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  • [DONATION POST]: PP Blog At Brink Again As May Approaches (And Publication Passes 1,600-Post Milestone)

    With May approaching , the PP Blog once again is at the edge of an abyss. In July 2011, the Blog enabled a donation button. We’ve stayed online to fight the good fight — thanks to readers.

    As was the case last month, key bills are coming due and core essentials are in short supply. It is never easy to pass the hat. But with the state of publishing, pass it we must.

    Our current editorial well consists of 1,620 posts, including 137 through the first 116 days of 2012. It is our hope there will be many more in the days, weeks and months ahead.

    Patrick

  • MOST UN-‘WISE’: 2 Ponzi Schemers Ride Their Wordplay To Prison Sentences Totaling More Than 33 Years; Judge Declares Crime ‘Evil’

    “Defendant Trebor Company (Robert spelled backward) is a sole proprietorship owned by [Robert C. Brown Jr.] and is the name he has used for his ‘investment group.’” — U.S. Securities and Exchange Commission, in civil complaint against Trebor and Brown, July 23, 2008

    “Evidence at trial established that much of the investor money was funneled through the ‘WISE’ account (wise investors simply excel) opened by Duane Allen Eddings.” — Office of U.S. Attorney Benjamin B. Wagner of the Eastern District of California, April 24, 2012

    It was a Ponzi scheme involving a purported expert, a shill and at least $17 million — and it featured wordplay: A business entity known as TREBOR got its name from spelling “Robert” backward, and WISE was a limited-liability company that stood for Wise Investors Simply Excel. Now, TREBORS’s namesake Robert C. Brown Jr., 59, of Vallejo, Calif., has been sentenced to 15 years and eight months in federal prison.

    Meanwhile, Duane Allen Eddings, 52, of San Francisco, has been sentenced to 17 years and six months. Federal prosecutors said Ponzi cash was funneled through a WISE account he opened, setting the stage for money-laundering to occur through an account Eddings controlled in the  name of CDC Global Inc. He is listed in records as the managing member of WISE, and prosecutors said he effectively was shilling for Brown by painting him as a stock-market “expert.”

    Eddings was found guilty by a jury last year on Ponzi-related charges of money-laundering, wire fraud, bankruptcy fraud and tax evasion. Ponzi colleague Brown pleaded guilty to wire fraud.

    In bringing a civil action in 2008, the SEC said investors believed Brown would invest their money in the stock market. But most of the funds never were invested.

    Instead, “Brown deposited investors’ money into accounts that he treated like personal piggy banks, using the money to pay for luxurious personal expenses such as upkeep on his Ferrari, limousine services, and expensive shopping trips with his girlfriend,” the SEC alleged in 2008.

    After the SEC brought its 2008 civil case, Brown and Eddings were charged criminally in 2009. The investigation that led to the charges was conducted by the U.S. Postal Inspection Service and IRS-Criminal Investigation.

    False statements and omitted details critical to prudent investment decisions were part of the Brown/Eddings scam, prosecutors charged.

    Eddings showcased his wealth to investors, claiming Brown was the “expert” who made it possible, prosecutors said.

    As the probe moved forward, however, investigators discovered that Eddings had invested only $1,000 with Brown and had been using investor cash to live the high life by funneling client money that did not belong to him through WISE — and then transferring it to the CDC Global account to make personal purchases.

    “In sentencing Brown, [U.S. District Judge John A. Mendez] expressed sympathy to the victims stating, ‘This is a crime among the worst that I see,’” prosecutors said.  “And he said that what Brown had done to his victims was ‘evil.’ Judge Mendez later said that this comment applied equally to Eddings. He further said that he was not convinced that the defendants were ‘no longer a danger to the public.’”

    About 400 victims were defrauded by the Brown/Eddings Ponzi, which operated between September 2005 and May 2007, prosecutors said.

    Making matters worse was that Brown and Eddings “encouraged investors to raise additional funds by taking out mortgages and home equity lines of credit on their homes,” prosecutors said.

    “Many” investors lost their homes, prosecutors said.

    In reverse-engineering the complex caper involving Brown and Eddings, investigators discovered that “Edding’s personal spending habits led to the collapse of the Ponzi scheme” and that Eddings had grossly understated his taxable income during one of Ponzi years and claimed to have a taxable income of zero during two of the years.

    Some of the Ponzi money went to “lulling payments to earlier investors” in a failed bid to keep the scheme afloat and prevent its detection, prosecutors said.

    “It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit,” said Marcus Williams, special agent in charge of the IRS Criminal Investigation Unit.

    Postal Inspector Oscar Villanueva described the Brown/Eddings scheme as “complex.”

    “Fraud schemes like the one perpetrated in this case are devastating to victims,” said U.S. Attorney Benjamin B. Wagner.

  • UPDATE: 3 Women Sentenced To Jail For Ponzi Swindle In California; Scam Involved Bogus ‘Milk’ Sales To Disneyland And Allegedly Targeted Parents Of School Children

    The three Ponzi schemers who duped investors in a scam in which milk purportedly would be sold to Disneyland. The "opportunity" was targeted in part at PTA members in Greater Los Angeles. Photo source: Los Angeles County District Attorney's Office via the Los Angeles County Sheriff's Department.

    The three California women who hatched a Ponzi scheme involving purportedly “exclusive” milk sales to Disneyland and allegedly recruited investors  from the ranks of local PTA members at an elementary school in the Los Angeles region now have been sentenced to jail terms. (PTA stands for Parent-Teacher Association.)

    The PP Blog first reported on Maricela Barajas, 42, Juliana Menefee, 51, and Eva Perez, 52, here.

    Barajas also is known as Maricela Torres.

    Authorities identified Perez as the “ringleader” of the fraud. She was ordered to pay more than $1 million in restitution and handed combined prison sentences in two counties totaling 13 years.

    Barajas and Menefee each pleaded no contest, according to Los Angeles County District Attorney’s Office. Each was sentenced to three years in state prison. The sentences will be served at the county jail, prosecutors said.

    Both Barajas and Menefee also were ordered to make restitution that totals a combined $590,000.

    Deputy District Attorney James Belna of the Major Fraud Division said all three women told victims that they were investing in a contract with the Alta Dena Dairy to sell milk exclusively to Disneyland.

    More than 30 people from throughout Los Angeles County invested between $2,000 to $100,000 with the three women and were promised extraordinary rates of return, Belna said.

    The Ponzi scheme, which also reached into San Bernardino County, operated between June 2008 and August 2010. Perez was sentenced to 10 years in prison after pleading guilty to her role in San Bernardino, and was sentenced to an additional three years in Los Angeles County after pleading no contest.

    Those sentences will be served consecutively, prosecutors said.

    Investigators from the Commercial Crimes Bureau of the Los Angeles County Sheriff’s Department did the legwork on the fraud inside the county’s borders, prosecutors said.

    As the Ponzi was unraveling and payments stopped, the scammers “organized informational meetings, and attempted to pacify investors by explaining the delays in payment were a result of an internal audit of the business,” investigators said last year.

    It is somewhat common for Ponzi scammers to claim payments have been delayed by audits.

    Barajas and Menefee were described by investigators as Ponzi pitchwomen who defrauded seven investors.  All in all, more than 30 people from within Los Angeles County got scammed.

  • INCREDIBLE! SEC Says Recidivist Huckster And Felon Allen E. Weintraub Is Scamming Again — This Time With Purported Facebook Shares; Court Grants Asset Freeze And Agency Publishes Phone Number To Take Complaints

    Allen E. Weintraub

    BULLETIN: The SEC is tackling another bizarre securities-fraud case in which the alleged elements read like fiction. In May 2011, the agency charged Allen E. Weintraub of Aventura, Fla., in a bogus “tender offer” caper in which he fraudulently claimed to have backers to purchase (for purported billions of dollars) Eastman Kodak Co. and AMR Corp., the parent company of American Airlines.

    Weintraub, who declared bankruptcy in 2007, submitted the bogus tender offers while he was on probation for two felony counts of organized fraud and one felony count of money-laundering, the agency charged.

    If that weren’t enough, the offers were submitted through a dissolved shell company known as Sterling Global Holdings while Weintraub was coming off a 2008 mortgage foreclosure. His criminal record dates back at least to 1992, according to records.

    Weintraub and Sterling Global were ordered in January 2012 to pay civil fines totaling $400,000 for the bizarre Kodak/AMR takeover fraud — and Weintraub once again was enjoined from violating federal securities laws. The January order followed a 2002 order in which Weintraub was banned from being an officer or director of a public company as a result of a previous scam, according to records.

    Alleged New Weintraub Fraud Emerges

    Now — incredibly — the SEC says Weintraub is presiding over yet-another fraud, this one involving the use of the alias “William Lewis” and three companies: Private Stock Transfer Inc., PST Investments III Inc. and World Financial Solutions.

    The latest scam involve the selling of “worthless shares” in an enterprise known as “PST Investments,” with Weintraub claiming he could arrange for customers to get pre-IPO shares of Facebook. The IPO scam operated at least in part through a website styled PrivateStockTransfer.com, the SEC alleged.

    As part of an emergency order and asset freeze, a federal judge has ordered the site taken offline. It was serving a blank page this morning, but Google cache suggests the site was active at least through April 10. The April 10 cache entry shows the logos of Twitter and Facebook, which potentially means that Weintraub was using two social media-platforms, including Facebook, to commit fraud against Facebook and possibly Twitter.

    Various government agencies have warned about social-networking fraud.

    Here is how the Google cache for the landing page of PrivateStockTransfer.com read (in part) on April 10 (italics added):

    Welcome to the leading company in PRIVATE STOCK buying and selling of the hottest PRIVATE COMPANIES. In the past only celebrities and big funds were invited to purchase shares in the hottest PRE-IPO companies. Today any accredited investor can have that opportunity as well. Today you can own stock in FACEBOOK, TWITTER, and other explosive pre-ipo companies.

    If you currently own stock in these companies and want to sell, Private Stock Transfer, can match you up to waiting buyers. No need to wait for the IPO to cash out. Today there is a Market for your Private Stock, and buyers waiting to buy.

    Another page on the site read (in part) on April 2 as follows, according to Google cache (italics added):

    FACEBOOK STOCK

    Currently available: April 1-30, 2012 or until sold

    100,000 Shares of common stock, PRICED at $38.00 a share and a minimum investment of 3,000 shares

    The April 2 page, according to the Google cache, asserted the offer was a “private placement” and, despite the offer of a specific number of shares and a “minimum investment” of 3,000 shares, asserted that “None of the information displayed represents a public offer to buy or sell any securities.”

    Regulators long have warned that scammers engage in wordplay and publish disclaimers to disguise the fraudulent sale of securities.

    Registration data for the domain shows it was registered to “bill lewis” of Tampa. The street address used in the domain registration appears to be the address of an office complex in Tampa that has a video-conferencing center among its amenities. The website was registered on Oct. 3, 2011, about five months after the SEC brought the “tender-offer” fraud case against Weintraub.

    As part of its latest Weintraub probe, the SEC has published the phone number and name of a specific senior attorney — and is asking the public for help.

    “The Division of Enforcement urges anyone who believes that Allen Weintraub may have recently defrauded them to contact John Rossetti, Senior Counsel, at 202-551-4819,” the agency announced — in bold type.

  • UPDATE: John Chiyuan Lee, Scammer Whose Case Shattered Ponzi-Board Myth, Sentenced To California State Prison And Ordered To Make Restitution

    John Chiyuan Lee

    In fleeing to Thailand, becoming a fugitive listed by INTERPOL and leaving dozens of U.S. victims in his wake when his Ponzi scheme collapsed, John Chiyuan Lee shattered the Ponzi-forum myth that “offshore equals safe.”

    “Safe — for a while while INTERPOL is beaming your picture 24/7 and U.S. authorities at the local, state and national level are on your trail” — might be more accurate

    Los Angeles County Sheriff’s Det. Simeon Plyler tracked Lee to Thailand, and U.S. Immigration and Custom Enforcement (ICE) and the U.S. Marshals Service worked with the sheriff’s office and Thailand’s government to locate and arrest the fugitive.

    He was found last year in Pataya, Thailand. U.S. Marshals brought him back to the United States to face justice.

    Lee, 40 at the time of his arrest, now has accepted responsibility for his crimes and accepted an early plea deal in Los Angeles Superior Court that includes a six-year sentence in California state prison and a restitution order of about $1.5 million, the Sheriff’s Department announced yesterday.

  • URGENT >> BULLETIN >> MOVING: JSS Tripler Banned By Italian Securities Regulator CONSOB; ‘Marketing The Offering’ Is ‘Prohibited,’ Agency Announces

    URGENT >> BULLETIN >> MOVING: CONSOB, the Italian securities regulator, has banned promos for JSS Tripler, the purported arm of a “program” known as JustBeenPaid that has advertised a daily return of 2 percent and a monthly return of 60 percent.

    In an English translation on CONSOB’s website this morning, the regulator described JSS Tripler as an “investment programme” and named an individual promoter. The wording may have global significance because it suggests that the Italian government views JSS Tripler as a venture that is offering unregistered securities through unregistered brokers.

    “Opportunities” similar to JSS Tripler/JustBeenPaid have triggered both civil and criminal prosecutions in the United States.

    Here is what CONSOB published in English:

    “In accordance with Art. 101, section 4, letter c) of Italian Legislative Decree no. 58/1998 (the “Consolidated Law on Finance”), Consob has prohibited marketing the offering to the public of the investment programme named JSS Tripler, implemented by Mauro Messina through the website http://gruppounitoworld.com and, in accordance with Art. 101, section 4, letter b) of the Consolidated Law on Finance, suspended for a further thirty-day period, marketing the offer to the public of the investment programmes named JSS Tripler, RicoChet Riches, System Explosion and Macro Trade implemented through the website < http://vizconsigli.com (resolutions nos. 18178 and 18179 of 18 April 2012).

    The marketing activities in question had previously been subject to a 90-day suspension under resolutions 18075 and 18076 of 20 January 2012 (see “Consob Informs” no. 4/2012).

    (In Consob Informa n. 17/12 – 23 April 2012)

    JSS Tripler-related claims first came under the CONSOB lens in January.

    In online conference calls, Frederick Mann — JSS/JBP’s purported operator — has declined to identity the purported opportunity with a nation-state. At least one website linked to Mann showcases content about a purported “sovereign citizen” under indictment in Alaska in an alleged murder plot targeting public officials.

    Link to CONSOB’s English translation.

  • RECOMMENDED READING: Prospective Class Action Against Accused Ponzi Schemer Ephren W. Taylor II Names Alleged Facilitators And Raises Specter Of Crime Spigot Involving ‘Self-Directed’ IRAs

    This cash came from the Trevor Cook Ponzi scheme and was stashed, according to filings in the civil case against Cook. Cook is serving a 25-year-sentence in federal prison. Photo source: Court records.

    EDITOR’S NOTE: As America’s fraud plague continues, some of the scammers are polluting the free market with incongruous and even bizarre schemes  — even as they purport to represent the best that freedom offers.

    The PP Blog highly recommends that readers check out this September 2011 document from the SEC that warns about scammers targeting holders of self-directed IRAs. Reading the document may help improve your understanding of the story below. There are differences between IRAs (emphasis added below): 

    “An Individual Retirement Account (IRA) is a form of retirement account that provides investors with certain tax benefits for retirement savings,” the SEC says. “Some common examples of IRAs used by investors include the traditional IRA, Roth IRA, Simplified Employee Pension (SEP) IRA, and Savings Incentive Match Plan for Employees (SIMPLE) IRA. All IRA accounts are held for investors by custodians or trustees. These may include banks, trust companies, or any other entity approved by the Internal Revenue Service (IRS) to act as a trustee or custodian.

    “A self-directed IRA is an IRA held by a trustee or custodian that permits investment in a broader set of assets than is permitted by most IRA custodians,” the SEC continues. “Most IRA custodians are banks and broker-dealers that limit the holdings in IRA accounts to firm-approved stocks, bonds, mutual funds and CDs.

    “Custodians and trustees for self-directed IRAs, however, may allow investors to invest retirement funds in other types of assets such as real estate, promissory notes, tax lien certificates, and private placement securities. While self-directed IRAs may offer investors access to an array of private investment opportunities that are not available through other IRA providers, investments in these kinds of assets may have unique risks that investors should consider. Those risks can include a lack of disclosure and liquidity — as well as the risk of fraud.”

    Here, now, a story about how holders of self-directed IRAs allegedly had their pockets picked . . .

    There’s Trevor Cook, who’s doing 25 years for his massive Minnesota Ponzi caper aimed at Christians, even as the trial of three of his accused colleagues is getting under way. Then there’s Kurt Barton, who’s doing 17 years for his Texas fraud scheme that also targeted people of faith and was described by the FBI as a robbery that took place without the aid of a gun.

    Meanwhile, there’s William Wise, a onetime international fugitive charged in California with a massive Ponzi scheme centering on offshore CDs. (Wise surrendered earlier this week.) And then there’s Robert Stinson Jr., the Pennsylvania Ponzi swindler now doing more than 33 years for his “Life’s Good” scam. (The FBI said he was wiring money even as a raid was under way.)

    And who could forget Californian Daniel C.S. Powell, implicated by the SEC in a life-settlement scam? (The venture became known as “Christian Stanley,” and its website traded on the name of former President Bill Clinton.)

    Then there’s Chris Cornett, implicated by the CFTC in a Forex swindle.

    Here’s why these names are important: All of these individuals — and more — are listed as scammers or alleged scammers in a proposed class-action lawsuit against Ephren W. Taylor II, now implicated by the SEC in a massive Ponzi swindle known as “City Capital.” The alleged City Capital targets were  people of faith.

    Though not defendants in the Taylor/City Capital lawsuit, the other alleged (or proven) scammers all had something in common beyond their abilities to separate people from their money, according to the complaint: complicit bankers and/or a means of plowing customers’ money from self-directed IRAs (SDIRAs) into their fraud schemes.

    SDIRAs are sold as freedom-celebrating devices that encourage personal responsibility and permit their holders to be more flexible in their investment choices. By law, the accounts are held by a custodian or trustee. Even so, sharks allegedly swim in these waters — and the worst of the worst may deny they have any duties to their customers and may be turning a blind eye to fraud schemes as a means of keeping a fee-generating, steady supply of fresh meat and blood in the water.

    “I am encouraging our plaintiffs to raise their voices and to make their legislators and regulators aware of how Ponzi schemes continue to be perpetrated through the use of self-directed IRA investment vehicles,” said Cathy Lerman of Cathy Jackson Lerman PA, one of the firms involved the prospective class action.

    Other attorney/firms involved in the litigation include California local trial counsel David Dorenfeld of Snyder Dorenfeld LLP; Michael W. Brown, an associate at Snyder Dorenfeld; and Jim Gitkin, principal of Salpeter Gitken LLP.

    Among the defendants named in the Taylor class action are Bank of America; Missouri Bank and Trust of Kansas City; Equity Trust Corp. of Ohio (an SDIRA provider); Entrust New Direction IRA Inc. of Colorado; The Entrust Group of California (an SDIRA provider); Entrust Administration Inc. of California; and Sunwest Trust Inc. of New Mexico. Other defendants also are named, and there is an allegation that Taylor used as many as 50 shell companies as part of his long-running fraud.

    A separate proposed class action has been filed against SDIRA providers named in the Taylor class action. That lawsuit alleges that as much as $94 billion may be tied up in SDIRAs nationwide, suggesting that fresh meat and blood could churn in the waters indefinitely.

    In effect, the lawyers are arguing that SDIRAs, which are lightly regulated or not regulated at all, have become the tools of criminals and are being used to separate investors from their money in one scam after another. Unlike traditional IRAs, SDIRA vessels may end up steering vast sums of cash into “opportunities” that not only may be exceptionally risky, but also may be downright crazy — such as Taylor’s purported “sweeps machines.”

    The Taylor lawsuit, for instance, argues that African American Christians effectively found themselves owning machines used in illegal gambling parlors and that churches that had invited Taylor to speak also got swept into incongruous schemes.

    Liberty City Church of Christ in Miami lost $100,000, owing to Taylor’s scams, the lawsuit contends. William Lee of Raleigh, N.C., got duped of $160,000 because Taylor and associates caused him to believe he was making a “socially conscious” investment that would help the public at large while at once resulting in an individual profit.

    The same thing happened to Gennet Thompson of Delray Beach, Fla. Thompson entrusted $17,200 to Taylor in one “opportunity” and $10,500 in another, according to the complaint.

    Trudy Morgan of Lithonia, Ga, had a similar experience — one that sucked away $30,000, according to the complaint.

    Read the complaint against Taylor, the banks and the SIDRAs.

     

  • Husband And Wife (And Purported ‘Sovereign Citizens’) Jailed In Georgia; Edgar Lee Rodgers And Diane Rowe Charged With Racketeering Amid Allegations They Tried To Sell Homes That Did Not Belong To Them

    Edgar Rodgers And Diane Rowe: Source: Booking photos at Fulton County Jail.

    Bond has been set at a combined $130,000 for a Georgia couple arrested Thursday by Atlanta police on charges they tried to sell homes that did not belong to them in an alleged paperwork scam involving bogus courthouse filings.

    In recent years, Georgia has been near the top of the list in both bank failures and foreclosures. A number of scams have evolved, including “squatters” divining themselves a right to sell or move into homes that do not belong to them and foreclosure-rescue schemes in which foreclosure subjects are told they can remain in their homes by paying “rent” to purported third-party deed-holders who somehow whisked ownership rights away from banks.

    Bond for Edgar Lee Rodgers was set at $85,000, according to the Fulton County Sheriff’s Office. Meanwhile, bond for Diane Rowe was set at $45,000.  Both Rodgers and Rowe — purported “sovereign citizens” — are detained at the Fulton County Jail.

    Rodgers has been charged with a single count of racketeering and five counts of theft by deception. His wife was charged with one count of racketeering and one count of theft by deception.

    Here is how the Atlanta Journal Constitution put it in a story yesterday:

    “Edgar Lee Rodgers and Diane Rowe are accused of filing false adverse possession documents — essentially claiming squatters’ rights — to homes that were vacant, likely due to foreclosure.”

    Also see coverage at CBS Atlanta, which quoted Atlanta Police Sgt. Paul Cooper on the arrest of the couple.

    View video report at WXIA (11Alive).

  • BULLETIN: SEC Says British Twin Brothers Started ‘Pump And Dump’ Fraud As Teens And Pushed Fake ‘Stock-Picking Robot’; Combined Scams Allegedly Generated Millions

    BULLETIN: The SEC has gone to federal court in New York, alleging that 20-year-old British twin brothers Thomas Edward Hunter and Alexander John Hunter started an elaborate online fraud scheme when they were 16 and netted millions of dollars.

    At least three Hunter websites were involved in the fraud, according to the SEC: DoublingStocks.com, DayTradingRobot.com and EquityPromoter.com. The EquityPromoter site allegedly was a stock-touting site that fueled the fraud.

    Part of the alleged pump-and-dump scam centered on a fake “stock-picking robot” dubbed “Marl,” which purportedly chose stocks that would double in price, featured “evolutionary framework” and was was capable of making “1,986,832 mathematical calculations per second.”

    Despite the impressive-sounding claims, the SEC charged, no robot was making real picks. Instead, the software just regurgitated stock symbols that had been entered into a database in advance and were linked to penny stocks the brothers were being paid secretly to hype.

    “Marl” formed its name from its purported inventors, Michael Cohen and Carl Williamson, the SEC charged. Cohen, the agency added, was positioned in the Hunter promos as the developer of the “famous ‘Global Alpha’ computer stock trading model” as a contractor for the Goldman Sachs Group Inc.”

    Representations about Michael Cohen “were false,” the agency alleged.

    “[N]o such employee or contractor worked in that capacity at Goldman Sachs,” the SEC charged.

    “The Hunters used the anonymity of the Internet and the promise of easy riches to prey on investors,” said Thomas A. Sporkin, chief of the SEC’s Office of Market Intelligence. “While touting their supposed breakthrough investment technology on two websites, the Hunters were racking up fees as stock promoters through a third.”

    A downloadable version of the purported “Marl” robot was offered online by the Hunters for $97, positioned alongside a $47 newsletter subscription, the SEC alleged.

    “The defendants claimed that the home software performed the same sophisticated analyses that purportedly underlay the defendants’ newsletter [stock] selections, but with the added benefit that investors would not have to wait for the emailed newsletters to capitalize on Marl’s analytic capabilities,” the agency alleged.

    In reality, the agency charged, “the home software was designed to retrieve predetermined stock ticker symbols from a database that the defendants populated to deliver those tickers to investors on dates set by the defendants.”

    In 2007, the SEC said, Alexander John Hunter sought bids from programmers to build the software. Here, according to the agency, is how the programming solicitation read (italics added).

    “Need a small software program which will appear to the user that once running it is analyzing thousands of penny stocks.

    “Every so often, the software will find a stock, and a message will appear from the system tray, and on the program showing the ticker symbol.

    “IMPORTANT: This software does not actually find stocks at all. It should connect to my database and simply request any new stocks I have put in.”

    The solicitation, according to the SEC, went on to say this (italics added):

    “Basically this is almost a ‘fake’ piece of software and needs to simply appear advanced to the user . . . “

    Various references to the purported miracle robot appear online. One such reference viewed today by the PP Blog appeared on Squidoo, a social-networking site. When the Blog clicked on a “Marl” link at the Squidoo site, it was forwarded to a Clickbank hoplink that included this message (italics added):

    “This site is no longer in service or has been disabled due to a terms of service violation.”

    Clickbank is an online retail outlet for digital products and affiliate marketers. The company is not referenced in the SEC complaint, and has not been accused of wrongdoing.

    “Marl” also was touted from MySpace, another social-networking portal. A “Marl” video with a URL containing a Clickbank hoplink appears on a MySpace page viewed today by the PP Blog, but generated a “This site is no longer in service or has been disabled due to a terms of service violation” error message when entered in a browser window.

    Promos for “Marl” also appeared on the TalkGold and MoneyMakerGroup Ponzi forum, according to research.

    It was not immediately clear if the Hunters were responsible for the Clickbank promos or whether other individuals also were selling “Marl” through Clickbank.

    The Hunter brothers, the SEC charged, were running scams within scams.

    “The SEC alleges that the brothers separately created the website Equitypromoter.com where they marketed their newsletter subscriber list to penny stock promoters and boasted, ‘One email to this list of people rockets a stock price,’” the agency said. “The Hunters were in turn paid to send selected penny stock ticker symbols to their subscribers, who were misled to believe that the stock ‘picks’ were the product of the robot. The Hunters sent out their newsletters near the beginning of the trading day, and the price and volume of the promoted stocks spiked dramatically as newsletter subscribers rushed to purchase shares. However, the stocks typically fell precipitously shortly thereafter, leaving investors with shares worth less than they had purchased them for earlier in the day.”

    All in all, the newsletter component of the scam fetched “at least” $1.2 million at $47 a pop, the agency alleged.

    Beyond that, the Hunters were “paid at least $1.865 million in fees from known or suspected stock promoters, and they did not disclose to their newsletter followers the conflicting relationship between their two businesses,” the agency alleged.

    How much the “robot” component of the scam allegedly fetched was not immediately clear, but the product was offered at $97, according to the SEC.

    Named a relief defendant in the SEC case against the Hunters was Regency Investment Group Corp. The agency described it as a “Panamanian company owned by defendant Alexander John Hunter and over which defendants Alexander John and Thomas Edward Hunter jointly have power of attorney.”

    In general, a company is named a relief defendant when there is reason to believe it has received ill-gotten gains from a scheme.

  • On Zeek Rewards, Cheerleaders, Currency And Exclamation Points

    Source: screen shot from Zeekler site.

    Owing to time constraints, the PP Blog hasn’t written much about Zeek Rewards, an MLM “program” married to a penny-auction site known as “Zeekler.” For simplicity, we’ll refer to both arms as “Zeek.”

    The structure of Zeek and precisely what it does are just plain baffling. Even so, it appears to have a legion of loyal followers, including followers on well-known Ponzi forums such as MoneyMakerGroup and TalkGold. The Ponzi-board presence of Zeek affiliates is potentially problematic in the sense that some of them also are pushing obvious fraud schemes such as JSS Tripler/JustBeenPaid, which advertises a return of 60 percent a month and does not disclose its base of operations.

    Yesterday, for instance, a MoneyMakerGroup poster “defending” JSS/JBP while dissing naysayer “Lynndel” was showcasing his Zeek affiliate link below his JSS/JBP “defense.”

    “I am sorry to bring it up to you, but every business is a ponzi online or not,” poster “masikk08” wrote in response to “Lynndel’s” pointed criticism of JSS/JBP.

    Let’s stop for a moment to assess what we just read: A JSS/JBP “defender” who’s also a Zeek affiliate just told you that “every business” is a Ponzi scheme.

    Those words from your potential Zeek sponsor are just plain absurd. They also are devoid of any real-world understanding of the Ponzi menace. Ponzis have put people out of their homes, ruined lives, caused divorces, caused bankruptcies, destroyed college plans and dreams of passing on money to children and caused or contributed to suicides. A number of Ponzi/pyramid-related, murder-for-hire plots have been investigated. A California man believed to have used his ecommerce platform to facilitate Ponzi schemes has been sentenced to death for arranging the contract slaying of his wife, a potential witness against him.

    “Every business makes money off of new customers and nothing lasts forever either,” the MoneyMakerGroup poster and Zeek affiliate continued, mixing an irrelevant point with a bromide.

    “But we have to make the best out of what opportunities we have,” he droned. “I get paid and everyone I know gets paid with JBP. So I can not agree with your statement. But if you do not like to make money with JBP, there are other opportunities you may be interested in. JBP is not for everyone you know.”

    Let’s assess those words: That people are getting paid is not evidence that no underlying crime exists. Successful Ponzis always pay. Bernard Madoff “paid” — right up until the day he didn’t.

    Below the post, “masikk08” used an all-caps headline to attract attention to Zeek: “I HAVE A GIFT FOR YOU,” the headline reads. When the link is clicked, it resolves to a Zeek page.

    “Zeek Affiliates are giving away up to 500 FREE BIDS to each of their registered and new customers!” the promo begins. It goes on to explain that the the bid giveaway is “AMAZING” and that the giveaway began in August 2011 and will “continue throughout the year!”

    Given that we’re approaching May 2012, it appears as though the giveaway has been extended well into 2012.

    Some JSS/JBP affiliates came under fire in January by CONSOB, the Italian securities regulator. From a U.S. perspective, both JSS/JBP and Zeek are using offshore payment processors. This, coupled with the Ponzi-board presence and the processors’ histories of enabling investment scams, could mean that money “earned” in one or more scam “programs” is passing through Zeek.

    Zeek Cash Auctions

    From the tempting-fate department, Zeek and its affiliates, using photos of U.S. currency,  also advertise what effectively are auctions for sums of U.S. cash  — all while affiliates laud the “program” for providing a return. These things easily could catch the attention of the Treasury Department’s Office of the Comptroller of the Currency, not to mention the SEC and potentially even the CFTC and the FTC.

    Bidders potentially could receive substantial sums of cash at a significant discount. There is a certain incongruity about this, perhaps particularly in the sense that the cash auctions create the appearance that U.S. currency is being used as bait and potentially as a loss leader. But the strangest thing of all is that successful bidders apparently have the option of receiving the full value of the U.S. currency via AlertPay or SolidTrustPay, both of which are based in Canada and both of which are friendly to fraud schemes.

    This opens the door to questions such as these: What registrations, if any, with which regulators in which countries does Zeek require — and does it have them? Which agency is its principal regulator? If a successful bidder pays less than the face value of the U.S. currency, is Zeek eating the loss? Is Zeek buying currency in bulk — or is it simply divining a sum available for bid and debiting its own bank or processing account for that sum when it sends the electronic equivalent of that sum to the successful bidder via the offshore processors?

    Is Zeek selling U.S. currency at a loss or at a profit? If at a loss, why? If at a profit, how? Is there a risk to the U.S. and the currency markets if other “opportunities” model Zeek?

    Blogger “Oz” at BehindMLM.com has written a number of articles that raise legitimate questions about Zeek. (It’s worth taking the time to use the search form at BehindMLM to check out the articles/editorials about Zeek.)

    As time allows, we’ll add to our coverage of Zeek. We’re reading a lot about it from a variety of sources. The source volume and competing claims about the “program” create an atmosphere of confusion, and the overall Zeek “story” is far from clear.

    For the purposes of this column, we’ll raise one final point: AdSurfDaily, which prosecutors have described as an international Ponzi scheme that operated over the Internet and plucked at least $110 million, once spouted that it would try to incorporate an auction arm of some sort. That arm never materialized.

    Zeek appears to have ASD-like elements, leading to questions about whether regulators could become concerned that Zeek was selling unregistered securities as investment contracts and using wordplay to mask an investment program as something else.

    ASD’s auction dream was speculative at best. Our initial take on Zeek is that it shared ASD’s now-ancient dream — indeed, other MLM’s have had the same dream — but Zeek actually put the dream into action. The question is whether that dream is compliant with any number of regulations that could come into play — or whether Zeek jumped the gun and now is trying to become compliant after the fact and after gathering an unknown sum of money while operating unlawfully.

    Lots of people — perhaps millions — support MLM in one form or another. It is virtually impossible to quantify all of the disingenuous presentations, which often are hyperbolic — if not completely over-the-top. A certain sphere within the MLM universe is dominated by hucksters. These hucksters often display a remarkable lack of awareness. Some of them are tone-deaf politically and have a tin ear for real-world PR.

    So, for the purpose of this first column on Zeek, we leave you with two questions: If you place a successful bid for a sum of U.S. currency on Zeekler, do you have any legal or political concerns if your cash equivalent is delivered via an offshore processor that has processed payments for one scam or collapsed scheme after another?

    And why can’t you get your money through PayPal?

     

  • AdSurfDaily Member Dwight Owen Schweitzer Ordered Not To Send Email To Federal Judge

    If you’re keeping a list of the strange sidebars associated with the AdSurfDaily Ponzi case, here is another entry for your notebook: U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida has ordered onetime practicing attorney Dwight Schweitzer not to contact her by email.

    The order was issued Monday, more than five months after Altonaga formally laid down the rules of decorum on how a lawsuit filed by Schweitzer and fellow pro se plaintiff Todd Disner in November against the United States and Rust Consulting Inc. would proceed.

    On Nov. 9, 2011, Altonaga specifically advised Schweitzer and Disner that they were required to follow the rules, one of which was that “[n]o letters, pleadings, motions or other documents may be sent directly to the District Judge or Magistrate Judge’s chambers.”

    The judge cautioned that “[e]very pleading, motion, memorandum or other paper required and/or permitted to be filed with the Court must be filed directly with the Clerk of the Court.”

    Regardless, Schweitzer sent an email pertaining to a scheduling matter directly to Altonaga on Monday. The judge responded by reminding Schweitzer of the Nov. 9 order and ordering him not to send her any more emails.

    “[T]he Plaintiff shall file his e-mail and all future filings directly with the Clerk of the Court,” Altonaga told Schweitzer.

    Her order was issued six days after she granted Rust’s motion to be dismissed as a defendant in the case, leaving the government as the sole defendant.

    It was not the first time Schweitzer allegedly had cut corners and sent an inappropriate communication directly to a judge. On April 17, 2009, the Statewide Grievance Committee of the Connecticut Bar found that he had sent an improper, ex parte communication via fax in July 2008 to a state judge in Florida on the same day she made a ruling against Schweitzer in a case in which he was suing a defendant pro se.

    The 2008 fax, according to the committee findings, inappropriately identified Schweitzer as a practicing attorney and was not copied to opposing counsel.

    “On or about July 1, 2008, the Respondent (Schweitzer) sent correspondence via facsimile to the chambers of the Honorable Sarah Zabel of the 11th Judicial Circuit of the State of Florida requesting that the dismissal of his case be reopened sua sponte or a hearing be noticed on a motion to set aside the dismissal,” the committee found.

    “The judge had made a ruling on the case that morning,” the committee continued. “The Respondent did not send, contemporaneously, a copy of the correspondence to opposing counsel. On the correspondence, the Respondent indicated that he was an ‘Attorney and Counselor at Law[,] licensed solely in the state of Connecticut.’ The Respondent was suspended from the practice of law on August 21, 2003, and his license has been inactive since that time. The Respondent did not indicate to the judge that his license in Connecticut has been suspended.”

    In response to the committee’s allegations, Schweitzer wrote, “The purpose of identifying my licensure in correspondence to a judge in a case where I am suing the very same attorney . . .  for malpractice and willful misconduct was to let the court know that I was not the typical pro se litigant and felt it completely appropriate to indicate my being licensed with all that it implies.”

    But the committee begged to differ, finding that Schweitzer had violated the Connecticut Rules of Professional Conduct even as his license to practice law in the state was under suspension. Schweitzer has not filed papers to regain his license, saying he is retired from the practice of law and interested in other pursuits.

    In his April 16 email to Altonaga, Schweitzer did copy opposing counsel, according to the address listed in the “To” line. Whether counsel received the email was unclear.

    What is clear is that Altonaga received it — and ordered Schweitzer not to do it again.

    On April 10, Altonaga dismissed Rust — the government-approved claims administrator in the civil portion of the ASD Ponzi case — as a defendant.

    The claims by Schweitzer and Disner were hypothetical in nature and “far from the ‘definite and concrete’ dispute required for the maintenance of a declaratory judgment action,” Altonaga ruled.

    The government has not responded to the complaint.

    Among other things, Schweitzer and Disner have contended that the government seized their private information illegally in seizing ASD’s database in August 2008 and that undercover agents who had joined ASD had violated the firm’s Terms of Service.

    ASD was running an international Ponzi scheme in which a securities business was disguised as an advertising company, according to the U.S. Secret Service.