PatrickPretty.com

Blog

  • TelexFree Trustee’s Proposed Class Actions May Affect Nearly 100,000 Alleged ‘Winners’ Globally

    newtelexfreelogoIt’s another MLM legal and PR catastrophe.

    Let’s begin with the numbers, which are staggering: In two separate actions on Jan. 15, TelexFree bankruptcy Trustee Stephen B. Darr sued 56 named alleged “winners” in the MLM Ponzi- and pyramid scheme believed to have generated about $3 billion in corrupt, cross-border economic activity.

    These 56 promoters — 23 with U.S. addresses and 33 with overseas addresses — effectively are the stand-ins for about 93,000 others who received more from TelexFree or “from other persons in connection with the purchase of membership plans or VoIP Packages” than they paid in. The adversary action in federal bankruptcy court in Massachusetts is filed as a proposed defendant class-action, meaning rulings for or against the named winners would apply to the unnamed 93,000 others.

    “The members of the Net Winner Class are so numerous that joinder of all members is impracticable,” Darr argued to Chief Bankruptcy Judge Melvin S. Hoffman.

    At least 11 U.S.-based promoters of TelexFree hauled more than $1 million each from the program, according to Darr’s complaint. At the top of the list was Benjamin Argueta of Somerville, Mass. He is alleged to have received more than $4 million, including more than $2.2 million in the last 90 days of the scheme.

    With alleged winnings of more than $2.5 million, including more than $1 million in the closing days, Zollo Alecci of Canico, Portugal, was the alleged top international winner. Canico is situated in the Madeira Islands, a spot apparently favored by Brazil-based TelexFree executive Carlos Costa.

    Costa, associated with a TelexFree branch known as Ympactus, also is a failed politician and alleged international racketeer.

    Much like Zeek Rewards’ receiver Kenneth D. Bell, who also filed a defendant class action, Darr is arguing that the alleged winners must return the money because it represents an ill-gotten gain.

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

    Accused TelexFree huckster Sann Rodrigues, who once claimed a $3 million haul, was not named an alleged winner in either of Darr’s proposed class actions — even though the sum Rodrigues claimed easily would have put him among the top winners.

    The reason why Rodrigues wasn’t named was not immediately clear, although he possibly used shell companies to offload some of his haul.

    TelexFree involved as many as 1.9 million participants, according to Darr.

    NOTE: Thanks to the ASD Updates Blog.




  • Would-Be Philadelphia Cop-Killer Claims ISIS Inspiration, Investigators Say

    Officer Jesse Hartnett survived an ambush by a suspect who claimed he was inspired by ISIS, police said. Photo source: Philadelphia Police Department, via Twitter.
    Officer Jesse Hartnett survived an ambush by a suspect who claimed he was inspired by ISIS, police said. Photo source: Philadelphia Police Department, via Twitter.

    Philadelphia police officer Jesse Hartnett has miraculously survived a late-night ambush in which a man who allegedly claimed allegiance to ISIS fired at least 11 shots at him and reached inside the patrol car to fire.

    The FBI and the U.S. Department of Homeland Security immediately became involved in the probe, Police Commissioner Richard Ross Jr. said. Hartnett, 33, a five-year veteran and former member of the Coast Guard, reportedly was hit at least three times at about 11:40 p.m. Thursday while in uniform and while operating a marked patrol car in West Philadelphia.

    Hartnett, seriously wounded, still pursued his attacker and returned fire, Ross said. The commissioner called the attack “absolutely evil.”

    The incident drew immediate comparisons to the horrifying and fatal ambush of two New York police officers in 2014. The New York attacks were dubbed assassinations, and Ross said Hartnett’s attacker tried to assassinate him.

    “This alleged intentional act of violence against an officer seeking to help a fellow citizen is horrifying and has no place in Pennsylvania,” Gov. Tom Wolf said in a statement.

  • FBI: Convicted Murderer And Cross-Border E-Bullion Fraudster James Fayed Was Scamming The Scammers

    Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.
    Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.

    Still pushing Ponzi-board schemes in the age of cross-border fraud and terrorism?

    In a retrospective on the 2008 E-Bullion case, a retired FBI special agent says convicted murderer James Fayed was scamming HYIP scammers.

    “He just pocketed the money from all these high-yield investment programs after they ran,” said Maura Kelley. “And the money continued to come in because the word didn’t get out right away that they weren’t paying. And people were still investing.”

    In 2011, Fayed, then 48, was sentenced to death for the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Indeed, the effective bagman for a host of Ponzi-board swindles ultimately turned to homicide in a bid to cover his tracks.

    Pamela was stabbed 13 times and left to die outside a Los Angeles-area parking garage.

    As the PP Blog reported in 2010, E-Bullion was a conduit for the AdSurfDaily Ponzi scheme.

    And, the Blog noted in 2011:

    E-Bullion has been linked to multiple Ponzi schemes, including Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.

    So, a man with murder in his heart also was supplying financial services to Ali Alishtari, an HYIP swindler who believed he was funding the purchase of night-vision goggles for a terrorist training camp in Afghanistan.

    Upon the conviction of Alishtari, U.S. Attorney Peeet Bharaha of the Southern District of New York offered remarks. As the PP Blog noted, here is part of what Bharaha and the FBI said:

    “Alishtari . . . admitted that he stole millions from investors and knowingly financed what he believed to be tools of terror. In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others.”

    Investigators said Alishtari “facilitated the transfer of $152,000, with the understanding that the money would be used to fund training for terrorists.

    “In the latter half of 2006,” according to investigators, “Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”

    Read the FBI’s retrospective on E-Bullion, titled “Fool’s Gold.”

    See the PP Blog’s long-running tag archive on references to E-Bullion.




  • Zeek Figure Darryle Douglas ‘Subject Of Ongoing Investigation’ By U.S. Marshals Service

    Auction Attics logo
    Auction Attics logo

    Darryle Douglas, the alleged Zeek Rewards’ insider whose arrest was ordered last month, is still wanted by the U.S. Marshals Service.

    “He is the subject of an ongoing investigation,” a spokesman for the Marshals Service in the Western District of North Carolina told the PP Blog moments ago. “We’re trying to locate him.”

    The spokesman declined to say more.

    Douglas resides in Orange County, Calif., according to court filings. The Marshals Service has nationwide jurisdiction. Whether Douglas remains in California or is elsewhere is unclear.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina ordered his arrest on Dec. 10.

    Mullen specifically found that Douglas had violated a court order in a civil case and that the Zeek receivership had suffered harm as a result of the conduct of Douglas. Kenneth D. Bell is the receiver.

    Douglas may have gravitated to an emerging scheme known as Auction Attics, with the aim of targeting Zeekers all over again. He has not complied with an order to surrender the Zeek database and other information.

    Zeek was alleged by the SEC to have been a Ponzi- and pyramid scheme that gathered more than $850 million. Auction Attics has a similar theme.




  • In Argument Over ‘Nutritional Product Pyramid Scheme,’ Indiana Man Allegedly Choked Woman And Threatened Her With Knife

    recommendedreading1EDITOR’S NOTE: It didn’t take long last year for MLM to get some bad press, with India’s Central Bank issuing a caution on Jan. 1. The trade also got some bad publicity very early this year.

    A 44-year-old Indiana man was jailed last week after choking a woman and threatening her with a knife as her young children hid under a kitchen table, according to WBIW.com in a story published Jan. 4.

    Shawn Turpin of Bedford was arrested and charged with strangulation and domestic battery in the presence of minors, the station reported.

    An argument between the adults over a “nutritional product pyramid scheme” sparked the assault, the station reported, quoting Lawrence County Sheriff Mike Branham.

    The scheme was not identified.

    Ponzi- and pyramid schemes have a history of sparking verbal and physical assaults and triggering events such as suicides and murder plots.




  • Bellevue, Neb: Purported ‘Sovereign Citizen’ Shows Up At Police Headquarters With Sword, Later Gets Tasered

    James Casale. From Bellevue (Neb.) police, via Facebook.
    James Casale. From Bellevue (Neb.) police, via Facebook.

    James Casale, 36, a purported “sovereign citizen,” allegedly showed up on New Year’s Eve wearing a “Guy Fawkes” mask and carrying a sword at police headquarters in Bellevue, Neb.

    Bellevue police posted a photo of the encounter on Facebook.

    Casale wasn’t arrested at headquarters, police said. Rather, he was arrested later at the home of his ex-wife after showing up there with the sword.

    “Bellevue Police were dispatched to investigate a call of a man armed with a belt and a Katana Sword in the yard of his ex-wife,” police said.  “Upon Officers arrival, Casale grabbed the handle of the Katana Sword. Officers ordered Casale to drop the weapon to the ground, however he continually refused. Officers then utilized a taser to stop the actions of Casale and he was taken into custody. There were no injuries during this incident. Casale was transported to Nebraska Medicine in Bellevue for medical attention. Charges are pending against Casale for the offenses of Terroristic Threats, Trespassing, Obstructing Police, Resisting Arrest, and Use of a Weapon to Commit a Felony.”

    From the Facebook post by police (italics added):

    James Casale is known to the Bellevue Police Department, as well as, other Sarpy County Law Enforcement Agencies. He is at times a self-proclaimed sovereign citizen and routinely shows up on police calls or in areas where Officers are present and launches his drone. Casale is also known to attend Bellevue City Council meetings in the past.

    “[T]he revolution starts tomorrow,” Casale allegedly told police.




  • BULLETIN: Terrorist-Inspired Attack In Rochester, N.Y., Thwarted, FBI Says

    breakingnews725BULLETIN: (2nd Update 1:58 p.m. ET U.S.A.) The FBI has arrested a man from Rochester, N.Y., saying he planned to show his support for ISIS by carrying out a machete attack today at a bar/restaurant in the Rochester area. ISIS is a terrorist group also known as ISIL.

    Today is New Year’s Eve. Bars and restaurants will be packed, a circumstance that suggests the suspect wanted to maximize the terror he would create.

    On Dec. 29, Emanuel L. Lutchman, 25, went shopping at a Walmart store on Hudson Ave. in Rochester to acquire the equipment needed for the bloody attack, including two black ski masks, zip-ties, two knives, a machete, duct tape, ammonia and latex gloves, according to a chilling FBI affidavit that outlined the plan.

    Lutchman’s shopping companion, however, was an FBI informant, according to the affidavit.

    Prior to his arrest yesterday, according to the affidavit, Lutchman swore his allegiance on video to ISIS leader Abu Bakr al-Baghdadi and claimed credit for the attack.

    “The FBI thwarted Emanuel Lutchman’s intent to kill civilians on New Year’s Eve,” said FBI Special Agent in Charge Adam S. Cohen of the Buffalo division.  “The FBI remains concerned about people overseas who use the Internet to inspire people in the United States to commit acts of violence where they live.”

    Lutchman allegedly told an FBI informant that he’d been in contact with an “Overseas Individual” who’d identified himself as an ISIS “brother.” This individual, according to the affidavit, allegedly told  Lutchman that being with ISIS was  “dream come true.”

    Lutchman, in December, “expressed his hatred for everything in America” and the supposed infidels here and his desire to go to Syria to join ISIS, according to the affidavit.

    Also in December, Lutchman talked about “doing assassinations” and using “firearms” and a “pressure-cooker bomb,” according to the affidavit.

    “I am ready to lose my family” to live under the ISIS caliphate, Lutchman allegedly said. At one point, according to the affidavit, he pointed out the bar/restaurant as a potential attack target and said “he knew someone with a machete and that his wife has a dagger.”

    The zip-ties were needed in case they “kidnap[ped] somebody,” Lutchman allegedly said.

    After the Walmart shopping trip, Lutchman allegedly said, “It’s going to get real after this. “It’s just you, me and the Lord. We gotta do this, we gotta do this precise.”

    Continuing, Lutchman allegedly said, “If we grab somebody, they can’t live. They may identify the vehicle. They can’t live.”

    He has been charged with attempting to provide material support to ISIS.

    “This New Year’s Eve prosecution underscores the threat of ISIL even in upstate New York but demonstrates our determination to immediately stop any who would cause harm in its name,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York.

    Rochester, in the western section of the state, has a population of about 210,000 and is New York’s third-largest city, behind New York City and Buffalo. Rochester is about the same size as San Bernardino, Calif., which was subjected to a terrorist  attack on Dec. 2 that killed 14 people.

    Read the statement on the Lutchman arrest by the Justice Department.

    Read the FBI affidavit.

  • BBC Hit With New Year’s Eve DDoS Attack

    Websites of the BBC, including those with news content, were rendered unavailable by a New Year’s Eve DDoS attack, the venerable company reported. The outage lasted on the order of three hours. Service has been restored.

    From BBC News (italics added):

    All the BBC’s websites were unavailable early on Thursday morning because of a large web attack.

    The problems began about 0700 GMT and meant visitors to the site saw an error message rather than webpages.




  • URGENT >> BULLETIN >> MOVING: TelexFree Figure Sann Rodrigues Found In Contempt Of Court

    Sann Rodrigues. From INTERPOL.
    Sann Rodrigues. From INTERPOL.

    (4th Update 7:23 p.m. ET U.S.A.) TelexFree, IFreeX and DFRF Enterprises’ figure Sann Rodrigues has been found in contempt of court in the SEC’s Ponzi- and pyramid case against TelexFree and a federal judge in Massachusetts has threatened to jail him.

    The SEC alleged Rodrigues, a recidivist securities offender,  violated an asset freeze imposed in 2014. U.S. District Judge Nathaniel M. Gorton today agreed.

    Gorton rejected defense arguments that Rodrigues, a Brazilian now accused of visa fraud in the United States, wasn’t skilled at English and didn’t understand the freeze order.

    “His arguments are unconvincing,” Gorton ruled. “Rodrigues was subject to a very similar temporary restraining order and preliminary injunction in a 2006 civil enforcement action also brought by the SEC. Thus, however complex were the requirements of the orders in this case, they were not unfamiliar.”

    The judge also rejected a contention by Rodrigues that he could not provide an accounting as ordered because providing the requested financial information would violate his Fifth Amendment right against self-incrimination. Gorton ruled that Rodrigues already had waived his right in dealings with the SEC

    From the Dec. 18 order by Gorton (italics added):

    Rodrigues argues that providing a full accounting of his assets and transactions would require him to disclose information that could incriminate him in several potential or actual criminal proceedings. Rodrigues is currently the subject of a criminal prosecution in a separate federal visa fraud case, U.S. V. Rodrigues (15-10227). He reports that he is also being investigated by the Massachusetts Attorney General with respect to another of his business ventures. In addition, he contends that he may still be under investigation for potential criminal charges related to the specific conduct that underlies this civil enforcement action.

    Whether defendant has made a sufficient showing to invoke the Fifth Amendment is, however, irrelevant. Rodrigues waived his right against self-incrimination by consenting to the Order. . . . In that proceeding, Rodrigues explicitly agreed to provide the very information he is now claiming to be privileged . . . Defendant was represented by counsel, who negotiated the language of the order with the SEC. In exchange for agreeing to provide the required accountings, Rodrigues received a carve-out of his frozen assets to pay for his bail in the separate criminal visa fraud case.

    By Jan. 15, Rodrigues must restore more than $334,000 removed in violation of the asset freeze, Gorton ruled. He also is required to “obtain the reconveyance” of real estate transferred in violation of the freeze or “remit funds equal to the market value thereof or provide the Court with a detailed plan as to how he will otherwise cure his contempt in relation to the transfer of those properties.”

    Rodrigues violated the freeze by  “removing cash from accounts or selling cars,” the judge found.

    The penalty for not meeting the conditions of the order is bail revocation, Gorton ruled.

    Rodrigues has become at least the second figure associated with a Ponzi-board “program” to be found in contempt this month.

    Darryle Douglas, an alleged Zeek Rewards’ insider, was ordered arrested on Dec. 10. That order was issued by Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina. Whether Douglas has been taken into custody is unclear.

    NOTE: Our thanks to the ASD Updates Blog.




  • An Incredibly Toxic Series Of HYIP Swindles — Everything From Bitcoin-Themed Scams To Purported Real-Estate Ventures That Claim To Aid Victims Of Terrorism

    FundComing.com says it is a real-estate venture that pays 5,000 percent after three days and had helped victims of terrorism in Syria, one of the homes of ISIS,
    FundComing.com says it is a real-estate venture that pays 5,000 percent after three days and had helped victims of terrorism in Syria, one of the homes of ISIS,

    Bitcoinest.net, a site that covers cryptocurrency news, reported today that “DoubleCloud.pw Is Another Bitcoin HYIP Ponzi Scheme.”

    The “pw” extension stands for Palau, an island country in the Western Pacific. But the extension has been rebranded as “Professional Web,” according to Wikipedia. The user-created encyclopedia says Symantec, the security company, reported in 2013 a lot of “pw” spam.

    The PP Blog today visited the DoubleCloud.pw website and observed an offer that advertises a “350% profit after 48 hours.” The Blog further visited the “Rules” page at the domain, which may be operating from Russia.

    While at the domain, we copied this “rules” passage — “is not available to the general public and is opened only to the qualified members” — and pasted it into Google. Turns out the phrase appears on many, many sites, meaning it is part of a script in which the operators simply swap in the name of their particular swindle.

    Bernard Madoff became infamous as a Ponzi schemer who tried to instill a sense of exclusivity in his investors. These HYIP scams are doing the same thing.

    Perhaps of particular concern is that the phrase is on many sites that do not have a Bitcoin theme, meaning the kit is being used by scammers across the HYIP sphere.

    One of them is known as FundComing.com, a purported real-estate venture that promises 5,000 percent after three days.

    A note on the site clams as such (italics added):

    “Today, we received a letter of thanks from investors [sic]. The investor comes from Syria, a 7 years [sic] old boy whose husband [sic] died from a terrorist attack. After the consent of her consent [sic], we put the letter of gratitude, the mood to share to you.”

    Syria, of course, is one of the strongholds of ISIS. Based on the purported testimonial, the FundComing “real estate” website appears to be positioning itself as a safe venture for families shattered by terrorists. Meanwhile, it is using the same “rules” as DoubleCloud.pw, the purported Bitcoin earnings “program.”

    Separately, a site styled Bond-dot.com is using the same “rules.” It says it is involved in both cryptocurrency and Forex from a purported base in “London (England).” It appears to be soliciting sums from $10 to $5,000, making it both a micro- and a macroscam.

    Other sites with virtually the same “rules” — and this is just the tip of the iceberg:

    • RazInvest.com
    • NextPayMoney.com
    • NanoIncomes.com
    • HYIPFirst.com
    • NextHourPay.com
    From the second page of Google search results for "
    From the second page of Google search results for “is not available to the general public and is opened only to the qualified members.”




     

  • IN MEMORY: Paul Schlegel, 1963-2015

    Paul Schlegel, a St. Louis-based musician and composer and longtime member of the antiscam community, has died. He was 52.

    Word of Paul’s Dec. 7 passing was received from Lynn Edgington of Eagle Research Associates, via a post today at the RealScam.com antiscam forum.

    Paul had assisted Eagle for years in its dual mission of educating the public about scams and working proactively with law enforcement. Paul also supplied administrative support to RealScam.

    “He truly had a servant’s heart,” RealScam administrator Soapboxmom wrote today.

    The PP Blog fondly remembers Paul for his support during a bizarre and concerning hectoring campaign orchestrated here by a cyberstalker who called himself “Almighty Joseph (the risen)” in 2009. The Blog was told it would be “scrambling to put out fires.”

    The stalker was a supporter of the AdViewGlobal Ponzi scheme, later tied by federal prosecutors to the AdSurfDaily Ponzi scheme, a $119 million caper that affected thousands and thousands of people globally.

    Paul also supported the Blog during the crippling DDoS attacks here in 2010. RealScam.com later would be targeted.

    Paul supported the Blog’s efforts to report on a bid by a purported Zeek Rewards’ consultant to disable the HubPage of K. Chang of the MLM Skeptic. The page eventually returned. Zeek was a combined Ponzi- and pyramid scheme that gathered more than $850 million, according to the SEC.

    Zeek affected hundreds of thousands of people.

    In 2014, RealScam and the PP Blog again were targeted in a bizarre hectoring campaign. So was Quatloos. Paul’s support never wavered.

    It is the nature of Ponzi schemes to bring out “blind-faith craziness” in some otherwise normal people, Paul once observed.

    Here is Paul Schlegel’s obituary. He is described as a loving family man whose life was filled with music from his heart.

    We’d add to these loving words that Paul helped lots of people in the development of their online knowledge base about scams. He was there day after day to help his fellow human beings avoid the pain of losses, so that the music could continue to play in their lives.