PatrickPretty.com

Author: PatrickPretty.com

  • Sea Of Incongruity Surrounds Club Asteria: As ‘Ken Russo’ Pushes ‘Opportunity’ On TalkGold Ponzi Board, World Bank Qualifies ‘Director’ Claims Made By Promoters

    The World Bank confirmed to the PP Blog this morning that a person named Andrea Lucas left its employment in December 1986, nearly 25 years ago. But Lucas was never a member of the World Bank’s board of directors, as many members of business “opportunity” known as Club Asteria have implied in online, MLM-style promotions for the firm.

    Rather, the World Bank described Lucas as a former department head among “many” department heads who held the internal title of director of an individual department. Lucas, the World Bank said, was director of the management systems and account department. She worked in Washington, D.C., according to the World Bank’s records.

    The PP Blog initially sought comment from the World Bank on March 3 about Lucas and various claims about Club Asteria made by members of the purported opportunity. Some of the claims have been made on the TalkGold Ponzi scheme and criminals’ forum. The World Bank’s name is being used in Club Asteria promos on TalkGold and other websites.

    A blurb for Andrea Lucas on the slow-loading Club Asteria website describes her in the first sentence as “former Director of the World Bank,” using an uppercase “D” in “Director” with no other qualifiers. The reference to the World Bank begins seven words into the profile. The profile also lists Andrea Lucas as  “founder and Managing Director of Club Asteria.” No other entities are referenced in the Andrea Lucas blurb.

    The blurb makes no mention that Andrea Lucas left her staff job at the World Bank more than two decades ago, when Ronald Reagan was President of the United States and Mikhail Gorbachev was General Secretary of the Communist Party of the now-dissolved Soviet Union.

    When Andrea Lucas last worked at the World Bank, George Herbert Walker Bush was Vice President of the United States and still more than two years away from his term as President. The “Black Monday” market crash of October 1987 had not yet occurred, and Iraq’s August 1990 invasion of Kuwait that led to the Gulf War was still nearly four years away. Modern-day accused shoplifter and actress Lindsay Lohan was five months old, and few people outside of Arkansas recognized the names of Bill Clinton and Hillary Clinton. Barack Obama, a community organizer in Chicago, had yet to enter Harvard Law School or meet Michelle Robinson, who’d become his wife and, later, First Lady of the United States.

    Regardless, Lucas and the World Bank are referenced repeatedly in online promos by Club Asteria members. Why the company and promoters had seized on the World Bank’s name when Andrea Lucas last was employed there nearly a quarter of a century ago as a young woman was not immediately clear.

    “Real Profit Sharing Program ! No Ponzi !” one affiliate promo preemptively screams. “Club Asteria from the Former Director of World Bank – Andrea Lucas.” The affiliate site includes a photo of a letter dated Dec. 14, 2010, and the letter appears to feature the World Bank’s letterhead and verify the former employment of Andrea Lucas at the World Bank.  It is positioned by the affiliate as a reason to trust Club Asteria.

    Why the affiliate would preemptively argue that Club Asteria was “No Ponzi” was unclear.

    Another promo describes Club Asteria as “a perfect home based business that specializes in the remittance business of sending funds back home.

    “We provide training, opportunities, consultation and one of the most sensational pay plans of our time,” the promo continues. Club asteria (sic) is run by a former Director of the World Bank and it (sic) set to take the net by storm.”

    “Ken Russo,” who posts at TalkGold as “DRdave” and promotes one highly questionable scheme after another, announced yesterday that Club Asteria’s membership ranks had soared to 187,481.

    The announcement occurred against the backdrop of a December warning by the Financial Fraud Enforcement Task Force led by U.S. Attorney General Eric Holder that visitors to websites and forums should be skeptical of claims.

    “Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims,” the Task Force warned.

    Except for its confirmation this morning that a person named Andrea Lucas once worked for the World Bank and its release of certain details about her employment nearly a quarter of a century ago, the World Bank declined to comment immediately about the linkage of its name to Club Asteria and the promos at TalkGold and other websites.

    The bank, however, confirmed it is aware of the claims. Meanwhile, some Club Asteria members are grumbling in forums about the firm’s slow-loading website and spotty customer support. Among the concerns is that the company recruited members under one set of rules, but may be trying to implement a new set that may force higher costs on participants who expect to get paid.

    Some Club Asteria members appear to be confused about whether Club Asteria conducts business from the United States or Hong Kong.

    How the company makes money beyond membership fees is unclear. Also unclear is whether the firm has significant revenue streams beyond membership fees. Club Asteria appears to publish no verifiable financial data.

    The World Bank is the most recent prominent international entity to have its name appear on TalkGold and other Ponzi forums that push highly questionable business pursuits. Last year, members of the purported MPB Today “grocery” program, which operates as an MLM, flooded websites and social-media sites such as YouTube with references to Walmart.

    It is common in the MLM sphere for affiliates to trade on the names of prominent business entities even if no ties exist. Walmart’s name also appeared in promos on the Ponzi boards.

    TalkGold, MoneyMakerGroup and ASAMonitor are referenced in federal court filings as places from which international Ponzi schemes are promoted. Even if Club Asteria is a legitimate enterprise, the mere fact it is being promoted on the Ponzi boards raises troubling questions about whether its revenue stream is polluted by proceeds from any number of fraud schemes operating globally.

    In recent weeks, federal agencies such as the SEC and CFTC have taken actions against schemes promoted on the Ponzi boards. Meanwhile, the FTC announced an action this week against an online enterprise that allegedly was not policing its affiliate sales force properly.

    The FTC charged Lester Gabriel Smith and Legacy Learning of Nashville, Tenn., with disseminating “deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or ‘independent’ reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.”

    In bringing the case, the agency held Smith and Legacy accountable for claims made by affiliates.

    “Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising.”

    See the FTC news release on Legacy Learning, which was assessed a $250,000 penalty.

  • SEC Chief Makes Veiled Reference To Imperia Invest Case In Congressional Testimony: Will Ongoing Law-Enforcement Initiatives Spell More Trouble For Serial Online Scammers And Their Enablers?

    SEC Chairman Mary Schapiro

    SEC Chairman Mary Schapiro alluded to the agency’s investigation of the alleged Imperia Invest IBC scam in testimony before Congress this morning, a development that may signal more bad news is in the offing for serial scammers online.

    Without mentioning Imperia by name, Schapiro told members of the House Subcommittee on Financial Services and General Government that the agency, which is a member of the Financial Fraud Enforcement Task Force, participated in “Operation Broken Trust.”

    In December, the U.S. Department of Justice noted that the Imperia case brought by the SEC in October was part of the operation. Imperia was promoted on Ponzi and criminals’ forums such as TalkGold and MoneyMakerGroup, both of which have been identified in federal court filings as places from which family-destroying international Ponzi and HYIP fraud schemes are promoted.

    Schapiro said today that the SEC has been aggressively pursuing “Ponzi scheme operators and perpetrators of offering frauds.” The Imperia case, which the SEC brought in Utah, is an example of an Internet-based offering fraud, as are many of the “programs” pitched on the Ponzi boards.

    In December, members of the Financial Fraud Enforcement Task Force identified Ponzi Scheme "hot spots" in the United States. Pictured here are FBI Executive Assistant Director Shawn Henry (foreground), with Attorney General Eric Holder (right) and Chief Postal Inspector Guy Cottrell. The Task Force specifically warned investors to be wary of social-networking sites and chat forums. And officials noted that "we continue to use sophisticated investigative techniques—like undercover operations and court-authorized electronic surveillance—to collect evidence in ongoing cases and to identify and stop criminals before they prey on others."

    Salt Lake City was identified in December by the Task Force as one of the “top five Ponzi scheme hot spots in the country.” Other Ponzi hot spots include Los Angeles, New York, Dallas and San Francisco, the Task Force said, cautioning Americans that the fraud hardly was limited to those cities.

    “Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims,” the Task Force urged.

    In June 2010, the Justice Department used its Justice Blog to create awareness about the emerging threat of mass-marketing fraud, specifically referencing the alleged Pathway To Prosperity Ponzi scheme. Pathway To Prosperity, which the U.S. Postal Inspection Service said created tens of thousands of victims from virtually all corners of the world, also was promoted on TalkGold and MoneyMakerGroup.

    In October, before the public knew Operation Broken Trust was under way, the SEC said Imperia had stolen millions of dollars from thousands of Americans with hearing impairments. The firm used a payment processor known as Perfect Money, a favorite among international scammers who populate the Ponzi boards. Imperia also purported to have a relationship with Visa, but was using the name “without authorization” to disarm skeptical investors, the agency said.

    Not a “single penny” was paid to Imperia investors, the SEC said.

    Money from the Imperia scheme is believed to have been funneled into accounts in Cyprus and New Zealand. Imperia purported to have operated from the Bahamas and Vanuatu, but the business addresses were “fake,” the SEC said.

    The Justice Department said Imperia used “a series of offshore PayPal style bank accounts to raise “in excess of $7 million from at least 14,000 investors worldwide, including 6,000 investors in the U.S. who have invested in excess of $4 million.”

    Earlier this year, the CFTC turned its attention to purported Forex programs that were promoted on TalkGold and MoneyMakerGroup. Some of those programs also used PerfectMoney. Like the SEC, the CFTC is part of the Financial Fraud Enforcement Task Force.

    Tips From The Task Force

    • Be careful of any investment opportunity that makes exaggerated earnings claims, especially during a short period of time.
    • Ask for written information about the investment, such as a prospectus, recent quarterly or annual reports, or an offering memorandum.
    • Consult an unbiased third party, like an unconnected broker or licensed financial adviser, before investing.
    • Don’t be fooled into believing an investment is safe just because someone you know is recommending it. So-called “affinity scams” are one of the favorite methods used to lure people in.
    • If you feel you are being pressured into investing, don’t do it.
    • Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims.

  • BULLETIN: ‘Sovereign Citizen’ Accused In ‘Two For One’ Plot To Murder Judges, State Troopers In Alaska; ‘Militia’ Had Acquired Grenades, Grenade Launcher, Machine Guns; Another Man Charged Separately In Plot To Kill Federal Judge

    Francis "Schaeffer" Cox

    BULLETIN: (UPDATED 7:04 P.M. EDT (MARCH 14, U.S.A.) Five residents of Alaska with ties to the so-called “sovereign” citizen and “militia” movements have been charged under state law in an alleged plot to kidnap or murder Alaska state troopers and a state judge in Fairbanks.

    One of the suspects was charged separately under federal law with threatening to kill U.S. District Judge Ralph R. Beistline and a member of Beistline’s family. Beistline was presiding over a civil tax case involving one of the state-level defendants, and was targeted “in retaliation for and on account of the performance of his official duties,” according to the indictment.

    Charged federally was Lonnie G. Vernon, 55, of Salcha.

    Vernon also was charged under state law. Also charged in the state case were Francis “Schaeffer” Cox, 27, of Fairbanks;  Karen Vernon, 64, of Salcha; Coleman Barney, 36, of North Pole;  and Michael O. Anderson, 35, of Fairbanks. Karen Vernon is Vernon’s wife.

    Anderson was charged with conspiracy to commit murder, conspiracy to commit kidnapping and tampering with evidence. Charges against the other defendants include conspiracy to commit murder, conspiracy to commit kidnapping, conspiracy to commit arson and misconduct involving weapons.

    Cox and “others” had acquired hand grenades, a grenade launcher, a .50-caliber machine gun, a .30-caliber machine gun, “dozens” of assault rifles and pistols and “thousands of rounds of ammunition,” according to the state complaint.

    Cox filed “nonsensical” pleadings while awaiting trial in a March 2010 case in which he was charged with not announcing he was concealing a handgun when he approached a police officer, according to the state complaint.

    In a YouTube video of a court hearing dated Dec. 14, 2010, Cox declared himself a sovereign being and said he did not recognize the authority of the court. Perhaps to amplify his disrespect for the court, he wore a hat when addressing the judge.

    “Wait, wait, wait, wait. No, no,” he told the judge. “If I get an invitation [for] next week, I’m going to treat it like an invitation to a Tupperware party.”

    “I won’t be here,” he declared.

    In October 2010 — with his trial date approaching in February 2011 — Cox began “amassing multiple caches of assault rifles and prohibited explosive devices,” including the grenades and machine guns, according to the charges.

    Just prior to his Feb. 14 trial date, Cox informed authorities he would not show up for trial. When he did not appear, a bench warrant was issued.

    The FBI had infiltrated the militia group at least by Feb. 12 and “lawfully recorded” conversations that occurred as the probe moved forward, according to the charges.

    Cox, according to the complaint, discussed a “241” program, which was shorthand for “two for one.”

    The plan “called for his militia to respond to attempts to arrest or kill him by responding against state court or law enforcement targets with twice the force and consequences as happened to him or his family,” according to the state complaint.

    Cox ventured that his arrest would constitute a “kidnapping” that, under the “241”plan,  called for two state targets to be arrested, meaning “kidnapped,”  according to the complaint.

    “If he was killed, two state targets would be killed,” according to the complaint. “If his house was taken, two state target houses would be burned.”

    And Cox talked about drilling a state judge “in his forehead,” according to the complaint.

    A Twitter account referenced in the state charging document includes this Jan. 26 post:

    “The DA made a motion to bar me from talking about the constitution in court! LOL He’ll be work’n as Chip N’ Dale dancer if he keeps this up.”

    In December 2010, according to the state complaint, Cox told a state judicial officer that “we know where all the Troopers live, we have you outmanned and outgunned and could probably have  you all dead in one night.”

    At a Cox-related hearing in December, Cox advised a  a state judge that “you’re now being treated as a criminal engaged in criminal activity and you’re being served in that manner.”

    Also present at the hearing was person described only as “Ken.” “Ken” declared himself a militia member speaking on behalf of Cox, saying he was Cox’s representative and “counsel before God,” according to the state complaint.

    The complaint also alleged that Cox or “others” acting “on his behalf — in the days leading up to the trial date — filed “multiple pleadings” that made no sense. The pleadings demanded the charges against Cox be dismissed and made “other claims,” according to the state complaint.

    Prosecutors did not describe the nature of the claims. “Sovereigns” have been known to threaten judges and members of law enforcement with criminal and civil prosecution and file claims for alleged damages. In some cases, “sovereigns” have placed liens for astronomical sums against public servants.

    Meanwhile, the complaint alleges that surveillance was being conducted on potential targets of the militia and that Cox was able to pinpoint on a map the residences of state troopers and judges.

    One state trooper reported being photographed at a gas station, possibly by Michael Anderson, one of the defendants in the state case.

    On Feb. 14, the date Cox was supposed to be in court for his trial, he met with the Vernons at their home, according to the state complaint.

    When the discussion turned to what would happen if authorities arrived to arrest Cox, Lonnie Vernon allegedly said, “I’ll take all the sons of bitches I can with me. They’ll die a miserable death too.”

    Later in February, Cox said that women and children could become casualties of the “241” plan, according to the complaint.

    One militia member told Cox that he was not “into killing women and children.” Cox, according to the complaint, responded by saying that he “would not target a woman or child, but if their kids get killed in the process, so be it.”

    Cox went on to say that, to make a point, “I’m not against sending somebody’s head in a box.”

    Later, Cox declared it his duty to oppose “the tyrant judge . . . who does not follow the constitution.”

    On Feb. 26, according to the complaint, Cox discussed the publication of “wanted dead or alive posters” that would include the faces of police officers, an assistant district attorney, a court clerk and a state judge.

    Lonnie Vernon allegedly claimed there is going to be a “bunch of dead mother-fuckers before all this is over,” according to the complaint.

    And Karen Vernon said the Vernon home would go “up in smoke” before law enforcement could take the couple’s property.

    Cox is the head of the “Alaska Peacemaker’s Militia,” according to the state complaint.

    After he determined the offered price for six hand grenades was reasonable, he speculated about leaving his hiding place in the home of Coleman Barney after the militia had acquired more weapons, including a handgun with a silencer, according to the complaint.

    Cox talked going to Montana to assure the safety of his family, and returning to Alaska to engage in “guerilla warfare,” according to the complaint.

  • Report By Small-Town Newspaper In Colorado Leads To Forex Ponzi Scheme Arrest In Chicago; FBI Nabs Mark Akins After Durango Herald Readers Provide Tips

    A fugitive suspected of helping organize a Forex Ponzi scheme that traded on a claim that a special “algorithm” led to hefty profits has been arrested in Chicago after a small-town Colorado newspaper 1,350 miles away reported he was wanted.

    The Durango Herald, which has a circulation of 9,400 and has received awards from the Associated Press, the Society of Professional Journalists and the Colorado Press Association over the years, reported earlier this month that Mark Akins was wanted for a scheme that allegedly had operated in Durango.

    Akins was accused of being the “gatekeeper” for the scheme, which netted at least $1.2 million and affected 70 investors.

    Also charged in the case was Frederick H.K. Baker of Utah. Baker already has made an initial court appearance in Utah. Akins is scheduled to make an appearance in Illinois next week, the Herald reported.

    After reading the Herald report that Akins was wanted, a woman contacted the newspaper to say she believed Akins was living in Chicago. The newspaper referred her to law enforcement.

    A reader in Chicago, meanwhile, said he contacted the FBI after reading the story, the Herald reported.

    The reader then emailed the paper to report that Akins had been arrested in the Windy City.

    “We saw your article and notified the FBI and he was arrested on Thursday night,” the reader told the newspaper.

    Read the Herald’s first story.

    Read the Herald’s follow-up story about the arrest of Akins.

    Claims of miraculous trading algorithms and fool-proof software are common in the universe of Forex hucksters.

    Robert Mihailovich Sr., a convicted felon, was charged by the CFTC last year with presiding over a Forex fraud that purportedly used a “mass sub-algorithm.” Mihailovich allegedly started the new scam after his release from prison in 2007.

    Enrique F. Villalba was charged last year with presiding over a futures fraud that allegedly used a unique “momentum filter.”

    Earlier this month, Jacob Juma Omukwe was charged in a Forex caper in which it was alleged he used software to trick customers into believing their money was segregated for safety.

    Anthony Eugene Linton was charged in January in a case that alleged he told customers that his miraculous software system let them “profit every time.”

  • PP Blog Operated By ‘Self-Appointed Idiot,’ Fan Of Nonexistent Nation Of ‘New Utopia’ Suggests; Blog Invited, Then Uninvited To Ceremony At ‘Palace’

    A man using the anonymous identity of “Mr. Protector,” a hotmail address and an IP in the Netherlands has scolded the PP Blog for a story that described “New Utopia” as a nonexistent nation in the Caribbean.

    New Utopia is the fanciful “tax haven” allegedly dreamed up by Lazarus R. Long, an American who declared himself a “prince” and hatched a plan to form a “new country” that would “rise from the Caribbean on giant concrete platforms built on an underwater land mass,” according to the SEC.

    Using the phrase “selfappointedidiotyouare” [Self Appointed Idiot You Are] apparently to chide the PP Blog for giving less than favorable coverage to the nonexistent nation, the man sent an email to the Blog this morning that both invited and uninvited the Blog to view New Utopia’s “Palace” on a date uncertain.

    “How about we print your words out about New Utopia in size 12 font and then, when New Utopia Construction begins, we can invite you there in front of the Palace and watch you eat the words and the paper they are written on?” the man wrote.

    In the very next paragraph, however, he uninvited the Blog.

    “[H]ow will we know to not allow you to visit The Principality of New Utopia?” the man inquired. “We will find a way of that be assured.”

    Although the context in which the man used the word “Protector” was unclear, it is a word that has been used by members of certain so-called “private associations” that challenge the authority of governments to regulate commerce and the securities industry.

    The AdViewGlobal (AVG) autosurf, for example, identified a member as a “Protector.” AVG has been identified in a racketeering lawsuit as an offshoot of the AdSurfDaily (ASD) autosurf. The lawsuit was filed by members of ASD.

    ASD was accused separately by the U.S. Secret Service of operating a $110 million Ponzi scheme and of committing wire fraud, securities fraud and engaging in the sale of unregistered securities.

    On Feb. 18, the PP Blog reported that federal agents — working with law-enforcement partners worldwide — had broken up a fraud ring operating in part from Florida, Costa Rica and elsewhere.

    Among the defendants charged both criminally and civilly was Jonathan R. Curshen. Curshen has been described as the one-time “honorary counsel” of St. Kitts-Nevis to Costa Rica and a purported “consulate” to New Utopia.

    New Utopia has its own website from which it sells an “International Drivers license” issued by New Utopia for $140.

    According to court records, the nonexistent principality is said to be located undersea “approximately 115 miles west of the Cayman Islands.” It would rise out of the water only after concrete stilts were erected and an above-sea base were anchored to a submerged land base.

    New Utopia, indeed, will rise, according to “Mr. Protector,” the author of the email sent to the PP Blog this morning.

    “Too many of us have worked too hard for too many years to just abandon this project,” he wrote.

    “Your ‘reporting’ does not help,” he complained.

    Long, also known as Howard Turney, was accused by the SEC in 1999 of promoting a fraudulent bond offering over the Internet to fund his upstart country. He settled with the agency in 2000 and was assessed a penalty of $24,000, but the penalty was waived.

    “Prince” Long has used the New Utopia website to complain bitterly about anonymous critics on the Internet. Whether “Mr. Protector” risked a royal scolding from the “Prince” for using an anonymous identity to contact the PP Blog was not immediately clear.

  • BULLETIN: CFTC Shuts Down Forex Scam Allegedly Operated In Wisconsin By Canadian Who Claimed Belize Incorporation; Website Of JadeFX Taken Offline; Federal Judge Orders Asset Freeze

    BULLETIN: A Canadian man was running a Forex scheme in the United States that touted its incorporation in Belize, the CFTC said.

    The scheme was operating from Wisconsin Dells, Wisc., and had at least six corporate bank accounts and two PayPal accounts into which customers sent money, the CFTC said.

    Named defendants in a case of solicitation fraud were Jacob Juma Omukwe, JadeFX Ltd. and Jade Investments Group LLC, all of Wisconsin Dells. Omukwe is a citizen of Canada, and the CFTC said that he “misappropriated more than $3.2 million from more than 500 customers in the United States and throughout the world to trade forex.”

    A federal judge has issued an emergency asset freeze. The JadeFX website has been taken offline. Neither Omukwe nor the companies was registered with the CFTC, and the website contained “many contradictory statements that appear to be the product of the Defendants having ‘lifted’ statements from various other websites hosted by legitimate forex dealers,” the CFTC charged.

    The case originally was filed under seal March 1. The seal was lifted after U.S. District Judge William M. Conley of the Western District of Wisconsin ordered an asset freeze and Omukwe consented to a permanent injunction.

    Omukwe told a sea of lies, according to the complaint. Among the lies was a claim that “JadeFX is operated out of Belize and does not conduct business in the United States,” the CFTC charged.

    Between June 2009 an Jan. 27, 2010, Omukwe and his fraudulent companies received more than $400,000 from investors “all over the world,” the CFTC charged.

    “However, during this eight month period, JadeFX had no forex trading account to place forex trades on behalf of customers,” the agency alleged.

    After Jan. 27, 2010, investors plowed more than $3 million into the scheme, and Omukwe kept about $2 million, according to the CFTC.

    Alarmingly, the CFTC added, “In order to foster the false impression that customer money is segregated from that of JadeFX, customers can download a software program from the Defendants’ website that purportedly enables customers to place forex trades in the customer’s account.

    “While Defendants create the appearance of segregated accounts for customers using the software program, in fact no such accounts exist,” the agency continued. “In reality, customers who send funds to the JadeFX or Jade bank accounts have no control over their funds once the money is sent to the Defendants’ bank accounts, which are controlled by Omukwe.”

    And Omukwe also falsely claimed to be “immune” to both U.S. law and laws of the individual states, the agency charged.

    All in all, the agency said, Omukwe had 12 bank accounts as part of the scheme, and used six of them to accept money from U.S. customers.

  • SEC: Recidivist Huckster Made Bedside Visit To Dying Man, Promised Him ‘Investment’ Would Take Care Of His Wife For ‘Life’; Couple’s Money Plundered In Apparent HYIP/Prime-Bank Hybrid Scheme With Link To Another Swindle

    EDITOR’S NOTE: Make no mistake: America is at risk from an epidemic of white-collar crime. American money is at risk, American prestige is at risk, and national security is at risk — as Americans hatch one fraud scheme after another and recruit other Americans (and citizens of other countries) to help the schemes mushroom. Some of the conduct reads like fiction of the strangest sort. It’s enough to want to make you gag.

    The story below may make some readers angry — and rightly so. It covers allegations against Larry Michael Parrish of Walkersville, Md. Parrish is accused by the SEC of orchestrating a $9.2 million swindle through IV Capital, his mysterious firm incorporated in Nevis, an island in the Caribbean.  The scheme allegedly had the characteristics of a sort of HYIP/prime bank hybrid.  “Programs” that resemble the one allegedly pushed by Parrish are regularly hawked on Ponzi scheme and criminals’ forums such as Talk Gold and MoneyMakerGroup. Because law enforcement has made inroads in educating the public about the dangers of HYIP schemes, the promoters of such schemes now are trying to make prospects believe they are not investing in an HYIP — and millions of dollars continue to vanish into giant, money-sucking sinkholes.

    The alleged Parrish scheme also has a link to another scheme — this one a “diamond-themed” caper, the SEC said.

    Get ready to gag . . .

    Posing as a concerned financial adviser and investment strategist, recidivist securities swindler Larry Michael Parrish of Walkersville, Md., visited a dying man in a Colorado hospital, the SEC said.

    The man was suffering from cancer. Parrish assured him that investing with him was safe, that the man’s wife would not have to worry about her finances after his death, that “the investment would provide for his wife for the rest of her life.”

    “That money is now gone,” the SEC said. And so is the money from 70 other investors in three states, about $9.2 million in all, the agency added.

    Because Parrish had had well-documented run-ins with the SEC, a trove of information about him was available online and in public filings. Some of his investors even found it. When they approached him with questions, Parrish lied, the SEC said.

    “When expressly asked by investors, Parrish denied that he was the named defendant,” the SEC charged.

    Although Parrish claimed he’d been running a successful business, he’d been running a Ponzi scheme since 2005, the agency said.

    The scheme began to collapse in June 2009, and the excuse-making began, the SEC said.

    “On August 17, 2009, Parrish wrote to his investors to explain the ‘delay in the payment of past earnings,’” the SEC charged. “The letter claimed that some investors in IV Capital had not paid taxes on earnings which ‘triggered a bank audit for the entire group.’”

    “Interest” payments could not be made until the purported bank audit had been completed and until the investors who purportedly weren’t complying with tax laws came into compliance, Parrish allegedly told investors.

    “As part of its investigation, the SEC did not find — and Parrish and IV Capital did not provide — any evidence that there ever was a bank audit that resulted in Parrish being unable to make payments to the investors,” the SEC said.

    But Parrish held to his cover story for months, the SEC said.

    In October 2009, he told investors that “there were still four members who were out of tax compliance,” the SEC said.

    By December 2009, the SEC said, Parrish was reporting good news to investors: Only three members purportedly remained out of tax compliance.

    Even so, the SEC said, Parrish told investors he faced other challenges. These challenges purportedly included “administrative work and time traveling and meeting with non-U.S. clients.”

    A Phantom Partner?

    In February 2010, two investors scheduled a meeting with Parrish in New York to talk about “missed payments and [the] current status of IV Capital. Parrish and a “purported partner in IV Capital” were supposed to attend the meeting.

    “The night before the two investors were to fly from Colorado, where they reside, to New York, Parrish contacted them to say the purported partner was unavailable to meet. As part of its investigation, the SEC did not find — and and IV Capital did not provide — any evidence that Parrish had any partner in IV Capital.”

    What the SEC eventually discovered was that Richard Dalton, who was running a separate, “diamond-themed”  Ponzi scheme, was acting as an agent for Parrish in the Parrish Ponzi scheme, which was called the “Trading Program.”

    Dalton’s alleged diamond-themed scheme also featured bizarre claims, including assertions that payments were delayed to investors because an airplane the firm used to shuttle diamonds from Africa lost an engine and had to make an emergency landing in Amsterdam.

    Parrish “misappropriated” at least $780,000 in investor funds by awarding himself cash, luxury vacations, a motorcycle, shopping trips, and other extravagances, the SEC said.

    He was not registered with the SEC, and had ignored orders handed down for previous misconduct, the SEC said.

    The nature of his new scheme involved some sort of high-risk trading on a limited basis, and part of the fraud is “presently uncategorizable,” the SEC said.

    “No investor funds remain,” the SEC said. “Parrish and IV Capital’s known bank accounts are empty.”

    Since the collapse of the scheme, “Parrish has virtually disappeared and refused to cooperate with the SEC during its investigation,” the agency said.

  • THIS AFTERNOON: 9 Visitors From 6 Countries Arrive At PP Blog Within 5 Minutes; All Pull Exact Same September 2010 Story About MPB Today Multilevel Marketing Program, Then Vanish

    In a highly unusual — and statistically improbable occurrence — nine visitors from six countries arrived on the PP Blog within five minutes today and sought unsuccessfully to pull the exact same story on the MPB Today multilevel marketing program. With the apparent aid of a script, all of the visitors also attempted unsuccessfully to pull a story about an alleged Ponzi caper in New Jersey.

    The MPB Today story was nearly six months old, and the New Jersey story was nearly seven months old. The visitors left as quickly as they came, and appear not to have sought to pull any other stories.  Although it is common for individual visitors to pull “old” stories, it is decidedly uncommon for multiple visitors to attempt to pull the same “old” stories from the Blog’s archives of nearly 1,100 stories virtually simultaneously.

    Because the pattern suddenly ceased and no other individual reader outside the subset of “sudden” visitors sought to pull the same stories, it does not appear likely that the URLs for the stories appeared on a common website today through which visitors all sought to load the same pages virtually simultaneously.

    Readers routinely post links to the PP Blog on forums. But as the forum posts age and are buried by new posts, the Blog receives fewer and fewer visits from the older links.

    MPB Today is based in Florida. It purportedly operates a “grocery” program, and the U.S. Department of Agriculture said last year that it was investigating certain claims made about the firm.

    The circumstances and motives surrounding the visits were not immediately clear. The Blog recorded visits from IPs in the United States, Russia, Brazil, Spain, Thailand and South Korea. Logs suggest a script of some sort was used, and that the visitors sought to pull an MPB Today story that was published Sept. 25.

    Logs also suggest that the same visitors sought to pull  a story that appeared Aug. 12 about Eli Weinstein. Weinstein was charged in an alleged Ponzi caper that may involve $200 million or more.

    The PP Blog’s Weinstein story included a reference to Nevin Shapiro, who was arrested in New Jersey in April 2010 on charges of running an $880 million Ponzi scheme involving a bogus wholesale grocery business.

    In October and November, the PP Blog experienced sustained DDoS attacks. During one three-hour window, the Blog received more than 6 million “hits.” The attacks were reported to law enforcement, and coincided with the Blog’s reporting on MPB Today and Ponzi scheme and criminals’ forums.

    The PP Blog also has been subjected to email spoofing, virtually relentless spamming, YouTube attacks, threats of “war” and threats to start “fires” because of its reporting about the alleged ASD Ponzi scheme, and a false registration to a “program” in which the Blog was referred to as “Rat Bastard.” The “Rat Bastard” reference appears to have been associated with a cash-gifting program.

  • U.S. Marshal John Perry Dies From Gunshot Wounds Sustained After Ambush Attack By St. Louis Fugitive; Attorney General Issues Statement; Perry Is Second Marshal Slain Since Feb. 16

    UPDATED 2:58 P.M. ET (U.S.A.) Deputy U.S. Marshal John Perry, who was critically wounded early yesterday in an ambush in Missouri in which another marshal and a St. Louis police officer were wounded, has died, the U.S. Marshals Service announced.

    Perry, 48, died at 7 p.m. yesterday at Saint Louis University Hospital. He had been a marshal for 10 years.

    Carlos Boles, a fugitive wanted for assaulting a police officer and drug possession, was killed in the exchange of gunfire.

    Deputy Marshal Theodore Abegg, 31, suffered a bullet wound to the leg. Abegg has been with the marshals service for three years.

    The St. Louis police officer, whom authorities did not identify, suffered a wound when a bullet struck his face. He was treated and released from a hospital.

    Abegg remains hospitalized.

    “Our people and our partners are well trained and prepared, but it is impossible to predict when a wanted individual will make a fateful choice that results in the loss of life or injury,” said Stacia A. Hylton, director of the U.S. Marshals Service.

    “When that happens, and the life lost is a law-enforcement officer or other public servant, it is an immeasurable tragedy felt by all,” Hylton said. “Today, unfortunately, we again feel that pain. Our thoughts and prayers are with our fallen deputy as well as the injured and their families.”

    U.S. Attorney General Eric Holder issued a special statement on the death of Perry.

    “Yesterday’s tragic shootings in St. Louis are yet another solemn reminder of the dangers that United States Marshals confront on a daily basis,” Holder said. “These brave men and women routinely put their lives on the line in their work to combat crime and gun violence, to apprehend dangerous criminals, and to help bring fugitives to justice. Yesterday’s actions by two Deputy U.S. Marshals and local police officers in St. Louis reflect the dedication and courage that defines America’s law-enforcement community.

    “Less than a month after Deputy U.S. Marshal Derek Hotsinpiller was killed in the line of duty in Elkins, West Virginia, our thoughts and prayers now are with the families of Deputy U.S. Marshal John Perry, who made the ultimate sacrifice, as well as with Deputy U.S. Marshal Theodore Abegg and the St. Louis police officer who were injured yesterday,” Holder said. “Their service, their courage, and their willingness to risk their own lives to protect the safety of others will not be forgotten. As we mourn this devastating loss, we also reaffirm that the Justice Department’s commitment to supporting our law-enforcement partners — and to ensuring officer safety — will continue to be a top priority.”

  • BULLETIN: SEC Charges Jason Bo-Alan Beckman In Trevor Cook Ponzi Scheme; Judge Freezes Assets; Agency Says Investors’ Cash Used To Make Child-Support Payments And Puchase ‘Luxury Homes’ And Cars

    BULLETIN: Jason Bo-Alan “Bo” Beckman has been charged civilly by the SEC in the Trevor Cook Ponzi scheme in Minnesota and named a “leading” figure, according to court filings. The case against Beckman was brought as an action separate from the civil action against Cook, who also was charged criminally and is in federal prison serving 25 years after pleading guilty last year.

    The SEC’s complaint suggests other defendants may follow.

    “His fraud was part of a bigger scheme orchestrated by and with Trevor Cook and several associates,” the agency said, alleging that Beckman raised about $47.3 million of the $194 million gathered in the overall fraud — roughly 25 percent of the overall total. Former radio host Pat Kiley previously was charged civilly.

    Chief U.S. District Judge Michael J. Davis has frozen Beckman’s assets.

    One individual — a 41-year old nurse — submitted a sworn affidavit to Davis that Beckman promised him “guaranteed” annual returns of “12% or greater.”

    The nurse, an inexperienced investor who put $130,000 into the scheme, asserted he learned about the purported currency-trading program from Hollie Beckman, Beckman’s wife. Hollie Beckman has been named a relief defendant amid assertions she received ill-gotten gains. Her assets also have been frozen.

    Another inexperienced investor — a 60-year-old man who previously was retired but has returned to work because his life savings of nearly $750,000 were wiped out in the scheme — said in a sworn affidavit that Beckman promised him a “guaranteed”  return of 10.5 percent. Like the nurse, the man was given a tour of the Van Dusen Mansion, the landmark Minneapolis estate from which Beckman and Cook conducted business.

    This man rolled over his 401K account and liquidated his pension fund to become an investor, according to an affidavit.

    Yet-another inexperienced investor — a 62-year-old man who works as a water-plant operator — said he put $99,300 into the scheme by liquidating an account at Bear Stearns. Beckman promised him that his “fixed” account would generate about 13 percent annually, according to a sworn affidavit.

    All told, the SEC charged, “Beckman’s investors ultimately lost over $39 million by investing in the Currency Program and putting their money in his hands.” About 143 investors gave Beckman their money.

    Luz M. Aguilar, an SEC investigator, said that $85 million of the $194 million “was never invested in any type of foreign currency trading.”

    And Aguilar alleged that “the Beckmans deposited approximately $7.7 million into their personal joint accounts.” The funds originated “from accounts containing funds of investors,” according to Aguilar.

    More than $61,000 was used to make child-support payments, Aguilar alleged.

    But most of the money went to fuel an extravagant life-stlye, according to Aguilar. Here is a list of some of the spending:

    • $210,828 for automobile payments. The fleet allegedly included a 2010 Jaguar, a 2008 Land Rover, a 2006 Land Rover, a 2008 Mercedes, a 2008 Suzuki and a 2000 Mercedes.
    • $1.49 million for payments “toward the purchase” of luxury homes in Minneapolis, Texas and Florida.
    • $695,000 for credit-card payments.
    • $180,000 for a suite to watch hockey games.
    • $36,000 to “resorts.”
    • $76,000 to a country club.
    • $108,000 for cash withdrawals.
    • $224,000 for construction and repairs.
    • $997,000 for payments to seven law firms.
    • $223,000 for taxes.

    “Beckman was in a position to know the truth about the Currency Program,” the SEC charged. “He worked side-by-side with Trevor Cook at the Van Dusen mansion. Red flags waved all around him. For example, he knew — by April 2008, over a year before the scheme collapsed — that investors’ funds were pooled and were not in segregated accounts at all. He also learned from Trevor Cook that the location of investors’ funds was ‘not a black and white situation.’ The warning signs were glaring. Yet Beckman kept [quiet] — and kept taking tens of millions of dollars from investors . . .

    “Now that the Currency Program is over — and the money flow has stopped — the Beckmans apparently are struggling to make ends meet. Their expansive home in the Minneapolis suburbs is in foreclosure,” the SEC said.

    The SEC asked Davis to halt a sheriff’s sale set for March 14, and the judge issued an order blocking it.

    Even though Beckman had serious doubts about Cook, he kept them to himself, not sharing with investors information they needed to make informed decisions, the SEC charged.

  • URGENT >> BULLETIN >> MOVING: Feds, SEC Say Connecticut Ponzi Scheme With International Reach Involved ‘Hundreds Of Millions Of Dollars’; 2 Arrests Made By FBI In Florida

    BULLETIN: A Connecticut hedge-fund operator not registered with the SEC “in any capacity” and two other men — both Venezuelan nationals — have been charged in a spectacular Ponzi caper that allegedly involved hundreds of millions of dollars and a derailed plot to thwart an SEC investigation.

    FBI agents have arrested Juan Carlos Guillen Zerpa, and Juan Carlos Horna Napolitano in Florida. They are charged with conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the SEC.

    Guillen Zerpa, 43, is an accountant and a citizen of Venezuela. Horna Napolitano is a Venezuelan citizen living in Pembroke Pines, Fla. Pembroke Pines is a city in Broward County.

    The principal defendant in the case — Francisco Illarramendi, 42, of New Canaan, Conn. — already has pleaded guilty to criminal charges, according to U.S. Attorney David B. Fein of the District of Connecticut. He was accused by the SEC in its civil case of misappropriating at least $53 million in investor assets.

    “As a result of the scheme, the investors and creditors of Illarramendi’s funds face potential losses of hundreds of millions of dollars,” the FBI said in a statement.

    The SEC today upgraded civil charges filed against Illarramendi in January, saying he “attempted to hide the fact that his hedge funds were missing assets by providing the SEC staff with a false letter from an accountant in Venezuela that purported to verify the existence of approximately $275 million in assets held by one of the funds.

    “Those assets do not exist,” the agency alleged.

    “Illarramendi knew that the SEC was onto his scheme and compounded his fraud by attempting to mislead the Commission’s staff,” said David P. Bergers, director of the SEC’s regional office in Boston.

    Fein said the scheme may prove to be the largest in Connecticut’s history.

    “This investigation has revealed that Francisco Illarramendi operated a massive Ponzi scheme that has defrauded foreign investors of hundreds of millions of dollars,” Fein said. “While the precise dollar losses will not be known for some time, based on this fast-moving investigation, we believe this case represents the largest white-collar prosecution ever brought by this office.”

    Both the FBI and the SEC pursued the case forcefully, Fein said. The agencies are part of the newly formed Connecticut Securities, Commodities and Investor Fraud Task Force, which Fein said was “actively investigating this and other financial fraud schemes.”

    A veteran FBI agent said criminals domestic and “overseas” should expect to get caught.

    “This investigation should serve as fair warning to those, whether in Connecticut, elsewhere in the United States, or overseas, who would attempt to victimize an increasing number of American and foreign investors,” said Kimberly K. Mertz, special agent in charge.

    “The Connecticut Securities, Commodities, and Investor Fraud Task Force will continue to aggressively investigate these criminals and protect the rights of the investing public,” Mertz said.

    Charging documents in the case allege a spectacular fraud that relied on self-dealing and an elaborate maze of deceit.

    Illarramendi pleaded guilty to two counts of wire fraud, one count of securities fraud, one count of investment adviser fraud and one count of conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the SEC.

    He faces up to 70 years in federal prison.

    “Illarramendi has admitted that he agreed to pay Guillen [Zerpa] and Horna [Napolitano] more than $3 million for fabricating” a letter and creating false support for $275 million in loans, the FBI said.

    Read the statement from the FBI and Fein.

    Read the SEC complaint.