Some TelexFree members may be unhappy if the “program” changes its compensation plan. Source: Screen shot of Blog at Blogspot.com.
Updated 8:36 a.m. ET (Feb. 26, U.S.A.) Some TelexFree promoters may be lobbying the company and Brazil-based executive Carlos Costa to keep its original Ponzi scheme intact, according to a Blog post (in Portuguese) observed by the PP Blog this morning.
BehindMLM.com reported on Feb. 19 that TelexFree may be in the process of changing its compensation plan. Details remain murky. It is common for fraud schemes that either know they are under scrutiny or sense they soon will be to change rules or make cosmetic tweaks to keep money coming in.
After-the-fact changes, however, cannot unring bells of HYIP fraud that already have been rung. And the changes sometimes introduce new disguises designed to sustain a Ponzi deception.
TelexFree, alleged in Brazil to be a pyramid scheme, has been under investigation in that country since at least June 2013. In the AdSurfDaily and Zeek Rewards Ponzi/pyramid cases in the United States, prosecutors said that both firms made cosmetic tweaks in bids to stay under the radar.
Here is a Google translation from Portuguese to English of the Blog post that may signal that some TelexFree reps want the firm to cling to a Ponzi business model (italics added):
Campaign advisers on social networks asking an unchanged Marketing Plan International Telexfree.
And you, what do you think? Want to try the new plan Telexfree or would you change anything, because this plan is already excellent?
Share if you do not want changes in Telexfree.
Affiliates of online Ponzi schemes often claim their “program” is legal and excellent because it pays. But all successful Ponzi schemes pay. Bernard Madoff’s epic scheme “paid” — until it didn’t. And the Ponzi scheme of George Theodule aimed at Haitian immigrants also “paid” — until it didn’t.
“George Louis Theodule defrauded his victims out of millions of their hard-earned dollars,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.
“[Theodule] did so by taking advantage of people who trusted him because of their cultural affinity,” Ferrer said. “Such tactics are intolerable, especially given that some of his victims lost their entire life savings. This sentence should send a strong message to those who prey on the trust of others: you will get caught and justice will be served.”
Also on the Blog reporting potential dissatisfaction with TelexFree changes was a post on something called CicloFAST, possibly an emerging “opportunity” of some sort. The CicloFAST website prominently displays a photo of a MasterCard.
Like TelexFree, CicloFast styles the last four letters of its name in uppercase — i.e. FREE and FAST. It was not immediately clear if the firms had a business relationship.
Some U.S.-based promoters of TelexFree claim that $15,125 sent to the company effectively will triple or quadruple in a year. Among the firm’s key pitchman is Sann Rodrigues, a former SEC defendant in a pyramid-scheme and affinity-fraud case.
Rodrigues, a purported TelexFree millionaire, has been billed by the firm as a headliner at a planned TelexFree convention March 1 and 2 in Spain.
Any change in the TelexFree compensation plan could lead to questions about why Rodrigues was permitted to make large sums of money under a plan that now needs to be changed and whether less-successful affiliates now will be hamstrung even tighter.
Some TelexFree promoters have demonized the Brazilian prosecutors who brought the pyramid case in the state of Acre. It is common for HYIP scams to pander to the rank-and-file and to marry the processes of demonization and envy.
Kenneth Wayne Leaming, the AdSurfDaily Ponzi story figure and purported “sovereign citizen” now serving eight years in federal prison in part for filing bogus liens against public officials involved in the 2008 ASD case, once claimed the federal judge in Washington state who presided over his criminal trial owed him 208,000 ounces of “99.9% fine silver.”
Among Leaming’s bizarre claims was that the judge was “operating [a] SLAVERY SYSTEM, etc.” Leaming earlier tried unsuccessfully to sue President Obama and U.S. Attorney General Eric Holder. Among his bizarre claims in that now-dismissed case was that he and a co-plaintiff — a man in prison on federal tax charges — were owed 12,000 ounces of gold.
After Leaming’s conviction in a 2013 trial in which federal prosecutors said he was channeling deceased cop-killer Christopher Dorner in the courtroom, the judge ordered the forfeiture of items seized from Leaming during an FBI probe of his activities in 2011. Those items included six firearms and police equipment, including badges, credentials, law-enforcement identification documents, light bars, crime-scene tape, handcuffs, vests and nightsticks.
Leaming “client” files also were ordered forfeited. (Some ASD members said Leaming was performing legal work for them, even though he is not an attorney.)
The Anti-Defamation League, which warned the public about Leaming before his name even surfaced in the context of ASD in 2010, now says a different group of purported “sovereign citizens” on the other side of the country is harassing a judge and court clerk in rural Greene County, N.Y. Greene County, in the Catskills, has a population of fewer than 50,000, according to its Wikipedia entry.
From the ADL (italics added):
. . . common law grand juries claim to have signed a “true bill” charging the chief clerk in Greene County with numerous “crimes” related to her alleged failure to file paperwork for the “grand jury,” according to ADL. They also “fined” a Greene County judge the amount of “100 ounces of silver,” citing 23 separate “violations” for failing to provide demanded documents and refusing to speak to their “board of review,” and allegedly sent harassing documents to a number of judges.
“[C]ommon law juries in Marion and St. Johns counties in Florida sent a ‘Writ of Mandamus’ to county officials demanding a budget of $1.5 million, office space and equipment and a meeting room with a conference table and chairs,” ADL reports.
Marion County is in North Central Florida in the Ocala region and has a population of about 335,000. St. John’s County is in Northeast Florida in the Jacksonville region and has a population of about 190,000.
There have been reports of violence and extremely menacing behavior involving “sovereign citizens” in Florida. In March 2013, purported “sovereign” Jeffrey Allen Wright was shot to death after pointing a pistol at a sheriff’s SWAT team in Navarre, situated in the Florida panhandle. Wright was wanted on a warrant for counterfeiting.
In November 2013, Tampa-region “sovereign citizen” Eric Holtgard was arrested twice in less than 24 hours, amid allegations he was menacing people with guns. In May 2013, purported “sovereign citizen” Bruce Chalmers Hicks of the Tampa region was arrested on charges that he was carrying a sidearm on the property of Turkey Creek Middle School in Plant City.
Larry M. Myers, a purported “sovereign citizen” and fugitive, was sentenced in 2012 to 78 months in federal prison. Authorities said he was was member of a bogus entity known as “The Constitutional Court of We The People In and For The United States of America” and the “Constitutional Common Law Court.”
“Myers and his co-conspirators mailed a CLC arrest warrant to a Chief Judge of a Florida State court,” the office of the Treasury Inspector General For Tax Administration (TIGTA) said. “They also issued a CLC contempt of court order and ‘militia’ arrest warrant to a District Judge.”
“Sovereign citizens” have been claiming judicial and jury authority for years. ADL suggests these elements of the purported “movement” might be gaining steam.
“Adherents of the sovereign citizen movement are forming their own vigilante “grand juries” in counties across the United States in an attempt to exact pressure on local government officials to accede to their anti-government demands and whims,” ADL said yesterday.
“The sovereign citizen group behind this attempt to form bogus grand juries is the National Liberty Alliance, formed in 2011 as the New York Liberty Alliance by sovereign citizen guru John Darash of Poughkeepsie, NY,” ADL says. “It recently launched a nationwide effort to recruit new members, and Darash and his followers have spent most of their time establishing ‘common law grand juries’ in counties across the country. The Liberty Alliance boasts of having 852 county organizers in 36 states and nearly 2,000 members from coast to coast.”
The purported TataAgro entity had a presence on the Ponzi boards and appears to have used trading screens to dupe the worldwide investing public. Image source: Google cache.
BULLETIN: (3rd Update 8:32 a.m. ET, Feb. 20 U.S.A.) The Tata Group, a global conglomerate based in India, says its name has been stolen by an HYIP Ponzi scheme. The fraud scheme is associated with a domain styled TataAgro.com and has a presence on the MoneyMakerGroup, TalkGold and DreamTeamMoney Ponzi forums, according to search results.
Like the recently exposed WCM777 fraud scheme, the TataAgro scam claims a business presence in the British Virgin Islands. WCM777 also traded on the names of famous companies, including Siemens, the German conglomerate. Siemens issued statements warning the public about WCM777. Tata now has done the same thing with the purported TataAgro entity.
The TataAgro website “claims that ‘Tata Agro Holding is a subsidiary of the globally known Tata group, [and is] one of the top 10 agro investment players in Asia’s financial market,’” the real Tata says. “It goes on to offer a wide range of investment plans with a monthly profitability of up to 100%.
“Members of the public are hereby cautioned that the information provided on the website is absolutely false, misleading and intended to defraud innocent and unwary members of the public,” the real Tata says. “Neither Tata Sons nor any other Tata company has any connection whatsoever with the aforesaid Tata Agro Holding. Tata Sons is initiating appropriate action in the matter.”
PonziTracker.com was among the first outlets to report the news of the Tata warning.
The TataAgro site appears not to be loading.
It is somewhat common for fraud schemes to try to steal the identities of major figures on the world financial stage. CONSOB, the Italian securities regulator, regularly publishes information on purported “opportunities” that adopt the names of legitimate firms to create confusion and fleece the masses.
A post dated Dec. 3, 2013, at the MoneyMakerGroup Ponzi forum claims the purported TataAgro entity pays “1.9-3.1% daily for 15-90 days” and accepts Perfect Money, BitCoin, EgoPay and Qiwi.
Meanwhile, a post dated Dec. 17 at the DreamTeamMoney Ponzi forum makes this claim (italics added):
Tata Agro is an agricultural investment company founded in 2012 in British Virgin Islands. We are a subsidiary of transcontinental conglomerate Tata Group that has been established in India back in 1868 and now boasts the combined market capitalization of $96 bln.
We have retained only the best things from a rich and long experience of our ancestor: the unique corporate culture, client-oriented and customized approach, and understanding of the market through retrospective analysis. Our fundamental aim is to help you grow your capital.
We work with assets like barley, soya, soya oil and meat, corn, wheat, and livestock and currently operate in CME Group, TOCOM, and MGEX exchange houses.
We are eager to offer you four investment plans with the daily ROI of 1.9% to 3.1% and investment term of 15 to 120 days. You can invest from 5 to 10,000 USD. Apart from that, we offer you a profitable referral program that lets you earn more and work side by side with your family and friends.
A post dated Dec. 17 at the TalkGold Ponzi forum makes these claims (italics added):
Invest 5 to 100$ for 15 days and earn 1.9% ROI daily;
Invest 100 to 1000$ for 30 days and earn 2.3% ROI daily;
Invest 1000 to 5000$ for 60 days and earn 2.5% ROI daily;
Invest 5000 to 10,000$ for 120 days and earn 3.1% ROI daily.
Collapsed fraud schemes such as Zeek Rewards, AdSurfDaily, Legisi, Pathway to Prosperity, Profitable Sunrise, Imperia Invest IBC and many more also had a presence on the Ponzi boards.
The TelexFree “program” currently has a presence on the Ponzi boards.
In a curious promo, Egyptian pyramids are being used as an art element by cheerleaders for TelexFree, an alleged pyramid scheme. Source: ConventionTelexFree.com. Red highlight by PP Blog.
U.S.-based TelexFree, alleged in Brazil to be a massive pyramid scheme, is serving up a heaping helping of strangeness.
For starters, a promo for TelexFree’s International Convention set for Spain next month is being voiced by Sann Rogrigues, whom the SEC successfully sued in 2006 amid allegations he was operating a pyramid scheme and engaging in affinity fraud aimed at the Brazilian community.
The promo curiously is playing against the backdrop of an image of the Pyramids of Giza. For good measure, images of other famous world landmarks are thrown in. These include St. Basil’s Cathedral (near the Kremlin) in Moscow; Big Ben in London; The Eiffel Tower in Paris; the Empire State Building and the Statue of Liberty in New York; the Leaning Tower of Pisa; and the Burj al Arab Hotel in Dubai.
TelexFree operates out of Marlborough, Mass., and Las Vegas in the United States. Its convention is scheduled for March 1 and 2 in Madrid.
The promo in which Rogrigues dispenses the TelexFree convention wisdom appears on a website styled ConventionTelexFree.com. Among the claims on the site is that American MLM lawyer Gerald P. Nehra will be among the “Special Guests” at the rah-rah fest in Spain.
American MLM lawyer Gerald Nehra will be a special guest at TelexFree’s International Convention in Madrid next month, according to ConventionTelexFree.com.
Serving as an expert witness for AdSurfDaily in 2008, Nehra opined that ASD was not a Ponzi scheme. ASD operator Andy Bowdoin, now serving 78 months in federal prison at the age of 79, later disagreed with his own expert. In 2012, Bowdoin admitted that ASD was a Ponzi scheme that had gathered $119 million and said the “program” never operated lawfully from its inception in 2006.
ASD promoted a return of 1 percent a day. Some TelexFree promoters say that “program” triples or quadruples money in a year. Some promos solicit sums of $15,125.
Nehra’s law firm also was touted by Zeek Rewards. In 2012, Zeek was accused by the SEC of operating a massive international Ponzi- and pyramid scheme that gathered hundreds of millions of dollars by planting the seed that returns would average 1.5 percent a day. At least two Zeek figures potentially now face prison sentences after pleading guilty for their roles in the scheme.
The court-appointed receiver in the Zeek case says he’s on the brink of filing lawsuits against thousands of Zeek promoters.
TelexFree appears recently to have begun operating under the name TelexFree International. Precisely where TelexFree International is based is unclear.
In the past, Nehra has described himself an an attorney for “TelexFREE in the USA,” according to BehindMLM.com. Whether he represents the TelexFree International derivative is unclear. Convention promoters, however, appear to believe he does.
As a reporter interviews a Peruvian official at the scene of a police raid against a WCM777 outlet in Lima, an image of American pitchman Harold Zapata (left) flashes on the screen. Source: YouTube.
Still using social-media sites to promote massive fraud schemes — even after the AdSurfDaily, Zeek Rewards and Profitable Sunrise debacles?
Thanks to his presence on social media, Harold Zapata, a WCM777 YouTube pitchman named a respondent in a Desist and Refrain order announced last month by California’s Department of Business Oversight, may be trapped between a rock and a hard place.
Zapata is a California resident. Not only does the state know about his YouTube presence — indeed, his promos are referenced in the D&R — so do authorities in Peru. Whether Zapata ever has ventured to Peru is unclear. What is clear is that Peruvian media have used snippets of his U.S.-based promo as a backdrop to video reports about a police raid against a local WCM777 outlet in Lima.
Whether he likes it or not, Zapata has become one of the American faces for WCM777. In one video, Zapata identified himself as a WCM777 “director . . . working directly with our founder, CEO, chairmans [sic], leaders in our WCM777 organization.”
WCM777 executives include Ming Xu and Zhi Liu, California said. Both men are named in the D&R. Zapata also is named.
California’s action against WCM777, its executives and Zapata may signal trouble for other YouTube pitchmen for highly questionable MLM “programs” or outright scams. For starters, YouTube commercials for HYIPs sometimes are copied and used by promoters of the same purported “opportunity,” thus saving fellow pitchmen the time and trouble of making their own videos. This can happen with or without permission, perhaps with an eager recruit using the video of another sponsor but inserting a URL to the recruit’s page in a companion text pitch below the actual video.
Beyond that, some fraud-scheme pitchmen openly share their YouTube promos with downline recruits as a means of driving more business to a scam. Such approaches typically are portrayed as the acts of a helpful sponsor who wants to see his or her recruits thrive by providing them the “tools” they need to succeed.
At least one YouTube pitchman for WCM777 appears to be using Zapata’s video to drive traffic to WCM777 and possibly other “opportunities.”
Zapata appears to have noticed this at least two months ago and placed warnings in Spanish and English on the YouTube site of the fellow WCM777 pitchman.
Here’s how the warnings read (italics added):
Por favor quite este video inmediatamente o me veo obligado a reportarte por infracción de copyright, de este video.
Please remove this video immediately or I will be forced to report this video for copyright infringement.
The video nevertheless remains. It shows Zapata pitching WCM777 in English, even after the California action and the raid in Peru. The title of the video on the fellow WCM777 pitchman’s site is “WCM777. FULL PRESENTATION IN ENGLISH.”
It is unclear from Zapata’s warnings whether he was upset that the video was being used without his permission or whether he was concerned that the fellow WCM777 pitchman was using the video to cherry-pick Zapata’s earnings.
Regardless of Zapata’s specific concerns, however, the continued appearance of the video shows the vulnerability of MLM pitchmen who promote “programs” on YouTube. Such promoters not only may lose control over their own content, they literally may lose control over their own faces.
Even if Zapata has stopped promoting WCM777, the video published by the fellow WCM777 pitchman makes it appear as though Zapata still is promoting the purported opportunity, which California publicly declared a scam last month. Last week, the state asked residents who invested in WCM777 to contact the DBO immediately.
At least 5,500 Californians plowed money into the WCM777 scam, the state said.
“The California Department of Business Oversight has seen a surge of high-yield investment schemes that take advantage of social networks to market illegal investments,” said Jan Lynn Owen, commissioner of the Department of Business Oversight. (Bolding added by PP Blog.)
In 2010, FINRA called the HYIP sphere a “bizarre substratum of the Internet” and issued a warning that such schemes were spreading on social-media sites such as YouTube, Facebook and Twitter. Zapata’s experience demonstrates that some HYIP pitchmen either missed the warning or chose to ignore it.
BehindMLM.com is reporting that WCM777 — now operating as Kingdom777 — appears now to be engaging in ham-handed wordplay to continue its duping of the masses. The “program,” BehindMLM reports, now is using the word “members” and trying to steer clear of the word “investors.”
Such wordplay bids foreshadowed doom at both AdSurfDaily, a $120 million Ponzi scheme, and Zeek Rewards, which allegedly gathered at least $850 million.
As the PP Blog reported in June 2012, here is part of what the U.S. Secret Service said in a filing in the ASD Ponzi-scheme case in February 2009 (italics’bolding added):
[ASD operator Andy] Bowdoin and his sponsor knew that it was illegal to sell investment opportunities to thousands of individuals; thus, they were careful not to call participants “investors” but rather referred to them as “members.” Moreover, there were careful not to call payments to “members” “return on investments”; rather, they referred to the income program as a “rebate” program . . .
For whatever reason, HYIPs and their pitchmen apparently continue to believe they can duck or circumvent securities regulations and laws against the sale of unregistered securities by calling an investment something else.
Prosecutors made short work of the Zeek and ASD wordplay, saying both “programs” engaged in linguistic games to describe an investment as something else.
WCM777 even may dialing up the HYIP wordplay madness. From BehindMLM.com (italics added):
A “dividend” [at WCM777/Kingdom777] is now a “bonus”… cuz well, a bonus could be anything… including an investment “return”, which is now also just a “bonus”.
Banners Broker members who log into their accounts are seeing this pop-up message: Source: Graphic published at RealScam.com
Whoever is pulling the linguistic strings at the Banners Broker HYIP cult operating globally online now is channeling Zeek Rewards, AdSurfDaily and AdViewGlobal in their final days.
Zeek, an $850 million Ponzi- and pyramid fraud that once suggested participants should change their toilet-paper dispensing habits if instructed to do so, threatened to ban members who didn’t stick to the company’s insidious, Stepfordian chant. It also planted the seed that it would use the courts to gag doubting voices and sue credit unions that dared to speak ill about its “program” that averaged a payout of 1.5 percent a day. And through proxies, Zeek made sure that other MLM companies and executives who’d dare question its outrageous claims knew that the Zeek eye in the sky was watching them.
AdSurfDaily, a $119 million Ponzi scheme that promised to pay 1 percent a day, announced that it had filled a pot with $750,000 in cash and would sue critics for tens of millions of dollars. (The U.S. Feds were so moved by the claim that they made sure it was included in an evidence exhibit used to seize more than $80 million in ASD cash.) Prior to the seizure, ASD’s Stepfordian wing made sure that doubters knew their doubts would be reported by right-thinking loyalists to “ASD legal.” After the seizure, some of the ASDers planted the seed that any fellow member who filed a remissions claim through the U.S. Department of Justice would get sued by their fellow members.
In 2009, after forming itself from the carcass of ASD’s MLM fraud scheme and on the brink of collapse itself, AdViewGlobal threatened to sue critics for purported copyright infringement. (Zeek, through purported “consultant” Robert Craddock, later would work the “infringement” gambit into its arsenal while planting the seed one or more Zeek lawyers would go after critics.)
To cement its thuggery, AVG, a Zeek- and ASD-like 1-percent-a day “program” that gathered millions of dollars, said it was watching what members said about it online and planted the seed it would seek to have the Internet connections of in-house critics shut down. AVG bizarrely (and incongruously) did these things while purporting to have “protectors” in its ranks and while purporting to enjoy U.S. and Florida Constitutional speech and commerce protections from its purported base of operations in Uruguay.
Now comes word that Banners Broker, an almost indescribably bizarre “program” whose online steroidal puppeteers have been stringing people along and picking pockets since at least 2012, has accidentally announced that it, too, has become a factory from which MLM thuggery is manufactured. Not only is Banners Broker watching members, the “program” says, its members also are watching members. The news first appeared on the RealScam.com antiscam forum.
Banners Broker, of course, wants members of its cyberspace cult to remain in their Stepfordian trances and not to notice they’re being manipulated like robots, so it has given its strong-arm bid an innocuous (if not wholesome-sounding) name: “Community Watch.”
Ready to projectile vomit?
Given the monitoring policy, individual members who’ve posted negative content should remove it, the “program” instructs. And members who observe other members posting negative content should contact the doubters and provide a copy of the “program’s” policy that bans negativity and threatens management-led account seizures.
On Feb. 12, Banners Broker will begin to take “a firmer stance against people that are speaking badly against Banners Broker,” the “program” bizarrely bleats.
“Affiliates found to be contributing to the negativity on the Internet will have their accounts locked,” the “program” threatens. “[T]hey will be banned from participating in the Banners Broker system and they will forfeit all of their inventory and revenue.”
Banners Broker appears also to be trying to chill nonmember critics.
“If you know of a site with content that is negative towards Banners Broker, we ask that you report it to the Community Watch,” the “program” instructs.
In June 2012, the PP Blog reported that a website selling “customers” to Zeek recruiters also was directing traffic to double-your-money Banners Broker and the 2-percent-a-day (precompounding) JSSTripler/JustBeenPaid HYIP scam purportedly operated by Frederick Mann.
On Jan. 17, 2013, the PP Blog reported it was receiving menacing communications about Banners Broker.
For additional background on bids to chill reporters or program members who publish information about scams and highly questionable “opportunities,” see this Dec. 27, 2012, PP Blog post: Our Choice For The Most Important PP Blog Post Of 2012.
Sann Rodrigues (right) will be a headliner at a TelexFree event scheduled next month in Spain. Source: TelexFree rolling promo on website.
Calling Sann Rodrigues its “TOP PROMOTER IN THE WORLD,” the alleged TelexFree pyramid scheme curiously has announced that Rodrigues will be a headliner at a TelexFree rah-rah session in Spain on March 1 and 2.
An image of Rodrigues now rolls across TelexFree’s website. But the promo does not mention that Rodrigues was successfully sued by the U.S. Securities and Exchange Commission in federal court in Massachusetts in 2006. The agency alleged that he was presiding over a pyramid scheme known as FoneClub and engaging in affinity fraud targeted at the Brazilian and Brazilian-American communities in Massachusetts.
A federal judge held Rodrigues, also known as Sanderley R. De Vasconcelos, “jointly and severally liable” with FoneClub for “$3,269,459 in disgorgement plus $151,928.49 in prejudgment interest,” the SEC said in 2007.
Prosecutors in Brazil have alleged that TelexFree is a massive pyramid scheme. The purported “opportunity” operates from Massachusetts, the same venue from which Rodrigues was sued by the SEC.
In the AdSurfDaily Ponzi-scheme case in 2008, the U.S. Secret Service alleged that neither ASD nor a business partner disclosed that the partner had been an SEC defendant in a successful 1997 prosecution that alleged the partner had pitched three prime-bank swindles, including one that advertised a return of 10,000 percent.
ASD was a $119 million Ponzi scheme targeted in part at the Christian community, federal prosecutors alleged.
In the $850 million Zeek Rewards’ Ponzi- and pyramid scheme in 2012, former SEC defendant Keith Laggos emerged as a key cheerleader. Laggos was sued by the SEC in 2004 in a case that alleged he didn’t disclose he was being paid to tout stock.
From the 2010 MPBToday MLM scam. Like Zeek Rewards, MPBToday traded in part on Walmart gift cards.
Ah, those serially disingenuous MLM hucksters and commission-based Ponzi pitchmen: They’ll ultimately destroy their own brands while picking millions of pockets. Before doing so, they’ll use your brand as a temporary means of sanitizing themselves, bring PR disasters to your legitimate company and perhaps even find an insidious way to turn the government into their banker.
Longtime PP Blog readers will recall the outrageous scam of MPBToday. MPBToday duped the MLM masses in part by planting the seed that Walmart gift cards or prepaid Visa cards would flow to members in unlimited supply if they sent $200 to the Florida-based “program” for a “one-time” purchase of “groceries” and if the members recruited two others who’d also recruit two others to do the same.
In addition to being a pyramid scheme that sent operator Gary Calhoun to prison in Florida on a racketeering charge, MPB Today could have been a scam that disguised “program” earnings as nontaxable “gifts” to dupe Uncle Sam.
It’s almost axiomatic in MLM Scam Land that an “opportunity” and/or its Stepfordian promoters will imply a tie to a major brick-and-mortar business or even the government, when no such ties exist or the ties are no more official than ties any consumer can enjoy — purchasing a gift card from a major retailer, having a bank account or renting a room at a major hotel chain, for instance. It happened at MPB Today in 2010, and it’s happening now within the Stepfordian wing of TelexFree — a wing in which promoters have suggested that TelexFree has been “authorized” or “approved” by the government.
It also happened both internally and externally at WCM777, now the subject of cross-border investigations in both North America and South America. In an apparent bid to sanitize the WCM777 scheme, alleged operator Ming Xu arranged to have himself photographed with celebrities such as former U.S. Vice President Al Gore and Apple co-founder Steve Wozniak. Meanwhile, WCM777 promoters rushed to YouTube and other social-media sites to claim that WCM777 had ties to famous businesses such as Siemens and a host of hospitality companies with famous flags.
Such rank MLM disingenuousness also occurred within the $850 million Zeek Rewards scheme. In the PP Blog’s view, Zeek’s maximum expression of such deception occurred when it was auctioning sums of U.S. cash and telling successful bidders they’d get paid through offshore payment processors such as AlertPay and SolidTrustPay. By divining sums up for auction and accepting bids for U.S. currency, Zeek implied it had been approved by the U.S. government, perhaps specifically the Treasury Department.
And by sending the incongruous (and bizarre) message that the Treasury-approved Zeek MLM scheme would pay members via offshore processors linked to the equally outrageous AdSurfDaily Ponzi scheme broken up by a Task Force consisting of the U.S. Secret Service and the Treasury Department (IRS) in 2008, Zeek served up another colossal mess for MLM.
Zeek, of course, followed the footsteps of MPBToday — whose operator lost his liberty after pushing all those Walmart cards out the door — by leeching off the names of major American retailers. In addition to auctioning cash, Zeek auctioned gift cards.
And this brings us to an interesting footnote in a quarterly report filed Jan. 30 by Kenneth D. Bell, the receiver in the Zeek Rewards Ponzi-scheme case. Zeek operated through Rex Venture Group (RVG).
“Unlike other retailers the Receiver Team approached, Wal-Mart and Home Depot readily agreed to refund the full amount of their gift cards held by RVG at the time of shut-down,” Bell advised Senior U.S. District Judge Graham C. Mullen. “The remaining gift cards were sold at auction, and their value is included in the gross receipts from the personal property portion of the Receivership auction.”
Walmart and Home Depot know a PR disaster when they see one. They ponied up quickly when the receiver asked them, thus making his job of gathering funds for Zeek victims a bit easier. Some other companies that perhaps have less PR savvy did not. The receiver auctioned their gift cards in public.
Bell’s examination of Zeek’s money flow continues, according to the Jan. 30 report. The report reveals that lawsuits against alleged insiders and winners had not been filed as of the 30th, but remain pending.
The receivership is “on the brink of filing,” Bell said.
Some Zeekers who choose to see instead of turning a blind eye perhaps can gain an understanding of just how dangerous the “program” was to the U.S. financial system — and not just the relatively small segment in which retailers that issue gift cards reside. Not only did Zeek create legal and PR dilemmas for itself, it created them for others, including gems of U.S. commerce and banking.
During 2013’s fourth quarter, attorneys for the receiver “sent demand letters to fifty-four (54) financial institutions seeking reimbursement for teller’s checks on which financial institutions were believed to have improperly stopped payment under Section 3-411 of the Uniform Commercial Code and in violation of the Freeze Order,” Bell advised the court.
“As of December 31, 2013, thirty-one (31) financial institutions had not responded to the Receiver’s demand(s) for payment of stopped payment cashier’s checks and bank money orders,” Bell continued. “Additionally, fifteen (15) issuers of teller’s checks had not responded to demand letters.”
Let’s hope these financial institutions develop the PR savvy of Wal-Mart and Home Depot. Zeek not only was a train wreck unto itself, it set the stage to involve legitimate enterprises in its own bizarre drama. Company after company that conducted business with Zeek or whose customers did so has had to lawyer up or at least rely on in-house counsel to determine how much exposure the “program” brought to legitimate enterprises.
The Zeek story is far from being over and likely will reverberate for years in the financial community. Bell now says that he’s “discovered additional RVG financial accounts during the fourth quarter.”
Zeek money, according to the report, circulated onshore and offshore.
“All transactional information received from financial institutions through the end of the fourth quarter has been included in the creation of the financial books and records,” Bell advised the court. “However, communications with financial institutions are ongoing, and there are outstanding requests by the Receiver for transactional information.”
When will other shoes drop?
“The Receiver Team continued its investigation into potential claims against RVG insiders and third-party advisers as a part of its ongoing fact investigation, continuing its analysis of documentary evidence that will be used in proving such claims,” Bell advised the court. “The Receiver Team also responded to requests for assistance and information from the U.S. Attorney’s Office that aided the government in obtaining plea agreements from both Dawn Wright-Olivares and Daniel Olivares.”
Wright Olivares, Zeek’s former COO, was charged criminally and civilly in December 2012 2013 (Feb. 5, 2014 edit). Olivares, her stepson, also was charged criminally and civilly. They are expected to appear in court this week to enter formal guilty pleas to criminal conduct.
Federal prosecutors say tax fraud occurred at Zeek.
Here, we’ll point you to an unrelated story by Jordan Maglich at PonziTracker.com. The story is about an alleged pitchman for Ponzi schemer Nicholas Cosmo, now serving 25 years in federal prison for his epic Agape World fraud. (Quick side note: Agape World was a purported “bridge lender,” similar in some ways to the outrageous “Profitable Sunrise” MLM fraud scheme broken up by the SEC last year.) The PonziTracker story on Agape World developments is titled, “Ponzi Associate Jailed For ‘Mind-Boggling’ Money Laundering Scheme.”
The story explains why alleged Cosmo pitchman Anthony Ciccone now is in jail. A snippet from the story:
According to prosecutors, Ciccone overpaid approximately $1.7 million in federal and state income taxes beginning in 2008 that was comprised of Ponzi scheme proceeds. Several years later, the funds were returned to Ciccone in the form of tax refunds, and Ciccone subsequently had his wife and mother-in-law launder the refund money through their bank accounts.
We wonder: Could some of the Zeekers effectively have been doing the same thing — deliberately overpaying taxes and using the government as a de facto bank that temporarily would conceal and warehouse Ponzi proceeds for return later in the form of tax refunds?
And for the 2011 tax year, according to the charging documents, “P.B.,” Wright-Olivares and others reported to the IRS that Zeek investors had received more than $108 million from the scheme when Zeek had paid out only about $13 million.
This caused Zeek victims to file “false tax returns with the IRS reporting phantom income that they never actually received,” according to the charging documents.
Zeek used the “false tax notices to perpetuate the Ponzi scheme,” according to the charging document.
TelexFree executive Carlos Costa is keen on Botafogo. Source: YouTube video.
MLM’s HYIP wing appears to have triggered another PR disaster for the trade: Guaraviton, a longtime sponsor of the Botafogo soccer club in Rio de Janeiro, may be none too pleased with the club’s deal that brought on TelexFree as a No. 2 sponsor.
TelexFree is under investigation in Brazil, amid allegations it is a pyramid scheme. There have been reports about death threats against a prosecutor and a judge.
Guaraviton, a beverage-maker, is Botafogo’s main sponsor. The club’s deal with TelexFree was a “negative surprise” to Guaraviton, according to a story on Abril.com. Grupo Abril is a major media outlet in Brazil.
Ponzi schemer Allen Stanford’s sponsorships caused embarrassment in the worlds of cricket and golf.
Prior to the collapse of the AdSurfDaily Ponzi scheme in 2008, members claimed ASD would have a car in auto racing’s Indy 500. (See PP Blog report from Feb. 22, 2009: Stanford/Bowdoin: ‘A Tapestry Of Believable Lies’
The “Aunt Ethels” in the United States — older people with money — will be thrilled to join TelexFree once they see how their relatives, friends and neighbors are prospering, according to a promo.
A columnist at Jornal.US News Service is reporting in Portuguese that TelexFree members are receiving instructions on how to register for the “program” by using location-masking proxies and bogus information on their countries of residence.
TelexFree has been the subject of a pyramid-scheme probe in Brazil since at least June 2013.
The Jornal.US News column raises the prospect that tax fraud aimed at the U.S. government could be occurring. TelexFree has U.S. footprints in Massachusetts and Nevada. Some American promoters have ignored the probe in Brazil and continue to enlist recruits. They’ve also ignored reports of death threats targeted at public officials in Brazil involved in the TelexFree probe.
In December 2013, federal prosecutors said tax fraud had occurred at Zeek Rewards, an MLM “program” that has features similar to TelexFree.
Whether TelexFree is under investigation in the United States is unknown. Some U.S.-based promoters have claimed that $15,125 sent to the “program” fetches a return of at least $42,075 in a year, plus the full return of the initial outlay.
As the PP Blog reported on Aug. 4, 2013, the math of the claim is basically this: After recruits send in $15,125, they purportedly receive at least $1,100 a week for 52 weeks. That computes to $57,200. Subtract the original outlay of $15,125, and emerge $42,075 on the plus side, with the principal also fully returned. In this context, TelexFree essentially triples or quadruples the initial outlay over the course of a year, according to the promos.
Like the 2008 AdSurfDaily Ponzi scheme ($120 million) and the 2012 Zeek Rewards’ scheme (at least $850 million) that led to Ponzi charges in the United States, the TelexFree “program” has a purported “advertising” component. In ASD, members purportedly got paid for clicking on ads; in Zeek and TelexFree, members purportedly get (or got) paid for posting ads online, according to narratives by promoters.
As was the case with Zeek, puff pieces are being used in TelexFree to help the scheme spread.
And as was the case with ASD and Zeek, TelexFree “supporters” are singing the praises of the company and clashing with messengers of “negative” news. There have been at least two instances in Brazil in which apparent TelexFree promoters targeted media reports about suicide deaths of TelexFree members with offers to join the “program.”
On Sept. 9, 2013, the PP Blog reported that TelexFree promoters were encouraging prospects in Brazil to fabricate an address in England to register for the “program” and may be encouraging fellow members to menace public officials.
There were reports last month that a Brazilian prosecutor involved in the TelexFree probe had been targeted in a ghastly intimidation campaign.
“[Former State Rep. Brian] Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.” — Office of Michigan Attorney General Bill Schuette, Dec. 20, 2013
A onetime Michigan statehouse member who’d earlier lost $400,000 in an offering fraud and responded by becoming a cheerleader for the thief who swindled him has pleaded no contest to a criminal charge of Neglect of Duty by a Public Official.
Strange as it sounds, it is not unusual in the fraud sphere for crime victims to turn into supporters of those who ripped them off or even to follow them to another scam in the hope of making up losses. The case against former Michigan Rep. Brian Palmer demonstrates that a victim’s behavior after a scam could have criminal consequences if he or she doesn’t break ties with a scammer.
Palmer, 64, of Romeo, reasoned that he could make up his losses in the offering fraud by assisting Jeffrey Ripley, who ran API Worldwide Inc. But API Worldwide proved to be a $9 million Ponzi scheme overseen by Ripley and fellow scammer Danny Lee VanLiere, the office of Michigan Attorney General Bill Schuette said.
“Ripley lost Palmer’s $400,000 on the investment and assured Palmer that he would get his money back if Palmer helped him with API,” prosecutors said. “Ripley gave Palmer credit for the $400,000 in API investments and Palmer cooperated with API because he believed he would receive a return on his lost funds.”
Palmer cooperated with investigators in the state probe conducted by Department of Attorney General’s Corporate Oversight Division and Public Integrity Unit and the Department of Insurance and Financial Services, Schuette’s office said.
In the API Worldwide scam, investigators said, senior citizens were lured into cashing out CDs and other investments and plowing the money into the purported “high-return” opportunity operated by Ripley, 61, of Sparta, and Danny Lee VanLiere, 62, of Grand Rapids.
From a statement by prosecutors (italics added):
Palmer met with potential investors on behalf of Ripley and API. With the knowledge that Ripley was attempting to circumvent the Securities Act, Palmer did not report the conduct to proper authorities.
Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.
“Public officials are sworn to uphold the law,” said Schuette. “Those who break the public trust should face the consequences.”
The charge of Neglect of Duty by a Public Official to which Palmer pleaded no contest is a misdemeanor. Ingham County Judge Patrick Cherry sentenced the former legislator to “320 hours of community service that shall be served in a capacity helping seniors and the homeless,” Schuette’s office said.
A fine and costs totaling $405 also were assessed against Palmer, who conceivably could have been fined up to $1,000 and ordered to spend a year in jail.
Ripley and VanLiere pleaded no contest earlier this year to racketeering and selling unregistered securities.
Ottawa County Circuit Court Chief Judge Edward R. Post sentenced both men to serve six to 20 years in prison. Ripley was ordered to pay more than $5.3 million in restitution. VanLiere was ordered to pay more than $3 million.
The API Worldwide scam has resulted in at least two other convictions, bringing the total conviction count to five.
On Dec. 13, Schuette said Douglas Kacos, 58, of Grand Rapids, and Thomas Doctor, 53, of Grand Rapids, pleaded no contest to misdemeanor Money Laundering, which is punishable by up to two years in prison and/or a $10,000 fine or twice the value of the proceeds, whichever amount is greater.
Kent County Circuit Court Judge James R. Redford is scheduled to sentence Kacos and Doctor on Jan. 27.
Bizarre levels of detachment and reservoirs of denial may accompany fraud schemes. In the $82 “Three Hebrew Boys” scam in South Carolina in which victims’ funds were used to acquire a party bus, a jet aircraft and expensive sports tickets, for example, some victims asserted that the scammers should not be prosecuted. Meanwhile, in the $21.5 million Dennis Bolze Ponzi scheme in Tennessee, Bolze told a federal judge that he could make up the losses if permitted access to the Internet and a computerized program — and a little time.
In the $119 million AdSurfDaily Ponzi case in Florida in 2008, thousands of victims initially expressed support for now-convicted Ponzi schemer Andy Bowdoin — even after prosecutors pointed out that he’d previously been convicted of crimes tied to securities swindles with a Ponzi element in Alabama and had a business partner implicated by the SEC in three prime-bank swindles. At least one purported “opportunity” (PaperlessAccess) appears to have hired Bowdoin in 2009 to be a commercial pitchman during an active criminal investigation into ASD and while the ASD Ponzi indictment against him was pending. While awaiting his ASD-related criminal trial in 2011, Bowdoin became a pitchman for OneX, a “program” federal prosecutors later called a scam.
In June 2013, a company known as iWowWe brought in Zeek Rewards figure Dawn Wright-Olivares as its chief marketing officer after the SEC alleged in August 2012 that Zeek was a Ponzi- and pyramid scheme that had gathered hundreds of millions of dollars and after the U.S. Secret Service announced it also was investigating Zeek. Wright-Olivares was charged criminally last week for her role in Zeek, creating a PR problem for iWowWe.
