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ZEEK: New Zealand Clawback Defendant With Alleged Username Of ‘sovlife’ Challenges U.S. Court’s Jurisdiction

UPDATED 9:37 P.M. EDT U.S.A. David Ian MacGregor Fraser, a New Zealand resident who allegedly used the Zeek Rewards’ username of “sovlife,” has challenged a U.S. Court’s jurisdiction over him in a clawback lawsuit filed in February by Zeek receiver Kenneth D. Bell.

Bell alleged that David Ian MacGregor Fraser received $89,722 from Zeek’s “unlawful combined Ponzi and pyramid scheme.” The receiver, who contends the U.S. Court has jurisdiction in international clawback actions in part because Zeek operated from North Carolina and sent money from the state to participants such as MacGregor Fraser, is seeking a judgment in that amount, plus interest. He alleges the money came from Zeek victims.

The U.S. Securities and Exchange Commission described Zeek in 2012 as a massive, cross-border fraud scheme that had gathered hundreds of millions of dollars. In October 2014, alleged Zeek operator Paul R. Burks was charged criminally with wire- and mail-fraud conspiracy, wire fraud, mail fraud, and tax-fraud conspiracy.

Earlier in 2014, Zeek figures Dawn Wright-Olivares and her stepson Daniel Olivares pleaded guilty to criminal charges filed in 2013 — Wright-Olivares to investment-fraud conspiracy and tax-fraud conspiracy and Olivares to investment-fraud conspiracy.

Web records suggest MacGregor Fraser used the shortened name of “David MacGregor” when pitching Zeek online through GetResponse.com, an email service sold in the United States and other countries.

A Zeek promo in which the username “sovlife” and the name “David MacGregor” appear begins in this fashion, according to Google search results. (Italics added):

Hi Friend

If you haven’t caught up with the latest news, or weren’t on the conference call the other day, then I just wanted to highlight the main points.

Screen shot of promo for Zeek. Red highlight by PP Blog.

MacGregor Fraser, who is represented in the clawback lawsuit by North Carolina attorney June K. Allison of Shumaker, Loop & Kendrick in Charlotte, answered Bell’s complaint as “David Fraser.” The answer, however, acknowledges the longer version of the name as it appeared in Bell’s complaint. So does an affidavit submitted to the U.S. court by David Ian MacGregor Fraser.

The moniker “sovLife” appears repeatedly on the website theclassifiedsplus.com through which videos play. Some of these videos point to MLM “programs” such as the Empower Network in which “sovLife” is used as the affiliate ID.

Other videos at theclassifiedsplus point to a web entity known as sovereignlife.com. This domain is styled “SovereignLife” and identifies its operator as “David MacGregor.” There is a corresponding YouTube account in that name through which videos viewable through theclassifiedsplus.com play.

One of them with an upload date of July 3, 2013, is titled “My July 4 Message for the America That Was.” In the video, a man (presumptively “David MacGregor”) holds forth that he once was a big supporter of the United States. That support, however, apparently has evaporated in that the man contends in the video that the United States is “Dare I say it? A force for evil.”

Other videos in the David MacGregor account have titles such as “Bitcoin Debit Card – How to Get One,” “You Can Now Be a Reseller For SovereignLife And Keep All The Money!,” “Tax Slave or Sovereign Individual?”

Some individuals who may identify with the word “sovereign” have participated in various fraud schemes, have painted their fellow human beings as slaves (see Frederick Mann) or government-owned property (see Kenneth Wayne Leaming) and have expressed an irrational belief that laws do not apply to them.

Other “sovereigns” have made wild claims that they hold diplomatic immunity and thus cannot be prosecuted or are answerable only to Jesus Christ.

Zeek Clawback Defense

Compared to the “David MacGregor” video suggestion that America is evil, the David Fraser response to Bell’s clawback complaint before Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina includes no inflammatory rhetoric or claims of evildoing by the United States.

Fraser, through the American law firm, is seeking dismissal of the complaint for lack of jurisdiction. He also is seeking to quash process in New Zealand, even though he acknowledges he has been served.

Among Fraser’s specific defense claims is that he was an “innocent participant” in Zeek, having joined the program in “November 2011” while he was a “resident of Malaysia” and maintaining “a Post Office Box in New Zealand.”

In possible conflict with the information shown in the screen shot above that references a sum ($5,000 in U.S. cash), the Super Bowl played in the United States and Super Bowl tickets that have “cash-out values for those not in the USA,” Fraser further contends he had “no specific knowledge that ZeekRewards was initiated from the United States.”

He also contends he was “unaware that ZeekRewards originated in North Carolina.” This, too, may be in possible conflict with information generally known about Zeek, in that Zeek openly operated from North Carolina and invited participants to events held in that state.

At one point in its history, Zeek openly advertised auctions for sums of U.S. cash — even as it preemptively denied it was operating a pyramid scheme and complained that the U.S. Social Security system was a “legal” and “collapsing” pyramid scheme.

Precisely why Zeek was making political statements on its website is unknown.

Accused Zeek Ponzi schemer Paul R. Burks lived in North Carolina. In 2012, Federal Election Commission records showed that Burks gave money to the campaign of U.S. Presidential hopeful Rep. Ron Paul.

From a U.S. standpoint, Zeek used offshore payment processors such as SolidTrustPay and AlertPay, both of which provided services for the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008.

Now-jailed AdSurfDaily Ponzi-scheme operator Andy Bowdoin also made donations to a political cause, according to the 2010 indictment against him.

AlertPay eventually transitioned into Payza. Bell has said he is continuing to investigate STP and Payza transactions, and federal prosecutors in the District of Colombia have been soliciting information on Payza for more than a year.

In his defense filings, Frazer said he “made or received” Zeek payments through AlertPay over the Internet, but maintained he’d never set foot in North Carolina.

Now, he contends, he unfairly is being “haled” to appear in court in North Carolina.

“To ask him to defend this suit halfway around the world on account of falling into the [Zeek] Insider’s international Internet scheme would clearly offend traditional notions of fair play and substantial justice,” his lawyer argued.

“Defendant Fraser never ordered or directed that anything of value be sent to him in either Malaysia or New Zealand from North Carolina,” his lawyer argued. “Rather, based on the way the website operated, amounts he earned on-line were credited to his on-line Payza account by ZeekRewards . . . Defendant Fraser did not know from what country or state the funds originated . . .”

In court filings, Fraser says he has been a citizen of New Zealand since 1978 and was born in Great Britain. He is a citizen there, too, according to his affidavit.

NOTE: Our thanks to the ASD Updates Blog.

May 10, 2015
In TelexFree Trustee’s Probe, Advisers Turn To Cross-Border Zeek Case For Guidance

Billing records in the TelexFree bankruptcy case show that advisers to court-appointed Trustee Stephen B. Darr held an hour-long teleconference with McGuireWoods, counsel to Zeek Rewards’ receiver Kenneth D. Bell.

This appears to mark the first time that Zeek’s name has surfaced in TelexFree-related court matters. The two cross-border MLM/network-marketing fraud schemes allegedly gathered a combined sum approaching $3 billion. Each scheme operated for only about two years.

The conference took place on Nov. 6, 2014. Precisely what was discussed was not disclosed, although the records suggest Darr’s advisers were studying the claims form used in the Zeek Ponzi- and pyramid case. Participants included Mesirow Financial Consulting LLC and McGuireWoods.

Mesirow, which provides accounting and financial services, has assisted Darr in the mammoth job of reverse-engineering the alleged $1.8 billion TelexFree cross-border fraud scheme. McGuireWoods has provided litigation counsel to Bell, who has sued Zeek vendors and thousands of individual participants who allegedly profited from the $897 million cross-border scheme shut down by the SEC in August 2012.

McGuireWoods is not providing legal counsel to Darr. That duty has been undertaken by Murphy & King (M&K.) Still, there may be lessons to be learned from the Zeek litigation. On Nov. 7, 2014, a day after the conference, two of Darr’s advisers at Mesirow noted “research regarding MLM payment schemes and Zeek rewards” in billing records.

Separate records in the Zeek-related cases show that Bell had studied litigation flowing from the $119 million AdSurfDaily cross-border Ponzi scheme broken up by the U.S. Secret Service in 2008. Bell has raised concerns about “serial” MLMers/network marketers moving from one fraud scheme to another.

Such schemes raise the prospect of a black market and back-alley deals infecting the legitimate commerce stream. It has been a concern in the TelexFree, Zeek and ASD cases. The screen shot below is taken from Mesirow’s first interim application for payment for assisting Darr in his TelexFree probe.

Mesirow’s billings notes make several mentions of M&K, Darr’s legal counsel. One of them, dated Jan. 15, 2015, noted a discussion “regarding promoter to promoter payments.”

In court filings, the U.S. Department of Homeland Security said an undercover agent joined TelexFree by paying a promoter directly.

TelexFree In Colombia

Billing notes by Mesirow say the firm analyzed “reports related to Colombian investigation” and that Mesirow is aware of a “Colombian creditor claiming $3MM.” In September 2014, the PP Blog reported that TelexFree President James Merrill claimed at a 2013 TelexFree event in California that Colombia “feared” network marketing.

The California TelexFree event may create a tie with Zeek, the Blog reported in April 2014.

In 2010, the U.S. government established ties between a Colombian MLM “program” known as D.M.G. Group to money-laundering in the United States to conceal narcotics profits.

As the PP Blog reported on Nov. 24, 2010 (italics added):

DMG’s membership ranks swelled to more than 400,000, with the scheme capturing hundreds of millions of dollars. The pyramid collapsed in 2008 — but not before [David] Murcia and others had set up an international money-laundering operation that routed narcotics proceeds through Mexico and concealed the criminality in real estate and other holdings in the United States, prosecutors said.

“The so-called ‘Bernie Madoff of Colombia’ now stands convicted of money-laundering in Manhattan federal court,” said U.S. Attorney Preet Bharara” [of the Southern District of New York].

TelexFree In Brazil

Mesirow’s billing notes also reference an ongoing investigation in Brazil into TelexFree activities through an affiliate known as Ympactus.

The shutdown by Brazilian authorities of Ympactus in the summer of 2013 “was the first of many indication that the Debtors were operating an unsustainable pyramid scheme,” Mesirow said.

It noted in the fee application that it has been in “regular contact” with U.S. government officials and “representatives of the Brazilian government.”

In its first billing, Mesirow said it has assisted Darr in recovering more than $17 million since the firm was formally appointed to assist the trustee on July 14, 2014. Mesirow is seeking about $1.6 million in fees for more than 2,962 hours of work, plus reimbursement of expenses of $20,942.

Read the Mesirow application and billing notes, which reference TelexFree figures such as Merrill, Carlos Wanzeler, Carlos Costa, accountant Joe Craft and MLM Attorney Gerald Nehra.

M&K, legal counsel to Darr, also has submitted a billing application with notes that reference Zeek Rewards. M&K, like Mesirow, joined with the trustee in July 2014. M&K is seeking more than $1.3 million, saying it has expended more than 2,784 hours. It also is seeking reimbursement of expenses of $36,116.

One M&K reference to Zeek mentions a “Review [of] Zeek Rewards settlement pleadings with net winners and insiders.” Another references a conference “regarding Zeek Rewards application to TelexFree case and practical implications.” Yet another references a “Review [of] Zeek Rewards docket re: how to treat inter-promoter activity.”

Still another note says this: “Research potential claims against Nehra.”

There are other Zeek references, plus references to other Ponzi cases.

May 9, 2015
Masonic Fraternal Police Department ‘Fictitious,’ Sheriff’s Dept. Says

From left to right: David Henry, Brandon Kiel and Tonette Hayes. Images provided by Los Angeles County Sheriffs Department. Photo compilation by PP Blog.

An outfit calling itself the Masonic Fraternal Police Department and operating in the area of Santa Clarita is “fictitious,” the Los Angeles County Sheriff’s Department said.

Three people linked to the bogus agency were arrested last week. There are concerns more people may be involved, the Sheriff’s Department said.

The alleged posers were identified as David Henry, 46, the purported “chief”; Brandon Kiel, 36; and Tonette Hayes, 56. The Los Angeles Times reported that Kiel was an aide to California Attorney General Kamala Harris and was placed on paid leave on April 30, the date of his arrest.

From the Times, quoting David Beltran, a spokesman for the California Department of Justice (italics added):

“The attorney general has been concerned about these serious allegations from the point she was first briefed on this investigation,” Beltran said. “Our office has been cooperating with investigators from the beginning and will continue to do so.”

The Masonic Fraternal Police Department has its own website at a .org. Among the claims is that “We are not ‘Sovereign Citizens’ nor do we condone terrorist activity, sovereign citizens or clandestine!”

At the same time, the site claims, “The Masonic Fraternal Police Department, (M.F.P.D.) is the Knights Templar’s!” It further ventures that “The Masonic Fraternal Police Department (M.F.P.D.) is a Masonic Sovereign Jurisdiction (Municipality) located within the incorporated City of Santa Clarita, California. The Chief of Police is Honorable Grand Master David Henry 33º was elected and is Governed by a Grand Supreme Council, and 33 Masonic Jurisdictions. He currently oversees a 1/2 Million members throughout the United States.

Immediate Suspicion And Confusion In Real Law-Enforcement Community

In an advisory published on May 5, the Sheriff’s Department said the sudden presence of the Masonic Fraternal Police Department “immediately created suspicion and confusion within the law enforcement community.”

From the advisory (italics/bolding added):

On or about January 27^th, 2015, letters from the “Masonic Fraternal Police Department” (MFPD) were sent via United States mail and were addressed to Chiefs of select law enforcement agencies throughout Southern California. The letters were sent to advise these Chiefs that “David Henry” had been elected as Chief of the MFPD, which immediately created suspicion and confusion within the law enforcement community.

Shortly after law enforcement agencies began receiving letters, many began receiving calls from an individual who identified himself as “Chief Deputy Director Brandon Kiel,” requesting meetings with each agency’s chief.

Detectives from the Los Angeles County Sheriff’s Department began their involvement with this investigation when a meeting was scheduled with Captain Roosevelt Johnson of Santa Clarita Valley Sheriff’s Station. During Captain Johnson’s meeting with members of MFPD, his suspicions were aroused when they could not answer basic questions about MFPD’s jurisdiction and overall department mission. The group claimed that they were descendants of the “Knights Templar” and that their police agency had been in existence for 3000 years. Additionally, they claimed that MFPD had sovereign jurisdiction in 33 States and across the border in Mexico.

Detectives conducted a thorough investigation in collaboration with several law enforcement agencies and determined MFPD was not a legitimate police agency.

On April 29th, 2015, Los Angeles County Sheriff’s Detectives, deputies from Santa Clarita Valley Sheriff’s Station and Sheriff’s Special Enforcement Bureau served search and arrest warrants in the 28000 block of Linda Vista Street and the 17000 Block of Sierra Highway, in the City of Santa Clarita Three individuals were arrested and identified as 46 year-old David Henry, 56 year-old Tonette Hayes, and 36 year-old Brandon Kiel. During the search of the above two locations, detectives recovered badges, identification cards, weapons, uniforms, police type vehicles and other law enforcement equipment.

Henry, a resident of Santa Clarita, was arrested for Perjury Under Oath and Impersonating a Peace Officer. He was booked at Santa Clarita Valley Station on April 30^th, 2015 and is pictured wearing a plaid shirt.

Hayes, also a resident of Santa Clarita, was arrested for Impersonating a Peace Officer and booked at Santa Clarita Valley Station on April 30^th, 2015. She is pictured wearing a black shirt.

Kiel, a resident of Los Angeles, was arrested for Impersonating a Peace Officer and Misuse of a Government Identification. He was booked at Santa Clarita Valley Station on April 30, 2015. He is pictured wearing a white shirt and grey suit.

Detectives believe these three suspects were attempting to deceive individuals in the community as to their status as law enforcement officials for a purpose yet to be determined. Investigators also believe there may be other individuals associated with this organization.

NOTE: Our thanks to a PP Blog reader who sent in this news tip.

May 7, 2015
URGENT >> BULLETIN >> MOVING: Zeek Receiver Files Clawback Lawsuits Against Residents Of Brazil, Israel, France, Sweden, Denmark, Germany, Ireland, Netherlands

URGENT >> BULLETIN >> MOVING: (10th Update 10:59 p.m. EDT U.S.A.) Zeek Rewards’ receiver Kenneth D. Bell has filed clawback lawsuits against alleged “winners” with addresses in Brazil, Israel, France, Sweden, Denmark, Germany, Ireland and the Netherlands.

The winners are alleged to have received illicit gains from Zeek’s Ponzi- and pyramid scheme. Alleged sums won range from tens of thousands of dollars to hundreds of thousands of dollars, according to eight complaints filed in U.S. District Court for the Western District of North Carolina.

The subheads below contain info on the alleged winners, where they live and how much they won.

Brazil

Eduardo Borges de Aguiar, Niteroi, Rio de Janeiro, $692,366.97. Username: “ZRBrasil.”

Denise Marchon Monteiro Bernardes, Niteroi, Rio de Janeiro, $159,930.77. Username: “denisemarchon.”

Fernando Eneas Lessa, Rio de Janeiro, $121,768.53. Username: “ZRRioDeJaneiro.”

Luis Claudio Lima Trindade, Ananindeua, Para, $101,129.02. Username “convite.”

Hygson Assef Pereira da Rocha, Rio de Janeiro, $95,776.73. Username: “hygson.”

Edson Tadeu Tobias, Sao Paulo, $87,682.07. Username: “nabisart.”

Daniel Elias Neves, Praia Grande, Sao Paulo, $85,747.32. Username: “danielneves.”

Israel

Hagit Rockah, Rishon LeZion, $316,584.31. Username: “bsd.”

Jacob Stiner, Netanya, $184,120.22. Username: “steiner.”

Tzahi Rozental and Itzhak Harel, Rishon LeZion, $183,164.93. Username: “2000dollar.” “Upon information and belief, Rozental and Harel received payments from ZeekRewards under the name Itzhak Harel.”

Pnina Soraski, Beitar Illit, $181,881.12. Username: “pnina.”

Hava Lipcer, Beit She’an, $173,049.21. Username: “success180.”

Sigalit Rahat, Rishon LeZion, $169,053.14. Username: “sigalitrahat.”

Demyan Michaeli, Holon, $153,074.10. Username: “demyan.”

Erez Shaked, Tel Aviv, $98,352.27. Username: “Erezmora.”

Menahem Lipcer, Beit She’an, $69,907.85. Username: “sucess180M.”

Rivka Haimovitz, Jerusalem, $69,646.49. Username: “dynemic.”

Oshrit Marciano, Mevaseret Zion, $68,419.10o. Username: “oshritmarciano.”

Baruch Heyman, Jerusalem, $68,165.19. Username: “arrowhead.”

Shemuel Cohen, Akko, $67,066.64. Username: “muli.”

Ilan Doron, Kochav Yair, $54,472.84. Username: “ilandoron.”

Meshulam Shapira, Jerusalem, $53,219.36. Username: “bracha.”

France

Suzanna Dreyer, La Valettedu-Var, $446,613.38. Username: “InterestedPeople.” (Also see BehindMLM.com story on “GooBets,” plus these PP Blog stories: “GooBets,’ Cross-Border Fraud Scheme, Emerges” and “After Seeing Photos Of Its Players On ‘GooBets,’ National Basketball Association To Turn Matter Over To ‘Legal Department.”)

Sweden

Nils Ove Marcelind, Torslanda, $131,051.06. Username: “spanien.”

Ola Persson, Orebro, $84,359.67. Username: “sunseeker.”

Rolf Ostlund, Gavle, $82,469.10. Username: “gate1.”

Lars Apelthun, Uppsala, $81,083.80. Username: “go2gate.”

Anders Brunnegard, Tvarred, $51,675.54. Username: “uniq.”

Denmark

Eric Mortensen, Kastrup, $563,452.84. Username: “mysecretcircle.”

Joergen Stegler Lorentzen, Vestervig, Thisted, $64,610.97. Username: “Thybo.”

Leda Rasmussen, Copenhagen, $53,652.76. Username: “bmw4me2.”

Germany

Marit Kafurke, Scheessel, $161,981.95. Username: “turbolady.”

Frank Astheimer, Martinsthal, $146,740.05. Username: “goldteam.”

Yovanka Mirich, Dusseldorf, $58,905.93. Username: “europe1.”

Jan Wrobel, Weil am Rhein, $53,450.17. Username: “team.”

Ireland

Michal Gach, Carrigaline, County Cork, $191,450.01. Username: “thebestrewards.”

Elena Avdeeva, Waterford, $126,221.45. Username: “brand.”

Vivian Akoh, Waterford, $102,670.75. Username: “greatauctions.”

Ngozi Nwamara, Waterford, $80,338.90. Username: “leadauctions.”

Ints Priekulis, Waterford, $77,330.24. Username: “in1.”

Kate Favour Iwuoma, Cork, $56,035.32. Username: “favourauctions.”

The Netherlands

Remco Boom, Delft, $103,695.82. Username: “oppsincome.”

Renze Deelstra, Aalsmeer, $68,787.17. Username: “turboteam2012.”

NOTE: Our thanks to the ASD Updates Blog.

May 6, 2015
British Columbia Securities Commission Issues Investor Alert On DFRF Enterprises Or Other ‘Companies Associated With Daniel Fernandez Rojo Filho’
URGENT >> BULLETIN >> MOVING: (Updated 6:30 p.m. EDT U.S.A.) The British Columbia Securities Commission has issued an Investor Alert on “DFRF Enterprises LLC, DFRF Enterprises Ltd., or other companies associated with Daniel Fernandez Rojo Filho.”

This appears to be the first such warning about DFRF in North America.

The claims associated with Rojo Filho and the enterprises are “economically impossible,” BCSC warned.

“Several” of the claims are “characteristic of investment fraud,” the agency warned.

From the Investor Alert (italics added):

The BCSC has become aware that Filho is offering investments to British Columbians with returns of up to 15% per month. Filho is also promising that DFRF will soon be listed on a public stock exchange, after which the value of members’ investments will triple within 30 days. Members will continue to receive up to 15% per month on their investment. These returns are economically impossible. Also, when selling securities, it is illegal to represent that those securities will be listed on an exchange without certain conditions being met.

Other claims being made by Filho include:
- investors’ principal is guaranteed and safe
- investor funds are held offshore
- he manages $144 billion in assets
- the company is extracting ten tonnes of gold per month from its mining properties in Mali, Africa
- 25% of the profits are donated to social and humanitarian causes
- existing members who refer new members are paid commissions of 10%
Several of these claims are characteristic of investment fraud. The BCSC urges investors/members, sales agents, or members of the public who have been approached or have information about DFRF Enterprises LLC, DFRF Enterprises Ltd or Daniel Filho to contact the BCSC inquiries line at 604-899-6854 or 1-800-373-6393 (toll free).

The PP Blog first wrote about Rojo Filho five years ago this month, reporting on his alleged role in a Ponzi scheme known as Evolution Market Group/Finanzas Forex. His name next appeared on the Blog in January 2015, in the context of DFRF, another high-yield scheme.

In February 2015, BehindMLM.com reported that DFRF had been sued in Massachusetts under the racketeering (RICO) statute.

Whether DFRF is under investigation by U.S. law enforcement is unclear. Two days ago, the PP Blog sought comment on DFRF from three U.S.-based law-enforcement agencies. None responded.

Earlier on Monday, BehindMLM.com reported that DFRF had dropped the names of the SEC and the FBI in a YouTube sales pitch uploaded in December 2014.

DFRF reportedly operates out of Florida and Massachusetts. The BCSC warning specifically referenced the city of Orlando, Fla.

The enterprise also claims it operates out of Vancouver, B.C., BCSC said.

On Monday, the PP Blog observed a DFRF video in which a presenter talked about “gold,” “humanitarian social projects, a “letter of credit,” a “global note,” a “master bond,” “insurance” and a purported guarantee.

Such a presentation leads to questions about whether DFRF is a hybrid mixture of a “traditional” HYIP, a prime-bank scheme and a shiny-object scheme.
May 6, 2015
Ripple Labs’ Settlement Agreement With Feds References Alleged Transaction With Roger Ver, American Expat Known As ‘Bitcoin Jesus’

From a settlement agreement between the U.S. Department of Justice and Ripple Labs. Red highlight by PP Blog. Source: U.S. Attorney’s Office for the Northern District of California.

EDITOR’S NOTE: Will MLM/network-marketing hucksters pushing UFunClub/UToken find any value in the story below?

Ripple Labs Inc., based in San Francisco, “developed and sold virtual currency known as ‘XRP,’” but didn’t follow the law and “failed to establish and maintain an appropriate anti-money laundering program,” the U.S. Department of Justice said.

If Ripple’s name sounds familiar, perhaps it’s because the company sued the Rippln MLM “opportunity” in late 2013, alleging trademark infringement. In a statement, the Justice Department makes a veiled reference to that action, something that put Ripple on the radar.

At some point, Ripple became the subject of a criminal investigation led by the office of U.S. Attorney Melinda Haag of the Northern District of California. The IRS Criminal Investigation Division also participated.

As the investigation proceeded, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) became involved on the civil front.

Of particular note in the Justice Department’s news release about a settlement agreement with Ripple that ended the criminal probe was an allegation that a second Ripple subsidiary known as XRP II in late 2013 allegedly “negotiated a $250,000 transaction with an individual who had prior felony convictions for dealing in explosive devices and had been sentenced to prison.”

Based on information in the Ripple settlement agreement, the government appears to believe this individual is Roger Ver, sometimes described as “Bitcoin Jesus.”

Ver was convicted in 2002 on charges of selling explosive devices on eBay.

XRP II appears to have constituted an effort on Ripple’s part to address FinCEN money-laundering concerns, but the subsidiary failed to “follow its own internal ‘know your customer’ requirements,” the Justice Department said.

“Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws,” said Director Jennifer Shasky Calvery of FinCEN. “Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”

From a Justice Department statement on the settlement (italics added).

Ripple Labs Inc. and its wholly-owned subsidiary, XRP II LLC, formerly XRP Fund II LLC, have agreed to resolve a criminal investigation in exchange for a settlement agreement calling for a series of substantial remedial measures, including a migration of a portion of Ripple’s virtual currency business to a separate entity, the company’s ongoing cooperation in other investigations, an extensive remedial framework to ensure future compliance with federal laws and forfeiture and penalties totaling $700,000.

NOTE: Our thanks to the ASD Updates Blog.

May 6, 2015
CLAIM: UFunClub Opponents Are Like Zombies From ‘The Walking Dead’

‘Dominator’ Michael Mansell tells the UFunClub/UToken troops that opponents of the program are like the disease-spreading zombies on ‘The Walking Dead’ television series. Source: YouTube promo dated May 4, 2015.

If you want to sell UFunClub/UToken, you have to understand that you’ll encounter opposition from “sheeples,” according to American promoter Michael Mansell of the UFUN Dominators Team.

These sheeples will be trapped in their miserable lives to the point of being brain dead, and therefore will not understand that the visionary Dominators seek to “change the status quo,” “don’t expect the norm” and “do not accept ordinary.”

How to deal with the sheeples? Well, you bash their heads with baseball bats, he jokes.

“You gotta push through those crowds of people,” he says in a 1:13:55 YouTube promo featuring three other American Dominators while UFunClub/UToken is under investigation in Thailand, where people are being arrested and property and assets are being seized.

“I liken it to pushing through a bunch of zombies from ‘The Walking Dead.’ They’re gonna bite you; they’re gonna try to scratch you; they’re gonna try to infect you with their disease,” Mansell continues.

“But you gotta keep swinging that bat at their brains to make sure they don’t get in your way. And you gotta keep pushing through those zombies until you get to the other side, where you create your own new world.”

There may be up to 3,000 Americans in UFunClub/UToken, even though there is no official office in the United States, according to the video.

Precisely how so many Americans became involved remains unclear. If the 3,000 number is correct, however, it would mean that Americans potentially dumped more than $1.9 million into the cross-border scheme. Promoters advertised a minimum buy-in of $635. Buy-in sums of $1,230, $6,040, $12,100 and $57,500 also were advertised, meaning that American involvement in UFunClub/UToken could far exceed $1.9 million.

Mansell was not advocating for actual violence against the purportedly brain-dead opposition; he was simply playing off a baseball-bat theme handed him by Rodney Burton, a fellow American Dominator.

American MLMers/network marketers, Burton suggests, should be like slugger Babe Ruth: They should swing for the fences and not worry about fanning. After all, he says, people remember Ruth for his homeruns, not the number of times he whiffed.

As for the American UFunClub/UToken Dominators?

“We’re going to stand and keep on swinging until there’s no more bat left,” Burton says.

He also contended during that call that UFunClub/UToken has an office in the United States that hasn’t opened. He didn’t say where, but claimed U.S. members would be able to fund their accounts through ACH transactions tied to an ewallet gateway.

If any of that sounds familiar to PP Blog readers, it perhaps is because the U.S. Department of Justice sued Four Oaks Bank in North Carolina in 2014 for turning a blind eye to fraud markers and processing “close to $60 million in ACH transactions in furtherance of the illegal scheme.”

Which illegal scheme was that? Why, Rex Venture Group LLC, the operator of the cross-border Zeek Rewards scheme that ultimately gathered $897 million.

Any UFunClub/UToken ACH vendor could be at the same risk. In the context of UFunClub/UToken, the risk even could be amplified.

Why?

The case of TelexFree, an alleged $1.8 billion cross-border Ponzi- and pyramid scheme, may provide a strong clue. Records show that Brazilian regulators opened probes into its activities in that country in 2013.

Any number of TelexFree promoters turned a blind eye to the Brazil developments and continued to promote the purported opportunity. U.S. regulators later charged several American TelexFree promoters with securities fraud.

Records say that an American undercover agent for the U.S. Department of Homeland Security joined the TelexFree scheme under a promoter based in the United States.

In other news from the Dominators’ video, American promoter Jamison Palmer was said to be back in the United States after promoting the scheme from Thailand.

May 5, 2015
UFunClub Affiliates Solicited International Bank Wires, Provided Type Of Instructions Seen In TelexFree, AdSurfDaily, Zeek And AdViewGlobal Schemes
Screen shot. Red highlight by PP Blog. Not only were UFun/Utoken recruits encouraged to send international bank wires through Guinea, they were further encouraged to share the instructions on at least eight social-media sites. Even as this was occurring, recruits were told to make their personal information available to their “program” sponsor — something that introduces the specter of identity theft.

UPDATED 8:18 A.M. EDT May 4 U.S.A. Affiliates of the alleged UFunClub MLM/network-marketing Ponzi- and pyramid scheme under investigation in Thailand encouraged recruits to join by wiring the Euro equivalent of sums of up to 100,000 U.S. dollars to Banque de Développement de Guinée S.A., according to promos in English published online.

Precisely how the African bank operates is unclear. Also unclear is why a “program” with an apparent base of operations in the Southeast Asia nations of Thailand and Malaysia was using a bank on the far edge of another continent.

Recruits sending wires further were instructed by UFunClub affiliates not to call UFunClub an “investment.” Rather, the recruits were told to describe UFun purchases as the acquisition of “GOODS AND SERVICES or SALARY.” The wiring instructions also suggested the acquisition could be be succinctly described as such: “Purchase Software.”

HYIP schemes are infamous for urging recruits not to use the language of the investment trades and to redescribe an investment “program” as something else. This longstanding and nefarious practice is a virtual concession that upstream purveyors and professional recruiters for scams understand they are violating the financial laws of nation-states and, in many instances, the laws of jurisdictional subdivisions such as states or provinces within those nation-states.

Crimes such as securities fraud, wire fraud, money-laundering, tax fraud and structuring transactions to evade bank-reporting requirements occur in this sea of wanton lawlessness. Stated “caps” or transaction limits typically suggest that the purveyors and their enablers are seeking to stay below a currency level they perceive a government may deem suspicious. (See Paragraph 23 of the 2010 indictment against AdSurfDaily Ponzi-scheme figure Andy Bowdoin in which his discussion of caps is highlighted. The indictment also outlines how Bowdoin, now in federal prison after pleading guilty to wire fraud, sought to avoid using the language of investments in his Ponzi investment program by describing it as something else.)

The unusually high UFun limit of $100,000, however, potentially was something that put the “program” on the radar of governments, despite the planning of UFunClub and its enablers. HYIP schemes typically express lower limits.

In the promos by UFunClub affiliates, the $100,000 limit was described as “per single transaction,” meaning there was no real ceiling if recruits capped second and subsequent wires at $100,000. This, too, could have caught the attention of international law enforcement.

How many governments in addition to Thailand may be investigating UFunClub is unknown. Thailand appears to be conducting a very public probe and potentially signaling its neighbors in the region that something at UFunClub is seriously and dangerously amiss.

Photos of Thai police officials have been carried in the local papers and online publications just about every day since word was received of a UFunClub raid, arrests and the issuance of warrants on April 10.

In the online instructional manual published by UFunClub affiliates, recruits were told to make Banque de Développement de Guinée the “Payee” for wires. They further were provided an International Bank Account Number (IBAN), a swift code and a street address for the bank in Conakry, a port on the Atlantic Ocean and Guinea’s capital city. The capital cities of Thailand (Bangkok) and Malaysia (Kuala Lampur) both are nearly 8,000 miles away from Conakry.

After completing their wire or wires, recruits were instructed by UFunClub affiliates of a purported “need to send a proof of bank wire payment to your sponsor at this time,” something that raises the prospect of identity theft or the outright theft of funds from a recruit’s bank account.

“Your new Ufun account will be set up after your sponsor validates your bank payment information,” the instructions continued.

Here is a portion of the follow-up instructions (italics added/formatting approximate):

Proofs must contain the following information
- Sender Name
- Sender Account Details
- Date
- Amount sent / currency
- Beneficiary Name
- Beneficiary Account Details
If you file your wire paperwork online, we STRONGLY suggest
- Use Snipping tool or a similar software to get a clear screen capture (Windows)
- Use CMND+Shift+4 to get a screen capture (Mac)
- Take a screen capture of a screen that shows you ALL of the above information – not just that says “Transfer Complete”
If you file the transfer your Utoken payment in a bank branch
- Ask your bank to email you the proof and forward that email to your Ufun sponsor
- If they give you a bank wire paper receipt, ask your bank to scan the proof or scan it yourself
  
  UFUN Accounts Dept. will not be accepting any images that are taken by a camera phone or are blurry/unclear
  
  UFUN Accounts Dept. will not accept any images that are edited with arrows or has information blocked out
  
  **You also need to send your Utoken Sponsor the following information**
Recruits were encouraged to share the wire-transfer instructions on at least eight social media sites.

See July 8, 2013 PP Blog story on the AdSurfDaily-like banking coaching tips distributed online by affiliates of TelexFree, later alleged to be a $1.8 billion cross-border pyramid and Ponzi scheme.

See June 7, 2012, PP Blog story on how affiliates Zeek Rewards were instructed to wire funds to Zeek’s bank in North Carolina. Zeek later was alleged to be an $897 million, cross-border pyramid and Ponzi fraud.

As is the current case with UFunClub/Utoken, affiliates of AdSurfDaily, TelexFree and Zeek were instructed not to call their “program” an investment “program.”

Recruits of UFunClub/UToken also are told that the value of UTokens only can rise and never can fall.
May 2, 2015
Zeek Rewards’ Dawn Wright-Olivares Loses ‘Several Motor Vehicles’ To Receiver In Cross-Border Ponzi Case; More Actions Coming Against International ‘Winners’ And Vendors

More lawsuits against international “winners” in the Zeek Rewards cross-border Ponzi-and pyramid-scheme case are coming, receiver Kenneth D. Bell has advised a federal judge.

Bell also signaled to Senior U.S. District Judge Graham C. Mullen that lawsuits may be coming against alleged international Zeek vendors such as Payza and SolidTrustPay, both of which earlier were involved in the AdSurfDaily Ponzi scheme and are Ponzi-forum darlings.

The U.S. Attorney’s Office for the District of Columbia has been soliciting information on Payza since at least December 2013. Last month, the U.S. Securities and Exchange Commission identified SolidTrustPay as a vendor for the alleged CashFlowBot (Dollar Monster) Ponzi scheme that operated out of the U.S. state of Georgia.

On another front, Zeek’s former COO — Dawn Wright-Olivares — doesn’t get to keep her cars.

“In the first quarter, the Receiver also took possession of several motor vehicles as part of the settlement with Defendant Dawn Wright-Oliveras,” Bell informed Mullen. “The Receiver has retained an auctioneer and intends to liquidate these vehicles during the second quarter of 2015.”

Wright-Olivares, an alleged Zeek “insider,” has been charged criminally and civilly by U.S. authorities. She has settled the federal civil charges and pleaded guilty in the criminal case. In addition, she faced litigation from Bell.

Bell’s forensic team has tracked Zeek money all over the world. The receiver already has sued alleged “winners” with addresses in the United Kingdom, Canada, Australia, New Zealand, the British Virgin Islands and Norway.

It won’t end there, he advised Mullen in a quarterly update to the court filed yesterday.

“The Receiver expects to file lawsuits against foreign net winners in additional countries during the second quarter of 2015,” he wrote.

Bell has raised concerns that some MLMers/network-marketers are pitching one fraud scheme after another.

News that Bell intended to expand his efforts to gather money for an estimated 800,000 victims of Zeek’s cross-border scheme was received while the nation of Thailand was squaring off against UFunClub/UToken, yet another scheme pushed by MLMers/network-marketers.

UFunClub/UToken possibly gathered more than $1.17 billion, according to reports in Thai media. Questions have been raised about whether North American “sovereign citizens” were involved in the “program” and a separate venture known as SVM Global Initiative.

So-called “sovereigns” were involved in the $119 million AdSurfDaily Ponzi scheme in 2008. ASD was pushed in part by Frederick Mann, the purported operator of multiple fraud schemes. Mann appears to have had sympathy for Francis Schaeffer Cox, an Alaskan “sovereign” and militia man implicated in a plot to murder public officials.

A scheme known as Profitable Sunrise also appears to have been pushed in part by “sovereign citizens.”

NOTE: Our thanks to the ASD Updates Blog.

May 1, 2015
‘Achieve Community’ Issued Cease-And-Desist Order, Accused Of Securities Fraud, Selling Unregistered Securities And Conducting ‘Pure’ Ponzi Scheme In Colorado

From a YouTube promo for Achieve Community.

BULLETIN: (3rd Update 3:44 p.m. EDT U.S.A.) The Colorado Division of Securities has issued a cease-and-desist order to “Achieve Community” and accused the network-marketing “program” of securities fraud and selling unregistered securities while conducting “a pure Ponzi and pyramid scheme.”

The order applies to Achieve, Achieve International LLC, Work with Troy Barnes Inc. and Achieve founders Troy Barnes of Michigan and Kristine “Kristi” Johnson of Colorado, the Division said.

Achieve was known in shorthand as TAC.

Johnson already has settled without admitting or denying the allegations, the Division said.

Barnes did not respond to the action, the Division said.

It added that the first complaints against Achieve were submitted to the state in October 2014. The state confirmed publicly in January that Achieve was under investigation.

“Given the location of Achieve in Colorado, we believe that it is important to address this fraudulent activity on a local level and ensure that state investors are protected by barring any further illegal sale or solicitation of these securities by the respondents in this state,” said Colorado Securities Commissioner Gerald Rome.

Colorado’s action is believed to be the first state-level action brought against Achieve, which the U.S. Securities and Exchange Commission charged with fraud in February 2015. A federal judge imposed an asset freeze in the SEC case.

Johnson and Barnes have invoked their Fifth Amendment right not to incriminate themselves, according to court filings. Barnes allegedly has told the SEC he is the target of a criminal investigation.

From a statement today by the Division (italics added):

Complainants alleged that they had bought shares in TAC after information on the company’s website promised 800-percent returns on “positions” in the TAC “matrix” costing $50 each.

According to an official complaint compiled by the Division, Barnes and Johnson both allegedly appeared in videos promising that investors would receive an unlimited 800-percent return on positions based on the funds of others who obtained new positions. Further, the founders stated that TAC was “a lifetime income plan,” that members could make “as much as you like with us, as often as you like with us,” and expressly claimed that they were not operating a pyramid or Ponzi scheme.

The Division alleged, however, that the respondents committed securities fraud because the business was, in fact, a pure Ponzi and pyramid scheme. Unlike lawful multi-level marketing businesses, TAC did not sell a product. The proceeds paid to investors and to Johnson and Barnes were derived from funds obtained from later participants in the TAC matrix.

The Division asserts that, despite acting as broker dealers in order to sell the positions, neither Barnes nor Johnson were licensed with the state, as required by the Colorado Securities Act. Furthermore, respondents violated the Act with the sale of unregistered securities products in the form of the $50 positions.

The PP Blog reported on April 20 that an order to show cause had been issued against Achieve and that a cease-and-desist order appeared to be pending.

Apr 30, 2015
Was An Unlicensed Money-Services Business In The United States Gathering Funds For The Alleged UFunClub/UToken Ponzi Scheme In Thailand?

This screen shot from the “shop” section of website of UTokenUSA shows that orders were being solicited for UTokens at prices between $635 and $12,100. Not shown is a solicitation for orders at a level of $57,500. Whether orders successfully were placed is unclear. At some point, these words appeared on the site: “[01-31-2015] In order to work with the system planning, the Utrade trading system will pause for 7 days, from 00:00am, 1st February 2015 and re-open 00:01am 8th February 2015 for system upgrades and conversion of tradable UToken for investment liquidity planning.
We will still be able to create membership accounts, but you will not be able to buy, sell, or trade Utokens until February 8, 2015.”
In March 2015, as part of its coverage of the WCM777 cross-border scam operating out of the United States, the PP Blog reported that court-appointed receiver Krista L. Freitag said this in a Feb. 27 court filing (italics added):

“Many investors gave cash to the company and to their leaders (or upline sponsors) who then deposited the cash along with other investor funds.” (Click here to read “WCM777: More Theft And Money Laundering MLM-Style.”)

Back in 2010, something similar happened in the deeply disturbing Imperia Invest IBC scam that appears to have operated offshore and definitely targeted people with hearing impairments. The SEC first charged Imperia and, in 2011, charged alleged pitchman Jody Dunn. Millions of dollars went missing.

Dunn may not have learned his lesson. His name later appeared as an alleged “winner” in Zeek Rewards, yet another cross-border MLM/network-marketing debacle. Zeek, operating from the United States, allegedly plucked $897 million. Some of the money allegedly ended up in places such as Moldova, the Cook Islands and the Turks and Caicos.

Moving forward to the 2014 TelexFree scheme taken down by the SEC and the U.S. Department of Homeland Security, what do we see? Well, allegations that TelexFree, too, had created conditions under which promoters were collecting money for the scheme and effectively becoming money mules.

TelexFree may have gathered $1.8 BILLION — yes, billion with a “b.”

Welcome to the black markets of MLM/network marketing. The schemes may feature in-house transfer vessels in which participants can transfer money or cash-earning investment points to other members in underground fashion. Promoters also can do back-alley deals with recruits, opening up second and subsequent black-market tiers.

BehindMLM.com reported yesterday that INTERPOL was about to become involved in the cross-border investigation into UFunClub/UToken that originated in Thailand. If it happens, it’s an encouraging sign.

UFunClub/UToken may have plucked more than $1.17 BILLION.

Separately, the PP Blog learned yesterday that a UFunClub/UToken promoters’ group known as UFUN Team USA had published a promo that claimed this (italics/bolding added):

We blog, tweet, and write about the latest news on UFUN and UTokens. Our team provides secure transaction exchange of physical currency to UToken digital currency from all around the world. Our service at UTokenUSA includes:

1. Purchasing UTokens through our website.
2. Guaranteed safe transfer of payment to UFUN.
3. UFUN Account Setup – **Setup time varies 1-5 business days.**
4. UToken & UFUN Support.
5. Referral/Downline Support – We help setup up your referrals under you.
6. Latest News and Updated on UFUN & UTokens.
7. Discount Coupons for you to offer to future members.

This UFunClub/UToken promoters’ group claimed recruits could purchase UTokens through its website and that the promoters “Guaranteed safe transfer of payment to UFUN.”

This leads to questions about whether an unlicensed Money Services Business was gathering funds for another unlicensed Money Services Business. UToken promoters claim the value of the purported digital currency only can rise and never can fall.

The UFUN Team USA site published a phone number with the 323 Area Code in Greater Los Angeles. That’s the same area from which WCM777 was operating.

Like any number of schemes, UFunClub/UToken has been positioned as a “passive” investment opportunity that already has created anywhere from 200 “millionaires” to 5,000, depending on the source of the claims.

This brings questions about an offering fraud and the sale of unregistered securities into play. The same sorts of questions existed with WCM777, Imperia, Zeek and TelexFree.

As the screen shot below taken from a YouTube promo shows, UFunClub/UToken did an in-house announcement about the “THE CONVERSION OF TRADABLE UTOKEN TO INVESTMENT POINTS” — apparently on Jan. 31.

Source: Screen shot from a YouTube video with a publication date of Feb. 10, 2015.

Some American MLMers/network marketers have claimed they traveled from the United States to Thailand to vet UFunClub/UToken and found the “program” to be legitimate.

The Thai police say the “program” is an international fraud scheme.

Apr 30, 2015