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  • Embezzled Banners Broker Pyramid Funds Allegedly Ended Up In ‘KulClub,’ Another Ponzi-Board MLM Program

    kulclublogo2ND UPDATE 2:25 P.M. EDT U.S.A. More horrible PR for the MLM trade: Banners Broker international pitchman and pyramid-scheme figure Kuldip Josun embezzled at least $3.6 million from affiliates, according to a receiver’s report.

    The money was deposited into a Swiss bank account held by an entity known as World Web Media Inc. and appears to have been used to start an “MLM program” known as “KulClub,” the receiver advised a court in Canada.

    Like the alleged $156 million Banners Broker scheme, KulClub had a presence on the MoneyMakerGroup forum, records show. U.S. authorities have alleged MoneyMakerGroup is a place from which fraud schemes are promoted.

    KulClub purports to be a “unique revenue sharing program in which KulClub shares the majority of its revenue with all its members. No other club can match it!”

    But msi Spergel inc., the Toronto-based Banners Broker receiver, said KulClub likely was started with stolen Banners Broker funds that never were recovered from the Swiss account.

    “The Receiver believes that Josun has since used the Swiss bank account funds for personal purposes, including the launching of his own MLM program called ‘KulClub,’” Spergel alleged. The receiver is seeking a sweeping order preventing the dissipation of assets.

    How did Josun end up with affiliate funds? After becoming the “main representative among international affiliates” of Banners Broker, the huckster allegedly hosted web events, flew to events in Europe, gathered money from hopefuls and kept it for himself.

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

    In that role, Josun would travel to meet with international affiliates, or potential affiliates, and conduct conference calls and seminars via videoconferencing. His day-to-day occupation with Banners Broker was to maximize Affiliate investment into the program, as well as to establish an international network Banners Broker Network. That is, he was responsible for encouraging the development of overseas affiliates into `super-affiliates’ (or “Resellers”), who would establish their own networks of affiliates.

    In his role as Banners Broker’s international representative, Josun would frequently fly to overseas locations with a significant amount of company funds. Those funds were used to advertise a lifestyle of success and luxury to potential affiliates. Josun spent existing affiliate funds lavishly in maintaining this facade, as he carried out a campaign to woo wealthy new affiliates to the Banners Broker enterprise.

    Josun’s spending in his role as Banners Broker’s international spokesperson lacked any effective oversight. No budgets were set for Josun’s business trips on behalf of Banners Broker, nor was there any control over his expenses.

    The Receiver asserts that Josun would regularly receive funds from affiliates meant to be spent on Banners Broker products. Rather than remit these funds to the company, Josun would redirect the funds to his own personal accounts in offshore jurisdictions, intending to place them beyond the reach of creditors.

    Similar allegations of cherry-picking have surfaced in the TelexFree Ponzi- and pyramid case. Like Banners Broker and KulClub, TelexFree had a presence on the Ponzi boards.

    Josun was hardly alone in misappropriating Banners Broker funds, the receiver alleged.

    Rajiv Dixit, a Banners Broker principal charged criminally,  “purchased six watches from Weir & Sons in Dublin, Ireland: three Rolexes and three Breitfings,” the receiver alleged. “Two of the watches were women’s watches.”

    The receiver’s allegations against Josun appear to be yet-another example of a scammer within a purported revshare “program” scamming both the “opportunity” itself and incoming participants. Although Banners Broker allegedly terminated Josun, it made little difference because the “program” itself was a scam.

    Read the receiver’s report.

    NOTE: Also see RealScam.com Banners Broker thread and this June 19 “Harrison” post.




  • After Vemma College Flap, Herbalife Products Marketed Through One Of Largest Catholic High Schools In United States

    HerbalifeMDHSconsentUPDATED 3:59 P.M. EDT U.S.A. It surfaced on Twitter today in the $HLF search thread that Herbalife products are being marketed through Mater Dei High School in Santa Ana, Calif. The Catholic school bills itself  “the largest non-public school west of Chicago.”

    Herbalife is under investigation by the Federal Trade Commission. Hedge-fund manager and Herbalife short-seller Bill Ackman has claimed the company is a pyramid scheme that targets vulnerable population groups. Herbalife denies the claims.

    Mater Dei says its 2,145-member student body consists of 38% Caucasian, 33% Hispanic, 19% Asian, 4% African-American, 1% Native American, 1% Pacific Islander and 4% “Other Race.”

    The school did not immediately respond today to a request for comment in which the PP Blog asked it whether it was aware of an Herbalife-related promo on its website, whether the promo was a school-endorsed activity and whether Mater Dei students were being recruited to sell Herbalife.

    Vemma, another MLM company, was charged last year by the FTC with operating a pyramid scheme, amid allegations the firm was targeting college students.

    Herbalife did not respond immediately to a request for comment on whether it was aware its products were being offered to Mater Dei students, whether students were being targeted for recruitment and whether the company had any concerns given the targeting allegations against Vemma.

    The Mater Dei website has a page styled “Herbalife Program > Consent & Waiver Form.” The page says “ALL current Mater Dei student-athletes are required to have a signed consent and waiver form on file in order to participate in the HERBALIFE Program.”

    A link to the form is provided, along with  a text prompt that says forms also are distributed by “coaches.” (See PP Blog screen shot of form.)

    A separate page on the Mater Dei website is styled “Herbalife Program > About.” It includes a phone number consistent with an Herbalife affiliate site in the name of “Coach Donte Mdhs.”

    The affiliate site says, “MATER DEI HIGH SCHOOL INFORMATION . . . All H24 Products are available to MD students (except Prepare).”

    A search of the Mater Dei website returns hundreds of results for the search term “Herbalife” (without the quotation marks). One of the results is an “Order NOW & Coupon Codes” page that says discounts are available to nearly two dozen school athletic teams and “Alumni, Dance, Faculty and Pep Squad” groups.

    In February, a man being sued for the return of his alleged winnings in the TelexFree MLM scheme claimed Herbalife executives and personnel helped sell him on the TelexFree deal. Herbalife did not respond to a request for comment on the claim.

    TelexFree generated more than $3 billion in illicit business, a court-appointed bankruptcy trustee claims.




  • TELEXFREE: Trustee Requests Stay In Lawsuit Against MLM Attorney Gerald Nehra, Others

    newtelexfreelogoUPDATED 11:14 A.M. EDT U.S.A. TelexFree Trustee Stephen B. Darr has requested a stay in the lawsuit against MLM attorney Gerald Nehra, the Nehra and Waak law firm and certain other individuals or entities accused civilly of helping the judicially declared Ponzi- and pyramid scheme gain a head of steam.

    “The Trustee seeks this stay at the request of the United States so as not to interfere with the proper administration and prosecution of the Criminal Action” against James Merrill, Darr advised Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts.

    Merrill, an alleged TelexFree principal from Massachusetts, has been under indictment for wire fraud and conspiracy since July 2014. His alleged business partner Carlos Wanzeler also was indicted, but fled to Brazil, prosecutors said. Merrill’s trial is scheduled for this fall.

    Wanzeler allegedly fled the United States via Canada after TelexFree declared bankruptcy in April 2014. Darr has said the cross-border program generated more than $3 billion in illicit business.

    “The Trustee was required to commence the Adversary Proceeding before the Criminal Action could be resolved because the expiration of the Statute of Limitation relevant to these actions was approaching and was clearly going to expire before the Criminal Action was resolved,” Darr advised Hoffman. “However, in commencing these actions, the Trustee does not intend to interfere with the proper administration of the Criminal Actions nor prejudice the Government’s prosecution of those actions.”

    The government’s concern about proceeding with the adversary actions against Nehra, the firm and others appears to be that Merrill could gain an advantage in the criminal case through discovery in the adversary actions.

    In April, Darr alleged that Nehra and the law firm were “actively involved” in promoting TelexFree’s Ponzi scheme and “duping” participants. Nehra and the firm are fighting the claim.

    Nehra and the firm advised Hoffman they “anticipated participation in criminal proceedings related to the case,” but did not define the nature of the criminal proceedings or say whether they anticipated being called as witnesses or potential indictees.

    “The Adversary Proceeding arises from the TelexFree Ponzi scheme that was perpetrated on thousands of mostly working class investors, domestic and worldwide, by James Merrill and Carlos Wanzeler and assisted by various individuals including those named in the Adversary Proceeding,” Darr advised Hoffman.

    The judge has set a hearing on the request for the stay at 10 a.m. on July 27 in Courtroom 2, J.W. McCormack Post Office & Court House, 5 Post Office Square, 12th Floor, Boston.


  • BULLETIN: FEDS: Burks Ran Scam Prior To ZeekRewards

    breakingnews725BULLETIN: (4th Update 9:13 p.m. EDT U.S.A.) Accused Ponzi schemer Paul Burks ran a “pyramid scheme” known as FollowMe1X2 that was a precursor to ZeekRewards, federal prosecutors say.

    A quote about FollowMe1X2 that appears in a prosecution filing today also appears verbatim in a post on the MoneyMakerGroup Ponzi forum dated Sept. 4, 2010, by “charlieone.”

    From the quote: FollowMe1X2 is “a fast-paced network advertising program that was designed to maximize your ad budget, increase your businesses exposure and your bank account exponentially!”

    FollowMe1X2 collapsed and participants were ported into ZeekRewards, prosecutors said.

    Zeek also had a presence on MoneyMakerGroup and other boards referenced in federal court filings as places from which Ponzi schemes are promoted.

    Today’s prosecution filings against Burks, who faces trial next month on charges of wire fraud, mail fraud. conspiracy to commit both and conspiracy to commit tax fraud, come in the form of a “Notice of Intent to Introduce Evidence and Memorandum of Law in Support of its Admissibility.”

    The document is similar to filings against now-convicted Ponzi schemer Andy Bowdoin of AdSurfDaily, another Ponzi board “program.” In the ASD cases, prosecutors tied Bowdoin to scams both before ASD (DailyProSurf) and after (AdViewGlobal and OneX).

    ASD, another Ponzi-board “program,” collapsed in 2008. Like Zeek, ASD used vendors such as SolidTrustPay and AlertPay and purported to have an “advertising” function.

    Like Burks, Bowdoin was accused of porting participants from one scam to another.

    BehindMLM.com reported today that Burks is seeking to have the tax-fraud conspiracy charge against him dismissed prior to trial, scheduled to begin July 5. Prosecutors have not yet responded to his argument.

    But in their notice today, prosecutors argued that the jury should be able to hear evidence that Zeek parent Rex Venture Group LLC had not filed corporate tax returns between 2003 and 2011.

    It also should be able to hear evidence about the FollowMe1X2 scheme, prosecutors contended.

    NOTE: Our thanks to the ASD Updates Blog.

  • Alleged TelexFree Winner Tries To Sue Trustee For ‘Emotional Distress’; Separately, U.S. Judge Asks Dominican Court For Assistance

    breakingnews725It may be a first in MLM clawback cases.

    Dwayne Jones, an alleged winner of more than $561,000 in the judicially declared TelexFree Ponzi- and pyramid scheme, is trying to sue Trustee Stephen B. Darr for “Emotional Distress and Anticipated Attorney & Court Costs.”

    In a proposed defendant class-action, Darr sued Jones and dozens of other alleged winners earlier this year for return of their gains. Jones was sued at a New York address. Acting pro se, he appears to have responded to Darr’s adversary complaint filed in Massachusetts federal bankruptcy court with a kit pleading from Maryland federal bankruptcy court in which he denied he was a TelexFree winner, raised jurisdictional claims and asserted the emotional-distress counterclaim against Darr.

    Darr responded on June 6, saying he “denies in full the sole allegation in the defendant’s Counterclaim, that the defendant is entitled to unspecified damages for emotional distress and anticipated attorney and court costs arising out of this litigation.”

    The trustee also entered affirmative defenses.

    Class-action cases filed by Darr against alleged TelexFree winners potentially affect nearly 100,000 participants globally who gained more from TelexFree than they paid in. The scheme allegedly created hundreds and hundreds of thousands of losers.

    Chief U.S. Bankruptcy Judge Melvin S. Hoffman of Massachusetts is presiding over the cross-border TelexFree case and adversary proceedings.

    On May 24, Hoffman asked judicial authorities in the Dominican Republic for assistance in serving process on more than a dozen clawback defendants located there.

    Darr contends TelexFree generated more than $3 billion in illicit business worldwide and that winners must return their gains.

    Kenneth D. Bell, the receiver in the Zeek Rewards case, also has brought clawback claims against alleged domestic and international winners in that scheme. Zeek is alleged to have gathered on the order of $897 million.




  • Stephen L. Cohen, SEC Official Who Introduced World To Zeek Case, Leaving Agency After Nearly 12 Years

    “The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors. ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.” — Stephen L. Cohen, Associate Director, SEC Division of Enforcement, Aug. 17, 2012

    Our best wishes to Stephen L. Cohen, who delivered the words above nearly four years ago. Cohen is leaving the U. S. Securities and Exchange Commission after nearly 12 years of service.

    “Throughout his career at the SEC, Steve has made substantial and long-lasting contributions to the Commission’s mission,” said Andrew J. Ceresney, director of the SEC’s Enforcement Division.  “He has supervised significant cases involving a wide variety of misconduct and has been closely involved in the implementation of various enhancements to the enforcement program.  His keen intellect and enthusiasm will be missed.”

    One of the cases he supervised — as the SEC noted today — was Zeek Rewards.

    The PP Blog’s lede in the story reporting the SEC’s Zeek action on Aug. 17, 2012 (italics added):

    The SEC has filed an emergency action in federal court in Charlotte, N.C., that alleges Zeek Rewards is a $600 million Ponzi and pyramid scheme.




  • PAYZA TO ZEEK RECEIVER: Don’t Blame Us

    ponzinews1Payza, an HYIP-friendly payment processor that recently bragged on Twitter about its attendance at an event for the teetering TrafficMonsoon scheme, has advised a federal judge that it is not responsible for millions of dollars that allegedly went missing in the Zeek Rewards’ scheme taken down by the SEC in 2012.

    Zeek receiver Kenneth D. Bell alleged in February that Payza and an outfit known as Payment World “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme. The PP Blog reported on Feb. 21 that the money at issue — about $13.1 million — may have ended up in one or more collapsed Russian banks after being transferred out of VictoriaBank in Moldova.

    Payza acknowledged it was a business partner with Payment World, but maintained the account in Moldova was Payment World’s alone and that it has sued Payment World for more than $20 million because it, too, had been ripped off.

    In response to Bell, who is seeking a contempt sanction and to hold Payza jointly liable with Payment World and VictoriaBank for return of the cash, Payza says it never had “dominion and control” over the money and thus should not be held liable.

    Payza, which operates out of Canada as part of a company known as MH Pillars of the United Kingdom, further contends with worked cooperatively and proactively with Bell and U.S. authorities tracking the money. The defense filing by Payza was docketed yesterday in the Western District of North Carolina and also claims Payza performed due diligence on Rex Venture Group, the operator of Zeek. The filing contained a declaration by MH Pillars Executive Vice President Firoz Patel.

    In a May 15 Twitter post, Payza said Patel was a speaker at a May 15 event in New York for the Traffic Monsoon program.

    The Tweet made no due-dilignce claims about Traffic Monsoon, which reportedly is under investigation by PayPal and has been blocked from a sum totaling on the order of $60 million.

    NOTE: Our thanks to the ASD Updates Blog.

    Also see TaraTalks site.




  • Sept. 26 Deadline Set For Filing TelexFree Claims; Claims Portal Opens As James Merrill Fights Evidence In Criminal Case

    newtelexfreelogoUPDATED 11:53 A.M. EDT U.S.A. Sept. 23, 2016: The claims deadline has been extended until Dec. 31, 2016, at 4:30 p.m. Prevailing Eastern Time. Claims must be filed through TelexFreeClaims.com. Our earlier story is below . . .

    **____________**

    TelexFree participants and others who may have a claim against the estate should read this important notice from bankruptcy Trustee Stephen B. Darr. It is styled “Notice of Deadline for Filing Electronic Proofs of Claim and Claims Procedures” and appeared on the docket yesterday.

    The electronic claims portal has been established at TelexFreeClaims.com and is operational, according to Darr’s notice. The deadline to file claims is Sept. 26, 2016, at 4:30 p.m. prevailing Eastern time.

    BMC Group Inc. is administering the electronic proof of claim (ePOC) form and its name appears on the TelexFree claims portal.

    Chief Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts has ruled TelexFree a Ponzi- and pyramid scheme.

    In a separate case, TelexFree principals James Merrill and Carlos Wanzeler were indicted in 2014 on charges of wire fraud and wire-fraud conspiracy. Wanzeler allegedly became an international fugitive by fleeing the United States for Brazil.

    Merrill this month sought to suppress evidence obtained as a result of a search of TelexFree headquarters in Marlborough, Mass., on April 15, 2014, two days after TelexFree’s bankruptcy filing, according to defense court filings in the criminal case.

    Through attorney Robert Goldstein, Merrill argued that the search by the U.S. Department of Homeland Security was “unconstitutionally overbroad and unparticularized” in that it targeted “all computers” and “all records.”

    Among other things, agents seized a laptop computer that day from TelexFree “consultant” Joseph Craft, according to the defense. Merrill argues that Craft’s laptop and all other evidence seized that day should be excluded.

    In 2014, the SEC alleged that Craft was TelexFree’s CFO and was in possession of nearly $38 million in TelexFree-related cashier’s checks on the date of the search.

    As the PP Blog reported on April 17, 2014 (italics added):

    “The Deputy Sheriff told Craft he could not take the laptop and bag and that these items would be subject to the search,” the SEC said in the affidavit. “[Homeland Security Investigations] Agents searched the bag and identified ten Wells Fargo Bank, N.A. cashier’s checks totaling $37,948,296.”

    Nine of the checks were dated April 11, 2014, just two days before TelexFree petitioned for bankruptcy in Nevada, according to the SEC affidavit and other court filings.

    The nine checks were “remitted to” James M. Merrill, TelexFree’s co-owner and former president. Of the nine, five were made out to TelexFree LLC “totaling $25,548,809, and one was made out to Katia B. Wanzeler,” believed to be the wife of TelexFree co-owner and treasurer Carlos Wanzeler,” the SEC asserted in the affidavit.

    The Katia Wanzeler check was for the sum of $2,000,635, the SEC alleged.

    A check dated April 3 was “remitted to” Carlos Wanzeler and made out to “TelexFree Dominicana SRL in the amount of $10,398,000,” the SEC alleged in the affidavit.

    TelexFree Dominicana SRL’s relationship to TelexFree was not immediately clear.

    On April 15, two days after the TelexFree bankruptcy filing and apparently just hours before the raid, Merrill “submitted an unsolicited order to sell $1,150,000 of his mutual fund holdings” and to have the money transferred to a bank in Massachusetts, the SEC said in the affidavit.

    “Bank statements show that two companies controlled by Craft received more than $2,010,000 between November 19, 2013 and March 14, 2014,” the SEC said in its complaint.

    NOTE: Our thanks to the ASD Updates Blog.




  • Alleged Zeek ‘Winner’ Repeatedly Invokes Fifth Amendment In Clawback Case

    UPDATED 3:07 P.M. EDT U.S.A. Darren Miller, an alleged winner of more than $1.635 million in Zeek Rewards and one of the lead defendants in a civil class-action clawback lawsuit filed by Zeek receiver Kenneth D. Bell, repeatedly has invoked his Fifth Amendment right not to incriminate himself, according to new court filings by Miller.

    In response to Bell’s 2014 clawback action in which the receiver seeks return of the winnings plus interest, Miller, of Coeur d’Alene, Idaho, also marked “sic” next to mentions of himself as a defendant. Bell is suing Miller and more than 9,000 alleged Zeek “winners.” The case is styled Bell v. Disner.

    Miller appears to have invoked the Fifth Amendment 41 times in response to 41 inquiries from Bell — 14 questions and 27 requests for documents.

    His response provides an overview of the sorts of questions Bell asked alleged “winners” through interrogatories. It also provides an overview of the type of documents sought from defendants by the receiver. Zeek was part of Rex Venture Group or RVG, alleged by the SEC and federal prosecutors to have been a North Carolina-based Ponzi- and pyramid scheme that gathered hundreds of millions of dollars before the SEC shut it down in August 2012.

    The Zeek clawback litigation itself shows the perils of pushing MLM schemes authorities deem to be fraudulent. Not only is money received from a “program” at great risk of clawback, expensive and emotionally draining legal proceedings on multiple fronts may ensue.  Some defendants even may fear criminal prosecution.

    At the same time, the Zeek clawback actions may provide something of a preview of what’s in store for tens of thousands of TelexFree “winners” pursued by the trustee in that Massachusetts case for return of their gains. TelexFree also was an MLM scheme.

    Pictured below is the first of 14 interrogatories advanced by Bell, according to Miller’s response:

    Question 1 of the Zeek interrogatories.
    Question 1 of the Zeek interrogatories.

    As you can see above, Bell not only asked about Miller’s involvement, he also asked about the involvement of others, potentially including upline sponsors. Here’s how Miller answered Question 1 and 13 others. (Only minor variations such as the Interrogatory number were present.)

    Darren Miller's answer to the first Zeek interrogatory.
    Darren Miller’s answer to the first Zeek interrogatory.

    For years now, the SEC has expressed concern about scams spreading on social media. Bell also had a question about that — in this case, in Interrogatory 14 (as show below):

    The Zeek receiver asked about social-media accounts. There has been a longtime concern about scams spreading on Faceek, Twitter, YouTube and other sites.
    The Zeek receiver asked about social-media accounts. There has been a longtime concern about scams spreading on Facebook, Twitter, YouTube and other sites.

    In the interrogatories, Bell wanted to know when an individual’s participation began and when it ended. The receiver also was interested in dates and sums and outcomes — such as when money was paid to Zeek and when money was received from the “program” and how it was spent or kept.

    Individuals also were asked to name people who had information “related to your defenses or claims,” according to Miller’s response. Meanwhile, they were asked if they contended Zeek was not a Ponzi or pyramid scheme and to provide the names of individuals who could back up the claim.

    Bell previously expressed concern that some MLMers were moving from one fraud scheme to another in serial fashion.

    On the document front, Bell had 27 specific requests for production, according to Miller’s response. Here is how Miller answered a request to produce documents used “in connection with recruiting persons to participate” in Zeek.

    Miller's response to a request for document production by the receiver.
    Miller’s response to a request for document production by the receiver.

    Miller’s response to the 26 other requests for documents was substantially similar.

    Also see PP Blog editorial from July 1, 2014: On The War In Zeekland And HYIP Rabbit Holes.

    NOTE: Our thanks to the ASD Updates Blog.




  • URGENT >> BULLETIN >> MOVING: TelexFree Trustee Sues MLM Attorney Gerald Nehra

    newtelexfreelogoURGENT >> BULLETIN >> MOVING: (6th Update 8 p.m. EDT U.S.A.) TelexFree Trustee Stephen B. Darr has sued MLM attorney Gerald Nehra and the Nehra and Waak law firm, alleging they were “actively involved” in promoting TelexFree’s Ponzi scheme and “duping” participants.

    Nehra and the firm have asked for more time to respond to the April 1 complaint, saying through court filings that they “anticipated participation in criminal proceedings related to the case.”

    Chief Bankruptcy Judge Melvin S. Hoffman extended the response deadline until June 1. The original deadline was May 2.

    Whether Nehra or the firm considered themselves potential TelexFree criminal defendants was unclear in the response. TelexFree principals James Merrill and Carlos Wanzeler are the sole criminal defendants to date.

    Separately, prosecutors in the Zeek Rewards’ criminal case against Paul Burks said in court filings in the Western District of North Carolina Monday that Nehra and law partner Richard Waak may be called as witnesses in the case against Burks.

    Nehra and Waak have settled with Zeek receiver Kenneth D. Bell, who alleged they “encouraged investors to participate in the [Zeek] scheme by knowingly allowing their names to be used in providing a false façade of legality and legitimacy and gave improper legal advice that allowed the scheme to continue far longer than it would have without the Defendants’ support.”

    Darr wants Nehra and the firm to return all legal fees paid to them by TelexFree between May 2012 and April 2014 — about $24,000. Hoffman has ruled TelexFree a Ponzi- and pyramid scheme, and Darr contends neither Nehra nor the firm provided any “compensable advice” during the two years they represented TelexFree.

    The trustee further contends that Nehra appeared in a YouTube video promoting TelexFree.

    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.
    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.

    Representing Zeek and TelexFree created incredible problems for the two lawyers. At least three of their MLM clients have been charged criminally and a mountain of litigation has been filed against Nehra and the firm, including actions by Darr, Bell and class-action attorneys.

    In the settlement with Bell, Nehra and Waak agreed to a confession of judgment for $100 million. They contended “that they acted in good faith as legal counsel,” but now “acknowledge and agree that, based on their current knowledge, during the period they served as counsel RVG in fact operated an unlawful Ponzi an pyramid scheme involving an unregistered investment contract that caused hundreds of millions of dollars in losses to innocent victims of the scheme,” according to filings from Bell.

    Government attorneys handing the Burks’ criminal case quoted the settlement language in their May 2 filing. RVG, or Rex Venture Group, was the operator of Zeek.

    Zeek and TelexFree combined allegedly gathered on the order of $3.9 billion while creating hundreds and hundreds of thousands of victims globally.

    A TelexFree video featuring Nehra appeared on YouTube in August 2013, according to Darr’s complaint. That’s two months after authorities in Brazil called TelexFree a pyramid scheme.

    Also in August 2013, MLM attorney Jeffrey Babener advised TelexFree that it was operating a pyramid scheme, Darr alleged in September 2014.

    TelexFree nevertheless continued to gather money until it collapsed in bankruptcy in April 2014, Darr alleged. The last payment to Nehra and the Nehra and Waak firm was made on April 3, 2014, just 10 days before the implosion, according to Darr.

    Read Darr’s complaint against Nehra and the firm.

    NOTE: Our thanks to the ASD Updates Blog.

     




       

  • DEVELOPING STORY: Phil Ming Xu Of WCM777 May Be Under Arrest In China

    wcm777UPDATED 3:11 P.M. EDT U.S.A. A report dated today at ShanghaiDaily.com says an individual “surnamed Xu” and associated with “World Capital Market Inc.” is “now in custody” after a police action against a “pyramid scheme” in China.

    The PP Blog has contacted the U.S. Securities and Exchange Commission to determine if the person reportedly under arrest in China is “Phil” Ming Xu of the World Capital Market/WCM777 scheme from 2014.

    If the individual proves to be the Xu in the SEC case, it would mean that Xu left the United States sometime after being charged civilly by the SEC in March 2014 with a fraud alleged to have gathered tens of millions of dollars. It also potentially means the scheme, which allegedly operated under different names and resulted in the appointment of a receiver by a U.S. federal court, continued offshore after the U.S. action.

    Phil Ming Xu resided in Temple City, Calif., the SEC said in 2014.

    From Shanghai Daily (italics added):

    Last June and August, police received alerts from the People’s Bank of China and the Guangdong branch of China Securities Regulatory Commission that the company and its owners were not qualified to conduct public financing, and a criminal investigation began.

    A U.S. criminal probe into World Capital Market and related companies or figures also is believed to be under way.

    The WCM777 story in the United States has been consistently bizarre. MLM hucksters, for example, pitched the “program” in churches and claimed the company had given loans for spectacular sums to some top American businesses.

    There also was a claim a former CIA operative was involved, that the appearance of “blood moons” in the sky would provide investors guidance, that Ming Xu had acquired a company that produced “Innocence of Muslims,” a film that has been described as anti-Islamic and denigrating to the prophet Muhammad, that Ming Xu was an educator at a purported university known as the Joseph Global Institute.

    UPDATE 2:03 P.M. EDT MAY 17 U.S.A. The SEC said today that it didn’t have anything on whether the Xu reportedly under arrest in China is the Xu from the agency’s March 2014 case.