BULLETIN: (14th Update 3:39 p.m. ET U.S.A.) Toronto police have arrested “Banners Broker” figures Christopher George Smith of Toronto and Rajiv Dixit of Vancouver.
Both suspects are 45 and are scheduled to make a court appearance today, police said. The scheme allegedly raised $93 million (U.S.).
They have been charged with Defrauding the Public of Over $5000, Possession of the Proceeds of Crime, Laundering the Proceeds of Crime, Operating a Pyramid-Selling Scheme and Making False or Misleading Representations under the Competition Act, police said.
“[T]here are 1000’s of victims worldwide in Banners Brokers pyramid scheme,” police said on Twitter. The remark was attributed to Det. Sgt. Ian Nichol of the Toronto Police Mass Marketing Section.
And, the department Tweeted, the agency and mass-marketing fraud investigators from the Royal Canadian Mounted Police “worked for 2yrs full time on Banners Brokers pyramid scheme investigation.”
Also assisting in the cross-border probe were the Competition Bureau of Canada, the Ministry of Government and Consumer Services, the Ministry of Finance, the U.S. Federal Trade Commission, FINTRAC and the Canada Revenue Agency, police said.
FINTRAC stands for the Financial Transactions and Reports Analysis Centre of Canada.
“[T]he program’s existence was entirely dependent upon the fee-based entry of new members and little or no real product or service was provided,” police said.
The PP Blog’s first reference to Banners Broker was published on June 17, 2012, when the Blog reported that a site that claimed it sold “customers” to Zeek Rewards members also was pushing traffic to Banners Broker and JSS Tripler/JustBeenPaid, the bizarre, 730-percent-a-year “program” purportedly operated by Frederick Mann.
Mann also was a pitchman for the AdSurfDaily Ponzi scheme. JSS/JBP, which later morphed into a “program” known as ProfitClicking, may have ties to the sovereign-citizens movement. Zeek allegedly was a Ponzi/pyramid scheme that gathered more than $850 million.
Some HYIP promoters move from scheme to scheme to scheme, creating a condition in which losses mount globally and banks become warehouses for fraud proceeds. The SEC yesterday announced charges against alleged Zeek promoter Trudy Gilmond, whom the agency alleged recruited members for multiple failed schemes.
URGENT >> BULLETIN >> MOVING: (5th Update 9:15 p.m. ET U.S.A.) The SEC has gone to federal court in the Western District of North Carolina and charged Zeek Rewards’ figure Trudy Gilmond with securities fraud, selling unregistered securities and failure to register as a broker-dealer.
Among the allegations: Gilmond knew Zeek was under investigation in 2012 and cashed out without telling investors the “program’s” days likely were numbered. She also is accused of joining with Zeek’s principals in playing word games to sanitize the fraud.
Gilmond, 45, of Vermont, is the first individual Zeek promoter charged in an alleged Ponzi- and pyramid scheme said to have gathered more than $850 million. She previously had been sued by court-appointed receiver Kenneth D. Bell as an alleged “winner” in the scheme.
In its complaint, the SEC said Gilmond is a “self-described network marketer who has participated in numerous MLM programs, operating under the trade name ‘Team Fired Up’ to attract followers and new recruits to join her ‘downline’ in those MLM programs (several of which ultimately collapsed in a fashion similar to ZeekRewards).”
Zeek’s former COO Dawn Wright-Olivares, an SEC civil defendant who also has been charged criminally, recruited Gilmond, the SEC charged.
Bell has raised the issue of MLMers or direct marketers moving from one fraud scheme to another. Gilmond now joins MLM promoter Matthew John Gagnon as a roving huckster pursued by both a receiver and the SEC. Gagnon also was pursued by criminal authorities.
With respect to Gilmond, the SEC described her as “one of the most successful and prolific promoters of ZeekRewards. From at least September 2011 until ZeekRewards was shut down in August 2012, Gilmond worked closely with the company founders and served as a senior ‘field liaison’ to promote the scheme, persuading scores of unsophisticated retail investors to buy ZeekRewards securities upon the promise of profit sharing. Gilmond reaped more than $1.7 million in transaction-based commissions and bogus profit-sharing for her recruiting efforts.”
Some of the specific allegations against Gilmond in the SEC complaint (italics added/editing performed):
Based on Gilmond’s efforts and the misstatements on the website, many of Gilmond’s team members ultimately purchased the ZeekRewards securities, earning Gilmond substantial commissions.
As a field liaison, Gilmond had access to portions of ZeekRewards’ internal electronic investor database so that she could make adjustments to individual accounts to address her affiliates’ concerns or complaints. Among other things, Gilmond had the ability to adjust the number of “points” earned and could assign downline recruits to certain affiliates, both of which impacted the measure of profit sharing or commissions paid to those affiliates. In addition, Gilmond developed close ties with Wright-Olivares and other ZeekRewards insiders, which gave her unique access and insight not available to a typical investor.
Having worked closely with the company founders and insiders to promote the scheme in her role as a senior field liaison, and given her prior experience with similar MLM programs that ultimately collapsed, Gilmond knew or should have known that the ZeekRewards scheme’s outsize returns (averaging 1.5% per day) were too good to be true and could not be sustained.
Gilmond also helped conceal from investors and regulators the true nature of the ZeekRewards scheme. To that end, Wright-Olivares and others directed, and Gilmond helped implement, several superficial or nominal changes to certain ZeekRewards features. This included removing any references on the website to the terms “investment” and “ROI”; substituting a daily award percentage that in the aggregate approximated 125% every 90 days rather than “guaranteeing” a 125% return; and requiring investors to give away VIP bids to foster the illusion of contributing efforts to the enterprise.
Aware that ZeekRewards was under investigation by several law enforcement agencies and that the business was in serious trouble in 2012, Gilmond and others withdrew substantial sums of money from the scheme before it was shut down, without advising investors that the scheme was likely to collapse.
What is known is that about 11,900 claimants have come forward. The number is included in a Dec. 4 report filed by Krista L. Freitag, the court-appointed receiver. The deadline for filing originally was Nov. 9. But Freitag, in October, asked the court to extend the deadline in part because too few claimants had surfaced.
U.S. District Judge John F. Walter of the Central District of California extended the deadline until Dec. 24 and empowered the receiver to take other actions “to increase the number of investor claims submitted,” according to the court docket.
The order seems to have aided the cause.
Noted Freitag in her report: “As proposed in the Receiver’s application, in addition to a reminder email blast notifying investors of the extended bar date and steps approved by the Court, the steps taken by the Receiver include opening a live telephone line for investor calls (which can be answered in six different languages), allowing investors to submit their supporting documents by mail, mailing physical notices to investors whose addresses are available from checks, and holding an in-person meeting in Los Angeles at which investors were able to submitting claims with assistance from the Receiver and her staff. As a result of these efforts, the response rate and number of claims received have increased significantly.”
As of Nov, 27, the number of claimants stood at approximately 11,900, the receiver noted.
Scotland Yard has identified the weapon as a knife, but the deck of a story in the Telegraph reports it was a machete and that a male suspect had yelled, “This is for Syria.”
From an early statement by Scotland Yard, attributed to Com. Richard Walton, head of the Met’s Counter Terrorism Command (italics added):
“We are treating this as a terrorist incident. I would urge the public to remain calm, but alert and vigilant.
“The threat from terrorism remains at severe, which means that a terrorist attack is highly likely.
“I would appeal to anyone who was in the vicinity of Leytonstone underground station earlier this evening at around 7pm who saw anything suspicious to call the Anti-Terrorist Hotline on 0800 789 321.
“Anyone who may have captured video or photographic footage of the incident is also urged to make contact with the Counter Terrorism Command via the Anti-Terrorist Hotline.”
The suspect, who is in custody in East London and whose name has not been released, was subdued by an officer with a TASER, Scotland Yard said.
“One man has sustained serious knife injuries; these are not believed at this stage to be life-threatening,” the agency said. “Two other people have sustained minor injuries.”
“This is now a federal terrorism investigation, led by the FBI,” FBI Director James Comey said yesterday about the San Bernardino mass shooting. “The reason for that is that the investigation so far has developed indications of radicalization by the killers and of the potential inspiration by foreign terrorist organizations.”
In a statement, the White House said this evening that President Obama will address the American people tomorrow at 8 p.m. from the Oval Office.
On Sunday, December 6th at 8:00PM EST, President Obama will address the nation from the Oval Office about the steps our government is taking to fulfill his highest priority: keeping the American people safe. The President will provide an update on the ongoing investigation into the tragic attack in San Bernardino. The President will also discuss the broader threat of terrorism, including the nature of the threat, how it has evolved, and how we will defeat it. He will reiterate his firm conviction that ISIL will be destroyed and that the United States must draw upon our values – our unwavering commitment to justice, equality and freedom – to prevail over terrorist groups that use violence to advance a destructive ideology.
EDITOR’S NOTE: There appears to be no evidence so far that the suitcase contained a bomb. Even so, the incident in Boston this morning shows that terrorism still is very much on the minds of police after the Boston Marathon bombings in 2013 and after the attack in San Bernardino, Calif., that killed 14 people on Dec. 2. Also: See 4:15 p.m. ET update below. Police have made an arrest and now are calling the subject a “suspect.” He earlier was called a “person of interest.”
This (left) is a photo of a man the Boston Police Department is trying to identify after someone reportedly “dropped a suitcase by the rear tire of a marked [U.S.] Department of Homeland Security vehicle then left the area in a hurry” at about 9:50 a.m. today.
The incident occurred in downtown Boston ” in the area of 408 Atlantic Avenue,” police said.
Authorities detonated the suitcase in an abundance of caution after observing wires inside of it, Chief William Evans says in this WVCB video.
“Officers are seeking the public’s assistance in locating and identifying the above person of interest in relation to this incident. Anyone with any information is asked to call District A-1 Detectives directly at (617) 343-4248,” the department said.
Streets in downtown Boston closed as police investigate a suspicious package: Atlantic Ave. at Northern Ave. pic.twitter.com/nPVgUV6vvV
Tyler Scott Testerman. Source: Aberdeen Police Deparment, via Facebook.
This is Tyler Scott Testerman, a 21-year-old man suspected of shooting an Aberdeen (Md.) police officer in the face early today. A manhunt ensued, and police announced the capture of Testerman minutes ago.
The shooting of the officer in a wooded area led to the closure of Aberdeen schools today, police said.
wbaltv.com has identified the officer as Jason Easton, a 10-year veteran of the force. The officer survived the shooting and was flown to a trauma center in Baltimore.
Easton was hit by several projectiles, suggesting a shotgun was used. Early in the investigation, police have not specifically identified the weapon.
Here is what Aberdeen police said at 8:30 today, prior to the capture (italics added):
Officer Shot in Face; Suspect At Large
Aberdeen, MD – On Friday, December 04, 2015, at approximately 2:27 AM, the Aberdeen Police Department responded to the 500 block of Ohio Court in reference to a suspicious circumstance. The initial investigating officer made contact with a complainant in the backyard and began to gather facts about the complaint. Next, a white male appeared from the wood line and fired a shot, striking the investigating officer in the face with 6-8 projectiles.
Maryland State Police Medevac responded and transported the officer from the scene to Maryland Shock Trauma. The injured officer is a 10 year veteran assigned to the Patrol Division, Midnight Shift. He is currently undergoing treatment for injuries sustained as a result of the incident.
Investigators responded quickly to the scene and identified Tyler Scott Testerman, W, M, DOB [deleted by PP Blog], as the alleged shooter. Testerman had already fled the scene on foot. Lastly, an immediate manhunt ensued that enlisted the support of the Maryland State Police and Harford County Sheriff’s Office. Detectives are actively following up on leads developed as to whereabouts of Testerman.
Aberdeen Public Schools have been closed today, and should resume normal operations on Monday, December 7, 2015. Traffic on Baltimore Street is not affected at this time.
The Aberdeen Police Department encourages anyone with information regarding the whereabouts of Tyler Testerman to contact the Aberdeen Police Department at 410-272-2121. Prepared By: Sgt. C. William Reiber
Jan Schlichtmann is famous in legal circles. If you’ve never heard of him, perhaps you’ve heard of the actor who played him on the big screen: John Travolta.
The film title was “A Civil Action,” with Travolta starring alongside Robert Duvall. The movie was based on the best-selling novel by Jonathan Harr.
UPDATED 1:22 P.M. ET U.S.A. There are reports in Brazil that a prosecutor who worked on a TelexFree action in that country has been found dead inside her apartment.
She has been identified as Nicole Gonzales Colombo Arnoldi, 35, of the state of Acre. The government of Acre has issued a statement of sympathy (in Portuguese) on the death. Arnoldi died yesterday, according to the statement. No cause was listed, and TelexFree was not referenced in the statement.
Brazil and the United States have shared information on the TelexFree case. The office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts did not respond immediately this morning to a request for comment on the tragic news from Brazil.
Whether the United States would send a delegation to Brazil for funeral services was not immediately known.
ac24horas.com is reporting (in Portuguese) that police are investigating the possibility of suicide by pistol, though no definitive conclusion has been reached.
In Brazil, the TelexFree probe was conducted in an atmosphere that led to threats against judges and prosecutors. As the PP Blog reported in December 2013, there were disturbing reports in Brazilian media that someone with a Facebook account used it to claim falsely that a prosecutor involved in the local TelexFree pyramid-scheme probe had been murdered. The bogus report was supplemented by photos of a mutilated body purported to be that of the prosecutor.
Investigators in Brazil treated the matter as an effort to intimidate the prosecutor, according to media accounts in Portuguese.
TelexFree was a cross-border MLM fraud that generated more than $3 billion in economic activity, according to a report by the court-appointed bankruptcy trustee in the United States. Arnoldi’s death occurred just four days after a U.S. Bankruptcy judge ruled the “program” a Ponzi- and pyramid scheme.
Chief Judge Melvin S. Hoffman of the District of Massachusetts made the ruling on Thanksgiving Eve in the United States.
Giropb.com.br is reporting that Arnoldi recently was involved in the investigation of a lynching in the city of Bujari, Brazil.
UPDATE 1:22 P.M. ET U.S.A. This photo of Arnoldi, via Twitter, is from @portal_serido, with credit to TV Globo.
Robert L. Dear. Source: Colorado Springs Police Department.
This is Robert L. Dear, the alleged mass shooter at a Planned Parenthood clinic in Colorado Springs yesterday. He is suspected of murdering officer Garrett Swasey of the University of Colorado Colorado Springs (UCCS) Police Department. He also is suspected of shooting 12 people in total, killing Swasey and two others.
President Obama said this morning that the incident terrorized an entire community.
The last thing Americans should have to do, over the holidays or any day, is comfort the families of people killed by gun violence — people who woke up in the morning and bid their loved ones goodbye with no idea it would be for the last time.
And yet, two days after Thanksgiving, that’s what we are forced to do again.
We don’t yet know what this particular gunman’s so-called motive was for shooting twelve people, or for terrorizing an entire community, when he opened fire with an assault weapon and took hostages at a Planned Parenthood center in Colorado. What we do know is that he killed a cop in the line of duty, along with two of the citizens that police officer was trying to protect. We know that law enforcement saved lives, as so many of them do every day, all across America. And we know that more Americans and their families had fear forced upon them.
This is not normal. We can’t let it become normal. If we truly care about this — if we’re going to offer up our thoughts and prayers again, for God knows how many times, with a truly clean conscience — then we have to do something about the easy accessibility of weapons of war on our streets to people who have no business wielding them. Period. Enough is enough.
May God bless Officer Garrett Swasey and the Americans he tried to save — and may He grant the rest of us the courage to do the same thing.
Swasey was 44, a six-year veteran of the campus police department. He was assisting the Colorado Springs Police Department, the university said.
CNN interviewed a witness who’d allegedly encountered Dear while the murderous event unfolded.
From CNN (italics added):
“Five seconds we stared right at each other … and in those five seconds, bullet holes passed through my window,” he said.
“He was looking directly at my face; he was aiming at my head. I could see it in his eyes … cold stone face.”
As the bullets ripped through his windshield, he started bleeding in the mouth and face, and assumed he’d been shot. He sped out of the parking lot.
It can be a small world. The PP Blog previously has written about John Suthers, Colorado’s former Attorney General and the one-time U.S.Attorney for the state. Suthers now is the mayor of Colorado Springs, meaning he is the local comforter-in-chief when there is a community-wide tragedy.
There was fear yesterday that Dear might have brought explosive devices with him.
Here’s what Suthers’ office says today, via Twitter:
#CentennialBlShooting#CSPD confirms Items brought to scene by suspect have been secured & processed. Items no longer a threat.
URGENT >> BULLETIN >> MOVING: Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts has ruled TelexFree a Ponzi and pyramid scheme. It is the first such ruling by a U.S. Court and was issued on Thanksgiving Eve.
EDITOR’S NOTE: The story about Phil Ming Xu’s asserted cooperation with the government appears below the subhead. We’ll lead with the news of extension of the claims deadline for WCM777 victims.
If you’re a victim of the World Capital Market/WCM777 Ponzi- and pyramid scam shut down by the SEC last year, you now have until Dec. 24 — Christmas Eve — to file your claim.
The original claims deadline had been Nov. 9. On Oct. 26, court-appointed receiver Krista L. Freitag asked for an extension. U.S. District Judge John F. Walter of the Central District of California granted the request on the same day, extending the deadline until Dec. 24 and empowering the receiver to take other actions “to increase the number of investor claims submitted,” according to the court docket.
Among other things, the WCM777 case demonstrates the logistical challenges posed by cross-border fraud schemes operating over the Internet and involving cash transactions and potentially thousands of domestic and international bank accounts, including at least 100 linked to accused WCM777 Ponzi schemer Phil Ming Xu alone. Victims from multiple countries piled up potentially by the tens of thousands. Not all of them spoke the same language and, as in similar scams, not all of them paid WCM777 directly. Rather, they paid their “upline” sponsor, making the task of following the money and filing a claim more difficult. (See March 15, 2015, PP Blog story: “WCM777: More Theft And Money Laundering MLM-Style.”
Phil Ming Xu Says He Cooperated With Government
The opening of a Phil Ming Xu declaration originally filed under seal in April 2014. The seal was lifted at the request of an investor and after federal prosecutors did not object.
Messina is alleged to have come into possession of $5 million in proceeds from the WCM777 fraud, some of which allegedly was directed to International Market Ventures, a company operated by Gary Messina, his nephew. Gary Messina formerly worked as the chief information officer for the Bureau of Citizenship and Immigration Services, an arm of the U.S. Department of Homeland Security.
Messina has been ordered to return the $5 million, and IMV — the recipient of a transfer from Messina — is on the hook for $941,505 of it.
The effort to lift the seal on Ming Xu’s April 2014 filings began more than a year later, on Aug. 21, 2015, with a filing by an alleged victim of Xu from Daly City, Calif. This individual asserted he’d wired $2,000 to HSBC Bank in Hong Kong as his initial investment in WCM, a company that “represented itself as a leader in China based business and finance.”
Walter lifted the seal in an order dated Sept. 14, after the office of U.S. Attorney Eileen M. Decker of the Central District of California did not object. Precisely what Decker’s office is investigating remains unclear, although tens of millions of dollars are alleged to have flowed through WCM and related entities.
How dangerous is the world of HYIP Ponzis? Well, the Press Democrat of Santa Rosa, Calif., reported in January 2015 that investigators believe a murder might be tied to WCM777 and a companion scam known as Kingdom777.
Ming Xu also was concerned about being harmed, according to his now-unsealed motion from April 2014 to file under seal. He did not list a source of harm, but with so much money and so many tentacles involved, it could be anybody — from a person down the street to a person overseas.
From the motion (italics added):
“Xu is making this request because public disclosure of his cooperation with the government, including the U.S. Attorney’s Office for the Central District of California and the Securities and Exchange Commission, could jeopardize potential criminal investigations and the use of proactive covert operations. If Xu’s cooperation was disclosed, potential subjects of the ongoing investigations may take certain steps to hide evidence and proceeds of criminal activity, flee the jurisdiction or potentially harm Xu or his family.”
As for what Ming Xu said in his actual declaration docketed in May 2014 and now public . . .
If you were pushing WCM777 during hotel pitchfests and in your church and continue to have doubt WCM777 was a Ponzi scheme, put those doubts to rest. The huckster conceded the Ponzi in his declaration, while alleging Messina also knew it was a Ponzi.
From the declaration (italics added):
“Mr. Messina knew the $5 million transferred to him was proceeds of an illegal Ponzi scheme and is being investigated by SEC and knew I was sending him the money to avoid detection and seizure of the funds by the federal government. I transferred the $5 million to Mr. Messina’s IOLTA account because he warned me the government would seize the money as illegal proceeds of the Ponzi scheme. Mr. Messina told me on several occasions that WCM had serious criminal and civil liability issues, and that he expected federal agents to show up at our office in Pasadena, execute a search warrant, seize all the computers, and other business records of WCM’s business operations.”
Ming Xu continued (italics added):
On or about February 27, 2014, Mr. Messina sent me a document to sign stating that the transfer of the $5 million was a non-recourse loan payable in full in five years. I executed the loan document after being advised to do so by Mr. Messina. The money I transferred to Mr. Messina was not truly a loan and the two-line document purporting to be a loan agreement is false.
On or about March 20, 2014, I wrote and sent a letter to Mr. Messina, wherein I demanded return of the $5 million transferred from the ToPacific bank account into Mr. Messina’s IOLTA account for SEC settlement. Mr. Messina refused to return the monies.
I have subsequently learned that Mr. Messina has disbursed some of these funds to an entity, International Marketing Ventures, a company that is controlled and operated by Gary Messina, his nephew.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
It is unclear if Ming Xu currently is cooperating with the government and how much his asserted cooperation in April 2014 helped in pursuit of the WCM777 case or other cases.
What is clear is that the WCM777 story has included a series of bizarre developments — everything from a pledge of love for the people of Peru written on the letterhead of a suspended California company and a recitation of the importance of “blood moons” to the appearance of a “Jesus sword” and the apparent involvement of a former CIA operative.
Strangest of all, though, may be the Ming Xu claim he was taking over a company linked to the film “Innocence of Muslims” as part of a bid to “transform nations” and “train a group of Josephs to bless the world.”
Who constituted the “Josephs” and how they would “bless the world” always has been unclear, as has the nature of the purported “training” they required. This particular segment of the WCM777 narrative is deeply strange in other ways. For example, a former reputed member of the Mafia named “Dr. Bruno Caporrimo” is part of the narrative and a purported Ming Xu associate.
So is a purported California university known as the “Joseph Global Institute” of which Ming Xu purportedly was “dean” and Caporrimo reportedly was “chancellor.” As the PP Blog reported last year, one promo for the institute appeared to rip off video footage from Liberty University, a well-known Christian college in Virginia.
‘Joseph Global Institute’ Narrative Evolves
Something that curiously calls itself “Southwestern University” even though it uses the four-letter acronym SWIU (at www.swiu.edu) now claims online that it has absorbed the Joseph Global Institute. Best we can tell, SWIU stands for “Spirituality Wisdom Inspiration Understanding” and appears not to be affiliated with Southwestern University of Georgetown, Texas, which uses www.southwestern.edu. SWIU purports to have a campus at 4040 Saltburn Drive in Georgetown, but the city does not have such a street, the Georgetown Police Department told the PP Blog today. (The city of Plano, nearly three hours from Georgetown, has a Saltburn Drive.)
The Joseph Global Institute previously planted the seed it was affiliated with Harvard.
Some people have blamed the “Innocence of Muslims” film for the Sept. 11, 2012, attack on U.S. outposts in Bengazi, Libya, that killed Ambassador Chris Stevens and three other Americans. The issue has dogged former Secretary of State Hillary Clinton, now a Democratic candidate for President of the United States.
The WCM777 Ponzi-scheme story has proceeded through all sorts of tortured twists and turns, creating nonfiction that reads like fiction. Although it not unusual for bizarre narratives to accompany Ponzi schemes, the narratives surrounding WCM777 are particulary bizarre — and Americans should be concerned and follow developments closely.
BULLETIN: (14th Update 3:39 p.m. ET U.S.A.) Toronto police have arrested “Banners Broker” figures Christopher George Smith of Toronto and Rajiv Dixit of Vancouver.
