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Author: PatrickPretty.com

  • A CHILL ACROSS THE PONZI LANDSCAPE: Two Women Arrested, Charged With Helping Bernard Madoff Pull Off Epic Ponzi Scheme; ‘House Of Cards Is Almost Never Built By One Lone Architect,’ U.S. Attorney Says

    Madoff

    BULLETIN: The FBI has arrested Joann Crupi of Westfield, N.J., and Annette Bongiorno of  Boca Raton, Fla.

    The women were charged with helping Bernard Madoff pull off his Ponzi scheme by both actively participating in and concealing the epic fraud, federal prosecutors in New York said. The women had worked for Madoff for a combined total of 65 years and routinely “executed” client trades “only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg.”

    “Those trades achieved annual rates of return that had been pre-determined by Madoff,” prosecutors charged.

    The scheme was so foundationally corrupt that Bongiorno “processed exceptional gains in the IA [investment-advisory] accounts that occurred months before the IA accounts even had been established,” prosecutors said.

    Meanwhile, she “also asked IA clients to return previously-issued BLMIS [Bernard L. Madoff Investment Securities] account statements so that she could alter them, and often include additional backdated trades. She received specific instructions from IA Clients about the amount of appreciations and gains they wanted to be reflected in their IA accounts,” prosecutors said.

    At the same time, Crupi “prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors,” prosecutors said. “Among other things, by keeping track of BLMIS’s daily cash balance, Crupi became aware that client redemption requests bore no relationship to [BLMIS’s] cash on hand, which by late 2008 was woefully insufficient to meet those requests.”

    Now, Bongiorno, 62, faces a maximum prison sentence of 75 years if convicted on all counts. Crupi, 49, potentially faces 65 years behind bars.

    “As everyone knows, Bernard Madoff perpetrated the largest financial fraud in history, but as we allege again today, others criminally assisted his epic crime,” said U.S. Attorney Preet Bharara of the Southern District of New York.

    In a comment that could send chills across the spines of Ponzi concealers and apologists across the United States, Bharara added that “A house of cards is almost never built by one lone architect.”

    Crupi and Bongiorno were charged with a series of felonies.

    Among the charges were conspiracy, securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and tax evasion.

    “Bongiorno and Crupi were both long-time Madoff employees who played vital roles in the scheme and its concealment,” said Janice K. Fedarcyk, FBI assistant-director-in-charge. “We knew early on that a fraud of this scale could not have been the work of one person alone.”

    Both defendants “personally benefited” from the fraud, prosecutors charged.

    Bongiorno stacked the deck in her own favor by creating “numerous backdated trades in her own IA accounts,” prosecutors said.

    “From 1975 to 2008, [she] deposited only approximately $920,000 into her own IA accounts; however, she withdrew more than $14 million during that same time period,” prosecutor said, adding that Bongiorno also received “more than $325,000 in off the books income” from the scheme — on top of her salary.

    Crupi “received payments of more than $2.7 million from Madoff directly out of the [BLMIS] bank account that held investor funds,” plus more than $270,000 in off-the-books income,” prosecutors charged.

  • BULLETIN: SEC Files Emergency Action To Halt Alleged ‘Diamond-Themed’ Ponzi Scheme And Related Fraud In Colorado; Richard Dalton Of Golden Accused Of Running Bizarre Multistate Scheme

    BULLETIN: (UPDATED 7:49 P.M. ET (U.S.A.) A Golden man ran a diamond-themed Ponzi scheme as part of a larger fraud, the SEC has charged in an emergency court action in federal court in Colorado.

    The agency said it filed the lawsuit to halt the actions of Richard Dalton and his company: Universal Consulting Resources LLC (UCR).

    Among the explanations for delayed payments to investors were that an airplane the firm used to shuttle diamonds from Africa lost an engine and had to make an emergency landing in Amsterdam and that the firm ultimately had been sold 18,000 fake gems, according to the complaint.

    Dalton’s age was not immediately clear. Regulators said he lived in Golden, and had been operating the diamond scam and a related fraud dubbed the “Trading Program.”

    UCR “solicited investors for two fraudulent offerings that were generally referred to as the ‘Trading Program’ and the ‘Diamond Program’ and promised returns of between 60% to 120% per year,” the SEC charged.

    “Dalton acted as an unregistered broker-dealer in actively soliciting investors to purchase securities – and commissioning finders and brokers to do the same – and Dalton and UCR offered and sold securities in violation of the registration provisions of the federal securities laws,” the SEC charged.

    The scheme began in March 2007 and operated through June 2010, the SEC alleged.

    Regulators charged that the scheme began to collapse in March and April of 2010.

    “From that time until at least November 12, 2010, Dalton and UCR have made false and misleading statements to investors to try to lull them into complacency and delay the disclosure of their fraudulent scheme,” the SEC charged.

    The diamond-themed fraud evolved from the initial fraud, the agency alleged. All in all, about 130 investors from 13 states plowed approximately $17 million into the schemes, according to the emergency filing.

    Dalton “funded his personal life at the expense of investors and also transferred more than $900,000 in order to purchase a home in the name of his wife,” the SEC charged.

    The SEC identified Marie Dalton as Dalton’s wife. She is named a relief defendant, meaning the agency believes she received ill-gotten gains from the scheme. Richard Dalton doled out thousands of dollars in cash as part of the scheme, including $936,000 in cash to purchase a home in his wife’s name, $35,000 for cosmetic dentistry, $38,000 for  Toyota truck and $5,000 for his daughter’s wedding, the SEC charged.

    The agency is seeking an asset freeze.

    “[I]n early 2009, UCR began offering the Diamond Program, which Dalton claimed would profit by using investor funds for diamond trading,” the SEC charged. “Similar to the Trading Program, Dalton claimed that investor funds would be safely held in an escrow account. Under the Diamond program, Dalton enticed investors with a guaranteed ten percent monthly return – or 120% yearly return.”

    Commission-based salespeople helped Dalton sell the scam, the agency said.

    “Investors typically learned about UCR’s investment programs from ‘finders’ or ‘brokers’ who were paid commissions by UCR, or from earlier investors who had received what they believed to be monthly distributions of profits from UCR, some of whom also received commissions for bringing in new investors,” the SEC said.

    “According to one investor,” the SEC continued, quoting the investor, “[A]s a result of the consistent returns from this investment, I started telling my friends and family about the investment I had made with Dalton. My friends and family started meeting with Dalton and some of them eventually invested with Dalton.”

    Some investors invested funds from their self-directed IRA retirement accounts, the SEC said.

    “As part of soliciting investors for the Trading Program, Dalton and UCR falsely told prospective investors that their invested funds would be held safely in an escrow account at a bank in the United States, and that a European trader (often referred to simply as ‘the Trader,’ but never known or referred to by name) would use the value of that account, but not the actual funds, to obtain leveraged funds to purchase and sell bank notes,” the SEC charged.

    The diamond-themed scheme operated in similar fashion, the SEC said.

    Read the emergency complaint.

    The complaint includes a reference to a Q&A session the SEC conducted with Dalton while investigating the case.

    Dalton refused to answer the following questions, according to the SEC:

    • Q Has UCR earned a profit in any year between 2007 and 2010?
    • Q How much revenue has UCR earned between 2007 and 2010?
    • Q Is it true that you currently have insufficient money to repay investors the
      outstanding principal and returns they are owed in the [Trading Program]?
    • Q Is it true that some of the money that you raised for the [Trading Program] was used to repay other investors rather than being invested in foreign . . . notes?
    • Q Is it true that some of the money you raised for the [Trading Program] was used for your own personal benefit to cover your personal expenses
      instead of for the benefit of that investment?
    • Q Is it true that the foreign note investment was a Ponzi scheme?
    • Q Is it true the mid-term note investment was a Ponzi scheme?
    • Q Did UCR ever buy any diamonds?
    • Q Have you ever bought any diamonds?
    • Q Has any investor money ever been used as collateral for the purchase of
      diamonds?
    • Q Have you ever engaged a bank to purchase diamonds?
    • Q Do you currently have any diamonds in your possession?
    • Q Do you have diamonds at your home?
    • Q Do you any diamonds in storage?
    • Q Have you moved diamonds to a foreign country?
    • Q Have you ever made any profit from the diamond investment business?
    • Q Isn’t it true that the diamond program is a Ponzi scheme?

    If the SEC’s allegations are true, it means that Dalton and the company were telling tall tales to investors even after the agency had questioned him under oath. Indeed, the agency said, the Q&A session took place in August 2010 — and Dalton and the company made “false and misleading statements to investors” right up until last week.

    Among the claims made as recently as last week was that investors could expect their funds   “soon,” the agency said.

    The “soon” explanation was part of a long-running pattern, and “after ‘soon’ had passed,” Dalton provided “a different excuse for why investors have not been repaid.” the SEC charged.

    One of the excuses was that the “number three engine” on the plane the company used to transport diamonds from Africa went out “and [the plane] had to land in Amsterdam for repair,” the SEC charged.

    Dalton next claimed the company discovered after the plane finally made its way to New York that “18,000 fake diamonds” were included in its cargo.

    He also did not turn over documents, according to the complaint.

    “Dalton produced no documents to the SEC,” the agency alleged. “He provided no evidence that the Trading Program and Diamond Program were legitimate investment programs. UCR did not produce a single accounting record.”

  • BULLETIN: Profiles Of Purported Attorney With AdSurfDaily Tie Removed From Cornell, Justia, Oyez Websites; Notary Public Told Washington Law Practice Board In 2005 That Kenneth Wayne Leaming Was ‘Physically And Emotionally Abusive’ And Coercive

    UPDATED 2:33 P.M. ET (U.S.A.) Cornell University Law School, Justia.com and Oyez.org have removed the online profiles of Kenneth Wayne Leaming. Leaming previously had been listed as an attorney who practiced law and advertised a fee structure of up to $250 an hour from Spanaway, Wash.

    Visitors were encouraged to “schedule a free introductory consultation.”

    Cornell said Sunday that it would remove Leaming’s profile if he proved not to be a licensed attorney. The university began checking into the matter after it learned a man by the same name had been accused in Washington state in 2005 of engaging in the unauthorized practice of law.

    The Washington State Bar Association (WSBA) said yesterday that it was continuing to research matters pertaining to Leaming. Leaming was the subject of a letter sent in 2005 by the Practice of Law Board of the State of Washington. The Law Board made a determination in December 2005 that Leaming’s conduct in cases it was investigating “constitutes the unauthorized practice of law.”

    In one case, the Law Board said, a notary public accused Leaming of coercing her into “notarizing documents that resulted in the loss of her notary license.”

    A final deposition of the case was not immediately available.

    “When [the notary] questioned you about the legality of notarizing the documents you drafted, you were physically and emotionally abusive to her,” the Law Board wrote in its letter to Leaming, citing the notary’s allegations. “[The notary] voluntarily resigned her notary license as a consequence of the acts you directed. She has also obtained an order of protection against you.”

    A purported business entity known as “AMERICAN-INTERNATIONAL BUSINESS LAW INC.,” which some AdSurfDaily members claim is providing legal representation to a group of members, is associated with Leaming, according to records.

    Unlawful practice of law can be charged as a crime in the state of Washington. Leaming is not listed as a member of the state bar, and has been described by the Anti-Defamation League (ADL) as a “self-described ‘recognized international lawyer’” and member of an extremist group known as the “Little Shell Pembina Band.”

    The ASD case has been filled with oddities since the U.S. Secret Service seized tens of millions of dollars from the Florida-based firm in August 2008, accusing ASD in a forfeiture complaint of operating a massive Ponzi scheme.

    Some ASD members have been associated with the “sovereign,” “Patriot” and tax-denial movements. The case has featured dozens of bizarre, pro-se pleadings filed by ASD members, some of whom claimed the prosecutors and judges involved in the case were guilty of crimes.

    One ASD member — Curtis Richmond — has been associated with a Utah  “Indian Tribe” a federal judge ruled a “sham” after members of the bogus tribe placed enormous financial judgments against public servants and members of law enforcement in the performance of their duties. The sham tribe was known as “Wampanoag Nation, Tribe of Grayhead, Wolf Band.” Richmond was successfully sued under the federal racketeering statute for his sham activities.

    Regardless, Richmond was hailed a “hero” on the now-defunct Surf’s Up forum, a pro-ASD website that had members who openly jeered and condemned prosecutors and the Secret Service. One forum member described ASD critics as “rats” and “maggots” and “cockroaches.” Some members heckled a federal prosecutor, calling him “Gomer Pyle.” One member wrote that the prosecutor should be placed in a medieval torture rack, suggesting fellow members should draw straws to determine who got the honor of turning the screw.

    ASD President Andy Bowdoin said the prosecution was the work of “Satan.”

    Many of the pro-se filings in the case are at odds with the public record, conflating realities that simply do not exist about matters pertaining to evidence and witnesses. Recent emails circulated by some ASD members suggest that a group of members is trying to cloud issues and intimidate victims into not filing complaints or making a claim for restitution.

    ASD also is the subject of a racketeering lawsuit brought by members against  Bowdoin and attorney Robert Garner of North Carolina.

    See story from Sunday.

    See story from Saturday.

  • Settlement With FTC Bans Scientist From Making Snakeoil Claims About POM Wonderful 100% Pomegranate Juice And POMx Supplements

    Now cooperating with an FTC probe into POM Wonderful, Mark Dreher has been barred from making misleading claims about the product. Two evidence exhibits in the case showed a newsletter in which Dreher allegedly made unsubstantiated claims about the juice and related products.

    UPDATED 2:31 P.M. ET (U.S.A.) The chief science officer of POMWonderful LLC knew as early as May 2007 that a company-funded, placebo-controlled study showed that there was  “no significant difference” between consumption of pomegranate juice and a control beverage after 18 months in reducing arterial plaque and the risk of heart disease but continued to tout “POM Wonderful’s cardiovascular research and benefits despite the negative testing results,” the FTC said.

    In addition to being touted as a treatment for heart disease, POM Wonderful also allegedly was pitched as a treatment for prostate cancer despite a lack of scientific proof that the juice prevented or reduced disease risk.

    Now Mark Dreher, a Ph.D. who was vice president of Science & Regulatory Affairs for POM Wonderful and allegedly help spread unproven claims about its products, has been barred from making “any disease treatment or prevention claim” that is misleading, the FTC said.

    In a settlement with the agency in a false-advertising case brought in September, Dreher acknowledged no wrongdoing.

    An order that accompanies the case “further prohibits Dreher from making other health claims for a food, drug, or dietary supplement for human use, including as an expert endorser, without competent and reliable scientific evidence to support the claim,” the FTC said.

    Dreher also agreed to a “cooperation clause” in the FTC’s ongoing case against POM Wonderful.

    Brought as an administrative action, the case alleged that POM Wonderful also was touted as a treatment for erectile dysfunction.

    “Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled,” David Vladeck, director of the FTC’s Bureau of Consumer Protection, said in September.

    “When a company touts scientific research in its advertising, the research must squarely support the claims made,” Vladeck said. “Contrary to POM Wonderful’s advertising, the available scientific information does not prove that POM Juice or POMx effectively treats or prevents these illnesses.”

    As has been the case with Internet-related frauds, the FTC gathered evidence that included photographs and written claims about the products as part of its probe, according to administrative filings.

    Visit the FTC site for case information.

  • CFTC: South Carolina Pastor Ran Forex Ponzi Scheme From House Of Worship; Historic Church Property In Charleston Has Seen It All — From Lincoln Presidency And Civil War To Kennedy Assassination And Election Of Obama

    The religious facility that ultimately became St. John’s Reformed Episcopal Church has seen a lot of history in its 160 years on Anson Street in Charleston, S.C. Construction predated the Civil War by 11 years. The facility opened in 1850 as the Anson Street Chapel for black Presbyterians, according to records maintained by the Charleston County Public Library.

    During this time, the United States was transitioning after the sudden death in office of President Zachary Taylor in 1850. Taylor was the 12th President of the United States. He was succeeded in office by Vice President Millard Fillmore, who never gained election in his own right after filling out Taylor’s term because voters in the North viewed him as willing to appease the South on the issue of slavery.

    When the Anson Street Chapel opened in 1850, Abraham Lincoln was a prairie lawyer in Illinois, his ascension to the Presidency still four administrations away and the Great Civil War still more than decade away. The church, renamed St. Joseph’s Roman Catholic Church in 1861, was hit by shells during the Civil War and “badly damaged,” but was rebuilt, according to library records. The facility survived to serve congregants for more than 100 years, before closing in 1965 — two years after the assassination of President John F. Kennedy and 20 years after the end of World War II.

    St. John’s Reformed Episcopal Church bought the property and restored it in 1971, during the Vietnam War-era administration of President Richard M. Nixon and about a year before the word “Watergate” became part of the national consciousness. Barack Obama was 10 years old in 1971, 37 years away from his election as the 44th President and 28 administrations removed from Lincoln’s Civil War-era Presidency.

    Now the church has seen another sort of history: Its pastor, the Rev. Ronald Satterfield, has been accused by the CFTC of operating a Forex Ponzi scheme from inside the facility. One of the company’s he allegedly formed — Graham Street Forex Group LLC — used the church’s address of 91 Anson Street, according to documents.

    Co-defendant Nicholas Bos of Ludington, Mich., used a business card that depicted a “one million dollar bill” and described the scam as an opportunity to earn “24% a year” as a participant in “Special programs,” CFTC alleged.

    Also named a defendant was an entity known as Shore-2-Summit Financial LLC.

    Satterfield “independently solicited acquaintances, members of his church congregation and their friends and family, and others in North Carolina, South Carolina, and Maryland, for funds to trade forex,” CFTC alleged.

    The scam operated “at least” between March 2006 and March 2009, CFTC alleged.

    To conceal the fraud, “Satterfield and Bos issued false customer account statements reflecting the promised returns and forex trading profits, when in fact Satterfield’s forex trading resulted in losses almost every month,” CFTC said.

    “The false statements also allegedly concealed their misappropriation of customer funds. In total, the complaint charges Satterfield and Bos with misappropriating more than $850,000 of customer funds for personal use,” CFTC said.

    More than 70 customers were fleeced in a scheme that gathered about $3.3 million, CFTC said.

    Satterfield told the Post and Courier of Charleston that CFTC had mischaracterized his trading activities.

  • UPDATE: Cornell University Seeks To Determine If Man Referenced In Email Circulated By ASD Members’ Group Is Licensed Attorney; Website Listing For Kenneth Wayne Leaming Under Review

    UPDATED 11:04 A.M. ET (U.S.A.) Cornell University said Sunday that it will remove a listing on its Law School website for Kenneth Wayne Leaming of Spanaway, Wash., if Leaming proves not to be a licensed attorney. A review of the listing and the circumstances under which Leaming’s name was added to a database of attorneys’ names is under way.

    A person named Kenneth Wayne Leaming of Spanaway, Wash., was accused in 2005 of engaging in the unauthorized practice of law, according to a document that appears on the website of the Washington State Bar Association (WSBA.) Meanwhile, a person by the same name is referenced by the Anti-Defamation League (ADL) as a “self-described ‘recognized international lawyer’ and a member of an “extremist group” known as “Little Shell Pembina Band of North America.”

    The group is known to have ties to Washington state, according to ADL.

    Leaming, according to ADL, once served as a deputy sheriff and member of the Civil Rights Task Force, a “sovereign citizen group that has used badges and raid jackets to resemble law enforcement officers.”

    Cornell noted that Leaming should “have provided us with documentary proof of his law license” before his name was published on a website the Law School runs in partnership with Justia.com.

    “[O]bviously that needs to be double-checked at this point for validity or alterations,” said Thomas R. Bruce, director of Cornell’s Legal Information Institute. “Of course we’ll remove him if he’s not what he claims to be.”

    As part of its partnership with Justia, Cornell publishes free listings for licensed attorneys across the United States. Leaming’s name appears in listings on both the Cornell Law School site and the Justia site.

    Leaming’s name also appears in a listing at Oyez.org, another Justia-affiliated site that publishes information on cases before the U.S. Supreme Court.  Whether Leaming, whose listings advertise a practice in Spanaway, is a licensed attorney is unclear.

    The listings, which advertise a fee structure and areas of practice such as Admiralty/Maritime, Business Law, Estate Planning and Native American Law, do not reference any law school attended by Leaming or law degree obtained. Bruce said the university would work with Justia to review “verification procedures used to make sure that those who claim to be attorneys actually are.”

    Whether Leaming has a law degree and is licensed to practice law in any state remains unclear. Bruce said the document published on the WSBA website “certainly paints an unfavorable picture.”

    Leaming goes by the nickname “Keny” and is associated with an entity known as “AMERICAN-INTERNATIONAL BUSINESS LAW INC.,” according to the listings on the Justia-connected sites.

    Last week members of Florida-based AdSurfDaily received an email that referenced “Keny” and the same business entity referenced in the attorney listings published by Cornell and others.

    The email, which appears to be a compendium that cobbles together communications from members of a group within ASD and asks ASD members to pass along the information, implies that ASD members who file for restitution through a government-approved process may face legal action from the group, which has or will file claims against the “illicit UNITED STATED (sic) OF AMERICA INC. et al” for its prosecution of the ASD Ponzi scheme case brought by the U.S. Secret Service in August 2008.

    “The Secret Service does not comment on or discuss ongoing investigations,” an agency spokesman said this morning.

    A purported “legal opinion” by “Keny” was contained within the email received by ASD members, which was circulated by an ASD member referred to as “Sara.”

    ASD is known to have ties to the so-called “Patriot” and “sovereign” movements. The movements are known to engage in what has been described as “paper terrorism” designed to rattle the government and litigation opponents.

    The U.S. Secret Service seized tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin in August 2008, alleging he was at the helm of a massive Ponzi scheme.

    An attorneys’ database at Martindale.com appears to have no listing for a lawyer named “Kenneth Leaming,” “Ken Leaming” or “Keny Leaming.”

    See earlier story.

  • DISTURBING: Email Received By Some ASD Members Suggests They Could Be Sued For Participating In Refund Program; Records Suggest ‘Legal Opinion’ Was Offered By Man Named In Complaints For ‘Unauthorized Practice Of Law’ And Linked To ‘Extremist Group’ By Anti-Defamation League

    In a bizarre and unsettling development, some members of AdSurfDaily who may be planning to file for restitution through the official claims administrator have received a confusing and threatening email from a “group” of ASD members.

    The email, which appears to be a compendium that cobbles together communications from the group and asks ASD members to pass along the information, implies that ASD members who file for restitution through the government-approved process may face legal action from the group, which has or will file claims against the “illicit UNITED STATED (sic) OF AMERICA INC. et al” for its prosecution of the ASD Ponzi scheme case brought by the U.S. Secret Service in August 2008.

    The lawsuit threat appears to be targeted at ASD members who are planning to file a restitution claim through Rust Consulting Inc. of Minneapolis. Rust Consulting is under contract with the government to administer the restitution program through a process known as remission in which ASD members must certify they are crime victims.

    Pasted into the email is a purported “legal opinion” by a person described as “Keny” of “AMERICAN-International Business Law inc. (sic).”

    “Keny” does not appear to be the source of the lawsuit threat. Rather, the email quotes a purported “legal opinion” by “Keny” — and then implies members who file through Rust Consulting may be sued by members of the group. The email asks members not to file for a refund through the official process.

    “Please send me your response(s) and I will manage the feedback timely,” says an email signed “MYHUB.” “Again, we are asking that our Claimants do not engage in the DOJ’s Remission Process, as long you want to maintain being part of our Group Claims whatsoever. If you are indeed wanting to eat on the other side of the fence, you must let us know before you submit anything to the DOJ, without causing us potential harm and further damages. In case you were to fail to notify us, we would have a possible claim against you, and that’s not what you want us to do in the first place.

    “We very much appreciate your understanding in this rather sensitive time of legal dealings,” the email continues. “No worries, we are just getting started to fight for and along with you. If you feel that this email could help some of your friends in ASD that are not part of our Group Claims, we are allowing you to share and forward this email as long it doesn’t end up in Blogs et al., but then again, people need to be informed since they can’t read and or understand the legal language or the meaning of words any longer.”

    Google search results include multiple references to “AMERICAN-INTERNATIONAL BUSINESS LAW INC” and a person referenced as “Keny.”

    One of the references appears on a website operated by Cornell University Law School under a heading of “Legal Services & Lawyers.” The Cornell reference identifies a person named Kenneth Wayne Leaming of AMERICAN-INTERNATIONAL BUSINESS LAW INC. of Spanaway, Wash. The Cornell site notes that correspondence should be sent to the attention of “Keny” and that Kenneth Wayne Leaming practices “Admiralty/Maritime, Business Law, Estate Planning and Native American Law.”

    Records at the Practice of Law Board at the Washington State Bar Association (WSBA) say that Kenneth Wayne Leaming, also known as Kenneth Wayne, was accused of the unauthorized practice of law by clients in 2005.

    One client accused Leaming of “actively market[ing] legal services via seminars and the internet” and of providing “legal advice” and preparing “pleadings for many clients,” according to WSBA.

    Another client accused Leaming of contracting with him “to assist him in avoiding an IRS lien on his home” and failing to provide the services.

    On Dec. 20, 2005, WSBA said in a letter to Leaming that his “conduct constitutes the unauthorized practice of law.” The final disposition of the matter was not immediately clear. Also unclear is whether Leaming ever was a licensed attorney or authorized to practice law in any state.

    Separately, the Anti-Defamation League (ADL) lists Leaming as a member of an “extremist group” known as “Little Shell Pembina Band of North America.”

    Leaming, according to ADL, is a “self-described ‘recognized international lawyer’ who once served as a deputy sheriff and member of the Civil Rights Task Force, a “sovereign citizen group that has used badges and raid jackets to resemble law enforcement officers.”

    “His CRTF partner, David Carroll Stephenson, was ordered by a federal court in March 2004 to stop promoting an alleged tax scam that allowed people to avoid an estimated $43 million in federal income taxes,” according to ADL.

    The identity of “MYHUB” was unclear in the email received by ASD members. Portions of the email were pieced together by a sender known as “Sara.” A person named Sara Mattoon once served as ASD’s official spokeswoman and is referenced in a court filing by the Secret Service in 2009.

    In the email, “Sara” referenced remarks attributed to “Keny” as a “legal opinion about why it may be unwise for you to fill out the [Rust Consulting] form, aside from it working against ASD.”

    The “Sara” email then reproduces the “MYHUB” email and the purported “legal opinion” by “Keny.”

    The purported legal opinion describes the Rust Consulting website, which is listed in court documents as the official site for ASD victims, as “almost exclusively a propaganda site to get the viewer to ‘believe’ the gov’t LIE that advertising via network marketing on the internet is somehow bad business and fraudulent, and solicit false testimony from the viewer based on the false information!”

    In yet-another email received by ASD members, a fellow member referenced as “Robert” also referred to the claims program administered by Rust Consulting. The email from “Robert” includes an unattributed opinion, meaning the identity of the person who offered the opinion is unclear.

    “If members feel it absolutely necessary to complete the remission form now instead of waiting a little longer for the legal process to be completed then they may want to write on a separate piece of paper and have it notarized saying that they were not an investor,” according to the opinion contained within the email from “Robert.”

    Members also should swear that “they purchased advertising for their website and that they were happy with their purchase,” according to the unattributed opinion circulated by “Robert.”

    “The govt is trying to trick people into saying it was an investment,” the opinion claimed.

    Separately, an apparent ASD member known as MMG7 who posts on the MoneyMakerGroup Ponzi forum left a scathing missive yesterday in an ASD thread at the forum.

    “The same people who abused their power, under the color of law, back in August of 2008 and basically *shut down* the company without due process are up to yet additional tactics to *CREATE VICTIMS* out of thin air,” the post read in part.

    “The general consensus is that once they can *create victims* they can then turn around and use it against ASD or even YOU.

    “It is VERY HEALTHY to question their motives. Remember, these are the same people that ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.

    “Could it be they thought ASD would roll over and play dead so they could put a feather in their cap and claim victory? Not to mention being able to keep a hefty sum of members monetary property.”

    The MoneyMakerGroup forum is referenced in a May filing by the U.S. Postal Inspection Service as a place from which Ponzi schemes are promoted. The filing accused an entity known as Pathway To Prosperity of conducting an international Ponzi scheme that defrauded more than 40,000 investors across the globe.

    MMG7 did not explain in his post how he arrived at the conclusion that ASD was denied due process in a court case that has featured more than 175 filings and a hearing called at ASD’s request to free seized money.

    ASD’s request was denied in November 2008 because it did not demonstrate at the hearing it requested to prove its legitimacy that it was operating lawfully and was not a Ponzi scheme, according to court records.

    ASD President Andy Bowdoin later met with federal prosecutors over a period of at least four days. Bowdoin, according to court filings, signed a proffer letter and acknowledged the government’s material allegations in the case were all true.

    Although Bowdoin initially contested the forfeiture of tens of millions of dollars seized in the case, he submitted to it in January 2009. By the end of February 2009, however, Bowdoin reentered the case, acting as his own attorney and seeking to reassert his claims to the money. Months of legal wrangling followed, and Bowdoin was forced to hire new attorneys. A federal judge ruled last fall that Bowdoin would not be permitted to reenter the case, and an order of forfeiture was signed in January 2010.

    Nor did MMG7 explain how he had arrived at his conclusion that the government “ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.”

    Court records plainly show that that the government explained in considerable detail to at least two federal judges why it sought the authority to seize tens of millions of dollars contained in the personal bank accounts of Bowdoin, who was accused of swindling investors in an Alabama securities caper in the 1990s. Moroever, the government has said all along that it intended to establish a restitution pool from the assets seized in the case.

    The implementation of both the pool and the restitution/remission process were delayed by appeals filed by Bowdoin.

    Bowdoin was sentenced to prison in the Alabama case, but avoided jail time by agreeing to make restitution, according to records.

    Clarence Busby, his business partner in the AdSurfDaily/Golden Panda Ad Builder venture, also swindled investors in a separate securities scheme in the 1990s, according to the SEC.

    At the same time, MMG7 did not explain how he arrived at his conclusion that the government “shut down” ASD. Records show that ASD was permitted to continue to display advertising after the seizure, but that Bowdoin chose not to do so.

    Prosecutors say that, despite ASD’s claims to a federal judge that it had no money to operate, the company had $1 million in an account under a “different name” on the island nation of Antigua.

    Records show that Bowdoin did not reveal the existence of the Antigua money to members until after ASD had asked the court for emergency cash to pay its rent and webhosting bill.

    U.S. District Judge Rosemary Collyer, whom Bowdoin and another member later tried to have removed from hearing the case, refused to release funds to ASD.

  • PRIVACY A CASUALTY OF MPB TODAY? Promo Shows Snapshot Of Customer In Walmart’s Pharmacy Section; Slide Show Shows 32 Snapshots Of MPB Affiliates Waving Checks And Walmart Cards, 15 Snapshots Taken Inside A Walmart Store

    An online side show for MPB Today includes images of Walmart customers shopping inside a Walmart store. One of the departments featured in the slide show was the Pharmacy Department. (The image in this post has been cropped by the PP Blog to exclude a woman standing near the pharmacy counter.)

    UPDATED 3:38 P.M. ET (U.S.A.) A 52-frame slide show accessible online may lead to questions about whether the privacy of Walmart customers and Walmart itself has been invaded in a sales promo for the purported MPB Today “grocery” program.

    At least nine of the slides show customers, including people who appear to be senior citizens, shopping inside a Walmart store. The promo also appears to capture the images of Walmart employees. Fifteen photos of various Walmart departments are displayed in the presentation.

    One of the snapshots taken inside the store includes the image of a woman standing inside the pharmacy section. The woman appears to be holding a cell phone to her left ear. The snapshot is dated Aug. 28, 2010 and time-stamped at 13:47.  It is unclear if the date and time reflect the actual date and time the photo was taken. Several of the photos in the promo are date – and time-stamped. It is possible that all of the photos displaying Walmart shoppers, employees and departments were taken on the same day.

    The promo opens with 32 consecutive photos of MPB Today members displaying checks and Walmart cards. The photos appear to have been taken in or around the members’ homes. An image of business titan Warren Buffet is visible on a laptop-computer screen in one of the slides.

    Buffet is not believed to have any affiliation with MPB Today. Walmart also is believed to have no affiliation with the MLM company. Regardless, images of Buffet and Walmart’s intellectual property have been widely featured in MPB Today promos.

    The promo is at least the third in which MPB Today affiliates appear to have produced or contributed to sales promos shot in whole or in part on Walmart property. Whether any of the affiliates obtained permission from the company or its employees and customers is unclear.

    Concerns about privacy also have been raised about Data Network Affiliates (DNA) and Narc That Car/Crowd Sourcing International, two other MLM programs whose affiliates shot promos on properties owned by major U.S. retailers, including Walmart.

    Both DNA and Narc That Car/Crowd Sourcing International purport to be in the business of paying MLM affiliates to record the license numbers of automobiles. Affiliates of both firms advised incoming members to take photos of license plates or write down license-plate numbers in the parking lots of retail outlets. One promo for DNA recommended that members also record license-plate numbers at doctors’ offices and churches.

    DNA appears to be morphing into another business known as One World One Website or “O-WOW.”

  • Want To Plant The Seed That Famous Brands Back Your MLM Product If They Do Not? Get Ready To Pony Up For Legal Bills: Evolv Banned From Using Trademarks Of M.D. Anderson Cancer Center, University Of Texas

    UPDATED 1:18 P.M. ET (U.S.A.) An MLM company that allegedly planted the seed that its bottled-water product had passed muster with a prestigious university and medical-research facility has agreed to stop making the claims and pay its own costs of litigation after agreeing to a settlement.

    The Board of Regents of the University of Texas System and the M.D. Anderson Cancer Center alleged last year that EvolvHealth LLC and HealtH2O Products LLC had infringed their trademarks and made confusing claims about limited research performed on behalf of the firms.

    M.D. Anderson is one of the most recognizable names in the world in the field of cancer research. The MLM firms used the center’s name to hoodwink the marketplace into believing it had conducted “extensive testing” of Evolv, a product whose base was Houston tap water infused with a formula known as Archaea Active, according to the lawsuit.

    Cancer patients were being misled and potentially harmed by the claims, and the value of the university and center’s trade names and their standing in the scientific community were being harmed through bids by the defendants to plant the seed that the prestigious facilities endorsed the product after examining it thoroughly.

    Nearly 800,000 cancer patients have sought treatment at M.D. Anderson since 1944, and neither the facility nor the university ever endorsed Evolv, despite published suggestions that they had, according to the lawsuit.

    M.D. Anderson claimed in the lawsuit that it had conducted only “preliminary” and “limited” testing under contract with HealtH2O to look at the anti-inflammatory properties of the Archaea Active formula and had conducted no conclusive, comprehensive research.

    Regardless, the product was positioned in the MLM sphere as having undergone “rigorous” testing. M.D. Anderson’s trademark even was placed on the “label of the Evolv product” and on websites operated by the defendants, according to the lawsuit.

    The defendants’ claims planted the seed that “M.D. Anderson performed more extensive testing than actually occurred, and that M.D. Anderson has made scientific findings regarding the Evolv product’s efficacy, safety or beneficial value in treating or preventing cancer,” the lawsuit alleged.

    Even the preliminary testing trumpeted as rigorous and extensive by MLM pitchmen was not scientifically confirmed, according to the lawsuit.

    After the university complained to the defendants, it then was asked to enter into an agreement that would give Evolv and HealtH2O a “worldwide, royalty-free license” to use M.D. Anderson’s name in a marketing material for a product largely consisting of common tap water, according to the lawsuit.

    Neither the university nor the center agreed to the licensing proposal that occurred after the fact, but the defendants kept using the prestigious names in their pitches, according to the lawsuit.

    Eventually HealtH2O tried to turn the tables by asserting counterclaims against the university and M.D. Anderson, but that effort collapsed with the settlement.

    To settle the case, the defendants now have agreed to a permanent injunction that bars them from using the famous trademarks and “any iteration or variation thereof.”

    Under the terms of the settlement, the defendants acknowledged no wrongdoing, but agreed neither to state nor imply that the university or M.D. Anderson endorsed the product.

    Had the case gone to trial and the university and M.D. Anderson prevailed, the defendants could have faced treble damages.

    Read a discussion thread on RealScam.com.

  • Book By Lynn Edgington, Chairman Of Eagle Research Associates Inc. And Regular Contributor To PP Blog, Now Available On Amazon.com; ‘Robbing You With A Keyboard Instead Of A Gun: Cyber Crime — How They Do It’

    DISCLOSURE: The PP Blog is referenced in Lynn Edgington’s new book and provided a comment about the good works undertaken by Eagle Research Associates Inc., a Public Benefit Nonprofit Corporation registered in California. Eagle, which researches Internet investment scams, was formed Aug. 3, 2007. It is an approved 501(c)3 Corporation.

    The PP Blog was not compensated for the comment it provided Eagle and, at various times, has given Eagle permission to reproduce articles that have appeared on the PP Blog. The Blog did not charge Eagle a fee. Lynn Edgington is a regular contributor to the PP Blog and is not compensated for his contributions. The PP Blog is not being compensated for providing the link to Lynn’s book (below photograph). The book is titled, “Robbing You With A Keyboard Instead Of A Gun: Cyber Crime – How They Do It.”

    Get more info on Lynn’s book at Amazon.com.

  • Are ASD Members Waging Ongoing Misinformation Campaign To Suppress Victims’ Count And Obstruct Justice? Note Instructs Members NOT To File For Restitution

    Andy Bowdoin

    The now-defunct Surf’s Up forum was AdSurfDaily’s officially endorsed news venue. It became so on Nov. 27, 2008, a little more than a week after a key court ruling went against ASD, a Florida company implicated by the U.S. Secret Service in an alleged $100 million Ponzi scheme. Surf’s Up routinely deleted posts that challenged ASD President Andy Bowdoin, and routinely suppressed information unfavorable to ASD.

    Surf’s Up was known for conflating fantastic realities to accommodate unpleasant fact sets. Among the unanswered questions as the ASD investigation proceeds is whether the forum and some of its members were/are engaging in efforts to obstruct justice by asking victims to spread misinformation.

    Some ASD and Surf’s Up members recently received the email below, which fractures facts and appears to encourage members to spread misinformation and not to participate in the federal restitution program. (Italics and carriage returns added. PP Blog’s Notes in Bold.)

    “Please pass this on to your group and ask them to pass it on to others who were in ASD. The lawsuit filed against ASD, Andy and his wife Faye was decided in ASD’s, Andy’s & Faye’s favor a few months ago. (PP Blog Notes: The lawsuit was not decided in favor of ASD, Andy Bowdoin or Faye Bowdoin. Florida dropped the lawsuit “without prejudice,” meaning it can be refiled. The state said it had turned over a victim’s list to the federal government for the purposes of securing restitution from funds seized by the U.S. Secret Service.)

    “In October the state of FL dropped all charges against ASD. (PP Blog Notes: See note above.)

    “The Federal charges are all that is left to be addressed and progress will be made on that this month. Unfortunately if members respond to this notice and file a claim, they will be contributing to ASD losing its case because the government will use it as evidence that ASD created these “victims.” (PP Blog Notes: Is this a deliberate attempt to suppress the victims’ count and a bid to obstruct justice? Beyond that, Andy Bowdoin’s appeal of the forfeiture of money he advised a federal judge belonged to him is hardly the sole, unsettled legal issue. It is known, for example, that a criminal grand-jury probe has been under way. Bowdoin references the criminal probe in his own court filings. It is possible that criminal indictments against multiple individuals could be returned.)

    “I have told this man that but he persists because he will make money from ‘helping.’ If ASD loses its case, THEN it would be appropriate to follow up these options, but not until then.

    “My husband was hit by a car while he was bicycling and I have been struggling to care for him at home alone. I am 63, 105 lbs and he is functionally quadriplegic (which means that there is much to be hopeful for but, in the meantime, it is very challenging). For this reason I am unable to keep everyone updated as I had hoped to do and I have been unable to spearhead a member campaign to help the effort as I had also hoped to.

    “God’s Blessings,
    Sara”

    (PP Blog Notes: The section of the note above even could bring things such as practicing law without a license into play because it introduces an “if, THEN” proposition that lays out a legal strategy. For example, “if” ASD loses the forfeiture proceeding in the appeals court, only “THEN” should victims register for the restitution program. One of the core problems is that there may be no way of knowing precisely when the appeals court will issue its ruling (oral arguments scheduled for this month have been canceled, and the appeals court will decide the issues based on briefs from both sides). Meanwhile, the restitution/remission forms victims must file are due by Jan. 19, 2011. Victims who follow the advice in the email could be denied a refund.)

    See related story.