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Category: The Economy

  • ANOTHER MLM PR DISASTER: Zhunrize, Alleged Worldwide Pyramid Scheme That Gathered $105 Million, Was Presented As A ‘Plan B’

    From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.
    From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.

    2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”

    The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.

    In 2012, Zeek and ASD figure Keith Laggos pushed the Lyoness “program” as a “Plan B.”

    Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”

    Lyoness is now under investigation in Australia, amid pyramid-scheme allegations.

    “Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”

    Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.

    MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.

    WCM777, meanwhile, collapsed in March 2014 after interventions by the SEC and state-level securities regulators. WCM777 purportedly was a “cloud computing” company  that allegedly gathered more than $80 million. In April 2014, another MLM HYIP scheme — TelexFree — collapsed. The SEC and the Massachusetts Securities Division said it was conducting a billion-dollar, cross-border securities swindle. TelexFree positioned itself as a “VOIP” company that also was in the apps, cellphone and credit-repair businesses.

    The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.

    The SEC yesterday announced fraud charges against the Zhunrize MLM scheme, accusing it of selling unregistered securities and operating a massive international pyramid scheme.

    The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.

    “Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.

    In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”

    One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.

    Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.

    In court filings, Zeek receiver Kenneth D. Bell has suggested that MLM may have a problem with “serial” participants in fraud schemes who tout purported “revenue-sharing” plans.

    Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.

    If someone pitches you on an MLM “Plan B,” run like the wind.

  • URGENT >> BULLETIN >> MOVING: SEC Calls Zhunrize MLM Company Worldwide ‘Pyramid Scheme’ That Gathered More Than $100 Million

    breakingnews72URGENT >> BULLETIN >> MOVING: (8th Update 6:56 p.m. EDT U.S.A.) The SEC has gone to federal court in the Northern District of Georgia, alleging that the Atlanta-based “Zhunrize” MLM program is a pyramid scheme that operates globally and has gathered $105 million from 77,000 investors.

    The Zhunrize “program” has been charged with fraud. It is at least the third MLM targeted by the SEC since March. The agency filed charges against WCM777 in March. In April, it filed charges against TelexFree.

    Zhunrize CEO Jeff Pan, 52, of Suwanee, Ga., also has been charged with fraud, the SEC said. A federal judge has issued an asset-freeze order.

    All three of the MLM schemes operated online and allegedly affected tens and tens of thousands of people.

    Zhunrize has been operating since 2012, the same year the SEC took down the Zeek Rewards MLM scheme, alleging a fraud that had gathered hundreds of millions of dollars.

    From a statement by the SEC on the Zhunrize case (italics added):

    According to the Commission’s complaint, Zhunrize purports to be a legitimate multi-level marketing business by which members purchase online stores and then sell merchandise through them, while earning commissions on products purchased by their customers and through store sales to other members and hosting fees paid by those members. In fact, the company is operating as a pyramid scheme because its commission structure is based on the continual recruitment of new members, with the most lucrative returns dependent on the downline recruitment of other members through store sales irrespective of any product sales. To date, the company has taken in approximately $105 million from approximately 77,000 investors since 2012.

    The Commission’s complaint further alleges that in its promotional materials, Zhunrize touts the ability to earn commissions from the sale of products, both through the owner’s store and through downstream owners’ stores. For example, a Zhunrize promotional video differentiates Zhunrize from other on-line multi-level marketing plans, claiming that Zhunrize has “sustainability.” According to the video, the Zhunrize “model will sustain itself because we will have millions more customers than distributors.” Later, the narrator in the video claims “we have the Vendor Relationships, the Logistics, the Payment Gateways to reach millions of new customers each month.”

    The Commission’s complaint also alleges that Zhunrize does not disclose, however, that to date substantially all of its revenue has comes from the sale of memberships (referred to as stores) and the corresponding monthly internet hosting fees associated with operating those stores, rather than the sale of products. Indeed, both Pan and a Zhunrize vice-president testified that the company currently derives 80-90% of its revenue from selling online stores and the monthly internet hosting fees for them, as opposed to actual products from these stores. Thus, contrary to the representations to potential investors, Zhunrize is actually a fraudulent pyramid scheme.

    Like other MLM schemes before it, Zhunrize appears to have traded on the names of famous companies outside the MLM realm. The PP Blog today, for instance, observed a promo for Zhunrize in Spanish that referenced an “online store” known as “ZHunCity” and dropped the names of Ebay, Amazon, Wal-Mart, Target and Best Buy.

    It is common for fraud schemes to drop the names of famous companies as a means of sanitizing the purported MLM ‘opportunities.” Offering materials for WCM 777, which allegedly gathered tens of millions of dollars, dropped the names of hundreds of famous brands while also dropping the names of famous businesspeople and famous politicians.

    WCM appears to have taken in on the order of $80 million, according to court records in the case. The Massachusetts Securities Division has alleged that TelexFree may have gathered more than $1.2 billion in a little better than two years.  WCM77 made its $80 million haul in about one year.

    TelexFree and WCM both engaged in affinity fraud by targeting specific population groups, according to court filings. There may be promos for Zhunrize in languages other than Spanish and English. The PP Blog observed a Zhunrize promo today that was simply labeled “Brazil,” which may mean Portuguese-speaking populations were targeted.

    That was the case with both WCM777 and TelexFree.

  • BULLETIN: Massachusetts Bank For TelexFree Settles With Securities Division For $3.5 Million; All Settlement Proceeds Will Go To Victims In The State; Bank Will Establish ‘Massachusetts Victim Relief Fund’

    breakingnews72BULLETIN: (3rd Update 1:34 p.m. EDT U.S.A.) A Massachusetts bank that established accounts for TelexFree and whose president is the brother of alleged TelexFree Ponzi- and pyramid-schemer James Merrill has settled with the Massachusetts Securities Division for $3.5 million.

    The settlement between MSD and Fidelity Co-operative of Fitchburg means that an escrow account consisting of the $3.5 million and whatever interest it draws will be set up for TelexFree victims who reside in the state. With MSD helping shepherd the process and maintaining veto power to protect the interest of victims, the bank will retain an independent claims administrator at its own expense to manage claims and disbursements.

    The escrow account will be called the “Massachusetts Victim Relief Fund.”

    At some point at least 120 days in the future, the administrator shall “determine an independent plan of Distribution.” TelexFree victims in Massachusetts will be able to file claims. Those with approved claims will be compensated under a formula established by the claims administrator.

    Precisely when the claim-filing period will begin was not immediately clear. Also unclear is precisely how many TelexFree victims reside in Massachusetts. What is clear is that MSD — with the consent of Fidelity Co-operative —  has arranged a means by which TelexFree victims residing in the state will receive money some of them may need desperately.

    Using a series of banks and payment vendors, TelexFree might have scammed as much as $90 million in Massachusetts alone. Its overall scam may have gathered more than $1.2 billion across the world.

    MSD brought alarming allegations of fraud against TelexFree in a civil action on April 15. By April 30, it had opened an investigation into Fidelity Co-operative’s role in the TelexFree case.

    As part of the settlement, the bank neither admitted nor denied the state’s allegations that it did not perform adequate due diligence on TelexFree before permitting the company to open three accounts in August and September of 2013.

    Only after receiving millions of dollars in TelexFree deposits for a period of between two and three months did Fidelity Co-operative conduct any legitimate due diligence on TelexFree, MSD alleged. On Nov. 27, 2013, according to MSD, bank president John Merrill asked Fidelity’s compliance and Bank Secrecy Act officer to review TelexFree’s banking activivity.

    Merrill is the brother of TelexFree figure James Merrill, later to be indicted with fellow TelexFree figure Carlos Wanzeler on charges of wire fraud and wire-fraud conspiracy.

    The bank’s compliance officer — by performing simple Internet searches — soon came to realize that TelexFree’s operations in Brazil had been shuttered amid pyramid-scheme allegations, according to MSD. The officer notified John Merrill of his findings and also relayed his concerns to an outside consultant the bank used for compliance and BSA issues.

    By Dec. 3, the bank advised TelexFree that it was closing its accounts by Dec. 31, MSD alleged.

    And, MSD alleged, Fidelity Co-operative also had opened personal accounts for James Merrill and Carlos Wanzeler. After the bank began conducting due diligence on TelexFree in earnest on Nov. 27 and during a period in which TelexFree accounts were pending closure, MSD alleged, Wanzeler transferred $3.5 million from his personal account at Fidelity Bank “to an overseas bank account held in Singapore at the Oversea-Chinese Banking Corporation.”

    Citing evidence listed by prosecutors in the office of U.S. Attorney Carmen Ortiz of the District of Massachusetts, MSD alleged that James Merrill and Wanzeler transferred more than “$10.4 million out of Fidelity Bank, in multiple transactions using personal accounts, to various other financial institutions after November 27, 2013.”

    Through both business and personal accounts at Fidelity Co-operative, “TelexFREE and its principals caused further harm to Massachusetts victims of the TelexFREE scheme,” MSD alleged.

    Massachusetts Commonwealth Secretary William Galvin oversees MSD, which has been squaring off against multiple cross-border pyramid schemes.

    Read the consent order between MSD and Fidelity Co-operative.

  • Small Sampling Of TelexFree ‘Net Losers’ Paints Picture Of Massive Cash Losses And Potentially Horrifying Loss Of Future Purchasing Power

    TelexFree pitchman Sann Rodrigues, one of four promoters accused by the SEC of fraud. Rodrigues has ties to Massachusetts, Florida and Brazil.
    TelexFree pitchman Sann Rodrigues, one of four promoters accused by the SEC of fraud. Rodrigues, a defendant in an earlier SEC case that alleged pyramid-scheming and affinity fraud,  has ties to Massachusetts, Florida and Brazil.

    UPDATED 3:33 P.M. EDT SEPT. 22 U.S.A. A small subset of data from 95 self-identified “net losers” in the TelexFree MLM scheme shows that they lost a whopping average of $27,578 each, according to an analysis by the PP Blog of court filings in the TelexFree bankruptcy case.

    The average could be higher because investment sums for four of the 95 were not immediately available. Particularly concerning is a claim from the 95 losers that there may be “1,000,000 or more victims” of TelexFree’s fraud.

    Viewed in microcosm, the data from the 95 losers paint a picture of an incredible loss of purchasing power across U.S. states and across the Atlantic Ocean into Italy — all from an association with TelexFree. At a minimum, the data suggest that TelexFree could cause certain U.S. investors to lose their nest eggs or even slip deeper into poverty.

    When compared to the U.S. poverty guidelines as published by the U.S. Department of Health & Human Services earlier this year, TelexFree eviscerated wealth among the TelexFree group of 95 at better than two times the U.S. poverty wage of $11,600 for one-person households in 2014. With average TelexFree losses among the group of 95 at $27,578, the 2014 poverty-wage of $27,910 for a five-member household nearly was matched. (The poverty guidelines referenced in this story are for the 48 contiguous U.S. states and the District of Columbia.)

    What this means, in essence, is that certain TelexFree members who perhaps were living in poverty or had a meager standard of living before they encountered TelexFree have lost capital at a rate that further tightens their economic shackles. Lost purchasing power means a lower standard of living for many Americans already living on tight budgets and may translate into things such as automobile repossessions and mortgage foreclosures.

    The bitter irony is that TelexFree — like many HYIP schemes — was positioned as the remedy for economic ills, perhaps particularly the ills of people already at the edge of individual and family disaster. In a bizarre sales strategy, TelexFree appears to have targeted the impoverished people of Haiti to sell a purported credit-repair program to impoverished people in the United States and elsewhere.

    Some purported TelexFree “leaders” appear to have had access to a “private jet” that traveled from nation to nation to line up marks.

    In many cases, according to the group of 95, the losses eroded or eviscerated the “life savings” of TelexFree members.

    Some TelexFree members were lured into the scheme by promises that $289 would return $1,040 in a year, $1,375 would return $5,200 and $15,125 would return $57,200. (Investors at the $1,375 level appear later to have been pitched to buy in at $1,425. Investors at the $289 level appear later to haven been pitched to buy in at $299. See story below for a reference to buy-ins at the $1,375 and  $1,425 levels among the group of 95. Many TelexFree members bought in at much higher levels.)

    “Everybody gets paid” was a common theme. The “program” even reached into other nations with severe economic challenges such as Peru and Rwanda.

    Of the group of 95, about 38 listed addresses in Massachusetts, TelexFree’s U.S. base. One individual in Everett, Mass., listed a loss of $427,500. Another person in Saugus, Mass., listed a loss of $345,000. Two other individuals with the same address in Revere, Mass., listed combined losses of $350,000 — $175,000 each. A person in Woburn, Mass., listed a loss of $72,800. Another person in Chelmsford, Mass., listed a loss of more than $58,777.

    In nearby Connecticut, a person in Stratford listed a loss of $42,000. A person in Monroe listed a loss of $35,625.  At the same time, a person in Trumbull listed a loss of $19,950. Also in the New England region, a person in Nashua, N.H., listed a loss of $16,000.

    To the south of Massachusetts, an individual in Waleska, Ga., listed a loss of more than $109,465. A person in Raleigh, N.C. listed a loss of more than $81,889. To the west, two persons with different addresses in Las Vegas listed losses of $50,000 — $25,000 each. Another person with a Las Vegas address listed a loss of $26,800. Yet another person in Las Vegas listed a loss of $17,175.

    In April 2014 — after bringing an emergency action against TelexFree and alleging it was conducting a massive Ponzi- and pyramid scheme — the U.S. Securities and Exchange Commission alleged that the “program” mainly was targeted at “Dominican and Brazilian immigrants in the U.S.”

    The SEC’s action occurred after authorities in Brazil — a Portuguese-speaking country — alleged that a TelexFree arm known as Ympactus was targeting investors there in a pyramid scheme.

    The group of 95 now says that TelexFree also targeted the “Nigerian and Russian” communities, in addition to the Spanish- or Portuguese-speaking communities.

    “. . . many Promoters do not speak English fluently,” the group of 95 says, adding that “creditor victims here are also undocumented immigrants residing in the United States, and may be thus extremely reluctant to directly participate in any formal proceedings, and also extremely reluctant to deal with a bankruptcy trustee or other official representative with duties other than solely to creditors. The bulk of the Debtors’ unsecured creditors cannot engage with these Chapter 11 Cases in any meaningful way.”

    Court filings by the group of 95 now show that TelexFree also had a presence among people who speak Italian and have addresses in Italy. Several addresses in Italy proper appear in a document filed by the group of 95, including the address of a person said to have lost $21,375, a person said to have lost $11,400 and another person said to have lost more than $8,699.

    Many others across the spectrum of the group of 95 suffered smaller losses that may be equally painful. The smallest sum lost by member of the group appears to be $900 — by a person in Deltona, Fla.  Another person in Deltona is said to have lost $1,645.

    Other “small” sums lost by members of the group of 95 include $1,375 by a person in Bologna, Italy; $1,425 by a person in Las Vegas; another $1,425 lost by a different person in Las Vegas; $1,425 by a person in New Bedford, Mass; and $1,425 by a person in Weymouth, Mass.

    Buy-in dollar sums from the low thousands to the multiple tens of thousands were common among the group of 95, which is seeking to form an official committee of unsecured creditors in the TelexFree bankruptcy case.

  • No Immediate Comment From Federal Reserve On Claims Related To Emerging BitClub Network ‘Program’

    cautionflagUPDATED 12:27 A.M. EDT SEPT. 22 U.S.A. The PP Blog today contacted the Board of Governors of the Federal Reserve System, owing to claims concerning the emerging BitClub Network “program” that is being pitched by certain members of the $850 million Zeek Rewards Ponzi- and pyramid scheme.

    Known in shorthand as the Fed, the Federal Reserve is the central bank of the United States.

    Someone is posting on the RealScam.com antiscam forum as “Fedman” and purporting to be “Steve,” a “Vice President” of a federal reserve bank. Fedman purports to have been employed by the Fed “for over 30 years,” to “manage large operations” and to “work with monetary policy.”

    Fedman appears to be defending pitches for BitClub Network by Brian Spatola, a New Jersey-based  alleged “winner” in the massive Zeek scheme that may have affected hundreds of thousands of people. The court-appointed receiver in the Zeek case is suing more than 9,000 alleged Zeek winners in the United States and has said he’ll also sue international winners in the “program.”

    The Fed did not immediately comment on the claims being made by Fedman.

    It is sometimes the case in HYIP schemes that promoters and defenders of “programs” drop the names of individuals and entities that have no ties whatsoever to a “program” as a means of sanitizing scams. The name-dropping associated with BitClub Network has been furious and now appears even to include the name of the U.S. central bank.

    bitclub350smallAfter missing a series of advertised launch dates — including one on Sept. 1, the 75th anniversary of the beginning of World War II and another on Sept. 10, the eve of the 13th anniversary of the 9/11 terrorist attacks — BitClub Network now appears to have launched.

    Promoters claim the scheme pays out between 0.3 and 0.8 percent a day for 1,000 days on invested sums of between $500 and $3,500. In addition, promoters claim there are recruitment commissions on top of the daily payout, a claim that accompanies many HYIP Ponzi- and pyramid swindles.

    Among the BitClub Network promoters are Spatola and T. LeMont Silver, late of Zeek. Silver also promoted the OneX pyramid scheme, an exceptionally murky program that used an image of a bomb in its logo.

    AdSurfDaily figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was a Federal Reserve conspiracy theorist and an overall banking conspiracy theorist. Leaming was arrested by an FBI terrorism task force in 2011, after filing bogus liens against federal officials who had a role in the ASD Ponzi prosecution that began in 2008.

    Leaming now is serving a lengthy prison sentence.

     

     

     

  • British Women Convicted For Roles In Cash-Gifting Pyramid Scheme With Bridal Theme

    recommendedreading1In May 2012, three American women and alleged “leaders” of a cash-gifting pyramid scheme were arrested in Connecticut for their roles in the purported “opportunity,” a pyramid that featured so-called “Women’s Gifting Tables” and had a food theme. Two of the woman later were sentenced to prison. The third woman was placed on three years’ probation and put under court supervision.

    It now has emerged that 11 women in Britain implicated in a highly similar scheme have been prosecuted. Six have been convicted. The British scheme was known variously as “Give and Take” and “Key to a Fortune” and had a bridal theme.

    MailOnline published a photo of promo material associated with the scam. It showed a beaming young woman, presumptively a newlywed, displaying a pile of cash from a bed.

    The apparent message? Get a great start in wedded life by handing over your cash to a gifting scheme and waiting for your £3,000 to magically turn into more than £20,000.

    Like the Connecticut cash-gifting scheme, the British scheme allegedly was led by older women, including some in their fifties or sixties. Both schemes featured false claims the “program” was legal.

    The British scheme reportedly gathered on the order of £21 million, with about 90 percent of participants losing their money. Some of the participants appear to have purchased multiple positions, hoping to score more than one payout.

    Western Morning News, quoting a prosecutor, reported the scheme was ruled with a “rod of iron.” In May 2012, federal prosecutors in the United States said the Connecticut scheme included an element of “intimidation” aimed at silencing people who questioned the scheme.

    The scheme in Britain allegedly operated between May 2008 and April 2009. The Connecticut scheme operated roughly between 2008 and 2011.

    From the BBC, quoting Judge Mark Horton (italics added):

    “These cases and the actions and attitudes of these defendants demonstrate the way in which pyramid promotional schemes and chain gifting schemes can be secretly created and quickly spread amongst a vast number of people and over several counties,” he said.

    Even members of Alcoholic’s Anonymous were targeted in the U.S. scheme, according to testimony in the case.

    Vulnerable individuals also were targeted in the U.K. scheme, according to multiple media accounts.

    In 2013, police in Canada issued a warning about a “Women’s Circle” cash-gifting scheme “making its rounds” in British Columbia. In 2010 and 2011, at least 15 women in the U.S. state of Michigan were charged criminally in an alleged cash-gifting scheme.

    In February 2014, a prosecutor in Hawaii warned about a “Women’s Circle” gifting scheme operating in that state. The PP Blog reported at the same time  that members of a cash-gifting scam known as BlessingGoldClub were trying to offload “units” in the Better-Living Global Marketing HYIP scam for $500. The units purportedly were being discounted from $1,295.

    In the U.K. case, Judge Horton said, “The public need to be aware that schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities as friends and family are lured into such a scheme,” according to Western Morning News.

     

  • Warrant Issued For Arrest Of Eric Matthew Frein, Pennsylvania Man Suspected Of Ambushing 2 State Troopers At Rural Barracks In Cowardly Nighttime Attack

    Eric Matthew Frein. Source: Pennsylvania State Police.
    Eric Matthew Frein. Source: Pennsylvania State Police.

    2nd Update 11:35 p.m. to note that Frein has been added to the FBI’s 10 Most Wanted Fugitive List.

    Normalcy has not returned to Monroe County in the Pocono Mountains region of Northeastern Pennsylvania. Two troopers allegedly were ambushed outside their barracks in a nighttime, shift-change attack at the Blooming Grove station in nearby Pike County on Friday.

    Cpl. Bryon T. Dickson, 38, was shot and killed. Tpr. Alex T. Douglass was seriously wounded.

    Pennsylvania State Police now say Eric Matthew Frein, 31, of Canadensis, Pa., is wanted in connection with the shootings. Canadensis is in Monroe County.

    Frein, described in media accounts as having “survivalist” skills, reportedly belongs to a group that reenacts European military campaigns.

    Here’s the lede in a Sept. 17 story from the Times Leader (italics added):

    Friends described homicide suspect Eric Matthew Frein as intelligent, an Eagle Scout and a military re-enactor, while the state police call him a “coward” who dressed up as a Serbian soldier.

    The manhunt for the 31-year-old Canadensis man continued Wednesday throughout the rural and dense areas of the Poconos in Monroe, Pike and Wayne counties, prompting the closure of several schools in the region.

    From a Sept 18 story at TheDailyReview.com (italics added):

    [State Police] Lt. Col. [George] Bivens declined to say which group Frein belonged to because they are hoping for cooperation from its members. But Frein is pictured repeatedly on the MySpace page of Istocni Vuk, a group that dresses up as Serbian Army soldiers. Roughly translated, the name Istocni Vuk means “Eastern Wolf.” On the page, Frein is referred to in one photo as Vuchko, which was the wolf mascot in the Sarajevo Winter Olympic games in 1984. On some sites online, Vuchko is referred to as “the tough and courageous wolf.”

    UPDATE 11:35 P.M. EDT U.S.A. Frein has been added to the FBI 10 Most Wanted Fugitive List.

  • Major Counter-Terrorism Operation Aimed At Alleged ISIS Supporters Announced In Australia; Police Seize Sword, Weapons; Random Attacks Planned Against Members Of Public, Police Say

    From abc.net,au
    From abc.net.au

    The largest counter-terrorism campaign in Australia’s history reportedly is under way today, with officials saying one or more individuals with links to ISIS planned random attacks against members of the Australian public to demonstrate the reach of the terrorist group.

    ISIS is associated with beheadings. Two American journalists and a British aid worker have been executed in this fashion by ISIS, which has taken over lands in Iraq and Syria.

    Video circulating in Australian media today shows that police seized a sword.

    Here is the lede from a story in The Telegraph (U.K.) (italics added):

    Pre-dawn raids across Sydney and Brisbane led to the arrest of fifteen people and the reported seizure of a scimitar, a gun, machetes, balaclavas and military fatigues which authorities said were to be used in a plot to “shock, horrify and terrorise” the community.

    “It is of serious concern that in the heart of our community there have been plans to conduct a random attack,” New South Wales Police Commissioner Andrew Scipione said. “We know there were plans on foot and we have been able to disrupt that.”

    From a statement by Australian Federal Police (italics added):

    Fifteen people have been detained in relation to serious terrorism related offences during a major NSW Joint Counter Terrorism (JCTT) operation in Sydney today.

    More than 800 officers from the AFP and NSW Police Force conducted 25 search warrants across Sydney this morning in the suburbs of Beecroft, Bellavista, Guildford, Merrylands, Northmead, Wentworthville, Marsfield, Westmead, Castle Hill, Revesby, Bass Hill and Regents Park.

    Fifteen warrants have been undertaken at Sydney premises this morning, with a further 10 warrants undertaken in relation to vehicles.

    The operation follows the Joint Counter Terrorism Team investigation of a group of people located in Sydney alleged to have the intent to carry out random attacks on individuals here in Australia.

    Police believe this group was actively preparing for the attacks however there is no information regarding a specific attack, including dates, time or location.

    The warrants were undertaken today to prevent the group’s planning activities at the earliest opportunity, and collect further evidence.

    Also see The Australian.

    Also see abc.net.au.

    From NBC News (italics added):

    Prime Minister Tony Abbott told reporters that “exhortations” were coming from an Australian who is senior in the ISIS movement to support networks in Australia to “conduct demonstration killings.”

     Also:

  • Launch Of Murky BitClub Network ‘Program’ Appears To Be Under Way

    From a BitClub Network promo on a page in Indonesian today. Red blocks by PP Blog.
    From a BitClub Network promo on a page in Indonesian today. Red blocks by PP Blog.

    Much remains murky about BitClub Network, a Bitcoin-themed “program” that in typical HYIP fashion missed at least three advertised launch dates earlier this month.

    The launch, however, now appears to have gotten under way shortly after “2 p.m. EST” today, a possible indicator that the “program” is using Panama time.

    One promo the PP Blog observed shortly after the launch time was in Indonesian. It appeared to claim that BitClub Network paid between 0.3 percent and 0.8 percent a day. If we are reading this claim correctly, it appears as though the promoter is saying recruits who send in $3,000 will earn somewhere between $9 and $24 a day — or between $270 and $720 a month.

    We ran the Indonesian claim through Google Translate. Here is part of what the English translation reads (italics added):

    . . . the process is run by experts [mining?] bitcoin Digital Currency you just sit at home and receive a daily income of about 0.3 to 0.8% everyday.

    The Indonesian pitch also referred to “compounding.” Many HYIP schemes purport that “earnings” can be compounded and that relatively small sums will be become tremendous fortunes over time. Zeek Rewards, which allegedly collected on the order of $850 million in a combined Ponzi- and pyramid scheme that lasted less than two years, was such a “compounding” program.

    If our reading of the early info on BitClub Network is correct, it is an upstart offering fraud with a lower daily payout rate than Zeek, which averaged about 1.5 percent. Promos for Bitclub Network claim recruits will get paid for 1,000 days. Zeek had a much shorter term, absent “rollovers.” BitClub Network also may have a rollover feature.

    Alleged Zeek Rewards winner Brian Spatola of Randolph, N.J., appears to be on the front lines of BitClub Network.  So does alleged Zeek winner T. LeMont Silver, a named defendant in a clawback action by the court-appointed receiver in the Zeek case.

    The BitClubNetwork site itself today was using rolling headlines from other sites. One read, “United Way Becomes Largest Nonprofit to Accept Bitcoin.”

    Some scams trade on the names of reputable entities as a means of creating a veneer of legitimacy. The names of other famous companies easily could appear in the rolling headlines on BitClub Network, which is presented as a “mining” venture that offers “shares.”

    That famous entities may use Bitcoin does not mean that BitClub Network itself is legitimate. Prior to the emergence of Bitcoin, the scammers who promote HYIPs routinely traded on the names of famous banks and credit-card companies, hoping the legitimacy of those enterprises would rub off on the emerging scams.

    Regulators have issued repeated warnings about the volatility of Bitcoin values and about scams that seek to tie themselves to Bitcoin.

    Here is part of what BitClub Network says about itself on its website (italics added):

    BitClub is not owned by any one person, we are a team of experts, entrepreneurs, professionals, network marketers, and programming geeks who have all come to together to launch a very simple business around a very complex industry. Anyone can join BitClub and begin earning a passive income by taking advantage of our expertise in Bitcoin mining and other Bitcoin related services.

    Fuzzy ownership and claims about “passive income” lead to questions about whether a “program” is conducting an offering fraud, selling unregistered securities as investment contracts and permitting recruits who have little or no net worth to direct whatever safety blanket they have to murky enterprises with long reach.

    Zeek Rewards preemptively denied it was a “pyramid scheme.” On its website, BitClub Network preemptively denies it is a “ponzi scheme .” The “program” claims to be “based in Europe.”

    It further claims to operate “virtually with contributors from all over the world.”

    And, it claims, “[o]ur main servers and technology for digital mining is located in a very secure and private location that will only be made available by pictures and a live video feed in the near future.”

    An earlier HYIP “program” known as JSS Tripler/JustBeenPaid appeared to use servers in the Netherlands. Frederick Mann, its murky purported operator, once fretted that the JSS/JBP servers could be subjected to a “cruise missile” attack.

    This is from the FAQs at the BitClub Network site (italics added):

    Q – If BitClub is already successful at mining Bitcoin then why are you sharing profit? Great Question!s [sic]

    A: Because of how mining works it is always getting harder and harder for smaller mines to make great profits. This is quickly turning into a game for the big boys. Bigger orders mean bigger discounts on hardware, less electricity and rent per Ghz, more flexibility in what is mined and many other factors. By starting BitClub Network we know that over the next couple of years we could become one of the largest most profitable mines in the world. We will actually make more money sharing the profits with you. That’s why there are so many mining pools, we are just doing things a little differently. We believe in the motto “Making money is a team sport.”

    Despite the fact BitClub Network says it does not promote that “a share will have set return and we don’t offer 100% ROI claims,” the site in Indonesian is making a claim that the daily payout will range between 0.3 percent and 0.8 percent. If people send in $3,000 and purportedly make between $9 and $24 a day with it, they’d make between $9,000 and $24,000 in BitClub Network’s purported term of 1,000 days.

    Bernard Madoff would not have dared to be so bold.

    A graphic of a smiling miner wearing a button-down shirt and swinging a pick appears on the site in Indonesian. Another graphic at the site shows Bitcoin and an Automated Teller Machine — as through BitClubNetwork will be the easiest thing in the world, that laborers worldwide will be smiling.

    The site in Indonesian also carries graphics of nice automobiles. A photo displays people standing in front of a “HOLLYWOOD” sign — presumptively in California. The banner in part reads, “MALAYSIA.”

    Another “MALAYSIA” banner appears in the foreground of a shot that shows people and pine trees set against a backdrop of snow.

    Following a recent pattern in HYIP promos, famous landmarks such as the Eiffel Tower and the Arc de Triomphe also appear on the site in Indonesian.

  • BULLETIN: MLM Attorney Jeffrey Babener Told TelexFree It Was Operating Pyramid Scheme Months Before Collapse, But MLM ‘Program’ Continued To Collect Money, Bankruptcy Trustee Says

    newtelexfreelogoBULLETIN: (2nd Update 5:26 p.m. EDT Sept. 16 U.S.A.) The court-appointed trustee in the TelexFree bankruptcy case says in court filings that MLM attorney Jeffrey Babener advised TelexFree in August 2013 that it was operating a pyramid scheme.

    TelexFree nevertheless continued to collect money, Trustee Stephen B. Darr said.

    Just two months earlier — in June 2013 — TelexFree’s Brazilian arm (Ympactus) “was seized by the Brazilian authorities and its operations shut down based upon the allegations that its operations constituted a pyramid scheme,” Darr said.

    Between early February 2014 and mid-March 2014 alone, Darr said, TelexFree “took approximately $50,000,000 from new and existing Promoters.”

    This occurred while both the SEC and the Massachusetts Securities Division were investigating TelexFree, Darr said.

    And, he noted, it also occurred after TelexFree — in the late summer or early fall of 2013 — had retained Robert Weaver, “an attorney with extensive white collar crime expertise, and the firm of Garvey, Schubert, Barer based in Seattle to, upon information and belief, provide legal advice respecting potential and/or ongoing violations of federal and state law.”

    “Despite the shutdown of Ympactus on the basis that its business was a pyramid scheme, and being advised in August of 2013 that the Debtors’ business plan was a pyramid scheme, the Principals continued to operate their business in accordance with that scheme throughout 2013 and into March 2014,” Darr said.

    Babener not only told TelexFree it was operating a pyramid scheme, he also told the law firm Greenberg Traurig that TelexFree was a pyramid scheme, Darr said.

    Greenberg Traurig, Darr said, initially had been retained by TelexFree in early February 2014 to represent the company “in connection with the MSD investigation.”

    The law firm then represented TelexFree in its Chapter 11 bankruptcy case. That case was filed in Nevada on April 13, two days before the SEC and MSD brought actions and the FBI and the U.S. Department of Homeland Security raided TelexFree’s office in Massachusetts.

    With TelexFree members complaining about high billings from TelexFree’s bankruptcy lawyers and other professionals involved in the bankruptcy case, Darr said that he “has reached an agreement in principle with Greenberg [Traurig] that should resolve the objections of the Trustee and the SEC to the Greenberg fee application.”

    (See BehindMLM.com for story on clashes with the Gordon Silver law firm over fees.)

    Overall, Darr said, TelexFree had racked up more than $5 billion in liabilities.

    If it proves true Babener advised TelexFree it was operating a pyramid scheme, his concerns would appear to be in stark contrast to words MLM attorney Gerald Nehra delivered at a TelexFree convention in California in July 2013.

    In May 2014, some TelexFree members accused Nehra of racketeering and turning a blind eye to fraud at TelexFree, alleging he misrepresented TelexFree as a legitimate business and encouraged TelexFree members “unknowingly” to “participate in the evasion of federal and state securities laws.”

    Moreover, the plaintiffs alleged, Nehra’s “opinions were packaged and promoted as part of TelexFree’s total ‘post Brazilian shut down package’ to the members of the putative class,” according to the complaint.

    Nehra was not merely providing zealous representation to TelexFree, the plaintiffs alleged. Rather, he counseled “TelexFree on methods to evade United States securities laws that were intended to offer, in part, protection from pyramid Ponzi schemes; all to enrich himself financially and serve his own selfish interests.”

    Nehra was billed as a “special guest” at a TelexFree rah-rah session in Spain in early March of this year, but appears not to have shown.

  • Attorney General References ISIS Recruiting Efforts; ‘We Have Established Processes For Detecting American Extremists Who Attempt To Join Terror Groups Abroad,’ Holder Says

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.” — Eric Holder, U.S. Attorney General, Sept. 15, 2014.

    EDITOR’S NOTE: This is the full statement of the U.S. Department of Justice on an initiative to combat violent extremism in an era in which terrorists effectively are operating global mass-marketing campaigns.  The terrorist group ISIS, which has taken over lands in Iraq and Syria, recently has engaged in beheadings of two American journalists and a British aid worker. A link to a video of remarks by U.S. Attorney General Eric Holder appears at the bottom of this post. ISIS also is known as ISIL.

    ** ________________________________ **

    Eric Holder. From Sept. 15, 2014, Justice Department video.
    Eric Holder. From Sept. 15, 2014, Justice Department video.

    Attorney General Eric Holder announced Monday that the Justice Department will launch a new series of pilot programs in cities across the country to bring together community representatives, public safety officials and religious leaders to counter violent extremism. The new programs will be run in partnership with the White House, the Department of Homeland Security, and the National Counterterrorism Center.

    “Today, few threats are more urgent than the threat posed by violent extremism,” [the] Attorney General said in a video message posted on the Justice Department’s website. “And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.”

    The complete text of the Attorney General’s video message is below:

    “Last week, millions of Americans paused to mark the 13th anniversary of the attacks of September 11, 2001 – the deadliest acts of terror ever carried out on American soil. For my colleagues at every level of our nation’s Department of Justice, and for me, this anniversary was also a solemn reminder of our most important obligation: to ensure America’s national security and protect the American people from a range of evolving threats.

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.

    “Through law enforcement agencies like the FBI, American authorities are working with our international partners and Interpol to disseminate information on foreign fighters in Syria and Iraq, including individuals who have traveled from the United States. We have established processes for detecting American extremists who attempt to join terror groups abroad. And we have engaged in extensive outreach to communities here in the U.S. – so we can work with them to identify threats before they emerge, to disrupt homegrown terrorists, and to apprehend would-be violent extremists. But we can – and we must – do even more.

    “Today, I am announcing that the Department of Justice is partnering with the White House, the Department of Homeland Security, and the National Counterterrorism Center to launch a new series of pilot programs in cities across the nation. These programs will bring together community representatives, public safety officials, religious leaders, and United States Attorneys to improve local engagement; to counter violent extremism; and – ultimately – to build a broad network of community partnerships to keep our nation safe. Under President Obama’s leadership, along with our interagency affiliates, we will work closely with community representatives to develop comprehensive local strategies, to raise awareness about important issues, to share information on best practices, and to expand and improve training in every area of the country.

    “Already, since 2012, our U.S. Attorneys have held or attended more than 1,700 engagement-related events or meetings to enhance trust and facilitate communication in their neighborhoods and districts. This innovative new pilot initiative will build on that important work. And the White House will be hosting a Countering Violent Extremism summit in October to highlight these and other domestic and international efforts. Ultimately, the pilot programs will enable us to develop more effective – and more inclusive – ways to help build the more just, secure, and free society that all Americans deserve.

    “As we move forward together, our work must continue to be guided by the core democratic values – and the ideals of freedom, openness, and inclusion – that have always set this nation apart on the world stage. We must be both innovative and aggressive in countering violent extremism and combating those who would sow intolerance, division, and hate – not just within our borders, but with our international partners on a global scale. And we must never lose sight of what violent extremists fear the most: the strength of our communities; our unwavering respect for equality, civil rights, and civil liberties; and our enduring commitment to justice, democracy, and the rule of law.”

    The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.