UPDATE: The Theory Of ‘Steroidal Puppeteers’

EDITOR’S NOTE: On Feb. 11, we published our theory of “Steroidal Puppeteers” in the ASD case. One of the prongs of the the theory holds that people with criminal intelligence superior to ASD President Andy Bowdoin were smart enough to let him do their bidding or recognized him as the perfect stooge while they remained out of sight to accomplish their illicit goals. In some cases, the goals were not reached before the government ended the criminal feast. This is an update to the theory.  Part of this column exists as a review. Under the “Case Within The Case” subhead, you’ll find some information from a government document filed in December that may demonstrate the U.S. Secret Service was aware that some autosurf purveyors perhaps were inclined to cherrypick expert testimony from the ASD evidentiary hearing last fall to rationalize the birth of a new autosurf or autosurfs.

It’s looking more and more as though the U.S. Secret Service recognized right away in July 2008 that AdSurfDaily was no ordinary autosurf, that there was a story within the story, a case within a case. Let’s walk back the surface story, and then consider the case within the case.

Surface Story

UPDATED 1:15 P.M. EDT (U.S.A.) The surface story included assertions that ASD President Andy Bowdoin had received a “Medal of Distinction” for business achievement from the President of the United States. Those assertions were easy to refute and, in fact, had been refuted by hobbyist investigators on Internet message boards prior even to the entry of the Secret Service in the case.

Regardless, Bowdoin posed with the medal, even taking it on the road with him, while suggesting ASD had amassed a giant pot from which it would hire lawyers to make its critics pay for their lies. ASD members cheered Bowdoin’s giant pot and informed critics on message boards that they would be sued, that ASD “legal” was aware of the smear campaign against the company, a smear campaign blamed on jealous MLMers.

And the advocates also traded on the medal. At the same time they were doing this, an Ohio drug addict also was trading on the same medal, which has no importance at all, does not signify business achievement and can be obtained by writing what amounts to a check for banquet tickets.

In the August forfeiture complaint, the Secret Service noted that ASD members were trumpeting the medal, using it as proof the ASD autosurf was unlike all the other surfs that had operated as Ponzi schemes. At the same time, members trumpeted Bowdoin’s remarkable record of business success. These things clearly were GIGO; garbage came in, and garbage went out. Compellingly, the IRS entered the case right away. The entry by the IRS, alongside the Secret Service, now looks like the first signal of the case within the case.

ASD members’ GIGO that followed later — through the fall and winter, and into the spring — is more explainable now, with the passage of time and the emergence of more facts. At first, however, it looked like unrestrained madness, a sort of viral delusion. Some of the early efforts of ASD supporters were just plain irrational:

• The early spin efforts positioned the Aug. 1 seizure of ASD’s money as a net plus, something that would give the surf the opportunity to demonstrate to a government that was merely confused by technology and the new way of advertising online that it had misread the ASD business model. Bowdoin was like Bill Gates and Steve Jobs and Henry Ford, people who had changed the world. ASD would be back up and running quickly. Members would profit from Bowdoin’s genius for years to come.
• When the Secret Service arrived with search warrants a few days later and effectively announced that it was not confused at all, that Bowdoin had been convicted in a previous securities scheme and that Golden Panda President Clarence Busby had been implicated in a previous securities scheme, ASD’s supporters became much more shrill. Bowdoin went on to compare the government’s acts to the 9/11 terrorist attacks. The government, which had been cast in the earliest hours as merely confused, then was cast as evil. The Secret Service and prosecutors were cast as a gang of Nazis, and the ASD case became Theatre of the Absurd.
• Theatre of the Absurd also now looks like a signal of the case within the case. Explanations became so tortured that they took on an almost comical quality. It was argued — and is still being argued, for example — that Big Box retailers and car manufacturers provide rebates, therefore ASD’s rebates were legal.  (Rebates generally are not illegal; selling unregistered securities is. So is wire fraud. So is money-laundering. So is racketeering. So is mail fraud. So is operating a Ponzi scheme to fund the rebates. ASD supporters’ arguments rarely addressed any of these things, deflecting to the general legality of rebates, which was never in question. What was in question was ASD’s form of rebates and how they were funded.)
• Some of the earliest efforts by ASD supporters to win the PR war were so bizarre they resulted in a PR backlash that kept ASD constantly in the news. There was an effort, for example, to discredit Florida Attorney General Bill McCollum and suggestions he should be charged with Deceptive Trade Practices for daring to inform the public about a scam. Rarely does one see such a bizarre approach to influencing public opinion, especially from a company that purports to be a professional communications firm.
• Some ASD advocates called for AARP, which advocates for senior citizens, to advocate on behalf of ASD, which was accused of fleecing senior citizens in a Pyramid and Ponzi scheme. (AARP later joined with McCollum in an effort to tighten Florida securities laws.)
• The Surf’s Up forum held a party online at the conclusion of the Sept. 30-Oct. 1 evidentiary hearing, complete with images of fireworks and champagne. Members were fed one-sided reports and persuaded that ASD had cleaned the government’s clock at the hearing. The prosecutors were heckled, ridiculed and made the butt of jokes. Observers who place a high importance on objectivity were stunned. Objective observers knew that ASD’s effort in the courtroom was a Hail Mary pass early in the legal game, not as time was expiring, not with the government’s case on the line. Andy Bowdoin, the purported Presidential medal-winner, took the 5th on the advice of counsel. He’d already put himself in a box by requesting emergency release of funds by claiming ASD could not pay its bills, apparently forgetting to tell his lawyers that he’d already told prosecutors that ASD had $1 million offshore in Antigua in an account under a different name.
• ASD said it would submit to court monitoring, which sounded good, but could not take prior crimes off the table. Bowdoin would become a sort of sacrificial lamb, taking himself out of the day-to-day operations of the company to appease the government, but there was no real way to divorce Bowdoin from what essentially was a wink-nod business to begin with.
• There was no real way to tell immediately if ASD or individual members had hidden money to prevent its seizure. Some individual ASD members, for example, sold ad packs to downline members, deposited the money in their own bank accounts and shifted the value of the ad packs to the purchasers by using ASD’s internal system. This easily can be construed as a form of tax avoidance, wire fraud and money-laundering. So, from the government’s point of view, ASD was committing crimes on a grand scale, even as individual ASD members perhaps were committing crimes on a lesser scale and using their local banks to stockpile illegal gains.
• The mere fact ASD provided this utility to sponsors destroyed any possibility that ASD’s records were reliable. Members clearly were using ASD as a business within a business for illicit purposes. It was particularly odious because a Ponzi always is burdensome. ASD was a Ponzi that was not even collecting all of its own revenue, and individual members effectively were guaranteeing their own income by siphoning it off before it even reached ASD, thus placing an even greater strain on the Ponzi.

Case Within The Case

The reason we’re updating the theory of Steroidal Puppeteers is that it was written before we had knowledge of the proffer letter Bowdoin had signed in the case and before he had embarked on his pro se litigation campaign.

Bowdoin’s behavior has been mind-boggling, so much so that he appears to have placed members of his family and close business associates in grave legal danger — perhaps with their complicity. Some qualifiers — the word perhaps, for example — are necessary because it is not known publicly if other proffer letters exist in the case and the extent to which ASD insiders were cooperating with the government prior to the launch of the AdViewGlobal (AVG) autosurf, which has close ties to ASD.

It is possible that Bowdoin wrongly assumed he had the unquestioned loyalty of certain people in the organization, while failing to make the calculation that the government had tremendous leverage over certain individuals. It is equally possible that Bowdoin’s behavior had become so extreme that he created “enemies” in his own camp because his seat-of-the pants management style and unpredictable behavior could implicate them.

At the same time, it is possible that certain loyalists peeled off to save themselves and joined the government camp, recognizing that the ASD enterprise was in an impossible box.

Along those lines, it also is possible that certain ASD members prevailed upon Bowdoin to ramp up the criminality. Some people within the enterprise have criminal records. Others have filed bankruptcies ranging from spectacular to garden-variety, including people Bowdoin knows well. Some people have been sued because of their business dealings. Like Bowdoin, some members have been associated with multiple businesses in multiple locations and organized company after company, a possible marker of money-laundering and racketeering.

What’s not known is the degree to which Bowdoin recruited them or the degree to which they saw Bowdoin as a means to accomplish their own illicit agendas — or the degree to which they worked with Bowdoin in concert. Some people could view Bowdoin as a monumental fool who cost them lots of money.

It also is known that tax-deniers, tax-schemers, stock manipulators and people who associate themselves with sovereignty movements — however loosely connected — exist within the ASD organization. Underground credit-repair organizations, including individuals who take extreme approaches, also are a part of the enterprise.

Federal Reserve conspiracy theorists exist within the enterprise. Multiple individuals who have engaged banks in bizarre litigation have been identified, including individuals who purport to believe that banks do not lend “real” money and therefore should have no expectation that debts can be collected if a borrower defaults.

Moreover, at least one person with a tie to ASD has been implicated in a money-laundering case involving an international drug operation whose home base is Medellin, Colombia.

Others with ties to ASD have been implicated in other Ponzi schemes — including judicially declared or successfully prosecuted Ponzi schemes — recycler matrices, and scores of failed autosurfs, including an autosurf that  had invested in at least 26 other autosurfs or HYIPs before the enterprise was smashed by the SEC.

The precise reason Bowdoin morphed into a pro se litigant after releasing his claims to tens of millions of dollars seized by the Secret Service — and, as a pro se litigant, tried to undo his decision to submit to the forfeiture — is not publicly known. The agenda, however, may not be uniquely Bowdoin’s.

Perhaps the greatest mystery of all is why Bowdoin would acknowledge ASD was operating illegally and sign a proffer letter, which signals a willingness to cooperate in untangling the mess, perhaps for some consideration — and then reverse course. The proffer letter could have been signed on any date between Aug. 1, 2008, and Jan. 13, 2009.

If Bowdoin signed the proffer letter knowing full well that AdViewGlobal was on the drawing board, it could be viewed as a five-alarm deception. If he signed the proffer letter after the ruling on the evidentiary hearing went against him in November, he may be an unrepentant criminal. If he signed it prior to the ruling, he may be an unrepentant liar and largely responsible for yet another grand fraud.

Prosecutors perhaps filed the December forfeiture complaint — the second against assets tied to ASD — for an underlying reason not addressed in the August complaint . The reason may be that they already knew a background plot was under way, but did not know the precise details. Subsequent actions by AVG participants perhaps interfered with a government investigation in progress.

If Bowdoin or AVG participants use the opinion of ASD expert witness Gerald Nehra that ASD was not a Ponzi scheme as a presumptive ace-in-the-hole to justify the launch of AVG and claim ASD hadn’t technically been ruled a Ponzi by a court, then Bowdoin and participants have demonstrated they have no respect for the judicial system.

Here is what federal prosecutors said in the December forfeiture complaint, which targeted other ASD assets, including the assets of AVG figures George and Judy Harris: (Emphasis added.)

“Mr. Nehra did not tell ASD that ASD was legal before ASD commenced, or ceased, its operation,” prosecutors said.

“At no time during ASD’s operations did Mr. Schwartz, or any attorney from [the Akerman Senterfitt law firm], tell ASD that it’s operation was legal.”

Bowdoin’s various pro se motions, all of which read like political statements and not cogent legal arguments, are still pending because Bowdoin didn’t follow up with them until ordered by a federal judge to state his intentions. The deadline for Bowdoin to state his intentions is today. The judge granted Bowdoin two delays totaling about five weeks, because Bowdoin’s attorney announced that Bowdoin was negotiating with federal prosecutors.

The mystery of Bowdoin’s earlier pro se strategy — before he was ordered to hire a new paid attorney, with his pro se motions still dangling — perhaps can be found in the “political” tone of the filings.

In a March 13 letter published on the Pro-ASD Surf’s Up forum, Bowdoin said he was influenced by a “group” of members to proceed pro se and to reopen his claims to the money.

Some members of this group could be among a group of people associated with tax-denial/avoidance schemes and found themselves in the awkward position of losing money they had squirreled away in ASD because of Bowdoin’s decision to submit to the forfeiture.

It might not be all members of the group — at least not all members of Bowdoin’s blind constituency — because the truly blind lack even a basic understanding of the issues or recite falsities by rote.

But there is nothing subtle about Bowdoin’s pro se filings.  The filings themselves rewrite the nature of the civil case against money and property and try to turn it into a criminal prosecution of Bowdoin, painting the government as purveyors of fraud, trickery and deceit.

Bowdoin, though, signed the documents. His signature coincided with other developments, including reports that the Secret Service had seized individual bank accounts of some ASD members and a decision by AVG autosurf to morph into a “private association.”

The situation is remarkable, bringing out a special brand of insanity. We doubt, however, that it is criminal insanity. Rather, it is the insanity of choosing to be blind when one has the clear option of choosing to see.