PatrickPretty.com

Author: PatrickPretty.com

  • LETTER TO READERS: PP Blog Calls Police, Turns Off Google AdSense Ads After Search Giant Refuses To Take Report About Chronic Harassment From YouTube Cyberstalker ‘unclefesta26’

    Dear Readers,

    YouTube and Google apparently are unwilling to do anything about the cyberstalker “unclefesta26,” who appears to be harassing the PP Blog (and others) from an IP in the United Kingdom.

    First, though, let me share some of reasons for this post.

    The PP Blog is a Google AdSense publisher. On Nov. 17, Google invited me to participate in a beta test of a tool designed to give publishers more control over the AdSense ads that appear on their sites. I eagerly registered for the beta program on the day I received the invitation because I sensed a gathering storm.

    Indeed, one of the reasons I quickly registered for the beta program was that “unclefesta26” had used YouTube as a platform from which to poison the Blog’s brand by planting the seed that it cannot be trusted because of some of the AdSense ads that have appeared here. Here is one example. Here is another. I saw the beta program as both a welcome tool and a means of minimizing harassment from “unclefesta26.”

    The PP Blog has thousands of readers. I have received only a tiny number of complaints about AdSense ads. By “tiny,” I mean no more than three in the past two and a half years.

    If you’ve never had a stalker, these matters perhaps will seem trivial to you. But I necessarily have to spend time and energy monitoring this situation, which is chilling my ability to publish and earn a living in an atmosphere free of extortion — emotional or financial.

    It’s important to note that “unclefesta26,” who previously was banned from posting on the PP Blog, also has used the name “Pistol” and “Pistol’s Pal” online. Stalking never should be taken lightly, especially when one has used the name “Pistol.”

    A search of YouTube associates “unclefesta26” with approximately 311 videos. Virtually all of them harass his targets in one way or another. YouTube is providing the stage, contrary to its own Community Guidelines.

    In any event, the new AdSense tool has been helpful in blocking certain types of ads from appearing on the Blog. The tool, however, is not perfect. Owing to a large number of variables that may trigger ads, I am not certain any tool can do a perfect job. One of the biggest variables of all is taste. What some readers may view as objectionable could be perceived by others as something worthy of embrace. The PP Blog does not establish the rules by which Google accepts advertisers.

    What “unclefesta26” is doing is at the edge of irrationality, another thing wholly consistent with stalking. His IP has appeared on the PP Blog hundreds of times in recent weeks, according to our database — this after I had banned an earlier IP. I detected the new IP only days ago. It has become clear that “unclefesta26” is persistently videotaping the Blog, narrating passages from the Blog, scraping content to which he adds provocative sexual innuendo and employing a keyword strategy to poison the brand of the Blog.

    How bizarre have things gotten? Well, “unclefesta26” is using the keyword phrase “anal exam” to confuse the YouTube public about the PP Blog. He is taking the PP Blog’s content, changing it to suit his ends — and then publishing commentary attributed to the Blog on YouTube.

    I offer no apologies for seeking to make a living in my profession — in an environment that is affecting operations large and small as publishers scramble to remain relevant and even to hang on in the Internet Age. I have used the tool — and a previous tool provided by Google — to try to minimize the publication of ads inconsistent with the aims of the PP Blog. I cannot make it perfect — and now I have to deal with “unclefesta26” poisoning the PP Blog’s brand on YouTube.

    In one of his YouTube videos, “unclefesta26” videotaped headlines that scrolled across the top of the PP Blog. He used software to insert a bogus headline, changed the wording on the Blog’s “Breaking News” graphic — and added text that a reader of the Blog conducts “Anal” exams — “That’s Arsehole or Asshole To You And I,” he noted — “On Person Or Persons Unknown.”

    Here are some questions YouTube and Google should contemplate: What if “unclefesta26” and others like him go after other AdSense publishers? What if he poisons the brands of other AdSense-participating journalists? Will publishers become reluctant to carry AdSense ads because the price of carrying them is to be pilloried on a stage that Google itself provides? How many small publishers such as the PP Blog will become discouraged when they come to realize that Google apparently is unwilling to act in the interests of its own publishers?

    Among the ad categories I have blocked are “Get Rich Quick,” “Drugs & Supplements” and “Weight Loss.” I also have blocked “Brokerages & Day Trading,” “Securities,” “Retirement Investments,” “Spread Betting” and about 18 other categories pertaining to finance, investments and pharmaceuticals/healthcare. I cannot make the system fool proof. I do not believe that Google can, either.

    “unclefesta26’s” stock-in-trade is to lie in wait until he sees an ad on the PP Blog that displeases him — and then to produce a video of the story in which the ad appears. His general allegation against the Blog is one of hypocrisy: If I write about a court case in which damages were ordered against a company in a false-advertising case — and if Google places an ad in the story from a company he perceives to be objectionable — “unclefesta26” races to YouTube to skewer the Blog. At the same time, he is using his YouTube site to ridicule actual living, breathing human beings who support the Blog’s editorial mission.

    Yes, “unclefesta26” even is using YouTube to harass the Blog’s readers. Looking at it another way, not only is “unclefesta26” attacking an AdSense publisher, he also is attacking the very people the AdSense program is designed to attract: readers interested in buying things and comparing options.

    What he is doing is wholly unnatural and disturbing — and I say this as a person who spent seven years in the law-enforcement trenches before embarking on my writing career more than two decades ago. I have seen great harm come to the objects of stalkers — both physical and emotional. Stalking is never to be taken lightly. There is no doubt — absolutely none — that the behavior of “unclefesta26” is consistent with an obsession to inflict distress. It also is consistent with a pattern of refusing to stop no matter what — and that makes it dangerous. It is vulgar, to be sure.

    “unclefesta26” was banned from posting on the PP Blog in June 2009 for chronic harassment of the Blog and its readers. The very nature of his cyberstalking site on YouTube demands that YouTube and Google pay attention. If I were David Letterman — and if this harassment were occurring in or near my home — “unclefesta26” already would have a date with a judge. He then could explain to the judge why he believes it legal to lift a person’s image off the Internet and create an animated video that depicts the person as a breast-squeezing pole dancer wearing what appears to be a diaper when he isn’t dancing in the buff.

    I contacted Google by phone at its corporate headquarters in Mountain View, Calif., Friday at 3:31 p.m. (PT) to file a cyberstalking complaint against  “unclefesta26,” who has produced yet-another video designed to harass the Blog. It is possible — though not certain — that the video was made after “unclefesta26” made a fraudulent click on an AdSense ad that appeared on the Blog.

    Even if the video “unclefesta26” produced did not use footage he accessed after making a fraudulent click, it still constitutes cyberstalking and harassment. I am not going to take it — especially not after the DDoS attacks by still-unknown parties against the Blog in 2010. They increased the Blog’s monthly costs tenfold.

    Here, below, is “unclefesta26’s” most recent effort to harass. (The person depicted in the YouTube video is not “unclefesta26.” Rather, the person appears to be a Google advertiser whose ad appeared on the PP Blog):

    Google No Help

    You’ll note in the video above that “unclefesta26” took a screen shot of a story that appeared on the PP Blog Jan. 5. The screen shot includes a slice from an AdSense ad that appeared in the post. “unclefesta26” used the following keywords on YouTube to plant the seed that the Blog was engaging in illegal conduct: “patrick pretty hypocrite scammer ponzi scam fraud.”

    In the past, “unclefesta26” has used a gmail address to email the Blog to nuisance it and to announce his latest YouTube efforts. Not only is he a cyberstalker, he also is proud of his efforts to use Google-owned properties to annoy and harass his targets. The part of the story that he does not tell is that he has been banned from multiple online sites for behavior consistent with cyberstalking and relentless hectoring.

    Rather than hosting his own sites, “unclefesta26” relies on free services provided by Google. In the past, he used a free Ning.com website as a platform of harassment. He has a documented history of ignoring rules of decorum and of creating multiple identities to keep his nuisance campaigns intact. A moderator at one forum told me that “unclefesta26” created more than a dozen user identities in a single day. He created at least two user identities at the PP Blog and also appears to have the ability to use proxies to enter sites from which he has been banned.

    My most unsatisfactory call to Google Friday lasted four minutes and 29 seconds. Google refused to transfer me to a person authorized to speak about security- and fraud-related matters and its AdSense program. Incredibly, Google explained there was no way to speak with a person who actually could listen to and field my complaint. In my frustration after hearing canned responses and after having had no luck in the past with getting YouTube to do anything, I voiced my displeasure, testily saying that I insisted on being transferred to someone in authority.

    What I got was another canned response. It was like talking to a person who’d been programmed by geeks to say the same thing no matter what. It’s not a stretch to believe that the phone-answerer at Google would have told me to send an email had I called to report I’d just been mugged on the Mountain View campus or had seen a woman thrown forcibly into a car. The company seemed to care less that we had a common business problem.

    I am not happy. The PP Blog produces revenue for Google and content that it eagerly indexes. The Blog is being harassed on Google-owned YouTube by a cyberstalker in no small measure because of its participation in Google’s AdSense program — and yet Google cannot or will not put me through to a person in authority.

    “unclefesta26” apparently believes that any revenue the Blog receives is too much because Google sometimes delivers ads to the Blog that he deems objectionable — this while he uses phrases such as “blow job” and “flasher” and engages in bizarre sexual innuendo on his YouTube stalking site, which is equally unfriendly to women.

    PP Blog Calls Police

    At 3:42 p.m., after getting off the phone with Google, I called the Mountain View (Calif.) Police Department and asked to speak with a police officer. I identified myself and the location from which I was calling, providing a brief summary of what I sought to report. The woman who answered the phone did not identify herself as a police officer. Eventually I was placed on hold. The woman then came back on the line and told me the Mountain View department could not take my complaint, that I had to call my local police department.

    So, at least for now, “unclefesta26” has demonstrated that people who wish to use YouTube to harass AdSense publishers and others have a safe haven. It will do absolutely no good to call my local police department in the United States. I had hoped that the Mountain View police would take a report and contact Google on my behalf to at least start the ball rolling — and that Google would call me back. It became next to impossible for me Friday night to think of Google as a company that cares.

    At least temporarily, the Blog has removed the code that produces the AdSense ads. If Google is unable or unwilling to accept a phone call from an AdSense publisher who is being harassed on a Google-owned site, Google is not looking out for me. The run-around one gets when one seeks to speak with an actual human being in authority about legitimate issues of cyberstalking and fraud is unacceptable. At the same time, YouTube has permitted “unclefesta26” to create a stalking and hectoring site — one that not only is targeting this Blog, but also subjecting people who interact with the Blog to ridicule. One of his targets is a registered 501(c)3 corporation that works proactively with the U.S. Secret Service and other law-enforcement agencies to educate the public about scams.

    I have sent three complaints about “unclefesta26” using the YouTube system of screens. The complaint system, which I first used months ago, is worthless in my view. I have never even received a response. The harassment has continued for well more than a year and even has been dialed up.

    Given my background, I do not subscribe to the belief that the best thing to do about “unclefesta26” is to ignore him. He has been banned from multiple online forums for harassing behavior, which demonstrates a troubling pattern of persistence. The only other people ever banned from the PP Blog were “joe,” who threatened to start “fires” that Blog could not put out, and ASD mainstay Bob Guenther, who threatened to take measures to defeat the Blog’s security systems.

    Given the DDoS attacks that were launched against the PP Blog in October and November — and a subsequent email it received that referenced “Doomsday” — the Blog has legitimate security concerns.

    What “unclefesta26” is doing is both revolting and shameful.

    And what Google and YouTube have done in response is equally revolting and shameful. They are permitting YouTube to be used as an agent of hurt. Both YouTube and Google have erected barriers that make it difficult for users to communicate with them in a meaningful way.

    This, Readers, is what “unclefesta26” is doing to the chairman of a 501(c)3 corporation. The chairman proactively works with the U.S. Secret Service to combat fraud online:

    YouTube and Google should be horrified. So should all advocates for safety on the Internet.

    “Things like predatory behavior, stalking, threats, harassment, intimidation, invading privacy, revealing other people’s personal information, and inciting others to commit violent acts or to violate the Terms of Use are taken very seriously,” YouTube notes in its Community Guidelines.

    Those words ring hollow to the PP Blog today.

    Patrick

  • Federal Judge, 5 Others Shot And Killed In Arizona; Suspect Lamented About ‘Gold Standard’ And ‘Currency’; Rep. Gabrielle Giffords Shot At Close Range, Survives Emergency Surgery

    Rep. Gabrielle Giffords.

    A federal judge was shot and killed in Arizona yesterday in an attack apparently aimed at a member of Congress who was holding a constituent event outside a supermarket in Tucson, an official said.

    Rep. Gabrielle Giffords was shot in the head at close range. President Obama said she was battling for her life after undergoing emergency surgery. The president announced the death of U.S. District Judge John Roll in a special statement at the White House.

    Roll had just attended Mass and had stopped by the supermarket on his way home. The Wall Street Journal reported that he stopped at the event to thank Giffords for signing a letter to the Ninth Circuit Court of Appeals that a judicial emergency existed in Arizona because of a high number of immigration cases and a lack of judges to hear them.

    Also killed in the attack were a nine-year-old girl, three senior citizens in their seventies and a 30-year-old Congressional aide engaged to be married.

    In 2009, Roll was under the 24-hour protection of the U.S. Marshals Service for about a month because of threats made against him, the Washington Post reported.

    The alleged shooter used a semiautomatic handgun, authorities said. He was identified as Jared Loughner, 22, of the Tucson region. This is believed to be his YouTube site.

    Obama dispatched FBI Director Robert Mueller to Arizona to coordinate the investigation.

    “We are going to get to the bottom of this,” the President pledged.

    Judge Roll was appointed to the federal bench by President George H.W. Bush in 1991.

    Giffords, a Democrat, was serving as the host of the constituent event, which was dubbed “Congress On Your Corner.”

    She is the wife of Capt. Mark Kelly, a naval officer, U.S. astronaut and Space Shuttle commander. Kelly’s brother, Scott Kelly, also is an astronaut. He is currently aboard the International Space Station in a mission that began in October.

    A disturbing portrait of Loughner was emerging in the early hours. The YouTube site and remarks attributed to him elsewhere suggest he was a burgeoning conspiracy theorist who authored or uttered incoherent ramblings on subjects such as the gold standard, government trickery and how one properly defines terrorism.

    “If I define terrorist then a terrorist is a person who employs terror or terrorism, especially as a political weapon. I define terrorist,” Loughner appears to have written. “If you call me a terrorist then the argument to call me a terrorist is ad hominem. You call me a terrorist.”

    Loughner also appears to have pondered the fractured thoughts that college was “illegal” under the U.S. Constitution and that people should be provided “accurate information of a new currency.”

  • Spectacular Ponzi Scheme Alleged In Utah By SEC; Attorney Who Didn’t Do Homework Helped Fraudster Grease Money Wheel By Calling Investment ‘One Of The Best He Had Ever Seen,’ Agency Says

    EDITOR’S NOTE: If you’re an autosurf or HYIP promoter — or a person who is accepting fees for driving business to an investment opportunity based on assertions you cannot independently verify to be truthful — the story below should be instructive. It perhaps will be particularly instructive if part of your fraud game plan is to improve upon the lies told by the fraudster-in-chief.

    In the first major Ponzi case brought in 2011, the SEC has charged a Utah man with presiding over a spectacular promissory-notes fraud involving at least $60 million and several co-defendants, including an attorney.

    When the scheme started to collapse, delayed payments were blamed on “Homeland Security” and banking red tape caused by the Madoff Ponzi, the SEC charged, alleging that investors were discouraged from contacting authorities and told lies to keep hope alive that their money was safe.

    Raymond P. Morris, 42, of Draper, conducted an unregistered offering and operated the Ponzi scheme “at least” between March 2007 and January 2009. The scheme defrauded “at least 90 investors” and was a Ponzi out of the gate, the agency said.

    Three other Utah men, including attorney Luc D. Nguyen, 40, of Draper, helped the fraud spread by conducting no due diligence, recklessly repeating assertions made by Morris as though they were truthful and coming up with their own lies to drive money to the scheme, the agency alleged.

    Also charged were James L. Haley, 49, of Draper, and Jay J. Linford, 49, of Orem. At the same time, several companies also were charged: E & R Holdings LLC, Wise Financial Holdings LLC, Momentum Leasing LLC, Cornerstone Capital Fund LLC, Vantage Point Capital LLC and Freedom Group LLC.

    Ponzi Scheme Collapses

    The Morris Ponzi scheme began to unravel in April 2008, when he stopped making regular payments to investors, the SEC charged.

    “Morris gave many explanations to investors, including that Homeland Security had frozen the accounts, that the Madoff case had caused banks to hold funds and that typographical errors in wire request forms had caused delays,” the SEC charged.

    “Morris told Haley, Nguyen and Linford to pass these explanations on to investors, and they did so without questioning Morris or conducting due diligence on Morris or the Fund,” the agency charged. “As investors complained and threatened to go to the Commission and other government agencies, Morris began disseminating phony bank statements falsely showing that he had over $200 million deposited with Wachovia Bank.

    “In late October 2008, Morris gave Nguyen a purported ‘Bank Confirmation Letter’ from Wachovia,” the SEC continued. “This fraudulent letter states that Wachovia ‘currently holds funds in the amount of . . . $201,782,567.89 . . . [and] Mr. Raymond Paul Morris is the signatory on this account.” The letter also says ‘the funds are good, clean and of non-criminal origin, are unencumbered and freely disposable.’”

    Meanwhile, the agency charged, Morris gave Nguyen a phony ‘Verification of Depository,’ also purporting to be from Wachovia Bank, showing that $201,827,067.89 was in Morris’s account.

    “After Nguyen received the bogus ‘Bank Confirmation Letter’ and ‘Verification of Depository,’ he agreed to draft a letter to Morris’s investors, assuring them their funds were safe.

    “Nguyen’s October 30, 2008 letter states that ‘Mr. Morris is in possession of funds that will allow for the return of the principal amount of your investment along with any back interest in the anticipated redemption of your Promissory Notes(s),’” the SEC continued.

    “This letter further confirmed that Nguyen was ‘in possession of a copy of an official bank letter confirming that the funds are in a specified account under Mr. Morris [sic] signatory control at such bank,’” the SEC said. “Nguyen did not conduct reasonable due diligence prior to sending this October 30, 2008 letter. The letter caused investors to delay their attempts to contact government authorities regarding Morris, Haley, Linford and Nguyen and their investment activities.

    “By the time the Ponzi scheme unraveled, Morris, Haley, Linford and Nguyen, and their respective entities, had defrauded at least 90 investors out of $60 million or more by offering and selling unregistered and non-exempt promissory notes based on material misrepresentations and omissions,” the SEC charged.

    Other Misrepresentations

    Lies fueled the scheme, the SEC charged.

    “Morris told investors that their principal would only be used for ‘verification of deposit’ purposes by certain private traders,” the SEC charged. “Morris further told investors these private traders would obtain large lines of credit and invest the proceeds in ways that would generate a guaranteed 20% per month interest rate.

    “In reality, Morris used investor money for personal expenses, including a luxurious home and several sports cars, and for making Ponzi payments to create an illusion of a successful investment,” the SEC said.

    Haley took the base story and improved upon it, the SEC said.

    “From about August 2007 through June 2008, Haley, through his entities Cornerstone Capital and Vantage Point, raised at least $20 million for Morris’s Fund. In soliciting investments, Haley repeated Morris’s misrepresentations to investors and made additional misrepresentations, including that he was the sole owner of the Fund,” the SEC charged.

    “Out of the approximate $20 million Haley raised, Haley used at least $700,000 for personal expenses, including payments on a new home and $25,000 per month rental payments while building this new home,” the SEC charged.

    Linford, accused of collecting about $1 million for the scheme, added to the lies, as well, the SEC charged.

    “Linford also knowingly misrepresented to some investors that he controlled the secure account where their funds would be held,” the SEC charged. “Contrary to what Linford told investors about their funds being secure, the wiring instructions he gave investors were instructions to deposit funds into an account Morris controlled. Linford had no authority to verify what was being done with investor funds once they were deposited into Morris’s account.”

    Nguyen held himself out as an “SEC attorney” and told investors the fund was “one of the best he had ever seen,” the SEC charged.

    “Nguyen told investors he had personally met with the attorneys representing the supposed trading companies involved in the Fund and that he had received copies of all operating agreements between the leasing companies and the trading companies,” the SEC charged. “In fact, Nguyen performed no due diligence on Morris or the Fund, never met with anyone affiliated with the Fund or a leasing company or trading company involved with the Fund and never received any documents associated with the Fund.”

    Read the complaint.

  • SEC: Broker Ripped Off Elderly Nuns In New York; Paul George Chironis Targeted Sisters Of Charity In Churning Scam, Agency Says

    A Long Island, N.Y.-based broker ripped off  “a congregation of mostly elderly nuns in the Bronx” in a churning scheme in which he repeatedly executed trades that eroded the value of two accounts held by the Sisters of Charity to line his own pockets, the SEC said.

    Paul George Chironis, 58, of Melville, N.Y.,  has settled the SEC’s administrative action by agreeing to pay the Sisters of Charity $350,000. He further was barred from associating with with any broker, dealer, investment adviser, municipal securities dealer, transfer agent, municipal adviser or nationally recognized statistical ratings organization.

    “Chironis took advantage of the trust placed in him by the Sisters of Charity and convinced the nuns to engage in a high turnover trading strategy unfit for their investment needs,” said George S. Canellos, director of the SEC’s New York Regional Office. “Chironis’s irresponsible actions virtually guaranteed the convent’s accounts would lose money due to the undisclosed and excessive costs being incurred while Chironis focused on generating substantial commissions for himself.”

    Meanwhile, Chironis was barred from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter.

    The Sisters of Charity used the investment accounts to pay “for the care of members of the Congregation living in assisted living facilities” and to support the Congregation’s charitable endeavors, the SEC said.

    Chironis, who neither admitted nor denied the allegations as part of a settlement agreement, had a history of churning, the SEC said.

    “Chironis has worked in the securities industry since 1981 and maintained Series 7 and 63 licenses since 1983,” the SEC said in administrative filings. “Prior to his association with Capital Growth [Financial Inc.,] Chironis received seven customer complaints filed with the NASD/FINRA, including complaints for churning and unsuitability.

    “As a result of customer complaints, in January 2006, the Michigan Securities Division required that Chironis be placed on heightened supervision, and in March 2006 the Vermont Securities Division prohibited Chironis from soliciting investors in Vermont. Chironis was associated with Capital Growth from November 2005 until February 2008, when Capital Growth ceased business operations. Since March 2009, Chironis has been associated with another registered broker-dealer located in New York, New York.”

    Capital Growth, which had offices in New York and Boca Raton, Fla., now is defunct, the SEC said.

    Chironis’ scheme targeting the nuns occurred between Jan. 1, 2007, and Jan. 31, 2008, the SEC said.

    Here is one example of how Chironis ripped off the nuns, according to the SEC administrative filing (emphasis added):

    “Chironis frequently replaced one bond with a bond or bonds of similar duration and yield. For example, on July 24, 2007, Chironis sold a Ginnie Mae bond with a 6% coupon rate, a maturity date of 2033 and a principal amount of $258,504.43. The very next day, Chironis purchased a Ginnie Mae bond with the same 6% coupon rate, the same 2033 maturity date and a principal amount of $201,636.05, along with a second Ginnie Mae bond with a 6% coupon rate, a 2032 maturity date and principal amount of $199,956.51. Capital Growth, through Chironis, charged the Accounts approximately $18,352 in transaction fees – in the form of markups and markdowns – on these three transactions. On September 26, 2007, Chironis sold one of the two bonds he purchased two months earlier, and on October 24, 2007, he sold the second.”

    During a 13-month period, the SEC said, the Sisters of Charity paid nearly 11 percent of the value of the nuns’ accounts to Chironis in the form of transaction fees.

  • BULLETIN: Incendiary Devices Sent To Two State Buildings In Maryland; Workers Being Evacuated; Probe Under Way

    BULLETIN: Two incendiary devices apparently mailed to state-government buildings in Annapolis and Hanover, Md., have detonated without causing a large explosion or widespread damage, according to published reports.

    Early reports are sketchy. No one appears to have been injured seriously, but the bomb squad, firefighters and ambulances are at the scene — and there are reports that the FBI is on the way.

    People are being evacuated from the buildings, described in published reports as the Maryland Department of Transportation headquarters in Hanover and the Jeffrey Building in Annapolis.

    ABC News is reporting that the packages “looked like a small padded envelope or a book” and “bust into flames” when opened. The packages emitted a “sulfuric odor” and resembled “devices recently mailed to embassies in Rome and in Greece.”

    ABC News early coverage.

    Eye on Annapolis early coverage.

    WBAL-TV early coverage.

    Baltimore Sun early coverage.

  • RECOMMENDED READING: Blogger Recalls His Real-Life Encounter With An MLM Stepfordian And Wonders Whether The Cadillac Ever Will Arrive At His House

    EDITOR’S NOTE: Blogger Chuck Miller, who posts on the website of the Albany (N.Y.) Times Union, has a post today on the unique circumstances under which he became a self-described “mark” for an MLM pitch nearly 20 years ago. Seems Miller’s MLM memories linger after nearly two decades. (You’ll learn why by clicking on the link to Miller’s column at the bottom of this post.)

    First, though, some introductory remarks are in order . . .

    Although Miller’s column is not on point with this August 2010 PP Blog column on the unique circumstances under which it was invited to check out the purported MPB Today “grocery” MLM, it reminded me that some MLM purveyors simply live for the pitch: Any person — at any time and in any context — is viewed as the warm market by the Stepfordians of the trade.

    Miller’s column also reminded me of a December 2009 column by Renee McGaw of the Denver Business Journal. McGaw got pitched to join the Trump Network after she sent an email to Wayde McKelvy, a figure in the alleged Mantria/Speed of Wealth Ponzi scheme.

    McKelvy is a defendant in the Mantria/Speed of Wealth case, which the SEC filed in November 2009. Just days after the case was filed, McGaw began to receive a steady stream of email from McKelvy, who had a $30 million Ponzi scheme case hanging over his head and still was pitching offers for MLMs.

    “How the heck can I help you become financially independent if you do not take the action steps that I recommend to you?” McKelvy memorably nudged the columnist just days after the SEC announced its intent to sue McKelvy back to the Stone Age.

    Of course, untold numbers of Stepfordian members of Florida-based AdSurfDaily continued to pump autosurf MLMs — even after ASD President Andy Bowdoin had tens of millions of dollars seized from his personal bank accounts and was accused by some of his own members of racketeering.

    Read Chuck Miller’s post about the circumstances under which he was cornered by a Stepfordian MLMer.

  • Is Andy Bowdoin Renewing His Efforts To Have Federal Judge Removed From Case? Accused Ponzi Swindler Faces New Filing Deadline To Argue For Case Transfer

    Andy Bowdoin

    Accused Ponzi swindler Andy Bowdoin of Florida-based AdSurfDaily has been granted an extra two weeks to argue that the criminal case against him should be transferred from U.S. District Court for the District of Columbia.

    Through his attorneys, Bowdoin informed U.S. District Judge Rosemary Collyer on Jan. 3 that he intends to file a Rule 21 motion to transfer his trial to another federal court. Under Rule 21, a defendant can argue that he cannot receive a fair and impartial trial in a specific district. Meanwhile, a defendant can argue that the trial should be moved for the convenience of the parties and witnesses.

    It was not immediately clear if prosecutors would oppose the motion. Bowdoin initially was ordered by a federal magistrate judge to file his motion within two weeks of his Dec. 17 arraignment in Washington. Collyer now has granted Bowdoin’s request for an extension to file. The new deadline is Jan. 18.

    In December 2009, Bowdoin sought to have Collyer removed from the civil-forfeiture case in which the U.S. Secret Service seized tens of millions of dollars from his personal bank accounts. Collyer refused to step down. In January 2010, she decreed the money forfeited to the U.S. government, which has established a process through which ASD victims can file a claim for a share of the seized proceeds.

    In an affidavit in support of his 2009 disqualification motion, Bowdoin claimed Collyer had a “deep seated animosity” toward him and that the judge “has a personal bias and prejudice” against him.

    Ironically, Bowdoin’s motion to disqualify Collyer in the civil case was docketed on Dec. 17, 2009. Exactly one year to the day later — on Dec. 17, 2010 — Bowdoin made his first appearance in the criminal case in the District of Columbia. Federal agents arrested Bowdoin in Florida on Dec. 1, 2010, after an indictment from a grand jury that began meeting in May 2009 was unsealed.

    Collyer did not preside over Bowdoin’s initial appearance in Washington, but has been assigned the criminal case. She issued her first ruling yesterday: a minute order that granted Bowdoin’s request for the two-week extension to file his Rule 21 motion.

    ASD member Curtis Richmond, who emerged as a figure in the civil litigation after filing pro se pleadings that accused Collyer and Chief U.S. District Judge Royce Lamberth of operating a “Kangaroo Court,” also sought unsuccessfully to have Collyer removed from the case in 2009.

    Richmond has been linked to a sham Utah “Indian” tribe that once sought unsuccessfully to have a federal judge removed from a different case on the eve of trial by claiming the judge owed Richmond $30 million.

  • FLORIDA — AGAIN: Man Arrested Amid Allegations He Swindled Investors In ‘Yogurt-Based Product To Re-Grow Hair’; Joseph P. Fox Of Telogenesis Inc. Was Recidivist Offender, State Says

    A Florida man who served jail time in an earlier scheme in California has been arrested by the Miami Beach Police Department and agents from the Florida Office of Financial Regulation (OFR), amid allegations he swindled investors in a “yogurt-based product to re-grow hair,” OFR said.

    Joseph P. Fox, president of Telogenesis Inc. of Miami Beach, was charged with Grand Theft and Organized Scheme to Defraud in his sale of Telogenesis stock.

    Beginning in 2007, Fox sold Telogenesis stock for $1,000 a share to at least 59 investors. All in all, he gathered $380,000 in the scheme and used most of the money to support his lifestyle, OFR said.

    In 2002, OFR said, Fox was charged with grand theft in California and served 270 days in jail.

    The Telogenesis scheme was similar to the California scheme, OFR said.

    Fox made “false representations” about the financial soundness of Telogenesis and its development of the yogurt-based hair product, positioning it as “a breakthrough in the cosmetic industry,” OFR said.

    A website from which a Telogenesis product was pitched as being available “very soon” for $1,999 included links to medical journals that appeared to have no tie to the product — and also to Oprah Winfrey’s website.

    Winfrey’s site also appeared to have no tie to the Telogenesis product, which was advertised on IGrowHair.com

    It is not uncommon for hucksters to try to create the appearance that prominent medical organizations, celebrities and the government endorse products when they do not.

  • Like MPB Today And Data Network Affiliates’ Promoters, TVI Express Pitchmen Used Images Of Warren Buffett And Donald Trump; Government Of South Africa Reportedly Opens Criminal Probe Amid Pyramid Allegations

    TVI Express, an MLM company whose pitchmen have used images of business titans Warren Buffett and Donald Trump to plant the seed they backed the firm, has come under criminal investigation in South Africa, according to web records and a media site.

    Buffett and Trump are believed to have no ties to the firm.

    News of the TVI criminal probe first was reported Dec. 30 by The New Age. The publication quotes a spokesperson for the South Africa Department of Trade and Industry, noting the TVI matter has become a “police case” involving pyramid-scheme allegations.

    TVI, purportedly based in London, also is under fire in Australia. Meanwhile, there are reports the company has come under fire in the U.S. state of Georgia. Reports that Georgia officials have issued a cease-and-desist order could not be confirmed immediately.

    It was not immediately clear if South Africa would seek to determine why TVI promoters sought to plant the seed that Buffett and Trump backed TVI, which purports to be in the travel business. An image of Buffett appears on the TVI home page — and images of Trump and former President Bill Clinton appear on an internal page.

    A number of MLM schemes have produced photos or made references to Clinton, who once delivered remarks to tout the direct-selling industry. Clinton did not endorse a specific company, and the Code of Conduct of the Direct Selling Association (DSA) specifically prohibits “Deceptive or Unlawful Consumer or Recruiting Practices.”

    In its Code of Conduct, DSA specifically requires member companies to provide information that is “accurate and complete.” At the same time, DSA says member companies “shall not present any selling opportunity to any prospective independent salesperson in a false, deceptive or misleading manner.”

    TVI Express is not listed as a DSA member on the organization’s website.

    Even as news about the TVI criminal probe was appearing online in South Africa, news that Buffett’s name allegedly had been used to sanitize elements of the George Theodule Ponzi scheme in Florida was appearing in the United States.

    Images of Buffett and Trump also have been used by promoters of a purported “grocery” MLM in Florida known as MPB Today. Separately, images (and references) to Trump and television icon Oprah Winfrey have been used in promotions for Data Network Affiliates (DNA), an MLM company purportedly in the business of building a database to help the U.S. government and the AMBER Alert program rescue abducted children.

    DNA now appears to have morphed into a company known as OWOW, which has positioned its products as cancer cures or treatments and even as a means of preventing the surgical amputation of limbs and growing tomatoes twice the size of ordinary tomatoes. DNA has a rating of “F” from the Better Business Bureau, the organization’s lowest.

    During the summer of 2010, DNA changed the name of an offering known as the Business Benefit Package (BBP) to the “BBB,” the acronym used by the Better Business Bureau. The BBP package debuted in March. The name change appeared to be an effort to cloud search-engine results and confuse prospects who were searching for BBB information about DNA online.

    Eventually websites bearing DNA’s name began to resolve to the OWOW site. DNA also used names such as TagEveryCar.com and LockInYourFreeSpot.com. Those sites also now resolve to the OWOW site.

    See story on a major case brought by the FTC in August 2010. Among other things, the case alleged that images of Winfrey and Rachel Ray were used in sales promos without their consent in an acai-berry scam.

  • Georgia Fraud Case Had ASD-Like Elements; Woman Sentenced To 60 Years For Scheme; Cynthia O’Tyson Was Recidivist Offender; TV Camera Captures Sentencing

    Andy and Faye Bowdoin posed for a picture with a Gadsden County (Fla.) Chamber of Commerce official in 2008. Andy Bowdoin later was accused of operating a massive Ponzi scheme. In a separate case in Georgia this week, Cynthia O'Tyson was sentenced to 60 years in prison for a scheme in which she reportedly used contacts at her church and the local Chamber of Commerce to give her scheme an air of legitimacy.

    A Georgia woman with a history of stealing and being placed on probation after serving short stints in custody now has been sentenced to 60 years in prison.

    Cynthia O’Tyson’s sentencing was captured in Superior Court by WRDW-TV, the CBS affiliate in Augusta. The station led its 5 p.m. and 6 p.m. newscasts yesterday with reports about the sentencing, noting that O’Tyson had scammed friends and members of her own family and community into believing she was a supplier of discount electronics.

    Meanwhile, the Augusta Chronicle reported that O’Tyson even had scammed the families of local officials and used members of her church and the Columbia County Chamber of Commerce to give the scheme an air of legitimacy.

    The O’Tyson scheme was reminiscent of the alleged AdSurfDaily Ponzi scheme in Florida. Federal prosecutors said ASD President Andy Bowdoin traded on religion. On July 2, 2008, Bowdoin, who was implicated in securities swindles in Alabama during the 1990s and also had a business partner implicated in a separate swindle during the 1990s, addressed the Gadsden County Chamber of Commerce.

    Initially pleased that ASD, which positioned itself as a jobs-creator and economic turbine, had chosen the struggling small town of Quincy, Fla., as its home, the Chamber touted ASD and the company.

    But the Chamber later called the FBI when questions were raised about Bowdoin’s purported “advertising” firm, according to federal court records. The U.S. Secret Service later described ASD as a massive Ponzi scheme that had gathered at least $110 million. Bowdoin described himself as a “money magnet” and asked members to imagine ASD profits just “flowing” to them after purchasing “ad packs” from the company and committing themselves to have an “attitude of gratitude” with God.

    O’Tyson’s scheme also was reminiscent of the much-larger scheme operated in Minnesota by convicted Ponzi swindler Tom Petters. Petters’ investors believed he sold discount merchandise to Big Box retailers.

    Although Petters’ crime was much larger than O’Tyson’s merchandise scam, he was sentenced to 10 years fewer than the Georgia woman. O’Tyson called her bogus company “Wholesale Liquidators.”

    See the O’Tyson report (video/print) on WRDW-TV.

    Read the O’Tyson sentencing story in the Augusta Chronicle.

  • OH, FLORIDA! Spectacular New Allegations Raised In George Theodule Ponzi Scheme; Bank Sued For $68 Million Amid Accusation It Funneled Investors’ Cash To Fraudster Through ‘Drive-Thru’ Window

    The Miami Herald broke the story last night (see link at bottom of post) that Wells Fargo, which merged with Wachovia Bank in December 2008 and assumed its liabilities, has been sued for $68 million by the court-appointed receiver in the George Theodule Ponzi scheme in Florida. Theodule largely targeted the Haitian-American community in his scheme — in part by trading on religion, in part by routing money to the scheme through “investment clubs”  and in part by making investors believe a “regulatory agency” that later proved to be bogus was keeping their money safe.

    Allegations contained in the complaint by receiver Jonathan Perlman are both mind-numbing and stunning, perhaps especially given the fact that Wachovia was charged criminally in a separate case in March 2009 with willfully failing to establish an anti-money laundering program and opening its doors to an international cocaine cartel. Wachovia settled the criminal case by entering into a deferred prosecution agreement with the Justice Department and agreeing to pay $160 million.

    Now, with the filing of the complaint by Perlman, Wachovia’s allegedly lax standards have jumped up to bite it again.

    Among the dramatic allegations against the bank:

    • A Wachovia branch in Lake Worth, Fla., accepted Theodule’s business after Washington Mutual (WAMU), his original bank, rejected it after observing a pattern of suspicious transactions. The Wachovia branch that  opened multiple accounts for Theodule was “just down the street” from the WAMU branch — and Wachovia did not call WAMU to make any inquiries about Theodule.
    • Wachovia did not review Theodule’s website and did not verify the corporate standing of his business.
    • Wachovia initially misclassified Theodule’s business as a “Professional Service Provider with a business activity designation of ‘Money Service Business.’” The initial classification triggered an internal Wachovia review on the very same day he opened the accounts. Several days later, Wachovia determined that Theodule actually was a “financial advisor” in the “investment business” — and the bank changed the business designation to “Securities/Commodities.”
    • Wachovia’s own reclassification of Theodule’s business gave it the knowledge that Theodule owed a fiduciary duty to his clients. Regardless, Wachovia did nothing to confirm that either Theodule or his companies were properly licensed. A “simple inquiry” to licensing agencies would have shown they were not. Not even cursory Google research was performed. The Ponzi nature of the business “would have been self-evident” had even basic research been performed.
    • Wachovia missed suspicions about Theodule that had been raised online, including information that suggested he had lied about being the “finance director at several large companies” and truthful assertions that “investment clubs” were funding his operations.
    • Within five weeks of the opening of Theodule’s accounts at Wachovia, 36 “investment club” accounts suddenly were opened at Wachovia. The club accounts fed Theodule’s Ponzi scheme. During the first month alone, the club accounts fed $2.2 million to the Ponzi. Theodule’s sister, wife and the best man at his wedding all opened feeder accounts at Wachovia.
    • A large sum of cash — actual currency — from  trusting investors was deposited into the feeder accounts. Wachovia then transferred the deposits to Theodule’s business account. During the first month, Wachovia permitted Theodule to withdraw $235,000 in actual “greenbacks,” even though the bank knew the money belonged to investors.
    • Wachovia made “special accommodations for Theodule’s extraordinary cash withdrawals by agreeing to deliver large amounts of cash through the drive-thru window in order to reduce the risk of theft from having Theodule or a Creative Capital employee walk out of the branch carrying the large bags of cash Wachovia was providing.”
    • Wachovia noticed suspicious activity in a feeder account opened in the name of Wealth Builders Circle LLC, which was managed by Dorothy Delisfort, (who went on to become Theodule’s wife).  The bank froze the Wealth Builders Circle account but did not freeze Theodule’s accounts. The bank lifted the freeze on the Wealth Builders Circle account four days later — after it received a fax from a Theodule company. The fax purported to be a “business plan.” Among the assertions in the fax was that the Theodule company was following “the lessons learned by the great investing minds of our time . . . including Warren Buffet . . .”
    • Theodule and his cohorts laundered more than $10 million through Wachovia between May 9, 2008, and July 31, 2008. They withdrew from the bank nearly $5 million more than they deposited.

    Read the Miami Herald story from last night.

    (NOTE: At the moment, the complaint is available on the newspaper’s website. It is worth a full read. An exhibit from the SEC case attached to the complaint lists the names of the “investment clubs.” One of the names referenced is Crowne Gold Inc.  Many of the clubs had high-sounding names. It was not immediately clear if the Crowne Gold Inc. referenced in the Wachovia lawsuit was the same Crowne Gold Inc. referenced in court filings in the EMG/FinanzasForex case.  The alleged EMG/Finanzas scheme was yet-another scheme pitched from the ASA Monitor and TalkGold forums — and some of the money has been linked to the international narcotics trade. It also is worth noting that scammers routinely use the names of business titans such as Warren Buffet to pull off massive swindles. As noted above, the lawsuit against Wachovia in the Theodule case alleges that Buffet’s name was used to sanitize the Theodule caper.)