A federal judge has ordered a Florida man to spend nearly 16 years in prison and pay $16.7 million in restitution for fleecing investors in a Ponzi scheme.
Sean Healy, 39, of Weston, scammed dozens of investors in Pennsylvania. He went on to live in the lap of luxury in Florida, acquiring a $2.4 million waterfront home, a Bentley, several Ferraris, Lamborghinis and Porsches worth more than $2.3 million and jewelry worth $1.5 million.
Meanwhile, Trevor Cook, charged criminally with mail fraud and tax evasion in a separate, $190 million Ponzi case in Minnesota, has struck a deal with prosecutors, the AP is reporting. Details about the deal are unclear, but the AP, citing comments by Bill Mauzy, Cook’s attorney, reported that Cook will plead guilty in the coming weeks.
Healy became infamous in Florida, and was described as a smaller version of former Wall Street titan Bernard Madoff and former Fort Lauderdale attorney Scott Rothstein. He was charged in a 55-count indictment unsealed in Pennsylvania last year with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice.
Initially Healy tried to sandbag prosecutors by providing “phony bank statements and phony trading records” to thwart a grand-jury probe, but the government didn’t buy it.
“When the authentic records were obtained, they revealed that Healy had simply spent the money on his extravagant lifestyle and used some of it to pay back earlier investors who he defrauded between 2003 and 2008,†prosecutors said.
Healy was sued separately by the SEC and the CFTC, which said he used investor funds to purchase gold bullion and “to lease a luxury suite at Miami’s BankAtlantic Arena.â€
For its part, the SEC said the sky was the limit for Healy.
“Rather than investing the money as he promised, Sean Healy used investor funds to finance an extravagant lifestyle for himself and his family,†the SEC said.
It is not nice to be George Theodule today. For starters, the expensive cars and other luxuries are gone — and now a federal judge has issued orders of disgorgement and penalties totaling more than $5.5 million in a Ponzi scheme case brought by the SEC in 2008.
Beyond that, though, people associated with Theodule — family members, winners in the scheme, employees and attorneys who worked for him while the scheme was ramping up — find themselves battling a blizzard of lawsuits filed by the court-appointed receiver in the case and either going to trial or trying to work out settlements.
Read a Dec. 31 filing by Jonathan E. Perlman, the receiver in the case against Theodule, Creative Capital Consortium LLC, A Creative Capital Concept$ LLC and other entities. The filing shows the type of legal exposure individuals who emerge as Ponzi scheme winners may confront, as well as the litigation individuals who allegedly aid and abet a Ponzi may confront.
Several Theodule employees have taken the 5th Amendment, according to Perlman.
Among his assertions was that more than $24 million in fraudulent transfers occurred during the scheme, which now is estimated to involve more than $60 million.
Earlier estimates in the case put the figure at about $23 million.
Theodule, through a network of “investment clubs,” largely targeted Haitian-Americans, the SEC said. Investors, who were told that some of the company’s profits were set aside to help Haiti and Haitian communities in the United States and Sierra Leone, were promised a 100 percent return on their money within 90 days.
In reality, the SEC said, Theodule lost $18 million trading stocks and options, commingled funds and pitched a purported, self-regulatory agency called Smart Investment Management Services LLC (SIMS).
Investors were told SIMS provided “independent verification of their deposits” and provided an “added measure of safety and security,” the SEC said.
It turned out that SIMS was a private company run by a former Creative Capital employee, the SEC said.
Investors said Theodule portrayed himself as a thoughtful, religious man.
UPDATED 12:28 P.M. EDT (U.S.A.) Sites appear to be back up. They were offline for at least seven hours. Earlier story is below . . .
Widespread maintenance? Moving to a new server? Several domains linked to an entity associated with INetGlobal have gone offline in recent hours and will not resolve. Why the sites are offline was not immediately clear.
The extent of the outage also was unclear. Sites that use a nameserver known as V-Webs.com appear to have been affected. V-Web’s own website will not resolve to a server, and sites at the same IP address in the Minneapolis area also will not resolve.
Attempts to “ping” the domains to determine if they were live resulted in this error message: “Destination host unreachable.”
It is not unusual for servers to have maintenance problems and for websites to go offline. What’s unusual about the current outage is that every URL at V-Webs itself appears to be offline, along with domains that use the V-webs.com nameserver. Customers affected by the outage may not be able to reach V-Webs through its website.
INetGlobal’s domain, meanwhile, is online. The site did not have a message that explained the outage at V-Webs, which it highlights as a service.
Among the domains affected by the outage is CheapClix.net, a Blog that showcases its support for INetGlobal. Other sites affected by the outage include mlm-im.com and homesquadcities.net, both of which are operated by Ken Haugen, who also operates the CheapClix site.
INetGlobal was implicated last month by the U.S. Secret Service in a Ponzi scheme. The company denied the allegations. A company known as V-Webs LLC was registered in 2004, but appears to be an inactive corporation, according to an affidavit filed by the Secret Service last month.
Haugen’s domains are not the only domains affected by the outage. Others affected include BillionaireByThirty.com, RevenueShareForum.com, WithGodItsPossible.com and JanetsMarketingBiz.com, among others.
A site known as Zippe.net in the same IP cluster is producing the same error message when pinged, while also triggering a security warning in search results and the Firefox browser window: “This site may harm your computer.”
Pings to the 207.67.5.19 IP address associated with V-Webs are timing out, meaning a Web browser cannot load the pages.
BULLETIN: Trevor Cook, the reputed head of a $190 million Ponzi scheme in Minnesota, has been charged criminally with mail fraud and income-tax evasion.
Cook, 37, previously had been charged civilly by the SEC and the CFTC. The criminal charges filed today came after a probe by the FBI and the IRS Criminal Investigations Unit, working with the regulatory agencies.
Prosecutors alleged Cook filed a false tax return in 2009, failing to report report taxable income of at least $5.2 million “upon which there was tax due in the amount of at least” $1.8 million, prosecutors said.
Cook was charged via a criminal information, rather than an indictment. Such charging documents sometimes mean a defendant is negotiating with prosecutors.
Prosecutors said Cook was “aided and abetted by others” in a scheme that fleeced at least 1,000 people “out of at least $190 million by purportedly selling investments in a foreign currency trading program,” prosecutors said.
“In reality,” prosecutors continued, “he was diverting the money provided him for other purposes, including making payments to previous investors; providing funds to Crown Forex, SA, in an effort to deceive Swiss banking regulators; purchasing ownership interest in two trading firms; buying a real estate development in Panama; paying personal expenses, including substantial gambling debts; and acquiring the Van Dusen Mansion in Minneapolis.”
The mansion has been sold by R.J. Zayed, the court-appointed receiver in the civil case. Zayed also has sold large-screen TVs and automobiles linked to the scheme, including a Rolls-Royce.
Prosecutors said the Cook case was being tackled by the Financial Fraud Enforcement Task Force, which President Obama formed late last year.
U.S. Attorney B. Todd Jones of the District of Minnesota made the announcement of the criminal charges against Cook.
Cook has been in jail since January as a result of a contempt of court order in the civil case, which was brought by the SEC and the CFTC.
Former Christian radio host Pat Kiley also was charged in the civil case.
The narrative of the Cook story occasionally has played out like a James Bond movie, with references to a submarine, an island retreat, Faberge eggs and foreign currency purportedly acquired by Cook with fraud proceeds.
A real-estate agent ventured to Cook’s island in Canada during the winter on a snowmobile to get the lay of the land, according to court filings.
An Ohio man who graduated from West Point and earned a law degree in Washington state has been charged in a bizarre Ponzi and investment-fraud scheme that allegedly combined the science of physics with a unique “momentum filter” that purportedly enabled him to predict how the futures market would behave with “an uncanny degree of certainty.â€
Enrique F. Villalba, 47, of Cuyahoga Falls, was charged in the scheme, which was conducted from Beachwood Ohio, prosecutors said.
Villalba is a graduate of the United States Military Academy at West Point and the University of Puget Sound School of Law, prosecutors said. Separately, he was sued by the SEC and the CFTC.
Prosecutors said investors losts millions of dollars in the scheme, and that Villalba used some of the money to fund coffee shops he owns in Hudson and Stow, Ohio. The coffee shops are known as “Rico Latte,” and the investment business was known as “Money Market Alternative LP.”
Villalba called his investment methodology “Money Market Plus,” saying clients could realize long-term gains averaging between 8 percent and 12 percent, prosecutors said. The scheme collapsed last year, after perhaps operating for more than a decade.
“Villalba represented that his knowledge of physics, when combined with his application of a unique ‘momentum filter,’ allowed him to predict with ‘an uncanny degree of certainty’ how the futures market would trend at various times during a given month, thereby allowing him to purchase and sell futures contracts to maximize gains,” prosecutors said.
Investors were told Villalba would place stop orders as a hedge against losses, but he did not place the orders, causing investors to lose “millions of dollars,” prosecutors said.
Money from investors was “converted” by Villalba to fund the coffee shops, buy property in Vermillion, Ohio, and also to make Ponzi payments to clients, prosecutors said.
The scheme netted about $29.7 million, prosecutors said.
“This case serves as an example to the public that the Department of Justice and the Financial Fraud Enforcement Task Force will fight fraud in order to protect the integrity of the financial markets,” said U.S. Attorney Steven M. Dettelbach.
“If you lie to investors, there will be a steep price to pay,” Dettelbach said. “This case resulted from tremendous coordination between the Department of Justice and civil enforcement agencies to protect the rights of investors all over the country.â€
President Obama started the Financial Fraud Enforcement Task Force in November.
A Florida man who spent time in prison for wire fraud and money-laundering in a previous Ponzi scheme embarked on a new scheme after his release, federal prosecutors said.
Within two years of being released from custody in 1996 — and while still on supervised probation — Michael Greenberg, 50, started a new Ponzi and fraud scheme.
The new scheme operated for more than a decade, gathered more than $53 million, fleeced investors and creditors out of more than $24 million and used the names of at least nine different companies, prosecutors said.
Just days ago FBI Director Robert Mueller III warned Congress that white-collar criminals in the United States increasingly were relying on shell corporations to commit crimes and avoid detection.
The U.S. Secret Service led the investigation, which is centered in Pinellas County, Fla. Greenberg has been charged with wire fraud.
One of his companies existed for “no other purpose than to defraud banks and the U.S. Small Business Administration,” the Secret Service said. The agency described several of the companies as operating “on paper.”
In 1992, Greenberg was sentenced to 46 months in federal prison after being convicted of operating a Ponzi scheme that fleeced his own father out of more than $1 million. Other investors also lost money in the scheme, according to records.
After being released from prison, Greenberg started a company named Pure Class Inc., according to the Secret Service complaint. The business involved the need for an automobile-dealer’s license, something that might be a tall order for a convicted felon to obtain.
Greenberg “hid behind a proxy in both forming the corporation and in obtaining the license,” the Secret Service said.
‘[A]ll business done with Pure Class from its inception was based on a fraud at its inception,” the Secret Service said.
Because of the corporate deception and the proxy, the Secret Service said, persons conducting due diligence on the company would have been shielded from discovering Greenberg’s felony conviction and facts to help them make informed investment and business decisions.
The agency painted a picture of an elaborate deception, alleging that Greenberg assumed the identity of a third person to trick at least one victim and created a bogus email account to correspond with the victim, as though Greenberg were a third party who could verify details about the business.
Greenberg also assumed the identities of his parents to get a loan and created “sham” corporations to keep investors from learning the truth about his business operations, the Secret Service said.
He is accused of creating false tax returns in his parents’ names, forging their signatures on a loan deal, stealing a notary stamp, affixing the stamp to the forged documents, and then forging the name of the notary.
Greenberg formed at least nine different corporations or business names to pull off the scheme, according to the Secret Service. He is accused of fleecing at least 30 investors and banks, and also is accused of swindling the U.S. Small Business Administration.
Among the victims were a real-estate developer and a law firm whose office manager invested the company’s line of credit of $119,000 in the scheme, according to the complaint.
Based on Greenberg’s fraud — and elaborate measures to cover it — he duped the Small Business Administration into backing $1.5 million in loans — loans that were acquired at least in part because Greenberg forged his wife’s signature on documents, according to the complaint.
A Florida man who operated a previous scam has been banned for life from the telemarketing business after state and federal authorities and the Better Business Bureau worked together to expose the operation, the Federal Trade Commission said.
“The FTC received invaluable assistance in this matter from the U.S. Postal Inspection Service, the University of Central Florida Police Department, Largo Police Department, and the Better Business Bureau of West Florida, Inc.,” the FTC said.
James Nicholson, who operated a company known as Group One Network and offered a “Credit Line Gold Card,” was sued by the FTC amid allegations the company charged an up-front fee for a “supposed, general-use credit card,” the agency said.
The card scored an “F” from the BBB — the organization’s lowest-possible rating on a 14-step scale.
It turned out that the card was no general-use card at all; rather, it was a card that only permitted customers to spend money at websites associated with Nicholson.
“Telemarketers working for Nicholson’s chief company, Group One Network, also claimed that consumers would get access to a significant line of credit that could be used for cash advances, and that their payment histories would be reported to the three major credit bureaus,” the FTC said. “In reality, consumers who paid the fee received an online shopping card they could only use to buy products from Group One’s Web sites, they could not get cash advances, and their credit histories were never reported to the credit bureaus.”
Nicholson also participated in a bogus “advance-fee interest-rate reduction/debt negotiation program,” the FTC said.
His recent run-in with law enforcement was not his first. In 1995, Nicholson pleaded guilty to wire fraud in a telemarketing scheme.
Nicholson now has been banned for life from telemarketing. In a settlement with the FTC, Nicholson gave up a 31-foot power boat, a Nissan Pathfinder, and jewelry and art valued at more than $10,000. He also is on the receiving end of a judgment for $17.2 million, which has been suspended because Nicholson and co-defendants are unable to pay.
Denying it was a Ponzi scheme, INetGlobal says a federal judge should release about $25 million, business records and computer equipment seized in an investigation by the U.S. Secret Service last month because the property was “unlawfully seized.”
Meanwhile, INetGlobal has accused its former chief executive officer — whom it describes as a “informant” who lied to the Secret Service — of hatching a plot to extort $500,000 from the company about seven weeks prior to the Feb. 23 raid.
Steven Keough, the former CEO, could not be reached for comment on this story.
INetGlobal also accused the Secret Service of lying.
At the same time, the company said it was part of a family of companies that are “clean, legitimate and profitable businesses,” and it accused the government of leaking the search-warrant affidavit in the case to the media, specifically citing the PP Blog.
INetGlobal and its operator, Steve Renner, are represented by Jon Hopeman. No criminal charges have been filed against Renner or the company.
A spokeswoman for U.S. Attorney B. Todd Jones declined to comment on INetGlobal’s court filings, saying that prosecutors would litigate the case in court and not in the media.
Also filing papers for INetGlobal in the case was attorney Mark J. Kallenbach.
Government Did Not Contact PP Blog; PP Blog Did Not Contact Government
“None of the information we published was obtained as a result of the government or an agent contacting the Blog and providing information for a story,” the PP Blog said. “Nor did the Blog contact the government or an agent to obtain the information.”
An exhibit the company produced for U.S. District Judge Donovan Frank reproduced a story the Blog published at 1:41 a.m. (ET) Feb. 25. The story was based on the Secret Service affidavit, which the Blog obtained from a government website open to any person with an Internet connection.
In its court filings, INetGlobal complained that its attorneys did not get a copy of the affidavit until Feb. 26.
“As of February 25, 2010, I had tried to get a copy of the affidavit,” Kallenbach wrote. “I was informed by the U.S. Attorney’s Office it was sealed. I was not provided a copy until February 26, 2010 at 1:57 p.m., 36 hours after the press had it. Someone leaked the affidavit to the press.”
The PP Blog was the first news outlet to publish information from the affidavit.
No member of government contacted the Blog though any means to arrange for access — exclusive or otherwise — to the material. Nor did the Blog contact any member of government to seek access — exclusive or otherwise — to the material. The Blog obtained the affidavit through the normal course of its reporting.
A Fiery Defense
Attorneys for Renner, INetGlobal and Inter-Mark Corp., the parent company of INetGlobal, appear ready to come out firing.
Among the documents the attorneys plan to present to Frank is a copy of an email dated Jan. 6 from Steven Keough, the former CEO, to attorney Aaron Hall of Minneapolis.
Keough, according to the email, said he was declining to accept a severance proposal offered by the company.
“If your client, Mr. Renner, is serious about resolving this quickly and amicably, then the minimum acceptable severance payment amount must be $500,000 — payable immediately,” the email read. “This reflects the promised signing bonus of $212,000 and promised one year salary of $288,000.”
The email suggested Keough was set on the amount of $500,000 and unwilling to negotiate. Keough proposed that Hall schedule a meeting at a place convenient for Hall on Jan. 8.
“Come with a check and signable documents to the meeting location,” the email read. “After noon on Friday all bets are off as to how this matter will be handled.”
The email was signed “Thank you,” followed by the word “Regards.” Keough’s name appeared below the closing.
INetGlobal argued that the email was evidence of an extortion plot.
“On January 6, 2010, Mr. Keough attempted to extort over $500,000 from iNetGlobal,” Kallenbach argued in a brief. “He demanded payment of the money by 5:00 p.m. that day or all bets are off. According to the Secret Service’s affidavit, Keough contacted the government in this matter for the first time on January 8, 2010.”
Why Kallenbach referenced the time of 5 p.m. — and not noon, as the email referenced — was not immediately clear. Also unclear was the amount INetGlobal offered in the severance package that Keough purportedly rejected.
Whether Keough could argue the amount was too small and did not reflect his understanding of how he would be compensated should be be terminated or choose to leave the company was unclear.
In the Secret Service affidavit, Keough, an attorney and former naval officer, was portrayed as having asserted he was fired for asking too many questions and had come to believe InetGlobal owner Steve Renner had hired him to be a “good face” for the company.
Kallenbach, whose brief said Keough had been fired Jan. 5 — the day before Keough sent the email to Hall — claimed Keough had been fired for cause.
“Mr. Keough was terminated because within a month or so after being hired in late October of 2009, Mr. Keough made no progress in understanding the business, did not fit in with IMC’s rank and file, was unwilling to work with IMC’s board of directors, and attempted to take over IMC’s business from Mr. Steven Renner,” the brief argued.
Secret Service Accused Of Lying
Hopeman asserted in his brief that the Secret Service affidavit contained “intentional and reckless falsehoods” that undermined the probable cause to search.
“In this case, the entire premise of the search warrant affidavit is that little advertising was sold, little was used, and there were no legitimate advertisers,” Hopeman argued. “The search warrant affidavit states that the advertisements ranged from other multi-level marketing sites to affiliate programs, non-English websites, and even iNetGlobal’s home page . . .
“It concluded, without support, that there were ‘few legitimate advertisers,’” Hopeman argued.
At the same time, Hopeman argued that the Secret Service also omitted facts from the affidavit that were favorable to Renner.
“Keough appeared on the company’s website as of January 5, 2010 stating that he intended to recruit new customers from all around the world,” Hopeman asserted. “These are not the same words that Keough spoke to the agents days later when he claimed that the entire business was fraudulent. The agents knew this fact because it is posted on the website, which they studied. This fact if included in the affidavit would have cast substantial doubt on the credibility of the informant, who provided the principal basis for probable cause.”
Hopeman also said the Secret Service painted an unfair picture of how Renner behaved at a January INetGlobal gathering in New York. The Secret Service, which had at least two undercover agents in the room, said Renner often spoke over an interpreter even though many of the attendees had little facility in English, started a pandemonium by handing out $20 bills in exchange for $10 bills, and told at least two different stories about INetGlobal’s revenue figures.
“A viewing of the tapes show that Mr. Renner was very candid about the nature of the business,” Hopeman argued. “During these same presentations, he informed those assembled that this was not an investment, and that one could not earn money by doing nothing. He also explained the internet services that he was selling and made it clear that web hosting, domain registration, and advertising, were his products.”
In previous autosurf prosecutions, the government has argued that surf operators attempt to mask investment programs by calling them something else. Prosecutors in the AdSurfDaily Ponzi case, for example, said that the ASD program was an investment program disguised as an “advertising” program.
It is not uncommon for autosurfs to instruct members to avoid using certain words, including the words “investment” or “investing.” Some autosurf members have scolded others for using the word “investment,” which prosecutors have painted as evidence of the wink-nod nature of autosurfs.
In the ASD case, which was filed in August 2008, the Secret Service described a member speaking to an undercover agent, instructing the agent to be careful not to use certain words.
“Don’t call it investing, you know what I mean, we can get in trouble if we say that, we have to be careful,” the agency quoted an ASD member as saying.
The agency, which asserted in its affidavit in the INetGlobal case that an ASD member tried to recruit an undercover agent to join Renner’s surf, said the ASD member demonstrated the wink-nod nature of the autosurf business.
“The [ASD] member said he had previously been a member of ASD . . . and said, ‘We know what happened there,’” the Secret Service alleged in the INetGlobal affidavit. “The member said he was reluctant to join iNetGlobal due to it being similar to ASD. The member said, ‘we all know what this program is.’ The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out.”
Hopeman, though, said the Secret Service was wrong.
“On February 23, 2010, the United States Secret Service strapped on its guns and raid jackets, searched the premises of Mr. Renner s business, took all of its documents and computers, seized over $25 million in cash belonging to the business and its customers, put 75 people out of work, and seized the money for their paychecks and their children s health insurance,” Hopeman argued. “The sealed affidavit was leaked to the press. This was not a cocaine cartel. It was not a mafia front. It was a legitimate business.”
In the ASD case, prosecutors argued that an ASD filing to counter the government’s Ponzi assertions was”full of sound and fury, [but] signifying nothing.â€
How the prosecution intends to respond to INetGlobal’s arguments is unclear.
Hopeman was the attorney for Tom Petters, implicated in a masssive Ponzi scheme in 2008. Petters was convicted in December.
UPDATED 6:05 P.M. EDT (U.S.A., Jan. 20, 2011.) In yet another case that portends disaster for the so-called “autosurf” industry, a federal judge has ordered the Noobing autosurf to be added as a receivership defendant in a fraud case brought against its parent company.
The FTC and attorneys general from Minnesota, North Carolina and Kansas brought the case against Noobing’s parent — Affiliate Strategies Inc. (ASI) — in July 2009. Several other companies were named defendants in the case, which alleged the firms participated in a scheme that promised guaranteed government grants from economic-stimulus funds.
Brett Blackman, ASI’s head, also was president of Noobing, members said. Noobing was not initially named a receivership defendant.
U.S. District Judge Julie A. Robinson issued an asset freeze Sept. 1, along with stern orders to preserve evidence and repatriate to the United States all assets and documents held on foreign soil. She also broadened the powers of Larry Cook, the court-appointed receiver.
Through his investigation, Cook determined that Noobing was operating under the umbrella of Apex Holdings International LLC, the same company under which ASI operated. Cook also determined that at least 14 other companies were operating under the Apex Holdings umbrella.
Noobing, which was registered in the United States, also had an offshoot in Nevis, according to court filings. Noobing targeted people with hearing impairments.
Cook asked Robinson last month to add Noobing and the other companies as receivership defendants after determining “each of the Subsidiaries used the same post office box as the [initial] Receivership Defendants.”
Moroever, Cook advised Robinson that he had received “receive numerous inquiries from creditors, former independent contractors, and tax authorities for the Subsidiaries.” He further argued that “each of the Subsidiaries was entirely reliant upon the business operations of the [initial] Receivership Defendants.”
Robinson, saying Cook had shown “good cause,” added Noobing and the others as defendants March 18.
No party — including the FTC, the state attorneys general, the initial set of defendants and the new defendants — objected, Robinson noted. In December, Illinois joined the FTC, Minnesota, North Carolina and Kansas in the action.
On the previous day, March 17, FBI Director Robert Mueller III, without naming names, testified before Congress. Mueller said that “shell corporations” are emerging as a threat to the U.S. banking system because owners were using them “to facilitate the concealing of criminal proceeds” and engage in money-laundering.
Neither Noobing not its corporate parent has been accused of a crime.
In February, the U.S. Secret Service alleged in a civil forfeiture complaint that INetGlobal, a company that operates an autosurf, was engaged in money-laundering and wire fraud while operating a Ponzi scheme.
INetGlobal is operated by Steve Renner, under his “umbrella corporation, InterMark,” the Secret Service alleged. The agency identified what it described as “subsidiaries,” specifically referencing “Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local,” as well as a company named “INet Global Productions.”
NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.
“The commission by Renner of the federal crimes of wire fraud, in violation of Title 18, United States Code Section 1343, and money laundering, in violation of Title 18, United States Code Section 1957, is essential to the operation of this Ponzi scheme,” the Secret Service alleged.
In August 2008, the Secret Service said AdSurfDaily, a Florida-based autosurf company, also was engaging in wire fraud and money-laundering while operating a Ponzi scheme.
U.S. District Judge Rosemary Collyer — on Jan. 4, 2010 — ordered the forfeiture of more than $65.8 million in the personal bank accounts of ASD President Andy Bowdoin. A little more than a month later, on Feb. 23, the Secret Service moved against INetGlobal.
Records show that ASD’s Bowdoin operated several corporations over the years. In September 2009, the state of Florida revoked the corporate registrations of AdSurfDaily and Bowdoin/Harris Enterprises Inc.
The revocations occurred just four days after Bowdoin told members he had exciting plans for ASD’s future. Despite his claim, Bowdoin never bothered to submit the paperwork to keep the firm’s registration intact, despite having been given a five-month window to do so.
In his remarks to members, Bowdoin said the government had seized the assets of ASD members. In his own sworn court filings, however, Bowdoin said the seized assets belonged to him and his company.
The Secret Service transcribed Bowdoin’s remarks, and presented them to Collyer Sept. 28. Federal prosecutors said Bowdoin’s remarks were evidence that “this con man cannot manage to keep his stories straight.â€
Collyer ordered the ASD asset forfeiture a little more than three months later. In the INetGlobal case, the Secret Service said one of its undercover agents was on the receiving end of a sales pitch from an ASD member who was trying to recruit the agent into INetGlobal.
Renner’s autosurf “began operating just weeks after ASD was put out of business by the Secret Service, and this new entity uses the same terminology and business model as ASD,” the agency said in an affidavit for a search warrant.
At least one of the undercover agents working the INetGlobal case also worked the ASD case, according to court filings. The Secret Service searched the Web for an INetGlobal affiliate site, and the INetGlobal affiliate who pitched the undercover agent also had been an ASD member, according to the affidavit.
“The member asked if [the undercover agent] was a network marketer,” the Secret Service said. “The member said he had previously been a member of ASD . . . and said, ‘We know what happened there.’
“The member said he was reluctant to join iNetGlobal due to it being similar to ASD,” the agency continued in the affidavit. “The member said, ‘we all know what this program is.’” The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out. The member said you convert your earnings to V-cash and then receive payouts by check or through an ATM card you can sign up for.”
Less than a month later, FBI Director Mueller told Congress that “shell corporations” and “stored value” debit devices and “reloadable debit cards” increasingly were being used “to move criminal proceeds.”
“This has created a ‘shadow’ banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers,” Mueller said.
Mueller did not name any companies in his Congressional testimony.
Using language with which followers of the long-running AdSurfDaily Ponzi/pyramid-scheme saga will be familiar, Data Network Affiliates (DNA) has declared its license-plate data program a “loss leader.”
Meanwhile, the company declared it has “no competition” and that members will come to understand its advertising claims are true once it rolls out three-fourths of its program.
“NO ONE or NOTHING could even come close to where we are or where we are going,” the company said in an email laced with sentence fragments and fractured syntax. “When 75% of The D.N.A. Opportunity is fully released. You will know why this statement is more than 100% accurate.”
DNA, a multilevel-marketing (MLM) company, did not say how a statement could be more than 100 percent true. Nor did the company explain why members would not be able to determine it was telling a truth that exceeded 100 percent until 75 percent of the program was released.
At the same time, DNA said “it expects” to pay out more than “$100,000” in “PRO” commissions April 5, adding that the addition of “3rd party” affiliates made it “believe” commissions would “grow to over $1,000,000 (one million weekly).”
Although DNA previously said it has recruited tens of thousands of affiliates for its “free” program that asks members to write down license-plate numbers for entry in a database as a means of helping the “Amber Alert” program recover abducted children, the company now suggests its data may not be all that useful.
“Currently the #1 benefit for D.N.A. collecting such DATA is the small and hopeful chance that it may help save a child or prevent a crime,” the company said in the email.
In a previous email, DNA acknowledged it had erected barriers that made it more time-consuming for “free” members to enter information in the database. The barriers can be removed by paying the company a one-time fee of $97 and a monthly fee of $29.95 for the right to use what the firm describes as a “PRO†data-entry module.
The “PRO” module, DNA says, makes “DATA ENTRY simpler, easier, faster and less time consuming.â€
DNA noted that it was selling other products for which it would pay commissions, including a “$35 to $50 bottle of NUTRITIONAL JUICES at a $10 price” and a “$35 to $50 bottle of LOTIONS & POTIONS at a $10 price.”
In a separate email, DNA said members who came into the company for free because of the license-plate program have nothing about which to complain.
“We receive over 50 e-mails a day saying why did you change from “FREE,’” DNA said. “FACT we have not changed anything from our original ‘FREE’ opportunity except to go from up to SIX LEVELS OF PAY ‘TO’ up to TEN LEVELS OF PAY.
“A person may still sign up as a FREE Affiliate and enter their TWENTY CAR TAGS,” DNA continued. “It will take 5 Minutes per Tag entered since advertising partners is our main source of income from DATA ENTRY. (PRO Affiliates create other sources of income so their per tag data entry time is only 30 to 60 seconds per car tag.[)]”
DNA encouraged members to “be positive.”
Details about how DNA has tied its free data-entry program to “advertising” partners are unclear. Also unclear is why the original group of thousands of members weren’t told when they were signing up for free — while perhaps relying on DNA’s assertion it could help the Amber Alert program — that the company intended to treat the data-entry program as a “loss leader” and make it harder, not easier, for free members to enter data.
Tens of thousands of free affiliates registered for DNA before the “PRO” data-entry module, which comes with an up-front cost of $126.95 and a monthly cost of $29.95 thereafter, was announced.
Using a largely all-caps presentation, DNA said the sky was the limit.
“D.N.A. is so much more than CAR TAG DATA,” the company said. “Many have said it but only one will do it. We will do in 3 to 5 years what took AMWAY 50 YEARS. Here is a partial list of current and future opportunities with D.N.A.
“LOCAL, NATIONAL & INTERNATIONAL ADVERTISING; GOLD FOR CASH; CELL PHONES FOR CASH; LAPTOPS FOR CASH; DIRECT TV; THE DISH NETWORK; SECURITY SYSTEMS; CREDIT REPAIR; DEBT REDUCTION; INTERNET SALES SYSTEMS; 1000’s OF DISCOUNT PRODUCTS; 1000’s OF DISCOUNT SERVICES; ONE STOP SHOPPING; HEALTH BENEFITS; DENTAL PLANS; LIFE INSURANCE; WHOLESALE AUTO BUYING; WHOLESALE TIRES; DISCOUNT DRUGS; TRAVEL and MUCH MORE…”
In the context of MLM, “loss leaders” can be dicey. In August 2008, federal prosecutors referenced AdSurfDaily’s use of the “loss leader” claim in a forfeiture complaint that seized more than $65.8 million from the bank accounts of ASD President Andy Bowdoin.
“In a further attempt to make Bowdoin’s business mode sound legitimate, [ASD attorney Robert] Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.
“[Undercover agents] have not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers to ‘earn their money back, plus a little more.’”
DNA has not been accused of wrongdoing. Whether the company has sufficient revenue streams to defeat a pyramid challenge — if one emerges — is unclear. Also unclear is the number of affiliates who signed up for free and then opted for the “PRO” data-entry module.
What is clear is that DNA knows the famous Emma Lazarus sonnet, “The New Colossus,” which is mounted on the pedestal of the Statue of Liberty. The company has its own take on it:
“Give D.N.A. your MLM tired, your MLM poor, your MLM people who are sick and tired of being sick and tired, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore,” DNA said in its email to members. “Send all of these, all who could not make it where they were, the homeless, tempest-tossed to D.N.A. as we lift our golden opportunity for free to all.”
Another MLM company in the license-plate recording business — Narc That Car — is the subject of an inquiry by the Better Business Bureau in Dallas to substantiate advertising claims and determine if the company is using a pyramid model to pay members.
The BBB now notes that Narc That Car is using the name “Crowd Sourcing International” — or “CSI” for short.
Other names associated with Narc That Car include Narc Technologies Inc. and National Automotive Record Centre Inc.
This post commemorates the life and passing of “Peep.”
Peep, believed to be four, was Maddy’s newly adopted brother. He died Monday at the veterinarian’s office after a lengthy illness that left him unable to process nutrients and gain strength. Peep made his home for the past month with my sister, my brother-in-law and my niece.
Maddy is a small dog; Peep was even smaller. He provided a great deal of love in his short time among us, and received a great deal of love in return.
What I’ll remember about Peep was the way he sat — like a thinker. Although it’s hard to describe, he sat in a way that projected sweetness, innocence and thoughtfulness. It became clear after a few days or so that he has glad to have people again. Maddy was good for him because she taught him how to trust again.
She also taught him how to score table scraps. Peep needed this sort of fun — any sort of fun, really.
His hair was severely matted, and he was just a speck. He must have weighed less than 10 pounds. Despite his youth, Peep had the bearing of a much older dog. Perhaps because he felt insecure or perhaps because he simply was too weak, Peep initially found no joy in his toys.
One beautiful, bright spot for Peep occurred when Maddy showed him how to have fun with his rawhide ball. Peep previously had no interest in the ball. After Maddy started trotting with it and batting it like a hockey puck, Peep suddenly found a spark. He batted it around himself — the first time he behaved in a fashion consistent with freedom.
At one time Peep must have been with a family who loved him. He was house-trained and had a good demeanor. He knew, for example, what it meant to see his leash– and he very agreeably readied himself to go outside. He was very bright.
Peep’s Perfect Freedom
Peep may hold a distinction among all people and animals. In his short time with us, he observed something I’d never seen in all my years: a wide-open Little League field. It was the field of my youth; it is close to a significant deer population, and it always has been fenced in. Workers temporarily removed the fences in late winter, leaving the field wide open. The scene was incongruous to all people and animals — except for Peep. He never saw the field fenced-in.
So, to Peep, no incongruity existed. To him, the wide-open field was a natural state. I drove by the field last night. The fences of my youth, which had been repaired and repainted dozens of times over the years, have been replaced by sparking, new fences. The fences are safer for players and spectators. They’re also much higher. There will be no more cheap home runs. Any balls driven over the fence will require a much higher arc, potentially meaning the current home-run record may never be shattered.
In any event, the fences may not come down again for another 50 or more years. Deer will not have the freedom to graze in the outfield again for decades. Unlike Peep, who had open access to the field, the neighborhood dogs will be blocked for decades from exploration and will need to find a new place to dig holes to hide their prized possessions.
I am not sure how Peep ever ended up at the shelter, but he did — and he had a number of dog maladies. It seems highly likely that he somehow became separated from his family and lived as a street stray for a considerable period of time. His medical situation Monday became incompatible with life.
We loved you, Peep, and you are resting in a beautiful place. You were preceded in death by your dog siblings Gracey, Skippy, Pal and Beef, and the cats Blue and Kitty. You also (presumably) were preceded by the orphaned, unnamed baby raccoon born in the city who followed me home when I was 11, learned to walk on a leash, ate salad and dog food and lived in the old console TV set I hollowed out until the Game Commission made me give him up. They told me he’d grown too big for his TV set and would be happier in the country
You are survived by your people, your dog cousin Allie, and Maddy, your sister.
In loving memory of Peep: 2006 (estimated) – 2010. His late stages of life were mostly about fences — except for that brief, magical time when even the fences at the Little League field came down and provided the neighborhood dogs and deer with a special brand of freedom that will not be seen again until the kids who race to take their positions on the field this spring — as I did long ago — become grandmothers and grandfathers.
A federal judge has ordered a Florida man to spend nearly 16 years in prison and pay $16.7 million in restitution for fleecing investors in a Ponzi scheme.
