UPDATED 12:24 P.M. ET (U.S.A.) Is Dean Blechman no longer the chief executive officer of Data Network Affiliates (DNA), an MLM firm that purports to be in the business of recording license-plate numbers of cars as they move from destination to destination?
Blechman, who identified himself as the CEO in an audio recording and was identified as the CEO in DNA marketing materials, no longer is listed on the website as an officer in any capacity.
An audio recording in which Blechman suggested he was monitoring “everyone that’s a distraction out there and anyone that’s printing stuff on the Internet or anywhere†and perhaps preparing to sue critics also has been removed from the website.
DNA has become the subject of criticism amid concerns about privacy and the propriety, safety and legality of recording license-plate numbers. The information purportedly was being collected for sale to companies that repossess automobiles. Because DNA customers would receive the addresses at which license-numbers were recorded by members, it raised the specter that repo men — or any data customer of DNA — could determine where car owners went to church, shopped and received medical care, including psychological treatment.
Some critics have said they believed Phil Piccolo, a notorious figure in MLM, was associated with the firm.
DNA’s website lists an address in the Cayman Islands.
It was not immediately clear if Blechman had resigned. Also unclear is why the recording was removed from the front page on the website. Blechman’s name has been removed from a roster of officers published on the website, leaving only the names of Arthur M. Kurek and Donald Kessler as officers.
Anthony Sasso is listed as a special consultant and founder. The site no longer lists a CEO. Blechman’s name was removed from both the main page of the website and from a page that appears after visitors click on an “About Us” tab at the top of the page.
The move occurred about three days prior to DNA’s claimed launch date of March 1. The launch date was postponed twice in February.
Video promotions for DNA have used images of Donald Trump and Oprah Winfrey. It is unclear if Trump and Winfrey approved the use of their images. At the same time, DNA members have made videos that identified stores such as Walmart and Target as the source of a ready supply of license-plate numbers.
Meanwhile, promoters have suggested that churches and doctors’ offices also were sources for license-plate data.
Blechman did not respond to the criticism. At the same time, threats to take legal action could be construed as a bid to muzzle affiliates to prevent them from writing anything less than a flattering review of the company in Blog and website posts, and in emails sent to prospects.
The U.S. Secret Service observed Minnesota-based INetGlobal’s operations for weeks in January, dispatched undercover agents to join the autosurf, learned that a bank recently had closed accounts tied to the firm amid money-laundering suspicions — and already had received incriminating information from the firm’s former chief executive officer prior to executing multiple search warrants Tuesday, according to records.
Agents even traveled to a company function in New York, mixed in with the audience and observed INetGlobal owner Steve Renner, according to records. The function was known as “Freedom Conference 2010.â€
Most of the attendees were Chinese, the Secret Service said.
“[C]onference registration took a long time because nobody at the registration desk spoke Chinese, and many of the conference attendees could not make themselves understood in English,” the agency said. “There was an interpreter in the main hall, but Renner often spoke over the interpreter.”
At one point, Renner started a pandemonium by holding up $20 bills, which he began handing out to attendees in exchange for $10 bills, the agency said.
“This caused a crush of people to approach the front of the hall, and Renner eventually needed assistance moving people back,” the Secret Service said. “Renner asked, through an interpreter, how many people in attendance had their own business, and only two raised their hands.”
Steven Keough, a retired naval officer who was INetGlobal’s CEO for only weeks before being fired by Renner, contacted federal prosecutors Jan. 8 to report concerns about Renner and the company, according to court documents.
Meanwhile, the search-warrant application cites the government’s prosecution of assets tied to Florida-based AdSurfDaily and a Jan. 4 order of forfeiture by U.S. District Judge Rosemary Collyer to bolster the case against INetGlobal and related companies. The application also cites the successful prosecution of the 12DailyPro and Phoenix Surf Ponzi schemes by the SEC.
As was the case in the ASD prosecution, the Secret Service raised allegations of Ponzi fraud, wire fraud and money-laundering against INetGlobal, saying the company had grossly overstated its membership numbers, had co-mingled funds and operated the business in slipshod fashion.
Agency Assigns Veteran From ASD Case To INetGlobal Case
At least one of the Secret Service agents involved in the INetGlobal investigation also was involved in the ASD investigation, according to the search-warrant affidavit. Agents located an INetGlobal sales pitch online, and the agent involved in the ASD probe called the INetGlobal member.
Out of the gate, INetGlobal was described by the member as a wink-nod proposition, the Secret Service said — and it turned out that the INetGlobal member also had been an ASD member.
“The member said he had previously been a member of ASD . . . and said, ‘We know what happened there,’” the Secret Service said. “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. 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. The member said members earn a daily return on their investment but that he was not sure what he exactly earned. The member said he has not been able to figure out the percentage of return due to the convoluted information provided on the iNetGlobal website.”
Regardless of the member’s own concerns about the program, the member nonetheless was eager to recruit the undercover Secret Service agent, according to the affidavit.
“The member pushed [the undercover agent] to join and wanted to conduct a three way call with his sponsor,” the Secret Service said. “The member said bringing in new members under you was the best way to earn maximum returns.”
CEO Met With Secret Service Prior To Raid
Keough’s holds a Bachelor of Science in Chinese from the U.S. Naval Academy at Annapolis, Md.; a Master of Arts in Congressional Studies from the Catholic University of America, Washington, D.C.; and a law degree from Boston College Law School.
After working for INetGlobal for only weeks, Keough said things going on inside the firm made no sense and he had come to believe Renner had hired him as a “good face†for the company, according to the search-warrant application.
Keough told agents he believed Renner fired him for asking too many questions, according to the filings.
“Keough described what he called his first ‘red flags,’ which were the reported size (50,000 members) and purported revenue ($100 million) of iNetGlobal; the complete disarray and disorganization of the businesses; and the seemingly small outside legitimate income,” the Secret Service said. “Keough further stated that the companies’ website never seemed to work properly, making him question what customers who purchased the advertising service alone, without the possibility of rebates, were getting for their money.
“Keough said on occasion he witnessed Renner manually manipulating the iNetGlobal system to pay out percentages that were different, and smaller, from the percentage listed on the iNetGlobal website,” the Secret Service continued. “Keough also wondered how, with so little outside income, the company could pay these outlandish returns. Keough said Renner would explain away his concerns by telling him how beneficial the advertising was and about all the different levels a member could achieve. Keough said, ‘I never really understood how it could work.’
“Renner told him iNetGlobal had 50,000 members, had been in business for 10 years, was debt free, and had made over $100 million in revenue. Keough said he later learned all these facts were ‘lies.’
“Keough further stated that Renner used the misleading information in power point presentations and webinars to recruit others,” the agency said.
Once becoming CEO, “Keough conducted his own internal audit and found, contrary to Renner’s statements, that iNetGlobal had only approximately 30,000 members, iNetGlobal had only been in business for 14 months, there were huge liabilities associated with the members’ ‘investments’ and the company’s estimated revenue was approximately $28 million, not the $100 million in revenue claimed by Renner.
“Keough said he was particularly alarmed because he knew Renner and/or representatives of iNetGlobal were using these false statements to promote and market iNetGlobal to would-be members (investors),” the Secret Service said. “Keough believed these false statements caused individuals to invest with iNetGlobal.’
“Keough said he had an iNetGlobal employee conduct an analysis to determine the member liability,” the Secret Service said. “The employee reported back to Keough that at least 87% of the company’s revenue was generated from sale of memberships to members residing in China.”
The search-warrant application also claimed that a company Renner owned provided payment-processing services for a Ponzi scheme called “Learn Waterhouse,” which was smashed by the SEC in 2004.
When a court-appointed receiver asked Renner to turn over funds to the receivership estate by converting electronic credits to cash, it was learned that Renner could not do it because he had “invested” more than $2.5 million in Learn Waterhouse V-Credits on “stamps, coins, Salvador Dali sculptures, autographed letters, guitars and amplifiers, fractional interests in motion picture companies, and fractional interests in oil wells, among other things.
“Additional sums of customers’ money had been spent by Renner personally, including on daily living expenses,” the Secret Service said.
UPDATED 2:59 P.M. ET (U.S.A.) Both sites discussed in story below are back up. . . .
Two websites associated with AdSurfDaily mainstay Bob Guenther are offline. The sites — asdmba.com and jaffapartners.com — both are returning this message:
“OOPS. This site is currently unavailable.” The message includes a prompt for ASDMBA and JaffaPartners to contact the hosting company.
Why the sites are offline is unclear. Both sites were operational yesterday. The registrations for both domains is current, with the ASDMBA site not set to expire until October 2010 and the JaffaPartners site good until December 2011.
Guenther was among more than 30 defendants sued earlier this month by shareholders of Cheyenne Mountain Entertainment (CME), a company that makes computer games.
The defendants are accused in Maricopa County Court in Arizona of RICO violations for “participating in a scheme or artifice to defraudâ€; conversion of assets and refusing to return the assets with an “evil mindâ€; unjust enrichment for “failing to pay†or provide consideration for assets; and fraudulent transfer/conveyance.”
Guenther is on probation in Maricopa County, after pleading guilty to a misdemeanor count of harassment last year in a case that involved his conduct toward CME. He initially was charged with two felonies in the case. Records in the Arizona case point out that Guenther has a previous felony conviction.
He pleaded guilty in the 1990s to a felony count of bank fraud, according to federal records.
ASDMBA solicited contributions from members, saying the organization wanted to protect members’ interests in the AdSurfDaily Ponzi scheme litigation. Some ASDMBA members said they would not have given money to ASDMBA had they known of Guenther’s felony record. Others complained that Guenther did not provide an adequate accounting of how the money ASDMBA collected was spent.
Members said ASDMBA collected tens of thousands of dollars.
UPDATED 10:40 A.M. ET (U.S.A.) Federal and state agents have raided the Minneapolis offices of Inter-Mark Corp., seeking evidence of a Ponzi scheme, the Star Tribune of Minneapolis/St. Paul is reporting.
Inter-Mark Corp. is operated by Steve Renner, who also operates a purported “advertising” service known as INetGlobal. In a scene that resembled the August 2008 raid at the headquarters of Florida-based AdSurfDaily, agents in Minnesota were seen carting boxes of documents and computers.
ASD was implicated in a $100 million Ponzi scheme.
Renner has been under investigation for at least 17 months and likely longer. He was indicted on charges of tax evasion in September 2008, about a month after the ASD raid. He was convicted in December 2009 of evading more than $332,000 in taxes between 2002 and 2005.
Renner, 54, “diverted substantial funds from his business, Cash Cards International (CCI), between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments,” prosecutors said in December.
He also used CCI funds to promote his musical band, “Stevie Renner and the Renegades,†prosecutors said.
“From 2001 to 2006, Renner owned CCI, an Internet-based stored-value card and money
transmission business, with locations in Minnesota, South Dakota, and Hawaii,” prosecutors said. “Although he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to file his income tax returns with the Internal Revenue Service for tax years 2002 through 2004 until March 5, 2006, the date on which he also filed his 2005 federal income tax return.”
“Tax evasion is not a victimless crime,†said Julio La Rosa of the IRS, upon Renner’s conviction.
“Honest, hardworking taxpayers pay the price when others choose to evade their tax obligations,” La Rosa said. “As this verdict shows, those that cheat will get caught.â€
Renner faces up to 20 years in federal prison in the tax case.
Renner also is associated with a domain known as AdPacs.com, which is throwing a server error. It is believed that AdPacs promoters also promoted the AdViewGlobal (AVG) autosurf, which had close ties to ASD.
Affiliates of Steve Renner's AdPacs.com pushed AdViewGlobal just prior to its February 2009 launch. This screen shot of search result that appeared online more than a year ago lists the name of Juan Fernandez, the CEO of AdSurfDaily. ASD is implicated in a $100 million Ponzi scheme. AVG launched AFTER the federal seizure of tens of millions of dollars in the ASD case. Like ASD President Andy Bowdoin, Fernandez took the 5th Amendment at an evidentiary hearing in September 2008. Now, Renner's company is the subject of a major federal probe. ASD sold "ad-packs." AVG referred to its version of "ad-packs" as "viewer impressions" after the phrase "ad-packs' became radioactive.
As was the case with the ASD raid in Florida, local media caught the events at Renner’s office yesterday on video. Minnesota has been plagued by Ponzi schemes. Some ASD members from Minnesota have been among the loudest advocates for ASD President Andy Bowdoin.
The Minnesota Financial Crimes Task Force assisted in the raid.
Earlier this month, the Secret Service announced the formation of an Electronic Crimes Task Force (ECTF) based in Memphis. The agency also has ECTFs in St. Louis, Kansas City, New Orleans and Europe.
“One of the top priorities for the Secret Service continues to be combating the computer
related crimes perpetrated by domestic and international criminals that target the U.S.
financial infrastructure,†said Secret Service Director Mark Sullivan.
“The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by working closely with experts from all affected sectors to constantly refresh and adapt our investigative methodologies.â€
Robert Guenther and a woman referenced as “Jane Doe” are listed as defendants in a shareholder lawsuit filed Feb. 2 in Arizona by investors in Cheyenne Mountain Games (CMG) and Cheyenne Mountain Entertainment (CME).
Guenther is the de facto head of the ASD Members Business Association (ASDMBA), an entity that came to life in the aftermath of the federal seizure of tens of millions of dollars from AdSurfDaily and a related company, Golden Panda Ad Builder. ASDMBA collected contributions from ASD members, saying it sought to protect their interests in the ASD litigation.
Some ASDMBA members complained that its operations were less than transparent and that Guenther did not provide adequate accounting of how more than $100,000 collected through individual contributions was spent.
Also named a defendant in the Arizona lawsuit was Jaffa Partners, a Texas entity with which Guenther is associated. The plaintiffs said they believed “Jane Doe” was Guenther’s wife. They are among more than 30 defendants listed in the case, which centers on alleged misconduct by Gary Whiting, a CME executive.
Guenther, “Jane Doe,” Jaffa and the other defendants are accused of RICO violations for “participating in a scheme or artifice to defraud”; conversion of assets and refusing to return the assets with an “evil mind”; unjust enrichment for “failing to pay” or provide consideration for assets; and fraudulent transfer/conveyance “with the actual intent to hinder, delay, or defraud.”
CME and CMG are involved in the development of an online game known as “Stargate Resistance.” CME has declared bankruptcy amid a sea of allegations of mismanagement and financial manipulations by Whiting and financial manipulations by others that harmed shareholders, according to court filings.
“Whiting has used CME and CMG as though they were his own piggy bank,” the shareholders alleged.
Among the allegations are that CME stopped paying employees and that Whiting instructed company officers to stop paying payroll taxes, racking up more than $1.5 million in unpaid taxes. More than $3.8 million on other bills also were not paid, according to the shareholders.
Whiting’s actions threatened the release of Stargate Resistance and the viability of the company itself, according to the shareholders.
Side deals kept from shareholders diluted the value of shares, the plaintiffs claimed. They also claimed Whiting may have caused “listening devices” to be planted in CME’s offices in Arizona and telephone calls of key employees to be recorded without their knowledge or consent.
In the ASD case, federal prosecutors alleged that the Florida-based company was a Ponzi scheme. After the seizure of ASD’s assets in August 2008, Guenther solicited contributions for ASDMBA.
Some ASDMBA members demanded their money back, criticizing Guenther for rude and obnoxious behavior and claiming they had received nothing in return for their contributions. They also complained that Guenther did not disclose that he had a felony conviction for bank fraud.
Guenther dismissed his critics as “left wing liberal no balled people,” calling one an “ignorant mouthy broad.” He also claimed ASDMBA was instrumental in returning money to ASD victims, saying the group retrieved funds for retired and active-duty police officers in Texas and California, and for a “high profile Dallas Cowboy†executive.
ASDMBA’s website urged association members to make an ASD’s promoter’s life “miserable” until he returned funds due another member.
Prosecutors filed a two forfeiture complaints against ASD and Golden Panda’s assets, saying they were in the process of establishing a compensation pool for ASD victims.
Guenther’s name is not listed in court filings as a person empowered to return assets to ASD victims.
Read the Arizona lawsuit filed by CME shareholders in which Guenther was named a defendant. The principal plaintiffs on behalf of shareholders are Keith Deering, Mark Renberg and Chris Lombardo, according to the verified complaint.
Images of Donald Trump and Oprah Winfrey appear in a YouTube video promo for Data Network Affiliates. Neither Trump nor Winfrey could be reached for comment tonight.
The images of business tycoon Donald Trump and entertainment icon Oprah Winfrey appear for 10 continuous minutes in a sales pitch for Data Network Affiliates (DNA) on YouTube.
DNA pitchmen have described the company as a multilevel-marketing (MLM) company that recruits affiliates to record license-plate numbers in the parking lots of retail stores, churches, doctors’ offices and “anywhere” cars are parked in a group. Some critics have raised propriety, safety, legal and privacy concerns.
It was unclear whether either celebrity approved the use of the images in the ad. A security guard answered the phone tonight at the Trump Organization in New York. He said the media office was closed for the day.
An operator answered the phone at Harpo Productions, Winfrey’s Chicago-based production company. She said no one would be available for comment until tomorrow.
The promo for DNA incorporates an audio recording from a company conference call. An image of Trump appears on the left side of the video screen, with Winfrey’s image on the right. The video appears to be an affiliate promo.
Referring to DNA Chief Executive Officer Dean Blechman, the narrator in the DNA conference call dubbed into the You Tube video says, “This is the guy. He rolls with the Donald Trumps; he rolls with the big boys. I mean, you know, he has [inaudible] certain people on speed dial that’s incredible.”
DNA’s web domain lists an address in the Cayman Islands. A “Contact Us” link on the DNA website resolves to message that says, “Information is coming soon!”
The domain advertised in the promo — DataNetworkAffiliates.org — is registered behind a proxy. A DNA affiliate URL on the .org website begins with the word “students,” and includes this message:
“We are sharing all of our marketing tools with our team so they can capitalize on this wonderful opportuniy (sic).” Get stared (sic) today at the link above.”
It was unclear if one of the tools was the video featuring the images of Trump and Winfrey.
Saying it has identified nearly 100 organizations that lost control of personal information they maintain on employees, customers or others, the FTC has notified the entities to tighten security on peer-to-peer (P2P) file-sharing networks.
At the same time, the agency said it has opened “non-public investigations” of companies whose customer or employee information has been exposed on P2P networks.
The FTC did not name the organizations that lost control of data, describing them as a mix of schools, local governments, small businesses and “corporations employing tens of thousands” of people.
In numerous cases, the FTC said, data maintained by the organizations was shared over their computer networks and now “is available on P2P networks” on which users play games, make phone calls, and share music, video and documents.
“[W]e found health-related information, financial records and drivers’ license and Social Security numbers — the kind of information that could lead to identity theft,†said FTC Chairman Jon Leibowitz.
The FTC provided three examples of letters sent to the organizations.
A letter sent to companies begins, “The Federal Trade Commission (FTC) is sending you this letter because at least one computer file containing sensitive personal information from or about your customers and/or employees has been shared from your computer network, or the network of one of your service providers, to a peer-to-peer file sharing (P2P) network.
“One such file is *******. The information is now available to users of the P2P network, who could use it to commit identity theft or fraud. Your failure to prevent such information from being shared to a P2P network may violate laws enforced by federal, state, or local law enforcement agencies.”
‘Hard Look’ Advised
“Companies should take a hard look at their systems to ensure that there are no unauthorized P2P file-sharing programs and that authorized programs are properly configured and secure,” Leibowitz said. “Just as important, companies that distribute P2P programs, for their part, should ensure that their software design does not contribute to inadvertent file sharing.â€
In litigation in recent years, the FTC brought privacy-breach actions against well-known companies such as CVS Caremark Corp., the largest pharmacy chain in the United States; Genica Corp., operators of Computer Geeks Discount Outlet and geeks.com; and Premier Capital Lending Inc.
Those cases all have been settled.
In the PremierCapital case, the FTC alleged the company allowed a third-party home seller to access data without taking reasonable steps to protect it.
“A hacker compromised the data by breaking into the home seller’s computer, obtaining the lender’s credentials, and using them to access hundreds of consumer reports,” the FTC said.
In the Computer Geeks case, the FTC alleged the company stored sensitive customer information in unencrypted text on its corporate computer network.
Hackers stole the information, the FTC said.
Meanwhile, in the CVS case, the FTC said that it opened its investigation after reading newspaper reports that the company was “throwing trash into open [D]umpsters that contained pill bottles with patient names, addresses, prescribing physicians’ names, medication and dosages; medication instruction sheets with personal information; computer order information from the pharmacies, including consumers’ personal information; employment applications, including Social Security numbers; payroll information; and credit card and insurance card information, including, in some cases, account numbers and driver’s license numbers.”
Visit the FTC site for info on previous data-breach cases.
AdSurfDaily President Andy Bowdoin's threats to sue critics backfired, exposing the company to even more scrutiny.
EDITOR’S NOTE: Repping for Data Network Affiliates or Narc That Car, two companies in the business of recording license-plate data? Here are some things you might want to consider . . .
UPDATED 2:21 P.M. ET (March 5, U.S.A.) Data Network Affiliates (DNA) and Narc That Car (NTC) both say they are soliciting members to record the license-plate numbers of cars for entry in a database. Both are multilevel-marketing (MLM) companies. Both have become the subject of scrutiny by web critics who have raised issues of propriety, safety, legality and privacy.
Both companies should thank their lucky stars that the criticism, so far, largely has been contained to the web.
Last week, Dean Blechman, the chief executive officer of DNA, came out firing against the critics. Painting with a brush that was almost unimaginably wide, Blechman suggested the company is monitoring “everyone that’s a distraction out there and anyone that’s printing stuff on the Internet or anywhere†and perhaps preparing to sue. (Emphasis added.)
Yes, a company whose members say is in the business of establishing a database so customers can monitor cars as they move from Walmart to a “doctor’s office” to other locations (including churches) now says it is monitoring “everyone” and “anyone” who poses a “distraction.”
“I’ll tell you one thing,†Blechman warned in an audio recording posted on DNA’s website, which lists an address in the Cayman Islands. “They better be very, very careful of what they write . . . [b]ecause I have every intention of policing and pursuing every legal ramification . . . against anybody that’s reporting any information inaccurate to try to tear down what I’m trying to build here.†(Emphasis added.)
So, a company with a domain that uses a Cayman Islands address and does not say where its corporate offices are located — and a company that does not have a working Contact Form on its website and, according to members, is in the business of recording license-plate numbers in the United States in the parking lots of retailers such as Walmart and Target, supermarkets, churches and doctors’ offices — is sending a clear message to critics.
Blechman’s remarks also might have the effect of chilling DNA affiliates. Some are apt to interpret his comments as a warning that they’d best raise no questions about the company if they’re writing about it in Blog posts or in emails sent to prospects. Customers of DNA and Narc That Car are ill-served by sponsors who might be inclined to write reviews that are anything less than flattering because such reviews might upset management of the companies.
DNA’s own pitchmen have identified Walmart, Target, supermarket parking lots, parking lots at churches and doctors’ offices and “anywhere” cars are parked in a group as the sources of license-plate numbers.
One of the pitchmen who introduced Blechman in the recording in which Blechman warned critics was the same pitchman who told listeners in a previous call that the company envisioned an America in which DNA members would record the plate number of a hypothetical “red corvette” parked at Walmart, and then record the plate number again an hour later at a “doctor’s office” — and then record it again three hours later when it was parked elsewhere.
Blechman said nothing about the pitchman’s comments in the recording in which he threatened critics. Nor did he address a DNA video promotion by the company’s top affiliate that suggested DNA members should behave “inconspicuously” while snapping photographs of “cars” and plate numbers at Walmart on their iPhones, Blackberrys and notepad computers.
Whether affiliates need the permission of retailers, patrons, clergy, worshipers, physicians, patients or any party is left to the imagination. How the company can prevent abuses also is left to the imagination.
Instead of addressing the criticism, Dean Blechman turned his focus on the critics, thus creating the appearance that the company has no problem with its members taking photos of cars and license plates at Walmart, at places of worship and at doctors’ offices.
Until Blechman speaks on these issues publicly in a news conference or addresses them in an official news release available to the media and DNA members, it is not unreasonable for Americans to believe that, if they are seeking the private counsel of clergy, their license-plate number may be recorded while they’re inside their place of worship pouring out their souls — and the number will be entered in a database used to track the movement of vehicles.
And it’s not unreasonable for Americans to believe their plate number will be recorded while they’re inside the office of their physician, surgeon, psychiatrist, psychologist, attorney or other professional.
What’s more, it’s not unreasonable for Americans to believe their plate number will be recorded wherever they do their shopping or reading, including retail outlets large and small, libraries and shops that sell adult videos and magazines.
Blechman needs to speak to these issues before the MLM program launches March 1. And he needs to make it plain whether he approves of the practice of writing down plate numbers (or recording them on video) where Americans shop, worship, receive medical and legal advice and spend their casual time.
How does DNA plan to guard against invasions of privacy? How can it prevent database customers from abusing data it provides?
DNA’s own pitchman offered up the possibility that the company wanted to create records of the movement of automobiles and offer that information for sale to database customers. If this is so — and if you don’t want anyone to know you’re seeking the counsel of clergy, a medical professional or a legal professional — you should know that DNA appears to be building a database that will record various sightings of your license plate.
If you owe money to a finance company and are having money problems, the repo man very well might learn you are seeking the counsel of your clergyman or even your therapist. The repo man will get the addresses. He will know if your car was parked at the office of a psychologist or a heart surgeon, a rabbi or a priest, the public library or the adult bookstore, the City Hall building or the casino, the curb in front of your house or the curb in front of friend’s house.
If your name is Daisy, if you’ve recently had heart-bypass surgery and fell into clinical depression and are having trouble paying your bills because you aren’t healthy enough to return to work or you’ve been laid off, the repo man might be able to tell his client:
“Hey, Daisy’s car was parked in a surgeon’s parking lot. Then it was spotted in her shrink’s parking lot. Then it moved to a credit counselor’s parking lot. Then she visited her daughter. Then she visited the Catholic parish down the street from her house.
“You won’t believe where the next sighting was. The Salvation Army soup kitchen! Daisy is broke — and she’s a nutcase to boot!”
And what if the availability of the info is not limited to the repo man or finance companies? The United States could become a country of paid snoopers who recruit other paid snoopers.
Blechman’s response was to threaten to sue critics. One of the pitchmen who introduced Blechman said the company had recruited 37,000 members in just a few weeks. The database product is not yet available, but the manpower to populate it is — and members by the thousands are being urged to write down plate numbers.
Some members already have a supply on hand: NTC launched before DNA, which Blechman described as his “unbelievable vision.” From appearances, it looks as though NTC had the vision first — and DNA now is in position to benefit from plate numbers submitted by NTC members.
Leading with an elbow normally is frowned upon in business and often leads to even more intense scrutiny. Ask AdSurfDaily President Andy Bowdoin, who announced that the company had amassed a giant money pot to punish critics.
Here, according to federal court filings, is what Bowdoin told ASD members at a company rally in Miami on July 12, 2008:
“These people that are making these slanderous remarks, they are going to continue these slanderous remarks in a court of law defending about a 30 to 40 million dollar slander lawsuit. Now, we’re ready to do battle with anybody. We have a legal fund set up. Right now we have about $750,000 in that legal fund. So we’re ready to get everything started and get the ball rolling.” (Emphasis added.)
Yes, Andy Bowdoin publicly threatened to sue critics. He, too, painted with a wide brush, saying his warning applied to “anybody.”
Less than a month later, the U.S. Secret Service raided ASD. Prosecutors said the company was operating a $100 million Ponzi scheme and engaging in wire fraud and money-laundering.
Bowdoin’s lack of PR skills later contributed to other nightmares for members. Bowdoin, for example, described the Secret Service seizure of his assets as an attack by “Satan.” And he compared the government’s actions to the 9/11 terrorist attacks that killed nearly 3,000 people.
He later said his fight against the government was inspired by a former Miss America.
The concerns about the propriety, privacy, safety and legality of both DNA and NTC are real. The BBB of Dallas and the district attorney of Henderson County, Texas, have opened inquiries into NTC.
Because DNA is competing in the same arena as NTC, it is not unreasonable to ask the same sort of questions.
Dean Blechman is a longtime businessman. He could learn a few things from the PR mistakes of Andy Bowdoin, one of which was to attack the critics before addressing the issues and making the company’s operations crystal clear and transparent to thousands of affiliates and members of the public.
Video cameras? Cell phone cameras? Notepad computers? Pens and pads?
Professional complexes? Walmart? Target? Adult bookstores? Libraries? Church parking lots? Doctors’ offices?
UPDATED 10:31 A.M. ET (U.S.A.) The chief executive officer of Data Network Affiliates (DNA) has come out swinging against critics, threatening to take legal action.
“There are some distractions I’m hearing about out there,” said CEO Dean Blechman.
An audio recording of Blechman’s remarks is posted on DNA’s website. Two DNA pitchmen warmed up listeners by exchanging compliments with each other and lauding Blechman for nearly seven minutes before he offered his remarks.
Blechman described DNA as his “unbelievable vision” — for which he had come out of retirement to make come true. “I have a chance to make that really happen,” he said.
“My 30 years of my reputation in business stands for itself, no matter what distractions are out there towards Data Network Affiliates,” Blechman said, after mentioning his background in the natural-products industry with a company known as TWIN LAB.
Without specifying the distractions and what the critics have gotten wrong, Blechman suggested he’ll sue, targeting his remarks at “everyone that’s a distraction out there and anyone that’s printing stuff on the Internet or anywhere.”
“I’ll tell you one thing,” he warned in the recording. “They better be very, very careful of what they write . . . [b]ecause I have every intention of policing and pursuing every legal ramification . . . against anybody that’s reporting any information inaccurate to try to tear down what I’m trying to build here.”
DNA’s domain lists a Cayman Islands address, as does a companion domain: TagEveryCar.com. A “Contact Us” link at the bottom of the DNA website resolves to a page that says, “Contact Data Network Affiliates[:] Information is coming soon!” The TagEveryCar domain redirects to the DNA website.
DNA has delayed the program launch twice this month, and now says it will launch March 1. DNA says it is building a database of license-plate numbers.
In recent days, critics have raised issues ranging from propriety, affiliate training, safety and privacy to the ownership of the company and why the domains listed offshore addresses. A multilevel-marketing firm, DNA says it has signed up more than 37,000 participants to gather license-plate numbers.
Pitchmen for the company have identified the parking lots of Walmart, Target, churches, doctors’ offices and “anywhere” cars are parked as sources of plate data.
Promoters have provided little instruction on matters such as whether DNA members are required to obtain the permission of store managers, church pastors and physicians before recording the plate numbers of patrons or congregants or patients, whether members should obtain additional insurance protection or consult with an attorney before entering the license-plate number recording business and how members are required to behave if confronted by store managers and patrons, church pastors and congregants, doctors and patients and police.
Lionel Cesaire, one of the DNA pitchmen who introduced Blechman in the recording, previously described DNA as a company with members who would record the license-plate number of a hypothetical “red corvette” parked at Walmart at noon, a “doctor’s office” at 1 p.m. and “somewhere else” at 4 p.m.
Privacy advocates may take a dim view of the approach, raising concerns about both propriety and legality. Some DNA members have recommended that affiliates record plate numbers with video cameras. Such information easily could end up on the Internet, exposing people to invasions of privacy and triggering lawsuits. At the same time, DNA members who collected information for the company could stockpile it and offer it for sale to other companies.
Blechman thanked Cesaire for his introductory remarks, but did not reference Cesaire’s remarks in a previous conference call about recording numbers at churches, store parking lots and doctors’ offices.
In a promotional video on YouTube, Florida-based DNA promoter Jeff Long — whom DNA says has recruited more than 700 members — suggested prospects should behave “inconspicuously” when snapping photographs of license plates at stores such as Walmart with iPhones, Blackberrys and notepad computers.
Cesaire also has used the word “inconspicuous” when describing the recording of plate numbers, suggesting that members might want to be seated in their cars when writing down plate numbers in retailers’ parking lots.
Describing his own experience collecting plate numbers at Walmart by taking pictures of them while strolling through the parking lot, Long said in a DNA promo on YouTube that store patrons looked at him “weird.”
“People looked at me kinda weird. But I didn’t care. You kind of do it inconspicuously. . . . because . . . you know, everybody, ‘Why are you taking a photo of my car?’†Long said.
As Long’s video narration continued, he said, “Who cares what people think? Who cares what people are going to . . . look at you weird? Whatever. Because as you do this, and you record 20 license plates, the company’s going to pay you $25.â€
The video promo continues to appear on YouTube. A similar video featuring Long in which the words referenced in the paragraphs above appear to have been edited out was removed from YouTube “by the user” in the past several hours, according to the YouTube site.
The video also was removed from a webpage operated by an individual DNA affiliate believed to have spammed the PP Blog Thursday.
A link to the now-removed YouTube video was sent to the PP Blog in a pure spam post Thursday at 10:05 p.m. The sender targeted a DNA discussion thread, but attempted to post an ALL-CAPS sales pitch (italics added):
“WANT TO JOIN DNA’s TOP TEAM AND LEARN THE TRADE SECRETS OF BUILDING A HUGE ORGANIZATION FAST AND FREE?
TO QUALIFY YOU MUST REGISTER TO BECOME A FREE AFFILIATE AT
[**SPAMMING LINK REMOVED BY ADMIN**]
SEE YOU AT THE TOP!
Later, a possible shill entered the thread, saying he was “tryin to sign up.” After that, a third poster left a sales URL in the same thread. The PP Blog attempted to contact DNA through its website to report the spam, but the site did not have a contact form.
In the recorded conference call, Blechman said members should be confident in the program.
“I am leading this company; I’m the CEO. I’m in charge. Every big decision is made by me and my partner, Arthur Kurek.
Kurek is president and chief financial officer of DNA, Blechman said.
In the call posted on DNA’s website, Blechman did not address any of the issues raised by critics. It is unclear if he approves of the Jeff Long video and Long’s plate-number collection method. Long has been identified in a DNA conference call as the company’s top recruiter.
Long recorded a similar video to recruit members for Narc That Car. The headline on the video now says, “NARC That Car – Don’t Join!” In the upper-right corner of the YouTube site, this message appears:
“This video talks about NARC That Car… IF YOU ARE PLANNING ON MARKETING THIS BUSINESS ON THE INTERNET DO NOT JOIN!!!!! NarcThatCar CANCELED AND DISABLED My distributorship because I put this video on YouTube…I’m now the #1 leader and sponsor in their BIGGEST COMPETITOR’S BUSINESS…DataNetworkAffiliates. Again…don’t join NarcThatCar if you plan on marketing on the internet!!!!!!”
Narc That Car is a Dallas-based business. Like DNA, Narc That Car says it is in the business of gathering license-plate data.
Trading off a popular phrase, Kerry John O’Neill’s “pay-it-forward” scheme has landed him in trouble with Canadian securities regulators, wiped him out financially and implicated an associate who helped him sell the scheme.
O’Neill even named his scheme the “Pay It Forward Program” (PIF), according to the British Columbia Securities Commission (BCSC), which accused him of collecting $9.6 million from 943 investors by telling them they could expect returns ranging from 100 percent to 300 percent in 90 days.
“Pay it forward” is a marketing buzzword phrase. The phrase often is associated with autosurf, cash-gifting and MLM schemes that recruit affiliates. The “pay-it-forward” sales approach has emerged as a potential marker of a financial fraud.
Broke and living in public housing, O’Neill now has become the subject of an investigation by the Alberta Securities Commission (ASC). Like BCSC, ASC is seeking sanctions against O’Neill, who was banned in September 2009 from the securities business in British Columbia.
BCSC accused O’Neill of selling unregistered securities as investment contracts. Although Pay It Forward was not an autosurf, similar prosecutions have been brought against autosurf operators in the United States.
“Between November 2005 and December 2006, O’Neill solicited investors to join the PIF Program and enter into investment contracts (the PIF Securities) with him,” BCSC said. “No prospectus was ever filed for the PIF Securities and none of the exemptions under the Securities Act . . . applied to their distribution. O’Neill was not registered under the Act when he distributed the PIF Securities.”
Banned along with O’Neill by BCSC was Renee Marie Helmig, also known as Nisha Helmig.
Helmig, of North Vancouver, admitted she “used false information provided by O’Neill to make misrepresentations to investors and potential investors to convince them to invest in Pay it Forward,” according to BCSC.
O’Neill’s particular brand of “pay-it-forward” involved a scheme by which investors were told that “their funds would be used to buy and sell distressed merchandise,” BCSC said.
Here is how money invested in the scheme was distributed, according to BCSC:
$6.4 million to pay amounts owed to other investors.
$1.1 million to purchase merchandise.
$213,000 for “other investment opportunities.”
$56,000 for O’Neill’s personal expenses.
The remainder was used for “expenses related to the distressed merchandise business,” BCSC said.
“[M]ost investors did not earn any return on their investments, but rather lost some or all of their investment capital,” BCSC said. “[T]he payments O’Neill made to investors did not come from profits he made from buying and selling distressed merchandise. Instead, O’Neill paid investors with other investors’ funds.”
“O’Neill has been unemployed since the PIF Program ended” in April 2007, BCSC said. “He lives in subsidized housing and his only income is a monthly disability benefit.”
A Florida man implicated in a pump-and-dump scheme tied to a Ponzi- and affinity-fraud scheme has been convicted and faces decades in federal prison.
Michael J. Muzio, 46, of Tampa, was convicted on six counts of securities fraud, two counts of substantive wire fraud, two counts of lying to the SEC and the FBI and one count of conspiring to commit wire fraud.
Muzio’s pump-and-dump scheme is linked to the alleged Home Pals Investment Club Ponzi and affinity-fraud scheme involving Ronnie Eugene Bass Jr., Abner Alabre and Brian J. Taglieri.
Bass, Alabre and Taglieri were accused civilly and criminally of targeting Haitian-Americans in a $14.3 million scheme.
Alabre, 33, of Miramar, Fla., and Taglieri, 39, of Jupiter, Fla., already have pleaded guilty to criminal charges, which were brought in October 2009. Bass and Alabre were accused by the SEC of fooling investors by saying Taglieri was Home Pals’ attorney, but Taglieri is not an attorney, according to records.
Muzio defrauded Haitian-American and other investors in South Florida and elsewhere “by manipulating” the stock price of International Business Ventures Group (IBVG), a Florida shell company “with no assets and virtually no business activities,” prosecutors said.
IBVG purportedly was operated from Palm Beach Gardens. Last month, U.S. Attorney General Eric Holder described the Palm Beach area as the “ground zero” of financial fraud. Holder ventured to Palm Beach to make a speech and introduce the Obama administration’s Financial Fraud Enforcement Task Force.
The manipulation scheme was carried out through “coordinated stock purchases and sales designed to artificially impact share prices,” the FBI said.
“To induce investors to purchase the stock, [Muzio] created a false impression that an active market for the stock existed by engaging in illegal ‘wash trades’ in which he simultaneously entered buy orders through one brokerage account under his control and offsetting sell orders at the same price through another brokerage account under his control.
“These trades had no real economic effect, but the defendant’s brokers unwittingly reported the trading activity and potential investors who saw the online reports were misled into believing that the stock was actively traded at the quoted prices,” the FBI said.
As often is the case in pump-and-dump schemes, Muzio “issued false and misleading press releases” claiming that the company had profitable business dealings.
Muzio claimed IBVG “had deals to provide and offer prepaid debit cards in Haiti,” as well as prepaid calling cards and “exclusive rights to market prepaid electric meters in Haiti,” the FBI said.
“Investors were offered the chance to purchase free-trading shares of stock, but then received certificates for restricted shares which could not be traded and ultimately proved to be worthless,” the FBI said.
Home Pals advised website viewers that the company was “honest†and adhered to “uncompromising ethics,†the SEC said.
UPDATED 12:24 P.M. ET (U.S.A.) Is Dean Blechman no longer the chief executive officer of Data Network Affiliates (DNA), an MLM firm that purports to be in the business of recording license-plate numbers of cars as they move from destination to destination?
