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Category: The Economy

  • BULLETIN: MyAdvertisingPays (MAPS) Again Referenced In TelexFree Litigation; Lawyer Calls It A Ponzi Scheme While Calling Simon Stepsys A ‘Ponzi Mogul’

    myadvertisingpaysBULLETIN: (6th update 7:23 p.m. ET U.S.A.) Class-action lawyers pursuing claims against TelexFree promoters have called the My Advertising Pays (MAPS) “program” a Ponzi scheme and described MAPS promoter Simon Stepsys as a “Ponzi mogul.”

    The case itself is not against MAPs. Even so, the lawyers now have made repeated references to MAPs and are lambasting the serial promotion of MLM fraud schemes. The newest reference to MAPS occurred in federal court filings in Massachusetts today. As the PP Blog reported last year, MAPS initially was mentioned in a proposed TelexFree-related class action filed in the Southern District of New York in December 2014.

    Daniil Shoyfer, an alleged promoter of TelexFree, plowed nearly $9,000 into MAPS a month after TelexFree filed bankruptcy in April 2014, according to attorney Alexander D. Wall. Shoyfer promptly was heralded by Stepsys, Wall contended.

    Stepsys, Wall alleged, “is an Internet Ponzi scheme mogul” currently promoting MAPS. He previously promoted the bizarre Banners Broker scheme that led to two arrests in Canada last month.

    Moving from one fraud scheme to another is a serious problem in MLM.

    A Stepsys-connected website includes “a paragraph, together with a photograph of Defendant Daniil Shoyfer, congratulating Mr. Shoyfer for reaching the ‘1200 Diamond level’ for his promotion of the MyAdvertisingPays scam,” Wall alleged.

    “This webpage also indicates that in May 2014 – the month following TelexFree’s declaration of bankruptcy – Mr. Shoyfer purchased ‘177 Credit Packs’ from MyAdvertisingPays. Upon information and belief, as well as research I have performed, [a] MyAdvertisingPays ‘Credit Pack’ costs $49.99,” Wall alleged. “Thus, Mr. Shoyfer invested at least $8,848.23 in a second Ponzi scheme in the month after TelexFree’s bankruptcy filing.”

    The class-action lawyers have been seeking a preliminary injunction against Shoyfer and an asset freeze that would prohibit dissipation of assets. Shoyfer has contended he believed TelexFree was legal and that there is a vendetta against him.

    MAPS has claimed recently to have closed itself to U.S. members, a possible indicator that it fears it is under investigation by American law enforcement.

    NOTE: Thanks to the ASD Updates Blog.




  • UPDATE: Sann Rodrigues Wants To Avoid ‘Con Air’ Flight

    Sann Rodrigues.
    Sann Rodrigues.

    Through defense counsel, TelexFree figure Sann Rodrigues said in court filings today that he wanted to avoid a flight on “Con Air” from Florida to Massachusetts to face a contempt proceeding in federal court there.

    “Con Air” is a nickname for the Justice Prisoner & Alien Transportation System (JPATS) operated by the U.S. Marshals Service. It’s also the title of a 1997 action film starring Nicolas Cage about a prisoner transport gone bad.

    Rodrigues, 44, is being held in Florida’s Pinellas County Jail, according to the Pinellas County Sheriff’s Office. Rodrigues resides in Davenport, Fla.

    U.S. District Judge Nathaniel M. Gorton of Massachusetts found Rodrigues in contempt last month and ordered him incarcerated on Jan. 15. The arrest was carried out yesterday by the Marshals, according to court filings.

    Robert Eckard, the lawyer for Rodrigues, advised Gorton today that his client desires to remain in Florida pending further order of the court.

    “The undersigned [Eckard] was advised by court personnel, before the start of yesterday’s hearing, that if the defendant was transported back to Boston for incarceration, it could take the United States Marshal’s service from one (1) to (3) months before the defendant would actually be back in Boston due [to] Federal Marshal service transportation routes, likely traversing the United States ending in California first before heading back to the east coast,” Eckard argued.

    “If the defendant is transported back to Boston, this would cause significant problems for the undersigned to be able to timely and effectively communicate with the defendant either for this case or the unrelated pending criminal case in Boston once he is loaded onto ‘Con Air.’”

    The SEC wants more information on whether Rodrigues will be held in Florida or Massachusetts, according to court filings.

    “The Commission seek[s] clarification as to whether he needs to be transported to Massachusetts by the United States Marshals Service or whether he should remain incarcerated in Florida pending further order of this Court,” the SEC said. “If he needs to be detained in Massachusetts, the Commission seeks clarification as to whether he may travel on bond using a commercial carrier or whether he needs to be escorted by the U.S. Marshal[s] Service.”

    NOTE: Thanks to the ASD Updates Blog.

    UPDATE 6:14 P.M. ET JAN. 22 U.S.A. Judge Gorton has issued an order that will keep Rodrigues in a Florida jail until the contempt is purged or further notice of the court.




  • ‘Phone Card’ Ponzi Schemer Caught With Pipe Bombs, IEDs And Thousands Of Rounds Of Ammunition Sentenced To Prison

    ponzinews1Istvan Merchenthaler, the “PhoneCard USA” Ponzi schemer who fabricated ties to Walmart and later was caught with pipe bombs, improvised explosive devices, a machine pistol and 16 other firearms spread across three states, has been sentenced to 140 months in federal prison.

    U.S. District Judge Robert F. Kelly of the Eastern District of Pennsylvania also ordered Merchenthaler to make restitution of more than $3.4 million, including more than $31,000 to the state of North Carolina “for the cost of a bomb-squad robot destroyed during an investigation of a storage facility containing several improvised explosive devices, Philly.com reported today.

    Prosecutors said yesterday that “several” IEDs linked to Merchenthaler in North Carolina exploded during a “render-safe” operation that resulted in damage to the robot and the storage facility.

    After the Ponzi case was brought in 2012, Merchenthaler jumped bail, stole two cars and fled from police. He later was captured in Maryland, investigators said.

    Here’s how prosecutors described the weaponry (italics added):

    Moreover, prior to and after jumping bail [in the Eastern District of Pennsylvania], Merchenthaler amassed approximately 17 firearms and over approximately 11,580 rounds of ammunition, as well as approximately 634 improvised explosive devices (“IEDs”), which he stored in Pennsylvania, North Carolina, and Maryland.  Approximately 67 of these IEDs were comprised of PVC pipe, almost all of which contained shrapnel in the form of nails, screws, or rocks.  The remaining approximately 567 IEDs were comprised of cardboard tubes in varying sizes and explosive power.  All of the IEDs – PVC and cardboard – were center primed with flash powder.  Merchenthaler drove these IEDs in his stolen vehicles to storage facilities in all three states.  During render safe procedures at a North Carolina storage facility, several of the IEDs exploded, resulting in damage to a bomb squad robot and the storage facility.




  • Is Profitable Sunrise Pyramid Case At Risk? SEC Declines Comment

    profitablesunriseimage1The SEC this afternoon declined comment on an order by a federal judge in Atlanta that could lead to the dismissal of the agency’s 2013 case against Profitable Sunrise, an alleged international pyramid scheme and offering fraud targeted at U.S. residents by one or more murky figures.

    Such a dismissal almost certainly would embolden overseas HYIP scammers who reach into the United States over the Internet to steal hundreds of millions of dollars. Profitable Sunrise targeted Christians.

    In April 2013, the PP Blog reported that the SEC alleged the “program” was using a “mail drop” in England and that “Profitable Sunrise operates for the benefit of unknown individuals and/or organizations doing businesses through companies formed in the Czech Republic and using bank accounts in the Czech Republic, Hungary, Latvia, and China, among other places.”

    Two days ago, on Jan. 19, Judge Thomas W. Thrash Jr. ordered the SEC to show cause within 21 days why the case should not be dismissed — apparently for lack of prosecution.

    “Decline comment beyond what we say in court filings,” the agency told the PP Blog today.

    How the agency would proceed in the next three weeks was unclear.

    Thrash’s order says there has been no action in the case since July 15, 2015, a period of more than six months.

    From the judge’s order (italics added):

    The above complaint was filed on April 4, 2013, on April 4, 2013 the Court granted plaintiff’s Motion for Temporary Restraining Order; on April 15, 2013 the Court granted plaintiff’s Motion for Preliminary Injunction; Clerk’s Entries of Default have been entered as to various defendants; on July 15, 2015 the Court directed the Clerk of Court to Receive Repatriated Funds. Since that date no further action has occurred; IS THEREFORE ORDERED that the plaintiff show cause in writing within twenty (21) days why the case should not be dismissed. The Clerk is DIRECTED to submit the case to the Court for further action at the expiration of the 21 days. SO ORDERED, this 19th day of January 2016.

    One of the claimed “plans” of Profitable Sunrise was bizarrely dubbed the “Long Haul” and purported to pay 2.7 percent a day. At least 34 U.S. states and provinces in Canada issued Investor Alerts or cease-and-desist orders against Profitable Sunrise.

    Among other things, the scheme demonstrated the dangers of doing business with exceptionally murky enterprises making claims that fabulous wealth would flow to investors. U.S. promoters working for commissions apparently believed the “program” was operated by “Roman Novak” and his brother “Radoslav,” a purported attorney.

    Whether the brothers actually exist is unclear. So is the final sum gathered by the “program,” which had a presence on well-known Ponzi-scheme forums such as TalkGold and MoneyMakerGroup.

    No receiver has been appointed to date in the Profitable Sunrise case. How victims would go about filing claims is unclear. So, too, is the amount of money available to victims from actions such as asset freezes.

    Hungary is reported to have suspected Profitable Sunrise of money-laundering.

    In May 2013, the PP Blog reported a Virginia man had petitioned the U.S. court for return of more than $57,000 wired to Profitable Sunrise. The SEC later objected to the petition, arguing it could open the floodgates to similar petitions while the agency was working to repatriate assets that one day could be distributed to victims.

    Christian author James Paris has said he feared for his safety and the safety of his family when writing about Profitable Sunrise. (See PP Blog October 2013 comment on the matter at the RealScam.com antiscam forum.)

    See PP Blog’s tag archive on references to Profitable Sunrise or use the Blog’s search function near the upper-right corner.

    NOTE: Our thanks to the ASD Updates Blog.




  • Full Statement Of SEC On Jailing Of Sann Rodrigues

    newtelexfreelogoEDITOR’S NOTE: As the PP Blog reported yesterday, TelexFree figure Sann Rodrigues has been jailed. The SEC today released a litigation statement on the matter and related developments. It is reproduced below in its entirety. 

    **__________________________**

    Florida Resident Ordered to Jail Based On Violating Court Orders Obtained by the SEC

    The Securities and Exchange Commission announced today that Sanderley Rodrigues de Vasconcelos (“Rodrigues”) of Davenport, Florida, who is charged with promoting a pyramid scheme, was ordered to jail for civil contempt arising from his repeated violations of court orders obtained by the Commission in its civil action filed in 2014 against Rodrigues.

    On April 15, 2014, the Commission filed an emergency civil action against TelexFree, Inc., Rodrigues and several other defendants and obtained from the U.S. District Court in Boston certain preliminary relief, including an order freezing the assets of Rodrigues. On June 10, 2015, Rodrigues consented to a court order requiring him to provide an accounting listing all assets and transactions over $500. On August 12, 2015, the Commission asked the court to hold Rodrigues in contempt, alleging that Rodrigues had transferred or disposed of assets and had failed to provide the court-ordered accounting. On December 18, 2015, the judge in the SEC’s civil case held Rodrigues in contempt for violating the terms of the court’s orders by: 1) transferring $233,473 out of his bank accounts; 2) selling a Mercedes Benz CLS; 3) selling a Ferrari F340; 4) transferring three Florida condominiums; and 4) failing to provide the court-ordered accounting. The court ordered Rodrigues to return all assets that he had transferred or disposed of in violation of the asset freeze, with a deadline of January 15, 2016. The court further warned Rodrigues that, if he failed to do so, he would be incarcerated for the contempt. On January 15, 2016, the Commission notified the court that Rodrigues had failed to comply with the December 18, 2015 order. On January 15, 2016, the court ordered Rodrigues held in jail until such time as he complies with the court’s December 18, 2015, order.

    In related proceedings, on November 25, 2015, the U.S. Bankruptcy Court in the District of Massachusetts ordered that the debtors in the TelexFree bankruptcy proceeding operated a Ponzi and pyramid scheme and are jointly and severally liable for the claims of victims.

    The SEC’s investigation was conducted by Scott R. Stanley, James Fay, Mark Albers, John McCann, Frank Huntington and Kevin Kelcourse of the SEC’s Boston Regional Office. The SEC’s litigation is being led by Mr. Huntington and Deena Bernstein.

    For further information, see Litigation Release Nos. 22974 (April 17, 2014)(SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants) and 22992 (May 13, 2014) (Criminal Charges Filed Against Two Principals of Massachusetts-Based Telexfree)

    http://www.sec.gov/litigation/litreleases/2016/lr23450.htm

  • BULLETIN: Sann Rodrigues, TelexFree Figure, Ordered Jailed

    Sann Rodrigues.
    Sann Rodrigues.

    BULLETIN:  (2nd Update 10:46 P.M. ET U.S.A.) TelexFree figure Sann Rodrigues has been ordered jailed.

    The order, dated Jan. 15, was issued by U.S. District Judge Nathaniel M. Gorton of the District of Massachusetts. Gorton found Rodrigues in civil contempt last month for violating an asset freeze.

    Rodrigues did not purge the contempt by Jan. 15, so Gorton ordered the U.S. Marshals Service to incarcerate him, according to the order. The huckster was charged by the SEC in April 2014 with fraud.

    The SEC has described Rodrigues as a recidivist securities fraudster who claimed God invented MLM and “binary.” He also was charged criminally with immigration fraud. A separate judge in that case had threatened to revoke bail if Rodrigues did not comply with orders in the SEC’s civil case.

    Whether Rodrigues now faces a bail-revocation hearing in the criminal case was not immediately clear.

    TelexFree was a pyramid- and Ponzi scheme that generated about $3 billion in illicit economic activity, according to bankruptcy trustee Stephen B. Darr.

    The PP Blog reported today that Rodrigues, who claimed to have made $3 million in TelexFree, was not listed among the scheme’s top winners in recent lawsuits filed by Darr. TelexFree had billed Rodrigues as its “TOP PROMOTER.”

    NOTE: Our thanks to the ASD Updates Blog.




  • TelexFree Trustee’s Proposed Class Actions May Affect Nearly 100,000 Alleged ‘Winners’ Globally

    newtelexfreelogoIt’s another MLM legal and PR catastrophe.

    Let’s begin with the numbers, which are staggering: In two separate actions on Jan. 15, TelexFree bankruptcy Trustee Stephen B. Darr sued 56 named alleged “winners” in the MLM Ponzi- and pyramid scheme believed to have generated about $3 billion in corrupt, cross-border economic activity.

    These 56 promoters — 23 with U.S. addresses and 33 with overseas addresses — effectively are the stand-ins for about 93,000 others who received more from TelexFree or “from other persons in connection with the purchase of membership plans or VoIP Packages” than they paid in. The adversary action in federal bankruptcy court in Massachusetts is filed as a proposed defendant class-action, meaning rulings for or against the named winners would apply to the unnamed 93,000 others.

    “The members of the Net Winner Class are so numerous that joinder of all members is impracticable,” Darr argued to Chief Bankruptcy Judge Melvin S. Hoffman.

    At least 11 U.S.-based promoters of TelexFree hauled more than $1 million each from the program, according to Darr’s complaint. At the top of the list was Benjamin Argueta of Somerville, Mass. He is alleged to have received more than $4 million, including more than $2.2 million in the last 90 days of the scheme.

    With alleged winnings of more than $2.5 million, including more than $1 million in the closing days, Zollo Alecci of Canico, Portugal, was the alleged top international winner. Canico is situated in the Madeira Islands, a spot apparently favored by Brazil-based TelexFree executive Carlos Costa.

    Costa, associated with a TelexFree branch known as Ympactus, also is a failed politician and alleged international racketeer.

    Much like Zeek Rewards’ receiver Kenneth D. Bell, who also filed a defendant class action, Darr is arguing that the alleged winners must return the money because it represents an ill-gotten gain.

    Hoffman already has ruled TelexFree a Ponzi- and pyramid scheme.

    Accused TelexFree huckster Sann Rodrigues, who once claimed a $3 million haul, was not named an alleged winner in either of Darr’s proposed class actions — even though the sum Rodrigues claimed easily would have put him among the top winners.

    The reason why Rodrigues wasn’t named was not immediately clear, although he possibly used shell companies to offload some of his haul.

    TelexFree involved as many as 1.9 million participants, according to Darr.

    NOTE: Thanks to the ASD Updates Blog.




  • Would-Be Philadelphia Cop-Killer Claims ISIS Inspiration, Investigators Say

    Officer Jesse Hartnett survived an ambush by a suspect who claimed he was inspired by ISIS, police said. Photo source: Philadelphia Police Department, via Twitter.
    Officer Jesse Hartnett survived an ambush by a suspect who claimed he was inspired by ISIS, police said. Photo source: Philadelphia Police Department, via Twitter.

    Philadelphia police officer Jesse Hartnett has miraculously survived a late-night ambush in which a man who allegedly claimed allegiance to ISIS fired at least 11 shots at him and reached inside the patrol car to fire.

    The FBI and the U.S. Department of Homeland Security immediately became involved in the probe, Police Commissioner Richard Ross Jr. said. Hartnett, 33, a five-year veteran and former member of the Coast Guard, reportedly was hit at least three times at about 11:40 p.m. Thursday while in uniform and while operating a marked patrol car in West Philadelphia.

    Hartnett, seriously wounded, still pursued his attacker and returned fire, Ross said. The commissioner called the attack “absolutely evil.”

    The incident drew immediate comparisons to the horrifying and fatal ambush of two New York police officers in 2014. The New York attacks were dubbed assassinations, and Ross said Hartnett’s attacker tried to assassinate him.

    “This alleged intentional act of violence against an officer seeking to help a fellow citizen is horrifying and has no place in Pennsylvania,” Gov. Tom Wolf said in a statement.

  • FBI: Convicted Murderer And Cross-Border E-Bullion Fraudster James Fayed Was Scamming The Scammers

    Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.
    Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.

    Still pushing Ponzi-board schemes in the age of cross-border fraud and terrorism?

    In a retrospective on the 2008 E-Bullion case, a retired FBI special agent says convicted murderer James Fayed was scamming HYIP scammers.

    “He just pocketed the money from all these high-yield investment programs after they ran,” said Maura Kelley. “And the money continued to come in because the word didn’t get out right away that they weren’t paying. And people were still investing.”

    In 2011, Fayed, then 48, was sentenced to death for the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Indeed, the effective bagman for a host of Ponzi-board swindles ultimately turned to homicide in a bid to cover his tracks.

    Pamela was stabbed 13 times and left to die outside a Los Angeles-area parking garage.

    As the PP Blog reported in 2010, E-Bullion was a conduit for the AdSurfDaily Ponzi scheme.

    And, the Blog noted in 2011:

    E-Bullion has been linked to multiple Ponzi schemes, including Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.

    So, a man with murder in his heart also was supplying financial services to Ali Alishtari, an HYIP swindler who believed he was funding the purchase of night-vision goggles for a terrorist training camp in Afghanistan.

    Upon the conviction of Alishtari, U.S. Attorney Peeet Bharaha of the Southern District of New York offered remarks. As the PP Blog noted, here is part of what Bharaha and the FBI said:

    “Alishtari . . . admitted that he stole millions from investors and knowingly financed what he believed to be tools of terror. In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others.”

    Investigators said Alishtari “facilitated the transfer of $152,000, with the understanding that the money would be used to fund training for terrorists.

    “In the latter half of 2006,” according to investigators, “Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”

    Read the FBI’s retrospective on E-Bullion, titled “Fool’s Gold.”

    See the PP Blog’s long-running tag archive on references to E-Bullion.




  • Zeek Figure Darryle Douglas ‘Subject Of Ongoing Investigation’ By U.S. Marshals Service

    Auction Attics logo
    Auction Attics logo

    Darryle Douglas, the alleged Zeek Rewards’ insider whose arrest was ordered last month, is still wanted by the U.S. Marshals Service.

    “He is the subject of an ongoing investigation,” a spokesman for the Marshals Service in the Western District of North Carolina told the PP Blog moments ago. “We’re trying to locate him.”

    The spokesman declined to say more.

    Douglas resides in Orange County, Calif., according to court filings. The Marshals Service has nationwide jurisdiction. Whether Douglas remains in California or is elsewhere is unclear.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina ordered his arrest on Dec. 10.

    Mullen specifically found that Douglas had violated a court order in a civil case and that the Zeek receivership had suffered harm as a result of the conduct of Douglas. Kenneth D. Bell is the receiver.

    Douglas may have gravitated to an emerging scheme known as Auction Attics, with the aim of targeting Zeekers all over again. He has not complied with an order to surrender the Zeek database and other information.

    Zeek was alleged by the SEC to have been a Ponzi- and pyramid scheme that gathered more than $850 million. Auction Attics has a similar theme.




  • In Argument Over ‘Nutritional Product Pyramid Scheme,’ Indiana Man Allegedly Choked Woman And Threatened Her With Knife

    recommendedreading1EDITOR’S NOTE: It didn’t take long last year for MLM to get some bad press, with India’s Central Bank issuing a caution on Jan. 1. The trade also got some bad publicity very early this year.

    A 44-year-old Indiana man was jailed last week after choking a woman and threatening her with a knife as her young children hid under a kitchen table, according to WBIW.com in a story published Jan. 4.

    Shawn Turpin of Bedford was arrested and charged with strangulation and domestic battery in the presence of minors, the station reported.

    An argument between the adults over a “nutritional product pyramid scheme” sparked the assault, the station reported, quoting Lawrence County Sheriff Mike Branham.

    The scheme was not identified.

    Ponzi- and pyramid schemes have a history of sparking verbal and physical assaults and triggering events such as suicides and murder plots.