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  • ‘Pay It Forward’ Gifting Scheme Leads To Felony Racketeering Charge, Sparks Child-Porn Probe In Michigan

    payitforwardAs the PP Blog reported more than six years ago, Pay It Forward (PIF) “programs” have a noxious history in HYIP and cash-gifting Scamland.

    A new case in Michigan, however, may be off-the-charts in terms of noxiousness. That’s because investigators looking into a PIF scheme there found child pornography on the alleged PIF operator’s computer, the office of Michigan Attorney General Bill Schuette said in February.

    Michael Skupin, 54, of Oakland County, was charged with six counts of possession of child sexually abusive materials five counts of larceny by conversion,and one count of Racketeering- Conducting a Criminal Enterprise.

    The PIF “program” was a Ponzi scheme that gobbled up $10,000 at a time from participants, Schuette’s office said.

    Records show that it’s not unusual for Ponzi schemers in Michigan to be charged with racketeering, a 20-year felony.

    “Victims allegedly made $10,000 cash investments in the [Skupin] scheme,” Schuette’s office said. “Their money would then cycle through a chart in which participants were eventually paid out of other new investors’ money.  The scheme was discovered when eventually there were no new investors signing and most people in the scheme lost all of their money.”

    The Oakland Press reported yesterday that Skupin was a former contestant on the “Survivor” television show.

    And, the publication reported, Skupin was accused of violating his release conditions while waiting trial on the charges against him.

    From the Oakland Press (italics added):

    Following his arraignment, the former reality TV contestant posted bond and was under house arrest with conditions that barred him from using the Internet except for work.

    But during a probable cause hearing Friday, April 8, in Clarkston’s 52-2 District Court, Judge Kelley Kostin ordered Skupin jailed because he violated the Internet bond conditions by posting on Facebook.

    Skupin now has made bail for a second time.

    PIF schemes have many price points — from low-dollar sums to high. In some PIF schemes, a recruiter may offer you the money to join a “program” — with the understanding you’ll do the same for your recruits. Some participants will purchase multiple “positions” for friends and family members, only to lose it all.

    Other such schemes may encourage you to purchase second and subsequent “positions” if you get paid — in effect, paying it forward to yourself, so you can get paid again.

    The money-cycling schemes ultimately collapse.




  • BRIEF: Get Prepared To File TelexFree Claims

    Good news for potentially hundreds of thousands of people with TelexFree claims. TelexFree bankruptcy Trustee Stephen B. Darr informed Chief Judge Melvin S. Hoffman yesterday that testing could begin this month on the electronic proof of claim form (ePOC) and the online claims portal administered by BMC Group Inc.

    If all goes well, the “ePOC and Portal will be up and running by early May 2016,” Darr noted.

    No formal opening date has been announced. When the system is in place, individuals will have at least 90 days to file claims.

    This is the section of the Trustee’s website that includes court filings in the bankruptcy case. Readers also may wish to view information contained within the tabs on the left side of the page. This is the tab for Information Regarding Claims.

    As of today, it notes that “There is no deadline yet for filing claims in the TelexFree cases and claims should not be filed at this time.”

    Darr’s status report to Hoffman yesterday suggested this could change in the coming weeks, so it’s time for claimants to prepare.

    Hoffman already has ruled TelexFree a Ponzi- and pyramid scheme.




  • Tax Problems Mount For TelexFree In Brazil, As Criminal Investigations Continue

    Carlos Wanzeler of TelexFree allegedly fled from the United States to Brazil while U.S. investigators were closing in on the company in 2014.
    Carlos Wanzeler of TelexFree allegedly fled from the United States to Brazil while U.S. investigators were closing in on the company in 2014.

    It’s easy enough to forget that TelexFree and its principals have epic legal problems outside the United States, where the company has been found a Ponzi- and pyramid scheme and alleged operators James Merrill and Carlos Wanzeler are under criminal indictment.

    History shows, however, that the problems began in the Brazilian state of Acre in 2013. That’s when the state government seized millions of dollars tied to the MLM “program,” amid pyramid-scheme allegations. In Brazil, TelexFree operated through a company known as Ympactus.

    Certain U.S. TelexFree promoters who allegedly pushed the “program” after the Acre action have been charged with fraud in the United States by the SEC.

    Now, GazetaOnline (Brazil) is reporting in Portuguese that TelexFree may owe billions of reais in back taxes to Brazil’s federal government. (See translation to English by Google Translate.)

    At the same time, the publication is reporting that two criminal probes into TelexFree by Brazil’s government for “suspicion of tax evasion, money laundering, and to act without authorization in the financial and capital markets” continue, according to a Google translation.

    Brazil’s government may have a claim to a large portion of the money seized in Acre. For starters, it appears to be going after about R$130 million (roughly $36 million U.S.) of the R$600 million seized. If the federal government is successful, the $36 million would be transferred from state court in Acre to federal court in Espirito Santo.

    NOTE: Our thanks to Mikaella Campos of GazetaOnline.




  • Second Guilty Plea From Purported JAG Lawyer Linked To SVM Global Initiative

    svmThe docket of of New York’s Kings Supreme Court (Brooklyn) shows that Kenneth Goldstein has pleaded guilty to a charge of unlicensed practice of law and a charge of offering a false instrument for filing.

    Goldstein, a purported JAG lawyer and figure in the SVM Global Initiative story, earlier pleaded guilty to the same charges in a separate case in Bronx County. The case in Kings County notes a plea agreement. Separate charges of aggravated harassment against Goldstein in Bronx County remain unresolved, according to the docket.

    Sentencing on the unlicensed practice and false instrument charges in Kings County tentatively is set for June 8. Goldstein, free on bond, next is scheduled to appear June 14 on both sets of charges in Bronx County. The Bronx docket suggests sentencing on the unlicensed practice and false-instrument charges there was postponed in March.

    SVM is operated by New Yorker Sheila V. Tabarsi, who once claimed that the “Bush administration” was involved in an “effort to dismantle this world economy” and that the effort has been “so concentrated” and “so diligent.” She has described herself as a former Air Force member, a medical intuitive, a psychic and a “Rev.” In turn, she has described Goldstein as a “USCG JAG OFFICER” and as “LIEUTENANT COMMANDER KENNETH GOLDSTEIN.”

    Published reports have described Goldstein as a former Coast Guard petty officer.

    After more than a year, SVM appears still not to have launched its purported matrix “program” to end poverty.

    In April 2015, the PP Blog reported that “sovereign citizens” might be involved in SVM and other online “programs,” including UFunClub. UFunClub is the subject of a major investigation in Thailand.

    At one point in 2015, Tabarsi described the PP Blog as part of a terrorist organization that sought to “INCITE A RIOT and commit unprovoked ATTACKS on DECORATED UNITED STATES WARTIME VETERANS” and additionally carry out a “HATE CRIME.”

    Goldstein has claimed to the PP Blog that Tabarsi “already presented her business plan to a senatorial body and has their seal of approval.”

    NOTE: Also see BehindMLM’s 2015 review of SVM and the MLM Skeptic Blog: “Is a Scam Targeting Veterans ‘to end poverty’ citing a FAKE JAG lawyer?”




  • RECEIVER: (1) Zeek Defendant Class Action May Conclude This Year; (2) Some Claimants Still Haven’t Signed Required Release; (3) $10 Million Settlement With NewBridge Bank

    This promo for Zeek promised "passive" income. The SEC has warned about such schemes for years.
    This promo for Zeek promised “passive” income. The SEC has warned about such schemes for years.

    Three significant pieces of news from Kenneth D. Bell, the receiver in the Zeek Rewards’ Ponzi- and pyramid-scheme case:

    In a March 28 announcement on the receivership website, Bell wrote that a defendant class-action lawsuit against more than 9,000 alleged Zeek winners in the United States may conclude this year.

    “We hope to bring to a conclusion in 2016 our class action against more than 9,000 net winners, which will be a significant milestone,” Bell wrote.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina certified the defendant class of alleged U.S. winners last year. The class includes “all persons and entities who participated in ZeekRewards and received at least $1000 more in money from ZeekRewards than they put into the program.”

    The winnings came from Ponzi proceeds and must be returned, Bell contended.

    A successful conclusion to the class action could mean more money for Zeek victims, Bell has said.

    TelexFree Bankruptcy Trustee Stephen B. Darr has filed similar litigation in that scheme. Darr’s action may affect nearly 100,000 alleged TelexFree winners.

    Bell has raised concerns about some MLMers moving from fraud scheme to fraud scheme. The SEC has raised concerns about the “whack-a-mole” nature of some fraudulent schemes.

    Meanwhile, Bell wrote yesterday that tens of thousands of people who are eligible for a distribution from the receivership estate have not received a check because they haven’t filled out the required forms. Such individuals should “log into the claims portal and electronically sign the Court required Release and OFAC Certification.”

    “At some point, I will be required to distribute the funds that have been reserved for these claimants to other Affiliates who have completed the process and, therefore, hold Allowed Claims,” Bell wrote.  “I don’t want any claimant with a recognized claim to lose out on receiving a distribution simply because they did not complete all of the steps required by the Court’s Orders.”

    Bell also highlighted a $10 million settlement with NewBridge Bank, a Zeek vendor. Zeek operated through Rex Venture Group.

    “The settlement arose out of claims the receivership had against NewBridge Bank for its continuing to provide banking services to Rex Venture Group after mid-April 2012, by which time the receivership alleged that the bank and its executives knew or should have known that Paul Burks and RVG were using their accounts to conduct an illegal Ponzi and pyramid scheme,” Bell wrote.

    Details of the receivership’s potential claims and the settlement with NewBridge are available through links in the receiver’s March 28 announcement.




  • URGENT >> BULLETIN >> MOVING: Zeek Vendor Pleads Guilty To Obstructing Probe

    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.
    From the criminal charges filed against Zeek payment vendor Jaymes Meyer in the Western District of North Carolina.

    URGENT >> BULLETIN >> MOVING: (12th Update 2:57 p.m. EDT U.S.A.) In what may be a warning shot fired across the bow of payment vendors who hope to profit from Ponzi schemes, Zeek Rewards’ vendor Jaymes Meyer of Preferred Merchants Solutions LLC has pleaded guilty to a criminal charge of obstructing investigators in the Zeek Ponzi- and pyramid-scheme case.

    Meyer, 47, of Napa, Calif., was charged criminally March 10 by federal prosecutors in the Western District of North Carolina. They alleged he hatched an “elaborate obstruction of justice scheme to conceal millions of dollars from the Government using a series of domestic and foreign nominees and related bank and brokerage accounts.”

    He was specifically accused of impeding the SEC’s Zeek probe beginning in 2012 and later lying to a federal judge and Zeek receiver Kenneth D. Bell.

    Senior U.S. District Judge Graham C. Mullen is presiding over the SEC’s Zeek case.

    As the PP Blog reported in October 2014, Bell accused Meyer of directing a $4.8 million transfer from a Rex Venture Group trust account to Preferred Merchants’ account “just 19 minutes after the SEC told them about the asset freeze and imminent shutdown of RVG” on Aug. 16, 2012.

    Rex, or RVG, was the operator of Zeek. It was under the control of accused Zeek Ponzi schemer Paul R. Burks. Burks is scheduled to go on trial in July.

    By March 2015, Bell and investigators had tracked Zeek money that flowed through Preferred to the Cook Islands and real estate in the Turks and Caicos. Prosecutors’ allegations against Meyer include a notice of forfeiture of $4.8 million.

    U.S. Magistrate Judge David S. Cayer accepted the guilty plea from Meyer on March 22. Certain documents in the case remain sealed. One document shows Meyer withdrew $195,000 in Zeek money in cash.

    At least two other payment vendors may be in Bell’s sights. On Feb. 21, 2016, the PP Blog reported that millions of dollars that originated through Zeek-related transactions involving Payza and Payment World may have ended up in a collapsed Russian bank.

    NOTE: Our thanks to the ASD Updates Blog.




     

  • Hoax Weaves Conspiracy Theories And Taunts Rep. Gabby Giffords, Victims Of Arizona Mass Shooting

    Jared Loughner. Source: Wikipedia.
    Jared Loughner. Source: Wikipedia.

    Jan. 8, 2011, was a horrifying day in U.S. history. It’s the day Jared Lee Loughner shot then-U.S. Rep. Gabrielle Giffords in the head. Grievously wounded, Giffords, remarkably, survived. Six others died in the Tucson attack, including U.S. District Judge John Roll of Arizona.

    In this Jan. 9, 2011, story, the Washington Post remembers Christina-Taylor Green, a 9-year-old slain by Loughner, a conspiracy theorist who opened fire at an outdoor constituent event hosted by Giffords in the parking lot of a supermarket. Christina’s granddad, Dallas Green, once was the manager of the Philadelphia Phillies and led the team to a World Series title in 1980.

    News circulated yesterday that Loughner had just sued Giffords for $25 million, bizarrely alleging emotional distress. The document painted incredibly wild conspiracy theories. Example: The congresswoman hadn’t really been shot. Instead, she was playing a role she learned by watching Ronald Reagan movies.

    Today, however, the filing docketed in Arizona federal court appears to be a hoax. For starters, it had a Philadelphia postmark, according to Tucson News Now. Loughner is detained in Minnesota. Beyond that, the envelope sent to the Arizona court was strikingly similar to one sent earlier this month to federal court in the Eastern District of Michigan.

    The Michigan document also had a Philadelphia postmark. It purported to be a lawsuit filed against Uber by Jason Brian Dalton, a former Uber driver accused of a mass shooting in Kalamazoo. This was a hoax carried out by Jonathan Lee Riches, posing as Dalton, according to the Smoking Gun.

    If this name seems familiar to you, perhaps it’s because you read it on the PP Blog — on Jan. 28, 2009. Riches, now listed by the Bureau of Prisons as a resident of a Philadelphia halfway house with a May 10 release date from federal custody, is a fraudster and notorious pro se litigant who once tried to enter the Bernard Madoff Ponzi fray.

    As a federal prisoner, Riches eventually tried to sue Loughner, alleging that Loughner might “try to kill me for being a moderate Democrat,” according to Above The Law. Now, it seems possible that the man who once filed against Loughner now is posing as the convicted mass murderer.

    Judge Roll is memorialized in this bust at the federal courthouse in Tucson. The courthouse in Yuma is named after him and also includes a bust. Image source: Ninth Circuit Public Information Office.
    Judge Roll is memorialized in this bust at the federal courthouse in Tucson. The courthouse in Yuma is named after him and also includes a bust. Image source: Ninth Circuit Public Information Office.

    The attack on Giffords, Judge Roll, little Christina and the others was one of the most notorious in recent U.S. history. It is sickening to contemplate that they have been subjected to a hoax in which Loughner may be a victim.

    If Riches pulled this off, he’d better lay low if he attends any Phillies games this summer. The Philadelphia fans aren’t apt to take kindly to someone who serves up even more pain for the Green family while using Giffords, an American hero, as his target-in-chief.





     

     

  • CSA: ‘No Business Is Currently Registered Or Authorized To Market Or Sell Binary Options In Canada’

    Offshore scammers have their eyes on your pocket book.  “[N]o business is currently registered or authorized to market or sell binary options in Canada,” the Canadian Securities Administrators said in an Investor Alert today.

    The risk is not merely the loss of money, CSA said.

    “Canadians are exposing themselves to the high risk of identity theft and fraud when signing up for these platforms that often request their credit card information,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers, Quebec’s secutities regulator. “The CSA warns investors that if they deal with these platforms, they risk the threat of thousands of dollars in unauthorized withdrawals on their credit cards and of being stuck with high-interest payments for a non-existent investment.”

    Binary options, CSA said, “are like ‘bets’ on how an asset (currency, stock, etc.) will perform in a limited amount of time – they are ‘all or nothing’ wagers, similar to gambling. However, even when investors see virtual gains, they often cannot access these profits as they don’t exist.”

    Read the CSA alert.

    On March 15, the U.S. Commodity Futures Trading Commission announced charges against two purported binary-options firms purportedly operating on the web from Israel.

    CFTC identified the defendants as Vault Options Ltd. and Global Trader 365.

    From the CFTC (italics added):

    In addition to alleging that Vault and GT 365 solicited more than $1 million from at least 50 U.S. customers, the Complaint alleges that Vault and GT 365 defrauded their customers by, among other things, misrepresenting and omitting the likelihood of profit and loss that customer make trading binary options, falsely claiming that customer funds were insured against losses, fraudulently inducing customers to send them more money before initial funds could be returned, and misappropriating customer funds. According to the Complaint, while Vault and GT 365’s websites touted large profits, many customers lost nearly all of their funds sometimes within days or a few weeks.




  • SEC, Lawyer Clash Over Representation Of TelexFree Figure Sann Rodrigues; Lamborghini Once Owned By Accused DFRF Enterprises’ Ponzi Schemer Daniel Fernandes Rojo Filho Was Used To Pay Sann’s Legal Fees

    In court filings, the SEC says it has traced the ownership of a 2008 Lamborghini once owned by TelexFree figure Sann Rodrigues and determined the car once was owned by accused DFRF Enterprises' Ponzi schemer Daniel Fernandes Rojo Filho. This was the check Filho used to purchase the vehicle. Source: Federal court fililes. Masking by PP Blog.
    Small world between accused scammers: In court filings, the SEC says it has traced the ownership of a 2008 Lamborghini owned by TelexFree figure Sann Rodrigues and determined the car once was owned by accused DFRF Enterprises’ Ponzi schemer Daniel Fernandes Rojo Filho. This, according to an SEC exhibit, was the check Filho used to purchase the vehicle and, apparently, a 2006 Ferrari. Source: Federal court files. Masking by PP Blog.

    3RD UPDATE 9:36 AM EDT MARCH 17 U.S.A. This one features highly questionable dealings between an alleged MLM securities fraudster (TelexFree’s Sann Rodrigues) and an alleged Ponzi schemer (Daniel Fernandes Rojo Filho of DFRF Enterprises). Filho also has been linked to the alleged 2010 Finanzas Forex/Evolution Market Group Ponzi scheme, a Ponzi-board “program” that allegedly had ties to the narcotics trade.

    Suffice to say, this developing story has a lot of moving parts. Here’s our distillation:

    On March 14, the SEC alleged that Rodrigues — whose assets are frozen — had transferred two expensive cars to Florida attorney Robert Eckard. Eckard is representing Rodrigues in the SEC’s civil case against him and other TelexFree figures and also in the Justice Department’s criminal case against him for immigration fraud.

    The transfers potentially created a conflict of interest for Eckard, given that Rodrigues currently is jailed for civil contempt for violating the asset freeze and has not purged that contempt, according to the SEC. Getting out of hock with the court will cost the huckster at least $334,000, perhaps more. Rodrigues claims he cannot pay and that the court should free him and put him on a payment plan.

    U.S. District Judge Nathaniel M. Gorton of Massachusetts is hearing the case.

    Why didn’t Rodrigues apply the two cars to purge the contempt?

    Well, according to the SEC, the cars — a 2008 Lamborghini Gallardo and a 2012 Fisker Karma — were transferred to Eckard after the agency moved for contempt against Rodrigues in August 2015.

    The SEC further suggested in its filings that Eckard paid far below book value for the cars. In the case of the used Lamborghini, the SEC said, the lawyer paid only $30,000 for a car that months earlier had sold for five times that sum.

    Eckard paid only $20,000 for the Fisker Karma, which months earlier had sold for three times that sum, the SEC said. Fisker Karma is an electric luxury vehicle whose operator declared bankruptcy..

    Reached by the PP Blog today, Eckard pointed to court filings in which he says Rodrigues — strapped for cash because of the freeze — paid him with cars, rather than cash. And, the lawyer contended, no conflict existed and the SEC had cleared the cars from the asset freeze.

    Because Rodrigues paid with cars, not cash, it created an unusual situation with vehicle taxes, Eckard said. He added that he consulted with authorities in Pasco County and with the Florida Department of Revenue when transferring the cars to his name.

    “I did not pay anything for the vehicle, but was required to put an amount down for tax purposes, since it was not a gift,” Eckard advised Gorton about the Lamborghini.

    The Fisker Karma was accepted from Rodrigues as payment for legal fees and proved to be a lemon with bad electrical parts and bad tires, Eckard contended.

    Eckard is moving to strike the SEC’s assertions from the court docket.

    Both Rodrigues and Filho are Brazilian by birth and Florida residents. How they came together remains unclear.

    The SEC linked Rodrigues to Filho last year.

    NOTE: Our thanks to the ASD Updates Blog.

    UPDATE 3:53 P.M. EDT U.S.A. MARCH 22: Looks as though Rodrigues will be released from jail, after coming up with a plan to purge the contempt. This matter is separate from the SEC’s securities-fraud case against him filed in April 2014.




  • TelexFree Trustee Seeks Approval Of Settlement With PricewaterhouseCoopers

    newtelexfreelogoBig Four accounting firm Pricewaterhouse Coopers posted more than $115,000 in fees from the TelexFree Ponzi/pyramid scheme and will pay it all back under the terms of a stipulated settlement with TelexFree Trustee Stephen B. Darr, according to court filings.

    PwC admits no liability in the settlement, which requires the approval of Chief Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts.

    In January 2014 — just three months before TelexFree collapsed in a pile of Ponzi rubble — the firm hired PwC to provide “tax consulting and tax structuring advice,” according to a stipulation filed by Darr and PwC.

    PwC issued three invoices in the coming weeks, and TelexFree paid them all, according to the stipulation. These totaled $115,335.66. The document suggests TelexFree may have made a $50,000 payment to PwC in advance of the receipt of an invoice and in the final hours before the bankruptcy filing.

    This invoice was dated April 15, 2014, but TelexFree paid it on April 11 of that year. Two days later, according to records, TelexFree filed for bankruptcy in Nevada.

    Darr contended that payments made by TelexFree to PwC were preferential and thus recoverable. The trustee also “raised issues regarding the value of the services that were provided by PwC to TelexFree, LLC and whether such payments could be recovered as fraudulent transfers.”

    Read the stipulation.




  • In Wake Of Herbalife Probe And Vemma Litigation, ESPN Asks If AdvoCare Is Pyramid Scheme And Pusher Of False Hope

    “And while the company claims its primary objective is selling products, many of its distributors tell a different story. ESPN interviewed more than 30 current and former salespeople, the vast majority of whom said their focus, and the focus of their superiors, was on recruiting other distributors. These new members, many of whom are drawn to the business’ strong religious culture or convinced of its credibility by its ties to the sports world, infuse the company with new funds — money that ultimately flows up to the powerful people who walk the stage at Success School.” — From “Drew Brees Has A Dream He’d Like To Sell You,” ESPN The Magazine And “Outside The Lines,” March 15, 2016

    advocarelogoWith Herbalife under investigation by the Federal Trade Commission and Vemma charged by the FTC with operating a pyramid scheme, ESPN has asked one of its own sponsors — AdvoCare, an MLM company — whether it is pushing a pyramid scheme.

    “Absolutely not,” replied Allison Levy, AdvoCare’s executive vice president and chief legal officer. (Link to March 11 AdvoCare video below. In its story (link below), ESPN said AdvoCare set up two cameras to record ESPN’s recording of the March 2 interview and also changed some info on its website after the network began to ask questions.)

    With MLM, one of the key questions is whether a significant percentage of products end up in the hands of retail users or whether a program’s distributors load up on product to qualify for commissions.

    Levy did not discuss the Herbalife and Vemma matters, although AdvoCare says on its website that it has 320,147 “retail customers.” Herbalife once famously said it didn’t have “visibility” into its number of retail customers, fueling concerns it was a pyramid scheme.

    One of the questions posed in the ESPN story is whether AdvoCare is drafting the unwary into its MLM program by relaying on professional athletes such as Drew Brees of the New Orleans Saints to be spokespeople for the firm. And is the company also trading on religion?

    Read the ESPN story.

    Visit the AdvoCare website to view its March 11 “media update” in advance of the ESPN story, published today.