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  • Florida Recidivist Swindler John A. Mattera Pleads Guilty In Fraud Scheme That Traded On Names Of Facebook And Groupon

    John Mattera: Source: Mattera Foundation Nov. 2. 2011, news release.

    John A. Mattera, the recidivist Boca Raton swindler who was charged civilly and criminally last year in a new caper, has pleaded guilty to one count of securities fraud, one count of wire fraud and one count of conspiracy to commit securities fraud and wire fraud, federal prosecutors said.

    He potentially faces decades in prison.

    Mattera, 50, was charged last year by the SEC and the office of U.S. Attorney Preet Bharara of the Southern District of New York with duping investors into believing his purported hedge fund had the inside track on shares of Facebook and Groupon in advance of the IPOs.

    The purported fund had the high-sounding name of “The Praetorian Global Fund,” investigators said.

    “With false promises of profitable investments in high-profile stock, John Mattera lured unsuspecting investors into a meticulously orchestrated, multi-million dollar fraud scheme, and used their money to fund his lavish lifestyle,” Bharara said.

    Investors plowed millions of dollars into the scheme, believing their money would be held in “escrow” at a Florida bank and that they’d have an advantage because Mattera held the key to higher Facebook and Groupon profits when the companies went public, prosecutors said.

    “However, instead of maintaining the investor money in the escrow accounts as Mattera promised, Mattera caused the vast majority of the funds to be transferred to other entities with which he was associated,” prosecutors said.  “Ultimately, Mattera misappropriated approximately $13 million of investor money, spending nearly $4 million on personal items for himself and his family, such as expensive jewelry, interior decorating and luxury cars.”

    And, prosecutors noted, “neither Mattera, Praetorian nor the G Power Entities held these shares of stock.”

    Mattera pleaded guilty in 2003 to seven counts of grand theft in three separate Florida criminal cases, according to court records. Among other things, “Mattera stole $34,000 from two Florida investors by promising to provide them with shares of stock that Mattera falsely represented he owned,” the SEC said of the 2003 cases.

    In 2009, the SEC charged Mattera “with fraudulently attempting to avoid registration requirements by backdating promissory notes to obtain improperly unrestricted shares of a company,” according to the agency.

    Despite his history of engineering fraud schemes, Mattera positioned himself as a community volunteer and head of a foundation, rubbing elbows with the American Red Cross and Florida’s elite in the days and months leading up to his most recent scam.

     

  • Was This Man Your Zeek Sponsor?

    Was this Jack Phillips your Zeek Rewards sponsor or member of your upline/downline? (Contributed photo cropped by PP Blog.)

    UPDATED 12:51 P.M. EDT (U.S.A.) This man (photo left) has been identified by a PP Blog reader as Jack Phillips, a suspect in an alleged swindle involving investments in purported emeralds.

    Phillips, 77, is a resident of Oregon. He was charged criminally last week in Salt Lake County, Utah, in the alleged emeralds caper.

    Zeek Rewards listed a member by the name of “Jack Junior Phillips,” according to materials viewed by the PP Blog. Zeek’s Jack Junior Phillips was a “Diamond” member and appears to be associated with a Oregon entity known as Yes You Can LLC.

    The Blog is seeking to determine conclusively if the Jack Phillips pictured on the left and associated with the alleged emeralds fraud is the same Jack Phillips associated with Zeek Rewards as a “diamond” affiliate.

    Two readers now have contacted the PP Blog, saying they were swindled by Jack Phillips in the alleged emeralds fraud.

    “We were solicited by Jack Phillips to [triple] our money in a matter of 90 days,” one reader wrote.

    The other reader asserted that the alleged emeralds caper involved a purported showing of the precious gems in Sarasota, Fla.

    “There were more than 30 families involved in this scam,” the reader wrote.

  • BULLETIN: Purported ‘Sovereign Citizen,’ 71, Charged In Alleged Murder-For-Hire Plot Against Federal Judge In Texas

    BULLETIN: A federal judge in Texas was the target of a murder-for-hire plot by a purported “sovereign citizen,” the FBI said.

    Phillip Monroe Ballard, 71, already was jailed at the Fort Worth Federal Correctional Institution when he solicited the killing of U.S. District Judge John McBryde, the office of U.S. Attorney Sarah R. Saldaña of the Northern District of Texas said.

    Ballard was to go on trial today before McBryde, prosecutors said. He now has been charged with soliciting the judge’s murder.

    Last month, according to the FBI, the agency received information from the Federal Bureau of Prisons (FCI Fort Worth) that Ballard was talking about having McBryde killed so a new judge would be assigned.

    On Sept. 9, according to the FBI, Ballard was in the prison’s “day room” with other inmates and “talking about his belief in being a sovereign citizen,” claiming that “he is immune from all the laws of the United States.”

    One of Ballard’s fellow inmates reported that Ballard had “approached him about killing McBryde,” federal prosecutors said.

    That inmate agreed to become a “cooperating source,” according to the FBI.

    Because Ballard feared McBryde would sentence him to 20 years, Ballard proposed a plan by which the judge would be murdered with a “high-powered rifle” outside the federal courthouse or with a car bomb.

    The informant told Ballard he could help arrange the judge’s murder and have “a guy on the outside” carry out the lethal crime, according to the FBI.

    Ballard offered $100,000 for the contract, provided the informant a “hand-written map” of the external courthouse and emailed his sister to send $5,000 to an address in Oklahoma, the FBI said.

    That address was the address set up by the FBI as part of its sting, and the $5,000 was the down payment on the judge’s murder, the FBI said.

    McBryde has recused himself from the tax trial, which has been postponed, federal prosecutors said.

     

     

  • ‘Investor-Fraud Summits’ Set For 6 U.S. Cities: Stamford, Conn.; Nashville, Tenn.; San Francisco; Denver; Cleveland And Miami

    What: Investor Fraud Summits.

    Where/When: Stamford, Conn. (today from 9 a.m. to 1 p.m. EDT at the University of Connecticut – Stamford Campus); Nashville, Tenn. (Oct. 4 from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South) ; San Francisco (Oct. 9, in Walnut Creek, Calif., from 9 a.m. to 1 p.m. PDT at the Rossmoor Retirement Community – Gateway Complex located at 1001 Rain Road); Denver (Oct. 10 from 8 a.m. to 12 p.m. MDT at the Tivoli Building – Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150); Cleveland (Oct. 11 in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway); and Miami (Oct. 12 from 9 a.m. to 1 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210).

    Why: Investment fraud losses have been “staggering,” the Justice Department says.

    Since the beginning of 2011, “the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion.”

    Summit Sponsors: Department of Justice, U.S. Attorneys’ offices, the FBI, the SEC, the FTC, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the CFTC, the Bankruptcy Trustees, FINRA, AARP and the Better Business Bureau.

    Top law-enforcement officials will be on hand at each of the summits. See the Justice Department news release for details.

  • Month After Zeek Ponzi Complaint By SEC, ASD Figures (And Zeek Pitchmen) Todd Disner And Dwight Owen Schweitzer Accuse Judge Who Dismissed Their ASD-Related Lawsuit Of ‘Sophistry’; Duo Tries To Reopen Case And Have Judge Removed

    MLM pitchmen and AdSurfDaily figures Todd Disner and Dwight Owen Schweitzer — both of whom went on to become promoters of the alleged Zeek Rewards Ponzi scheme — have accused a federal judge of “sophistry.”

    Sophistry, according to Dictionary.com, means “a subtle, tricky, superficially plausible, but generally fallacious method of reasoning.”

    Disner turned to MLM after his days as a founder of the Quiznos sandwhich franchise. Schweitzer is a former attorney whose license was suspended in Connecticut. Both men live in southern Florida.

    The curious assertion by Disner and Schweitzer against U.S. District Judge Rosemary Collyer appeared on Collyer’s court docket in the District of Columbia on Sept. 17, one month to the day after the SEC alleged in the western District of North Carolina that the Zeek Rewards MLM “program” was a $600 million Ponzi scheme and pyramid fraud that potentially had affected more than 1 million people.

    Senior U.S. District Judge Graham C. Mullen of the western District of North Carolina is presiding over the Zeek case. Kenneth D. Bell is the court-appointed receiver.

    Zeek and ASD are known to have members in common.

    The ASD Ponzi scheme, which collapsed in 2008, affected at least 97,000 people and created at least 9,000 victims, federal prosecutors said.

    Disner and Schweitzer also were pitchmen for ASD, which federal prosecutors in the District of Columbia have described as a $119 million Ponzi scheme marketed MLM-style. The ASD duo sued the United States in November 2011, claiming their records in ASD’s database were private and thus unlawfully seized and accusing federal prosecutors and a U.S. Secret Service agent of presenting a “tissue of lies” when bringing the civil- forfeiture case against $65.8 million in the bank accounts of ASD President Andy Bowdoin in August 2008.

    On Aug. 29, Collyer sentenced Bowdoin to 78 months in federal prison. Bowdoin, 77, pleaded guilty to wire fraud in May 2012, admitting in a statement of offense that ASD was a Ponzi scheme and that his business never operated lawfully from its inception in 2006.

    Collyer dismissed the Disner/Schweitzer complaint on the same day she sentenced Bowdoin.

    But Disner and Schweitzer now claim Bowdoin’s admission “was a necessary part of his plea bargain” with the government. They further assert that Bowdoin’s admission was the “coerced confession of an 80 year old man.”

    In court filings in May, however, Bowdoin said this:

    “I have read this Plea Agreement and discussed it with my attorneys, Michael McDonnell, Esq. and Charles Murray, Esq. I fully understand this Plea Agreement and agree to it without reservation. I do this voluntarily and of my own free will, intending to be legally bound. No threats have been made against me nor am I under the influence of anything that could impede my ability to understand this Plea Agreement fully. I am pleading guilty because I am in fact guilty of the offense(s) identified in this Plea Agreement.” (Italics/bolding added by PP Blog.)

    In the filing docketed Sept. 17, Disner and Schweitzer claim the Secret Service “manufactured” events to ensure that the ASD case was heard by Collyer. Earlier, Disner and Schweitzer advanced a theory that undercover agents who joined ASD in 2008 had a duty to identify themselves to ASD management.

    Even after Bowdoin pleaded guilty in May, Disner and Schweitzer contended that the government’s case was a “house of cards,” according to court filings.

    Disner and Schweitzer now have asked for their lawsuit to be reopened and to have Collyer removed from the case. In ASD-related litigation, Collyer has ordered the forfeiture of more than $80 million.

    The bid by Disner and Schweitzer to have Collyer removed from ASD-related litigation is at least the third. In 2009, purported “sovereign” being Curtis Richmond unsuccessfully sought to have Collyer removed. So did Bowdoin.

    Disner is now involved with purported Zeek Rewards consultant Robert Craddock in an effort to raise money to challenge either the SEC or the court-appointed receiver in the Zeek case.

    Among the early theories advanced by Craddock was that Mullen — the judge in the Zeek case — was playing politics by appointing Bell’s firm as the receiver to enable the firm to gorge itself on fees.

    Both ASD and Zeek were accused of selling unregistered securities as investment contracts. The U.S. Secret Service brought the ASD case, with the SEC bringing the Zeek case.

    The Secret Service confirmed on Aug. 17 that it also was investigating Zeek. The SEC said that, since January 2011, Zeek had “raised more than $600 million from approximately 1 million investors nationwide and overseas by making unregistered offers and sales of
    securities through the ZeekRewards website in the form of Premium Subscriptions
    and VIP Bids.”

    Zeek was an arm of North Carolina-based Rex Venture Group LLC and was operated by Paul R. Burks, the SEC said.

    In their filing accusing Collyer of sophistry, Disner and Schweitzer appear to suggest that Collyer needs a lesson in MLM from purported MLM expert Keith Laggos and MLM attorney Gerald Nehra.

    Laggos, an  SEC defendant in a 2004 case that alleged he issued laudatory press releases without disclosing he was being compensated, is listed in court records as a Zeek consultant. Laggos settled the 2004 SEC case without admitting or denying liability but agreeing to pay more than $30,000, including a $19,500 civil penalty.

    Laggos once opined that ASD was not a Ponzi scheme. Nehra also opined that ASD was not a Ponzi scheme. Richard W. Waak, Nehra’s law partner, is listed in court filings by Zeek as an attorney for the firm.

    Read the Disner/Schweitzer motion to remove Collyer.

    Screen shot of section of motion by ASD figures Todd Disner and Dwight Owen Schweitzer to remove Judge Collyer for alleged "cause."

  • FOR COURT PERSONNEL, ATTORNEYS, INVESTIGATORS: Alberta Judge Analyzes Bizarre Filings By ‘Sovereign Citizens,’ Others; Divorce Case Leads To Extraordinary Dissection Of Various Schemes And Introduces New Term: ‘Organized Pseudolegal Commercial Argument’ (OPCA)

    From time to time over the years, readers have commented that some of the stories published by the PP Blog read like fiction. Did AdSurfDaily Ponzi schemer Andy Bowdoin, for example, really compare the U.S. Secret Service to “Satan” and the 9/11 terrorists?

    The answer is yes. But if the answer weren’t disturbing enough, any number of Bowdoin’s apologists were more than pleased to help the recidivist con man spread his reality-distortion field on the Internet. By the time it was over, purported “sovereign citizen” Kenneth Wayne Leaming was filing false liens against a federal judge, three federal prosecutors and a Secret Service agent who’d had roles in the ASD case, according to the FBI.

    The Blog itself has pointed out that various “defenders” of various bizarre schemes have woven impossible tales — tales that wouldn’t sell as fiction because they require the suspension of too much disbelief.

    If you’re a reporter, you haven’t lived until you’ve been invited to a ribbon-cutting ceremony conducted by the nonexistent “prince” of a nonexistent undersea nation that purportedly sells driver’s licenses for $140.

    Never in human history has fractured thinking been packaged and sold at the scale provided by the Internet. Law enforcement and the courts are facing unprecedented challenges as various litigants and, in some cases, their customers, seek to undermine the authority of judges, prosecutors and police.

    In what the PP Blog believes to be one of the most important pieces of judicial reasoning published in 2012, an Alberta judge overseeing a divorce case and encountering bizarre posturing by one of the parties appears to have coined a new term: “Organized Pseudolegal Commercial Argument” or OPCA for short.

    Court of Queen’s Bench Associate Chief Justice John Rooke used the divorce case as a springboard to discuss some of the bizarre litigation now occurring in Canada and the United States — theories advanced by “sovereign citizens,” for instance. Highlighted below are snippets from the judge’s issuance of a “Reasons for the Decision.” (Bolding added by PP Blog.)

    “These Reasons in many instances identify reported caselaw that comments on OPCA litigants, OPCA gurus, and their misconduct. It should be understood that the reported caselaw is the proverbial tip of the iceberg. The vast majority of encounters between this Court and OPCA litigants are not reported.

    These litigants and their schemes have been encountered in almost all areas of law. They appear in chambers, in criminal proceedings, initiate civil litigation based on illusionary OPCA rights, attempt to evade court and state authority with procedural and defencebased schemes, and interfere with unrelated matters.

    OPCA strategies as brought before this Court have proven disruptive, inflict unnecessary expenses on other parties, and are ultimately harmful to the persons who appear in court and attempt to invoke these vexatious strategies. Because of the nonsense they argue, OPCA litigants are invariably unsuccessful and their positions dismissed, typically without written reasons. Nevertheless, their litigation abuse continues. The growing volume of this kind of vexatious litigation is a reason why these Reasons suggest a strong response to curb this misconduct.”  — Queen’s Bench Associate Chief Justice John Rooke, Sept. 18, 2012

    Did you know that American Uniform Commercial Code (UCC) schemes advanced by vexatious litigants have made their way into Canada?

    And did you know that some individuals advancing such schemes do not seem to understand they are quoting codes and law to Canadian judges that apply only in America?

    Not only do the codes and law not only not apply under Canadian law, they misinterpret the meaning and application of American law.

    But it gets stranger than that: Dennis Larry Meads is a party to the divorce case filed in Alberta and referenced above. To say the case has served up a symphony of the bizzare would be an understatement.

    Meads, for instance, allegedly has instructed Rooke “and the Bank of Canada to use a secret bank account, with the same number as his social insurance number or birth certificate, to pay all his child and spousal support obligations, and provide him $100 billion in precious metals. Mr. Meads has also purported to create various contractual obligations for those who might interact with him, or who write or speak his name.”

    The case has prompted Rooke to dissect some very strange events taking place in Canadian and U.S. courts.

    Theses cases, according to the judge, “often fall into the following descriptions: Detaxers; Freemen or Freemen-on-the-Land; Sovereign Men or Sovereign Citizens; Church of the Ecumenical Redemption International (CERI); Moorish Law; and other labels.”

    At one point in the divorce proceeding, Meads attempted to give an envelope to the judge, but the judge refused, explaining “I refused the envelope, and noted that if the envelope was abandoned then I would put those materials in the garbage. I reassured Mr. Meads that I will apply the laws of Alberta and Canada, and that while he is in Court, he will follow the Court’s rules.

    Mr. Meads’ reply was that was “unacceptable,” and he claimed that the “UCC” is “universal law,” according to the judge.

    As the proceeding continued, according to the judge, Meads accused the court of “enticing me into slavery.”

    Meads went on to insist that “the Bible is the ‘Maximus of Law’” before leaving the courtroom.

    Read the judge’s reasoning and dissection of strange courtroom events in multiple cases.

  • SEC Says Zeek Probe ‘Is Continuing’; Agency Updates Information Page

    UPDATED 10:05 P.M. EDT (U.S.A.) The SEC today updated its information site on the Zeek Rewards Ponzi scheme case, noting its investigation “is continuing” and pointedly adding language that “ZeekRewards and [Paul R.] Burks immediately consented to an asset freeze, the appointment of a receiver over their assets, and the payment of a $4 million penalty.”

    Although the agency gave no specific reason for the update, it occurred against the backdrop of an ongoing effort by Zeek figure Robert Craddock to intervene in the case after collecting donations from individual members of Zeek.

    1.

    Screen shot of section from Google cache. This is how this section of the SEC's Zeek information page looked prior to today's update.

    2.

    Screen shot: The red highlights were added by the PP Blog and show today's change to the SEC's Zeek info site.

    Blogger Jordan Maglich of PonziTracker.com noted yesterday that Craddock reportedly had been subpoenaed to appear before the SEC.

    From PonziTracker (italics added):

    While the SEC did not provide the reason for the subpoena, some have speculated that recent comments attributed by Craddock to the SEC concerning purported admissions of fault in the SEC’s case against Zeek which were later refuted may have piqued the SEC’s interest.

    On Sept. 23, the PP Blog reported that Craddock’s name did not appear on a Sept. 17 list of “EMPLOYEES, OTHER PERSONNEL, ATTORNEYS, ACCOUNTANTS & OTHER AGENTS/CONTRACTORS” submitted by Zeek to Senior U.S. District Judge Graham C. Mullen even though Craddock identified himself in July as a Zeek “consultant.”

    Craddock also was present on separate fundraising calls last month with Todd Disner, a Zeek pitchman and a member of the AdSurfDaily 1-percent-a-day Ponzi scheme, and with T. LeMont Silver. Silver was described on a Zeek website in June as a Zeek “employee.”

    Among other things, Silver was a pitchman for OneX, which federal prosecutors in the District of Columbia described in April as a “fraudulent scheme” and “pyramid” that was cycling money in ASD-like fashion. Jailed ASD Ponzi scheme operator Andy Bowdoin also was a OneX pitchman.

    ASD was a Ponzi scheme that gathered at least $119 million, according to federal prosecutors. Zeek’s business model was very similar to ASD’s business model.

    Zeek was a Ponzi scheme that gathered $600 million, according to the SEC.

    See Sept. 19 PP Blog story.

    Visit the SEC’s Zeek infomation page.

  • UPDATE: 1-Percent-A-Day Ponzi Schemer Andy Bowdoin Of AdSurfDaily In Custody Of U.S. Marshals And On Way To Federal Prison

    Andy Bowdoin's booking photo in the District of Columbia.

    Convicted AdSurfDaily Ponzi schemer Andy Bowdoin is in the custody of the U.S. Marshals Service and is listed “in transit” to a federal detention facility, according to court filings and the Federal Bureau of Prisons website.

    Where Bowdoin, 77, will do his time has not yet been revealed. But a criminal judgment against Bowdoin signed Sept. 21 by U.S. District Judge Rosemary Collyer included a recommendation that Bowdoin be incarcerated “at a Low or Minimum Security facility near Tallahassee,” Fla.

    Bowdoin’s ASD, which purported to pay members 1 percent a day, operated in Quincy, Fla., a short drive from Tallahassee.

    On Aug. 29, Collyer sentenced Bowdoin to 78 months. He pleaded guilty to a Ponzi-related charge of wire fraud in May and admitted ASD was a Ponzi scheme.

    Bowdoin had been held at a jail in the District of Columbia since June 12, the date his bond was revoked after federal prosecutors proffered evidence that he continued to commit crimes after the U.S. Secret Service raided ASD in 2008.

    The Secret Service said last month that it also was investigating Zeek Rewards, another 1-percent-a-day-plus “program.” The SEC has described Zeek as a $600 million Ponzi- and pyramid scheme.

    ASD gathered at least $119 million, according to court filings.

    Zeek and ASD are known to have had members in common.

  • BULLETIN: FTC Says Rent-To-Own Companies Used Software To Spy On Customers In Their Own Homes And At WiFi Spots; Agency’s Complaints Introduce Specter of Private Big Brother

    BULLETIN: In announcing deeply troubling allegations today, the FTC said that seven rent-to-own companies and a software firm spied on customers who leased computers.

    The customers were spied on in their own homes and at WiFi spots, the FTC alleged.

    Although the companies agreed to settle the FTC’s charges, the allegations alone introduce the specter that private businesses that leased computers to financially strapped Americans licensed themselves to go into the spy business, effectively snooping on potentially hundreds of thousands of people and creating a condition under which data could be harvested to track their public movements.

    Software installed on the computers gave the rental companies the ability to take remote screen shots, log keystrokes and, in some instances, use the computer’s installed webcam to snap photos not only of customers, but also of visitors in their homes, the FTC said.

    “An agreement to rent a computer doesn’t give a company license to access consumers’ private emails, bank account information, and medical records, or, even worse, webcam photos of people in the privacy of their own homes,” said FTC Chairman Jon Leibowitz.

    Some of the firms that put themselves in the spy business were “franchisees of Aaron’s, ColorTyme, and Premier Rental Purchase,” the FTC said.

    Named in a series of FTC complaints are software firm DesignerWare LLC and its principals, Timothy Kelly and Ronald P. Koller; Aspen Way Enterprises Inc.; Watershed Development Corp.; Showplace Inc., d/b/a Showplace Rent-to-Own; J.A.G. Rents LLC, d/b/a ColorTyme; Red Zone Inc., d/b/a ColorTyme; B. Stamper Enterprises Inc., d/b/a Premier Rental Purchase; and C.A.L.M. Ventures Inc., d/b/a Premier Rental Purchase.

    From an FTC statement today (italics added):

    DesignerWare’s software contained a “kill switch” the rent-to-own stores could use to disable a computer if it was stolen, or if the renter failed to make timely payments. DesignerWare also had an add-on program known as “Detective Mode” that purportedly helped rent-to-own stores locate rented computers and collect late payments.  DesignerWare’s software also collected data that allowed the rent-to-own operators to secretly track the location of rented computers, and thus the computers’ users.

    When Detective Mode was activated, the software could log key strokes, capture screen shots and take photographs using a computer’s webcam, the FTC alleged.  It also presented a fake software program registration screen that tricked consumers into providing their personal contact information.

    Detailed allegations are laid out in the various complaints — and those details might be enough to make Americans’ skin crawl.

    “Data gathered by DesignerWare and provided to rent-to-own stores using Detective Mode revealed private and confidential details about computer users, such as user names and passwords for email accounts, social media websites, and financial institutions; Social Security numbers; medical records; private emails to doctors; bank and credit card statements; and webcam pictures of children, partially undressed individuals, and intimate activities at home,” the FTC said.

    Customers even were tracked while away from their homes, the FTC charged. From the complaint against DesignerWare (italics/bolding added):

    16. Since at least September 2011, on every computer that has a wireless card
    installed, PC Rental Agent automatically logs the WiFi hotspots that the wireless card either sees or uses to connect to the Internet. When a computer connects to DesignerWare’s servers, it reports the WiFi hotspot location information along with the computer’s IP address.

    17. DesignerWare cross-references the information logged by a rented computer to PC Rental Agent with a publicly available list of WiFi hotspots’ physical locations and provides its licensees with street addresses for the particular WiFi hotspots viewed or accessed by the computer. The information derived from WiFi hotspot contacts can frequently pinpoint a computer’s location to a single building, and, when aggregated, can track the movements and patterns of individual computer users over time. DesignerWare provides its licensees with this location information for the ten most recent reporting cycles. DesignerWare recommends that rent-to-own stores only use this data in connection with recovering stolen property, but it does not monitor, restrict, or otherwise limit its licensees’ access to such location information.

    18. DesignerWare applied its location tracking upgrade of PC Rental Agent to every computer on which PC Rental Agent was installed, without obtaining consent from, or providing notice to, the computers’ renters. After the September 2011 upgrade, in numerous instances PC Rental Agent has been installed on rented computers without the computer renter’s knowledge or consent. Thus, consumers using those computers on which PC Rental Agent is installed – who may or may not be the computers’ renters, and who may or may not be current in their lease payments – do not know that their physical location can be identified from the WiFi hotspots that their computers encounter. Nor do they know that employees of the rent-to-own stores from which their computers are rented can monitor their physical locations and the patterns of their movements.

    The software also gave the rental companies the ability to dupe people into filling out a form when a “fake registration window” appeared on the computer screens, the FTC charged.

    Customers, according to the FTC complaint against Watershed, for example, saw a screen that claimed their computer did not contain an “activated” copy of Microsoft Windows.

    “No actual software is registered as a result of a consumer providing the requested information,” the FTC charged. “Instead, Detective Mode captures the information entered in the prompt boxes and sends the data to Watershed. In numerous instances, Watershed has used this information to find, require payment for, or repossess a computer.”

    Read the FTC’s extraordinary statement and see links to the complaints by clicking here.

  • EDITORIAL: On Threats, Reporting On An Unprecedented Crime Wave — And A Disappearing Cloud Tag In The Age Of Epic White-Collar Fraud

    EDITOR’S NOTE: On Friday, the PP Blog was informed by the Washington State Department of Financial Institutions that it wanted the Blog to remove its “tag.”

    This editorial describes the PP Blog’s thoughts on the matter.

    ** _____ **

    Containing HYIP fraud schemes and online crime in the Information Age is a daunting challenge. There definitely is an element of whack-a-mole. As soon as law enforcement takes action against one scheme, a new one rises to replace it. The schemes often operate across borders, making the challenge even more daunting.

    There can be no doubt that these schemes pose a threat to both economic security and national and international security. The mass marketing of criminal schemes is a recipe for anarchy and puts the legitimate marketplace at risk.

    If you’re a reporter or Blogger covering online fraud schemes, it’s a safe bet your site soon will be lined with “comments” in “support” of the schemes. Once you wrap your brain around the mind-bending reality that Ponzi schemes actually have “defenders,” you shouldn’t be surprised if you end up spending more time performing maintenance chores on your site and less time reporting on scams.

    That’s exactly what the scammers want, of course. And they might not stop with simple distractions.

    Some of the chores will be garden-variety — pruning spam and sales pitches for follow-up- scams, for instance. It will be some of the most disingenuous drivel you’ll ever read. You perhaps will notice right away that the “offers” for the emerging “program” will be very similar to the “offers” for the just-collapsed “program” — and that the emerging “program” itself will be very similar to the just-collapsed “program.”

    But if your site has been around long enough — and the PP Blog has been around long enough — you perhaps will notice that some of the “comments” you receive will be deeply disturbing and will go far beyond an amateur bid to sanitize a fraud scheme as a legitimate business.

    Some individuals “defending” a scam will use menacing language. Their would-be “comments” will include direct or veiled threats. Some of them will plant the seed that somebody might just die if you keep reporting on fraud schemes. That “somebody” just might be you or a family member, they’ll imply. Sometimes they’ll state it plainly.

    Last month the PP Blog reported two specific threats to the U.S. law-enforcement agency that handles such things. These threats weren’t directed at me. Rather, individuals who tried to post here directed them at others.

    For security reasons, I won’t get into the details about who was threatened and what was said. In a general sense, I’ll say that it’s not very smart to use this Blog in a bid to convey threats.

    And it is foolish beyond measure to plant the seed that you’re the type of person who might be involved with a group that’s talking about carrying out political assassinations — you know, because you perceive the individuals you reference in your would-be posts to be enemies of what you view as “free enterprise” and what people who understand mathematics and serialized criminality view as five-alarm fraud schemes.

    This Blog operates in a constant environment of threats. Regardless, it tries not to complain too much about things that go on behind the scenes. The news is that scammers are using the Internet to plunder residents of town after town, city after city, country after country. Our focus is to bring to public attention the greatest white-collar fraud epidemic in history. Some of the stories wouldn’t sell as fiction because they require the suspension of too much disbelief — but they nevertheless are very, very real.

    Now, to the purpose of this post . . .

    This Blog is widely read by law enforcement, which uses it for the purposes of research. One of the most important parts of the Blog is its cloud tags. The Blog uses a WordPress widget that tracks certain keywords. The more mentions a certain keyword gets, the greater its size becomes in our sidebar widget. The graphic (above/left) is a screen shot of our cloud tags as they exist today in the sidebar.

    By looking at the screen shot, you’ll see that, as of today, electronic Ponzi schemer Andy Bowdoin has been referenced on the PP Blog more than brick-and-mortar Ponzi schemer Bernard Madoff. You’ll also see the name of Kenneth Wayne Leaming, the Washington state resident and purported “sovereign citizen” now jailed at a federal facility near Seattle on charges of targeting public officials in harassment campaigns.

    You’ll also see that law-enforcement agencies get prominent play on this Blog. As of the time of this post, if a reader clicks on the tag for the SEC, they’ll see what is depicted in the screen shot directly below. (Editorial continues below screen shot.)

    The tags — along with the Blog’s search form — put a lot of information in a common area. As of today, the PP Blog has an archive that includes nearly 1,800 stories. Hundreds and hundreds of thousands of words appear on the Blog, along with thousands of links to information sources both internal and external. Tags and the search function help readers get to what they want to see faster.

    In no small measure, the tags and the text snippets and included links tell the story of these very troubled times — and what law enforcement is doing to restore order after the U.S. capital markets almost tanked in 2008. This Blog has used WordPress for nearly four years. Never once has it received a complaint about its tags.

    Until Friday.

    Today I am reluctantly reporting that a regulatory agency that should know better and apparently understands neither WordPress nor the Internet in the era of epic white-collar fraud contacted the PP Blog and asked that its tag be removed.

    I could hardly believe my eyes.

    “This blog is not the DFI archives nor is it affiliated with the Washington State regulatory agency the Department of Financial Institutions,” the Washington State Department of Financial Institutions wrote on Friday. “You are welcome to link to items from our site, but the statement currently on your blog page is misleading.”

    And just what allegedly was “misleading?” Why, our single-entry tag for the Washington State Department of Financial Institutions (DFI). DFI apparently believes the Blog’s automatically generated tag line that reads “You are browsing the archives of ‘Washington State Department of Financial Institutions’” could cause readers to mistakenly conclude they are on DFI’s website, not the PP Blog.

    DFI got a mention on the PP Blog on Thursday, and we created a tag for the agency. The CFTC, which stressed cooperation among agencies when it announced the case against an alleged $53 million Forex fraud operating across national borders, thanked DFI and several other agencies (both domestic and international) for their cooperation. We thought that noteworthy, so we referenced all of the agencies in our story.

    But our tag on DFI is “misleading,” the agency says.

    “Please remove the info-box on your site,” the agency says.

    Friends, I have to tell you that I was stunned. Both individuals and criminal organizations are stealing money by the tens of millions now. As Gregg Evans has pointed out repeatedly, traditional bank robbery with guns and masked intruders is largely going out of style because it’s “safer” to steal even greater sums of money on the Internet.

    This Blog exists to expose that fraud. It is here 24/7/365, and it is sustained only by the goodwill of small handful of individuals. The Blog is hanging by a prayer — even as criminals send taunts and menacing communications and threats.

    We are honored that the law-enforcement community comes here constantly to read about what’s going on “out there” during these deeply troubling times. The threat to law and order never has been greater. “Sovereign citizens,” for example, are filing bogus liens against public officials, threatening judges — and holding “seminars” to teach others how to become anarchists.

    One of the places “sovereign citizens” are operating is Washington state, DFI’s home state. This Blog also maintains a “sovereign citizens” tag.

    It is darned hard to get bad press on the PP Blog if you’re an agency engaged in the worldwide fight against fraud. But DFI is getting some today. Fortunes are being stolen worldwide. Bogus liens are being filed against public officials. Reporters are being menaced by cyberstalkers who are running interference for criminals — and DFI wants to complain about a tag that serves the public interest and creates confusion only in Bureacratic La-La Land.

    Get a clue, DFI. Your tag, though, now has been removed at your request — and it is a stupefying loss for the public.

    Here, for posterity, is a screen shot of the “tag” DFI complained about:

     

     

  • ZEEK: Part Of The Backstory — In Pictures

    UPDATED 4:20 P.M. EDT (U.S.A.) Unsolved mysteries remain in the Zeek Rewards Ponzi scheme case. Among the unanswered questions are these:

    • How many members did Zeek have in common with AdSurfDaily, a predecessor 1-percent-a-day scam to the Zeek scheme?
    • Why do some Zeek “defenders” appear to be engaged in bizarre bids to harass and menace Zeek critics?
    • Why did Zeek list certain ASD members or story figures as employees on its website — and why does some of the employee information published on Zeek’s website in June appear to be at odds with employee information contained in court filings by Zeek last week?
    • How much connectivity did Zeek have with scams such as NarcThatCar, AdViewGlobal, OneX and JSSTripler/JustBeenPaid, a “program” that may have ties to the “sovereign citizens” movement?

    On June 7, the PP Blog reported that a Zeek Rewards MLM “program” website was listing the names of 16 Zeek “employees,” including the name of Terralynn Hoy, a mainstay in the AdSurfDaily Ponzi scheme story. Also included was the name of OH Brown, an executive at a company (USHBB Inc.) that produced ads for the NarcThatCar pyramid scheme. This information is reflected in screen shots Nos. 1 and 2. Notes by the PP Blog also are included.

    Hoy participated in at least one conference call for Zeek, as did Brown. Zeek’s 1-percent-a-day-plus business model was very similar to the business model of ASD, which the U.S. Secret Service described in 2008 as a massive online Ponzi scheme that had gathered tens of millions of dollars. Zeek launched after the collapse of ASD and had members and/or figures in common with ASD and AdViewGlobal, a collapsed 1-percent-a-day “program” federal prosecutors linked in April 2012 to ASD.

    1.

     

    2.

    ADDITIONAL NOTES: T. LeMont Silver, identified by Zeek in June as an employee, also was a pitchman for “OneX.” In April, federal prosecutors in the District of Columbia described OneX as a “fraudulent scheme” and “pyramid” that was recycling money in AdSurfDaily-like fashion. ASD was a $119 million Ponzi scheme operated by the now-jailed Andy Bowdoin, who also was a OneX pitchman.

    Among Silver’s OneX claims was that OneX positions being given away were worth $5,000. Bowdoin declared OneX an excellent “program” for college students.

    Even though Zeek claimed Silver, Hoy, Catherine Parker, Brown, Trudy Gilmond and Marie Young Cain as “employees” in June, they are not referenced as “EMPLOYEES, OTHER PERSONNEL, ATTORNEYS, ACCOUNTANTS & OTHER AGENTS/CONTRACTORS” in a Sept. 17 court filing by Rex Venture Group LLC/Zeek operator Paul R. Burks.

    Also absent from Burks’ Sept. 17 list of Rex/Zeek employees/contractors is Robert Craddock, who identified himself in July as a Rex “consultant.” In July, prior to the SEC’s Ponzi allegations against Zeek, Craddock sought to disable the Hub of Zeek critic “K. Chang” by filing a complaint for purported copyright/trademark infringement and libel with HubPages.com. Craddock was successful briefly, but HubPages eventually restored the “K. Chang” Hub. Craddock later became involved in a purported effort to raise funds to “protect” Zeek affiliates from the SEC and/or the court-appointed receiver in the Zeek Ponzi case.

    Gilmond once pitched Regenesis2x2, a “program” that became the subject of a U.S. Secret Service investigation in 2009. The Secret Service also is investigating Zeek. The SEC described Zeek last month as a $600 million Ponzi- and pyramid scheme.

    Precisely how and when Rex/Zeek hired or replaced/dismissed employees is unclear. The names of a number of individuals listed by Zeek as employees in June do not appear on the list Burks filed in court last week.

    NarcThatCar effectively collapsed in 2010, after coming under scrutiny by the Better Business Bureau and investigative reporters. Narc operated from Texas — and yet did part of its banking in North Carolina at one of the banks used by Zeek. Both Narc and Zeek used USHBB Inc. to produce ads for their respective “programs.” Both Narc and Zeek scored “F” grades with the BBB — and when the BBB published negative information about the respective “programs,” some affiliates of the respective “programs” claimed the BBB was a fraud.

    Zeek ‘Defender’ Stalks PP Blog, Starts Disinformation Site After HubPages Restores ‘K. Chang’ Site Targeted By Craddock

    The PP Blog is reporting today that, after the SEC described Zeek as a $600 million fraud and after HubPages restored the “K. Chang” Hub critical of Zeek and targeted by Craddock, a purported Zeek “defender” used the Internet repeatedly to send harassing communications to the PP Blog. Dated Aug. 28, one such communication was an announcement that the PP Blog and “K. Chang” had been targeted in a retaliation campaign for their respective reporting on Zeek.

    3.

    4.

    The Blog’s stalker created more than a dozen bogus usernames and email addresses to send harassing (and bizarre) communications to the PP Blog.

    Here is one from Aug. 31 (italics added):

    Watch out for the Romney lover namely KSChang!!!! He was saw holding hands with Mitt, caressing the presidential candidate, while surfing PatrickP’s amazing, smart, funny, and romantic blog.

    Mitt Romney is the Republican nominee for President of the United States.

    For reasons that remain known only to the PP Blog’s cyberstalker, the individual also sent a one-word harassing communication — “Pussy” — to the thread below this Aug. 29 PP Blog guest column by Gregg Evans. Separately, the cyberstalker sent a communication that planted the seed Evans would get sued for his Aug. 29 PP Blog column.

    “Are you willing go toe to toe with a lawyer on your claims and back up this article?” the cyberstalker wrote.

    On Aug. 31, the cyberstalker — who’d been banned under multiple identities — sent this harassing communication to the PP Blog:

    “What happened to your face dude, looks like you got ran over by an ugly truck.”