UPDATED 7:53 P.M. EDT (U.S.A.) AdViewGlobal (AVG), which also is known as the AV Global Association (AVGA), registered the association name as a fictitious entity in Florida in April, canceled and re-registered it in May — and canceled the registration again July 21 in a transaction that involved a hotel fax machine in Montevideo, Uruguay, according to records.
AVGA’s name initially was registered by Gary Talbert April 21 and used the same address AdSurfDaily used — 13 S. Calhoun Street, Quincy, Fla. — according to documents on file in Florida. Federal prosecutors said last year that the S. Calhoun address was bogus.
Talbert, once an ASD executive and later the chief executive officer of AVG before resigning in March, was listed as the owner in the April filing, which was dated a month after AVG had announced Talbert’s resignation.
AdViewGlobal claimed to have no ties to AdSurfDaily, but this document lists ASD's address in Quincy, Fla., as AVG's address.
It was not immediately clear why the filing occurred in April and included Talbert’s name after he had resigned a month earlier, but Talbert’s name and purported signature appear in the document. The surf announced a shift to an association structure in February, one day after AdSurfDaily President Andy Bowdoin signed the first of his pro se pleadings in the ASD forfeiture case and two days after reports circulated that the U.S. Secret Service had seized the bank accounts of some individual ASD members.
On May 29, the surf reregistered the name, this time listing Judy Harris as the owner and using the address of the Harris home in Tallahassee as its address. The reregistration occurred two days prior to the issuance of a news release by AVG through PR Newswire that used a Tallahassee dateline.
AVG sent a follow-up email announcing its news release to members on the same day. The email hotlinked to servers at Forbes Magazine and other publishers, pulling the publishers’ logos off their servers and creating the impression that the companies had endorsed AVG. The email purported to have originated in Uruguay.
By June 25, a little more than three weeks after the issuance of the June 1 news release, AVG announced it was suspending cashouts.
Federal prosecutors said in December that the mortgage on the Harris home had been paid off in June 2008 with more than $157,000 in illegal proceeds from AdSurfDaily Inc., a Florida company accused last year in a forfeiture complaint of wire fraud, money-laundering and operating a Ponzi scheme.
The name of the Montevideo hotel appears at the top of the faxed document, as do the fax number and international dialing identifier. The document suggests the fax might have been sent to another company in the United States before being forwarded to the Florida Department of State — or the opposite, faxed from the United States to Uruguay.
The timing of the registration cancellation coincides with an unconfirmed report that AVG had fired employees in Uruguay on July 20.
Members later said that Bowdoin was the silent head of AVG.
In early February, after AVG’s graphics were seen Jan. 31 in an ASD-controlled webroom that showed AVG’s street address as the same S. Calhoun address ASD used, AVG explained the appearance of the graphic was an “operational coincidence.”
Regardless, AVG used the address in April in filings in Florida.
UPDATED 8:19 P.M. EDT (U.S.A.) Motions to intervene in the civil forfeiture case against AdSurfDaily Inc. are pouring into U.S. District Court for the District of Columbia.
The motions are filed pro se and may be the result of an organized effort by an AdSurfDaily upline. The motions claim the government now owes ASD members funds seized by the U.S. Secret Service last year.
Included among the first five filers are Bruce Disner, Carol L. Rose, Lisa Koehler, Joseph Poggioreale and Jacqueline Poggioreale. It is unclear if other filings will follow.
Disner claims the government owes him $42,000; Rose claims “$140 put in + earnings”; Koehler claims $1,000; Joseph Poggioreale claims $22,000 in a filing that also includes the name Jacqueline Poggiorelae; Jacqueline Poggioreale claims $22,000 in an individual filing.
“At the time the funds were confiscated I had done nothing wrong,” the motions claim. “These funds were not only, in part, mine but the proceeds of ASD’s approximately one hundred thousand customers, contractors, employees and advertisers doing business with and for Ad Surf Daily.”
Five motions have appeared on Judge Rosemary Collyer’s docket for the August forfeiture case so far today. They are styled as motions “to Intervene and Petition to Return Wrongfully Confiscated Funds.” The motions appear to be from a litigation blueprint and blame the government for events, not ASD President Andy Bowdoin.
“This reckless action by the Government and its agents, served to terminate my living, my advertising campaign for my businesses, and my future wellbeing for both myself my family and my customers,” the motions claim.
“This reckless action has prevented me from paying my financial obligations in a timely matter and in some cases not at all,” the motions continue. “This reckless action has done irreparable damage to my reputation with my friends, family and customers and has caused me endless embarrassment and loss of my precious credibility.”
The motions point the finger of blame at prosecutors, not Bowdoin, and include a numbered list and an all-caps subhead:
AFTER ONE YEAR:
1. The U.S. Government has failed to produce any EVIDENCE of alleged wrongdoing.
2. The U.S. Government has failed to produce any WITNESSES of alleged wrongdoing.
3. The U.S. Government has failed to produce any VICTIMS of alleged wrongdoing.
4. The action was based solely on the OPINIONS of the U. S. Government agents.
5. The U.S. Government failed to notify me or any other affected parties as to the whereabouts or disposition of (my) our assets. (See Rule 983, U.S. Rules of Evidence).
“By this reckless action and reckless disregard of the law by my Government to ‘protect’ its citizens, the U.S. Government has made us victims by confiscating our assets and terminally affected our businesses’ and all but wiped away all or part of their incomes both present and future,” the motions claim.
“This reckless action by the Government has served to punish both Ad Surf Daily and its customers, contractors, employees and vendors without the benefit of a trial in a Court of Law,” the motions continue.
“This reckless action by the Government has infringed on my civil rights and my Constitutional Rights to do business in the United States.
“I HEREBY, file this Motion and Petition to Refund my money which includes cash profits, my ad packages and any computer software databases returned forthwith.
“THEREFORE, Petitioner requests the Court to enter an Order Allowing Petitioner to Intervene and Order Authorizing the Return of the above referenced funds to Petitioner,” the motions conclude.
Collyer previously has denied a series of motions to intervene. Prosecutors have argued that the motions are delaying the establishment of a restitution pool for ASD members who certified they were crime victims.
The judge consistently has ruled that the assets seized — including tens of millions of dollars — belonged to Andy Bowdoin, not individual ASD members, and that others lacked standing to intervene in the case.
Unlike previous pro se claims, today’s claims assert that the government has a duty to refund paper profits that showed in the back offices of ASD members. Meanwhile, the motions also demand the return of ASD ad-packs — even though Bowdoin was authorized to display ads after the seizure and did not do so.
Today’s motions also appear to demand the government to return ASD’s database — although to whom was not clear. Members have said ASD itself appears to have sold the database or made it available to other users.
Some ASD members scolded Bowdoin in March, after they began to receive email pitches for a purported surf known as PaperlessAccess. In a video, Bowdoin told members PaperlessAccess was a way for them to make up losses.
People complained as recently as last week that telemarketers using the ASD database were contacting them.
Meanwhile, prosecutors said in April that Bowdoin had signed a proffer letter in the case and acknowledged that ASD was operating illegally at the time of the seizure.
Reports that the government has been given until Aug. 28 to demonstrate AdSurfDaily is a Ponzi scheme are false.
The false reports have been circulating among ASD members and are driven by at least one upline sponsor.
Fact is, ASD President Andy Bowdoin has been given until Aug. 28 to show cause why his motion to reverse his decision to forfeit tens of millions of dollars seized from his bank accounts should not be denied. The original deadline was Aug. 7. We covered this story July 24.
Regardless, reports have circulated for a few days that the government was on the precipice and would lose the ASD case if it did not come up with better evidence by Aug. 28.
“Guess what!!!” an ASD sponsor exclaimed to a downline group today. “The Government has until Aug 28th to prove that ASD was a ponzi scheme. So far they have not been able to do it. There is a chance we might be back in business!!!!!!!!! Wouldn’t that be awesome!!”
It simply is not true.
Similar reports surfaced on the Pro-ASD Surf’s Up Forum in April. An order by the judge for prosecutors to respond to Andy Bowdoin’s pro se pleadings by a certain date was interpreted as an order to prosecutor William Cowden to “charge Andy Bowd[o]in or end it and return the money.â€
The false report gave hope to some ASD members that Bowdoin was on the cusp of scoring a dramatic win. About two weeks after the false report appeared on Surf’s Up, prosecutors filed a court document and noted Andy Bowdoin had signed a proffer letter in the case and acknowledged that the material allegations against ASD all were true.
UPDATED 11:18 A.M. EDT (U.S.A. AUG. 25) Two men identified as having significant positions of financial trust inside AdViewGlobal (AVG) discharged more than $1.6 million in separate bankruptcy filings, records show.
One man used a mail drop as his street address in a 2004 bankruptcy filing that discharged $261,474 while claiming only $6,375 in assets, according to court filings.
At the time of the filing, the man owed $5,300 to a courier service; $3,000 to a hosting company; $42,000 to lawsuit plaintiffs in a case that appears to have dealt with a piece of candy marketed MLM-style as a diet aid; $180,000 to an industrial park; and miscellaneous other debts.
Meanwhile, a second man who held a position of trust inside AVG filed bankruptcy twice — a personal filing (2005) and a business filing (2004) — and discharged nearly $1.4 million while claiming only $3,500 in assets, research shows.
Like the first man, the second man used a mail drop as his street address, advising the court the address was an apartment. The address actually was a UPS Store that once operated as a Mailboxes Etc, research shows.
About four years later, the man went to work for AVG, according to research.
Like ASD President Andy Bowdoin, whom members now say was the silent head of AVG, the men were involved in multiple businesses in multiple states and presided over enterprises that were sued over financial matters or for violations of federal law, records show.
A former business partner of one of the men committed suicide in 2002, after allegations surfaced that a large sum of money was missing from a co-op venture managed by the former partner. Prior to taking his own life, the former partner made inquiries about banking in Switzerland and the Caribbean, according to court filings.
The PatrickPretty.com Blog is withholding publication of the names of the men, who are not named in any ASD-related litigation.
A receiver appointed to review financial records of Affiliate Strategies Inc. and related companies named defendants in a fraudulent government-grants scheme last month advised a federal judge that the companies were insolvent and had less than one day’s operating cash requirements in their bank accounts.
Astonishingly, receiver Larry Cook advised U.S. District Judge Julie A. Robinson that the attorneys he hired to assist in the probe “received thirty two US Mail crates” filled with complaints on Wednesday alone.
“Although it is difficult to summarize the mass volume of calls and letters, a majority of the communications are from elderly individuals, or their children, who have discovered automatic checking account deductions from their, or their parents’, checking accounts and are requesting refunds,” Cook said in the preliminary report.
Although Cook advised the judge he has been able to recover about $300,000 through the early weeks of his investigation and expected to recover more as the investigation proceeds, the defendants’ businesses appeared to be broke.
“The Receiver’s work over the past three weeks suggests the Defendants’ operations were insolvent on the date [July 24] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds,” Cook said.
He observed that the “Defendants’ business operations were high revenue/low margin operations which required significant cash in-flows from new victims to meet current trade creditor and consumer refund obligations.”
Noobing, an autosurf that targeted people with hearing impairments, was identified by Cook as a company affiliated with ASI. Noobing was not named a defendant in the fraud complaint filed last month by the Federal Trade Commission and the attorneys general of Kansas, Minnesota and North Carolina.
Cook, though, said he discovered Noobing had registered as a corporation on the Caribbean island of Nevis on March 25, 2009. Noobing launched last year and was promoted by members of AdSurfDaily Inc., a surf firm from which the U.S. government seized tens of millions of dollars last year in a wire-fraud, money-laundering and Ponzi scheme probe.
Noobing generated more than $590,000 in revenue last year and more than $541,000 this year before going offline, according to Cook’s preliminary report.
Cook estimated that Noobing was in the hole nearly $550,000 since last year.
Blackman, according to Cook, recently registered several corporations offshore, including Noobing; ASI Management Inc., formed in Belize on March 24, 2009; Landmark Publishing Group LLC, formed in Nevis on March 25, 2009; Landmark Publishing LLC, formed in Nevis on March 25, 2009; International Research and Writing Group LLC, formed in Nevis on July 1, 2009; and International Publishing Group LLC, formed in Nevis on July 1, 2009.
All in all, Cook said, “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.”
“Of immediate concern is the large distributions and salary paid to defendant Brett Black[man] since 2008,” Cook advised the judge in his report. “Per the QuickBooks accounting records, Blackman received $841,545 of distributions from Apex Holdings International, LLC in 2008 and made a net contribution of $491,559 into Affiliate Strategies, Inc. ($581,388 of contributions and $89,829 of distributions) for a total net distribution of $349,986, in addition to salary payments of $118,049.
“In 2009,” Cook continued, “Blackman has received $253,506 of distributions from Apex Holdings International, LLC and has made a net contribution of $113,000 into Affiliate Strategies, Inc. ($349,000 of contributions and $226,000 of distributions). The total net distributions and salary to Blackman for 2008 and 2009 is approximately $490,000.”
Cook said his assessment was ongoing. He reported that some of the accounts involved in the investigation had chargeback rates of as high as 77 percent, meaning that better than three of four customers who made credit-card charges requested refunds.
EDITOR’S NOTE: Information in this story was gleaned Tuesday and Wednesday from a source who spoke to the PatrickPretty.com Blog on the condition of anonymity. We interviewed the source Wednesday. The source said a large group of individuals once loyal to Andy Bowdoin no longer could stand in his corner. “We got mixed up in ASD and feel horrible about it,” the source said.
UPDATED 10:22 A.M. EDT (U.S.A.) Andy Bowdoin was the recognized head of AdViewGlobal among a core group of insiders and dispatched his stepson, George Harris, to Switzerland to establish bank accounts, according to information provided the PatrickPretty.com Blog.
In an email that circulated among ASD members — some of whom were described as sickened by Bowdoin’s gall — Bowdoin denied that Swiss accounts ever were opened. He acknowledged, though, that both George and Judy Harris trekked to Switzerland, accompanied by another individual.
His concession has led to questions about whether Bowdoin was telling the truth that no Swiss accounts were opened. The U.S. government is engaged in an active campaign to pierce Swiss banking secrecy and has scored landmark wins in recent months that have resulted in indictments against Americans who were using the banks to evade income taxes.
Meanwhile, the U.S. Secret Service has seized at least one computer used by an AVG insider and the Phoenix Police Department is investigating a purported theft of $2.7 million from AVG, according to the email.
“There is no doubt in my mind whatsoever” that remarks attributed to Bowdoin in the email were authored by Bowdoin, the source said.
Bowdoin told a person who questioned his business judgment that Harris was unable to open Swiss accounts because “the banks said they did not like accounts with a lot of out going transactions,” according to the email.
A person who participated in AVG took Bowdoin to task for laissez-faire management, a lack of follow-up controls and various business blunders — one of which purportedly was a deal assembled in November 2008 to acquire the Phoenix-based EWalletPlus payment processor for $75,000.
(NOTE: Even after reviewing the email, we could not determine who actually owns eWalletPlus. At least three companies or individuals have claimed to own the web-based payment processor, which is offline. The website now resolves to a parked page and appears to be for sale on sedo.com.)
Bowdoin performed virtually no due diligence before acquiring eWalletPlus, according to the email, but explained “[a] lot of business is conducted without ever meeting the owner because there are so many ways to perform due deligence [sic] in this high tech world.”
The purported deal, according to the email, involved a purchase contract and occurred the same month a federal judge ruled that ASD had not demonstrated it was a legal enterprise and not a Ponzi scheme at a Sept. 30-Oct. 1 evidentiary hearing ASD specifically requested.
Bowdoin’s purported actions lead to questions about whether he was prepared to remain in the illegal autosurf business no matter what a federal judge said. At the same time, the email leads to questions about why a group of AVG insiders ever would follow Bowdoin from ASD to the new company with serious legal business still on the table.
“It doesn’t make sense,” the source said. “These guys got greedy and thought by running things offshore,” they were . . . “[untouchable.]”
Plans to develop AVG were discussed at a private meeting on a cruise ship among 13 people, the source said.
Problems developed when AVG was unable to gain or maintain control over bank accounts — including one at First Caribbean Bank — needed to operate the business. One of the issues was who had signature authority over accounts, according to the email.
AVG blindly paid $20,000 to a formerly trusted person to set up a legal structure and bank account in Costa Rica — and George and Judy Harris “went down” to Costa Rica to get the lay of the legal landscape and review the corporate documentation, according to Bowdoin’s remarks in the email.
While in Costa Rica, George Harris was advised by a local attorney that the fee for setting up a corporation was only $1,200, which led to questions about whether the formerly trusted party had skimmed $18,800 in the purported $20,000 deal.
“[S]omeone made a lot of profit,” Bowdoin said, according to the email.
In any event, the bank account in Costa Rica was needed as a conduit to forward funds to Uruguay, according to Bowdoin, citing a claim made by the formerly trusted party.
No money made its way into the account in Costa Rica, even though the formerly trusted party was supposed to place $2.2 million in the account for later transfer to Uruguay, according to the email.
Bowdoin appointed Judy Harris an AVG trustee in a bid to get control of the money, according to the email.
“Yes, I asked Judy to be trustee to see if we could over come the money that had been stolen,” Bowdoin said, according to the email. “But when people started cashing out excessively it was soon apparant (sic) that it could not be overcome without some changes in page impressions. If the money had not been stolen all of the cash out requests could of been paid and there would of been plenty of operating capital. Hopefully some of the members will be able to come up with a solution.”
Infighting developed over whether AVG would be operated from the United States or Uruguay. Bowdoin groused that labor was less costly in Uruguay, but an AVG insider insisted the company operate from inside the United States, according to the email.
“I never had all of these problems with ASD,” Bowdoin said, according to the email. “It is evident now that I should of been more hands on in management.”
Bowdoin’s behavior cannot be reconciled, said the source, who acknowledged embarrassment for having participated in ASD after his instincts told him something was wrong.
At an ASD rally in Florida last year, the source said, he observed a man holding a briefcase. The man explained that the briefcase was “full of cashiers checks for $50,000 apiece,” the source said.
Later, members of his downline group shared reports that “people with piles and piles of cash” had attended ASD rallies.
“I don’t believe [Andy Bowdoin] for a second,” the source said. “He lost all credibility in our camp after firing his attorneys — and [filing] all those [pro se] motions.”
By the time the government seized Bowdoin’s assets last summer, the source said, a family member had lost tens of thousands of dollars consisting of an initial outlay and unredeemed paper profits that ASD displayed in the family member’s back office.
UPDATED 10:56 P.M. EDT (U.S.A.) Autosurf participant? Fan of international “stored value” debit cards to offload your profits? You should have a lump in your throat about the size of, say, the Dominican Republic right now.
The U.S. Drug Enforcement Administration (DEA) has audio and photographic evidence of Virtual Money Inc. President Robert Everett Hodgins accepting $100,000 and agreeing to launder drug money in the Dominican Republic for a fee of 10 percent of the amount, according to court documents cited by The Oklahoman (see link to story below).
The transaction was part of a DEA sting last year known as “Operation Highwire.”
Hodgins lives in Oklahoma, although his current whereabouts is unknown. Nolan Clay, the veteran, award-winning reporter who wrote the VM story, covered the Murrah Federal Building bombing in Oklahoma City that killed 168 people in 1995 and the execution of home-grown terrorist Timothy McVeigh in 2001.
VM was indicted last year under seal for helping a Colombian drug operation launder money at ATM machines. There was little media coverage of the indictment. We learned about it only yesterday by fluke. Within a short while, it became evident that VM had a considerable presence in the autosurf trade.
Connecting The VM Autosurf Dots
Virtual Money Inc., known simply as VM, is the company that provided debit cards to AdSurfDaily Inc. Research shows that VM also provided cards to other HYIPs and autosurfs.
As part of our research into a separate matter yesterday — and before we learned of the VM indictment — we viewed the source code from an ad for ASD that appeared in early 2007. We observed a link to the VM website in the source code, tried to follow it and eventually arrived at a message that explained VM no longer was operating. At the time, ASD also advertised that it accepted CEP Trust and e-Gold as payment methods. CEP later was implicated in its own Ponzi scheme, and e-Gold was indicted for money-laundering.
Screen shot: snippet of source code from 2007 ad for ASD showing URL for Virtual Money Inc.
The VM hyperlinks caught our interest, and we researched the matter further. Eventually we came upon Clay’s story about the alleged VM drug ties. The story did not mention autosurfs.
We obtained copies of the indictments against VM, which were filed in April 2008 in Connecticut under seal, superseded in June 2008 under seal and then made public in late September, about seven weeks after the forfeiture complaint was served in the ASD case. The VM indictments in the Medellin drug case got very little media attention.
One outlet that did pay attention was The Oklahoman, which published Clay’s story about the drug and money-laundering allegations. Clay reported that the government believed Hodgins had been laundering money for a “major Colombian drug operation” for years.
VM, which offered “stored value” debit cards, was accused in the indictments of laundering money for a drug enterprise in Medellin. Yes, that Medellin, a Medellin that once was home base for drug lord and terrorist Pablo Escobar.
Genesis
In addition to providing cards for ASD, VM also provided debit cards to the failed Phoenix Surf Ponzi scheme and other surfs and HYIPs, according to web records. VM’s name is mentioned in Paragraph 22 of the August forfeiture complaint against ASD, and also in Government Exhibit 2Â in the ASD case, which cites the PhoenixSurf Ponzi prosecution.
What this means is that autosurf and HYIP participants were using the same debit card a Colombian cocaine enterprise allegedly was using. It also means that VM recognized the utility its card would have in the autosurf world and that the autosurf world embraced the card.
These development became even more troubling today. Research suggests that Robert Hodgins or a VM designate participated in an ASD function about a month after ASD began its rollout in October 2006.
“Virtual money owner was there and ASD will be the only accepted autosurf by them,” a forum poster wrote Nov. 15, 2006. The post was a bit fuzzy, but seemed to suggest Hodgins or a designate participated on a conference call or an ASD physical function in Orlando.
It’s now clear from reading the Ponzi boards that VM — despite the poster’s claim that ASD would be its exclusive customer — had developed a significant presence in the surf/HYIP worlds in 2006.
During that same year, according to the DEA court filings unsealed in September 2008 after a two-year investigation, VM cards were used in Medellin to withdraw at least $7.1 million in drug proceeds at ATMs between April 2006 and August 2006.
If the allegations are true, it means that the company that provided the debit cards ASD used was in the business of laundering money for at least one international narco business before ASD even launched. Because the drug investigation overlapped into 2008 and featured the handover of money by an informant to Hodgins (see below), it means that VM continued to be in the business of laundering drug proceeds after ASD’s launch.
Ten names appear in the federal indictment against VM and Hodgins, including the names of alleged drug brokers and importers in Medellin.
What can’t be ruled out now is that narco businesses also were using autosurfs to launder money — perhaps without the knowledge of the autosurf operators — owing to the VM ties and use of the VM debit card.
A drug enterprise or exporters/importers could pose as autosurf customers, for example, to “hide” illegal drug profits in the surf, only to extract the drug profits (plus additional surf profits) later by reclaiming the money via wire, or offloading it from debit cards.
The Bombshell
Among other things, Clay reported in The Oklahoman Oct. 19, 2008, that the DEA infiltrated VM through a confidential informant who befriended Hodgins.
“The informant claimed an uncle needed drug proceeds transferred overseas,” the newspaper reported, citing government documents. “Hodgins agreed to conduct this and other transfers for a fee of 10 percent of the amount.”
In March 2008, the informant “gave Hodgins $100,000 in undercover funds and asked that the ‘drug proceeds’ be moved to a Dominican Republic bank,” the newspaper reported, citing government documents. “Hodgins agreed, while the informant secretly recorded him and surveillance agents photographed them.”
What this means, if the allegations are true, is that the DEA has audio and photographic evidence of the man who provided debit cards to ASD and other surf enterprises accepting money to participate in international drug transactions and international money-laundering.
There are many “What ifs” here — for example, What if the international drug trade has latched onto the illegal surf business to launder proceeds from the international sale of narcotics? What if the person standing in front of you at an ASD rally was an international drug trafficker who was using ASD to increase profits and launder the drug proceeds?
Kneejerk autosurf defenders naturally will dismiss such questions, but they are important — and the DEA might have evidence that shows a known figure in the debit-card business, a figure with obvious ties to the autosurf business, was willing to launder proceeds for a Medellin cocaine operation for a fee. The autosurfs could have aided in the laundering.
Feel that lump yet?
If not, you should consider that Pablo Escobar — now dead — was implicated in the assassination of a Colombian presidential candidate and an airline bombing that killed 110 people.
We always have been struck by how quickly the U.S. Secret Service entered the ASD case. It is not clear if the Secret Service and the DEA have shared information, but it could not be more clear that international criminals are well aware of the utility of “stored value” debit cards.
Such cards are becoming a fixture in the autosurf trade.
UPDATED 9:24 A.M. EDT (U.S.A.) “Life in These United States” now means that staid Reader’s Digest, hamstrung by debt during a recession and competing in an era unfriendly to print publications, will declare bankruptcy.
The news comes on the heels of an announcement Friday by the FDIC that five more U.S. banks had failed, bringing the unofficial year-to-date total to 77. Only three banks failed in 2007.
One of Friday’s failed banks — Dwelling House Savings & Loan — told the Pittsburgh Business Times that fraudulent automated transactions had drained $3 million (more than 21 percent of deposits) from the small institution. The bank had been warned after an inspection by regulators in 2004 to tighten its anti-money laundering practices in the era of cyber crime.
Reader’s Digest said its filing will come in the form of a Chapter 11 pre-pack and that a majority of senior lenders already had approved the plan. Reader’s Digest said it elected not to make a $27 million interest payment due yesterday, but will emerge from the filing swiftly, having pared its debt from $2.2 billion to $550 million with the cooperation of lenders.
“This agreement in principle with our lenders follows months of intensive strategic review of our balance-sheet issues to financially strengthen the company,” said Mary Berner, president and chief executive officer of the Reader’s Digest Association.
After the company emerges from protection, it will be owned by senior lenders.
Reader’s Digest now joins a long list of print publishers battered by circulation and advertising declines as the public’s appetite shifts from turning pages to clicking on a mouse for news and entertainment.
Most Americans — and readers from all parts of the world — are familiar with the Reader’s Digest approach of condensing features and publishing staples such as “Life in These United States,” “All in a Day’s Work,” “Humor in Uniform,” “Quotable Quotes” and “Laughter Is The Best Medicine.”
The company recently slashed payroll by 8 percent, but ad pages and circulation continued to decline even as the magazine was reducing costs.
Despite the recession and unprecedented financial challenges, no prominent media brands and print titles have ventured into autosurf waters to boost revenues to save themselves or avoid a trip to bankruptcy court.
Even though self-styled “professionals” who run surf sites insist is it possible to generate tens of millions of dollars of legitimate “advertising” sales practically overnight by installing a surf script and promising “advertisers” they’ll receive back all of their money and emerge with a profit by clicking on “ads,” legitimate companies won’t involve themselves in such schemes.
Media companies with famous brands and enviable web traffic could crush amateur competitors by installing surf scripts and showcasing awards they’ve received from advertising and journalism societies — and even produce a roster of Pulitzer winners to woo prospects — but have chosen not to do so.
It’s because business ethics actually exist — and it’s because they aren’t willing to lie to readers and advertisers or involve them in wink-nod ventures and Ponzi schemes.
Not even to save themselves or to avoid a date with a bankruptcy judge.
Federal prosecutors seized more than $65 million from Florida-based AdSurfDaily last year, a self-described professional advertising company operated by Andy Bowdoin.
Prosecutors said ASD was engaging in wire fraud and money-laundering while operating a massive Ponzi scheme. Virtual Money Inc., a company that once provided debit cards for ASD, has been indicted on charges of helping a Colombian drug operation launder money in Medellin.
The news means that some ASD members were using the same cards Colombian drug lords allegedly were using to launder money at ATMs in Medellin.
UPDATED 2:55 P.M. EDT (U.S.A.) In a short Business Wire news release late this morning, Vana Blue Inc. said it “has canceled all agreements with Karveck Int’l and has no affiliation with [the] company or its affiliates.”
The company claimed to own Karveck International in February 2009, declaring it a “newly acquired asset” that had produced $1.8 million in revenue in January. Karveck was described as a company that “specializes in internet advertising and promotion in a search engine and ad clicking type environment.”
Today’s news release, however, said the deal once described as completed never was finalized and that the cancellation came as a result of “further due diligence.”
“Vana Blue was unable to complete this transaction but is in the final stages of negotiation with an oil company to continue its plans of acquisitions,” said Donald Rex Gay, Vana Blue’s president.
Vana Blue is a Pinksheet stock that trades under the symbol VBLU.
Among other things, Vana Blue has said it owned the eWalletPlus payment processor that has been associated with AdViewGlobal (AVG), an autosurf with ties to AdSurfDaily Inc. Karveck’s name also has been associated with AVG, but AVG identified George and Judy Harris as its owners.
George Harris is the stepson of ASD President Andy Bowdoin.
AVG was in prelaunch phase in January, the month before Vana Blue announced the sales figures for Karveck International. There has been one report that AVG registered in Uruguay as Karveck International, but that report has not been confirmed.
Vana Blue’s domain name now resolves to a GoDaddy.com parked page. Meanwhile, the domain for eWalletPlus also resolves to a parked page and appears to be for sale on sedo.com.
Today’s Vana Blue news release used a Gmail address. Previous news releases by the firm used an email address at the Vana Blue domain.
AVG announced to members Aug. 5 that it had reported a theft of $2.7 million to state and federal authorities. The surf made the announcement one day after ASD announced in court filings that it was negotiating with federal prosecutors in a case that involved the seizure of tens of millions of dollars last August from Bowdoin.
Vana Blue used mail services in both Phoenix and Las Vegas for its street address, according to records. Vana Blue also has said it had an agreement with a company known as Net Auction Plus, an eBay alternative, “to provide online, affordable, and flexible payment services.”
The NetAuctionPlus.com domain name is registered to Michael Austin and uses the same Phoenix mail-service address as Vana Blue. The NetAuctionPlus.com domain throws a server error.
Austin’s name also has been associated with eWalletPlus, but is only one of several names associated with the payment processor and money-services business. AVG promoters have claimed that eWalletPlus was AVG’s in-house payment processor.
The names of at least two other companies — TMS Corp. and TMS Association — also have been associated with Vana Blue. Both firms purportedly owned eWalletPlus.
A third firm with a similar-sounding name — TMS Corp. USA LLC — is registered in Nevada and Arizona.
Records show the registration of TMS Corp. USA LLC was recorded by Gary Talbert, a former ASD executive. The Arizona registration lists ASD’s street address in Quincy, Fla.
Federal prosecutors said last year that ASD’s Quincy address was bogus.
In January, Karveck International was referred to in this Business Wire news release carried by Reuters as “Karveck Corporation.” It was described as a media company with “international reach that provides high volume exposure for websites thus creating advanced advertising on the internet for big and small businesses and for individuals who have products and services to sell.”
The name change from Karveck Corp. to Karveck International was not explained.
AVG has a history of issuing confusing announcements. In May — on the same day the Obama administration announced a crackdown on international monetary fraud — AVG announced it had secured a new offshore wire facility after losing a previous facility in March.
The surf, which purports to be headquartered in Uruguay, provided account numbers and detailed wire instructions for members. Three days later, a company AVG identified as a facilitator of the transfers issued an express, public denial that it had any business relationship with AVG.
AVG never acknowledged the denial. Instead, the surf issued an announcement signed “AVGA Management†that the wire deal it just had described as completed had failed because of unsuccessful negotiations.
UPDATED 9:49 A.M. EDT (U.S.A.) A Dallas-based company and its president were charged in a sealed indictment in April 2008 with helping a Colombian cocaine operation launder money by providing debit cards that were used to convert drug proceeds to cash in Medellin.
The company — Virtual Money Inc. — once provided debit cards to AdSurfDaily Inc., a Florida company accused in August 2008 of money-laundering, wire fraud and operating an autosurf Ponzi scheme.
Prosecutors brought a forfeiture complaint for tens of millions of dollars in the ASD money-laundering case. A grand jury in the Virtual Money case has authorized forfeiture complaints totaling $7.12 million.
Prosecutors said that Virtual Money, known simply as VM, helped the Colombian drug operation offload at least $7.1 million in drug proceeds at automated teller machines in Medellin. Medellin once was home base of the infamous Medellin Cartel, operated by drug lord and terrorist Pablo Escobar. Escobar was killed by Colombia National Police in 1993.
Escobar was implicated in the assassination of Colombian presidential candidate Luis Carlos Galán and the bombing of Avianca Flight 203 over Colombia, which killed 110 people.
Autosurf promoters long have claimed that participation in illegal surf enterprises is harmless. The indictment against VM — and the allegations that it laundered money for a Colombian drug organization — demonstrates the dangers of participating in murky businesses in which participants have no way of knowing what is in the hearts and minds of other participants.
It was not immediately clear how long ASD used the VM debit card, which was heavily promoted in early 2007 when ASD said it was having cash-flow problems.
Two Colombian conspirators “directed their agents in the United States to provide proceeds of sales of controlled substances to agents of VIRTUAL MONEY, INC. to be sent to Colombia so the proceeds could be made available to the clients,” according to the indictment.
VM “stored value cards were used by the members of the conspiracy to make available at a Daviviendo Bank ATM in Medellin, Colombia the peso equivalent of US $2,430,810.24 in April 2006; US $2,437,023.53 in June 2006; and US $2,257,761.45 in August 2006,” prosecutors charged.
The VM indictment, which was brought in Connecticut after a two-year investigation by the Drug Enforcement Administration, was unsealed in September. It names 10 defendants, including VM President Robert Hodgins.
Debit cards with “stored value” have become an increasingly popular way for autosurfs to collect and distribute money.
In 2007, members of an ASD downline team hailed the VM debit card as one of the key advantages of ASD membership. The same downline team claimed that ASD provided “shelter” from the Federal Trade Commission and the Securities and Exchange Commission
ASD downline group pitches VM card in 2007.
The card “[c]an be used in over 210 countries and territories and growing!” a sales pitch by the downline group said. “Funds conversion to local currencies at local ATMs.”
VM’s website now directs either to a “Forbidden” error or a message that explains the company is not operational, depending on what URL visitors use.
“We have a dedicated team working around the clock to ensure that the advanced and trusted service that all Virtual Money Card Holders have been use to over the past years, will be back and available as soon as possible as we are currently updating our facilities and servers,” VM said in the message.
The coming hours and days may mark the end of AdSurfDaily. Fragmentation, fractiousness and bitterness are marking ASD’s final descent into infamy.
Steve Watt of TheJoyLuckClub, for instance, is accusing the Mods at the Pro-ASD Surf’s Up forum of covering up for Andy Bowdoin and AdViewGlobal (AVG), an offshoot of ASD.
We wish we could applaud Watt’s actions. We cannot.
Steve Watt is promoting yet another surf site at TheJoyLuckClub, despite everything that has happened and despite announcing that he was out of the surf-promoting business. He also has contributed to the delay of the government’s proposed restitution program by being an early champion of Curtis Richmond’s pro se pleadings, and doesn’t seem to understand that TheJoyLuckClub’s message is at odds with itself.
At one time, Watt announced a denial by U.S. District Judge Rosemary Collyer of a Richmond pro se pleading would lead to a “Major Criminal Complaint that will be filed with the U.S. Atty. General.” Watt encouraged members to join a nonprofit organization he and other Surf’s Up members formed — ASD Members International (ASDMI) — to litigate against the government even if it was behaving legally.
Richmond, meanwhile, is associated with a Utah “Indian” tribe a federal judge ruled a “complete sham.” The “tribe” became infamous for becoming embroiled in vexatious litigation against public officials, and the oddities did not end there.
Some people who used a sham tribal “arbitration” panel known as the Western Arbitration Council (WAC) to do their bidding against the government were jailed for tax crimes, including Bruce Robert Travis. Among other things, Travis is the self-published author of “My Past Life As Jesus” and “The Messiah For Hire.”
Travis, associated with tax denier Royal Lamarr Hardy, now reportedly is working on a book in which he’ll describe what it’s like to be Jesus behind bars.
Dale Stevens, “chief†of the sham Utah tribe to which Richmond belonged — the Wampanoag Nation, Tribe of Grayhead, Wolf Band — was arrested for child pornography and anounced his intention to marry two underage girls.
One of the girls was 12. Stevens, 69, said he’d hoped to enter into marital bliss with her in exchange for half a cooler of “energy bars.â€
Despite all the information at their disposal about entities and individuals with whom they were associating themselves on the periphery, neither Watt nor Surf’s Up divorced themselves from the circus.
Regardless, Watt now writes that he is unhappy that the Mods refused to send an email blast to encourage Surf’s Up members to cooperate in a story proposed by Mike Mason, who once worked as a television journalist in Florida and has started a Blog.
The Mods at one time sent blasts if Bowdoin or favorite sons cleared their throats. They used the forum to champion ridiculous, pro se pleadings after Bowdoin declared his paid attorneys incompetent and fired them — and even after a federal judge in a separate case had ruled that Curtis Richmond and others had engaged in racketeering and mail fraud in a bid to destroy the credit of public officials in Utah by placing enormous, fraudulent judgments against them for having the temerity actually to do their jobs.
A family-services workerwho was doing the good work of protecting children.
Good grief.
And never mind that Bowdoin and Richmond’s drivel delayed for months the government’s plan to implement a restitution program for participants who certified under oath they were crime victims. Surf’s Up almost never missed a chance to rally the troops to hate the government, even if it meant dispossessed widows caught up in the scheme had to wait even longer for their chance to get some money back.
At Surf’s Up, the widows always could wait. It’s a plain fact that some of the Mods and members started a forum to promote AVG after receiving ASD’s official endorsement just days after a key ruling went against Bowdoin in November, just weeks after Bowdoin took the 5th Amendment in his own case.
“Too honest” to testify, a Surf’s Up poster ventured. A $50,000 Lincoln was parked in Bowdoin’s driveway when the remark was made, having been purchased for cash with ASD “rally” money diverted to another Bowdoin enterprise. Meanwhile, victims of a Bowdoin securities scheme a decade ago got a check for $100.
Not to worry. If Bowdoin could not produce an audited balance sheet certifying ASD’s solvency and the courts could not see the beauty of ASD’s business plan, the widows always could make up their losses in AVG, which purportedly was headquartered in Uruguay and immune from all the meddling by the evil U.S. government.
Here is a plain fact — and it is a fact no matter what you read on Surf’s Up: ASD was catastrophically insolvent. It ignored the liabilities side of the ledger and hid behind “rebates aren’t guaranteed.” As a practical matter, ASD had no means even to deliver all the “ads” it sold. If you joined ASD, you gave Andy Bowdoin a license to keep your money.
The government intervened to give you a shot at getting some of your money back before the Ponzi scheme collapsed. The reason the restitution program hasn’t started is because the government has been unable to perfect its title to the money because of pro se pleadings by Bowdoin and others. No restitution program can begin until the government has clear title to the proceeds seized from ASD.
AVG, for its part, announced in June that it was suspending cashouts and exercising its version of a “rebates aren’t guaranteed” clause. In effect, AVG seized the money — the exact same thing Surf’s Up railed against the government for doing last year. The AVG forum started by some of the Surf’s Up Mods and members went missing after AVG suspended cashouts.
Two of the Surf’s Up Mods announced yesterday that no email blast urging members to cooperate with Mason would be forthcoming. It first was explained that one of the Mods had been sick and that the proposal couldn’t be addressed immediately. Then it was said the Mods had to consult by phone to approve any blast. Finally, it was said that two of the Mods had communicated with Mason, but a decision had been made not to bring the matter to the attention of the full Surf’s Up membership.
In essence, the Mods explained that Mason was an unknown commodity and might slant his coverage to the government’s point of view.
For all intents and purposes, the ASD forfeiture case will end soon. It will be a clear, clean win for the public officials who prevented this contemptible Ponzi scheme from mushrooming globally and sucking wealth from 84 percent of members so 16 percent could enrich themselves.
We’d like to give Steve Watt credit for calling out the Surf’s Up Mods and regret that we cannot — and we sincerely hope that Steve will see the light.
