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  • BOLO Clarence Busby? Reader Puzzled By RICO Defendant’s Absence; Says Busby Out Of Touch For ‘Months’

    Should the government and litigants be on the lookout for Clarence Busby? He hasn’t been charged with a crime and, in September, he surrendered his claims to money seized by the U.S. Secret Service as part of its probe into the alleged criminal business practices of his company, Golden Panda Ad Builder of Acworth, Ga.

    Prosecutors said the money was part of the proceeds of a wire-fraud, money-laundering and $100 million Ponzi scheme in which Busby and Golden Panda participated with AdSurfDaily Inc. of Quincy, Fla.

    Busby identified himself as a minister. But he also is in the real-estate business, and last night a reader contacted us to say he has been unable to reach Busby.

    “We are buying a house from him and can’t seem to get in contact with him,” the reader said. “The last we heard, he was overseas starting up an internet company. We are a little concerned.”

    The reader added that he has been unable to contact Busby “for the past couple of months.”

    Here’s what we know about Busby: He played it cool as a cucumber when federal prosecutors announced the seizure of tens of millions of dollars last summer. Busby announced to Golden Panda members that his faith would get him through the dark hours. He composed a series of cloying Blog posts, assuring everyone that things would be just fine.

    Clarence Busby lays on the syrup, to be sure. In court filings, he explained how he’d gone fishing with ASD President Andy Bowdoin.

    “As a social courtesy to Bowdoin, I asked a pastor friend of mine, Rev. Charles Green, if he might bring his boat and join me in inviting Bowdoin on a relaxing fishing trip,” Busby told U.S. District Judge Rosemary Collyer. “I imagined that operating ASD involved a lot of stress, and I had heard Bowdoin liked to fish. I also wanted a respite from work. The invitation was extended and Bowdoin agreed to join us.”

    Busby then explained how Golden Panda was born:

    “On April 11, 2008, we fished at a lake in Brunswick, Georgia for a day. On that Day Bowdoin surprised me by recommending that I start a Chinese version of ASD,” Busby said.  “Bowdoin suggested that I organize the business without him. He said, ‘I can’t handle the business I already have,’ stating that I should be the one to create, own, and operate this Chinese version of ASD.

    “I was interested in the idea, but did not have knowledge of computers and the web, so I thought Bowdoin should run it, but Bowdoin did not want to run it,” Busby continued. “I chose the name of Golden Panda Ad Builder Inc. and I had the company incorporated on May 15, 2008. At that time, I still thought that Bowdoin would end up running the business, so I placed his name as President of the company, although Bowdoin never actually took any step to run the company.

    “Two and one half weeks before Golden Panda commenced operations on July 24, 2008, Bowdoin called me and reiterated that he did not have time for Golden Panda, had done nothing to help create it, and therefore thought I should be the one to own, operate, and control the business.

    “I then decided that with the help of my kids that I really could run a web based advertising business on my own. On July 2, 2008, I amended the Golden Panda papers with the state, naming myself as the President and removing Bowdoin’s name.”

    In his court filings, Busby said he didn’t know Bowdoin “had prior run ins with the law” and had been arrested in Alabama for defrauding investors.

    Busby did not say if he told his fishing partner about his own run-ins with the law: The Securities and Exchange Commission said Busby defrauded investors in the 1990s.

    “[T]he Commission alleged that Busby violated the antifraud provisions of the securities laws by offering and selling investment contracts in connection with three different prime bank schemes,” the SEC said.

    “Using misrepresentations and omissions in each of the three schemes, Busby raised money for purported trading programs in ‘prime bank’ notes by fraudulently representing to investors that the investments were risk-free and that the ventures would pay returns ranging from 750% to 10,000%. In total, Busby raised nearly $1 million from more than 70 investors. None of the investors earned the exorbitant returns promised by Busby,” the SEC said.

    Busby settled the case with the SEC in May 1998 by agreeing not to break securities laws. The SEC waived a $15,000 penalty and accrued interest because Busby certified he was broke.

    Almost 10 years to the month later, Busby went fishing with Andy Bowdoin. Both men now have been accused of racketeering in a class-action lawsuit brought by members of AdSurfDaily.

  • BREAKING NEWS: Bowdoin, Busby, Garner, BOA Sued Anew

    Attorney Robert Garner
    Attorney Robert Garner

    UPDATED 7:42 P.M. EST (U.S.A.) Individuals associated with AdSurfDaily Inc. have been sued in U.S. District Court in Washington, D.C. The complaint alleges racketeering, and names Bank Of America a defendant for aiding and abetting the scheme.

    BOA was not named a RICO defendant.

    The case was brought by Mike Collins of Savage, Minn.; Frank Greene of Washington, D.C.;  and Natures Discount of Aventura, Fla. It was filed as a class-action and has been assigned to Judge Rosemary Collyer, the same judge hearing the ASD civil-forfeiture case filed by federal prosecutors in August and a second forfeiture case against ASD assets seized in December.

    Natures Discount previously sued the same defendants in U.S. District Court for the Northern District of Florida, but withdrew the case.

    “From ASD’s inception in November 2006, Defendant Bank of America played an integral role in ASD’s operations and success,” the plaintiffs charged. “While other financial institutions and payment processors refused to facilitate ASD’s fraud, Bank of America, even in the face of significant banking best practices ‘red flags’ and likely violations of the Bank Secrecy Act and relevant anti-money laundering statutes, not only conducted business with ASD and the RICO Defendants, but it also substantially assisted the expansion of the ASD scheme.”

    Plaintiffs Hint Of Other Bowdoin, Busby, Garner Schemes

    ASD President Andy Bowdoin, Golden Panda President Clarence Busby and ASD attorney Robert Garner were accused in the complaint of conspiring with unnamed parties in organized efforts to defraud.

    The complaint alleged the men were involved in “other” schemes beyond ASD, Golden Panda and LaFuenteDinero, and have “committed or aided and abetted in the commission of countless acts of racketeering activity,” including indictable offenses.

    “The ASD Enterprise provides the RICO Defendants and other unnamed co-conspirators with a system by which to operate fraudulent schemes such as ASD, to hide the fraudulent nature of the schemes, and to profit from such schemes,” the plaintiffs alleged. “Each RICO Defendant agreed to perform services of a kind which facilitated the operation of the ASD Enterprise and facilitated the RICO Defendants and others in the operation of various fraudulent schemes, including ASD.”

    Attorneys for the plaintiffs did not name the other alleged schemes. One of the attorneys, Steven N. Berk, is a former federal prosecutor and a former staff attorney for the Securities and Exchange Commission. Berk served as an assistant U.S. Attorney for the District of Columbia, and is a partner in Chavez & Gertler in Washington.

    In recent weeks, at least three autosurfs using a model similar to ASD either have launched or are in the process of launching. One of the autosurfs — AdGateWorld — once published a Terms of Service document on its website that included references to “ASD.”

    adgatetermssmall1

    Screenshot from Oct. 25, 2008.

    A second autosurf known as AdViewGlobal has known ties to ASD. Early promotions for the surf listed Juan Fernandez, chief executive officer of ASD, as “national sales manager” for AdViewGlobal.

    Meanwhile, a surf known as Biz Ad Splash is using a model that requires members to become “qualified distributors” after 30 days to take advantage of surfing rebates. ASD briefly tried a similar approach in July, according to a forfeiture complaint filed in December by federal prosecutors against assets linked to ASD.

    “In July 2008, on the first page of its website, ASD informed prospective ad purchasers that “[a]d purchasers will continue to be paid rebates until they receive 100 percent of their ad purchases,” prosecutors said. “To earn an additional 25% rebate on their ad purchase, an ad purchaser must have a minimum group sales volume of $15 per month or their sales volume must average $15 per month while the ad package is still active. This helps us maintain a constant growth so everyone can reap their profits.”

    None of the new surf sites identifies the owners/operators. And they all list offshore registration — BizAdSplash and AdGateWorld in Panama, and AdViewGlobal in Uruguay. The IP addresses for each of the surfs resolve to Panama.

    adgateworld525Early AdGateWorld promoter’s pitch.

    Plaintiffs in the RICO lawsuit outlined an alleged pattern of fraud and deceit on the parts of Bowdoin and Busby, citing their previous encounters with securities regulators — a felony conviction for Bowdoin in Alabama and a deal Busby struck with the Securities and Exchange Commission to settle charges he was a principal in three prime bank schemes that defrauded investors. Neither man disclosed their previous involvement in securities schemes to members before launching ASD and Golden Panda Ad Builder, the plaintiffs charged.

    Bowdoin spun an untrue tale of fabulous business success to recruit ASD members, and the company and some of its participants told lie after lie to separate people from their money, the plaintiffs alleged.

    Included among the lies were assertions that ASD was going to “sign up” more than 100 Fortune 500 companies “such as Google, Coke, Pepsi” and others to pay for advertising and generate revenue to pay for rebates. Another lie was that ASD had a contract to place ads for three companies and would collect “at least $13 million a year” as a result of the contract, the plaintiffs alleged.

  • ASD Members International Dissolved

    It came online a few months ago with the strange promise it would litigate against government entities involved in the AdSurfDaily case — even if they were behaving legally. If lawsuits didn’t work, then perhaps it would see about having prosecutors charged with crimes.

    But ASD Members International (ASDMI), a nonprofit registered in Missouri, is no more. The corporation has been formally dissolved. It existed for less than 90 days — Oct. 30, 2008 through Jan. 26, 2009. The process of dissolving the entity actually began on Dec. 10. Formal papers were signed Jan. 21, and the dissolution was recorded Jan. 26.

    ASDMI’s website now redirects to tripod.com.

    “As most of you know by now, Andy Bowdoin has withdrawn as a claimant in the Forfeiture of Assets against ASD,” ASDMI said on the tripod site.  “ASDMI (ASD Members International) had retained an attorney to try and overturn the forfeiture. It was determined that it would be too difficult and costly to work on a contingency basis for a class action suit. ASDMI was attempting to obtain legal standing in case 1:08-cv-01345. We also found that to obtain standing would be extremely difficult if not impossible.

    “Mr. Bowdoin’s recent actions were a surprise to us and our negotiations have ended abruptly,” ASDMI continued. “The moneys we have spent on this negotiation have been wasted to say the least.”

    ASDMI had crowed on its website as late as last week that it had persuaded 167 people to part with their money and join in the important work of jailing prosecutors and suing the government back to the Stone Age, if necessary, to recover money paid to AdSurfDaily.

    Prosecutors seized at least $93.5 million amid allegations that ASD President Andy Bowdoin was running a Ponzi scheme and engaging in wire fraud and money-laundering.

    Image problems for ASDMI began out of the gate. A PR flap ensued when two board members of the group were linked to Curtis Richmond, a man associated with a Utah “Indian” tribe a federal judge ruled a sham. The tribe, purportedly formed in an Arby’s restaurant, is well-known in local, state and federal government circles for employing a strategy called “mailbox arbitration” and threatening prosecutors, judges and police officers.

    ASDMI denied any links to Richmond, who was convicted of felony contempt of court in 2007 for threatening or trying to intimidate federal judges, but the links were obvious. In November, Richmond attempted to file a motion to dismiss the ASD case. Judge Rosemary Collyer denied him leave to file.

    At the same time, at least one ASDMI board member — through a separate website — was organizing a campaign to send certified letters to prosecutors.

    Mailbox arbitration works on the theory you can mail certified demand letters to litigation opponents. If they don’t sign for the letters or choose to ignore the demands, you declare they’ve defaulted on a contract and file a judgment for an enormous amount of money.

    It didn’t help that Dale Stevens, “chief” of the sham tribe — the Wampanoag Nation, Tribe of Grayhead, Wolf Band — was arrested for child pornography and anounced his intention to marry two underage girls.

    One of the girls was 12. Stevens, 69, said he’d hoped to enter into marital bliss with her in exchange for half a cooler of “energy bars.”

    And it didn’t help when Judge Rosemary Collyer issued a ruling in November that ASD had not demonstrated that it was a legal business and not a Ponzi scheme at a Sept. 30-Oct. 1 evidentiary hearing.

    In the end, ASDMI lasted about as long as a typical autosurf Ponzi scheme. Many surf sites begin to fail within two to three months of launch (if not sooner) — sometimes because the operator is impossibly upside down, and sometimes because he or she simply decides to run with the money.

  • Bowdoin/Madoff Comparison: Is It Fair?

    andybowdoinartLast night we received a note from a reader who had a bone to pick: He advised us, seemingly politely, that ASD was not an “autosurf.”  Rather, he said, it was a “manual surf.”

    There was a whiff of passive-aggressiveness in the note: He informed us that he did not desire to “address your blog” with the exception of informing us of the differences between a manual surf and an autosurf.

    Because we received this note shortly after publishing a graphic showing Andy Bowdoin, Bernard Madoff and Arthur Nadel in the same image, we wondered if the reader actually had a bigger bone to pick but didn’t want to acknowledge it. He didn’t want to “address your blog,” after all. (View the graphic.)

    We have received many such notes since August. Lots of them have been passive-aggressive in nature — poison arrows and bitter sarcasm delivered with a smile — and some were just plain aggressive. Virtually all of them tried to change the subject in some way and deflect from the core issues. We’ve been told that our “little blog” was universally reviled, told that we had “no right” to write about ASD because we weren’t members and, in the next breath, told that people who really understand how the world works recognize the ASD case for what it is: an attempt by the government to trample on people’s rights.

    ‘Win-At-All-Costs’ Strategy Backfired: ASD Members Destroyed Firm’s Already-Fleeting Credibility

    If you were the owner of an Internet program in almost unimaginable trouble with the government — so much trouble that prosecutors wanted to seize your property and sell it at auction — would you want members trying to “help” your case by insulting or trying to intimidate prosecutors, federal judges and other people who had the power to make a difference?

    Would you want Kool-Aid campaigns to Bill O’Reilly or petition drives aimed at getting politicians to endorse Ponzi schemes during an election year that coincided with an economic crisis? (Talk about a mixed message.) Would you want members trying to influence public opinion by sending chain letters to reporters? Would you want people repeating claims that a deal with a penny-stock company was going to pump $200 million into ASD? Would you want people filing complaints and trying to have a TV station charged with “deceptive business practices” for broadcasting news unflattering to ASD?

    And how about certified-mail campaigns right out of a sham Utah “Indian” tribe’s playbook — a tribe purportedy founded inside an Arby’s restaurant? Finally, would you want people filing complaints with the Office of Inspector General at the Justice Department before there had been a single finding of fact in the case?

    If you want to be taken seriously, you wouldn’t want any of these things. So why encourage them?

    What’s more, why invite even more scrutiny of ASD? The firm and its own out-of-control members destroyed the only chance ASD had to be viewed as a progressive, professional advertising company with a sharp, well-honed message and a well-oiled PR operation.

    Nothing that ASD or its members did was consistent with professionalism. The messages couldn’t possibly have been more at odds with themselves.

    Here is how a professional communications company would have addressed a monumental crisis:

    We emphatically deny the government’s assertions and look forward to explaining our business model to the Court. We are confident these issues will be resolved to our satisfaction and that we’ll continue to provide an extraordinary value and opportunity to our worldwide customer base.

    Compare that simple message to the ultimate messages.

    Back to last night’s note . . .

    The AdSurfDaily case does not hinge on whether ASD was a manual surf or an autosurf. We acknowledge that ASD participants had to click on an object to see the next ad. We have written about this, pointing out that a young girl videotaped clicking on ASD ads said it was so simple a six-year-old could do it. In the same video, the supervising adult implied that Facebook was a paid ASD advertiser. Lots of ASD members were capable of doing or saying anything to get the sale.

    The term “autosurf” generally has come to mean a surf site that loads ads in a rotator and pays people “rebates” to view them. The term is used in virtually all litigation involving similar businesses, so we’re comfortable with it. Readers seem to know what “autosurf” litigation is about, and ASD would be in the same trouble if it offered “rebates” but operated as what commonly is known as a manual traffic exchange.

    As we noted above, the note was polite. But we can’t help but wonder why the reader had the need to define ASD as a manual surf at this late date. It impressed us as yet another bid to change the subject. Andy Bowdoin already has surrendered claims to the lion’s share of the seized assets, and the court has acknowledged his motion to withdraw the claims.

    For all intents and purposes, the forfeiture element of the case is over, and the government has won.

    The Bowdoin/Madoff/Nadel Graphic

    Let us know if you think it was fair or unfair by leaving a comment.

    We believe it is fair for the following reasons:

    • All three men are implicated in big-dollar Ponzi schemes.
    • All three men have close ties to Florida.
    • All three men are in their 70s.
    • Ponzi schemes are very much in the news.
    • A $100 million Ponzi scheme should not be viewed as a minor event simply because there are larger Ponzi schemes.
    • Incredible sums of wealth were destroyed.
    • Although it is true the government intervened in the Bowdoin case before the Ponzi collapsed, it is equally true that it didn’t intervene in the Madoff/Nadel cases — much to the dismay of investors who lost fortunes.
    • Madoff, despite the fact he is Public Enemy No. 1, is said to be cooperating with investigators. If true, it does not minimize the crime or make it any less repulsive — but it is something Bowdoin didn’t do. To say Bowdoin’s approach was cynical is to understate his method. He encouraged members to send in testimonials while shielding them from important facts. He then relied on members to testify at the evidentiary hearing, while notifying the court that he intended to take the 5th.
    • Prosecuors allege in all three cases that company funds were diverted to fuel personal spending, including luxury spending for things such as automobiles. Prosecutors also allege that company funds were directed to family members and that extravagant purchases were made.

    So, make your case: Fair or unfair? We are always pleased to publish dissenting opinions.

  • Gadfly Prison Inmate Jonathan Lee Riches Enters Madoff Fray; Files Motion To Intervene In Bankruptcy Case

    jonathanleeerichesmadoffsmallVeteran court watchers might have wagered it was only a matter of time before Jonathan Lee Riches filed a motion in the Bernard Madoff bankruptcy case.

    Had you placed a friendly wager, you’d be a winner. Riches’  brief  was recorded yesterday. He called it an “Amicus Curaie” motion to gain standing with the Court.

    Riches, also known as #40948018, is a prisoner at Federal Correctional Institution (FCI) Williamsburg, in Salters, S.C. His brief was filed longhand — on tablet paper. You can see it on the Madoff Trustee site, operated by Irving Picard, the court appointed trustee.

    Doing a stint for wire fraud, Riches has, among other things, sued the Williamsburg prison telephone number. He also has sued Plato and  Nostradamus, among more than 1,000 others.

    We’re publishing this post for a couple of reasons. The first is that the motion is laugh-out-loud funny. Riches, for example, claims he met Madoff on eharmony.com in 2001. A romantic relationship ensued, and Madoff picked Riches’ brain to learn how to become a better criminal.

    Riches also claims Madoff took money from Williamsburg inmates after offering them 16.8 percent interest, and then invested the money in a Swiss Ponzi scheme.

    So, have a laugh during these troubled times.

    Our second reason for publishing this post is a serious one. Readers following the AdSurfDaily Ponzi scheme litigation know that a strange motion also was filed in that case. Curtis Richmond, a man linked to a sham Utah “Indian” tribe purportedly founded in an Arby’s restaurant, filed a motion to have the case dismissed.

    He was denied leave to file, and has a history of filing frivolous litigation, as does Riches.

    Here we have two very serious cases — Madoff and ASD/Andy Bowdoin — and the judges and true parties to the cases have to accommodate nonsense in a search for the truth. It’s still nonsense, even if it does make you laugh.

    Riches’ brief was funny, to be sure. And there also is humor to be found in a brief filed by a member of a sham “Indian” tribe founded in Arby’s.

    Devoting airtime or column inches to things of this nature often is a tough call. On one hand, neither court brief cited above serves the interests of justice. On the other, however, it’s hard to ignore the human-interest elements of either brief. Madoff on eharmony? Arby’s Indians?

    So, we’ll keep this post brief and acknowledge both the humor and the very serious business at hand.

  • Seniors In Gallery Of Ponzi Rogues; Grandpa Breaks Bad

    bowdoinmadoffnadel

    We noted Sunday that a startling number of senior citizens have been implicated in Ponzi schemes or accused of monumental financial misdeeds. Featured in this graphic are (left to right): Andy Bowdoin, president of fundamentally defunct AdSurfDaily Inc. of Quincy, Fla.; Bernard Madoff, head man at fundamentally defunct Bernard L. Madoff Investment Securities of New York; and Arthur Nadel, principal in several fundamentally defunct hedge funds in Sarasota, Fla.

    Bowdoin is 74. Prosecutors said he fleeced investors in a $100 million Ponzi scheme by selling unregistered securities and calling them “advertisements.”

    Madoff, who might have presided over the biggest Ponzi scheme in world history, is 70. Losses could reach $50 billion.

    Nadel, 76, was arrested yesterday in Tampa, after being on the lam for two weeks. An estimated $300 million is missing from hedge funds he managed in Sarasota.

    Authorities said all three men lived well while investors were being taken to the cleaners. Just prior to a federal seizure of his assets in August, Bowdoin put a gleaming new Lincoln in the driveway — after setting up a sham entity, diverting ASD money to it in a bid to hide assets, and using ASD cash to fuel personal spending in the hundreds of thousands of dollars by family members and preferred investors, prosecutors said.

    Bowdoin has surrendered claims to approximately $100 million in cash and other assets seized by the Feds. In a second forfeiture complaint that is unresolved, prosecutors seek to take control over other assets tied to the firm, including cars, a 20-foot Triton Cabana boat, jet skis and other property purchased with the proceeds of an illegal enterprise.

    Irving Picard, the trustee in the Madoff case, has filed papers to reject expensive automobile leases. While Madoff was engaging in a Ponzi scheme, Picard said, investors were footing the bill for three Mercedes, a Range Rover, a Lexus and a Cadillac.

    madoffleases

    Lease costs for the Mercedes units alone exceeded $4,200 a month, while the lease for the Range Rover cost $1,153 monthly. The Lexus ($888/month) and the Cadillac ($884/month) were relative bargains compared to the other vehicles.

    Prosecutors now say Nadel also took money from company funds and used it for family businesses. The receiver in the Nadel case, Burton Wiand, said in court filings that one of the family business owns as many as five airplanes.

    Other seniors in Ponzi trouble include Richard Picolli, 82, operator of the alleged Gen-See Ponzi in western New York. Prosecutors said he mostly targeted Catholics.

    Meanwhile, Ronald Keith Owens, 73, was just sentenced in Texas to 60 years in prison for running a “prime bank” Ponzi scheme promising huge returns out of the Bahamas and elsewhere.

    Elsewhere, James Blackman Roberts, 71, of Heber Springs, Ark., was just sentenced to 15 years in prison for running a $43.5 million Ponzi scheme.

  • Nadel Diverted Client Funds To Family: Feds

    nadelcheck500

    Florida hedge-fund manager Arthur Nadel turned himself in yesterday to the FBI in Tampa.

    Nadel had gone missing Jan. 14. He was immediately jailed. A bail hearing is set Friday.

    Previously we’ve written about some of the Nadel parallels to the AdSurfDaily Ponzi scheme case. Some of the parallels grew even more striking yesterday, with assertions by federal authorities that Nadel had diverted client funds to family businesses and his wife.

    Federal prosecutors filed a second forfeiture complaint last month against assets tied to ASD. The government seized real estate, automobiles, a boat and other water equipment paid for with ASD money diverted to family members of ASD President Andy Bowdoin.

    In a forfeiture complaint filed in August, prosecutors seized tens of millions of dollars Bowdoin had in bank accounts, plus other real estate tied to ASD. The total amount seized in the case is at least $93.5 million.

    Burton W. Wiand, the receiver in the Nadel case, now has gone to court to attach family assets.

    “Based on our investigation, it is likely that a significant sum of the proceeds of Nadel’s scheme made its way into other accounts controlled by Nadel and/or his wife, Marguerite Nadel,” Wiand said.

    Last year, for instance, Nadel signed checks transferring at least “$1,003,500.00” from Scoop Capital to himself and his wife, Wiand said.

    The scheme likely had been under way for years, Wiand said.

    “Further, in 2003 and 2004 I have already seen documentation showing that at least $685,000.00 was transferred to Nadel and his wife (and have reason to believe that significantly more money was transferred to them),” Wiand said. “In short, it is apparent from the documentation that large quantities of money were diverted from the Hedge Funds to Nadel and Mrs. Nadel. Indeed, to date we have not uncovered any source of income for Nadel or his wife that was not in some manner funded with money from the scheme.”

    Nadel made the checks out by hand, making them payable either to himself or his wife and himself. Sometimes he used the couple’s formal names — “Arthur” and “Marguerite”; other times he used the informal “Art” and “Peg.”

    As the hedge fun assets dwindled, Nadel acquired jets, airplanes and real estate for the family businesses, according to court filings.

    Precisely how clients’ money was plundered virtually it its entirety was unclear. What is clear is that the scheme began to unravel when the alleged Bernard Madoff Ponzi was revealed.

    Nadel, prosecutors said, had been under pressure from colleagues to hire an independent accountant to audit the firms’ assets, but always said no. When the Madoff case made headlines, colleagues insisted on an independent audit. Nadel fled on Jan. 14, a date by which it had become clear that the audit would be performed, prosecutors said.

    Peg Nadel has not been charged with any crimes.

  • Readers Ask: Are The Surf Promoters REALLY That Stupid?

    duhWe’ve received a number of comments from readers that fall along these lines: Are the people promoting autosurfs despite what has happened to AdSurfDaily, LaFuenteDinero and Golden Panda — and the collapse of MegaLido (and others) — REALLY that stupid?

    The short answer is maybe. Each and every one of them is risking the same personal fate as Andy Bowdoin and others before him. Like Bowdoin, they could find themselves enjoying a quiet breakfast one morning when the life-altering knock comes to the door. Because Bowdoin involved family members, knocks also came to the doors of loved ones. The Feds now intend to sell their property, too. Why? Because it was obtained illegally from proceeds of a crime.

    So why continue to promote autosurfs, perhaps even become a “founder” in one of them? Here’s the long answer:

    Damage Control

    For some promoters, it’s actually a tortured form of damage control because they know they’re crooks. To acknowledge the government is right is to acknowledge a crime — and to create a problem with downline members in the autosurf under investigation or in other surfs yet to make the Feds’ radar screens.

    Depending on the level of a downline member’s losses, he or she just might be inspired to sue or actually even call authorities. The promoters don’t want that to happen, so they project an air of confidence. The gambit is that “confidence” in the program and business model — even if it has been blasted to smithereens by the Feds — minimizes the chances of getting arrested or sued by people whose pockets they’ve picked.

    Did you know that “con man” is short for “confidence man?”

    Think about it: The government has just pulverized three autosurfs — not one, not two, but three. Most people would take that as a strong clue that there is nothing to be confident about, that prosecutors understand precisely what is going on, precisely how to dismantle the operations and precisely how to litigate against autosurfs to make it virtually impossible for the government to lose a case.

    The only people “confident” in the model are the con artists. It’s part and parcel to their existence. It’s what they do.

    Henceforth, prosecutors will need only to summon the ASD, LaFuenteDinero and GoldenPanda litigation templates, insert the facts concerning any new surf they seek to dismantle, file the paperwork in the appropriate U.S. District Court — and wait for the surf operator to fold, perhaps after he or she spends hundreds of thousands of dollars to defend a case that can’t be won.

    Like Andy Bowdoin did.

    Greed

    Another reason people continue to promote autosurfs or become an autosurf founder is because they’re just plain greedy and have decided to ignore the consequences. They’ve seen how ASD put $100 million on the table, and have envisioned themselves receiving a big chunk of a like amount.

    Greed definitely is in play in some cases. If someone sends you an email promoting a new surf site in the aftermath of the ASD experience,  it makes little sense to ponder the motivation. Simply assume it’s greed or criminality.

    Addiction

    Yet another reason some people continue to promote is because they’re addicted to the surfs. It’s almost akin to a morbid drug, alcohol or gambling addiction. Despite obvious, painful consequences, they have the need to serve the addiction.

    Did you notice how some people recoiled when commentators said that the government’s seizure of ASD cash was the equivalent of seizing drug money? The comparison was perfectly rational — the illegal sale of drugs poses a clear and present danger to society, and the illegal sale of securities poses a clear and present danger to society — but the comparison separated some people from their senses or caused them to change the subject.

    What does ASD have to do with drugs? they asked, often testily. Acknowledging an addiction is horribly painful, which is why addicts prefer the disease to the cure.

    All of these are reasons why the answer to the “stupid” question has to be maybe. Criminals, greedy people and addicts aren’t necessarily stupid — but, of course, some of them are.

    Crowds have been lining up to perform street justice on Ponzi purveyors in New York in the wake of the Bernard Madoff scandal. The more patient public, for its part, has never been more interested in seeing Ponzi purveyors brought to the official halls of justice — and yet the autosurf promoters don’t seem even to know there never has been a worse time to be in the Ponzi business.

  • BREAKING NEWS: Natures Discount Drops RICO Lawsuit Against Bowdoin, Busby, Garner

    Natures Discount, a former AdSurfDaily advertiser, has dropped a racketeering lawsuit it brought in November against ASD President Andy Bowdoin, Golden Panda President Clarence Busby, and Robert Garner, an attorney who appeared in a video touting ASD’s legality.

    Bank of America also was named a defendant in the Natures Discount complaint, though not as a RICO defendant. Natures Discount asserted that the bank didn’t pay close enough attention to Bowdoin and Busby and aided them in their scheme to defraud customers.

    The allegations against BOA also were dismissed.

    “Pursuant to Rule 41(a) of the Federal Rules of Civil Procedure, Plaintiff hereby gives notice of its voluntary dismissal of the above-styled action without prejudice,” Natures Discount said in court filings today. “Each party will bear their own costs.”

    The dismissal follows on the heels of a government notice last week that it intends to litigate two separate forfeiture actions filed against ASD to their conclusion and take possession of all seized money and property tied to the firm.

    Should the government prevail — and ASD already has surrendered claims to assets seized in the initial forfeiture complaint filed in August — it would mean the government would have exclusive control over virtually all of ASD’s money and property.

    Prosecutors last week established a procedure for members to file for ASD refunds, saying it intended to liquidate real estate and other assets seized from ASD. Members seeking refunds will be required to file petitions and certify under oath that they were crime victims.

    In December, a second forfeiture complaint filed against assets tied to ASD alleged that hundreds of thousands of dollars of ASD funds were used to fuel personal spending by Bowdoin family members. Included were automobiles, a boat, jet skis, hauling trailers and a family home in Tallahassee.

    The government has not guaranteed any refund amount, and its probe is ongoing. All of ASD’s assets were forfeitable under U.S. law because they were the proceeds of a criminal enterprise, prosecutors said.

  • MegaLido: Is There An ‘Instant2U.com’ Tie?

    egoldenpandasmallIn the weeks following the seizure of cash and property linked to AdSurfDaily Inc., some former members of ASD turned their attention to promoting MegaLido.

    MegaLido was pushed as a safe, offshore alternative to ASD and Golden Panda, and a way to make up ASD/Golden Panda losses that stemmed from the government seizure of cash and other assets linked to the firms.

    “MegaLido Rocks!” one promoter blared, noting excitedly that it paid 12 percent a day and “It’s Offshore!”

    MegaLido ultimately tanked, leaving members holding the bag.

    Now it appears as though MegaLido had at least an indirect tie to an autosurf known as instant2u.com, the domain for which was registered July 27, only a few days before the government seized ASD assets.

    instant2u promoted 14 percent a day.

    instant2u.com also failed. Based on forum reports, the surf began to fail sometime in November — just as MegaLido was coming to prominence in the surf world. Soon thereafter, though, MegaLido also failed.

    If you type instant2u.com into the location bar of your browser, you’ll see that the domain tries to redirect to MegaLido, which is throwing a “Failed To Connect” error.

    It is not known if the domains had common ownership or were working together in indirect fashion to harvest money from customers. What is known is that autosurfs often join forces to create churn. CEP, yet another autosurf Ponzi scheme, had money in 26 separate autosurfs or HYIPs, prosecutors said.

    The instant2u redirect to MegaLido might not be evident in all browsers, but we tested it in Firefox and it tried to redirect to MegaLido. People are complaining about it on a MegaLido forum. They know they’ve been “had” whether the two surfs had common ownership or not.

    These developments demonstrate, once again, that there is nothing noble about the autosurf business. instant2u became the subject of Web discussions as early as July 31, just one day before ASD’s assets were seized.

    ASD effectively went out of business Aug. 1, followed within weeks by both instant2u and MegaLido. Some of the people who promoted all three surfs are still promoting surf sites, demonstrating that they’re willing to relieve people of their money no matter what.

  • Bowdoin, Nadel Cases Have Striking Parallels

    Some of the parallels between the alleged AdSurfDaily Ponzi scheme and the alleged financial misdeeds of Florida hedge-fund manager Arthur Nadel are striking.

    Two obvious parallels are the common Florida venue and the ages of the principals. ASD operated out of Quincy; Nadel out of Sarasota. ASD President Andy Bowdoin is 74; Nadel is 76.

    Beyond the obvious, though, other striking parallels exist.

    Despite checkered pasts, both Bowdoin and Nadel became stars quickly, their ascent fueled by promoting consistent, strong investment returns. Neither man was well-heeled all that long ago, according to court records.

    Bowdoin, prosecutors said, had made no significant money in the past 20 years — despite claims to the contray — and yet suddenly found himself in possession of tens of millions of dollars from his autosurf company. Prosecutors said Bowdoin claimed to sell “advertising,” but actually was selling unregistered securities that advertised a return of 1 percent a day.

    In court filings, Nadel said he was broke in 1995. In the years that followed he claimed to be managing a $300 million portfolio.

    Authorities said Nadel placed $1.25 million into a secret account just prior to his Jan. 14 vanishing act. Prosecutors said Bowdoin told members $1 million had been stolen from ASD by Russian hackers, but Bowdoin never filed a police report.

    A bank closed a Bowdoin account last summer amid Ponzi concerns. Bowdoin told the bank he planned to buy a home in another country, prosecutors said. Members now are wondering if the money actually had been stolen by hackers or if the theft story was just a cover story.

    Neither Bowdoin nor Nadel disclosed information many investors would have found crucial when making decisions to do business with the firms. Bowdoin had a previous run-in with securities regulators more than a decade ago and was charged with felonies.

    Prosecutors said he never disclosed this to prospects, adding that he also didn’t mention he’d pleaded guilty to securities fraud and was sentenced to a year in prison. The sentence was suspended when Bowdoin agreed to make resitution.

    Nadel didn’t disclose that he had been disbarred in New York in 1982, amid assertions he removed $50,000 from an escrow account to pay a client’s debt to a loan shark. One of Nadel’s companies also told investors that its accountant was a CPA. It turns out that the accountant had let his license lapse years before Nadel opened shop and was sanctioned by the state for continuing to claim a CPA credential.

    Both Nadel and Bowdoin also had disputes with ex-wives, according to court documents and newspaper reports.

    In 1995, for instance, Nadel was involved in a divorce dispute with one of four ex-wives and claimed abject poverty, according to the the St. Petersburg Times.

    Less than a decade later, the Times reported, Nadel morphed into the role of philanthropist with hundreds of thousands of dollars to spend to help local charities and civic organizations.

    Bowdoin also had a dispute with an ex-wife in the 1990s, during a period in which he was down and out, the Times reported.

    Bowdoin still owed his ex-wife, JoAnn Kennedy, more than $162,000 in October, even though ASD funds were used for lavish purchases by Bowdoin’s current wife and her son.

    In June, Edna Faye Bowdoin, Bowdoin’s current wife, and her son, George Harris, opened a bank account, funding it with more than $177,000 from an ASD account in a different bank. More than $152,000 of the money was used to retire the mortgage on a Tallahassee home Harris shared with his wife, prosecutors said.

    ASD funds were used on various dates in June to purchase automobiles, a Triton Cabana boat, jet skis and other items. On June 10 and June 11 alone, prosecutors said, almost $240,000 in ASD funds were used to pay for personal items by Bowdoin family members or friends.

    In late July, ASD funds were used to purchase a $50,000 Lincoln. A month later, Bowdoin sent a retitution check in the amount of $100 to victims of the Alabama scam a decade earlier, the Times reported. His ex-wife got nothing.