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  • Feb. 5 TelexFree Bankruptcy Conference Is Canceled; Judge Orders Public Posting Of Trustee’s Report

    newtelexfreelogoUPDATED 5:42 A.M. ET FEB. 5 U.S.A. U.S. Bankruptcy Judge Melvin S. Hoffman has canceled a status hearing set for tomorrow in the TelexFree bankruptcy case.

    Hoffman further has ordered the report filed yesterday by TelexFree Trustee Stephen B. Darr to be posted publicly. Although the report already was posted, Hoffman’s order appears to underscore his desire to make sure it is widely read.

    Darr said yesterday that TelexFree, a purported VOIP company involved in multilevel marketing, may have involved more than 1 million participants globally and gathered as much as $1.8 billion in about two years. The trustee flatly called TelexFree a pyramid scheme.

    “In light of the detailed status report, the status conference scheduled for 2/5/2015 in these cases is canceled,” Hoffman wrote in an order today. “Kurtzman Carson Consultants LLC is odered to make a copy of this status report available for viewing by the public via the Kurtzman Carson website.”

    KCC now is providing links to Darr’s status report in two places — in a PDF on the lead page of filings, and on a TelexFree information page.

    Read Feb. 3 PP Blog report on Darr’s filing.

  • Zeek Figure Robert Craddock’s Fun Club USA Severely Sanctioned In Trademark-Infringement Case; Judge Orders Default For Failure To Follow Court Order

    OfferHubb.net Inc. sued Zeek Rewards figure Robert Craddock in February 2014, alleging Craddock “immediately” embarked on a web-based disparagement campaign after OfferHubb chose in July 2013 not to renew a contract with Craddock and Craddock’s Fun Club USA Inc.

    Co-defendants included Craddock’s wife, Sylvia Salgado Craddock, and Fun Club.

    Craddock was accused in the complaint of cybersquatting, trademark infringement, wrongful use of a computer, misappropriation of trade secrets, wrongful interference with economic relations, breach of contract, unjust enrichment, defamation and hiding behind a shell company.

    Now, a federal district judge in Nevada — following the October recommendation of a magistrate judge   — has ordered sanctions.  This includes the striking of the answer Fun Club filed in February. It also includes a default order against the enterprise.

    Why? Fun Club’s “failure to comply with this Court’s Order to obtain counsel,” Judge Richard F. Boulware II said in the order.

    Boulware also ordered the clerk to enter judgment and close the case. The financial fallout was not immediately clear.

    As the PP Blog reported in October (italics added):

    Fun Club and Craddock are referenced in a blistering memo filed in the Zeek Ponzi- and pyramid-scheme case by the SEC on Dec. 17, 2012. In the memo, the SEC accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver. The SEC further alleged that Craddock was spreading misinformation about how the agency viewed its own case against Zeek and that Fun Club appeared to have been formed 11 days after the SEC emergency action against Zeek on Aug. 17, 2012.

    Craddock has not been charged by the SEC with wrongdoing . . .

    The trademark-infringement claim may be particularly concerning to the MLM trade, given that Craddock has asserted he works as a copyright and trademark agent on behalf of MLM “programs.”

    On July 22, 2012, while purportedly working as a “consultant” for Zeek, Craddock filed a copyright- and trademark-infringement complaint against a HubPages website operated by Zeek critic K. Chang. K. Chang, who also posts on publications such as the PP Blog and BehindMLM.com, ultimately prevailed in the action brought by Craddock.

    Less than a month later, the SEC brought the Ponzi- and pyramid action against Zeek.

    Earlier this year, a website known as Changes Worldwide identified Craddock as its copyright agent. Filings by the SEC in June 2014 alleged that Faith Sloan, accused in April 2014 of securities fraud by the agency in its Ponzi- and pyramid complaint against the TelexFree “program,” sent more than $15,000 to an entity known as Changes Worldwide LLC after an asset freeze was imposed against Sloan in the TelexFree case.

    Sloan also was a Zeek affiliate. Whether proceeds that originated in Zeek and/or TelexFree made their way into Changes Worldwide is unclear.

    Craddock also was sued for trademark infringement and other alleged offenses by a firm known as BTG180, which accused Craddock of using the alleged Fun Club “shell corporation” to engage in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

    NOTE: Our thanks to the ASD Updates Blog.

  • ‘Achieve Community’ Websites Inaccessible

    From a promo for Achieve Community on YouTube.
    From a promo for Achieve Community on YouTube.

    UPDATED 12:20 P.M. ET U.S.A. Two websites associated with the “Achieve Community” — ReadyToAchieve.com and TheAchieveCommunity.com — are inaccessible this morning.

    Achieve Community is under investigation by the Colorado Division of Securities.

    The PP Blog asked the Division this morning if it was aware of the outage and whether the inaccessibility of the sites had anything to do with the investigation.

    “I cannot comment further at this time,” said Lillian Alves, Colorado’s Deputy Securities Commissioner.

    Reports surfaced yesterday on a Facebook site known as the “NonOfficialAchieveCommunity” that Achieve had shut down its own private forum and that a page linked to a purported new payment processor for Achieve was carrying a “server maintenance” message.

    The maintenance message continues to appear today.

    Some Achievers have condemned the NonOfficialAchieveCommunity Facebook site, which also is known as “the Sheepdog” and does not echo the company line. In recent days, one poster made the preposterous assertion that the Sheepdog was responsible for ruining 10,000 lives and could be held financially liable by Achievers.

    Achieve purportedly is operated by Kristi Johnson of Colorado and Troy Barnes of Michigan.  The “program,” backed by hucksters such as Rodney Blackburn, reportedly has not made payouts for nearly three months after encountering trouble with payment processors.

    Blackburn is pushing multiple “programs” with a presence on well-known Ponzi-scheme forums — and even camped out on the website of the U.S. Securities and Exchange Commission to record a promo.

    The SEC last month declined to comment on Blackburn’s commercial.

     

     

  • URGENT >> BULLETIN >> MOVING: Bankruptcy Trustee Says TelexFree Was ‘Pyramid Scheme’ That Gathered As Much As $1.8 Billion

    breakingnews72URGENT >> BULLETIN >> MOVING: (10th Update 8:53 p.m. ET U.S.A.) In his first formal report to the Massachusetts bankruptcy court, TelexFree Trustee Stephen B. Darr calls the company a “pyramid scheme” that may have involved 1 million or more participants globally and gathered as much as $1.8 billion through arms in the United States and Brazil.

    If the numbers hold up, it would mean that TelexFree has surpassed the Zeek Rewards scheme in both victims’ count and haul. Zeek is estimated to have created about 800,000 victims, while hauling about $897 million. Zeek was shut down by the SEC in August 2012.

    The SEC and the Massachusetts Securities Division brought actions against TelexFree in April 2014.

    Darr also revealed that 13 private lawsuits have been filed against TelexFree and/or related principals, including former executives James Merrill and Carlos Wanzeler.

    TelexFree’s Brazilian arm was known as Ympactus and “grew much more quickly than the Debtors and its shutdown by Brazilian authorities in the summer of 2013 was the first of many red flags that the Debtors were operating an unsustainable pyramid scheme,” Darr advised U.S. Bankruptcy Judge Melvin S. Hoffman.

    Darr also strongly implied that a black market existed both internally at TelexFree and externally to the cross-border enterprise. It is known that the U.S. Department of Homeland Security, through its Homeland Security Investigations arm, is deeply involved in the TelexFree probe.

    Today’s report by Darr may — at least in part — explain why. From the report (italics added/minor editing performed):

    The Debtors’ business plan was complicated in and of itself. The scheme’s complexity was expanded further, however, through a web of inter-Participant transactions that permeated the scheme.

    First, a new Participant could purchase a membership plan by making payment directly to the Debtors . . . or by redeeming accumulated credits.

    In lieu of paying funds directly to the Debtors, it appears that many Participants became involved in the scheme by paying their membership fee directly to a recruiting Participant who often did not remit the payment from the new Participant to the Debtors. Rather, the recruiting Participant frequently retained the payment from the new Participant in return for a reduction, or redemption, of their accumulated credits. The mechanics of this transaction were as follows:

    a) After an invoice was issued to the new Participant and marked as pending, the new Participant would forward the invoice through the system to the recruiting Participant for payment;

    b) The recruiting Participant would then pay the invoice using the recruiting Participant’s credits. The Debtors’ database would charge the recruiting Participant’s credits for the invoice and mark the invoice as paid.

    In this manner, new Participants often joined the Debtors’ scheme without any money actually being paid to the Debtors.

    In addition to the two scenarios outlined above, there appears to have been a third type of transaction that did not involve the Debtors at all. This type of transaction involved the transfer of credits by one Participant to another Participant in exchange for cash or other consideration. The motivation for the transfer of credits is not always clear, although in some instances recruiting Participants may have purchased credits so that such recruiting Participant had sufficient credits to be redeemed after receiving payment from a new Participant.

    Growth at the Ympactus arm in Brazil accelerated “in the fall of 2012 through the early summer of 2013,” Darr asserted.

    “The Debtors’ records indicate that by the spring of 2013, Ympactus had cash receipts of more than $100,000,000 per month,” he continued. “These receipts do not reflect inter-Participant transactions that did not involve direct payment to Ympactus.”

    After Brazilian authorities intervened in June 2013, freezing as much as $300 million in that country, the U.S. TelexFree arms — previously underperformers compared to Ympactus — began to surge, Darr alleged.

    “Following the shutdown of Ympactus, the Debtors’ revenues increased dramatically such that by the end of 2013 and early 2014, the Debtors were generating cash of as much as $50,000,000 per month, without regard to inter-Participant transactions for which consideration did not pass to the Debtors,” Darr said.

    TelexFree banking relationships crumbled, Darr said in the report.

    “Multiple banks closed the Debtors’ operating accounts apparently based upon suspicious activity in those accounts,” Darr said.

    A lawyer advised TelexFree in mid-2013 that its business plan constituted a pyramid scheme, Darr said.

    “Although the Debtors were apprised in mid-2013 by counsel that the business plan was a pyramid scheme, they continued to operate using that plan until March 2014. At that time, the Debtors introduced a new business plan, even though the Debtors were apparently advised that the new plan did not rectify the problem. The new plan was unanimously rejected by the Participants, which appears to have precipitated a ‘run on the bank’ inasmuch as $58,000,000 or more was paid out to certain Participants in the several weeks leading up to the filing of the petitions. An additional $100,000,000 was requested by Participants but was not paid.”

    In September 2014, Darr identified MLM lawyer Jeffrey Babener as an attorney who advised TelexFree it was operating a pyramid scheme.  Babener isn’t named in today’s filing, so it is not immediately clear if a second attorney also advised TelexFree that its platform was a pyramid.

    Darr also said in the report that TelexFree “wrote off” a receivable “in the approximate amount of $180,000,000” due from Ympactus. The write-off appears to have occurred in late 2013, after the action in Brazil.

    “Upon information and belief, the Debtors advanced the costs for the voice over internet protocol, or ‘VOIP’, service for both the Debtors and Ympactus,” Darr said. “Ympactus contracted to pay a portion of its revenues to the Debtors as a commission, but it is unclear the extent to which these payments were ever made. In December 2013, six months after the seizure of Ympactus’ assets by the Brazilian authorities, the Debtors established, and then subsequently wrote off, a receivable due from Ympactus in the approximate amount of $180,000,000, purportedly for unpaid commissions and related services.”

    Darr also identified a number of TelexFree subsidiaries or affiliates, noting there could be more. These are among the entities and ownership information listed in the report. (Please note that not all location information is listed):

    • TelexFree International LLC:: Ownership: Wanzeler, Carlos Costa, Merrill:: Location:: Nevis.
    • TelexFree Mobile Holdings Inc.:: Ownership:: Wanzeler and Merrill.
    • Graham Bell Telex LLC:: Ownership:: TelexFree Mobile Holdings LLC and Costa.
    • TelexFree Mobile LLC:: Ownership:: Graham Bell Telex LLC and Infinium Wireless.
    • TelexElectric LLLP: Ownership:: Wanzeler, Costa and Merrill.
    • Bright Lite Future LLC:: Ownership: Wanzeler, Costa and Merrill.
    • Brazilian Help Inc.:: Ownership: Wanzeler.
    • Sunwind Energy Group LLLP: Ownership: 1127 Enterprises LLC and Merchant Enterprises Inc.
    • Sunwind Energy Solutions:: Ownership:: 1127 Enterprises Inc., ACE.
    • LLLP: Ownership:: LLP, Executive Marketing Inc. and Sunwind Energy Group LLLP.
    • Sunwind Energy Doyle North LLC:: Ownership: Sunwind Energy Southern LLLP, ACE LLP, Adams Craft Ewing LLLP, Guasti LLC.
    • ACE LLP:: Ownership:: Undetermined.
    • Executive Marketing Inc.:: Ownership:: Undetermined.
    • 1127 Solutions LLC:: Ownership: Undetermined.
    • Merchant Enterprises Inc.:: Ownership: Undetermined.

    “There may have been other entities formed by the Debtors’ principals to conduct similar operations in other jurisdictions, including TelexFree Ecuador, TelexFree Columbia, TelexFree Dominican Republic, TelexFree Canada, and TelexFree International, Ltd. (Cayman Islands),” Darr alleged.

    And, he noted, “In addition, other entities appear to have been formed by the Debtors’ principals for related or unrelated purposes, including JC Real Estate Investments LLC; JC Real Estate Management Co., LLC; Above and Beyond the Limit LLC; CNW Real Estate LLC; CNW Realty State LLC; Acceris Realty Estate LLC; KC Realty State LLC; Makeover Investments LLC; Eagleview Realty Estate LLC; and Grandview Realty Estate LLC.

    With forensics well under way and with Darr in communication with investigators in the United States and Brazil, how big is the job ahead? (Bolding added):

    “The database identifies more than 2,100,000 electronic mail addresses for Participants in the operations of both the Debtors and Ympactus,” Darr said. “Of this amount, approximately 1,000,000 appear to be provided by Participants of the Debtors, with the balance related to the Ympactus Participants. The database identifies more than 17,000,000 different accounts, of which approximately 12,000,000 are those of Participants and 5,000,000 are those of Ympactus Participants. As referenced earlier, an individual Participant could maintain multiple accounts using a single electronic mail address, and an individual Participant could also maintain more than one electronic mail address. During the period February 2012 to April 2014, the total combined cash receipts for the Debtors and Ympactus were in excess of $1,800,000,000 and combined noncash revenue was approximately $4,200,000,000.

    Oddities abound, according to the report.

    ” . . . the Debtors’ computer system does not link all accounts for an individual Participant, and the Participant name field enabled Participants to use different variations of their name in the input process,” Darr said.

    “Certain accounts do not contain electronic mail address information. Of those accounts that do contain electronic mail address information, in some instances, the information is facially inaccurate, such as the Participant’s use of the Debtors’ electronic mail address as a placeholder such as [deleted by PP Blog]. In other instances, a Participant may have used the same electronic mail address as other Participants, including the sharing of electronic mail addresses with family members. Unlike the computer systems of similar type enterprises, the Debtors’ system did not require confirmation of an electronic mail address.

    “Similarly,” Darr said, “certain accounts do not contain physical address information. Some other accounts contain physical address information that is facially inaccurate, such as the use of a country code that is inconsistent with the address, e.g., ‘San Paulo, USA.’”

    From the report (italics/bolding added):

    Manual credits were credits assigned to a Participant’s account balance on account of money paid to the Debtors for one of several reasons, as distinguished from credits “earned” from the placement of advertisements or other components of the compensation scheme. The Debtors’ records reflect approximately $151,000,000 of manual credits issued to certain Participants. The issuance of manual credits appears to be a fraud within the larger fraud of the pyramid scheme with the Debtors’ insiders adding large amounts of credits to certain accounts whereby the credits could then be sold to other Participants. There appears to be no corresponding payment supporting many of these large manual credits.

  • EXTRAORDINARY! Harper Lee, Beloved Author Of ‘To Kill A Mockingbird,’ Will Publish Second Novel In July; ‘Atticus’ And ‘Scout’ Are Characters, Publisher Confirms

    breakingnews72The publishing world and lovers of American literature are electrified this morning with news that the Harper imprint of HarperCollins is publishing “Go Set a Watchman,” a second novel by Harper Lee.

    Lee, 88, issued a statement through Harper in which she explained that she completed the book before setting out to write “To Kill a Mockingbird” decades ago.

    “In the mid-1950s, I completed a novel called Go Set a Watchman,” Lee said. “It features the character known as Scout [from To Kill a Mockingbird] as an adult woman and I thought it a pretty decent effort. My editor, who was taken by the flashbacks to Scout’s childhood, persuaded me to write a novel from the point of view of the young Scout. I was a first-time writer, so I did as I was told. I hadn’t realized it had survived, so was surprised and delighted when my dear friend and lawyer Tonja Carter discovered it. After much thought and hesitation I shared it with a handful of people I trust and was pleased to hear that they considered it worthy of publication. I am humbled and amazed that this will now be published after all these years.”

    July 14 is the official publishing date.

    Harper, the publisher, described Go Set a Watchman as set “during the mid-1950s.

    “[It] features many of the characters from To Kill a Mockingbird some twenty years later,” the publisher continued. “Scout (Jean Louise Finch) has returned to Maycomb from New York to visit her father, Atticus. She is forced to grapple with issues both personal and political as she tries to understand her father’s attitude toward society, and her own feelings about the place where she was born and spent her childhood.”

    Published by J. B. Lippincott in 1960, To Kill a Mockingbird became an American classic and received the 1961 Pulitzer Prize for fiction. At the 35th Academy Awards in 1963, Gregory Peck was awarded the Best Actor Oscar for his 1962 portrayal of Lee’s “Atticus Finch.”

    Lee is famously publicity-shy. Despite the extraordinary talent she displayed in To Kill a Mockingbird and the reading public’s thirst for more, she never published a second novel.

    Says Jonathan Burnham, senior vice president and publisher at Harper: “This is a remarkable literary event. The existence of Go Set a Watchman was unknown until recently, and its discovery is an extraordinary gift to the many readers and fans of To Kill a Mockingbird. Reading in many ways like a sequel to Harper Lee’s classic novel, it is a compelling and ultimately moving narrative about a father and a daughter’s relationship, and the life of a small Alabama town living through the racial tensions of the 1950s.”

  • Promos By ‘Achieve Community’ Huckster For ‘Military Medical Relief 21’ Go Missing From YouTube

    The MMR21 logo. Source: screen shot.
    The MMR21 logo. Source: screen shot.

    UPDATED 12:11 P.M. ET U.S.A. Two YouTube promos that asked U.S. military personnel and 20-year retirees to enroll in a purported study piggybacking off a purported “compound medication” to treat pain have been deleted.

    The promos were linked last month to “Achieve Community” huckster Rodney Blackburn, who also created a Facebook site to promote “Military Medical Relief 21” (MMR21), the “program” targeted at military members and retirees. The Facebook site now appears to be inaccessible.

    One individual Facebook text promo attributed to Blackburn that remains includes four exclamation marks and screams, “Help our soldiers today! Soldiers are being compensated! Soldiers are finding relief from addictive pain medication! Enroll today or spread the word to millions of soldiers!”

    A link to a YouTube video appears below the text promo. When clicked, this message appears, “This video has been removed by the user.” The promo appears to have been directed to the official Facebook site of “Army Wives,” a television program on the Lifetime cable and satellite network.

    On YouTube, Blackburn asserted that military personnel would be paid for their participation in MMR21, which purportedly is a nonopiate pain cream. MMR21 purportedly is linked to a Wyoming nonprofit registered Jan. 2 and called American Christian Warrior 13 Inc.

    Precisely who is running MMR21 and American Christian Warrior 13 is unclear. Also unclear is how the two are related and why the YouTube promos were deleted.

    At least one of the YouTube promos referenced the U.S. Food and Drug Administration and claimed ingredients contained within the compound had been “approved” without saying whether the medication itself had been approved. On Jan. 16, the FDA said it could not comment immediately. On Jan. 20, the agency declined to comment.

    Blackburn featured an individual described as “Dr. Tony” in one of the promos.

    At least one website Blackburn said was linked to MMR21 is soliciting information from military personnel. Despite the fact that the site is asking for intensely personal medical information, identification documents and even information on employment and medical insurance, it appears to be hosted at an insecure URL.

    Among the questions on the site:

    • Are you pregnant?
    • If pregnant, Due Date[.]
    • Last Menstrual Period[.]

    Prospects are solicited to provide information on whether they suffer from one or more of at least 56 medical ailments listed on the site. Examples include menopause, andropause, stretch marks, migraine, nervous disorder, depression, decreased sexual function, hypertension, hypotension and many more.

    A message on the site claims, “This form encrypts at the time of submission and will remain secured until it reaches your evaluating Doctor.”

    The names of the purported “evaluating” doctors are not disclosed. Also undisclosed is any information on their medical training, licenses held, board certifications and whether they are being compensated by MMR21 or American Christian Warrior. MMR21’s website appears to rotate to CMF10.com, the site that claims forms are encrypted during submission.

    How much military members purportedly could earn through MMR21 is unclear. Facebook sites with military themes appear to have been spammed by more than one individual with links to the “program.”

    Prior to the YouTube deletions of Blackburn’s MMR21 promos, they were mixed in with his promos for at least three money-cycler schemes with a presence on the Ponzi boards. “Achieve Community,” one of the Ponzi-board “programs” Blackburn is pitching, is under investigation by the Colorado Division of Securities.

    Claims about at least two other Ponzi-board “programs” Blackburn is pitching are more absurd than even Achieve claims. Achieve asserts $50 turns into $400.

    One of Blackburn’s MMR21 promos claimed, “The American Christian Warrior 13 Non Profit (ACW13) is actively looking for Soldiers to provide acceptance and need [sic] feedback after using our product. [A]nd for feedback there is compensation!!!

    “Yes[,] you and other military soldiers can be compensated for this!!!!”

    In order to be compensated, military personnel needed to participate in the study and “not be using or agree to stop using your current topical cream,” according to the video by Blackburn.

  • UPDATE: ‘Bacon’ Program Pushed By ‘Achieve Community’ Hucksters Reportedly Put On Hold By ‘Admin’; Second Program May Be DOA After Purported Payza Freeze

    If this graphic is to believed, "BRING THE BACON HOME" will produce a happy marriage and bring you children -- along with a palm-tree lined oceanfront mansion near a convenient airport, a big car and delicious, oversized fruit.
    “BRING THE BACON HOME” purportedly is operated by an “admin” who is a “young trustworthy girl from Singapore,” according to a Ponzi-board post. If this graphic is to believed, the “program” will produce a happy marriage and bring you children — along with a palm-tree-lined oceanfront mansion near a convenient airport, a big car, lots of U.S. cash and delicious, oversized fruit.

    UPDATED 6:20 A.M. ET U.S.A. “BRING THE BACON HOME,” a bizarre Ponzi-board “program” purportedly operated by “Sherilyn” from “Singapore” and pushed on YouTube by Achieve Community hucksters Rodney Blackburn and Mike Chitty, reportedly collapsed during a so-called Beta launch this week and has been put on hold.

    The “program” purportedly turns $40 into $1,800. Achieve Community purportedly turns $50 into $400, although it has been dogged by problems for more than two months and now is the subject of an investigation by the Colorado Division of Securities.

    “BRING THE BACON HOME” appears to have enabled subscription purchases, but the early haul before the failed Beta is unclear. “Sherilyn” is quoted on the MoneyMakerGroup Ponzi forum in a post dated Jan. 26 as saying, “Just buy the subs and let us do the ‘magic’ for now.”

    “My Beta Bacon got Burnt,” one Ponzi-board wag ventured.

    Separately, a “program” known as Cycles 24/7 that was advertised on the Achieve Community private forum last month may be dead. Cycles 24/7 initially collapsed at launch, but rebirthed itself — at least long enough to grab some cash.

    Cycles 24/7 purportedly is operated by “Rick Fleming.” Like Achieve, Cycles 24/7 purported to turn $50 into $400.

    On Jan. 24, a poster on MoneyMakerGroup claimed this about Cycles 24/7: “I have 45$ in payza balance, but admin say that his payza money Frozen, how i can withraw [sic] to egopay?”

    The MoneyMakerGroup claim about Payza freezing Cycles 24/7 funds followed by two days a claim on the Blog at EgoPay.com that EgoPay had been hacked and that a “gap” in cash reserves existed.

    Cycles 24/7 and “BRING THE BACON HOME” both listed EgoPay and Payza among their processors. Like Achieve Community, Cycles 24/7 is serving ads for other HYIPs.

    One ad for “BRING THE BACON HOME” observed today by the PP Blog on the Cycles 24/7 site referenced “Unison Wealth,” yet another Ponzi-board “program” pushed by Achieve Community members.

    The ad was titled “Bring Home The Bacon.” A text line read, “Did you miss Unison Wealth on the 1st day?” When clicked, the ad led to the “BRING THE BACON HOME” site.

    Unison Wealth also is beaming ads for other HYIP schemes.

    It is not unusual for one HYIP venture to try to prop up another through advertising or even to invest in other scams. Beginning in 2005, for instance, the CEP scam allegedly plowed money into at least 26 other schemes.

    In 2012, after the collapse of the $897 million Zeek Rewards “program,” a venture known as Wealth Creation Alliance published ads for one HYIP scheme after another. The schemes typically are Ponzi schemes or pyramid schemes — or sometimes both. They engage in securities fraud and the sale of unregistered securities across national borders.

    People who openly profess Christian beliefs or faith in God often are at once the marks and the purveyors of such schemes. AdSurfDaily Ponzi schemer Andy Bowdoin, an apparent advocate of The Prosperity Gospel who encouraged his MLM flock to envision money “flowing” to them, once declared himself a Christian “money magnet.”

    Federal prosecutors tied Bowdoin to at least four fraud schemes, including at least two that surfaced after the collapse of ASD in 2008. He is now in federal prison.

    One of Bowdoin’s schemes was called “One X.” “I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin claimed in 2011.

    The “this case” to which he referred was the ASD Ponzi prosecution. Bowdoin lost on all fronts, eventually pleading guilty to wire fraud.

    Bowdoin also was associated with a scam known as AdViewGlobal that once threatened to litigate against its own members for asking questions. AVG, as it was known, also created a private forum after its public scam outreach started to create problems.

    Achieve Community recently has added a private forum.

    Another current Ponzi-board HYIP scheme pushed by one or more Achieve Community promoters is called “Trinity Lines.” Among other things, Trinity Lines claims to be the purveyor of “high quality scriptural vignettes.” It also claims:

    • “Although this opportunity is geared for those who appreciate the Scriptures, we welcome anybody to join our community.”
    • “We at Trinity Lines do believe in God and believe in the power of ‘His Word’.

    Though not writing about any specific MLM HYIP schemes, the associate pastor of an evangelical church in Massachusetts this week called “The Prosperity Gospel” a “pyramid scheme” and “a form of oppression.”

    The column is titled, “Why the Prosperity Gospel Is the Worst Pyramid Scheme Ever.”

    From the column by Nicholas McDonald at The Gospel Coalition (italics added):

    Step One: A snazzy entrepreneur wants to make a lot of money. Said snazzy entrepreneur tells two little old ladies that if they sell his “Wow-What-A-Sham 3000,” they can make some dough to pay off their cat-sitting bills. That will cost them a startup investment of $401.76. And yes, Wow-What-A-Sham 3000 is a gimmick. But that’s okay, it’s not really about selling the product anyway; it’s about recruiting more salespeople.

    McDonald is associate pastor at Carlisle Congregational Church, according to his bio line in the column.

  • Police Officers Attacked By Gunman After Swearing-In Ceremony In New Hope, Minn.

    Jan. 29 Editor’s Note: Updates appear at the bottom of this story . . .

    This is the early statement of the Hennepin County Sheriff’s Office on a shooting last night that occurred at City Hall in New Hope, Minn. New Hope has a population of about 20,000, according to its Wikipedia entry. It is a Minneapolis suburb.

    **__________________**

    January 26, 2015 (New Hope) At approximately 7:00 p.m. tonight, the city of New Hope held a swearing in ceremony for two officers with the New Hope Police Department during the scheduled City Council meeting.

    Shortly following the ceremony, at approximately 7:15p.m., an adult male entered City Hall with a gun and began firing at the officers inside the building. During this exchange, two New Hope Police officers were struck by gunfire. Subsequently, additional New Hope Police officers who were on scene returned fire, killing the lone suspect.

    Both officers who were shot were transported to a local hospital and are receiving medical attention. They are both expected to survive their injuries.

    The identity of the suspect will be released by the Hennepin County Medical Examiner’s Office.

    No further information will be available at this time.

    The incident is under investigation by the Hennepin County Sheriff’s Office.

    **__________________**

    Police officers Joshua Eernisse and Adam Johnson were sworn in at last night’s meeting. Their New Hope careers appear almost immediately to have begun with gunfire directed at themselves and fellow officers. Precisely who the targets were was not immediately clear.

    The Star Tribune has a video of part of the incident, plus print coverage.

    Among the New Hope Council members attending the meeting was John Elder. After gunshots rang out near council chambers and a bullet reportedly penetrated the door, he appears to have been pressed into a most unexpected duty. Elder, according to his bio on New Hope’s website, had “worked for 21 years in law enforcement for the Hennepin County Sheriff’s Office, Lakeville Police Department and New Hope Police Department. He is currently a Public Information Officer (PIO) for the Minneapolis Police Department.”

    From the Star Tribune (italics added):

    New Hope City Council Member John Elder, a former police officer and currently a public information officer for the Minneapolis Police Department, appears in the video, behind the council desk with his gun drawn and pointed toward the door to the chambers. The audio on the video then goes silent.

    Elder and others were eventually escorted to safety nearby.

    The motive for the attack is unclear.

    Jan. 29 updates: The Hennepin County Sheriff’s Office has identified the wounded officers as Joshua Eernisse and Beau Schoenhard, saying they are out of the hospital. Eernisse formerly worked as a police officer in Mason City, Iowa, and is one of the New Hope officers who’d just been sworn in. Schoenhard has been with the New Hope force since 2008.

    KARE has identified the deceased shooter as Raymond Kmetz, 68. NBC News, meanwhile, is reporting that Kmetz was armed with a “pistol-grip shotgun” whose serial number had been “scrubbed off.”

    From NBC News: “The Minnesota man who opened fire during a police swearing-in ceremony this week, wounding two officers, had a history of mental illness and was on the state’s list of people prohibited from owning a gun, authorities said Wednesday.”

  • BULLETIN: Quebec’s AMF And Other Agencies Issue Warnings On ‘GetEasy’ And ‘iGetMania’ Program

    igetmaniaBULLETIN: Canada’s province of Quebec has issued a warning on an increasingly bizarre and evolving scheme once known as “GetEasy” and now known as “iGetMania,” calling it an “investment program” that has “not filed a prospectus” and is “not registered with the [Autorité des marchés financiers] in any capacity.”

    AMF is Quebec’s securities regulator. The action appears to mark the first official warning about iGetMania in North America.

    Separately, CONSOB, the Italian securities regulator, has published a warning on iGetMania that is based on Jan. 21 information received from Commission de Surveillance du Secteur Financier (CSSF), the regulator in Luxembourg.

    The PP Blog has observed an ad for iGetMania on craigslist in Rome.

    At the same time, the Malta Financial Services Authority is spreading the word about the iGetMania warning from Luxembourg.  (See MFSA warning dated Jan. 22 here.)

    From a statement by AMF (italics added):

    The Autorité des marchés financiers (“AMF”) is cautioning investors in Québec about an investment program connected to the Portuguese firm GetEasy Limited and the British firm iGetMania Limited. Their investment products are tied in particular to the leasing of global positioning equipment and are promoted via conferences, the web and social media.

    Through membership programs, members of GetEasy and iGetMania can subscribe to packages (or “packs”) via the Internet. The investment helps finance the acquisition of global positioning equipment for leasing by the firm. Revenues are shared between investors and the firm, and investors are not required to handle any management matters. In turn, investors are urged to recruit two other members and thereby create two teams. New members are then encouraged to recruit two other members each, and so on. Revenue is distributed based on the activity generated by members of each team by way of bonuses, commissions and a point system. Members are lured by promises of hefty profits.

    The AMF wishes to inform investors that GetEasy and iGetMania have not filed a prospectus and are not registered with the AMF in any capacity. Investors should therefore be very cautious with investment offers from these firms since they might incur losses for which remedies are highly restricted or non-existent.

    The AMF is closely monitoring this matter and will take any measures deemed necessary in the event of violations under the laws it administers.

    See story dated yesterday on BehindMLM.com titled “iGetMania Review: GetEasy go from Ponzi bad to Ponzi worse.”

    A snippet:

    “GetEasy took off in the wake of the regulatory shut down of TelexFree.

    “Seeking to scoop up disenfranchised investors who lost funds in the billion dollar Ponzi scheme, GetEasy successfully attracted a significant number of investors from Portugal, Spain and to a lesser extent, South America and greater Europe.”

  • DEVELOPING STORY: Post On EgoPay Blog Claims Hack, ‘Gap In The Cash Reserves,’ Embezzlement And Staff Suspensions; Some ‘Achieve Community’ Promoters Are Pushing Other Ponzi-Board Schemes That Claim EgoPay Tie

    "BRING THE BACON HOME," a Ponzi-board "program" pushed by Achieve Community promoter Rodney Blackburn, says EgoPay is among its payment processors. An EgoPay Blog post claims it was hacked and subjected to embezzlement by itw owner -- and that the CEO has stepped down. The PP Blog cannot verify the claims.
    “BRING THE BACON HOME,” a Ponzi-board “program” pushed by Achieve Community promoter Rodney Blackburn, says EgoPay is among its payment processors. A Blog post on the EgoPay site claims EgoPay was hacked and subjected to embezzlement by its owner — and that the CEO has stepped down. The PP Blog cannot verify the claims.

    UPDATED 1:09 P.M. ET U.S.A. The Blog on the website of the EgoPay payment processor claims in a Jan. 22 post that the company was hacked on Dec. 28. The claims, which the PP Blog cannot confirm, read like a spy novel that marries insidious financial fraud and escalating computer fraud to uber-bizarre palace intrigue.

    After the hack, the post claims, EgoPay could trust no one. So it disabled its “transaction interface,” suspended staff, called in an unidentified “investigation team,”  let support tickets go unanswered and interacted with “Astropay and Payza as well a few key merchants to gauge interest in helping remedy this situation.”

    “Egopay was looking for help to discover the truth of the hack, for funding or liquidity, as well as to help consult on how to resolve this situation,” the Blog post claims.

    Whether any “interest” was forthcoming was unclear in the post.  Also unclear is how the asserted events would affect a range of schemes on the Ponzi boards.

    Given companion assertions on the Blog that EgoPay “owner” Amir Aziz effectively had hijacked EgoPay servers to delete evidence of a crime and that the hack “exposed a gap in the cash reserves of Egopay,” using EgoPay in any fashion would seem an exceptionally risky proposition.

    It was unclear in the Blog post whether EgoPay was blaming Aziz for the Dec. 28 hack. The post claimed that EgoPay determined on Jan. 5 that Aziz had been embezzling from the company, but it further claimed that (italics added):

    On January 18th, 2015 Amir Aziz social engineered his way with the hosting provider to reset his accesses and grant him access again to the servers which he used in turn to delete his Egopay account from the system (we would assume to cover his scheme) and removed all other Administrative accesses.

    The EgoPay Blog, which did not identify who wrote the post describing the hack and the post-hack actions and claims the company is back in full control of the servers, did not say whether it called police or regulatory authorities.

    The post further claims that Tadas Kasputis, the onetime CEO of EgoPay, has stepped down, “allowing for a new team to come onboard to make or break this situation.”

    The post did not say who was stepping in to fill the asserted leadership vacuum. Nor did it say who currently was running the company. The Blog post is attributed to the “Egopay Team.”

    On Friday, the PP Blog reported that the state of Colorado had opened an investigation into “Achieve Community,” a money-cycling scheme with a Ponzi-board presence. Although Achieve appears not to have advertised EgoPay, some Achieve promoters are pushing Ponzi-board schemes that claim to accept EgoPay.

    One such “program” is bizarrely called “BRING THE BACON HOME” and has a curious catch phrase of “We Do Bacon Right.” Achieve promoter Rodney Blackburn now is pushing “BRING THE BACON HOME.”

    “Are you ready to make some Yummy Money?!” Rodney asks in a text line below his Jan 14 YouTube promo titled “Bring The Bacon Home- Comp Plan and Review!!!” The video has a play time of 14:53.

    “Unison Wealth,” another Ponzi-board “program” pushed by Blackburn, also says it accepts EgoPay.

    Despite the Jan. 22 EgoPay Blog post asserting the company could trust no one — not even its own staff — the same page on which the post appears contends that “EgoPay.com is your safe way to Pay.”

    Here’s how the Blog post on the EgoPay site begins to explain the asserted hacking (italics added):

    On December 28th, during the holiday period, Egopay suffered a hack that greatly impacted key merchants and partners.  False values were made available in the merchants platform, when no actual value was transmitted in Egopay.  This hacker then proceeded to convert this fake value into irreversible currencies all within a one hour window.   These merchants believed that this value was in their Egopay account, but unfortunately it was not.  Upon discovery, at this point, Egopay immediately put restrictions in place and placed transactions from being automatically completed, to manual review to contain further damage and impact on our merchants.  The Shopping Cart Interface (SCI) was also restricted.  The impact amount was between 1M to 1.5M total for a handful of merchants.

    We concluded, that this hack must have been perpetrated by someone from within who knew the inner workings and had privileged access, so we took immediate actions and suspended everyone that we suspected while this investigation was underway.  Unfortunately, this resulted in our support services being delayed or non-existent.  Support tickets were not being answered and our transaction interface was taken down to stop any further exploit.  Considering the evidence on hand, Egopay was left with no choice but to take these drastic actions.

  • Costly Sanctions Imposed Against Profitable Sunrise HYIP Figures In Ohio, Settlement Documents Show; Fallout Could Last Years

    EDITOR’S NOTE: A PP Blog story dated yesterday includes other details.

    ** _________________________**

    From a promo for Profitable Sunrise.
    From a promo for Profitable Sunrise.

    Still pitching HYIP schemes and Ponzi-board “programs?” Positioning them as a means of helping a charity and/or ministry raise funds?

    Becoming a promoter of Profitable Sunrise — an absurd  Ponzi-board HYIP scheme with a purported payout of up to 2.7 percent a day plus “compounding” — may have long-term financial consequences on Nancy Jo Frazer of Bryan, Ohio.

    And the fallout is not limited to Frazer, a wife, mother, beauty-pageant champion and network-marketing enthusiast with a clientele that includes members of the faith community.

    Not counting legal bills from defense counsel, Frazer’s foray into Profitable Sunrise cost her, her husband David and Nancy’s Profitable Sunrise colleague Albert Rosebrock at least $108,146.61. That’s the sum due the Ohio Attorney General’s office as part of a supplemental settlement agreement finalized in recent days.

    The PP Blog obtained the supplemental settlement agreement through a public-records request with the state of Ohio yesterday. The document was received today, along with other settlement documents requested by the Blog. There was a slight delay in obtaining the material because sensitive information in the documents such as bank-account numbers had to be redacted before they could be sent.

    The supplemental settlement agreement shows that Profitable Sunrise may affect the two Frazers and Rosebrock for 10 years to come, given that the state has agreed to accept payments from them totaling a minimum of $844.02 a month for the next 120 months. The trio optionally may choose to pay a higher monthly sum to retire the debt faster.

    Slightly more than $6,864 of the $108,146.61 due has been satisfied through the application of previously frozen funds. The Frazers and Rosebrook, however, must begin paying down the balance within 60 days.

    The supplemental agreement has an enforceability provision that calls for the entire unpaid sum to become due in the event of a default and adds a fee of 10 percent if default occurs.

    Separate documents obtained by the Blog through a public-information request show that Ohio has used a second set of enforcement teeth to assure compliance with a separate agreed order. That agreed order provides the state the authority to bring a contempt proceeding before the Williams County Court if prosecutors come to believe Nancy Frazer and Rosebrock aren’t holding up their end of the agreed order.

    The agreed order specifies that financial sanctions against them could total $710,000 if a judge who conducts an evidentiary hearing at the request of the state holds them in contempt.

    From the agreed order (italics added):

    If any of the Defendants fail to comply with any of the conditions as set forth in this Agreed Entry and Order, the State may file a Motion to show cause why Defendants should be held in contempt. In such case, the Court will conduct an evidentiary hearing on the State’s Motion. If the State demonstrates after an evidentiary hearing by a preponderance of the evidence that Defendants Nancy Jo Frazer, Albert Rosebrock, and/or Defendant Defining Vision Ministries, Inc., individually or in any combination, through their own actions or through the actions of their agents, representatives, or assigns, violated any of the conditions set forth in this Agreed Entry and Order, the Court shall order a judgment in an amount up to $710,000.00, in favor of the Attorney General. In any such action for contempt of Court, the State need not establish whether or not any damages were appropriately awardable under the claims set forth in the Complaint.

    Under the separate agreed order, Nancy Frazer and Rosebrook are required to dissolve Defining Vision Ministries and to turn over whatever assets it has left to the state. (Defining Vision Ministries formerly was known as Focus Up Ministries, the supposed beneficiary of proceeds from Profitable Sunrise.)

    The order also reveals that a freeze on a Rosebrock bank account in July 2013 resulted in a payment of $910.30 to him from Social Security being made inaccessible, a circumstance that demonstrates that unpleasant things can happen if investigators believe tainted funds are mixed with legitimate money. The Social Security funds have been released to Rosebrock.

    It clearly could have gone harder on Nancy Frazer et al, but it’s equally clear Ohio won on the enforcement front. The message: Pitching utterly preposterous HYIP schemes and presenting them as charitable fundraisers or endeavors simply will not be tolerated. There will be costly, potentially embarrassing litigation. There will be serious financial consequences (at least).

    Concluding note:  For reasons of competitive journalism and security, the PP Blog is declining to publish the settlement documents. This is a story about a ribald HYIP fraud — Profitable Sunrise — that appears to have been operated through a mail drop in England by a person using the identity of a ghost. Even with the redactions, the Blog is concerned that HYIP scammers and dens of thieves could use certain information in the documents to start harm anew. The Blog therefore is choosing to err on the side of caution.