PatrickPretty.com

Category: Writing And Branding

  • Two Readers Who Made A Difference — And How You Can, Too

    NOTE: This post originally was published March 30 at 12:21 a.m. It will remain in this slot for several days, but new posts will appear below it.

    Dear Readers,

    In November, I introduced “penny-a-post” annual subscriptions. These were designed to allow readers to value the PP Blog’s editorial well of 2,500 articles between 1 cent and 4 cents each.

    A couple of my readers did something special for me: They subscribed twice — first at the $25 level in November, and then once again in January and February, respectively. They have been with me for a long time, practically since Day One.  They play active roles in the antiscam community and have helped educate many, many people across the world.

    I am deeply appreciative for what they did. It was most unexpected, and provided one of those moments that restore a doubting soul.  I hadn’t even contemplated double-subscribers.

    Even so — and despite the fact these two extremely thoughtful readers created a life-affirming moment for me — I want to discourage double subscriptions. One has to be enough, at whatever level an individual reader can comfortably afford.

    In thinking about their gesture toward me and this Blog and what I need to do to survive contractions or inconsistent revenue in other areas, I have come up with another approach. I am hoping several of you will become a special type of subscriber, a PPBlog100 subscriber.

    When I introduced the penny-a-post theme, I was hoping to attract 25 subscribers at the $25 level immediately and another 100 to 150 within a few months. I expected a smaller number at the higher levels, perhaps 50 or so spread across the three other options during the course of a year. It was my hope that the numbers in all the penny categories would build as the months progressed.

    As I saw it, new subscribers coming aboard each month would improve month-to-month revenue and perhaps even fortify it by guarding against revenue declines elsewhere. The automatic renewals a year later, coupled with staggered renewal times across a 12-month period, would reduce the number of fires in a very uncertain world for journalists and publishing in general.

    Because the volume at the $25 level simply isn’t where I need it to be and I managed only to pick up one subscriber at a level higher than $25, I am now introducing a $100-only category, the PPBlog100. It is my hope this category will help maximize revenue on a per-subscriber basis in the immediate near term while giving the lower levels — especially the $25 and $50 levels — more time to grow.

    Regardless of category, all paid subscribers will be helping keep the Blog free for those who cannot afford to subscribe and for those who simply choose not to. There is no paywall at the PP Blog.

    Our editorial well now stands at 2,627 posts since December 2008. Our stories help keep people out of harm’s way and provide genuine opportunities to learn. When something reminds us of something else — an emerging fraud scheme pulling the same tricks as an earlier scheme — we inform readers. The sooner they spot the pattern, the safer they will be.

    Much of the history of the online Ponzi world since the AdSurfDaily Ponzi scheme in 2008 is recorded in our well. We connect dots and describe patterns and common themes. Some readers and researchers use the Blog as a means of understanding how schemes evolve.

    The button below is solely for the $100 PPBlog100 subscription with annual renewal. No one who has to dig deep should subscribe at the $100 level. It is for readers who can do so comfortably and want to make sure that the Blog and I can continue to weather the continued storm in publishing.

    The other options remain available here.

    My sincere thanks goes to all of my readers — tonight especially to the two described above and others like them who have gone the extra mile as the battle against the cross-border Ponzi scourge continues.

    Patrick




  • After Seeing Photos Of Its Players On ‘GooBets,’ National Basketball Association To Turn Matter Over To ‘Legal Department’

    This is the logo at GooBets.com. It is not the same as the logo at GooBets.biz. (See below.)
    This is the logo at GooBets.com. It is not the same as the logo at GooBets.biz. (See below.)

    As the PP Blog reported yesterday, photos of National Basketball Association players and team jerseys are appearing on the .com (https://www) website of “GooBets,” a purported betting entity in which recruits are being told “Everybody Makes 25% to 31% Per Week. Period!!!”

    The NBA said today that the matter had been forwarded to “our Legal department, which will follow up with the company appropriately.”

    It is not unusual for fraud schemes to seek to create a veneer of legitimacy by trading on the names of famous brands.

    Images of National Football League players and jerseys also appear on the GooBets site. The NFL said yesterday that it had no comment on the matter. The U.S. Securities and Exchange Commission declined to comment.

    GooBets appears to be targeted at speakers of Portuguese and English. It may be operating from multiple websites, providing confusing information in the process. A site styled GooBets.biz (https:/www) claims the enterprise is part of something called “Nordic Market Services Limited.” The CEO is identified as Steven Martinez.

    A separate site at GooBets.com claims Miguel Carvalho, a “famous [P]ortuguese trader,” is “Main Trader Goobets.”

    A phone number that appears on the .biz version of GooBets — 44 203 514 6959 — also shows up on the site of an enterprise known as DirectBull.com. DirectBull’s site claims it operates as a “subsidiary of Nordic Market Services Limited which manages and serves large scale investors from Northern Europe and North America. With Direct Bull, Nordic Market Services Limited offers the opportunity to small scale investors to take part in the trading on the world financial markets and earn significant profits.”

    Among the claims on the DirectBull site is that investors can earn between 103 percent and 125 percent in one day, with a minimum investment of $5 and a maximum of $20,000. A 30-day plan at the same minimums and maximums promises earnings of between 370 percent and 1,600 percent.

    Portions of the DirectBull site resemble the sites of HYIP scams known as MooreFund and as “Rockfeller.biz.”

    These individual schemes may be parts of much larger frauds that are evolving as circumstances warrant. If one pipeline runs dry, the organizers simply open another one.

    This is the logo at GooBets.biz. It is not precisely the same as the logo at GooBets.com.
    This is the logo at GooBets.biz. It is not precisely the same as the logo at GooBets.com.
    The DirectBull site publishes the same phone number as GooBets.biz.
    The DirectBull site publishes the same phone number as GooBets.biz.

  • BULLETIN: SEC Hits Another Ponzi-Board Scam; Action Against CashFlowBot (DollarMonster) May Cause Restlessness Among ‘Small’ Operators

    breakingnews72BULLETIN: The SEC has gone to federal court in Atlanta, charging the alleged operator of CashFlowBot (DollarMonster) with operating a Ponzi scheme. The “program” had a presence on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup.

    James A. Evans, 33, of Villa Rica, Ga., has been charged with selling unregistered securities and securities fraud. The SEC accused him of making misrepresentations to investors and operating CashFlowBot as a Ponzi scheme dating back at least to 2012.

    CashFlowBot, according to the SEC complaint, used the SolidTrustPay payment processor.

    From the SEC complaint (italics added):

    The underlying mechanics of the DollarMonster scheme were simple: investors deposited funds into their Solid Trust accounts and then transferred those funds to a Solid Trust account controlled by Defendant Evans. Defendant Evans then transferred a portion of the funds to his personal bank account, and also redistributed funds to investors’ Solid Trust accounts as purported investment returns.

    Investors were able to log into their DollarMonster accounts, which included the purported dollar value of their accounts (without identifying any underlying securities or ownership interests), including purported earnings.

    The DollarMonster website did not contain language limiting investors to accredited or sophisticated investors, nor did the process of registration or creating an account require information indicating whether investors were sophisticated or accredited.

    The scam gathered about $1.15 million, the SEC alleged. The agency’s action is the second this year against a Ponzi-board scheme that, relatively speaking, appears not to have collected a tremendous sum of money. (Not that $1.15 million is anything to sneeze at.)

    In February, the SEC sued Achieve Community, alleged to have gathered about $3.8 million. The actions against Achieve and CashFlowBot may demonstrate that the agency is tracking schemes large and small, something that could cause fitful sleep in the HYIP sphere.

    Some schemes such as TelexFree (2014/$1.8 billion) and ZeekRewards (2012/$897 million) gathered tremendous sums of money before interventions by law enforcement.

    After he was subpoenaed in July 2014, Evans appeared to be hatching a new scheme at TheInvestorsExchange.com, the SEC said.

    “Theinvestorsexchange.com purports to match investors looking for an investment return with individuals and companies that need capital,” the SEC alleged. “Theinvestorsexchange.com website also lists various advertisements for purported investment opportunities, with links to email addresses that potential investors can contact for further information.”

    Read the SEC’s statement on CashFlowBot.

  • URGENT >> BULLETIN >> MOVING: Investment Scam Targeted Military Personnel At Fort Hood In Texas, SEC Says

    breakingnews72URGENT >> BULLETIN >> MOVING: (Updated 9:05 a.m. EDT April 15 U.S.A.) An investment scam known as LB Stocks and Trades Advice LLC was targeted at military personnel at Fort Hood in Texas and perhaps other installations, the SEC has alleged.

    Charged in the scheme were the company and alleged operator Leroy Brown Jr., 32, of Killeen, Texas. The SEC described Brown as a member of the U.S. Army between 2001 and 2013.

    “Trust is a bedrock principle to our military, and we allege that Brown exploited his own military experience and abused that trust for his own personal gain,” said David Woodcock, director of the SEC’s Fort Worth Regional Office. “Investment fraud is always wrong, but it’s especially pernicious when perpetrated against those who have sacrificed so much for our freedom.”

    A federal judge imposed an asset freeze and temporary restraining order, the SEC said.

    Brown, the SEC said, claimed a longstanding presence in the investment trade, offices in New York and San Francisco, “guaranteed” returns, an ability to double or triple money in 120 days and business associations with “Walmart, Apple, Sony, Microsoft, Best Buy, HP, USA Today, and McAfee.”

    From the SEC’s complaint (italics added):

    Based on these intentional misrepresentations, Brown solicits investors to purchase $1,000 membership certificates in LB Stocks to participate in the Company’s purported investments in undeveloped real estate that Brown guarantees will double or triple the investors’ investments. Brown also represents that he and LB Stocks trade stocks, mutual funds, exchange traded funds (“ETFs”), commodities, and foreign exchange currencies for their clients.

    In a statement, the SEC said Brown “specifically claimed to have all the necessary licenses and registrations to conduct securities business. In reality, Brown is not a licensed securities professional and his firm is not registered with the SEC, Financial Industry Regulatory Authority, or any state regulator. Brown and his firm have no evident experience with investments.”

    Some of Brown’s claims were bizarre. Among them, according to the SEC, was that Brown would offer an “IPO” under a ticker symbol already in use by another company.

    “Thank you God. BOOM POW BAM[,]” Brown allegedly wrote on Facebook.

    As part of his scheme, Brown copied information from the website of E*Trade to his own website — and then swapped in “LB” names, the SEC alleged.

    The precise dollar sum gathered by the scheme was not immediately clear.

    “Beginning in the first quarter of 2014, Brown began receiving substantial deposits of funds into his personal brokerage account,” the SEC charged. “These deposits show that Brown received funds from investors who intended to invest in, or with, LB Stocks. In fact, wire transfer details for several of these deposits specifically reference LB Stocks as the ‘Acct Party’ in the receiving account field — even though the funds were deposited or transferred directly into Brown’s personal brokerage account.”

    “Nearly all” of the funds went from the personal brokerage account into Brown’s personal bank accounts, the SEC alleged.

    Although Brown didn’t leave the Army until July 2013, he claimed to have 65,000 investment clients, the SEC charged.

    Americans are very sensitive to events involving Fort Hood. In 2009, the base was the site of a mass shooting carried out by Nidal Malik Hasan, a former Army major now on Death Row. Thirteen individuals were killed, including officers, enlisted personnel and one civilian employee.

    Thirty-two more individuals were wounded, many of them struck by bullets.

    Read the SEC’s Investor Bulletin for military personnel.

  • ‘GooBets,’ Cross-Border Fraud Scheme, Emerges

    GooBets, an emerging HYIP scheme with a presence on social media, is leehing off the brands of the NBA and NFL, among others.
    GooBets, an emerging HYIP scheme with a presence on social media, is leeching off the brands of the NBA and NFL, among others.

    2ND UPDATE 2:19 P.M. EDT U.S.A. A “program” known as “GooBets” that appears to be targeting speakers of Portuguese and English has emerged. BehindMLM.com broke the news this morning.

    After observing the GooBets site, the PP Blog sought comment from the National Football League and the National Basketball Association. That’s because GooBets is using the intellectual property of both sports leagues in a rolling promo on its website.

    Neither league responded immediately to the requests for comment. The Blog will publish the responses, if received.

    Update 12:25 p.m. Brian McCarthy, a spokesman for the NFL, said in an email that the league did not have a comment.

    Update at 2:19 p.m. The U.S. Securities and Exchange Commission declined to comment on GooBets. (Original story continues below . . .)

    Images of players from the NFL’s San Francisco 49ers and Seattle Seahawks appear on the GooBets website. So do images of players from the NBA’s Los Angeles Lakers and Orlando Magic. An inspirational quote attributed to NBA legend Michael Jordan appears on the site, which also uses images from professional soccer and tennis.

    Many fraud schemes leech off the brands of famous business entities or people.

    GooBets is reminiscent of earlier collapsed “betting” schemes or “arbitrage” programs such as GoldNuggetInvest. GNI collapsed in 2010, amid a bizarre assertion it was seeking a “crystal clear vision of our financial vortex.” A probable reload scheme known as “New GNI” later emerged, pushed by Ponzi-board legend “Ken Russo,” a figure in the Zeek Rewards and Profitable Sunrise schemes — among many others.

    Zeek Rewards and Profitable Sunrise were massive fraud schemes, according to the SEC. NewGNI appears to have gone missing in 2013.

    Like the original GNI, NewGNI, Zeek and Profitable Sunrise, GooBets has a presence on well-known Ponzi-scheme forums such as MoneyMakerGroup.

    Twitter already is thick with GooBets promos. One of them, dated today, claims that “Sports Trading Has Never Been So Easy. In GooBets Everybody Makes 25% to 31% Per Week. Period!!!”

    Promos for GooBets also appear on Facebook and YouTube. The U.S. Securities and Exchange Commission updated its Investor Alert on fraud schemes trading on social media in November 2014.

    “Investment fraud criminals look for victims on social media sites, chat rooms, and bulletin boards,” the SEC said.

    The targeting of GooBets — at speakers of Portuguese or English — also is reminiscent of the collapsed TelexFree scheme in 2014. TelexFree, which reached across borders and appears to have gathered $1.8 billion while creating at least hundreds of thousands of fraud victims, triggered investigations by the SEC and the U.S. Department of Homeland Security.

    In 2015, a scheme known as Wings Network was operating in part from Massachusetts at Ground Zero for TelexFree. The SEC brought an action against management and promoters, alleging Wings was a Ponzi- and pyramid scheme that appeared to have set up shop in Portugal and the United Arab Emirates to reach across borders and scam the masses.

    Wings allegedly plucked at least $23.5 million.

    At least one TelexFree promoter who appears to have been involved in the WCM777 scam broken up by the SEC last year used the logo of the NFL in Facebook promos and sought to lure prospects with game tickets.

    A promo in English for GooBets observed by the PP Blog today read in part (italics added):

    Hey, it’s a VERY excited Darren here :-)

    This is like shooting fish in a barrel… a barrel with no water in it !!

    I have FINALLY found the Holy Grail – a 100% legit way to earn a steady and secure Passive Income stream online and I just had to tell you about it.

    The name of the Company is GooBets LLC. and is the collaboration between a VERY successful ‘Sports Trader’ – Miguel Carvalho and his Mega-Business partner – Augusto Queiroz.

  • ‘Bacon’ Crumbles — And Yet Props Up MAPS

    EDITOR’S NOTE: The interconnectivity of fraud schemes is one of the core dangers of the HYIP sphere. Stolen proceeds continually cycle between and among scams, making banks and payment vendors virtual warehouses for cross-border criminals and their serial enablers. The problem may be intensifying. More and more HYIP schemes appear to be using script kits — essentially prefabricated websites — in which emerging schemes simply plug in their information and graphics. These kits allow schemes to show ads for other schemes, including competitive schemes.

    Simply put, modern scams are driving business to other modern scams.

    As the story below illustrates, the cycle may not be broken even if a particular scheme suspends payouts.

    **____________________**

    baconmapssmall“Bring The Bacon Home,” a Ponzi-board “program” popularized in part by Achieve Community hucksters, reportedly has crumbled.

    The circumstance surrounding the collapse, however, demonstrates that BTBH is contributing to ongoing harm. Indeed, the “program” continues to publish ads for other HYIP schemes, including “MyAdvertisingPays.”

    MAPS, as it is known, is referenced in a prospective class-action complaint filed against multiple TelexFree figures and financial vendors in U.S. District Court for the Southern District of New York in December 2014.

    TelexFree was alleged by the SEC last year to have been a combined pyramid and Ponzi scheme. The trustee in the TelexFree bankruptcy case says the cross-border “program” may have gathered as much as $1.8 billion.

    TelexFree and MAPS are known to have had promoters in common. It was learned last month that Shaun Smith, an alleged “winner” in the Zeek Rewards scheme broken up by the SEC in 2012, also is promoting MAPS.

    Zeek receiver Kenneth D. Bell is suing Smith and more than 9,000 other alleged “winners,” amid claims they are in possession of proceeds that flowed from a Ponzi scheme.

    Despite the reported collapse of BTBH, it continues not only to publish ads for MAPS, but other schemes.

    BTBH, which had claimed $40 turned into $1,800, encountered a failed launch in January. The “program” then embarked on a self-styled “relaunch,” but that, too, appears now to have failed — leaving investors holding the bag.

    Before Achieve Community collapsed under the weight of an SEC investigation announced in February in which the agency alleged Achieve was a combined Ponzi- and pyramid scheme that had gathered $3.8 million, any number of Achieve promoters also were promoting other cross-border scams.

    Another of the scams currently advertised on BTBH is “MooreFund,” as the screen shot below demonstrates. MooreFund also was promoted by Achieve members.

    baconmoorefundsmall

    As the PP Blog reported on Feb. 24 (italics added):

    Like Achieve, MooreFund has a presence on well-known Ponzi-scheme forums such as MoneyMakerGroup and TalkGold. The “program” purports to offer four investment plans. These promise absurd daily interest rates of between 1.5 percent and 3 percent, with “compounding” available on three of the four plans and tiered recruitment commissions offered on all four.

    MooreFund, in turn, was promoted online alongside a “binary options” scheme known as SpotFN that recently became the subject of a cease-and-desist order in Missouri.

    See April 12 report on BTBH at BehindMLM.com.

  • Another Rodney Blackburn ‘Program’ DOA

    daily-earnings4th Update 1:15 p.m. EDT U.S.A. “Daily-Earnings,” yet another Ponzi-board scheme pushed by Achieve Community huckster Rodney Blackburn, appears to have met its demise. The “https” dotcom for Daily-Earnings is publishing a “Your web space is ready to go!” message, suggesting front-page content has been moved from the site.

    Not all pages of the site, however, are offline. An FAQ page, for instance, is publishing ads for “programs” called SecretSocietySystem and “ILuvBanners.” There’s also an ad at Daily-Earnings for Intellashares, a “program” that collapsed earlier this year but now is trying a relaunch.

    Ads for these “programs” also are being published at Daily-Earnings:

    MassiveWealthCycler. (“4daily position $17 only per sub prelaunch JOIN NOW.”)

    V Stream TV. (“FREE Cable TV Sign Up for FREE No Monthly Fees Join NOW.”)

    Demonstrating the interconnectivity of certain types of MLM schemes, the ILuvBanners’ site is publishing ads for:

    10In20Back. (NEW! 10in20back..ONLY $10 PER SHARE. PAYZA & STP.”)

    PassiveIncomeADay. (Claim of “Daily Passive I . . . PASSIVE INCOME A DAY! Turn $5 into $7.5 150%,” but dotcom currently is generating a server error.)

    MooreFund. (An unqualified disaster.)

    Blackburn pushed Achieve Community, which the SEC described in court filings on Feb. 12 as a combined Ponzi- and pyramid scheme. He also has been associated with “Trinity Lines,” a collapsed “program” trading on the name of God, and Automatic Mobile Cash, which appears to have collapsed in March.

    The huckster also created a combined ad for Achieve Community, TrinityLines and UnisonWealth. The SEC declined to comment on the promo.

    At one point, the MooreFund and RockfellerBiz “programs” came into the fold, with Blackburn blessing both of them.

    His promo for “Daily-Earnings” appears to have been published on Feb. 28, a little more than two weeks after the SEC’s Achieve Community action.

    At the time, the actual Daily Earnings site was displaying ads for other scams while hawking “AdPacks.” The “program” possibly operated from Istanbul, Turkey.

  • DEVELOPING STORY: Thai Police Bust ‘UFunClub,’ Yet Another Cross-Border Network-Marketing Program; Case May Involve $307 Million

    ufunclubUPDATED 9:10 A.M. EDT U.S.A. It’s whack-a-mole via MLM or network marketing — again.

    There are reports in Thai media about a major pyramid/Ponzi bust involving a cross-border “program” known as “UFunClub.” (See links below.)

    No American suspects appear to have been arrested or named so far, but Americans have promoted UFunClub. One of them, according to BehindMLM.com, is Jamison Palmer.

    On Feb. 19, 2015, the PP Blog contacted the Alabama Securities Commission for comment after it observed a promo online for “UFunClub” attributed to Melton McClanahan, an American implicated in the cross-border “Profitable Sunrise” scheme broken up by state regulators and the U.S. Securities and Exchange Commission in 2013.

    Even as McClanahan was pitching UFunClub, he was pitching “Unison Wealth,” a Ponzi-board “program” pushed by Achieve Community huckster Rodney Blackburn. Achieve Community was taken down by the SEC in February 2015.

    ASC did not respond to the request for comment on UFunClub and Unison Wealth, and it is unclear whether they are under investigation in the United States. What is clear is that McClanahan was issued a cease-and-desist order by ASC for his alleged role in pushing Profitable Sunrise. He also was subpoenaed by the SEC in the Profitable Sunrise case.

    It’s also clear that some network marketers are moving from scheme to scheme to scheme in an ongoing and insidious environment of whack-a-mole. Schemes using a common network of promoters are feeding off each other.

    From a Bangkok Post story on UFunClub (italics added):

    Deputy Prime Minister Prawit Wongsuwon instructed police to investigate the case and quickly hunt down and arrest the suspects.

    Police have been working alongside the Consumer Protection Police Division, the Office of The Consumer Protection Board and the Anti-Money Laundering Office in the investigation. The company’s operating licence was revoked.

    Like other schemes, UFunClub spread in part on social media, according to a report at Nationmultimedia.com (italics added):

    OCPB secretary-general Amphon Wongsiri said the U-Fun group mobilised investments through the website www.u-fun-u-token.com, www.youtube.com and many other avenues including via direct contact by its agents.

    Recent whack-a-mole schemes include TelexFree, Wings Network, Zeek Rewards, eAdGear, iFreeX and EmGoldEx.

  • GlobalNews.ca: Pyramid Scheme Was Operating Out Of British Columbia Nursing Home

    cautionflagTwo senior managers at the St. Michael’s Centre nursing home in Burnaby allegedly were running a pyramid scheme targeted at women and have been fired, GlobalNews.ca is reporting.

    Workers — rather than residents — were the apparent targets. The Royal Canadian Mounted Police are investigating, the publication reported.

    Whether the scheme was operating as a “gifting” program was not immediately clear. In 2013, there were reports in British Columbia about a “women’s circle” gifting scam in the province.

    Such schemes may adopt a theme of “women helping women.” There have been criminal prosecutions flowing from such schemes in the United States and the United Kingdom.

    In November 2014, Idaho Attorney General Lawrence Wasden issued a warning about a “women’s” program operating in that U.S. state.

    Some promoters who push gifting scams also participate in other forms of the pyramid- or Ponzi scheme. Such was the case among certain participants in “Blessing Gold Club.”  They simultaneously were pushing a scheme known as Better-Living Global Marketing, a “program” whose business model strongly resembled that of the Zeek Rewards scheme taken down by the SEC in 2012.

    BLGM now is the subject of a criminal investigation in Hong Kong.

     

  • BULLETIN: SpotFN, ‘Binary Options’ Platform, Issued Cease-And-Desist Order In Missouri

    spotfmBULLETIN: (Updated 5:52 a.m. EDT April 8 U.S.A.) A “binary options” platform operating out of England allegedly plucked $82,742 from four Missouri investors, telling one of them that his money “had been stolen by former employees and could only be retrieved by paying a service fee and taxes to the companies’ supposed insurance company, Allianz Tiriac, located in Romania.”

    The office of Missouri Secretary of State Jason Kander has issued a cease-and-desist order that applies to SpotFN.com, Spot FN LLC, Spot CEO James Kingsley and “affiliated New York companies Binary Holdings and Binary Academics,” Kander’s office said.

    Spot does not appear to be an MLM. But some MLM “programs” are pushing binary-options schemes.

    Among the issues in Missouri is that the Spot and Binary entities “and Kingsley are not registered to offer investment advice or act as broker-dealers in the state of Missouri,” Kander’s office said.

    “Email and online-based investment opportunities such as this are a common practice by scammers to lure investors,” Kander said. “If you or someone you know was approached via email with an investment opportunity — especially by a foreign-based company — contact my office before turning over your hard-earned money.”

    According to a statement by Kander’s office, Spot told a story about “guaranteed” profits and used the Internet and telemarketers to line up business for binary options, “which are bets on whether an event will happen at a specific time.”

    Prospects were told to “send their investment funds through a website via their credit card, and their funds would be invested either by a ‘robot trader’ or an ‘executive trader,’ with a higher fee. In some instances, investor credit cards were charged without the investor’s knowledge or authorization,” Kander’s office said.

  • In Asking Court To Reject Proposed Herbalife Class-Action Settlement, Objectors Point To Clawback Actions Flowing From Zeek Case

    EDITOR’S NOTE:  Clients of attorney Douglas M. Brooks object to the proposed Herbalife-class-action settlement on a number of grounds. This story focuses on only one of them: one that cites “clawback” actions flowing from the Zeek Rewards’ Ponzi- and pyramid case. The Zeek clawback actions underscore the litigation dangers MLM distributors may encounter after harrumphing for a mother ship alleged to be a fraud.

    Risk may be particularly elevated if distributors emerged with a profit or if they offered deceptive “leads” or “training” programs . . .

    The PP Blog accessed the objections of Brooks’ clients through the website of TruthInAdvertising, which also is objecting to the proposed Herbalife settlement.  The link appears at the bottom of this story . . .

    Source: Screen shot from federal court filing.
    Source: Screen shot from federal court filing.

    At least 18 individuals objecting to a proposed class-action settlement in Dana Bostick v. Herbalife International of America Inc et al say the $17.5 million settlement, as stipulated by both sides, could shield “high-level distributors” from “clawback” lawsuits.

    All of the objectors have filed complaints against Herbalife with the Federal Trade Commission, according to their Bostick declarations. They are represented by Massachusetts attorney Douglas M. Brooks.

    Brooks has litigated against Herbalife in the past and has advocated the position that “The Multi-Level Marketing Industry Causes Substantial Injury to Consumers.”

    In their objections, Brooks’ clients specifically argue that “The Release in the Settlement Stipulation is too broad in that it will release claims against high level Herbalife distributors.” As examples of the types of Herbalife distributors who could be sued for return of winnings, the objectors cite “leads” providers and providers of “training” courses.

    Although the Bostick case was not brought by the government, the FTC has been investigating Herbalife since March 2014. “[S]everal state Attorneys General” also are investigating the company, the objectors contend.

    Made “under penalty of perjury,” their affidavits in Bostick list complaints to the attorneys general of Illinois, Nevada and Connecticut.

    Should one or more agencies bring a case against Herbalife, lawsuits against certain individual distributors could provide an additional compensation remedy. This particular route to recovery would be blocked under the current stipulated settlement agreement, the objectors say.

    They also say the current pot of $17.5 million is far too small and that the stipulated agreement is defective in other ways.

    Objectors Cite Zeek, Fortune Hi-Tech Cases

    “The potential for claims against Herbalife’s high level distributors is not merely theoretical,” the objectors contend. “For example, in an action by the receiver arising out of the SEC’s prosecution of a multilevel marketing firm known as Zeek Rewards, the court recently certified a defendant class comprised of the ‘net winners.’”

    The case is known as Bell v. Disner. Kenneth D. Bell, a North Carolina attorney and the court-appointed receiver in the SEC’s Ponzi- and pyramid case against Zeek filed in August 2012, is suing more than a dozen individuals for a combined sum in the millions of dollars. He’s also suing certain alleged shell companies used by distributors to harvest illicit profits from Zeek.

    At the same time, Bell is suing more than 9,000 other individuals or business entities in a defendant class-action case that already has been certified by a federal judge. The class consists of U.S. Zeek affiliates who allegedly received sums in excess of $1,000 from Zeek.

    These actions combined pursue the recovery of about $283 million Zeek allegedly paid out to top promoters in an environment in which “over 92% of the money paid in to Zeek came from net losers.”

    Zeek appears to have created approximately 800,000 losers, according to court filings

    “[B]ecause ZeekRewards’ net winners ‘won’ (the victims’) money in an unlawful Ponzi and pyramid scheme, they are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims,” Bell wrote in March 2014.

    Since that time, he also has sued dozens of alleged Zeek winners with addresses in Australia, New Zealand, the United Kingdom, the British Virgin Islands, Canada and Norway. The actions also seek the return of millions of dollars.

    But the Zeek clawbacks are not a unique example of the type of litigation that may surface if an MLM company is accused of fraud, the Herbalife objectors represented by Brooks say.

    “In an action by the Federal Trade Commission and four state Attorneys General against the multilevel marketing firm Fortune Hi-Tech Marketing, the court-appointed receiver recently received approval to commence litigation against ‘highly compensated representatives,’” they say.

    NOTE: Access objection through TruthInAdvertising.org.