BREAKING BAD: Already-Convicted Narcotics/Firearms Felon With Peripheral Tie To AdSurfDaily And Zeek Ponzi Cases Pleads Guilty In ‘Commodities Online’ Caper After Saying He Approved Another Felon’s Request To Transfer More Than $5 Million To Mexico On Heels Of SEC Subpoena

EDITOR’S NOTE: In case you haven’t seen the series finale, there are no spoilers in this post. “Breaking Bad” ended its original run on AMC, and America said goodbye (or good riddance) to Walter White, the money-launderer next door, last night. The fictional White, of course, had been pursuing clandestine wealth, recklessly disregarding the safety of his family, destroying the lives of people who got in the way of his self-consuming greed and risking U.S. national security for five TV seasons. (At one point, he’d amassed at least $80 million in cash — enough to equip a small army of thugs or terrorists had they found its hiding place. Lo and behold, a group of neo-Nazi racketeers/murderers in part supplying Czech narcotics traffickers through a Houston-based methylamine supplier and upstart meth manufacturer did find it. Put another way, a white-supremacist group that openly shot at cops and murdered a bicycle-riding child to prevent him from tattling about the heist of a train carrying a meth precursor gained unwarranted economic power in the tens of millions of dollars.)

Like the world of narcotics traffickers, the HYIP world is filled with Walter White-types, the wire fraudsters and money-launderers next door. Beyond that, claims of great faith in God and miraculous money-making systems often accompany HYIP schemes. If you’re repeatedly joining murky HYIP schemes or pushing them, you’re engaging in the same sort of self-indulgence and self-deception chronicled each week on “Breaking Bad,” a program whose greed- and desperation-driven central character — Walter White — openly defies the U.S. government, helps crime thrive in the United States, Mexico and (now) Europe, sets the stage for political instability and for hostilities to develop among friendly nations, and rationalizes it as a necessary means of making money for his family.

The MLM equivalent of a Walter White could be in your upline or downline. Such a figure also could be very close to the money flow, staying out of sight but positioning himself to influence or even extort the public face of the scheme.

White broke bad when he morphed from a mild-mannered, noble but financially struggling chemistry teacher and family man into a brutal and conniving meth kingpin after his cancer diagnosis — on the theory that manufacturing and selling meth would help him pile up some cash to provide for his family after his death. Bodies in Mexico and the United States have piled up around him ever since, including the bodies of 167 people who perished when two planes collided over Albuquerque after an air-traffic controller who couldn’t concentrate on work accidentally directed them into each other because he’d been reduced to emotional rubble by his daughter’s drug-related death. (She asphyxiated on her own vomit; the airplane death toll in Albuquerque was only one less than the real-life Oklahoma City domestic-terrorist attack in 1995, which killed 168 when the Alfred P. Murrah Federal Building was bombed by Timothy McVeigh.)

Another body was that of White’s own brother-in-law, a DEA agent murdered by a neo-Nazi White had hired to kill his business partner (and onetime chemistry student) Jesse Pinkman, the boyfriend of the woman who drown in her own puke. Yet-another body (actually a body part) was that of a DEA informant’s head mounted on a turtle after being severed by a Mexican cartel to send a message. The head and turtle were booby-trapped with explosives that detonated, killing a DEA agent. Still-another body was that of Gus Fring, a Chilean national, New Mexico drug kingpin and onetime White boss who laundered funds through chicken restaurants, pretended to be a supporter of the DEA and was killed by a wheelchair bomb planted by White in the nursing home in which Fring’s enemy Hector Salamanca, a onetime cartel enforcer, resided.

White’s form of money-laundering was the classic car wash. But the writers easily could have provided him a different front, perhaps that of respected teacher who’d gravitated to the commodities field and relied on MLM-style pitchmen and boiler rooms to drum up business for the side operation and help clean up the cash.

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James C. Howard III

James C. Howard III

Court documents in the Commodities Online Ponzi caper describe “purported” purchases of “iron ore” and “related equipment” by the Florida-based firm in Mexico. The documents also point out that the enterprise was led by two individuals previously convicted of narcotics crimes in the United States and that more than $5 million mysteriously was wired to “accounts in Mexico” in March 2011 after one of the felons approved the wiring “directions” of the other — this after the first felon had received an SEC subpoena and the second had found out about it.

Separately, the court-appointed receiver in the case says that, “after substantial investigation, including extensive interviews, depositions, and on-site investigation conducted both in the United States and Mexico, the Receiver concluded that the Defendants had no recoverable iron ore or related equipment in Mexico.”

What they did have in Mexico, if anything, remains unclear. Also unclear is how much of the money sent to Mexico will be recoverable

More than two years after the SEC moved against Commodities Online, the precise nature of its business remains murky. As noted above, one of the things that is known is that two of the firm’s managers were associated with narcotics earlier in their lives and had criminal records for felonies and and yet somehow had managed to become investment executives.

Now, one of those felons — James Clark Howard III — has pleaded guilty to mail- and wire-fraud conspiracy for his role in the Commodities Online scam.

And, according to Howard’s proffer in the criminal side of the case, he approved the “directions” of fellow felon Louis N. Gallo III to wire millions of dollars to Mexico after Howard had been subpoenaed by the SEC.

Gallo was in Mexico, according to the proffer — and that’s an oddity because he was on U.S. federal probation at the time. The Sun Sentinel newspaper reported in 2012 that “Gallo was sentenced in 2008 in New Jersey for bank fraud, intent to distribute cocaine and transmitting a threat to injure.”

And, according to the proffer, Howard was one of the controllers of an enterprise known as SSH2 Acquisitions Inc., which has been sued amid allegations it, too, was conducting a Ponzi scheme. Howard also has been implicated in a separate Ponzi scheme targeting Haitian-Americans in Florida.

Terralynn Hoy, who has not been accused of wrongdoing, is listed in Nevada as a onetime director of SSH2. SSH2 sued Howard, alleging he was conducting a Ponzi scheme.

Hoy earlier had been a cheerleader for AdSurfDaily, which proved to be a $119 million Ponzi scheme. After that, she became a cheerleader for AdViewGlobal, a 1-percent-a-day Ponzi scheme federal prosecutors linked to ASD President Andy Bowdoin, now serving a 78-month sentence in federal prison for the ASD scam. Hoy later was listed by Zeek Rewards as an “employee.” In August 2012, the SEC described Zeek as a $600 million Ponzi and pyramid scheme.

Bowdoin, like Howard, was a convicted felon, according to court records.

AdViewGlobal launched in 2009, even as ASD was the subject of a major federal investigation. Zeek, whose business model strongly resembled the models of ASD and AVG, launched after both ASD and AVG had collapsed. With two convicted felons linked to the narcotics business at the helm, Commodities Online appears to have gathered more than $20 million.

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  1. Howard III has plead guilty to “Attempt and conspiracy fraud”, one count. The other charges, (fraud by wire, mail fraud, and laundering of monetary instruments) have for some reason been dropped. Those charges may still stand against the other defendants.