are resolved.

In June 2009, attorneys for the parties suing Bowdoin and Garner referenced the AdViewGlobal (AVG) autosurf, an entity with close ties to ASD. In September 2009, federal prosecutors made a veiled reference to AVG in a filing that suggested that Bowdoin and family members initially planned to “move to another country and profit from a knock-off autosurf program that Bowdoin funded and helped to start.”

The assets seized in the December 2008 forfeiture case identified Bowdoin family members as beneficiaries of ASD’s illegal conduct. Members of AVG later identified George and Judy Harris as AVG’s owners, with Bowdoin as a silent partner.

George Harris is the son of Bowdoin’s wife, Edna Faye Bowdoin, who also was named in the December 2008 complaint as a beneficiary of ASD’s illegal conduct.

AVG crashed and burned in June 2009, taking an unknown sum of money paid by members with it by exercising its version of a “rebates aren’t guaranteed” clause. There were reports that $2.7 million was stolen from AVG, which purportedly operated from Uruguay.

Among AVG’s most noteworthy promoters were former ASD members, including some of the moderators of the now-defunct Pro-ASD Surf’s Up forum. Surf’s Up suddenly went missing in the earliest days of 2010.

Bowdoin, 75, has been portrayed by prosecutors as “delusional.” He pleaded guilty in Alabama during the 1990s to felony securities charges, according to court records. A decade later, he associated with Clarence Busby, the operator of Golden Panda Ad Builder, the so-called “Chinese” option for ASD members.

Bowdoin and Busby, according to court filings by Busby, talked about forming Golden Panda in April 2008 while on a “relaxing fishing trip” to a Georgia lake.

Busby, identified by the title “Rev.” at least 120 times in autosurf-related litigation, was implicated by the SEC in three prime-bank schemes in the 1990s, according to records. Golden Panda has ceded more than $14.6 million to the government in the ASD case, including $646,266.13 formally ordered forfeited by Collyer last week, and more than $14 million Collyer ordered forfeited in July 2009.

In his court filings, Busby said he didn’t know Bowdoin “had prior run ins with the law” and had been arrested in Alabama for defrauding investors.

Busby did not say if he told his fishing partner about his own run-ins with the law: The SEC said Busby defrauded investors in the 1990s “by offering and selling investment
contracts in connection with three different prime bank schemes.”

“Using misrepresentations and omissions in each of the three schemes, Busby raised money for purported programs in ‘prime bank’ notes by fraudulently representing to investors that the investments were risk-free and that the ventures would pay returns ranging from 750% to 10,000%. In total, Busby raised nearly $1 million from more than 70 investors. None of the investors earned the exorbitant returns promised by Busby,” the SEC said.

Busby went on to operate an autosurf known as Biz Ad Splash, which also crashed and burned, reportedly taking members’ money with it. All of the notable autosurfs that dominated the stage in the aftermath of the ASD seizure — MegaLido, AdGateWorld, BAS, Ad-Ventures4U, Noobing and others — have now either died or are in a serious state of decay.

Last month, the U.S. Secret Service, which conducted the probes into ASD, Golden Panda and LaFuenteDinero, asserted that INetGlobal, a company operated by Steve Renner, was operating an autosurf Ponzi scheme and targeting Chinese participants.

The IRS is involved in both the ASD case and the INetGlobal case, according to court filings.

Steve Renner was convicted of income-tax evasion in December 2009. Federal prosecutors described the INetGlobal case last week as a “major fraud and money laundering investigation.”

Renner has denied the government’s allegations.

Bowdoin now says he is appealing the forfeiture order issued by Collyer last week in the December 2008 case. If Bowdoin does appeal the order, it will be his second appeal. He also is appealing the forfeiture order in the August 2008 case.

UPDATED 1:04 P.M. EDT (U.S.A.) In yet another case that portends disaster for the so-called “autosurf” industry, a federal judge has ordered the Noobing autosurf to be added as a receivership defendant in a fraud case brought against its parent company.

The FTC and attorneys general from Minnesota, North Carolina and Kansas brought the case against Noobing’s parent — Affiliate Strategies Inc. (ASI) — in July 2009. Several other companies were named defendants in the case, which alleged the firms participated in a scheme that promised guaranteed government grants from economic-stimulus funds.

Brett Blackman, ASI’s head, also was president of Noobing, members said. Noobing was not initially named a receivership defendant.

U.S. District Judge Julie A. Robinson issued an asset freeze Sept. 1, along with stern orders to preserve evidence and repatriate to the United States all assets and documents held on foreign soil. She also broadened the powers of Larry Cook, the court-appointed receiver.

Through his investigation, Cook determined that Noobing was operating under the umbrella of Apex Holdings International LLC, the same company under which ASI operated. Cook also determined that at least 14 other companies were operating under the Apex Holdings umbrella.

Noobing, which was registered in the United States, also had an offshoot in Nevis, according to court filings. Noobing targeted people with hearing impairments.

Cook asked Robinson last month to add Noobing and the other companies as receivership defendants after determining “each of the Subsidiaries used the same post office box as the [initial] Receivership Defendants.”

Moroever, Cook advised Robinson that he had received “receive numerous inquiries from creditors, former independent contractors, and tax authorities for the Subsidiaries.” He further argued that “each of the Subsidiaries was entirely reliant upon the business operations of the [initial] Receivership Defendants.”

Robinson, saying Cook had shown “good cause,” added Noobing and the others as defendants March 18.

No party  — including the FTC, the state attorneys general, the initial set of defendants and the new defendants — objected, Robinson noted. In December, Illinois joined the FTC, Minnesota, North Carolina and Kansas in the action.

On the previous day, March 17, FBI Director Robert Mueller III, without naming names, testified before Congress. Mueller said that “shell corporations” are emerging as a threat to the U.S. banking system because owners were using them “to facilitate the concealing of criminal proceeds” and engage in money-laundering.

Neither Noobing not its corporate parent has been accused of a crime.

In February, the U.S. Secret Service alleged in a civil forfeiture complaint that INetGlobal, a company that operates an autosurf, was engaged in money-laundering and wire fraud while operating a Ponzi scheme.

INetGlobal is operated by Steve Renner, under his “umbrella corporation, InterMark,” the Secret Service alleged. The agency identified what it described as “subsidiaries,” specifically referencing “Virtual Payment Systems, V-Media, Cash Cards International, and V-Local,” as well as a company named “INet Global Productions.”

“The commission by Renner of the federal crimes of wire fraud, in violation of Title 18, United States Code Section 1343, and money laundering, in violation of Title 18, United States Code Section 1957, is essential to the operation of this Ponzi scheme,” the Secret Service alleged.

In August 2008, the Secret Service said AdSurfDaily, a Florida-based autosurf company, also was engaging in wire fraud and money-laundering while operating a Ponzi scheme.

U.S. District Judge Rosemary Collyer — on Jan. 4, 2010 — ordered the forfeiture of more than $65.8 million in the personal bank accounts of ASD President Andy Bowdoin. A little more than a month later, on Feb. 23, the Secret Service moved against INetGlobal.

Records show that ASD’s Bowdoin operated several corporations over the years. In September 2009, the state of Florida revoked the corporate registrations of AdSurfDaily and Bowdoin/Harris Enterprises Inc.

The revocations occurred just four days after Bowdoin told members he had exciting plans for ASD’s future. Despite his claim, Bowdoin never bothered to submit the paperwork to keep the firm’s registration intact, despite having been given a five-month window to do so.

In his remarks to members, Bowdoin said the government had seized the assets of ASD members. In his own sworn court filings, however, Bowdoin said the seized assets belonged to him and his company.

The Secret Service transcribed Bowdoin’s remarks, and presented them to Collyer Sept. 28. Federal prosecutors said Bowdoin’s remarks were evidence that “this con man cannot manage to keep his stories straight.”

Collyer ordered the ASD asset forfeiture a little more than three months later. In the INetGlobal case, the Secret Service said one of its undercover agents was on the receiving end of a sales pitch from an ASD member who was trying to recruit the agent into INetGlobal.

Renner’s autosurf  “began operating just weeks after ASD was put out of business by the Secret Service, and this new entity uses the same terminology and business model as ASD,” the agency said in an affidavit for a search warrant.

At least one of the undercover agents working the INetGlobal case also worked the ASD case, according to court filings. The Secret Service searched the Web for an INetGlobal affiliate site, and the INetGlobal affiliate who pitched the undercover agent also had been an ASD member, according to the affidavit.

“The member asked if [the undercover agent] was a network marketer,” the Secret Service said. “The member said he had previously been a member of ASD . . . and said, ‘We know what happened there.’

“The member said he was reluctant to join iNetGlobal due to it being similar to ASD,” the agency continued in the affidavit. “The member said, ‘we all know what this program is.’” The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out. The member said you convert your earnings to V-cash and then receive payouts by check or through an ATM card you can sign up for.”

Less than a month later, FBI Director Mueller told Congress that “shell corporations” and “stored value” debit devices and “reloadable debit cards” increasingly were being used “to move criminal proceeds.”

“This has created a ‘shadow’ banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers,” Mueller said.

Mueller did not name any companies in his Congressional testimony.

The court-appointed receiver in the fraud case against the parent company of the Noobing autosurf has asked a federal judge for the authority to add Noobing to the receivership probe.

Larry Cook, the receiver, said that Noobing and 14 other companies under the Affiliate Strategies Inc. (ASI) umbrella have become the subjects of “numerous inquiries” from “tax authorities,”  creditors and “former independent contractors.”

Cook did not identify specific parties that made inquiries, but noted that “each of the Subsidiaries used the same post office box as the Receivership Defendants.”

Noobing targeted people with hearing impairments in its promotions. It is known that some Noobing members have contacted the Federal Trade Commission, which is spearheading the ASI probe, along with the attorneys general of Kansas, Minnesota, North Carolina and Illinois.

At least one deaf member of Noobing says she has contacted a sheriff’s department in California about the company.

News that Cook is seeking judicial approval to add Noobing to his receivership probe came on the same day that the U.S. Secret Service said it was conducting an intense probe of INetGlobal, which operated a Minneapolis-based autosurf.

In an application for a search warrant in a Ponzi case against INetGlobal, the Secret Service referenced the AdSurfDaily Ponzi scheme case, saying a member of ASD had attempted to recruit an undercover Secret Service agent into the INetGlobal scheme.

ASD members and members of a closely connected surf known as AdViewGlobal also promoted Noobing, as did INetGlobal members, according to web records.

Steve Renner, the owner of INetGlobal, was convicted in December of four felony counts of income-tax evasion for his conduct with other companies earlier this decade.

Autosurfs are notorious for keeping poor records or no records at all, and autosurf participants are notorious for engineering schemes to milk tax-free income.

Cook said tax reporting is required, and is seeking an order that pertains to Noobing and 14 other ASI umbrella companies. Cook listed Noobing’s name at the top of the list.

“In order to complete the tax reporting requirements and otherwise address the creditors’ and other claims, the Receiver seeks a clear order that he is the Receiver for the Subsidiaries,” Cook said.

And, he added, “Counsel for the [FTC] has reviewed this Motion and concurs.”

ASI and a number of companies were sued last year in a scheme involving government grants. Noobing went offline in the immediate aftermath of the FTC probe.

EDITOR’S NOTE: This list summarizes several programs pushed by members of AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme. In some cases, the programs were pushed prior to the seizure by the U.S. Secret Service in August 2008 of 15 bank accounts linked to ASD or Golden Panda Ad Builder, one of the companies implicated in the ASD scheme. Each of the programs listed below came to a dubious end or continue to exist in an unclear, shadowy form. This list is presented in no particular order and does not include every HYIP/autosurf pitched by ASD members.

UPDATED 3:16 P.M. ET (U.S.A.)

Gold Nugget Invest (GNI): Collapsed Friday. HYIP. Government of Belize issued warning in November. Ownership hidden behind proxy. Business model unclear. Presented as betting arbitrage, but perhaps was involved in forex. Advertised payout of 7.5 percent per week. Possibly linked to European banking investigation. Changed rules on the fly. Still collecting money after “Re-organization.” Purportedly launched in October 2006, the same month ASD was preparing for launch.

Genius Funds/Cash Tanker/Saza Investments: Pushed by ASD member “joe” in a post on the ProASD Surf’s Up forum just prior to collapse of GNI. CashTanker, which used a graphic depicting Jesus, now has tanked after advertising payouts of 2 percent a day. “joe” pitched GNI, Genius Funds, Cash Tanker and Saza Investments in an egg-themed promotion in which the word “egg” was used in domain names that redirected to the HYIPs. “joe’s” egg-themed domain that redirected to Cash Tanker now redirects to a program called PTV Partner, an HYIP that bills itself “The Ultimate High Yield Asset for your Financial Portfolio!” “joe’s” egg-themed pitch was based on the screaming notion that “ALL MY EGGS ARE NOT IN ONE BASKET. I MAKE $2000.00 A WEEK.” A street address for the egg-themed domains corresponds to an address in a federal lawsuit involving cell-phone trafficking.

Regenesis 2×2: Matrix in Seattle area. Records seized by U.S. Secret Service in July 2009. Operators kept under surveillance for five weeks. Multiple search warrants issued. Discarded records found in Dumpster. Sold “commission centers” for $325. Touted itself the “THE ECONOMIC STIMULUS PLAN FOR YOU.” Site appears to have been registered behind a proxy in Europe. Jeffrey William Snyder, one of the individuals kept under surveillance, was a convicted felon on probation for a previous securities scheme.

GoldenPandaAdBuilder: So-called “Chinese” version of ASD. Assets seized in two forfeiture complaints in ASD case. Operated by Clarence Busby of Georgia. Records in now-dismissed RICO lawsuit against Busby identified him as “Rev.” at least 120 times. Busby was implicated by SEC in 1990s in three prime-bank schemes that promised enormous payouts. Purportedly became Golden Panda president after going fishing with ASD President Andy Bowdoin in April 2008. Federal judge ordered forfeiture of more than $14 million from Golden Panda in July 2009. Busby now purported “chief consultant” of BizAdSplash (BAS). Ceased payouts in July 2009, after declaring “crisis” and claiming members were overpaid. Went offline. Returned online. Went offline again for about two weeks during 2009 Holiday season. Now back online.

BizAdSplash (BAS): (Also see GoldenPanda entry above.) BAS launched in aftermath of seizure of assets in ASD/GoldenPanda case. Assets seized in civil complaints in ASD/GoldenPanda case total about $80.52 million. Clarence Busby purported to be chief consultant of BAS. BAS touted purported offshore registration in Panama. Georgia corporation records show version of surf’s name used address of UPS Store No. 2644 in Kennesaw, Ga.

Noobing: Pitched as alternative to ASD after seizure. Noobing targeted deaf people. Deaf member says she reported Noobing to FBI and sheriff’s department in California. There are recent suggestions that deaf members also reported Noobing to SEC. FTC and attorneys general of Minnesota, Kansas and North Carolina joined in suing Affiliate Strategies Inc. (ASI), Noobing’s parent company, in alleged scheme offering guaranteed government grants from economic stimulus funds. Illinois now has joined the FTC action. Original lawsuit filed in July 2009. Like ASD, ASI owned a jet ski. Court-appointed receiver sold it at auction. Receiver performed a preliminary exam of Noobing’s records and determined surf was upside down by approximately $550,000. Noobing gathered money in aftermath of seizure of ASD’s bank accounts. Surf slashed payouts in early 2009, citing unclear ruling in ASD case. Site offline since FTC lawsuit, which did not name Noobing.

DailyProSurf (DPS): DPS is a largely unknown and mysterious surf site registered by ASD President Andy Bowdoin in August 2006, about two months prior to the formal birth of ASD. Records suggest DPS operated prior to registration, although its ownership was unclear. (NOTE: The story in the DPS link in this paragraph also contains information on 12DailyPro and PhoenixSurf, two surfs sued successfully by the SEC.)

AdVentures4U (ADV4U): Surf tanked in August 2009. Reportedly had more than 60,000 members. Members identified Steve R. Smith as owner. Smith also purported owner of venture called TradingGold4Cash. In confusing note to ADV4U members, Smith purportedly said his family received threats. Used ASD-like “rebates aren’t guaranteed” excuse upon payout suspension. Urged members not to contact payment processors. Site reportedly conducted business with hotmail address.

CEP: Judicially declared Ponzi scheme. Smashed by SEC. ASD once advertised it accepted funds through CEP Trust, the payment processor associated with the CEP Ponzi scheme.

MegaLido: Pushed by ASD members in aftermath of seizure of ASD’s assets and positioned as a safe, “offshore” alternative, MegaLido tanked late in 2008, during the Christmas season, a few months after the ASD seizure. MegaLido purportedly had 27,000 members. MegaLido might have had a tie to Instant2U, another surf that tanked during the 2008 Holiday season. “MegaLido Rocks!” one ASD promoter blared, noting excitedly that it paid 12 percent a day and “It’s Offshore!” Instant2U advertised 14 percent a day.

Frogress: Pitched by ASD members in aftermath of seizure. Frogress tanked in January 2009, just after the Christmas holiday in 2008.

DailyProfitPond: Another surf pitched by ASD members in aftermath of seizure. DailyProfitPond tanked in December 2008, in the days leading up to Christmas. One DailyProfitPond promoter said it was possible to start with $12 and turn it into $12,000. The “return” was listed as 150 percent over 30 days.

AdViewGlobal (AVG or AVGA): Surf with ASD/Bowdoin ties. Formally debuted in February 2009, with a push from the now-defunct Pro-ASD Surf’s Up forum and ASD members. Tanked in June 2009 after collecting untold millions of dollars.

Perhaps one of the most bizarre autosurfs ever to enter the “industry.” Switched to “private association” structure after reportedly meeting with felon convicted in a 1990s securities scheme. Cited U.S. Constitutional protection despite purported headquarters in Uruguay.

AVG disclaimed any ties to ASD, despite fact its CEO was a former ASD executive who submitted a sworn affidavit in the ASD case. Issued news release disclaiming ASD ties; release was signed by an ASD employee who had testified in federal court for ASD in 2008. Said the fact AVG’s graphics appeared on ASD-controlled website was “operational coincidence.”

Announced bank account “suspension” in March 2009, blaming it on members who wired too many transactions in excess of $9,500. Announced CEO resignation, saying CEO would remain in “accounting” department. Announced new wire facility as done deal in May 2009. Company it identified as wire facilitator issued public denial, suggesting AVG was trying to funnel money to itself through a shell company.

Shell company operated by man with two large bankruptcy filings, including one in which an address listed as an apartment was the address of a mail drop. Purported AVG “compliance” department head was sued twice in 2008 for noncompliance with federal law. AVG claimed to own eWalletPlus payment processor. Actual eWalletPlus ownership far from clear. At least two people close to AVG money had spectacular bankruptcy filings. Andy Bowdoin, whom members later said was AVG’s silent head, was arrested for felony securities violations in the 1990s and entered guilty pleas.

AdGateWorld (AGW): Now-defunct surf launched after ASD seizure. Later purportedly sold to interests in the “Middle East.” Claims cannot be verified. AGW linked to ASD member Jack Schrold, a Florida attorney once suspended from the Florida bar for misconduct. Schrold was sued successfully by the FTC for the actions of his credit-repair firm, and also was convicted separately of knowledge of the commission of conspiracy and wire-fraud. AGW announced its death as “End of Dream.” Blamed members in announcement: “This honest and legitimate approach using the advertising rebate model apparently did not meet the expectations of the herd mentality.”

PaperlessAccess: Mysterious upstart surf. ASD President Andy Bowdoin appeared in a video for Paperless Access in 2009, after the ASD seizure. Video appeared online in March 2009 — during time frame in which AVG was announcing bank-account suspension and the departure of its CEO. PaperlessAccess positioned as way for ASD members to regain money seized by the government. Bowdoin did not identify the owners of Paperless Access, describing them only as a small group of people. Nor did Bowdoin mention that the government was establishing an ASD refund program.

PremiumAdsClub (PAC): Tanked in February 2009. Members said it collected money right up to the end.

AggeroInvestment: Had PAC ties. Advertised 60 percent a month, plus bonuses. Collected money to the bitter end.

QBusinessSolution: Surf with purported ties to former ASD executive Juan Fernandez, who took the 5th Amendment in the ASD forfeiture case. # # #

A court-appointed receiver has described the accounting records of Affiliate Strategies Inc. (ASI) as a mess, saying “an opinion on the accuracy of these records is not possible without an extensive audit that would require significant additional costs.”

ASI is the parent company of the Noobing autosurf, which targeted deaf people in sales promotions. ASI and its president, Brett Blackman, were sued by the Federal Trade Commission last year for their alleged roles in a scheme that promised guaranteed government grants of $25,000 from economic-stimulus funds.

Several other companies and individuals were named in the FTC complaint. Although Noobing was not named in the FTC complaint, receiver Larry Cook examined Noobing’s records last year and made a preliminary determination that it was insolvent. The Noobing website has been offline for months.

Attorneys general from Kansas, North Carolina, Minnesota and Illinois joined the FTC in the action.

In October, U.S. District Judge Julie A. Robinson authorized Cook to sell ASI’s assets, including office equipment, a vehicle and a jet ski.

In a report to Robinson filed last week, Cook said the office equipment fetched $12,500 at auction. Meanwhile, the vehicle — a 2003 Saturn L200 — fetched $2,500. The jet ski — a 2005 Yamaha — brought in $1,800.

In August 2009, Cook said in a preliminary report to the court that “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.” One of the companies was Noobing, which listed registrations in both the United States and Nevis.

Kris Rogers, who was the comptroller for ASI and president of an affiliate company known as Custom Accounting Services LLC, told Cook that “the expenses of [the] combined companies have exceeded the revenues since October or November 2008,” according to court filings.

If Rogers’ assertions are true, it means that both Noobing and ASI — its parent company — were insolvent when the Noobing autosurf was collecting money with the suggestion that participants could earn a return of up to 3 percent a day. Noobing slashed daily payouts in early 2009, an act that caused an uproar on the Ponzi boards.

Noobing blamed the slashed payout on what it described as an unclear ruling in the AdSurfDaily case. The company did not say why it chose to collect money using a business model that U.S. government has challenged in repeated court cases. After Noobing members complained, the company explained that payouts never were guaranteed.

Noobing became popular after the August 2008 seizure of tens of millions of dollars from Florida-based ASD amid Ponzi scheme allegations. After the FTC and the attorneys general took the action against ASI and other defendants in the alleged grants scheme, Cook made a preliminary determination that Noobing was nearly $550,000 in the hole.

When the financial records of the ASI-affiliated records were examined as a whole in Cook’s preliminary analysis last year, he found that “over twenty-five thousand accounting
transactions, including several thousand intercompany transfers” had oocuured.

“The transfers between the various LLCs make it difficult to sort out the net result and profits or losses sustained by each LLC,” Cook said.

“The Receiver’s work over the past three weeks,” Cook said in August 2009, “suggests the Defendants’ operations were insolvent on the date [July 24] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds.”

Noobing promoter Jim Beach pitched the program using sign language on YouTube.

EDITOR’S NOTE: “Carolyn,” the subject of this story, is deaf. She uses a videophone and a human interpreter. The interpreter served as Carolyn’s voice for the interview, translating the Blog’s questions for Carolyn and her responses.

Here, now, the story . . .

A 64-year-old California woman — “Carolyn” — said she lost $5,300 in the Noobing autosurf.  Carolyn is deaf. She described herself as a person of limited means financially, saying her experience with Noobing is keeping her awake at night and that the company simply pretended she did not exist when she repeatedly sought answers.

Carolyn, who lives in the Mojave Valley community of Needles in San Bernardino County, said she was introduced to Noobing, part of the Affiliate Strategies Inc. (ASI) umbrella of companies, in January 2009.  The introduction was made by another deaf person who had 18 members in her downline.

Carolyn’s sponsor was in the downline of Noobing promoter Jim Beach, Carolyn said. The sponsor lost more than $6,000 in Noobing, Carolyn said.

ASI was named a defendant in a fraud lawsuit filed by the Federal Trade Commission in July 2009. Neither Noobing nor Beach is a defendant in the FTC action, but Noobing is mentioned in court documents filed by Larry Cook, the court-appointed receiver.

In a preliminary report, Cook said Noobing generated more than $590,000 in revenue in 2008 and and more than $541,000 in 2009 before going offline. He estimated that Noobing was in the hole nearly $550,000 since 2008, and noted that the ASI network of companies “were high revenue/low margin operations which required significant cash in-flows from new victims to meet current trade creditor and consumer refund obligations.”

Beach used sign language and promoted the autosurf on YouTube, according to web records. Carolyn, who described herself as “fairly new” to the Internet, said she became increasingly worried about the money she had entrusted to Noobing.

On a website deemed “The Official Web Blog” of Noobing, the program was described as a “hit” among deaf people. Noobing, according to the Blog, was promoted at Deaf Expos in Kansas, Missouri, New Jersey and Texas in 2008 “to connect with the often overlooked hearing impaired business community.”

Deaf people “waited in long lines just for a chance to check out Noobing,” according to the Blog.

Beach, whom the Blog described as “Noobing Sales Manager” and a CODA — the child of a deaf adult — traveled extensively to recruit  deaf members, according to the Blog.

Carolyn communicated with Beach at least three times in her early days with Noobing in 2009,  but he told her he “left the management of Noobing in April 2009,”  Carolyn said. He then asked her if she wanted to join a program involving the sale of vitamins. Carolyn declined to join the vitamin program.

Noobing was no help when she called to get answers, Carolyn said.

“Whenever I called Noobing, they would just hang up on me,” Carolyn said, adding that her sponsor also has ceased communicating with her.

She added that she “had to go to a debt counselor.”

“It’s a frustrating road to hoe,” Carolyn said. “It has been very frustrating.”

“It was on my [credit] card,” she said. “I just racked up my debt unbelievably.”

Carolyn provided this URL as an example of a site at which hearing-impaired members discussed and promoted Noobing:

http://www.alldeaf.com/introduce-yourself/60136-hi-deafies-new-here-today-want-friends-affiliate-noobing.html

Noobing was popular among members of AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme. Carolyn said she was not a member of ASD, adding that she has contacted the Internet Crime Complaint Center operated by the FBI, the National White Collar Crime Center and the Bureau of Justice Assistance to complain about Noobing.

She also contacted the San Bernardino County Sheriff’s Department, and will meet with an investigator tomorrow, Carolyn said.

“I feel depressed,” she said. “I feel I’ve been really victimized. It’s hard to make ends meet. I can’t sleep at night; I’m constantly worried over my finances.”

Read an Aug. 3, 2008, story about the litigation against ASI and other defendants. The case largely centers around an alleged grant-writing scheme.

Visit the site of Larry Cook, the court-appointed receiver in the FTC case against ASI and other defendants.

Visit the site of Kansas Attorney General Steve Six, one of four state attorneys general who have joined the FTC in the ASI action.

All that glitters was not gold in the seedy world of Gold Quest International (GQI), according to the receiver in the GQI Ponzi scheme case.

Corrupt money was given to a ministry in the form of a gift, and other corrupt money is part of a homicide investigation in Los Angeles, according to court filings.

Receiver Larry Cook has informed a federal judge that he has accepted a settlement of $100,000 from Charles Capp Ministries, saying the Oklahoma-based Christian organization unwittingly received fraudulent transfers of “at least” of $201,517 between January 2006 and August 2008 from the Ponzi scheme, according to court filings.

“No allegations of fraud or securities violations were alleged against Charles Capps Ministries in the complaint filed by the SEC in this action,” Cook said. “Based on the information and belief of the receiver, Charles Capps Ministries was the unwitting recipient of investor funds from Defendant David Greene. Upon learning of the source of the funds it received from Greene, Charles Capps Ministries agreed to return the $100,000 settlement amount.”

David Greene also is known as “Lord David Greene.” He is one of four named defendants in the SEC case. The others are GQI, John Jenkins and Michael McGee. The SEC filed the action in May 2008, and was hit almost immediately with a bizarre effort to undermine the prosecution.

A litigant purporting to be the “attorney general” of a purported “sovereign” Indian tribe attempted unsuccessfully to file a lawsuit against the SEC for $1.7 trillion for enforcing securities laws. The GQI entity may have links to an extremist group — The Little Shell Pembina Band of North America — monitored by the Anti Defamation League.

The ‘Goldfinger’ Murder

Cook, who performed an international paper chase in the GQI case, further informed the judge that certain GQI assets are tied up in a homicide investigation in California.

“The owner of E-Bullion was arrested in August 2008 for arranging the murder of his wife, a co-owner of E-Bullion,” Cook said. “The Receiver and the Commission have made numerous inquiries regarding future access to the E-Bullion business records and funds, and we have been advised the U.S. Attorney’s office has not made a decision on when or how these records and funds will be administered.”

E-bullion co-founder James Fayed, 46, was charged with murder by the Los Angeles District Attorney’s office in September 2008. Prosecutors said he paid Jose Luis Moya, 49, a sum of $25,000 to arrange the murder of his wife, Pamela Fayed. The case has been dubbed the “Goldfinger Murder” in California.

E-bullion was one of the payment processors used by GQI, which the SEC says operated a $28 million Ponzi scheme with Panamanian registration from Las Vegas. GQI purported to be immune from U.S. law because it was part of a “sovereign” Indian tribe in North Dakota.

More than 2,100 investors from the United States and Canada participated in GQI. Participants perhaps received as much as $19 million in Ponzi payments, according to investigators in the United States and Canada.

Cook reported that he had recovered only $389,145.57 to date by tracking money all over the world. Much of the money simply disappeared after making its way to New Zealand, he said.

“Defendant David Greene has testified that he believed that GQI was going to pay investors the returns promised to them via the profits earned by GQI’s investments in Topaz Group Ltd., an entity based in New Zealand,” Cook said. “The Receiver has identified approximately $3.15 million in payments to Topaz Group from the Tri Fund Inc. account, David Greene['s] personal account, and John Jenkins['] personal account.

“The Receiver identified and contacted the owner of Topaz Group Ltd., John Davies, in New Zealand,” Cook continued. “Davies advised the Receiver that the funds he received from David Greene were sent to him on behalf of David Greene. Davies stated that Greene always represented that the investment was Greene’s personal investment and it was not until February 2008 that Greene disclosed the funds belonged to an investment group. Davies stated the funds were not for a specific investment, but were used to fund the expenses of individuals working in Europe to complete various banking transactions that were scheduled to close and pay large profits. Davies further stated that none of these transactions were successful.

“The Receiver, with the Commission’s assistance, has obtained copies of the Topaz Group Ltd. bank account records in New Zealand,” Cook said. “The Receiver has examined and analyzed this account and determined the majority of the funds transferred by Greene to Topaz were immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies. A small percentage of the funds Greene sent to Topaz were wired to the individuals identified by John Davies as working on the banking transactions in Europe, and the remainder appear to be used for Topaz Group’s miscellaneous expenses.

“The Receiver and the Commission have participated in conference calls with the New Zealand law enforcement authorities,” Cook said. “The Receiver has provided the New Zealand investigators with information concerning transfers of investor funds from Defendants Greene and Jenkins to Topaz Group Ltd.”

For additional information see this document from the Alberta Securities Commission.

See this filing by the SEC.

Cook also is the receiver in the case against Affiliate Strategies Inc., the parent company of the Noobing autosurf. Noobing pitched itself to individuals with hearing impairments.

UPDATED Jan. 20, 2010: Sale. Price of Single-User License for “Rebates Aren’t Guaranteed” lowered to $9.88.

Dear Readers,

We are pleased today to release, “Rebates Aren’t Guaranteed: The True Story Of Ponzi Deceptions And Myths In The Criminal Autosurf ‘Industry.’”

Belong to an autosurf? Thought about joining one? Think they’re harmless?

Think again. “Rebates Aren’t Guaranteed” reveals some shocking truths about the so-called “industry.” You could be joining an organization whose members belong to groups that would embarrass you from one end of your town to the other.

You’ll read about bizarre litigation surrounding these groups and how you could become part of it just by joining an autosurf — perhaps even after hearing the pitch from a close friend or family member.

Perhaps even from a person purporting to be a “Christian.”

First, a few key facts about the publication:

• Pages: 43
• Words: 12,722
• Illustrations: 18
• Format: PDF (You’ll need Adobe Reader, which likely already is on your computer.)
• Download process:  After purchase, you will receive an email with a secure download link. The product and your license will be included in a Zip file.

The Table of Contents has “clickable” links for your convenience. We recommend you read through the publication front-to-back once or twice.  After that, you’ll be able to return to the TOC for quick reference and click on a link to take you to specific areas inside the document.

The price of the product is $27 (Jan. 20, 2010: On sale for $9.88) for a Personal Use License and $47 for a Family Use License. The Family Use License entitles you to use the product as a gift for up to five family members.

Purchase of the Family Linecse reduces your per-copy expense to only $7.83. With the Holiday season approaching — and with autosurf predators ready, willing and able to separate your loved ones from their money — “Rebates Aren’t Guaranteed” might make for an appropriate gift.

Rebates Aren't Guaranteed

It is our hope that many people unfamiliar with the unseemly world of the autosurf will benefit from this publication.

Included in the publication is a “prayer” that circulated among members of the AdSurfDaily autosurf. The prayer is unique in many ways, perhaps particularly in its release date and in its fire-and-brimstone quality. The release date may trouble some readers — but it’s an important part of the fabric of the ASD story.

At the same time, “Rebates Aren’t Guaranteed” seeks to open eyes that have been closed by choice to the dangerous world of the autosurf. The eReport is filled with facts about ASD, Noobing and other autosurfs.

You will see visual evidence of why prosecutors say ASD President Andy Bowdoin is telling a federal judge one story and members another. If you are an ASD member, use the information to help shape your thinking. If you are a longtime autosurf observer, use the information as part of your continuing knowledge base.

The publication outlines deceptions and myths, destroying the myth that “offshore” autosurfs provide protection from the SEC and the FTC, for example. You’ll read about a notable Ponzi prosecution in Canada — one that resulted in disgorgement and penalties against the operators totaling $42 million.

Meanwhile, you’ll read about cases in which the government took swift action to stymie Ponzi operators, including companies and individuals who purported to be “offshore” but were operating from the United States.

You’ll read about why the Surf’s Up forum is important to the ASD case, and how fractured thinking has generated one magical theory after another.

The eReport also provides information on Curtis Richmond, including screen shots of Richmond-connected documents. You’ll be left wondering how he became such an important player in the ASD story, a man labeled a “hero” on Surf’s Up.

One of the chapters is titled, “Divine Viruses To Invade Satanic Databases.” The chapter outlines some of the oddities of the ASD case.

As always, Readers, we thank you for your time and appreciate your readership.

Here is the PayPal button for the Personal License: (On sale now for $9.88)

Here is the PayPal button for the Family License:

Thank you.

Regards,

Patrick

Noobing pitched itself to deaf people on YouTube.

A federal judge has given the go-ahead to a court-appointed receiver to sell the assets of Affiliate Strategies Inc. (ASI), the parent company of the Noobing autosurf.

U.S. District Judge Julie A. Robinson of the District of Kansas approved the plan submitted by receiver Larry Cook. The plan authorizes Cook to sell the assets in auction lots — right down to a stainless-steel wastebasket in the women’s restroom.

Robinson’s order permits Cook to sell ASI’s jet-ski, a 2005 Yamaha, along with a 2003 Saturn automobile owned by the firm.

“[Cook] previously determined the Receivership Defendants’ business operations could not be operated legally and profitably,” the receiver’s attorney, Brian M. Holland, said in a court filing.

AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme, used money to purchase two jet skis, federal prosecutors said.

ASI’s furnishings, furniture, computer equipment, servers and related equipment all will go. Included in the equipment are the Compaq 6820 notebook computer used by ASI/Noobing President Brett Blackman, and the Lenovo SL500 notebook computer used by Noobing programmer Mike Reed, according to court filings.

Neither Noobing nor Reed was named a defendant in the July action filed by the Federal Trade Commission and the attorneys general of Kansas, Minnesota and North Carolina. Noobing’s website, however, went offline in the wake of the action against ASI and several affiliated firms and individuals, including Blackman.

One of the affiliated companies — the Grant Writer’s Institute — was alleged to have sold a fraudulent program that offered “guaranteed” government grants from economic stimulus funds. Separately, Cook said his preliminary investigation revealed that a 70-year-old Philadelphia man had been charged $995 for the names and addresses of three benevolent entities that could help him repair the aging home he shared with his wife.

Noobing targeted deaf people in promotions. Although the Noobing surf was not named a defendant in the FTC action, Cook’s preliminary assessment revealed Noobing had gathered $590,000 in revenue last year and more than $541,000 this year.

Cook estimated that the surf was in the hole nearly $550,000 since last year.

Noobing participants became furious in February, when the surf slashed daily payouts to a fraction of 1 percent after paying up to 3 percent earlier.

Some members said Noobing should provide refunds, but Reed said on the ASA forum that no refunds would be granted because the company never guaranteed a return. Regardless, some participants said they’d get their money back by filing chargebacks with credit-card companies.

Critics said the practice was contemptible, pointing out the wink-nod nature of autosurfs and the stress it puts on banks. On one hand, participants are happy to accept Ponzi payouts from the surfs. On the other, in order to perform a chargeback, they claim surfs failed to deliver the “advertising” they paid for when a surf slashes payouts.

Such an approach costs banks time and money. Some veteran autosurf pushers who position themselves as experts recommend the chargeback approach, in effect using banks to guarantee “advertising” purchases from the surfs even if surfs that slash payouts or suspend them still are displaying ads.

The ASA forum is a popular site among autosurf enthusiasts. Critics call it a Ponzi board for both autosurfs and HYIPs.

Noobing blamed its decision to slash payouts on uncertainty in the ASD case.

“If there is a bad guy in this whole story, it’s the government!” Reed exclaimed on the ASA forum in February. “Let’s get mad at them! How can sharing our revenue to help control costs for legitimate advertisers be a bad thing? How can keeping $90+ million dollars to protect the people who worked with ASD be a fair result? It’s madness!!! Our government is the bad guy here, not Noobing.

“Let’s get mad at the source of this challenge!” Reed railed. “Call your congressman, send letters, speak publicly!!”

Some ASD promoters pushed Noobing after the U.S. Secret Service seized tens of millions of dollars from ASD last year in a wire-fraud, money-laundering and Ponzi scheme probe.

Cook said the case against ASI and co-defendants was going to take some time to unwind because of thousands of intercompany transactions and the fact that some of the entities had registered as corporations offshore.

“Of immediate concern is the large distributions and salary paid to defendant Brett Black[man] since 2008,” Cook advised Robinson in a preliminary report. “Per the QuickBooks accounting records, Blackman received $841,545 of distributions from Apex Holdings International, LLC in 2008 and made a net contribution of $491,559 into Affiliate Strategies, Inc. ($581,388 of contributions and $89,829 of distributions) for a total net distribution of $349,986, in addition to salary payments of $118,049.

“In 2009,” Cook continued, “Blackman has received $253,506 of distributions from Apex Holdings International, LLC and has made a net contribution of $113,000 into Affiliate Strategies, Inc. ($349,000 of contributions and $226,000 of distributions). The total net distributions and salary to Blackman for 2008 and 2009 is approximately $490,000.”

Cook said his assessment was ongoing. He reported that some of the accounts involved in the investigation had chargeback rates of as high as 77 percent, meaning that better than three of four customers who made credit-card charges requested refunds.

Blackman, according to Cook, recently registered several corporations offshore, including Noobing; ASI Management Inc., formed in Belize on March 24, 2009; Landmark Publishing Group LLC, formed in Nevis on March 25, 2009; Landmark Publishing LLC, formed in Nevis on March 25, 2009; International Research and Writing Group LLC, formed in Nevis on July 1, 2009; and International Publishing Group LLC, formed in Nevis on July 1, 2009.

All in all, Cook said, “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.”

Robinson previously ordered all offshore assets to be repatriated.

Dear Readers,

From time to time I publish a post in letter form. This usually happens when a post in story, editorial or essay form does not seem appropriate. This is one of those times.

Honestly, just how strange could things get in Ponzi Land?

Ponzi Land, which relatively few people outside of law enforcement even knew existed a year ago,  suddenly and notoriously is populated by senior citizens — and not only as victims, but also as perpetrators.  So much of it seems upside down, a world that challenges assumptions.

Are we entering a sort of awkward cross between a Lewis Carroll-like world and an Orwellian world, a world in which illogic passes for logic and, because news travels so quickly on the Internet and because negatives get spun so furiously as positives these days, bizarre crime gets positioned or explained away as a new form of nobility?

Let’s take a look at today’s news on Ponzi schemes.

Before we begin, did you notice the phrasing in the sentence above — today’s news on Ponzi schemes? Ponzi schemes are breaking out like Blue Light Specials broke out at the Kmart of my youth. Men and women whose hair is blue or tinting toward blue are running Ponzis — instead of doing recon in the aisles and waiting for the famous voice to intone, “Attention Kmart shoppers.”

It used to be that you made money by not spending it or shopping patiently and even furiously for the best possible deal, perhaps especially if you were a senior.

Allegations now have emerged that Julia Ann Schmidt, the 68-year-old alleged Ponzi schemer from Texas, posed as an investment adviser using the name of Fortis Investments, a famous European brand with U.S. reach.

Schmidt allegedly said she was working for a man named  “Jack Layne” — and when investors became skeptical, she hired a man to pretend to be “Jack Layne Jr.,” saying “Jack Layne” had died.

The case is new, and few facts have emerged. But the allegations read as though Schmidt knew she was about to get caught, and called a meeting of investors, telling them that she was rolling over their investments into an insurance annuity. She allegedly brought the man pretending to be “Jack Layne Jr.” to the meeting, telling investors their money was safe because “Jack Layne Jr.” was handling “all the investor accounts through a local Waco law firm.”

To add a false air of nobility to the alleged scheme, senior-citizen Schmidt put on a show for investors, prosecutors said.

“In order to falsely lend credibility to the annuity transfer, [Schmidt] completed an application for her and her husband for the transfer of a non-existent sum of $500,000 from Fortis Investments to Life Insurance Company of the Southwest,” prosecutors said.

For good measure, Schmidt “provided the false address for ‘Jack Layne’ and Fortis Investments where the annuity contracts and authorizations were to be mailed,” prosecutors said.

The investment firm’s address proved to be a vacant parcel of land.

So, if we’re reading this correctly, the alleged Schmidt plot involved:

• A Ponzi scheme Schmidt pulled off by posing as an investment adviser for a prominent company that did not have a clue who she was.
• Schmidt’s knowledge that her story and the scheme were collapsing.
• An attempt by Schmidt to create plausible deniability by introducing “Jack Layne Jr.” and explaining that “Jack Layne” had died.
• An attempt by Schmidt to sanitize the fraud and calm fears by explaining that “Jack Layne Jr.” was working with a “law firm.”
• A subplot in which Schmidt further hoped to calm fears by creating nobility where none existed, saying investment accounts were being rolled over into an insurance annuity.
• A false demonstration of nobility in which Schmidt pretended she was rolling over $500,000 into an insurance annuity.
• Schmidt’s use of U.S. mail  in furtherance of a bizarre scheme to create nobility where none existed.

Kmart, which dialed down Blue Light specials in the 1990s but still brings them back from time to time, needs to make them a fixture in stores again.

Right away.

Here is more news involving alleged senior Ponzi schemers or proven senior Ponzi schemers:

In Buffalo, N.Y., Richard Piccoli, 83 — yes, 83 — was sentenced to 20 years in prison for recruiting Catholics and senior citizens into a Ponzi scheme he’d been operating since 1975. He’d managed to fleece investors out of as much as $25 million, leading to “devastating” consequences for the victims, prosecutors said.

One of his victims said Piccoli had tried to turn the world upside down, putting on an air of nobility and youthful vigor when he was selling the scheme, but expecting the dignity and respect normally accorded a frail, 83-year-old man after the scheme was exposed.

“He wanted to reverse his age when he wanted us as victims,” a woman told WGRZ-TV. “And now, he’s like, saying just the opposite: ‘Oh, I’m too old to be punished.’ So, you know, he worked his age in his own favor.”

Piccoli ultimately cooperated with investigators — in no small part because the evidence was overwhelming. Authorities had cataloged ads he had placed in Catholic newspapers and publications. The ads, which promised a payout, specifically targeted seniors and people of faith.

An undercover agent from the U.S. Postal Inspection Service, which had worked with the IRS to target Piccoli in a sting, posed as a man seeking to invest money for his aging mother.

Piccoli, always looking for senior-citizen marks even in his 80s and trading for decades on the noble names of Catholic priests and churches, was happy to oblige.

The churches were getting a 3 percent return on investments in safe institutions. Piccoli told them he could get 7 percent and provided a guarantee, reportedly even saying the investments were tax-free. This was music to the ears of churches and parishioners who’d watched a consolidation of Catholic entities across the United States that had resulted in the closure of schools and churches, owing to a lack of resources.

“During one taped conversation, Piccoli promised the investigator ‘we can make a hell of a profit,’ and boasted that his list of clients included at least 50 priests,” The Buffalo News reported.

Piccoli’s attorney asked for a sentence of six years. A federal judge said such a light sentence would not reflect the severity of a crime that involved tens of millions of dollars and as many as 500 victims over the years, and sent Piccoli to prison for 20 years — effectively a life sentence.

In the end, justice was served, including justice for a 79-year-old man Piccoli had fleeced. The man said he suffered a heart attack after news of Piccoli’s arrest broke last winter. Authorities, acting swiftly after Piccoli’s name had been brought to their attention and an investigation began, recognized almost instantly that he had been operating a Ponzi scheme for decades.

They froze the crime in its tracks, trapping $6 million that still remained. Piccoli had gathered at least $500,000 in November 2008 alone, and at least $16 million since 2007, depositing the money and writing checks to earlier investors as money came in from new investors. He promised a payout of between 7.1 percent and 8.3 percent, but had been insolvent for years — and owed unsuspecting clients up to $25 million.

Piccoli’s attorney — doing what attorneys are paid to do — pointed out that Piccoli had cooperated after getting caught, a sort of last shot at nobility. The attorney criticized neither the judge who sentenced his elderly client to 20 years nor the prosecutors who brought the case.

Judith Zabalaoui, 71, was accused in February of swindling Greater New Orleans investors out of more than $3.2 million in an elaborate Ponzi fraud in which she set up fake companies, pretended to have employees and called her mailboxes at UPS stores “suites” to trick clients into thinking they were dealing with real firms. In August, she was sentenced to eight years in prison.

Zabalaoui became emotional in the courtroom at her sentencing, explaining that she had committed crimes because she wanted her family to live well and had a predisposition for over-protecting her loved ones.

Her victims cried — not for her, but for themselves.

Elsewhere, in reports about the Bernard Madoff Ponzi scheme published yesterday, Madoff was said to have sponsored cocaine parties at his securities company.

Madoff, 71, was sentenced in June to 150 years in prison. His Ponzi wiped out personal, charitable and corporate fortunes. An attorney with whom Madoff granted a prison interview — the same attorney now is suing Madoff and others — said Madoff  “spends time” in prison with a Mafia crime boss and a convicted spy. The attorney claimed Madoff enjoys pizza cooked by a child molester.

Madoff told the FBI he had acted alone in the $65 billion swindle. No one believes that, not the FBI, not the attorney who is suing him.

Bernard Madoff was not the sort of customer who performed recon in the aisles at Kmart and spent extra time in the store, hoping to be there when the famous Blue Light flashed.

Regardless, Kmart can’t bring back the Blue Light Special for Americans of average or noble means fast enough. America needs the Blue Light Special, if for no other reason than to signal that Lewis Carroll and George Orwell wrote fiction, that the world is not upside down, that the Age of Innocence has returned.

Let’s just hope it’s not the Age of Innocence described in Edith Wharton’s Pulitzer Prize-winning novel — and that an age of innocence truly once existed and is worth going back to to seek a cure for what ails us now.

Patrick

P.S. You’ve noticed, of course, that it has become increasingly fashionable to claim nobility and to blame the government if you get named in a Ponzi prosecution or a prosecution that alleges fraud in general. We have been reporting on the fraud allegations against Affiliate Strategies Inc. (ASI), the umbrella company under which the Noobing autosurf set up shop. Noobing targeted deaf people.

On Sept. 4, an unnamed party issued a news release with this bold headline:

“FTC on Rampage! Are they really out to help the Consumers or out to raise money?”

Among the assertions in the news release, which apparently was a third-party bid to position ASI and other companies as noble enterprises, was this:

“During our investigation of the tactics used by the FTC we wanted to see how the process was done to protect the consumer and the procedures they had to follow to prove that consumers were being harmed. To our amazement the FTC does not have to follow the law of the Constitution, and there is no Due process given to those that they claim are harming the public.”

The claim was made despite the fact the civil prosecution against ASI is occurring in a federal court under the watchful eye of a federal judge to ensure fairness for all parties — alleged perpetrators and alleged victims.

Federal investigators were described in the news release as “The “NEW AGED MAFIA.” The FTC was described as extorting “money from companies all across the country” in a bid to raise money “for the states that join them in the law suits.”

In late August, the court-appointed receiver in the case against ASI said an affiliated company named a defendant in the prosecution charged a 70-year-old Philadelphia man on Social Security $995 for the names and addresses of three entities that possibly could help him secure a grant to repair his deteriorating home.

One of the addresses proved to be the address of the Philadelphia Regional Office of the U.S. Department of Housing and Urban Development, which had been misidentified as a benevolent organization known as “World Changers,” according to court filings.

The companies named defendants in the FTC lawsuit were insolvent “and had less than one day’s operating cash requirements in their bank accounts,” according to the receiver.

“The Receiver’s work over the past three weeks suggests the Defendants’ operations were insolvent on the date [July 24] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds,” the receiver said.