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  • EDITORIAL: BizAdSplash, AdGateWorld, AdViewGlobal: Serial Promoters Should Be Prosecuted, ASD Members In Clone Ranks Should Be Excluded From Restitution Fund

    ASD's Andy Bowdoin

    If a thousand people tell you the autosurf they’re promoting is the “real deal” and that they’ve done their “due diligence” — they are lying.

    If you believe them, you are setting yourself up to be fleeced and perhaps even dragged into court, perhaps as a reluctant victim or perhaps even as a defendant in a fraud case.

    If you promote the surfs, email prospects, attach your referral URL to forum and web posts, set up forums to pimp these miserable businesses, accept commissions, provide strategic advice or an “earnings calculator” or spreadsheet, tell people to “call” you for details, maintain a list of surfs that are “working” and surfs that are not, defend the surfs in forums, repeat Garbage In, Garbage Out (GIGO) from the program owners and claim you had no ill intent when the surf failed because you were relying on the assertions of your upline sponsor or the program owner, well, you are asking for trouble.

    The SEC told you that three years ago with the 12DailyPro prosecution and the follow-up prosecutions of Phoenix Surf and CEP.

    And the U.S. Secret Service told you that almost 18 months ago with the prosecution of AdSurfDaily, Golden Panda Ad Builder and LaFuenteDinero. Moreover, the President of the United States and the Attorney General of the United States told you that last year with the creation of the Interagency Financial Fraud Enforcement Task Force.

    Plan to defend your surf participation on the grounds people are free to make up their own minds and that the government has no right to interfere with commerce? Congratulations. You’ve just provided aid and comfort to securities fraudsters, narcotics traffickers, drug dealers and people engaged in human trafficking.

    That’s their argument, and that makes you their intellectual soulmate. It also was the argument for slavery in the 19th century and earlier. Society rejected the argument long ago. It was far too taxing on the intellect and the human soul to be assigned any continuing credibility. The poison you deliver through your Ponzi is at least the equal of the poison the man hiding in the shadows of the school yard wants to deliver to your child.

    Selling a Ponzi? You are selling people into financial bondage. You might as well sell human beings to the highest bidder on Public Square: Ponzi = Slavery To Money Lost. That’s what you’re selling, and it consumes human souls.

    Willful Blindness

    Still an autosurf player? There you are, still ignoring information published in the open, still flailing, still pimping, still telling people this one is “different,” still pretending that the enterprises are wholesome or a “game” or a nontraditional investment, still persuading yourself daily that there is no way that any of the money gathered by these schemes could fall into the hands of people who’d sooner drop a bomb on your office than assign you or your family members and friends any worth as human beings.

    Perhaps you’re even signing your emails with a “God Bless” or a religious reference. Maybe you’re even including a disclaimer of some sort, perhaps not recognizing that you’re setting the stage to be labeled an affinity fraudster in addition to being labeled a financial fraudster — and providing investigators the evidence of “consciousness of guilt” by all the ducking and weaving and dancing you’re doing in your bid to find words to insulate yourself from liability.

    “God bless” makes you look like a crook in the context of autosurfs and HYIPs. The disclaimer makes you look like a common fraudster who’s made a cold calculation and arrived at the conclusion you’re smarter than the cops and the regulators.

    You likely haven’t seen a disclaimer along these lines, but here is what the standard disclaimers mean — no matter how they’re dressed up, no matter how polite the language:

    I am a common fraudster, but I’d like you to think I’m an “industry” expert and a thoughtful sponsor. Basically I’m a parrot: I repeat what the program owners tell me. Usually I’m better with words than they are, so I dress it up. I’m smart enough to know that no real due diligence is possible with these things. They don’t publish financials. They all use offshore payment processors. There is no real way to check on any financial claims. I got “paid” and others got “paid” is good enough for me. I’m willing to take the risk that the money generated by the surfs will be used for peaceful purposes, rather than building bombs.

    Every autosurf (and HYIP) I’ve pitched has failed. Some of the operators are the subjects of criminal actions and lawsuits filed by the government and members of the surfs. Some of the participants had criminal records, had been arrested for felonies, had been charged civilly with securities fraud or had been sued for other wrongdoing. I didn’t bother to tell you these things because I didn’t really know and, besides, it was not my job to do the research. My job is to be willfully blind. My job is to show you what’s out there and let you make up your own mind — you being an adult and thus free to make your own choices. I just want your money.

    Don’t come crying to me if the surf fails after you’ve signed up under me. I’m a victim, too, but I won’t whine about it. Too much risk of getting caught. Stick with me and we’ll become victims in one scheme after another. For now, I’ll make the most money because my list is bigger than yours and I run a forum and am an active participant in other forums. Follow my lead. Build your surf list. Start a forum — and you can be a victim just like me!

    You are on thin ice for even participating in a surf. This ice becomes thinner yet if you make the decision to become a pimp. You could find yourself all alone — in need of an attorney.

    Under The Microscope

    Have you read any of our coverage of the alleged Trevor Cook/Pat Kiley Ponzi scheme in Minnesota? We have published a number of stories demonstrating that local communities are paying close attention to the Ponzi players in their midst. Neighbors and local cops are putting the alleged schemers under the microscope.

    Cook was videotaped in a grocery store after the Ponzi allegations surfaced because a loss-prevention specialist thought he just might be using the store to deplete assets of the receivership estate. His wife also was videotaped. The 71-member police department in Eagan, Minn., contacted the receiver in the case to report Cook was using a credit card after his assets were frozen.

    The general public and its representatives have connected the dots autosurf and HYIP promoters refuse to connect, let alone acknowledge: Ponzi = Pain, and Ponzi = Scrutiny — even by the local cops and grocers and retailers.

    Trevor Cook now has been jailed for contempt of court. A federal judge has ordered him to turn over tens of millions of dollars investigators have traced to the alleged scheme. Jamie Solow was ordered to jail in Florida for trying to hide assets in the Cook Islands in another fraud scheme.

    Still undecided on where you stand on the issue of autosurfs and HYIPs? Ask yourself if you want to be videotaped when you go into the store to buy a loaf of bread — or videotaped as you return to your car. Ask yourself if you want to be sitting in court watching a video produced by a camera that even captured the numbers on your license plate.

    That’s how much regard society has for Ponzi schemers these days. If you get named in a Ponzi complaint, you’re going to be on TV, in the newspapers, on the radio, on the Internet. You’re even going to be on the video the store detective is shooting because he figures you’re up to no good.

    And if you are promoting autosurf and HYIP schemes today, you are sticking out like a sore thumb. You may be putting your freedom at risk because you cannot say no to the money and continue to believe that, if there’s a hole, you can wiggle out of it with your command of language or by playing the victims’ card.

    You are not a victim if you are continuing to promote autosurfs and HYIPs. You are a perpetrator.

    ‘Offshore’ Beacon Signals The Crime

    Ever receive a pitch highlighting the advantages of an “offshore” surf or HYIP enterprise? The people who send you such pitches want you to think that “offshore” equals “safe.” You should regard such pitches as clear evidence you are being scammed by a criminal, one who is willing to lie to separate you from your money and perhaps even make you part of a court case.

    The three so-called AdSurfDaily clones — BizAdSplash, AdGateWorld and AdViewGlobal — all have tanked. Each launched in the aftermath of the federal seizure of tens of millions of dollars from ASD. Each domain name for the clones was registered after the seizure. Each of the clones highlighted “offshore” locations. Promoters preached the gospel of having learned from ASD’s mistakes.

    Like a bunch of Stepford children, ASD members lined up to promote the clones. The clones filled their “membership” rosters with ASD members looking for a way to retrieve their ASD losses.

    Andy Bowdoin put some ASD members in desperate straits. All three of the clones traded off that misery, positioning themselves as cures for what ailed ASD, while they also benefited from Bowdoin’s antigovernment missives. He fanned the flames, told the troops that the U.S. Secret Service — the agency that guards the President and the Treasury — was comprised of Nazis and terrorists responsible for losses 30 times greater than the 9/11 losses.

    We’re of the mind that very few true BAS, AGW and AVG victims exist. There is good reason to believe that most of the earliest members of the clones also belonged to ASD. Their participation in the clones speaks of a willful blindness — and also of a desire to enrich themselves by trading off the misery of those who would come later.

    It is particularly galling — almost galling beyond measure — that some of the earliest members of the clones were complaining about “slow” refunds in the ASD case. They were perfectly willing to see themselves as ASD “victims” if it meant getting back a share of their money from restitution proceeds. At the same time, they were perfectly willing to rail against the members of law enforcement who stopped the ASD scheme from mushrooming — all while they were trying to help the clones mushroom to pocket commissions and make up for ASD losses.

    Those positions are irreconcilable. They speak compellingly of egregious intent to defraud.

    Looking for your BAS, AGW or AVG money? Good luck. It could be in the pocket of an insider or a serial promoter. It could be in any number of offshore banks or payment processors — or it could be hidden practically anywhere. The cash is not in plain view, to be sure.

    We sincerely hope the investigators dug down deep into the filthy laboratories of these schemes — and just observed and observed and observed and interacted with the “players” undetected, using the intelligence they gathered to set the stage for a spectacular autosurf and HYIP takedown to come.

    In the near term, members of BAS, AGW and AVG who also were members of ASD should be excluded from the proposed ASD restitution fund. The days of willful blindness and wink-nod need to come to an end.

    Ponzi = Slavery To Money Lost.

  • BizAdSplash Tanks, Takes Participants’ Money With It, Members Say; Surf Invokes God, Says ‘Party Is Over’ In Sign-Off Note

    The Biz Ad Splash (BAS) autosurf has tanked, taking participants’ money with it, members said tonight.

    Members reported receiving a platitude-filled email from Clarence Busby announcing the surf’s closure. The email, which included a pep talk and invoked God, did not say if, when or how members would be compensated.

    “Now what about the future?” the email said. “No matter what, there is a future. There are many things on the internet that will help you in this future, so don’t give up. Make the effort and success is just right around the corner. May your life be full of faith, hope and love. This is where you will find your best rewards. May God bless you all!”

    Busby’s name appeared at the bottom of the email, which carried a business address of Acworth, Ga. The surf, which purported upon its 2009 launch to be headquartered offshore, came to life in the wake of the seizure of tens of millions of dollars from AdSurfDaily Inc. and Golden Panda Ad Builder. Busby is the former president of Golden Panda, which ceded more than $14 million to the government in the ASD/Golden Panda case.

    Known for syrupy communications, Busby described the BAS staff as “sad,” according to the email.

    “Our staff has been sad, not just because of losing a job, but because they have developed friendships with many of you and are very sad to ‘break up the party,’” the email said. “With anything that has had life, it is very sad to have that life taken away.”

    Busby was identified in the email as the owner of BAS. In earlier communications, he was identified as “chief consultant.” It was not immediately clear how he purportedly had ascended from consulting work to ownership.

    “As owner of this company, I have had many, many hours that I sincerely enjoyed working with you, and of course, a few ‘witching’ hours that were just plain scary,” the email said. “After many sleepless nights over the past few weeks, trying to come to the correct conclusion, I have made a decision to ‘pull the cord and turn out the lights.’ The party is over.

    “No decision like this comes easy, at least not for me,” the email continued. “I know many people have had tremendous success, while others have just learned another of life’s lessons in their loss. With a heart that is very heavy and sad, I have come to realize that not every plan brings success. But I do know that every failed plan does bring you a tremendous amount of knowledge in lessons learned, that will bring you closer to the success you are reaching to achieve.”

    One BAS member who contacted the PP Blog said her family was out tens of thousands of dollars with the closure — and also out the value of advertising they purchased.

    “I am retired and I did not get involved in this company just to give money away for we need the money to retire,” the member said. “Mr. Clarence Busby is nothing but a dishonest crook.”

    Busby, who used the title “Rev.” at least 120 times in a court filing involving Golden Panda last year, was implicated by the SEC in three prime-bank schemes in the 1990s, according to records. He agreed not to break securities laws in a settlement with the SEC.

    Despite the failure of BAS and the problems Golden Panda had that resulted in the seizure of more than $14 million in five Busby/Golden Panda bank accounts, Busby had he was better for having operated BAS.

    “Please accept my humble appreciation to all of you who have encouraged, supported and worked so diligently with all of us this past year. Also, for those who prayed for me when I was in the hospital, I will never forget your calls, your letters and your friendships. It really did help move me to get well.”

    BAS paid out more than $2 million during its operations, according to the email. The email did not say how much the surf had taken in.

    “Biz Ad Splash has been online as an internet advertising business for one year this very week,” the email said. “During that time, BAS has paid out over $2,000,000 in commissions and has almost 9000 members.

    “This year has brought many new friends who have believed in BAS and whose efforts gave BAS a chance for success,” the email continued. “Your encouragement and commitment was well received, and with sincere appreciation for the opportunity we had working with each of you, we honorably salute you.

    “You are the reason that we have delayed this closing, hoping that there would be enough that believed in the program to see it through,” the email said. “The past 120 days BAS’ balance sheet as continually gone in the red, and at this time, we do not have the funds to continue with our program. The past few weeks our sales have not been strong enough to pay out reasonable commissions with our RRSP program, or enough funds to handle overhead and continue operations.”

  • POLL: Are The Robbers Smarter Than The Cops? (Sidenote: Are You Ready For A Ponzi Prime-Time Drama On Cable?)

    Our new poll asks a simple question: “Is The Average Autosurf/HYIP Promoter Smarter Than The Average FBI Agent, Secret Service Agent, Postal Inspector, IRS Investigator Or SEC/CFTC Investigator?”

    You may vote only once. There is an option of “Other” in this poll if you don’t want to limit yourself to a “Yes” or “No” answer.

    This poll was sparked by comments we’ve read on the Ponzi boards in recent days. It often seems as though the autosurf and HYIP promoters ignore the possibility that they could get dragged into a major investigation quickly, perhaps assuming that the mere fact they do not own or operate the “program” lets them off the hook from civil and/or criminal liability.

    Serial promoters race from program to program in the “industry,” pocketing commissions and other profits despite the fact one program after another crashes and burns, participants get hurt, families get torn apart, friends turn against friends — and the government has a history of destroying the programs and forcing particpants to pay back ill-gotten gains.

    The days of plausible deniability might be coming to an end for promoters of electronic Ponzis. If you’ve paid any attention at all to the AdSurfDaily case, it is obvious that the government has gleaned valuable intelligence. The men and women who guard the President of the United States and the Treasury started the prosecutorial ball rolling in the ASD case.

    In the ASD case, prosecutors have cited previous autosurf prosecutions by the SEC — namely 12DailyPro and PhoenixSurf. With the bad publicity Ponzi schemes are receiving these days — and with Ponzi headlines constantly in the news and the creation of the Interagency Financial Fraud Enforcement Task Force — the days of “wink-nod” in the autosurf and HYIP Ponzi universes may be coming to an end.

    Did you know that “Damages,” the popular TV drama starring Emmy-winning actress Glenn Close (as Patty Hewes), is wrapping its third season around a fictional Ponzi scheme? It’s a takeoff on the Madoff scheme, and here, in part, is what the New York Times says:

    The “Madoff scenario is a more plausible and inviting crime than the sinister energy-corporation conspiracy that Patty eventually took down last season,” the Times opines. “That story line presumed that corporate titans were not just greedy and murderous but also brainy, and that’s a bit much to swallow in the current economy.”

    Did the Times just call the fraudsters brainless? You decide.

    Here, now, our poll. It also will be in the sidebar to the right:

    Feel free to argue your points in the Comments section of this post. Meanwhile, go here to read what the Times says about “Damages.”

    Cable viewers are going to get plenty of Ponzi in the weeks ahead — not only on CNN, MSNBC and Fox News — but also on “Damages,” Monday night at 10 ET and PT, 9 CT, on FX.

  • THE GREAT PONZI PAPER CHASE: Playing Field Spans Globe, Judge Says; SEC Notes Cook/Kiley Banking Ties In Antigua, Europe, Middle East

    The ruling by a federal judge yesterday that put alleged Minnesota Ponzi schemer Trevor Cook behind bars until he surrenders tens of millions of dollars in offshore bank accounts includes some interesting details.

    For one, Cook, accused by the SEC and the CFTC in a $190 million fraud, had access to a bank account in Antigua. Money connected to Cook was transferred to Antigua Overseas Bank LTD, according to an exhibit Chief U.S. District Judge Michael Davis cited in the case.

    AdSurfDaily, a Florida firm implicated in a $100 million Ponzi scheme, also had money in Antigua. ASD, according to court filings, had at least $1 million in a bank on the Caribbean island — in an account under a different name. The name of ASD’s bank has not been disclosed. Neither has the name under which the account was opened.

    Meanwhile, Cook also had access to bank accounts in “Denmark, the Middle East, Sweden, Switzerland, Germany and Central America,” according to court filings.

    Gold Nugget Invest (GNI), an online HYIP that recently went bust, also purportedly relied on Eurpoean banks. One of GNI’s principals purportedly is named “Jurgen,” and GNI cited a problem with deposits at a “Correspondent Bank” of Yesilada Bank. Money GNI purportedly relied on was frozen “by the German Authorities,” GNI participants said, relying on a convoluted email from the company as their source.

    “This particular frozen account contains all of Yesilada’s client’s foreign exchange funds,” GNI said in a lengthy message to members. It did not identify the “Correspondent Bank.”

    No public documents suggest Cook’s operations were connected to GNI or ASD. But do you wonder just how many players these alleged schemes have in common?

    The documents in the Cook case outline an alleged elaborate fraud that occurred internationally and involved multiple international banks. Those elements have become common in Ponzi scheme probes, some of which are giving new meaning to the phrase “paper chase.”

    Willfull Blindness

    Members of GNI appear not even to know for certain what business the company is in and appear not even to be certain about with whom they’re actually doing business, a sort of willful blindness. Members seem to believe that GNI is in the sports “arbitrage” business, which apparently uses a hedging system to minimize betting risk, but the company also has made references to forex trading.

    GNI members receive nothing that resembles proof of what the company does with investors’ money. Some members suggest that the only thing that mattered to them was that GNI “paid” — before it stopped paying earlier this month, that is.

    GNI began to show signs of an impending failure in the days after Judge Davis froze the assets of the alleged Cook/Pat Kiley scheme in Minnesota, though no linkage has been established between the Cook/Kiley operations and GNI.

    Actions the SEC and federal prosecutors took last year against Antigua banking magnate Allen Stanford — himself implicated in an international Ponzi scheme that perhaps involved as much as $8 billion — appear to have had a ripple effect across the world of online autosurfs and HYIPs.

    Several failed in the wake of the federal actions against Stanford, who is jailed in Texas. The BizAdSplash (BAS) autosurf, for example, reported problems in the aftermath of the alleged Stanford Ponzi.

    Incredible Challenge For Investigators

    What does it all mean? The big picture is far from clear. The autosurf and HYIP landscape is littered with carcasses from one side of the world to another. This universe is dominated by spectacularly corrupt businesses and individuals, many of whom exist in the shadows.

    Last year, the Obama administration announced an initiative to crack down on offshore fraudsters. Some of the litigation that has emerged — or already was in the pipeline when the initiative was announced — produces legal tales that hardly can be believed. The litigation also demonstrates the incredible amount of investigative work and reverse-engineering that is required to prepare a case against defendants.

    Here are some examples from the Cook/Kiley case, which is still very much an investigation in progress:

    There are multiple defendants or relief defendants that allegedly received ill-gotten gains from the scheme, including Cook and Kiley, UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC, Basel Group LLC, Crown Forex LLC, Market Shot LLC, PFG Coin and Bullion, Oxford Developers, S.A., Oxford FX Growth LP, Oxford Global Managed Futures Fund, L.P., UBS Diversified FX Advisors LLC, UBS Diversified FX Growth L.P., UBS Diversified FX Management LCC, Clifford and Ellen Berg and other unspecified individuals and companies.

    Note the multiple references to company names that use the word “Oxford” and references to famous corporate initials such as UBS, which investigators believe is a bid to create the appearance of legitimacy by milking off the names of legitimate companies.

    Notice also the reference to PFG Coin and Bullion. Many recent scams have included references to precious minerals or precious metals. Other schemes have mixed purported forex trading — notice the FX references — and gambling in one form or another.

    The task of unraveling the Cook/Kiley network has fallen chiefly to Scott Hlavacek, an SEC accountant.

    Here are some words from Judge Davis, citing allegations and Hlavacek’s early work on the case, a paper chase if ever there was one:

    “From his review of bank records and other documents, Mr. Hlavacek determined that from July 2006 through July 2009, the Defendants’ bank accounts received at least $190 million from at least 1,000 investors,” Davis said, citing records. “Mr. Hlavacek further determined that from August 2006 through July 2009, Cook and Kiley used $108 million of the investors’ money to fund banking and trading accounts, and to trade in foreign currencies.”

    The judge continued (emphasis added):

    “Hlavacek further determined that Cook and Kiley used $42.8 million of investors’ money for their own use: $18 million was diverted to buy ownership interests in two trading firms; $12.8 million to finance the construction of a casino in Panama; $4.8 million that Cook lost through gambling; $2.8 million that Cook used to acquire the Van Dusen mansion [in Minneapolis]; $2.7 million withdrawn in cash and cashier’s checks; $1.3 million to make payments to lawyers; $1 million to a private investment firm; and $1 million to pay personal credit cards and bank payments.”

    Cook, according to investigators, had a Barclay’s credit card that he used to purchase hard-to-trace gift cards after the asset freeze.

    “On December 1, 2009, Cook obtained $2,700 in gift cards from the Cub Foods store in Eagan [Minn.] by charging such purchase to a Barclay’s credit card,” Davis said, citing records. “On December 3, 2009, Cook incurred purchases at the same Cub Foods store totaling $2,784.51 using the Barclay’s credit card.

    “Thousands of dollars were charged to Target Stores to obtain gift cards using the same Barclay’s credit card used at the Cub Foods Store,” Davis said. “On October 20, 2009, Cook sold a car to Morrie’s Motors and received a cashier’s check in the amount of $37,500. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders.

    “On October 15, 2009, Cook sold a car to Premier Marketing and received a cashier’s check in the amount of $16,500. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders,” the judge said.

    “On July 2, 2009, Cook withdrew $600,000 from the Oxford Global FX, LLC account at Associated Bank. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders.”

    Worn out yet? If so, you likely won’t gain any comfort from the fact that the litigation is only two months old and that the investigation still is in its early stages — with the world as the stage.

  • PONZI UNIVERSE: Just How Weird Will It Get? Spammer With Possible ASD Ties Tries To Post News Release In 10 Separate PP Threads; Elsewhere, A ‘Comic Book’ Ponzi Scheme

    On a day a federal judge ordered alleged Minnesota Ponzi schemer Trevor Cook jailed — in part for not turning over a two-passenger submarine allegedly purchased on eBay with Ponzi proceeds — the following things happened:

    • A would-be PP Blog poster attempted to post the same news release about AdSurfDaily mainstay “Professor” Patrick Moriarty in 10 separate threads over a span of 26 minutes. The early indications are that the spammer was associated with both the alleged ASD Ponzi scheme and Gold Nugget Invest (GNI), an HYIP that tanked earlier this month after advertising tax-free returns of 7.5 percent a week. (One poster after another on the Ponzi boards has defended GNI, saying the program was “real” and “honest” because it paid. The same defenses have been uttered for ASD.)
    • The FBI announced the Ponzi scheme arrests of two Greater Chicago men, alleging they had met in federal prison while serving time for previous fraud schemes. After they emerged from prison, they started a Ponzi scheme involving comic books and movies that bilked investors out of $4 million.

    Just how crazy are things going to get in the Ponzi universe? It’s a universe that already includes figures associated with bizarre litigation centered on bizarre claims they are immune from U.S. law because they are adopted members of “Indian” tribes purported to be “sovereign” and that their sovereignty not only is absolute, but also is portable; figures who claim Ponzi schemes are legal as long as participants get “paid”; figures who claim the presence of convicted felons in one scheme after another is mere coincidence; figures who claim prosecutors are not permitted Constitutionally to interfere with commerce even if the commerce is illegal; figures who believe the United States passed secret legislation in the 1990s in anticipation of a visit by reptilian aliens; figures who claim the answer to Ponzi schemes that plague America is even more Ponzi schemes.

    First, a few paragraphs about the would-be serial poster on the PP Blog earlier today:

    We were working on a story this afternoon when our Comments Box in the Blog’s administrative panel began to bulge from spam from a would-be poster. We always check the spam box several times a day in case our filter flags a legitimate comment as spam. When we took a peek this afternoon, the filter had collected 10 consecutive posts from the same sender.

    Each of the would-be posts was targeted at separate Comments threads below stories. Each was a duplicate of a Justice Department news release on “Professor” Patrick Moriarty’s guilty plea to tax charges earlier this month, a story we covered 15 days ago. (If you’re new to the PP Blog, Moriarty was a member of the alleged ASD Ponzi scheme. His tax case was separate from the alleged scheme masterminded by ASD President Andy Bowdoin, and Moriarty is not listed as a defendant in the ASD Ponzi case. He became notable, however, for advancing a theory that the ASD prosecutors had interfered with commerce. Moriarty also once established a nonprofit entity in the name of a man accused of murdering a woman in cold blood and shooting a Missouri police officer four times.)

    In any event, none of the threads the would-be poster selected to copy and paste the news release pertained to Moriarty. Near as we can tell, the poster may have a link to both the alleged ASD scheme and the GNI “arbitrage” program, an HYIP that tanked recently. The would-be poster did not include an actual comment with his copy-and-paste news release; he simply copied and attempted to paste it in 10 separate threads over a period of 26 minutes.

    The first attempt occurred at 3:03 p.m. ET; it was followed by attempts at 3:24 in two separate threads; 3:25 in two separate threads; 3:26 in a separate thread; 3:27 in two separate threads; 3:28 in a separate thread; and 3:29 in a separate thread.

    As often is the case with ASD, the question is why. Based on a preliminary analysis of data, we believe the would be-poster was a member of the now-defunct Surf’s Up forum, a Pro-ASD site that railed against the government and advocated on behalf of Ponzi schemes. Surf’s Up went missing earlier this month. A forum with Surf’s Up ties that had advocated for a surf known as AdViewGlobal (AVG) went missing last summer — after AVG, which had close ASD ties, suspended payouts.

    We’ll update readers on the would-be serial poster if we develop more information. At the moment, the data suggest his effort is connected in some form or fashion to this story. His name may or may not be “joe.”

    Turning now to the alleged “comic book” Ponzi scheme, the FBI said it operated in the Chicago area and was known as Sundown Entertainment Inc.

    Charged with wire fraud in the case were Daniel Parrilli, 59, of Carol Stream, and Christopher Andersen, 59, of Westmont.

    Parrilli and Anderson allegedly met while serving time for fraud in federal prison earlier this decade.

    The alleged Parrilli/Andersen Ponzi scheme was the second to touch Carol Stream in recent weeks. On Jan. 8, the SEC charged Steve Salutric, 51, a church treasurer, with operating a Ponzi scheme by raiding the Charles Schwab accounts of clients of Results One Financial LLC.

    Salutric is accused of misappropriating at least $1.8 million in clients’ funds, including more than $400,000 from a 96-year-old woman with dementia. The woman, identified by the SEC as “Client A,”  resided in a nursing home.

    Fearing his fraud was about to be exposed, Salutric began to approach clients with offers to pay them “hush money,” the SEC said.

  • BULLETIN: Trevor Cook Jailed For Contempt In Minnesota Ponzi Scheme Case; Judge Orders Him To Surrender $27 Million, Submarine, Houseboat, More

    UPDATED 7:55 P.M. ET (U.S.A.) A federal judge has ordered Trevor Cook jailed for not turning over assets in a Minnesota Ponzi scheme case brought by the SEC.

    Chief U.S. District Judge Michael J. Davis found Cook in civil contempt of court. U.S. Marshals “escorted Cook from the courtroom to jail,” the SEC said.

    “Mr. Cook has elected to disregard the court’s orders and will now be a guest of the federal correctional system until he mends his ways,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.

    Cook, accused with Christian radio host Pat Kiley in November of operating a complex financial fraud involving forex trading, would remain jailed until he surrendered $27 million “located in offshore accounts, a BMW and two Lexus automobiles, a submarine, a houseboat, a collection of expensive watches, a collection of Faberge eggs, Bon Jovi concert tickets, and $670,000 in cash,” the SEC said.

    An investor said in a court deposition that Cook told him he bought the two-person submarine on eBay for $40,000 to access a private island in Canada. Investigators said the scheme involved at least $190 million.

  • Bowdoin, Prosecutors Clash Anew In August 2008 Forfeiture Case; Dispute May Explain Government’s Announcement Last Week That Separate Case Could Be Delayed For ‘Several Months’

    UPDATED 2:03 P.M. ET (U.S.A.) Two attorneys for AdSurfDaily President Andy Bowdoin are asking a federal judge to vacate orders she issued granting a default judgment to the government and granting a final order of forfeiture to tens of millions of dollars and a home seized in the case.

    Attorneys Charles A. Murray and Michael R.N. McDonnell assert that U.S. District Judge Rosemary Collyer issued the orders granting the judgment and forfeiture in error — before Bowdoin’s legal remedies were exhausted in the August 2008 civil-forfeiture case against ASD-connected assets.

    Although Bowdoin’s defense counsel asserted the government did not oppose the motions, prosecutors fired back with a motion to clarify their point of view, suggesting they did not want anyone to get the impression that they believed Bowdoin’s new arguments had merit.

    Collyer issued the judgment and forfeiture order Jan. 4, Bowdoin’s counsel argued. The order was entered into the record Jan. 6, 57 days after Collyer issued an order in November that denied Bowdoin’s bid to reassert claims to money he forfeited to the government in January 2009.

    Bowdoin still had three days remaining to challenge Collyer’s November ruling when the final judgment and forfeiture order were entered Jan. 6, Bowdoin’s counsel argued, asserting that Collyer had entered the judgment and forfeiture order “erroneously” and prejudiced their client.

    A decision by Collyer not to vacate the orders would result in a “manifest injustice” to Bowdoin, his attorneys argued.

    Bowdoin may turn to the U.S. Court of Appeals for a remedy, his attorneys said. They argued that “intervening circumstances beyond [Bowdoin’s] control” had affected the outcome of the case, suggesting that a clerical error of some sort had prejudiced their client.

    Assistant U.S. Attorneys Deborah L. Connor and Barry Wiegand said Collyer’s issuance of the default and forfeiture orders was legally sound.

    “[T]he United States will contest in every Court at any level any challenge to any of these rulings as error,” Connor and Wiegand said.

    Prosecutors said the government  had spoken with Murray and related to him that it did not oppose providing Bowdoin time to argue his motions. But Connor and Wiegand said the government wanted to make its position “clear” that it did not believe Collyer had erred.

    “The Court’s rulings and issuance of a default judgment and final order or forfeiture were correct in law and fully justified by [the] case’s posture when [Collyer] ruled,” the prosecutors said.

    They added that they intended to file a supplemental brief. How the case would proceed was not immediately clear.

    Prosecutors said last week that there might be a delay of “several months” before final adjudication of a separate forfeiture case brought against ASD-connected assets in December 2008. Bowdoin’s new filings in the August 2008 case suggest both cases could be delayed.

  • POLL RESULT: Readers Say Ponzi Schemes Pose National-Security Threat; Did Surf and HYIP Advocates See Poll As PR Threat?

    By better than a two-to-one margin, readers of the PatrickPretty.com Blog have concluded that Ponzi schemes pose a threat to national security, according to the results of a poll.

    The poll, which began on Jan. 13 and concluded this morning, was unscientific. Still, the results suggest readers are concerned that the criminality associated with Ponzi schemes affects more than individual victims and has broader societal implications beyond the obvious threat to the financial security of investors.

    Sixty-seven percent of the Blog’s readers who participated in the poll said Ponzi schemes pose a threat to national security. Meanwhile, 33 percent said Ponzi schemes do not pose such a threat. A total of 79 readers answered the question. There were 53 “Yes” votes cast, and 26 “No” votes.

    In the poll’s opening hours, those who said Ponzi schemes posed a national-security threat outnumbered those with the opposing view by a margin of nine-to-one. The margin narrowed quickly with a burst of “No” votes, eventually settling in a range that incorporated the poll’s final result. Relatively few votes were cast during the final week of the poll, and the results during the final week generally reflected the overall result: for every two “Yes” votes cast, there was one “No” vote.

    That was not always the case. “Yes” voters surged to an early lead, holding a 90 percent majority. That lead, however, was pared back by short, consecutive bursts of “No” votes. More than one surge of three or four consecutive “No” votes occurred in rapid succession.

    Readers who said Ponzi schemes posed a threat to national security comprised a significant majority throughout the poll, always holding at least 64 percent of the vote. After the opening surge, the majority’s lead never was seriously threatened.

    There are indications, however, of shenanigans to affect the outcome of the poll. These indications do not rise to the level of proof, but are worth noting.

    Because the Blog’s audience includes readers who identify themselves as advocates for autosurf Ponzi schemes and say the government’s efforts to control them are unfair and ill-advised, it is possible that a minor effort was made to organize like-minded voters to cast “No” votes — i.e., to say Ponzi schemes do not pose a threat to national security.

    Advocacy for Ponzi schemes largely is nonexistent outside the corrupt, insular world of autosurf and HYIP Ponzi schemes. Promoters of such schemes sometimes are called “leaders,” and they receive commissions for recruiting participants into the schemes. There also is a culture of “insiders” in such schemes. The “insiders” are people who gain disproportionate shares of revenue created by the schemes through private dealings. The “insiders” also include people who receive compensation not necessarily because of what they do, but who they know.

    Both the “leaders” and “insiders” — along with autosurf/HYIP downline members sometimes known as the “cheerleaders” — have been known to organize efforts to squelch autosurf and HYIP critics.

    Based on voting patterns in the poll, it is possible — though not certain — that leaders, insiders and cheerleaders made an effort to recruit “No” votes in a bloc. The reason it cannot be ruled out is “No” votes were cast in short, consecutive bursts but were almost nonexistent during the opening hours of the poll.

    This possible anomaly occurred even though autosurf and HYIP advocates monitor the PP Blog closely and routinely condemn it.

    After the early, commanding lead of “Yes” voters, “No” voters cut into the lead with short bursts of three or four consecutive “No” votes that were not offset by “Yes” votes.

    Because “No” votes also surged in short, consecutive bursts after we published stories that mentioned Ponzi links to terrorism and murder, it is possible — though not certain — that leaders, insiders and cheerleaders sought to affect the outcome of the poll because they perceived it as a PR threat to their autosurf and HYIP schemes.

    We cannot say conclusively, however, that shenanigans occurred. Even so, the pattern is worth noting because of previous bids across the autosurf and HYIP universes to silence critics, squash legitimate discussion of autosurf and HYIP schemes and position regulators and law-enforcement entities as jack-booted thugs, Nazis, enemies of Constitutional law and even terrorists.

    Even if there were no efforts to line up “No” votes, more than two-thirds of PP Blog readers — a substantial majority — said Ponzi schemes pose a threat to national security. If there were efforts to line up “No” votes, the majority of “Yes” votes could be even higher.

  • GNI Members: Failed Program Was ‘Honest’ And ‘Real’; Critics Should Shut Up And Focus On Haiti Earthquake

    Critics of Gold Nugget Invest (GNI), the collapsed Internet HYIP, do not understand that the program that advertised a return of 7.5 percent a week was “real,” according to a member writing on an online Ponzi board.

    Bickering about GNI only will lead to additional problems for the company, which is faithfully trying to reorganize, and the critics should send money to Haiti instead of infecting the membership with negative thinking, according to the member.

    “[W]hy not use your idle time for [the Haitian people?]” the GNI apologist asked on the ASA Monitor Ponzi board. “l doubt if you can do that ‘cos that is your true nature.”

    Haiti suffered a devastating earthquake Jan. 12. As many as 200,000 people are believed to have perished.

    In earlier posts, the apologist suggested that GNI critics were suffering from “mental illness” and observed that, “I will be very grateful if GNI runs for 20 years as a pronzi (sic) !!!!”

    The poster did not explain how a program purported to be a “real” business could create legitimate profits by operating as a Ponzi scheme.

    GNI, which positioned itself as a betting “arbitrage,” tanked last week. It is among a number of recent investment programs using the name of a precious metal or a precious mineral that have encountered difficulty either from members or law enforcement. GNI did not publish verifiable financial information. There is no way to verify GNI’s claims, including an apparent claim that certain resources are tied up in a purported banking investigation in Europe that has nothing to do with the company.

    GNI now says its program will pay “up to” 20 percent monthly through a “No Risk Wager.” The company did not explain how it had categorically eliminated risk during a period in which it apparently did not have access to the capital it needed to operate and had suddenly changed the rules, leaving existing members holding the bag while apparently still advertising for new members to entrust their funds to the firm.

    Some members, though, insisted they were standing by GNI because it always had “paid” and just hit a bump in the road.

    Canadian regulators last week declared a collapsed program known as Gold Quest International (GQI) a “sham” and both a Ponzi and a pyramid scheme. Investors dumped at least $27 million into the program, according to the U.S. Securities and Exchange Commission.

    GQI, which claimed Panamanian registration while operating from Las Vegas and saying it was immune to U.S. and Canadian law because it was affiliated with a “sovereign” Indian tribe, scammed thousands of investors, according to the SEC and the Alberta Securities Commission.

    At least $3.15 million linked to GQI ended up in New Zealand, in one or more bank accounts tied to a company known as Topaz Group Ltd., according to court filings by Larry Cook, the court-appointed receiver in the SEC case. The majority of that money then was “immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies,” according to court filings.

    John Davies was identified as the owner of Topaz Group.

    Other GQI money made its way into E-Bullion accounts in California, according to court filings. The E-Bullion money is tied up in a fraud and murder investigation of E-Bullion owner James Fayed, accused of having his wife killed in a Greater Los Angeles parking garage.

    Another “gold-themed” tie involves Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia. Anderson recently was sentenced to 90 months in federal prison in the United States for operating a $4 million Ponzi scheme known as Frontier Assets.

    Anderson also was linked to a mysterious scheme known as the “Alpha Project.”

    U.S. and Canadian investigators identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.

    Records in the Anderson case include references to E-Bullion.

  • PROSECUTORS: ‘Final Action’ In Second ASD Forfeiture Case Not Expected For ‘Several Months’

    UPDATED 11:46 A.M. ET (U.S.A.) Final judicial action in the second forfeiture case filed against assets connected to AdSurfDaily “is not expected for at least several months,” federal prosecutors said.

    The second action was filed in December 2008. It identified family members of ASD President Andy Bowdoin as beneficiaries of a Ponzi, wire-fraud and money-laundering scheme operated by ASD.

    Among the family members identified in the December complaint were Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris. Judy Harris, the wife of George Harris, also was identified in the complaint as a beneficiary of ASD’s alleged illegal conduct.

    Prosecutors filed the initial action against ASD’s assets in August 2008. That case concluded with the Jan. 4 issuance of a final forfeiture order by U.S. District Judge Rosemary Collyer, prosecutors said.

    The government now has title to nearly $80 million seized in the August 2008 case — the lion’s share of the liquid assets (cash) from the combined cases. Only about $635,000 in cash was listed as seized in the December case, meaning prosecutors have control of more than 99 percent of the money targeted in the combined cases.

    Prosecutors did not explain why they anticipated a considerable delay in finalizing the December 2008 case. (UPDATE: 11:46 A.M: Citing an investigation in progress, a Justice Department spokesman declined to comment.)

    Nothing so far suggests, however, that the December case has been delayed as a result of an appeal by Bowdoin in the August case. The record does not reflect an appeal. The delay appears to be procedural.

    The December complaint alleged that Edna Faye Bowdoin and George Harris used money from two ASD Bank of America accounts to open an account at a third bank.

    The new account was funded with an opening deposit of more than $177,000 — more than $157,000 of which was used to pay off the mortgage of the Tallahassee home George and Judy Harris shared, according to the complaint.

    Read the prosecution’s statement.

  • California Man Guilty In $62 Million Ponzi Scheme; Milton Retana Targeted Latinos, Ordered Evidence To Be Hidden In Back Of Religious Bookstore

    In yet another case in which the name of a precious metal or mineral was used in a Ponzi scheme, Milton Retana has been found guilty of six counts of mail fraud and one count of lying to federal investigators.

    Evidence of the fraud was hidden in the back of a religious bookstore operated by Retana’s wife, prosecutors said. When investigators searched the bookstore, they found millions of dollars in cash, prosecutors said.

    Retana, 46, of Huntington Park, Calif., faces a maximum of up to 125 years in prison. Sentencing is set for April 26. Investigators said he operated Best Diamond Funding, a Ponzi, affinity-fraud and real-estate investment scheme that fleeced more than 2,000 victims out of more than $62 million.

    Best Diamond was located next door to the bookstore. The FBI and U.S. Postal Inspection Service smashed the scheme, prosecutors said.

    Jurors returned the verdict in less than an hour, after a week-long trial. Dozens of victims appeared in court to hear the verdict, prosecutors said.

    Beginning in 2006, Retana told investors their money would be used to buy and sell real estate. He targeted mostly a Spanish-speaking audience, and used religion in his pitches, prosecutors said.

    “Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit,” prosecutors said.

    But records showed Retana “used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money,” prosecutors said.

    As often is the case in investment schemes, victims “mortgaged their homes and drained their retirement accounts because they believed Retana’s promises that their investments would be safe,” prosecutors said.

    Among the victims were a stone mason, a truck driver and a roofer. The roofer also was the pastor of his church.

    The scheme nearly was detected in 2008, when the California Department of Real Estate audited Best Diamond, prosecutors said.

    Retana, though, stymied the probe “by ordering his employees to hide all of the investor files at the back of his wife’s religious bookstore, La Libreria Del Exito Mundial.

    “His scheme was disrupted in October 2008, when federal agents from the United States Postal Inspection Service and the Federal Bureau of Investigation executed search warrants on the offices of Best Diamond Funding and the bookstore,” prosecutors said.

    Agents found $800,000 in cash stashed in Retana’s desk and $3.2 million in cash hidden in the back of the bookstore. Investigators seized another $8 million from Retana’s bank accounts.

    “Soon after the execution of the federal search warrants, agents interviewed Retana, who lied about how much money he had received from the investors and claimed that he could pay all of them back,” prosecutors said. “Retana was later secretly recorded telling a Best Diamond employee not to tell the government how much money Best Diamond had received from the investors.”