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  • Zeek Receiver To Make Third Distribution To Ponzi Victims, Says A Fourth Is Possible

    In an announcement dated Jan. 12, 2017, Zeek receiver Kenneth D. Bell said he’ll make a third distribution to Ponzi victims and that a fourth is possible.

    After the third distribution,  victims will have received about 75 percent of their losses, Bell said. The third distribution is set for March 15.

    Let us note here that these results are remarkable. Many Ponzi victims receive only pennies on the dollar, if anything at all. Quick action by the SEC and the U.S. Secret Service in 2012 no doubt benefited the receivership and, in turn, the victims.

    A series of clawback lawsuits and other actions initiated by Bell against Zeek net winners and others may return even more to the estate.

    Here is Bell’s Jan. 12 announcement in full (italics added):

    ANNOUNCEMENT FROM THE RECEIVER – January 12, 2017

    I am pleased to announce that we will be making a third partial interim distribution to all Affiliates who hold Allowed Claims on March 15, 2017. When made, combined with the first and second partial interim distributions and the amounts paid by ZeekRewards to such Affiliates before it was shut down, the third partial interim distribution will have returned to victims with Allowed Claims a total of at least 75% of their losses using the rising tide method.

    If you previously have received payment from the Receivership, or receive a payment for the first time during the January 31 distribution, you will be issued another payment on March 15, 2017. If you had recovered more than 60% from ZeekRewards prior to its shutdown, but less than 75%, you will receive a distribution as part of the third partial interim distribution.

    The funds used to make the third partial interim distribution will be taken from the reserves that I previously held for those Affiliates whose claims were disallowed and forfeited pursuant to the Court’s November 16, 2017 Order that required these claimants to provide their Release and OFAC certification by December 31, 2016. Their failure to do so has permitted me to release these reserves and to pay the third partial interim distribution to Affiliates that hold Allowed Claims.

    Finally, we do not have authority to accept new claims and are not considering further requests to amend previously allowed claims. The time to file claims or to amend claims has passed.

    I am confident that we will make a further distribution in the future. I ask you for your patience, and thank you for your continuing support.




  • Zeek Figures Wright-Olivares, Olivares Listed As Federal Prisoners

    Dawn Wright-Olivares

    The landing spots for two key Zeek Rewards figures now are known. Former Zeek COO Dawn Wright-Olivares is listed as inmate 29336-058 at FMC Carswell in Fort Worth, Texas. The facility is a Federal Medical Center for female offenders and has an adjacent minimum security satellite camp, according to the Federal Bureau of Prisons website.

    Daniel C. Olivares, the stepson of Wright-Olivares and the former senior technology officer at Zeek, is listed as inmate 29335-058 at CI Taft, a contracted correctional institution operated by a private corporation in Taft, Calif., according to the BOP website.

    Wright-Olivares and Olivares were sentenced in September 2016 by U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina. Both defendants had agreements with prosecutors and pleaded guilty in February 2014.

    Cogburn imposed a term of seven and a half years on Wright-Olivares. Olivares was sentenced to two years. Each defendant pleaded guilty to investment-fraud conspiracy, with Wright-Olivares also pleading guilty to tax-fraud conspiracy.

    The Winston-Salem Journal is reporting this morning that Zeek operator Paul Burks tentatively is scheduled to be sentenced Feb. 13.

    Zeek was one of the largest combined Ponzi- and pyramid schemes in U.S. history.

    Wright-Olivares and Olivares were not immediately sentenced to prison after their guilty pleas. Their situation was not unique, and some defendants are given time to report after their formal sentencing.




  • BULLETIN: Feds Make Another TelexFree Arrest, Find $20 Million Hidden In Box Spring

    BULLETIN: Federal authorities have arrested a man and have found $20 million allegedly linked to TelexFree in a box spring in an apartment in Westborough, Mass. Agents have seized the cash and charged Cleber Rene Rizerio Rocha, 28, with conspiring to commit money-laundering.

    Rocha may be a Brazilian national with ties to a nephew of TelexFree figure Carlos Wanzeler.

    From a statement by the office of U.S. Attorney Carmen Ortiz (italics added):

    The complaint alleges that an intermediary working on Wanzeler’s behalf contacted an associate for help transferring millions of dollars of TelexFree money – still hidden in the greater Boston area – from the United States to Brazil. The associate, who subsequently became a cooperating witness for the government, allegedly arranged with Wanzeler’s nephew in Brazil to launder the cash through Hong Kong, convert it to Brazilian reals, and transfer it to Brazilian accounts.

    According to court documents, Rocha, acting as a courier for Wanzeler’s nephew, flew from Brazil to JFK Airport in New York City a few days ago. Yesterday, Rocha met the cooperating witness at a restaurant in Hudson, Mass., and allegedly gave him $2.2 million in a suitcase. After the meeting, agents followed Rocha to an apartment complex in Westborough, Mass., and later arrested him. That night, federal agents searched an apartment at the Westborough complex and seized a massive stockpile of cash hidden in a box spring. The cash appears to total approximately $20 million.




  • URGENT >> BULLETIN >> MOVING: Judge Begins Process Of Ordering Judgments Against Zeek Net Winners; Millions Awarded So Far, Millions More Pending

    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.
    Screen shot of the proposed final judgment against veteran HYIP huckster T. LeMont Silver in the Zeek clawback cases.

    URGENT >> BULLETIN >> MOVING: At long last, there is a spectacular crack in the ceiling of MLM HYIP Ponzi Land!

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina has begun the process of ordering judgments against Zeek Rewards’ winners sued by receiver Kenneth D. Bell, according to the docket of the clawback case.

    Millions of dollars in final judgments have been awarded so far, with millions more awaiting Mullen’s signature. Bell, for example, is pushing for a judgment of more than $3.1 million against veteran HYIP huckster T. LeMont Silver, his wife and a Silver shell company.

    The Silver amount includes more than $2.3 million in winnings, plus more than $802,000 in prejudgment interest. Pending the judge’s signature, any Zeek income derived by the Silvers will become attachable, with the prospect of Mullen also awarding postjudgment interest.

    Final judgments against the Silvers and several other Zeek winners could be entered by the end of the year.

    Mullen already has issued final judgments against Zeek and AdSurfDaily Ponzi scheme figure Jerry Napier ($2.349 million, including prejudgment interest of more than $600,000); Darren Miller ($2.198 million, including more than $561,000 in prejudgment interest; Aaron Andrews, Shara Andrews and an Andrews shell company ($1.359 million, including more than $347,000 in prejudgment interest).

    Longtime HYIP hucksters, Aaron and Shara Andrews were known as Team Aaron Shara.

    Each of the orders Mullen already has signed includes this language (italics added):

    The Court confirms this amount is the Final Judgment of the Court against this Defendant and hereby authorizes the Receiver to pursue appropriate collection proceedings.

    On Nov. 29, Bell won against the named winners and a defendant class of more than 9,400 other winners in summary judgment, meaning the judge rejected arguments they were entitled to keep more than $200 million in Ponzi proceeds.

    “How much of that we will be able to collect for distribution to claimants with allowed claims is uncertain at this time,” Bell wrote on Nov. 29. “However, we will pursue collection of these judgments vigorously, and expect the ultimate amount collected will be a substantial sum.”

    The money will go to the Zeek losers who filed the appropriate paperwork and whose claims were approved.

    Stephen B. Darr, the trustee for TelexFree, has followed Bell’s lead in pursuing net winners from MLM HYIP fraud schemes. Darr effectively has sued more than 93,000 alleged TelexFree winners.

    Other receivers in HYIP cases potentially could follow the leads of both Bell and Darr in pursuing clawback litigation against alleged winners.

    NOTE: Our thanks to the ASD Updates Blog.




  • BehindMLM.com Expects Accessibility Issue To Be Resolved Dec. 10

    We’ve received inquiries about why some readers have not been able to access BehindMLM.com.

    Oz, the editor there, has reported on the site that the ETA for a fix is Dec. 10. Hosting issues began several days ago.

    Although not all readers have been able to access the site, Oz has posted some updates on the hosting issue, as well as some new stories.

    As a temporary measure, readers who can’t access the site may be able to do so through Google cache. We accessed the content by typing “behindmlm” into the location bar on Google Chrome and selecting “Cached” from under the triangle in the top Google search result.

    Here’s a screen shot of how to do that:

    bmlmprompt

    To access the cache of a story, find the headline of the story in the cached copy of the BehindMLM landing page. Copy the headline into Google search and press Enter. If the story is indexed, you should be able to see it in the search results. Select “Cached” (as above) if Google can’t deliver you to the page.

    Best to you. Oz.

  • TelexFree Trustee Hopes Merrill’s Guilty Plea And Sentencing Will Spark More Claims; Darr Asks Judge To Extend Filing Deadline Until March

    newtelexfreelogo-1UPDATED DEC. 22, 2016: The court has extended the claims deadline until March 15, 2017. Earlier story below . . .

    ** _____________**

    With the Dec. 31 filing deadline for TelexFree claims fast approaching, court-appointed Trustee Stephen B. Darr has asked the court to extend the deadline until March 15, 2017.

    Chief Bankruptcy Judge Melvin S. Hoffman has scheduled a hearing Dec. 21 to consider the request.

    Darr advised the judge yesterday that about 121,000 claims had been filed. He added that the guilty plea of TelexFree’s James Merrill, Merrill’s agreement with prosecutors to forfeit tens of millions of dollars and publicity surrounding Merrill’s sentencing set for March 2 and 3 might encourage more participants to file claims.

    Hoffman already has granted one extension — from Sept. 26 until Dec. 31. The scheme, which the judge ruled a combined Ponzi- and pyramid, may have created hundreds and hundreds of thousands of victims worldwide.

    As things stand now, the claims-filing deadline remains Dec. 31 at 4:30 p.m. Prevailing Eastern Time.

    The process of making participants as whole as possible has been “extraordinarily complex,” Darr advised the judge.

    Challenges have included the number of victims, the geographic dispersion of victims throughout the world, the magnitude of losses, language barriers and the complexity of TelexFree itself, Darr advised the judge.

    Criminal prosecutors said in Merrill’s plea agreement that his role in the TelexFree scheme created at least $550 million in losses.

    Codefendant Carlos Wanzeler fled to Brazil, prosecutors said.




  • MyAdvertisingPays Claims $60 Million Theft At Hands Of VX Gateway, A Payment Processor

    myadvertisingpays-1In a 23-page lawsuit filed Dec. 1 in federal court for the Southern District of Texas, the MyAdvertisingPays “program” claims it has been ripped off to the tune of $60 million by VX Gateway, a payment processor with alleged business divisions in Texas, Panama and the United Kingdom. The complaint does not say whether MyAdvertisingPays has reported the alleged huge theft to law enforcement.

    MyAdvertisingPays, a purported advertising business with model similar to “programs” that have been prosecuted for fraud and the sale of unregistered securities under U.S. laws, operates online and is known variously as MAP or MAPS. The complaint was filed in the name of MyAdvertisingPays (MAP) Limited, “an Anguillan corporation” that claims  a “principal place of business” at a residential address in Ocean Springs, Miss.

    Anguilla is a British overseas territory in the Caribbean.

    Why an offshore entity was claiming a principal place of business in Mississippi was not immediately clear. MAPS said it 2015 that it was pulling out of the United States. Mississippi business records show a company known as My Advertising Pays L.L.C. was situated at a different Ocean Springs residential address and was dissolved in September 2013.

    Named defendants in the complaint were VX Gateway Corp. of Houston, VX Gateway Inc. of Panama City, Panama, and VX Gateway Limited of Leeds, United Kingdom. Also named defendants were apparent VX executives Timothy MacKay and Celia Dunlop of Houston.

    In May, the PP Blog reported that Roger Alberto Santamaria Del Cid, an apparent nominee director for offshore companies who once was listed as the contact person for the Perfect Money payment processor and a corporate “subscriber” for VX Gateway in Panamanian business records, was referenced at least three times in the “Panama Papers.” Del Cid, whose name also surfaced in the context of the notorious Finanzas Forex fraud scheme in 2010, was not named a defendant in the MAPS lawsuit against VX.

    MAPS, which lists Michael Deese as it CEO, contends that the lawsuit it brought against VX and its associated companies and executives “is about the recovery of $60 million of stolen money.”

    The complaint paints a picture that MAPS believed VX “itself would process payments made to MAP.” Instead, according to the complaint, VX “only provided the online portal itself, and outsourced all payment processing to various third-parties.”

    Beyond that, according to the complaint, VX “initially, and for an extended period of time, refused to disclose” the identities of the third parties.

    From the complaint (italics added/light editing performed):

    Around the time that MAP and VX Gateway entered into the Agreement, MacKay required MAP CEO, Michael Deese (“Deese”), to sign numerous documents, including but not limited to, bank signature cards and/or power of attorney agreements allowing VX Gateway and/or MacKay to act on behalf of MAP and/or Deese, that MacKay stated were necessary to set-up various bank accounts to facilitate the processing of payments by MAP’s customers.

    VX Gateway retained all the original documents signed by Deese, including but not limited to, the original copy of the Agreement and any and all documentation necessary for setting up various bank accounts on behalf of MAP. VX Gateway provided no copies of any of the formational documents including, but not limited to, the Agreement to MAP.

    The complaint did not explain why Deese ever would do business with a firm that allegedly operated in this manner. Regardless, over time the defendants allegedly didn’t return about $60 million due MAPS.

    Law360.com wrote about the specific allegations here. (Registration may be required.)




  • Fake News Could Have Triggered Tragedy At Pizza Shop In Nation’s Capital

    Fake news designed to confirm biases is one of the things that props up MLM HYIP scams. Now, such false reports have entered the political realm.

    Edgar Maddison Welch, 28, of Salisbury, N.C., was arrested yesterday in Washington, D.C., on charges of assault with a deadly weapon. Police say he fired a shot inside a pizza restaurant and told them he was there “to self-investigate “Pizza Gate” (a fictitious online conspiracy theory).”

    “Pizza Gate” involves a conspiracy theory that prominent Democrats and the Hillary Clinton campaign were involved in sex crimes against children and that the ring used a pizza place as a cover.

    From a Metropolitan PD news release dated today about yesterday’s incident at the pizza shop Italics added):

    At approximately 2:58 pm, members of the Second District received a call for a man with a firearm. The suspect entered the location and pointed a firearm in the direction of the victim who is an employee of the restaurant. The victim was able to flee and notify police. The suspect proceeded to discharge the rifle inside of the establishment. Members of the Second District responded and arrested the suspect without incident. Two firearms were recovered inside the location. An additional weapon was recovered from the suspect’s vehicle. There were no reported injuries.

    The Daily Beast is reporting Welch was a fan of conspiracy theorist Alex Jones.

    In the HYIP sphere, hucksters routinely try to sanitize fraud schemes by claiming the endorsements of politicians. False stories about Presidents George W. Bush and Barack Obama backing online “programs” have circulated for years on the Internet.

    After the schemes make the enforcement radar and collapse, the scammers typically claim that the U.S. government grew unhappy because it wasn’t getting a large-enough cut and/or decided to undermine free enterprise to keep workers in chains.




  • SALT LAKE TRIBUNE: No Decision Reached At Traffic Monsoon Hearing Today

    BRIEF: Lots of people are awaiting word on what happened today at the big Traffic Monsoon hearing in Salt Lake City.

    In a story titled “Age of the Internet creates questions in alleged international Ponzi scheme case,” The Salt Lake Tribune is reporting this evening that U.S. District Judge Jill Parrish has taken the issues under advisement and will rule later.

    More . . .

  • Bogus Magazine Cover Depicts Alleged Ponzi Schemer Charles Scoville Of Traffic Monsoon As 2016’s Best CEO

    This bogus Forbes' cover says Charles Scoville was 2016's BEST CEO. (Red markings by PP Blog.)
    This bogus Forbes’ cover says Charles Scoville was 2016’s BEST CEO. (Red markings by PP Blog.)

    DISCLOSURE: The PP Blog is a Google publisher.

    A bogus cover of Forbes magazine circulating on Facebook depicts SEC Ponzi defendant Charles Scoville of Traffic Monsoon as the “BEST” CEO of 2016 — all while misspelling his last name.

    The image, which falsely showcases the Forbes’ issue as a “LIMITED EDITION,” appears today on the “TrafficMonsoonupdates” page on Facebook, a cheerleading site for the alleged Ponzi scheme. The post comes at a time that both Facebook and Google have been criticized for not screening out fake news during the recent U.S. presidential election.

    Scoville, of Utah, was not named the best CEO by Forbes either before or after the SEC alleged in July that he was at the helm of a Ponzi scheme that had gathered more than $207 million and had affected at least 162,000 investors across the globe.

    And despite the implication that Forbes had named Traffic Monsoon the “BEST TRAFFIC EXCHANGE IN THE WORLD,” no such thing happened. The SEC’s case against Scoville and his company is still being actively litigated, according to the website of the court-appointed receiver for Traffic Monsoon.

    It is not unusual for promoters of HYIP schemes to claim major publications have lauded them or even that U.S. Presidents supported them. Prior to its 2014 collapse, the TelexFree Ponzi- and pyramid scheme wrapped logos of local TV stations into its promos to imply endorsement. TelexFree may have generated more than $3 billion in illicit transactions.

    In 2008, the $119 million AdSurfDaily Ponzi scheme falsely claimed then-President George W. Bush had given ASD operator Andy Bowdoin a special award for business achievement. An ASD knockoff scam known as AdViewGlobal fraudulently traded on the logos of Forbes and other publishers in 2009.

    A current fraudulent scheme known as OneCoin also has traded on the name of Forbes, according to BehindMLM.com. Earlier, promoters of the WCM777 scam implied the endorsement of the Wall Street Journal.




  • In Immigration Fraud Case, TelexFree Figure Sann Rodrigues Sentenced To Time Served And 2 Years’ Supervised Release

    sannrodrigues1UPDATED 1:56 P.M. ET U.S.A. TelexFree figure Sann Rodrigues could have been sentenced to 10 years for immigration fraud. Instead, he was sentenced yesterday to time served. The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts said early this afternoon that Rodrigues ended up spending 57 days behind bars after his May 2015 arrest on the immigration charge.

    A citizen of Brazil, according to court filings, Rodrigues presented his U.S. “green card to Customs and Border Protection Officers on May 3, 2015, at Logan Airport [in Boston], knowing that he obtained that document based upon false statements to immigration officials,” prosecutors said.

    Rodrigues was not charged criminally for his involvement in TelexFree, perhaps the largest combined Ponzi- and pyramid scheme in history. SEC civil charges brought against him in April 2104 remain intact, as does other TelexFree-related civil litigation.

    A veteran huckster who once claimed “God” invented MLM and “binary,” Rodrigues potentially faces large financial judgments for his TelexFree behavior, which followed earlier behavior in a scheme known as Universo Fone Club prosecuted by the SEC in 2006.

    Rodrigues also promoted a collapsed “program” known as IFreeX.

    U.S. criminal prosecutors said Rodrigues was freed after sentencing in Massachusetts yesterday and will be on supervised release for two years.

    During his period of supervised release, he is “required to comply with any immigration-related orders, the U.S. Attorney’s Office said.

    Because Rodrigues, a Brazilian national, now has been convicted of a felony, he is subject to “administrative immigration proceedings” by the U.S. Department of Homeland Security, the U.S. Attorney’s Office said.

    Such actions potentially could lead to deportation.

    NOTE: Our thanks to the ASD Updates Blog.