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  • Famed Prosecutor Who Tied HYIP Scheme To Terrorist Financier Fired By Trump Administration

    Former U.S. Attorney Preet Bharara. Source: Southern District of New York.

    EDITORIAL: Ponzi schemers, Wall Street fraudsters and corrupt politicians must be taking comfort in the reported abrupt firing by the Trump administration of Preet Bharara, the U.S. Attorney for the Southern District of New York.

    There is no question that President Trump had the power to ask Bharara and dozens of other U.S. Attorneys who were holdovers from the Obama administration to go. But Bharara expected to stay, especially since Trump asked him to do so.

    Bharara’s name has appeared on the PP Blog many times. In fact, something he once said became a source of great (and ongoing) editorial inspiration for peeling back layers of the HYIP onion.

    You see, back in 2009, Bharara tied an HYIP scheme to a case of terrorism financing. This was the case against Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. He was accused of operating an investment fraud known as FEDI and moving money with the belief he was purchasing night-vision goggles and other equipment for a terrorist camp in Afghanistan.

    It turned out that online marketers interested in commissions pushed FEDI to Americans, Canadians and others, not knowing its operator was interested in helping dark forces kill people en masse.

    How many other schemes could be sponsoring terrorism or fueling organized crime remains an open question. There are thousands of dark possibilities to mull, some of them (like FEDI and Profitable Sunrise) cloaked in light. HYIP schemes are ground zero for fake news.

    Knowing Preet Bharara was on the job always was a comforting thought. He brought FEDI to justice and, for example, made sure Liberty Reserve could not continue to launder billions of dollars for HYIP fraudsters and other criminals. (Did you know that one of the Liberty Reserve figures prosecuted by Bharara was a shill on the TalkGold Ponzi forum?)

    Bharara’s work, of course, was hardly limited to unmasking financial fraudsters.

    It is disheartening to think that the Trump administration is bemoaning “fake news” in one breath and firing the exposer of FEDI’s fake news in the next.

    Lots of purveyors of FEDI-like “programs” are online right now. They are delivering fake news through millions of column-inches and through terabytes of video.

    Some of them even have declared Trump their champion.

    The public owes a debt of gratitude to Preet Bharara. The President should have left him in place to continue the good fight.




  • SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans

    A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.

    VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.

    A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.

    Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.

    “Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.

    The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.

    From the SEC’s ViziNova  complaint (italics added/light editing performed):

    Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.

    In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .

    Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.

    ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.

    Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.

    “There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”

    The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.

    Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.

    In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.

    Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.

    Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.




  • BULLETIN: New TelexFree Money-Laundering Allegations In Brazil Ensnare Wives, Relatives Of Wanzeler And Costa

    Fifteen TelexFree figures have been linked to a money-laundering scheme in Brazil, according to the Federal Public Ministry of Espírito Santo (MPF/ES).

    Among those linked were TelexFree principals Carlos Wanzeler and Carlos Costa and their wives, MPF/ES said today.

    Katia Wanzeler, Wanzeler’s wife, is believed still to be residing in the United States. U.S. prosecutors consider her husband an international fugitive who fled to Brazil when U.S. investigative heat came on him in 2014.

    The laundering racket led to the purchase of cars and a company in Brazil known as Voxbras, MPF/ES said.

    Here, according to MPF/ES, is the list of those involved in the laundering scheme:

    • Carlos Nataniel Wanzeler
    • Carlos Roberto Costa
    • Katia Helia Wanzeler, wife of Carlos Wanzeler
    • Jozélia Miriam Sangali, wife of Carlos Costa
    • Danny Fabricio Cabral Gomes
    • Febe Wanzeler de Almeida e Souza, sister of Carlos Wanzeler
    • Marisa Machado Wanzeler Salgado, sister of Carlos Wanzeler
    • Roberta Rosa de Jesus
    • Draco Vaz de Oliveira
    • Alex Gomes
    • Diorgeney William of Assisi
    • Lelio Celso Ramires Farias
    • Rhalff Junio de Almeida Coutinho
    • Leide Januaria de Araújo
    • Elizabeth Cerqueira Costa Alves, sister of Carlos Costa

    Their places of residence were not listed.

    Katia Wanzeler was arrested in the United States on a material-witness warrant in 2014. She later was released. She has not been charged criminally in the United States.

    James Merrill, a TelexFree business partner of Carlos Wanzeler, is scheduled to be sentenced March 22 in Massachusetts federal court.

    See the MPF/ES news release (Portuguese): See the English translation by Google Translate.




  • REPORTS: Traffic Monsoon Pitchman Who Urged ‘RIOT’ And Called Receiver ‘Lying Cow’ Later Accused Of Kicking Woman ‘To The Head’

    Some promoters of Traffic Monsoon have engaged in heated rhetoric. This is a screen shot of a hijacked image that depicts President Trump as a supporter of the “program” the SEC has called a massive Ponzi scheme.

    UPDATED 1:36 P.M. ET U.S.A. Jose Nunes, the Traffic Monsoon pitchman who last fall used a slogan of “RIOT” to support the company and called the receiver in the SEC’s Ponzi case a “lying cow,” later reportedly was involved in domestic-violence incidents in November and January.

    A Feb. 6 report in the North Wales (U.K.) Daily Post says Nunes, 42, of Llanrug, was accused of carrying out “repeated acts of violence” against the woman, including kicking her “to the head” in front of their daughter.

    The most recent attacks reportedly marked at least the third time Nunes had been accused of assaulting the woman. According to the Daily Post, Nunes pleaded guilty to assaulting her in 2011.

    A purported “Revenue Shares Matter” campaign backed in September by Nunes featured a flaming graphic with the word “RIOT” in all-caps. By October, Nunes was calling Utah attorney Peggy Hunt — the receiver in the July 2016 Traffic Monsoon case — “Piggy,” a “[b . . . h” and a “Lying cow.”

    Attacks against his former girlfriend allegedly followed in November and January. The newspaper account of Nunes’ most recent alleged assaults does not report specific reasons or dates on which they occurred, but stress has been high in some Traffic Monsoon circles.

    Some supporters of Traffic Monsoon have been awaiting impatiently since November for key rulings from U.S. District Judge Jill N. Parrish.

    Rhetoric among some supporters of the “program” has been over-the-top. One effort in support of Traffic Monsoon on a Facebook site featured a hijacked photo of President Trump displaying a bogus executive order shutting down the SEC and declaring the agency “full of shit” and “useless.”

    The SEC alleged that Traffic Monsoon’s claim that it was a successful advertising business was “merely an illusion” and that 99 percent of the “program’s” revenue was derived from new investor funds.

    Traffic Monsoon operator Charles Scoville — who once appeared in a promotional photograph with Nunes — contends no Ponzi existed. He has asked Parrish to shut down the receivership and to dismiss the charges.




  • Kristine Johnson Of ‘The Achieve Community’ Scam Sentenced To 21 Months

    2ND UPDATE 8:38 P.M. EDT U.S.A. Kristine Louise “Kristi” Johnson, one of the two principals of “The Achieve Community” (TAC) Ponzi- and pyramid scheme, has been sentenced to 21 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said moments ago.

    The SEC sued Johnson and codefendant Troy A. Barnes in February 2015. Johnson, 60 at the time of the SEC action, listed an address in Aurora, Colo. In June 2015, she was charged criminally with wire-fraud conspiracy and agreed to plead guilty.

    Barnes, 52 at the time of the SEC action, was charged criminally later. He listed an address in Riverview, Mich.

    By the time Achieve collapsed in February 2015, it owed investors more than $51 million, prosecutors said.

    “[H]er conspirators and TAC had available only 4% or approximately $2.6 million,” federal prosecutors said.

    Like many scams, Achieve was a Ponzi-board “program” that operated over the Internet and created thousands and thousands of victims with promises of absurd returns on the order of 700 percent. At least 4,000 of the victims lived outside the United States, prosecutors said.

    The Johnson sentencing was the second involving a Ponzi-schemer in the Western District of North Carolina in the past 24 hours. Paul Burks of Zeek Rewards was sentenced yesterday to 176 months for his scam involving hundreds of millions of dollars.

    Achieve hauled something on the order of $6.8 million.

    Burks’ sentencing judge, Max O. Cogburn Jr. yesterday commented about “cheerleaders” for Zeek.

    Achieve also had cheerleaders. One of them used the name of the SEC and its website in a bizarre promo.




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

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

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

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

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

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

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

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

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

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

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

    From a statement today by prosecutors (italics added):

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

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



  • Zeek Net-Winner Notifications Expected To Begin Soon; Receiver To Establish ‘Net Winnings Determination Response Portal’

    If you’re a net winner in the massive Zeek Rewards’ Ponzi- and pyramid scheme, your notice that you must return your ill-gotten haul with interest may arrive as early as next week.

    Under the terms of a court order by Senior U.S. District Judge Graham C. Mullen, the notice will apply to more than 9,000 alleged winners of at least $1,000 and will arrive via email. At least with respect to Zeek, the days of MLMers profiting from scams while the operators go to jail are over.

    In a Feb. 2 announcement, Zeek receiver Kenneth D. Bell said the receivership will establish a “Net Winnings Determination Response Portal” through which winners are “required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification.”

    Bell successfully sued the winners in a defendant class-action case. The trustee in the TelexFree case is following a similar path, further demonstrating that winnings from MLM scams simply are not safe.

    FTI Consulting Inc., the Zeek receiver’s expert, found that Zeek’s net losers lost more than $822 million and the net winners hauled away more than $282 million. Ninety percent of Zeek entrants lost money, according to the findings. which defense experts were unable to refute.

    Here is Bell’s Feb. 2 announcement (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – February 2, 2017

    As I previously announced, I continue to pursue Final Judgments requiring each member of the Net Winner Class of those who won at least $1000 in ZeekRewards to repay their net winnings to the Receivership for distribution to victims of the scheme. On January 27, 2017, United States District Judge Graham Mullen entered an Order on Process for Determining the Amount of Final Judgments Against Net Winner Class Members, which sets forth the process for determining the amount of the net winnings received by each member of the Net Winner Class. That amount plus prejudgment interest will then become the amount of the Final Judgment to be entered against the net winner. I intend to pursue collection of these judgments vigorously, and expect the ultimate amount collected, while uncertain, will be a substantial sum.

    The Court’s Order, which describes the process in detail, may be viewed by following this link. The first step in the process – notifying each Net Winner of the amount of their net winnings – is expected to begin next week. After notification, each Net Winner is required to provide a response stating whether he or she accepts or disagrees with that amount within 60 days of the notification using a website Net Winnings Determination Response Portal. More information and links to the Response Portal will be sent to the Net Winner Class members in the notification email. If a Net Winner does not receive their notification by February 13, 2017 then he or she should email netwinningsresponse@zeeknetwinnerclass.com to receive instructions on how to obtain the notification.

    Throughout the Receivership, the Receiver has expressed a willingness to consider voluntary final settlements with ZeekRewards’ Net Winners to efficiently resolve the claims against them. Hundreds of settlements have been negotiated with Net Winners and approved by the Court. If a Net Winner wants to discuss a settlement of the Receiver’s claims prior to Final Judgment being entered, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.

     

    Visit the receivership website.




  • BULLETIN: TelexFree Trustee Moves For Default Judgments Against Dozens Of Alleged Overseas ‘Winners’

    BULLETIN: TelexFree Trustee Stephen B. Darr has moved for assessments of damage and default judgments against dozens of alleged overseas “winners” in the massive Ponzi- and pyramid scheme. The motion before Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts asks for millions of dollars from about 33 TelexFree promoters with non-U.S. addresses who did not enter defenses after being properly served Darr’s class-action complaint brought in January 2016 and subsequently amended.

    Like the class-action lawsuit and individual actions brought by receiver in the Zeek Rewards’ case, the action by the TelexFree trustee demonstrates that “winners” in corrupt MLM schemes will be pursued to return their gains, plus interest, to the hundreds and hundreds of thousands of “losers” created by such cross-border fraud capers.

    Kenneth D. Bell, the receiver in the Zeek case, now is moving to perfect millions of dollars in judgments.

    Hoffman has set a May 3 hearing in Boston on Darr’s motion.

    Read Darr’s motion.

    One of the alleged overseas winners pursued by Darr received more than $2.92 million, according to a court exhibit. Seven others received at least $1 million. Others still received tens or hundreds of thousands of dollars.

    In other corrupt MLM schemes, new recruits were encouraged to pay their sponsor directly, rather than paying the company directly. This also was the case at TelexFree, a situation that led to money not being forwarded to the firm, contributing to the deepening of the Ponzi.




  • BRIEF: Feds Tweet Photo Of $20 Million Allegedly Found In Box Spring And Tied To TelexFree

    Federal prosecutors have Tweeted a photo of $20 million allegedly found stuffed in a box spring and linked to the massive TelexFree Ponzi- and pyramid caper.

    The cash was found Jan. 4 by the Homeland Security Investigations branch of U.S. Immigration and Customs Enforcement, an arm of the U.S. Department of Homeland Security.

    Agents seized the cash and arrested Cleber Rene Rizerio Rocha, 28, of Brazil. He remains jailed.

    In other HYIP news, apparent supporters of the Traffic Monsoon “program” have been using Twitter in the past 24 hours to ask President Trump to intervene in the SEC’s fraud case brought in July 2016.

    Traffic Monsoon was pitched as an “advertising” program. The SEC alleged the program operated as a Ponzi scheme.




  • Zeek Receiver Solicits Victim Letters For Feb. 13 Sentencing Of Paul Burks

    Paul Burks will be sentenced Feb. 13 for his criminal role in Zeek Rewards, and the court-appointed receiver is soliciting letters from victims of the combined Ponzi- and pyramid scheme that affected hundreds of thousands of people.

    Zeek gathered hundreds of millions of dollars in a massive fraud scheme broken up by the SEC and the U.S. Secret Service in 2012.

    From receiver Kenneth D. Bell in an announcement dated Jan 19, 2017  (italics added):

    Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

    • Becoming insolvent;
    • Filing for bankruptcy under the Bankruptcy Code;
    • Suffering substantial loss of a retirement, education, or other savings or investment fund;
    • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
    • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
    • Suffering substantial harm to his or her ability to obtain credit.

    I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

    Bell also is special master of the criminal case against Burks.

    Burks, then 67, was indicted in 2014 on charges of wire and mail fraud, wire- and mail-fraud conspiracy and tax-fraud conspiracy. He was convicted by a jury in July 2016 at age 69 on all charges and potentially faces decades in federal prison.

    Two of Burks’ former Zeek colleagues — Dawn Wright-Olivares and her stepson Daniel Olivares — previously pleaded guilty and now are listed as federal prisoners.




  • INTERPOL: ‘Digital Currencies Increasingly Used To Finance Criminal Activities[,] Including Terrorism’

    Pushing a murky, MLM-style digital currency scheme or even a purported one? Involving family, friends and online contacts?

    INTERPOL is warning that “digital currencies [are] increasingly used to finance criminal activities[,] including terrorism.”

    The warning is included in an INTERPOL announcement dated Jan. 16 about a law-enforcement conference in Qatar on the topic of transnational crime and how digital currencies are being used to launder money.

    “Digital currencies are not constrained by national regulations or borders, therefore cooperation in fighting against criminal uses of digital currencies must also transcend borders and integrate solutions from both law enforcement and the private sector,” said Tim Morris, INTERPOL’s executive director of Police Services.

    About 400 participants from law enforcement and private industry from 60 counties attended the conference in Doha, INTERPOL said. The event concluded today.

    INTERPOL, Europol and the Basel Institute on Governance, with the collaboration of the Qatar National Anti-Money Laundering and Terrorism Financing Committee, organized the conference, INTERPOL said.

    Even Bitcoin can be exploited for criminal purposes, INTERPOL said.

    Any number of murky cryptocurrencies are being marketed MLM-style online. BehindMLM.com has reported that one known as OneCoin is being investigated in multiple countries.and that even a kidnapping and ransom plot involving promoters has been reported.

    Read the INTERPOL announcement titled “Digital currencies and money laundering focus of INTERPOL meeting.”