The SEC has filed a lawsuit against the Traffic Monsoon “program” and called it a Ponzi scheme that had gathered $207 million, the Salt Lake Tribune is reporting.
The assets of Traffic Monsoon and alleged operator Charles Scoville have been frozen, the newspaper reports.
On June 1, the PP Blog reported that Payza — a payment processor under fire from the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case brought by the SEC in 2012 — bragged about its attendance at a Traffic Monsoon event in May.
Traffic Monsoon, which may be a whack-a-mole scheme, is a purported “advertising “program” similar to the AdSurfDaily Ponzi scheme and other scams, including Banners Broker.
UPDATED 4:31 P.M. EDT U.S.A. Zeek Rewards was always inexcusably horrid, fueled by serial willful blindness and the sort of practiced disingenuousness that props up so many MLM “programs.” In dollar volume, Zeek ended up being more than seven times larger than the $119 million AdSurfDaily MLM Ponzi scheme that put ASD operator Andy Bowdoin in federal prison for six and a half years. By this measuring stick, Zeek’s Paul Burks could be staring at 45 or more years.
Bowdoin, 77 when he accepted a plea deal before trial in 2012, received the maximum term of 78 months under the deal after earlier facing decades in prison. He pleaded guilty to a single count of wire fraud and acknowledged ASD was a Ponzi scheme and that the “program” never had operated lawfully from its 2006 inception. Other charges that could have led to a longer term were not pursued.
Burks did not have a plea deal. The $939 million dollar volume of the Zeek scam will not be the sole measuring stick considered by U.S. District Judge Max O. Cogburn Jr. when Burks’ sentencing date comes around. Even so, 45 years is not out of the question, given the terms imposed on other Ponzi schemers. Scott Rothstein, for example, received 50 years for a $1.2 billion scam.
Rothstein reportedly cooperated with the government after his convictions with the hope of receiving a sentencing reduction. Whether Burks will have a similar option or be able to argue successfully for mitigation is unknown.
What is known is that even 20 years for Burks, nearing his 70th birthday, is a virtual life sentence. Like Rothstein, he has some serious thinking to do.
Zeek was a tragedy for many, many investors lured in by promises of enormous returns. Can there be any doubt it’s also a personal tragedy for Burks and his family, given what the Zeeker-in-chief now faces?
“This massive scam is one of the largest in breadth and scope ever prosecuted by this office,” U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said about Zeek.
Another problem for Burks is that North Carolina, a U.S. banking center, can be downright unfriendly to Ponzi schemers. Keith Franklin Simmons was sentenced to 50 years for his $40 million “Black Diamond” scheme, a scheme much smaller than Zeek. Although that sentence later was reduced on appeal to 40 years, four decades is hardly a bargain — and Zeek had something else in common with Black Diamond in addition to operating in the same federal district in the same state.
Indeed, with both Zeek and Black Diamond, the Feds pursued actions against banks that allegedly were asleep at the wheel. Ponzi schemes put economic security at risk.
Burks had to know that Zeek was going to cause his world to crumble. He’d been an MLMer for years, he knew about the ASD case, Bernard Madoff, Rothstein, Ponzi pain in general throughout society and bizarre happenings in his own company.
Why he moved forward is a sort of maximum imponderable. Why so many in the trade followed him after ASD is an even more disturbing question.
Zeek’s wing of MLM, which also includes ASD, TelexFree, WCM777 and others, has harmed millions and millions of people. It is a vast wasteland of wink-nod disingenuousness and racketeering. The cross-border nature of these schemes is truly frightening.
Kenneth D. Bell, the court-appointed receiver for Zeek, is pursuing class-action litigation involving more than 9,000 alleged Zeek winners. It is known that some of the winners also participated in ASD. These winners were at the scene of two crimes. Some of them were at the scene of more than two.
This is a major problem for MLM, whether the trade acknowledges it or not. Recruits were told Zeek couldn’t be a Ponzi scheme because MLM lawyers were involved.
And they were told that Zeek was on the up-and-up because it issued 1099 tax forms. These longstanding MLM myths have been shattered in both criminal and civil prosecutions.
With respect to Burks’ sentencing, the government’s recommendation is not yet known. Lengthy sentences for senior-citizen Ponzi schemers, however, are hardly unprecedented. Madoff, in his seventies, received 150 years.
Richard Piccoli, 83, received 20 years for a scheme far smaller than Zeek in dollar volume and number of victims. Piccoli advertised in Catholic publications, and is believed to have caused about $25 million in losses to about 250 people.
Zeek advertised online and in MLM publications, creating hundreds of millions of dollars in losses while creating hundreds of thousands of victims.
Gavin Eugene Long, the alleged mass murderer of police officers in Baton Rouge yesterday, was a “sovereign citizen” and “MOOR,” according to a bizarre filing in his name last year with the recorder of deeds in Jackson County, Mo.
CBS News reported Long, a Kansas City native, claimed to have been in Dallas after the July 7 ambush murders of five police officers there by Micah Xavier Johnson.
“Sovereign citizens” form an irrational belief that laws to not apply to them. African Americans who may self-identify as “sovereigns” sometimes express an affiliation with Moors or Moorishness. Long, killed after reportedly ambushing police, was African American.
New filings by federal prosecutors in the criminal case against Zeek’s Paul Burks reveal that a grand-jury investigation was under way within days of the SEC’s Aug. 17, 2012, shutdown of the “program” and confirmation by the U.S. Secret Service that it also was investigating Zeek.
Burks was subpoenaed by the grand jury on Aug. 24, 2012, and testified before the panel less than a month later, on Sept. 20, 2012, according to prosecutors. He ultimately was indicted by the grand jury in October 2014, more than two years after the August 2012 subpoena and his subsequent appearance the following month.
Whether others within Zeek also had been subpoenaed or had knowledge of Burks’ appearance is unclear. What is known is that a group of Zeek members — during the same 2012 time period — embarked on a fundraising campaign while accusing the SEC of misleading a federal judge and admitting it had a weak case.
One of the members of the group was Todd Disner, a former winner in the AdSurfDaily Ponzi scheme later identified as a major winner in the Zeek scheme. Zeek receiver Kenneth D. Bell has raised the issue of serial promoters moving from one fraud scheme to another.
Given that ASD operator Andy Bowdoin is in federal prison for running a Ponzi scheme and Zeek’s “program” was similar to ASD in key ways, events at ASD could be problematic for Burks. How did Disner, for example, end up at Zeek?
Despite knowing about ASD in 2011, Burks nevertheless moved forward with Zeek, prosecutors contend.
The government is arguing that the ASD fraud put Burks on notice of his own fraud and that evidence pertaining to ASD should be admissible.
Precisely what the government intends to introduce about ASD is unknown. But as part of his defense, Burks is asking U.S. District Judge Max O. Cogburn Jr. to exclude evidence about ASD.
“This case is about Paul Burks, Rex Venture Group, Zeekler.com, and ZeekRewards.com,” Burks advised Cogburn in a June 28 trial brief. “It is not a referendum on direct selling or multi-level marketing programs. The trial of this case is not the time, or the place, for a jury to render a verdict on these types of companies or programs, which are perfectly legal yet regularly criticized.
“It is also not about corporate malfeasance or wrongdoing by others, which is precisely what the Government seeks to convey to the jury by referencing ASD. Accordingly, the Government should be barred from any reference ASD, or any other entity whose conduct is completely irrelevant to the facts of this case. Even if there is some limited relevance to ASD (it is mentioned in government witness interviews), the Court should bar any mention of ASD since the limited probative value of such evidence is substantially outweighed by a danger of unfair prejudice, confusion, being grossly misleading, and inviting a trial-within-a-trial.”
Burks’ trial on charges of wire fraud, mail fraud, conspiracy to commit both and conspiracy to commit tax fraud is scheduled to get under way July 5.
We’re working on a story that will cover other elements of his defense.
In a development yesterday, the government contended Burks withheld “purported” handwritten notebooks from the grand jury during his September 2012 appearance and didn’t turn them over until April 2016.
Burks now wants to use the “unauthenticated” notebooks as a trial exhibit and as the basis for the opinions of expert witnesses he intends to call, prosecutors argued.
“Defendant’s failure to produce these documents in response to the Grand Jury testimony, his testimony that he had produced all responsive documents, and the production of these Handwritten Notebooks on the eve of trial, without explanation, all raise serious concerns about the legitimacy of the Handwritten Notebooks,” prosecutors argued to Cogburn.
“Rather, [Andy] Bowdoin manufactured the revenue numbers to deceive members into believing that they could reasonably expect to receive an average daily return on their investment with [AdSurfDaily] of at least 1%. This percentage in no way corresponded to the daily revenue that ASD was generating, but had been determined by ASD’s operators to be the amount needed to attract a steady stream of newcomers.” — U.S. Secret Service affidavit in AdSurfDaily forfeiture case, Feb. 26, 2009
“Defendant [Paul] Burks simply made up the ‘daily net profit’ without any reference at all to profits. The true revenue from the [Zeek] scheme, approximately 98% of all incoming funds, came from victim-investors . . . [T]he co-conspirators published bogus daily figures of Zeek’s profits, averaging approximately 1.4% a day . . .” — Office of U.S. Attorney Jill Westmoreland Rose, June 24, 2016
“Burks and his co-conspirators were very aware of ASD and of the fact that it was shut down. For example, on March 26, 2011, a few months after the owner of ASD was indicted, Burks and Dawn Wright-Olivares emailed regarding an affiliate[‘]s advertisement for ZeekRewards that included in the title, ‘[i]f you were in ASD or AVG then you will know how good this is.'” — Office of U.S. Attorney Jill Westmoreland Rose, June 24, 2016
With the July 5 trial date for alleged Zeek Rewards’ operator Paul Burks fast approaching, federal prosecutors making a case for willful blindness now say Burks and co-conspirator Dawn Wright-Olivares plowed forward even though they were “very aware” of the Ponzi-scheme case against AdSurfDaily and operator Andy Bowdoin.
In fact, the office of U.S. Attorney Jill Westmoreland Rose said in June 24 filings, the subject of ASD had come up at Zeek at least by March 2011, only a few months after Bowdoin had been indicted in November 2010.
The triggering event for an email discussion between Burks and Wright-Olivares had been an affiliate’s promotion for Zeek that in part read, “[i]f you were in ASD or AVG then you will know how good this is,” prosecutors said.
“AVG” is short for AdViewGlobal, a 1-percent-a-day scam Bowdoin and others launched just two months after the U.S. Secret Service, using forfeiture law, seized tens of millions of dollars from Bowdoin for his operation of ASD in August 2008. A federal judge revoked Bowdoin’s bail in the ASD case after she found out about AVG.
Wright-Olivares, in February 2014, pleaded guilty to criminal charges for her role in Zeek. She and stepson Daniel Olivares, who also pleaded guilty, are expected to testify against Burks.
The Zeek affiliate’s March 2011 promo using the names of both ASD and AVG prompted Wright-Olivares to advise the affiliate to be “careful with [her] subject line,” prosecutors said. A lecture using all-caps allegedly ensued.
“We cannot have ZeekRewards compared to ASD or AVG EVER for ANY REASON,” Wright-Olivares allegedly wrote to the affiliate. “They were both shut down. We are very very different from both companies.”
It was unclear from the filing whether the Zeek affiliate also had belonged to ASD and AVG. Zeek receiver Kenneth D. Bell has raised the issue of some MLMers moving from one fraud scheme to another, actions that lead to a sort of permanent fog of preposterous disingenuousness and willful blindness in the HYIP sphere.
After ASD had become a topic of discussion inside Zeek in March 2011, the subject came up again in June of that year, prosecutors alleged.
“Similarly, on June 28, 2011, over [S]kype, Wright-Olivares told Burks that changes needed to be made to the program to make it sustainable,” prosecutors alleged. “Burks retorted: ‘I’m the one with my neck in the noose…not you…If the swat team shows up it’s MY ass in the can…’ Wright-Olivares responded, ‘[i]’ll be there too… they will seize it all and we are liable ask the ASD people.'”
By June 2011, it was public knowledge that ASD had gathered at least $110 million. Burks’ prosecutors now are suggesting that, despite the lessons of the ASD case, Burks and Wright-Olivares did not abandon Zeek because the money was simply too good.
“In 2011 alone, Burks received approximately $11 million in income from ZeekRewards out of total revenue of approximately $37 million,” prosecutors alleged in their June 24 brief. They earlier pegged the total haul of Wright-Olivares at about $7.2 million.
Burks is facing charges of with mail- and wire-fraud conspiracy, mail fraud, wire fraud and tax-fraud conspiracy. Some MLMers have insisted for years that the issuance of tax forms by a “program” demonstrates no fraud is under way.
With Zeek, prosecutors have laid bare that notion.
From prosecutors’ assertions (italics added):
In total, Defendant Burks, and others, reported to the IRS supposed income by the victim-investors of over $96 million for the year 2011 on the 1099s issued, while ZeekRewards actually paid out less than approximately $13 million in cash to victim-investors during that year. As a result, individual victim-investors filed false tax returns with the IRS reporting phantom income that they never actually received, and Burks, and others were able to use the false tax notices to perpetuate the Ponzi scheme by making the phantom money seem like it actually existed.
Roger Alberto Santamaria Del Cid, an apparent nominee director for offshore companies who is listed as a corporate “subscriber” for VX Gateway in Panamanian business records, is referenced at least three times in the “Panama Papers.”
VX is a payment processor for the MyAdvertisingPays (MAPS) cross-border scheme that touts Anguilla registration after earlier operating from the U.S. state of Mississippi. MAPS purportedly pulled out of the United States last year, potentially leaving thousands of American affiliates expecting payouts holding the bag.
In April 2015, the PP Blog reported that MAPs, a purported “advertising” program similar to the AdSurfDaily Ponzi scheme, was trading on the name of President Obama after ASD previously had traded on the name of President George W. Bush. MAPS is known to have members in common with the judicially declared TelexFree Ponzi- and pyramid scheme, which also traded on the names of government officials.
It is somewhat common in the HYIP sphere for “programs” and their affiliates to drive traffic to schemes by suggesting the endorsement of government agencies or prominent government officials.
TelexFree, which may have generated $3 billion in illicit cross-border business, collapsed in 2014.
The Facebook site for the TaraTalksBlog, a MAPS critic, reported on May 7 that it had received “numerous reports that MAP has closed members accounts, with no redress, after members have requested payment withdrawals.”
In short, non-U.S. affiliates of MAPs also may be having trouble getting paid.
Then-Deputy U.S. Attorney General James Cole also said (bolding added):
“Because of the sophistication of the world economy, organized crime groups have developed an ability to exploit legitimate actors and their skills in order to further the criminal enterprises. For example, transnational organized criminal groups often rely on lawyers to facilitate illicit transactions. These lawyers create shell companies, open offshore bank accounts in the names of those shell companies, and launder criminal proceeds through trust accounts. Other lawyers working for organized crime figures bring frivolous libel cases against individuals who expose their criminal activities.”
As noted above, the Panama Papers database shows Del Cid’s name at least three times. On April 14, the PP Blog reported (italics added):
Del Cid’s name has appeared on the PP Blog a couple of times. On Feb. 8, 2011, the Blog reported that his name had appeared in court filings in a federal forfeiture case involving assets linked to the notorious EMG/Finanzas Forex scheme in the Middle District of Florida. (See Paragraph 10 of this affidavit by a Task Force investigator.)
Money from EMG/Finanzas was linked to the international narcotics trade. OpenCorporates lists del Cid here as a Finanzas “subscriber.” The site lists Tatiana Itzel Saldaöa Escobar as another Finanzas subscriber, and the same name appears alongside Del Cid as a VX subscriber.
New court filings in Canada by the receiver and liquidators in the Banners Broker case now estimate the total haul of the alleged double-your-money pyramid scam at more than $156 million. That’s up from an earlier estimate by Toronto police of $93 million. If the $156 million figure proves correct, it would make Banners Broker a bigger fraud than the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008.
Like MAPS, which currently is operating, ASD and Banners Broker purported to be “advertising” companies. The ASD case threw down the gauntlet on securities companies trying to evade the law by pretending to be “advertising” firms.
But the apparent upstaging of ASD by Banners Broker in dollar volume in the purported “advertising” trade is not the only news.
Rajiv Dixit, one of the Banners Broker figures who helped put Stepsys in the position of getting rich from online fraud schemes, was arrested in Canada in December 2015.
Filings April 4 by the receiver and liquidators in the case show that Dixit may be trying to use “sovereign citizen” courtroom tactics against them in Canadian proceedings. In the United States, AdSurfDaily figure Kenneth Wayne Leaming tried the same thing in that case.
The Banners Broker receiver and liquidators have reported Dixit’s alleged activities to the court.
Specifically, they say Dixit, who calls himself “the man master rajiv of the family dixit” [sic] and his targets “interlopers,” is trying to foist a bogus “Cease and Desist” order on them that threatens a fine of $36 per second if they don’t back off from their judicially mandated duties. Dixit apparently wants to be paid in “silver dollars.”
From the receiver/liquidators (italics added):
The Cease and Desist Notices go on to state that if the Court Officers and their counsel do not cease and desist “all actions and claims against Mr. Rajiv Dixit and or Rajiv Dixit forthwith” Dixit will invoice them $47,304,000.00 silver dollars “[p]lus, for each second starting at 12:00:01 AM until the cease and desist is complied with, each Respondent will be charged an additional $36.000 per second.”
Court filings in other cross-border cases — including Zeek Rewards and DFRF Enterprises — have signaled that “sovereigns” also were involved in those schemes.
With Banners Broker, Dixit called his affiliates “stupid,” according to the new filings by the receiver and liquidators.
“These frauds are easily duplicated, and at times, we find ourselves playing ‘whack-a-mole,’ chasing the same set of fraudsters who, after feeling a bit of heat, simply close down one scheme and quickly set up a new one under a different name.” — Andrew Ceresney, SEC Enforcement Division director, March 2, 2016
EDITOR’S NOTE: Type “whack-a-mole” into the PP Blog’s search box near the upper-right corner to find our stories that touch on frauds rising to replace other frauds. Examples include so-called “programs” that claim to be “advertising” companies or to have an “advertising” component — for example, Zeek Rewards, TelexFree, Banners Broker and AdSurfDaily. If you’re in an “advertising” program such as MyAdvertisingPays (MAPS) or TrafficMonsoon, you should asking some serious questions and thinking about whether serial fraudsters are whacking you.
When one scheme collapses, another quickly rises to replace it. Many such schemes operate simultaneously, drafting the unwary into multiple miseries. Ill-gotten gains or losses pile up in the billions of dollars. Yes, billions.
Of course, “whack-a-mole” is not limited to “advertising” schemes. There are “cycler” schemes such as “The Achieve Community” and its Ponzi-board equivalents. Meanwhile, there are HYIP schemes such as “Profitable Sunrise” and its Ponzi-board equivalents. MoneyMakerGroup and TalkGold are examples of Ponzi boards. The scammers now have added social media such as YouTube, Facebook and Twitter to their arsenal. Vulnerable people and population groups are constant targets.
Scams such as WCM777 that claim to have a “product” also are part of “whack-a-mole.”
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Let’s begin by encouraging you to read Andrew Ceresney’s opening remarks at a joint symposium today sponsored by the SEC and the University of Illinois at Chicago. (Link at bottom of story. Also see Twitter links.)
Ceresney is the SEC’s director of enforcement. One of the things the PP Blog noted while reading the text of his remarks is that it included a subhead titled “Pyramid Schemes and Multi-Level Marketing.”
SEC’s Ceresney: Pyramid schemes are attacks on retail investors, often target working class, immigrant communities https://t.co/bq7lZOw4nG
This reflected on ongoing effort by the SEC to educate the public that the presence of a “product” in a scheme does not necessarily mean no scam is under way. Many MLMers erroneously believe that a “product” (or purported one) offered for sale cures all ills. That is simply not the case. A year ago in Congressional testimony, the director spoke about a “coordinated effort” to disrupt pyramid schemes.
Ceresney today provided more details on a new Task Force that is combating pyramid fraud. Here is part of his remarks (italics/bolding added):
After seeing an increase in complaints regarding pyramid schemes and affinity fraud, the SEC formed a nationwide Pyramid Scheme Task Force in June 2014 to provide a disciplined approach to halting the momentum of illegal pyramid scheme activities in the United States. The goal of the Task Force is to target these schemes by aggressively enforcing existing securities laws and increasing public awareness of this activity.
The Division is deploying resources to disrupt these schemes through a coordinated effort of timely, aggressive enforcement actions along with community outreach and investor education. More than fifty SEC staff members are part of the nationwide Task Force, which is enhancing its enforcement reach by collaborating with other agencies and law enforcement authorities. We are also using new analytic techniques to identify patterns and common threads, thereby permitting earlier detection of potential fraudulent schemes.
Collaboration with other regulators, including criminal authorities, is an important goal of the Task Force. To advance this goal, the Task Force has hosted an interagency summit attended by over 200 representatives from other federal and state agencies and has presented at local trainings and agency-specific conferences. And, of course, we have partnered with other regulators and criminal authorities to bring high-impact actions in this space. For example, one month after we filed our enforcement action against the operators of the TelexFree pyramid scheme, two of TelexFree’s principals were charged by the criminal authorities.
Will the “program” you’re currently pitching become the subject of a “high-impact action?” Time will tell.
In 11 SEC actions since 2012 involving pyramid operators, the damage resulted in ill-gotten gains or losses totaling more than $4.2 billion, Ceresney said today.
Funds from Zeek, which once auctioned sums of U.S. currency, may have ended up in a collapsed Russian bank. Graphic from the PP Blog archives: April 2012.
(Updated 11:14 a.m. ET U.S.A.) Money due victims of Zeek Rewards from transactions involving Payza and Payment World may have been transferred from VictoriaBank in Moldova to JSC TusarBank in Russia in violation of an asset freeze imposed in 2012 by a U.S. court, according to court filings by Zeek receiver Kenneth D. Bell.
Meanwhile, OboPay’s name now has surfaced in filings by Bell. This is in the form of an October 2012 email from a Payment World official to a Payza official questioning Payza’s relationship with OboPay. The U.S. Justice Department last year announced a criminal investigation involving Payza and OboPay. The specific reason behind the probe and the targets are unknown.
Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina last week lifted the seal on Bell’s 258-page filing in which Bell alleged Payza, Payment World and VictoriaBank enabled Zeek’s Ponzi scheme shut down by the SEC in 2012. The filing consisted of a 26-page motion and 232 pages of exhibits, including emails between Payza and Payment World. As noted above, one of the exhibits raises the name of OboPay.
Mullen imposed the asset freeze in August 2012.
Whether the possible transfer of Zeek-related funds from Moldova to Russia is part of the Russian probe is unclear.
Adding to the international intrigue is that a second Russian bank that somehow might have been involved in the Payment World-related money flow reportedly collapsed in 2013. This institution is known as Master Bank and is described in Bell’s exhibits as a “sponsoring bank” of a Payment World entity in Hong Kong.
A sponsoring bank provides processors access to Visa or MasterCard networks
On Sept. 13, 2015, just prior to the collapse of TusarBank, the Moscow Times listed Master Bank as one of “Russia’s Biggest Banking Crashes of the Last 2 Years.” This crash occurred in 2013 and was notable for something beyond the 31.3-billion-ruble bailout.
Even having Igor Putin, a cousin of President Vladimir Putin, on the board of directors could not save Master Bank. The lender’s license was revoked in November 2013 with the Central Bank alleging the bank had violated money laundering legislation and processed large suspicious transactions.
In 2012, just prior to the collapse of Zeek, Zeek figure Keith Laggos claimed he had helped Zeek move payment operations offshore, including to Hong Kong. Specific details of that asserted move are unknown. Zeek had about 15 financial vendors, according to court filings.
Payza, under the leadership of Firoz Patel, has claimed it conducted due diligence on Zeek, according to Bell’s filings. Even if true, it somehow appears to have missed that Zeek was offering an outrageous and unusually consistent return averaging about 1.5 percent a day and also claimed “compounding” was possible.
The SEC has described Zeek as a cross-border Ponzi scheme that gathered nearly $900 million while operating from North Carolina.
From Bell’s filing (italics added):
On August 29, 2010, Paul Burks [of Zeek] onboarded an account with Payza (then, known as AlertPay) in the name of Rex Venture Group LLC that was associated with two websites: www.zeekrewards.com and www.zeekler.com. Prior to the boarding of the account, Payza purportedly conducted due diligence, collecting and reviewing information about Paul Burks and the business. According to Payza, during the course of the relationship, it monitored and mitigated risk. Despite these procedures, Payza did not identify or address the red flags indicating that ZeekRewards was a Ponzi scheme and, instead, together with PaymentWorld and VictoriaBank [of Moldova], facilitated access and payment to and from ZeekRewards by numerous affiliates worldwide.
Bell’s 258-page filing is available on the landing page of the receivership website. It is styled, “Memorandum in Support of the Receiver’s Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets.”
Zeek Rewards’ receiver Kenneth D. Bell has gone to federal court in the Western District of North Carolina, alleging that the Payza and Payment World payment processors “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme.
More than $13.1 million in funds from North Carolina-based Zeek that could be used to compensate victims ended up in VictoriaBank in Moldova, owing to a processing relationship among Payza, Payment World and the bank, Bell alleged.
Now, Bell contends, “based on recent developments in the Receiver’s investigation, there is an open question as to whether the Receivership Assets held on Reserve at VictoriaBank remain or were transferred from the account.”
Prosecutors haven’t revealed the target of the criminal probe. It is unclear whether there is any nexus with the Zeek case, alleged overall to involve $897 million. Zeek, a Ponzi forum “program,” allegedly created tens and tens of thousands of victims worldwide.
Payza is a Ponzi-forum darling. Its predecessor, AlertPay, is referenced in court filings in the 2008 AdSurfDaily Ponzi case. Scores of Ponzi-board “programs” claim to accept Payza, including an emerging scheme known as Traffic Monsoon.
Bell accused Payza, Payment World and VictoriaBank of violating an asset-freeze order issued in 2012 by Senior U.S. District Judge Graham C. Mullen.
In a novel legal maneuver, Bell has persuaded Mullen to freeze a correspondent account VictoriaBank holds on U.S. soil at Bank of New York Mellon. Mullen authorized the freezing of more than $13.1 million in the account.
If the account proves not to hold that sum, VictoriaBank must deposit with the receivership the difference between the frozen sum and the $13.1 million Bell claims as receivership assets, according to the order.
Bell signaled on Feb. 1 that the receivership would pursue Payza, Payment World and VictoriaBank.
Moldova is situated in Eastern Europe. It shares a border with Ukraine, a world hot spot.
Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.
Still pushing Ponzi-board schemes in the age of cross-border fraud and terrorism?
In a retrospective on the 2008 E-Bullion case, a retired FBI special agent says convicted murderer James Fayed was scamming HYIP scammers.
“He just pocketed the money from all these high-yield investment programs after they ran,” said Maura Kelley. “And the money continued to come in because the word didn’t get out right away that they weren’t paying. And people were still investing.”
In 2011, Fayed, then 48, was sentenced to death for the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Indeed, the effective bagman for a host of Ponzi-board swindles ultimately turned to homicide in a bid to cover his tracks.
Pamela was stabbed 13 times and left to die outside a Los Angeles-area parking garage.
E-Bullion has been linked to multiple Ponzi schemes, including Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.
So, a man with murder in his heart also was supplying financial services to Ali Alishtari, an HYIP swindler who believed he was funding the purchase of night-vision goggles for a terrorist training camp in Afghanistan.
Upon the conviction of Alishtari, U.S. Attorney Peeet Bharaha of the Southern District of New York offered remarks. As the PP Blog noted, here is part of what Bharaha and the FBI said:
“Alishtari . . . admitted that he stole millions from investors and knowingly financed what he believed to be tools of terror. In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others.”
Investigators said Alishtari “facilitated the transfer of $152,000, with the understanding that the money would be used to fund training for terrorists.
“In the latter half of 2006,” according to investigators, “Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”
The SEC has filed a lawsuit against the Traffic Monsoon “program” and called it a Ponzi scheme that had gathered $207 million, the Salt Lake Tribune is reporting.
UPDATED 4:31 P.M. EDT U.S.A. Zeek Rewards was always inexcusably horrid, fueled by serial willful blindness and the sort of practiced disingenuousness that props up so many MLM “programs.” In dollar volume, Zeek ended up being more than seven times larger than the $119 million AdSurfDaily MLM Ponzi scheme that 
Roger Alberto Santamaria Del Cid, an apparent nominee director for offshore companies who is listed as a corporate “subscriber” for VX Gateway in Panamanian business records, is referenced at least three times in the “Panama Papers.”
Let’s begin by encouraging you to read Andrew Ceresney’s opening remarks at a joint symposium today sponsored by the SEC and the University of Illinois at Chicago. (Link at bottom of story. Also see Twitter links.)
