Kudos to the Salt Lake Tribune for expanding on its earlier series on multilevel marketing, which we referenced here. On May 27, the newspaper published two more stories — and one of them features a photograph of a Rolls-Royce with the words “mona vie” emblazoned on its side.
The expensive car is one of the possessions of evangelical Christian Brig Hart, a top-of-the heap MonaVie distributor who openly told the Trib he mixes religion and business. Hart lives in a Florida mansion, and also has a Lamborghini, the newspaper reported.
Hart has made questionable health claims about the benefits of MonaVie’s juice product, the Trib reported.
In a separate story, the Trib reported on local MLM participants who had given up on the dream.
Both stories have accompanying comments threads in which readers both defend and criticize MLM. As always, the PP Blog views the comments from the defenders as the most instructive. People who complain about MLM are “victim mentality people,” one reader observed. “End of story!”
An MLM critic, meanwhile, opined that the trade was “morally repugnant.” Another quoted scripture and wrote that he believed the “big guy might have had something different in mind than rolls royces and armani for his followers.”
Trevor Cook (pictured) employed a "sick" web designer who declared himself "Trevor's bitch," according to former radio host Pat Kiley. Kiley says he also employed the designer, but fired him after determining he had a high "sleaze factor." Kiley compared Cook to Pontius Pilate.
In pro se court filings, accused Minnesota schemer Pat Kiley says recordings of his radio show presented on CD for his examination and verification by the SEC in the civil case against him are unreliable. Meanwhile, Kiley described his civil co-defendant Trevor Cook as acting “like Pontius Pilate,” the Roman prefect many Christians believe authorized the crucifixion of Jesus.
Kiley, 72, was accused by the SEC in 2009 of hawking the scam on his radio show, “Follow The Money.” The same phrase became part of the American lexicon during the Watergate-era administration of President Richard Nixon, when it was uttered by “Deep Throat,” a then-unidentified source used by Washington Post reporter Bob Woodward. The Watergate scandal also featured recordings — and those recordings led to Nixon’s downfall.
The SEC recordings of his radio show are not fair and accurate, Kiley advised a federal judge, because of dozens of “distortions” in the recordings.
“There seems to be some distortions,” Kiley said repeatedly, referring to recordings of his radio programs in January, February, March, April, May and June of 2009.
And because of those distortions, which occurred at various times in the recordings, “Kiley denies that the file . . . is fair and accurate,” Kiley said.
Cook, who was charged criminally, is serving a 25-year sentence in federal prison. Both Cook and Kiley were sued by the SEC and CFTC, and the civil portion of the case has taken a turn toward the bizarre.
On May 19, Kiley asked a federal judge to sanction a CFTC attorney $1,000 and make the penalty payable to Kiley. Kiley asserts the CFTC lawyer filed an “offensive” pleading.
Yesterday, in filings in the SEC case, Kiley raised the issues of the purported distortions in the recordings and compared Cook to Pilate. The Pilate comparison occurred after the SEC asked Kiley to admit he was responsible for the content of the PatKiley.com website.
“Kiley denies any responsibility for the content of the website at www.patkiley.com,” he advised the judge. “Kiley not only had to contend with Cook’s control of the website but also had to contend with another of Cook’s ‘cast of characters’ . . . ”
A member of that cast was a web designer, Kiley said.
Kiley said he had hired the designer, but fired him “after about a month or so” because of his high “sleaze factor.”
Kiley did not say precisely how he calculated sleaze factors when making personnel decisions. But he claimed that he “caught” the designer saying things to prospective clients that “were not accurate” and causing problems on the website.
After Kiley fired the designer for his purportedly high sleaze factor, the designer went to work for Cook, Kiley claimed.
Kiley further became alienated with the designer after the designer described himself as “Trevor’s bitch,” Kiley claimed.
The “bitch” remark, Kiley said, “was a very ‘sick’ comment for any human being to make about themselves.”
“By this time Kiley was totally fed up with the website because it had become nothing more than a ‘literary bordello,’” Kiley informed the judge.
Kiley concluded his answer to the SEC by giving it advice on how to conduct itself in court.
“Kiley is wondering if the SEC uses ‘confusion’ as a strategy and if so, then Kiley recommends that they change direction,” he said in yesterday’s filing.
One of the domain name seizure notices in a federal sting operation in which agents created a "payment processor" to infiltrate operations alleged to be corrupt.
Kaboom! In a move that may send shockwaves across the fraudulent HYIP, autosurf, sports-betting and “arbitrage” universes domestically and offshore, Maryland’s top federal prosecutor has released details of a two-year long undercover sting in which federal agents created a “payment processor” to infiltrate illegal gambling operations.
Using methods straight out of the scammer’s playbook and turning the playbook back on the alleged scammers themselves, the federal operation resulted in the seizure of 11 bank accounts in the United States, Guam, Panama, Malta, Portugal and the Netherlands, prosecutors said.
Ten domain names associated with illegal gambling sites also were seized.
“It is illegal for internet gambling enterprises to do business in Maryland, regardless of where the website operator is located,” said U.S. Attorney Rod J. Rosenstein. “We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country.”
The name of the Feds’ “payment processor” was Linwood Payment Solutions — and its website now serves this message:
“Linwood Payment Solutions is a Department of Homeland Security Undercover Business set up to identify and prosecute companies accepting and paying out funds for U.S. customers who gamble online illegally.
“If you have questions regarding funds withdrawn from your bank account for gambling purposes contact the online gambling company you provided your banking information to.”
As part of the sting, the U.S. Department of Homeland Security (Homeland Security Investigations or HSI) “obtained a business address near Atlantic City, New Jersey,” according to court records.
HSI then created a website for the “payment processor,” opened bank accounts, set up a “payment processing plant” and staffed it until it could process “thousands” of transactions daily.
Undercover operatives then began to mix with “top managers of gambling organizations,” discussing fees and contracts. Having established ties to the alleged scammers, Linwood began to process payments — in excess of $33 million in all, involving more than 300,000 transactions, according to court records.
Seized domain names include:
Bookmaker.com
2Betsdi.com
Funtimebingo.com
Goldenarchcasino.com
Truepoker.com
Betmaker.com
Betgrandesports.com
Doylesroom.com
Betehorse.com
Beted.com
Seizure notices now adorn the websites.
Indicted were ThrillX Systems Ltd., d/b/a BetEd; Darren Wright and David Parchomchuk of British Columbia, Canada; K23 Group Financial Services, d/b/a BMX Entertainment; and Ann Marie Puig, 35, of San Jose, Costa Rica.
“The proceeds from illegal Internet gambling are often used to fuel organized crime and support criminal activity,” said William Winter, special agent in charge of ICE’s HSI unit.
Anthony Sasso's mugshot from his 2005 arrest in Broward County.
BULLETIN: A man described as the data expert for an online MLM program that purported to pay participants for recording license-plate numbers to help the AMBER Alert program recover abducted children is a convicted felon who was arrested in a racketeering case brought by the Broward Sheriff’s Office as part of a sting operation in 2005, the PP Blog has learned.
Anthony Sasso is referenced as a “special board consultant” in numerous online promos for Data Network Affiliates (DNA), which now appears to be doing business as “One World, One Website” or OWOW. It was not immediately clear if Sasso continues to be affiliated with the firms.
Also unclear was whether the sheriff’s office would open a probe into DNA. The agency had no immediate comment today.
DNA, a company associated with one bizarre claim after another, had no affiliation with AMBER Alert. It remains far from clear whether DNA, which misspelled the name of its own departing chief executive officer last year after withholding the news of the resignation for nearly a week, had the capacity to help AMBER Alert do anything.
The firm also claimed it delivered free cell phones with unlimited talk and text for $10 a month, while at once claiming it was the “MORAL OBLIGATION” of churches to sell a purported MLM mortgage-reduction program to people facing foreclosure. The firm, which touted Christianity in its sales pitches, also claimed to be in the offshore “resorts” business.
The 2005 sting that led to Sasso’s arrest was known as “Operation Money Car.” It targeted a “cloning ring” involving stolen automobiles, according to records at the sheriff’s office.
DNA was associated with Phil Picollo, described online as the “one-man Internet crime wave.” The firm, which used addresses in Nevada and Boca Raton and conducted business behind a domain that listed a Cayman Islands address, emerged early last year in part by trading on the names of Donald Trump and Oprah Winfrey. The firm scored an “F” from the Better Business Bureau for not responding to customer complaints.
Trump and Winfrey are believed to have no ties to DNA. In a radio interview last year arranged after Piccolo threatened to sue the host, Piccolo positioned himself as a man of God — but later said he knew people who could cause physical harm to come to critics.
By the time 2010 had come to a close, the DNA website was redirecting to the OWOW website. One OWOW promo traded on the name of the National Institutes of Health, positioning an OWOW bottled-water product as a cancer-fighter. Meanwhile, Piccolo claimed OWOW offered a “magnetic” product that not only had prevented a leg amputation, but also had helped gardeners grow tomatoes twice the size of ordinary tomatoes while helping dairy cows produce more milk.
Sasso also was part of a Boca Raton company known as Phone Guard, which markets an application that prevents texting while driving. Phone Guard was endorsed by teen sensation Justin Bieber, according to promos for the firm.
The Broward-Palm Beach NewTimes carried a story this morning on PhoneGuard and the Bieber promotion. The publication reported that Sasso had been asked to resign.
Options Media, the holding company that markets Phone Guard, had no immediate comment on Sasso when contacted by the PP Blog late this afternoon. The Blog left a message for Scott Frohman, the chief executive officer of Options Media. Frohman was said to be at a meeting.
Sasso was described in DNA promos as “The King Of Data For Dollars” and was said to be the “owner of the largest database of text numbers in the world.”
From Google cache: A company known as Landen Options and Futures uses the acronym LOFL. The same acronym is web shorthand for "Laughing Out Freaking Loud." Belgium authorities say the firm is not registered to conduct business in investments and that no such firm is located at the listed address in Brussels. Meanwhile, the firm's website has gone missing.
DEVELOPING STORY: A financial firm purportedly headquartered in Belgium quickly may become a source of international intrigue as regulators seek to piece together clues to solve what appears to be an evolving mystery.
For starters, the company — Landen Options and Futures — used the acronym LOFL on its website, according to search results accessible in Google cache. The site itself now is returning a “Server not found” error.
It was not immediately clear if the firm has gathered money from investors.
Although LOFL could be an actual, legitimate acronym a company might choose for itself, it also is web shorthand for “Laughing Out [Freaking] Loud” and “Lots of [Freaking] Luck.”
On May 20, the Financial Services and Markets Authority of Belgium (FSMA) issued a warning about the purported firm.
FSMA said the firm “claims to offer investment services from premises at Avenue Louise/Louizalaan 149, 1050 Brussels.”
But Landen Options and Futures “does not have the authorization in Belgium necessary to offer investment services in or from Belgium,” FSMA said. “Moreover, it is not situated at the address provided.”
FSMA “thus advises the public against responding to any offers of investment services made in the name of Landen Options and Futures and against transferring money to any account number they might mention,” the agency said.
Web cache also reveals that a copyright notice on the firm’s website purported to date back to 1990:
Records, however, show that the domain, which is behind a privacy proxy, was not registered until Jan. 3, 2011.
Other records show that the purported firm issued bizarre, awkwardly worded news releases through online PR sites to drive traffic. The news releases also speak to Forex trading.
One vague, poorly worded release claims the firm is establishing a Forex platform in “some part” of the United Kingdom.
“Landen Options and Futures, a prominent independent brokerage firm with main office located at Brussels Belgium, and has been providing brokerage trading services to international traders and investors, recently announced that it will soon commence its brokerage trading operations in some part of the United Kingdom,” the Feb. 16 release on PR.com read in part.
The release further claimed the company “has built two new branch offices in London and Scotland ” and “will provide foreign Exchange and futures trading services to traders and investors in UK with service highlights on online trading capabilities.”
Meanwhile, the release claims that the UK venture “recently received regulatory approval from UK Financial Services Authority.”
It quoted a person identified as “Mr. Harvey Davies,” purportedly the firm’s chairman and chief executive officer.
“In (sic) behalf of the entire company, we are glad to announce the commencement of our brokerage trading services in some part of United Kingdom,” the release referencing Davies read in part.
A Feb. 19 release quoted a person identified as Nathan Wauters, the firm’s purported “Managing Director.”
On Jan. 21, nearly a month prior, Wauters was quoted in a news release speaking about something called “The Algorithmics.”
The PP Blog confirmed this morning that the U.S. Commodity Futures Trading Commission is seeking information on the purported firm.
Kaboom! It turns out that the cases announced this week against American Precious Metals LLC (APM) by the CFTC and FTC were part of a geographically localized law-enforcement initiative that sprouted from “Operation Broken Trust,” a major national initiative undertaken last year by the U.S. Department of Justice and partner agencies as part of the interagency Financial Fraud Enforcement Task Force.
The localized initiative that led to both the CFTC and FTC bringing actions against APM is known as the South Florida Securities and Investment Fraud Initiative. It was created in December 2010 by U.S. Attorney Wifredo Ferrer, the top federal prosecutor in the Miami region.
The CFTC accused APM of running a precious-metals scam. Meanwhile, the FTC opened up a second legal front by charging the company with operating a telemarketing fraud scheme from a boiler room. The effect of the approach is that APM, which both agencies accused of running frauds that had gathered tens of millions of dollars, now has to square off against litigation coming from two different directions.
Ferrer has warned for months that white-collar fraudsters operating in the region had no safe haven either onshore or offshore.
In addition to Ferrer’s office, the CFTC and FTC, members of the South Florida Task Force include the FBI, the IRS, the U.S. Secret Service, the U.S. Postal Inspection Service, the SEC, the FDIC, the Florida Office of Financial Regulation and ICE Homeland Investigations.
ICE is a division of the U.S. Department of Homeland Security.
“Investors lose billions of dollars annually to fraudulent schemes,” Ferrer said in December, when introducing the new task force. “Some victims — the luckier ones — lose only thousands of dollars. Others lose their entire lives’ savings. While the victims of fraud are financially ruined, the fraudsters live a life of luxury. Together with our law enforcement and regulatory partners, we hope to help put an end to this type of fraud.”
Michael S. Goldberg, the Connecticut man who lured investors into bogus deals in part by creating websites that traded on the name of JPMorgan Chase Bank and other companies, has been sentenced to 10 years in federal prison.
Goldberg, 40, stole more than $30 million from investors over a period of 12 years in a scheme that gathered more than $100 million, U.S. Attorney David B. Fein of the District of Connecticut said. Goldberg was charged last year, and pleaded guilty to three counts of wire fraud in September.
Elements of the prosecution were brought by the Connecticut Securities, Commodities and Investor Fraud Task Force, an arm of the interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009.
“As a result of this defendant’s decade-long fraud scheme, many victims lost their homes, retirement security or college savings for their children,” Fein said.
As is the case in most Ponzi schemes, victims will not emerge with much, Fein said.
“Despite the best efforts of the FBI and the receiver who has been appointed by the court to recover funds, it is unlikely that most of these victims will ever be made whole,” he said. “The lengthy prison term imposed [May 16] is an appropriate one for an individual who caused financial misery for so many, and should deter others from seeking to prey upon innocent investors.”
Goldberg, a purported diamond and real-estate expert, used a virtual playbook for fraud, according to records.
Part of his caper featured domain-name fraud in which websites were created in the name of JPMorgan Chase and others to sanitize his scheme and disarm skeptics, according to records.
Although Goldberg claimed to buy distressed assets from Chase, no such business relationship existed, prosecutors said.
If the bogus websites were not enough, Goldberg also “often created false documents and other items to induce investors to believe that his business relationships were legitimate,” the Task Force said.
Bogus inventories, manifests, contracts, business checks, bank statements, business cards and company identification cards were part of the scam, the Task Force said.
And Goldberg did not invest in “diamond contracts” as he purported, prosecutors said.
U.S. District Judge Robert N. Chatigny ordered Goldberg to pay more than $31 million in restitution and to report to prison on July 18. Various authorities continue to unravel the scam, prosecutors said.
BULLETIN: In the third such action in the United States since March 30, the CFTC has gone to federal court in Florida to block what it described as a “precious metals” scam that incorporated fictitious trading.
Charged with fraud in the case were Sammy J. Goldman of Delray Beach, Fla., and Harry Robert Tanner Jr. of Lake Worth, Fla. Their Florida-based firm — American Precious Metals LLC (APM) — also was charged.
Tanner was the subject of two previous actions by the National Futures Association for misconduct and was permanently barred by NFA in 2006, the CFTC said.
Goldman, also has been the subject of regulatory actions, according to records.
The CFTC case was filed under seal May 10. Investigators today described APM’s operations it as a “massive fraudulent scheme” that purportedly gathered more than $23 million since July 2007 as part of a “boiler room”telemarketing scam.
APM’s website has been seized by the court-appointed receiver, David R. Chase. U.S. District Judge William Zloch is presiding over the case and issued a Temporary restraining Order after the CFTC filed an emergency petition.
The CFTC’s allegations read like an impossible work of fiction.
APM purported to offer a “Leveraged Precious Metals Investment Program” through which the firm sold metal to customers and arranged financing through a firm known as Global Asset Management (GAM), which purportedly received “interest,” the CFTC said.
The metal purportedly was stored in “independent depository,” the CFTC said.
Along the troubles with the claims was APM did “not purchase or sell physical precious metals on behalf of its leverage program customers,” the agency charged.
“Further, APM does not arrange for or provide loans for the purchase of physical precious metals by its customers,” the agency continued. “APM customers have no physical precious metals stored in any independent depository, and since no loan has been disbursed, no interest accrues on any loan.”
Here is what actually happens through the boiler room, the CFTC charged.
“[A]fter charging commissions of approximately 40% of customers’ funds, APM sends customer funds to GAM, which also does not purchase or sell physical precious metals on behalf of APM leverage program customers.
“Instead,” the agency alleged, “GAM pools the funds received from APM with funds received from similar boiler room telemarketing firms, takes a portion of the funds as its own profit, and deposits the rest in margin accounts held in GAM’s name with various United Kingdom-based firms where GAM trades over-the-counter (‘OTC’) precious metals derivatives. APM discloses none of GAM’s actual activity to its customers.”
Customers further get ripped off through “enormous commissions” APM takes off the top, along with a “3-5% mark-up on the price of the physical precious metals purportedly sold to the customer, account opening fees and the monthly ‘interest’ GAM charges on the financing purportedly provided to the customers,” the CFTC charged.
How corrupt was the scheme?
“[A]s of January 7, 2010, APM’s approximately 396 then-existing leverage program customers purportedly owned gold, silver, platinum, and palladium with a total value of $23,834, 108,” the agency said.
However, “neither APM, GAM nor any secure depository held any physical precious metals for those customers,” the CFTC charged.
“When a customer makes an order to purchase precious metal, APM simply records the transaction on paper and deducts an ‘administrative fee’ equal to 15% of the total value of the metal being purchased, which is equivalent to approximately 40% of the customer’s total cash outlay,” the CFTC charged. “APM divides the administrative fee among the firm’s management personnel and the employees responsible for soliciting the customer. APM pools the remaining customer funds in APM’s own bank accounts with funds received from other customers and sends a portion of its pooled customer funds to GAM on a weekly basis.”
Separately, the Federal Trade Commission has charged Tanner and his wife, Andrea Tanner, with telemarketing fraud.
BULLETIN: UPDATED 3:50 P.M. EDT (U.S.A.) The FTC has gone to federal court to halt what it described as a $467 million, online fraud scheme operating across international borders. The scheme was exposed through international cooperation among the FTC, the Canada Competition Bureau, Service Alberta, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud, the Edmonton Better Business Bureau and the BBB of Southern Nevada, officials said.
Charged in the case were Jesse Willms, Peter Graver, Adam Sechrist, Brett Callister, Carey L. Milne and several companies.
Willms, a Canadian, released a statement on his website that described the FTC case as a “disagreement.”
“We believe our business practices are compliant with the law and are working to resolve this disagreement with the appropriate government agencies,” the statement attributed to Willms read in part.
The FTC had a far different take.
Part of the scheme falsely traded on the names of Oprah Winfrey and Rachael Ray while also making false claims of cancer cures and weight loss, the FTC charged. In fact, the FTC said, Winfrey has sued Willms.
Named corporate defendants by the SEC were: 1021018 Alberta Ltd., also doing business as Just Think Media, Credit Report America, eDirect Software, WuLongsource and Wuyi Source; 1016363 Alberta Ltd., also doing business as eDirect Software; 1524948 Alberta Ltd., also doing business as Terra Marketing Group, SwipeBids.com and SwipeAuctions.com; Circle Media Bids Limited, also doing business as SwipeBids.com, SwipeAuctions.com, and Selloffauctions.com; Coastwest Holdings Ltd.; Farend Services Ltd.; JDW Media LLC; Net Soft Media LLC, also doing business as SwipeBids.com; Sphere Media LLC, also doing business as SwipeBids.com and SwipeAuctions.com; and True Net LLC, also doing business as Selloffauctions.com.
In addition to using the names of Winfrey and Ray, the scheme also traded on the famous names of CNN, USA Today, CBS, the “60 Minutes” television show and other brands, the FTC said.
“None of these entities have endorsed or positively reported on any of the 10 Willms defendants’ products,” the FTC said. The agency added that financial service-providers were duped and manipulated into processing payments for the alleged scam, in part through the creation of “dummy” websites designed to sanitize the scheme.
“Shell corporations” also were used to hoodwink service-providers, the FTC alleged. Consumers were fleeced out of at least $412 million in the scam, which netted nearly half a billion dollars, the agency charged.
The heart of the scheme was a continuity-billing fraud in which consumers who responded to “free” trial offers were billed for products and services they never requested, the agency said.
“The defendants used the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit card and bank accounts,” said David C. Vladeck, director of the FTC’s Bureau of Consumer Protection. “‘Free’ must really mean ‘free’ no matter where the offer is made.”
A Canadian official said cross-border cooperation was vital as agencies combat online fraud schemes.
“Internet fraud is a global problem that requires an international enforcement response,” said Lisa Campbell, deputy commissioner of competition for the Competition Bureau of Canada. “International cooperation ensures that fraudsters can’t hide behind borders.”
Auction fraud also was part of the massive scam, the FTC said.
“Willms and 10 companies he controls used deceptive tactics in offering ‘free trials’ for various products online, including acai berry weight-loss pills, teeth whiteners, and health supplements containing resveratrol (the supposedly healthful ingredient in red wine), as well as for a work-at-home scheme, access to government grants, free credit reports, and penny auctions,” the FTC said.
Penny auctions, the agency said, are “online auctions in which consumers must purchase bids, usually for $0.50 to $1 each. Regardless of whether a consumer actually wins a penny auction, the consumer has paid for each bid he or she placed during the auction. However, each bid that is placed raises the price of the auctioned item by a penny.”
“Willms and his companies obtained consumers’ credit or debit card account numbers, by enticing them with bogus ‘free’ or ‘risk-free’ trial offers that supposedly required only small shipping and handling fees, and also promised phony ‘bonus’ offers just for signing up,” the FTC said.
Consumers, though, often were “charged for the ‘free’ trial plus a monthly recurring fee, typically $79.95,” the agency said.
Making matters worse, the agency alleged, consumers also were “charged monthly recurring fees for the so-called bonus offers,” the agency said.
A purported money-back guarantee was no remedy because “consumers were often unsuccessful in canceling the charges or obtaining refunds, and the process involved time-consuming phone calls and other steps that made the deals far from risk-free.”
Meanwhile, the “penny auctions” were corrupt, the agency charged.
“The complaint charges that the defendants’ penny auction offers falsely indicated consumers would receive free ‘bonus’ bids, but those who provided credit or debit card numbers to facilitate future auction buying were hit with charges they did not know about, including $150 for introductory ‘bonus’ bids and $11.95 per month for ongoing ‘bonus’ bids,” the FTC charged.
Winfrey and Ray never endorsed the program, despite the appearance that they had, the FTC said.
Affiliate marketers in pursuit of commissions helped the massive fraud scheme go viral, affecting consumers in the United States, Canada, the United Kingdom, Australia and New Zealand, the FTC said. Important details were buried in the “fine print,” the agency charged.
The complaint was filed in federal court in Seattle. Willms resides in Alberta, according to the complaint. Graver, Callister and Milne are from Utah. Sechrist lives in Pennsylvania.
Some of the corporate defendants are from Canada. Others are from England, Cyprus, Utah, Idaho and Nevada, according to the complaint.
“Offshore merchant banking services” were used as part of the scam, the FTC said.
“Because these corporate defendants have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices,” the FTC said.
This May 1 promo for Club Asteria describes its as an "investment company" and instructs prospects that "you will not again anything unless you invest." The promo advertises returns of up to 7 percent a week. "I am happy because even if I am not doing anything I still manage to earn from it," the promo claims.
P2P was promoted on the TalkGold and MoneyMakerGroup Ponzi forums.
A little over a month later, in July 2010, the Financial Industry Regulatory Authority (FINRA) described the HYIP sphere as a “bizarre substratum of the Internet” and issued a fraud alert. FINRA also referenced the P2P case. At the same time, it pointed to the collapsed Genius Funds Ponzi, believed to have consumed $400 million.
Genius Funds also was promoted on TalkGold and MoneyMakerGroup.
In December 2010, the interagency Financial Fraud Enforcement Task Force led by U.S. Attorney General Eric Holder specifically warned the public to be wary of social-networking sites and chat forums. The warning was part of “Operation Broken Trust,” a law-enforcement initiative in which investigators described more than $10 billion in losses from recent fraud cases.
One of the cases described was the SEC’s action against Imperia Invest IBC, a murky offshore business accused of stealing millions of dollars from the deaf.
Imperia Invest also was promoted on TalkGold and MoneyMakerGroup.
Last week, promoters of a Virginia-based company known as Club Asteria (CA) announced on the Ponzi boards that PayPal had frozen CA’s funds and blocked its access to the PayPal system. Although CA has been presented as a wholesome “opportunity” recognized by the Internal Revenue Service as a nonprofit organization (see graphic below), the CA promoter who announced the PayPal news last week on MoneyMakerGroup simultaneously was promoting two “programs” that purportedly pay 60 percent a month.
Some CA promoters claim CA pays 520 percent a year. Even jailed Ponzi schemer Bernard Madoff would blush at such advertised rates of return.
MoneyMakerGroup is referenced in federal court filings as a place from which Ponzi schemes are promoted. So is TalkGold, another well-known forum in the HYIP world.
This morning — also on the MoneyMakerGroup — a different CA promoter announced that CA’s Andrea Lucas had responded to last week’s PayPal news. Even as the CA member was announcing on a known Ponzi scheme and criminals’ forum that Lucas had issued a statement on the PayPal matter, he simultaneously was promoting two HYIPs and something called One Dollar Riches.
“OneDollarRiches allows you to parlay a small investment of just one dollar into a constant stream of cash, day in and day out!” according to its ad. “You can make 100 times your investment in just a few days by following our simple step by step instructions.”
The mere presence of CA promotions on the Ponzi boards leads to questions about whether the firm’s receipts are polluted by Ponzi proceeds. Paying members from such proceeds would put CA members in possession of tainted money — and banks into which they deposited those proceeds also would be in possession of tainted money.
Lucas, according to the CA website, now has publicly acknowledged last week’s actions by PayPal. Details, though, were spartan. CA did not say how much money PayPal had frozen. Meanwhile, the firm instructed members to fund their accounts by using offshore processors.
At the same time, CA urged members not to spread bad news about the company on forums. Members who shared negative information were subject to having their CA accounts revoked, according to the company.
“Members shall not publically (sic) disparage, demean or attack Club Asteria, its members, services or charitable activities,” CA remarks attributed to Lucas on the CA website read. The remarks were dated May 16 and appeared in the “News” section of the site.
In the same announcement, Lucas acknowledged that a “small group” of CA members “used their PayPal accounts to cheat fellow members.”
The company claimed it had turned the members “over to the authorities,” but did not identify the authorities or say whether they were based in the United States or elsewhere.
CA, which said PayPal was “acting with integrity,” then counseled its members to rely on offshore processors.
“First, if you have been paying for your membership through PayPal, please discontinue your subscription with PayPal immediately and start using one of the other approved payment processors AlertPay, Towah or CashX to ensure that your membership stays current,” the remarks attributed to Lucas read.
“Second, Do NOT use online forums, websites or social networks to lodge blame or complaints about PayPal or your Club Asteria team,” the remarks continued. “There is no benefit or purpose in this, and it only serves to create discord and spread rumors. Not only that, doing so is a direct violation of Code of Ethics & Conduct, Rule 8 and can result in immediate revocation of your membership.”
CA’s bizarre announcement occurred against the backdrop of thousands of bizarre promos for the firm that appear online. Some promos claim $20 spent with CA monthly turns into a lifetime income of $1,600 a month. Others claim CA is a “passive” investment opportunity, which raises questions about whether CA — whose members claim the program typically pays out about 3 percent to 4 percent a week or up to 208 percent a year — is selling unregistered securities as investment contracts.
Lucas has been referred to in promos as a former “chairman” and “vice president” of the World Bank. Several promos have described her as a Christian “saint.”
CA’s claims that only a “small group” of members is causing problems may be dubious. Wild claims have been made in promo after promo for the firm, which says it is not in the investment business.
This promo for CA contains a link that resolves to an active CA affiliate site. The affiliate site has a low affiliate ID number, suggesting the affiliate was one of CA's earliest members. The promo claims CA is a 501 (c)(3) nonprofit organization recognized by the IRS.
Some of you may experience availability issues today and tomorrow as the PP Blog performs maintenance. Intermittent outages may occur in the next 24 to 48 hours.
Although the Blog is expected to be largely available, it may not be accessible in all areas until the maintenance is completed.
Kudos to the Salt Lake Tribune for expanding on its earlier series on multilevel marketing, which we referenced here. On May 27, the newspaper published two more stories — and one of them features a photograph of a Rolls-Royce with the words “mona vie” emblazoned on its side.
