Robert Allen Stanford, once listed by Forbes magazine as one of the richest men in the United States, has been found guilty in a Texas federal court on charges he operated one of the most epic Ponzi frauds in U.S. history.
Stanford, 61, was found guilty on 13 of 14 criminal counts filed against him. The swindle involved about $7 billion — considerably less than Bernard Madoff’s caper, but still epic compared with virtually all other known Ponzi schemes.
An American, Stanford became a banking magnate in the Caribbean island of Antigua. His Ponzi scam involved certificates of deposit.
Watch Breaking News report on MyFoxHouston.com . . .
Dwight Owen Schweitzer and Todd Disner — the two AdSurfDaily members from Miami who filed suit against the Justice Department and Rust Consulting Inc. in November 2011 — never filed remissions-claims forms, Rust said in a motion to dismiss the complaint.
And Schweitzer and Disner are “impermissibly” seeking to relitigate the forfeiture action against tens of millions of dollars in the personal bank accounts of ASD President Andy Bowdoin before a federal judge in Florida, Rust asserted.
The original civil case was brought by federal prosecutors in the District of Columbia and decided against Bowdoin/ASD by a federal judge in the District of Columbia.
But Disner and Schweitzer now are seeking a Florida venue to “avoid or evade the earlier judgment in the Seizure Action, or to deny its force or effect,” Rust argued in its dismissal motion.
The Florida court “lacks subject matter jurisdiction,” Rust argued. But even if the court concluded that it could preside over the the lawsuit, Schweitzer and Disner have not stated “a claim upon which relief can be granted against RUST, on the grounds that it constitutes an impermissible attack on the orders, rulings, and judgment rendered in the Seizure Action.”
“Plaintiffs are effectively seeking to re-litigate the Seizure Action in this case,” Rust argued. “Their material allegations and demands for relief center on their desire for this Court to determine whether the USA presented sufficient evidence in the Seizure Action to justify the seizure and confiscation of property held by ASD, including and in particular Plaintiff’s alleged property . . . In other words, in this action Plaintiffs seek to challenge the court’s decisions rendered in the Seizure Action. This is impermissible.”
Moreover, Rust argued, “it cannot be ignored that Plaintiffs admit they were afforded means in the Seizure Action to submit claims for their alleged property, but elected not to do so.”
In bringing their case in November, Schweitzer and Disner claimed an affidavit filed in the forfeiture case by the U.S. Secret Service in the District of Columbia was flawed and that the government hired Rust to implement a remissions program “designed to collect evidence and coerced admissions from the plaintiffs to be used by the government” at the criminal trial of ASD President Andy Bowdoin.
Disner and Schweitzer also took issue with government agents joining ASD prior to the August 2008 seizure and allegedly violating the ASD membership agreement, including an undercover agent who placed his undercover “MySpace” page in ASD’s advertising rotator. In 2008, the government alleged that “ASD did not require, or even verify that the agent “had any product or service to sell.”
Had the agents “lived up to the obligations they took on by becoming members of ASD they should have reported their own violations of the ASD terms of service with the result that the sites they foisted upon ASD would have been removed and the benefits to them as advertisers’ would be forfeited as the ASD rules mandated,” Disner and Schweitzer argued.
As of yesterday, the government had not responded to the lawsuit, which was brought by Schweitzer and Disner in the form of a complaint for declaratory relief that alleged Constitutional violations.
Whether Schweitzer and Disner properly served the government in the case is an issue.
U.S. District Judge Cecilia M. Altonaga has given them an extension of five days — from March 7 to March 12 — to demonstrate the government has been properly served.
If Schweitzer and Disner have properly served the government, it is possible that the Justice Department may move for dismissal on grounds similar to the grounds cited by Rust.
Not only were final orders of forfeiture entered by U.S. District Judge Rosemary Collyer in the District of Columbia, her orders were upheld by the U.S. Court of Appeals months before Schweitzer and Disner turned to the Florida federal court.
In September 2011 — weeks before Schweitzer and Disner brought their complaint — the government returned about $55 million to ASD members who demonstrated a loss through the remissions process administered by Rust.
When the government announced the return of the money, the U.S. Secret Service described ASD as a “criminal enterprise.”
In their complaint, however, Schweitzer and Disner argued that ASD was a profitable venture, in stark contrast to assertions by the government that ASD was insolvent because it created a liability of $1.25 for each dollar it took in through the sale of purported “advertising.”
“There is a line between First Amendment Rights vs. Libel here. So, when does your right to form an opinion begins (sic) and when does it constitute a defamation of character? The answer is, law enforcement agencies don’t pay attention to what’s being said on forums and blogs, so get your head straight and feet firm on the ground.” — “MoneyMakingBrain,” in March 4, 2012, post on RealScam.com
As previously reported on the PP Blog, a JSS Tripler/JustBeenPaid “defender” known as “MoneyMakingBrain” (MMB) has emailed threats to the PP Blog, hatched bizarre conspiracy theories here and at RealScam.com and planted the seed that he was someone to fear.
The email threats were received after MMB claimed Feb. 18 on RealScam he had performed “due diligence” on JSS Tripler/JustBeenPaid. On a website known as “ReviewOPedia,” a poster with the same handle offered this on Feb. 14, in the context of JSS Tripler/JustBeenPaid:
“They are for real! ”
Within the same Feb. 14 ReviewOPedia post, MoneyMakingBrain ventured this (italics added):
“BTW, everybody should check out the JBP live support chatroom which has over 160 people at any given time and is live 24/7. You can ask all the questions you can come up with and there is always moderator. Who does that? I’m sold already. So, if someone here claims that they ‘didn’t get paid’, either they still don’t understand how the matrix works or they’re just internet trolls.”
Whether the “MoneyMakingBrain” on the PP Blog and the “MoneyMakingBrain” on ReviewOPedia are one and the same is unknown to the PP Blog.
Precisely why the MMB known to the PP Blog and RealScam.com has been trying to chill specific individuals and antiscam forums is unclear. What is known is that what he’s doing is hardly unique.
Lessons Of HYIP History Ignored
While asserting that he knows the PP Blog’s IP address and posting location, MMB now is making a claim on RealScam, a forum that concerns itself with international mass-marketing fraud, that “law enforcement agencies don’t pay attention to what’s being said on forums and blogs.”
That claim is contrary to the public record, which shows that any number of agencies, self-regulatory bodies and private attorneys have been noting for years that HYIP schemes are proliferating on the Internet and being spread by posters on forums and social-networking sites. It also ignores the reality — also a matter of public record — that law-enforcement has a history of filing court documents that reproduce HYIP forum posts and of infiltrating HYIP schemes.
Prominent FINRA Warning On HYIPs
In July 2010, the Financial Industry Regulatory Authority issued this highly public alert. FINRA noted that “HYIPs use an array of websites and social media — including YouTube, Twitter and Facebook — to lure investors.”
HYIPs fabricate a “buzz” and create “the illusion of social consensus,” FINRA said, describing the sinister approach as a “common persuasion tactic fraudsters use to suggest that “everyone is investing in HYIPs, so they must be legitimate.”
Forum Posts Become Evidence In HYIP Cases
In the SEC’s May 2008 prosecution of the Legisi HYIP scheme, the agency included page after page of forum posts as part of a 267-page evidence exhibit in support of an asset freeze. A federal judge approved the freeze. (The screenshot below is from one of the forum pages.)
Legisi operator Gregory McKnight pleaded guilty to criminal charges of wire fraud last month. He also faces millions of dollars in civil judgments. The SEC Legisi filings also include a reference to the MoneyMakerGroup forum, which is listed in other federal court filings as a place from which HYIP Ponzi schemes are promoted.
This section of the Legisi Terms of Service purports that members must avow they are not an "informant, nor associated with any informant" of the IRS, FBI, CIA and the SEC, among others. The others included "Her Majesty's Police," the Intelligence Services of Great Britain, the Serious Fraud Office, Interpol and others.
Included within the SEC filings is a reproduction of Legisi’s bizarre Terms. (See graphic at right. It is taken from court filings.) Among other things, the Terms made members avow they were not an “informant” for various government entities.
JSS Tripler/JustBeenPaid has similar Terms. The Terms read like an invitation to join an international financial conspiracy. (The next two paragraphs are verbatim from the JSS Tripler/Just BeenPaid member agreement. Italics added.)
6. I affirm that I am not an employee or official of any government agency, nor am I acting on behalf of or collecting information for or on behalf of any government agency.
7. I affirm that I am not an employee, by contract or otherwise, of any media or research company, and I am not reading any of the JBP pages in order to collect information for someone else.”
When the U.S. Postal Inspection Service filed criminal charges against Nicholas Smirnow in May 2010 for his alleged operation of the Pathway To Prosperity HYIP Ponzi scheme, MoneyMakerGroup, TalkGold and ASAMonitor were specifically referenced in the service’s case filings. Smirnow now has his face on an INTERPOL “Wanted” poster.
MMB took great exception to the PP Blog’s Smirnow post, apparently believing it had no relevance in the context of JSS Tripler/JustBeenPaid. MMB also apparently believes the PP Blog and RealScam are treating Frederick Mann, the purported operator of JSS Tripler/JustBeenPaid, unfairly.
Among other things, MMB asserted on the PP Blog that “no one is invisible to the MoneyMakingBrain and you need to stop doing what you’re doing against this man immediately. Because if you don’t, I am going to make a formal complain (sic) to the very authorities you purport are coming after scam sites and send all the evidence I’ve gathered so far from posting on your site and the realscam site. I don’t like witch hunts and I am sure Fred Mann can whip your ass in court for your highly suggestive, provocative, highly contentious and flat-out defamatory commentaries against his character on your sites.”
MMB further suggested that JSS Tripler/JustBeenPaid critics may be “needing to look for another ISP because you won’t have internet access at home or your office, wherever.”
About three months after the SEC brought the $72 million Legisi/McKnight HYIP Ponzi case, the U.S. Secret Service — in August 2008 — filed evidence exhibits in support of an order to freeze tens of millions of dollars in AdSurfDaily-related bank accounts. The complaint in support of the seizure specifically references an ASD-related “Breaking News” Blog, and an evidence exhibit labeled “Government Exhibit 5” consists entirely of an ASD-related post on a different Blog that took up 15 printed pages.
The 15-page post featured alleged comments from ASD President Andy Bowdoin in which he threatened to sue critics.
“These people that are making these slanderous remarks, they are going to continue these slanderous remarks in a court of law defending about a 30 to 40 million dollar slander lawsuit,” the post quoted Bowdoin as saying. (The screen shot below is from Government Exhibit 5. It has been a matter of public record approaching four years.)
Both the ASD and Legisi investigations used government agents in undercover capacities, according to court filings.
Meanwhile, in June 2009, attorneys suing Bowdoin on behalf of ASD members in a civil RICO (racketeering) case referred to the PP Blog’s reporting on the ASD Ponzi case, specifically its reporting on a spinoff surf known as AdViewGlobal (AVG). (See court document. See June 30, 2009, related story. See PP Blog story the attorneys referenced in their filings.)
During its short run, AVG bizarrely asserted that it operated as a “private association” that enjoyed U.S. Constitutional protections in Uruguay. AVG used U.S.-based Gmail addresses to conduct business, something JSS Tripler/JustBeenPaid is doing. The defunct surf further claimed that it had appointed a person who held the title of “Protector.”
Such claims have been linked to the so-called “sovereign citizen” movement. On Feb. 27, 2012, the PP Blog reported that a site linked to Mann published videos of Francis Schaeffer Cox, a purported “sovereign citizen” indicted in Alaska in an alleged murder plot against public officials. The site features a drop-in ad for JSS Tripler/JustBeenPaid that encourages prospects to register with a Gmail address.
Whether MMB is aware of all of these these historical incidents while issuing threats and planting the seed he has the power to divorce JSS Tripler/JustBeenPaid critics from their Internet connections is not known. MMB’s posting privileges were revoked by the PP Blog last week after he emailed threats and menacing communications. RealScam has continued to permit MMB to post on its forum.
The PP Blog believes it is unwise to click on any link MMB has posted on RealScam. He appears to be attempting to bait members of the antiscam community into clicking on links as part of a bid to gather IP addresses and other data from posters — all while asserting he has the power to use the information to harm individuals and entities such as Eagle Research Associates, a California based nonprofit that seeks to educate the public about scams.
Piling On The HYIP Absurdity
In what would become one of the most visited threads in the history of the PP Blog, a poster known as “CORRECTION” repeatedly demanded that the Blog retract this June 3, 2009, headline about the AdViewGlobal (AVG) autosurf and a strategy advanced by a promoter by which AVG upline sponsors could gather money from individual prospects and funnel it through the sponsors’ local banks before passing it to offshore payment processors — instead of letting AVG gather the money.
“Get it right before you lead with this inaccurate, bias (sic) and unfair reporting!!!!!!!!!!!” CORRECTION demanded.
The PP Blog did not submit to the demand to retract the headline.
It was revealed later in court filings that the grand jury that indicted Bowdoin on charges of wire fraud, securities fraud and selling unregistered securities began to meet in May 2009, about a month prior to ASD- and AVG-related threats and demands made against the PP Blog.
“The focus of this sweep was fraud committed against individual investors, including Ponzi schemes, high-yield investment fraud, and market manipulation cases,” said Shawn Henry, the FBI’s executive assistant director. “Operation Broken Trust highlights the pervasiveness of the threat we face, and its impact on individuals from all walks of life.
“The perpetrators of these crimes are those who YOU might trust . . . friends and colleagues — people from your workplace, your child’s soccer team, even your church,” Henry said.
Read this March 1, 2012, story that reports a top U.S. Justice Department official speaking in Mexico referenced bogus libel lawsuits filed to protect criminal enterprises. Read this Justice Department news release last week on a meeting in Ottawa between top U.S. officials and top Canadian officials to discuss cross-border fraud.
More HYIP Nonsense: No ‘Unfriendly Political Jurisdictions’
JSS Tripler/JustBeenPaid purports to pay a daily return of twice that offered by Bowdoin and ASD — and eight times that of Legisi. The JSS Tripler/JustBeenPaid returns are somewhat on par with the returns offered by Pathway To Prosperity.
At the same time, JSS Tripler/JustBeenPaid says this on its website (italics added):
“Our business operations are geographically decentralized. We don’t have any central office. We’re not located in any ‘unfriendly political jurisdictions.’”
It is difficult to conceive how JSS Tripler/JustBeenPaid could send any brighter signals of a scam in progress, given its absurd advertised rate of return and a public proclamation that it is not located in any “unfriendly political jurisdictions.”
In 2008, Frederick Mann, the purported operator of JSS Tripler/JustBeenPaid, identified himself as an ASD pitchman. On Jan. 23, 2012 — six weeks ago today — the Italian securities regulator CONSOB announced it had opened a JSS Tripler-related probe and issued a 90-day suspension order.
During a March 1 conference call for JSS Tripler/JustBeenPaid, a caller informed Mann that a member of his second-level downline had informed him that the member’s bid to advertise the “opportunity” had been blocked in Holland amid concerns of legality.
“Tell him not to advertise in any particular country,” Mann replied.
Redacted screen shot of "regional representatives" claim today on the website of JSS Tripler/JustBeenPaid.
BULLETIN: The PP Blog has learned that JSS Tripler/JustBeenPaid is publishing a page in which it advertises the availability of “regional representatives” in various parts of the world, including Italy.
On Jan. 23, CONSOB, the Italian securities regulator, took action against certain JSS Tripler/JustBeenPaid affiliaties. Despite the CONSOB action, JSS Tripler/JustBeenPaid is openly advertising that it has at least two affiliates who speak Italian and that the affiliates are available to “assist you with ALL aspects of the program IN YOUR LANGUAGE.”
The page also touts the native-language talents of JSS Tripler/JustBeenPaid affiliates to assist members in Hong Hong, Taiwan, Belgium, Canada, Ireland, the United Kingdom, the United States (to assist people who speak English or Japanese), Germany, Lithuania, Indonesia, Malaysia, Mongolia, Poland, Portugal, Latvia, France, Chile, the Dominican Republic, Ecuador and Spain.
JSS Tripler/JustBeenPaid described its outreach via regional reps as “AMAZING!”
“The people on this page have been thoroughly trained in all the workings of JustBeenPaid’s programs, and are happy to assist you TODAY!” the murky entity crowed.
In a Feb. 23 conference call, Frederick Mann, the purported operator of JSS Tripler/JustBeenPaid, declined to say precisely where the “opportunity” itself was located.
JSS Tripler/JustBeenPaid, Mann asserted to an audience of Americans and at least one person who claimed to be a resident of Canada, was “not located in any specific part of the world.
“We’re all over the planet,” he said, speaking with an English accent that appeared to be native to South Africa.
The assertion led to questions about whether Mann was running the “program” in a fashion reminiscent of a sort of small-scale Bank of Credit and Commerce International (BCCI). BCCI deliberately structured itself in murky fashion to ward off oversight by regulators. Its collapse created one of the great business scandals of the 1990s, prompting the Wall Street Journal (Europe) to observe that BCCI had been set up to be “offshore everywhere.”
BCCI’s collapse also triggered Congressional probes in the United States, along with both civil and criminal prosecutions.
The CONSOB probe in Italy, which the agency announced nearly six weeks ago, was not referenced on the “representatives” page on the JSS Tripler/JustBeenPaid website.
Incongruously, the “representatives” page included a link to an “agreement” page in which JSS Tripler/JustBeenPaid registrants and/or prospects were informed they must affirm “that I am not an employee or official of any government agency, nor am I acting on behalf of or collecting information for or on behalf of any government agency.”
Moreover, the registrants and/or prospects were informed they must affirm “that I am not an employee, by contract or otherwise, of any media or research company, and I am not reading any of the JBP pages in order to collect information for someone else.”
The collapsed Legis HYIP published similar terms. (More on the Legisi prosecution below.)
How long the JSS Tripler/JustBeenPaid regional reps have been in place was not immediately clear. Also unclear was whether each of the reps had a physical presence in the respective countries or were using the Internet to reach over borders and perform customer service and recruit downlines in the respective nations.
The U.S. government and other governments of the world have become increasingly concerned about cross-border fraud. Yesterday, U.S. Attorney General Eric Holder and Janet Napolitano, the secretary of the U.S. Department of Homeland Security, met with top officials in Canada to discuss the problem.
Perhaps aghast over JSS Tripler/JustBeenPaid developments, a poster on the MoneyMakerGroup Ponzi forum declared today that having regional reps for JSS Tripler/JustBeenPaid is an “insane idea.”
“Forget about the matrix spots and payouts,” the MoneyMakerGroup poster wrote today. “[W]hy is 200,000 + members not enough and why arent (sic) we off the radar and private and not opening ourselves up to potential problems ? Regional reps is an insane idea, Im (sic) sorry but the admin needs to protect us and wakeup (sic) to the reality that you cant (sic) get this huge and expect nothing bad to happen.”
The poster did not explain his apparent belief that JSS Tripler/JustBeenPaid had a duty to go “private” and to get “off the radar” of regulators. Nor did he say precisely what constituted something “bad.”
HYIPs have been the subject of both civil and criminal litigation in various jurisdictions.
It is common for HYIP purveyors to tout purported “offshore” operating venues and to claim such venues insulate an “opportunity” from prosecution. It also is common for HYIPs to announce they are “private” programs and therefore not subject to government oversight. At the same time, it is common for HYIPs to try to structure a Terms of Service or Member Agreement that purports either that the “opportunity” is not selling securities or is not subject to regulatory oversight.
Some HYIPs, including JSS Tripler/JustBeenPaid, have preemptively denied they are Ponzi schemes.
The purported returns of JSS Tripler/JustBeenPaid are somewhat on par with the returns of Nicholas Smirnow of the alleged Pathway To Prosperity HYIP Ponzi scheme. Smirnow is listed as “Wanted” by INTERPOL.
On Feb. 27, the PP Blog reported that a website linked to Mann displayed videos of Francis Schaeffer Cox, an American and purported “sovereign citizen” under indictment in Alaska in an alleged murder plot against public officials.
Separately, a YouTube promo for JSS Tripler/JustBeenPaid dated yesterday asserted that “[a]ll you have to do is wait for your money to increase!!!”
A Blog post dated today, meanwhile, makes this assertion (italics added):
“The JSS Tripler new site is one month old. It has been a month of phenomenal growth, but it’s nothing compared to what’s in the future. Some ‘Big Things’ are on the horizon that will enable many of the members to become millionaires, some could even become billionaires.”
Neither the March 3 Blog post nor the March 2 YouTube video referenced the CONSOB probe.
In 2008, AdSurfDaily President Andy Bowdoin asserted that ASD had a plan to create 100,000 millionaires in three years. On Dec. 1, 2010, the U.S. government announced that Bowdoin had been indicted on Ponzi-related charges of wire fraud, securities fraud and selling unregistered securities.
Seabaugh also was an affiliate of an enterprise known as Ad-Ventures4U (ADV4u), which crashed in 2009 amid allegations that its operator had been threatened by members.
In web promos, Mann has described himself as a promoter for both ASD and ADV4U. Some affiliates have described him as a “genius,” the same description accorded Bowdoin before the August 2008 raid on ASD headquarters by the U.S. Secret Service.
After the event — and facing both civil prosecution and a criminal investigation — Bowdoin told ASD members that the raid was the work of “Satan.”
It is a descriptor completely contrary to the typical view Americans have of the Secret Service, which has the twin duties of protecting the nation’s financial infrastructure and the life of the President of the United States.
Most Americans believe the Secret Service consists of heroes who place themselves in harm’s way every day to keep the United States safe, doing everything from making sure U.S. grandparents have safe places to deposit their Social Security checks to making sure that the President is well-protected and accessible to the American people.
Kenneth Wayne Leaming, an ASD member and purported “sovereign citizen,” allegedly filed a bogus lien against the Secret Service agent who led the ASD investigation in 2008, the FBI said in November 2011 court filings.
Leaming also allegedly filed bogus liens against a federal judge and three federal prosecutors involved in the ASD case, according to court filings by the FBI. He is jailed near Seattle awaiting trial on those charges, along with charges of filing false liens against other public officials, concealing two federal fugitives wanted in a home-business caper in Arkansas, being a felon in possession of firearms and uttering a bogus “Bonded Primissory Note” for $1 million.
Court filings suggest Leaming was conducting financial research on John Roberts, the chief justice of the United States and the head judge of the U.S. Supreme Court, while hatching a scheme to serve papers on Roberts through a school attended by the distinguished jurist’s children.
EDITOR’S NOTE: A top U.S. official — speaking today in Mexico City at the High-Level Hemispheric Meeting Against Transnational Organized Crime hosted by the Mexican government under the framework of the Organization of American States (OAS) — addressed the challenges the world law-enforcement community is confronting in the Internet Age.
In remarks apt to cause unease within the HYIP and organized-crime spheres, Deputy U.S. Attorney General James Cole noted that the government was wise to efforts by criminals to chill efforts to expose crimes by filing libel lawsuits. (A link to Cole’s full prepared remarks appears at the bottom of this story.)
Some recent Ponzi cases in the United States involving incredible sums of money — and the corresponding behavior of some of the participants — help prove the point . . .
AdSurfDaily President Andy Bowdoin, named a defendant in a 2009 civil case that alleged racketeering, issued “slander” lawsuit threats prior to the August 2008 intervention by the U.S. Secret Service in the ASD scheme. The threats were issued not long after Bowdoin had returned from a trip arranged by a lawyer in which the ASD patriarch had ventured to Panama and Costa Rica, according to court filings.
Bowdoin later was indicted, amid allegations he was presiding over an international Ponzi scheme that had gathered at least $110 million. Robert Hodgins, who was referenced in 2007 ads for ASD, is an international fugitive wanted by INTERPOL. The United States accused Hodgins of laundering proceeds for narcotics traffickers in Colombia.
In advance of today’s High-Level Hemispheric Meeting Against Transnational Organized Crime, OAS Secretary General José Miguel Insulza noted that such crime “is the principal continental source of activities such as drug trafficking, the illicit trafficking of firearms and immigrants, human trafficking, money laundering, corruption, kidnapping, and cybercrimes.”
Befitting its importance, the hemispheric meeting was hosted by Felipe Calderón, the president of Mexico.
Among others things, Deputy U.S. Attorney General James Cole said this at the meeting:
“The advance of globalization and the internet, while hugely beneficial to people everywhere, has also created unparalleled opportunities for criminals to expand their operations and use the facilities of global communication and commerce to carry out their criminal activities across national borders.”
Although Cole did not use the term “HYIP” in his remarks, it is clear that the U.S. government is well aware of the dangers online fraud schemes pose as they reach across borders to accumulate tens and even hundreds of millions of dollars — sometimes through a single fraud scheme.
As the PP Blog read the text of Cole’s remarks, another thing leaped off the page. Indeed, Cole said this (emphasis added):
“Because of the sophistication of the world economy, organized crime groups have developed an ability to exploit legitimate actors and their skills in order to further the criminal enterprises. For example, transnational organized criminal groups often rely on lawyers to facilitate illicit transactions. These lawyers create shell companies, open offshore bank accounts in the names of those shell companies, and launder criminal proceeds through trust accounts. Other lawyers working for organized crime figures bring frivolous libel cases against individuals who expose their criminal activities.“
Cole, of course, wasn’t talking specifically about the AdSurfDaily Ponzi case and ASD’s preposterous claims that Bowdoin had found a legitimate way to pay interest of 1 percent a day on the tens of millions of dollars sent in by participants and that ASD would create 100,000 millionaires in three years.
Even so, the words Cole uttered in Mexico City today have deep relevance to the HYIP sphere. Indeed, ASD reached across international borders and relied on an international sales force.
Here is how ASD worked: It relied on “legitimate actors” of the sort Cole described — in ASD’s case, a lawyer who allegedly scrubbed the “opportunity” to ensure compliance, and Moms and Pops and entrepreneurs (and people down on their luck) who signed up and became the friendly faces to their prospect bases. The salespeople were paid 10 percent for recruiting a friend with money and 5 percent more if the friend could recruit a friend with money — on top of “surfing” earnings of 1 percent a day and even more through the purported miracle of “compounding.”
The current HYIP scheme of JSS Tripler/JustBeenPaid has the same type of payout schemes that ASD foisted on the marketplace. One big difference is the JSS/JBP says it can provide twice the daily payout of ASD.
JSS/JBP’s purported operator is Frederick Mann, a former ASD pitchman.
In September 2011, the U.S. Secret Service described ASD as a “criminal enterprise.”
You’ll note above that Cole today used the same phrase to describe one of the inherent threats of transnational organized crime. And, as noted above, he also spoke about bids to chill critics through the filing of libel lawsuits.
Those same types of threats were made in the ASD case, beginning in the summer of 2008. In fact, federal prosecutors even included an evidence exhibit in case filings that alluded to one such alleged threat. Unmentioned in the initial ASD case filings were the bids to chill reporters in at least two states and a newspaper in Georgia.
If you’ve been following the HYIP sphere for any length of time, you know that threats to sue members of the antiscam community are part of the landscape — so much so, that it has become an HYIP cliche. The bids to chill are not limited to threats to sue for libel and “slander,” however.
It also is becoming an HYIP cliche that the operators and apologists for brazen HYIPs threaten to file complaints with the ISPs of members of the antiscam community — i.e., if you report about us we’ll take down your Internet connection and/or sue you for copyright/trademark infringement.
These things are transparent bids to chill speech. They also are designed to have a secondary “benefit”: to make the marks — who may consist in part of people who are otherwise “legitimate actors” — believe that harm will come to them if they ever complain, that there are severe consequences to those who complain.
These nefarious methods have surfaced in scheme after scheme after scheme, as have various assertions about “offshore” venues and the purported “safety” the “offshore” venues provide. Longtime observers know the claims are part and parcel to the HYIP sphere — and that claims that someone is a successful businessman who has presided over multiple companies almost certainly will be incorporated into the sales pitch for an “opportunity.”
The FBI, for just one example, has been warning for years about securities fraud, the “shadow banking system” and the use of shell companies to disguise fraud proceeds. The director has testified repeatedly on Capitol Hill about the subject, while simultaneously warning about debit cards that are being used in nefarious ways and the dangers posed by lone wolves and “home-grown, violent extremists.”
All of these things are or may be in play in the HYIP sphere. Here are some things you should know:
It is likely that the scheme’s operator is trading on the credibility you have with loved ones and friends within your immediate sphere of influence to drive dollars to the scam. It is equally likely that you are being denied the sort of information that would empower you to make an informed purchasing decision and highly likely you are being asked to participate in a venture that could result in prosecutions under both civil and criminal law, possibly even the RICO statute.
The rate of return will be preposterous in any real-world context and the math will be fuzzy and confusing, if not downright impossible.
Your sponsor will lie to you or pass on GIGO that is part of the company line because the company line is more convenient than the uncomfortable truth. It will be garbage coming in, and garbage going out.
You will be subjected to a direct or indirect threat or a bid to chill, especially if you ask uncomfortable questions or raise any doubts.
There is a chance you’ll be working for a racketeer or an international criminal, perhaps even a “sovereign citizen” who has hatched a construction by which nothing is a crime, that all conduct is lawful in the name of freedom and free markets. If your sentiment is against the government or “big business” because of your personal financial situation or your political or philosophical views, an extremist may try to exploit your sentiment for personal profit.
Just some things to think about in the age of the HYIP, the age of terrorism and the age of transnational organized crime as practiced on the Internet . . .
Read the full remarks of Deputy U.S. Attorney General James Cole here.
