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  • ‘DAVE’ UPDATE: JSS Tripler 2 (T2) Blocks Public Access To Forum; Purported ‘Admin’ Claims Members Distorting ‘The Facts’ As He Announces ‘Scan’ Of Member-Critics On MoneyMakerGroup; Faith Sloan Chides Legendary Huckster ‘Ken Russo’ With ‘Oopsies’

    UPDATE: “Dave,” the purported “admin” of an increasingly bizarre HYIP known as JSS Tripler 2 (T2), has blocked public access to the T2 forum.

    T2, which purportedly was born after a meeting of Ponzi-forum minds, is using payment processors notoriously friendly to Ponzi and fraud schemes. The “program” is trading on the name of a different Ponzi scheme even as it preemptively denies that T2 itself is a Ponzi scheme and advertises a return of 2 percent a day on top of referral commissions.

    But payouts can’t be made because an AlertPay account in the name of “Chris,” an apparent one-time business partner of “Dave,” was frozen, “Dave” has asserted.

    The action blocking the public from the forum was taken because naysayers were copying information from the forum and using it to make critical posts elsewhere, according to “Dave.”

    Forum closures, post deletions, traffic blockages and leeching off the name recognition of other “programs” often are signatures of scams-in-progress. (See July 2009 story on the roller-coaster ride of the AdViewGlobal (AVG) forum, which rose from the carcass of the alleged AdSurfDaily Ponzi scheme and was accompanied by threats that AVG critics would be banned, sued or lose their Internet connections.) Similar claims have accompanied events at T2.

    Purported ‘Scan’ Of MoneyMakerGroup

    And “Dave,” posting on the T2 forum as “foradmin,” also claims he has performed “a scan over on [MoneyMakerGroup”] to “see who is turning against us and promoting T2 as a scam.”

    “Dave” did not say precisely what his “scan” entailed or how he intended to hold naysayers accountable for their off-site posting activities. Nor did he explain how scanning MoneyMakerGroup for T2 traitors could help T2 solve its core problem: the apparent blockage of the “Chris” AlertPay account that was used to launch T2 in the fall of 2011.

    Although “Dave” and “Chris” purportedly are battling electronically across continents, “Dave” purportedly is telling T2 members there is reason to be hopeful that onetime T2 business partner “Chris” will stop being a wretch long enough to get the “program” restarted, according to forum posts.

    But even the amount purportedly trapped in the AlertPay account when the freeze ensued and things purportedly turned sour between “Dave” and “Chris” is in dispute. “Dave,” according to forum posts, has claimed at least two separate sums: $200,000 and $160,000.

    The reporting disparity only leads to more questions about T2. “Dave,” according to forum posts, is advocating for T2 members not to file AlertPay disputes. T2 says it sells “dream positions” (DPs) for $10 each and something called “dream matrices” (DMs) for $20.  T2 bills itself as the place “WHERE YOUR DREAMS COME TRUE.”

    With a representation of a sparking-silver  crescent moon encasing the phrase “2%” in glowing gold — and against a backdrop of twinkling stars in multiple sizes — T2 goes about the business of impressing website prospects.

    Among the veteran hucksters in its ranks is Ponzi-forum legend “Ken Russo.”

    OINKER ALERT: ‘Ken Russo’ Assesses Criminality Of ‘Chris’

    “Ken Russo” — a man whose fraud bona fides only grow as he leads participants into one train wreck  after another and habitually posts his “earnings” in forums listed in federal court filings as places from which Ponzi schemes are promoted — claims to have communicated with “Chris” and decided that the lack of follow-up communications from “Chris” suggests that “Chris has “committed a serious crime” and that he “should cooperate fully at this time.”

    Whether “Ken Russo” called police on “Chris” is unclear. Also unclear is how any police investigation would proceed once officers determined that “Ken Russo,” too, was promoting a “program” whose advertised annualized return was on the order of 730 percent — with recruitment commissions on top of that — while simultaneously insisting it was not a Ponzi scheme after having been born on a Ponzi forum listed in federal court files and claiming to be trying to rebirth itself from Thailand.

    The word “MoneyMakerGroup” is spelled out by a fraud victim in longhand in a 2008 evidence exhibit in the Legisi HYIP scheme, which triggered both civil (SEC) and criminal investigations (U.S. Secret Service) and charges. Legisi, another Ponzi forum darling, allegedly gathered more than $72 million and sparked an undercover probe by the Secret Service, which assigned an agent to pose as an interested investor.

    Mazu.com operator and forum huckster Matthew J. Gagnon was charged both criminally and civilly in the Legisi case, with the SEC describing Gagnon as “a danger to the investing public.” Civil judgments totaling more than $2.5 million have piled up against Gagnon. The evidence exhibit filed in the case (referenced above and partially displayed on the right) shows “Money Maker Group.com” in longhand, along with Gagnon’s name and phone number in longhand.

    “Dave” asserted last week that “Chris” would be arrested — and then “Dave” purportedly left England for Thailand, apparently with the expectation that an unidentified police agency would mop up on “Chris” after “Dave” boarded a plane for the Indochina Peninsula.

    Thailand now has emerged as the purported venue from which “Dave” now claims he is back in communication with “Chris,” after “Chris” purportedly had ducked him in England when both men were in the country simultaneously.

    After being subjected to arrest threats, “Chris,” according to Dave, is starting to understand that he is in an impossible legal thicket and is displaying a willingness to solve the purported AlertPay problem.

    “Chris,” according to “Dave,” apparently also recognizes that T2 members who live in England might pose a localized threat to “Chris,” something that reportedly has made “Chris” more amenable to making sure money gets back in the hands of T2 members.

    “Dave” did not say what police agency he purportedly called on “Chris.” Whether “Chris” will construe “Dave’s” purported actions and the prospect of local menacing by individual T2 members as extortion bids is unclear.

    Despite preemptively denying T2 is a Ponzi scheme, “Dave,” appears not to recognize that prosecutors might construe at least one of his forum remarks as a virtual confession that T2 was selling unregistered securities as investment contracts and positioning the “program” as a passive investment opportunity.

    “Dave,” according to “Dave,” worked his “ass” off and created a condition under which members “can sit and watch TV and make a fantastic return.” Meanwhile, the T2 website claims that “Dream Positions are perfect for the ‘passive type’ member.”

    Faith Holds Forth

    HYIP aficionado Faith Sloan has trained her sights on both “Dave” and “Ken Russo.”

    Sloan, who published a “JSS Tripler2 (T2) Calculator” on her Blog and speculated that her “$1500 outlay of cash” compounded for 75 days would morph into an “account value of $6,623.75” of which “$5,123.75” would be profit, announced that “Dave” booted her off the T2 forum — apparently for making him look bad.

    Events at T2, she now ventures, may be “borderline insane.” And “Dave” may be “EXTREMELY INCOMPETENT” or perhaps “just a little SCAMMER boy” — if not a “hybrid mix.”

    In July 2010, the Financial Industry Regulatory Authority (FINRA) ran a public-awareness campaign that warned about HYIP scams that spread on social-media sites. FINRA described the HYIP sphere as a “bizarre substratum of the Internet.”

    The awareness campaign occurred against the backdrop of criminal charges being filed by the U.S. Postal Inspection Service against Nicholas Smirnow, a one-time bank robber and drug dealer and the alleged operator of the Pathway To Prosperity HYIP fraud scheme.

    Pathway To Prosperity generated more than $70 million and created 40,000 victims from 120 countries, according to court filings.

    Whether Sloan acquainted herself with FINRA’s public-awareness campaign about HYIPs and documents by Professor James E. Byrne that explained the alleged fraud behind Pathway to Prosperity is unclear. Also unclear is whether Sloan is aware that the U.S. Department of Justice has spotlighted the Pathway To Prosperity case as an example of international mass-marketing fraud.

    What is clear is that T2’s asserted payout rate is nearly as absurd as Pathway to Prosperity’s. It’s also clear Faith Sloan — despite her T2 calculator — is publicly challenging fellow HYIP purveyor “Ken Russo” to get real.

    “Ken Russo,” Faith Sloan declares on her Blog, is “a crybaby!”

    And “Ken Russo,” she asserts, made a bad call on a program known as “Dollar Monster” and has “NOT made any money with his $24000.00 in JSSTripler2 . . .”

    “Oopsies,” she chides “Ken Russo.”

    Whether “Ken Russo” actually has $24,000 riding in T2 is unclear.

     

  • BULLETIN: Jenifer Devine, New Jersey Woman At Helm Of ‘Wholesale Fraud,’ Sentenced To 37 Months For Ponzi Scheme

    Jenifer Devine, the New Jersey woman accused of presiding over a Ponzi scheme involving a purported wholesale clothing and electronics business, has been sentenced to 37 months in federal prison, federal prosecutors said.

    Devine, 40, of Fair Lawn, was arrested in November 2010, amid allegations she lured investors with outsize returns of up to 25 percent every 30 or 60 days.

    U.S. Attorney Paul Fishman said at the time that Devine’s purported wholesale business was nothing more than a “wholesale fraud,” and investigators cautioned investors to be more discriminating.

    Investors lost more than $2 million in the scheme, which gathered $8 million, prosecutors said.

    Devine pleaded guilty to wire fraud in September 2011, after in investigation by the FBI.

    NorthJersey.com is reporting that Devine was remanded into custody immediately after sentencing court today.

  • BULLETIN: ‘Trust Account’ For Accused Ponzi Schemer Andy Bowdoin ‘Currently Unable To Receive Money’; Is Bowdoin Encountering New Troubles In Wake Of ‘OneX’ Promos?

    ASD's Thomas A. "Andy" Bowdoin

    UPDATED 6:31 P.M. ET (U.S.A.) A website collecting money through PayPal for the criminal defense of accused Ponzi schemer Andy Bowdoin of AdSurfDaily appears to have lost its ability to gather funds designated for an attorney’s “trust account.”

    This message (next paragraph) appears if would-be Bowdoin sympathizers click on any of a number of payment buttons on the site, which is known as “Andy’s Fundraising Army.”

    “This recipient is currently unable to receive money.”

    The message originates on PayPal’s server.

    Why the trust account lost the ability to collect money via PayPal is unclear. The office of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia said this afternoon that it “typically does not comment on pending cases, and has no comment on this particular matter.”

    Machen’s office is leading the Bowdoin prosecution.

    Bowdoin, 77, is awaiting a September 2012 trial on charges of wire fraud, securities fraud and selling unregistered securities. The U.S. Secret Service said the ASD patriarch was presiding over a Ponzi scheme involving at least $110 million and thousands of victims.

    In September 2011, the Secret Service and federal prosecutors returned to members more than $55 million seized in 2008 in the civil portion of the case. The agency described ASD as a “criminal enterprise.”

    Bowdoin began to solicit money through the fundraising website last summer, after repeated delays. Information published on the site suggests Bowdoin collected about $26,800, far short of this stated goal of $500,000. The site positioned Bowdoin as “David,” with the government as “Goliath.”

    In recent months, Bowdoin has been pushing a mysterious scheme known as OneX, claiming God had delivered OneX to enable him to pay for his criminal defense.

    ASD figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was arrested by the FBI in November 2011. He is detained in a federal facility near Seattle on charged he filed fraudulent liens against at least five public officials involved in the ASD Ponzi case.

     

  • EDITORIAL: Recruiting Seniors Into Your Downline? Why Ponzi-Forum Purveyors And Pimps Should Pay Attention To Dennis Bolze’s Failed Bid To Have His 27-Year-Prison Sentence Reduced

    EDITOR’S NOTE: The U.S. Court of Appeals for the Sixth Circuit yesterday rejected the bid of convicted Tennessee fraudster and Ponzi schemer Dennis Bolze to have his 27-year prison sentence reduced. Although Bolze did not operate the sort of HYIP typically promoted on Ponzi boards such as TalkGold and MoneyMakerGroup, he advanced some of the arguments/rationalizations that often appear on the forums.

    A three-judge appeals panel from the 6th Circuit yesterday reduced those arguments to ruin . . .

    Dennis Bolze’s Ponzi scheme operated for more than six years, gathered $21 million, created more than 100 victims in the United States and Europe and caused millions of dollars in losses.

    Bolze, 63, was sentenced in 2010 to 327 months in federal prison — in other words, more than 27 years. If he survives the lengthy term, he’ll be nearly 90 years old when released.

    U.S. District Judge Thomas A. Varlan of the Eastern District of Tennessee sentenced Bolze, applying a “a two-level vulnerable victim enhancement.”

    Here is why Ponzi purveyors and their forum pimps need to pay attention: They may be recruiting senior citizens and other vulnerable populations into their schemes. In doing so, they risk significant sentencing enhancements if indicted and convicted. This may be particularly true in cases of Internet fraud in which purveyors and their pimps cast exceptionally wide nets.

    Following the advisory guidelines, Varlan could have sentenced Bolze under the facts of the case to as little as 252 months, according to the 6th Circuit. But the judge chose the upper term of 327 months — in effect, six-plus more years — because vulnerable victims were ensnared in the scheme.

    Bolze claimed his enhanced sentence was “substantively unreasonable.” The appeals court disagreed, siding with Varlan.

    “We conclude that the vulnerable victim enhancement was properly applied and that the sentence at the top of the advisory guideline range was substantively reasonable,” the 6th Circuit ruled.

    And the three-judge panel pointed out that “a person who is a victim of the offense of conviction qualifies as a ‘vulnerable victim’ if that person ‘is unusually vulnerable due to age, physical or mental condition, or . . . is otherwise particularly susceptible to the criminal conduct.’”

    It often is the case on the Ponzi boards that purveyors and pimps of fraud schemes argue that disclaimers such as “do not invest more than you can afford to lose” insulate them from prosecution.

    Bolze used a similar argument for a sentencing reduction, asserting that his victims invested only “discretionary money.”

    He further argued that age alone was  not sufficient to justify the enhancement “and that the present poor financial condition of his victims is not relevant to whether they were unusually vulnerable at the time they invested their money with him,” according to the 6th Circuit.

    Meanwhile, Bolze “denied that he forced anyone to invest” and claimed “that he did not know” certain investors “because his associate dealt with them.”

    The panel rejected each of those arguments. It also rejected a contention by Bolze that only victims who appeared in court at his sentencing proceeding and offered testimony under oath could be counted against him for the purposes of sentencing.

    Varlan was within his discretion when he considered victim-impact statements to fashion a sentence for Bolze, the panel ruled. (Emphasis added).

    “A sentencing court is not limited to consideration of sworn testimony,” the panel ruled, adding that “The Crime Victims’ Rights Act gave the district court express authority to consider victim impact statements.”

    If Ponzi purveyors and their forum pimps still find themselves committed to robbing people on the Internet, other parts of the appeals-panel ruling could give them pause.

    “Additionally” the panel ruled, “we will not disturb the district court’s choice to believe the victims’ statements over Bolze’s testimony.

    “Many victims reported that Bolze convinced them to invest by assuring them that their money would be safe, contrary to Bolze’s assertion that his investors were ‘simply willing to take on more risky investments,” the panel continued. “And many victims did not invest ‘discretionary money’ as Bolze claimed, but funds ‘they intended to use for their basic needs and to provide them with an income on which to live in their retirement.”

    But the news gets even worse for the committed felons on the Ponzi boards, perhaps particularly the hucksters-in-chief who are deliberately targeting seniors and retirees and may have individuals in their organizations doing the same thing. A Bolze claim that he “didn’t know” vulnerable populations were being targeted was summarily rejected by the panel. (Emphasis added.)

    “Furthermore,” the panel ruled, “the preponderance of the evidence supports the district court’s determination that Bolze knew or should have known that victims of his offense were unusually vulnerable to his fraudulent scheme. The district court found that Bolze knew ‘several of the victims were in or about to enter retirement,’ that Bolze ‘had personal dealings with the victims, going so far as to bring them to his home,’ and that Bolze expressly told investors that ‘the investment strategies he was advocating were ideal for people of their situation[.]’”

    If you’re a Ponzi board huckster — and if you’re recruiting downlines through presentations in your home, other homes or through webinars and conference calls — the ruling by the 6th Circuit provides compelling reasons why you should stop.

    Now.

    This is perhaps particularly true if you’re involved in a scheme that has gained a head of steam and you’re telling recruits that all is OK because the authorities would have moved by now if anything was amiss. Such tortured constructions frequently appear on the Ponzi forums.

    Importantly, Bolze’s scheme lasted for more than six years. The longer a scheme lasts, the higher the odds that that senior citizens and other vulnerable populations will become investors — a situation that sets the stage for a sentencing enhancement.

    In rejecting Bolze’s arguments, the 6th Circuit pointed to the experience of “H.H.,” a 76-year old widow living in the Mediterranean region of Europe who’d met with Bolze personally and was the subject of an invitation to his home.

    “When the Ponzi scheme collapsed, H.H. lost her investment,” the appeals panel recounted. “Among other adverse impacts, she could no longer afford private health insurance . . . She is now forced ‘to live on a very small state pension of approximately $175 per week’ and spend the equity in her home on basic necessities.”

    If none of this so far has given pause to the Ponzi purveyors and their forum pimps, perhaps a line buried in the appeals-panel ruling will emerge as a difference-maker for some. (Emphasis added.)

    “The [sentencing] enhancement applies if the Government proves that one victim of the Ponzi scheme was unusually vulnerable.”

    That’s a low bar indeed, considering that the Ponzi purveyors and their forum pimps reach into all corners of the world on the Internet. Their reach alone, coupled with their practiced, serialized disingenuousness, puts them at great risk of recruiting a person such as “H.H.” into their fraud scheme — and persons such as “H.H.” have great sway with judges.

    Still planning that personal pitch or webinar or mass email? Still telling folks not to invest more than they can afford to lose and claiming you never forced anyone to invest? Still turning a blind eye to what you knew or should have known.

    If so, the 6th Circuit just told you it isn’t going to work and that a sentencing enhancement might be in your future, as it was for Dennis Bolze, a purported day-trader who briefly went on the lam after the Bernard Madoff Ponzi scheme was exposed.

  • BULLETIN: Federal Judge Orders Jeremy Johnson And Others Acting On His Behalf To Disable Website That Used Court-Appointed Receiver’s Name And Described Firm As Workplace Of ‘Thieves’ And ‘Crooks’

    EDITOR’S NOTE: This story originally was published Jan. 9, 2012, 3:01 p.m. It was updated at 5:01 p.m. on the same date. The PP Blog temporarily “unpublished” the story on March 23, 2012. Explanation of why it was taken offline temporarily is here. On March 23, 2012, the PP Blog’s security software recorded a “mass injection attack” as the Blog visited a domain styled CollotGuerard.com while researching matters pertaining to Jeremy Johnson. Collot Guerard is an attorney for the FTC and an alleged subject of harassment by Johnson or people close to Johnson because of the FTC actions against Johnson. The PPBlog is not revisiting the CollotGuerard.com domain and believes it is imprudent for readers to visit the domain.

    Our Jan. 9, 2012, story was republished below on Jan. 15, 2013 . . .

     

    A federal judge in Nevada has ordered Jeremy Johnson and others acting on his behalf to disable a website that used the name of a court-appointed receiver in its domain root and painted the receiver and his firm as “Thieves,” “Lairs” (sic) and “Crooks.”

    An attorney for Robb Evans, the receiver in the Johnson/IWorks fraud case brought by the FTC in 2010 and the namesake of California-based Robb Evans & Associates, petitioned Chief Judge Roger L. Hunt in a Dec. 14 emergency motion to order the site taken offline. Hunt issued the order to disable the site on Friday, according to the docket of the case. The domain was styled “RobbEvansFraud.com.”

    The order also applies to sites that use “any variation of the receiver’s name,” according to the docket. Through his attorney, Evans claimed that Johnson and others were violating a court order, confusing the public and undermining the receivership estate by registering a domain name in the receiver’s name.

    Evans and his firm are fiduciaries in numerous cases and have well-established bona fides. Evans himself rose to national prominence as one of the liquidators in the infamous Bank of Credit and Commerce International (BCCI) case in the 1990s, earning plaudits from U.S. District Judge Joyce Hens Green for his efforts to recover funds for victims of BCCI’s massive international fraud.

    Hunt also ordered Johnson to “cease and desist”  from using email addresses that used the name of the Federal Trade Commission. The FTC claimed last month that Johnson, accused alongside IWorks Inc. and scores of defendants in December 2010 in an alleged fraud scheme involving hundreds of millions of dollars, had registered numerous domain names that used the FTC’s name.

    The domain names allegedly were purchased in the fall of 2011, approaching a year after the FTC brought the Johnson/IWorks case.

    Johnson and others also registered domain names in the names of individual FTC attorneys involved in the Johnson/IWorks case, according to the FTC. Although Hunt did not ban such domain registrations that used the name of the FTC or its attorneys, he warned both Johnson and the FTC that contempt was a remedy if there was no “good faith” effort to resolve the domain-name issue, according to the court docket.

    The FTC last week declined to comment on the domain-name dispute. In court filings, it has argued that the domain registrations and email addresses could confuse the public and cause harm.

    In court filings, the FTC claimed that at least one of the domains was used to harass Collot Guerard, a longtime FTC attorney and member of the District of Columbia Bar since 1973. A site that used her name now appears to have been taken offline. Although the domain continues to resolve to a server, content the FTC deemed harassing in nature appears to have vanished.

    Guerard and Evans also were derided in ads someone placed on Google, according to last month’s emergency motions. Those ads appear to have been removed. The identity of the person or company that placed them is unclear.

    Recent developments in the FTC’s action against Johnson and other IWorks defendants have led to questions about where free speech ends and harassment begins. The developments also have led to questions about whether government employees at any level could become the subjects of attacks and harassment campaigns through instances in which defendants “fight back” by buying up domain names in the names of their accusers and placing ads that describe their accusers as criminals.

    Other than self-restraint, there appear to be few obstacles to prevent a defendant from registering a domain name in the name of his or her prosecutor or accuser and perhaps even driving traffic to the sites by purchasing ads that use highly suggestive language or make an outright claim that the public employee is a crook.

    An ad that appeared on Google described Guerard as “corrupt.” A separate ad described Evans, the receiver, as a fraudster. Both Guerard and Evans have had roles in the Johnson/IWorks case.

    Johnson has denied wrongdoing.

     

  • JSS Tripler 2 (T2) Creates Another Bizarre Ponzi-Land Spectacle; Purported Operator Purportedly Takes Off For Thailand After Threatening Purported One-Time Business Partner In Wake Of Purported AlertPay Freeze

    Online huckster “Ken Russo,” also known as “DRdave,” appears once again to have backed an HYIP fraud scheme and recruited a downline into a Ponzi morass. This one is known as JSS Tripler 2 — T2 for shorthand — and the backstory is just plain bizarre.

    Several cross-border crimes punishable by jail time already may have occurred, and there are reports that T2 somehow was operating through an AlertPay account that was not owned by T2 or T2’s purported operator, another person known as “Dave.”

    Like virtually all HYIP schemes, details are fuzzy and ambiguous. But “Dave” apparently was operating T2 through an AlertPay account owned by “Chris,” and the Canada-based payment processor — according to Ponzi board posts — has frozen the account.

    “Dave,” meanwhile, asserted that the account contained $200,000 and that “Chris” will “be in police custody by the end of the day,” according to Ponzi-board posts.

    Although the “police” assertion appears to have been made earlier this month, there appears to be no corresponding information about what police agency “Dave” called to have “Chris” taken into custody. Nor has “Dave” explained why police should consider “Chris” a criminal at the exclusion of “Dave,” whose T2 program claims to pay members a return of 2 percent a day plus referral commissions.

    The purported daily payout rate is double that claimed by AdSurfDaily, which the U.S. Secret Service said more than three years ago was operating a massive international Ponzi scheme on the Internet. Like T2, ASD also offered referral commissions on top of absurd daily returns.

    Such a “confluence” of payment schemes and an apparent lack of outside revenue are markers of a pure or virtually pure Ponzi scheme — even though criminals on the Ponzi forums turn a blind eye to the fundamental mathematical reality and the virtual certainly that members are being paid from the funds of other members.

    It is unclear if anything about T2 is real.

    What is clear is that ASD President Andy Bowdoin was indicted on charges of wire fraud, securities fraud and selling unregistered securities in December 2010. He faces up to 125 years in federal prison if convicted on all counts, a fact virtually ignored by T2 promoters. ASD also was promoted on Ponzi boards such as MoneyMakerGroup and TalkGold.

    At the same time T2’s “Dave” was claiming to have alerted police about “Chris,” “Dave” appears not to have explained what he intended to do if “Chris” called police on him.

    Also apparently absent from the police claim is any sort of real-world explanation of how it apparently came to be that “Dave” had come to believe it somehow was appropriate for a program “admin” such as himself to run a scheme through a third-party’s AlertPay account, not an account in the name of T2.

    “Dave” appears also to have asserted he had the power to exact “a lifetime ban from internet access” against “Chris” while further asserting that he somehow could authorize AlertPay to pay T2 members with money in the frozen account held by “Chris.”

    Ponzi-forum posts from October assert T2’s server was located in Thailand, with “Dave” being “from the UK.” It appears now, however, that the server is in the United States. “I Got Paid” posts on the Ponzi boards suggest payments have come from a Gmail address that uses the name of “Chris” in its makeup, not an email address from the JSSTripler2 domain.

    Such mechanics also were in place for JustBeenPaid and JSSTripler (see link below), “programs” that appear to have used multiple domains and addresses in multiple jurisdictions to funnel payouts to participants.

    For his part, “Ken Russo” — who earlier introduced members to the Club Asteria disaster and any number of fraud schemes — is describing T2 members who are demanding real-world answers as individuals who should be “deleted.”

    “The relatively few members who are demonstrating impatience along with their demand for a refund should be taken care of and deleted from the program and this forum,” “Ken Russo” ventured, according to RealScam.com, an antifraud site that concentrates on mass-marketing fraud. “Their continued presence here will only create more anxiety and frustration.”

    T2 was almost impossibly bizarre from the moment it came out of the gate. The “program” apparently believed it prudent to adopt the name of an existing program in the fraud stable of JustBeenPaid: JSS Tripler. Ponzi-board supporters of the emerging T2 “program” asserted that, since JSS Tripler apparently had not trademarked its name, that using the name as the calling card of a new “program” was perfectly acceptable.

    Why any legitimate entity would want to adopt the name of an obvious fraud scheme such as JSS Tripler was left to the imagination — as are so many things in the foundationally corrupt worlds of HYIPs.

    In any event, “Dave” now claims that he’s traveling to Thailand to try to right the T2 ship because he was having trouble concentrating from his undisclosed earlier location, according to Ponzi forum posts. Some T2 cheerleaders appear to be urging T2 members not to file disputes with AlertPay, a common occurrence when HYIP Ponzi schemes begin to tank.

    T2 apparently also has licensed itself to ban members and seize money (or the representations of money) in their accounts for speaking ill of the purported “program.”

  • RECOMMENDED READING: Fortune Magazine On The Manipulations Of Recidivist Con Man Barry Minkow — And Deseret News On The Sentencing Of Utah Ponzi Schemer Travis Wright In Front Of A ‘Couple Of Rows Of Eagle Scouts’

    EDITOR’S NOTE: This post contains links to recommended reading on Barry Minkow and Travis Wright — the former a classic narcissist and con man doing his second stint in federal prison after having played the redemption circuit for years, the latter a man who used other people’s money to ensconce himself in the lap of luxury, surround himself  with gaudy taxidermy such as a full-body African lion — and once reportedly paid $150,000 to have a swimming pool at his tony digs moved eight feet to make his life more perfect.

    The stories on Minkow in Fortune magazine and Travis Wright in Deseret News are intriguing and, we believe, socially significant. Both provide plenty of fodder for rumination as America continues to confront an epidemic of white-collar fraud . . .

    Barry Minkow first rose to national infamy as a con man who’d managed to dupe investors and Wall Street before he was old enough to sip a cocktail legally in many jurisdictions. The spectacular rise and fall of his ZZZZ Best carpet-cleaning business became one of the great cautionary tales of the 1980s.

    Minkow was sentenced to federal prison for the ZZZZ Best caper, but reportedly embraced Christianity while jailed and later was freed. He became a pastor who doubled as a fraud analyst and television commentator.

    But Minkow, now 45, is back in prison. Fortune magazine explains why in its Jan. 16 issue — and also reports that Minkow appears to have let it slip during the filming of a movie on his life that he was up to no good again. Here is an outtake:

    “Finally, one day in September 2009, recounts Meyers, he was in the production booth with headphones on when Minkow and James Caan were schmoozing between takes. Perhaps forgetting about the open mike in his lapel, Minkow leaned over to Caan and whispered, “I financed this movie by clipping companies,” Minkow said.

    “Clipping,” of course, is a slang word for “swindling.” Minkow says the incident “never happened.” “Not ever,” he wrote Fortune in an e-mail in September. “And have him produce the tape.”

    Fortune reports that the tape was produced and that “Minkow said it.”

    And Fortune reports plenty of other things, including an assertion that some people working on the film were getting paid in strange ways.

    Read the Fortune story.

    Separately, Deseret News is reporting that Utah Ponzi schemer Travis Wright has been sentenced to 10 years in federal prison.

    Here is an outtake from the story in the Deseret News:

    “A couple of rows of Eagle Scouts in court to support a former Scoutmaster-turned-criminal might have backfired against a convicted Ponzi scheme operator Friday.”

    Going to court to observe proceedings as part of a civics lesson is one thing. But should Eagle Scouts assemble in court to show “support” for a man facing sentencing for one of the largest frauds in Utah history?

    In Ponzi schemes — as longtime observers and victims know all too well — the visuals often are incongruous. In the AdSurfDaily case, for instance, some members who openly described themselves as people of faith looked on and said nothing as ASD President Andy Bowdoin claimed the prosecution was the work of “Satan” and compared the U.S. Secret Service to the 9/11 terrorists.

    It’s our hope that the scouts were present at Wright’s sentencing to receive an education on how Ponzis alter lives and futures, not as stage props for Wright. And we also hope that Wright, post-release, shows the scouts that redemption is not just a religious or penal theory and that he doesn’t backslide like Minkow and become a slave to self-absorption.

    Read the full story on Wright’s sentencing in the Deseret News, which notes that “several” victims were crying in the courtroom.

    NOTE ON ADDITIONAL RECOMMENDED READING: “The Salon of Famous Babies,” a classic poem by Irving Feldman, is not about Ponzi schemes. But if a Ponzi schemer or narcissist’s “daydream of glory” has sucked the joy from your life, you very well might find that the poem gives voice to your feelings of anger and provides a measure of comfort.

    Visit the Virginia Quarterly Review to read “The Salon of Famous Babies.”

    “As well teach ducks to drown as teach him not to take it all as owed the world’s own son and heir.” — From “The Salon of Famous Babies” by Irving Feldman, American poet

  • Missouri Investigators Say Senior Citizens — Ages 91, 88 And 79 — Among Victims Swindled By Unregistered Dealer In Fraud Scheme That Diverted Money To ‘Hooters’ Waitresses

    Three senior citizens — including a 91-year-old Pennsylvania resident and 88- and 79-year-old  residents of Missouri — were fleeced in an investment scheme in which $10,000 was diverted to “three waitresses at a Hooters restaurant and one clerk at another retail establishment,” Missouri investigators said.

    All in all, the long-running scheme fetched at least $948,000, affected at least 12 investors and may result in losses of $724,000, the office of Missouri Secretary of State Robin Carnahan said.

    Named in a cease-and-desist order was Richard Joseph Gumerman, an engineer apparently doubling as an unauthorized securities dealer and commodities trader in Independence, Mo.

    “Before trusting someone with their savings, Missourians should check out the legitimacy of both the investment and the person offering it,” Carnahan said. “One phone call to the Securities Division could potentially protect a lifetime’s worth of savings.”

    Missouri Secretary of State Robin Carnahan

    Independence is famed as the boyhood home of President Harry Truman, who returned to the community after leaving the White House in 1953. The Harry S. Truman [Presidential] Library and Museum is situated in the city of about 116,000 residents.

    At least two of the seniors who invested with Gumerman are Independence residents, according to the cease-and-desist order.

    One of the residents — the 88-year-old — invested $329,000 with Gumerman between January 2002 and November 2009, according to the order.

    In February 2011, according to the order, the investor requested $50,000 from the investment, but Gumerman did not send the money.

    When interviewed by investigators, the 88-year-old said that Gumerman “kept stalling” when asked for an investment redemption, according to the order.

    Gumerman did business as Gumerman Trading Co. (GTC) at an address in Lees Summit, Mo., according to the order.

    “[I]n the last several years Gumerman stated that he ‘borrowed’ several hundred thousand dollars from the GTC Bank Account,” regulators alleged in the order.

    The funds that made their way to the Hooters waitresses originated in the GTC account, according to the order.

  • ANOTHER MYTH-BUSTER: Accused California Fraudster Arrested/Deported By Panama And Returned To United States On New Year’s Eve; Joseph Randall Medcalf Faces Federal Trial In Alleged $3.2 Million Investment Scheme

    “You can run, but you can’t hide. International cooperation in the pursuit of fugitives is essential as we combat complex financial crimes. Mr. Medcalf is the latest in a long list of fugitives who have been brought back to the United States to face justice. My office is grateful to the authorities in Panama for their assistance in this matter.” — Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, Jan. 3, 2012

    Joseph Randall Medcalf has become the latest person to rip to shreds a myth commonly advanced on Ponzi scheme and criminals’ forums such as TalkGold and MoneyMakerGroup that “offshore equals safe.”

    Medcalf, 55, resided in Clovis, Calif., before fleeing the United States in 2008 after his $3.2 million investment scheme collapsed and he declared bankruptcy, federal prosecutors said. Medcalf was indicted in March 2011, by a federal grand jury in Fresno.

    Prosecutors now say he was “arrested late last week in Panama,” which deported him.

    Medcalf was transported to Atlanta on New Year’s Eve and is expected to be returned to California to face the charges.

    The FBI is handing the criminal probe, and the “Office of International Affairs in the Justice Department’s Criminal Division assisted in the coordination of Medcalf’s deportation to the United States,” prosecutors said.

    Medcalf  presided over companies known as All Valley Holdings LLC and CenCal Value Investments, prosecutors said.

    He “did not invest the clients’ money as promised but used it for his own personal expenses and enjoyment,” prosecutors said.

  • SEC Names 3 Defendants In Alleged $16 Million Credit-Card ‘Merchant Portfolio’ Ponzi Scheme Targeted At Mormons; Records Show Schemes Within Schemes Dating Back Years

    EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme as opposed to shrimp, here is an entry: an alleged “merchant portfolio” Ponzi scheme.

    Ponzi and fraud schemes often use impressive-sounding terminology to separate people from their money. Schemes typically mushroom to consume millions of dollars when investors — who sometimes become commission-based promoters and effectively act as unregistered brokers and dealers — accept a firm’s extraordinary claims at face value, ignore red flags such as outsized returns or engage in willful blindness because choosing to see is bad for profits.

    In June 2010, the SEC charged Joseph A. Nelson, Anthony C. Zufelt, David Decker, Cache Decker and five companies “in connection with three related Ponzi schemes largely targeting the Mormon community.” The complaint was filed in Utah and alleges schemes within schemes dating back at least to 2005.

    As 2011 came to a close, the SEC named three additional defendants in a separate, Nelson-related complaint also filed in Utah. Named in the year-end complaint were Kevin J. Wilcox, Jennifer E. Thoennes and Eric R. Nelson.

    Eric Nelson is Joseph Nelson’s brother. He is accused of deceiving investors by creating “fictitious bank account statements reflecting balances in his brother’s accounts that were far in excess of the actual amounts in those accounts.”

    Wilcox and Thoennes are accused of solicitation fraud

    Joseph Nelson, Wilcox and Thoennes told investors “that Joseph Nelson and his companies were engaged in the business of purchasing ‘merchant portfolios’ of credit card processing accounts, holding them for a certain period of time, and then selling them for a profit to financial institutions, such as banks.”

    “Many” of the investors were “fellow members of the Church of Jesus Christ of Latter Day Saints” whom Joseph Nelson “identified and targeted through church connections and during church functions,” the SEC charged.

    But “Joseph Nelson and his companies never purchased or sold a single merchant portfolio,” the SEC charged.

    “The money invested with Joseph Nelson and his companies was instead used by Nelson to make incremental payments to investors in a Ponzi-scheme fashion, to pay his associates, including Wilcox and Thoennes, and to pay his own lavish personal expenses, as well as those of other family members,” the SEC charged.

    Affinity fraud is a major problem in Utah. In June 2010, the FBI said thousands of people in the state had been victimized by Ponzi schemes and cases of investment fraud that caused Utah residents to lose an estimated $1.4 billion.

    SEC Warns About Scams That Use Social-Media Sites To Fleece The Masses

    In a separate, unrelated action yesterday, the SEC charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn, a social-media site.

    Social media increasingly are being used to sanitize schemes and help them mushroom, a top SEC official said.

    “Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, co-chief of the SEC Enforcement Division’s Asset Management Unit.

    Charged in an SEC administrative action yesterday was Anthony Fields, 54, of Lyons, Ill.

    The agency alleged he “offered more than $500 billion in fictitious securities through various social media websites.”

    On LinkedIn, for example, he allegedly used “discussions to promote fictitious ‘bank guarantees’ and ‘medium-term notes.’”

    Read the SEC order against Fields, Anthony Fields & Associates and Platinum Securities Brokers. See this SEC Investor Alert on social-media fraud.

    Revisit this July 2010 PP Blog story on a FINRA warning about HYIPs and scams that use social media to proliferate. See this Nov. 2, 2011, PP Blog editorial on a threat by AdLandPro — a purported social-media site — to sue RealScam.com, an antifraud forum.

    Among other collapsed schemes, the alleged AdSurfDaily and Pathway To Prosperity Ponzi schemes were promoted on AdLandPro. A recent thread at AdLandPro is promoting OneX, which also is being promoted by ASD President Andy Bowdoin while he awaits trial on criminal charges of wire-fraud, securities fraud and selling unregistered securities.

    Among the screaming headlines in OneX-related content on AdLandPro is this one:

    “Are You in Deep Money Trouble? See Me at Once!”

     

  • EDITORIAL: The Creeping Creepiness Of Jeremy Johnson — And The Use Of Google Ads As A Weapon Of Abuse Against Public Officials And Court-Appointed Receivers In Performance Of Their Duties

    EDITOR’S NOTE: This story originally was published Jan. 4, 2012, 3:32 p.m. It was updated at 9:59 p.m. on the same date. The PP Blog temporarily “unpublished” the story on March 23, 2012. Explanation of why it was taken offline temporarily is here. On March 23, 2012, the PP Blog’s security software recorded a “mass injection attack” as the Blog visited a domain styled CollotGuerard.com while researching matters pertaining to Jeremy Johnson. Collot Guerard is an attorney for the FTC and an alleged subject of harassment by Johnson or people close to Johnson because of the FTC actions against Johnson. The PPBlog is not revisiting the CollotGuerard.com domain and believes it is imprudent for readers to visit the domain.

    Our Jan. 4, 2012, story, with the original introductory editor’s note, is republished below. The republication date is Jan. 15, 2013 . . .

    EDITOR’S NOTE: In this January 2011 column on the concept of “fraud creep,” the PP Blog explained that law enforcement is counting victims of web-based scams by the tens of thousands.  The numbers are truly alarming, and the investigative and logistical challenges of unraveling a fraud scheme that may fuel itself by tapping into thousands of bank or payment accounts are unprecedented. In some individual cases, victims’ losses have been counted in the tens of millions — if not the hundreds of millions — of dollars. The Blog suggested a principal definition for the ever-expanding phenomenon of “fraud creep” and four associated definitions, including this one:

    “A form of deceit (fraud-creep plan) employed by hucksters, particularly on the Internet, characterized by efforts to popularize an illicit pursuit by withholding critical information and demonizing market regulators. Profits are reaped by tapping into disillusionment and despair and creating a bogeyman or figure of blame to rationalize participation in a dubious or illegal enterprise. The bogeyman or figure of blame often may be the government, a branch of government, a law-enforcement or regulatory agency or government employee.”

    In the editorial below, the PP Blog reports that public servants have good reason to worry that their good names and the good work they do in pursuit of justice for victims are endangered as “fraud creep” continues to evolve. Indeed,  the creepiest part of the Internet is further winnowing the already-thin blue line of defense against scams and scammers.

    “[A] party’s bad faith use of an Internet domain incorporating, without permission, the name of another party is not only misleading, but may bring extremely harmful consequences for the abused party . . . There is simply no legitimate reason for Johnson to use domains and e-mails carrying the names of FTC attorneys. Johnson is not seeking legitimate outlets for his views, but merely continues his pattern of deceit and harassment and is attempting to interfere with legitimate government business via illegitimate means.” — Federal Trade Commission, in emergency filing in the Jeremy Johnson/IWorks case, Dec. 15, 2011

    UPDATED 9:59 P.M. ET (U.S.A.) Jeremy Johnson, IWorks Inc. and dozens of shell companies were implicated by the FTC in an alleged fraud scheme involving hundreds of millions of dollars. Johnson, 35, of St. George, Utah, denies wrongdoing. The case was filed in U.S. District Court in Nevada in December 2010. Elements of the case have devolved into what Johnson is disingenuously positioning as a battle to maintain his right to free speech.

    Collot Guerard, a Washington-based FTC attorney, career public servant and member of the District of Columbia Bar since 1973, is among a number of law-enforcement officials involved in the case. What she was subjected to is nothing short of chilling and disgraceful — and, as you’ll see below, Google and other companies had a chance to profit from the creepy attack on Guerard.

    Screen shot: Until this morning, Google was publishing this ad, which planted the seed that longtime FTC staff attorney Collot Guerard is “corrupt.” Precisely who placed the ad and how it was paid for are unclear. Another ad on Google’s network planted the seed that Robb Evans, the court-appointed receiver in the Jeremy Johnson/IWorks case, is a fraudster. The ad that used the receiver’s name also has gone missing.

    As a preliminary matter, the Blog is reporting today that ads displayed on Google that attacked Guerard and Robb Evans, the court-appointed receiver in the Johnson/IWorks case, appear to have gone missing this morning after having been published around the clock for days. For now, at least, the damage appears to have been contained — but the mere fact it presented itself in the first place is a matter for great introspection. No public official can feel secure in this environment. If attacks against them are condoned, then no member of the public can have confidence in his or her own safety.

    As another preliminary matter, the Blog is reporting that certain domains allegedly used to attack Guerard and Evans appear to have been disabled this afternoon. The how and why are not immediately clear. (UPDATE 9:59 P.M.: The domains appear to have been reenabled.)

    FTC Files Emergency Motion

    In little-noticed emergency court filings in federal court in Nevada last month, the FTC advised Chief U.S. District Judge Roger L. Hunt that it issued a subpoena to Web.com Group Inc., a Florida-based domain-name registrar. Through the subpoena, the agency learned that Utah-based Johnson “purchased and gained control over” CollotGuerard.com, according to the FTC’s emergency filing.

    Johnson’s aim was to use the domain to harass Guerard, according to the FTC filing. The agency also said “Johnson and others working with him purchased and/or gained control over the Internet domains and websites” titled RonnieBrooke.com and JaniceKopec.com. In supplemental filings yesterday, the agency alleged that Kevin Pilon, a Johnson/IWorks co-defendant, purchased the Brooke and Kopec domains.

    Brooke and Kopec also are FTC attorneys involved in  the Johnson/IWorks case.

    If the FTC’s allegations are true, the events involving Johnson and Pilon are almost indescribably creepy. Indeed, taxpayers and fraud victims may have good reason to be totally creeped out, given that Johnson and Pilon allegedly registered at least three domains in the names of public officials and have (or may have) a corresponding ability to create email addresses in their names.

    Johnson, according to the FTC, also spent $525.60 at BlueHost to purchase 24 domains in a single order on Dec. 3. Many of the domains use the FTC’s name. Here is a sampling:

    • FTCExtortion.com
    • FTCCorruption.com
    • FTCHatesBusiness.com
    • FTCgov.net
    • FTCScam.com

    There are at least 19 more, according to the FTC, noting that it issued a subpoena to FastDomains.com Inc., a BlueHost sister company, to glean the information. The agency also said Andy Johnson, who is Jeremy Johnson’s brother and another co-defendant in the Johnson/IWorks case, registered domains that used the FTC’s name and the name of Evans, the court-appointed receiver.

    Screen shot: Part of Jeremy Johnson’s domain-name lineup, as taken from an FTC filing yesterday.

    In its filings, the FTC is stressing that it is not attempting to to stifle any defendant’s right to free speech. Instead, the FTC is asking Hunt to enjoin “Jeremy Johnson . . . and those working in concert with him from deceptively using domain names, websites, and Facebook and Twitter pages that either expressly or impliedly claim to be associated with the FTC or FTC attorneys.”

    An attorney for Evans has filed a similar motion. Hunt is scheduled to hear arguments tomorrow.

    The slippery slope in all of this is that the adjudication of fraud cases nationwide and restitution to victims could be delayed as agencies and judges are forced to address Internet side shows orchestrated by defendants. Such side shows inevitably will affect judicial economy and increase costs to taxpayers, while potentially creating a condition in which individual public servants will have to hire private counsel, file harassment reports with local police, ask police in their local jurisdictions to provide extra patrols of their homes and neighborhoods and change their phone numbers.

    Another potential outcome is that victims of fraud schemes will lose hope as they witness agencies and employees that are supposed to protect them becoming bogged down by an ever-expanding series of harassment campaigns on the web. If Jeremy Johnson’s alleged misdeeds aimed at Guerard and potentially infecting others proves anything, it’s that the thin blue line guarding society can be made thinner . . . and thinner . . . and thinner on the Internet.

    Make no mistake: This is a horror show in slow motion that is hiding behind the 1st Amendment.

    Public servants at all levels have valid reasons if they’re suddenly feeling demoralized and totally creeped out. If the alleged Johnson practice of harassing public servants online and declaring it a 1st Amendment right is permitted to stand, any employee from any conceivable branch of government is at risk of having his or name appropriated as part of a strategic harassment campaign. As things stand, if a defendant in any conceivable dispute can gain access to a registrar and provide a way to pay for a domain name, he or she apparently will have little trouble starting a harassment campaign.

    And if a defendant has access to a Google AdWords account, he or she can use the account to place an ad that plants the seed that the public employee and object of their loathing is a fraud.

    No, creepy does not even begin to describe the harassment campaign to which Guerard and Evans have been subjected.  Johnson and his alleged helpers should be ashamed. Judge Hunt should order domains used as harassment tools taken offline.

    Creeps Are Limited Only By Their Imaginations

    Unhappy about that speeding ticket and given to behaving like a creep? As things stand today, it appears you’ll have little trouble acquiring a domain in the name of state trooper and waging an electronic war against her. Perturbed because you got caught parking in front of a fire hydrant? If you’re given to being a creep or can’t make the calculation that there are differences between free speech and cyberstalking, apparently there are very few obstacles between you and sliming the cop through a domain that uses his name.

    Behind on your child support and so blinded by contempt for your ex that you cannot recognize or cannot contain your own creepiness? Little is stopping you from sliming the domestic-relations officer. Found guilty by a judge at any court level? As a creep-in-waiting, all that stands between you and your revenge campaign are an easy-to-obtain domain registration and your ability to showcase your advancing madness by publishing slime.

    Seeing red because Juror No. 6, a grandmother living on Social Security, sided with 11 other jurors and found you guilty of breaking into your neighbor’s home last Christmas, stealing his 40-inch LCD television and selling it for crack money? If the alleged Johnson model is permitted to stand, you can taunt Grandma and her fellow jurors by registering domains in their names — and then you can use your creepy intelligence to smear them.

    If you’re inclined to be a creep, that is.

    If readers are not already sufficiently creeped out, they should consider this:

    One FTC official who has interacted with Johnson in the case and knows about the domains bearing the names of his agency colleagues appears to have preemptively registered a domain in his own name, possibly to prevent Johnson and/or his sympathizers from doing the same thing.

    If that’s what happened, it is a perfectly rational response — but one that demonstrates just how vulnerable public servants are to attack. Any creep can start one at any time.

    Johnson himself, according to the FTC, advised the FTC employee in an email that other government employees might be wise to buy their own dot.coms.

    “I noticed that you purchased [DotanWeinman.com] yesterday [Dec. 12] and you certainly could have purchased the other domains earlier if you did not wish for them to be used by others,” Johnson allegedly wrote to FTC staff attorney Dotan Weinman.

    Johnson did not say in the email how he happened to notice Weinman had purchased DotanWeinman.com, which leads to questions about whether Johnson himself had been thinking about adding a Weinman domain to his harassment stable.

    That’s creepy, to be sure.