AdSurfDaily President Andy Bowdoin still hasn’t responded to a Jan. 15 racketeering lawsuit filed against him by three ASD members seeking class-action certification.
Meanwhile, Bank of America, a non-RICO defendant accused in the complaint of aiding Bowdoin and others in a fraudulent scheme, has added two additional attorneys who specialize in complex financial litigation to its legal team.
At the same time, Steven Berk, an attorney for the plaintiffs, has notified U.S. District Court for the District of Columbia that he has left the law firm of Chavez & Gertler and has started his own firm, Berk Law LLC of Washington, D.C.
Berk filed papers yesterday to ask the court to delay the due date until May 26 for the plaintiffs’ response to a motion to dismiss Golden Panda Ad Builder President Clarence Busby as a defendant in the case. The response had been due May 11, but Busby’s attorneys have agreed to a 15-day delay.
Like Bowdoin and ASD attorney Robert Garner, Busby was named a RICO defendant, amid allegations he engaged in racketeering with Bowdoin, Garner and unnamed others. Bowdoin is the sole named RICO defendant who hasn’t responded to the complaint.
Although he is an attorney, Garner filed a pro se pleading asking to have until May 22 to respond to the complaint. It is unclear if he intends to continue to represent himself or if he’ll retain counsel.
Busby, through his attorneys, said he should be dismissed from the RICO case because he already has settled a separate case filed by the government in August 2008.
Why Bowdoin hasn’t responded to the RICO complaint, which was filed in January and amended April 27, is unclear. He filed at least four pro se motions in the government forfeiture case in February and March and authored a special statement to ASD members released through the pro-ASD Surf’s Up forum that said other filings he planned “should really get” the attention of prosecutors.
Prosecutors, however, said Bowdoin had signed a proffer letter in the case and had acknowledged to law enforcement that ASD had been operating illegally. Proffer letters sometimes mean that the one who proffers is trying to minimize exposure while providing information that may help in the prosecution of others.
Bowdoin’s pro se litany began at the same time the AdViewGlobal (AVG) autosurf introduced members to Pro Advocate Group, a company that says it can help people practice law without a license. Pro Advocate Group is associated with Karl Dahlstrom, who was sentenced to 78 months in federal prison in the 1990s for securities fraud.
Securities fraud is one of the allegations cited in the government’s August forfeiture complaint against assets tied to ASD and Golden Panda. Both Bowdoin and Busby have had previous run-ins with securities regulators. In separate cases in the 1990s, Bowdoin was almost jailed in Alabama, and Busby was ordered in Georgia not to break securities laws after the SEC alleged he had pushed three fraudulent prime-bank schemes.
AVG has family and promoters’ ties to ASD. Bowdoin’s stepson, George Harris, is listed as an AVG trustee. The government filed a second forfeiture complaint against assets tied to ASD in December, implicating Harris and his mother — Edna Faye Bowdoin, Andy Bowdoin’s wife — in the ASD scheme.
Also in March, Andy Bowdoin appeared in a video for an upstart surf firm known as PaperlessAccess, which he positioned as a company that could help ASD members earn back funds seized by the government in August.
Bowdoin’s PaperlessAccess video went missing after only a few days, and Surf’s Up reported he had been misled by the company. While all this was happening, AVGÂ announced the sudden resignation of Gary Talbert, its chief executive officer and a former ASD executive.
Talbert’s March 20 resignation was followed three days later by an AVG announcement that its bank account had been suspended. Earlier this week, AVG announced that it had struck a deal that would enable customers to wire money for advertising purchases to an offshore bank, but a company AVG identified as the beneficiary of the funds — KINGZ Capital Management Corp. — issued a denial that it had any business relationship with AVG.
Michael P. Krywenky, president and chief executive officer of KINGZ, said the company was “very shocked” and “appalled” by the claims, noting that attorneys for KINGZ were monitoring the situation.
Krywenky said KINGZ believed a scam of some sort was under way at AVG.
AVG yesterday ignored Krywenky’s denial, instead issuing a statement that advised members it was looking at other wire “options” and expected to announce “additional funding solutions within the next 2 weeks.”
Late last month, the plaintiffs in the RICO case alleged that ASD had hired the “majority” of the staff of Bank of America’s branch in Quincy, Fla., as ASD employees, paying the Bank of America employees more than other ASD employees doing the same work.
One of the plaintiffs’ arguments was that Bank of America knew its employees also were working for ASD and should have detected that the company was up to no good.
Bowdoin promised ASD members in March that he would have a conference call to update members. The call never occurred, and Bowdoin has not explained why he has not responded to the RICO complaint.
After announcing Monday that it had a deal for members to purchase “advertising” beginning Tuesday through international wire transfers, the AdViewGlobal (AVG) autosurf now says it had no such deal.
Rather, the surf said in a note signed “AVGA Management,” negotiations were “ultimately unsuccessful.” AVG did not explain how a deal described as completed — up to and including instructions and account numbers for customers to use — had suddenly become the casualty of unsuccessful negotiations.
The explanation may not sit well with members — and it may not sit well with KINGZ Capital Management Corp., which expressly denied yesterday that it had any business relationship with AVG and said it believed it was a victim of a fraud attempt.
AVG announced Monday that customers could wire money to The Bank of N. T. Butterfield and Son Ltd. Customers were provided instructions to list KINGZ as the beneficiary and given KINGZ’ account number.
The AVG claim came to the attention of KINGZ President and Chief Executive Officer Michael P. Krywenky, who said yesterday the claim was false and that KINGZ was conducting an investigation.
“KINGZ Capital Management Corporation nor any of its affiliates have any relationship with AdViewGlobal,†Krywenky said. “Also, I have already confirmed with our bank in Barbados that we are NOT accepting any funds from anyone at, or any clients of, AdViewGlobal.â€
AVG did not address Krywenky’s denial or even tell members about it.
Here is what AVG, which also is known as the AV Global Association or AVGA, told members (italics added):
“Wire Transfer Option: The wire transfer option in the member back office has been disabled. The negotiations were ultimately unsuccessful. We apologize for any inconvenience this may have caused our members. Please be aware that we have identified multiple options that will better serve our members and AVGA. These new options will be less cumbersome as well as more cost efficient. We expect to announce the additional funding solutions within the next 2 weeks.
“Thanks and have a wonderful weekend.
“AVGA Managementâ€
Krywenky said yesterday that KINGZ believed that a scam of some sort was under way at AVG.
KINGZ , he said, had discussed services with a firm known as Living Legacy One LLC.
Public records show that a corporation by that name was registered in Florida April 18, 2008, and filed an annual report on April 29, 2009. Living Legacy One LLC lists Gerald Castor as its managing member.
AVG, in a March announcement to members concerning the suspension of its bank account, identified Gerald Castor as an employee of its “Compliance†department.
U.S. regulators say autosurf companies sell securities but call themselves “advertising†companies to avoid scrutiny by agencies such as the SEC. In recent months, autosurfs have been highlighting purported “offshore†locations, and some promoters say the surfs can hide members’ income from the IRS and “shelter†them from the SEC, the FTC and state attorneys general.
Describing himself and KINGZ as astounded by AVG’s claims, Krywenky said yesterday that attorneys for the firm were monitoring the situation.
“It’s extremely bizarre,†he said.
AVG members are complaining about low rates of return after the company, which purports to be an offshore “advertising’ service, promoted a 200-percent, matching-bonus offer for weeks — even after its bank account had been suspended.
At the “low” rates of return, some AVG members now say they’ll neither earn back the money they spent on advertising by viewing ads nor emerge with a profit through rebates.
Members also have complained about unclear explanations from AVG.
“But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil.” — From 1 Timothy 6:9-10
He was hailed a Christian “genius,” and AdSurfDaily President Andy Bowdoin often invoked God during his sales pitches.
“We need to have an attitude of gratitude with God,” Bowdoin told an ASD gathering in Las Vegas last year. “And I always say, ‘Thank you, God, for developing me into a money magnet.’ And I see myself as a money magnet in attracting money and, I say, attracting large sums of money.”
Many of his admirers portrayed him as the forward-thinking inventor of a miraculous business system for “good Christian people.” To prosecutors who had seen it all before, however, he was neither a genius nor an inventor.
Bowdoin, they said, was nothing more than a felonious imitator who had modeled his business on at least one multimillion-dollar Ponzi scheme that had traded on dreams before regulators reduced it to ruins.
AdSurfDaily almost wasn’t called AdSurfDaily. “Initially,” prosecutors said, “Mr. Bowdoin had intended to operate” under a different name.
It is little known, but on Aug. 24, 2006, Andy Bowdoin registered that name with the state of Florida. It used two of the three words that comprised the title of the infamous 12DailyPro autosurf Ponzi scheme — and, as it turned out, one of two words that comprised the title of the infamous PhoenixSurf autosurf Ponzi scheme.
The highly imitative name Bowdoin selected for his venture was “DailyProSurf,” according to records in Florida.
In a widely publicized case, 12DailyPro had been accused just six months earlier by the Securities and Exchange Commission of operating a $50 million Ponzi scheme from Charlotte, N.C. The allegations against 12DailyPro were brought on Feb. 20, 2006.
Two days later — on Feb. 22, 2006 — PhoenixSurf launched from the Atlanta suburb of Marietta, Ga. The surf collected more than $41.9 million before flaming out three months later, in May 2006. In 2007, it became the subject of yet another SEC Ponzi scheme investigation.
During its brief run, PhoenixSurf averaged nearly $14 million a month in revenue. Like 12DailyPro, PhoenixSurf purported to be an “advertising” service and was charged with the sale of unregistered securities as investment contracts.
SEC Introduces World To The Autosurf Ponzi . . .
The SEC’s prosecution of 12DailyPro in 2006 made headlines. The context of the case was alarming, and the numbers were jaw-dropping. A woman operating out of an apartment in North Carolina had managed to disguise a securities business as an advertising service, collecting more than $50 million on the Internet in only eight months’ time while allegedly siphoning $1.9 million into her own bank account and paying old customers with money received from new members.
The SEC announced the 12DailyPro prosecution on Feb. 27, 2006, issuing a news release on the SEC website and providing a copy of the complaint. Perhaps like no Internet fraud case before it, the 12DailyPro case demonstrated it was possible for hucksters to deploy technology to collect staggering sums quickly and convert all or part of the proceeds to their own use.
12DailyPro and PhoenixSurf took in a combined amount of at least $91.9 million in only months of operation, prosecutors said. Bowdoin’s ASD, at its peak, collected tens of millions of dollars weekly. Federal agents conducted a raid in August 2008 and found at least $93.5 million. After a slow start, ASD had surpassed both 12DailyPro and PhoenixSurf as a cash machine.
What new ASD members by the thousands didn’t know, prosecutors said, was that they were paying for abuses Bowdoin had built into the system and for liabilities he had accrued when at least one previous iteration of the surf had gone bust.
To explain slow or absent ASD payouts during the many dark days before ASD took off, Bowdoin at one point told some members that $1 million had been stolen from ASD by “Russian” hackers, but he never filed a police report, prosecutors said.
Naturally the claim led to questions about whether hackers actually had stolen the money — or whether it had been stolen by somebody else.
Bowdoin deliberately set up his program so ASD insiders effectively could steal from the company and pass along the cost of the thefts to the latest crop of recruits, prosecutors said in December.
DailyProSurf Domain Appears Online During Height Of 12DailyPro Craze, Then Vanishes Mysteriously
It is unclear if Bowdoin ever registered a website in the name of DailyProSurf, operated a forerunner to ASD under that name or benefited from from an operation that used the DailyProSurf name.
What is clear is that someone registered .com and .net sites in the DailyProSurf name — and that DailyProSurf references continue to appear alongside references to 12DailyPro in search results even to this day. It also is clear that DailyProSurf graphics were ordered and delivered by a company that catered to surf sites — including autosurf script sales — and autosurf promoters pushed traffic to the sites in early 2006, during the height of the 12DailyPro craze and while PhoenixSurf was just getting off the ground.
The presence of DailySurfPro raises an intriguing question: Did ASD have a predecessor site?
The DailyProSurf domain name was operational — and affiliates were pushing the site — at least eights months before Bowdoin registered the DailyProSurf name with the Florida Department of State.
Bowdoin registered the DailyProSurf name in Florida in August 2006. But references to DailyProSurf.com from as early as January 2006 appear online. References later in 2006 include a report about members not getting paid and a theory the surf was a “scam” that had ceased operations and gone offline. One web service captured a screen shot of a “suspension” notice from the hosting company for DailyProSurf.com. Both the .com and .net domain names now appear to be available for repurchase.
It also is known that both DailyProSurf and ASD used the same format to create affiliate links — the domain name, followed by a slash and then followed by code in this format: ?ref=[affiliate ID number]
In early 2006, the affiliate ID numbers for DailyProSurf were low numbers such as 30 and 75, which means the program was just getting started, likely using the same script that powered other autosurf sites. (Type dailyprosurf.com/?ref= into Google to see some of the search results. You’ll also see 12DailyPro affiliate links using the same format in the search results.)
Within a month of Bowdoin’s October 2006 launch of AdSurfDaily –Â just two months after Bowdoin had registered the DailyProSurf name in Florida — members complained about not getting paid by ASD. ASD provided a number of excuses, according to members, telling participants that script problems were at fault.
By February 2007, ASD was coming apart at the seams. Bowdoin announced the formation of a new corporation that would be known as “AdSalesDaily” — as opposed to “AdSurfDaily” — and he offered “stock” in the company to buyers willing to pay the minimum price of $10,000, according to participants.
A similar pitch had almost landed Bowdoin in prison in Alabama in the 1990s; investigators attributed 89 separate instances of fraud to Bowdoin, including an assertion that he had used money from new investors to pay off older ones, the central element of a Ponzi scheme.
Feeling the heat from early ASD members in February and March 2007, Bowdoin sought to keep them at bay. Bowdoin ventured from Florida to Atlanta to speak with unnamed “leaders” and work on solutions, he told members.
The solution he ultimately arrived at, prosecutors said, was to relaunch the surf under the name of ASD Cash Generator, port old accounts to the new surf — and not tell new members that they were paying for liabilities racked up by the original ASD.
The Beginning Of The End
During the months of February and March 2007 — a full year before ASD began to rake in the kind of money 12DailyPro and PhoenixSurf had raked in — Bowdoin made a catastrophic mistake that ultimately would come back to haunt him and lead to ASD’s undoing: He started donating money to the National Republican Congressional Committee (NRCC), even as ASD members were complaining about not getting paid.
In 2008, a false story pushed by ASD members that Bowdoin had received a special award from the White House for a lifetime of business achievement began to circulate online, prosecutors said. What members pushing the story did not know — because Bowdoin did not tell them — was that the award was for NRCC campaign contributions, not business achievement, and that there was a paper trail to prove it.
It is a virtual certainty that Bowdoin’s NRCC contributions came from the proceeds of a Ponzi scheme.
Because of his political donations and business filings, Bowdoin’s name and address appeared in both federal and state databases accessible to any person with an Internet connection.
The paper trail led to the campaign donations — and it also led to what prosecutors called a fraudulent address: 13 S. Calhoun St., Quincy, Fla. It was the address Bowdoin had used for AdSurfDaily, AdSalesDaily and DailyProSurf in public filings. Crucially, however, it was not the actual address of the former flower shop owned by Bowdoin’s wife that went on to become Bowdoin’s headquarters for various businesses, including ASD.
Older filings in the Florida Department of State database listed the address of the building as 11 S. Calhoun, but newer filings in the Florida database and the Federal Election Commission database listed the address as 13 S. Calhoun.
ASD also used the 13 S. Calhoun address on its website.
“[T]he address listed on ASD’s webpage is not a valid mailing address,” prosecutors said. “The address 13 S. Calhoun Street, Quincy, Florida does not exist. A building located at 11 S. Calhoun Street is a now defunct flower shop that used to be run by Bowdoin’s wife. It appears that Bowdoin or one of his associates merely posted the number 13 on another door attached to the same building.
“ASD has been receiving mail there.” (Emphasis added).
Bowdoin, a man who registered a hybrid surf that borrowed from the names of two infamous Ponzi schemes that had raked in nearly $100 million practically overnight, found himself in a trap of his own making because of the allegations he had fabricated a mailing address.
ASD told members it was impossible to operate because the government seized its money and its computers, but prosecutors returned the computers at ASD’s request and did not object to a hearing the company requested to have some of its money unfrozen. ASD lost the hearing because it could not demonstrate it was operating legally. Its clear route out of the Ponzi thicket was to produce an audited balance sheet that demonstrated solvency. ASD did not do so.
Why did ASD not restart after its computers were returned if it truly was an “advertising” business? One of the reasons is that it knew its audience would flee unless it was getting paid to surf, prosecutors said.
But there could be another reason that is equally revealing.
Because Bowdoin allegedly had used a bogus address to set up ASD, had publicized the address on the ASD website and had received mail at the address, any further business activity from the former flower shop involving mail could be construed as additional evidence of mail fraud.
If prosecutors are correct that 13 S. Calhoun was a bogus address, count after count of mail fraud could have piled up had Bowdoin reopened ASD and continued to use the address. Changing the address could have been construed as an acknowledgment that mail fraud had occurred earlier.
Although ASD owned another building in Quincy outright after having paid $800,000 cash for it, prosecutors said the building had been acquired with the proceeds of a crime. Moving wasn’t a good option because it could not undo the damage that had been done by using the 13 S. Calhoun mailing address.
Federal Election Commission (FEC) records show that Bowdoin, using the name “AdSalesDaily” and the address of 13. S. Calhoun, made the first of his political donations on Feb. 27, 2007, even as ASD members were clamoring for their cash. His first donation was for $250. He matched it in March 2007, with another $250 donation. In 2008, using the name “AdSurfDaily” and the address of 13 S. Calhoun, Bowdoin donated $5,000 to the NRCC.
Missing Dreams Now, ‘See Those Checks’ Then
As was the case with 12DailyPro, many ASD dreams have gone missing.
Although the DailyProSurf domain name also went missing, the public filing Bowdoin made in Florida using the 13 S. Calhoun address did not. And neither did records pertaining to his campaign donations in the names of “AdSalesDaily” and “AdSurfDaily,” both of which also used the 13 S. Calhoun address.
Andy Bowdoin, indeed, demonstrated a remarkable capacity to attract money.
“Thank you, God, for destining me to great wealth,” he exhorted the Las Vegas crowd to internalize and recite during the day.
And he exhorted members to picture themselves wealthy.
“See a big check coming in from AdSurfDaily,” he urged. “I signed a check the other day, about $22,000. See those checks like that coming for you constantly, just flowing to you.”
UPDATED 2:59 P.M. EDT (U.S.A.) Claims by the AdViewGlobal (AVG) autosurf that KINGZ Capital Management Corp. is aiding AVG in offshore wire transfers are false, and KINGZ has launched an investigation, the company’s top executive said in an interview this morning.
“Nothing has ever been accepted from [AVG], nothing has been — and nothing will be,” said Michael P. Krywenky, president and chief executive officer of KINGZ. “We are very shocked, and we’re appalled [by the AVG claims].”
Krywenky said the company was “astounded” when it received a call from Europe about the AVG claims.
“KINGZ Capital Management Corporation nor any of its affiliates have any relationship with AdViewGlobal,” Krywenky said. “Also, I have already confirmed with our bank in Barbados that we are NOT accepting any funds from anyone at, or any clients of, AdViewGlobal.”
Krywenky said KINGZ believed that a scam of some sort was under way. He noted that KINGZ had discussed services with a firm known as Living Legacy One LLC, but said he did not have details about the company at his immediate disposal.
A corporation by that name was registered in Florida April 18, 2008, and filed an annual report on April 29, 2009. Living Legacy One LLC lists Gerald Castor as its managing member.
Gerald Castor has been identified in AVG announcements as an employee of AVG’s “Compliance” department.
No money would make its way to the autosurf firm from KINGZ, Krywenky said.
“It’s extremely bizarre,” he said. “I am absolutely astounded.”
On Monday, AVG announced in a forum set up by Mods and members of the embattled AdSurfDaily (ASD) autosurf that AVG had secured a deal for members to wire money offshore to pay for “advertising.”
KINGZ was mentioned in the AVG announcement as one of the companies that would be involved in the transfers. AVG provided a KINGZ account number in its announcement, along with instructions for members to facilitate wire transfers.
“We’re in discussion with our lawyers,” Krywenky said.
AVG’s announcement came on the same day that the Obama administration announced it was cracking down on offshore tax cheats.
AVG has close ties to ASD. The U.S. Secret Service seized tens of millions of dollars from ASD President Andy Bowdoin in August, amid allegations of wire fraud, money-laundering, engaging in the sale of unregistered securities and operating a Ponzi scheme from Florida.
AVG purports to be headquartered in Uruguay. Gary Talbert, AVG’s chief executive officer and a former ASD executive, resigned suddenly on March 20.
In a March 23 announcement signed by “The AVG Management Team,†AVG said its bank account had been “suspended.” It blamed customers, saying they had sent too many wire transactions in excess of $9,500.
On March 25, an AVG announcement signed by Gerald Castor said AVG’s banking problems were being rectified.
Problems with an Arizona-based, money-service business known as eWalletPlus followed. Servers for eWalletPlus now resolve to Panama. Like AVG, the company claims now to be headquartered in Uruguay.
Promoters made AVG’s purported offshore location a big selling point since its inception a few months after the seizure of ASD’s assets.
AVG, which had been promoting a 200-percent, matching bonus offer — an offer that caused one promoter to exclaim that $5,000 turned into $15,000 “instantly!†— said it was working to rectify its banking problem.
The solution AVG said it had found — wiring money to an offshore bank — was not going to work, said Krywenky of KINGZ.
“I think that we may be victims of a scam here,” he said.
On Feb. 27, ASD President Andy Bowdoin — acting as his own attorney — filed a motion to rescind a decision he made in January to submit to the forfeiture of tens of millions of dollars and real estate seized by the government in a wire fraud, money-laundering and Ponzi scheme investigation.
Federal prosecutors, on April 24, filed a memorandum asking U.S. District Judge Judge Rosemary Collyer to deny Bowdoin’s motion to rescind the forfeiture. Prosecutors argued that the law wasn’t on Bowdoin’s side, and advised the court that Bowdoin had acknowledged the government’s material allegations all were true and that Bowdoin had signed a proffer letter.
Bowdoin, according to prosecutors, had:
“confirmed to law enforcement officials that he modeled his enterprise on another’s failed fraud schemeâ€
“acknowledged that there was almost no revenue independent from what he secured from the ‘members’â€
“confirmed that the revenue figures of the enterprise were managed to make it appear to prospective members that the enterprise called Ad Surf Daily was a consistently profitable, and brilliant, passive income opportunityâ€
Charles A. Murray, whom Bowdoin retained as paid counsel in April after Bowdoin earlier had filed one pro se motion after another, now has asked Collyer to let Bowdoin withdraw his self-filed motion to rescind his decision to submit to the forfeiture “without prejudice.”
Murray advised the court that, as Bowdoin and ASD’s new paid corporate counsel, he intended to “resubmit this Motion to Rescind on or before May 15, 2009″Â — only with a lawyer’s touch, not the amateur legal prose of a pro se litigant.
“Good cause exists for permitting Mr. Bowdoin et al, Claimants’ to withdraw the pro se
pleading and refile it upon consultation with counsel,” Murray argued.
“Unrepresented at the time Mr. Bowdoin, et al, Claimants’ filed the original motion, Mr.
Bowdoin et al, Claimants’ were not aware of the legal standards applicable to the motion and, so, did not present all facts germane to decision.”
In a March 13 letter to ASD members published at the Pro-ASD Surf’s Up forum, Bowdoin chided prosecutors by saying his pro se filings “should really get their attention.
“Watch for the filings,” Bowdoin instructed. “I will be speaking out on a conference call as soon as the filings are completed. We will notify you of the call. I look forward to talking to you then.”
Bowdoin, however, never filed another pro se motion (the last one was filed March 9, four days before Bowdoin had turned to Surf’s Up to reinvigorate support and taunt prosecutors).
And Bowdoin never conducted the promised conference call.
Even before news of Bowdoin’s pro se filings broke on March 4, Surf’s Up had been hinting something special might be coming. Bowdoin’s pro se move coincided with an announcement by the AdViewGlobal (AVG) autosurf, which has close ties to ASD, that it was moving underground and forming a private association.
AVG introduced members to a company known as Pro Advocate Group, which says it can help people practice law without a license. Bowdoin’s three initial pro se filings were signed and dated by him Feb. 25, one day before AVG introduced Pro Advocate Group. Bowdoin’s filings did not become a matter of public record until March 4.
Best-laid plans?
It is possible that an order from Collyer that Bowdoin didn’t anticipate short-circuited his pro se litigation plan. On March 26, the judge ordered Bowdoin’s previous paid counsel to inform Bowdoin that corporate entities that had filed claims in the ASD case — AdSurfDaily Inc. and Bowdoin/Harris Enterprise Inc. — could not proceed pro se. Collyer also ordered the lawyers to request permission to withdraw from the case if that was their intent.
Akerman Senterfitt, Bowdoin’s previous paid counsel, complied with the judge’s order and was granted leave to withdraw from the case.
Probe Still Under Way
The ASD case continues to be an active investigation. It is possible that investigators viewed Bowdoin’s March 13 Surf’s Up letter and that prosecutors made a veiled reference to it in their April 24 memorandum to Collyer asking her not to permit Bowdoin to change his mind about submitting to the forfeiture.
“Mr. Bowdoin says that after discussing this case with his supporters, and concluding that
they were smarter than his attorneys, he has changed his mind,” prosecutors said.
Are they referring to these words in Bowdoin’s Surf’s Up letter?
“About a month ago, several members introduced me to a group that studied what my attorneys did,” Bowdoin said in the letter. “The group said that my attorneys had taken the wrong approach. The group was very confident that they could help because the government had broken so many laws and had violated our rights as citizens of the United States.”
Nowhere in any of Bowdoin’s four self-filed pleadings does he discuss his rationale for becoming a pro se litigant after conferring with supporters. His only public statements on the matter have been made on Surf’s Up.
A New Clash?
Murray’s filing on Bowdoin’s behalf potentially sets up a new clash with prosecutors, who now have yet another document to address. At the same time, pro se motions filed by other litigants in the case have appeared on the record in recent days, and may require additional responses from prosecutors.
If Murray persuades Collyer to grant Murray’s motion to withdraw Bowdoin’s rescission motion and Murray files a new motion to rescind, it would mean that:
Bowdoin had submitted to the forfeiture on the advice of previous paid counsel.
Changed his mind more than a month later as a pro se litigant and tried to undo his forfeiture decision with a self-filed rescission motion.
Changed his mind again about his rescission motion under the advice of new paid counsel.
Withdrew his motion to rescind his forfeiture decision, only to have it reinstated on his behalf by a professional attorney.
On Jan. 13, Bowdoin asked the court to permit him to submit to the forfeiture. Collyer granted Bowdoin’s request Jan. 22, a hurdle that began to open a door for prosecutors to begin the slow process of liquidating ASD assets to provide refunds to customers.
Now, approaching four months later — and with pro se pleadings dominating the docket — prosecutors have not been able even to begin the liquidation process or implement a refund program.
UPDATED 12:43 P.M. EDT (May 7, U.S.A.) As often is the case in the tin-eared autosurf world, the timing was impeccable: On the day the Obama administration announced a crackdown on U.S. corporations and citizens who use offshore tax havens to hide income, autosurf company AdViewGlobal (AVG) announced it had a deal with an offshore bank to accept member deposits for the purchase of “advertising.”
U.S. regulators say autosurf companies sell securities but call themselves “advertising” companies to avoid scrutiny by agencies such as the SEC. In recent months, autosurfs have been highlighting purported “offshore” locations, and some promoters say the surfs can hide members’ income from the IRS and “shelter” them from the SEC, the FTC and state attorneys general.
“I’m asking Congress to pass some commonsense measures,” Obama said at 11:37 a.m. (EDT) yesterday. “One of these measures would let the IRS know how much income Americans are generating in overseas accounts by requiring overseas banks to provide 1099s for their American clients, just like Americans have to do for their bank accounts here in this country. If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens, and act accordingly.”
At 5:54 p.m. yesterday, a member of an AVG forum operated by some of the Mods and members of the Pro-AdSurfDaily Surf’s Up forum announced that AVG members now could wire money from the United States to The Bank of N. T. Butterfield and Son Ltd.
Butterfield has locations in Bermuda, the Bahamas, Barbados and the Cayman Islands, among other places.
Obama specifically referenced the Cayman Islands in his remarks announcing the crackdown.
“On the campaign, I used to talk about the outrage of a building in the Cayman Islands that had over 12,000 businesses — businesses claim this building as their headquarters,” Obama said. “And I’ve said before, either this is the largest building in the world or the largest tax scam in the world.”
Under a headline titled “BREAKING NEWS Fund your Advertising,” AVG members were told this (italics added):
“AV GLOBAL ASSOCIATION is pleased to announce
“Beginning Tuesday May 5, you will be able to purchase more advertising.
“There will be a form that you can access to arrange for your purchase.
“Specific information will be required in order to process your payment.
“You will need to provide your Name; A Number; email address used for your AVGA Account; phone number; and address.
“Wire transfers: These instruments usually clear within two business days. Although there are fees charged by your bank and our bank also assesses fees (usually our bank will charge $15) your account is credited immediately upon receipt and your advertising program begins immediately. Your purchase will be adjusted by the fees.
Review:
All funds must be accompanied by the correct identifying information:
* Name
* AVGA id number
* email address
*mailing address
*and phone number
Without this information your money will be returned to you through the originating bank.
Remember: The form will appear on the Website by Tuesday before midnight. If there is a change, you will be notified.
Please print the form and complete it so that your bank [h]as all of the pertinent information.
Transfer information:
The Bank of N. T. Butterfield and Son, LTD.
Via
J. P. Morgan Chase Bank
Bldg. F. Floor 8
4 Chase Metrotech Center
New York, NY,
USA, 11245
Swift # [Deleted by this Blog]
Account # [Deleted by this Blog]
Beneficiary: KINGZ Capital Management Corporation
Account # [Deleted by this Blog]
Reference: YOUR NAME & YOUR I.D.# & YOUR EMAIL ADDRESS
UPDATE:Â KINGZ Capital Management Corp. has issued a strong denial of AVG’s claims.Michael P. Krywenky, president and chief executive officer of KINGZ, said on May 7 that the firm had no business tie to AVG and had launched an investigation into the claims.
“KINGZ Capital Management Corporation nor any of its affiliates have any relationship with AdViewGlobal,†Krywenky said. “Also, I have already confirmed with our bank in Barbados that we are NOT accepting any funds from anyone at, or any clients of, AdViewGlobal.â€
AVG has close ties to AdSurfDaily (ASD), whose assets were seized in August after a joint investigation by the U.S. Secret Service and the IRS was opened in July. Federal prosecutors said ASD was engaging in wire fraud and money-laundering while selling unregistered securities and operating a Ponzi scheme from Florida.
Prosecutors alleged that ASD President Andy Bowdoin, who was arrested on felony securities charges in Alabama in the 1990s and pleaded guilty, claimed falsely that he had received a special award last year for business acumen from President Bush.
Now AVG appears to be courting trouble from the new occupant of the White House — after the Secret Service specifically refuted Bowdoin’s Bush claims.
George Harris, an AVG trustee, is the stepson of ASD’s Bowdoin. A Tallahassee home and a car owned by Harris and his wife were seized in December, after prosecutors filed a second forfeiture complaint against assets tied to ASD. The complaint alleged massive internal fraud at ASD, citing a litany of personal purchases made with corporate funds and a claim that $1 million had been stolen from the firm by “Russian” hackers.
No police report was filed.
AVG purports to be headquartered in Uruguay. Its servers resolve to Panama. Gary Talbert, AVG’s chief executive officer and a former ASD executive, resigned suddenly on March 20
On March 23, AVG announced that its bank account had been suspended, blaming the suspension on members who sent too many wire transactions in excess of $9,500. No AVG executive or employee signed the suspension announcement. It was signed “The AVG Management Team.â€
Problems with an Arizona-based, money-service business known as eWalletPlus followed. Servers for eWalletPlus now resolve to Panama, and the company claims now to be headquartered in Uruguay.
AVG, which had been promoting a 200-percent, matching bonus offer — an offer that caused one promoter to exclaim that $5,000 turned into $15,000 “instantly!” — said it was working to rectify its banking problem.
Its solution was announced yesterday: Wiring money to an offshore bank.
Promoters made AVG’s purported offshore location a big selling point since its inception a few months after the seizure of ASD’s assets.
UPDATED 2:26 P.M. EDT (U.S.A.) A purported transcript of remarks in March 2007 by AdSurfDaily President Andy Bowdoin paints a picture of a startup company with serious problems Bowdoin tried to solve by offering “stock” in the firm.
The “minimum purchase” of the stock was set at “$10,000,” and the the money would be used to help the company get back on its feet, according to the transcript, which was dated March 12, 2007, and posted in the asamonitor forum.
ASD had been operating only a few months at the time of Bowdoin’s remarks and already was in over its head, according to the purported transcript and other records.
AdSurfDaily also would undergo a name change to “AdSalesDaily,” according to the transcript.
Just two weeks earlier — on Feb. 27, 2007 — the Federal Election Commission recorded a $250 donation from “Mr. T. Bowdoin” in the name of “AdSalesDaily Inc.” The FEC recorded another $250 donation from “Mr. T. Bowdoin” in the name of “AdSalesDaily Inc.” on March 27, 2007, two weeks after the purported stock offering.
Screen shot of Federal Election Commission record showing 'Mr. T. Bowdoin' was the 'owner' of 'Adsalesdaily, Inc' and made a political donation under that name in 2007.
Both donations were targeted to the National Republican Congressional Committee (NRCC) and used an address — 13 S. Calhoun Street, Quincy, FL 32351 — federal prosecutors later said was bogus.
Although the donations listed Bowdoin as the “owner” of AdSalesDaily Inc., the corporation appears not to have been registered in Florida. Records in Georgia list “Ad Sales Daily, Inc.” as a corporation that initially was registered in Georgia May 8, 2007, more than two months after Bowdoin identified himself as the owner in federal campaign records.
The Georgia entity does not list Bowdoin as an owner, officer or filer for the corporation — or as a person involved in any capacity. Rather, “Ad Sales Daily, Inc.” is listed as a Delaware foreign corporation, with J. Heardy Myers listed as the corporate filer and Myers (of Marietta, Ga.) and Otis Whitcomb (also of Marietta) listed as officers.
AdSalesDaily Inc. was incorporated in Delaware on March 22, 2007, according to filings.
In posts from March 2, 2007 at a forum known as stacontact.myfastforum.org, Myers is referred to as “Executive Vice President” and “Chief Information Technology Officer” of Ad Sales Daily Inc., with Bowdoin listed as “president.” A “write-up” that resembled a news release on Bowdoin and Myers was published in the forum.
Within the same thread later in the month, however, a poster said Myers had resigned as executive vice president to “focus on getting the other website completed. He will continue to be a member of the President’s Circle.”
A person who identified himself as a member of an ASD downline group known as “oneteam” started the forum thread. “oneteam” used free hosting at homestead.com to promote ASD. At one time, “oneteam” displayed an ad that said ASD deposits were insured by the FDIC and that ASD provided “shelter” from the SEC and the FTC.
On March 22, 2007, a forum poster quoted Bowdoin as saying, “We should have all the stock money coming in this week.”
On July 17, 2008, a Blog known as “Otitis’s Weblog” (sic) included a denial that Ad Sales Daily Inc. had been affiliated with Bowdoin, saying “Any Bowdin (sic) has made false public statements in late 2006 to beginning 2007, that he had a company named Ad Sales Daily. Andy Bowdin (sic) has never done business as Ad Sales Daily, or incorporated this name or filed for a business license in Florida where he resides.”
The denial on “Otitis’s Weblog” appears to be the only post on the Blog.
Why Bowdoin would claim to own a company he did not own — and make two campaign donations recorded by the FEC in the name of AdSalesDaily Inc. — is unclear. The federal filings recorded in February and March 2007 specifically list Bowdoin as the “owner” of AdSalesDaily Inc. (See the screen shot above of the February 2007 FEC record.)
Bowdoin, according to the transcript at asamonitor, had been in Atlanta in March 2007 to get “input” from “leaders” on the company’s problems. It is unclear if Bowdoin actually sold any stock in ASD. There does not appear to have been any public filings concerning an offering, although an offering could have been conducted privately.
“Hi Folks,” the transcript began. “My name is Andy Bowdoin, President of AdSurfDaily. We are not having an opportunity call tonight, but it will be an update call instead.
“I am in Atlanta Georgia tonight and I have been up here this afternoon meeting with some of our leaders getting some input on some of the issues we have,” Bowdoin continued, according to the transcript.
The transcript did not identify the leaders.
“We have known that we should have shut down the site for a long time, because of the issues we continually have with the site, but we have been putting band aids on it to keep it going until the new site was ready,” Bowdoin said, according to the transcript. “We have been using a lot of our programmers time to repair it and keep it going. That is expensive and wasting money and prolonging the development of our new site. But now the existing AdSurfDaily site is beyond repair.”
Script problems “drained” money from ASD, according to the transcript.
“[T]he mathematical formula that governs the payouts are wrong,” Bowdoin was quoted as saying in the transcript. “The site has been paying out 63%, 67% and 72% instead of the normal 60%. This has drained the money we had for pay outs. Therefore all pay outs are on hold at this time.”
Bowdoin did not say if people who benefited from extra payout amounts were asked to return the money, according to the transcript. Instead, ASD stopped payouts altogether.
“We have frozen all accounts,” Bowdoin said, according to the transcript. “We have disabled the ability to make upgrades and purchase new ads. You can still view ads and earn credits to show your site. You can still look at you history and referral page. You can print out your information in your History page and Referral page. We will use this information to make everyone whole when we launch the new site. Our goal is to launch the new site during the month of May and make everyone profitable.”
Bowdoin next pitched a stock offering, according to the transcript (emphasis added).
“We will be selling stock in the new corporation AdSalesDaily to finish paying for the development of the new site and make the current payouts. The minimum purchase for the stock is $10,000. We are looking for people who share our vision, and are willing to invest toward the continued development and completion of the new AdSalesDaily website. If you are interested in purchasing some of the stock or if you know someone that might be interested in listening to the stock presentation, call the home office at 850-627-2206.”
The transcript and political donations in the name of AdSalesDaily may mean that ASD operated under three different names — not just two — between October 2006 and August 2008, the month certain assets tied to the firm were seized by the U.S. Secret Service. The assets were seized when ASD was operating as ASD Cash Generator.
A second forfeiture complaint filed in December 2008 against assets tied to ASD cites at least one unidentified “silent partner.” The December complaint references a purported theft of $1 million from ASD at the hands of “Russian” hackers, alleging that no police report ever was filed despite the loss of a magnificent sum.
The complaint describes the transition from the name AdSurfDaily to ASD Cash Generator. It does not reference “AdSalesDaily,” but federal records show that Bowdoin gave two campaign donations in that name.
“Mr. Bowdoin told some individuals that he had to stop operating the program over the Internet as AdSurfDaily after one or more Russians hacked into his program and caused the ASD operation to issue approximately $1 million to one or more Russians,†prosecutors said.
Bowdoin explained the money was taken “before [he] discovered that the Russians had not paid any money to ASD to secure for themselves a portion of its revenue stream (as so-called ‘rebates’),†prosecutors said.
The December complaint also alleges that Bowdoin blamed the company’s problems on “cash reserves that had been drained because surfing commissions were overpaid” — a possible reference to Bowdoin’s remarks in the March 2007 transcript about script problems.
But Bowdoin and ASD insiders, according to the December complaint, arranged for ASD money to be stolen.
“Mr. Bowdoin and associates issued ad packages to friends and family (who paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said. “Mr. Bowdoin also gave free ad packages to a son and former daughter-in-law, by which they pulled funds out of ASD without paying any money to ASD. In his son’s case, he arranged for another employee to ‘surf’ the program in order to qualify for a share of the daily rebates.”
Select individuals “were able to pull out considerable funds from the so-called rebate program even though in many cases they put little, if any, of their own money into the scheme,†prosecutors said.
“For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,†prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.â€
FEC records show that Bowdoin — under the name of “Mr. T. Andy Bowdoin, Jr” and “AdSurfDaily Inc. and AdSurfsDaily Inc. (the second “s” is an apparent typo) ” — gave $5,000 to the National Republican Congressional Committee in 2008. Two donations of $2,500 were recorded — one on June 6, 2008, and another on July 7, 2008.
Bowdoin’s NRCC donations resulted in the issuance of a “Medal of Distinction,” which Bowdoin and ASD promoters positioned as an important award for business accomplishments from the White House. The “medal,” however, is issued for campaign donations and signfies only one’s ability to write a check for what amounts to the purchase of banquet tickets.
Even as the FEC was recording the donation on July 7, undercover agents from an IRS/Secret Service task force based in Florida were beginning to scrutinize ASD.
Prosecutors said last month that Bowdoin had signed a proffer letter and acknowledged to law enforcement that the material allegations in the government’s August complaint all were true. The government did not reveal the entire contents of the proffer letter or the date it was signed.
Given the allegations in the December forfeiture complaint and direct quotations attributed to Bowdoin, it is possible that the December complaint itself is based at least in part on Bowdoin’s proffer.
It is the story that won’t go away, driven as much by the personalities and people who support AdSurfDaily as it is by the legal issues that put the company in the national spotlight.
On Aug. 1, 2008, an ambiguous note appeared on ASD’s website. The note suggested a government investigation was under way. In the weeks and months that followed, the story grew increasingly bizarre. ASD President Andy Bowdoin likened the seizure of funds tied to his company to the 9/11 terrorist attacks, saying the government’s actions were the work of “Satan.”
Curtis Richmond, an ASD member, pro se litigant and member of a sham Utah “Indian” tribe that once held an organizational meeting in an Arby’s restaurant and listed a meeting room attached to a doughnut shop as the address of its purported “Supreme Court,” eventually entered the fray.
There were signs at the very beginning that the ASD case would not be ordinary. Here are some snippets from our earliest reports:
ASD Cash Generator Under Scrutiny By U.S. Attorney
Aug. 2, 2008
So far the ASDCashGenerator website hasn’t gone dark, but the lights definitely are flickering . . .
At the moment the page loads with this message:
“Friday, August 1st 2008 afternoon update:
“Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.
“ASD Management.”
. . . As always is the case, sustainability is the issue. Can a company that promises a return for viewing advertisements generate enough revenue to sustain payouts? Will it have to dip into revenues from new members to pay older members, thus setting up the classic Ponzi situation?
Assertions appear online that Andy Bowdoin was accorded a presidential honor known as “The Medal Of Distinction” and has been feted by President Bush and Vice President Cheney.
Bowdoin And ASD Cash Generator Investigation Still Not Clarified; Information Sketchy Across Web As ASD Members Show Signs Of Viral Nervousness
Aug 3, 2008
ASD Cash Generator (ASD) still had an ambiguous note on its website as of late morning (EDT) in the United States, Sunday, Aug. 3, 2008. Andy Bowdoin’s ASD support page and page outlining ASD as a legal business still were redirecting to a message suggesting that the U.S. Attorney in Washington, D.C., now was involved in ASD’s business affairs.
Today marks the third day a message that suggests an ASD investigation is under way has appeared at the Andy Bowdoin site.
Elsewhere across the web discussion about ASD Cash Generator was taking place in forum after forum, and on Blog after Blog. ASD members continue to cling to hope that the U.S. Attorney is going to give ASD Cash Generator a clean bill of health, something members appear to view as a potential new endorsement.
In essence, some ASD members are arguing that a government investigation of ASD is a good thing. Should ASD pass muster with agents from the U.S. Attorney’s office in the District of Columbia, so the thinking goes, it can only mean good things for the company.
It’s unsettling to read these sorts of posts. One person even posted a link to an audio, claiming it was proof that all is well at ASD and that the alleged U.S. Attorney investigation is just a bump in the road. The poster talked about how negativity about any company could be found online — true enough.
The ASD audio is not proof of anything. It’s a third-party report that consists of vagaries. A speaker in the audio even made the claim that “one of the negatives of the Internet is just freedom of speech, and people can go on there and say what they want.”
Freedom of speech a negative? Hardly. The speaker at once was condemning freedom of speech and then taking advantage of his right to speak freely. It’s just another in a long line of tortured defenses of ASD Cash Generator. Some ASD members appear to want to sue anybody who dares offer an opinion contrary to their own, yet another reason why it’s a good thing that ASD is under scrutiny.
Responsible commentary on ASD is exactly what the public needs to make informed decisions. There are reports online that ASD is taking in millions of dollars and that people are writing cashier’s checks for thousands and thousands of dollars and directing money toward the program. The public has a vested interest in the outcome.
Investigation Mystery At ASD Cash Generator Remains
Aug 4, 2008
Today marks the fourth day a message that suggests federal investigators are looking into the business practices of ASD Cash Generator is posted on the ASD website.
Meanwhile, ASD members continue to wait for information to flow into the ASD information vacuum. The message on the ASD site is ambiguous, meaning it can be interpreted in multiple ways . . .
Web commentary on ASD Cash Generator continues to be active. Some of the commentary is rational and cautionary in nature. Some of it, however, is irrational. Politics and religion have entered the discussion in some places. This creates the impression that some ASD members are blind followers. It’s a nasty business problem to have because it undermines credibility.
One ASD member thought it prudent to post an ASD Affiliate link in a third-party news story about ASD. The member also posted a link to another autosurfing opportunity in the same news story. It’s being sold as ambassadorship of the opportunities, as though all news accounts and opinion pieces on ASD that are contrary to ASD sales materials are inherently fatally flawed.
Yesterday I noted that some ASD members were condemning free speech and freedom of the press, while reserving for themselves the same rights they’d deny others. If a writer suggests that people should be very cautious when considering ASD Cash Generator, some ASD members are quick to jump in with threats of ASD lawsuits and threats of litigation.
One ASD member told me yesterday that I should be writing about Social Security. The thinking was that Social Security is a Ponzi scheme and that anybody who writes about ASD is giving the government a pass at the expense of continued negative publicity for ASD . . .
It’s impossible to imagine that some people actually believe the best way to make their “value case” for ASD is to pick fights with people who buy ink by the barrel. There are threats of multimillion dollar lawsuits and rumors of multimillion dollar lawsuits. Meanwhile, the ASD Cash Generator website continues to beam the ambiguous message suggesting a federal investigation is under way.
Hey, companies are entitled to have cheerleaders. When the cheerleading takes on a cult-like appearance, however, the public should ask some very tough questions.
Right now some ASD devotees are making the Andy Bowdoin company look very bad indeed.
Autosurfing Programs: Why The Feds And Investigators Have An Interest, And Why The Public Does, Too
Aug. 4, 2008
People seem very willing to throw money at autosurfs. The appeal is a high return on investment with minimal responsibility and virtually no work. Buy advertising credits, view ads by others, and get paid.
Life is not that simple. Business is not that simple. It’s easy for well-intentioned people to believe that it is — at least at first. The lure of easy money is as old as commerce itself.
Spend a few minutes peeling back layers of the autosurf onion if you’re contemplating joining one. Federal investigators, regulatory agencies and state attorneys general have an interest in monitoring the autosurf business. So does the public at large.
People have “invested” millions of dollars in autosurf companies. Some of them have taken on a cult-like following. People are fascinated by the idea of “earning” money by viewing ads. Some people “invest” their life savings in autosurfs . . .
At what price to individuals, families and society as a whole?
The mere fact the technology to create an autosurf advertising program is readily available should be of great concern to law-enforcement agencies and regulatory authorities such as the SEC and FTC.
Some people view autosurfs as a license to print money. News about a new autosurf program can help the program go viral. It’s easy to imagine teams of MLMers, for example, spreading the word about new autosurf programs to downline members. And it’s easy to imagine those downline members spreading the autosurf news to even more people.
It is possible for millions of dollars to pour into an autosurf site. The SEC cautions against autosurfs. Accounts aren’t insured or protected. Beyond that, however, there are very good reasons for the government to investigate and monitor autosurfing. What if the autosurf “opportunity” is offshore and exists as a means of escaping taxation? Want to be part of that?
And there is a “worst-case scenario,” too. Criminals and terrorists do exist in this world. They pay close attention to the U.S. culture and have access to technology that can be used in ruinous ways.
Think it hasn’t occurred to people who are criminally or terroristically inclined that they could use autosurfs to fund enterprises that would bring harm to a great number of people? . . .
But this theory doesn’t address the core problem with autosurfing: the classic Ponzi set-up. New money is being used to pay old members, a shell game. People are very susceptible to the argument that autosurfing is nothing more than a new advertising model and is in no way connected to the sale of securities.
Prodigious, unfettered income streams are needed to make an autosurf “work” mathematically, if a percentage of revenue is returned to members in the form of a “rebate.” Some autosurfs advertise returns that are unsustainable on the face of the promise. Secondary revenue streams can’t be mythological or exist only in theory.
Phrases such as “We’re working to create revenue streams,” for example, is one of the possible signposts for failure.
Plenty of laws of math — as well of laws of the land — apply to insurance companies and investment companies. They have to demonstrate through public filings that they are able to absorb losses and continue as ongoing concerns.
Many autosurf opportunities are do different than an insurance company that would advertise hurricane protection and not have the means actually to protect customers in the event a hurricane actually flattened their homes.
There are good reasons for the government to scrutinize autosurfs and monitor them with the same sort of zealousness directed at insurance and securities firms. The public interest is huge.
ASD Cash, Golden Panda Investigations Enter 5th Day
Aug. 5, 2008
. . . All is not well in the autosurf business. Some members of ASD even are trying to quash forum and Blog discussions by threatening lawsuits. They’re making themselves look silly, like members of a cult. It’s understandable that some people are trying to find a silver lining in all of this, but many of the ruminations are just clutching at straws.
No U.S. Attorney or member of an investigative agency is going to appear at a lectern and give any autosurf program that pays a rebate or dividend a clean bill of health. To do so would be to endorse a business model that has the capacity to do great harm.
Even if a program owner’s motives are entirely pure, it is inconceivable that the government is going to endorse the paid-to-surf model — tacitly or explicitly. Advertising is a cost center, not a profit center. The argument that autosurfs are the equivalent of Google Adwords or newspaper classified ads is a loser. One of the problems with autosurfs is that the “opportunity” is more valuable than the advertising itself.
Here you have a captive audience, one that wasn’t lured by the chance to see exciting new products scroll across the page, but by the opportunity to become part of the members’ pool and earn payouts over and above the actual cost of advertising.
Golden Panda Ad Builder yesterday was urging members to send in reports that they actually bought some products as a result of viewing the ads. This, presumably, will become fodder to show to investigators to demonstrate once and for all that the products themselves are the attraction and not the rebate opportunity.
It is an argument that seems destined to fall on deaf ears — in other words, clutching at straws.
Florida TV Station Reports Agents Executing Search Warrant At ASD Cash Generator In Quincy; Details Unclear
Aug. 5, 2008
WCTV is reporting that agents are executing a search warrant at ASD Cash Generator headquarters in Quincy, Florida.
Details are sketchy. WCTV serves Tallahassee, Thomasville and Valdosta., and is a CBS affiliate.
UPDATED 5:28 P.M. EDT (U.S.A.) Attorneys for three plaintiffs who accused ASD President Andy Bowdoin, ASD attorney Robert Garner and Golden Panda Ad Builder President Clarence Busby of racketeering have asked a federal judge for more time to prepare.
The plaintiffs were joined in the motion by Bank of America, a non-RICO defendant in the case.
If the motion is granted, it would extend the time for responses between the plaintiffs and Bank of America until July 30 — two days short of the one-year anniversary federal prosecutors informed ASD that assets tied to ASD and Golden Panda were being seized.
The forfeiture case was brought by the government in August. The RICO case was brought in civil court Jan. 15 as a separate case by three members of ASD. Bowdoin, Garner and Busby are accused of racketeering in the RICO case. Bank of America is accused of aiding and abetting a fraudulent scheme.
Citing court records in their joint motion, the plaintiffs and Bank of America said the bank moved to dismiss the plaintiffs’ initial complaint on March 20. But the plaintiffs filed an amended complaint April 27, “thereby mooting Bank of America’s motion to dismiss the initial complaint.”
Under a new proposed timeline, Bank of America would have until June 10 to move to dismiss or otherwise respond to the plaintiffs’ amended complaint. The plaintiffs, meanwhile, would have until July 10 to file an opposition to a motion to dismiss, and Bank of America would have until July 30 to file a reply in support of a motion to dismiss.
ASD President Andy Bowdoin is the only named defendant not to have responded to the lawsuit.
UPDATE 3:04 P.M. Attorneys for Golden Panda Ad Builder President Clarence Busby have filed a supplement to their motion to dismiss the case against Busby. The supplement advised the court that the motion to dismiss applies to both the Jan. 15 initial complaint and the April 27 amended complaint filed by the plaintiffs.
“The amended complaint contains no substantive change in the substance of claims against Rev. Busby as would warrant either the withdrawal of Rev. Busby’s motion to dismiss or amendment thereto,” Busby’s lawyers said.
“Counsel to Rev. Busby received the amended complaint on April 29, 2009, one day after submitting Rev. Busby’s motion to dismiss the original complaint,” the lawyers said. “The amended complaint contains substantively the same content as the original complaint as that content pertains to Rev. Busby; the amended complaint’s substantive modifications pertain to Defendant Bank of America, N.A.
“In their amended complaint, Plaintiffs have pled facts with greater specificity concerning Defendant Bank of America’s relationship and involvement with Defendant AdSurfDaily,” the lawyers said. “The factual allegations against Rev. Busby, however, are unaltered from Plaintiffs’ original complaint.
“Under the original and amended complaints, the Plaintiffs’ claims against Rev. Busby are barred by the doctrine of res judicata; the plaintiffs lack standing to sue Rev. Busby; the plaintiffs have failed to plead facts sufficient to state a prima facie case that Rev. Busby owed a fiduciary duty; and the plaintiffs have failed to plead facts sufficient to state a prima facie case that Rev. Busby has violated the civil RICO statute. ”
“Accordingly,” Busby’s lawyers said, “under both complaints, the plaintiffs have failed to state a claim upon which relief can be granted and the amended, as the original, complaint should be dismissed.”
UPDATE 5:28 P.M. Judge Rosemary Collyer has granted the joint motion by the plaintiffs and Bank of America for more time.
MINUTE ORDER granting . . . Bank of America’s unopposed Motion for Extension of Time. Bank of America shall answer or otherwise respond to the Amended Complaint . . . no later than June 10, 2009. If Bank of America files a motion to dismiss or for summary judgment, Plaintiffs shall respond no later than July 10, 2009; and Bank of America shall reply no later than July 30, 2009. Signed by Judge Rosemary M. Collyer on 5/1/09.
Editor’s Note: This thread is designed to promote discussion on the practical value of the “rebates aren’t guaranteed” argument as applied by AdSurfDaily and other autosurfs. Does the argument hold any water? And could it be applied — and have a prayer of succeeding — in other situations in which federal agencies brought allegations of fraud? Lower in this post you’ll read about a case in which the SEC said an HYIP purveyor “absconded” with investors’ funds. It’s not an autosurf case, but some surf owners do abscond with funds. Could a “rebates aren’t guaranteed” or “returns aren’t guaranteed” defense insulate autosurf and HYIP purveyors from prosecution?
Lots of AdSurfDaily members have defended Andy Bowdoin and the company’s business practices by saying “rebates aren’t guaranteed.” Prosecutors see the argument as wordplay to disguise the Ponzi nature of surfs and to insulate surf companies from prosecution for fraud, among other crimes.
“Rebates aren’t guaranteed” is the highly presumptive ace-in-the-hole surf companies use to wipe away liabilities with a single keystroke. Money is collected with a promise or suggestion of a return. The surfs typically become insolvent virtually instantly because incoming money from members typically is their only significant revenue stream. There is no real way to offset liabilities created by the promise or suggestion of a return, so they use wordplay — “rebates aren’t guaranteed” — to ignore the liabilities side of the ledger.
None of the autosurfs the government has taken action against has been able to demonstrate solvency, including ASD — and yet ASD, in classic Ponzi style, was making payouts up to the very end. It did so by taking money from new members to pay off older ones. That’s dangerous enough, but there is an even greater danger.
The greatest danger of “rebates aren’t guaranteed” as practiced by ASD and others is that it creates a license to steal from top to bottom within an autosurf enterprise. If surf operators got their way, a prosecution would be an impossibility. No victims would exist because of wordplay — and no one ever could hope even for a partial refund because of contractual disclaimers.
Bowdoin — or any surf operator, insider or promoter who used the same language to present an offer — could simply drift off into the sunset with the cash, leaving victims with no remedy. People could set up surfs with the express purpose of collecting cash and disappearing with the money by citing “rebates aren’t guaranteed.”
Below you’ll read about an April 22 case from the world of high-yield investment programs (HYIPs) that features allegations of an enormous theft from investors. Read the summary and ask yourself if a preemptive disclaimer aimed at shielding the company from prosecution on fraud or theft charges ever would be taken seriously by a judge.
If you arrive at the conclusion that such a defense would fail, ask yourself why so many autosurf enthusiasts — Bowdoin supporters included — seem to think that such a defense is a magic bullet. HYIPs, online or offline, are close cousins to autosurf investment schemes because of the promise or suggestion of enormous returns.
Summary
The Securities and Exchange Commission has accused David Praise, Noel Kamanga Mwangi, Martin A. Burke, and William F. Dippolito of conducting two fraudulent high-yield securities offerings between August 2007 and August 2008.
Prosecutors said the defendants raised $14.7 million in the twin schemes, taking advantage of investors in the United States and Canada.
In the first offering, “Praise represented that investors could make $15 million for every $1 million invested through a so-called ‘buy-sell’ trading program involving foreign bank instruments,” the SEC said.
“But no ‘buy-sell’ transactions ever occurred,” the SEC said. Instead, “Praise and others absconded with the funds.” (Emphasis added.)
The initial scheme fetched $12.2 million. It worked so well, that Praise and one of his co-defendants did it again, the SEC said.
“In the second offering, the Commission alleges that defendants Burke and Praise told an investor that a company Burke controlled had arranged to purchase a 500 million euro ‘medium-term note,’ which they would use to support a trading program,” the SEC said.
“Burke and Praise told the investor he would receive $10 million in 30 days, plus trading profits over the next year,” the SEC said. “At their direction, the investor deposited $2.5 million into an account controlled by defendant William F. Dippolito, a Tacoma, Washington attorney who the Commission charged with fraud in a similar fraudulent scheme in 2007.
“The funds were never used as Burke and Praise claimed,” the SEC said. “Rather, Dippolito, at defendant Mwangi’s direction, sent the funds to Mwangi, entities Praise controlled, and others.”
Praise, Mwangi and Burke were charged with securities fraud. Dippolito was charged with aiding and abetting Praise, Mwangi and Burke’s violations.
And the SEC also is trying to force the return of money paid out in the scheme, saying it amounted to ill-gotten gains.
Named relief defendants “because they received investor funds for no consideration” were Marinco Inc., China Infrastructure Capital Management Inc., Werner Buettiker, Gabrial Pennicott, Cynthia Pennicott, Salomon Bassim, William Lenz, Lenzburg Capital Corp., Integrated Technologies Group Inc., Investor Select, A.G., Robert Justino, Kismet Cyriacks, Zara Akbar, Dr. Brian P. Killian and William R. Chapman.
“As to these relief defendants, the Commission requests disgorgement of their ill-gotten gains, with prejudgment interest,” the SEC said.
Under the theory of “returns aren’t guaranteed” or “rebates aren’t guaranteed” as advanced by autosurf promoters, each of the defendants mentioned above could escape prosecution simply by structuring a contract that insulated them from fraud charges and created a license to steal. A court never could order the return of ill-gotten gains from relief defendants because of wordplay.
Any HYIP operator — online or offline — or any autosurf operator could accept cash from customers and simply decide to keep it. They could buy cars and boats, give money to friends and family and be completely shielded from prosecution by citing “returns aren’t guaranteed” or “rebates aren’t guaranteed.”
Even people disinclined ever to take money would get a free pass if the allure of the “rebates aren’t guaranteed” protection become too much and they submitted to temptation. As long as they had a disclaimer, any person could issue a security at any time and simply keep the cash, hamstringing both investors and prosecutors.
In our view, the license to steal created by “rebates aren’t guaranteed” is the core danger of autosurfs. Surf enthusiasts argue, of course, that their favorite surf operator never would run with the money.
But that’s beside the point. If prosecutors didn’t act or if a court gave its approval to “rebates aren’t guaranteed,” global theft factories would spring up overnight. Once the target theft amount was met, the thief simply could walk off with the money, citing the “rebates aren’t guaranteed” protection.
UPDATED 9:10 P.M. EDT (U.S.A.) Joyce Haws, an Iowa woman who filed a motion last week to set aside the forfeiture in the AdSurfDaily case, is listed in court documents as a “founder” of Golden Panda Ad Builder.
Haws and “her spouse” are listed on a roster of 34 Golden Panda “founders” who provided start-up money for Golden Panda, according to a sworn affidavit filed Aug. 29 by Golden Panda President Clarence Busby. The pro se document filed by Haws also includes Michael Haws as a litigant, and the docket report in the forfeiture case lists the Haws as claimants, listing their ASD member numbers.
Busby filed the affidavit after federal prosecutors brought a forfeiture action in August against assets tied to ASD and Golden Panda, amid allegations of wire fraud, money-laundering, selling unregistered securities and operating a Ponzi scheme.
In 1998, U.S. District Judge Thomas W. Thrash ordered Busby not to break securities laws after he was implicated in three “prime bank” schemes.
“Using misrepresentations and omissions in each of the three schemes, Busby raised money for purported trading programs in ‘prime bank’ notes by fraudulently representing to investors that the investments were risk-free and that the ventures would pay returns ranging from 750% to 10,000%,” the SEC said at the time.
“In total, Busby raised nearly $1 million from more than 70 investors,” the SEC said. “None of the investors earned the exorbitant returns promised by Busby.”
Busby has been a minister for 30 years, according to court filings. He also is in the real-estate business, and autosurf enthusiasts have said he has ties to BizAdSplash, a surfing company that debuted after the seizure of funds from ASD and Golden Panda.
Haws set up rallies for ASD in U.S. cities, ASD members said. Rallies in Ankeny, Iowa — the city Haws lists as her home — brought in $2.5 million last year, ASD member Mindy Bales told the Des Moines Register. One of the rallies was held in July 2008, the same month Golden Panda launched, and fetched $1.6 million.
Haws also organized ASD rallies Minneapolis (April 26, 2008);Â Rochester, Minn. (May 17, 2008); and Las Vegas (May 31, 2008), an ASD member said.
Busby filed a motion yesterday to dismiss a racketeering lawsuit filed against him in January by ASD members. Through his attorney, Busby said in the lawsuit that ASD and Golden Panda were separate companies.
One of the assertions in the RICO case is that money that made its way into Golden Panda accounts had orgininated in ASD accounts.
