BULLETIN: SEC Backs Legisi Receiver’s Bid To Pursue E-Bullion Cash

BULLETIN: The SEC has asked a federal judge to permit the receiver in the Legisi HYIP Ponzi-scheme case  to pursue funds tied up after the arrest of James Fayed, the operator of the e-Bullion payment processor. Fayed was convicted in 2011 of ordering the murder of his wife, a potential witness against him. Pamela Fayed was slashed to death in a Greater Los Angeles parking garage in July 2008. The SEC brought the Legisi fraud prosecution in May 2008, just two months before Pamela was killed.

E-bullion has been linked to several Ponzi schemes. In court filings on June 6, receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through the defunct processor. Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for an order “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.

The SEC now says Steeh should issue the order because Gordon’s efforts could “lead to the recovery of millions of dollars for the Receivership Estate, funds which ultimately could be distributed to victims pursuant to a Court-approved formula.”

Under Gordon’s plan, the SEC said, Legisi’s “winning investors” would be provided a process to dispute claims for the e-Bullion money.

“As a result,” the SEC said, “any investors who assert that they are entitled to money claimed by the Receiver would have an opportunity to have their arguments heard and decided by the Court. No moneys would be disbursed until after the Court hears and decides such disputed claims.”

The agency also said that Gordon earlier had successfully claimed $1.7 million from e-Gold, an e-Bullion rival charged in a 2007 money-laundering case. In May 2013, federal prosecutors in New York charged Liberty Reserve — yet another payment processor linked to online fraud schemes and other crime — in an alleged $6 billion money-laundering conspiracy.

With a take of $72 million, Legisi was a “program” pitched on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — forums from which “programs” such as AdSurfDaily ($119 million), Zeek Rewards ($600 million), Pathway To Prosperity ($70 million) and Profitable Sunrise also were pitched. The combined scams gathered at least $861 million, according to federal court records. The number could be significantly higher because the final take of Profitable Sunrise — estimated in the tens of millions of dollars — is unknown. If Profitable Sunrise gathered $140 million, it would mean that the take of the five scams combined exceeded $1 billion.

Similar scams continue to be promoted on the Ponzi boards by commission-based hucksters. The condition is comparable to “whack-a-mole” in the sense that one scam rises to replace another. The “offers” frequently are targeted at victims of previous schemes and positioned as a means investors can “earn” back funds lost in the earlier scams.

Federal court records show that prosecutors asserted an AdSurfDaily pitchwoman funded her ASD account through e-Bullion, which also has been tied to mysterious scams such as Gold Quest International, the “Alpha Project” and Flat Electronic Data Interchange, known as FEDI. FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.

Cash associated with the ASD Ponzi scheme was seized on Aug. 1, 2008, about four days after Pamela Fayed was murdered in Los Angeles. Erma Seabaugh, the ASD promoter who funded her account with e-Bullion, also pitched a scam known as StreamlineGold, according to federal records.

In November 2007, a MoneyMakerGroup poster claimed this about StreamLineGold (italics added):

StreamLine Gold is literally what it says. [I]t can provide you with an unlimited income through the combination of Precious Metals and Cash with a business model whose time has come PLUS the most advanced and lucrative pay plan ever devised.

Seabaugh, according to records, was promoting ASD through an entity known as Carpe Diem, a purported “religious” nonprofit firm in Oregon.

Separately, the receiver in the Zeek Rewards Ponzi case has said that he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

An evidence exhibit in the Legisi case shows that investors had to affirm they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.