REMEMBER PRAEBIUS? Penny-Stock Firm ASD Claimed Would Pump $200 Million Into Its Coffers Was Flogged By California Man In ‘Fraudulent Touting’ Scheme During Month ASD Announced ‘Joint Advertising Venture,’ Records Show
On Oct. 29, 2008, Andy Bowdoin's AdSurfDaily Inc. announced a purported $200 million joint venture with Praebius Communications. During that same month, Praebius' penny stock was part of a "Fraudulent Touting" scheme operated by Songkram Roy Sahachaisere of Huntington Beach, Calif., the SEC says.
A California man and his company have been accused by the SEC of running a “Fraudulent Touting” scheme that pumped the penny stock of Praebius Communications, a company the alleged AdSurfDaily Ponzi scheme once claimed would generate $200 million for its coffers through a joint “advertising” venture.
Charged by the SEC with fraud were Songkram Roy Sahachaisere and InvestSource Inc. of Huntington Beach. The Praebius stock was pumped by Sahachaisere as part of what the SEC described as a “massive” email and newsletter scam.
“Between January 1, 2008 and March 31, 2009, InvestSource sent nearly 450 email messages to over 24 million recipients,” the SEC charged.
Praebius was one of seven InvestSource clients whose stock was pumped and dumped to generate illegal profits of more than $276,000, the SEC charged.
The timing of the alleged touting scheme, according to records, coincided with dates in October 2008 in which ASD, an autosurf company, was announcing a purportedly lucrative joint venture with Praebius. ASD announced the prospective deal on Oct. 29, 2008. During the same time period, ASD was awaiting a key court ruling on whether it had demonstrated at an evidentiary hearing earlier in October that it was operating lawfully. Using a headline of “ASD-Praebius Venture” on its now-defunct Breaking News website while awaiting the ruling, ASD said it expected to garner revenues of about $200 million “over the first several years” from Praebius.
Announcement of prospective $200 million deal with Praebius Communications on ASD’s Breaking News website. The announcement was removed after some members questioned it.
The SEC now says Sahachaisere and InvestSource were pitching Praebius stock during the same month, declaring their business practices to be “Fraudulent Touting” because they “failed to disclose that they were selling the very securities they were recommending investors buy.”
Sahachaisere and InvestSource received 4.1 million shares of Praebius stock between Oct. 2, 2008, and Nov. 25, 2008, the SEC charged.
The scheme involving Praebius netted $49,215 for Sahachaisere and InvestSource, the SEC said.
Five of the seven stocks — including Praebius — experienced “significant increases in trading volume during InvestSource’s promotions,” the SEC said.
ASD’s name is not referenced in the SEC complaint, and Praebius was not listed as a defendant in the case. Praebius is referenced in the case as a client that paid InvestSource and Sahachaisere in stock “to provide investor relations services.”
One of the issues in the ASD Ponzi case was whether the company had revenue streams adequate enough to pay “rebates” to members of 1 percent a day or 365 percent a year for viewing “advertising.” During the evidentiary hearing, ASD never produced audited, certified financial statements to prove it could sustain the rebates. Prosecutors described the company as catastrophically insolvent and reliant on revenue from new members to pay “rebates” to older members in classic Ponzi scheme fashion.
Less than a month after an evidentiary hearing concluded on Oct. 1, 2008, ASD announced the purported joint venture with Praebius. Critics immediately questioned both the $200 million figure quoted by ASD and the timing of the announcement because Praebius did not publish verifiable financial data and ASD was described by federal prosecutors in the Ponzi scheme case as hopelessly under water.
Although ASD purported to be a professional communications firm, its announcement of the purported $200 million deal did not quote executives of either ASD or Praebius. The announcement led to questions about why Praebius would knowingly associate its name with a company suspected of operating a massive, international Ponzi scheme while it allegedly also engaged in wire fraud and money-laundering while selling unregistered securities.
Some ASD critics saw the announcement as a cynical means of instilling hope in ASD members that all was not lost while signaling to a federal judge that ASD had a major, new client that single-handedly could wipe away the firm’s alleged insolvency. Even as critics were voicing concerns that ASD was advancing yet-another story that was too good to be true, members of the now-defunct Pro-ASD Surf’s Up forum were cheerleading ASD’s purported revenue infusion from Praebius.
Some ASD members sprinted to forums to announce the news, but the information could not be verified. ASD later removed the announcement from its website.
According to the SEC’s complaint against Sahachaisere and InvestSource, nearly 4.5 million shares of Praebius traded hands between Oct. 7, 2008, and Jan. 27, 2009, generating less than $50,000 in revenue.
ASD never explained how Praebius, which did not publish verifiable financial data, could generate the $200 million ASD cited in the announcement.
Less than a month after ASD issued the Praebius announcement, a federal judge ruled ASD had not demonstrated at the evidentiary hearing that it was operating lawfully and was not a Ponzi scheme. By Dec. 19, 2008, federal prosecutors had filed a second forfeiture case against ASD-connected assets, again citing Ponzi allegations.
Even as prosecutors were filing the second Ponzi complaint, Surf’s Up members were claiming that the government secretly had admitted ASD was not a Ponzi scheme.
From the SEC "Fraudulent Touting" court case against Songkram Roy Sahachaisere and InvestSource Inc. The highlight in red shows the alleged illegal touting of Praebius stock.
Patrick, it’s nice to see that even “Uncle” Andy, the con man, was himself conned by someone else. Irony is so……ironic!
But then, very few people believed this “Breaking News” as it made as much sense as Andy declaring that he had found the Lost City of Atlantis and had sold them a countless number of Ad Packs. It seems you cannot tell the crooks without a scorecard…
Hi Don,
I don’t know if Andy was conned or not — but ASD members who relied on the ASD news release and perhaps thought they somehow were helping ASD by purchasing Praebius stock might have been conned.
Whether any ASD members rushed to buy Praebius stock after ASD issued the announcement is unclear.
In my view, the entire news release was dubious on its face. I remember that some of the Surf’s Up folks had kittens when a few ASD members had the temerity to question it. The news release then went missing.
Patrick
Hi Patrick:
Any of your readers interested in actually investing in penny stocks should pay attention to these two resource sites prior to executing any purchase.
News and information through Yahoo, TheStreet.com, CNBC and others is not geared towards these teensy, beensy tiny stocks and is often very, very inadequate.
http://www.otcbb.com Official site of the Over the Counter Bulletin Board which is similar to a NASDAQ for even smaller stocks and does require minimal financial reporting.
http://www.pinksheets.com This is the junk heap of stocks and has no reporting requirements of any substance. Be very, very careful with stocks that only trade on the pink sheets. Come to think of it, I can see no reason to ever buy a pink sheet stock. LOL
ARWR
Hey Patrick,
Since were on the topic of ASD and it’s wind-nod business, here is something that lends some credence to BOA’s role in ASD’s growth.
It’s a long article so I pasted some of the references to BOA below with some of my comments in []
http://www.huffingtonpost.com/2010/06/29/wells-fargo-bofa-admit-fi_n_629239.html
“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,†Woods says.
[Couldn’t we essentially say the same about the Quincy BOA and the 100,000 people fleeced?]
“No big U.S. bank — Wells Fargo included — has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again. ”
[Was the risk calculated by the Quincy BOA, nothing more than a fine and a fingers-crossed-behind-the-back promise, if the authorities determined they violated the Bank Secrecy Act?]
“These criminal empires have no choice but to use the global banking system to finance their businesses, Mexican Senator Felipe Gonzalez says.”
[Seems Uncle Andy felt the same way]
“There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,†Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught.â€
“The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.”
“Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.
Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009.”
[Let’s put Quincy on the map, oops Uncle Andy already did]
Big Joe
Of course all of the anti BoA rhetoric is based on the assumption that it was not the BoA which reported the activities of Bowdoin/ASD in the first place.
Anyone who has actually read the Bank Secrecy Act would realize only too well that it (the act) makes very clear that banks and financial institutions are not only required to report suspicious activities but that the mechanism to do so is required to be automatic AND financial institutions are required, under penalty of sanction, to not reveal such reports to anyone, ESPECIALLY the account holder.
Further, as has been pointed out on many occasions, the BSA itself encourages said banks to comply with any request from the regulatory agency/ies to facilitate ongoing investigation by allowing suspect accounts to remain active for the duration of the investigations
Based on actual evidence, there’s as many reasons to believe the possibility BoA was fully in compliance with its’ legal (and moral) requirements as there are to believe in some big bank/evilGUBment conspiracy theories.
LRM, that argument might have some credibility if BOA had not continued to process millions of dollars of bank checks for so long and had a close relationship with the staff at Quincy (many staff from the Quincy branch moonlighting for the autosurf company) . Equally it is known that another bank (the name of which is recorded somewhere on this very blog.) closed down some Bowdoin accounts because they suspected that the ASD business was not legal. Knowing that, it is more than likely that they were the ones to report ASD.
Even if BOA at some higher level finally reported suspicious activity in ASD, all that can be said is that they certainly took their time and permitted millions to go through a personal account at their Quincy branch, paid in at BOAs all over the US before doing anything about it.
The conduct of the Quincy branch of BOA is highly suspect. It might have been a small backwoods branch, but their senior staff are also trained and know enough to sound alarm bells. It wont be the first time that a small rural branch of a national bank has been knowingly, recklessly or negligenctly involved in a an illegal business where money laundering and other illegal activities are present. And small rural branches of large institutions are also part of that insistution, ergo BOA Quincy is still BOA and had the same obligations to operate according to the law as their Head Office.
Vested interests is a very powerful motivator, and, having seen first hand some of the tricks that banks get up to in small rural communities, when influenced by “important clients”, before they are caught (if ever) I will not be surprised if BOA has a lot to hide in the ASD affair.
Wont be surprised if they manage to get out of it either.
Here is more of Senator Blum’s quote from the link posted by JOE
Large banks are protected from indictments by a variant of the too-big-to-fail theory.
Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.
The theory is like a get-out-of-jail-free card for big banks, Blum says.
“There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,†Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught.â€
there is blood on the hands of BOA, period!!!
So what are we suggesting here ???
A bank which conforms with its’ legal requirements under the Bank Secrecy Act and files a Suspicious Activity Report (SAR) should then cancel the account ?? And what’s more, do so without arousing the suspicions of the account holder ???
Ah, right, gotcha.
Having fulfilled its’ legal requirements, should the bank in question simply refuse to co operate with investigators, is that the suggestion ???
Perhaps the bank should have insisted the investigators complete their investigations within a certain time limit, after which the bank would simply close the account/s.
Perhaps the banks and/or government could introduce a sort of sliding scale Bank Secrecy Act.
You know, if the fraudsters were REALLY clever and tried REALLY, REALLY hard to cover their activities, the banks and investigators would give them special dispensation. Call off the investigation/s after a few weeks and give the money back.
For goodness’ sake, it’s called the bank SECRECY act for a bloody good reason.
What’s more, it takes investigators YEARS and YEARS to gather sufficient evidence to make a case stick, years during which it is imperative the fraudsters are unaware of any investigation.
The banks are caught between a rock and a hard place.
Sanctioned if they DON’T report, criticized if they do and totally at the mercy of the investigating agencies time frame once they HAVE reported.
IM(very)HO peoples’ angst should be directed wholly and solely where it belongs at Bowdoin, AdSurf Daily and the serial fraudsters who contributed to the scam. Why on earth anyone would continue to believe ANYTHING which came out of the Bowdoin/ASD camp is beyond me.
Do yourselves a favour and read the requirements of the BSA then research on the filing of SARs. Find out exactly what the guidelines are for MSBs co operation with ongoing investigations.
Ummn,
you are missing my point.
My statement was:
“Based on actual evidence, there’s as many reasons to believe the possibility BoA was fully in compliance with its’ legal (and moral) requirements as there are to believe in some big bank/evilGUBment conspiracy theories”
There IS NO “actual evidence”
Which means there’s as much reason to believe the bank is innocent as there is to believe the bank is part of a conspiracy or to believe Bowdoins’ story.
IOW, whether or not the BoA was in compliance, as far as the public is concerned, the current situation would be the same.
To speculate otherwise is just that, speculation.
No one will know EXACTLY what transpired until the court case, and even then there is no certainty what occurred under the terms of the BSA will be revealed in its’ entirety.
Most people have acknowledged by now that virtually every single “fact” stated by Bowdoin was at best only partially correct and, at worst, a downright fabrication.
To suddenly now decide “He lied about everything, Oh, except the bit where we can at least partially blame someone else for being ripped off” says more about what happens in the aftermath of every single fraud of this type than it does about actual evidence.
LRM,
I hear you. However, I think that JOE has made some valid points and personal experience with small rural branches and, however much I regret it now, I was with ASD during the time that the BOA was sued by them to pass millions and miillions of dollars into Andy Bowdoins personal accounts.
OF COURSE, Andy Bowdoin & Co are the people responsible for the rip off, the con, the fraud or whatever you want to call it. No sane ex member nor follower of the ASD Story has any doubt whatsoever abou that issue.
That is not the same as saying the BOA QUINCY branch may well have been involved in a breach of banking security and rules for some time before ASD was reported. We do not know who reported them, but we do know that a different bank asked them to close their accounts as they suspected illegal activity. Even if someone somewhere in the BoA structure did report them, that does not exonerate the actions of BoA QUINCY. It is also the BoA and is covered by banking rules.
There are far too many instances of banking institutions and law enforcement agencies being negligent in carrying out their obligations, for a blanket statement
There IS NO “actual evidenceâ€
Which means there’s as much reason to believe the bank is innocent as there is to believe the bank is part of a conspiracy or to believe Bowdoins’ story.
Just look at the cited cases JOE has presented AND remember the SEC role in the Maddoff affair.
I strongly suspect that if each and every staff member of the BoA was obliged to provide all truthful data and every ASD member who had any information about the conduct of BoA Quincy was obliged to provide it, there would be “Actual Evidence”
It is not a question of moving the blame – that rests fair and square on the Bowdoin shoulders. However, when we debate about Enablers and attack online payment processors, that is fine to implicate them in the crimes they cover up. Why is not correct to question a legitimate insitution IF they negligently did the same?
.
From my perspective there’s absolutely no reason at all to not question anyone involved in the fraud.
I have absolutely no interest at all in defending the BoA or any other financial institution at all.
HOWEVER, having said that,
I have been a hobby observer of the online fraud “scene” for around 15 years, during which time I have observed more of these beasts than I care to remember. The “blame the financial institution” routine is de rigeur when it comes to “wash-up time” with virtually every “big one” I’ve seen. It benefits the “steroidal puppeteers” to shift blame and focus away from the reality of their criminal activities.
12 Daily Pro promoters had Stormpay, Gold Nugget Investments had the Alberta Securities Commission and Alertpay and GeniusFunds have nominated the Cyprus banks as their fallguys.
My pedantic nature has lead to me actually reading the Bank Secrecy Act in its’ entirety, as well as the requirements governing Suspicious Activities Reports as well as the IRS, US Treasury/finCEN and FDIC guidelines and recommendations.
To date, I have seen no evidence that the current situation is anything other than completely “normal”
If the BoA followed regulations to the letter, there would be no difference in the amount of evidence available to the public/victims.
IOW, if the BoA DID, in fact, file SARs, and DID comply fully with its’ legal and moral obligations and DID co operate fully with the IRS/FBI/DoJ taskforce and DID allow the accounts to remain open as requested and DID furnish the task force with evidence and DID maintain secrecy, the situation would be no different than it is currently.
We simply would not know a bloody thing.
In fact, finCEN has even issued “guidelines for MSBs which receive a request by law enforcement to keep accounts open” http://www.fincen.gov/Maintaining_Accounts_Guidance.html
That’s the nature of the BSA, that’s how online fraud investigations have previously been run and undoubtedly will continue to be run. That is, by the way, whether such investigations take 40 minutes, plus advertisement time (as per TV) or the 18 months “real” investigations of this type require.
On the other hand, the “BoA and/or Quincy branch” must have been involved story relies on rumour, innuendo and conjecture.
IF the BoA filed SARs and were asked by the investigators to maintain the status quo, OF COURSE the staff of the Quincy branch knew and kept quiet. I suggest people read the Bank Secrecy Act and discover the penalties which would apply if they had revealed anything to ANYONE.
“Keeping quiet” BTW, doesn’t mean the HYIP/ponzi “nudge, nudge, wink, wink” type of quiet and the penalties for not filing are severe:
The law may impose civil and criminal penalties against businesses and their employees who fail to comply with the law. Penalties may be assessed for:
* Failure to secure identifying information
* Failure to maintain required records
* Failure to file a report or filing a report containing any material omission or misstatement
A civil penalty of $500 may be asserted against a financial institution for failure to file a SAR due to negligence. A civil penalty for willful failure to file a SAR can be asserted against any domestic financial institution and its partners, directors, officers, or employees in the amount of the transaction (not to exceed $100,000), or $25,000, whichever is greater. The penalty for recordkeeping violations can be up to $1,000 per violation.
Criminally, a person may be subject to a fine of $250,000 or imprisoned up to five years for failure to file a SAR. If the violation is committed during a violation of another federal law or as a pattern of illegal activity involving transactions exceeding $100,000 in any 12-month period, the fine is increased up to $500,000 and/or ten years in prison. In addition, any person who knowingly makes any false, fictitious or fraudulent statement or representation in the SAR may be fined up to $10,000 and/or imprisoned up to five years. For recordkeeping violations, the penalty may not exceed $1,000 per violation and/or up to one year in prison. The fine increases to $10,000 and/or up to five years in prison if committed in furtherance of another Federal crime.
Further:
Confidentiality of suspicious activity reports. Suspicious activity reports are confidential. Any bank subpoenaed or otherwise requested to disclose a suspicious activity report or the information contained in a suspicious activity report shall decline to produce the suspicious activity report or to provide any information that would disclose that a suspicious activity report has been prepared or filed citing this part, applicable law (e.g., 31 U.S.C. 5318(g)), or both, and notify the appropriate FDIC regional office (Division of Supervision).
http://www.fdic.gov/regulations/laws/rules/2000-7500.html
Oops a few typos there
The First sentence should read
“I hear you. However, I think that JOE has made some valid points and my personal and non personal experience with small rural branches and (however much I regret it now,) my time with ASD during the time that the BOA was used by them to pass millions and miillions of dollars into Andy Bowdoins personal accounts, leads me to think differently.
I agree that we will probably never know what happened as far as BoA Quincy is concerned. I would also suggest that, at branch level, a great many, if not all of the staff there havent even heard of the BSA never mind read it. ASD even took in the local Chamber of Commerce for a while. They employed a lot of people in a depressed area and were, at that time, very influencial in the town.
Noone is shifting the blame. That rests and will always rest with the perpetrators and promoters of the ponzi. (well perhaps the steroidal puppeteers and a few others with vested interests may be doing so, but that is not the case as far as these comments are concerned)
However it doesnt change the fact that banking a local level does not always perform as it should and, even if we never find out what happened in the Quincy branch, suspicions of negligence are not going to go away. The recent world economic crisis and world banking crisis, with its toxic products (another word for fraudulent) have shown us that we cannot rely on the banking system at any level to be “whiter than white”, so why on earth should we assume that a small town branch was so competent.
Yes, you are right, we will never know and IF ther was negligence on the part of BoA at any level, it is unlikely it will come to light without substantial new evidence and the likelihood of any prosecution succeeding is more than remote IMO. However, I wouldnt mind betting that a few heads rolled at BoA after the August 2008 seizure.
Personally,
I wouldn’t mind betting the BSA worked exactly as it should and the BoA followed its’ publicly stated position of not only filing SARs, but also fully co operating with investigators requests to allow the accounts to remain open.
Pure speculation, of course, but I also wouldn’t mind betting one of the reasons the prosecution was able to appear in court so well “armed” was the fact it had been “inside” the bank accounts far longer than has been estimated.
@ LRM
Thanks for clearing up what you meant by “Actual Evidence” My apologies for perceiving another meaning. I agree with so much of what you and alasycia have written.
As far as blame: For the first time participants it lies with the HYIP/PONZI (and all the support structures like Payment processors, promoters,etc.) If participants continue after the first burn, then the blame lies with the HYIP/PONZI and the participants.
Big Joe
[…] The ASD Stepfordians immediately raced to forums to spread the good news. But skeptics immediately questioned the claim, pointing out that Praebius Communications — the penny-stock firm that supposedly was going to provide ASD a $200 million injection — did not even publish audited financials. SEC records later showed that, in October 2008, the same month ASD was awaiting the court decision and claiming a new $200 million was coming on board, Praebius stock was being pumped in a fraudulent-touting scheme. […]
[…] allegedly was involved in a massive pump-and-dump scheme. In 2010, according to the SEC, Sahachaisere fraudulently touted the stock of Praebius Communications. That’s the company […]