PatrickPretty.com

Author: PatrickPretty.com

  • Justice Department Using Undercover Agents To Battle White-Collar Criminals; Top Official Says Investigative Tactics Normally Used To Prosecute Organized Crime Figures Useful In Battling Fraud Epidemic

    EDITOR’S NOTE: The remarks below are excerpted from a speech last week in New York by Assistant U.S. Attorney General Lanny A. Breuer. As the PP Blog has previously reported, the Justice Department and agencies such as the FBI and U.S. Secret Service have been using undercover operatives to infiltrate criminal operations and networks used by the criminals.

    One of the FBI investigations Breuer referenced was the Trevor Cook Ponzi scheme in Minneapolis. The scheme consumed tens of millions of dollars, defrauding victims of at least $158 million. Many mysteries remain in the case.

    Meanwhile, undercover operatives also recently were used to expose penny-stock schemes operating in Florida.

    It also is known that the Secret Service used undercover operatives in the AdSurfDaily case, the INetGlobal case, the Regenesis 2×2 case, the Legisi case and a case involving alleged international fraudster Vladislav Horohorin, accused of using criminal forums to peddle stolen credit-card information.

    Here, now, some excerpts from Breuer’s speech . . .

    Part of Trevor Cook's stash.

    “Now, as I’m sure you know, financial criminals can be extraordinarily innovative, and they are often expert at covering their tracks. So we are always looking for creative ways to gather the evidence we need to bring financial criminals to justice. To that end, we have begun increasingly to rely, in white collar cases, on undercover investigative techniques that have perhaps been more commonly associated with the investigation of organized and violent crime.

    “As part of this effort, we have significantly strengthened the Criminal Division’s Office of Enforcement Operations (known as OEO), which is the office in the Justice Department that reviews and approves all applications for federal wiretaps from across the country. We have a dynamic new OEO Director, Paul O’Brien, and we’ve substantially increased the number of attorneys at OEO who review these wiretap applications, adding to their ranks experienced prosecutors and recent graduates who have completed federal clerkships. As a result, the number of wiretaps we authorize – in all types of cases – has gone up.

    “Let me give you just two examples of white collar cases in which we have used undercover techniques, both of which also highlight areas in which we have stepped up our white collar enforcement efforts more generally.

    “The first example is the case of Trevor Cook, which was prosecuted by the U.S. Attorney’s Office in Minneapolis. Mr. Cook is just one of dozens of individuals whom we’ve prosecuted in recent months for participating in investment fraud schemes. Over the course of several years, Mr. Cook schemed to defraud at least 1,000 people out of approximately $190 million by pretending to sell them investments in a foreign currency trading program.

    “In reality, he was pocketing the money or using it to pay off other investors. As was recently reported in the New York Times, we gathered evidence against Mr. Cook by using an undercover informant to record his transactions and conversations. [Cook] pleaded guilty earlier this year and was recently sentenced to 25 years in prison.

    “Trevor Cook is one of literally hundreds of financial criminals who have preyed upon vulnerable, individual investors and bilked them out of their savings using investment fraud schemes. And as with Mr. Cook, we have been prosecuting these people aggressively, all over the country – from New Jersey and Connecticut to Texas and California, and everywhere in between.

    “The second example comes from our enhanced efforts in the area of FCPA enforcement. Earlier this year, as I’m sure many of you know, we indicted 22 defendants in the military and law enforcement products industry for their participation in widespread schemes to bribe foreign government officials. These indictments resulted from the Department’s most extensive use ever of undercover law enforcement techniques in an FCPA investigation, and they represent the single largest prosecution of individuals in the history of our FCPA enforcement efforts. In September, one of the defendants in the case, Richard Bistrong, pleaded guilty . . .

    “Over the last 18 months, we’ve devoted significant additional resources to the Criminal Division’s Fraud Section. We’ve recruited talent not only from white shoe law firms, but also from a deep pool of prosecutors around the country who bring with them extensive experience in prosecuting everyone from violent mobsters to dangerous terrorists. We are now bringing that extraordinary talent and experience to bear on prosecuting financial fraudsters.”

    See related story on alleged Pathway To Prosperity Ponzi scheme.

    See related story on alleged Legisi Ponzi scheme.

    See related story on Matt Gagnon and Mazu.com.

  • Feds Charge Robert Stinson Criminally On Heels Of SEC Lawsuit; Prosecutors Say ‘Life’s Good’ Operator Stole More Than $17 Million In Ponzi Scheme, Wired Money Even As FBI Was Conducting Raid

    Even as the FBI was executing search warrants in the case of Life’s Good Inc. operator Robert Stinson Jr., Stinson was “wiring stolen funds out of Life’s Good bank accounts to other accounts,” federal prosecutors said.

    That act alone led to criminal charges of obstruction of justice. In a 26-count indictment in an alleged Ponzi scheme in which Stinson was accused of stealing more than $17 million from more than 260 investors, Stinson also was charged with wire fraud, mail fraud, money-laundering, bank fraud, filing false tax returns and making false statements to federal agents.

    At 12:06 p.m. on June 29 — the date of the raid and while federal agents were executing search warrants — Stinson began a series of wire transactions in which he moved at least $225,000 to prevent the cash from being seized, according to the indictment.

    Two of the transactions occurred during the same minute and involved two separate banks, according to the indictment.

    The scam involved promises of fixed returns of between 8 and 16 percent in four bogus real-estate hedge funds, prosecutors said. They added that Stinson was not a graduate of the Massachusetts Institute of Technology or Pennsylvania State University, as he had claimed.

    Although Stinson, 55, of Berwyn, Pa., told a tale of fabulous business success, he actually was a recidivist securities offender and had multiple fraud convictions. Part of his most recent fraud involved and online “webinar” and a PowerPoint presentation, according to the indictment.

    Stinson claimed to have “funded millions of dollars in real estate rehab and improvements as well as saved over 1,500 families from foreclosure free of charge,” according to the indictment.

    “Advisors” who drove business to the criminal firm were paid commissions of between 5 percent and 10 percent of the money they brought in.

    In 1986, he was convicted of wire fraud and larceny in U.S. Court in Delaware, according to records. In 1987, he was convicted of forgery and larceny in New Jersey state court. During the same year, he was convicted of mail fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Meanwhile, in 1996, he was convicted of criminal conspiracy in state court in Pennsylvania. In 2001, he was convicted of bank fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Stinson filed two bankruptcy petitions in 1999, one in October and another in December, according to records.

    Nine years earlier, in 1990, he was charged with fraud by the SEC. He was ordered to pay a judgment of $7,680, but the judgment remains unpaid, according to court filings.

    The SEC sued Stinson in June. The criminal probe was conducted by the FBI, the IRS and the U.S. Postal Inspection Service.

    If convicted on all counts, Stinson faces a maximum sentence of 329 years in federal prison and a fine of $6.8 million.

  • NOTE TO READERS: PP Blog Back Again; Criminals Try To Make Mincemeat Out Of 1st Amendment; CEO Of Small Company In North Carolina Stands Up For Press Freedom

    UPDATED 1:42 P.M. ET (U.S.A.) The PP Blog has returned. A major series of assaults on the Blog — and press freedom under the 1st Amendment to the U.S. Constitution — have been turned back. Five federal agencies are aware of the attacks. Evidence has been preserved.

    The Blog has established a satellite presence and certain redundancies, enabling its content to be published across multiple platforms. All content has been preserved, including more than 9,000 comments from readers, some of whom are victims of Ponzi schemes, pyramid schemes, MLM-style frauds and other forms of fraud.

    It is said that the last couple of months leading up to an election in the United States is the “Silly Season” in which political operatives get downright dirty.

    Unlike the Silly Season for political operatives, however, the Silly Season for online criminals has no generally restrained window of opportunity and no generally accepted beginning or end. It never really ends. Criminals want to continue to steal from senior citizens and people of faith, for instance. They want to shackle and hamstring the law-enforcement community. They want to position poison as candy and coopt people through appeals to greed — and they want to disable megaphones large and small.

    One week ago today, a new assault against the PP Blog began, the second in eight days. The Blog’s online “signature” was removed for security reasons. The signature popped back online briefly Friday, and a massive assault that ultimately consumed hundreds of MB of data (just to record the first couple of hours of the attack in text form) began instantly. Again the Blog’s signature was removed for security reasons.

    The Blog’s signature returned Saturday; yet-another assault began.

    Over the past several days, the data and security challenge were analyzed. A specialist painstakingly deployed an approach designed to thwart the attack. The Blog’s signature returned yesterday afternoon, as did the attackers. The attack was professionally managed and suppressed.

    Owing to the intervention of an entity and certain individuals who do not trivialize the Blog’s editorial mission and the 1st Amendment, the PP Blog has survived to publish this post.

    We confess that we were overcome with emotion when the Blog and its editorial well of 965 stories and thousands of links appeared back online yesterday afternoon.

    One of the great ironies of the situation is that some criminals and fraudsters on the Internet insist that they are the victims of Big Brother and what has become known as the “evilGUBment.” They rationalize egregious criminal behavior, in some cases portraying themselves as patriots and modern-day freedom-fighters.

    Some of them, apparently, trash the very same Constitution they claim to support by summoning hidden armies and weaponizing data packets to attack the very Constitutional principles they purport to embrace.

    The PP Blog was attacked to make the world safer for criminals — this while wealth in Florida and many other places on the map is bleeding out into the Caribbean and elsewhere and terrorists are creating toner bombs and underwear bombs and hoping to rivet the world’s attention on a detonation.

    Our heartfelt thanks to Kevin Kwasnik, CEO and Founder of USA Domains, a hosting company in Hickory. N.C., that stood up for the principle that a free press will not be denied in a Democracy.

    In a world in which criminals and hucksters paint investigators who probe domestic and international fraud and journalists who write about it as Nazis, Kevin Kwasnik stood up for a small Blog in a sea of Blogs.

    His family understands attempts to silence voices, and the lessons have been passed down through succeeding generations from a place known as Auschwitz, the largest of the concentration camps operated by the real Nazis.

  • KABOOM! Federal Judge Was Right When He Ordered Marketers To Pay $48.2 Million In False-Advertising Case Brought By FTC, Appeals Panel Rules; ‘Complete Absence Of Support’ For Most Claims Made About Supreme Greens And Coral Calcium Dietary Supplements

    The name of infomercial pitchman Kevin Trudeau is cited in an unsuccessful appeal of an order to pay $48.2 million for false advertising. Trudeau, a convicted felon who has clashed with the FTC multiple times, is not a party to the order.

    UPDATED 11:44 A.M. EDT (U.S.A.) So, you want to tell customers that your products cure diseases ranging from cancer to Parkinson’s and multiple sclerosis? And when critics and investigators and lawyers begin to ask tough questions, you want to deflect?

    And when a federal judge orders you to pay $48.2 million for making deceptive claims, you want to turn to the U.S. Court of Appeals and claim the critics got it all wrong, the FTC got it all wrong, expert witnesses got it all wrong  and the judge who ordered you to pay got it all wrong — and you want the appeals court to believe your claims were “mere puffery and were mollified by disclaimers?”

    Get ready to write a big check and return your ill-gotten gains: The U.S. Court of Appeals for the First Circuit has upheld the order to pay issued by U.S. District Judge George O’Toole in a case involving what the FTC described as the “phony health claims” made by marketers of dietary supplements known as “Supreme Greens” and “Coral Calcium.”

    Infomercial pitchman Kevin Trudeau hawked the purported benefits of coral-derived calcium on TV, settling the FTC claim for $2 million and a ban from making infomercials for products other than books. The FTC action that led to the appeal by other defendants was brought in 2004.

    The ruling by the appeals court upholding the $48.2 million penalty, however, cites passages from an infomercial in which Trudeau asked Robert Barefoot — referred to in court filings as a “purported” expert — questions.

    “Barefoot claimed that all diseases are caused by a condition called acidosis,” according to court documents. Here is part of what Barefoot said  (red added):

    “Are you getting the minerals? And if you’re not, you will become acidic and you will get one of the major diseases. You can have heart disease, cancer, lupus, fibromyalgia, multiple sclerosis. Name the disease, they’re all caused by acidosis.”

    Barefoot then claimed that calcium derived from Okinawan coral cured cancer and helped multiple-sclerosis patients emerge from their wheelchairs.

    “[W]e’ve been studying the coral calcium and I can tell you there are tens of millions of people, millions of testimonials. I’ve had 1,000 people tell me how they’ve cured their cancer. I’ve witnessed people get out of wheelchairs with multiple sclerosis just by getting on the coral.”

    “Barefoot asserted that coral-derived calcium was an effective cure for these diseases because it renders the body more alkaline, thereby curing acidosis,” according to court filings.

    The appeals filing cites infomercial exchanges between Trudeau and Barefoot (bolding added):

    Trudeau (host ): Pain, talk about pain. Read in your book if a person has pain, muscle
    pain, joint pain –

    Barefoot: Yes, yes.

    Trudeau: – they take calcium –

    Barefoot: Yes.

    Trudeau: – their body turns from acid to alkaline, pain goes away.

    Barefoot: That’s exactly –

    Trudeau: Is that common?

    Barefoot: Yes, yes, very common.

    Deflections and ambiguities then became part of the case, according to court filings (bolding added):

    “Barefoot went on to claim that coral-derived calcium is superior to other sources of calcium because it is 100% bioavailable, meaning that all coral-derived calcium that is ingested is also absorbed into the body.

    “To bolster his claims, Barefoot noted that unspecified articles from the Journal of the American Medical Association and the New England Journal of Medicine ‘said that calcium supplements reverse cancer . . . that’s a quote.’”

    “The infomercial directed potential customers to call an 800 number, on the other end of which DMC-employed telemarketers would follow a script directing them to tell potential customers that the product Coral Calcium would be 100% absorbed by their bodies and would combat degenerative diseases by rendering an acidic body more alkaline.

    “Telemarketers were also directed to tell sick customers that they should take higher doses of Coral Calcium, up to three times the standard dose. During the relevant time period (from January 2002 to July 2003), the Coral Calcium infomercial generated $54,034,394.82 in sales . . .”

    In a passage from the appeal documents in which the panel referred to a deposition by Barefoot in the case, the panel raised again the issues of defection and ambiguity (bolding added):

    “Indeed, Barefoot’s deposition testimony primarily relies on appeals to generic authority; his standard rhetorical practice is to assert that there are myriad studies that support a given claim, without identifying any specifically,” the appeals panel noted.

    It footnoted two examples:

    “For example, Barefoot claims that he ‘hired the No. 1 scientist in America . . . and he did a peer-review study all over the world and came up with thousands and thousands of references’”; and that ‘I could load you up where it would take you ten years to get out of this building before you read all the people that say calcium prevents cancer’”; and that “[t]ens of thousands of scientists are saying that [calcium prevents cancer], and I can show you the documents.’”

    “For example, when asked about the public availability of these uncountable studies, Barefoot said ‘I have just finished a book called Let’s Cure Humanity, in which I give you 1,000 scientific references. You’re asking for them. I’m giving them to you. I will also give you 100 scientific quotations from the world’s best scientists, and the quotations are startling: reverses PMS, it reverses cancer; that it reverses diabetes . . . ..”

    In upholding Judge O’Toole’s findings and the $48.2 million judgment, the appeals panel ruled that he had applied the court’s “equitable authority to fashion an appropriate remedy, ordering the Defendants to cure their customers in a way that their bogus supplements could not.”

    O’Toole issued the payment order in August 2009, requiring infomercial pitchman Donald W. Barrett, Robert Maihos and their two companies — Direct Marketing Concepts Inc. and ITV Direct Inc. — to pony up for false advertising.

    Read the decision by the appeals panel.

    In a settlement with the FTC in 2004, Barefoot agreed not to make deceptive claims. He disputes that he ever did anything wrong in touting the efficacy of coral calcium.

    “We have cooperated with the FTC, and have reached a settlement, whereby, even though Barefoot is innocent, he pleads guilty and thereby avoids a very expensive trial, which even if he won, would not compensate him for his losses,” his website notes.

  • Fugitives Charged In Michigan Ponzi Scheme Captured By U.S. Marshals, Police In Tennessee; Rita Gosselin And Husband Had Been On The Lam Since April

    CAPTURED: Rita Gosselin

    In December 2009, Rita Gosselin was indicted for racketeering in Michigan. Michigan Attorney General Mike Cox said she was at the helm of a real-estate Ponzi scheme involving promissory notes.

    In April 2010, Gosselin, 58, was alleged to have cut a monitoring device and fled the the state with her husband, Richard Gosselin, 62.

    The couple was captured yesterday in Tennessee by the U.S. Marshals Service and the Humboldt Police Department.

    Meanwhile, a Nevada couple charged earlier this week in a Ponzi case remains on the lam. Perry and Rachelle Griggs disappeared in January 2010.

    Perry Griggs operated the scheme while he was incarcerated in federal prison for another Ponzi scheme, authorities said.

    See earlier story on Rita Gosselin.

    See earlier story on Perry and Rachelle Griggs.

  • BULLETIN: FBI Seeks Arrest Of Perry and Rachelle Griggs; Agency Alleges Husband-And-Wife Team Ran Ponzi Scheme While Husband Was Federal Prisoner In Nevada; Manhunt Under Way

    WANTED BY FBI: Perry and Rachelle Griggs

    BULLETIN: UPDATED WITH INFORMATION FROM THE CFTC AT 7:03 P.M. EDT (U.S.A.) Perry and Rachelle Griggs are on the lam after running a Ponzi scheme while Perry Griggs was a federal prisoner in Nevada, the FBI said.

    The alleged commodities scheme consumed about $3 million and was targeted principally at inmates and family members of inmates, the FBI said.

    Separately, the CFTC said Perry Griggs ran a previous Ponzi scheme that resulted in convictions for wire fraud and money-laundering, a restitution order for more than $3 million and a 96-month prison sentence. Perry Griggs began serving the sentence in 2003, but hatched the new scheme while incarcerated.

    Yet-another scheme grew out of the scheme Perry Griggs hatched from prison, according to the CFTC. If the allegations are true, it means that Perry Griggs has been at the center of at least three fraud schemes since 2003, and launched two of them while in federal custody.

    The scheme for which Perry Griggs began serving time in 2003 involved coffee futures, the CFTC said. Even as he was serving time, Perry Griggs executed trades for the new scheme from prison by using the Internet and a telephone, according to court filings.

    Perry Griggs and his wife lost investors’ money in the new scheme and made Ponzi-style payments to cover up the fraud, while also stealing about $1 million to pay “for personal expenses, including luxury car leases, renting a home in Hawaii, purchasing jewelry and chartering a private jet,” the CFTC said.

    The couple went missing from a halfway house after Perry Griggs’ release from prison. Perry Griggs was on parole for the earlier Ponzi scheme when he fled while the second scheme was unraveling, the CFTC said.

    Perry Griggs was housed “with a large number of inmates from Hawaii,” the FBI said. He was released from prison in late 2008, and went missing with his wife from Las Vegas in January 2010.

    Indictments against the husband and wife were returned by a federal grand jury in Hawaii yesterday.

    The FBI has launched what it described as a “national fugitive manhunt with a primary focus on the states of Nevada, Washington, and California.”

    PERRY JAY GRIGGS is 49 years old, 5’10” tall, 180 pounds, with grey hair and blue eyes. He is known to have expensive tastes in sports cars, high-end clothing, cigars, and golf, the FBI said.

    RACHELLE LOUISE GRIGGS, also known as RACHELLE RUTLEDGE, is 42 years old, 5’4” tall, 150 pounds with blonde hair and green eyes.

    Anyone recognizing PERRY and RACHELLE GRIGGS or having information as to their current location is asked to call the Honolulu FBI at 808-566-4300.

    Perry Griggs also spent time in federal prisons in California and Texas. The Ponzi that put the couple on the lam operated through a scam company known as Aloha Trading Co., which purported to be in the business of trading commodities, the FBI said.

    Meanwhile, the CFTC said investors in the second scheme were lured by the promise of high returns. Some investors refinanced their homes and liquidated retirement accounts to invest with Perry and Rachelle Griggs.

    A third scheme grew from the second scheme and involved a company known as Paradise Trading LLC, the CFTC said.

    Read the CFTC complaint.

  • FTC Shows Federal Judge Screen Shots Of Online Promos; Agency Sues Purported ‘Wellness’ Firm For Deceptive Trade Practices, False Advertising

    An evidence exhibit filed by the FTC in federal court in San Francisco shows screen shots of claims made online by Wellness Support Network Inc. The agency now has sued the California company, alleging deceptive trade practices and false advertising in the marketing of  products purported to treat and prevent diabetes.

    Included in the 25-page evidence exhibit are 22 screen shots that capture text, images and claims made about the Wellness products. Within the exhibits are images of purported customers who provided testimonials, along with a text claim that “Nobel Prize winning technology validates WSN Diabetic Pack ingredients!”

    The FTC’s action against Wellness is the most recent false-advertising case in which the agency visited websites and took screen shots of claims made on the sites. Court filings also show that the FTC is copying videos produced by Internet marketers, and using the videos to bolster fraud cases.

    Court filings in the Wellness case suggest the firm was under investigation for months before the FTC brought the action.

    This is a screen shot from an evidence exhibit in the FTC case against Wellness. The FTC exhibit included 22 screen shots of claims made online.

    Named defendants in the case were Wellness and its principals, Robert Held and Robyn Held.

  • NOTE TO ASD VICTIMS: Rust Consulting Inc. Is The ONLY Authorized Claims Administrator; Don’t Be Confused By Claims Another Company Can Expedite Refunds

    ASD's Andy Bowdoin.

    In early September, federal prosecutors informed U.S. District Judge Rosemary Collyer that an official website had been established to inform victims of the alleged AdSurfDaily Ponzi scheme about the remissions and restitution process.

    The government’s filing, which lists the URL of the website — http://www.adsurfdailyremission.com/ — is a public record. It has been on Collyer’s docket since Sept. 2. It is signed by three federal prosecutors, including Ronald C. Machen Jr., the U.S. Attorney for the District of Columbia.

    What the filing means is that the government has formally notified Collyer that it has done what it said it would do all along: Arrange for ASD victims to receive restitution from seized funds through a formal process known as remission.

    The remissions website is operated by Rust Consulting Inc., which is under contract with the government to handle the remissions and restitution process.

    The PP Blog has seen reports and received inquiries from readers about a company known as Anshell Financial Services LLC (AFS). Among other things, AFS claims to be able to “expedite” the process of recovery. It also claims it has “established an efficient business relationship” with Rust, the official claims administrator.

    Not so fast, says Rust.

    “Rust Consulting, Inc. is an independent claims administrator that has been retained by the U.S. Secret Service to assist in processing Remission Forms,” Rust said. “Neither the U.S. Secret Service nor Rust Consulting, Inc. are in any way affiliated with or endorse AnShell Financial Services.”

    AFS published a document on its website that says it will charge a recovery fee to assist ASD, Golden Panda and LaFuenteDinero members. The document was called a “retainer agreement.”

    “The fee for these services is a retainer of the lesser of 10% of your investment or $1,000 against 10% of the recovered investment,” AFS said. The company also noted in an email to victims that it may be “intimidating and unpleasant” to work with the government.

    There is no need to pay any company to recover money seized by the Secret Service in the ASD case. Contrary to claims made by some ASD members, the government has said all along that it intends to form a restitution pool from the seized assets. It has hired Rust to administer the process and the pool.

    As things stand today, the pool is not fully funded because of appeals filed by ASD President Andy Bowdoin. The government is 3-0 in the forfeiture litigation so far, and 1-0 in the appeals process — with a Bowdoin appeal remaining to be decided.

    Among the bizarre claims circulated by some ASD members is that prosecutors placed approximately $80 million seized in the case in interest-bearing accounts that generated $1 billion or more in revenue.

    Some ASD members claimed prosecutors were partying with the money and had stolen at least some of it. Others claimed Collyer was conspiring with another federal judge to deny ASD members justice.

    Even as some ASD members were making one bizarre claim after another, others added to strange nature of the case by claiming there were no “witnesses” and no “evidence” against ASD in the case.

    These claims were made despite the fact Collyer conducted an evidentiary hearing in open court over a two-day period in the fall of 2008. ASD members attended the hearing and even testified. Evidence was tested and witnesses examined by both the government and the ASD side.

    Some of the evidence against ASD has been in the public record since Aug. 5, 2008. Regardless, dozens of members continued to insist there was no evidence against the company.

    In November 2008, Collyer ruled that ASD had not demonstrated it was a lawful business and not a Ponzi scheme.

    Bowdoin later signed a proffer letter and acknowledged the government’s material allegations all were true. He met with prosecutors over a period of at least four days, and gave information against his interest because he believed that cooperation possibly could help him avoid a prison sentence, according to Bowdoin’s own court filings.

    In January 2009, Bowdoin submitted to the forfeiture. In March 2009, he said through a letter released on the now-defunct Surf’s Up forum that he changed his mind after consulting with a “group” of members. Bowdoin tried to renew his claims to the money, but the effort failed after a months-long court battle.

    Bowdoin next tried to have Collyer removed from the case, another effort that failed. He has blamed lawyers from both sides of the case for his legal predicament, and claimed his continuing fight was inspired by a former Miss America.

  • EDITORIAL: Script For MPB Today Promo Used The Word ‘Monkeys’ In Context Of Obama Presidency; Research Suggests At Least Two Versions Of Script Existed; One Painted Obamas As Welfare Recipients Aspiring To Eat Dog Food And Table Scraps Left By Family Pet

    EDITOR’S NOTE: The PP Blog previously wrote about a promo by an MPB Today affiliate that sought to recruit prospects by depicting President Obama and Secretary of State Hillary Clinton as Nazis. The PP Blog is reporting today that at least two versions of the affiliate’s anti-Obama script appear to have existed, including one that used the word “monkeys” in the context of the Obama presidency. It is possible that the second script was actually a work-in-progress that was edited over time and later resulted in the publication of a single video, and was not a script unto itself.

    PHOTO CREDIT: United Nations, U.S. Department of State, Oct. 26, 2010: Secretary Clinton addresses a meeting of the UN Security Council marking the 10th anniversary of landmark Council resolution 1325 on women in peace and security.

    Before the PP Blog was knocked offline Saturday by a DDoS attack that delivered more than 6.1 million hits in a compressed time frame, the Blog was continuing its research into several stories. One of them involved a bizarre political attack on President Obama, First Lady Michelle Obama and Secretary of State Hillary Clinton. The attack came in the form of an animated sales promo for the purported MPB Today “grocery” program. We earlier published frames from the video, which was taken offline last month after the Blog wrote about it.

    Research now suggests there were at least two scripts for the promo or a single script that was  a work-in-progress that resulted in a finished video.

    At least one finished video was published on GoAnimate.com, a video service. The video depicted Obama and Secretary of State Hillary Clinton as Nazis, with Obama as a left-handed-saluting Nazi who cowered to Clinton, and Clinton as a drunken, whining Nazi who knocked out Michelle Obama after barging into the Oval Office. The phrase “Brown-noser” was used in this video which, incredibly, was a sales pitch designed to recruit MPB Today members.

    “Brown-noser,” of course, is a loaded phrase — not that depicting the President as a cowering Nazi, the First Lady as an embarrassment to the nation and the Secretary of State as the Nazi-In-Chief is any less objectionable.

    MPB Today affiliates routinely mention Walmart in their promos. Perhaps it was lost on the author of the anti-Obama screed that Clinton, a former First Lady and formerly a duly elected member of the U.S. Senate — the same body from which Obama emerged — was the first woman ever appointed to Walmart’s board of directors. Her appointment occurred in 1986, nearly a quarter of a century ago. Clinton no longer serves on Walmart’s board.

    Hillary Clinton also was a serious contender for the Presidency of the United States. She is held in high regard by tens of millions of Americans, including Americans who disagree with her political philosophy. Clinton is only the second woman ever to serve as U.S. Secretary of State. Only two Republicans cast votes against Clinton’s nomination as Secretary; the overall vote in January 2009 was 94-2.

    Although it is unclear if the second script resulted in a finished video that later was removed, the script is published online and is available in Google search results. If anything, it is even more objectionable than the script that resulted in the published video.

    Here is the script, as published on Google. (Italics and carriage returns added):

    SCENE0:

    SCENE1: michelle_obama O’ Barry Baby, since we’ve joined MPB TODAY your popularity has increased in the polls! Who runs these polls, monkeys??

    SCENE2: michelle_obama obama It’s true, Shell Bell.. and I’ve even been asked to be a greeter at Walmart since I’m there so much using my $200 giftcards.

    SCENE3: michelle_obama obama And I just love those $300 commission checks, too! Me too, Babe, me too…

    SCENE4: michelle_obama obama I’m so relieved we’ve totally eliminated our grocery bill! You’re relieved? Now I’ll finally get some real dog food instead of just Sasha’s scraps

    SCENE5: obama michelle_obama Pardon me, Honey… it must be all those beans I ate at Sam’s Club today. Wheww, somebody open a window, I can’t breathe.

    SCENE6: michelle_obama obama Hmm, I should prolly call my Food Stamp worker now that I’ve joined MPB

    SCENE7: michelle_obama obama I only had to spend $200 to join, but I borrowed the money so don’t worry, honey.

    SCENE8: obama michelle_obama You what?? You borrowed the money to join MPB Today? From whom?? Oh no, here it comes…

    SCENE9: obama michelle_obama Uhh, from Hilary, Here she comes now…

    SCENE10: obama michelle_obama hillary Hail Hil, what’s wrong with you??

    SCENE11: obama hillary michelle_obama I couldn’t find 2 people to join me in MPB Today, now I’m going to lose my money! I feel so woozy, like I got clunked in the head, what just happened??

    SCENE12: hillary obama michelle_obama Maybe it’s time to lose the pantsuit from Big Lots and start shopping at Walmart, like I do. Then maybe people will join you in MPB. What a freakin’ drama queen That’s it, I’m outta here

    SCENE14: hillary obama Listen, I pledge to help you get your 2 people but even if I can’t you’ll still get your groceries?

    SCENE15: obama hillary All you’ll have to do is pay shipping on the groceries, Hil, no big deal… right? I suppose not but I feel like such a loser. cough cough… let’s not even go there.

    SCENE16: obama hillary You’re no loser, Hil, and besides… no one loses with MPB Today, not even you… OMG, What a Brown-noser

    SCENE17: obama hillary O’ I’m so relieved, now I can go home and tell Bill. Just go home, PLEASE just go home…

    SCENE19: [URL Deleted By PP Blog] Brought To You by: [Deleted By PP Blog]

    SCENE18: Join MPB Today With a Real Mentor, Not Merely a Marketer… Big Difference!

    SCENE20: Join MPB Today With a Real Mentor, Not Merely a Marketer… Big Difference!

    The script.

    Apparently the self-described “Real Mentor” believed it prudent for business purposes to offend as many Americans and citizens of the world as possible in the bizarre bid to glean affiliate checks and Walmart gift cards from MPB Today, an MLM program.

    The second script makes no reference to Nazis, but does include a reference to “monkeys.” Hillary Clinton was called “Hitlary” in the script that resulted in the published video. The Secretary is merely “Hillary” in the second script. The “Brown-noser” line is common to both scripts.

    And what do the Obamas eat? Well, “dog food,” according to the script. Apparently this is a step up from the table “scraps” the family dog left unconsumed.

    The script also references the federal Food Stamp program, apparently painting at least one of the Obamas as in need of the services provided by the USDA-operated program and a caseworker.

    President Obama apparently was positioned as a Walmart “greeter” in the script.

    The word “bizarre” does not even begin to cover the scripts or the finished video that emerged. We are left wondering if someone made the calculation that the use of the word “monkeys” would be just too caustic for the finished product, but that the Nazi depiction would strike just the right chord to stimulate money to change hands. Regardless, the phrase “Brown-noser” appears to have been included in both scripts — and we’d fully expect the producer to argue that the phrase was just a throw-away line, that it was in no way designed as code to remind MPB Today prospects that Obama does not have the same bloodlines as, say, the 43 Presidents who preceded him.

    That any version of the promo emerged in a bid to attract prospects to MPB Today is a matter for great introspection. At the moment, we can’t think of a single thing that tops it in terms of unrestrained gall, xenophobia and pure idiocy.

    In the often bizarre world of MLM, we’ve apparently reached the point that a “real mentor” puts the President of the United States in a Walmart greeter’s attire, places him on Food Stamps, depicts him (or his family) as aspiring to eat dog food, uses animated images of a dog to reinforce the poisonous stereotypes, lashes out against the First Lady and the Secretary of State — and then urges others to sign up for a “grocery” program and do the same.

    That MPB Today has not spoken out against this is only one of many reasons people should choose not to do business with the firm.

  • PP Blog Returns After 4-Day Outage Caused By DDoS Attack; Site Flooded Saturday By Millions Of Hits

    Dear Readers,

    The PP Blog was brought down Saturday by a DDoS attack that flooded its servers with more than 6.1 million “hits” during a three-hour window. The Blog was shut down for security reasons, and federal law-enforcement agencies have been made aware of the attack.

    We were made aware of the nature of the attack this morning. Software engineers initially described the event as “suspicious,” saying the Blog suddenly had received an “immense” amount of traffic.

    Our heartfelt appreciation is extended to readers who contacted us and expressed their concern and their support for the Blog’s editorial mission during the outage.

    Thank you.

    Sincerely,

    Patrick

  • BULLETIN: Woman Who Did Not Report Ponzi Schemer Richard Piccoli Sentenced To 18 Months In Federal Prison For ‘Misprision Of Felony’ And Tax Charge; Kathleen Fuoco Turned ‘Blind Eye’ To Fraud, Prosecutors Say

    BULLETIN: In a case that could send shockwaves across the culture of promoting scams and accepting payments from scams, a New York woman who turned a blind eye to Richard Piccoli’s long-running Ponzi scheme in New York state has been sentenced to 18 months in federal prison for misprision of a felony and willful failure to file tax returns.

    Kathleen Fuoco, 60, of West Seneca, N.Y., pleaded guilty to the charges in June. She was sentenced today in Buffalo. Piccoli, 83, was sentenced to 20 years in prison last year. He became infamous in the Buffalo region for targeting people of faith in the scheme.

    Fuoco knew Piccoli was operating a scam, but did not report him, prosecutors said in June. Her failure to report the scheme brought about the misprision charge and also resulted in an agreement with prosecutors in which a financial judgment of $25 million would be placed against Fuoco, the total amount of restitution due victims.

    Piccoli operated a firm known as Gen-See Capital Corp., and directly targeted Christians and senior citizens.

    “Our seniors and clergy are absolutely pleased with Gen-See’s Re-Investment Program,” Piccoli said, according to marketing materials gathered by investigators as evidence in the case.

    The Piccoli prosecution was brought after an undercover sting by the U.S. Postal Inspection Service and the IRS.

    After Fuoco’s guilty plea in June,  U.S. Attorney William J. Hochul said “the public should know that if you attempt to defraud any hard working citizen or turn a blind eye while someone else is committing fraud, you will be caught and prosecuted to the fullest extent of the law.”

    Hochul built on his earlier remarks after Fuoco’s sentencing today.

    “The best defense for investors is to conduct your own due diligence and research,” he said. “When unscrupulous defendants take advantage of others through fraud, however, my office stands ready to bring the full force of law to punish the crime.”

    Misprision of felony is a charge that serial promoters of online scams such as autosurfs, HYIPs and 2×2 matrix cyclers potentially could face. The schemes proliferate in no small measure because promoters who play dumb to the fraud create the conditions that make it possible for the “programs” to go “viral” on the Internet.

    Some promoters help fuel scheme after scheme after scheme, perhaps saying later that they were surprised the programs proved to be fraudulent.

    Such bids to create plausible deniability have been unmasked by the U.S. Secret Service in a number of investigations since 2008. In some cases, the agency has used undercover identities to join the schemes and later advised federal judges that the agents were instructed by members of the schemes to avoid using certain phrases in sales pitches to minimize the chance of getting caught.

    In certain undercover operations, the Secret Service revealed it had agents in rooms or venues from which scammers were delivering sales pitches to an audience. Some schemers have been kept under surveillance for weeks by agents.

    Court documents in the alleged AdSurfDaily (Florida) and INetGlobal (Minnesota) Ponzi schemes — and in the alleged Regenesis 2×2 (Washington state) Ponzi scheme — show that agents moved from location to location and even city to city to build evidence against Ponzi schemers.

    Meanwhile, court documents show that undercover Secret Service operatives and their state law-enforcement colleagues even have posed as interested investors and walked right through the front doors of offices operated by suspected fraudsters.

    Court filings in the alleged Legisi Ponzi scheme brought by the SEC show that the behavior of the alleged schemer changed after he came to understand he was under investigation — a development that allegedly led to even greater chicanery to hide the scheme.