EDITOR’S NOTE: The indictment in Delaware against Patrick A. Wiley of Detroit illustrates the dangers of entrusting money to a person who claims he can help you recover money lost in a securities swindle. It also illustrates that a person who claims he can help you recover money lost to a securities swindle — and then strings you along — can be charged with serious crimes.
A Detroit man has been indicted for racketeering in Delaware amid allegations he swindled at least $276,000 from a woman in an “investment recovery scam,” prosecutors said.
Patrick A. Wiley, 42, also was charged with securities fraud, selling unregistered securities and theft, Delaware Attorney General Beau Biden said. The prosecution was brought by Biden’s Securities Unit.
All in all, the victim in the case lost more than $300,000, including $45,000 in the original swindle.
Wiley’s investment-recovery scam grew out of an earlier fraud scheme in which the victim was persuaded by another man to invest in a “joint trading venture†that purportedly involved “several wealthy persons in London, England” and would fetch a return of $10 million on an outlay of $50,000 in only months, Biden’s office said.
“With deep sympathies for her loss, we remind all Delawareans that any deal that sounds too good to be true, probably is,” Biden said.
The victim was recruited into the investment scheme in early 2005 by Darren Dobson, 45, of Charlotte, N.C., Biden’s office said. After a state probe, Dobson was indicted in Delaware earlier this year on charges of securities fraud, selling unregistered securities and transacting business as an unregistered agent.
Investigators said the victim sent $45,000 to a Tampa company known as VFG Management
LLC based on Dobson’s claim “that a $50,000 investment would yield a return of $10 million by June 2005.”
VFG Management was “the entity through which the London partners were supposedly operating the joint trading venture,” Biden’s office said.
When no returns materialized, the victim contacted Wiley based on her belief he had been an investor in the same scam, authorities said.
“Wiley claimed he had information regarding the principals involved and that he would pursue them to obtain the victim’s promised investment return,” Biden’s office said. “On numerous occasions between October 2005 and November 2007, Wiley solicited funds from the victim to defray the cost of his efforts, including trips that he was supposedly taking abroad for meetings with the London trading partners and their attorney. During that time period, the victim wired more than $276,000 to Wiley on sixty-one separate occasions. The victim never received the promised investment return or the investment principal.”
Biden described the alleged scam as a “con game.”
“We are particularly disturbed by crimes that use trust and confidence as a means to an
illegitimate end,” Biden said. “The victim in this case has lost over $300,000 in a con game.”
Growing up a child of Andy Bowdoin and advancing through adolescence and adulthood was hard because of Bowdoin’s habitual scheming, according to Scott Bowdoin, Andy Bowdoin’s son.
“He uses religion — always,” Scott Bowdoin, 42, said flatly of his 75-year-old father, noting he had not spoken to Andy Bowdoin in about 15 years because the elder Bowdoin had ripped off his own mother, Scott’s late grandmother, in a credit-card scheme.
The elder Bowdoin left his own mother “with nothing,” Scott Bowdoin asserted. “The electricity was about to get cut off, the water was about to get cut off. He is a man with no conscience.”
Scott Bowdoin made the remarks about his father in an interview with the PP Blog this morning. The younger Bowdoin said his father had disgraced the family name — and that it was high time the public in general and AdSurfDaily members in particular knew that Andy Bowdoin did not enjoy the uniform support of his family as the ASD Ponzi case winds its way through the courts.
There was a long-ago scheme involving telephone calling cards, Scott Bowdoin said.
And there was an “air-conditioning scam” in Florida, he added, saying his father traded on faith.
“He’d go around and evangelize,” Scott Bowdoin said. “That was a scam. He did something with cell-phone towers. That was a scam.”
Andy Bowdoin has been married five times, Scott Bowdoin said, adding that Andy Bowdoin’s financial scheming devastated Scott’s grandmother late in her life.
“He drained my grandmother,” Scott said.
Separately, an Andy Bowdoin family member who spoke to the PP Blog on the condition of anonymity said Bowdoin “has been doing this since the 1960s.
“I always knew he was a con man,” the family member said. “I just didn’t know he could do it at this level.”
The “level,” according to federal prosecutors and the U.S. Secret Service, exceeds $80 million and may approach $100 million when a final accounting is done. Records show that agents seized more than $65.8 million from 10 Andy Bowdoin bank accounts, including one that contained more than $31 million and another that contained more than $23 million.
In total, about $80 million was officially listed as forfeited in the case. Andy Bowdoin has appealed the forfeitures, which were ordered by U.S. District Judge Rosemary Collyer. An attempt last year by Bowdoin to force Collyer to withdraw as the presiding judge failed.
Prosecutors claimed in court filings that ASD was a massive international Ponzi scheme masked as an “advertising” business.
“I was a little surprised because I didn’t know he could pull off a scam that big,” Scott Bowdoin said. “But, by God, he did it.”
After the elder Bowdoin scammed his own mother in the 1990s, Scott Bowdoin said, “I told him you are dead to me.” Andy Bowdoin later was implicated in a securities swindle in Alabama. Records show he was making restitution to the Alabama victims even as he was operating ASD in 2008.
“I pity you when you have to face the Lord when you die,” Scott Bowdoin said he told his father after he had fleeced Scott’s grandmother.
In July 2008, years after the Alabama swindle and while ASD was gathering tens of millions of dollars per month, ASD money was used to purchase a Lincoln automobile for nearly $50,000, according to court records. At the time, Bowdoin still owed the Alabama victims about $45,000.
Even more ASD money — more than $1 million — went to acquire real estate, a Honda automobile, an Acura automobile, jet skis, a Cabana boat, marine equipment and haul trailers, according to records. A shell company linked to Andy Bowdoin’s company began to make the purchases in June 2008, less than two weeks after an ASD “rally” in Las Vegas.
While in Las Vegas, Andy Bowdoin urged members to imagine themselves getting large checks from ASD and thanked God for making him a “money magnet,” according to records.
Scott Bowdoin described his father as a “classic con artist.”
“He is a very, very, very smart man,” Scott Bowdoin said. “He knows exactly what he is doing. He uses religion — always.”
And Scott Bowdoin lamented his father’s appeals in the forfeiture case against his assets.
“I don’t understand why this man is not sitting in prison,” Scott Bowdoin said. “He pulled off the ultimate [con] this time.”
Scott said his father left when he was 14 and that father and son had been estranged for years.
Asked what he would do if his father suddenly materialized in the same room with him, Scott said that Andy Bowdoin “won’t come around me.
“I’d probably punch him in the face,” Scott said.
Asked if he had any advice for ASD members, Scott said, “Don’t believe a word he says. He’s a great actor. He is a good bullshitter. He could sell a screen door to a submarine captain.”
Calling his dad a “charmer,” Scott said he was aware that some ASD members continued to cling to hope that his father came as the “Christian” depicted in sales pitches and motivational talks. After the company was raided in August 2008, Bowdoin asked his followers to trust in God, saying the government action against his autosurfing company was the work of “Satan.”
“These people who feel sorry for him thinking he is a good Christian — they have blinders on,” Scott Bowdoin said. “He has hurt more people than just [members of] AdSurfDaily. I can guarantee it.”
Andy Bowdoin wasted his talents chasing schemes, Scott Bowdoin maintained.
“If he had gone the right way, he could have been a Donald Trump,” Scott contended. “[But] he wanted to start at the top, not at the bottom.”
Meanwhile, the other Bowdoin family member interviewed by the PP Blog said that he believed Andy was “a sociopath.”
“I know that whatever he puts his efforts in to is [designed to] con people out of as much money as he can,” the other family member said. “Andy is a sociopath. There aren’t many sociopaths, but he is one.”
Both family members said they were not participants in ASD and learned about the alleged scheme on the Internet.
The family member who spoke on the condition of anonymity explained he had done so in an effort to maintain as much privacy as he could as a sea of allegations swirled around Andy Bowdoin.
“The man is a genius,” he said of Andy Bowdoin, “but he has a criminal mind. Anyone involved with his companies — they’d be sucked into a Ponzi. To me, he is a sociopath; he will drag other people down. People need to be [careful]. A good con has a little bit of truth to it.”
Andy Bowdoin, said the family member, has lived a “sad” life.
“It’s sad because he could have used his talent for good,” the family member said. “I don’t hate the man, but I pity him.”
When he thinks about Andy Bowdoin, the family member said, he thinks about Bowdoin’s father.
“Andy Bowdoin’s father was a good man,” the family member said.
This website was part of a $30 million acai-berry scam that offered purported "free trials," overbilled customers repeatedly and fraudulently traded on the names of Oprah Winfrey, Rachel Ray and other celebrities and well-known brands, the FTC alleged.
UPDATED 4:56 P.M. EDT (U.S.A.) Calling the operations of Arizona-based Central Coast Nutraceuticals Inc. (CCN) and affiliated companies a “$30 million” scam in 2009 alone, the Federal Trade Commission has obtained a court-ordered asset freeze in an acai-berry fraud case.
Charged along with CCN were Graham D. Gibson, Michael A. McKenzy and four companies that shared the same Phoenix street address : iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.
The FTC’s case file includes statements from Oprah Winfrey’s Harpo Inc. and author and TV personality Rachel Ray that they never endorsed acai-berry products as the alleged scammers claimed and that their intellectual property was being abused.
The FTC’s action may send shockwaves across Internet Marketing slime pits, which routinely trade on celebrity names to sanitize “business opportunities” that imply famous people and entities endorse offers that appear online.
At the same time, the FTC action may have a chilling effect on online hucksters who make misleading or unproven claims that their products cure anything from cancer to obesity.
A big part of the scheme centered on bogus “free trial” offers and corrupt billing practices in which “numerous unauthorized charges” were made to customers’ credit-cards and debit cards, the FTC alleged.
Another part of the scheme centered on false claims that using a product known as AcaiPure “could lead to rapid and substantial weight loss,” the FTC charged.
“Too many ‘free’ offers come with strings attached,†said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “In this case, the defendants promised buyers a ‘risk free’ trial and then illegally billed their credit cards again and again — and again.”
Vladeck said the FTC estimated “that about a million people have fallen victim to this scam,” with the scheme spreading in part owing to the fraudsters’ use of “fake endorsements” from Winfrey and Ray.
“Ms. Oprah Winfrey has never endorsed or approved AcaiPure,†said Douglas J. Pattison, chief executive officer of Harpo Inc.
In fact, Pattison said in court filings, Winfrey “has never endorsed any acai berry supplement or acai berry related product by name” and “has never approved or agreed to have her image or name used in conjunction with the sale and marketing of any acai berry related product.â€
Winfrey sued more than 40 companies for trademark infringement last year, amid claims scammers were using her image and brand to fleece the public.
For her part, Ray said in court filings that she, too, had been victimized by Internet Marketers who used her image and brand to pull off fraud schemes.
“I did not approve or agree to the use of my name or my image on this website. . . . I have never used, endorsed or approved AcaiPure. I am not associated with nor do I endorse or approve any acai berry product, company or online solicitation of such products, including AcaiPure,†Ray said.
In another move that may cause great unease in the part of the Internet Marketing landscape that entitles itself to divine testimonials and plant the seed that famous people endorse their fraudulent offers, the FTC included photos of the websites and shared a video that allegedly made fraudulent claims.
The PP Blog conducted an interview this morning with Scott Bowdoin, a son of AdSurfDaily President Andy Bowdoin. Scott Bowdoin stressed that he did not approve of his father’s conduct or support Andy Bowdoin in any way.
In August 2008, the U.S. Secret Service alleged that Andy Bowdoin was at the helm of a massive international Ponzi scheme disguised as an advertising business.
Scott Bowdoin said he consented to the interview to make it clear that his father does not enjoy the widespread support of his family.
“This is a man who ruined our name,” Scott Bowdoin said of his father.
“He is a man with no conscience; he has been doing this all his life,” Scott Bowdoin said.
The PP Blog will publish a lengthier story based on the interview later today.
Robert Hodgins of Dallas-based Virtual Money Inc. is wanted by Interpol in an international money-laundering case that allegedly involves proceeds from the sale of narcotics. Virtual Money Inc.'s name is referenced in the AdSurfDaily autosurf Ponzi scheme case brought by the U.S. Secret Service and the PhoenixSurf autosurf Ponzi scheme case brought by the Securities and Exchange Commission. The case against VM and Hodgins was brought by the U.S. Drug Enforcement Administration and the IRS. PHOTO SOURCE: Interpol.
A Colombian national implicated in an international conspiracy to launder drug money has been sentenced to 45 months in prison, federal prosecutors announced.
Meanwhile, another figure in the alleged scheme — Robert Hodgins, the operator of Dallas-based Virtual Money Inc. (VM) — remains at large, prosecutors said. Hodgins is wanted by Interpol on a warrant issued by a federal judge in Connecticut.
Hodgins is Canadian by birth and lived in the Oklahoma City area of the United States, according to records.
VM’s name is referenced in the forfeiture allegations in the AdSurfDaily autosurf Ponzi scheme case brought by the U.S. Secret Service in the District of Columbia in August 2008. It also is referenced in the PhoenixSurf Ponzi prosecution brought by the SEC in Los Angeles in July 2007.
Juan Merlano Salazar, 36, of Medellin, Colombia, was sentenced to 45 months Aug. 9 by U.S. District Judge Mark R. Kravitz of the District of Connecticut. Salazar is among five defendants convicted so far in the money-laundering case, which allegedly involved the use of debit cards provided by VM to launder drug proceeds at ATMs in Colombia, according to court filings.
Hodgins also is alleged to have accepted $100,000 to launder drug proceeds in the Dominican Republic.
The Colombian narco business used “stored value cards” to enable drug proceeds to be withdrawn from banks in Medellin as Colombian pesos, prosecutors said.
Medellin was home base to the late drug lord Pablo Escobar.
In August 2009, the PP Blog reported that VM’s name appeared in advertising materials for ASD in 2007. Records suggest that Hodgins or a VM designate attended an ASD function in Orlando in November 2006, about a month after ASD began its rollout.
This 2007 ad for ASD promoted the VM debit card.
Some ASD members have said they observed large sums of cash and briefcases full of cashiers’ checks at ASD “rallies” in U.S. cities in the spring and summer of 2008, which led to questions about whether ASD was laundering money for a drug cartel and international criminals.
If the allegations against VM and Hodgins are true, it means the company that provided the debit cards ASD used was in the business of laundering money for at least one international narco business.
On Aug. 1, 2008, the U.S. Secret Service seized more than $80 million in the ASD case. The money allegedly was tied to at least three autosurfs: ASD, GoldenPandaAdBuilder and LaFuenteDinero.
ASD, which had operated under at least one other name and perhaps as many as three or more, claimed in 2007 that one of the reasons it could not make payments to members was that $1 million had been stolen by “Russian” hackers.
Prosecutors said ASD never filed a police report — not even to report the theft of a huge sum of money. ASD instead relaunched as ASD Cash Generator. By the summer of 2008, it was gathering tens of millions of dollars per week.
One bank account in the name of ASD President Andy Bowdoin seized by the Secret Service contained more than $31 million, according to court filings. Another account in Bowdoin’s name contained more than $23 million. Bowdoin was referenced as the “Sole Proprietor” of the accounts.
All in all, the Secret Service seized more than $65.8 million from 10 Bowdoin bank accounts, and more than $14 million from at least five bank accounts linked to Golden Panda, according to records.
BULLETIN:(UPDATED 6:10 P.M. EDT (U.S.A.) North Dakota Attorney General Wayne Stenehjem has issued a cease-and-desist order against Kenneth Jacobi and his company, XM Brands Inc., amid allegations of deceptive trade practices in the sale of acai berry and teeth-whitening products on the Internet.
Jacobi’s enterprises are based in Hollywood, Fla. In the order, North Dakota said it also had “concerns about the safety and efficacy of the products” sold by Jacobi and XM Brands and warned participants in the business not to destroy evidence.
“Efficacy” means effectiveness.
“XM Brands’ deceptive marketing practices are a ruse to trick consumers into unwanted or unauthorized purchases,†Stenehjem said. “Making it worse, because consumers often purchase the products via pop-up websites, it is very difficult for them later to locate the website to cancel.â€
The PP Blog visited three websites referenced in the order by their URLs. All three sites — VividWhiteSmiles.com, MyEverBriteSmile.com and DazzlingWhiteSystem.com — were registered behind a proxy. North Dakota investigators said Jacobi and XM Brands “are believed” to own the sites.
The alleged scheme featured “free trial†or “negative option†marketing practices that tricked consumers and trapped them into making unwanted and unauthorized purchases, investigators said.
“Consumers unknowingly are enrolled by XM Brands in a membership program with automatic future shipments of products, and XM Brands charges the consumer’s credit card the full price of the product each month until the consumer is eventually able to cancel the enrollment,†Stenehjem said.
In the order to cease and desist, the state alleged that XM Brands and Jacobi “have refused to provide responses and produce documents” requested by the state after it launched an investigation May 6.
Parrell Grossman, director of North Dakota’s Consumer Protection division, advised consumers to be on the look out for scammers.
“Teeth whitening, anti-aging, acai berry, and diet pill products lend themselves to deceptive ‘free trial’ or ‘negative option’ marketing techniques,†Grossman said. “Steer clear of deceptive website solicitations and instead talk to your dentist, health care provider, or local health food store about safe and effective solutions.â€
XM Brands is awash in a sea of complaints, North Dakota investigators said.
“One Better Business Bureau in Florida received over 1,000 complaints against XM Brands last year alone,” Stenehjem’s office said.
Florida also is investigating XM Brands, according to the website of Attorney General Bill McCollum. The Better Business Bureau of Southeast Florida and the Caribbean says it is compiling information on the firm and has received “numerous” complaints.
As of today, the BBB website referenced 1,387 complaints against XM Brands.
Read the cease-and-desist order, which references a number of names that may be associated with Jacobi’s business. The order applies to the businesses and their “officers, directors, owners, agents, servants, employees and representatives.”
Jacobi and XM Brands are “liable for their own misconduct and/or for directing others to engage in misconduct,” according to the order. The state issued a warning in the order that destruction of evidence or hiding documents and records could result in criminal prosecution.
A Texas man paid a Belize company to produce ads that ran on CNBC and Fox Business News for his oil-and-gas venture, but the offer proved to be fraudulent and the SEC has filed an emergency court action to stop the scheme, the agency said.
Jon C. Grinder of Houston used “at least” $210,000 of investor funds to pay the offshore firm to launch the TV ads, which claimed investors could earn annual returns of up to 40 percent from “low risk producing wells.”
Ginder personally called prospects who responded to the ads. The SEC described the scheme as multilayered, saying Ginder “fraudulently raised approximately $3.5 million from over 50 investors nationwide through three unregistered oil and gas limited partnership offerings.”
Investors were told their money would be used to purchases leases and renovate existing wells to enhance production, amid claims that “historical oil and gas data” suggested production would surge once the properties were improved.
The SEC described the claims as “wildly optimistic” and “fraudulent on their face” because “the historical oil and gas production from the partnership leases was very poor” and “many of the wells had no recent production history.”
In one of the offerings, annual production was estimated at 91,000 barrels even though the wells had produced a total of only 67,000 barrels in the preceding 15 years.
“There were no reserve reports or any other credible basis upon which he could form a reasonable belief that the wells could be reworked to yield a production rate in a single year that would exceed over 135 percent of the prior combined 15 years[‘] worth of productivity,” the SEC said.
During the first year of the venture (2008), total production after several wells “purportedly” were reworked topped out at only about 3,522 barrels — a far cry from the projection of 91,000 barrels, the SEC said.
In 2009, the agency said, production topped out at about 3,986 barrels.
Ginder continued to raise funds based on the same “false and misleading” projections through March 2010, while also failing to disclose the venture was operating at a loss, the SEC said.
But production misrepresentations were only part of the scheme, the SEC said.
Ginder, according to the agency, also used investor funds to provide an unauthorized, interest-free loan of $300,000 to a penny-stock company “founded by his friend and in which Ginder owned stock.”
The penny-stock firm “failed to repay the loan,” the SEC said.
Ginder also did not disclose that $800,000 in investor funds were used to purchase leases from a private company he controlled, netting him a cash profit of $700,000 and 10 “partnership units” worth $60,000 each, the agency charged.
All in all, Ginder netted $1.3 million from self-dealing, the SEC alleged.
The SEC has asked a federal judge to freeze Ginder’s assets, along with the assets of two related companies: Northamerican Energy Group Inc. (NEG) and Northamerican Energy Group Corp. (NEGC). The agency alleged that the scheme operated between February 2008 and May 2010.
In this YouTube promo for Data Network Affiliates (DNA), the images of Donald Trump and Oprah Winfrey streamed for 10 continuous minutes. There is no evidence that either celebrity endorsed the company. Claims also were made on YouTube that Apple Inc. had a special "branding" relationship with DNA. No evidence to support the claim has surfaced.
In 2009, Oprah Winfrey sued more than 40 companies for trademark infringement amid claims they were fleecing the public by implying she endorsed their Acai berry products.
Winfrey, an American television and business icon, is based in Chicago. Harpo Productions, which produces The Oprah Winfrey Show and The Dr. Oz Show, filed the infringement lawsuit on behalf of Winfrey and Dr. Mehmet Oz, a heart surgeon.
“Neither Ms. Winfrey nor Dr. Oz has ever sponsored or endorsed any acai, resveratrol or dietary supplement product and cannot vouch for their safety or effectiveness,” Harpo said on the Oprah website last year. “It is our intention to put an end to these companies’ false claims and increasingly deceptive practices.”
Oz issued a statement last year on the Oprah site, saying scammers were using his name to swindle the public.
“The companies that are using my name to hawk these products are duping the public,” Oz said. “I do not endorse any of these products. By falsely presenting products as ‘scientifically proven’ and endorsed by well-known figures, these companies do a gross disservice to the public health and could even pose a danger to those who believe their false and unproven claims. I am taking this step in the interest of public safety. I feel compelled to stand up against these companies and their deceitful practices.”
The Federal Trade Commission announced today that its Chicago office will announce an “action against Internet Marketers of Acai berry weight-loss pills and ‘colon cleansers.’” The FTC announcement is expected Monday.
It was not immediately clear if the agency’s decision to announce the news in Chicago was a coincidence. What is clear is that Winfrey’s name often is appropriated by scammers or purveyors of questionable “business opportunities” and products and services in a bid to leech off her brand and drive sales.
It also is clear that Illinois Attorney General Lisa Madigan is taking action against firms that falsely state or imply their products are endorsed by celebrities. The names of Winfrey and Oz are mentioned in three lawsuits Madigan filed last year.
Other celebrity names mentioned in the Illinois lawsuits, which alleged deceptive trade practices for the manner in which products were marketed and customers were approached and billed, include Rachel Ray, Gweneth Paltrow, Courtney Love and Eva Longoria-Parker.
Madigan said scammers linked the names of celebrities to purported deals that involved free trials and claims of weight loss.
“For thousands of dieters, the quest for a miracle product has become a nightmare,” Madigan said last year. “Far too often, consumers end up losing their money — not weight — in these deals.”
The attorney general did not mince words when describing bogus marketing practices.
“We must hold these Internet scammers accountable for their role in a seedy marketing game that steers unsuspecting consumers to online schemes,” Madigan said. “We also need to send a clear message to other marketers and networks in the business of designing misleading, traffic-enticing schemes.”
Earlier this year, Winfrey’s image appeared for 10 consecutive minutes in a YouTube video pitch for Data Network Affiliates (DNA), which purports to assist law enforcement in locating abducted children. The image of Donald Trump, another American business and entertainment icon, appeared in the same pitch.
Other YouTube pitches for DNA implied that the company had a special, cell-phone branding deal with Apple Inc., which brought the world the iPhone.
Neither the Winfrey organization nor the Trump organization returned calls from the PP Blog earlier this year. Apple also did not return calls.
It is common for multilevel-marketing (MLM) participants to make fantastic claims about products, including false claims they are endorsed by celebrities and captains of industry.
The ad for DNA that included Winfrey’s image appeared months after she filed the lawsuit in the Acai berry cases last year. One DNA pitchman said in a conference call earlier this year that the company had “certain people on speed dial that’s incredible.â€
UPDATED 2:40 P.M. EDT (U.S.A) The Newark Star-Ledger and the Asbury Park Press are reporting that New Jersey real-estate developer Eli Weinstein has been arrested by the FBI in a Ponzi and affinity-fraud case that may involve $200 million or more.
Both newspapers had photographers on the scene as the arrest was made this morning.
2:40 P.M. UPDATE: Weinstein is 35. He lives in Lakewood, N.J. Federal prosecutors, led by U.S. Attorney Paul J. Fishman, have issued a statement that describes the case as a Ponzi and affinity-fraud scheme targeting orthodox believers of the Jewish faith.
“Weinstein is charged with offering an array of lucrative investment opportunities that served the single purpose of fattening his wallet,” Fishman said. “It is always offensive when someone steals from others to finance his own luxurious lifestyle, but it is especially galling to exploit a community with whom one shares an inherent trust.â€
A veteran FBI agent said the scheme was contemptible.
“Based on the allegations in the criminal complaint – lies, threats, deliberate misrepresentations, and even counterfeit checks, it is clear to us that the defendants in this matter exploited the close community ties of the Orthodox Jewish Community for one goal: to steal money through an elaborate real estate and Ponzi scheme,†said Michael B. Ward, special agent in charge of the Newark division.
“This investigation highlights the need for consumers to do their own homework before entering into any business arrangements and not simply take the word of the other partners,” Ward continued. “If something seems too good to be true, it almost always is.”
Ward credited the IRS for assisting in the probe, saying its role was important in unmasking the scheme.
“At its most basic level, this is a case about greed and the abuse of trust,” Ward said. “The subjects in this case did not utilize overly sophisticated fraud schemes, but rather took advantage of trusted relationships to persuade victims to invest in their staged real estate ventures, which were often supported by false and forged documents.â€
Also charged in the case was Vladimir Siforov, 43, of Manalapan, N.J. He “remains at large,” prosecutors said.
Weinstein’s New Jersey Ponzi arrest was the second in the state in recent months to allegedly involve a spectacular sum of money.
Nevin J. Shapiro, 41, of Miami Beach, Fla., was arrested in New Jersey in April on charges of running an $880 million Ponzi scheme involving a bogus wholesale grocery business.
The alleged Weinstein and Shapiro schemes combined may involve more than $1 billion.
EDITOR’S NOTE: The arrest of Vladislav Horohorin is notable on a number of levels. First, the arrest in Europe was a result of an online fraud scheme that allegedly crossed international borders and made its way to the United States, where criminal charges were filed. At the same time, the crime allegedly involved the transfer of money though international payment processors. Perhaps more than anything, however, the case against Horohorin demonstrates that the U.S. Secret Service is “plugged into” forums that promote international lawlessness. His arrest is very bad news for credit-card crooks and HYIP and autosurf Ponzi schemers — and their corrupt colleagues.
Here, now, the story on the arrest of Horohorin . . .
A credit-card trafficker based in Russia has been arrested in France on U.S. charges after the U.S. Secret Service infiltrated an online scheme operating internationally through Internet forums, the Justice Department said.
Undercover Secret Service agents “negotiated the sale of numerous stolen credit card dumps,” the Justice Department said.
Vladislav Anatolievich Horohorin, 27, was arrested in Nice. He was indicted under seal in November 2009 on U.S. charges of access device fraud and aggravated identity theft. The seal was lifted today.
Authorities said they believed he was “one of the most prolific sellers of stolen data” in the world, noting Horohorin was known in web forums as “BadB.” He lived in Moscow, and was a citizen of both Israel and the Ukraine.
The Justice Department revealed today that the U.S. Secret Service used an “online undercover identity” to interact with operators of the international scheme, which featured the sale of stolen credit-card information known as “dumps.”
Payments were transferred through online currency services, including a service known as “Webmoney” that was hosted in Russia, the Justice Department said.
“Cyber criminals who target U.S citizens should not fool themselves into believing they can elude justice simply because they commit crimes outside of our borders,” said Assistant Attorney General Lanny Breuer. “As this and so many other cases demonstrate, working hand in hand with our partners around the globe, we will do everything in our power to bring these criminals to the United States to answer for their alleged crimes.”
Horohorin was arrested Aug. 7 as he attempted to board a flight to Moscow. He will be extradited to the United States, the Justice Department said.
A top Secret Service official said the agency would be relentless in its pursuit of cyber-criminals.
“This arrest is an illustration of the success that comes from international law enforcement and private sector partnerships and confirms the Secret Service commitment to traversing the globe in pursuit of online criminals,” said Michael Merritt, assistant director for investigations.
In August 2008, Merritt was among the officials who announced the seizure of tens of millions of dollars in the alleged AdSurfDaily Ponzi scheme.
Assisting the Secret Service in the Horohorin probe were the French Police Nationale Aux Frontiers, the Netherlands Police Agency National Crime Squad High Tech Crime Unit, and the FBI’s Atlanta Field Office.
Horohorin was one of the founders of a network known as CarderPlanet, a forum through which criminals sold stolen financial data to other criminals.
Using his “BadB” forum identity, Horohorin “advertised the availability of stolen credit card information through these web forums, and directed purchasers to create accounts at “dumps.name,” a fully-automated dumps vending website operated by Horohorin and hosted outside the United States,” the Justice Department said.
“The website was designed to assist in the exchange of funds for the stolen credit card information,” the Justice Department said.
The FTC said today that images of President Obama were used to help a bogus "medical discount plan" trick customers into believing they were purchasing health insurance.
EDITOR’S NOTE: Some readers will recall that one of the Secret Service’s allegations in the AdSurfDaily Ponzi case is that pitchmen tried to sanitize the scheme by making false claims that ASD President Andy Bowdoin had received an award for business acumen from President George W. Bush and Vice President Dick Cheney.
Others will recall that Mantria Corp. — implicated in a Ponzi scheme by the SEC — used images of former President Clinton and other world figures to sanitize a “green” energy scheme.
Now comes word that the FTC has brought a fraud case against a company amid allegations it used images of President Obama, the White House, the U.S. Capitol and lawmakers to sanitize a bogus “medical discount plan” marketed as health insurance.
Here, now, the story . . .
A company that used images of President Obama and the White House — along with logos that resembled the logos of government agencies — has been charged by the Federal Trade Commission with marketing a bogus “medical discount plan” as healthcare insurance.
At least two other firms and their operators and associates have been charged separately with running discount scams, and a nationwide crackdown involving at least 24 states is under way. The FTC has dubbed the sweep “Operation Health Care Hustle.”
“With so many Americans struggling to deal with the costs of health care, these medical discount benefit plans sound appealing because they masquerade as health insurance,†said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “But they are not insurance. They don’t offer the benefits of health insurance, and victims don’t know they’ve been ripped off until after they’ve tried to use the service and paid their bill.â€
The fraud case against Health Care One LLC and associated firms illustrates the dangers not only of promoting scams, but also of of trying to recruit customers into them by implying a product or service is endorsed by the President, members of Congress or the government in general.
Indeed, Health Care One’s website already has been seized by a court-appointed receiver — and content that once appeared on the site and affiliated sites has vanished. In a remarkable news presentation today, the FTC released a video pitch used by the company.
Healthcare One LLC used images of the White House while scamming customers, the FTC said.
The pitch features video of Obama addressing Congress about healthcare issues on Sept. 9, 2009. Heathcare One makes Obama the star of the video, showcasing remarks in which the President stated, “No one should go broke because they get sick.†Vice President Joe Biden and House Speaker Nancy Pelosi are in the background of the video.
The video then cuts away to a passage in which Obama said, “That is heartbreaking. It is wrong, and no one should be treated that way in the United States of America.”
The video then quickly cuts away again to an image of the U.S. Capitol. Official-looking logos appear on the screen, along with the words “REGISTRATION NOW OPEN[:] NATIONAL HEALTHCARE DISCOUNT PROGRAM[:] FOR ALL UNINSURED AMERICANS.”
A narrator simultaneously declares that “registration is now open for a national healthcare discount program.” The narrator — as an image of the White House replaces an image of the Capitol — goes on to say that “Citizens4Healthcare is now authorized to offer you savings of 20 to 60 percent on doctors, hospitals, prescription drugs and more.”
As the video proceeds, the narrator declares that “there are daily registration limits for this program, so call now for immediate acceptance . . .”
Healthcare One was specifically charged with claiming it sold health insurance when it did not — and of misleading the public into thinking it was affiliated with the federal government.
“Defendants’ advertisements lead consumers to reasonably believe that Health Care One’s program is affiliated with, or endorsed or sponsored by, the federal government,” the FTC said.
“It is not,” the agency said flatly in court filings, accusing the company of selling a scam.
Read more about “Operation Health Care Hustle.” (Look in the upper-right corner of the screen when you land on the FTC page. You”ll find links to other cases announced today — and also a link to the video cited above.)
EDITOR’S NOTE: The indictment in Delaware against Patrick A. Wiley of Detroit illustrates the dangers of entrusting money to a person who claims he can help you recover money lost in a securities swindle. It also illustrates that a person who claims he can help you recover money lost to a securities swindle — and then strings you along — can be charged with serious crimes.
