Plaintiffs Say BOA Dismissal Motion Should Be Denied, Ask Court To Note 80/20 Plan And SolidTrustPay Activity, Cite ASD Payoff Of Mortgage Held By AdViewGlobal Owners
Andy Bowdoin
A federal judge should deny Bank of America’s motion to be dismissed as a defendant in a case that alleges it aided and abetted racketeers operating a massive Ponzi scheme from a former floral shop in Quincy, Fla., the plaintiffs argued yesterday.
Bank of America is not named a RICO defendant in the case, which was filed by three members of AdSurfDaily. The plaintiffs seek class-action status and treble damages.
The bank said in court filings that it has done nothing wrong, and argued that the plaintiffs had made vague assertions and not stated a proper claim.
Attorneys for the plaintiffs disagreed, filing a lengthy response to the bank’s dismissal motion — a response that cites suspicious wire transactions ASD routed through SolidTrustPay, a payment processor based in Canada.
Meanwhile, the plaintiffs said the bank ignored ASD President Andy Bowdoin’s felony criminal record, his ties to a previous securities scheme and his history of operating multiple failed businesses. The plaintiffs made a veiled reference to ASD’s efforts to promote an 80/20 program — something that is occurring now in the AdViewGlobal (AVG) autosurf, which has close ASD ties.
At the same time, the plaintiffs referenced a December forfeiture complaint in which federal prosecutors alleged that ASD money was used to retire the home mortgage of George and Judy Harris. George Harris is the stepson of Andy Bowdoin and the son of Edna Faye Bowdoin, Andy Bowdoin’s wife. Judy Harris is the wife of George Harris.
AVG, which previously had disclaimed any affiliation with ASD, now says it is owned by George and Judy Harris. Andy Bowdoin identified George Harris last summer as the head of ASD’s “real estate division.”
Attorneys for the plaintiffs also referenced Andy Bowdoin’s own acknowledgments that ASD was operating illegally.
“ASD was the brainchild of Thomas Bowdoin, a convicted felon with a history of securities fraud violations and failed business ventures,” the plaintiffs said. “Bowdoin admits that ASD operated [as] a Ponzi scheme.
“ASD sold no products or services, held no intellectual property rights, and had no successful business professionals in management or on its Board,” the plaintiffs continued. “ASD had no colorable legitimate means to generate the massive profits (365% per year) Bowdoin and his co-conspirators promised investors nor the tens of millions of dollars a month flooding its tiny office — a former floral shop — in the small town of Quincy, Florida.”
The bank missed key markers of a scam, the plaintiffs alleged.
“Indeed, when Bowdoin began his relationship with Bank of America, the illegal ‘AutoSurf’ schemes which ASD emulated were well known among banks, regulators and law enforcement authorities,” the plaintiffs said.
“It is no wonder that the two local banks in Quincy refused to even open an account for Bowdoin and ASD. Bank of America, on the other hand, welcomed Bowdoin with open arms, allowing him to open not one but ultimately 10 separate d/b/a accounts. In one month alone, $90 million dollars in cash, cashiers checks and Visa credit card charges were deposited in these accounts. Bank of America made it possible for victims throughout the country to deposit funds with the Ponzi scheme by simply completing a deposit slip and adding the ASD account number. Many of the deposit slips were even pre-printed with ASD’s account information.
“Bank of America also enabled unsuspecting victims to wire transfer contributions to ASD from anywhere in the world,” the plaintiffs said. “Bank of America willingly allowed ASD to falsely legitimize its operations using the Bank’s good name. Bank of America never once questioned or asked ASD to remove its name from its website or written materials that prominently featured Bank of America.”
Reference To Harris Mortgage
On Page 15 of their answer to the bank’s dismissal motion, the plaintiffs referenced the government’s assertion that ASD money was used to pay off the home mortgage of George and Judy Harris and in other unusual ways.
“By virtue of its active involvement in ASD’s business affairs, Bank of America was aware that funds flowed from the RICO Defendants’ accounts in a manner inconsistent with a legitimate business,” the plaintiffs asserted. “Bowdoin, in particular, used ASD business accounts at Bank of America with impunity to purchase personal luxury items, to pay off mortgages for family members, to buy property, and to otherwise dissipate business funds.”
The plaintiffs then referenced what they described as red-flag-waving transactions ASD routed to Solid Trust Pay, a payment processor based in Canada.
“ASD’s transfers of funds from Bank of America accounts also provided Bank of America with information about the suspicious nature of ASD’s operations,” the plaintiffs said.
“In a two-week period, the RICO Defendants wired several million dollars from their Bank of America accounts to an internet-operated, Canada-based money transmitting and payment company. Such a transaction is not consistent with a legitimate business enterprise.
“The RICO Defendants additionally used funds from the Bank of America accounts of one scheme, ASD, to seed the Bank of America accounts of another scheme operated by the RICO Defendants, Golden Panda. These transactions, too, were consistent with a fraudulent scheme, and inconsistent with legitimate business activity.”
On Page 25 of their answer to Bank of America, the plaintiffs referenced ASD’s efforts to get members to participate in an 80/20 program. Such programs are designed to stem the outflow of cash from an autosurf.
“The RICO Defendants counseled members on reinvesting rebates and commissions under the auspices of trying to help members maximize their financial gains,” the plaintiffs said.
AVG, which announced that it was suspending payouts to members, advised members that participation in an 80/20 program would be mandatory should the surf resume payouts on a date uncertain.
AVG’s name was mentioned in a previous filing by the plaintiffs, although the surf firm has not been named a RICO defendant.
Andy Bowdoin, a RICO defendant along with ASD attorney Robert Garner, has not responded to the complaint, which was filed in January and amended in April. Garner answered the complaint, saying U.S. District Court for the District of Columbia did not have jurisdiction over him.
Read the plaintiffs’ answer to BOA.
As large as Robert Garner is, I’d think that many states and federal districts have jurisdiction over him. Or is he “sovereign”? He could be his own tribe almost.
Looks to me like a well argued and very reasonable answer. Irrespective of protective legislation for the banking system – the nearly two years of BoA involvement and the degree of BoA involvement in ASD, leads one to believe that if they did report ASD activities and were asked to let them continue, they did it very late in the day and there was considerable negligence involved.
I suspect they allowed and collaborated with ASD for a very long time before any questions were asked or reports made. They were very clearly and publically enablers of this operation. Had they done their homework and acted a lot sooner, many victims would have been spared the hardship and heartache they are going through.
the nearly two years of BoA involvement and the degree of BoA involvement in ASD, leads one to believe that if they did report ASD activities and were asked to let them continue, they did it very late in the day and there was considerable negligence involved
There is no indication that BoA reported ASD activities, nor that they were asked to let them continue. It will be a subject of bank secrecy if it is the case.
However, whether or not they reported ASD at the end were asked to continue for “weeks”, has very little to do with the nearly two years of enabling that they provided for ASD and the subsequent laundering of money etc etc. for which they must be made accountable.
I’m not sure that the bank secrecy laws cover allowing opening 10 accounts to someone who had brushings with security laws. Even after a VP talked with the person in charge. And BOA employees could have refused to work for an obvious ponzi scheme.
There is a case that the bank secrecy laws limit the options of BOA in some ways, but the allegations in the court document make a good case that the employees at the BOA branch and the VP were, at best, negligent in not seeing ASD for the ponzi scheme it was. At the very least they should have been suspicious even if they did not know exactly what was wrong. They, the BOA employees and the VP could have said “no” to opening the 10 accounts, and working out of hours for ASD. But, as alleged, they didn’t.
I think the plaintiffs make a good case here.
After all the revelations of the past few months regarding what really transpires inside the HYIP ponzi “autosurf” arena, what on earth would lead anybody to believe ANYTHING that is presented as “factual” from inside said arena ????
It is testament to the skill of the fraudsters involved that, even among those who claim to have “seen the light,” many still refuse to accept the “full” reality of what has transpired.
Anyone with more than a passing interest in frauds of this type could not help but be overwhelmed by an almost overpowering sense of deja vu at the cries of “the banks should have” or “the payment processors should have” or “the government should have” (or shouldn’t have, depending on the side of the fence of the claimant/s)
This situation wasn’t and isn’t accidental.
These fraudsters have set out on an intentional path from the outset.
Every single step was planned and implemented with the intention of defrauding EVERYONE involved, and one of the most basic tools of an intending fraudster is the technique to “always include as much factual information as you can get away with”
Was there a “Congressional Medal of Honour” ??? Yep BUT……
Did ASD have a physical address in Quincy ???? Yep BUT….
Was Bowdoin involved in the several businesses touted ??? Yep BUT…
Were there BoA accounts ??? Yep BUT….
I will state again: US banking regulations require that Suspicious Activity Report (SAR) filing by Money Services Businesses (MSBs) is mandatory, automated and heavily policed.
While it is PERHAPS possible that employee/s of BoA somehow circumvented the requirements, surely logic and history dictate that it is way, way more likely that this whole scenario fits under the category of being just “MORE lies, half truths errors by ommission” associated with ASD”
From memory, virtually every single one of this type of fraud I have observed over the past 15 or 20 years has been followed by the same or similar recriminations, while, again from memory, not 1 of them has resulted in prosecution of MSB.
LRM, you make some very interesting pòints, and I would agree with the majority of them,although I am not as convinced as you that any BoA reporting of suspicious activity was anything like timely, and for that reason there may well be culpability in enabling a scam from that quarter.
Secondly, although I am sure that the argument that it was the bank’s fault is not new on the collapse or closure of autosurfs etc, it is important to remember that ASD drew its membership from a far wider public than the typical online players pool.
There were factories, offices, church and other groups in small towns where a very large proportion of the members were recruited OFFLINE through the many mini rallies held by promoters or by friends and family. Iowa is a great example of these recruitment tactics.
These people had probably never heard of an autosurf, or an internet scam and had never read an internet forum in their lives. The active involvement of one of the major national banking corporations would have been a very important part of establishing ASD’s legitimacy and credibility for them.