Steve Renner has no standing to contest the seizure of “the vast majority” of the money and assets in the INetGlobal autosurf Ponzi case because the seized property was owned by corporations, not Renner, federal prosecutors said.
Only $151,100 of the $26 million seized in the case came from accounts in Renner’s name, prosecutors said, arguing that bids to release the money were premature and that only an attorney for Renner — and not the companies — has filed a notice of appearance in the case.
Meanwhile, in its response to Renner’s motion last week to challenge the seizure on Constitutional grounds and have $25 million returned, the prosecution said yesterday that his bid was a “thinly veiled attempt to force the government to reveal facts relating to an on-going criminal investigation.”
A “major fraud and money laundering investigation is under way bearing serious criminal consequences,” prosecutors said.
The government probe, which prosecutors now say includes the IRS, is in its early stages. Investigators to date have filed neither a civil forfeiture complaint nor criminal charges that seek the forfeiture of the funds, “and much of the evidence has only recently been seized and is needed for the investigation,” prosecutors said.
“If the seized evidence is returned, it will not be available for the ongoing investigation,” prosecutors argued.
Moreover, they argued, “If the Court orders the return of the seized funds, the money will be spent, and will be unavailable for future return to victims” should the government prevail.
Prosecutors made similar arguments in the AdSurfDaily autosurf prosecution — and the arguments prevailed. In filings yesterday, the government once again cited the successful ASD prosecution, along with the successful prosecutions of the 12DailyPro and PhoenixSurf autosurfs.
“iNetGlobal is not a one-of-a-kind scam, nor is it the first of its kind,” prosecutors said yesterday.
Steve Renner was convicted on four felony counts of income-tax evasion in December, and is awaiting sentencing in the tax case.
No ‘Leak’ Occurred: Gov’t Acknowledges Timing ‘Error’ In Posting Of Affidavit
Prosecutors denied an assertion by Renner last week that the government had leaked the search-warrant affidavit in the INetGlobal case to the media.
Under a bold subhead titled “The ‘Leak,’” prosecutors said the claim the document was leaked “is false, and has no bearing on the issues presented in this motion.”
They added that the posting of the document on the government website was intended as a means of informing victims and witnesses efficiently, while trying to avoid a circumstance that occurred in the AdSurfDaily case: switchboards in prosecutors’ offices becoming inundated with telephone calls from people seeking information.
Prosecutors said the government had explained its point of view to INetGlobal on Feb. 26, almost a month prior to Renner’s “leaking” claim filed last week. Renner’s claim specifically cited the PP Blog.
“[T]he U.S. Attorney’s Office had planned, once the search and seizure warrants in this case were filed with the clerk’s office, to post a link to the affidavit on the website of the U.S. Attorney’s Office,” prosecutors said. “The U.S. Attorney’s Office for the District of Columbia was inundated with calls following their execution of warrants in the AdSurf Daily case, and the U.S. Attorney’s Office in Minnesota hoped to avoid this by efficiently getting information to victims, witnesses, and other interested parties by referring them to the affidavit.”
“Through an error, an employee of the U.S. Attorney’s Office’s Community Relations Division mistakenly believed that the time had come to post the affidavit when it had not,” prosecutors said. “The affidavit was posted on the late afternoon or early evening of February 24th, and was taken down the following morning when the error came to light.
“During the night, apparently, a single blogger found the affidavit and wrote a story about it,” prosecutors continued. “That story is reprinted in Mr. Renner’s motion papers. As noted, all of this was explained to Counsel immediately after the fact, and Counsel did not raise the issue of the premature release of the affidavit again until this motion was filed.”
IRS Enters INetGlobal Probe
Filings by the prosecution yesterday confirmed that the IRS has entered the case. An affidavit by an IRS criminal investigator asserts that an entity known as VMedia Marketing LLC opened a checking account at Premier Bank Minnesota on March 1, six days after the Secret Service executed search warrants in the INetGlobal case.
“Steven M. Renner reserved sole signature authority on the account upon inception,” the IRS agent said. “On or about March 6, 2010, Matthew D. Renner was added to have signature authority on the account.”
Matthew Renner is Steve Renner’s son. He has not been accused of wrongdoing.
A total of $47,400 was deposited in the account, the IRS agent said. He listed the names of sources of the deposits. Two individuals with Chinese names wired individual deposits of $7,400 and $8,500 into the account.
“Official checks” drawn on Wells Fargo bank and totaling $16,500 also were deposited in the account. These checks were made out to “V-Media or U-Media,” the IRS agent said.
Meanwhile, the agent said, “a check made payable to Steve Renner in the amount of $15,000.00 from The Toronto-Dominion Bank was also deposited into the account.”
At least 23 withdrawals were made from the account, the IRS agent said. He noted that the majority of these checks have either ‘week 3/1 – 3/5″ or ‘3/1 – 3/5 written on the memo line. In addition, one check was made payable to MEDA (Metropolitan Economic Development Assoc.) in the amount of $2,000.00. The memo section of the check made payable to MEDA stated ‘250 SECOND AVE #106A RENT.’”
That address was one of the business addresses searched by the Secret Service Feb. 23.
Prosecutors, saying Renner made “sweeping” assertions last week that he had no cash to pay employees, argued that the investigation by the IRS agent into the Premier Bank Minnesota account opened after the raid suggested otherwise.
“Renner subsequently wrote 23 checks that appear to be payroll checks, plus a check for the rent on Suite 106A, 250 Second Avenue,” prosecutors said.
Because the $15,000 deposit drawn on Toronto-Dominion bank was held until March 19, “several” withdrawals by check initially were returned to Premier Bank Minnesota, the IRS agent said.
“Later on, Steven Renner came into Premier Bank Minnesota and had cashier’s checks issued to the same names indicated on the checks that had previously been returned to the bank,” the IRS agent said. “On or about March 23, 2010, the above indicated account was closed.”
INetGlobal disclosed “none of this” in its arguments last week to release funds, prosecutors said.
Moreover, prosecutors said the government “is attempting to work with the company” on the issue of payroll.
Prosecution: INetGlobal ‘Omitted’ Names Of Employees
“[T]here is concern that the company continues to have access to unseized funds with which to make payroll,” prosecutors said. “In addition, the first list of employees submitted to the government omitted several names of people the Secret Service had identified as employees of the company during the execution of the search warrants on February 23, 2010. A request that this issue be addressed elicited a response that was confusing; the government requested clarification and is awaiting a response.”
Meanwhile, prosecutors claimed that Renner had placed “factual inaccuracies” in the record of the case, arguing that Renner’s claim that the seizure was “unreasonable” and that the Secret Service allegedly told “intentional and reckless falsehoods” in securing the warrant could not stand up to judicial scrutiny.
“Such is the unsurprising reaction of a company accused of running a Ponzi scheme,” prosecutors said.