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  • Indicted Payza Announces ‘Restructuring’

    As one of its operators sits in a Michigan federal prison and the other is listed “at large” by U.S. authorities, Payza today announced a purported “restructuring” as a “European service” that has ceased serving U.S. customers.

    “This means that no transactions are allowed for US members at this time and Payza will no longer be servicing businesses registered in the US, neither providing US payout services or US based withdrawals,” Payza said in a Blog post accessible via Twitter.

    Precisely who is running things at the company is unclear. The Blog post had a byline of “Payza Writer.”

    Ferhan Patel, 37, is listed as an inmate at the federal correctional institute in Milan, Mich. He was arrested Sunday in Detroit. Firoz Patel, his brother and co-defendant in a major money-laundering case announced Tuesday by U.S. prosecutors, appears neither to have surrendered or been arrested. Firoz Patel is 43. The brothers are citizens of Canada and reportedly lived in the Montreal area.

    The office of U.S. Attorney Jessie K. Liu of the District of Columbia confirmed Wednesday that Payza’s dotcom domain had been seized.

    Prosecutors said Payza had helped fuel Ponzi schemes, pyramid schemes, a child-porn site and other criminal activities. Homeland Security Investigations is leading the probe.

    Payza and a predecessor company known as AlertPay have been referenced in Ponzi-scheme litigation dating back at least to 2008’s AdSurfDaily Ponzi scheme, a $119 million fraud. More recent “programs” with ties to Payza include Traffic Monsoon and Zeek Rewards.




  • Payza Site Seized By Feds

    The website Payza.com has been seized, the office of U.S. Attorney Jessie K. Liu of the District of Columbia confirmed tonight. It was not immediately clear how the action will affect Payza customers worldwide, but Liu’s office has updated an information site here.

    In the update, authorities provided an email address for persons who have questions or concerns about their Payza accounts.

    Payza was mostly mum today about prosecutors’ announcement yesterday that Payza and its operators had been indicted.

    A Facebook post today under a Payza account said this:

    As some of you may be aware of already, Payza is currently dealing with some legal matters in the United States. We cannot give any specific details at this time, but please be aware that this is an accusation and it is NOT evidence of guilt. Right now, this is affecting our Website, Blog and Reference Center, but we are working on a solution and we do not want you to worry. Unfortunately, we cannot share any more information right now.

    Thank you for your patience and understanding, 
    Team Payza

    Payza unlawfully processed more than $250 million in transactions for Ponzi schemes, pyramid schemes and a child-porn site, authorities said.

  • Proposed Class Action Alleges Traffic Monsoon’s Scoville Told PayPal He Was In ‘Investments’ Business

    From a proposed class-action lawsuit against PayPal sparked by the alleged Traffic Monsoon/Charles Scoville Ponzi scheme. Red highlights by PP Blog.

    In the aftermath of the SEC’s securities-fraud action against him last year and a judicial ruling this year that he was opertaing a Ponzi scheme, Traffic Monsoon’s Charles Scoville has blanketed social media with claims he was not offering investments.

    But Scoville told PayPal that “Traffic Monsoon’s business was “Investments – general” when he opened an account for the “program” in 2014, according to a proposed class-action lawsuit against the payment processor for aiding and abetting Scoville’s alleged fraud.

    This happened after PayPal had “previously banned Scoville from using its services following allegations that his prior pay-to-click businesses, which also purportedly sold advertising businesses with revenue sharing, were Ponzi/pyramid schemes,” according to the lawsuit.

    Whether the SEC would seize on the claim as the agency’s case against Scoville and Traffic Monsoon works its way through the courts was not immediately clear. Investigators potentially could argue that Scoville was telling investors one thing while telling PayPal another.

    Likely because of a court-imposed stay of litigation against Scoville and Traffic Monsoon while Scoville appeals judicial findings against him in the SEC case, neither Scoville nor Traffic Monsoon is named a defendant in the proposed class action.

    Named defendants are PayPal Inc. and PayPal Holdings Inc. Plaintiffs are Chukwuka Obi and Kingsley Ezeude. The case was filed May 4 in U.S. District Court for the Northern District of California.

    From the complaint (italics added/light editing performed):

    The [Traffic Monsoon] scheme lasted from September 2014 through July 2016. During this time, Traffic Monsoon duped investors into believing it was “a specialized advertising and revenue sharing company” that operated a pay-to-click and Internet traffic exchange program. On its website, Traffic Monsoon falsely told investors that it was not selling investments or operating a Ponzi/pyramid scheme that would pay returns to existing investors with money from new investors . . .

    Traffic Monsoon also concealed from its investors that Scoville, its sole member and operator, had a prior history of defrauding investors through similar pay-to-click investment “businesses.” Unbeknownst to investors – but known to PayPal – Traffic Monsoon was not Scoville’s first fraudulent investment scheme disguised as a “pay-to-click” program. In fact, just as he did with Traffic Monsoon, Scoville ran his prior pay-to-click schemes with PayPal’s support and through PayPal’s infrastructure. Indeed, in 2011 PayPal had banned Scoville from using its services following allegations that Scoville was operating a substantially similar – and similarly fraudulent – “pay-to-click” investment scheme. Yet, despite its knowledge of Scoville’s past pay-to-click schemes and its knowledge that pay-to-click websites have Ponzi/pyramid scheme features, PayPal failed to enforce its own ban and allowed Scoville to open an account for Traffic Monsoon in September 2014, using PayPal’s infrastructure to perpetrate and profit from his new – but similar in its material respects – “pay-to-click” investment fraud.

    The 52-page complaint argues that the left hand at PayPal didn’t know what the right had was doing with respect to doing business with and applying policies to Scoville.

    From the complaint (italics added/light editing performed):

    PayPal was aware that Scoville had previously operated similar pay-to-click businesses that PayPal banned from using its services following allegations that the businesses were Ponzi/pyramid schemes. PayPal is also aware that pay-to-click businesses raise concerns regarding fraud and that some have Ponzi/pyramid scheme features. Indeed, PayPal has placed holds or bans on other pay-to-click businesses. Yet PayPal did not enforce its own ban on Scoville’s use of its services.

    By knowingly allowing Scoville’s new pay-to-click scheme, Traffic Monsoon, to use its services, PayPal departed from its own policy that prohibits the use of its services for “transactions that . . . support pyramid or ponzi schemes.” (PayPal Acceptable Use Policy.) . . .

    PayPal was aware that Traffic Monsoon was falsely representing to investors that it sold advertising services, not investments. Scoville told PayPal (but not investors) that Traffic Monsoon offered investments, which PayPal noted in PayPal Account 7752. When PayPal reviewed Traffic Monsoon’s website to verify the information provided by Scoville, PayPal learned that Traffic Monsoon was a pay-to-click scheme; represented to investors that Traffic Monsoon sold advertising services, not investments; and promised to make payments to investors in pyramid scheme fashion . . .

    PayPal also knew that Traffic Monsoon was a Ponzi/pyramid scheme. PayPal actively monitored Traffic Monsoon’s PayPal account. It was aware of each investment and each withdrawal from the account. PayPal was aware that Traffic Monsoon was making Ponzi/pyramid scheme payments to investors and that Traffic Monsoon’s Ponzi/pyramid scheme was growing exponentially in classic Ponzi/pyramid scheme fashion.

    PayPal told Bloomberg that it looked forward to refuting the claims.

    The complaint is posted on Dropbox.




  • Troy Barnes, ‘Achieve Community’ Ponzi Schemer, Sentenced To 33 Months

    Troy A. Barnes ran “The Achieve Community” (TAC) scam along with Kristine L. “Kristi” Johnson.

    Barnes, 53, of Riverview Mich., now has been sentenced to 33 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose announced. Johnson, of Colorado, earlier was sentenced to 21 months.

    Achieve was a Ponzi-board program that used a “triple algorithm” cover story to fleece investors, the SEC said in  a February 2015.

    Through Rose’s office, the U.S. Secret Service later charged Barnes and Johnson criminally.

    Similar to other schemes, Achieve participants were told they were not making an investment and the company wasn’t offering one, despite dangling a return.

    From a statement by prosecutors (italics added):

    According to court filings, as the scheme grew in size and scope, Barnes and Johnson concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term “investment” would draw scrutiny from regulators, they instructed victim-investors, “We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.” Even when TAC was unable to operate because their payment processor concluded that TAC was indeed operating a Ponzi scheme and ceased doing business with the company, Barnes and Johnson lied to victims, falsely stating that, “The only reason that [TAC] is not paying out today is that our processor can’t handle the volume of money we are paying our members.”

    Achieve created more than 10,000 victims worldwide, prosecutors said.

    Barnes also was sentenced to three years’ probation after his release, ordered to forfeit $4.7 million and to pay $302,297 in restitution, prosecutors said.




  • In Atmosphere Of Murkiness, Are Violations Of The Traffic Monsoon Asset Freeze Taking Place?

    EDITOR’S NOTE: Traffic Monsoon is a Utah company. The firm also has purported business operations in the United Kingdom and Dubai. Details about the offshore operations are murky.

    A claim from an apparent Traffic Monsoon affiliate appeared Monday (April 3) on Facebook that “Allied Wallet is making refunds of [Traffic Monsoon]  purchases made by credit cards or debit cards. Many people are getting this [sic] refunds.”

    In the same thread on the TrafficMonsoonupdates Facebook site, a poster claimed, “I received this in my bank today . . . 10.04% of my initial deposit to TM.” The apparent partial refund was marked “AW*TRAFFICM.”

    In July, U.S. District Judge Jill N. Parrish ordered all assets of Traffic Monsoon and operator Charles Scoville frozen. An October report by court-appointed receiver Peggy Hunt said that Allied Wallet had claimed it had approximately $7 million in Traffic Monsoon funds on deposit when the SEC filed its Ponzi action against the “program.”

    The asset freeze imposed by Parrish was further reinforced last week when she issued a preliminary injunction at the request of the SEC.

    From the preliminary injunction, which names Allied Wallet and other Traffic Monsoon vendors, including PayPal, Payza, Solid Trust Pay and JPMorgan Chase Bank (italics added):

    Each of the financial or brokerage institutions, debtors, and bailees, or any other person or entity holding Defendants’ Assets shall hold or retain within their control and prohibit the withdrawal, removal, transfer, or other disposal of any such assets, funds, or other properties.

    Why, then, are Traffic Monsoon members claiming Allied Wallet is issuing at least partial refunds? And if the refunds are taking place, are they in violation of the asset freeze?

    Allied Wallet did not respond to a request for comment Monday. Neither did the SEC or Hunt.

    But the docket of the SEC’s case against Traffic Monsoon now shows that Hunt filed a notice of a subpoena naming Allied Wallet on Tuesday. How things would proceed was not immediately clear.

    Hunt previously informed the court about a statement Scoville allegedly made about how Traffic Monsoon hooked up with Allied Wallet prior to the SEC action via a company that purportedly was given to him.

    From the statement, as contained in a transcript filed by Hunt last year (italics added):

    Well, the thing is is Traffic Monsoon in the UK was kind of formed in a way because, when we were in Dubai, that’s when we got set up with someone who knew people inside of Allied Wallet to help us get an Allied Wallet account set up. And when we were setting up Allied Wallet, Allied Wallet required us to have a registration in the UK.

    Scoville went on to say, “We had somebody who was there with us who said, I’ve got a UK company. We can change it to the Traffic Monsoon, and then we could use that registration so you can use Allied Wallet. So that’s Taheer and Amir, both of them are on that business registration, but technically they don’t own any of the company.”

    And, according to the transcript, Scoville said, “they were just giving me a company that they had already registered as a speedy process of just making sure that we have a business registration in the UK. But they put me on as the owner.”

    Scoville, according to the transcript, grew to have doubts about the U.K. operation because he could not confirm that staff or security personnel for which he was paying 6,000 pounds per month actually were working at the U.K. office of his own company.

    From the transcript (italics added):

    I went over there, and apparently, the person at the front desk didn’t know who I was, who asked to see the people that were working for Traffic Monsoon, and they said that there’s nobody there. So I don’t know all of the ins and outs of what’s going on there. I may have been scammed. I don’t know.

    Parrish has found that Traffic Monsoon operated as a Ponzi scheme, according to court documents. Scoville has said he will file an appeal.




  • ‘Traffic Hurricane’ Members Beware: Preliminary Injunction Prohibits Traffic Monsoon, Scoville From Benefiting From ‘AdPack’ Businesses

    2ND UPDATE 6:58 P.M. EDT U.S.A. Here’s a news flash for individuals who joined a “program” called Traffic Hurricane with the belief they somehow were helping the defense of Charles Scoville and Traffic Monsoon: Both Scoville and Traffic Monsoon  are “prohibited from soliciting, accepting, or depositing any monies obtained from actual or prospective investors, individuals, customers, companies, and/or entities, through the Internet or other electronic means for Traffic Monsoon or a business model substantially similar to Traffic Monsoon’s sale of AdPacks.” (Bold emphasis added.)

    The quoted passage is from the very first paragraph of a preliminary injunction issued by U.S. District Judge Jill N. Parrish March 28 against Traffic Monsoon and Scoville. The order effectively bars Scoville from being an owner, silent partner or beneficiary of an adpack business.

    Though the passage doesn’t specifically reference Traffic Hurricane, it is known that Traffic Hurricane operates over the Internet and surfaced after the SEC brought Ponzi charges against Traffic Monsoon in July 2016 and that Traffic Hurricane traded on a theme of assisting Scoville and Traffic Monsoon with defense costs.

    In August 2016, the PP Blog reported that Traffic Hurricane was a reload scheme targeting Traffic Monsoon participants.

    Huyugadal!!

    Ernie Ganz, a onetime associate of Scoville’s, reportedly is the operator of Traffic Hurricane. Earlier this month BehindMLM reported on a falling out between Ganz and Scoville.

    Peggy Hunt, the court-appointed receiver for Traffic Monsoon, once subpoenaed Ganz, according to BehindMLM.

    Hunt today published the March 28 preliminary injunction that includes the adpack ban.

    Because the prohibition appeared in the very first paragraph of the preliminary injunction, it appears as though the judge, the receiver and the SEC are aware of reload schemes aimed at members of Traffic Monsoon.

    The receivership website today announced that Parrish had “found that Traffic Monsoon, LLC operated as a Ponzi scheme.”

    Some supporters of Traffic Monsoon and Scoville have claimed on Facebook that that never happened.

    This document on the receivership website today says that it did happen, and Hunt urged Traffic Monsoon members to review the March 28 court rulings against Traffic Monoon and Scoville “in their entirety.”




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  • SEC Charges Zeek Figure Keith Laggos With Publishing Fake News To Sanitize Ponzi/Pyramid Scheme

    In December 2013, these plaques of Network Marketing Business Journal Zeek puff pieces were put up for auction by the court-appointed receiver for Zeek. On March 22, 2017, the SEC charged former NMBJ publisher Keith Laggos with securities fraud.

    Keith Laggos, an AdSurfDaily Ponzi scheme figure and the onetime publisher of Network Marketing Business Journal, has been charged by the SEC with securities fraud for illegally touting the Zeek Rewards scheme and using NMBJ to sanitize the egregious fraud that gathered hundreds of millions of dollars.

    Among the agency’s allegations is that “Laggos’s favorable editorials of the scheme contained material misstatements and omissions. Laggos published theses misstatements despite being made aware of their inaccuracy and otherwise being in a position as a paid consultant for ZeekRewards to know of their falsity.”

    The former .com site for NMBJ now is showing a “For Sale” sign.

    Plaques commemorating NMBJ’s Zeek puff pieces on Zeek were listed as auction items by the court-appointed receiver for Zeek in December 2013.

    From an SEC statement on March 23, 2017 (italics added):

    The SEC alleges that, from at least June 2011 through July 2012, Laggos, through NMBJ and while acting a paid consultant for ZeekRewards, was paid at least $64,000 for publishing several editorials providing crucial publicity to the ZeekRewards scheme. These publications promoted ZeekRewards as the “company of the month” and touted, among other things, the scheme’s supposed record earnings and opportunity to generate income for participants. Laggos failed to disclose the fact that he was paid for the favorable editorial coverage, the amount that he was paid, and that he was a paid consultant for ZeekRewards.

    Laggos, a prior defendant in an SEC touting case, agreed to pay $79,190.68 to settle the Zeek matter, the SEC said. In addition, he agreed to a permanent injunction from future violations of Sections 17(a) and 17(b) of the Securities Act, from participating in future securities offerings and from providing paid publicity to securities.

    The SEC moved against Zeek on Aug. 17, 2012. (See Aug. 12, 2012, PP Blog editorial that references Laggos: “Karl Wallenda Wouldn’t Do Zeek.”)

    See BehindMLM’s March 25, 2017, story on the charges against Laggos.

    See the SEC’s litigation statement.

    Whether other outlets that publish fake news to sanitize fraudulent MLM schemes would learn from the case against Laggos was not immediately clear.




  • SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans

    A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.

    VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.

    A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.

    Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.

    “Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.

    The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.

    From the SEC’s ViziNova  complaint (italics added/light editing performed):

    Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.

    In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .

    Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.

    ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.

    Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.

    “There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”

    The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.

    Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.

    In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.

    Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.

    Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.




  • REPORTS: Traffic Monsoon Pitchman Who Urged ‘RIOT’ And Called Receiver ‘Lying Cow’ Later Accused Of Kicking Woman ‘To The Head’

    Some promoters of Traffic Monsoon have engaged in heated rhetoric. This is a screen shot of a hijacked image that depicts President Trump as a supporter of the “program” the SEC has called a massive Ponzi scheme.

    UPDATED 1:36 P.M. ET U.S.A. Jose Nunes, the Traffic Monsoon pitchman who last fall used a slogan of “RIOT” to support the company and called the receiver in the SEC’s Ponzi case a “lying cow,” later reportedly was involved in domestic-violence incidents in November and January.

    A Feb. 6 report in the North Wales (U.K.) Daily Post says Nunes, 42, of Llanrug, was accused of carrying out “repeated acts of violence” against the woman, including kicking her “to the head” in front of their daughter.

    The most recent attacks reportedly marked at least the third time Nunes had been accused of assaulting the woman. According to the Daily Post, Nunes pleaded guilty to assaulting her in 2011.

    A purported “Revenue Shares Matter” campaign backed in September by Nunes featured a flaming graphic with the word “RIOT” in all-caps. By October, Nunes was calling Utah attorney Peggy Hunt — the receiver in the July 2016 Traffic Monsoon case — “Piggy,” a “[b . . . h” and a “Lying cow.”

    Attacks against his former girlfriend allegedly followed in November and January. The newspaper account of Nunes’ most recent alleged assaults does not report specific reasons or dates on which they occurred, but stress has been high in some Traffic Monsoon circles.

    Some supporters of Traffic Monsoon have been awaiting impatiently since November for key rulings from U.S. District Judge Jill N. Parrish.

    Rhetoric among some supporters of the “program” has been over-the-top. One effort in support of Traffic Monsoon on a Facebook site featured a hijacked photo of President Trump displaying a bogus executive order shutting down the SEC and declaring the agency “full of shit” and “useless.”

    The SEC alleged that Traffic Monsoon’s claim that it was a successful advertising business was “merely an illusion” and that 99 percent of the “program’s” revenue was derived from new investor funds.

    Traffic Monsoon operator Charles Scoville — who once appeared in a promotional photograph with Nunes — contends no Ponzi existed. He has asked Parrish to shut down the receivership and to dismiss the charges.




  • BULLETIN: Paul Burks Of Zeek Rewards Sentenced To More Than 14 Years; Judge Comments On ‘Cheerleaders’

    3RD UPDATE 4:52 P.M. ET U.S.A. Paul Burks, the principal behind the $939 million Zeek Rewards Ponzi- and pyramid scheme broken up by the SEC and the U.S. Secret Service in August 2012, has been sentenced to 176 months in federal prison, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said moments ago.

    U.S. District Judge Max Cogburn Jr. presided over sentencing court for Burks, 70.  Zeek was an MLM scam that created hundreds of thousands of victims globally.

    “But anyone could have seen what was going to occur outside himself and his (marketing) cheerleaders,” the judge said in court, according to the Winston-Salem Journal.

    In clawback lawsuits, Zeek receiver Kenneth D. Bell has triumphed over thousands of net winners in the scheme.

    When Burks was indicted in October 2014, the grand jury alleged that Burks and others offered a “bogus 125% return on investment” through a “sham internet-based penny auction company.”

    Bell earlier alleged that some of the winners he sued were “serial” participants in Zeek-like schemes to defraud. Among the clawback defendants were Todd Disner, a figure from the AdSurfDaily Ponzi scheme, and T. LeMont Silver, a promoter of multiple Ponzi schemes.

    “Programs” such as Zeek and ASD often try to sanitize themselves by calling themselves revenue-sharing schemes.

    Burks also was sentenced to make restitution in the amount of $244 million and to serve three years’ probation after his prison release. There are media accounts today that suggest Burks is in poor health.

    Though 176 months is a lengthy term, there has been speculation that Burks would receive an even longer term, given the enormous size of Zeek and the number of victims.

    Said Bell, the receiver, in a statement dated Feb. 13. “Judge Cogburn cited the need to balance the harm caused by Mr. Burks’ conduct against Mr. Burks’ extremely poor health and [the fact he is] 70 years of age.”

    From a statement today by prosecutors (italics added):

    At sentencing, Judge Cogburn stated that for the defendant’s scheme to work would have required a miracle on the order of the “loaves and fishes.” Judge Cogburn stated that a significant sentence was necessary to promote respect for the law, provide just punishment, and also deter others considering committing fraud. Judge Cogburn further noted that the scheme was “almost breathtaking” and emphasized that the defendant had time to stop it.

    Dawn Wright-Olivares and Daniel Olivares of Zeek also have been sentenced to prison.



  • BULLETIN: TelexFree Trustee Moves For Default Judgments Against Dozens Of Alleged Overseas ‘Winners’

    BULLETIN: TelexFree Trustee Stephen B. Darr has moved for assessments of damage and default judgments against dozens of alleged overseas “winners” in the massive Ponzi- and pyramid scheme. The motion before Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts asks for millions of dollars from about 33 TelexFree promoters with non-U.S. addresses who did not enter defenses after being properly served Darr’s class-action complaint brought in January 2016 and subsequently amended.

    Like the class-action lawsuit and individual actions brought by receiver in the Zeek Rewards’ case, the action by the TelexFree trustee demonstrates that “winners” in corrupt MLM schemes will be pursued to return their gains, plus interest, to the hundreds and hundreds of thousands of “losers” created by such cross-border fraud capers.

    Kenneth D. Bell, the receiver in the Zeek case, now is moving to perfect millions of dollars in judgments.

    Hoffman has set a May 3 hearing in Boston on Darr’s motion.

    Read Darr’s motion.

    One of the alleged overseas winners pursued by Darr received more than $2.92 million, according to a court exhibit. Seven others received at least $1 million. Others still received tens or hundreds of thousands of dollars.

    In other corrupt MLM schemes, new recruits were encouraged to pay their sponsor directly, rather than paying the company directly. This also was the case at TelexFree, a situation that led to money not being forwarded to the firm, contributing to the deepening of the Ponzi.