From Google cache earlier today for BehindMLM.com.
UPDATED 3:21 A.M. EDT SEPT. 30 U.S.A. The PP Blog is aware that BehindMLM.com, the popular review site that covers multilevel marketing and fraud schemes within the sphere, is offline. The precise reason why is unclear at this time.
BehindMLM.com reported Sept. 26 that it had received a DMCA takedown notice from Faith Sloan, an MLM HYIP huckster and figure in the TelexFree Ponzi- and pyramid-scheme story. In April 2014, Sloan was charged with securities fraud by the SEC for her alleged role in TelexFree, described by regulators as a billion-dollar fraud that crossed national borders.
In the takedown action, Sloan complained about certain photographs that have appeared on BehindMLM.com. Sloan claims to own the copyrights and that Behind MLM’s use of the photographs was unauthorized.
BehindMLM has called Sloan’s claims “bogus” and has said an outage was possible as the situation evolved.
Content from BehindMLM.com has been cited in court filings by TelexFree members who alleged that racketeering violations occurred within TelexFree. More than 1 million TelexFree victims may exist around the world.
From an SEC exhibit filed last week in the SEC’s case against eAdGear, an alleged international pyramid- and Ponzi scheme that gathered $129 million. Redactions by PP Blog.
EDITOR’S NOTE: eAdGear, which had entities in California and Hong Kong, “primarily” targeted “investors in the U.S., China, and Taiwan” and gathered $129 million in a combined pyramid- and Ponzi scheme that engaged in brand-leeching, the SEC alleged last week. An MLM scam known as WCM777, which allegedly gathered more than $80 million, also engaged in brand-leeching while targeting Asian communities, according to court filings. The SEC sued WCM777 in March 2014. Among the SEC’s alarming allegations against WCM777 was that it planted a false seed that it had partnerships “with more than 700 major companies such as Siemens, Denny’s, and Goldman Sachs.”
“This new approach to Internet advertising has businesses of all sizes, from small home based businesses to large corporations such as Google, Starbucks, Kodak, etc., joining ASD,” a 2008 promo for ASD read. “Not only are there over 75,000 small businesses advertising with ASD, but now major corporations are as well. Remember, a part of the daily rebate comes from the revenue corporations pay to advertise with ASD.”
It was all a crock. The U.S. Secret Service, which opened an undercover probe in July 2008, went on describe ASD as a “criminal enterprise.” ASD President Andy Bowdoin was convicted of wire fraud in the ASD Ponzi case. He is serving a lengthy term in federal prison.
Even while it was operating, ASD talked about a nascent “Chinese” arm known as Golden Panda Ad Builder. In retrospect, it now appears that plans to involve Asian populations in HYIP schemes were well under way at least by 2008 and since have evolved into frauds that were even larger than ASD. (ASD gathered $119 million and has been eclipsed in dollar volume by at least three Internet-based investment scams since then: TelexFree (possibly $1.2 billion); Zeek Rewards (c. $850 million); and eAdGear ($129 million). Falling just short of making this list were Zhunrize (allegedly $105 million) and WCM777 (allegedly $80 million). It is clear from court filings that Zeek also had a presence in Asian communities.)
There also was a tertiary scam inside the ASD scam. Indeed, promos for an entity known as ASD Offer Universe encouraged members to click on Google ads so ASD would earn fees of up to $5 a click. Here’s now that promo began (italics added):
“ASD ENTERS INTO AGREEMENT WITH GOOGLE FOR NEW CONSUMER SITE. Months ahead of schedule, Google and ASD Offer Universe are now teaming up to show Google ads on the site. Google, after seeing all of the major advertisers already being shown on ASD Offer Universe agreed to enter into a relationship with ASD.”
Did the eAdGear “program” channel long-ago events at ASD to help its massive pyramid scheme grow?
ASD was a purported “advertising” firm that operated a “rotator.”
Let’s compare what happened at ASD in 2008 to what the SEC now says happened at eAdGear, accused by the agency last week of operating a $129 million pyramid- and Ponzi scheme and positioning itself as an advertising company and an SEO firm.
By at least March 2014, the SEC says in court filings, investigators learned of a promo for eAdGear that read, “Google and Yahoo are partnering up with eAdGear for SEO services!!”
In the land of serial promoters of MLM or direct-sales HYIP scams, it’s as though the ASD case never happened.
The name-dropping and toxic disingenuousness associated with eAdGear hardly were limited to the abuse of the names of Google and Yahoo, according to SEC exhibits filed in the eAdGear case. It appears there were at least 253 incidents of brand-leeching associated with eAdGear. Indeed, eAdGear appears to have planned its ascent to the upper echelon of the fraud sphere by deliberately placing bogus ads for famous companies into its ad “rotator” to create a false sense that its “program” was legitimate.
Target Corp., the famous retailer, had its brand leeched, the SEC alleged. So did Lbrands, the Columbus, Ohio-based company that owns Victoria’s Secret
Now, let’s look at some of the behind-the-scenes investigative work performed by the SEC. Court filings by the agency show that, on July 1, 2014, the SEC issued a subpoena to Yahoo to check on the eAdGear-associated claims.
Yahoo responded on July 10 by advising the SEC that it had “identified no contracts or agreements with eAdGear[].”
Meanwhile, according to court filings, the SEC made an inquiry at Google on June 30. Google responded on July 22, advising the agency that it “is not aware of any commercial relationship between [eAdGear] and Google.”
Because ads for famous companies, including Target, Gap Inc. and Victoria’s Secret, had appeared in the eAdGear “rotator,” the SEC contacted those companies. (The response by L Brands Inc., owners of Victoria’s Secret, is shown above.)
Target responded by searching its database of vendors to which it had issued payments. No records surfaced for eAdGear, according to the SEC. Gap, similarly, informed the SEC that it had no record of doing business with eAdGear.
What else does the SEC have? Well, according to court records, it has internal eAdGear email correspondence that shows an employee was instructed to place 253 links to famous companies in its rotator.
These companies included Avon, Sears, Nordstrom, eBay, QVC, HSN, J.C. Penney, Banana Republic, Dillard’s, Kohl’s, Macy’s, Amazon.com, Men’s Wearhouse, Kmart, New York magazine and more.
These are among BCSC’s assertions — under a subheading titled “False impression of paid advertisements and advertising revenue”:
Bossteam described itself on its websites, in documents and in presentations as an online advertising business having huge growth potential and ready to become a leading global online advertising company. It referred to well-known online businesses such as Google, Amazon and eBay, and to the fast-growing advertising revenues of these businesses.
Although hundreds of “ads” appeared on the advertising platforms, the majority of the ads posted on Bossteam’s websites were associated with Bossteam’s own administrative accounts (accounts accessible by those controlling its systems) and not to accounts for advertisers or members who had paid to post links to their websites on Bossteam’s websites.
Ads associated with Bossteam’s administrative accounts included webpages for well-known local and international businesses.
Local businesses whose webpages appeared on Bossteam’s websites included a restaurant, a security systems company, a heating company and a private career college. Websites of well-known businesses and personalities included World Wrestling Entertainment, Miriam Webster and Britney Spears.
Posting the websites of local and international businesses on Bossteam’s websites without payment created a false impression that such businesses were advertising on Bossteam’s websites and paying Bossteam to do so.
Because Bossteam and eAdgear were similar businesses and appear largely to have targeted members of the Asian community, one has to wonder whether the schemes had promoters in common. For now, at least, the answer is unclear. What is clear is that some promoters simply move from one fraud scheme to an another when the “program” of the moment craters or encounters regulatory scrutiny.
Serial HYIP huckster and Zeek figure T. LeMont Silver currently is in name-dropping overdrive for BitClub Network, one of his latest “programs.” Silver’s name has surfaced in private lawsuits involving eAdGear and an interconnected enterprise known as Go Fun Places, which is referenced in the SEC’s eAdGear case. (For one instance, see the reference to Go Fun Places within the letter from L Brands to the SEC in the graphic above.)
URGENT >> BULLETIN >> MOVING: (12th Update 1:28 p.m. EDT U.S.A.) The SEC has gone to federal court in San Francisco, alleging that the eAdGear “program” was a pyramid- and Ponzi scheme that gathered $129 million. The action against eAdGear is the second major pyramid-scheme prosecution announced by the SEC this week.
The SEC has identified eAdGear’s operators as Charles S. Wang, 52, and Qian Cathy Zhang, 52, of Warren, N.J., and Francis Y. Yuen, 53, of Dublin, Calif. They have been charged with fraud and an asset freeze has been imposed, the SEC said.
Zhang is Wang’s wife, the SEC said, alleging the couple was part of a “ruse” that positioned Zhang as an ordinary “member” who “became hugely successful.”
“During sworn testimony before the staff of the Commission in the investigation preceding the filing of this case, Zhang asserted her privilege against self-incrimination rather than answer questions about her role at eAdGear,” the SEC said in its complaint.
The eAdGear “opportunity” itself, according to the SEC, was a “fiction.”
“eAdGear and its operators falsely claimed that they were running a profitable Internet marketing company when in reality, they were operating a Ponzi and pyramid scheme that preyed on Chinese communities and caused investors to lose millions of dollars,” said Jina L. Choi, director of the SEC’s San Francisco Regional Office.
Though not named a defendant in the eAdGear complaint, Zeek Rewards figure and alleged Zeek “winner” T. LeMont Silver may find himself at the center of yet another Ponzi- and pyramid storm. That’s because eAdGear once tried to sue ZeekRewards.com, amid claims of cyberpiracy, unfair competition and benefiting from copyright infringement.
And it’s also because Silver’s name surfaced in fraud lawsuits between and among eAdGear Inc., GoFunPlaces Inc., Randal Williams and JubiMax LLC.
. . . even though eAdGear claimed to be a successful Internet marketing company, nearly all of its revenue was generated by investors, not its products or services.
The complaint alleges that eAdGear’s operators used money from new investors to pay earlier investors as well as to repay a personal loan and purchase million-dollar homes for themselves. It alleges the operators concealed and perpetuated the scheme by displaying sham websites on eAdGear’s own site to make it appear as if it had real, paying customers and manipulated revenue distributions to investors to appear profitable.
eAdGear began operating in December 2010 and grew to include 66,000 accounts held by “tens of thousands of investors” mostly of Chinese descent, the SEC said.
Corporate defendants include eAdGear Inc of Pleasanton, Calif., and eAdGear Holdings Limited of Hong Kong. The “program” sold “so-called ‘memberships’ or ‘business packages,’” the SEC said.
From the SEC complaint (italics added):
Defendants market eAdGear as a successful internet marketing and advertising company that uses search engine optimization (“SEO”) technology they claimed to have developed to help paying clients increase the page rankings of their websites on various search engines. Defendants claim to share 70% of the revenue generated daily by this business with investors.
In reality, eAdGear’s purported business is a ruse. Instead, well over 99% of the funds eAdGear has received have come from its investors, and eAdGear simply uses new investor money to make payments to — or to credit the accounts of — existing members in classic Ponzi scheme fashion.
Wang, Yuen, and Zhang have perpetrated this fraud by, among other things: installing Wang as chief executive officer, and Yuen as chief financial officer and chief operating officer of eAdGear, Inc., while portraying Wang’s wife, Zhang, as an ordinary “member” who became hugely successful; creating a fiction of a business that has paying customers when it does not; and manipulating daily revenue distributions to credit investors’ accounts, to make it appear as though eAdGear is operating profitably.
Earlier this week, the SEC announced charges against a “program” known as Zhunrize, describing it as pyramid scheme that had gathered $105 million.
Zhunrize presented itself as a “Plan B,” a core fraud signature in the HYIP world. T. LeMont Silver, among others, is a “Plan B” pitchman.
The website of TelexFree will not load this afternoon. Whether this signals a development in the TelexFree Ponzi, pyramid and bankruptcy cases was not immediately clear.
EDITOR’S NOTE ADDED 1:32 P.M. EDT SEPT. 28 U.S.A. TelexFree.com appears to be back online. At this time, why the landing page wouldn’t load remains a mystery. Our earlier story is below . . .
The website of TelexFree, alleged in April by the SEC and the Massachusetts Securities Division to have operated a billion-dollar pyramid and Ponzi scheme across state and national borders, will not load. Nor will the domain return a ping.
This condition appears to have surfaced in recent hours. The site previously included TelexFree-authored words written in April or May that suggested TelexFree somehow could emerge from bankruptcy. Stephen B. Darr, a court-appointed trustee, is now administering TelexFree. He has said he has no intention of reorganizing or reactivating the company.
Websites involved in Ponzi schemes sometimes are seized by court order or voluntarily surrendered by the operators. Receivers and trustees later sometimes use the URLs for the domains to publish news that concerns investors.
Why TelexFree.com won’t load is unclear. The office of U.S. Attorney Carmen Ortiz, which is leading the criminal prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, did not immediately respond to a request for comment.
Merrill and Wanzeler have been charged with wire fraud and wire-fraud conspiracy. U.S. prosecutors have called Wanzeler a fugitive who ducked out of the United States through Canada under cover of darkness — and later flew to Brazil.
From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.
2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”
The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.
Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”
“Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”
Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.
MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.
The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.
The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.
“Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.
In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”
One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.
Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.
Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.
If someone pitches you on an MLM “Plan B,” run like the wind.
URGENT >> BULLETIN >> MOVING: (8th Update 6:56 p.m. EDT U.S.A.) The SEC has gone to federal court in the Northern District of Georgia, alleging that the Atlanta-based “Zhunrize” MLM program is a pyramid scheme that operates globally and has gathered $105 million from 77,000 investors.
The Zhunrize “program” has been charged with fraud. It is at least the third MLM targeted by the SEC since March. The agency filed charges against WCM777 in March. In April, it filed charges against TelexFree.
Zhunrize CEO Jeff Pan, 52, of Suwanee, Ga., also has been charged with fraud, the SEC said. A federal judge has issued an asset-freeze order.
All three of the MLM schemes operated online and allegedly affected tens and tens of thousands of people.
Zhunrize has been operating since 2012, the same year the SEC took down the Zeek Rewards MLM scheme, alleging a fraud that had gathered hundreds of millions of dollars.
According to the Commission’s complaint, Zhunrize purports to be a legitimate multi-level marketing business by which members purchase online stores and then sell merchandise through them, while earning commissions on products purchased by their customers and through store sales to other members and hosting fees paid by those members. In fact, the company is operating as a pyramid scheme because its commission structure is based on the continual recruitment of new members, with the most lucrative returns dependent on the downline recruitment of other members through store sales irrespective of any product sales. To date, the company has taken in approximately $105 million from approximately 77,000 investors since 2012.
The Commission’s complaint further alleges that in its promotional materials, Zhunrize touts the ability to earn commissions from the sale of products, both through the owner’s store and through downstream owners’ stores. For example, a Zhunrize promotional video differentiates Zhunrize from other on-line multi-level marketing plans, claiming that Zhunrize has “sustainability.” According to the video, the Zhunrize “model will sustain itself because we will have millions more customers than distributors.” Later, the narrator in the video claims “we have the Vendor Relationships, the Logistics, the Payment Gateways to reach millions of new customers each month.”
The Commission’s complaint also alleges that Zhunrize does not disclose, however, that to date substantially all of its revenue has comes from the sale of memberships (referred to as stores) and the corresponding monthly internet hosting fees associated with operating those stores, rather than the sale of products. Indeed, both Pan and a Zhunrize vice-president testified that the company currently derives 80-90% of its revenue from selling online stores and the monthly internet hosting fees for them, as opposed to actual products from these stores. Thus, contrary to the representations to potential investors, Zhunrize is actually a fraudulent pyramid scheme.
Like other MLM schemes before it, Zhunrize appears to have traded on the names of famous companies outside the MLM realm. The PP Blog today, for instance, observed a promo for Zhunrize in Spanish that referenced an “online store” known as “ZHunCity” and dropped the names of Ebay, Amazon, Wal-Mart, Target and Best Buy.
It is common for fraud schemes to drop the names of famous companies as a means of sanitizing the purported MLM ‘opportunities.” Offering materials for WCM 777, which allegedly gathered tens of millions of dollars, dropped the names of hundreds of famous brands while also dropping the names of famous businesspeople and famous politicians.
WCM appears to have taken in on the order of $80 million, according to court records in the case. The Massachusetts Securities Division has alleged that TelexFree may have gathered more than $1.2 billion in a little better than two years. WCM77 made its $80 million haul in about one year.
TelexFree and WCM both engaged in affinity fraud by targeting specific population groups, according to court filings. There may be promos for Zhunrize in languages other than Spanish and English. The PP Blog observed a Zhunrize promo today that was simply labeled “Brazil,” which may mean Portuguese-speaking populations were targeted.
BULLETIN: (3rd Update 1:34 p.m. EDT U.S.A.) A Massachusetts bank that established accounts for TelexFree and whose president is the brother of alleged TelexFree Ponzi- and pyramid-schemer James Merrill has settled with the Massachusetts Securities Division for $3.5 million.
The settlement between MSD and Fidelity Co-operative of Fitchburg means that an escrow account consisting of the $3.5 million and whatever interest it draws will be set up for TelexFree victims who reside in the state. With MSD helping shepherd the process and maintaining veto power to protect the interest of victims, the bank will retain an independent claims administrator at its own expense to manage claims and disbursements.
The escrow account will be called the “Massachusetts Victim Relief Fund.”
At some point at least 120 days in the future, the administrator shall “determine an independent plan of Distribution.” TelexFree victims in Massachusetts will be able to file claims. Those with approved claims will be compensated under a formula established by the claims administrator.
Precisely when the claim-filing period will begin was not immediately clear. Also unclear is precisely how many TelexFree victims reside in Massachusetts. What is clear is that MSD — with the consent of Fidelity Co-operative — has arranged a means by which TelexFree victims residing in the state will receive money some of them may need desperately.
Using a series of banks and payment vendors, TelexFree might have scammed as much as $90 million in Massachusetts alone. Its overall scam may have gathered more than $1.2 billion across the world.
As part of the settlement, the bank neither admitted nor denied the state’s allegations that it did not perform adequate due diligence on TelexFree before permitting the company to open three accounts in August and September of 2013.
Only after receiving millions of dollars in TelexFree deposits for a period of between two and three months did Fidelity Co-operative conduct any legitimate due diligence on TelexFree, MSD alleged. On Nov. 27, 2013, according to MSD, bank president John Merrill asked Fidelity’s compliance and Bank Secrecy Act officer to review TelexFree’s banking activivity.
Merrill is the brother of TelexFree figure James Merrill, later to be indicted with fellow TelexFree figure Carlos Wanzeler on charges of wire fraud and wire-fraud conspiracy.
The bank’s compliance officer — by performing simple Internet searches — soon came to realize that TelexFree’s operations in Brazil had been shuttered amid pyramid-scheme allegations, according to MSD. The officer notified John Merrill of his findings and also relayed his concerns to an outside consultant the bank used for compliance and BSA issues.
By Dec. 3, the bank advised TelexFree that it was closing its accounts by Dec. 31, MSD alleged.
And, MSD alleged, Fidelity Co-operative also had opened personal accounts for James Merrill and Carlos Wanzeler. After the bank began conducting due diligence on TelexFree in earnest on Nov. 27 and during a period in which TelexFree accounts were pending closure, MSD alleged, Wanzeler transferred $3.5 million from his personal account at Fidelity Bank “to an overseas bank account held in Singapore at the Oversea-Chinese Banking Corporation.”
Citing evidence listed by prosecutors in the office of U.S. Attorney Carmen Ortiz of the District of Massachusetts, MSD alleged that James Merrill and Wanzeler transferred more than “$10.4 million out of Fidelity Bank, in multiple transactions using personal accounts, to various other financial institutions after November 27, 2013.”
Through both business and personal accounts at Fidelity Co-operative, “TelexFREE and its principals caused further harm to Massachusetts victims of the TelexFREE scheme,” MSD alleged.
Massachusetts Commonwealth Secretary William Galvin oversees MSD, which has been squaring off against multiple cross-border pyramid schemes.
TelexFree pitchman Sann Rodrigues, one of four promoters accused by the SEC of fraud. Rodrigues, a defendant in an earlier SEC case that alleged pyramid-scheming and affinity fraud, has ties to Massachusetts, Florida and Brazil.
UPDATED 3:33 P.M. EDT SEPT. 22 U.S.A. A small subset of data from 95 self-identified “net losers” in the TelexFree MLM scheme shows that they lost a whopping average of $27,578 each, according to an analysis by the PP Blog of court filings in the TelexFree bankruptcy case.
The average could be higher because investment sums for four of the 95 were not immediately available. Particularly concerning is a claim from the 95 losers that there may be “1,000,000 or more victims” of TelexFree’s fraud.
Viewed in microcosm, the data from the 95 losers paint a picture of an incredible loss of purchasing power across U.S. states and across the Atlantic Ocean into Italy — all from an association with TelexFree. At a minimum, the data suggest that TelexFree could cause certain U.S. investors to lose their nest eggs or even slip deeper into poverty.
When compared to the U.S. poverty guidelines as published by the U.S. Department of Health & Human Services earlier this year, TelexFree eviscerated wealth among the TelexFree group of 95 at better than two times the U.S. poverty wage of $11,600 for one-person households in 2014. With average TelexFree losses among the group of 95 at $27,578, the 2014 poverty-wage of $27,910 for a five-member household nearly was matched. (The poverty guidelines referenced in this story are for the 48 contiguous U.S. states and the District of Columbia.)
What this means, in essence, is that certain TelexFree members who perhaps were living in poverty or had a meager standard of living before they encountered TelexFree have lost capital at a rate that further tightens their economic shackles. Lost purchasing power means a lower standard of living for many Americans already living on tight budgets and may translate into things such as automobile repossessions and mortgage foreclosures.
The bitter irony is that TelexFree — like many HYIP schemes — was positioned as the remedy for economic ills, perhaps particularly the ills of people already at the edge of individual and family disaster. In a bizarre sales strategy, TelexFree appears to have targeted the impoverished people of Haiti to sell a purported credit-repair program to impoverished people in the United States and elsewhere.
In many cases, according to the group of 95, the losses eroded or eviscerated the “life savings” of TelexFree members.
Some TelexFree members were lured into the scheme by promises that $289 would return $1,040 in a year, $1,375 would return $5,200 and $15,125 would return $57,200. (Investors at the $1,375 level appear later to have been pitched to buy in at $1,425. Investors at the $289 level appear later to haven been pitched to buy in at $299. See story below for a reference to buy-ins at the $1,375 and $1,425 levels among the group of 95. Many TelexFree members bought in at much higher levels.)
“Everybody gets paid” was a common theme. The “program” even reached into other nations with severe economic challenges such as Peru and Rwanda.
Of the group of 95, about 38 listed addresses in Massachusetts, TelexFree’s U.S. base. One individual in Everett, Mass., listed a loss of $427,500. Another person in Saugus, Mass., listed a loss of $345,000. Two other individuals with the same address in Revere, Mass., listed combined losses of $350,000 — $175,000 each. A person in Woburn, Mass., listed a loss of $72,800. Another person in Chelmsford, Mass., listed a loss of more than $58,777.
In nearby Connecticut, a person in Stratford listed a loss of $42,000. A person in Monroe listed a loss of $35,625. At the same time, a person in Trumbull listed a loss of $19,950. Also in the New England region, a person in Nashua, N.H., listed a loss of $16,000.
To the south of Massachusetts, an individual in Waleska, Ga., listed a loss of more than $109,465. A person in Raleigh, N.C. listed a loss of more than $81,889. To the west, two persons with different addresses in Las Vegas listed losses of $50,000 — $25,000 each. Another person with a Las Vegas address listed a loss of $26,800. Yet another person in Las Vegas listed a loss of $17,175.
In April 2014 — after bringing an emergency action against TelexFree and alleging it was conducting a massive Ponzi- and pyramid scheme — the U.S. Securities and Exchange Commission alleged that the “program” mainly was targeted at “Dominican and Brazilian immigrants in the U.S.”
The SEC’s action occurred after authorities in Brazil — a Portuguese-speaking country — alleged that a TelexFree arm known as Ympactus was targeting investors there in a pyramid scheme.
The group of 95 now says that TelexFree also targeted the “Nigerian and Russian” communities, in addition to the Spanish- or Portuguese-speaking communities.
“. . . many Promoters do not speak English fluently,” the group of 95 says, adding that “creditor victims here are also undocumented immigrants residing in the United States, and may be thus extremely reluctant to directly participate in any formal proceedings, and also extremely reluctant to deal with a bankruptcy trustee or other official representative with duties other than solely to creditors. The bulk of the Debtors’ unsecured creditors cannot engage with these Chapter 11 Cases in any meaningful way.”
Court filings by the group of 95 now show that TelexFree also had a presence among people who speak Italian and have addresses in Italy. Several addresses in Italy proper appear in a document filed by the group of 95, including the address of a person said to have lost $21,375, a person said to have lost $11,400 and another person said to have lost more than $8,699.
Many others across the spectrum of the group of 95 suffered smaller losses that may be equally painful. The smallest sum lost by member of the group appears to be $900 — by a person in Deltona, Fla. Another person in Deltona is said to have lost $1,645.
Other “small” sums lost by members of the group of 95 include $1,375 by a person in Bologna, Italy; $1,425 by a person in Las Vegas; another $1,425 lost by a different person in Las Vegas; $1,425 by a person in New Bedford, Mass; and $1,425 by a person in Weymouth, Mass.
Buy-in dollar sums from the low thousands to the multiple tens of thousands were common among the group of 95, which is seeking to form an official committee of unsecured creditors in the TelexFree bankruptcy case.
UPDATED 12:27 A.M. EDT SEPT. 22 U.S.A. The PP Blog today contacted the Board of Governors of the Federal Reserve System, owing to claims concerning the emerging BitClub Network “program” that is being pitched by certain members of the $850 million Zeek Rewards Ponzi- and pyramid scheme.
Known in shorthand as the Fed, the Federal Reserve is the central bank of the United States.
Someone is posting on the RealScam.com antiscam forum as “Fedman” and purporting to be “Steve,” a “Vice President” of a federal reserve bank. Fedman purports to have been employed by the Fed “for over 30 years,” to “manage large operations” and to “work with monetary policy.”
Fedman appears to be defending pitches for BitClub Network by Brian Spatola, a New Jersey-based alleged “winner” in the massive Zeek scheme that may have affected hundreds of thousands of people. The court-appointed receiver in the Zeek case is suing more than 9,000 alleged Zeek winners in the United States and has said he’ll also sue international winners in the “program.”
The Fed did not immediately comment on the claims being made by Fedman.
It is sometimes the case in HYIP schemes that promoters and defenders of “programs” drop the names of individuals and entities that have no ties whatsoever to a “program” as a means of sanitizing scams. The name-dropping associated with BitClub Network has been furious and now appears even to include the name of the U.S. central bank.
After missing a series of advertised launch dates — including one on Sept. 1, the 75th anniversary of the beginning of World War II and another on Sept. 10, the eve of the 13th anniversary of the 9/11 terrorist attacks — BitClub Network now appears to have launched.
Promoters claim the scheme pays out between 0.3 and 0.8 percent a day for 1,000 days on invested sums of between $500 and $3,500. In addition, promoters claim there are recruitment commissions on top of the daily payout, a claim that accompanies many HYIP Ponzi- and pyramid swindles.
Among the BitClub Network promoters are Spatola and T. LeMont Silver, late of Zeek. Silver also promoted the OneX pyramid scheme, an exceptionally murky program that used an image of a bomb in its logo.
AdSurfDaily figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was a Federal Reserve conspiracy theorist and an overall banking conspiracy theorist. Leaming was arrested by an FBI terrorism task force in 2011, after filing bogus liens against federal officials who had a role in the ASD Ponzi prosecution that began in 2008.
In May 2012, three American women and alleged “leaders” of a cash-gifting pyramid scheme were arrested in Connecticut for their roles in the purported “opportunity,” a pyramid that featured so-called “Women’s Gifting Tables” and had a food theme. Two of the woman later were sentenced to prison. The third woman was placed on three years’ probation and put under court supervision.
It now has emerged that 11 women in Britain implicated in a highly similar scheme have been prosecuted. Six have been convicted. The British scheme was known variously as “Give and Take” and “Key to a Fortune” and had a bridal theme.
The apparent message? Get a great start in wedded life by handing over your cash to a gifting scheme and waiting for your £3,000 to magically turn into more than £20,000.
Like the Connecticut cash-gifting scheme, the British scheme allegedly was led by older women, including some in their fifties or sixties. Both schemes featured false claims the “program” was legal.
The British scheme reportedly gathered on the order of £21 million, with about 90 percent of participants losing their money. Some of the participants appear to have purchased multiple positions, hoping to score more than one payout.
Western Morning News, quoting a prosecutor, reported the scheme was ruled with a “rod of iron.” In May 2012, federal prosecutors in the United States said the Connecticut scheme included an element of “intimidation” aimed at silencing people who questioned the scheme.
The scheme in Britain allegedly operated between May 2008 and April 2009. The Connecticut scheme operated roughly between 2008 and 2011.
From the BBC, quoting Judge Mark Horton (italics added):
“These cases and the actions and attitudes of these defendants demonstrate the way in which pyramid promotional schemes and chain gifting schemes can be secretly created and quickly spread amongst a vast number of people and over several counties,” he said.
In February 2014, a prosecutor in Hawaii warned about a “Women’s Circle” gifting scheme operating in that state. The PP Blog reported at the same time that members of a cash-gifting scam known as BlessingGoldClub were trying to offload “units” in the Better-Living Global Marketing HYIP scam for $500. The units purportedly were being discounted from $1,295.
In the U.K. case, Judge Horton said, “The public need to be aware that schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities as friends and family are lured into such a scheme,” according to Western Morning News.
Eric Matthew Frein. Source: Pennsylvania State Police.
2nd Update 11:35 p.m. to note that Frein has been added to the FBI’s 10 Most Wanted Fugitive List.
Normalcy has not returned to Monroe County in the Pocono Mountains region of Northeastern Pennsylvania. Two troopers allegedly were ambushed outside their barracks in a nighttime, shift-change attack at the Blooming Grove station in nearby Pike County on Friday.
Cpl. Bryon T. Dickson, 38, was shot and killed. Tpr. Alex T. Douglass was seriously wounded.
Friends described homicide suspect Eric Matthew Frein as intelligent, an Eagle Scout and a military re-enactor, while the state police call him a “coward” who dressed up as a Serbian soldier.
The manhunt for the 31-year-old Canadensis man continued Wednesday throughout the rural and dense areas of the Poconos in Monroe, Pike and Wayne counties, prompting the closure of several schools in the region.
[State Police] Lt. Col. [George] Bivens declined to say which group Frein belonged to because they are hoping for cooperation from its members. But Frein is pictured repeatedly on the MySpace page of Istocni Vuk, a group that dresses up as Serbian Army soldiers. Roughly translated, the name Istocni Vuk means “Eastern Wolf.” On the page, Frein is referred to in one photo as Vuchko, which was the wolf mascot in the Sarajevo Winter Olympic games in 1984. On some sites online, Vuchko is referred to as “the tough and courageous wolf.”
UPDATE 11:35 P.M. EDT U.S.A. Frein has been added to the FBI 10 Most Wanted Fugitive List.
