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Patrick
In a 29-page court order announced yesterday by the SEC, U.S. District Judge George Caram Steeh of the Eastern District of Michigan laid out the case of willful blindness against serial HYIP pitchman Matthew John Gagnon.
That case now has resulted in court-ordered judgments of more than $4.2 million against Gagnon, who also was named in a criminal complaint by the U.S. Secret Service in November 2011.
But in the HYIP sphere, which FINRA described in 2010 as a “bizarre substratum of the Internet,” not even the huge judgment against Gagnon announced yesterday appeared to unnerve the serial scammers on the TalkGold and MoneyMakerGroup Ponzi forums.
Posting as “DRdave” on TalkGold, huckster “Ken Russo” announced he’d received a new payment of $482.08 from JSS Tripler/JustBeenPaid, a “program” whose purported daily payout rate of 2 percent dwarfs the purported payout rate of Legisi, one of the “programs” that led to Gagnon’s demise.
In a March 15 conference call, Frederick Mann, the purported operator of JSS/JBP, told members that the company was making the payouts from money sent in by “new members.” Paying “old” members with money from “new” members is the central element of a Ponzi scheme.
Even as “Ken Russo” was making the announcement, the online security company McAfee was publishing a “Warning: Dangerous Site” message about the JustBeenPaid website.
“We tested this site and found it’s risky to visit,” McAfee’s Site Advisor reported.
In 2010, the SEC declared Gagnon a “danger to the investing public” for his serial promotion of scams. (See paragraph 11 of May 2010 SEC complaint.)
Assessing Gagnon more than $4.2 million in disgorgement, prejudgment interest and penalties, Steeh found that:
Whether “Ken Russo” has conducted any “due diligence” on JSS/JBP is unknown. Whether “Ken Russo” has any qualifications to sell securities is unknown. Whether “Ken Russo” qualified investors in any way is unknown. Whether “Ken Russo” retained or reviewed JSS/JBP records, bank or brokerage accounts statements or e-currency account records is unknown.
What is known is that “Ken Russo” proceeds from scheme to scheme to scheme.
“I would caution everyone not to listen to anyone who is posting negative comments about this program,” “Ken Russo,” posting as “DRdave” on TalkGold, urged today. “JBP/JSSTripler has changed many lives during the past 13 months and it is one of the best programs I have seen since I first entered the industry back in 1996!”
Here, according to the SEC, is how Gagnon, who’d been pitching programs online “since at least 1997,” described Legisi:
“IN ALL OUR EXPERIENCE IF (sic) HIGH YIELD PROGRAMS THIS IS THE ONLY GENUINE PROGRAM THAT WE HAVE EVER FOUND!”
McKnight, like Gagnon, is facing millions of dollars in civil judgments. And McKnight pleaded guilty last month to a criminal charge of wire fraud.
It turned out that Legisi was not “GENUINE” at all.
BULLETIN: A federal judge has frozen the assets of three Florida companies and their operator, after the Federal Trade Commission alleged a “precious metals” telemarketing scam aimed at senior citizens was under way and had collected nearly $9 million.
Named defendants in the case were Anthony J. Columbo, Premier Precious Metals Inc., Rushmore Consulting Group Inc. and PPM Credit Inc., all of Deerfield Beach.
Customers got trapped in a boondoggle in which they were lured into buying precious metals on credit while their capital was eaten away by undisclosed or misrepresented fees. In some cases, the only way out of the thicket was to pay more money “or lose their investment,” the FTC charged.
“High-pressure” pitchmen picked the pockets of customers, the FTC charged.
“The majority of consumers who purchase precious metals from Defendants lose money,” the FTC charged. “Consumers’ equity in their precious metals investments is drained by the fees and commissions that are assessed at the inception of their transactions and by the constant accumulation of service fees and interest charges on the leverage portion of their accounts.
“These fees, commissions, and interest charges negatively affect consumers’ ability to break even or profit on the precious metals investments,” the FTC continued. “When a consumer’s equity decreases sufficiently, an equity call is issued and the consumer must either invest additional money or allow the precious metals to be liquidated at a loss, making the investments risky. In some instances, consumers’ accounts are liquidated without notice to consumers.”
Assisting in the FTC probe were the Better Business Bureau of Southeast Florida and the Caribbean, the Commodity Futures Trading Commission (CFTC), the Florida Department of Agriculture and Consumer Affairs, the State of Florida Office of the Attorney General, the Florida Office of Financial Regulation and the Broward County Sheriff’s Office, the FTC said.
Read the FTC complaint.
Read the Temporary Restraining Order, originally filed under seal.
UPDATED 10:35 P.M. EDT (U.S.A.) Matthew John Gagnon, an HYIP huckster and promoter of the Legisi Ponzi scheme, has been hit with orders of disgorgement and penalties totaling more than $4.2 million, the SEC said.
Gagnon, of Portland, Ore., and Weslaco, Texas, was described by the SEC as a serial promoter of fraud schemes through his Mazu.com website.
“The Court found that Gagnon ‘purposefully built up an image of trustworthiness in the on-line investing community and exploited this trust,’” the SEC said. “The Court also found that Gagnon ‘repeatedly committed egregious violations of the federal securities laws’ and ‘has shown no remorse for his conduct.’”
U.S. District Judge George Caram Steeh of the Eastern District of Michigan presided over the Gagnon case, which the SEC brought in May 2010. The SEC case against Gagnon was not limited to his involvement in Legisi. It also addressed his involvement in a “resorts” securities-fraud scheme from which money was diverted to a recidivist felon, and his involvement in multiple Forex schemes.
Legisi, an HYIP fraud, had a considerable presence on the TalkGold and MoneyMakerGroup Ponzi forums. Legisi operator Gregory McKnight pleaded guilty to wire fraud last month.
Here is the breakdown of the financial penalties ordered by Steeh in the May 2010 case against Gagnon: $3,613,259 in disgorgement; $488,570.47 in prejudgment interest; and a $100,000 civil penalty.
The court-appointed receiver in the Legisi case also holds millions of dollars in judgments against Gagnon.
Here is a snippet from Steeh’s order of permanent injunction against Gagnon (italics added):
“[Gagnon] explained that ‘I have a trader I represent in Europe that can trade your funds in a managed account.’ Gagnon promised that investors in the European Trade Offer would experience ‘consistent monthly profits’ and ‘very few losing trades.’ Apparently, the European trader is ‘Juju,’ who is Jjunju Kateregga, a Ugandan national residing in Finland. Gagnon promoted Juju’s trading prowess after meeting him on the internet, exchanging emails and talking to him on the phone ‘a few times.’”
NOTE: The quoted passage above pertains to a purported “managed Forex trading” offer pitched by Gagnon after he moved on from Legisi. (Read the full order at Justia.com.)
In November 2011, the U.S. Secret Service filed a criminal complaint against Gagnon for his alleged wrongdoing in Legisi.
Julius C. Blackwelder, the 59-year-old former bishop of the Bridgeport Ward of the Church of Jesus Christ of Latter-day Saints in Trumbull, Conn., has been charged with money-laundering, mail fraud and wire fraud.
“This defendant is alleged to have abused his position of trust as a leader in his church to defraud fellow church members and others out of hundreds of thousands of dollars,” said U.S. Attorney David B. Fein of the District of Connecticut.
Meanwhile, in Tennessee, federal prosecutors charged Brian Keith Miller of Maryville in a separate alleged fraud scheme.
Miller, prosecutors said, was a former securities broker who hatched a Ponzi scheme and sucked in the trusting locals. He was arrested Monday on charges of wire fraud, money laundering and filing false tax returns.
“Rather than investing the victims’ funds as promised, the indictment charges that Miller misappropriated investment funds to his own use and used a portion of the victims’ funds to pay other victims to lull them into believing that they were receiving payments on their investments,” the office of U.S. Attorney William C. Killian of the Eastern District of Tennessee said.
“The indictment also charges that Miller knowingly engaged in monetary transactions greater than $10,000 with the proceeds of the fraud scheme and filed false federal income tax returns for 2007 and 2008,” Killian’s office said.
In the alleged Connecticut fraud scheme, Blackwelder solicited members of his church congregation, claiming “that he would invest their money in safe, long-term commodities futures contracts, and that he was an experienced and successful commodities investor,” Fein’s office said.
But Blackwelder “used investors’ money to pay his own expenses, which included repaying earlier investors in the scheme, building a waterfront home in Stratford, and repaying personal bank loans,” prosecutors said.
One loan was a credit line from a bank that had received funds from the Troubled Asset Relief Program (TARP) program. An investigation by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the IRS, the Connecticut Department of Banking and the U.S. Postal Inspection Service followed.
Blackwelder’s fraud scheme had a comforting name, officials said: “Friend’s Investment Group.”
Even so, it was a scam that plucked $400,000 from victims, prosecutors said, noting that Blackwelder now resides in Utah.
The Miller Ponzi case in Tennessee was brought by the FBI and the IRS, prosecutors said.
It sometimes is the case in the corrupt universes of HYIPs that a change in the status quo signals panic or devastating news. It’s also sometimes the case that significant developments get explained away as meaningless or part of a plan that had been in place all along in response to explosive growth.
It is almost always the case that HYIPs such as JSS Tripler/JustBeenPaid and their various purveyors reveal incongruities and internal inconsistencies — and a few big ones now are in play at JSS/JBP.
Within the past several days, audio recordings of JSS Tripler/JustBeenPaid “conference calls” featuring pitchman and purported COO “Carl Pearson” have gone missing from the JSS/JBP website. The recordings previously had been embedded on the site below the embedded recordings of Frederick Mann, the purported operator of JSS/JBP. Although Mann’s recordings remain, the recordings of Pearson have vanished.
No recording from Mann was added to the site last week, meaning the last embedded Mann recording carries a date of March 15. No recording was posted for March 22, meaning that the streak of posting a recording of every Mann Thursday conference call dating back to Feb. 16 had been broken.
In the March 15 call, Mann told members that JSS/JBP was paying them with money from “new members” and that it was OK to call JSS/JBP an investment program. Using money from new members to pay old members is the central element of a Ponzi scheme. And because Mann himself described JSS/JBP as an investment program, promoters could find themselves confronting assertions they are selling unregistered securities as investment contracts.
JSS/JBP members who identified themselves of residents of the United States or Canada were on the March 15 call (and also on previous calls). Their nationalities and citizenship are potentially important because JSS/JBP has no known securities registrations, meaning that regulators from either the United States or Canada could move against the enterprise and perhaps even some of its promoters.
Mann has declined on multiple occasions to identify JSS/JBP with a nation-state — and promoters still are pushing the scheme, despite the fact they appear to have no clue about the internal workings of JSS/JBP and how they (and their recruits) ever could recover their investments in the event of a collapse or a government intervention.
In January, the Italian securities regulator CONSOB announced a JSS/JBP-related action — and affiliates still promoted the program, with JSS/JBP itself claiming it was posting record numbers of new members daily.
At least a few JSS/JBP members have noted the removal of the Pearson calls. Earlier today, the PP Blog viewed an affiliate’s Blog for JSS/JBP in which an assertion was made that Pearson had become too busy with other duties to host calls.
“Due to the unprecedented growth of JBP, Carl Pearson will no longer be doing the weekly conferences,” a comment from a reader asserted. “He is prioritising now full time in the back office operations of JBP.”
The comment was dated March 21. A follow-up comment dated March 22 suggested the recordings had been removed for security reasons and that other information also might be removed.
“From the conference room yesterday at around 8pm Dominick got on the mic and announced it,” the post claimed. “He also said that staff members could have their pictures and information removed from the site if they wanted to and Carl as well as other staff members decided it would be best to have that information removed. He said that they are growing so fast that they could be targeted by crooks and hackers.”
But what the explanation did not reveal is why Mann’s recordings remained on the site if concern about crooks and hackers was great enough to trigger the removal of the Pearson recordings.
As often is the case in the HYIP sphere, the information was posted anonymously, meaning it could not be verified. Even so, the information is potentially disturbing in the sense that it defaults to well-known HYIP clichés such as introducing the prospect of hackers — while ignoring the potentially damning information contained in the jettisoned material as a factor in the removal decision and the obvious fact that information that remains on the site may be equally damning.
With a straight face, for example, JSS/JBP purports to pay a daily return of 2 percent and a monthly return of 60 percent.
In 2007, when the alleged AdSurfDaily Ponzi scheme stopped making payments to members (even as its operator allegedly was making political donations with Ponzi money), ASD President Andy Bowdoin allegedly blamed the halted member payouts on script problems and “Russian” hackers who’d allegedly taken $1 million.
Bowdoin never filed a police report about the purported theft of $1 million, federal prosecutors said.
In 2008 promotional materials attributed to Mann, Mann was identified as an ASD pitchman. As the ASD prosecution moved forward, it became apparent that certain ASD members either were “sovereign citizens” or sympathizers. Some “sovereign citizens” hold extreme antigovernment views and have an irrational belief that laws do not apply to them.
In November 2011, ASD figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by an FBI Terrorism Task Force in Washington state on charges he had filed false liens against at least five public officials involved in the ASD case, including a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service.
On Feb. 27, the PP Blog reported that a website linked to Mann included links to 11 videos concerning Francis Schaeffer Cox, a purported “sovereign citizen” under indictment in an alleged murder plot against public officials in Alaska.
One poster on the JSS/JBP-related Blog from which the “hackers” explanation was advanced had a different take on conference-call-related developments.
“Heat is also the REAL reason why Carl Pearson has moved off the conference calls,” the poster speculated.
EDITOR’S NOTE: Simply put, the World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL) pyramid scheme of James Bunchan and Seng Tan was one of the ugliest — if not the ugliest — in U.S. history. Bunchan eventually was implicated in a a murder-for-hire plot in which 12 witnesses and a federal prosecutor in Massachusetts were discussed as targets.
Bunchan was convicted in both the pyramid case and the murder-for-hire case, which was brought separately. He was sentenced to a combined 60 years in federal prison, sentences upheld by the U.S. Court of Appeals.
Tan was sentenced to 20 years for her role in the WMDS/1UOL pyramid scheme, which also was a Ponzi scheme. The U.S. Court of Appeals for the First Circuit now has upheld that conviction. The opinion of the panel was written by Circuit Judge Ojetta Rogeriee Thompson in exceptionally straightforward language apt to put readers “right there.”
A link to the full opinion appears at the bottom of this story . . .
“She usually made quite an entrance, showing up in a chauffeur-driven Mercedes . . . Tan’s pitch was quite attractive. She and Bunchan were millionaires, she said, and the ‘gods’ had sent her to make ‘the Cambodian people’ millionaires too.” — First Circuit Judge Ojetta Rogeriee Thompson, writing for the court and denying the appeal of Seng Tang in the WMDS/1UOL pyramid-scheme case, March 23, 2012
An affinity fraudster who ran a $20 million pyramid scheme with her husband has lost her bid to overturn her conviction and 20-year prison sentence.
Writing for the U.S. Court of Appeals for the First Circuit, Judge Ojetta Rogeriee Thompson laid out the thinking of a three-judge panel that denied the appeal of Seng Tan, who ran the fraud scheme with James Bunchan.
Using exceptionally straightforward language in the 17-page opinion, Thompson recounted the nature of the pyramid case. The opinion began with a subhead titled “SETTING THE STAGE.”
“A federal jury convicted James Bunchan and Seng Tan, a husband and wife team, of numerous mail-fraud, money-laundering, and conspiracy crimes committed in furtherance of a classic pyramid scheme that swindled some 500 people out of roughly $20,000,000 in the early to mid-2000s,” the opinion began. “Fellow scammer Christian Rochon pled guilty to similar charges on the first day of trial, and his testimony in the prosecution’s case helped seal the couple’s fate.”
Thompson next described the venture, below a subhead titled “THE SCHEME.”
“Bunchan founded and owned two self-styled multi-level marketing (MLM) companies — World Marketing Direct Selling (WMDS) and Oneuniverseonline (1UOL) — that supposedly made a mint selling health and dietary supplements. In a legit MLM venture — think Avon, Mary Kay, Amway (companies Tan had worked for) — each person who joins the sales force also becomes a recruiter who brings in other persons underneath her. But the venture survives by making money off of product sales, not off of new recruits.
“Not so with WMDS and 1UOL,” Thompson continued. “Neither sold much of anything, and both raised gobs of money almost exclusively by recruiting new investors, also called members.”
“Here,” Thompson continued, “is how it all worked.” (Italics added.)
Bunchan tasked Tan with drumming up new members, something she was born to do, apparently. Both she and Bunchan are Cambodian émigrés. And they focused their recruitment efforts primarily on Cambodians living here, many of whom were first-generation Cambodian-Americans who had limited educations and spoke little English. As “CEO Executive National Marketing Director,” Tan ran informational seminars for potential investors, meeting them at hotels, their homes, and elsewhere. She usually made quite an entrance, showing up in a chauffeur-driven Mercedes. And she spoke to the attendees in their native language (Khmer), stressing their common background too (including their shared experiences living in Cambodia during the murderous reign of the Khmer Rouge).
Tan’s pitch was quite attractive. She and Bunchan were millionaires, she said, and the “gods” had sent her to make “the Cambodian people” millionaires too. She bragged about how profitable both companies were thanks to high product sales, which earned members at the “Distributor” level fantastic sales commissions. But a member did not have to sell a single item to make money, she explained. For a lump-sum payment of $26,347.86, an investor could skip the Distributor level, become a “Director I,” and get an immediate “bonus” of $2,797, plus $300 every month for the rest of her life, her children’s lives, their children’s lives, and so on. Promotional pamphlets also promised investors that if they recruited more members and kicked in more money (any where from $130,000-$160,000), they could become “Gold Directors” and earn even higher never-ending monthly payouts (something like $2,500 a month). And Tan urged persons short on cash to take out second mortgages or home-equity loans or to borrow money from their retirement accounts to finance their investments, and more than 150 people did. She even had members sign forms so that the loan proceeds would be wired directly to WMDS or 1UOL.
When prospective investors asked her point-blank whether they had to sell company merchandise to get money, Tan answered no. She and Bunchan reduced their promises to writing, with Tan even signing letters guaranteeing monthly returns basically forever.
In words that could describe many corrupt ventures, Thompson noted that the “scheme started out swimmingly.
“WMDS and 1UOL used newly-invested money to trick old investors into thinking that the good times were here to stay,” Thompson wrote. “Not knowing any better, members were ecstatic. Bunchan and Tan were too, obviously. And with cash pouring in, the pair used the companies’ coffers as their own personal piggy bank.”
It frequently is the case in the universes of corrupt “opportunites,” including HYIPS, that the weather gets blamed when payment problems develop — so much so, that explanations involving high winds have become an investment-fraud cliché.
Such was the case in the WMDS/1UOL scam.
“[Tan] started having trouble signing up new investors,” Thompson wrote. “So WMDS and 1UOL stopped mailing out the monthly checks. Members revolted, naturally. Tan tried to quell the uprising, blaming the ‘delay’ on banking glitches caused by Hurricane Katrina and telling members that they would get their checks soon — out-and-out lies, the record reveals.”
Even more fraud clichés came into play, including thefts from family members to prop up the scheme, the continued gathering of funds while the enterprise was tanking and the issuance of selective payouts to calm nervous investors and sustain the deception.
“Worse still,” Thompson wrote, “after getting an earful from irate investors, Tan flew to Minnesota and raked in hundreds of thousands of dollars — bilking her son-in-law out of $150,000 and his friend out of $300,000 — making the same false promises of unending returns she had made before. And she herself decided which lucky member would get a check from the new money — an ill-conceived stopgap measure, it turns out.”
The ruling also includes a footnote that speaks to yet-another investment-fraud cliché: the appointment of a “name-only” executive to become the face of an enterprise. This was the alleged role of Rochon, the purported “president.”
“A high-school graduate, Rochon became president (in name only, though) for one reason, and one reason only: Bunchan wanted an ‘American face’ for his companies, and his neighbor Rochon (a Caucasian of Canadian decent) apparently fit the bill,” the footnote reads. “And after renting Rochon a suit jacket and taking him to a professional photographer, Bunchan had Rochon’s photo plastered all over the companies’ promotional pamphlets.”
Read the ruling and the dissection of the legal issues here.
BULLETIN: Ronald James Davenport, the Washington state “sovereign citizen” convicted in November 2011 of filing false liens for billions of dollars against four public officials, has been sentenced to 41 months in federal prison, the Justice Department said today.
Davenport was convicted of the false-liens charges during the same month AdSurfDaily figure and purported Washington state “sovereign citizen” Kenneth Wayne Leaming was accused in a separate case of filing bogus liens against five public officials involved in the ASD Ponzi case brought by the U.S. Secret Service in August 2008.
Leaming’s targets included a federal judge and three federal prosecutors in the District of Columbia and a special agent of the U.S. Secret Service, according to court filings.
Davenport, described by prosecutors as a tax defier, targeted the U.S. Attorney for the Eastern District of Washington, an assistant U.S. Attorney, an IRS agent and a court clerk with false liens, prosecutors said.
“The liens were filed in the county auditor records of Spokane and Whatcom Counties, Wash,” prosecutors said. “Each lien claimed that the victim owed Davenport $5,184,000,000. It also purported to attach all of the victim’s real and personal property as security for this debt. As proved at trial, the defendant chose these four victims because of their involvement in an effort to collect from Davenport more than $250,000 in back taxes.”
U.S. District Judge Garr M. King of Oregon sat in special designation in the Davenport case because the Washington state federal judiciary recused itself, prosecutors said.
The Justice Department’s Tax Division and the Treasury Inspector General for Tax Administration (TIGTA) prosecuted the case because the U.S. Attorney’s Office in Eastern Washington also recused itself, the Justice Department said.
BULLETIN: Two men, including one who’d filed for bankruptcy when a previous “sales training” venture collapsed, were at the helm of a Ponzi scheme that gathered $51.6 million and left investors with nothing, the Alberta Securities Commission said.
Appearance dates for Dale Joseph Edgar St. Jean and Gregory Dennis Tindall have been set for May 9 in Calgary. The men presided over TransCap Corp. and Strata-Trade Corp., both of Calgary, ASC said.
Both men were charged by the SEC in a 2010 case that alleged they were managing members of a $34 million offering fraud based in Florida that led to the collapse of two hedge funds known as Arcanum Equity Fund LLC and Vestium Equity Fund LLC and subsequent bankruptcy filings.
The 2010 SEC filing also references TransCap, one of the Canadian entities named in the ASC action.
“[I]nstead of investing the investor funds as stated in the Offering Memorandum and contractual documents, St. Jean and Tindall used the investors’ money to orchestrate a Ponzi scheme that ultimately collapsed in November 2009,” ASC alleged.
Meanwhile, “St. Jean, Tindall and Strata-Trade falsely certified that an offering memorandum did not contain a misrepresentation and failed to file an offering memorandum and any reports of exempt distribution as required,” ASC alleged, further claiming that “Tindall made false and misleading statements to ASC investigators.”
In total, the scheme raised about $51.6 million between March 2005 and December 2009, with “at least $25.03 million” coming from “at least 133 Alberta investors,” ASC alleged.
A “sales-training franchise” St. Jean once owned and operated collapsed and caused St. Jean to file for bankruptcy, ASC alleged, further asserting that investors in the Ponzi scheme were not provided accurate information about St. Jean’s track record in business.
Among other jobs, St. Jean had sold mutual funds and worked in construction, retail, computer sales and the jewelry business, ASC said.
Tindall had “no training in securities or investments and no professional designations,” ASC alleged, asserting he lied to investigators about not getting paid from TransCap, a purported bond-trading business with an arm in bridge financing.
“During the times material to these proceedings, Tindall was paid a monthly draw of between $5,000 and $25,000 per month,” ASC alleged. “In 2008, his draw was $300,000.”
“As of about April 29, 2010, TransCap and Strata were indebted to investors in the approximate amount of $51.6 million, and had no funds left to pay investors any principal or returns,” ASC said.
Despite offering materials that asserted otherwise, “TransCap’s business was not primarily related to bond trading or bridge financing,” the agency alleged. “Rather, investor’s funds were used to administer a [P]onzi scheme wherein money was taken from later investors and used to pay returns to earlier investors.”
Investors were lured into the scheme by a “promise of low risk and high returns of 18% to 22%,” ASC said.
An Illinois man hawking a Yukon gold-mining venture via postal mail and email has pleaded guilty to selling unregistered securities, federal prosecutors said.
Jeremiah D. Jacob, 32, of Columbia, faces up to five years in federal prison, a fine of $10,000 and three years’ supervised release, the office of U.S. Attorney Stephen R. Wigginton of the Southern District of Illinois said.
The office also brought the criminal prosecution against alleged Pathway To Prosperity HYIP operator Nicholas Smirnow in 2010. Like the Smirnow case, the case against Jacob began with a probe by the U.S. Postal Inspection Service.
State and federal investigators, including the Illinois Securities Department and the IRS, worked with postal inspectors in the Jacob probe, prosecutors said.
“In selling and offering for sale the security, Jeremiah D. Jacob made use of the United States mail service and email communications in interstate commerce,” Wigginton’s office said.
The company Jacob was pitching “was, in fact, dissolved,” prosecutors said.
Even so, Jacob tapped an investor for $200,000 with the promise of an annual return of 15 percent, prosecutors said.
Some HYIP schemes tout unregistered securities and advertise returns that dwarf the returns Jacob purported to offer.
In the HYIP sphere, securities-registration violations are common, as are the sale of unregistered securities by MLM-style hucksters who troll the Internet in search of marks from whom they can “earn” commissions.
Some of the purported HYIP “opportunities” have been linked to companies that are dissolved or exist in a shell form to disguise tentacles of a financial-fraud scheme. Some of the “companies” do not exist in any real-world sense.
Although Jacob’s company was not an HYIP in the usual sense of the term, HYIP operators and purveyors are subject to the same securities laws that led to the prosecution of Jacob.
UPDATED 2:57 A.M. EDT (U.S.A., MARCH 27) Vague information about JSS Tripler/JustBeenPaid is all over the web. The “opportunity” purportedly operated by Frederick Mann is targeting investors in Canada, the United States and many other countries through conference calls, videos and text pitches.
The PP Blog has listened to recordings of four JSS/JBP conference calls with Mann as the featured guest. Persons who asked questions during the calls have identified themselves as residents of the Canadian provinces of “Alberta” and “British Columbia” and several U.S. states. One caller suggested he was Jamaican — and Jamaica, like Canada and the United States, has had more than its share of problems with massive fraud schemes.
See story on combined Jamaica/U.S. allegations against Bertram A. Hill. See story about the guilty plea of Jamaican citizen David A. Smith, implicated by the United States in a spectacular international fraud scheme that involved at least $220 million.
One of the hallmarks of HYIP fraud is vagueness about an “opportunity.” JSS/JBP, for example, purports to pay a daily return of 2 percent, with Mann accorded the description of “mathematical genius.”
But Mann — despite the various superlatives attached to his name and the various preposterous claims — does not tell investors in Canada or the United States (or any other country) where the JSS/JBP “program” is operating from.
As an exercise in identifying red flags, the PP Blog today is proposing that readers visit the website of “Blue Hedge Investments.” (The URLs are below.)
Among other things, “Blue Hedge” describes itself as a “truly once-in-a-lifetime opportunity.”
Promoters of JSS/JBP use similar language when promoting their “program.”
And “Blue Hedge” — also in vague, JSS/JBP-like fashion — also says this: “BlueHedge Investments is led by a team of well-respected Canadian specialists with vast experience in the offline and online investment market . . .”
If anything, though, JSS/JBP is even more vague than “Blue Hedge.” JSS/JBP, for example, doesn’t even identify itself with a nation-state.
Unlike JSS/JBP, “Blue Hedge” plants the seed that its investors earn 9 percent a month, a relatively modest claim in the HYIP sphere. JSS/JBP, on the other hand, claims 60 percent a month, more than 6.6 times the “advertised” monthly return of “Blue Hedge.”
While “Blue Hedge” asserts it is interested in “the financial stability of our people today,” JSS/JBP promoters also claim their program is about the people — specifically, “average people.”
Many people instantly would question any claim that appears on the “Blue Hedge” website, even though its purported payout is far lower than the payout advertised by JSS/JBP and thousands of its affiliates.
But the sad reality is that many people would question neither the claims of “Blue Hedge” nor the even more extreme (or even more opaque) claims of JSS/JBP.
Like “Blue Hedge,” JSS/JBP has a “Platinum” program. And like “Blue Hedge,” JSS/JBP is out there for all of Canada (and all of the United States and other countries) to see.
“Blue Hedge” provides a learning opportunity for all JSS/JBP promoters. The PP Blog encourages readers to visit the “Blue Hedge” site.
It perhaps is best to start with this page to get a sense of the interest rates while comparing them to JSS/JBP. You’ll see “Invest Now” buttons on the page, but perhaps it is best to avoid clicking on them until you’ve visited the “Blue Hedge” FAQs page and finally this page to assess its content and watch the short video.
After that, click on the “Invest Now” button and assess its content. It might be one of the best clicks you make all year. (See button on this page.)