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  • BULLETIN: U.S. TelexFree Probe May Expand Overseas

    James Merrill.
    James Merrill.

    BULLETIN: Federal prosecutors in the United States have informed a federal judge that “evidence underlying this case is closely tied to certain foreign countries, especially Brazil” and that “it is likely that the parties will need to review evidence in foreign countries and arrange for foreign witnesses and/or law enforcement officers to travel to the United States to testify at trial.”

    The assertion by U.S. prosecutors is part of a motion to designate TelexFree as a “complex case” that calls for an exception to the Speedy Trial Act, a law that requires an indicted defendant to be tried within 70 days. Former TelexFree executives or managers James Merrill and Carlos Wanzeler were indicted on July 23.

    It was unclear whether Merrill, who remains in the United States, would challenge prosecutors on the issue. Wanzeler ducked out of the United States through Canada on April 15, and flew to Brazil on April 17, according to prosecution filings.

    From a prosecution filing today (italics added):

    Relief from the requirements of the Speedy Trial Act is needed to allow the parties enough time to produce and examine discovery and evidence in this case and to prepare for trial. In the event of trial, substantial lead time will be required to secure the attendance of foreign witnesses, including the permission of host countries and travel. The ends of justice served by relief from Speedy Trial Act requirements in this case outweigh the best interests of the public and the defendant in a speedy trial; failure to grant relief may deny the parties the time needed for effective trial preparation, taking into account the exercise of due diligence, and may result in a miscarriage of justice.

    U.S. prosecutors asserted today that they had seized 400 terabytes of data “spanning 46 servers.”  Meanwhile, prosecutors said they’d “seized about 26 separate computers from TelexFree’s headquarters – all containing independent drives that are not networked to the servers described above – as well as about three other computers obtained via grand jury subpoena.”

    At the same time, prosecutors said the U.S. government had “also issued approximately 185 grand jury subpoenas in the course of its investigation so far, nearly all for large productions of business records, including from multiple banks, brokerage houses, and payment processing services. The government is in the process of scanning the seized documents and, along with the subpoenaed materials, compiling a single database for production to the defense.”

    NOTE: Our thanks to the ASD Updates Blog.

     

  • Missouri Raised ‘Grave Concerns’ Over TelexFree

    newtelexfreelogoThe staff of the Missouri Public Service Commission raised “grave concerns” that permitting TelexFree’s telecom registration to remain intact in the state could “assist in the perpetuation of a fraud on investors,” records show.

    Missouri approved the registration in March 2014. TelexFree applied for it the previous month, according to records.

    Those records included a notarized TelexFree affidavit dated Feb. 14 — Valentine’s Day — and signed by “Jim Merrill,” who held the title “Managing Member.” The name and seal of a Massachusetts notary public appear on the document.

    Among other things, the document attests that TelexFree is “ready, willing, able, and will comply with all applicable state and federal laws and regulations imposed upon providers of interconnected voice over Internet protocol services.” It also attests that “the Applicant is legally, financially, and technically qualified to provide interconnected voice over Internet protocol services.”

    But on April 13, 2014, just weeks after “Jim Merrill” had advised Missouri that TelexFree was “financially” qualified to operate in the state, TelexFree filed for bankruptcy protection in Nevada. (The case since has been moved to Massachusetts.)

    In May, Missouri moved to revoke TelexFree’s registration, citing information it had received April 18 from Joseph Isaacs, a TelexFree telecom consultant.

    “Mr. Isaacs indicated the affidavit signed by Jim Merrill is not truthful,” a Public Service Commission staffer wrote to the full commission. The staffer recommended revocation of TelexFree’s registration.

    Isaacs, according to the staffer’s affidavit, pointed the commission to civil fraud actions against TelexFree filed by the Massachusetts Securities Division and the U.S. Securities and Exchange Commission on April 15, two days after the bankruptcy filing.

    By May 9, federal prosecutors had announced the criminal prosecution of TelexFree figures James Merrill and Carlos Wanzeler. The Missouri staffer pointed the commission to a news release by the office of U.S. Attorney Carmen Ortiz on the Merrill/Wanzeler prosecutions for wire-fraud conspiracy.

    The Missouri staffer also advised the commission that the FBI and Homeland Security Investigations (HSI), an arm the U.S. Department of Homeland Security, were involved in the TelexFree probe. He also noted that TelexFree itself had acknowledged on its website that service interruptions or discontinuation were possible because “we are not currently in position to support our network.”

    The staffer recommended that TelexFree be stripped of its telecom registration. On May 27, the commission gave TelexFree until June 24 to respond to a motion to revoke the registration.

    “TELEXFREE did not respond,” the commission said in a July 2 revocation order. The order became effective Aug. 1.

    Records in other states show that TelexFree filed a flurry of telecom-registration applications in the weeks leading up to its bankruptcy filing and the exposure of its alleged pyramid- and Ponzi scheme.

     

  • URGENT >> BULLETIN >> MOVING: Court Grants Approval For Zeek Receiver To Sue International Winners

    breakingnews72URGENT >> BULLETIN >> MOVING: A U.S. federal judge has approved a motion by the receiver in the Zeek Rewards Ponzi- and pyramid-scheme case to sue alleged “net winners” who live outside the United States.

    Receiver Kenneth D. Bell sought the authority “to file one or more actions in this Court and in foreign courts to pursue claims for the return of fraudulently transferred money and disgorgement of net funds received against significant ‘net winners’ who reside outside the United States. The foreign ‘net winners’ to be pursued all won at least $1000, the threshold previously approved by this Court.”

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina authorized the receiver today to pursue the international clawback claims.

    Precise details about when Bell intends to bring the actions were not immediately known tonight.

    Bell is pursuing clawback claims against more than 9,000 U.S. residents.

    Note: Our thanks to the ASD Updates Blog.

  • Purported ‘Sovereign Citizen’ Who Bizarrely Claimed His Authority Came From ‘The Vatican’ Convicted Of Issuing Bogus Diplomatic Credentials

    From ABC report on James McBride and "Divine Province."
    From ABC News report on James McBride and “Divine Province.”

    EDITOR’S NOTE: U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI) are referenced in the story about purported “sovereign citizen” James T. McBride below. ICE/HSI also are involved in the investigation of the alleged TelexFree Ponzi- and pyramid scheme. Whether TelexFree had any “sovereign citizens” in its ranks is unclear. “Sovereign citizens,” however, have been linked to other HYIP schemes. Wild narratives may accompany such schemes both before and after a government intervention.

    ** __________________________________ **

    James T. McBride first came to our attention in January 2013, after a reader alerted us to a story in the Sun Sentinel about a bizarre incident that occurred during a bankruptcy hearing for a Florida business known as RoboVault.

    As the Sun Sentinel reported at the time (italics added):

    McBride, who claims to derive his authority from the Vatican, sent letters to the judge and trustee demanding the bankruptcy case be dropped. He previously has been profiled in media accounts as a “sovereign separatist,” someone who believes he is not subject to state and federal laws.

    McBride’s name next surfaced in February 2013, as part of a story concerning the arrest near Columbus, Ohio, of a purported “sovereign citizen.” A police officer and police canine reportedly were injured. (See Comments thread below story, which references an entity known as “Divine Province.”)

    So-called “sovereign citizens” — jailed AdSurfDaily figure Kenneth Wayne Leaming is one of them — have an irrational belief that laws do not apply to them.  Leaming became the target of an FBI investigation after filing false liens against various public officials involved in the ASD Ponzi case. Investigators found bogus police credentials in Leaming’s possession.

    Prosecutors said Leaming was a member of the “County Rangers,” the armed-enforcement wing of a group of “sovereign citizens.”

    By May 2014, prosecutors had formally connected McBride, 60, of Columbus, Ohio, to “Divine Province.” He has now been convicted in the Eastern District of Virginia on charges of conspiracy, causing the impersonation of a diplomat and producing false identification documents.

    Yes. You read that right: causing the impersonation of a diplomat.

    Here’s part of what ICE/HSI and federal prosecutors in the office of U.S. Attorney Dana J. Boente of the Eastern District of Virginia had to say about the McBride case (italics added):

    McBride was indicted on May 14, 2014, by a federal grand jury of one count of conspiracy, one count of causing the impersonation of a diplomat and four counts of producing false identification documents. According to the evidence at trial, McBride was the leader of a sovereign citizen group called “Divine Province,” whose members claimed the U.S. government was a “municipal corporation” that did not have authority over them. McBride produced and distributed false diplomatic identification cards to his group’s members, and he encouraged them to make claims of diplomatic immunity to avoid arrest, debts or taxes. None of the group’s members were in fact accredited diplomats.

    McBride started selling the identification cards in September 2012 at a seminar he organized in Herndon, Virginia. Afterwards, he started selling the IDs from a website and shipping them around the country.

    McBride sold the IDs in pairs, one that identified the holder as a “Universal Post Office Diplomat” and another that purported to be an “International Diplomatic Driver Permit,” for approximately $200. The defendant also encouraged his members to send copies of the IDs to governmental agencies to notify them of a member’s “status” as a diplomat. The defendant claimed that his authority to issue the IDs came from the Vatican. The defendant also gave a televised interview on ABC News prior to the filing of charges in the case, in which he reiterated such claims. During the course of the charged conduct, the defendant’s organization earned close to $500,000.

    Watch segment of ABC News video in which McBride bizarrely calls himself the “primary trustee of the world.”

    McBride potentially faces two decades in prison, prosecutors said.

  • FLASH: Globo.com: TelexFree-Related Ambush Shooting In Brazil

    UPDATED 12:11 P.M. EDT U.S.A. A TelexFree member who recruited others into the MLM “program” has been shot and seriously wounded in an ambush in Brazil, Globo.com (Gazeta Online) is reporting this morning.

    Here is the link in Portuguese. Here is a Google Translation in English.

    Separately, there are reports in Peru that a TelexFree promoter was arrested earlier this week at an airport. Peruvian National Police also have referenced the airport event. (Google English translation here.)

  • Jailed Ponzi Schemer, 2 Family Members Indicted In Alleged Asset-Concealment Conspiracy; Cash Allegedly Hidden In ‘Ammunition Canister’; Case Follows On Heels Of Case In Which Now-Convicted Pitchman Tried To Duck Clawback Lawsuit

    breakingnews72So, you want to hide assets from a court-appointed receiver in a Ponzi scheme case? And when the U.S. Secret Service asks questions, you want to lie?

    South Carolina Ponzi schemer Ronnie Gene Wilson — sentenced in November 2012 to serve nearly 20 years for the Atlantic Bullion and Coin Inc. fraud — has been indicted on new charges from his prison cell. Two members of his family also have been indicted.

    An announcement published on the website of court-appointed receiver Beattie B. Ashmore says Wilson, whom the Federal Bureau of Prisons says is 67, has been indicted post-sentencing “concerning the hiding and concealment of assets from the government and the Receiver.”

    Also indicted were Wilson’s wife, Cassie Wilson, and his brother, Tim Wilson. The case is being prosecuted by the office of U.S. Attorney Bill Nettles of the District of South Carolina.

    “The Receiver’s office has recovered over $400,000.00 in gold, silver, and cash from Cassie Wilson and Tim Wilson in the last six months,” Ashmore said in the announcement. “These assets were delivered to them by Ronnie Gene Wilson after his arrest in an effort to hide these assets from the Receiver. This indictment reflects the government and Receiver’s persistent efforts to recover assets for the purpose of paying back the victims of the Ponzi scheme. This indictment will be followed by a number of lawsuits to be filed by the Receiver against those that profited from the Ronnie Gene Wilson Ponzi scheme.”

    From the indictment (italics added):

    On or about September 20, 2012, in the District of South Carolina, in a matter within the jurisdiction of the executive branch of the government of the United States, RONNIE GENE WILSON, did knowingly and willfully make a false, fraudulent and fictitious material statement and representation the same to be false, that is RONNIE GENE WILSON made false statements to an agent of the United States Secret Service that he had not hidden or transferred assets when, in fact, he well knew that he had secreted assets with family members. All in violation of Title 18, United States Code, Section 1001 (a )(2).

    The indictment alleges that Wilson gave his brother “an ammunition canister containing United States currency” in April 2012, shortly after the federal Ponzi probe began.

    Tim Wilson “hid an ammunition canister containing United States currency,” the indictment alleges.

    It further alleges that later, in the summer of 2012, Ronnie Wilson gave his wife “an ammunition canister containing United States currency.”

    And in February 2014, according to the indictment, Cassie Wilson “during a deposition concealed from counsel for the Federal Receiver her possession of the ammunition canister containing federal currency.”

    Also from the indictment (italics added):

    [The Grand Jury charges] [t]hat beginning in or about April 2012, and continuing up and to the date of this Indictment, in the District of South Carolina and elsewhere, the Defendants, RONNIE GENE WILSON, TIMOTHY L. WILSON and
    CASSANDRA K. WILSON, knowingly and willfully did combine, conspire, confederate, agree and have a tacit understanding with each other and with others known and unknown to the Grand Jury, to corruptly influence, obstruct and impede the due administration of justice in the investigation and prosecution of United States v. Ronnie Gene Wilson, et al., No. 8:12-320, and in the investigation and prosecution of In re Receiver for Ronnie Gene Wilson, et al., No.8: 12-2078, by the hiding and transferring of assets to prevent or impair the Government’s lawful authority to take such property under its lawful custody and control, in violation of Title 18, United States Code, Sections 1503, 1512(c) & 2232(a).

    See March 16, 2012, PP Blog story for additional background.

    Visit the receiver’s website.

    In December 2013, Benton T. Hall, 22, of Mesa, Ariz., pleaded guilty a federal charge of trying to hide assets from Ashmore and the Feds in the Atlantic Bullion and Coin case. Hall worked with Wallace Lindsey Howell, 61, of Mauldin, S.C., prosecutors said.

    “Once Howell learned that Secret Service was investigating and that Wilson would be charged, he sought assistance from Benton T. Hall and others in hiding assets that had been acquired with Ponzi money,” prosecutors said.  “Howell was afraid that the federal receiver working to marshal assets related to the Wilson Ponzi fraud would ‘claw back’ this assets so they could be distributed to the victims of the Ponzi scheme.

    “Howell transferred to Benton T. Hall and others approximately $1.5 million in property, gold and silver coins, equipment, and cash.  Benton T. Hall then worked to hide this money from the federal receiver and law enforcement,” prosecutors said.

    Howell, a Wilson pitchman, pleaded guilty in January 2013 to wire-fraud conspiracy.

  • Trustee Confirms TelexFree Did Not Own Building

    Despite worldwide promos implying otherwise, TelexFree was neither the sole occupant nor owner of this Massachusetts building.
    Despite worldwide promos implying otherwise, TelexFree was neither the sole occupant nor the owner of this Massachusetts building.

    One of TelexFree’s alleged reality-distortion fields has been formally exposed.

    Perhaps you saw the recruitment promos (both corporate and affiliate) that planted the seed TelexFree was the sole occupant of a large building in Marlborough, Mass.

    Former President James Merrill was shown posing in front of the structure. A caption on TelexFree’s website read, “The Company HQ: United States.”

    Using the building as a backdrop, one or more affiliates taped promos from the parking lot, creating the impression that TelexFree had a large physical presence in the United States.

    And perhaps you noticed that the SEC viewed those promos as “materially false and misleading” because, as the agency put it in a May 2014 amended complaint (italics added):

    (a) TelexFree, Inc. does not own or occupy the entire building; (b) TelexFree, Inc. originally shared a single suite (consisting of a receptionist, conference rooms, and cubicles) with many other companies; (c) only in December 2013 did TelexFree, Inc. move into its own suite in a portion of the first floor; and (d) TelexFree, LLC has no physical office at all, just a mailing address in Nevada. Despite being the company’s president, Merrill failed to take effective action to prevent or correct the misstatements.

    In court filings in the TelexFree bankruptcy case today, the trustee confirmed that, in November 2013, TelexFree leased a first-floor office in the building (Suite 118) for $5,944 a month. The lease officially began on Jan. 1, 2014, and was set to run through March 2015.

    Other records show TelexFree shared a second-floor office (Suite 200) in the same building with multiple companies. How much it paid for that office was not immediately clear.

    What is clear is that Stephen B. Darr, the trustee, has negotiated the termination of the lease of the first-floor office, concluding he “has no continuing need for the Premise” and thus potentially saving the estate tens of thousands of dollars. The landlord has agreed to settle for a retention of a security deposit and certain furnishings and fixtures — and to let the trustee out of the lease.

    As for the overall TelexFree morass?

    “I’ve been involved in a lot of interesting cases,” Darr told the Wall Street Journal, in a Law Blog article published Aug. 11. “TelexFree is number one.”

  • BOSTON GLOBE: Massachusetts Now Investigating EmGoldEx

    The EmGoldEx "program" describes gold as cash and the "new splendor."
    The EmGoldEx “program” describes gold as “money” and an ancient investment vehicle available in a “new splendor.”

    If TelexFree, WCM777 and Wings Network were not enough, the office of Massachusetts Commonwealth Secretary William Galvin now is investigating the “EmGoldEx” program.

    The Boston Globe broke the story this morning. Galvin leads the Massachusetts Securities Division.

    From the Globe (italics added):

    Secretary of State William F. Galvin’s office is investigating the Andover operation of Emgoldex Team USA Inc., a company that recruits investors to buy gold online and pays bonuses for referring friends and acquaintances.

    The degree to which EmGoldEx has penetrated Massachusetts is unclear. “Gold” and other shiny-object schemes typically ride on the coattails of MLM HYIP recruiting scams. Narratives surrounding such schemes often are incongruous, if not downright wild, sometimes focusing on tales of spectacular profit opportunities in Europe and the Middle East and a chance to deal with purported royal families or upstream investors interested in elevating people out of poverty.

    EmGoldEx purportedly operates from Dubai. Here is a verbatim snippet of the EmGoldEx narrative as it appears in challenged English: “To become a client of the Internet – shop, it is necessary to be registered and make an Order. In the Internet shop an account will be opened for you and the purchase price will be fixed for 24 hours.”

    Hidden text on the page appears to be in Russian.

    As part of the TelexFree probe in April, Galvin’s office alleged a Massachusetts entity had asserted that it bought “TelexFree packages, and all sorts of real estate within the U.S.A. or foreign countries.” Investigators further alleged that the enterprise asserted it was backed by “Dubai investors.”

    Regulators in Quebec issued a warning on a “program” known as Karatbars International earlier this year. Other recent (or relatively recent) gold-themed “programs” that have been targeted by regulators include Gold Nugget Invest (HYIP/shiny-object scheme that collapsed in 2010 amid bizarre, companion claims INTERPOL was investigating the SEC); and Gold Quest International (HYIP with possible links to the “sovereign citizens movement” and operated in part by a purported “Lord”).

    In October 2013, the office of North Carolina Secretary of State Elaine F. Marshall announced criminal charges against Rondell Scott Hedrick, 48, of Lexington, N.C.

    Investigators linked Hedrick to an alleged “precious metals scam” that involved trawling for investor cash on Craigslist.

    One investor, according to the state, wired Hedrick $5,000 after Hedrick had provided instructions and claimed he’d be leaving for Dubai soon and providing the investor a return of 200 percent.

    Shiny-object scams are close cousins to prime-bank swindles, which produce equally wild narratives. (See Sept. 30, 2011, PP Blog story on the experience of U.S. Ponzi schemer Marian Morgan, who was arrested in Sri Lanka.)

    Read June 2014 review of EmGoldEx on BehindMLM.com.

    Galvin’s office is publishing a brochure on how to steer clear of pyramid schemes.

  • URGENT >> BULLETIN >> MOVING: TelexFree Was Ponzi Scheme Selling Unregistered Securities, Accused Former Interim CFO Says

    From a defense filing by Joseph Craft today.

    URGENT >> BULLETIN >> MOVING: (5th update 7:33 P.M. EDT U.S.A.) In a defense filing in the SEC’s securities fraud case against him, former TelexFree interim CFO Joseph Craft says he concluded TelexFree was a Ponzi scheme selling unregistered securities.

    The acknowledgement, which appears to be the first concession from the TelexFree inner circle that the enterprise engaged in fraud, potentially pits Craft against other TelexFree defendants and others who may have inside knowledge of the scheme. Craft paints himself in the filing as an outsider who was misled by insiders.

    Craft, 50, came to the Ponzi/securities conclusion in “approximately March” 2014, according to the filing. TelexFree filed for bankruptcy protection the following month. The SEC immediately sued, the Massachusetts Securities Division (MSD) filed a civil-fraud action and federal agents raided TelexFree headquarters in Marlborough, Mass. It later became known that the U.S. Department of Homeland Security had conducted an undercover investigation into TelexFree’s operations beginning at least by October 2013.

    Alleged TelexFree managers or executives James Merrill and Carlos Wanzeler later were indicted on criminal charges of wire fraud and wire-fraud conspiracy.

    Filings in the TelexFree bankruptcy case say Craft was appointed TelexFree CFO on April 13. Why he’d accept the appointment from Merrill and Wanzeler at an emergency board meeting on a Sunday night in April after concluding TelexFree was a Ponzi scheme in March was not immediately clear in defense filings.

    Tracy Hope Davis, the U.S. Bankruptcy Trustee when the TelexFree bankruptcy case was filed in Nevada, expressed concerns about what happened during that meeting.

    Craft, a certified public accountant in Boonville, Ind., was charged civilly by the SEC in April, two days after the bankruptcy filing. So were seven others, including Merrill and Wanzeler, former executive Steve Labriola and four alleged promoters. The scheme gathered more than $1.2 billion, MSD alleged.

    TelexFree also was charged civilly. Craft became TelexFree’s accountant in July 2012, according to the defense filing.

    Craft “denies that he was a principal or insider in the enterprise at any time, and says that he performed honest and legitimate accounting services for the corporations named in the Complaint,” the defense filing reads in part. “He denies that he assisted any wrongful activity. He was kept in the dark about the true nature of the enterprise’s activities and was a victim of misrepresentations for most of the time that he served as TelexFree’s accountant. He was not an insider, employee, owner, principal or promoter.”

    And, according to the filing, “[i]n 2013 and 2014” while performing accounting services for TelexFree, Craft “relied on the advice of the defendant enterprises’ counsel in all material respects.”

    The former CFO did not identify the counsel. One TelexFree lawyer, MLM attorney Gerald Nehra, has been accused of racketeering by some TelexFree members.

    Other Highlights Of Defense Filing

    Craft admitted he was aware a Brazilian state court in Acre had suspended TelexFree’s Brazilian affiliate (Ympactus) in June 2013, but says he “was told that the suspension was improper and was going to be overturned.”  He did not say who advised him the Acre action would be overturned.

    He “denies that he was involved in any way in ‘running a huge Ponzi and pyramid scheme.’ He was not involved in company operations. He was not a company principal or someone who was correctly informed about many of the [details] of the company’s true operations.”

    Craft admits that he “compiled an unaudited, informal financial statement” that was filed with MSD in 2013. But the statement, he says, was “based entirely on information provided by corporate officers.”

    “At the time of preparing the compilation Mr. Craft had been misinformed about the company’s activities and material information was withheld by company officers,” according to the defense filing.

    The SEC has said TelexFree’s VOIP service was a front to mask a billion-dollar fraud scheme.

    NOTE: Our thanks to the ASD Updates Blog.

     

     

  • BULLETIN: MLM Attorney And Companion Entity Received $843,000 Through Sale Of ‘Bogus Compliance Course’ That Served As ‘Window Dressing’ For Ponzi- And Pyramid Scheme, Zeek Receiver Says

    breakingnews72BULLETIN: (2nd update 9:54 p.m. EDT U.S.A.) MLM attorney Kevin Grimes and a companion entity known as MLM Compliance VT LLC received $843,000 from the Zeek Rewards pyramid- and Ponzi scheme through the sale of a “bogus compliance course,” receiver Kenneth D. Bell has alleged in an amended complaint.

    The amended complaint, filed yesterday, includes MLM Compliance as a defendant. The original complaint filed last month did not. Also new in the amended complaint is the figure of $843,000. The original complaint did not specify a specific sum.

    Co-defendants also include Grimes and the Grimes & Reese law firm.

    “In total, Grimes and MLM Compliance received approximately $843,000 from RVG for the bogus course,” Bell alleged. “The final payment from [Zeek operator Rex Venture Group] to Grimes and MLM Compliance was, upon information and belief, a check rushed to and indorsed by Kevin D. Grimes for $342,510, which posted on August 13, 2012, less than a week prior to ZeekRewards’ shutdown.”

    The course, Bell alleged, served as “window dressing” for the Zeek fraud. The SEC shut down Zeek on Aug. 17, 2012.

    Some MLMers immediately raced to other fraud schemes — after participating not only in Zeek, but in the AdSurfDaily MLM Ponzi scheme and other “programs.”

    Zeek gathered on the order of $850 million in a combined pyramid- and Ponzi scheme that operated for about two years. It was “an internet based so-called ‘MLM’ (multi-level marketing) program,” Bell said.

    Grimes and MLM Compliance engaged in “Unfair and Deceptive Trade Practices” by creating the course, which “served to bolster what they knew to be an unlawful scheme,” Bell alleged.

    Bell is suing Grimes and the Grimes and Reese firm for a sum in excess of $100 million, alleging they were unjustly enriched and engaged in Legal Malpractice, Negligence, Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty.

    Our thanks to the ASD Updates Blog.

    See June 25, 2014, PP Blog story.

  • Illinois Bans TelexFree Figure And Veteran HYIP Pitchwoman Faith Sloan From Selling Securities; Violation Of Ban Could Result In Felony Charge

    newtelexfreelogoLongtime HYIP huckster and TelexFree figure Faith Sloan has been banned by Illinois from selling securities. The prohibition order is dated June 9. It was issued by the Securities Department of Illinois Secretary of State Jesse White.

    The state found that Sloan, an Illinois resident, operated a TelexFree-related website and acted as an unregistered securities dealer, salesperson and investment adviser.

    Violating the order could result in a felony charge, the state said.

    Sloan, who faces TelexFree-related civil charges of securities fraud from the U.S. Securities and Exchange Commission, is associated with the website TelexFreePower.com. The website now appears not to be loading properly.

    When Illinois observed the site, the state said in the prohibition order, the site loaded an image of an “exotic sports car” with a statement that read, “I made $200 in 7 days working 3 minutes a day.”

    The image implied that “one would be able to afford the exotic sports car by becoming a member of TelexFree,” the state said.

    The SEC also has referenced the TelexFreePower website. In addition to promoting the massive TelexFree pyramid- and Ponzi scheme, the SEC said, Sloan violated the asset freeze in the case and lied to a federal judge.

    Faith Sloan. Source: YouTube.
    Faith Sloan. Source: YouTube.

    The order also bans TelexFree managers or executives James Merrill, Carlos Wanzeler, Joe Craft and Steve Labriola from selling securities in the state.

    Attorneys handling the TelexFree bankruptcy case appear to have became aware of the order at least by June 16, according to billing records in the bankruptcy case. The effect the order had on decision-making in the bankruptcy case is unclear.

    On July 16, bankruptcy trustee Stephen B. Darr said in court filings that he has “no intention of reorganizing or reactivating” the TelexFree businesses. TelexFree, its former manager or executives and some of its promoters, including Sloan, are facing a mountain of litigation.

    Merrill and Wanzeler have been indicted on U.S. charges of wire fraud and wire-fraud conspiracy. Brazilian federal police conducted TelexFree-related raids last week.

    Sloan has blamed TelexFree, Merrill, Wanzeler and MLM attorney Gerald Nehra for her TelexFree-related troubles.