Depictions of Jesus Christ were used in the Profitable Sunrise and the equally bizarre “Cash Tanker” HYIP schemes — and now are being used in promos for TelexFree, an MLM “opportunity” under investigation in Brazil amid pyramid-scheme and securities concerns.
It looks as though the statue of Christ the Redeemer in Rio de Janeiro has been used in promos for both TelexFree and Profitable Sunrise, which the U.S. Securities and Exchange Commission said in April 2013 was a fraud scheme operating in part through a “mail drop” in England.
1.
From a promo for TelexFree playing on YouTube. Another part of the video shows money being tossed by one TelexFree pitchman and raining down on another.
TelexFree affiliates have shared a photo of President James M. Merrill posing in front of an office building in Massachusetts. The photo, however, is not proof of TelexFree’s legitimacy and raises questions about whether the company was trying to plant the seed it had a massive physical presence in the United States.
UPDATED 10:22 P.M. EDT (U.S.A.) The purported TelexFree “opportunity” is under investigation by multiple agencies in Brazil, its purported base of operations despite competing claims the company is headquartered in the United States. The notes below concern TelexFree’s U.S. presence and positioning. They are presented in no particular order of importance. TelexFree says it is in the communications business.
TelexFree has a footprint in Massachusetts at 225 Cedar Hill Street, Suite 200, Marlborough. It is a shared office facility. Ads for the building suggest a conference room with video capabilities can be rented by the hour. One suggested use of the room is for attorneys to rent it to conduct depositions. Some attorneys practicing in the state and federal courts use the building as a business address.
Other lessees include the Massachusetts Library System (MLS), which describes itself as “state-supported collaborative” to foster “cooperation, communication, innovation, and sharing among member libraries of all types.” MLS uses Suite 229, according to its website.
TelexFree operates as an MLM. One of the problems in the MLM sphere is that purported “opportunities” and their promoters have been known to dupe participants by leasing virtual office space to create the illusion of scale or of a massive physical presence. Such was the case with a Florida entity associated with AdViewGlobal, an AdSurfDaily knockoff scam that purported to pay 1 percent a day. As the PP Blog reported on May 31, 2009 (italics added):
Research suggests a company with which AVG has a close association is headquartered in a modern office building in the United States. The building was constructed in 2003. Office functions and conferencing can be rented by the hour. Two large airports are nearby, and a major Interstate highway is situated one mile from the building.
It is a virtual certainty that AVG, which purported to operate from Uruguay, actually was operating from the U.S. states of Florida and Arizona and using a series of business entities to launder the proceeds of its fraud scheme. AVG disappeared mysteriously in June 2009.
On Dec. 14, 2011, the PP Blog reported that Text Cash Network (TCN) — another purported MLM “opportunity” — was using a virtual office in Boca Raton, Fla., in a bid to create the illusion of scale. TCN promoters published photos of a glistening building with TCN’s name affixed near the crown of the building. The Boca Raton Police Department, however, said the firm’s name did not appear on the building.
Although the PP Blog is unaware of any bids to Photoshop TelexFree’s name on a large office building, affiliates have shared photos of TelexFree President James M. Merrill posing in front of the large Massachusetts building. So there can be no confusion, TelexFree does not own the building. TelexFree affiliates/prospects should not rely on the photo of the building as proof of the legitimacy of the company. The photo itself raises questions about whether Merrill and TelexFree were trying to create the illusion of scale. Even though the answer could be no, the negative inferences that can be drawn from the photo contribute to MLM’s reputation for serial disingenuousness.
TelexFree also has a presence in the state of Nevada. Records show that an entity known as TelexFree LLC is listed as “Domestic Limited-Liability Company” situated in Las Vegas. Listed managers include Carlos N. Wanzeler, Carlos Costa and James M. Merrill. TelexFree operates in Massachusetts with an “Inc.” version of the name — i.e., TelexFree Inc., having undergone a name change in February 2012 from Common Cents Communications Inc. In Massachusetts, James Merrill is listed as the registered agent, president, secretary and director of the firm, with Carlos Wanzeler listed as treasuer and director. Unlike the Nevada “LLC” version of TelexFree, Carlos Costa appears not to hold a title in the Massachusetts “Inc.” entity.
The footprints in the United States are important in the sense that they establish a business presence in the country should TelexFree become the subject of U.S. investigations akin to what is happening now in Brazil, where pyramid-scheme and securities concerns have been raised. Along those lines, records of the Financial Industry Regulatory Authority (FINRA) appear not to list TelexFree — despite the fact affiliates in the United States have claimed members acquire “stock” from TelexFree that can be sold through TelexFree and that affiliates purchase “contracts” from TelexFree.
One YouTube video viewed by the PP Blog shows a TelexFree affiliate purportedly cashing out his stock through his TelexFree back office. The affiliate appears to be speaking in U.S. English, citing the date as March 19, 2013. In the video, the affiliate describes his pitch as a “quick withdrawal video” — i.e., proof that TelexFree is legitimate because it pays.
“OK,” the narrator intones. “I’m going to sell all my stock.” The video shows a tab labeled “Stock” and a subtab styled “Repurchase” in the back office.
The narrator then clicks on a series of graphics styled “REPURCHASE” and tells the audience that he wants to show it all the “stock that I have that converts to actual money.” He then proceeds to a “Withdraw” subtab under a “Statement” tab. These actions eventually expose a screen that shows an “AVAILABLE BALANCE” of $927.61 for withdrawal.
For a brief moment, the acronym “BT&T” flashes on the screen, suggesting the TelexFree affiliate is seeking to have his earnings from stock sales relayed through North Carolina-based Branch Banking & Trust. The interesting thing about that is that the alleged $600 million Zeek Rewards Ponzi- and pyramid scheme claimed it had a banking relationship with BB&T.
In May 2012 — on Memorial Day — Zeek mysteriously announced it was ending its relationship with BB&T. It was unclear from the TelexFree affiliate’s video whether he was a BB&T customer or whether TelexFree was. What is clear is that the SEC moved against Zeek in August 2012, accusing the company of securities fraud and selling unregistered securities as investment contracts. The U.S. Secret Service said it also was investigating Zeek.
In this TelexFree promo running on YouTube, the acronym BB&T flashes on the screen in a TelexFree affiliate’s back office.
Among the problems with HYIP schemes is that banks can become conduits through which illicit proceeds are routed or stockpiled. Zeek used at least 15 domestic and foreign financial institutions to pull off its fraud, according to court filings.
Because HYIPs offer commissions to members who recruit other members along with “investment returns,” legitimate financial institutions can come into possession of money tainted by fraud.
Like Zeek (and AdViewGlobal and AdSurfDaily), TelexFree has a presence on well-known forums listed in U.S. court records as places from which Ponzi schemes are promoted.
TelexFree shares some of the characteristics of fraud schemes such as Zeek, AdViewGlobal, AdSurfDaily, Profitable Sunrise and others. ASD, AVG and Zeek, for instance, had a purported “advertising” element. So does TelexFree.
TelexFree affiliates claim they get paid for posting ads online for the purported “opportunity.” Zeek affiliates made the same claim.
It is highly likely that Zeek and TelexFree have promoters in common, a situation that potentially is problematic, given that some affiliates may have used money from Zeek to join TelexFree — and the court-appointed receiver in the Zeek case is pursuing clawbacks against “winners.” In short, some of the winnings could have been spent in TelexFree.
An online promo for Zeek in July 2012 claimed North Carolina-based Zeek had 100,000 affiliates in Brazil alone. TelexFree affiliates are claiming that their “opportunity” now has hundreds of thousands of affiliates, which suggests TelexFree has achieved Zeek-like scale. Whether it enjoys Zeek-like, money-pulling power on the order of $600 million is unclear.
What is clear is that TelexFree, like Zeek before it, is spreading in part through the posting of promos on classified-ad or similar sites across the United States. Profitable Sunrise, another HYIP, spread in similar fashion. Dozens of U.S. states issued Investor Alerts or cease-and-desist orders against Profitable Sunrise, which the SEC accused of fraud in April 2013.
To gain an early sense of the scale TelexFree may be achieving in the United States, the PP Blog typed into Google the term “TelexFree” and the names of several U.S. states known to have taken actions against Profitable Sunrise. This revealed URLs such as “TelexFreeOhio” and “telexfreetexas.blogspot.com,” for two examples. It also showcased classified-ad (or similar) sites on which TelexFree promos are running or have run.
Finally, the state of Massachussets was the venue from which the prosecutions of the infamous World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL) pyramid-schemes were brought in federal court. Those fraud schemes were targeted at Cambodian-Americans. The state does not take kindly to affinity fraud. In March, Massachusetts securities regulators charged a man in an alleged fraud bid against the Kenyan community.
Among the claims of the MLM hucksters pitching WMDS and 1UOL was that members could purchase an income. Some TelexFree affiliates are making similar claims.
The WMDS and 1UOL frauds became infamous as the source of death threats, including one against a federal prosecutor.
Media outlets in Brazil have reported that death threats have surfaced over the TelexFree scheme.
For the reasons cited above and more, it would be surprising if things end well in the United States for TelexFree, which has Zeek and ASD-like signatures of MLM disasters waiting to happen.
The PP Blog was hit by a bot attack today bearing multiple IP signatures from Singapore. Dozens of Singapore IPs maintained open connections to the Blog for approximately three minutes. Why the Blog was targeted was unclear. The bots sought to call up individual stories and a number of archive URLs. In at least a few instances, the bots appear to have sought unsuccessfully to execute code.
Over the years, the PP Blog has been targeted multiple times with DDoS attacks and traffic floods. The Blog also is targeted by spammers at a rate that now is approaching 2,000 per day. In March, for example, the Blog received 34,310 spams. That number increased in April to 51,165. In May, it increased to 56,489, or roughly 75 per hour.
Here is a screen shot of part of today’s attack from Singapore:
Meanwhile, here is a screen shot showing the increase in spam since February 2013.
The bitter reality of traffic floods and bot attacks is that they drive up costs and may cause readers to experience slow loading times. With more time spent on maintenance chores, less time is spent on reporting on fraud schemes.
That, of course, is exactly what the scammers want — even as some of them try to advance bizarre conspiracy theories.
Duncan MacDonald was touted as an IndyCar sponsor on YouTube. The SEC now says he was running a $10 million Ponzi scheme.
Global Corporate Alliance (GCA) was not an MLM or HYIP firm. Even so, some of the allegations against the Dallas-based company read like U.S. government complaints filed against Zeek Rewards, Profitable Sunrise and AdSurfDaily. Perhaps most notable is the SEC’s allegation that GCA had no underlying profitable business through which it generated payments to investors, making the payments it did generate Ponzi payments. Moreover, the SEC alleged that the scheme spread in large part because commission-based pitchmen selling GCA’s unregistered securities repeated “false information that [Duncan] MacDonald [III] told them when introducing them to the program.”
“MacDonald and [Gloria] Solomon knew that the brokers were repeating their false claims to potential and existing investors, and intended for them to do so,” the SEC charged.
MacDonald, GCA’s President and CEO, is 50; Solomon, GCA’s chief administrative officer, is 71. She now joins a long list of alleged senior-citizen Ponzi schemers. Both Solomon and MacDonald are Dallas residents and have been charged civilly and criminally, the SEC said.
With the scheme in a state of collapse, GCA allegedly concocted excuses to explain why investors were not getting paid. Among the excuses, according to the SEC, was that “GCA’s legal department needed to suspend payments to confirm that the program was following all regulations.”
Such an excuse could have come straight out of HYIP Ponzi Land. GCA, according to the SEC, also told investors that money “was stuck in GCA’s overseas account.” If that weren’t enough, GCA also allegedly created numbers on a screen to dupe investors, something that HYIP Ponzi schemes promoted on various forums and social-media sites do every day.
Just how made-up were GCA’s numbers?
“MacDonald and Solomon created fake monthly statements to falsely portray GCA as a thriving health insurance company successfully enrolling thousands of premium-paying policyholders each month,” said David Peavler, associate director of the SEC’s Fort Worth Regional Office. “In reality, they never had more than 40 policyholders, and half of those were GCA’s own employees.”
GCA also tried to escape its bitter Ponzi reality by falsely claiming it “previously sold a portion of its revenue stream from paying members to a Chinese hedge fund,” the SEC charged.
But if there is a topper — if there is one thing that investors contemplating joining an HYIP can learn from the experience of GCA — it’s that heavy marketing perhaps can produce Ponzi-sustaining cash flow for a limited time, but it cannot undo what effectively is a criminal business plan.
Like its MLM-style HYIP cousins, GCA allegedly launched as a Ponzi and only made the Ponzi deeper by burning through money to put on a show for investors and prospects. At this precise moment, any number of schemes promoted on the Ponzi boards are using an HYIP/MLM version of the very “plan” GCA used in the brick-and-mortar world. They’re launching/operating with no underlying profitable business, perhaps trading on the names of famous business entities to create legitimacy by osmosis and even claiming they’ve been vetted by attorneys. And they’re relying on commission-based salespeople to create cashflow for their schemes.
Whose name did GCA trade on? None other than IndyCar. MacDonald even cited the name of “Danica” in a video playing on YouTube, although he did not use her last name of “Patrick.” News stories in 2010 tout GCA as “the official insurance program of IndyCar.”
Like GCA, each and every one of the HYIP schemes will end in disaster. The only real question is how much money they’ll steal before the inevitable collapse, how much damage they’ll do to business partners and how much cash the operators will siphon.
19. MacDonald believed that the new venture required $15 million of initial capital and envisioned that this funding would come from a single investor. During 2008 and 2009, MacDonald was introduced to and spoke with a number of people he understood to have access to these kinds of funds, including potential investors and brokers. But MacDonald and Solomon began spending money on the business before raising any capital. They began hiring employees, heavily marketing the program, and pursuing sponsorship agreements with large groups. Indeed, by June 2010, GCA had entered into a multi-year, multi-million dollar sponsorship.
20. MacDonald tried for months to find a single investor, but was unsuccessful. Accordingly, MacDonald decided to fractionalize the program—for example, seeking 15 investors to invest one million dollars each, rather than a single $15 million investment. When pitching the business to a least some of these investors, and to brokers who were assisting him in identifying investors, MacDonald significantly misrepresented the history and state of GCA and NACA’s business. First, MacDonald led them to believe that NACA already had more than 100,000 premium-paying members. Further, he told them that GCA had previously sold a portion of its revenue stream from these paying members to a Chinese hedge fund. MacDonald told them that these kinds of purchases were normally not offered to individual investors but were typically reserved for large institutional investors. In reality, when MacDonald made these statements, GCA and NACA had no paying members, no revenue, no history of selling interests in a revenue stream, and no relationships with institutional investors or a Chinese hedge fund.
An emerging scheme that butchers the English language and contends it opposes spam also bizarrely says it intends to build its business by requiring members to post ads on Facebook and Twitter.
Equally bizarrely, the scheme says it accepts Liberty Reserve, the now-shuttered payment processor implicated by the United States last month in an alleged $6 billion money-laundering conspiracy.
The scheme is known as Earn Profit Click — or EPC for short. The PP Blog observed ads for the “program” over the weekend on a Profitable Sunrise Facebook site. The ads now appear to have been removed. Profitable Sunrise was a murky international pyramid scheme that may have gathered tens of millions of dollars by using offshore bank accounts, the SEC said in April.
Since that time, pitches for reload scam after reload scam have appeared on the still-active Profitable Sunrise Facebook site. Both the SEC and FINRA have warned that scams are spreading via social media such as Facebook, Twitter, YouTube and others. EPC’s full name is similar to “ProfitClicking,” a scam that rose from JSSTripler/JustBeenPaid, an earlier scam that also used social media to spread.
EPC is similar to Zeek Rewards in the sense that “members” are required to place ads for the “program.” In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid fraud. Unlike Zeek, EPC appears to be trying to force members to post ads on specific social-media sites that may have heavy viewership. (Many Zeek ads were placed on classified-ad sites with low traffic; such also appeared to be the case with Profitable Sunrise.)
Here is a verbatim snippet from the purported Terms of EPC (italics added):
19. You have to post face book ads in a group which have at least 500 members. If you want to post the ad on any of your friends’ wall, then the condition is that your particular friend must have at least 300 friends in his friends list.
20. If you post the ad on LinkedIn or twitter in a group then there should be at least 200 members in this group. If you post the ad on a friend’s wall then there should be 100 friends in his friends list.
21. In a group, you can post maximum 2 ads in 24 hours.
22. On a friend’s wall, you can post only one ad during 24 hours.
23. By accepting terms and conditions, you will be bound to keep the marketing material confidential provided on website.
Part of the “Earn Profit Click” pitch.
Elsewhere on its site, EPC claims to be a “Rapidly spread advertising company” through which members can “earn thousands of free entry [sic] that are changing lives [sic] of thousands people [sic] . . .”
Meanwhile, EPC makes this text declaration: “We are a win-win game players [sic], as we provide our members a suitable era [sic] to win high financial benefits and helps [sic] to make their financial future [sic] splendid. We have the best minds from the field of IT to assist you and to handle the operations of EPC. Our mature, dedicated and wonderful team has twenty years [sic] experience in the field of online home-based business.”
A graphic on the site declares, “We are growing fastly [sic].”
The site reproduces famous logos and appears to trying to plant the seed that well-known companies such as GoDaddy, HostGator and the Ernst & Young accounting firm somehow have endorsed EPC’s operations. (The PP Blog’s research suggest GoDaddy is the EPC domain registrar and that HostGator servers are being used.) Promos for various HYIP scams appear on the same page as the logos of the famous companies. The HYIP scams include FastCashMega (“Turn $10 Into $20,010 Without Recruiting”); “NonStopPayments” (“6% Daily For 180 Business Days”); and “WorldConsumerAlliance,” a “program” once known as “WealthCreationAlliance” that launched as a Zeek Rewards reload scam in 2012 and published ad after ad for HYIP scams.
From a first-quarter 2013 security analysis by McAfee Labs. Red highlight by PP Blog.
DISCLOSURE: The PP Blog uses McAfee security software. The Blog is not compensated for its use of the software.
UPDATED 10:23 A.M. (JUNE 15, U.S.A.) The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) have issued an Investor Alert warning about a sharp increase in spam linked to “pump-and-dump” stock schemes.
The warning points to a threats analysis for 2013’s first quarter published by McAfee Labs, an arm of McAfee, the Intel Corp.-owned Internet-security company. The same document reports that “botnet-creating malware” was being sold via Liberty Reserve, the now-shuttered payment processor purportedly based in Costa Rica that was charged in the United States last month with orchestrating a $6 billion money-laundering conspiracy.
One of the “products” was described as “Vector Bot, for €1,000, payable via Liberty Reserve.”
Various bots and malware kits are sold on the Internet — and not always in English. At least two of the malware pitches reproduced in the McAfee report appear to be in Russian or Slavic derivatives. One of the products pitched from a forum was called “Dump Memory Grabber,” which reportedly was designed to steal “payment card information from several US banks, including Chase, Capital One, Citibank, and Union Bank of California,” McAfee reports.
“The malware’s author, who appears to have links to a Russian cybercrime gang, asks for US$2,000,” McAfee reports.
‘Pump-And-Dump’ Spam
“Spam e-mail is the bait used to lure people into making bad investment decisions,” said Cameron Funkhouser, executive vice president of FINRA’s Office of Fraud Detection and Market Intelligence. “No one should ever make an investment based on the advice of an unsolicited email.”
“Investors should always be wary of unsolicited investment offers in the form of an e-mail from a stranger,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy. “The best response to investment spam is to hit delete.”
Similar to an HYIP warning issued by FINRA in 2010, the new SEC/FINRA Alert on pump-and-dump schemes advises investors that “[t]hese false claims could also be made on social media such as Facebook and Twitter as well as on bulletin boards and chat room pages.”
On May 2, the PP Blog published a story about a pitch for a purported “opportunity” known as UPrivateBanking, a “program” pitched at victims on the alleged Profitable Sunrise HYIP scheme. The pitch appeared on Facebook and triggered a McAfee security warning. The website for UPrivateBanking triggers a “Phishing” warning.
Later, on June 2, the PP Blog reported that a “program” known as AdHitProfits that also was targeted on Facebook at Profitable Sunrise victims also was triggering a McAfee security warning. Like the Profitable Sunrise and UPrivateBanking schemes, AdHitProfits has a presence on well-known Ponzi-scheme forums such as TalkGold and MoneyMakerGroup.
It has happened again — this time in Raleigh, N.C., officials said.
Sullivan Colin, 36, has been arrested on a charge of filing a false lien for $3 million against a court clerk who oversaw a foreclosure case, the Raleigh News Observer is reporting.
From the News Observer (italics added):
Court officials say the lien and a second one that . . . Sullivan Colin, 36, was trying to file Friday when he was arrested, are part of harassment of court officials by adherents of a “sovereign citizen” movement that denies government authority.
Colin was taken into custody at the Wake County Register of Deeds office Friday afternoon when he went there to file another lien, officials said, and was arrested Friday evening.
Purported “sovereign citizens” have been implicated in bizarre plots in various U.S. states to file false liens against the property of public officials. The practice has been described as “paper terrorism.”
AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was convicted in March of multiple crimes, including filing bogus liens against federal officials involved in the prosecution of the $119 million ASD Ponzi scheme. In May, he was sentenced to eight years in federal prison.
Former Leaming business associate David Carroll Stephenson also was convicted of filing false liens. He was sentenced to 10 years. Stephenson already was in jail for a tax scam.
In March, two California scammers (Ronald Wesley Groves and Donald Charles Mann) who’d swindled investors in an “international bank trades” caper were sentenced to additional time for targeting a federal prosecutors and FBI agents with false liens.
Earlier — in January 2013 — Robert Clifton Tanner, a purported Louisiana “sovereign citizen” implicated in a cross-border plot to file bogus financial judgments against state-court judges and others in Utah, was sentenced to 30 months in prison.
In November 2012, Cherron Marie Phillips, a purported Illinois “sovereign citizen,” was charged with filing false liens that sought $100 billion each from former Chicago U.S. Attorney Patrick J. Fitzgerald and 11 other public officials, including a chief U.S. District Judge, a U.S. District Judge, two U.S. Magistrate Judges, an assistant U.S. Attorney, a federal court clerk, four federal Task Force officers and a federal agent.
Harvey Douglas Goff, a purported Utah “sovereign citizen” who allegedly claimed he enjoyed “diplomatic immunity,” was charged in May 2011 with placing bogus liens seeking spectacular sums from public officials. He was sentenced in April 2013 to 36 months in federal prison.
In 2011, California Ponzi schemer Thanh Viet Jeremy Cao pleaded gulity to federal charges in Nevada that he filed false liens against public officials. Meanwhile, Mark D. Leitner was indicted in Florida during the same year on charges of filing false liens for $48.489 billion against a number of federal employees.
Flash forward to 2013, and Donald Joe Barber, a purported Alabama “sovereign citizen,” was convicted of fraud for trying to pay off a mortgage with a bogus “bonded promissory note.” Purported “sovereigns” have been linked to multiple forms of fraud
Also see December 2010 story about a false-liens case against Andrew Isaac Chance in Maryland. Meanwhile, see a June 2010 story about a false-liens case against Ronald James Davenport in Washington state.
“Investigators from [the Social Security Administration] discovered that hundreds of victims throughout the United States were losing their social security benefits and their life savings either because they believed that they had won ‘The Jamaican Lottery’ or because, as part of another telemarketing scheme, they revealed enough information about themselves that allowed the thieves to fraudulently divert their money.” — Office of U.S. Attorney James L. Santelle, Eastern District of Wisconsin, June 7, 2013
For O’Brain J. Lynch, senior citizens receiving retirement benefits from the Social Security Administration and other sources were the perfect targets of a criminal organization operating an international mass-marketing fraud scheme from Jamaica.
The scheme duped people into believing they had won “The Jamaican Lottery.” In reality, authorities said, it was an advance-fee scam designed to drain retirement accounts and to recruit cashers in the United States.
Lynch, 28, of of Montego Bay, Jamaica, now faces up to 20 years in federal prison after pleading guilty to wire fraud, the office of U.S. Attorney James L. Santelle of the Eastern District of Wisconsin said last week. The case was investigated by SSA, the U.S. Postal Inspection Service and Homeland Security Investigations (HSI).
“Americans have lost millions of dollars to criminals from countries around the world in foreign lottery scams, said Pete Zegarac, inspector in charge of the Chicago Division of the U.S. Postal Inspection Service. “When one family member is harmed by a foreign lottery scam, the impact is felt by all. Losses can be monumental, sometimes entire life savings are wiped out. ”
From a statement by prosecutors (italics added):
A Jamaican Lottery Scheme is a form of mass-marketing fraud committed via the internet, telemarketing, or mass mailings. Jamaican criminal organizations contact victims and identify themselves as lawyers, government officials, law enforcement agents, or lottery company officials. The potential victims are led to believe they won an international multi-million dollar lottery. The fraudulent telemarketers then inform the victims that in order to receive their winnings the victim needs to pay an advance fee. This fee is usually described as a tax, insurance payment, or customs duty that must be paid to release the winnings. The victims are instructed to send the funds via mail or wire transfer.
The scammers routinely involve victims to help facilitate the laundering of financial transactions by receiving and withdrawing funds from prepaid cards and receiving and sending wire transfers. In an attempt to conceal and layer the proceeds from the lottery scams, the scammers direct victims to send funds, knowingly and unknowingly, to other victims and associates of the scammers within the United States. These victims and co-conspirators then transfer the proceeds of this fraud to the scammers in Jamaica by wire transfers. The Jamaican criminal organizations have modified the lottery scam into other variations of telemarketing schemes to include redirecting individuals Social Security Administration (SSA) benefits, direct deposit, automatic debit, re-routing schemes and other identity theft schemes.
According to documents filed in court, in March 2012, the SSA learned that a social security recipient, from Glendale, Wisconsin, was receiving social security benefits in the name of other recipients and cashing in these benefits. Special Agents from the SSA – Office of Inspector General (OIG) discovered the recipient was sending this money to Jamaica because he believed he had won “The Jamaican Lottery.” He said he was contacted by an official from Global International who informed him that he won $2.5 million and two (2) Mercedes Benz vehicles in a sweepstakes. He was then advised that in order for him to collect the money and the cars, he had to pay taxes, customs duty, and other fees. He initially sent his own money to Jamaica, and, once he had depleted his own assets, he was directed, by telephone, to accept checks, Direct Express cards, and other cash value cards in the names of other people (who were also victims), cash them out and then send the money to Jamaica. As a result, numerous victims did not receive their social security benefits, and instead they were mailed to Jamaica. Investigators from SSA discovered that hundreds of victims throughout the United States were losing their social security benefits and their life savings either because they believed that they had won “The Jamaican Lottery” or because, as part of another telemarketing scheme, they revealed enough information about themselves that allowed the thieves to fraudulently divert their money.
Prosecutors said they believed Lynch was the first Jamaican national charged in the United States with this type of fraud.
“We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business,” said Gary Hartwig, special-agent-in charge of HSI’s Chicago Division.
The Journal Sentinel newspaper (Milwaukee) reported last week that Lynch also is known as “Jake Dinero.”
International mass-marketing fraud takes many forms. In 2010, the U.S. Postal Inspection Service alleged that the Pathway To Prosperity HYIP scheme gathered about $70 million and affected 40,000 investors in 120 countries. P2P was a Ponzi-board “program” that in part gained a head of steam on the TalkGold and MoneyMakerGroup fraud forums.
The alleged $600 million Zeek Rewards Ponzi- and pyramid scheme followed P2P as a favored “program” on the Ponzi boards, as did the alleged Profitable Sunrise HYIP scheme. Profitable Sunrise may have collected tens of millions of dollars, the SEC said in April 2013, after bringing fraud charges against Zeek Rewards in August 2012.
Reload scams have been targeted at both Zeek and Profitable Sunrise victims, authorities said.
On May 9, the PP Blog reported that an emerging scam that is seeking to tie itself to the Catholic Church is engaging in a spam campaign and seeking to lure Profitable Sunrise victims into a new trap. The scam is using the name of “ALL SAINTS CATHOLIC CHURCH LOAN FIRM” and many other names, some of which are published in the Comments thread in the story linked in the first sentence of this paragraph.
Russell R. Wasendorf Sr., before his two-decade old fraud scheme collapsed in 2012 and affected 24,000 investors.
URGENT >> BULLETIN >> MOVING: (UPDATED 2:54 P.M. EDT U.S.A.) The CFTC has gone to federal court in the Northern District of Iowa, accusing U.S. Bank National Association of permitting now-jailed scammer Russell R. Wasendorf Sr. of Peregrine Financial Group to use Peregrine customer funds as security “on loans it made to Wasendorf, his wife, and his construction company, Wasendorf Construction, L.L.C., to build an office complex for Peregrine in Cedar Falls, Iowa.”
Not only that, the CFTC charged, U.S. Bank also permitted Wasensorf to treat investor funds held by the bank as if they were held in “Peregrine’s commercial checking account and knowingly allowed and facilitated Wasendorf’s transfers of customer funds out of this account to pay for Wasendorf’s private airplane, his restaurant and his divorce settlement.”
U.S. Bank is the fifth-largest bank in the United States. It is based in Minneapolis.
Forbes is reporting this afternoon that U.S. Bank denies the charges and is blaming the CFTC for not detecting Wasendorf’s fraud.
Federal law and CFTC regulations “prohibit depository institutions, like U.S. Bank, from using or holding funds that belong to customers of a Futures Commission Merchant (FCM) as though they belong to anyone other than the customers, and also prohibit the extension of credit based on such funds to anyone other than the customers,” the agency said.
Customer funds must be held in segregated accounts, the CFTC said, alleging that “U.S. Bank knew that these transfers were not for the benefit of Peregrine’s customers.”
Through the bank in 2010, the CFTC alleged, Wasendorf used an account at the bank holding customer funds to pay more than $2.46 million as part of a divorce settlement to his ex-wife.
All told, the CFTC said, between June 2008 and June 2012, more than $118 million floated through a U.S. Bank account under Wasendorf’s control, with about 94 percent of that sum consisting of customer funds.
“[M]ore than 30% of those funds were used by Wasendorf for personal expenditures and his other companies,” the CFTC alleged.
At least $5 million went to a Wasendorf restaurant known as My Verona. More than $13.5 million went to an entity known as Wasendorf & Associates and more than $2.5 million went to a Wasendorf “personal investment in Romania,” the CFTC said.
Meanwhile, between June 2008 and June 2012, he transferred more than $1.1 million from an account holding customer funds to Wasendorf Air LLC, “the holding company for Wasendorf’s private airplane,” the CFTC charged.
“The Commodity Exchange Act and Commission rules protecting customer funds impose obligations on banks that hold those funds,” said David Meister, the CFTC’s director of enforcement. “As should be apparent from today’s action, we will seek to hold a bank to account if it falls short on complying with customer fund protection obligations. Wasendorf stole vast sums of customer money, but his crimes do not excuse U.S. Bank from its own independent responsibilities.”
Wasendorf, the CFTC said, “defrauded more than 24,000 Peregrine clients and misappropriated more than $215 million over two decades using a customer segregated account at U.S. Bank.”
This attractive blonde woman is featured on the landing page of My Fun Life.
UPDATED 4:04 P.M. EDT (U.S.A.) It has been another miserable PR week for MLM.
Some members of the alleged Zeek Rewards Ponzi- and pyramid scheme now are receiving over-the-top emails for an emerging travel-membership “program” known as “MyFunLife,” a source tells the PP Blog.
Meanwhile, executives from a longstanding MLM company are suing each other in Utah while other baffling cases involving upstart MLMs remain in the courts.
The nascent My Fun Life “program” appears already to have sparked a thread deletion at the DreamTeamMoney Ponzi forum — after two posters complained that a huckster had purloined sales content and used it to recruit downline members. (More on the DreamTeamMoney pitch below. First, the email pitch . . .)
According to a PP Blog source, Zeekers were emailed a MyFunLife affiliate offer that blared, “There is a CHANGE taking place in our industry . . . Something SO BIG, SO NEW, and SO COMPELLING I just have to SHARE IT with you . . .”
The email hype-fest went on to declare My Fun Life “a revolutionary company in the emerging MOBILE APP Industry that’s about to take the world by STORM. They are in the process of building the largest GLOBAL NETWORK of their kind by introducing the HOTTEST APPS in the HOTTEST MARKETS!”
The pitch appeared below a subject line of “This will be BIGGER and SAFER then Zeek, and it’s LEGAL! You’ll thank me later! ONLY $21 THAT’S IT!!!” The 19-word subject line was backed by five exclamation points.
Here’s how another part of the email pitch read (italics added):
The company is using a 3X10 Forced Matrix Compensation structure with up to 50% check matching (on all your personals) with upfront coding bonuses that pay out weekly! And you can earn up to 7 Levels in the Matrix without having to sponsor or talk with anyone! Hello??? (Sponsoring is only required to get paid on levels 8,9 &10) Its INCREDIBLE and its gonna BLOW UP and it’s only $21 to get in.
As of today, the only content visible on the MyFunLife.com landing page are the words “Coming Soon.” Those words are backed by a series of rotating photographs, including a photo of an attractive blonde woman taking in some sun from a hammock under palm trees.
“They are positioning several big global leaders now and anticipate 200,000 members in the first 6 months!” the email pitch contended. “Please get back with me asap so I can secure YOU a Top position in my matrix prior to launch!”
The now-missing pitch on DreamTeamMoney urged prospects to GET IN “EARLYYYY!!” — in part because the “COMP PLAN” for My Fun Life called for “‘matching’ bonuses up to 50%, and ‘coded bonuses’ to die for -> they are UNREAL!! Launching in 45 countries. Major money and talent behind this.”
As part of the Ponzi-board pitch, the poster shared a plan to “build it fast and hard with . . . solo ads, FB, Craigslist, my list, and more.”
In its early days, MyFunLife appears not to have a presence on other well-known Ponzi boards. Like TalkGold and MoneyMakerGroup, DreamTeamMoney is infamous as a launch pad for scores and scores of fraud schemes, including a bizarre “program” known as “Insectrio.”
Zeek also was promoted widely on the Ponzi boards.
News of the impending debut of MyFunLife came during the same week that MLM was generating more bad headlines in the mainstream press. XanGo co-founder and board member Bryan B. Davis accused the Utah-based firm of looting. Meanwhile, XanGo accused Davis of extortion and incompetent lawyering.
Those lawsuits followed a lawsuit and counter-lawsuit earlier this year by the purported Go Fun Places and JubiMax opportunities, both of which have a presence on the Ponzi boards.
UPDATED 4:13 P.M. EDT (U.S.A.) If you repaired to your favorite New Jersey tavern on your way home after a hard day of work — and if you ordered a high-end spirit because it was payday or you simply preferred a premium brand — you might have been suckered in a “dishonest ruse to increase profits,” the state Attorney General said.
As part of a undercover probe by the Division of Alcoholic Beverage Control (ABC), investigators posing as ordinary revelers ordered “neat” drinks of premium brands, saved samples, tested them with a device called a “True Spirit Authenticator” and tested them further at “the laboratories of the brand manufacturers,” investigators said.
Of the 150 samples tested, “30 were not the brand they purported to be,” investigators said. A “neat” drink contains no ice or mixers.
The spirits probe was dubbed “Operation Swill,” Attorney General Jeffrey Chiesa said.
Investigators believe at least 29 establishments were pouring cheap stuff into premium bottles to dupe patrons. Potentially even worse than brand-swapping, Chiesa said in a video on the website of USA Today, was that “dirty water” allegedly was used as a substitute in one of the taverns and that “rubbing alcohol and caramel color to simulate a scotch” also was used.
The state has released a map of evidence seizures in Operation Swill, along with a photo of funnels seized as evidence.
“Consumers should have the peace of mind of knowing that they will get what they spent their hard-earned money on every single time — no exceptions,” Chiesa said. “I believe Operation Swill will go a long way towards restoring that peace of mind and will also serve as a warning to anyone currently engaging in, or thinking about engaging in, this fraudulent practice.”
From a statement by the Attorney General’s Office (italics added):
The operation focused on the 29 establishments because of information from confidential informants, consumer complaints and testing of samples conducted by both the ABC and the manufacturers of the brands. The samples were taken in January and February when ABC investigators visited 63 licensed establishments across the state and covertly took 150 samples. The undercover ABC detectives visited these establishments and secured samples of premium brand spirits by paying for drinks ordered “neat” – that is with no ice or mixer.Some of the locations visited had previous complaints against them, and some were chosen at random.
