A Pennsylvania minister who ran two Ponzi schemes and bilked New Jersey churchgoers out of more than $1 million has pleaded guilty to mail fraud and wire fraud.
Terence Mayfield of Phoenixville faces up to 40 years in prison and fines in excess of $250,000. Sentencing is set July 14, before U.S. District Judge Joseph H. Rodriguez.
Prosecutors said Mayfield, 47, fleeced members of the Church of Grace and Peace in Toms River, N.J., by getting them to invest in fraudulent real-estate schemes. One of the scams involved foreclosure bailouts. The scams were uncovered by an attorney who belonged to the church and notified authorities.
Mayfield had been a guest minister at the church and soon pitched an opportunity offered by his Pennsylvania company, known as 4 Life LLC.
“Soon after he first spoke to congregants, Mayfield began soliciting money from church members and holding meetings at the church and elsewhere,” prosecutors said.
Mayfield positioned himself as “a legitimate investment advisor” and required each potential investor to pay between approximately $1,000 and $1,500 as an “entry fee†to the [My Home Banc] program,” prosecutors said.
Congregants were told that My Home Bank, or MHB, “would help investors eliminate debt and build wealth through investments in income-generating real estate,” prosecutors said. Mayfield also suggested investing in distressed real estate.
“After paying the fee, potential investors met with Mayfield regarding the investment program, at which time Mayfield told the potential investors that he would identify and provide them with information about available income-generating properties which would generate positive cash flow for the potential investor,” prosecutors said.
In some instances, Mayfield advised church members who did not have cash at their disposal to refinance their homes, prosecutors said.
Mixing investors’ money with his personal money also was part of the scheme, prosecutors said.
“Mayfield admitted that he did not maintain the funds in escrow accounts as he told investors would be the case,” prosecutors said. “[He] also admitted that aside from helping two investors identify and arrange for the purchase of an investment property in Charlotte, N.C., he never purchased or arranged for the purchase of investment properties for investors from the church as part of the mail fraud. Mayfield used the investors’ funds to repay earlier investors and to pay his personal expenses.”
At the same time, prosecutors said, Mayfield conned both investors and homeowners in a foreclosure-bailout scheme. The homeowners lost at least $75,000 in the deal, which involved purported real-estate transactions in Pennsylvania and Georgia.
Beginning in May 2007, Mayfield solicited prospects to invest in a program he referred to as “foreclosure bailouts,â€Â prosecutors said.
“To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an ‘investment fee’ and Mayfield a ‘broker’s fee.’
“Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit,” prosecutors continued.
“At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor. Mayfield, as part of the scheme and to induce a homeowner to participate in a ‘foreclosure bailout,’ made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be ‘drawn down’ on a monthly basis and used to pay the homeowner’s monthly rent payments,” prosecutors said.
“Mayfield admitted that at the closing of the ‘foreclosure bailout’ transactions, he directed the homeowner to either wire transfer or directly deposit funds intended to be maintained in an escrow account into his company’s bank account. Mayfield admitted he did not maintain the funds in escrow, but instead used the funds for his own benefit,” prosecutors said.
UPDATED 12:30 P.M. EDT (U.S.A.) eWalletPlus, a money-exchanger associated with a surfing company that has close ties to AdSurfDaily, no longer is taking new registrations, according to its website. The site does not explain why.
At the same time, AdViewGlobal (AVG) — the firm with close ASD ties — sent members a newsletter encouraging them to use the so-called “80/20 Rule,” a sign the company may be desperate to keep money in the system.
AVG’s newsletter led with the 80/20 pitch, despite all of the news it could have led with. AVG again did not fully explain its banking problems or an apparent inability to process some or all ACH transactions. The newsletter was said to have originated in Phoenix, the purported home of eWalletPlus.
“One of the strategies to have your advertising with AVGA pay for itself besides watching the 24 required sites is to use the 80/20 rule,” AVG said in its newsletter. “Simply stated you use 80% of your daily earnings to purchase[] additional page impressions and cash out 20%.
“This will create additional income by creating more probabilities of sales because of increase[d] advertising of your site. And second by purchasing more page impressions every day this increases sales that directly affect your VIP.”
“VIP” is AVG’s term for what ASD called “rebates.”
“If you have any questions about the 80/20 rule your up line should be able to give you additional details,” AVG continued. “The AVGA business model is sound and will work to promote your business and help pay for the advertising bill.”
Just below the 80/20 pitch was an announcement that AVG’s 200-percent, matching-bonus program had been extended until April 10. The company has been promoting the 200-percent program, which applies to members and their sponsors, for weeks.
One promoter claimed a $5,000 purchase turned into $15,000 “instantly!” The promoter making the claim was Shad Foss, who has been linked to the CEP Ponzi scheme. ASD once advertised that it accepted payments from CEP Trust, the failed payment processor run by the operators of the CEP Ponzi scheme.
Although AVG used the newsletter to announce its “Future Is Very Bright,” it has never fully explained the March 20 departure of Gary Talbert, its chief executive officer and a former ASD executive.
On March 23, the company announced it had a banking problem, but did not fully explain what the problem was and how it was affecting operations. The March 23 annoucement blamed the problem on AVG members who’d sent too many bank wires in excess of $9,500.
AVG has a history of not identifying the corporate authors of specific communications to members. Some correspondence has been signed by the “AVG Management Team,” which has led to questions about who is running things and why no one has emerged as the public face of the company.
UPDATED 10:53 P.M. EDT (U.S.A.) In an angry religious rant, a member of the Pro-AdSurfDaily Surf’s Up Forum claimed that a senior trial attorney in the Department of Justice “is going to be introduced to God Himself!”
The remark was directed at William Cowden, one of the prosecutors in the ASD civil-forfeiture case. The post was titled, “God will Undo This Injustice.”
A poster with the username of “stuart” made the remark. Forum Mods have permitted the inflammatory post to stand. As of this writing, no other forum member has responded to it.
UPDATE: Some Surf’s Up members have responded to the post, rebuking “stuart” for his lack of decorum. “stuart” responded by saying he was just “encourage[ing] those that want to beleive.”
Here is the original post, verbatim (italics added):
Just watched the news about the Steven’s case. It was shown how corrupt these AG”s can be. Cowden has met more than his match. Cowden is going to be introduced to God Himself! Andy said as the Bible states that if God be for us who can be against us! I met Andy at the Miami rally and he shook my hand and looked me in the eyes. ASD is the most honest thing online. Since satan’s attack allowing the goverment to hold 50,000.00 of my own I have battled through every day just to keep the faith. There are thousands of people praying for God to rescue our funds. People we are ASD! The goverment has what doesn’t belong to them. God Almighty will avenge Andy and all of us! I’d rather God avenge us then we trying ourselves. God does a much better job. Look Andy is 75 and with God has not crumbled under all this preasure that should let you know that God is with all of us who beleive. If you don’t beleive then you like the AG are in for a rude awakening. Further more the Holy Spirit was very much felt at that rally in Miami.
Topic: In their response to an Andy Bowdoin pleading, federal prosecutors yesterday pointedly referred to ASDÂ insiders as Bowdoin “associates” and “confederates.”
Is it a signal?
Topic: Shad Foss, whom the receiver in the CEP Ponzi scheme case views as a Ponzi promoter worthy of pursuing for clawbacks, sent an email in late March encouraging people to sign up for AdViewGlobal (AVG).
AVG has been running a 200-percent, matching-bonus program, and has close ties to ASD. ASD once advertised that it used the services of CEP Trust, the failed payment processor run by the operators of the CEP Ponzi scheme.
Foss got some of the math wrong in his AVG pitch. Regardless, he managed to use exclamation points to end four consecutive sentences in his 200-percent promotion (emphasis added):
That means $500 turns into $1500 instantly!
$1000 turns into $3,000 instantly!
$2500 turns into $7,5000 instantly!
$5000 turns into $15,000 instantly!
AVG members now are expressing nervousness about trouble the company has been having with payout issues and getting banking and payment-processor issues fixed.
Some members have questioned whether a process involving a button that permits one AVG member to transfer money to another from within the AVG system might constitute money laundering or tax evasion. Members say it’s a means for upline sponsors to make sure members of their downlines don’t have to wait to have AVG purchases credited, but law enforcement could take a dim view of the system.
AVG members also are complaining about low rebate rates, as the surf firm continues to offer huge matching bonuses electronically — a way to collect large sums of cash without requiring people to be physically present to qualify for bonuses. ASD filled its coffers by offering matching bonuses to people who attended “rallies” in U.S. cities; AVG is not conducting rallies, but instead is offering rally-like bonuses electronically.
Topic: Noobing, a surf site that targeted people with hearing impairments, now has been given an official scam label by asamonitor. Noobing used a rebate model similar to ASD, then slashed the payout rate. When members then received only tiny rebates, they complained, claiming bait-and-switch. A Noobing employee said the company slashed rebates because of an unclear ruling in the ASD case.
Topic: Mods at the Pro-ASD Surf’s Up forum continue to champion Andy Bowdoin. Some of the Mods and members also are promoting AVG, but AVG members have been complaining that they aren’t getting satisfactory answers from the Mods or the company. Meanwhile, some Surf’s Up members are openly questioning the Mods’ undying devotion to Bowdoin.
Let’s begin with some Breaking News. An armed suspect who tried to shoot two Pittsburgh police officers early this morning underwent surgery after the officers shot him, police said.
The Pittsburgh Post-Gazette is reporting the suspect was bleeding from the head and holding a gun as he approached a police car. An officer ordered him to drop the gun, and the man tried to shoot the officer.
By this time, another police officer had arrived in a second patrol car. The man then charged both officers, and they shot him, police said.
Three Pittsburgh police officers were shot and killed Saturday while responding to a domestic call. Richard “Pop†Poplawski, 22, was identified as the suspected shooter.
The Anti-Defamation League, which monitors extremist groups, now says Poplawski had an account at Stormfront.org, and was pushing conspiracy theories and engaging in hate speech against Jews, nonwhites and the government.
“This was a troubled young man who was deeply infected with anti-Semitism and racism and who bought into conspiracy theories about Jews and other racial minorities and the government,” said Shari Kochman, ADL Allegheny Regional Director, based in Cleveland. “He was able to obtain confirmation of his views by sharing them with like-minded white supremacist sites and joining their online community of haters.”
One theory Poplawski shared was that the government — through the Federal Emergency Management Agency (FEMA) — was setting up concentration camps to imprison Americans.
Some members of AdSurfDaily have advanced a FEMA conspiracy theory, citing talk-show host Glenn Beck as a source. ASD recently asked members to write to Beck to protest the government’s actions in the ASD case.
ADL On Poplawski
Here is some research on Poplawski by ADL:
“Following the Super Bowl victory of the Pittsburgh Steelers in early February 2009, Poplawski used the celebrations that occurred in Pittsburgh as an opportunity to ‘survey police procedure in an unrestful environment,’ and reported the results of his reconnaissance to fellow Stormfronters. “It was just creepy seeing busses [sic] put into action by authorities, as if they were ready to transport busloads of Steeler fans to 645 FEMA drive if necessary,” ADL quoted Poplawski as saying.
“This last comment was a reference to popular right-wing conspiracy theories about Federal Emergency Management Agency (FEMA)-constructed prisons and concentration camps for U.S. citizens. Such conspiracy theories had long been staples of the militia movement, but received a reinvigorating shot in the arm following the election of Barack Obama as president. Almost overnight, right-wing conspiracists across the country revived all of their 1990s militia conspiracy theories about the ‘New World Order,’ planned gun confiscations, and government plots against the citizenry. Once more, wild speculations about SHTF (“s–t hits the fan”) and TEOTWAKI (“the end of the world as we know it”) scenarios became rampant.
“Poplawski bought into the SHTF/TEOTWAKI conspiracy theories hook, line and sinker, even posting a link to Stormfront of a YouTube video featuring talk show host Glenn Beck talking about FEMA camps with Congressman Ron Paul. When the city of Pittsburgh got a Homeland Security grant to add surveillance cameras to protect downtown bridges, Poplawski told Stormfronters that it was ‘ramping up the police state.’ He said, too, that he gave warnings to grocery store customers he encountered (but only if they were white) to stock up on canned goods and other long-lasting foods.”
Prosecutors have responded to ASD President Andy Bowdoin’s pro se claim that he was denied fair notice that the conduct of ASD was illegal, saying ignorance of the law is no excuse.
At the same time, prosecutors asserted Bowdoin’s own past as a criminal defendant turned his argument that the case should be dismissed on its ear.
“In this case, Mr. Bowdoin’s motion to dismiss on vagueness grounds is all the more
remarkable because he was previously arrested for having used money he took from individuals who invested in a new opportunity he had been promoting to repay debts he owed to individuals who lost money after investing with him in a different venture,” prosecutors said, referring to Bowdoin’s arrest in Alabama in the 1990s.
“Mr. Bowdoin even acknowledged that he lost money in a similar auto-surf ‘Ponzi’ scam that the government closed before he started ASD,” prosecutors said. “The ‘I forgot what I knew’ inference Mr. Bowdoin would have this Court draw certainly provides no basis for dismissing the government’s wire fraud allegations on vagueness grounds.”
And Bowdoin was tilting at windmills when he asserted that the government was required to warn him that wire fraud, money-laundering and running a Ponzi scheme were illegal.
“Mr. Bowdoin’s assertion that he ‘did not know or realize that his conduct was illegal’ cannot survive a moment’s analysis,” prosecutors said. “The central claim underpinning the government’s forfeiture action is that Ad Surf Daily (ASD) and Golden Panda (GP) were unlawful, fraudulent ventures operating over the Internet.
“The government’s complaint alleges that ASD and GP operators falsely stated that they were offering legitimate business opportunities in which ‘members’ could invest and expect a profitable return of at least 125%, at the rate of about 1% per day, on each dollar invested,” prosecutors continued.
“But, as the two related forfeiture complaints show, ASD and GP had no actual independent operations and, thus, earned no profits from which to pay out the returns they promised to their members-investors. Rather, in a classic ‘Ponzi’ style scheme, money from investments by later ‘members’ was (and would have been) used to redeem promises of fantastical returns made to earlier member-investors.”
Bowdoin Piled Lies On Lies, Prosecutors Claim
Andy Bowdoin is only pretending to be ignorant, prosecutors said.
“At bottom, Mr. Bowdoin’s protestations of ignorance are yet another lie: he not only knew that he lacked sufficient revenue to pay the returns he promised, he knew the revenue numbers he posted were made-up. With such knowledge, and given that Mr. Bowdoin does not deny having used the Internet to publicize his false promises and misrepresentations, his argument for dismissal on void-for-vagueness principles is meritless,” prosecutors said.
In walking back Bowdoin’s pro se pleading, prosecutors said that Bowdoin appears to be arguing that he should be permitted to lie with impunity and keep money he collected as a result of his lies.
“To examine Mr. Bowdoin’s proposition, at the outset, the Court should recall precisely
what the government has alleged in seeking forfeiture in this civil action: the defendants in this case, several parcels of real property and millions of dollars — were amassed through a wire fraud. In particular, the government asserts that Mr. Bowdoin ran a ‘Ponzi’ style scam that made false promises to deceive investors into sending their money off to Mr. Bowdoin and his associates.
“The government asserts that Mr. Bowdoin and his associates failed to tell the investors that ASD was merely shuffling their money — that it had no true profits with which to
pay the profitable returns it promised them. In light of the government’s allegations here, Mr. Bowdoin seems to be asserting (1) that he did not know that it was illegal for him to lie to investors in order to cause them to send him their money in the first place, and (2) that he should therefore get to keep all of the money he secured by lying. He offers, not surprisingly, no authority for his proposition.”
Prosecutors cited law and precedent to back their claims, arguing that Bowdoin was making vague, disingenuous claims, including the claim that he is a “defendant” in a criminal prosecution when the forfeiture case resides in civil court.
“This is a civil forfeiture action, not a criminal prosecution, so Mr. Bowdoin’s references to himself as the ‘defendant’ are miscast,” prosecutors said.
“Thus, citations to precedent dismissing criminal prosecutions are not strictly apposite to this case. Properly speaking, the defendants in this case are not Mr. Bowdoin or his confederates at Ad-Surf Daily or Golden Panda, but the real properties and many millions of dollars garnered in a ‘Ponzi’ style fraud.
“Ironically, even on its own terms, Mr. Bowdoin’s pro se filing cites only fatally vague generalities. Examples include: ‘[i]n criminal prosecution, unclarity alone is enough to resolve the doubt in favor of the defendant’ (citation omitted); ‘[t]he ‘rule of lenity’ is a principle of statutory construction which provides that criminal statutes must be narrowly construed, and any ambiguity be resolved in favor of lenity’ (citation omitted); and, ‘vice of vagueness in criminal statutes is treachery†(citation omitted),” prosecutors said.
One of the theories about ASD President Andy Bowdoin’s recent series of pro se legal filings in the August civil-forfeiture case is that he is trying to stave the filing of criminal charges by slowing the civil case to a crawl.
Could it be true? Sure. Bowdoin’s pro se pleadings, however, also could be a response to pressure applied by others.
Bowdoin, while still working with paid counsel in January, threw in the towel and submitted to the August forfeiture. He told the court that he did not intend to raise the forfeiture at a later time. Basically he ceded tens of millions of dollars to the government. Bowdoin did not tell the membership at large about his decision. He then vanished from the stage for weeks.
What happened during Bowdoin’s weeks of absence is not a matter of public record, but could be telling.
In late February, Bowdoin suddenly reemerged. He blamed his paid attorneys for poor lawyering, and then proceeded to act as his own attorney. Bowdoin says he now has rescinded his decision to submit to the forfeiture. His paid lawyers, who never withdrew from the case even as Bowdoin was filing pro se pleadings, now have asked the court to withdraw, saying their representation of Bowdoin had become unreasonably difficult. The court has not yet issued an order that permits the paid lawyers to leave the case.
The conventional wisdom that Bowdoin’s pro se reemergence was a bid to delay a criminal indictment could be true — but it could be that and more.
It’s not a stretch to think that some ASD members — perhaps particularly insiders and people who view Bowdoin as a person who owes them a pile of money — were unhappy about his decision to submit to the forfeiture and then keep the news of his decision to himself. Some of these people may view themselves as being at risk of indictment and see Bowdoin’s move as the move of a turncoat.
By pressuring Bowdoin to climb back on the horse, they could be trying to stave off indictments against themselves. There is no doubt that criminals were involved in ASD. What’s not known is just how much leverage criminals could apply to Bowdoin.
For the sake of discussion, let’s say ASD had 50,000 paying members. With an organization of that size, Bowdoin would know very little about the motivations of individual members — and the people who sponsored them into the program. One of the core risks of running an autosurf is not knowing who your neighbors are and how they are capable of behaving.
One piece of wishful thinking often shared by ASD members was that ASD was just one, big, happy family. This notion always struck us as fanciful. If ASD’s paid members were assembled in a 50,000-seat stadium, there is no reason to believe they wouldn’t reflect the best and worst of society — as is typical of large crowds, whether the sport is baseball, football or autosurfing.
Bowdoin is 74. There is a chance that he believes he has more things to fear than just what the government can do to him personally. It is possible that Bowdoin family members could be indicted, for instance. At the same time, it is possible that Bowdoin perceives a threat from some ASD members and has safety concerns.
Would you fear for your safety if you were the public face of a $100 million Ponzi scheme that collected money from all over the world — and you knew only a very small fraction of the people who were sending you all that money? Bowdoin has no real way of knowing if he’s doing business with thugs unknown, criminal gangs or even terrorists.
No one seems to know why Bowdoin hasn’t been served a lawsuit filed in January that alleges racketeering. If it’s a clerical snafu of some sort, it would have to be one that also is affecting the plaintiffs’ ability to serve Bowdoin’s two RICO co-defendants, attorney Robert Garner and Golden Panda Ad Builder President Clarence Busby.
With large sums of money involved, it’s not a stretch to believe that some people owed large sums would not be inclined to accept “rebates aren’t guaranteed” or “the evil government took the money” as excuses.
“Pay up” could be the policy in certain circles.
The conventional wisdom also has held that only traditional autosurf players and people new to Web commerce were players in ASD. That could be largely true, but not universally true. ASD was gaining a head of steam as the U.S. economy was going into steep decline. Legitimate securities brokers could have been using the company to generate cash to hide losses.
We’re not saying that occurred, mind you. At the same time, if legitimate brokers had been stealing from clients and knew those clients were due redemptions, they could have turned to ASD to generate cash flow. If such a group exists, it means clients of legitimate brokers also lost money in ASD — without their knowledge, as was the case with Bernard Madoff.
Some of the amounts reportedly directed at ASD were huge amounts for an ordinary autosurf player. It is possible that investment combines and criminal brokers were using ASD to stave off a Madoff-like day of reckoning.
You’ve likely noticed that AdViewGlobal, a surf with Bowdoin family ties and management in common with ASD, was promoting a 200-percent, matching-bonus program. It very much looks like a cynical bid to raise cash in volume to pay off ASD insiders and strategic shills. ASD did the same thing when it morphed into ASD Cash Generator.
Bowdoin has engaged in behavior that suggests he’ll do almost anything for cash. In the fall, after a judge ruled ASD hadn’t demonstrated it was a legal enterprise, Bowdoin pitched VOIP service to members.
Recently he appeared in a video for Paperless Access, which appears to be an upstart surf firm. Bowdoin told viewers they could use Paperless Access to recapture money seized by the government last year in the ASD probe.
There obviously is no arm’s-length distance between ASD and AVG, despite AVG’s tortured claims to the contrary. What’s less clear is the precise reason AVG exists.
One reason might be as a means to pay off debt racked up by ASD. Another reason might be because the people who are running it are monumentally stupid. It launched while an active criminal investigation and a RICO probe were under way, with Bowdoin and other ASD insiders, including Bowdoin family members and ASD executives, as likely targets.
AVG’s launch happened in full public view. Known ASD participants were pushing it. Suggestions were made that ASD accounts might get ported over to AVG. Bowdoin might as well have taken out an ad in the New York Times to announce he had decided to commit himself to a life of crime.
So much about ASD boggles the mind — and yet so much is not known.
What is known is that tens of millions of dollars are involved. And it’s also known that large sums of money can make people do crazy things.
UPDATED 1:45 P.M. EDT (U.S.A.) Language federal prosecutors used in a December forfeiture complaint against assets tied to AdSurfDaily might help explain the emergence of AdViewGlobal (AVG), a surf firm with common management and close ties to ASD.
Meanwhile, court filings by ASD President Andy Bowdoin continue to electrify some ASD members, but Bowdoin’s once-considerable support base is diminishing in size rapidly. Evidence continues to mount that fewer and fewer people are buying what Bowdoin is selling in his various pro se legal pleadings.
We’ve written about this before. Today we’ll do so again because Bowdoin’s filings never add clarity. They add only clutter. Even so, Bowdoin’s few remaining champions at the Pro-ASD Surf’s up forum always can be relied upon to cloud the issues further.
But clutter by Bowdoin and other pro se litigants in the ASD civil-forfeiture case is delaying justice for rank-and-file ASD members. The case involving money and property seized by the government in August nearly was litigated to conclusion in January, when Bowdoin formally submitted to the forfeiture. The government was on the cusp of implementing an orderly process through which ASD’s assets would be liquidated to create a restitution pool.
All of that is on hold now because of Bowdoin’s emergence in February as a pro se litigant.
Points To Ponder
A second forfeiture case filed in December against assets tied to ASD is proceeding on a separate track — one that appears to have been designed by prosecutors as leverage to make ASD members as “whole” as possible. Prosecutors asserted that some of Bowdoin’s family members, including his wife and stepson, had used ASD money to fuel extravagant spending, including the wholesale retirement of a $157,216 mortgage on the home of George Harris, Bowdoin’s stepson.
George Harris is listed as a trustee for AVG. Gary Talbert, a former ASD executive, was chief executive officer of AVG before resigning suddenly last month. The resignation was announced after Bowdoin acknowledged in a pro se pleading that ASD was operating illegally when agents seized tens of millions of dollars in August.
Nearly $30,000 also was used to buy a car for George Harris and his wife, Judy Harris. About $33,000 was used to buy a car for an ASD employee, and Bowdoin himself parked a Lincoln valued at nearly $50,000 in his driveway, prosecutors said.
The purchase of the Lincoln was telling. Bowdoin had an appetite for expensive cars when he was charged in Alabama in the 1990s with 89 separate counts of securities fraud, according to his victims.
Bowdoin never told ASD members about the Alabama fraud charges when he was busy collecting money from them. Nor did he tell his Alabama victims of his newfound ASD wealth. The money used to purchase the Lincoln would have been more than enough for Bowdoin to retire the remaining restitution due Alabama victims from more than a decade ago.
He chose the Lincoln instead.
In the end, though, it’s probably a good thing that Bowdoin chose the Lincoln over his Alabama victims. The government views ASD’s assets as the proceeds of an illegal enterprise. In theory, the government could claw back any ASD money sent to the victims, who’d then hold the unenviable distinction of having been ripped off by Bowdoin twice.
Contemplating that outcome is just plain sad — but there’s more. What’s left could explain the formation of AdViewGlobal and how close Bowdoin associates could be using it to line their pockets while Bowdoin files one pro se pleading after another in the ASD case.
The ASD/AVG Tie
Prosecutors say Bowdoin did not file a police report when more than $1 million went missing from ASD at the purported hands of “Russian” hackers. Nor did Bowdoin file a police report when other money went missing from ASD.
What Bowdoin did, according to prosecutors, was engage attorney Robert Garner to figure new and better ways to steal from ASD members. This led to the production of a video that sanitized the ASD business model. Before long, ASD couldn’t even get all of the cash it was collecting to the bank.
Those Pesky Details
Certain details from the December forfeiture complaint haven’t gotten much play on Blogs and forums. They may prove to be critical, however, because they may explain how AdViewGlobal (AVG) came into being.
Prelaunch promotions for AVG began to appear online during the second week of December. Early promotions suggested ASD members would be able to port their ASD earnings/expenditures to AVG. The government filed the second forfeiture complaint Dec. 19, just as AVG buzz was building.
Included in the December complaint were assertions that ASD had played the rebuilding card before, telling members that a renamed and reconstituted version of ASD would emerge because cash-flow problems had crippled the original enterprise. The renamed version would be called the ASD “Cash Generator.”
Screen shot of Page 21 from December forfeiture complaint against assets tied to ASD. Andy Bowdoin, while ASD was in failure mode, explains a process by which ASD accounts would be transferred to ASD "Cash Generator. Early promotions for AdViewGlobal (AVG), a surf with close ASD ties, suggested account balances from ASD Cash Generator might be ported to AVG.
Prosecutors very well may have a recording and/or a transcript of an ASD Cash Generator pitch given by Bowdoin because some quotations from the December complaint are attributed directly to Bowdoin andnotes from a transcriptionist appear to be contained within a document prosecutors are using. The information sounds very much like the early pitches for AVG, with references to transferring account balances from one entity to the other.
AVG may be nothing more than ASD history repeating itself in a different form, with insiders receiving benefits hidden from rank-and-file members.
Here is what prosecutors said in the December complaint (italics added to emphasize quotations from Bowdoin and bold added to emphasize what appears to be notes from a transcriptionist):
“To avoid regulatory scrutiny when ASD’s first iteration collapsed, Mr. Bowdoin explained that account balances of the prior operation would be transferred to the new operation, allowing the old program’s participants to share in the new revenue stream as new funds came into the new operation.
“In discussing the transferring of such account balances, Mr. Bowdoin explained:
‘You have heard us talk about not overwhelming the system by not transferring all of the ad packages from the old site at one time. If we did that it would never get off the ground. To avoid that from happening, we must transfer the balances in increments.
‘Here is the plan our Accountant suggested. Based on the sales that we now have, transfer over 150,000 ad packages which will be about 5%. Based on $3,000 per day in sales we can pay 1%. 50% of $3,000 is $1,500 which is 1% of the 150,000.
‘We have enough sales now to start at $3,000 per day for the first 5 days and the $1,500 on Sat. And [sic] Sun.
‘As our sales increase in increments of $3,000 per day we will transfer another 150,000 ad purchases.
‘In other words, when sales reach $6,000 per day we will transfer another 150,00 [sic] ad purchases [strike out “ad purchases”], when they reach $9,000 per day we will transfer over [strike out “over”] another 150,000. Then when they start expiring we will transfer more and we will continue this until we get all of the balances transferred.
‘All credits for surfing will be transferred. All pending cash outs will be paid from profits from the new cash generator site and then all cash balances on the old site will also be paid from profits. The time for paying pending cash outs and cash balances will be determined by Sales.’
“Mr. Bowdoin never told later participants with ASD that the funds they paid to ASD were being used to pay returns to participants with AdSurfDaily who failed to receive promised returns because one or more Russians had defrauded AdSurfDaily,” prosecutors said.
In essence, prosecutors are saying that ASD emerged as ASD “Cash Generator” because Andy Bowdoin owed participants a pile of money he couldn’t pay. He solved the problem by porting old obligations to the new company, but never told new members they were paying the freight for the original group of insiders and members who were not in the loop.
Bowdoin avoided getting sued by using this approach. He also avoided trouble from insiders to whom large sums were owed, in effect creating a new generation of victims so his original insiders could get paid.
Some of those insiders now appear to have become players in AVG — ASD history repeating itself in a different form.
The government is right about the ASD case. Its duty is to stop the “rebates aren’t guaranteed” madness before huge criminal combines begin to use it as a license to take money and keep it by hiding behind a disclaimer that gives them a license to steal.
UPDATED 8:33 P.M. EDT (U.S.A.) A federal judge said one of ASD President Andy Bowdoin’s pro se pleadings to reverse his earlier decision to submit to the forfeiture of proceeds seized by the government in a Ponzi scheme case cited no law.
Bowdoin’s pleading appeared to presume that the filing alone achieved the goal of reversing his decision to submit to the forfeiture, the judge implied.
“Mr. Bowdoin cites no law for the proposition that his ‘Notice of Rescission and Withdrawal of Release of Claims to Seized Property & Consent to Forfeiture’ ‘legally accomplishe[s]’ his goal of re-instituting Claimants’ claims to the defendant property which the Court ordered withdrawn on January 22, 2009 pursuant to Claimants’ own motion,” Judge Rosemary Collyer said.
In an order to show cause issued late this afternoon, Collyer said she construed Bowdoin’s filing as a “motion to vacate” a previous order she issued to permit Bowdoin to withdraw his claim to the seized proceeds.
It is not unusual for a judge to exercise discretion and construe the meaning of a motion filed by a pro se litigant. Pro se motions typically are prepared by nonexperts and sometimes make tremendous leaps of logic or do not include supporting law. Bowdoin, who is not an attorney, has been acting as his own attorney since late February.
Collyer ordered the prosecution to show cause why she should not reverse her previous order by April 24. She also ordered prosecutors to respond to Bowdoin motions to dismiss the case for lack of jurisdiction and lack of fair notice by April 24.
UPDATED 11:05 A.M. EDT (U.S.A.) Acting as his own attorney, AdSurfDaily Inc. President Andy Bowdoin has filed a motion to rescind a decision he made in January to submit to the forfeiture of real estate and tens of millions of dollars seized by the government in August.
As first reported in this Blog last month, an earlier motion Bowdoin filed to rescind his decision to the forfeiture appeared not to apply to the proceeds seized last summer. Rather, Bowdoin’s initial motion to rescind appeared to apply to property seized in a second forfeiture complaint prosecutors filed in December.
Neither Bowdoin nor any corporate entity associated with the property listed in the December complaint appears to have filed a verified claim to the property or a motion asking to submit to the forfeiture. Among the proceeds listed in the December complaint were a Florida home owned by Bowdoin’s stepson, George Harris, and his wife, Judy Harris. An automobile owned by George and Judy Harris also was seized, along with two other cars prosecutors said were purchased with illegal ASD proceeds. A boat and marine equipment also were seized.
Bowdoin’s initial motion to rescind appears to be a rescission of a decision he never made — either to claim the property listed in the December complaint or to forfeit it.
Confused? You’re not alone. Sometimes pro se pleadings are extremely difficult to reconcile because the arguments don’t follow a recognized structure or logical form.
Judge Rosemary Collyer included a handwritten note on Bowdoin’s most recent motion to rescind.
“Let this be filed,” she wrote.
It is unclear if Bowdoin filed the second motion to rescind before or after Collyer’s issuance of an order last week that advised Bowdoin and his paid attorneys that corporations could not proceed as pro se litigants. The document makes two corporate claims to the August proceeds.
Corporate claimants include AdSurfDaily Inc. and Bowdoin/Harris Enterprises Inc.
Bowdoin’s paid attorneys yesterday asked the court for permission to withdraw from the case, saying Bowdoin had not consulted them on his pro se filings and that serving as his attorneys had become “unreasonably difficult.”
“Mr. Bowdoin filed these motions without consulting with counsel and without bothering to advise counsel that he would be submitting motions on his own. Under these circumstances, the Akerman Senterfitt Law Firm cannot render effective assistance of counsel,†attorneys Michael Fayad and Jonathan Goodman said.
Bowdoin claimed in his motion that his lawyers were “ineffective at best and only looking out for the best interest of the government.” Fayad and Goodman said yesterday that the client-attorney relationship was affected by a ruling that went against ASD in November.
“After this Court denied Claimant’s Emergency Motion for Return of Seized Funds [on Nov. 19, 2008], the client-lawyer relationship between the Firm and all three Claimants substantially deteriorated and has not improved thus rendering the representation unreasonably difficult,†the lawyers said.
In Bowdoin’s most recent motion, he said his earlier decision to submit to the forfeiture was a “grave mistake and error” and that he was acting under “severe duress.”
Bowdoin’s motion, however, also makes the strange claim that “procedures” government agents used to search for and seize proceeds “were non-existent.”
He also contends what the government did was “improper, illegal and tainted with violations of due process of law.”
Bowdoin’s now makes the claim that his decision to rescind “is now legally accomplished as a matter of law” — a claim that makes a considerable leap because his earlier decision to submit to the forfeiture was made with “prejudice” — meaning Bowdoin agreed to the forfeiture and would not later contest it — and Collyer signed an order granting Bowdoin’s motion to submit.
UPDATED 7:24 P.M. EDT (U.S.A.) Michael Fayad and Jonathan Goodman of Akerman Senterfitt have asked a federal judge to withdraw themselves and the firm as attorneys for AdSurfDaily Inc., Bowdoin/Harris Enterprises Inc. and Andy Bowdoin.
At the same time, the firm cited attorney-client privilege with respect to its communications with Bowdoin.
In asking for leave to withdraw, the attorneys said their representation of Bowdoin had become “unreasonably difficult.”
“After this Court denied Claimant’s Emergency Motion for Return of Seized Funds [on Nov. 19, 2008], the client-lawyer relationship between the Firm and all three Claimants substantially deteriorated and has not improved thus rendering the representation unreasonably difficult,” the lawyers said.
U.S. District Judge Rosemary Collyer ordered the lawyers to instruct Bowdoin on critical points of law last week, after Bowdoin had filed a series of motions acting as his own attorney. The firm never formally withdrew from the case, but Bowdoin said in court filings that he had fired Fayad and Goodman.
Bowdoin told ASD members March 13 that he had spent $800,000 on the forfeiture case filed last August and dismissed the attorneys for getting “no results.” He added that he had consulted with a “group” that “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.”
Akerman Senterfitt advised Collyer today that it had contacted Bowdoin and his corporate alter egos “recently” and advised them on the critical matters, which dealt with a rule that corporations could not proceed as pro se litigants.
“The Akerman Senterfitt law firm has recently been able to contact its clients and has obtained their consent to withdraw from representing them,” the firm said. It did not say how it contacted Bowdoin or identify his whereabouts.
“In addition, Akerman Senterfitt’s two corporate clients have been specifically advised that they cannot appear as litigants in this Court on a pro se basis and that they must have counsel,” the firm said. “Through their principal, Mr. Bowdoin, the two corporate clients provided written acknowledgment of their understanding of this legal rule.”
Collyer said last week that AdSurfDaily Inc. and Bowdoin/Harris Enterprises Inc. could not represent themselves pro se on claims to seized proceeds because they are corporations. Bowdoin is permitted to represent himself as an individual on claims, but the corporations must have an attorney.
Plaintiffs in a racketeering lawsuit against Bowdoin that is separate from the forfeiture case said they have not been able to serve Bowdoin or co-defendants Robert Garner or Clarence Busby.
Garner was an ASD attorney. Busby was president of Golden Panda Ad Builder, a company whose assets were seized in the ASD probe. The RICO lawsuit has been pending since Jan. 15. A second summons was issued March 18.
Why Bowdoin, Garner and Busby have not been served is unclear. Garner is listed as a director of AdSurfDaily Inc. in Nevada corporation records. But ASD’s incorporation in Nevada appears to be in default for not filing an annual update of officers by Dec. 31, 2008.
ASD is listed as a Nevada-based foreign corporation in Florida, with Bowdoin holding the titles of director, president, secretary and treasurer. Garner’s name is not listed in the Florida documents, which were filed May 23, 2008.
ASD, in longhand, listed its address as 13 S. Calhoun St., Quincy, Fla., in its May 2008 Florida filing. Federal prosecutors said the address was bogus. The same address is listed in Nevada corporation records. Public filings suggest that the U.S. Secret Service was on the ground in Quincy prior to the seizure of ASD’s assets last August. The forfeiture complaint contains a photograph of an ASD sign the prosecution said listed the bogus address.
Florida filings from 1995 and 1996 by Bowdoin’s wife, Edna Faye Bowdoin, list the address of the building ASD went on to use as its headquarters as 11 S. Calhoun Street. The building once was home to Faye’s Florist Inc. The same building was listed by Edna Faye Bowdoin as having the 13 S. Calhoun Street address and serving as headquarters for Bowdoin/Harris Enterprises, according to June 2008 Florida records.
Fayad and Goodman today did not say where Bowdoin could be reached, acknowledging that they were aware of his pro se pleadings because they were a matter of public record.
“Given the attorney-client privilege, the Akerman Senterfitt law firm cannot disclose the
specific issues underlying the problems with the client-lawyer relationship,” the firm said.
“However, without breaching the attorney-client relationship, and based on documents which Mr. Bowdoin publicly filed with the clerk’s office, it is obvious that Claimants have decided to represent themselves without consulting their counsel,” the firm continued.
“By way of example only, Mr. Bowdoin has recently filed, on a pro se basis, a series of motions. Mr. Bowdoin filed these motions without consulting with counsel and without bothering to advise counsel that he would be submitting motions on his own. Under these circumstances, the Akerman Senterfitt Law Firm cannot render effective assistance of counsel.”
In a proposed order for leave to withdraw as Bowdoin’s counsel, the firm said Bowdoin’s last known address was 8 Gilcrease Lane, Quincy, FL 32351.
AdViewGlobal (AVG), a surf firm that has close ties to ASD, introduced members to a firm known as Pro Advocate Group in February. Pro Advocate Group says it can help people practice law without a license. Bowdoin’s pro se pleadings began to appear at the same time AVG introduced the company.
Karl Dahlstrom is associated with Pro Advocate Group. He was sentenced to 78 months in federal prison in the 1990s for securities fraud.
Fayad and Goodman filed notice with the court last fall that Bowdoin would exercise his 5th Amendment right against self-incrimination at the Sept. 30-Oct. 1 evidentiary hearing. Bowdoin did not appear for the hearing or take the stand.
In his pro se pleadings, however, Bowdoin acknowledged ASD was operating illegally last summer when agents seized real estate and tens of millions of dollars amid allegations of wire fraud, money-laundering and running a Ponzi scheme.
Bowdoin said he was denied “fair notice” that his conduct was illegal. Within days of his claim, Gary Talbert, a former ASD executive, resigned as chief executive officer of AVG.
