PatrickPretty.com

Category: Ad Surf Daily

  • Zeek’s Paul Burks Now In Federal Custody

    Paul Burks, the 70-year-old operator of the Zeek Rewards Ponzi scheme, now is listed as prisoner No. 29723-058 at FMC Lexington. The facility is an administrative security federal medical center with an adjacent minimum security satellite camp in Lexington, Ky.

    After being sentenced in February to more than 14 years, Burks was ordered to report to the facility no later than yesterday. He reportedly is suffering from significant medical issues.

    Burks has become the third and senior-most Zeek executive sent to jail. Dawn Wright-Olivares and Daniel Olivares earlier began serving respective terms of 7.5 years and two years.

    U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina was the sentencing judge in all of the cases against the Zeek braintrust.

    Zeek’s operations were similar to the AdSurfDaily Ponzi scheme, which sent ASD President Andy Bowdoin to federal prison in 2012. Bowdoin, now 82, is scheduled to be released in February 2018. He is listed as a prisoner at Butner Medium FCI in Butner, N.C. The Butner prison also has a medical facility. Bowdoin, like Burks, had health issues prior to sentencing.

    Like ASD, Zeek was a Ponzi-board “program.”

    Troy Barnes, one of the principals of “The Achieve Community” (TAC) scam, was sentenced in April to 33 months in prison. TAC also was a Ponzi-board “program.”

    Barnes’ Achieve colleague Kristi Johnson was sentenced to 21 months.




  • URGENT >> BULLETIN >> MOVING: Judge Maintains Traffic Monsoon Receivership And Asset Freeze, Grants SEC’s Request For Preliminary Injunction

    URGENT >> BULLETIN >> MOVING: A federal judge in Utah has denied the request of Charles Scoville and Traffic Monsoon to set aside the Traffic Monsoon receivership and has granted the SEC’s motion for a preliminary injunction that continues an asset freeze ordered in July 2016.

    “The evidence clearly points to the fact that Traffic Monsoon’s explosive growth was driven by members purchasing and repurchasing AdPacks in order to obtain the incredible returns on their investment, not by intense demand for Traffic Monsoon’s services,” U.S. District Judge Jill N. Parrish ruled. “Indeed, many AdPack purchasers had no interest in the website visits Traffic Monsoon offered, and Traffic Monsoon only ever delivered a fraction of the clicks it promised to deliver. In short, the economic reality of the AdPack purchases is that they were investments.”

    From a footnote in the judge’s ruling (italics added/light editing performed):

    One of the unique aspects of Traffic Monsoon that differentiates it from other Ponzi schemes is that members had to continually reinvest in the scheme by rolling over the profit from fully matured AdPacks into the purchase of new AdPacks. This amounted to a shell game in which an initial investment of a sum of money would continually cycle among the members’ accounts.

    A large portion of an initial investment would be distributed to other members as either revenue sharing or a commission. Then the members that received the revenue sharing payments or commissions would reinvest it by rolling it over into new AdP[a]ck purchases. Under this system, the same dollar could be distributed to member accounts as revenue sharing or a commission many times, until either Traffic Monsoon withdrew it as profit or a member withdrew it from his or her account.

    This explains why the members had a relatively small amount in their accounts when the court entered the TRO—$34.2 million—while the number of outstanding AdPacks, if allowed to mature, would amount to $243.9 million. So long as the members, encouraged by a continual flow of money into their accounts, reinvested most of their money rather than withdrawing it, a relatively small amount of money continually redistributed among the members through revenue sharing could fuel much greater expectations as to the near-future value of the AdPacks.

    But once the money ceased to continually recycle among the member accounts, as happened when the court entered the TRO, there wasn’t enough money to pay what experience had led the members to believe their AdPack investment would be worth after a short 55-day wait. That is why Traffic Monsoon had only about $60 million in assets to cover outstanding AdPacks that would be worth $243.9 million if they had matured, even though member account balances amounted to only $34.2 million.

    More . . .




  • SEC Charges Zeek Figure Keith Laggos With Publishing Fake News To Sanitize Ponzi/Pyramid Scheme

    In December 2013, these plaques of Network Marketing Business Journal Zeek puff pieces were put up for auction by the court-appointed receiver for Zeek. On March 22, 2017, the SEC charged former NMBJ publisher Keith Laggos with securities fraud.

    Keith Laggos, an AdSurfDaily Ponzi scheme figure and the onetime publisher of Network Marketing Business Journal, has been charged by the SEC with securities fraud for illegally touting the Zeek Rewards scheme and using NMBJ to sanitize the egregious fraud that gathered hundreds of millions of dollars.

    Among the agency’s allegations is that “Laggos’s favorable editorials of the scheme contained material misstatements and omissions. Laggos published theses misstatements despite being made aware of their inaccuracy and otherwise being in a position as a paid consultant for ZeekRewards to know of their falsity.”

    The former .com site for NMBJ now is showing a “For Sale” sign.

    Plaques commemorating NMBJ’s Zeek puff pieces on Zeek were listed as auction items by the court-appointed receiver for Zeek in December 2013.

    From an SEC statement on March 23, 2017 (italics added):

    The SEC alleges that, from at least June 2011 through July 2012, Laggos, through NMBJ and while acting a paid consultant for ZeekRewards, was paid at least $64,000 for publishing several editorials providing crucial publicity to the ZeekRewards scheme. These publications promoted ZeekRewards as the “company of the month” and touted, among other things, the scheme’s supposed record earnings and opportunity to generate income for participants. Laggos failed to disclose the fact that he was paid for the favorable editorial coverage, the amount that he was paid, and that he was a paid consultant for ZeekRewards.

    Laggos, a prior defendant in an SEC touting case, agreed to pay $79,190.68 to settle the Zeek matter, the SEC said. In addition, he agreed to a permanent injunction from future violations of Sections 17(a) and 17(b) of the Securities Act, from participating in future securities offerings and from providing paid publicity to securities.

    The SEC moved against Zeek on Aug. 17, 2012. (See Aug. 12, 2012, PP Blog editorial that references Laggos: “Karl Wallenda Wouldn’t Do Zeek.”)

    See BehindMLM’s March 25, 2017, story on the charges against Laggos.

    See the SEC’s litigation statement.

    Whether other outlets that publish fake news to sanitize fraudulent MLM schemes would learn from the case against Laggos was not immediately clear.




  • BULLETIN: Paul Burks Of Zeek Rewards Sentenced To More Than 14 Years; Judge Comments On ‘Cheerleaders’

    3RD UPDATE 4:52 P.M. ET U.S.A. Paul Burks, the principal behind the $939 million Zeek Rewards Ponzi- and pyramid scheme broken up by the SEC and the U.S. Secret Service in August 2012, has been sentenced to 176 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said moments ago.

    U.S. District Judge Max Cogburn Jr. presided over sentencing court for Burks, 70.  Zeek was an MLM scam that created hundreds of thousands of victims globally.

    “But anyone could have seen what was going to occur outside himself and his (marketing) cheerleaders,” the judge said in court, according to the Winston-Salem Journal.

    In clawback lawsuits, Zeek receiver Kenneth D. Bell has triumphed over thousands of net winners in the scheme.

    When Burks was indicted in October 2014, the grand jury alleged that Burks and others offered a “bogus 125% return on investment” through a “sham internet-based penny auction company.”

    Bell earlier alleged that some of the winners he sued were “serial” participants in Zeek-like schemes to defraud. Among the clawback defendants were Todd Disner, a figure from the AdSurfDaily Ponzi scheme, and T. LeMont Silver, a promoter of multiple Ponzi schemes.

    “Programs” such as Zeek and ASD often try to sanitize themselves by calling themselves revenue-sharing schemes.

    Burks also was sentenced to make restitution in the amount of $244 million and to serve three years’ probation after his prison release. There are media accounts today that suggest Burks is in poor health.

    Though 176 months is a lengthy term, there has been speculation that Burks would receive an even longer term, given the enormous size of Zeek and the number of victims.

    Said Bell, the receiver, in a statement dated Feb. 13. “Judge Cogburn cited the need to balance the harm caused by Mr. Burks’ conduct against Mr. Burks’ extremely poor health and [the fact he is] 70 years of age.”

    From a statement today by prosecutors (italics added):

    At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

    Dawn Wright-Olivares and Daniel Olivares of Zeek also have been sentenced to prison.



  • URGENT >> BULLETIN >> MOVING: Judge Begins Process Of Ordering Judgments Against Zeek Net Winners; Millions Awarded So Far, Millions More Pending

    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.
    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.

    URGENT >> BULLETIN >> MOVING: At long last, there is a spectacular crack in the ceiling of MLM HYIP Ponzi Land!

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has begun the process of ordering judgments against Zeek Rewards’ winners sued by receiver Kenneth D. Bell, according to the docket of the clawback case.

    Millions of dollars in final judgments have been awarded so far, with millions more awaiting Mullen’s signature. Bell, for example, is pushing for a judgment of more than $3.1 million against veteran HYIP huckster T. LeMont Silver, his wife and a Silver shell company.

    The Silver amount includes more than $2.3 million in winnings, plus more than $802,000 in prejudgment interest. Pending the judge’s signature, any Zeek income derived by the Silvers will become attachable, with the prospect of Mullen also awarding postjudgment interest.

    Final judgments against the Silvers and several other Zeek winners could be entered by the end of the year.

    Mullen already has issued final judgments against Zeek and AdSurfDaily Ponzi scheme figure Jerry Napier ($2.349 million, including prejudgment interest of more than $600,000); Darren Miller ($2.198 million, including more than $561,000 in prejudgment interest; Aaron Andrews, Shara Andrews and an Andrews shell company ($1.359 million, including more than $347,000 in prejudgment interest).

    Longtime HYIP hucksters, Aaron and Shara Andrews were known as Team Aaron Shara.

    Each of the orders Mullen already has signed includes this language (italics added):

    The Court confirms this amount is the Final Judgment of the Court against this Defendant and hereby authorizes the Receiver to pursue appropriate collection proceedings.

    On Nov. 29, Bell won against the named winners and a defendant class of more than 9,400 other winners in summary judgment, meaning the judge rejected arguments they were entitled to keep more than $200 million in Ponzi proceeds.

    “How much of that we will be able to collect for distribution to claimants with allowed claims is uncertain at this time,” Bell wrote on Nov. 29. “However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.”

    The money will go to the Zeek losers who filed the appropriate paperwork and whose claims were approved.

    Stephen B. Darr, the trustee for TelexFree, has followed Bell’s lead in pursuing net winners from MLM HYIP fraud schemes. Darr effectively has sued more than 93,000 alleged TelexFree winners.

    Other receivers in HYIP cases potentially could follow the leads of both Bell and Darr in pursuing clawback litigation against alleged winners.

    NOTE: Our thanks to the ASD Updates Blog.




  • TELEXFREE: Prosecutors Docket Prospective Witness List And Exhibits Against James Merrill: Understanding The Background

    EDITOR’S NOTE: This story, which easily could be titled “What NOT To Do In MLM,” summarizes a few of the witnesses and exhibits the U.S. government may use against TelexFree’s James Merrill when his trial gets under way Oct. 24 in Massachusetts. The background provided below is based on research by the PP Blog. Prosecutors filed their witness/exhibit lists on Sept. 26 in U.S. District Court. For our Brazilian readers, we’ll note here that the United States is expected to call at least one member of the Brazilian Federal Police to testify. U.S. District Judge Timothy S. Hillman is presiding. In total, dozens of witnesses may testify, including some who have been sued by the SEC, TelexFree Trustee Stephen B. Darr or private attorneys. There are hundreds of government exhibits, some collected by the Massachusetts Securities Division and the U.S. Department of Homeland Security.

    **______________________**

    EXHIBIT: The government may introduce a document filed by TelexFree with the Alabama Public Service Commission in March 2014.

    BACKGROUND: This document potentially could be used to demonstrate Merrill lied to regulators and business consultants. It was filed on March 20, 2014, and asserts TelexFree was “financially qualified” to operate in the state as a telecom company and that its “current financials Show considerable net worth.”

    Less than a month later, however, TelexFree filed for bankruptcy, raising questions about the truthfulness of its telecom applications in various states. The document, which the PP Blog published before TelexFree’s bankruptcy filing, also ties Merrill to Indiana MLM accountant Joe Craft, a former interim TelexFree executive listed Sept. 26 by the government as a witness. Craft was sued alongside Merrill and others by the SEC in April 2014. He later filed a pleading in which he said he had concluded TelexFree was a Ponzi scheme selling unregistered securities and that he had been misled by TelexFree insiders.

    Joseph Isaacs, a Florida-based consultant for TelexFree, helped prepare TelexFree’s telecom filing in Alabama and other states. Isaacs also now is listed as a government witness. Filings in Missouri say Isaacs told regulators there that Merrill had not been truthful when submitting an affidavit.

    tfwcmmerrillsuv-1EXHIBIT: The government may introduce a photo of Merrill posing with a Hummer vehicle in TelexFree promos.

    BACKGROUND: Ponzi/pyramid schemes and flashy rides are virtually inseparable.

    In 2014, a federal judge ordered TelexFree pitchman Santiago De La Rosa — an SEC defendant — to sell two BMWs and a Land Rover Range Rover. De La Rosa now is listed as a government witness.

    EXHIBIT: The government may introduce a September 2013 email that shows Merrill was aware of a criminal indictment and prison term imposed against AdSurfDaily President Andy Bowdoin in a Ponzi case with remarkable similarities to TelexFree.

    BACKGROUND: The email described above allegedly was sent to Merrill by MLM attorney Jeffrey Babener. Babener now is listed as a government witness. Darr, the bankruptcy trustee, has said Babener informed TelexFree in August 2013 that it was operating a pyramid scheme, but TelexFree nevertheless continued to gather money.

    The ASD case, which also came up in the prosecution of Zeek Rewards’ operator Paul Burks, potentially could be used to demonstrate Merrill was engaging in willful blindness in his operation of TelexFree.

    One of Merrill’s MLM attorneys — Gerald Nehra — has been sued by Darr, private attorneys and the court-appointed receiver in the SEC’s case against Zeek. Nehra also was a figure in the ASD case. He now is listed as a government witness against Merrill.

    EXHIBIT: A video by Thomas More of Newport Beach, Calif.

    BACKGROUND: The SEC has warned for years that scams spread on social media. More, now listed as a government witness, was a TelexFree pitchman who was listed as a “winner” in the Zeek Rewards Ponzi- and pyramid scheme. Nehra once was a speaker at a TelexFree event in Newport Beach.

    EXHIBIT: Records from various banks and financial vendors for Merrill or TelexFree.

    BACKGROUND: Follow the money.

    NOTE: Our thanks to the ASD Updates Blog.




  • SINISTER: TrafficPowerline, A Ponzi-Board ‘Program,’ Threatens BehindMLM

    “The threat did not explain now a negative review on BehindMLM could be any worse than a fawning sales pitch on MoneyMakerGroup. ‘Programs’ that have appeared on that forum have caused billions of dollars in losses globally.” — PP Blog, Sept. 5, 2016

    trafficpowerlinelogoTrafficPowerline, a “program” whose thread-starter at the MoneyMakerGroup Ponzi forum has more than 4,700 posts, reportedly is threatening BehindMLM.com because of a negative review. (More on the bizarre and sinister threat to artificially link BehindMLM to malware and porn below.)

    The mere presence of TrafficPowerline on MoneyMakerGroup suggests tainted proceeds from any number of scams could be flowing to the emerging program. “proReflex” is the starter in a thread dated July 23. The post begins with the classic line of “I am not the Admin.”

    MoneyMakerGroup is listed in U.S. federal court files as a place from which Ponzi schemes are promoted. Infamous schemes such as Zeek Rewards, AdSurfDaily, TelexFree and many others were listed there, contributing to a condition under which polluted money flows from scheme to scheme to scheme.

    A “program” similar to TrafficPowerline — Traffic Monsoon — was shut down by the SEC on July 26, just three days after TrafficPowerline made its MoneyMakerGroup debut. Like TrafficPowerline, TrafficMonsoon was a Ponzi-board scheme.

    In a post dated Sept. 5, BehindMLM reported that Pearse Donnelly of TrafficPowerline and an earlier scheme known as “MoBrabus” was the source of the threat. MoBrabus also was listed on the Ponzi boards. One of its payment processors was Payza, which the court-appointed receiver in the Zeek case has accused of facilitating that mammoth, cross-border scheme.

    Donnelly, according to BehindMLM, demanded the review be taken down within 72 hours or else a “negative SEO” campaign against BehindMLM would begin.

    Tools used against the well-known review site would include “SGA, Xrummer, Scrape BoX, SeNuke and other SEO tools at our disposal or from service providers to create thousands of low PR, PBN, PN, Porn, Link Farms and Malware site backlinks to your site along with teen-girl 10% free sex online 9% harmful for your computer 8% do not open this link 8% porn 8% adult content harmful 8% computer virus 8% dangerous 8%.”

    The apparent TrafficPowerline aim is to artificially damage BehindMLM’s worth with Google and other search engines through fraudulently placed links.

    Despite bizarrely claiming he was “nicely” requesting BehindMLM to kill the review and not issuing a threat. Donnelly reportedly went on to write that “I am fucking serious OZ do not fuck with me take down the fucking pages or I will make it my little project to fuck your site up.”

    The threat did not explain now a negative review on BehindMLM could be any worse than a fawning sales pitch on MoneyMakerGroup. “Programs” that have appeared on that forum have caused billions of dollars in losses globally.

    Sites sometimes have been known to overplay their hands when trying to bludgeon critics. KlearGear.com allegedly once threatened negative reviewers with a fine of $3,500. The site ended up getting sued by a public advocacy group.

    Because the PP Blog today was able to access the TrafficPowerline website, it means the site is accessible in the United States — after the TrafficMonsoon case and the allegations of securities fraud and after California passed a law that backs consumers if companies try to strongarm consumers by limiting speech through nondisparagement clauses.




  • ‘TRAFFIC HURRICANE’: Reload Scheme Targets Traffic Monsoon Participants And Tries To Gag Reporters

    traffichurricanelogoIn the aftermath of the SEC’s Ponzi action against Traffic Monsoon last month, a website styled TrafficHurricane.plus has gone live and has a sign-up page. Ponzi-friendly Payza and SolidTrustPay are the listed money-movers.

    There are many items of interest on the Terms page, including exceptionally awkward English syntax and a preemptive bid to gag reporters.

    On the syntax front: “You are under the money laundering prevention law . . .”

    On the effort-to-gag front: “If you are not a member you are prohibited from modifying, copying, distributing, transmitting, publishing, selling, creating derivative works and / or using any information available on and / or through TrafficHurricane.”

    The PP Blog accessed the Traffic Hurricane page from the United States today. Given the Traffic Monsoon example and other examples in recent years, U.S. law enforcement may deem the offer as an offering of securities targeted at unaccredited investors in the United States and elsewhere.

    Traffic Hurricane has the hallmarks of a securities reload scheme and reportedly is hosted on the same server as TrafficMonsoon.plus, which appears to have been an earlier effort to launch a reload scheme. TrafficMonsoon originally operated at TrafficMonsoon.com, but that page now resolves to the website of the court-appointed receiver in the TrafficMonsoon case.

    In the HYIP sphere, reload schemes are somewhat common and provide a means by which victims get scammed a second time. Such schemes typically surface when a initial scheme displayed an incredible ability to gather money and line up suckers. Promos for Traffic Hurricane already are running on Twitter.

    The SEC said Traffic Monsoon rounded up more than $207 million. The agency’s complaint says the “program” had more than 162,000 investors.

    Apparently only in operation for a couple of days, Traffic Hurricane this morning said on its landing page that it already had 5,111 members. Like Traffic Monsoon, Traffic Hurricane says it is an “advertising” program.

    The situation is reminiscent of the 2008 AdSurfDaily “advertising” Ponzi scheme shut down by the U.S. Secret Service. ASD sparked at least three reload schemes, including one called AdViewGlobal. Investigators later linked ASD President Andy Bowdoin to AdViewGlobal. Because of AdViewGlobal, a federal judge revoked Bowdoin’s bond in the ASD Ponzi case.

    Charles Scoville, the alleged operator of Traffic Monsoon, has not been charged criminally. It is unclear whether a criminal investigation is proceeding on a parallel track with the SEC’s civil action against Scoville and Traffic Monsoon, but similar schemes have triggered criminal probes.

    BehindMLM.com, quoting TrafficMonsoon cheerleader Sharon James, is reporting Ernie Ganz is behind Traffic Hurricane.

    Other than the core business model and the reload schemes, TrafficMonsoon is like AdSurfDaily in other key ways.

    Traffic Monsoon supporters on social-media sites, for example, virtually are confessing their desire to engage in securities fraud on a global scale. Any number of them are using ASD-like arguments such as “we aren’t selling securities because we announced we weren’t selling securities” and payouts were never guaranteed.

    There also are ASD-like petition drives and various efforts to raise funds to fight the U.S. government. (See June 16, 2011, PP Blog editorial,  “The AdSurfDaily Solution.”)

    Like Traffic Hurricane, the AdViewGlobal knockoff scheme also tried to gag critics.




  • EDITORIAL: Arguments Of Zeek Winners Continue La-La Land Narrative, But Come As No Surprise In MLM’s HYIP Wing

    Zeek receiver Kenneth D. Bell.
    Zeek receiver Kenneth D. Bell.

    Many people in the antiscam community applauded Kenneth D. Bell, the receiver for Zeek Rewards, when he sued more than 9,000 individuals more than two years ago for return of their gains from the scheme. Those gains — more than $200 million — came from Ponzi proceeds, Bell alleged.

    And he pointed out that the money rightfully should go to the hundreds of thousands of Zeekers globally who were “affiliate victims.” Court filings later would show that Zeek gathered on the order of $940 million in less than two years. Only TelexFree, another MLM HYIP scheme that was disintegrating when Bell announced his lawsuit against the Zeek “winners” in March 2014, may be bigger.

    More than 90,000 (gulp!) alleged TelexFree winners now are being sued by Trustee Stephen B. Darr. TelexFree infamously caused angry affiliates to pour into the company’s billion-dollar broom closet in Massachusetts. It was a good thing police were there to keep order.

    Thanks to the willful blindness and serial disingenuousness brought to you by serial MLM HYIPers such as Todd Disner, T. LeMont Silver and “Ken Russo,” huge class-action cases in which “winning” promoters of MLM securities schemes are named defendants now are a reality.

    Bell, unfairly maligned among some MLM HYIPers and even some apparent “sovereign citizens,” deserves a lot of credit for trying to bring a measure of financial justice to the hundreds of thousands of individuals ripped off by Zeek and for establishing a sort of blueprint for how Darr could proceed.

    This blueprint also is there in case the Traffic Monsoon receiver needs it. Traffic Monsoon, an alleged $207 million scheme, was broken up by the SEC last month. There already is evidence that Traffic Monsoon had promoters in common with TelexFree.

    It is true that the number of potential defendants across the HYIP sphere is staggering. But it is equally true that the number of victims of these cross-border schemes is even more staggering. This number is in the millions. The global losses are in the billions. Absent actions such as those brought by Bell and Darr, however, there would be virtually no financial accountability. Society would be saying that it’s OK to profit through the promotion of online Ponzi schemes.

    For years, the PP Blog has raised questions about the national-security implications of cross-border HYIP schemes. The narratives surrounding such schemes typically are bizarre, with anonymous Ponzi-board pitchmen typically beginning with “I am not the admin” of the “program.” It all goes recklessly downhill from there.

    To those who feel a chill every time one of these schemes gains a head of steam, it came as no surprise that the alleged Zeek “winners” are arguing they should get to keep their hauls. It is simply the natural progression of the HYIP narrative.

    Bell, a former federal prosecutor, is having none of this. Indeed, his is the voice of common sense.

    From his argument (italics/bolding added):

    Defendants still act as if Zeek was a legitimate business and Defendants were “internet marketing specialists” entitled to be paid as employees rather than investors in the scheme, all of which is of course pure fiction.

    Specifically, Defendants ask the Court to absolve the scheme’s net winners from their obligation to repay the victims’ money because of an alleged “limitation” on the timing of future claims included in the scheme’s website’s “Terms of Service” (or “TOS”), which in any event do not limit the Receiver’s claims against Defendants. The Court should resist Defendants’ invitation to create the dangerous loophole of allowing a fraudster to use the terms implementing a Ponzi scheme to limit the right of a subsequently appointed Receiver to recover funds paid to the winners of the fraudulent scheme. While such a rule would be a great recruiting tool for future Ponzi scheme operators, it is surely an unacceptable legal rule and public policy.

    Also, Defendants urge the Court to rule that by purchasing bids, posting online advertisements (which Zeek boasted would take only three to five minutes a day), and recruiting thousands of victims to the scheme, they provided “reasonably equivalent value” to ZeekRewards such that they get to keep the victims’ money that they won in the scheme. In other words, Defendants claim that those Defendants who spent the most time successfully promoting the scheme and multiplying the number of its victims should be given the most credit against the Receiver’s claims to recover their fraudulently transferred winnings. In fact, in arguing that they were supposedly rightly paid for their “services,” Defendants stretch to compare themselves to the utility company, which among many other differences does not invest money in their customers’ businesses hoping to share in compounding profits of 125% every ninety days.

    NOTE: Our thanks to the ASD Updates Blog.




  • Private Attorneys Now Investigating Traffic Monsoon

    Charles Scoville: From YouTube.
    Charles Scoville: From YouTube.

    UPDATED 1:15 P.M. EDT U.S.A. It has happened in previous cases involving alleged violations of federal securities laws, and now it’s happening with Traffic Monsoon.

    “The Peiffer Rosca Wolf law firm is investigating Traffic Monsoon, LLC and Charles Scoville’s alleged Ponzi scheme on behalf of investors – whom Traffic Monsoon called ‘members,'” the firm said in a PR release today.

    How the firm would proceed is unclear. The announcement, however, potentially means Traffic Monsoon and Scoville will be facing litigation on a front separate from the Ponzi case filed by the SEC on July 26.

    After the 2008 AdSurfDaily Ponzi case was filed by the U.S. Secret Service, private attorneys filed a racketeering complaint against ASD operator Andy Bowdoin (and others) that helped out a second Ponzi scheme known as AdViewGlobal.

    Class-action attorneys also filed complaints in the TelexFree and Zeek Ponzi- and pyramid cases. Certain TelexFree-related actions alleged racketeering and referenced a “program” similar to Traffic Monsoon: My AdvertisingPays. There also were counts of fraud against TelexFree principals and some individual promoters.

    Even if they don’t result in a recovery, the actions filed by private individuals — as opposed to government plaintiffs — force defendants to confront litigation on multiple fronts. Defense costs may soar.

    “The Peiffer Rosca Wolf lawyers are preparing to take action and seek compensation on behalf of those who invested in the alleged Ponzi scheme orchestrated by Traffic Monsoon and Scoville,” the firm said.

    Traffic Monsoon gathered at least $207 million, according to the SEC.




  • TRAFFIC MONSOON: Whack-A-Mole — For Sure

    trafficmonsoonlogoNews came early this morning that the SEC had moved against Traffic Monsoon, calling it a Ponzi scheme. Both the “program” and alleged operator Charles Scoville were charged civilly yesterday in Utah federal court with securities fraud and selling unregistered securities to unaccredited investors.

    Scoville also was the braintrust behind AdHitProfits, a Ponzi-board “program” in part targeted at people who also were targeted in the egregious 2013 Profitable Sunrise cross-border scam in which millions of dollars appear to have vanished overseas.

    As the PP Blog reported on June 2, 2013 (italics added):

    A spammer hit a Profitable Sunrise Facebook site yesterday with five drive-by offers for “AdHitProfits.” All five of the machine-gunned theft bids claimed the same thing: “make money every half an hour…100% commission let your money grow for you at high speed.”

    The AHP “program” also is being pitched on the Ponzi boards, with the thread-starter at MoneyMakerGroup bragging that “Payza, []STP & Liberty Reserve Accepted !!”

    LibertyReserve was described last week by federal prosecutors in New York as a criminal enterprise that had laundered more than $6 billion for Ponzi schemers, credit-card fraudsters, identity thieves, investment fraudsters, computer hackers, child pornographers and narcotics traffickers.

    Traffic Monsoon allegedly used PayPal, SolidTrustPay and Payza, a processing firm under fire from the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid-scheme case. Payza also is involved in a federal investigation centered in the District of Columbia.

    In its complaint against Traffic Monsoon and Scoville, the SEC says PayPal restricted Traffic Monsoon during the winter, in January 2016.

    Our research shows that Scoville then turned to Payza for the heavy lifting and that Payza attended a Traffic Monsoon event in May 2016, during the spring and while funds in PayPal had been frozen by PayPal.

    From the SEC complaint (italics added):

    After the PayPal freeze, Scoville began using other payment processors more extensively: Solid Trust Pay, headquartered in Ontario, and Payza, headquartered in London with offices in New York. He has also used an account at JPMorgan Chase to receive investor funds.

    Zeek used both SolidTrustPay and Payza, as did the AdSurfDaily Ponzi scheme before it.

    Traffic Monsoon’s haul appears to have exceeded $200 million, potentially making it one of the largest advertising “revshare” schemes of all time. As things stand, it is larger than other well-known revshare frauds such as AdSurfDaily ($119 million) and Banners Broker ($156 million). Some of the Banners Broker cash reportedly ended up in KulClub, yet another Ponzi-board MLM scheme.

    Ponzi-board schemes are eviscerating wealth globally. It is not unusual for such schemes to use multiple payment processors and to target vulnerable population groups. Agencies from the U.S. Department of Homeland Security have been involved in a number of major investigations of Ponzi-board “programs.”

    It is unclear if DHS or other U.S. agencies with the power of arrest are involved in a Traffic Monsoon probe. History has shown, however, that when the SEC brings a civil case, other agencies sometimes carry out criminal investigations on a parallel track.