PatrickPretty.com

Category: The Economy

Zeek Receiver Posts ‘Notice Of Certification Of Defendant Class Action’; Document Pertains To Thousands Of Alleged ‘Winners’

What once was only theoretical in the context of MLM HYIP schemes — that a receiver appointed by a court could simultaneously sue thousands of “winners” from disparate locations for return of funds received from an alleged Ponzi or pyramid scheme — is now a reality.

This reality was cemented today by the posting of a “Notice of Certification of Defendant Class Action” by Zeek Rewards receiver Kenneth D. Bell. The four-page document is posted on the receivership website.

Bell is suing more than 9,000 individuals in the United States alleged to have received more than $1,000 from the “program.”

Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina certified the defendant class of alleged winners last month. On March 11, Mullen approved Bell’s plan to notify the defendants on the receivership website and through the email addresses they used for Zeek or the receivership.

Here is the notice. (Because the PP Blog could not precisely duplicate the formatting, some of the formatting below is approximate.)

NOTICE OF CERTIFICATION OF DEFENDANT CLASS ACTION

On February 10, 2015, Judge Graham C. Mullen, United States Judge for the Western District of North Carolina issued an ORDER granting the motion of Kenneth D. Bell, the court-appointed Receiver for Rex Venture Group, LLC (“RVG”), to certify a Defendant Class (the “Net Winner Class”) in this action comprised of all persons and entities who were Net Winners of more than $1000 in ZeekRewards. A copy of this ORDER is attached. This notice is being provided to notify you that according to RVG’s records you are a member of the Net Winner Class and inform you about certain important information related to the Net Winner Class and the legal process going forward.

1. In this lawsuit against the named Defendants and the Net Winner Class, the Receiver alleges that because ZeekRewards’ Net Winners “won” (the victims) money in an unlawful Ponzi and/or pyramid scheme, the Net Winners are not permitted to keep their winnings and must return the fraudulently transferred winnings to the Receiver for distribution to the ZeekRewards’ victims. Specifically, the Receiver has asserted claims for relief for: (1) Fraudulent Transfer of RVG Funds in violation of the North Carolina Fraudulent Transfer Act; (2) Common Law Fraudulent Transfer; and (3) Constructive Trust.

2. Net Winners are defined in the Complaint as those who received more money from ZeekRewards than they paid in. Therefore, the Net Winner Class includes all persons and entities who participated in ZeekRewards and received at least $1000 more in money from ZeekRewards than they put into the program. RVG’s records show that you are a member of the Net Winner Class. Your membership in the Net Winner Class depends solely on the amount of your net winnings. It does not depend on whether or not you believed ZeekRewards was lawful, your level of knowledge concerning the program or whether you still have the money you received.

3. The Court has not yet ruled on the merits of the claims in this lawsuit; however, when it does so, its orders will be legally binding upon you and all other members of the Net Winner Class. The Court has noted that the common questions related to the Net Winner Class are “whether ZeekRewards operated as a Ponzi and/or pyramid scheme and whether net winnings received by the Defendants should be returned to the Receiver.” The Court has further held that the details of each class member’s participation in ZeekRewards do not need to be addressed in answering these common and controlling questions. The ongoing legal proceedings in the case will answer these common questions.

4. You are not required to and there should be no need for you to participate in the legal proceedings related to answering the common questions for the Net Winner Class. The Court has determined that the named Defendants, who the Court noted collectively won more than $11 million in profits from ZeekRewards, “inevitably share the same defenses against liability for repayment of the alleged fraudulent transfers made to the class, which does not depend on the personal circumstances of particular affiliates” and that those Defendants and their counsel “are able to fairly and adequately represent the interests of the defendant class.” Also, all pleadings and other papers filed in this action are available for your inspection in the office of the Clerk of Court for the Federal Court in the Western District of North Carolina in Charlotte, North Carolina, and on the Federal Court PACER electronic public access service that allows users to obtain case and docket information online at https://www.pacer.gov/.

5. You will, however, have an opportunity to participate in the process if the Net Winner Class is found to be required to repay their net winnings. If liability is found, the Receiver intends to seek a court Judgment against each class member in the amount of their individualized net winnings plus interest at least from August 17, 2012, when ZeekRewards was shut down and the Receiver appointed. The final amount of each Net Winner Class member’s net winnings and any Judgment against them will be set later in the proceedings after the liability of the class has been established. While the specifics of the process for determining those amounts has not yet been decided, the Receiver intends to seek a process that will notify you of the amount of your net winnings according to the RVG records, allow you a reasonable opportunity to provide a response (supported by relevant documentation if you disagree with the calculation) and then either reach an agreement on the amount or have the amount determined by a judicial process. It is likely to be several months or longer before this process begins so you do not need to take any action at this time either with the Receiver or counsel for the named Defendants related to determining the amount of your net winnings. This is true even if you believe that you are not a member of the Net Winner Class because you did not receive more than $1000 more from ZeekRewards than you put in (you will have an opportunity to make that argument at the appropriate time). However, if you have not already done so, you are advised to gather and preserve any documents or information (including electronic files) related to the amount you paid into and received from ZeekRewards so those documents and that information can be used in the later process to determine the amount of your net winnings.

6. CONTACT INFORMATION REQUIRED – This notice has been sent to the last known electronic address for each member of the Net Winner Class and published on the Receivership website, the Court’s docket and other forums. For purposes of future communications to the Net Winner Class it is important that the Court have updated contact information for all class members. Therefore, please provide your Name, Residential Street Address (or Business address for an entity), Email Address and Phone Number to:

Kenneth D. Bell
McGuireWoods LLP
ATTN: ZeekRewards Class Action
201 North Tryon Street, Suite 3000
Charlotte, North Carolina 28202
Or
zeekrewardsclassaction@mcguirewoods.com

Please be advised that the failure to provide current contact information will not allow you to avoid any liability or obligation related to this matter.

7. Since early in the Receivership, the Receiver has expressed a willingness to consider voluntary settlements on the Receiver’s claims with ZeekRewards’ net winners and others against whom the Receiver has claims. To date, there have been numerous settlements approved by the Court in which net winners and the Receiver agreed on an amount to be repaid, often with payment terms that allowed the net winner to repay the agreed amount over a number of months. Net Winners are still permitted to discuss a potential settlement of the Receiver’s claims against them even though they have become members of the Net Winner Class. If you desire to discuss a settlement of the Receiver’s claims against you, please communicate with the Receiver at zeeksettlement@mcguirewoods.com.

8. This notice is intended to inform you about the Net Winner Class and answer basic questions regarding the Receiver’s claims and the legal process.

PLEASE CONSIDER THIS NOTICE CAREFULLY BECAUSE YOU WILL BE LEGALLY BOUND BY FUTURE ORDERS OF THE COURT IN THIS ACTION. IF YOU ARE UNSURE OF WHAT COURSE TO FOLLOW OR IF YOU HAVE ANY QUESTIONS ABOUT YOUR SPECIFIC CIRCUMSTANCES, YOU MAY WISH TO CONTACT YOUR OWN ATTORNEY. PLEASE DO NOT CONTACT THE RECEIVER, THE COURT OR COUNSEL FOR THE NAMED DEFENDANTS WITH GENERAL QUESTIONS ABOUT THE NET WINNER CLASS OR YOUR PARTICULAR SITUATION OTHER THAN IF YOU WANT TO DISCUSS A POTENTIAL SETTLEMENT WITH THE RECEIVER AS DESCRIBED ABOVE.

Read the notice on the receivership website.

Visit the receivership website.

NOTE: Our thanks to the ASD Updates Blog.

Mar 17, 2015
PARTINGS: Ronald C. Machen Jr., Whose Office Led AdSurfDaily Criminal Prosecution, Is Leaving Post As U.S. Attorney For District Of Columbia

“Serving as the U.S. Attorney for the District of Columbia has been the highest honor of my professional career. I am tremendously grateful to the President, Attorney General Holder, and Congresswoman Eleanor Holmes Norton for placing their trust in me. The men and women of this office are among the most dedicated and talented public servants in the country. I am proud of the work we have done together to achieve justice in the courthouse and to build bonds of trust with the community that we serve. I leave this position confident that my extraordinary colleagues will continue to pursue justice and protect the residents of the District and this great nation.” — U.S. Attorney Ronald C. Machen Jr., District of Columbia, March 16, 2015

Ronald C. Machen Jr. is leaving his post as U.S. Attorney for the District of Columbia after five years.

Ronald C. Machen Jr. led many important prosecutions during his five-year tenure as U.S. Attorney for the District of Columbia. The one PP Blog readers are most apt to remember is the criminal prosecution of AdSurfDaily Ponzi-scheme figure Andy Bowdoin.

Machen, 45, is leaving his post and intends to reenter private practice, the Justice Department said today.

“During more than five years as United States Attorney for the District of Columbia, Ron Machen has distinguished himself as a skilled leader, a devoted public servant, and a forceful champion of justice on behalf of the American people,” said Attorney General Eric Holder.

Upon the sentencing of Bowdoin in August 2012, Machen called the huckster “a master of fraud and deception” who cheated “victims out of their hard-earned money and savings with his get-rich scheme.”

AdSurfDaily gathered $119 million through its Internet-based fraud, a 1-percent-a-day “program” that purported to be in the “advertising” business, not the business of selling securities.

Machen will leave his post on April 1. Principal Assistant U.S. Attorney Vincent H. Cohen Jr., 44, will become Acting U.S. Attorney on that date.

Two assistant U.S. Attorneys and a special agent of the U.S. Secret Service involved in the ASD case were targeted with false liens by Kenneth Wayne Leaming, a purported “sovereign citizen” from Washington state. Leaming was arrested by an FBI Terrorism Task Force and was successfully prosecuted by the office of then-U.S. Attorney Jenny A. Durkan of the Western District of Washington.

We wish Ronald Machen the best, and we thank him for his service to his country.

Mar 16, 2015
BULLETIN: Zeek Figure Robert Craddock Indicted In Separate Scheme

BULLETIN: Florida resident Robert Craddock, a figure in the Zeek Rewards Ponzi-scheme story, has been indicted in a separate scheme involving the alleged theft of more than $135,000 from a compensation fund set up to assist businesses affected by the Deepwater Horizon oil spill in 2010.

The office of U.S. Attorney A. Lee Bentley III of the Middle District of Florida announced Friday that Craddock, 54, of Port Orange, had been charged with wire fraud. The U.S. Secret Service conducted the probe.

BehindMLM.com reported the news in a story dated March 16.

Prosecutors said in a statement that Craddock “crafted fictitious invoices to support the amount of lost earnings that he claimed.”

From the statement by prosecutors (italics added):

According to the indictment, following the April 2010 explosion of the Deepwater Horizon oil rig (which was being leased by BP, formerly known as British Petroleum), Craddock submitted a claim to BP and the Gulf Coast Claims Facility (“GCCF”), an independent facility established by BP to compensate qualified claimants, for lost earnings purportedly related to the impact of the oil spill on his businesses.

Though uncharged in the Zeek case, Craddock has been described by the SEC as an obstructionist who encouraged victims of the $897 million Zeek scheme not to cooperate with Kenneth D. Bell, the court-appointed receiver.

Separately, the Daytona Beach News-Journal is reporting that local property records showed that Craddock, a pilot, recently “bought a home complete with aircraft hangar that backs up to a runway in Spruce Creek Fly-In.”

In 2012, Craddock was involved in a fundraising venture purportedly to assist Zeek participants to mount a challenge against the SEC for bringing the Zeek Ponzi case. This occurred through a Craddock venture known as Fun Club USA, later described by litigants suing Craddock for alleged trademark infringement as a shell company engaged in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

Precisely how much Craddock collected in the Zeek-related fundraising effort is unclear. Also unclear is precisely how the money was used.

Zeek figures Todd Disner and T. LeMont Silver — alleged winners of millions of dollars from Zeek — helped champion the fundraising venture. Disner also was a figure in the AdSurfDaily Ponzi-scheme story, something Zeek receiver Kenneth D. Bell pointed out to a federal judge.

Bell has raised concerns that MLMers or network marketers are moving from fraud scheme to fraud scheme to fraud scheme.

Craddock has been a lightning rod for MLM controversy. In November 2012, for example, he bizarrely planted the seed that MLM attorney Kevin Thompson was practicing law without a license. Thompson described Craddock as a liar.

But if there is a signature Craddock moment, it occurred in July 2012, when Craddock sought to disable a HubPage critical of Zeek by alleging author K. Chang had engaged in libel, trademark infringement and copyright infringement. It was all a fantastic crock, and K. Chang eventually prevailed.

Less than a month after Craddock moved against K. Chang, the SEC and the U.S. Secret Service moved against Zeek.

Court records from the ASD Ponzi case show that ASD also tried to chill reporters with threats about lawsuits in the weeks prior to a government raid on ASD headquarters in August 2008.

In 2014, Craddock was listed as a copyright enforcer on the website of an entity known as Changes Worldwide LLC. The SEC has accused TelexFree figure Faith Sloan of violating the asset freeze in the TelexFree case by sending thousands of dollars to Changes Worldwide. Sloan also was a Zeek affiliate.

Craddock later reportedly authored a book whose sales copy included a claim that the U.S. government should have modeled a “stimulus program” after Zeek, which prosecutors have described as a Ponzi- and pyramid scheme that had gathered $897 million and affected hundreds of thousands of people globally.

The SEC declined to comment on the book, which was offered on Amazon.com.

Mar 16, 2015
EgoPay Site Inaccessible

This screen shot from Google cache appears to show that the website of EgoPay.com was active at least part of the day on March 9.

Poster “Markus” stopped at the PP Blog at 2:19 p.m. ET today, raising a question about why the site of the EgoPay payment processor won’t load.

When the PP Blog later sought to visit the site, it encountered this error message: “www.egopay.com – Connection failed.”

Precisely when the site started generating that message is unclear. A March 9 Facebook post included a screen shot of the same error message the PP Blog observed today.

It is unclear if the EgoPay site has been offline continuously since the 9th. Google cache appears to show the site was online at least part of the day on the 9th.

HYIP enthusiasts apparently haven’t lost faith. On March 11, someone posted this on Twitter: “Huge Income For Your Egopay Account,investing money.”

On March 10, someone posted this on Twitter: “Egopay Payment Received,investing tips.” The post included a link to something called “Qatar Investment,” a site that promises “3400% profit in 24 Hour [sic] (Principal Return).”

The Qatar Investment site also says this: “Fund your Perfecy [sic] Money, Bitcoin or EgoPay account. You can fund your account by Credit Card, Bank Wire Transfer, Cash Deposits, Western Union, Money Gram and other payment methods.”

Despite the apparent Twitter claim on March 10 that Qatar Investment had paid someone through EgoPay on that date, whether anyone actually got paid is unclear.

Could it be the end for EgoPay, a Ponzi-board darling? And if it is the end, what caused it?

Also see Jan. 26 PP Blog post.

Mar 14, 2015
BULLETIN: CLAIM: Former CIA Operative Was Paid More Than $400,000 By Companies Linked To WCM Ponzi Scheme

UPDATED 9:44 P.M. EDT MARCH 14 U.S.A. How strange were things in the universe of WCM777, an MLM “program” accused by the SEC last year of pulling off an $80 million, cross-border Ponzi swindle?

Would you believe that a former CIA operative with two felony convictions ended up on the payroll?

Robert Sensi, the former operative, received $403,000 from companies linked to WCM777, according to an amended lawsuit filed against Sensi in U.S. District Court for the Central District of California.

WCM777 was operated by Ming Xu of Temple City, Calif. A forensic accounting has determined that the WCM777 entities used 77 domestic bank accounts and 23 foreign ones, according to filings by court-appointed receiver Krista L. Freitag.

Sensi was paid six times through ToPacific Inc. and one time through World Capital Market Inc. between Jan 30 and March 25, 2014, according to court filings.

Alleged payments to Robert Sensi from WCM777-related firms. Source: Screen shot from federal court filing.

Freitag is suing Sensi for return of the money. She initially sued him for the return of $385,000 (excluding interest and costs) in November 2014, alleging that he claimed he “used to work” for the CIA and was hired by WCM777-related companies to address complaints about the program by authorities in Peru, Taiwan and Dubai. She further alleged that Sensi was “well aware” that various WCM777-related business were engaged in a Ponzi scheme.

Sensi responded to the November complaint on Feb. 9. He did not expressly deny Freitag’s claim that he had claimed to have worked for the CIA, but he did deny the allegations he’d been hired by the Xu entities to address the concerns about WCM777 in Peru, Taiwan and Dubai. He further denied he had knowledge of a Ponzi scheme.

In his answer, Sensi admitted “services were rendered pertaining to Peru, Taiwan, and Dubai.” But he did not describe the services. On March 12, Freitag filed an amended complaint, asserting in the filing that Sensi had received $403,000 from the WCM777 entities, not the $385,000 specified in the original complaint.

Court records or published reports from the past two decades show that Sensi has been sentenced to prison twice — once for stealing millions of dollars from Kuwait Airways, a second time for a “Nigerian letters” scam in which a German businessman was swindled.

Larry J. Kolb, an author and former CIA agent, has written extensively about Sensi, his ties to the CIA and further ties to Republican politicians and Republican political causes, including fundraising.

Chapter 1 of “America at Night,” a 2007 book by Kolb, is available for free on Kolb’s website. The chapter references a meeting Kolb had in California with attorney “Vince Messina” in May 2004.

A snippet (italics added):

Vince was late for lunch, and I wish he’d never shown up. But, then again, all indications are if Vince hadn’t sucked me back into the secret world, somebody else would’ve. So I don’t hold it against him. Vince Messina. Washington tax and immigration attorney, international dealmaker, bon vivant. Based on what I know of his background, he has to be as old as the hills. But somehow he doesn’t seem it. Bald on top, short dark hair on the sides, olive skin, smiles a lot, constantly on the move. Vince is on the up and up, but spends much of his time in strange lands working for mysterious clients.

During the lunch meeting, Messina asked Kolb if he knew Sensi, a somewhat startling question, Kolb wrote.

After Kolb answered yes, Messina called his nephew, Gary Messina, a U.S. Department of Homeland Security official, to enable Gary to listen in, Kolb wrote.

Ten years later, in May 2014, Vincent Messina would become a relief defendant in the WCM777 Ponzi case. The SEC alleged that Messina was WCM’s asserted “general counsel” and had come into possession of $5 million from the fraud scheme.

More than $941,000 of the $5 million went to International Market Ventures (IMV), a company operated by Gary Messina, according to court filings.

U.S. District Judge John F. Walter declared the $5 million that flowed to Vincent Messina “ill gotten” and ordered it disgorged. IMV was held jointly liable with Vincent Messina for disgorgement of $941,505 of the $5 million sum.

Mar 13, 2015
‘MyAdvertisingPays’ And A Bromide Thrice Vomited

It turns out that a hackneyed expression currently in play within MyAdvertisingPays (MAPS) is a lightly remixed version of one used in the collapsed Zeek Rewards and Achieve Community schemes.

Will this thrice-vomited bromide become a kiss of death for MAPS?

Back before the SEC shut down Zeek in 2012, the $897 million scheme traded in part on “If you want things in your life to change, you have to change things in your life.”

With Achieve prior to its shutdown by the SEC last month, it was “If you do not GO after what you want, you’ll never have it.”

On Twitter, a promoter of the emerging MAPS scheme is prospecting for recruits with a similar line. “If you want something you’ve never had, then you’ve got to do something you’ve never done!”

The PP Blog reported on March 9 that the name of MAPS appears in a TelexFree-related class-action lawsuit originally filed in federal court in New York and later transferred to Massachusetts. Even though MAPS isn’t named a defendant, it is clear that both private lawyers and government lawyers are aware of MAPS.

With an alleged haul of more than $1.8 billion, TelexFree likely is the largest MLM HYIP fraud of all time. Zeek, the previous title-holder in terms of its alleged haul, probably now is second. Both schemes may have created hundreds of thousands of victims.

Zeek’s receiver currently is involved in an international paper chase to round up assets for victims. Some of the money allegedly was routed to the Cook Islands (South Pacific) through a California company and then used to buy property in the Turks and Caicos (North Atlantic).

MAPS, which appears to have a paper presence on the Caribbean island of Anguilla but likely operates from the United States, recently claimed to have “110676+ Users.” Given its business model and the presence of serial promoters of fraud schemes in its membership ranks, MAPS very well could be a litigation target-in-the-making.

Regardless, many MLM HYIP Ponzi promoters will pretend that the membership should not be concerned — as they did with Zeek and Achieve Community.

Mar 13, 2015
BULLETIN: To Hinder Recovery, Zeek Assets Were Funneled To Cook Islands And Used To Purchase Property In Turks And Caicos, Receiver Says

Zeek receiver Kenneth D. Bell has filed a land claim in the Turks and Caicos Islands on behalf of Zeek victims, according to this evidence exhibit in U.S. District Court for the Western District of North Carolina. (Masking by PP Blog.)

BULLETIN: The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case says millions of dollars in Zeek assets were transferred from the United States to the Cook Islands in the South Pacific by a former Zeek vendor known as Preferred Merchants Solutions LLC. At least part of the money allegedly then was used to purchase and renovate a “water-view vacation home” in the Turks and Caicos Islands in the North Atlantic.

Receiver Kenneth D. Bell hired local counsel in the Turks and Caicos to bottle up the property through the filing of a “Caution,” which Bell says “forbids any action with respect to the title of the Turks & Caicos Property” until the matter is resolved in the United States.

Senior U.S. District Judge Graham C. Mullen has frozen the island property, which Bell said he intends to sell to benefit Zeek victims.

Zeek was operated by Paul R. Burks through Rex Venture Group LLC. Preferred is operated by Jaymes Meyer of Napa, Calif.

Events that led to the island freeze involve a bizarre circumstance that allegedly occurred in June 2012, when tens of millions of dollars in undeposited checks — enough to fill six to eight mail bins — had backed up at Zeek, starving the Rex enterprise for cash during a period in which Zeek was having banking problems in North Carolina and its alleged Ponzi was crumbling.

As the PP Blog reported in October 2014, Burks allegedly hired Preferred to solve the problem and also to provide trust services. Bell contends that Preferred effectively transferred Zeek Ponzi cash to itself after it learned from the SEC on Aug. 16, 2012, that an order freezing Zeek assets was imminent.

Bell now says Preferred Merchants, “a single-member LLC owned entirely by Jaymes Meyer, transferred $7,737,402 of RVG assets from an RVG trust account . . . for which Preferred Merchants served as trustee. Prior to receiving the RVG Trust Funds, Preferred Merchants had a total of $2,790 in its bank account on August 1, 2012. Preferred Merchants is Meyer’s only source of income.”

The SEC moved against Zeek on Aug. 17, 2012, securing an asset freeze.

“On October 5, 2012,” according to Bell, “Meyer transferred $300,000 from Preferred Merchants to a Scottrade account held in the name of Fidus, LLC, a Delaware entity for which Meyer is the managing member, but was owned by ‘The Spiritum Holdings Irrevocable Trust,’ . . . a ‘Cook Islands Trust’ that Meyer set up in September 2012” after the Zeek freeze.

“On October 9, 2012, Meyer transferred an additional $6,100,000 from Preferred Merchants to the Scottrade Fidus account,” Bell said. “All or nearly all of the money held or transferred by Preferred Merchants or Meyer to the Scottrade Fidus account were RVG Trust Funds.”

More asset-shielding shenanigans occurred as 2013 was getting under way, months after the court-imposed freeze in August 2012, Bell alleged.

“On February 21, 2013, Meyer wired $6,000,000 from the Scottrade Fidus account to an account owned by the Spiritum Trust at Capital Security Bank Limited located in the Cook Islands,” Bell alleged. “On July 3, 2013, Meyer wired the $400,000 remaining in the Scottrade Fidus accounts to the same Spiritum Trust account in the Cook Islands.

“On or about June 28, 2013, Bella Vita Ltd., an entity in the Turks & Caicos Islands that was created and owned by the Spiritum Trust, purchased real property in the Turks & Caicos Islands designated as Title # 60609/24/Norway & Five Cays Section / Providenciales Island (‘Turks & Caicos Home’).”

What are the specs on the home?

It “is described as a 5 bedroom 5 bath home, which Meyer testified has views of the water,” Bell said. “The money used to purchase this real property were RVG Trust Funds that Meyer had deposited into various accounts owned by the Spiritum Trust.”

What else did Zeek victims allegedly pay for?

“Since the purchase of the Turks & Caicos Home, Meyer has coordinated and supervised improvements and renovations to the home and property, purchased furniture and fixtures, and purchased a boat, scuba equipment, and other personal property to be used with the Turks & Caicos Home . . .

“Meyer claims that over $1.5 million . . . has been spent ‘renovating’ the property and making these additional purchases,” Bell said. “All of these purchases were made with RVG Trust Funds that had come directly or indirectly from the Spiritum Trust or Meyer. However, Meyer and Preferred Merchants disclaim any ownership interest or control over Bella Vita, Ltd. or the Turks & Caicos Property.”

Bell has asked Mullen to “impose and enforce an equitable lien by ordering transfer of title to the Turks & Caicos Property to the Receivership Estate to ensure that there is no more evasion or hindrance of the Receiver’s recovery of these assets by Preferred Merchants and Meyer. The Receiver can then sell the Turks & Caicos Property to collect additional funds for the benefit of the victims of the ZeekRewards scheme.”

NOTE: Our thanks to the ASD Updates Blog.

This map, created by the PP Blog through ZeeMaps, depicts the headquarters of Zeek Rewards in Lexington, N.C., the headquarters of of Preferred Merchants Solutions LLC in Napa, Calif., the Cook Islands’ island of Rarotonga in the South Pacific, and the island of Providenciales (Turks and Caicos) in the North Atlantic.

Mar 13, 2015
UPDATE: ‘Automatic Mobile Cash’ Tanks

“Automatic Mobile Cash,” pushed on YouTube by “Achieve Community” hucksters Rodney Blackburn and Mike Chitty, has tanked, according to chatter on the MoneyMakerGroup Ponzi forum.

MMG poster “im the man,” citing information from SolidTrustPay, claimed yesterday that SolidTrustPay had blocked AMC’s ability “to accept deposits or make withdraws.” Other information in the 16-page, 226-post MMG thread suggests AMC was making selective payouts through SolidTrustPay and Payza at the beginning of March.

Blackburn and Chitty were representatives of something called the “Legendary Income Solutions Team” or LIST, often mixing promos for Achieve Community with appeals for viewers to get on board the LIST train and enroll in various HYIP schemes. YouTube appears to have banned Chitty. Blackburn deleted a number of his pitches for HYIP fraud schemes, and now is suggesting he’s returned to his roots in traditional MLM.

The PP Blog reported last week that Blackburn was touting a “tea” known as “laso,” amid claims it “mitigates” HIV, the virus that causes AIDS.

On Feb. 18, the SEC described Achieve Community as a pyramid- and Ponzi scheme that had gathered more than $3.8 million. A federal judge granted an asset freeze. Criminal investigations into Achieve Community reportedly also are under way.

Chitty claimed AMC paid a “dividend.” Blackburn claimed his good friend Chitty was making “3,000 a month” from AMC.

“That’s some ridiculous money,” he said.

In addition, Blackburn published various “earnings” extrapolations for AMC. One claimed that the purchase of 100 “packages” for $2,500 from AMC turned into $73,000 in a year.

In January, Blackburn dared the SEC to investigate Achieve Community and other programs he was pushing. Whether he’ll dare the Federal Trade Commission or the Food and Drug Administration to investigate the laso health claims was not immediately clear.

The laso tea is one of the offerings of an MLM “program” known as “Total Life Changes.”

After Blackburn’s SEC dare, a “program” known as “TrinityLines” that traded on the name of God and allusions to Scripture went missing.

Blackburn also was promoting “MooreFund,” an obvious fraud purportedly operating from the United Kingdom. He also threw in with “Rockfeller,” an obvious fraud trading on the name of the famous Rockefeller family.

“BRING THE BACON HOME” and “Unison Wealth” also were in the stable. The “bacon” program now has carded at least its second failed launch, and reportedly has a plan to launch again tomorrow. Unison Wealth, meanwhile, appears to have developed problems.

Mar 10, 2015
[PART 2]: ‘MyAdvertisingPays’ Scheme Referenced In TelexFree-Related Class-Action Complaint That Alleges Racketeering — A Zeek Tie, Too

EDITOR’S NOTE: Part 1 of this two-part PP Blog series covered allegations against an alleged New York City-based TelexFree promoter . . .

**__________________**

2ND UPDATE 9:42 A.M. EDT U.S.A. Though not charged as a defendant, the emerging “MyAdvertisingPays” (MAPS) scheme is referenced in a proposed class-action lawsuit filed against multiple TelexFree figures and financial vendors in U.S. District Court for the Southern District of New York in December 2014.

Because both New York’s Southern District and Eastern District are key centers of prosecutions against U.S. financial fraudsters, the proposed TelexFree class-action — now transferred to Massachusetts federal court — leads to questions about whether other “programs” such as MAPS could become the subjects of prosecutions.

Those odds might increase because Staten Island-based Daniil Shoyfer, alleged by the TelexFree plaintiffs “to have been the largest single Promoter in the greater New York area,” also is promoting MAPs, according to a YouTube site in his name.

Beyond that, Shaun Smith, alleged by the receiver in the Zeek Rewards Ponzi- and pyramid case to be one of the largest Zeek “winners” in the United Kingdom, also is promoting MAPs. Receiver Kenneth D. Bell is suing Smith and other alleged U.K. Zeek promoters for return of the funds, alleging they are Ponzi proceeds that came from Zeek victims.

Bell has expressed concern about MLMers or network marketers moving from one fraud scheme to another.

The TelexFree-related class action describes MAPS as a “120% ROI advertising-based Ponzi scheme.”

MyAdvertisingPays (MAPS) is referenced in this TelexFree-related class-action complaint. Red highlight by PP Blog.

The MAPS website purports to have “110676+ Users” and to be “GROWING FAST!” MAPS is the subject of a long thread at the RealScam.com antiscam forum. (Also see BehindMLM.com review of MAPS, also known as MAP.)

From the BehindMLM.com review (italics added):

Using the familiar advertising credit + Ponzi scheme business model, MyAdvertisingPays simpl[y] shuffle new affiliate money around to pay off existing investors.

The business model of MAPS is similar to the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. MAPS purports to operate from George Hill, Anguilla, a British overseas territory in the Caribbean.

In the proposed TelexFree class action, the reference to MAPS appears in a section that alleges various TelexFree financial vendors enabled the fraud. Some of the vendors are alleged to have engaged in racketeering activity.

At least one Zeek vendor has claimed it was rendered insolvent, owing to its Zeek ties.

On its website, MAPS claims it does not accept PayPal because PayPal “has a bad habit of freezing or limiting members accounts for little or no reason at all.” Instead, it encourages prospects to use SolidTrustPay, a vendor used by both the Zeek and ASD schemes.

MAPS also says it uses something called “VX Gateway,” which purports to operate out of Panama.

Mar 9, 2015
‘Achieve Community’ Domains Disconnected

From an Achieve promo playing on YouTube. Masking by PP Blog.

Two domains linked to the alleged “Achieve Community” pyramid- and Ponzi scheme appear to have been disconnected. On Feb. 17, the PP Blog reported that the domains — ReadyToAchieve.com and TheAchieveCommunity.com — were displaying “Account Suspended” messages.

ReadyToAchieve appears still to have DNS servers, but now displays nothing and will not return a ping. TheAchieveCommunity, meanwhile, displays a “no nameserver” message in registration data.

In a complaint filed under seal in U.S. District Court for the District of Colorado on Feb. 12, the SEC described Achieve as a pyramid- and Ponzi scheme operated by Kristine L. Johnson of Colorado and Troy A. Barnes of Michigan. The agency announced the case on Feb. 18, after the seal was lifted.

Both Johnson and Barnes have asserted their Fifth Amendment rights not to incriminate themselves in the SEC case. Barnes reportedly has claimed he’s under criminal investigation, although it is unclear where and by whom. Both ASD Updates and BehindMLM.com have reported Johnson is the subject of a criminal investigation by the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina.

Tompkins is leaving her post today, after nearly five years on the job. North Carolina is a banking center, and Tompkins has become known for her role in bringing cases involving multimillion-dollar investment schemes, securities fraud and mortgage-fraud conspiracies.

One such case was the criminal prosecution of three figures associated with Zeek Rewards, an alleged Ponzi scheme said to have gathered on the order of $897 million. Why Johnson, a Colorado resident charged civilly by the SEC in Colorado federal court last month in the Achieve case, is under criminal investigation in North Carolina is unclear.

Zeek receiver Kenneth D. Bell has raised concerns about network marketers proceeding from one fraud scheme to another. At least one filing in the Achieve case in Colorado suggests Zeek and Achieve had promoters in common, given that the woman who filed the document asking for her Achieve money back also is listed by Bell as a “winner” in the Zeek scheme broken up by the SEC and the U.S. Secret Service in 2012.

As the PP Blog reported on Aug. 17, 2012, the date news of the Achieve probe became public (italics added):

The Secret Service leads a multiagency electronic crimes Task Force in Charlotte, N.C. The Charlotte Task Force is known by the acronym CMECTF.

One promo for Achieve claimed its members had the “God given universal right” to spend their money however they pleased and were choosing “not to sell out to the banking system.” Among other things, Achieve claimed $50 turned into $400.

In court filings, the SEC said it has examined at least five Achieve-related bank accounts. The filings also suggest Achieve polluted the commerce stream at at least least nine points of contact: three banks, one credit union, four payment processors and one brokerage firm.

Johnson is alleged to have provided $10,000 to a church. One or more churches sent money to Zeek Rewards, according to court filings.

Because an untold number of Achieve members received debit cards that could be used at ATMs to offload “earnings,” fraudulent proceeds had the potential to flow through many hundreds of towns and cities, effectively turning local banks into dispensaries for Ponzi schemes or warehouses for them. Achieve is said to have had between 9,000 and 14,000 members.

Ads for other fraud schemes were displayed when Achieve members accessed the “program’s” private forum, contributing to concerns that fraudulent proceeds are circulating between and among scams.

Mar 9, 2015
[PART 1]: CLAIM: Major TelexFree Promoter Operated Out Of New York City Beauty Salon And Marriott Hotel

“Because that’s where the money is.” — Classic rejoinder attributed to Brooklyn-born criminal Willie Sutton, reportedly after he was asked why he robbed banks. The often-quoted line may or may not be apocryphal. (Also see “Sutton’s Law” on the need to consider the obvious and “When you hear hoofbeats, think of horses not zebras.”)

UPDATED 5:26 P.M. EDT U.S.A. If you had the means to throw down $140 for “Chocolate Body Therapy” or $260 to get the “Prince or Princess for a Day” treatment, would you also have the means to direct some cash to an MLM “program” purported to double or triple your money?

Daniil Shoyfer of Staten Island perhaps thought so. In a proposed class-action lawsuit against various TelexFree figures, the plaintiffs accuse Shoyfer of holding TelexFree pitchfests at Salon Delacqua, a beauty shop that offers moderately priced and upscale services on 86th Street in Brooklyn. The meetings appear to have occurred at 8 p.m., near or at the shop’s published closing time.

These pitches included promises of “fabulous wealth,” according to the plaintiffs. The salon also advertises a “Brazilian Karatine” hair-strengthening treatment that takes three hours and begins at $250.

And when Shoyfer wasn’t at the salon, he allegedly was at the Marriott Hotel Grand Ballroom at 102-05 Ditmars Blvd. in the Queens neighborhood of East Elmhust near LaGuardia Airport, pitching the “program” in a room that hotel says on its website can be configured to seat 400.

The demographics from the neighborhood (2010) suggest that 30 percent of its residents were born outside of the United States, with a Latino population on the rise. TelexFree was accused last year by the SEC of targeting immigrants.

Shoyfer pitchfests also were hosted elsewhere in the Greater New York City region, and allegedly were conducted in English and Russian. The sites included the SOHO Lounge in Brooklyn and a real-estate office in the Rego Park neighborhood of Queens.

Accused TelexFree executive Steve Labriola was a co-host at a Shoyfer Marriott pitchfest, dubbed a “Superweekend in NY,” according to the plaintiffs.

Shoyfer allegedly took his marching orders from Labriola and other TelexFree “founders,” including accused Ponzi schemers James Merrill, Carlos Wanzeler and Carlos Costa. Also within the alleged den of financial impropriety were accused TelexFree securities fraudster Joe Craft, an accountant, and Katia Wanzeler, the wife of Carlos Wanzeler.

Along for the ride in the TelexFree swindle, according to the plaintiffs, were Sann Rodrigues, Faith Sloan, Randy Crosby and Santiago de la Rosa, all four of whom were accused by the SEC last year of securities fraud and named defendants in the proposed class action. It is one of several tied to the alleged TelexFree Ponzi- and pyramid scheme.

“Defendant Shoyfer was the creator and leader of a large network of TelexFree Promoters based primarily in New York City, but extending into other states as well, including Massachusetts, and he is believed to have been the largest single Promoter in the greater New York area,” the plaintiffs alleged. “Under any view, Shoyfer funneled a portion of his ill-gotten gain up the food chain to TelexFree, its masterminds and other Defendants.”

The complaint includes alleged passages from Shoyfer text messages to his TelexFree group. These suggest he was gathering cashier’s checks from his downline, and included a claim that he had made “$142,320 in a single week in February 2014” from TelexFree.

According to the complaint, in December 2013, prior to TelexFree’s Sunday night bankruptcy filing in April 2014, Shoyfer told his group this on behalf of himself and TelexFree “founders” (italics added):

From my upper line “Happy New Year everyone!!! 2014 is gonna be the best year for Telexfree$$$! TelexMobil is about to be launched in January! ! And, on Thursday January 23rd at 6.30 pm I will be doing my first Telexfree Superweekend in NY with Steve Labriola (director of international marketing TF) at Marriott Hotel Grand Ballroom by La Guardia Airport at 102-05 Dimars Blvd, Flushing NY 11369 (parking available). Now is the time to meet with top corporate representative..and my top leaders in my rapidly growing team.. You MUST invite your people (forward this msg to them), especially those who r still sitting on sidelines, debating about legibility [sic] and future of this company. .Trust me after this event, all negativity will disappear. .and you will double and triple you earnings in this busine$$ venture in 2014…”

On Feb. 26, 2014, about two days before the Massachusetts Securities Division made public the news that TelexFree was under investigation, Shoyfer allegedly told his group this on behalf of himself and TelexFree “founders” (italics added):

I just received checks from everyone but will wait for u to bring it until 2 p.m… then I’m going to FedEx.

On Feb. 28, the very day news broke that MSD was investigating TelexFree even as the company was reaching into Spain and conducting an event at an ornate hotel in Madrid, Shoyfer allegedly told his group this on behalf of himself and TelexFree “founders” (italics added):

Bring me certified checks now I will send them to ewallet by federal express and they will post it immediately.

TelexFree is alleged to have changed its compensation plan on March 9, 2014, much to the fury of affiliates. Shoyfer, however, continued to promote it, according to the plaintiffs (italics added):

Hey..my team Telexfree! ! And here we go again..Come to check out and learn about new compensation plan TF 2.0.. and how to grow it even faster and MUCH more aggressively and efficiently than the one we had before.…Here is this week’s schedule. . Monday 03/24 at Salon Delacqua (2027 86 str) at 8.00 pm (in English) ..Wednesday 03/26 at SOHO launch(2213 65th street) at 7.45 pm ( in Russian) and Thursday 03/27 at 7.30 pm at 63-112 Woodhaven Blvd in a real estate office. In my case, since I have started from absulute zero during this passed week Mon 03/17- Sun 03/23/14 I booked 11,500 from new one and 21,600 still coming from old plan..A total of 31,100 in 7 short days… Go Telex!!!”

The import of this, according to the plaintiffs, is that [a]fter the institution of the new TelexFree compensation plan in March of 2014, Shoyfer took part in a closed meeting with TelexFree’s Directors and Owners in Marlborough, Massachusetts, at which Shoyfer was instructed not to discuss the new TelexFree compensation plan with other, non-insiders, as the new compensation plan was detrimental to Promoters and was adopted to forestall filing bankruptcy.”

In short, the plaintiffs accuse Shoyfer of working in concert with TelexFree management to dupe people into enrolling “right up until TelexFree’s bankruptcy filing.”

Filings in the TelexFree bankruptcy case suggest Shoyfer received nearly $88,000 from TelexFree in two separate payments just prior to the April 13 bankruptcy filing. The first, for $9,902.37, occurred on March 21, and the second, for $78,037.33, occurred on March 28.

NOTE: Part 2 of this two-part PP Blog series on the class-action lawsuit, which was filed in U.S. District Court for the Southern District of New York, will be published later. Part 2 will cover other allegations from the complaint, filed Dec. 12. A copy of the complaint is available through TruthInAdvertising.org. (Link to complaint temporarily disabled by PP Blog at 9 p.m. EDT March 9, 2015.)

Mar 8, 2015