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DEVELOPING STORY: Zeek Figure Robert Craddock Accused Of Trademark Infringement And Engaging In ‘Shake-Down’ Bid Against MLM Affiliates

EDITOR’S NOTE: The story below focuses mostly on a lawsuit filed against Zeek Rewards figure Robert Craddock by a Nevada company known as BTG180. A lawsuit filed against Craddock by a Wyoming company known as OfferHubb.net Inc. makes similar claims against Craddock.

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DEVELOPING STORY: (4th Update 10:12 a.m. EDT Oct. 14 U.S.A.) Zeek Rewards figure Robert Craddock has been accused in a private lawsuit filed in Nevada federal court of trademark infringement and using a “shell corporation” to engage in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

The alleged shell corporation is known as Fun Club USA Inc., according to a complaint filed Feb. 5, 2014. It has “no employees,” was “never capitalized” and created a condition under which Craddock was able to use funds directed to the corporation by MLMers as his personal funds, the plaintiffs contend.

The plaintiffs in the case are listed as BTG180 LLC and Randall Jeffers. A second complaint against Craddock was filed on the same day, also in Nevada. Plaintiffs in that case are OfferHubb.net Inc. and David Flynn, who allege that Craddock “immediately” embarked on a web-based disparagement campaign against them after OfferHubb chose in July 2013 not to renew a contract with Craddock and FunClub USA.

OfferHubb.net Inc. further accused Craddock of misrepresenting the company, breaching the OfferHubb Terms of Service by inducing affiliates to make side deals and accept kickbacks from affiliates and cross-selling other MLM opportunities in contravention of his agreement with OfferHubb.

BTG180 is associated with a “program” known as BidsThatGive, which positioned itself as an opportunity to fight child poverty and the exploitation trades. An apparent prelaunch for BidsThatGive was conducted in July 2012, the month before the SEC moved against Zeek.

Fun Club and Craddock are referenced in a blistering memo filed in the Zeek Ponzi- and pyramid-scheme case by the SEC on Dec. 17, 2012. In the memo, the SEC accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver. The SEC further alleged that Craddock was spreading misinformation about how the agency viewed its own case against Zeek and that Fun Club appeared to have been formed 11 days after the SEC emergency action against Zeek on Aug. 17, 2012.

Craddock has not been charged by the SEC with wrongdoing.

Despite the SEC’s December 2012 assertions against Craddock and Fun Club, however, BTG180 appears to have entered into a contract with Craddock and Fun Club on Aug. 12, 2013, just five days shy of the one-year anniversary of the SEC’s complaint against Zeek. In the August 2012 action, the agency accused Zeek of engaging in securities fraud, selling unregistered securities and operating a combined Ponzi and pyramid scheme that had gathered hundreds of millions of dollars in just shy of 20 months.

BTG180, according to its own lawsuit against Craddock and Fun Club filed in February 2014, paid Craddock and the shell company $50,000 in advance of work Craddock had agreed to perform for BTG180.

BTG180 says it wants back the $50,000 because Craddock failed to deliver. It also contends other actions by Craddock caused it to suffer damages.

Part of Craddock’s duties, according to the complaint, was to “market the BTG180 network marketing opportunity to former affiliates of the Zeek Rewards network, which had provided products similar to those provided by BTG180.”

Craddock did not perform the agreed-to work, according to the lawsuit. Instead, he attempted to “induce BTG180 to promote and incorporate into its product line a so-called checking account draft processing system known as BTM. Craddock is the founder of a corporation known as BTM Check Draft Inc.”

Without authorization from BTG180’s Jeffers, according to the complaint, Craddock pitched his BTM check system to the members of BTG180, amid false claims that it “had been approved by BTG180” and was in the company’s product stable.

Other “confrontations” between Craddock and “BTG180 executives” ensued, and Craddock tried to “induce” BTG180 to “market other products for him,” according to the complaint.

When Craddock “continued to defy Plaintiffs requests to stop these actions,” according to the complaint, “BTG stopped paying Craddock and Fun Club.”

Under the terms of the contract, according to an exhibit in the case, Craddock and Fun Club were to receive $20,000 a month through BTG180, plus approved expenses, from Sept. 1, 2013 through Sept. 1, 2014.

Craddock also was required not to reveal BTG180’s trade secrets and proprietary information, according to the exhibit.

But at some point during contractually required Craddock visits to BTG180’s operations in Nevada, according to the complaint, BTG180 came to believe that “Craddock used a computer or several computers at BTG180’s offices to access and download and/or retain contact information of BTG180’s affiliates.”

Craddock, according to the complaint, then sought to harm BTG180 by “disrupting and ruining its relationships with its affiliates.”

As part of his plan to ruin BTG180, according to the complaint, Craddock established a website styled BTGlegal.com and engaged in trademark infringement while doing so. As a further part of this scheme, according to the complaint, Craddock used the website to paint Jeffers as dishonest and unethical, saying Jeffers and “other principals” of BTG180 had criminal records and a history of defrauding people.

At the same time, according to the complaint, Craddock claimed that BTG180 had been “classified” a Ponzi scheme, that the company was to be “investigated,” that “reports” about BTG180 had been filed with the North Carolina Attorney General, that a Zeek-like action against BTG180 was planned by investigators and that “BTG180 affiliates could face criminal or other legal charges for signing up new affiliates.”

Craddock, according to the complaint, issued an “edict” that “all BTG180 affiliates were under a cease and desist order to stop doing business with BTG180.”

By December 2013, according to the complaint, Craddock was soliciting monthly donations of $25 each from BTG180 affiliates, saying the money would help them get back sums they had paid to BTG180. At the same time, according to the complaint, Craddock was encouraging members to contact a reporter at ABC News by email and to use a subject line that read, “They Took My Money and Used Kids to Lure me In.”

In 2012, according to the BTG180 complaint, Craddock had solicted donations from Zeek members amid assertions he was protecting their legal interests. He eventually did the same thing to BTG180 and OfferHub participants, a “shake-down” bid targeted at MLMers, according to the complaint filed by BTG180.

Craddock is accused in the complaint of cybersquatting, trademark infringement, wrongful use of a computer, misappropriation of trade secrets, wrongful interference with economic relations, breach of contract, unjust enrichment, defamation and hiding behind a shell company.

The trademark-infringement claim may be particularly concerning to the MLM trade, given that Craddock has asserted he works as a copyright and trademark agent on behalf of MLM “programs.”

On July 22, 2012, while purportedly working as a “consultant” for Zeek, Craddock filed a copyright- and trademark-infringement complaint against a HubPages website operated by Zeek critic K. Chang. K. Chang, who also posts on publications such as the PP Blog and BehindMLM.com, ultimately prevailed in the action brought by Craddock.

Less than a month later, the SEC brought the Ponzi- and pyramid action against Zeek.

Earlier this year, a website known as Changes Worldwide identified Craddock as its copyright agent. Filings by the SEC in June 2014 alleged that Faith Sloan, accused in April 2014 of securities fraud by the agency in its Ponzi- and pyramid complaint against the TelexFree “program,” sent more than $15,000 to an entity known as Changes Worldwide LLC after an asset freeze was opposed against Sloan in the TelexFree case.

Sloan also was a Zeek affiliate. Whether proceeds that originated in Zeek and/or TelexFree made their way into Changes Worldwide is unclear.

BehindMLM.com, recently the subject of a DMCA takedown notice by Sloan but now back online, reported yesterday that Changes Worldwide and a companion entity known as Changes Trading are having payment problems. As the PP Blog reported on Oct. 2, the email address Sloan used to file the complaint against BehindMLM.com was associated with a 2×2 matrix “program” known as “Diamond Holiday Feeder” that was making the HYIP rounds in 2010.

Despite the fact Sloan accused BehindMLM.com of using on its website copyrighted material she owned, one of her 2010 promos for Diamond Holiday feeder used nearly three minutes of a soundtrack recorded in 2009 by The Black Eyed Peas to celebrate the 24th season of the Oprah Winfrey Show.

MPB Today, a collapsed matrix cycler that led to racketeering charges in Florida against the “program” operator, is an example of a 2×2. Another example is Regenesis 2×2, which led to a U.S. Secret Service probe in Washington state in 2009. Some Zeekers are known to have promoted Regenesis 2×2.

News broke last week that Craddock is listed on Amazon.com as the author of a book on Zeek Rewards. Marketing copy for the book asserts that the U.S. government should have modeled a “stimulus program” after Zeek, rather than shutting it down.

In the current infringement actions against Craddock, the dockets of the case suggest Craddock no longer has paid counsel and is seeking to litigate pro se against the plaintiffs, contending that the cases should have been handled through binding arbitration, not actions in federal court.

Craddock’s wife is a co-defendant, amid claims she and her husband used Fun Club USA to dupe MLMers who provided money to protect their legal interests.

NOTE: Our thanks to the ASD Updates Blog.

Oct 13, 2014
UPDATE: Ad For Book By Zeek Figure Robert Craddock Appears On Drudge Report

This ad for Zeek figure Robert Craddock’s new book appeared on the Drudge Report today. Source: Screen shot.

DISCLOSURE: The PP Blog carries ads from AdChoices that are delivered by Google.

UPDATED 7:22 A.M. EDT OCT. 12 U.S.A. The PP Blog observed yesterday that a new book by Zeek Rewards figure Robert Craddock now is available on Amazon.com after earlier having been listed as “Out of Print” and with “Limited Availability.” The price of the 276-page paperback, as advertised on Amazon.com yesterday and today, is $22.45.

This afternoon the PP Blog observed an ad for the Craddock book at the top of the Drudge Report, one of the most highly trafficked political websites in the world. A symbol in the ad suggested it originated through AdChoices. Ads on the Drudge Report are arranged through Intermarkets Inc.

Marketing copy for the book, which the PP Blog accessed directly through Amazon.com, does not mention that Zeek Rewards was alleged to be a massive international Ponzi- and pyramid scheme that gathered hundreds of millions of dollars and affected hundreds of thousands of people.

The copy argues that the U.S. government should have modeled a “stimulus program” after Zeek, instead of shutting it down.

Oct 11, 2014
SEC Declines To Comment On New Claims Attributed To Zeek Figure Robert Craddock

UPDATED 8:30 P.M. EDT U.S.A. The SEC this afternoon declined to comment on a confounding claim attributed to Zeek Rewards figure Robert Craddock that Zeek took in $1 billion in 12 months and that the U.S. government should have modeled a “stimulus program” after Zeek instead of shutting it down in 2012.

News that Craddock apparently had authored a book on Zeek and was making new claims first appeared on BehindMLM.com early today. In 2012, the SEC described Zeek as a massive Ponzi- and pyramid scheme and described Craddock as an obstructionist who was encouraging victims not to cooperate with Kenneth D. Bell, the court-appointed receiver in the agency’s civil case. Craddock has not been been charged with wrongdoing.

Titled “The Zeek Phenomenon: Zero to $1 Billion in 12 Months,” the book in which Craddock is listed as the author is advertised on Amazon.com as a paperback “Out of Print” and with “Limited Availability.” Sept. 29 of this year is the asserted publication date.

The office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina did not respond immediately to a request for comment on the claims. Tompkins’ office brought successful criminal prosecutions against Zeek figures Dawn Wright-Olivares (investment-fraud conspiracy and tax-fraud conspiracy) and Daniel Olivares (investment-fraud conspiracy) in late 2013.

Wright-Olivares, 45, and Olivares, 31, her stepson, pleaded guilty to the respective criminal charges against them in February 2014. Earlier, in December 2013, they settled SEC civil charges against them by agreeing to pay millions of dollars each, “the entirety of their ill-gotten gains plus prejudgment interest,” the SEC said at the time.

In July 2014, Bell said in court filings that Wright-Olivares, Olivares and alleged Zeek operator Paul Burks had agreed to a consent judgment of $600 million “to be satisfied with substantially all of their assets.”

Other court filings by Bell say a criminal investigation into Burks remains open. Bell also is special master in the criminal case.

The Confounding Claims

Craddock’s apparent claim that Zeek took in $1 billion in a year appears to be at odds with court filings by federal prosecutors in December 2013 that claim Zeek gathered a maximum sum of $897 million before collapsing in August 2012. If, as the claim suggests, Zeek took in $1 billion, there may exist a discrepancy of at least $103 million between the claim attributed to Craddock and the government’s account.

How Craddock apparently arrived at the $1 billion figure was not immediately clear. Such a discrepancy, though, potentially could cause both the SEC and federal prosecutors to revisit the Zeek numbers. The assertions attributed to Craddock suggest that Zeek’s haul could have been much larger and occurred in the narrower time frame of 12 months, not the nearly 20 months cited by the SEC.

In short, could an undisclosed, unrecovered pile of Zeek cash exist elsewhere?

According to marketing copy on Amazon.com for the book attributed to Craddock, the government messed up big time by taking down Zeek.

Here’s a snippet (italics added):

In 2012, if the present Administration wanted to build a successful stimulus program, it should have used Zeek Rewards as a guide. This pioneering venture went from zero to one billion dollars in just 12 months, paid over 400 million dollars to more than 20,000 people earning an average of $20,000, created 10 people who made over one million dollars, and caused several thousand people to earn incomes in excess of one hundred thousand dollars. This unparalleled example would have been a phenomenal feat for our US Government during a period when our very financial existence was threatened.

The words “Ponzi” and “pyramid” appear nowhere in the marketing copy on Amazon.com. Whether Zeek “paid” is immaterial in the context of Ponzi schemes. So is the issue of how much it paid. Bernard Madoff “paid.” All successful Ponzi schemes “pay.” Zeek launched after the collapse of Madoff’s epic fraud, leading to questions about whether Zeek, its insiders and key promoters simply divorced themselves from reality.

Moreover, Zeek launched after the collapse of AdSurfDaily, a Zeek-like scam that promoted a return of 1 percent a day. Zeek’s purported daily payout averaged 1.5 percent, a percentage grossly superior to Madoff and significantly better than ASD.

In 2012, less than a month prior to the SEC’s Zeek action, Craddock temporarily succeeded in taking down a HubPages site operated by Zeek critic “K. Chang” by accusing him of copyright and trademark infringement.

K. Chang ultimately prevailed, but the site experienced downtime.

As the PP Blog reported at the time, Zeek appeared not to own the trademarks Craddock complained about, purportedly with the authority of North Carolina-based Zeek operator Rex Venture Group. Rather, the trademarks were listed in the name of Ebon Research Systems LLC, a Florida business.

A business known as Ebon Research Systems Publishing LLC is listed as Craddock’s publisher for the new book on Zeek, according to the Amazon.com listing.

Florida records suggest that Ebon Research Systems Publishing is managed by Dr. Florence Alexander, the same person behind Ebon Research Systems LLC when the HubPages flap played out more than two years ago.

The PP Blog spoke with Alexander in 2012. She said she “certainly” knew of Zeek, but said she had “no knowledge” of any trademark or copyright complaint filed at HubPages against K. Chang.

Although Craddock claimed to be a Zeek “consultant” while filing the claim against K. Chang prior to the SEC action in 2012, Zeek itself did not list him as one after the action, according to court records maintained by the ASD Updates Blog. (See Zeek filing from September 2012 here.)

Oct 7, 2014
TelexFree Figure Carlos Costa Trounced At Polls For Seat In Brazilian Congress

UPDATED 9:32 P.M. EDT U.S.A. TelexFree figure Carlos Costa of the state of Espírito Santo appears to have come up far short in his bid to win a seat in Brazil’s 513-member federal Chamber of Deputies, the equivalent of the U.S. House of Representatives.

Although final numbers appear not to be available yet, more than 99 percent of the vote appears to have been tabulated. Costa appears to be listed in 31st place in a crowded field in which a maximum of 10 candidates from his region would fill vacancies.

Costa appears to have gleaned about 0.61 percent of the vote, with the successful candidates receiving far higher percentages. At the time of this PP Blog post, the lead vote-getter appears to have gleaned about 8.55 percent. The lowest vote-getter among the top 10 received about 2.68 percent.

Costa’s campaign appeared to focus on wooing MLMers. Regulators in both Brazil and the United States have described TelexFree as a pyramid scheme. Some TelexFree members have alleged that racketeering violations occurred within the cross-border enterprise.

Costa’s campaign site appears not to have conceded defeat as of the time of this PP Blog post.

Oct 5, 2014
KABOOM! Banners Broker MLM ‘Program’ Described As ‘Criminal Enterprise’ That Gathered Tens Of Million Of Dollars

“Affiliates found to be contributing to the negativity on the Internet will have their accounts locked, they will be banned from participating in the Banners Broker system and they will forfeit all of their inventory and revenue.” — Banners Broker threat to members, February 2014

“It is the position of investigators that this business was a pyramid scheme that over time evolved into a straight Ponzi scheme in which new victims were recruited to stave off requests for withdrawals and complaints from older ones.” — Royal Canadian Mounted Police, July 17, 2014: Source: Affidavit that shows the RCMP, the Toronto Strategic Partnership and the Toronto Police Services Financial Crime Unit are involved in a criminal probe of Banners Broker.

EDITOR’S NOTE: The double-your-money Banners Broker “program” posed as an online “advertising” company. It appears to have gathered tens of millions of dollars using a series of conduits and employing entities or business identities in money-laundering havens. At least for now, the total sum stolen from participants is unclear. As alleged, funds were “diverted by the suspects and their associated corporations to various offshore and other bank accounts controlled by them.”

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How to begin the brainwashing process: Screen shot from page of court exhibit in Canada.

As an interview subject allegedly told the Competition Bureau of Canada on April 9, 2013, it was all so simple to Banners Broker operator Christopher George “Chris” Smith:

Indeed, Canadian authorities now have alleged, when the subject “met with Smith [in 2010,] he asked Smith why people lost money in these programs and Smith said it was what the programs were designed for, they bring people in, make some money and then they shut down and people move on to the next one.”

What was Smith allegedly discussing at the meeting in Toronto? His desire to come up with a “copycat” of Travel Ventures International, a purported “opportunity” also known as TVI Express and described as a scam on multiple continents. (See K. Chang’s MLM Skeptic Blog for a report on how TVI Express spread around the world.)

This, friends, is whack-a-mole — in the style of MLM huckster Chris Smith. It’s also racketeering MLM-style, whether formally prosecuted as such or not. And so it comes as no surprise that the term “criminal enterprise” to describe Banners Broker and its associated corporations now appears in court filings in Canada. (See links and credits at bottom of this story.)

In 2011, the U.S. Secret Service described the AdSurfDaily Ponzi scheme, another cross-border MLM fraud, as a “criminal enterprise.”

Members of the TelexFree MLM “program” allege that racketeering occurred within that enterprise, described by U.S. regulators earlier this year as a billion-dollar, cross-border pyramid- and Ponzi scheme. The Zeek Rewards MLM “program,” alleged to have gathered on the order of $850 million before is August 2012 collapse, launched after the 2008 collapse of ASD. There can be no doubt that TelexFree, Zeek, ASD and Banners Broker had promoters in common.

There also can be no doubt that “see no evil” MLM cottage industries sprouted up around these foundationally corrupt “programs” and offered services such as “lead” provision and “ad” placement. Victims have piled up in such numbers that, in the TelexFree scam alone, 20,000 Greyhound buses with a 50-seat capacity each would be required to accommodate the fleeced masses.

But where would they all go to observe events and be acknowledged at once?

No courtroom can accommodate 1 million victims. Even if Mass-Participation Court existed and were gaveled into session on an unbooked Saturday in Pasadena’s famous Rose Bowl with onetime Tournament of Roses Parade Grand Marshal and U.S. Supreme Court Associate Justice Sandra Day O’Connor coming out of retirement to preside, the huge stadium’s seating capacity of 92,542 still would be far too small to accommodate the injured parties.

Beyond that, Greyhound’s entire noble fleet consists of only 1,200 buses, not the 20,000 that would be required to transport TelexFree victims to California.

Despite the best efforts of the courts, victims are being lost as a result of these insidious MLM schemes. Some will be re-victimized in a whack-a-mole reload scam pitched by an MLM predator with a smile on his or her face and a Bible verse at the ready.

There also can be no doubt that certain members of the “programs” are members of a criminal combine that, whether loosely or closely associated, pushes one racketeering scam after another on the consuming public. It is willful blindness on a global scale. It is so dangerous, so calculating and methodical, so gruesomely injurious to persons and property, that it almost defies description.

Next time someone tries to recruit you into an HYIP “program” by telling you the “leaders” are already on board, here’s what to think: The racketeers are either running things or influencing events (again). They’re going to harm me (again). They’re going to harm my community, my country (again). They’re going to say they have been vetted by “attorneys” (again).

And then, as Chris Smith allegedly said, they’re going to shut down and “move on to the next one.”

Again.

Reclaim Your Brain — Right Now!

Like predecessor scams such as AdSurfDaily and AdViewGlobal and Zeek, the hypnotized and robotic Stepfordians in Banners Broker who’d been brainwashed by cult tactics rose up to “defend” the “program,” including some individuals who continued to champion the scam even after it effectively extorted them into paying more fees to keep their positions intact and to retain any chance of receiving a payout.

While trying to chill members who remained in control of their gray matter and hadn’t slipped into an MLM trance, Banners Broker naturally counted on the Stepfordians whose brains it had reduced to slush to wage efforts to chill Blogs and websites that report on scams.

“If you know of a site with content that is negative towards Banners Broker, we ask that you report it to the Community Watch,” the “program” instructed in February 2014.

Yes. Amazing as it sounds, Banners Brokers called its efforts to cover up its own criminal enterprise a “Community Watch” program. Even earlier than that, it dispatched the Stepfordians to harass and hound a Blogger named Finch, who now says, “I received all kinds of threats, smears and public verbal bashings.”

On Jan. 17, 2013, the PP Blog reported it was receiving menacing communications about Banners Broker.

For additional background on bids to chill reporters or program members who publish information about scams and highly questionable “opportunities,” see this Dec. 27, 2012, PP Blog post: Our Choice For The Most Important PP Blog Post Of 2012. (It’s about an effort to chill K. Chang over his reporting on Zeek Rewards.)

Also read about continuing efforts from the MLM HYIP sphere to destroy the antiscam well at BehindMLM.com and RealScam.com.

NOTE: A special shout out today to RealScam.com and the Banners Broker Ponzi Scam Community on Facebook. They shared this 275-page court filing in Canada on civil and criminal investigations into Banners Broker.

ALSO: Visit the website of the msi Spergel inc., the receiver.

Oct 4, 2014
NEW ENGLAND PUBLIC RADIO: Secretary Galvin Talks TelexFree, Sann Rodrigues And ‘IFreeX,’ Tells Station Accused Huckster’s ‘Current Whereabouts . . . Unknown’

UPDATED 8 A.M. EDT U.S.A. New England Public Radio has a minute-long audio report on TelexFree, iFreeX and Sann Rodrigues, including comments from Massachusetts Commonwealth Secretary William Galvin.

An NEPR text report is available here. Look under the byline of Kari Njiiri for a link to the audio report.

Rodrigues, accused in April 2014 by the U.S. Securities and Exchange Commission of fraud over his alleged role in TelexFree, earlier (in 2006) was accused of fraud by the SEC in a separate alleged pyramid scheme involving phone products. iFreeX may constitute at least his third dance in securities- and affinity-fraud schemes involving communications products.

Galvin reportedly told the station that the “current whereabouts” of Rodrigues is unknown. The charged pitchman hails from Brazil, once resided in Massachusetts and also has lived in Florida.

Rodrigues, according to the SEC, has claimed that “God” started MLM and “binary” MLM “programs.”

On Dec. 19, 2013, the PP Blog reported that TelexFree puff pieces were appearing in a publication that featured a columnist who asserted Jesus Christ was the person who inspired modern network marketers through his recruitment of 12 disciples.

Ads for an apparent cash-gifting scheme appeared in the same publication.

SEC case filings alleged that, on March 15, Rodrigues’ co-defendant Faith Sloan claimed on her website that the TelexFree compensation plan was changing and was not in final form — “[b]ut is Getting BETTER as Jesus said.”

Regulators have described TelexFree as a billion-dollar pyramid- and Ponzi scheme that operated across national borders.

Claims of divine authority or inspiration are not unusual in MLM HYIP frauds. In the 2008 AdSurfDaily case, for instance, accused operator Andy Bowdoin claimed God was on his side and compared the U.S. Secret Service to “Satan” and the 9/11 terrorists. Bowoin later was sentenced to federal prison for his $119 million Ponzi scheme.

Promos showed Bowdoin asserting from a stage in Las Vegas that he was a Christian “money magnet” and that cash would “flow” back to people who gave him tens of thousands of dollars at a time.

Affinity fraud may occur in many contexts: appeals to religious faith, appeals to common interests, appeals to common heritage, appeals to common political interests and more.

Oct 3, 2014
Email Address In Faith Sloan’s DMCA Complaint Against BehindMLM.com Appears In 2010 Promo About Purported $10,000 Payout From Matrix Cycler; ‘You Can Do That Over And Over Again,’ Veteran HYIP Huckster Claims

More than two minutes and 40 seconds of a special version of “I Gotta Feeling” recorded by the Black Eyed Peas to honor Oprah Winfrey plays in this “team” promo for a matrix-cycler “program” known as “Diamond Holiday Feeder.” Neither the group nor Winfrey is credited. Source: screen shot from DailyMotion.com.

The Gmail address used by TelexFree figure Faith Sloan in a Sept. 23 DMCA takedown notice filed against BehindMLM.com appears below a 2010 video promo for a “program” known as “Diamond Holiday Feeder,” part of a larger “program” purportedly engaged in the travel business while also operating a matrix cycler.

Matrix cyclers sometimes are known as 2x2s or “get two who get two.” MPB Today, a collapsed matrix cycler that led to racketeering charges in Florida against the “program” operator, is an example of a 2×2. Another example is Regenesis 2×2, which led to a U.S. Secret Service probe in Washington state in 2009.

In a 3:44 video whose publication date is listed as April 8, 2010, Sloan claims to have made $10,000 in the Diamond Holiday Feeder program and further claims “you can do that over and over again.” The headline of the video is, “Ten Thousand Dollars Proof – Diamond Holiday Feeder – BYC.”

Another Sloan video for a “team” build of the Diamond Holiday “program” uses nearly three full minutes of a special version of “I Gotta Feeling” recorded by The Black Eyed Peas to honor Oprah Winfrey and the 24th year of The Oprah Winfrey Show in September 2009. Neither Winfrey nor the group is credited in the “team” promo. The “team” build video is dated March 21, 2010.

Ironically, Sloan has accused BehindMLM.com of copyright infringement, amid allegations it used photos to which she owned the copyright on its website.

BehindMLM.com says Sloan’s claims are bogus.

Though TelexFree would come later — after the apparent collapse of Diamond Holiday Feeder, with Sloan blaming events on management — an image of Sloan posing in front of a TelexFree logo appears on the Diamond Holiday Feeder video site. The site appears now to be driving traffic to a “program” known as “RE247365.” (BehindMLM.com is back online after being offline for all or parts of three days. Read its “RE247365” review.)

In the current TelexFree case in which she is accused of securities fraud, Sloan likewise is blaming management.

Sloan’s narration in the April 2010 video shows her Diamond Holiday Feeder back office and suggests she did not withdraw her purported earnings of $10,000 all at once to her bank account, but rather in smaller increments. Such a practice may lead to questions about whether she was engaged in structuring transactions to avoid bank-reporting requirements. In a civil action against TelexFree in April, the Massachusetts Securities Division raised the issue of structuring.

Other information suggests Sloan gravitated to Diamond Holiday Feeder after the collapse of the Noobing MLM scam in 2009. Noobing, in part, was targeted at people with hearing impairments, including a California woman the PP Blog interviewed in 2010 through her interpreter.

On a website deemed “The Official Web Blog” of Noobing, the program was described as a “hit” among deaf people. Noobing, according to the Blog, was promoted at Deaf Expos in Kansas, Missouri, New Jersey and Texas in 2008 “to connect with the often overlooked hearing impaired business community.”

Noobing was under the umbrella of an enterprise known as Affiliate Strategies Inc. that was running a government-grants swindle and was sued by the FTC and three state-level attorneys general for fraud. ASI went into receivership, taking Noobing with it. The enterprise had offshore conduits in Belize and Nevis.

On one August day in 2009, attorneys assisting the ASI receivership “received thirty two US Mail crates” filled with complaints from scam victims, receiver Larry Cook said at the time.

“The Receiver’s work over the past three weeks suggests the Defendants’ operations were insolvent on the date [July 24, 2009] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds,” Cook said at the time.

Oct 2, 2014
Did iFreeX ‘Program’ Pirate T-Mobile’s Branding Material?

From a YouTube promo for iFreeX. Masking by PP Blog.

T-Mobile told the PP Blog today that it was looking into a situation in which images of Carly Foulkes appear to have made their way into a promo for iFreeX, an emerging “program” that became the subject of a scam warning by Massachusetts Commonwealth Secretary William Galvin yesterday.

Foulkes, a Canadian model, is known colloquially as “the T-Mobile Girl.” Millions of television viewers were charmed by Foulkes, who helped T-Mobile build its brand and also is known colloquially as “the girl in pink.”

In 2013, Business Insider called Foulkes “one of the most recognizable brand spokespeople out there right now.”

A promo for iFreeX appears to show Foulkes in full T-Mobile wardrobe regalia, clad in her traditional pink summer dress and displaying a cell phone. A logo for iFreeX appears just below her image.

T-Mobile said this afternoon that it “will look into it.”

It is not unusual for MLM “programs” to engage in brand-leeching. Most of the recent HYIP schemes taken down by the SEC have traded on the names, reputations and imagery of famous companies.

“iFreex appears to be nothing more than a rebranded TelexFREE fraud for mobile phones,” Galvin said yesterday. “Everyone, but especially those in the Brazilian and other immigrant communities that are the target of these pitches, need to be skeptical of any scheme that offers guaranteed returns with little or no effort. Unfortunately, we have seen an increase in these pyramid schemes in the past year.”

TelexFree is alleged to have operated a billion-dollar, cross border pyramid and Ponzi scheme. Reload scams typically pop up to replace cratered “programs.”

“IFREEX PRE LAUNCH / PRÉ LANCEMENT/ PRÉ LANÇAMENTO!” the text section of an IFreeX promo on YouTube screams.

Oct 1, 2014
BehindMLM.com Offline

From Google cache earlier today for BehindMLM.com.

UPDATED 3:21 A.M. EDT SEPT. 30 U.S.A. The PP Blog is aware that BehindMLM.com, the popular review site that covers multilevel marketing and fraud schemes within the sphere, is offline. The precise reason why is unclear at this time.

BehindMLM.com reported Sept. 26 that it had received a DMCA takedown notice from Faith Sloan, an MLM HYIP huckster and figure in the TelexFree Ponzi- and pyramid-scheme story. In April 2014, Sloan was charged with securities fraud by the SEC for her alleged role in TelexFree, described by regulators as a billion-dollar fraud that crossed national borders.

In the takedown action, Sloan complained about certain photographs that have appeared on BehindMLM.com. Sloan claims to own the copyrights and that Behind MLM’s use of the photographs was unauthorized.

BehindMLM has called Sloan’s claims “bogus” and has said an outage was possible as the situation evolved.

Content from BehindMLM.com has been cited in court filings by TelexFree members who alleged that racketeering violations occurred within TelexFree. More than 1 million TelexFree victims may exist around the world.

Analysis by the PP Blog of a small subset of data from 95 self-identified victims of TelexFree shows that the group of 95 lost a whopping average of $27,578 each and that claimed losses ranged from a low of $900 to a high of $427,500.

Sep 29, 2014
SPECIAL REPORT: eAdGear ‘Program’ Allegedly Traded Falsely On Names Of Famous Companies And Brands; SEC Contacted Google, Yahoo, Target, Victoria’s Secret (And More) To Refute Claims; Separately, ‘Bossteam’ Enterprise In Canada Operated In Similar Fashion, Records Show
From an SEC exhibit filed last week in the SEC’s case against eAdGear, an alleged international pyramid- and Ponzi scheme that gathered $129 million. Redactions by PP Blog.

EDITOR’S NOTE: eAdGear, which had entities in California and Hong Kong, “primarily” targeted “investors in the U.S., China, and Taiwan” and gathered $129 million in a combined pyramid- and Ponzi scheme that engaged in brand-leeching, the SEC alleged last week. An MLM scam known as WCM777, which allegedly gathered more than $80 million, also engaged in brand-leeching while targeting Asian communities, according to court filings. The SEC sued WCM777 in March 2014. Among the SEC’s alarming allegations against WCM777 was that it planted a false seed that it had partnerships “with more than 700 major companies such as Siemens, Denny’s, and Goldman Sachs.”

** ______________________**

UPDATED 3:14 P.M. EDT SEPT 29 U.S.A. Irrespective of their primary target audiences and whether their promos are in English, Chinese or another language, HYIPs and investment-fraud schemes often trade fraudulently on the names of famous companies and engage in brand-leeching to create a veneer of legitimacy. In 2008, for example, the purported AdSurfDaily advertising “program” falsely traded on the names of then-U.S. President George W. Bush, Google, Kodak, Pepsi, Macy’s, USA Today, NBC and many more.

“This new approach to Internet advertising has businesses of all sizes, from small home based businesses to large corporations such as Google, Starbucks, Kodak, etc., joining ASD,” a 2008 promo for ASD read. “Not only are there over 75,000 small businesses advertising with ASD, but now major corporations are as well. Remember, a part of the daily rebate comes from the revenue corporations pay to advertise with ASD.”

It was all a crock. The U.S. Secret Service, which opened an undercover probe in July 2008, went on describe ASD as a “criminal enterprise.” ASD President Andy Bowdoin was convicted of wire fraud in the ASD Ponzi case. He is serving a lengthy term in federal prison.

Even while it was operating, ASD talked about a nascent “Chinese” arm known as Golden Panda Ad Builder. In retrospect, it now appears that plans to involve Asian populations in HYIP schemes were well under way at least by 2008 and since have evolved into frauds that were even larger than ASD. (ASD gathered $119 million and has been eclipsed in dollar volume by at least three Internet-based investment scams since then: TelexFree (possibly $1.2 billion); Zeek Rewards (c. $850 million); and eAdGear ($129 million). Falling just short of making this list were Zhunrize (allegedly $105 million) and WCM777 (allegedly $80 million). It is clear from court filings that Zeek also had a presence in Asian communities.)

There also was a tertiary scam inside the ASD scam. Indeed, promos for an entity known as ASD Offer Universe encouraged members to click on Google ads so ASD would earn fees of up to $5 a click. Here’s now that promo began (italics added):

“ASD ENTERS INTO AGREEMENT WITH GOOGLE FOR NEW CONSUMER SITE. Months ahead of schedule, Google and ASD Offer Universe are now teaming up to show Google ads on the site. Google, after seeing all of the major advertisers already being shown on ASD Offer Universe agreed to enter into a relationship with ASD.”

Brand-leeching is a form of “reputation parasitism.”

Did the eAdGear “program” channel long-ago events at ASD to help its massive pyramid scheme grow?

ASD was a purported “advertising” firm that operated a “rotator.”

Let’s compare what happened at ASD in 2008 to what the SEC now says happened at eAdGear, accused by the agency last week of operating a $129 million pyramid- and Ponzi scheme and positioning itself as an advertising company and an SEO firm.

By at least March 2014, the SEC says in court filings, investigators learned of a promo for eAdGear that read, “Google and Yahoo are partnering up with eAdGear for SEO services!!”

In the land of serial promoters of MLM or direct-sales HYIP scams, it’s as though the ASD case never happened.

The name-dropping and toxic disingenuousness associated with eAdGear hardly were limited to the abuse of the names of Google and Yahoo, according to SEC exhibits filed in the eAdGear case. It appears there were at least 253 incidents of brand-leeching associated with eAdGear. Indeed, eAdGear appears to have planned its ascent to the upper echelon of the fraud sphere by deliberately placing bogus ads for famous companies into its ad “rotator” to create a false sense that its “program” was legitimate.

Target Corp., the famous retailer, had its brand leeched, the SEC alleged. So did Lbrands, the Columbus, Ohio-based company that owns Victoria’s Secret

Now, let’s look at some of the behind-the-scenes investigative work performed by the SEC. Court filings by the agency show that, on July 1, 2014, the SEC issued a subpoena to Yahoo to check on the eAdGear-associated claims.

Yahoo responded on July 10 by advising the SEC that it had “identified no contracts or agreements with eAdGear[].”

Meanwhile, according to court filings, the SEC made an inquiry at Google on June 30. Google responded on July 22, advising the agency that it “is not aware of any commercial relationship between [eAdGear] and Google.”

Because ads for famous companies, including Target, Gap Inc. and Victoria’s Secret, had appeared in the eAdGear “rotator,” the SEC contacted those companies. (The response by L Brands Inc., owners of Victoria’s Secret, is shown above.)

Target responded by searching its database of vendors to which it had issued payments. No records surfaced for eAdGear, according to the SEC. Gap, similarly, informed the SEC that it had no record of doing business with eAdGear.

What else does the SEC have? Well, according to court records, it has internal eAdGear email correspondence that shows an employee was instructed to place 253 links to famous companies in its rotator.

These companies included Avon, Sears, Nordstrom, eBay, QVC, HSN, J.C. Penney, Banana Republic, Dillard’s, Kohl’s, Macy’s, Amazon.com, Men’s Wearhouse, Kmart, New York magazine and more.

Finally, let’s compare the SEC allegations to the August 2014 findings of the British Columbia Securities Commission concerning a “program” known as “Bossteam” that became the subject of a 2012 Ponzi warning in Canada.

These are among BCSC’s assertions — under a subheading titled “False impression of paid advertisements and advertising revenue”:
- Bossteam described itself on its websites, in documents and in presentations as an online advertising business having huge growth potential and ready to become a leading global online advertising company. It referred to well-known online businesses such as Google, Amazon and eBay, and to the fast-growing advertising revenues of these businesses.
- Although hundreds of “ads” appeared on the advertising platforms, the majority of the ads posted on Bossteam’s websites were associated with Bossteam’s own administrative accounts (accounts accessible by those controlling its systems) and not to accounts for advertisers or members who had paid to post links to their websites on Bossteam’s websites.
- Ads associated with Bossteam’s administrative accounts included webpages for well-known local and international businesses.
- Local businesses whose webpages appeared on Bossteam’s websites included a restaurant, a security systems company, a heating company and a private career college. Websites of well-known businesses and personalities included World Wrestling Entertainment, Miriam Webster and Britney Spears.
- Posting the websites of local and international businesses on Bossteam’s websites without payment created a false impression that such businesses were advertising on Bossteam’s websites and paying Bossteam to do so.
Because Bossteam and eAdgear were similar businesses and appear largely to have targeted members of the Asian community, one has to wonder whether the schemes had promoters in common. For now, at least, the answer is unclear. What is clear is that some promoters simply move from one fraud scheme to an another when the “program” of the moment craters or encounters regulatory scrutiny.

Serial HYIP huckster and Zeek figure T. LeMont Silver currently is in name-dropping overdrive for BitClub Network, one of his latest “programs.” Silver’s name has surfaced in private lawsuits involving eAdGear and an interconnected enterprise known as Go Fun Places, which is referenced in the SEC’s eAdGear case. (For one instance, see the reference to Go Fun Places within the letter from L Brands to the SEC in the graphic above.)

NOTE: Our thanks to the ASD Updates Blog.
Sep 28, 2014
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.

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.

Sep 24, 2014