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  • URGENT >> BULLETIN >> MOVING: FTC Gains Spectacular Judgment Of $359 Million In Alleged Cross-Border Fraud Involving Continuity Billing; Case Features Elements Similar To Allegations Against Jeremy Johnson

    David Vladeck of the FTC

    URGENT >> BULLETIN >> MOVING: In a case that featured elements similar to the allegations against U.S.-based Internet Marketer Jeremy Johnson, the FTC has gained a $359 million consent judgment against alleged Canadian scammer Jesse Willms and other defendants.

    The agency sued Willms in May 2011, about six months after it sued Johnson. Wiilms now has settled without acknowledging wrongdoing, but the settlement appears to be a straight-line win for the agency, which lauded the Canada Competition Bureau, Service Alberta, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud, the Edmonton Better Business Bureau and the BBB of Southern Nevada for assisting in the cross-border probe.

    “The fact that almost four million consumers fell prey to the lure of these ‘free trial’ offers is a stark reminder that ‘free’ offers can come at a huge price,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

    Without referencing Johnson or the case against him, IWorks Inc. and scores of other defendants when commenting on the Willms’ judgment, Vladek said this:

    “The FTC has stopped about $1 billion in online marketing fraud during the past two years by shutting down operations like this. But consumers still need to beware, because scam artists are constantly coming up with new ways to deceive people online.”

    Johnson has denied wrongdoing on both the civil and criminal fronts. Federal prosecutors said last month that they anticipate Johnson will face criminal charges in addition to a single count of mail fraud he currently faces. And a court appointed receiver in the FTC’s civil case issued a report earlier this month that described a massive fraud scheme that crossed international borders and cloaked assets.

    The alleged scams of Willms and Johnson pulled in at least $700 million, according to court filings.

    A federal judge must approve the Willms’ consent order, which requires the surrender of bank account funds and “proceeds from the sale of his house, personal property, and corporate assets, including a Cadillac Escalade, fur coat, and artwork, the FTC said.

    “International collaboration is increasingly important for enforcement agencies combating deceptive practices online,” said Lisa Campbell, deputy commissioner of Competition for the Canada Competition Bureau.

    Part of the Willms’ scheme falsely traded on the names of Oprah Winfrey and Rachael Ray while also making false claims of cancer cures and weight loss, the FTC charged last year. In fact, the FTC said, Winfrey sued Willms.

    In addition to using the names of Winfrey and Ray, the Willms’ scheme also traded on the famous names of CNN, USA Today, CBS, the “60 Minutes” television show and other brands, the FTC said last year.

    News about the Willms’ settlement came on the same day affiliates of JSS Tripler/JustBeenPaid were using the name and image of actress Lindsay Lohan in a YouTube promo. JSS Tripler/JustBeenPaid affiliates also have traded on the names and likenesses of Winfrey and Warren Buffett.

    JSS Tripler/JustBeenPaid purports to be an investment scheme that pays annualized returns of 730 percent. The “program” operates online and is purportedly the braintrust of Frederick Mann.

  • BULLETIN: Feds Say Bo Beckman, Trevor Cook Ponzi Scheme Figure, Tried To Dupe National Hockey League In Bid To Acquire Interest In Minnesota Wild — And Used Funds Stolen From Elderly Couple And Others To Do It

    BULLETIN: A new indictment has been returned in the case of Jason Bo-Alan Beckman, Gerald Durand and Pat Kiley — all figures in the Trevor Cook Ponzi scheme that allegedly gathered $194 million and one was of the largest financial crimes in Minnesota history.

    Among the stunning new allegations is that Beckman tried to inflate his net worth to dupe the National Hockey League in a bid to acquire an ownership interest in the NHL’s Minnesota Wild franchise and that money stolen from investors — including senior citizens now in their nineties — was used in Beckman’s unsuccessful effort to gain a share of the team.

    Cook, now serving a 25-year prison sentence for ruining investors in his colossal Ponzi caper, provided Beckman $5 million in commingled funds of investors duped by his currency-trading scheme for “use in his bid for ownership in the Minnesota Wild,” according to the indictment.

    During his 2008 bid, Beckman retained local counsel in Minnesota and the services of certified public accountants to assist him in preparing materials for the NHL.

    Beckman’s own attorney, according to the indictment, warned him that the currency program was “riddled with illegalities,” including “the illegal sale of unregistered securities, inadequate or misleading disclosure to [victim investors], both about the products and about the fees, and transactions by unlicensed persons and entities,” according to the indictment.

    The attorney further warned that the currency program needed to be discontinued and that investors’ funds needed to be returned, according to the indictment.

    Regardless, Beckman pressed on, according to the indictment.

    His activities to dupe the NHL have led to two mail-fraud charges for mailings in May and October of 2008, according to the indictment.

    In December 2011, the PP Blog reported that federal prosecutors asserted that Beckman had sought to address a whopping shortfall in a trading account and prop up the monumental fraud by stealing about $3.9 million from the elderly couple.

    The indictment returned yesterday alleges that money belonging to those two victims was part of a commingled pool of funds used to trick the NHL.

    Beckman sold two life-insurance policies on the woman’s “then 92-year old husband” for about $3.9 million, and then converted “the proceeds of that sale for his own benefit,” prosecutors alleged in December.

    The woman had suffered a stroke, resides with her husband at an assisted-living facility and suffers from partial paralysis on her left side, prosecutors alleged in December.

    Beckman’s theft of about $3.9 million from the elderly couple also led to a charge of income-tax evasion, according to the indictment.

    The accused schemer knew the money he stole constituted income, but he channeled it through various entities and ignored advice from a tax-return preparer to file return for the 2008 tax year — the same year he tried to dupe the NHL, according to the indictment.

    The indictment also alleges that Beckman filed a false return in 2009 that claimed a Ponzi-scheme loss of nearly $1.5 million.

    Just a year after he was trying to impress the NHL with his purported financial worth and using stolen funds to do it, Beckman claimed his 2009 income was “-6.607,” according to the indictment.

  • UPDATE: JSS Tripler/JustBeenPaid Promoters Now Trading On The Name And Image Of Actress Lindsay Lohan; Video Promo Appears After Earlier YouTube Removals — And Even As CONSOB Probe Under Way In Italy

    After earlier trading on the names of Warren Buffett and Oprah Winfrey and even fictional spaceman “Mr. Spock,” promoters of JSS Tripler/JustBeenPaid now are trading on the name of actress Lindsay Lohan.

    A 1:14 YouTube promo for JSS Tripler/JustBeenPaid dated Feb. 14, 2012 — Valentine’s Day — flashes images of Lohan throughout the video. The promo is titled “Sexy Lindsay Lohan.”

    Below the video, seven links appear for JSS Tripler/JustBeenPaid-related sites. The links are accompanied by a text pitch.

    Here is one claim from the text pitch. (Italics added):

    “Basically, You Earn 2% per Day or 60% per Month! No sponsoring Requirements. Use Daily Compounding to Increase Your Earnings! Make Daily Withdrawals to Get Your Money Out! This may be one of the easiest and best ways to earn money you’ve ever seen!

    “Sponsor People to Earn 10% Referral Bonuses on the First Level and 5% on the Second! Withdraw this Money Daily, or Use It to Further Compound and Increase Your Earnings!

    “You Can Start with Just $10 and Turn It into a Fortune!”

    Here is another. (Italics added):

    “75 DAY GET RICH PLAN!
    “Day 1:
    “Add Money
    “Days 2 — 75:
    “100% Reinvest your daily earnings
    “Day 76:
    “Balance now 340% bigger after Day 1 Investment deducted!
    “Day 76 onwards:
    “Conservative: Reinvest 70% of daily earnings and cashout the remaining 30%.
    “Aggressive: Reinvest 80% of daily earnings and cashout the remaining 20%.
    “RESULT: Ever Increasing Earnings and Daily Cashout Amounts!”

    Incongruously, the text pitch ends with these words:

    “Never join ptc and other scam sites.”

    Neither the video nor the accompanying text pitch explained how JSS Tripler/JustBeenPaid, which purportedly is operated by Frederick Mann, could pay an annualized rate of return that is between 48 and 73 times higher than rates touted by imprisoned Ponzi schemer Bernard Madoff.

    The YouTube promo trading on Lohan’s name and images was posted less than a month after CONSOB, the Italian securities regulator, announced that it had opened a probe into the actions of certain JSS Tripler promoters.

    Within days of the announcement, certain U.S.-based websites with links to JSS Tripler/JustBeenPaid mysteriously went missing. Those sites remain inaccessible in the United States, although the reason they no longer are accessible is unclear.

    It is common for hucksters to trade on the names of famous people to sanitize fraud schemes.

    YouTube earlier removed some promos for JSS Tripler/JustBeenPaid, although others remained.

    One Ponzi-forum promoter claimed in October 2011 that a YouTube ban would pose only a temporary problem.

    “No sweat, I own over 500 Youtube accounts, so I’ll just keep making videos like normal, plus I can always use Viddler and Windows movie maker and facebook video as well,” a MoneyMakerGroup poster poster claimed.

  • BULLETIN: SEC Says California Man Was Running THREE Ponzi Schemes — One Of Them Allegedly Duped Investors Into Believing They Were Funding FedEx Distribution Facility In Las Vegas

    BULLETIN: The SEC has gone to federal court in the Southern District of California, alleging that Steven L. Hamilton of Carlsbad was running three Ponzi schemes through three companies he set up “to solicit unsuspecting investors.”

    Hamilton is 42, the SEC said.

    One of the offers allegedly duped people into believing they were investing in a Las Vegas distribution center for FedEx, the famous courier company.

    “Hamilton, however, did not have an agreement with Federal Express to build a Federal Express facility in Las Vegas, Nevada, and did not have a signed lease with Federal Express,” the SEC charged. “Instead, Hamilton converted the investor funds to his own use.”

    Hamilton and his companies also duped investors into believing they were investing in real estate loans secured by deeds of trust or certificates of deposit.

    Charged with Hamilton were Verde Retirement LLC of San Diego, Verde FX Nevada LLC of San Diego and Covenant Capital Partners of Encinitas, Calif.

    “Hamilton used the money he raised from these three fraudulent offerings to pay his personal living expenses,” the SEC charged. “In order to perpetuate his scheme, and to make his purported investments appear successful, Hamilton also used a portion of the monies he raised to pay fictitious returns to investors when, in fact, his investments were non-existent and he was simply using investors’ monies to pay other investors.”

    The combined fraud schemes operated between 2007 and February 2011, raising at least $1.6 million from at least 23 investors, the SEC said.

    And Hamilton also touted certificates of deposit — while trading on the name of the government and engaging in website chicanery to sanitize the scheme, the SEC said.

    “Fliers for the Verde CDs, posted by Hamilton on the Verde website, advertised ‘fixed income accounts’ that ‘earn 5x more than a comparable term current bank CD,’” the SEC charged.

    Site visitors were told that capital was “protected by our highly conservative senior loans against high quality, income producing commercial real estate,” the SEC charged.

    “In a September 2010 iteration of the website, Verde represented that its fixed income accounts were ‘supported by the monthly interest payments’ Verde received from its portfolio of ‘well chosen, US Government Agency guaranteed (Fannie Mae Freddie Mac), conservative, senior loans,’” the SEC charged.

    At the same time, the website further assured  prospects “that the Verde mortgage portfolio was ‘backed 100% by the US Government Agencies, thus ensuring [investor] principal and income [were] safe,’” the SEC charged. “By November 2010, the website had been revised to eliminate references to a portfolio that included ‘FDIC insured CDs.’”

    Regulators and U.S. law enforcement long have warned that fraud schemes destroy confidence in legitimate capital markets and that the Internet has been used by hucksters to disguise criminality and create the appearance of legitimacy.

    Read the SEC complaint.

  • VANCOUVER SUN: Investors From At Least 3 Countries Plowed Millions Into Scheme That Has Led To Suspension Of British Columbia Notary Public; Ponzi Probe Triggers Questions About Overlooked Red Flags And Lack Of Due Diligence By Salesman

    EDITOR’S NOTE: Some investors in Canada, the United States, the United Kingdom and potentially elsewhere got an unpleasant Valentine’s Day surprise when they learned that an investment scheme into which they had plowed millions of dollars was under investigation by the British Columbia Securities Commission (BCSC) in Canada.

    In the early stages of the probe, it appears as through the investment was pushed through mainstream channels. Even so, the case may provide a learning experience for would-be Ponzi-board purveyors who’ve been nudged toward the darkness by the serial scammers who populate the boards.

    Indeed, the BCSC action exposes the myth that here are no consequences for ignoring or downplaying red flags and not performing legitimate due diligence before recommending an investment scheme. 

    The PP Blog’s brief and a link to recommended reading are below . . .

    On Feb. 14, BCSC issued this Investor Alert on Rashida Samji and Arvindbhai B. Patel. Samji is a notary public. Just a week earlier — on Feb. 7 — her license was suspended by the BC Society of Notaries Public. Her property has been put under the control of a custodian.

    Patel, a financial planner and mutual-fund salesperson, allegedly recommended Samji’s investment scheme, which “offered a 12% annual return,” BCSC said, noting that the funds were “purportedly held in a trust account administered by Samji.” (Italics added.)

    What Ponzi-Board Promoters Can Learn From BCSC Action

    Although the purported opportunity was not the type typically promoted on the Ponzi and fraud boards and there has been no suggestion that Samji’s alleged program was offered on the boards, the events surrounding Patel have produced a cautionary tale. It is one that upstart promoters should embrace and use as a reason not to follow their Ponzi-cesspit colleagues into the darkness.

    Of concern to Ponzi-board purveyors, whether upstart affiliates, serial cheerleaders for investment schemes or the owners of “programs”:

    • Patel is under investigation by the British Columbia government for recommending the scheme.
    • BCSC has filed liens against his real estate.
    • Certain of his other assets have been frozen, including his retirement savings and brokerage accounts.
    • Electronic communications appear to have been used to introduce prospects to the scheme.
    • Patel allegedly plowed his own money into the scheme and introduced others who followed his lead and plowed money into the scheme.

    Patel has not formally been accused of wrongdoing. Even so, the investigation to date showcases the legal thicket that may rise to consume individuals who recommend or actively promote highly questionable investment schemes.

    Because BCSC has tied Patel to Samji’s scheme, it has taken measures to stop the damage in its tracks by denying him the ability to dissipate or liquidate assets. His financial life effectively is on hold as the investigation continues — and that is something that can happen to Ponzi-board promoters at any point in time.

    Of further relevance to Ponzi-board hucksters is another series of facts: the opportunity Patel allegedly recommended promised returns of “only” 12 percent annually and he appears to have known Samji in some real-world way — i.e., his contact with her may not been have been exclusively virtual in nature, meaning he has actually seen her or can speak about her intelligently.

    On the Ponzi boards, promoters routinely tout investment schemes that promise returns that dwarf the returns allegedly promised by Samji — and they may have no contact with scheme operators beyond the virtual. This means they may have even less legal cover if a government action or other litigation ensues. They may not even be able to demonstrate they were engaging with a real person or business entity if called to the witness stand to explain their actions as promoters.

    The PP Blog highly recommends this story that appears today in the Vancouver Sun.

    Of particular note is Patel’s explanation to the BCSC for his alleged conduct,  portions of which the the newspaper published after obtaining a transcript of a proceeding last week. The proceeding has led to questions about red flags that were ignored and due diligence that was shelved in favor of simply believing Samji’s line.

    Not questioning a “line” or performing even minimal due diligence is something that happens daily — even hourly and minute-by-minute — on the Ponzi boards. Virtually all downstream consequences on both promoters and victims are ignored as promoters fire up “I got paid” posts.

    A snippet from the newspaper account on Patel’s explanation to BCSC. (Italics added):

    “I asked her if I could talk to someone at Mark Anthony Group and see if I could verify the structure of the investment,” he told the panel.

    “She indicated to me, basically, it’s very confidential information – She told me she had consulted a lawyer and she did not require any disclosures or memorandums.”

    Any person who has spent so little as five minutes on the Ponzi boards has seen this type of explanation advanced. “Program” sponsors may refer to lawyers without naming them, imply secrecy is required and preemptively deny that any disclosures are required. Promoters then parrot the information, whether or not it is true. Such “explanations” about purported confidentiality requirements and the need to compartmentalize information frequently accompany HYIP “programs” and prime-bank swindles.

    Before Patel even uttered his explanation, here is what BCSC had to say:

    “We felt it was important to warn investors not to send any money to either of these individuals,” said Lang Evans, director of enforcement for the BCSC. “We encourage anyone who had dealings with Samji or Patel to contact the BCSC.”

    Visit the BCSC information page on the case.

  • BIRTH OF A ‘SOVEREIGN’ VERB: Appeals Court Upholds Convictions In ‘False-Liens’ Case In Which Defendant Called Law ‘A[**] Wipe’ And Declared He’d ‘Lien . . . Down’ Even On Court-Appointed Defense Counsel; Co-Defendant Was Figure In SEC’s Gold Quest International Ponzi Case And Sought To File Bizarre Lawsuit Against Agency

    “I don’t want to see a lawyer. If you do, I’m going to lien him down fast.” — Gregory Allen Davis addressing U.S. Magistrate Judge Alice R. Senechal of North Dakota in a false-liens case that evolved from events in 2010 and earlier

    UPDATED 5:14 P.M. ET (U.S.A.)

    The word “lien” is a noun. But it seems quickly to have become a verb in the mind of Gregory Allen Davis, a reputed “sovereign citizen” accused in 2010 of filing false liens against U.S. District Judge Daniel Hovland of North Dakota and Lynn Jordheim, a federal prosecutor who once served as the acting U.S. Attorney for the state.

    Appearing before U.S. Magistrate Judge Alice R. Senechal to be arraigned on charges of filing false liens in the form of UCC Financing Statements against Hovland and Jordheim, Davis informed Senechal that he’d reject the appointment of defense counsel by the court, according to transcripts cited by the U.S. Court of Appeals for the Eighth Circuit. (PP Blog emphasis):

    “I don’t want to see a lawyer,” Davis barked to the judge. “If you do, I’m going to lien him down fast.”

    A Tortured History

    With the belligerent morphing of “lien” from noun to verb even as Davis claimed the judge had no jurisdiction over him and demanded she present her “oath of office,” thus began a new chapter in the already-bizarre sagas of Davis and fellow purported “sovereign citizen” Michael Howard Reed.

    Reed emerged as a figure in the May 2008 SEC Ponzi-scheme case against Gold-Quest International (GQI) after asserting he was the “attorney general” for an “Indian” tribe in North Dakota and trying to sue the agency for the staggering sum of $1.7 trillion.

    GQI operated from Las Vegas and touted a footprint in Panama. Reed’s apparent theory was that the enterprise, which was accused of hatching a Ponzi that had gathered nearly $30 million, was untouchable under U.S. law and that it enjoyed sovereignty that somehow was portable across multiple state lines in the United States. A federal judge in Nevada quickly put an end to that nonsensical argument — even as regulators in Canada also were preparing or pressing claims against GQI, which purportedly was operated by a “Lord.”

    Reed’s unsuccessful bid to intervene in the GQI case was hardly his only encounter with the federal judiciary and law-enforcement agencies.

    In rejecting various claims by Davis and Reed in the false-liens case and upholding the rulings of U.S. District Judge Charles B. Kornmann of South Dakota — who was sitting in special designation because the North Dakota federal judiciary had recused itself — the Eighth Circuit appeals panel started out by reciting some of the tortured litigation history surrounding the false-liens case. (Italics added):

    “Gregory Allen Davis and Michael Howard Reed irrationally believe that their membership in the Little Shell Nation, an unrecognized Indian tribe, means they are not United States citizens subject to the jurisdiction of the federal courts. This belief led them into serious trouble. First, Reed threatened North Dakota District Judge Ralph Erickson because he refused to dismiss federal drug charges against two other Little Shell members. Months later, when District Judge Daniel Hovland denied a motion to dismiss a firearm charge pending against Reed, Davis filed a Uniform Commercial Code (UCC) financing statement listing Judge Hovland and acting United States Attorney Lynn Jordheim as $3.4 million debtors and Davis as the secured party. After a three-day trial, a jury convicted Davis and Reed of conspiring to file and filing false liens against Judge Hovland and Jordheim in violation of 18 U.S.C. § 1521. The jury also convicted Reed of corruptly obstructing justice in violation of 18 U.S.C. § 1503(a), based on his earlier threats. On appeal, Davis argues that the evidence was insufficient to prove a violation of § 1521. Both Davis and Reed argue, for somewhat different reasons, that the district court violated their constitutional rights by allowing them to represent themselves at trial. We affirm.”

    Notwithstanding the fact Davis initially had claimed he’d “lien . . . down” even appointed defense counsel and personally defend the charge that he’d filed false liens against public officials, Davis subsequently permitted a lawyer appointed by the court as “standby counsel” to carry out duties such as arguing evidentiary issues, according to court records. Both Davis and Reed reserved their rights to argue the case-in-chief.

    “[T]hey provided opening statements, cross-examined the government’s witnesses, testified in their own defense, and offered a mountain of irrelevant documents relating to their claims of personal sovereignty,” according to Eighth Circuit.

    But after both men were convicted of filing false liens and conspiring to file them, they then claimed they should not have been permitted to act as their own counsel, a claim in stark contrast to the earlier insistence by Davis that he be permitted to exercise his Constitutional right to represent himself and that he’d file a lien against a defense attorney if one were appointed for him.

    Among other things, the Eighth Circuit upheld Kornmann’s conclusion that Davis “knowingly and voluntarily waived his right to counsel.” It made the same determination in rejecting Reed’s argument that the judge should not have permitted him to argue his own case.

    Reed claimed, among other things, that “he should not have been allowed to defend himself foolishly,” according to the Eighth Circuit.

    The Story Within The Story

    Also of note is that the federal law under which Davis and Reed were charged and convicted in North Dakota is the same law under which AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was charged in November 2011 by an FBI terrorism task force in Washington state: Retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title.

    Leaming, 56, also has a “Little Shell” link, according to the Anti-Defamation League.

    In court filings, the FBI said Leaming filed bogus liens against a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service — among other officials. In addition, he is charged with being a felon in possession of firearms, harboring two fugitives and uttering a bogus “Bonded Promissory Note” for $1 million. He is jailed near Seattle.

    But to Davis, the law against filing false liens against public officials is “ass wipe,” according to a citation in the Eighth Circuit decision upholding his conviction.

    “At trial, an FBI agent testified that, during a January 20 interview, Davis admitted to filing this lien, threatened to file more liens, and referred to the statute prohibiting false liens as “ass wipe,” the appeals panel recounted.

    Leaming, according to court filings in the false-liens cases against him, filed the liens in Washington state.

    Davis, though, chose to file liens in the District of Columbia — and he did so electronically, according to the Eighth Circuit.

    “Reed and Davis conducted a recorded telephone conversation on January 5, 2010, the day Judge Hovland issued an order denying Reed’s motion to dismiss the pending firearms charge,” the appeals panel recounted. “The two discussed placing UCC liens for $2.4 million in cash and $1 million in silver against federal entities. The next day, Davis electronically filed a Form UCC-1 financing statement with the Recorder of Deeds in Washington, D.C., listing as debtors, ‘1. U.S. District Court of North Dakota/Daniel Hovland,’ and ‘2. Acting United States Attorney, Lynn C. Jordheim.”

    The histories of both the Davis/Reed case and the emerging Leaming case lead to troubling questions about whether the Internet and the current state of U.S. and state procedures with respect to how liens are accepted and recorded in the public record have opened the doors for “sovereign citizens” to wage far-reaching revenge campaigns against public officials.

    This comes at potential expense to both taxpayers and the targeted public officials who at least briefly have to take time away from their public duties and put on the hat of a witness/crime victim.

    The Eighth Circuit ruling, for instance, points out that lien targets and federal officials “Hovland and Jordheim testified that they are not indebted to Davis” despite his assertion they owed him millions of dollars.

    “Davis chose a filing office whose public records would likely be searched by a party looking for adverse claims against the properties of Judge Hovland and Jordheim, such as prospective lenders, credit card issuers, and credit rating agencies,” the appeals panel found. “He also filed the facially suspect statement electronically and it became a public record without review.”

    And, as the appeals panel highlighted in a potentially ominous footnote, different results are possible in different jurisdictions. (PP Blog emphasis added):

    “Some States have amended UCC Article 9 to give filing officers discretion to refuse apparently fraudulent or unauthorized filings and to streamline procedures for the removal of fraudulent filings. See White & Summers, Uniform Commercial Code § 31-16 (6th ed. 2010). Absent such an amendment, the UCC grants little authority to refuse to accept fraudulent filings. See § 9-520(a) & cmt. 2.”

    See “The Lawless Ones” report by the Anti-Defamation League.

    Read the Feb. 9, 2012, ruling against Davis and Reed by a three-judge panel in the Eighth Circuit.

  • RECOMMENDED READING: ‘Sovereign’ Reports: Mayor Of Fayetteville, N.C., Retracts Proclamation Declaring ‘Moorish American Week’; New Jersey Man Allegedly Declares He’s A ‘Sovereign’ After Bizarre Encounter With Allentown (Pa.) Police In Middle Of The Night

    Part of the Moorish American Week proclamation. Fayetteville was one of 11 American cities reportedly to approve the proclamation, which has led to questions about whether government officials simply rubber-stamped a document that claimed a "sovereign Theocratic Government" had been formed inside the United States.

    As the website of the purported “Moorish American National Government” informs visitors that 11 U.S. mayors “have issued official proclamations in recognition of Moorish American Week,” the mayor of Fayetteville, N.C., tells the Fayetteville Observer that he is withdrawing the proclamation he approved.

    An obscure group called “Moorish Americans” has “attempted to file court documents claiming sovereignty from the U.S.,” the newspaper reports.

    On a page of its website, the Moorish American National Government publishes a “Proclamation Of Status And Jurisdiction Of The Moorish Americans.”

    “In the course of human events,” the Moorish proclamation begins, “The Founding Fathers of The United States brought forth on this Continent two new Nations. One, themselves, a conglomerate of Pale Skin Descendants from the Nations of Europe.

    “The other Nation,” the proclamation continues, “a Comity of Olive Skin Nationals extracted from various Countries affixed indigenously to the North Western and South Western Shores of Africa, yet latent in slavery. Now, in the plan of Universal Justice, it has become necessary for the latter, standing in their Proper Person, to proclaim their true Free National Status, thus dissolving the political bands and assumable jurisdictions of the former.” (Emphasis added.)

    Among the claims made by “Moorish Americans” in the proclamation approved by Fayetteville and other cities was that the Moorish had “formed a sovereign Theocratic Government.”

    ‘Moorish’-Related Litigation

    The PP Blog used “justia moorish” — without the quotes — in a Google search. (Justia.com is a resource that publishes court filings and judicial rulings.) The Google search returned several references to litigation in which “Moorish” was a term in case stylings.

    As one example, this Justia page shows a ruling in the Northern District of Illinois in which a federal judge weighed the confusing issues in a lawsuit by an entity known as the Moorish Science Temple of America against the city of Berwyn, Ill. As another example, this Justia page refers to a case filed in New Jersey federal court on Dec. 21, 2011.

    That case references the “MOORISH SCIENCE TEMPLE OF AMERICA 4TH & 5TH GENERATION and ATTORNEYS IN FACT ON BEHALF OF THE ESTATE OF CHESTER R. JENKINS, JR.” as plaintiffs, with the defendants listed as “SUPERIOR COURT OF NEW JERSEY, JOHN DOE, CHARLES M. RAND and MAUREEN B. MANTINEO.”

    No case filing is accessible through the Justia link.

    A ruling in a different case in Wisconsin federal court is available through this Justia link. The case is styled “Anchorbank FSB v. Moorish Science Temple of America.”

    Meanwhile, a ruling in a case in which Soloman Seales Jr. is listed as the plaintiff and “Branch Moorish Science Temple and Unknown Gerard” are listed as the defendants is available through this Justia.com link. That case was filed in Missouri federal court, and Seales is described as a “prisoner” who brought the action against the Moorish entity.

    Separately, the Charlotte Criminal Lawyer Blog reported in July 2011 that a “Moorish Nation” Defense is clogging up the court system in Mecklenburg County, N.C. Charlotte, a famous American city, is the county seat of Mecklenburg County.

    From the Blog:

    “The details of this strategy vary throughout the nation, but the underlying theory is that a defendant is of Moorish decent, and is not subject to the laws of the United States,” wrote attorney Brad Smith. “According to the Mecklenburg County version, the defendant takes on a new name, and declares that he cannot be prosecuted for any crimes which occurred under his prior name.”

    The “Moorish Defense,” Smith wrote, “is nothing more than a scam” that may cause harm to defendants accused of crimes.

    Visit the website of the Southern Poverty Law Center to acquaint yourself with some of the strangeness associated with purported “Moorish Americans” who are gaining a toehold among some people of African descent while Moorish adherents engage in behavior similar to adherents of the “sovereign citizen” movement.

    Although the “sovereign citizen” movement was largely white and has racist roots, those “roots have been virtually forgotten by increasing numbers of black Americans who have melded it with selective interpretations of the teachings of pioneer black nationalist Noble Drew Ali, who founded the exclusively black Moorish Science Temple of America (MSTA) almost 100 years ago,” SPLC reports.

    Strange ‘Sovereign’ Event In Pennsylvania

    The Allentown (Pa.) Morning Call is reporting that a New Jersey man was arrested this week on charges of indecent exposure, open lewdness, public drunkenness and disorderly conduct.

    After police stopped the man amid reports he had urinated in front of a 7-Eleven convenience store at 3:05 a.m. on Feb. 16, the man allegedly declared his purported sovereignty and told an officer to “kiss” something, the newspaper reported.

    Read the Morning Call story on what the man allegedly told police.

     

  • Reputed Colorado ‘Sovereign Citizen’ Matthew O’Neill Pleads Guilty To Providing False Information After Mailing White Powder To State Department Of Revenue; Envelope Triggered Terrorism Scare And Evacuation Of Employees From Government Building

    On May 17, 2011, Matthew “Matt” O’Neill, 52, entered a post office in Kremmling, Colo., and “filled out documents for certified or registered mail,” federal prosecutors said.

    O’Neill, though, did not immediately put his envelope in the mail. Instead, he left the post office and “reentered several times before finally mailing” it, prosecutors said.

    By May 25, a mail-room employee of the Colorado Department of Revenue had begun the typical process of opening the envelope, stapling the documents inside and routing it to the intended recipient, prosecutors said.

    After placing the envelope on her desk, the recipient observed “white powder” falling out onto her work space. She then took the contents to another office, informed a colleague about the suspicious substance — and the two employees placed the contents on the desk, left the office and locked the door.

    They next informed the Revenue Department floor manager, who immediately dialed 9/11 and contacted the Colorado State Patrol. Fearing they’d been exposed to a biological or chemical substance, the two employees tried to decontaminate themselves by washing their hands, prosecutors said.

    More moments of high anxiety followed as the employees waited for the Denver Fire Department and the HAZMAT team to arrive. Practically every adult in America understands the horror caused when powdered substances spill out of envelopes. In September 2011 — about a week after the 9/11 terrorist attacks — the anthrax attacks began through the mail.

    Five people died. Seventeen became infected. One of the largest investigations in U.S. history began.

    When the fire department and HAZMAT team arrived at the Revenue Department, first responders — necessarily expecting the worst — took precautions with clothing and equipment and entered the building. An evacuation of people ensued.

    It was not the first time the Revenue Department had heard from Matthew O’Neill.

    As the probe continued, investigators learned that O’Neill had “sent several documents that express his views as a sovereign citizen, and that he believes that he does not have to pay state or federal taxes.”

    O’Neill pleaded guilty this week to providing false information related to a terrorism offense for his mailing of the white powder, which proved to be baking soda but nevertheless caused fear to spread and left employees wondering if they’d lose their limbs or perhaps even their lives.

    “Those who mail a threat, especially one containing material simulating a biological or chemical agent, will face felony criminal consequences,” said U.S. Attorney John Walsh.

    “All threatening communications are taken seriously, the recipient of these types of threats cannot determine the true nature of the implied, or stated danger,” said James Yacone, special agent in charge of the FBI’s Denver office. “The FBI wants to remind everyone that mailing a threatening communication that contains a hoax of any kind in a parcel will be aggressively investigated.  We will continue to respond to such threats, along with our federal, state, and local law enforcement partners, through the combined resources of the Joint Terrorism Task Force.”

    Whether the power was harmful was not the issue, said the region’s top postal inspector.

    Threatening mailings “not only constitute a federal crime, but cause alarm to victims and victim institutions,” said Tommy Coke, acting postal inspector in charge of the Denver Division of the U.S. Postal Inspection Service.

    Sentencing for O’Neill before U.S. District Judge Marcia S. Krieger is set for June 4. He potentially faces up to five years in federal prison and a fine of up to $250,000.

    Some “sovereign citizens” have attempted to use the mail to instill fear among judges, prosecutors, investigators, litigation opponents, community officials and taxing authorities.

  • BULLETIN: Suspect Whose Aim Was To Carry Out Suicide Bombing At U.S. Capitol Building In Washington Arrested; Man Also Proposed Attacks On U.S. Military Offices, Army Generals, Restaurant And Synagogue, FBI Says

    BULLETIN: The FBI and federal prosecutors in Virginia have confirmed the arrest of Amine El Khalifi, describing him as a Moroccan national living in the United States illegally and saying he planned a suicide bombing with a vest strapped to his body today at the U.S. Capitol building in Washington.

    El Khalifi, 29, resided in Alexandria, Va., and represents “the continuing threat we face from homegrown violent extremists,” said Lisa Monaco, assistant attorney general for national security.

    “[He] allegedly believed he was working with al Qaeda and devised the plot, the targets, and the methods on his own,” said U.S. Attorney Neil MacBride of the Eastern District of Virginia.

    A “confidential human source” told the FBI more than  a year ago — in January 2011 — that  El Khalifi had met with other individuals at a residence in Arlington.

    During the meeting, U.S. officials said, “one individual produced what appeared to be an AK-47, two revolvers and ammunition. El Khalifi allegedly expressed agreement with a statement by this individual that the ‘war on terrorism’ was a ‘war on Muslims’ and said that the group needed to be ready for war.”

    By Dec. 1, 2011 — with El Khalifi under surveillance — “he was introduced by a man he knew as ‘Hussien’ to an individual named ‘Yusuf,’ who was, in reality, an undercover law enforcement officer,” prosecutors said.  “Throughout December 2011 and January 2012, El Khalifi allegedly proposed to carry out a bombing attack. His proposed targets included a building that contained U.S. military offices, as well as a synagogue, U.S. Army generals and a restaurant frequented by military officials.”

    After witnessing a staged explosion purportedly triggered through a cell phone at a West Virgina quarry last month, “El Khalifi expressed a desire for a larger explosion in his attack. He also selected Feb. 17, 2012, as the day of the operation,” prosecutors said.

    “El Khalifi dialed a cell phone number that he believed would detonate a bomb placed in the quarry,” prosecutors said.

    Over the next month, El Khalifi repeatedly traveled to the Capitol building to conduct surveillance, prosecutors said.

    He also asked for a gun that “he could use during the attack to shoot any officers who might attempt to stop him,” prosecutors said.

    El Khalifi was arrested today a short distance from the Capitol after traveling there to conduct the suicide bombing. But it was a sting in which equipment given to him had been rendered inert, prosecutors said.

    “This individual allegedly followed a twisted, radical ideology that is not representative of the Muslim community in the United States,” said James W. McJunkin, assistant director in charge of the FBI Washington Field Office.

     

  • With CONSOB Probe Under Way In Italy And Certain U.S. Affiliate Sites Offline, JSS Tripler/JustBeenPaid Members Say AlertPay Is Sending Them Debit Cards: ‘Now I Can Start Using AP In Other Programs,’ MoneyMakerGroup Promoter Announces

    “You can only load money from your Alertpay account onto it. So, now I can start using AP in other programs & have an easy way to get my money to spend, by loading funds from my AP account onto the card. Then I can use the card like a regular debit card in stores, online & even withdraw the money off of the card via an ATM machine.” — MoneyMakerGroup post by JSS Tripler/JustBeenPaid promoter, Feb. 16, 2012

    There’s none so blind as those who will not see.

    Only a little more than eight months ago — on June 3, 2011 — the U.S. Secret Service advised a federal judge in Maryland that HYIP schemes spread in part through coordinated posts on “discussion boards.” One of the boards referenced in a Secret Service affidavit aimed at seizing tens of millions of dollars in “criminal proceeds” linked to HYIP hucksters and other scammers was TalkGold.

    Yes, that TalkGold, the Ponzi cesspit, the same TalkGold to which promoters of JSS Tripler/JustBeenPaid race to fire up “I got paid” posts to help sustain a scam that advertises an annualized return of 730 percent on top of two-tier downline commissions totaling 15 percent — more, if members choose to “compound” their “earnings” by leaving them in the system.

    JSSTripler/JustBeenPaid promoters are doing this on the Ponzi forums even after CONSOB, the Italian securities regulator, announced a JSS Tripler-related action late last month and certain promoters’ websites in the United States suddenly have gone missing this month. Frederick Mann is the purported operator of the scheme.

    It was not the first time TalkGold’s name had been referenced as a place from which massive fraud schemes were promoted. The board was referenced in 2010 filings by the U.S. Postal Inspection Service in the Pathway to Prosperity (P2) case. So was MoneyMakerGroup, another Ponzi and fraud cesspit.  P2P operator Nicholas Smirnow was charged criminally, and investigators described P2P as an HYIP scheme that had spread to at least 120 countries and created as many as 40,000 victims. The alleged P2P haul: about $70 million.

    Courtroom references by the Secret Service to TalkGold in the context of fraud schemes date back at least to 2007.

    Here is how the Secret Service affidavit from June 2011 described the activities that occur on TalkGold and elsewhere. (Italics added):

    “Most of the individual posts to the boards are from those who invest in the pyramid schemes and those who operate and promote the illegal investment scams.”

    Based on the Secret Service affidavit and voluminous evidence culled in the aftermath of the 2007 E-Gold investigation that had led to 2008 guilty pleas on charges related to unlicensed money-transmitting and money-laundering, the judge authorized the seizure of tens of millions of dollars from the E-Gold accounts of alleged scammers who’d set up shop through E-Gold to fleece the masses.

    On June 20, 2011, U.S. District Judge Ellen L. Hollander ordered the money “arrested.” The forfeiture is pending, and the final sum seized is unclear. But the website of a court-appointed claims administrator includes this notation. (Emphasis added):  “Approximately $90 million has been seized and/or restrained from the sale of e-metal held in accounts at E-Gold.”

    These things are exceptionally noteworthy in the context of the forfeiture case:

    • E-Gold is assisting investigators in ridding itself of corrupt proceeds warehoused as a result of the money-laundering allegations in 2007. It has cooperated with prosecutors in identifying accounts linked to HYIP scammers and other hucksters.
    • The Secret Service agent who filed the affidavit is the same agent who led the 2008 AdSurfDaily Ponzi scheme investigation, which resulted in the forfeiture of at least $80 million and criminal charges against ASD operator Andy Bowdoin.
    • Even though the agent allegedly has been targeted with false liens by so-called “sovereign citizens” for his work in the ASD Ponzi case, he continues to serve in a capacity that is vital to the security of the United States. He has conducted numerous investigations involving money-laundering and other crimes. These cases, according to court filings, have resulted in the seizure of more than $300 million in “criminally derived proceeds.” That is more than a quarter of a billion dollars. The agent and his colleagues have worked with a Task Force whose members reverse-engineer fantastically complex financial crimes.
    • The court-appointed administrator handing the claims process is the same company that handled a similar process in the ASD Ponzi case.

    E-Gold has done the right thing in cooperating with investigators.

    Coming Soon To An ATM Near You

    Any person who spends so little as five minutes on the Ponzi boards knows that Canada-based AlertPay is conducting business with serial promoters of outrageous frauds — frauds that have grave consequences to individual pocketbooks and frauds that have grave ramifications to national and international security.

    And now, according to posts that originate on forums referenced in multiple U.S. court filings about massive international fraud schemes, AlertPay is sending debit cards to the scammers.

    “Thanks Mann & Co.,” the excited poster announcing her coup on MoneyMakerGroup said, adding five smilies to accent her glee after her earlier reference to ATMs and stores that now could be used to offload profits from a scheme that advertises a return of 2 percent a day.

    In an earlier post, the MoneyMakerGroup member said she received the AlertPay debit card in her mailbox in North Carolina.

    “Now I’m able 2 get my money out FAST!!!!!!!!!!!!” she roared.

    Below her post was a link to a “program” known as “Expert Invest Group” that purports to pay “up to 20000% After 30 days.” The company says its accepts AlertPay, Perfect Money and “Liberty Reserver (sic).”

    A (Brief) Pictorial Study In Contrasts

    1.

    MoneyMakerGroup post from Feb. 16 by promoter of JSSTripler/JustBeenPaid. The post highlights the utilty of AlertPay debit cards in joining other "programs" and offloading profits at ATMs and retail outlets.

    2.

    From Paragraph 55 of a U.S. Secret Service affidavit filed in U.S. District Court in Maryland on June 3, 2011.

  • BULLETIN: Andrew Isaac Chance Sentenced To 65 Months In Federal Prison For False-Lien And Tax Scams; ‘Tax Defier’ Filed Bogus UCC Statement For $1.313 Billion Against Federal Prosecutor, Justice Department Says

    BULLETIN: Andrew Isaac Chance, the Maryland man described by the Justice Department as a “tax defier” and recidivist fraudster who filed a bogus lien for $1.313 billion against a federal prosecutor, has been sentenced to 65 months in federal prison.

    Chance, a retired station manager of the Washington (D.C.) Metropolitan Area Transit Authority, explained that he filed liens against the federal prosecutor and a Maryland state prosecutor because they had “done him wrong,” prosecutors said.

    The bogus lien against the federal prosecutor was in the form of a UCC Financing Statement filed in Maryland. The Uniform Commercial Code has been in the news in recent days in the context of purported “sovereign citizens.”

    Michael Lee Crane, an Arizona man now charged in three murders in late January, told a judge at his arraignment on the first two murder charges that “I would like to reserve my right to Uniform Commercial Code 1-207, and the Uniform Commercial Code 1-103.”

    Chance filed the false lien against the federal prosecutor who’d handled an earlier tax-fraud case against him “shortly after” Chance was released from prison. Chance, prosecutors said, was on federal probation when he filed the lien.

    After filing the bogus lien, Chance returned to the same behavior that landed him in prison initially, filing three false claims for tax refunds, prosecutors said.

    “This sentence shows that filing false tax returns and retaliating against federal prosecutors and other government officials, who are simply doing their jobs, will not be tolerated,” said John A. DiCicco, principal deputy assistant attorney general of the Justice Department’s Tax Division.

    In the false-liens case, Chance was charged under the same law federal prosecutors in Washington state used to charge AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming: Retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title.

    Leaming allegedly was involved in the filing of several retaliatory liens against federal officials.  He also faces charges of harboring fugitives, being a felon in possession of firearms and uttering a bogus “Bonded Promissory Note.”