PatrickPretty.com

Month: September 2013

  • SPECIAL REPORT: Like AdSurfDaily And OneX Before It, Alleged TelexFree Pyramid Scheme May Be Engaging In Game Of Payment-Processor Roulette

    “While reviewing the ASD website in the District of Columbia, [an undercover agent] found a posting within ASD’s News section, apparently posted by ASD on July 2, 2008. The title of the posting was, “Alert Pay & Direct Deposit are being phased out July 31, 2008.” According to ASD’s posting, “We have notified BOA not to accept cash or personal checks for deposit account – English or Spanish.” ASD further stated, “Please remember that the preferred method of purchasing Ad Packages is by mailing a Check or by Solid Trust Pay . . . Solid Trust Pay is a Canada based money transmitting and payment company that, like the e-Gold system, operates over the Internet. It appears that beginning August 1, 2008, Solid Trust Pay will be ASD’s preferred method for receiving funds from members, and for paying rebates and commissions to members . . . Within the past two weeks, ASD has wired several million dollars to Solid Trust Pay from its BOA Accounts. A TFA also learned that earlier in July 2008, a bank other than BOA closed the last account that was controlled by Bowdoin or family members after that bank determined, and explained to them, that an investigation by the bank determined that Bowdoin appeared to be operating a Ponzi scheme.” — AdSurfDaily Ponzi scheme forfeiture complaint, August 2008

    TelexFree affiliate promos encouraging participants to register for International Payout Systems (I-Payout) began to appear online in recent hours. Just last month, TelexFree affiliates were encouraged to register for Global Payout Gateway, another e-Wallet vendor that supposedly would solve TelexFree's payment problems. There now are reports online that GPG has dumped TelexFree, leading to questions about whether TelexFree is trying to port its alleged fraud scheme to yet another vendor -- I-Payout.
    TelexFree affiliate promos encouraging participants to register for International Payout Systems (I-Payout) began to appear online in recent hours. Just last month, TelexFree affiliates were encouraged to register for Global Payroll Gateway, another e-Wallet vendor that supposedly would solve TelexFree’s payment problems as a pyramid-scheme probe moved forward in Brazil. There now are reports online that GPG has dumped TelexFree, leading to questions about whether TelexFree is trying to port its alleged fraud scheme to yet another vendor — I-Payout. Source: Google search results.

    In 2008, the U.S. Secret Service effectively accused the AdSurfDaily MLM “program” of playing a game of payment-processor roulette as U.S. law enforcement put the squeeze on certain money-movers, the willfully blind enablers of online fraud schemes.

    ASD, a $119 million HYIP Ponzi scheme that led to a 78-month prison sentence for operator Andy Bowdoin, started out by accepting “e-Gold and Virtual Money,” according to a Ponzi-scheme forfeiture complaint filed in federal court in August 2008.

    But ASD, according to the complaint, realized e-Gold had come under investigation for enabling the laundering of money, something that could put the heat on ASD.

    “Shortly after publicity surrounding the government’s investigation into e-Gold appeared, ASD discontinued using the e-Gold system as a means for receiving member funds,” the complaint alleged.

    And even as these events were occurring, according to court filings in the ASD case and in other cases, Robert Hodgins, a supplier of debit cards and the operator of Virtual Money Inc. — now listed by INTERPOL as an international fugitive — came under investigation in Connecticut amid allegations he was assisting in the laundering of narcotics proceeds in Medellin, Colombia, and prepping himself to assist in the laundering of funds in the Dominican Republic.

    Virtual Money, whom some ASD members said was supplying debit cards to ASD, also was linked to the PhoenixSurf Ponzi scheme, according to court filings.

    In December 2010, federal prosecutors alleged that ASD also had accepted money from e-Bullion, a California firm that processed payments for Ponzi schemes, including the $72 million Legisi HYIP scheme in Michigan that led to prison sentences for operator Gregory McKnight and pitchman Matthew John Gagnon. E-Bullion operator James Fayed has been sentenced to death for ordering the brutal contract slaying of his wife, a potential witness against him. Pamela Fayed’s throat was slashed repeatedly in the shadows of a Greater Los Angeles parking garage, her husband seated on a nearby park bench “like he doesn’t have a care in the world.”

    ASD, according to court filings, also used AlertPay and SolidTrustPay, money-movers based in Canada that have been linked to multiple Ponzi schemes, including the alleged $600 million Zeek Rewards Ponzi scheme broken up by the SEC last year.

    Not even Bowdoin’s arrest in 2010 stopped him from pitching fraud schemes, according to court filings. Facing serious criminal charges for his actions in ASD, Bowdoin (in 2011) became a pitchmen for the OneX “program,” which federal prosecutors later alleged to be a pyramid scheme recycling money in ASD-like fashion. Among Bowdoin’s fellow OneX pitchmen was T. LeMont Silver, later of Zeek and later of  JubiMax and GoFunPlaces, two MLM “programs” that are suing each other amid allegations of financial fraud.

    At one time, OneX claimed to have a relationship with SolidTrustPay. It then claimed to have ended that relationship and to have started a relationship with I-Payout. Earlier, I-Payout had listed the uber-bizarre TextCashNetwork MLM “program” with ties to the Phil Piccolo organization as a “selected client.” TextCashNetwork now appears to have disappeared, but still is operating with the acronym “TCN” — this time as TrueCashNetwork. How the “new” TCN is processing payments is unknown. What is known is that someone associated with the “new” TCN has sent emails to “winners” in the Zeek scheme in an apparent bid to get them to flog for the new iteration, an apparent investment arm of which is being promoted as an opportunity to earn an interest rate of 50 percent.

    Now — as incredible as it seems — promoters of the alleged TelexFree pyramid scheme operating in Brazil and the United States now are claiming that TelexFree is using I-Payout, known formally as International Payout Systems Inc. Equally incredibly, this is happening less than a month after TelexFree promoters advised TelexFree participants to register with Global Payroll Gateway (GPG), another eWallet company and supplier of debit cards, as a means of getting paid after payouts to Brazilian members of TelexFree were blocked in Brazil.

    Just last month, TelexFree affiliates were encouraging prospects to register with Global Payroll Gateway (GPG). In recent hours --0 and amid reports GPG has given TelexFree the boot -- TelexFree affiliates have been urged to register with I-Payout.
    Just last month, TelexFree affiliates were encouraging prospects to register with Global Payroll Gateway (GPG). In recent hours — and amid reports GPG has given TelexFree the boot — TelexFree affiliates have been urged to register with I-Payout. Source: Google search results.

    There are reports online, including on Facebook from self-identified members of TelexFree, that GPG gave TelexFree the boot in recent days. No sooner did those reports surface than videos went up on YouTube encouraging TelexFree members to register for I-Payout.

    One of the reports that TelexFree suddenly had shifted from GPG to I-Payout is published on the MoneyMakerGroup forum. MoneyMakerGroup’s name appears in U.S. court files as a place from which Ponzi and fraud schemes are promoted. Both FINRA and the SEC have warned that HYIP schemes spread in part through social-media sites such as forums, YouTube and Facebook.

    Because international MLM HYIP fraud schemes often have promoters in common — and because the schemes are promoted on Ponzi cesspits such as MoneyMakerGroup and TalkGold —  proceeds from the schemes can flow into banks at the local level, putting them in the position of becoming warehouses for the ill-gotten gains of participants, including winners and insiders. The use of stored-value debit cards such as those in play in HYIP schemes can lead to the quick dissipation of assets, meaning that victims of an HYIP scheme may have limited hope (or even no hope) that a recovery can be made for their benefit.

    The most recent incongruous events involving TelexFree are occurring even as at least one judge and one prosecutor involved in the TelexFree pyramid probe in Brazil reportedly have been threatened with death. And, as was the case with ASD, some promoters of TelexFree have claimed an ability to expedite the flow of money to the scheme — perhaps through back-office transactions within the TelexFree system.

    Also see report on BehindMLM.com.

     

     

  • REPORT: Brazilian Judge In TelexFree Case Again Threatened With Death

    telexfreeatseaThe judge presiding over elements of the TelexFree pyramid-scheme case in the Brazilian state of Acre again has been threatened with death and a police investigation is under way, according to Globo.com.

    Here is the Sept. 12 story in Portuguese. He is an English translation by Google Translate.

    It is the second time the judge reportedly has received death threats related to the TelexFree probe. Earlier threats were made in June. (The link in the preceding sentence is to the Google English translation. Here is the Portuguese original from June.)

    Despite the unsettling events in Brazil — indeed, a prosecutor also reportedly has been threatened with death — American MLMers continue to flog the purported TelexFree “opportunity.” Some promos claim a payment of $15,125 to TelexFree for the purchase of a “contract” fetches at least $42,075 in a year.

    Also see Aug. 4, 2013, PP Blog editorial about a July MLM rah-rah event for TelexFree in California that occurred against the backdrop of reported death threats in Brazil aimed at judicial officers and while multiple pyramid-scheme probes were under way in Brazil.

    Meanwhile, see July 8, 2013, PP Blog report that outlines some of the coaching about money flow TelexFree affiliates in the United States have received. (It is very reminiscent of the AdSurfDaily Ponzi scheme, which the U.S. Secret Service broke up in August 2008.)

    For more information on TelexFree, use the PP Blog’s search function in the upper-right corner. Type in “TelexFree.”

    TelexFree operates in the United States as TelexFree Inc. and TelexFree LLC. It recently claimed also to have a presence in the United Kingdom.

  • REPORT: ‘Women’s Circle’ Cash-Gifting Pyramid Scheme ‘Making Its Rounds’ In Canada’s Province Of British Columbia

    recommendedreading1The Castlegar Source, a publication in British Columbia, is reporting that the Nelson Police Department has issued a warning on a purported “women’s circle” gifting “program” making its way around the area.

    A similar scheme operating in the United States resulted in criminal charges being filed against Connecticut-based pitchwomen and subsequent convictions — with jail sentences ordered.

    Former Connecticut Attorney General Richard Blumenthal — now a U.S. Senator — once described “gifting” schemes as “pernicious” and as “merely a fancy name for an old-fashioned pyramid scheme that bleeds newcomers to feed the parasites above them.”

    “State and federal law prohibit all pyramid schemes because each one is a house of cards doomed to collapse,” Blumenthal said in 2009, noting that the “The Women’s Gifting Table” scheme in Connecticut positioned itself as a “sisterhood.”

    It seems Blumenthal’s early assessment of the perniciousness of the Connecticut scheme was correct. It later was revealed that even members of Alcoholics Anonymous had been targeted in the scheme. In 2009, the Better Business Bureau warned that frauds associated with gifting programs and gifting clubs were flourishing on the Internet.

    The schemes, according to the BBB, may use social-media to gain a head of steam and ultimately take advantage of families struggling to make ends meet during challenging economic times.

    Flash forward to 2013. From yesterday’s edition of the Castlegar Source (italics added):

    Police said because there is no new money created in the circle, the scheme is simply a fraud that allows the original recruiters to take money from the new members. 

    Eventually, when no new recruits come into the circle, the gifters will have lost their money.

    Pyramid schemes are illegal under section 206 (1) (e) of the Criminal Code and Competition’s Act.

     

  • TELEXFREE: Promoters Tell Brazilian Prospects To Create Registration Address In England — And To Appear At Door Of Brazilian Supreme Court Judge

    telexfreelogoEDITOR’S NOTE: At the time of the publication of this story, the PP Blog was experiencing trouble loading graphics. The probable cause of this is a conflict between certain plugins used by the Blog. We are working to correct this problem . . .

     

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    UPDATED 12:25 P.M. EDT (U.S.A.) TelexFree, an alleged pyramid scheme operating as an MLM that has U.S. arms in Massachusetts and Nevada and effectively was shut down in June in Brazil (by court order in Brazil) but continues to operate elsewhere, seems on the cusp of cementing itself as a marquee example of cross-border fraud.

    Several days ago, the company inexplicably began to publish the address of a purported office in the United Kingdom in Watford — near London. Today an apparent TelexFree promoter writing on a media site in Brazil appears to be instructing Brazilian affiliates to enroll with the firm by using any address in London, thousands of miles away. This coaching appears to originate from a hotmail address. (See story/comments thread in Portuguese; see translation of story/comments thread via Google Translate.)

    The center of London is approximately 5,700 miles away from the center of Rio de Janeiro, the Brazilian city that will play host to the 2016 Olympics. London hosted the 2012 Olympics. There are dozens of pyramid-scheme probes under way in Brazil, in the run-up to the 2016 Summer Games.

    Even more troubling than the suggestion that Brazilians should fabricate a London address to enroll in TelexFree is a suggestion from another apparent TelexFree affiliate on the same site in Brazil that affiliates should appear at the door of a judge of the Supreme Court of Brazil. It is unclear from the English translation of the post whether any protest aimed at the judge would occur at the Supreme Court or at his personal residence. Plenty of peaceful protests occur in Brazil. But a protest at the residence of a judge potentially would introduce the specter of menacing — something that was present in the AdSurfDaily Ponzi case in the United States.

    Purported American “sovereign citizen” Kenneth Wayne Leaming — a figure in the ASD story — was convicted earlier this year of multiple charges, including filing bogus liens against public officials involved in the ASD case. The evidence in the case strongly suggested that Leaming intended to stalk the children of the Chief Justice of the United States at the school they attended — as part of a plot to serve paperwork on the Chief Justice.

    TheTelexFree story is similar in certain key ways to the ASD story. For starters, some ASD members refused to believe that a crime had been committed against them and taunted prosecutors and the U.S. Secret Service with threats. There have been reports in Brazil of death threats against a judge and a prosecutor. Both the ASD and TelexFree schemes were targeted at Christians. Meanwhile, members of both “programs” were promised preposterous, unusually consistent returns. In the ASD case, the precoumpounding returns computed to an annual return in excess of 300 percent. Some TelexFree promoters have claimed that sending $15,125 to TelexFree results in a tripling or quadrupling of the money in a year.

    Beyond that, it almost certainly is the case that some TelexFree affiliates also were pitchmen for ASD and for Zeek Rewards, an MLM “program” described by the SEC last year as a $600 million Ponzi- and pyramid scheme. This leads to questions about whether criminal MLM combines are driving business to purported “opportunities” despite the legal, financial and social consequences. In April 2013, the SEC said a “program” known as Profitable Sunrise was using a mail drop in England as part of a massive scam that used a series of offshore bank accounts potentially to fleece people of faith of millions and millions of dollars.

    Now, TelexFree purports to be operating from England. The mere listing of a business address is not proof that no scam is occurring, despite repeated bids by HYIP schemes to create an air of legitimacy by publishing an address or registering it with a government. Profitable Sunrise, for instance, had a registered address. So did Zeek. So did AdSurfDaily. Both of the TelexFree addresses in the United States appear to be virtual offices or mail drops.

    And TelexFree affiliates have been sending confusing messages for months on how to send money to the firm. This sometimes signals that money-laundering, wire fraud or another crime is occurring. Some of the TelexFree affiliate bids strongly resemble events at ASD — events that led to the criminal indictment and subsequent sentencing of ASD President Andy Bowdoin to a 78-month prison term. (Also see Aug. 21 PP Blog story on a TelexFree shift to yet another payment processor.)

    BehindMLM.com is reporting that “rampant fraud” may be affecting TelexFree’s operations.

     

  • Zeek Claims Portal Is Closed; Filing Deadline Passes; [Updated To Include Sept. 6, 2013, Link To ‘Letter From The Receiver’]

    breakingnews72 UPDATED 3:37 P.M. EDT (SEPT. 6, 2013 U.S.A.) The portal for filing claims in the Zeek Rewards Ponzi-scheme case is closed. The deadline for filing claims passed at 11:59 p.m. EDT on Sept. 5.

    The website of the Zeek receivership remains online. On Sept. 6, receiver Kenneth D. Bell” posted a new “Letter from the Receiver.” (See comments thread below for some of the highlights.)

     

  • New Count Of Loan-Sharking Filed Against Accused Ponzi Schemer

    breakingnews72Already facing criminal Ponzi and loan-sharking charges in Massachusetts and a disgorgement order of at least $3.1 million in an SEC civil case brought him in April 2013, Steven Palladino faces a new hurdle: He has been arrested again for loan-sharking.

    That arrest came yesterday, according to the office of Suffolk County (Mass.) District Attorney Daniel F. Conley.

    Less than two months ago (July 18, 2013), the SEC said it had obtained a disgorgement order of at least $3.1 million against Palladino and his company, Viking Financial Group Inc.

    On Aug. 11, Palladino repeatedly “began calling and texting” to demand repayment of $30,000 from a customer to whom he’d provided an illegal loan in February 2013 at a usurious interest rate of 40 percent,  Conley’s office said.

    “The victim contacted Boston Police, who yesterday apprehended Palladino in his 2012 Mercedes CLS 63 AMG Coupe at a West Roxbury gas station,” Conley’s office said. ” In his pockets were wads of cash totaling $4,395 and a check to the Viking Financial Group for $3,499.47.”

  • United Kingdom’s Financial Conduct Authority Issues Warning On SolidTrustPay, An HYIP Darling On The Ponzi Boards

    fcastpwarningseptember2013UPDATED 3:33 P.M. EDT (U.S.A.) Thanks to PP Blog reader “Tony,” who first posted a link to the FCA warning in this story thread on how a Profitable Sunrise Facebook site was being used to promote TelexFree, an alleged pyramid scheme.

    In April 2013, the SEC described Profitable Sunrise as a murky offering fraud that may have gathered tens of millions of dollars. SolidTrustPay, a Ponzi-forum darling used by a stunning number of schemes, reportedly was one of the processors used by Profitable Sunrise. Zeek Rewards, alleged last year by the SEC to have been a combined Ponzi- and pyramid scheme that had gathered at least $600 million, also used SolidTrustPay, according to court filings. So did AdSurfDaily, a $119 million Ponzi scheme broken up by the U.S. Secret Service in 2008. And so did JSSTripler/JustBeenPaid, a “program” purportedly operated by Frederick Mann that has spawned at least three reload scams and, like ASD, may have ties to the “sovereign citizens” movement. “Sovereign citizens” may be gaining a toehold in Canada, one of the bases of SolidTrustPay. (Please note that the “opportunities” referenced above constitute only a small sampling of the HYIP schemes enabled by SolidTrustPay.)

    Also see this 2012 Consent Order between the Securities Department of the U.S. state of Arkansas and SolidTrustPay in which SolidTrustPay agreed to pay a $60,000 civil penalty and did not contest findings that it had been operating illegally in the state for years, had processed about $12 million in Arkansas through about 43,600 transactions and had illegally mined more than $331,000 in fees and commissions in the state.

    What follows below is the warning on SolidTrustPay issued on Aug. 30, 2013, by the Financial Conduct Authority (FCA) of the United Kingdom. From the FCA:

    SolidTrust Pay Ltd

    Published: 30/08/2013

    We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.

    Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised by us.

    However, some firms act without our authorisation and some knowingly run scams like share fraud.

    This firm is not authorised by us but has been targeting people in the UK:

    SolidTrust Pay Ltd

    Website: www.solidtrustpay.com

    How to protect yourself

    We strongly advise you to only deal with financial firms that are authorised by us, and check the Financial Services Register to ensure they are. It has information on firms and individuals that are, or have been, regulated by us.

    If a firm does not appear on the Register but claims it does, contact our Consumer Helpline on 0800 111 6768.

    There are more steps you should take to protect yourself from unauthorised firms.

    You should also be aware that if you give money to an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

    Report an unauthorised firm

    If you think you have been approached by an unauthorised firm or contacted about a scam, you should contact our Consumer Helpline on 0800 111 6768. If you were offered, bought or sold shares, you can use our share fraud reporting form.

    You can see more ways to report an unauthorised firm and find out what to do if you have been scammed.

     

  • Profitable Sunrise Facebook Site Again Used To Drive Business To TelexFree, An Alleged Pyramid Scheme

    Despite at least seven pyramid-scheme probes into TelexFree, an apparent affiliate of the MLM "program" was promoting it yesterday on Facebook -- on a site once used to lead cheers for the Profitable Sunrise scheme.
    Despite at least seven pyramid-scheme probes into TelexFree, an apparent affiliate of the MLM “program” was promoting it yesterday on Facebook — on a site once used to lead cheers for the Profitable Sunrise scheme.

    A Facebook cheerleading site for Profitable Sunrise — alleged in April by the SEC to have conducted an offering fraud that may have gathered tens of millions of dollars through offshore bank accounts — again is being used to drive dollars the TelexFree scheme. The same Facebook site has been used to drive cash to multiple schemes. Some of the schemes already have disappeared, taking unknown sums with them.

    “100% Guaranteed Get Paid To Post Telexfree Ads,” a post on the Profitable Sunrise site roared yesterday. There was no mention that at least seven pyramid-scheme probes into TelexFree are under way in Brazil.

    The TelexFree pitch on the Profitable Sunrise Facebook site is surrounded by claims that a “conference call” has been held with a purported Profitable Sunrise “Admin” and that a new call will be held today and that some sort of good news is in the offing.

    With respect to Profitable Sunrise, a post dated Aug. 21 declares that the U.S. government “Is The Crooked One.”

    In 2010, FINRA said that HYIP fraud schemes were spreading though social-media sites through which pitchmen seek to sanitize the scams by making them appear to be legitimate programs.

    “Whack-a-mole” also is an element in the scams: As soon as one scam is shut down, others pop up to replace it. The interconnectivity of the schemes and the willful blindness of many participants put banks and payment processors in the position of becoming warehouses for fraudulent proceeds, leading to questions about money-laundering, wire fraud and national security.

    In August 2012, the SEC said the Zeek Rewards MLM scheme had gathered at least $600 million through a combined Ponzi- and pyramid scheme. The final haul of Profitable Sunrise, which the SEC described in April 2013 as a scheme operated by an apparent ghost, is unknown.

    By some estimates, TelexFree has gathered $300 million or more. Some promoters have planted the seed that TelexFree was “authorized” by the U.S. government. The U.S. government does not authorize such schemes.

    BehindMLM.com is reporting today that investigators in Brazil have established promotional links between TelexFree and BBOM, another alleged fraud scheme operating in Brazil.

  • Zeek Claims-Filing Deadline Is Thursday, Sept. 5, 2013; Only 2 Days Left

    The deadline for filing claims in the Zeek Rewards Ponzi-scheme case is 11:59 p.m. prevailing Eastern time on Thursday, Sept. 5, 2013. That’s only two days from today.

    A “File a Claim” button is accessible on the website of the court-appointed receiver. The receiver is Kenneth D. Bell.

    The Garden City Group is the authorized claims administrator working for the Receiver Team, according to the receiver’s website.

    “This is the only legitimate, Court-approved claims form,” the receivership website notes.

    Visit the receiver’s Claims FAQs page.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the Zeek case. North Carolina is in the U.S. Eastern Time Zone, the prevailing time zone for Zeek claims.

    On May 8, 2013, Mullen approved the claims process, set the bar date and approved the receiver’s method of administering the process. The claims portal opened on schedule on May 15. Claims submitted after the Sept. 5 deadline “are automatically disallowed pursuant to the Order approving the Claims Process,” according to the receiver.

  • GLOBAL POST: Canadian Cops, Lawyers, Judges Named In Multimillion-Dollar ‘Liens’ Or ‘Ecclesiastical Notices’

    recommendedreading1On Sept. 28, 2012, the PP Blog reported on bizarre court filings linked to “sovereign citizens,” “Freemen-on-the-Land” and others in Canada.  The story may provide some additional context for a story published yesterday by the Global Post with a Vancouver dateline.

    From the Global Post: “Police officers, Crown lawyers and judges have been sued or been named in multimillion-dollar ‘liens’ or ‘ecclesiastical notices’ or other legal manoeuvres.”

    Notaries public reportedly have encountered menacing behavior from “sovereigns” or “freemen.” Police have experienced the same during traffic stops.

    And there is concern about encounters involving firearms, according to a bulletin quoted by the Global Post.