Noobing-Connected Firm Discussed In Senate Hearing

Jon Leibowitz, FTC chairman

The head of the Federal Trade Commission told a Senate panel yesterday that a firm associated with the Noobing autosurf embarked on a scheme to sell a $59 book and then used a telemarketing company to upsell customers to an expensive program that fraudulently sold “guaranteed” government grants from economic-stimulus funds.

“Just last week, some of the defendants allegedly responsible for the ‘Grant Writers Institute’ [GWI] grant scam agreed to a preliminary injunction halting their operation pending final resolution of the matter by the court,” FTC Chairman Jon Leibowitz told the Senate Committee on Homeland Security and Governmental Affairs.

Noobing, which pitched itself to deaf consumers and was promoted by members of AdSurfDaily (ASD), went offline in the aftermath of the FTC lawsuit against Affiliate Strategies Inc., GWI and related companies.

“The complaint charged that GWI falsely claimed that consumers were eligible for grants as part of the recently announced economic stimulus package,” Leibowitz told the panel. “For example, consumers who called GWI in response to a mass-mailed postcard heard a recording that said, ‘If you’ve been reading the papers you know that recently our government released $700 billion into the private sector. What you probably don’t know is that there is another $300 billion that must be given away this year to people just like you.’ The recording continued, ‘And if you’re one of the lucky few who knows how to find and apply for these grants, you will receive a check for $25,000 or more, and we guarantee it . . . If you don’t get a check for $25,000 or more, you pay nothing.”

Sen. Joseph Lieberman, chairman, Senate Committee on Homeland Security and Governmental Affairs.

Sen. Joe Lieberman, ID-Conn., presided over the hearing, which was titled “Follow the Money: An Update on Stimulus Spending, Transparency, and Fraud Prevention.”

Leibowitz updated Lieberman’s panel on efforts by “[c]on artists [who] have sought to exploit the American Recovery and Reinvestment Act of 2009,” according to his testimony.

He noted that some fraudsters had used images of “President Obama and Vice President Biden to add legitimacy to their misrepresentations.”

In a forfeiture case against ASD, a Florida company accused of operating an international Ponzi scheme from a former flower shop in a small town, federal prosecutors said promoters of the scheme falsely claimed that ASD President Andy Bowdoin had received an award for a business achievement from President George W. Bush.

Rather than let the wire-fraud, money-laundering and securities investigation proceed until all the facts of ASD’s business practices were known, some ASD members embarked on a letter-writing campaign to the Senate and asked members of Congress to investigate the prosecutors, not the alleged schemers.

Others filed court motions that accused a federal judge and the prosecutors of crimes.

See Reuters story on the Senate hearing.