President Bush observes the 2006 swearing-in ceremony of incoming Transportation Secretary Mary Peters. Peters held the cabinet post between October 2006 and January 2009. Source: Wikipedia: White House photo by Paul Morse.
UPDATED 5:42 P.M. ET (U.S.A.) Public officials involved in the AdSurfDaily Ponzi case were not the only targets of bogus liens filed by Kenneth Wayne Leaming, according to federal prosecutors in Seattle.
Leaming, 55, also filed a lien against Mary Peters, the U.S. Secretary of Transportation under President George W. Bush during his second White House term, prosecutors said.
In addition, prosecutors said Leaming filed liens against U.S. District Judge Rosemary Collyer; former U.S. Attorney Jeffrey A. Taylor; former assistant U.S. Attorney William Cowden; current assistant U.S. Attorney Vasu B. Muthyala; and Roy Dotson, a special agent of the U.S. Secret Service.
Collyer is presiding over both the civil and criminal prosecutions connected to the ASD Ponzi case in the District of Columbia. The civil case, which led to the successful forfeiture of tens of millions of dollars in the personal bank accounts of ASD President Andy Bowdoin, was brought by Taylor’s office in August 2008.
Cowden and Muthyala assisted in the prosecution against ASD-related assets, including more than $65.8 million in Bowdoin’s 10 bank accounts and more than $14 million in other bank accounts linked to Golden Panda Ad Builder, a companion autosurf.
Dotson was a key investigator in the case, which was brought in part through the efforts of a Florida-based Task Force. Bowdoin was arrested in December 2010. He is free awaiting trial in the District of Columbia.
Taylor was succeeded as U.S. Attorney by Ronald C. Machen Jr. Machen’s office was sued pro se earlier this month by ASD members Todd Disner and Dwight Owen Schweitzer of Miami. Disner, a cofounder of the Quiznos sandwich franchise, and Schweitzer, a former attorney whose license was suspended in Connecticut, asserted that prosecutors engaged in “character assassination” against Bowdoin and that the forfeiture case consisted of a “tissue of lies.” They also claimed Dotson’s affidavit that led to the seizure of Bowdoin’s assets was flawed and that 4th Amendment violations had occurred.
Disner and Schweitzer also named Rust Consulting Inc., the government-approved claims administrator in the Ponzi case, a pro se lawsuit defendant. In September, Machen joined Assistant Attorney General Lanny Breuer in announcing that the government had returned $55 million to victims of the ASD Ponzi.
Collyer ordered the forfeiture of Bowdoin’s assets in January 2010. Her rulings were upheld by the U.S. Court of Appeals. Bowdoin, 77, is using Facebook and a website known as “Andy’s Fundraising Army” to raise money for his criminal defense on charges of wire fraud, securities fraud and selling unregistered securities.
Why Peters allegedly was targeted by Leaming was not immediately clear. But court records suggest the FBI is investigating Leaming ties to a Washington state group of “sovereign citizens” known as the “County Rangers.”
Leaming was arrested on Tuesday. On Wednesday, he appeared before U.S. Magistrate Judge J. Richard Creatura in Tacoma. Creatura ordered Leaming’s detention to continue. The date of Leaming’s next court appearance was not immediately clear.
Leaming, according to prosecutors, was found Tuesday with two federal fugitives from Arkansas who were indicted in February on federal charges related to an alleged envelope-stuffing scheme. Prosecutors identified the fugitives as Timothy Shawn Donavan and Sharon Jeannette Henningsen.
Donavan and Henningsen have court histories that include declaring themselves “living breathing free” people to whom laws do not apply, according to records. Like Leaming, they are being held at the Sea Tac Federal Detention Center near Seattle.
Leaming has been charged with retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title, an obstruction of justice statute.
Among the government’s allegations against Bowdoin is that he falsely claimed to have received an important award for business acumen from President Bush in 2008. ASD members used Bush’s name in online promos, according to records.
In July 2008 — as the Secret Service and the Task Force were investigating ASD — Bowdoin threatened to sue critics, according to court filings. After the seizure of his assets, he claimed the government’s action was the work of “Satan” and compared the seizure to the 9/11 terrorist attacks, which killed nearly 3,000 people in New York, Washington and Pennsylvania.
Cowden, whose name was repeatedly misspelled as “Crowden” by pro se litigants in the forfeiture case, was derided as “Gomer Pyle” on the now-defunct, pro-ASD “Surf’s Up” forum. One ASD member opined that Cowden should be placed in a torture rack. Another said a “militia” should storm Washington. Still another issued a “prayer” that called for prosecutors to be struck dead.
ASD critics were derided as “rats,” “maggots” and “cockroaches.”
In December 2010, prosecutors linked ASD to E-Bullion, a defunct California payment processor operated by James Fayed. E-Bullion has been linked to several Ponzi schemes.
Earlier this month, Fayed was formally sentenced to death for arranging the contract slaying of his estranged wife, Pamela Fayed.
Pamela Fayed was slashed 13 times in a Greater Los Angeles parking garage in July 2008 while James Fayed sat on a bench within earshot of Pamela’s screams, according to records.
At least one ASD member used E-Bullion to send money to ASD, according to federal court records. That member — former ASD “trainer” Erma Seabaugh of Missouri — was operating a purported “religious” nonprofit in Oregon and using ASD to promote a pyramid scheme, according to records.
URGENT >> BULLETIN >> MOVING: AdSurfDaily figure Kenneth Wayne Leaming was arrested Tuesday by the FBI on criminal charges of retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title, the PP Blog has learned.
Leaming, 55, of Spanaway, Wash., was arrested at his home, the office of U.S. Attorney Jenny A. Durkan said this evening. When arrested, Leaming was found with two federal fugitives from Arkansas. Both were arrested with Leaming and are detained at the Sea Tac Federal Detention Center near Seattle. Leaming is being held at the same facility.
Prosecutors identified the fugitives as Timothy Shawn Donavan and Sharon Jeannette Henningsen. Prison records say Donavan is 63; Henningsen is 67. They were accused of mail fraud in an alleged home-based business scheme involving stuffing envelopes.
Prosecutors in Seattle said Leaming is accused of filing liens against at least five federal employees involved in the ASD case, including a federal judge, a former U.S. attorney, a former assistant U.S. attorney, a current assistant U.S. Attorney and an agent of the U.S. Secret Service.
Bail details for Leaming and the Arkansas fugitives were not immediately clear.
UPDATED 3:59 P.M. ET (U.S.A.) : Kenneth Wayne Leaming, an AdSurfDaily figure and a purported “sovereign citizen,” has been arrested in Washington state.
Leaming, 55, is listed as a prisoner at the Sea Tac Federal Detention Center near Seattle, a spokesman for the Federal Bureau of Prisons said this afternoon. The circumstances under which Leaming was arrested and detained were not immediately clear. Also unclear was the date upon which he was arrested.
Federal prosecutors in the office of U.S. Attorney Ronald C. Machen Jr. in the District of Columbia — the venue from which ASD President Andy Bowdoin was charged last year with operating a Ponzi scheme involving at least $110 million — did not immediately return a call seeking comment on Leaming’s arrest and whether it was related to his ASD activities.
The office of U.S. Attorney Jenny A. Durkan in Seattle had no immediate details on Leaming’s arrest and detention.
In 2010, Leaming unsuccessfully sought to sue the United States — apparently for the staggering sum of more than $29 trillion — for its actions in the ASD case.
Meanwhile, in 2009, Leaming sought to place the Washington State Bar Association in involuntary bankruptcy, according to federal records. Records also show that Leaming sought to place a Franciscan hospital in Washington state in bankruptcy.
The Anti-Defamation League lists Leaming as a member of an “active anti-government extremist group that calls itself the ‘Little Shell Pembina Band of North America.’”
Leaming, who uses the names of “Kenneth Wayne” and “Keny,” was blocked in 2010 by U.S. District Judge Rosemary Collyer from filing pro se pleadings in the civil case against ASD’s assets. That case was brought in the District of Columbia by the U.S. Secret Service in August 2008.
Records show that, in 2010, ads listing Leaming as an “attorney” appeared online. Leaming, though, appears to have no law degree.
ASD members have claimed Leaming was providing them legal advice.
Leaming’s company — American-International Business Law Inc. of Spanaway, Wash. — is listed as registered agent for at least 73 companies. Some of the companies use the word “federal” in their names. One company conjures the image of a U.S. government agency in its name, calling itself “Homeland Security Service.” Another company calls itself “Presidential Detail.”
Two other companies use forms of the name “JP Morgan.”
Some sovereign citizens — including members of ASD — have clashed with banks in litigation unrelated to ASD.
In October 2011, some ASD members received an email that used the Leaming nickname “Keny” and encouraged them to file paperwork at the “county” level that identified a federal judge, prosecutors and a U.S. Secret Service agent as “DOJ thieves.”
Screen shot: This OWOW "Store" lists a street address in the Bronx and touts a "GRAND OPENING" on an unspecified date. The store URL is linked to PayPal, although the store appears to have lost its ability to collect money via the online payment processor. Separately, the store's apparent parent company — One World One Website Inc. — is listed in Wyoming records as "Inactive – Administratively Dissolved (Tax)." Earlier this month, OWOW led the charge to promote Text Cash Network (TCN), according to affiliate promos. OWOW is associated with Phil Piccolo and Joe Reid. Reid has led the conference-call cheerleading for TCN after previously leading the conference-call cheerleading for Data Network Affiliates (DNA), yet another company associated with Piccolo. Reid also has appeared in at least one video for OWOW. Piccolo is known online as the "one-man Internet crime wave" and has a history of threatening critics. Promos for DNA, OWOW and TCN describe the firms as "free" opportunities that create wealth for members.
UPDATED 12:46 P.M. ET (U.S.A.) One World One Website Inc. (OWOW), the company linked to MLM huckster Phil Piccolo, has been listed in Wyoming as “Inactive – Administratively Dissolved (Tax).” The state lists the firm’s “inactive” date as Nov. 10. OWOW’s ownership is not listed, although records suggest the firm organized itself to float 1 billion shares of common stock. Whether the stock was public or private is unclear. Also unclear is whether any actual stock was issued.
Separately, web records show that Text Cash Network (TCN) — a purported text-advertising firm promoted on the OWOW site earlier this month — uses the same four DNS servers and an IP address in the same string as Data Network Affiliates (DNA), another venture linked to Piccolo. Records also suggest that the TCN domain name originally was registered last month through an entity known as OWOW Wholesale Domains before the registration was made private.
Meanwhile, a site known as OWOW Wholesale Direct that uses the One World One Website Inc. logo is soliciting orders for a number of products, including two products OWOW positioned last year as cures or treatments for cancer. The order page links to PayPal. When visitors press the PayPal button, this message appears:
“This recipient is currently unable to receive money.”
If prospects visit the main OWOW website — as opposed to the OWOW Wholesale Direct site — they are told they need to enter the site through an affiliate link to purchase products, including the two purported cancer cures or treatments. When a visitor arrives at the main OWOW site through an affiliate link, they can place items in a shopping cart — but when they are about to be forwarded to the payment page, these messages appear: “This Connection is Untrusted” (Firefox); “The site’s security certificate has expired!” (Google Chrome); “There is a problem with this website’s security certificate” (Internet Explorer).
The presence of the shopping cart on the main OWOW site and the presence of the PayPal buttons on the OWOW Wholesale Direct site suggest the firm or its affiliates provided customers two different ways to pay: PayPal and perhaps an independent credit-card processor whose identity remains unclear because of the problem with the security certificate on the orders site.
A graphic on the the OWOW Wholesale Direct site suggests the firm has a “store” in the Bronx at 11 E. 213th Street, “Just two blocks from Gun Hill Road off of Jerome Avenue.”
The headline in the graphic reads, “Earn THOUSANDS Giving Away A FREE Opportunity.”
It is unclear whether OWOW sold franchises to affiliates or operates the store as a self-owned retail outlet. In 2010, DNA claimed affiliates could pay a fee to open their own cell-phone stores.
DNA, however, appears never to have released its promised cell phone or opened any stores. The firm purported to be a player in many businesses, including a license-plate recording business to assist law enforcement, a mortgage-reduction business and an offshore “resorts” business.
In 2010, OWOW claimed that people who sent it money before Nov. 30 (2010) would earn “24% Annual Interest.” If members missed the Nov. 30 date, they’d earn only 18 percent, according to the promo.
The November 2010 email led to questions about whether OWOW was selling unregistered securities as investment contracts.
“Did you know that many PROS are receiving 24% Annual Interest on their money (sic),” the OWOW pitch read in part. “The deadline for 24% annual interest paid in monthly increments of 2% will end on 11/30/2010 . . . Any funds deposited thereafter will pay 18% annual interest in monthly increments of 1.5% . . .”
DNA-Like Culture Of Threats Emerging At TCN?
In 2010, DNA threatened critics while trying to manage its operations in an information vacuum. Upon its appearance online early last year, DNA had neither a contact form nor a contact email address on its website. Virtually the same circumstance has presented itself at TCN.
Late last winter — after DNA placed a Gmail address on its site after considerable howling from critics — a person who sent a note to the Gmail address received back an autoresponder message with a headline of “Top 16 Customer Service Issues.”
Item No. 5 on the Top 16 list read: “The D.N.A. Management is Aware of many FALSE Rumors . . . The D.N.A. Legal Department is on top of such and is taking Legal Action . . . You can not become the #1 record breaking company in THE WORLD . . . Without people taking cheap shots at you . . . In the mean time keep on keeping on . . .”
DNA also claimed the reason its original domain registration used privacy protection and an address in the Cayman Islands (while leeching off the name of the U.S. AMBER Alert system) was to prevent management from having to “put up with 100 stupid calls a day.”
TCN, according to an affiliate’s Blog, now is saying this (italics/indentation added):
“The Internet is The WILD WILD WEST when it comes to what people say about anything. The laws are very different today than they were even 3 years ago. They finally passed several laws that will allow a company like T.C.N. to protect it’s (sic) good name and business model. And we will use the full extent of the law to protect T.C.N. when made available to us. Please note that many of these blogs or so called M.L.M. SELF PROCLAIMED CRITICS produced no legal documentation not (sic) substantial facts. Instead they hide behind such disclaimers such as IT IS MY OPINION or SO AND SO SAID OR CLAIMS. Now on the other hand if a Licensed MLM Practicing Attorney were to say such please let us know ASAP. NOTE ALSO: Many people who write these blogs hide behind bogus names, e-mails and even hide their ISP. If you ever come across someone who does slander or prints mis-information about our company and you have a real name and contact information please pass it on to our legal department located in your back office.”
The same TCN affiliate site also suggests there may be tax advantages if prospects enroll in the upstart opportunity.
“T.C.N. Corporate has a 100% separate division set up to call on traditional businesses worldwide. V.I.P. Agent will need to sell only 1 V.I.P. Advertising Package Annually,” according to the affiliate site. “A sale to self to resell, to personally use or to just give it away as a gift would count as such. In fact when you personally use it or give it away as a gift it just may have some tax benefits. Check with a professional tax accountant.”
And TCN — like DNA before it — also is offering an explanation for why is does not use a contact form or publish a contact email address, according to the TCN affiliate’s Blog, which is hosted on Blogspot, Google’s free platform (italics/indentation added):
“Text Cash Network Inc is a USA Corporation and is own (sic) 100% by a five year old communication company which is another USA Corporation owned by The Johnson Group. We have not disclosed the communication’s company (sic) name or contact information in fear that THOUSANDS OF AGENTS may or should we say would call them for information prior to our official launch of 12/12/2011. They are not an MLM or Marketing Company set up to handle such incoming calls. Once T.C.N. Customer Service Center is open they could then just re-direct such calls to T.C.N.”
Like OWOW, a company named “The Johnson Group Inc.” is listed in Wyoming records as “Inactive – Administratively Dissolved (Tax).” It is unclear, however, whether The Johnson Group entity in Wyoming is the same firm that owns TCN.
TCN and OWOW use the same registered-agent service in Wyoming, according to records. TCN’s corporate registration became effective on Nov. 8. Records suggest that, just two days later — on Nov. 10 — OWOW’s registration was listed as “Inactive – Administratively Dissolved (Tax).”
Affiliates of TCN say the firm is operating in the region of Boca Raton, Fla., as an arm of The Johnson Group. DNA also operated from Boca Raton, and OWOW listed an address in nearby Deerfield Beach.
Are TCN Affiliates Creating Another Flap?
Even through TCN says it is owned by “The Johnson Group,” some TCN affiliates whose promos also reference OWOW have added an ampersand and an extra proper noun to their TCN ads. These promos identify TCN’s owners as “The Johnson & Johnson Group.”
Johnson & Johnson, a component of both Dow Jones and the S&P 500, is the internationally famous maker of pharmaceuticals and consumer products that are household names. Johnson & Johnson, which is based in New Jersey, also is known under a “Group” version of its name.
Several TCN affiliates — including international affiliates whose native language may not be English — are claiming this in promos (italics/indentation added):
“O.W.O.W. is ONLY promoting TEXT CASH NETWORK Inc
HERE IS WHY… #1 they pay like 100 times more than ANY OTHER and #2 is that: TEXT CASH NETWORK is owned and operated by The Johnson & Johnson Group.” (Emphasis added).
The promos go on to list “Mr. T. Michael Johnson” as “C.E.O.” of the “Johnson & Johnson Group” and “Mr. R. Christopher Johnson” as “President.”
Some affiliate promos for TCN that also reference OWOW have described “The Johnson & Johnson Group” as a player in the “Internet Software Business since 1994.” Promos for TCN that do not included the ampersand and the extra proper noun have described “The Johnson Group” as a “communications” company.
On Wednesday, Johnson & Johnson — the New Jersey-based Dow and S&P 500 component — said that it “will look into” whether the TCN promos and the Johnson & Johnson Group references could create any brand confusion.
“I am not aware of any affiliation they would have with Johnson & Johnson,” a company spokesman said about TCN and The Johnson Group.
One TCN affiliate promo that referenced the Piccolo-associated OWOW entity and used the name “Johnson & Johnson Group” blared this message (italics/indentation added):
“Why did O.W.O.W. get a TEN DAY JUMP START with this Incredible Opportunity? Two words “JOE REID”… One of The Johnson & Johnson Group management team was once in the referral marketing industry and knew of Joe’s reputation for taking companies into the marketplace. Joe started off consulting with them and is now the only person direct to the company.
“O.W.O.W. management convinced Joe that they should not open up the flood gates and that they should use O.W.O.W. as their TEST TEAM and get any bugs out of the system,” the message continued. “Joe convinced J&J to do a WHISPER LAUNCH… And we got the gift of a lifetime.
“Our team recruited over 1000 people in less than 24 hours… We estimate our team will build a 10,000 team in 10 days . . .”
When DNA — yet another company linked to Piccolo — came out of the gate last year, it claimed it was “going public” and used the names of Martha Stewart, Donald Trump and Oprah Winfrey. Joe Reid was one of DNA’s principal cheerleaders.
Reid has emerged in the same role for TCN, which is using the same conference-call software DNA used last year. Reid has suggested TCN could become the next Groupon. The Groupon references were made before Groupon’s stock price plummeted to below the $20 IPO level earlier this week.
Analysts have fretted about the Groupon business model and emerging competition.
TCN purports to be in a business by which members will receive up to five text advertisements per day to their cell phone. Its site is filled with errors of grammar and usage, but the firm says it has recruited more than 80,000 members in just days.
Among the claims on the TCN website is this:
“Here are two mathematical examples of maximum revenue sharing. A 2×10 Referral Structure Pays A Maximum Earnings (sic) of $76.75 Per Day or $2,302.50 Per Month plus Matching Bonuses. A 3×10 Maximum Earnings = To (sic) High Of A Dollar Figure To Put In Print.”
BULLETIN: David S. Mandel, the receiver in the alleged Commodities Online LLC Ponzi and fraud scheme, has sued four Florida residents and is demanding more than $9 million.
Named defendants in U.S. District Court in the Southern District of Florida are James C. Howard III of Parkland; Louis N. Gallo III of Parkland; Martin Vegas of North Bay Village; and George Saliba, also known as George Saliva, of Parkland.
“From January 26, 2010 until April 1, 2011, Howard and Gallo operated and controlled a Ponzi Scheme designed to defraud investors that allowed Howard, Gallo and their confederates to steal and misappropriate investor funds,” Mandel alleged in the lawsuit.
“Howard and Gallo, in running the Ponzi Scheme, regularly made transfers of Commodities Online funds from one related entity to another with no business purpose other than to make the Ponzi Scheme more difficult to detect and assist in conveying the appearance of a profitable business to investors,” Mandel alleged.
Howard controlled Florida firms known as Sutton Capital LLC and J&W Trading LLC, Mandel alleged. Meanwhile, Gallo controlled Florida firms known as Minjo Corp. and American Financial Solutions LLC, according to the lawsuit.
Four “related entities involved in the inter-company transfers utilized in the Ponzi scheme” were identified by Mandel as:
SSH2 Acquisitions Inc, controlled by nondefendant Michael Palermo.
Rapallo Investment Group LLC, controlled by non-defendant Patricia Saa.
Minerales Mexiron LLC, a Florida firm controlled by defendant George Saliba.
Minerales Mexico Iron SACV Inc., another Florida company controlled by Saliba.
Former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy is listed in Nevada records as a “director” of SSH2. She has not been accused of wrongdoing. SSH2 sued Howard and others in 2010, in a case that alleged it was a victim of a Ponzi scheme.
On two dates in February 2010, Mandel alleged, Howard “wrongfully converted” more than $1.74 million my moving it from Commodities Online to Sutton Capital and JW Trading.
In March 2010 and April 2010, according to Mandel, Howard caused Commodities Online to “lend” more than $320,000 to yet another entity: Pisces Trading Inc.
“Howard thereafter directed Pisces Trading, Inc. to repay these loaned Commodities Online funds to his wholly owned and controlled entity, J&W Trading, thereby converting the Commodities Online funds to his own benefit and use,” Mandel alleged.
From March 2010 to March 2011, “Gallo converted $413,143 of Commodities Online funds to his own use and benefit by causing net funds to be transferred to his wholly owned and controlled entity, American Financial,” Mandel alleged.
Between May 2010 and March 2011, according to the lawsuit, “Gallo converted $1,767,870 of Commodities Online funds to his own use and benefit by causing net funds in that amount transferred to his wholly owned and controlled entity, Minjo.
In March 2011, according to the lawsuit, Gallo also “converted $360,000 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Minerales Yacimientos y Reservas in Mexico, which the Receiver is advised is a fictitious company.”
Still moving money in March 2011, Gallo “converted $226,200 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Terracerias y Pavimentos in Mexico” — plus the following sums and destinations:
$40,044 to Jorge Ortega Balderas in Mexico.
$700,000 to Diego Diaz Ceballos Torre in Mexico.
$625,000 to Grupo Minero Leecota in Mexico.
$150,000 to Franscisco Javier Ortiz Gonzalez in Mexico.
In a separate filing, Mandel said that the process of determining whether Commodities Online had any iron holdings in Mexico had proven difficult, but that investigators now believe that there is “no recoverable iron ore in Mexico.”
What happened to the money in Mexico is unclear. In April 2011, the SEC alleged that about $3.8 million funds linked to Commodities Online flowed to Mexico and the Netherlands as the agency was issuing subpoenas in the emerging fraud case in March 2011.
The transfers were “extremely suspicious,” the agency said in April.
“Howard, Gallo, and Vegas breached their fiduciary duty to Commodities Online and its investors by personally stealing and misappropriating Commodities Online funds, allowing coconspirators to steal and misappropriate those funds, and dissipating almost $3 million through imprudent transfers of Commodities Online funds to Mexico without adequate controls and documentation to insure the company’s assets and funds,” Mandel alleged in the lawsuit.
Money continued to flow to Mexico even after Commodities Online retained attorney James Sallah in March 2011 and Sallah “counseled management of Commodities Online to discontinue all solicitations of new investor money, to freeze all existing company assets and otherwise cooperate with the Securities and Exchange Commission,” according to Mandel’s lawsuit.
“Contrary to Mr. Sallah’s advice, defendants Howard, Gallo and Vegas, in disregard of their fiduciary duties to Commodities Online and its investors, continued to authorize wire transfers of Commodities Online funds to various accounts in Mexico where the funds became untraceable and defendants could re-divert the proceeds of the wire transfers to their personal use and benefit,” according to the lawsuit
Vegas, according to Mandel, “converted $631,264 of Commodities Online funds to his personal use and benefit by causing those net funds to be paid out to him for no consideration.”
Saliba, according to the lawsuit, “controlled” Minerales and Mexiron and “converted $2,089,368 of Commodities Online funds to his own use and benefit” between May 2010 and November 2010.
Screen shot: PDF from section of Page 1 of the indictment of Doris E. Nelson in an alleged $126 million Ponzi operating internationally through multiple companies.
EDITOR’S NOTE: This information is presented in the form of briefs, with links to external sources.
1.)Doris E. Nelson, arrested/jailed in Spokane, Wash., region, last week after federal raid in April 2010. SEC filed civil charges in September 2011.
The allegations against Nelson and multiple companies in Nevada, Utah and Canada are alarming, but also somewhat standard fare if you’ve been observing how schemes form and then explain away problems when trouble develops.
Among the core allegations are these:
Nelson, of Colbert, Wash., ran a payday-loan business called “The Little Loan Shoppe” in the area of Spokane. The firm was linked to multiple LLCs in the United States and multiple LTDs in Canada. The business started out in the Canadian province of British Columbia in roughly 1997, and moved to the United States “in or about 2001.” Investors were told they could earn enormous profits from the spread between the loan shop’s expenses and what it charged customers for a short-term loan.
The Ponzi scheme took in “at least” $126 million and caused losses of more than $40 million — losses that affected “at least” 800 investors.
Federal prosecutors say they have identified “victim investors” in multiple Canadian provinces and multiple U.S. states. The indictment also lists a victim from Spain.
The payday loan business was not profitable. Investors were getting paid through a complex shell game that lasted for years and involved the formation of new companies, including marketing and “leads” arms.
Nelson and some of the defendants engaged in wire fraud, mail fraud and money-laundering.
Nelson lied to the Manitoba Securities Commission and advised certain parties to lie to the British Columbia Securities Commission (BCSC).
Nelson used investor funds to purchase a motor home valued at nearly $127,000, a Chevrolet Corvette valued at more than $61,000, a Mercedes Benz valued at nearly $112,000. She purchased more than $220,000 in clothing at the St. Johns Knits store and $217,000 at other stores, including Nordstrom.
Nelson lost $400,000 of investors’ funds gambling at various Las Vegas casinos.
Nelson spent investors’ money on luxury sea cruises, including nearly $29,000 on a Royal Caribbean cruise in which she also spent $23,500 in investor funds to gamble.
The promissory-notes scheme showed classic signs of collapse in October 2008. (More details below.) Nelson slashed payouts to investors — from an anticipated rate of between 40 percent and 60 percent to 10 percent. The 10 percent payouts collapsed by March 2009.
Nelson claimed Little Loan Shoppe bought the building it used in Spokane, but that was a lie. In truth, the company was paying rent to a company owned by Nelson’s husband.
In February 2008, leading up to the beginning of the end in October 2008, Nelson forecast “an explosion of profit.” In May, she announced that “our industry is thriving.” She then opened a new window for investments, telling marks that she was “excepting” new money, as opposed to “accepting” it. “[T]his window of opportunity will probably not be open again due to the expected surplus of income . . .” she wrote.
Between late June and late July of 2008, Nelson announced a “massive marketing campaign” that would turn the operation into “one of the largest loan companies.”
Millions of dollars flowed to the teetering scheme after Nelson’s various hype fests.
In October 2008, Nelson lied to BCSC about how she was making interest payments to investors, denying that the money came from “newer” investors and claiming the cash came from loan profits.
BCSC ordered Nelson to stop issuing promissory notes. Nelson then told investors that changes to U.S. lending laws had “dramatically reduced our profits . . .”
In February 2009, Nelson advised investors to quit contacting her about their investments because the inquiries were distracting her. She then announced a purported account review. In March 2009, Nelson told investors that the account review was behind schedule and perhaps would not be completed until the middle of April.
In March 2009, Nelson traveled to Florida to try to get more money from existing investors.
The scam then collapsed in its entirety and investors experienced ruin.
Read/view coverage of alleged Nelson scam at KXLY.com.
The Alleged Garfield M. Taylor Ponzi Scheme In Metro Washington, D.C.
2.)Garfield M. Taylor, others sued by SEC last week amid spectacular allegations of Ponzi fraud targeted at charities and people of faith, among others.
Outlined below are some of the core allegations in the alleged Garfield M. Taylor Ponzi scheme, which includes multiple defendants and multiple companies. The SEC brought the case last week, alleging a $27 million Ponzi scheme.
First, a quote from Stephen L. Cohen, the SEC’s associate director in the Division of Enforcement.
“Garfield Taylor and his partners in the scheme touted themselves as seasoned and trustworthy financial professionals offering a conservative but lucrative investment opportunity. In reality, they were gambling away investor assets in extremely risky trades and operating a classic Ponzi scheme.”
Key allegations:
Garfield Taylor, of North Bethesda, Md., formerly worked for Fannie Mae and “frequently” used its name in his fraud pitch. His companies, Garfield Taylor Inc. and Gibraltar Asset Management Group LLC, were charged by the SEC, as were five alleged “collaborators”: Maurice G. Taylor of Bowie, Md., who is the brother of Garfield Taylor; Randolph M. Taylor of Washington, D.C., who is the nephew of Garfield Taylor; Benjamin C. Dalley of Washington, D.C., who is the childhood friend and business partner of Randolph Taylor; Jeffrey A. King of Upper Marlboro, Md., whose sister is married to Maurice Taylor; William B. Mitchell of Middle River, Md.
The scheme operated “at least” between 2005 and 2010, targeting “middle class” investors and charities.
The FDIC’s name was used to sanitize the scam.
Unregistered brokers were used to recruit investors.
The firms themselves were not registered.
Misleading PowerPoint presentations were used.
A Baptist church in Maryland, a children’s charity in Washington and an investment club in Philadelphia were shown the PowerPoint presentations.
Fancy language such as “proprietary strategy,” “covered call investment strategy” and “unparalleled downside protection” was used.
The Baptist church also was shown a “fake ‘letter of recommendation’ from Charles Schwab.”
“This letter was not prepared by anyone at Charles Schwab. Rather, it is a fabrication.”
A retiree from Lanham, Md., plowed more than $780,000 into the scam, an amount that represented “nearly his entire retirement savings.”
At least one investor in 2009 was worried about his/her nest egg in the post-Bernard Madoff environment, but Dalley reassured the investor that the opportunity had “taken the internal measures to strictly regulate our traders and accounting to ensure that our investor’s investments are safe.”
When Dalley provided the assurance, he already knew that the opportunity “had not followed a covered call trading strategy and had instead engaged in highly speculative naked options trading.”
Garfield Taylor actually was operating a “joint Ponzi scheme” through his companies.
Garfield Taylor “convinced at least three individuals to give him the username and password to their online brokerage accounts in order for Garfield Taylor to place trades in those accounts on a discretionary basis in exchange for a share of any profits generated.” A Maryland woman duped in this fashion lost “nearly her entire account” originally worth $450,000 “in a matter of two months.”
Garfield Taylor used investors’ money to send his children to private school at a cost of $73,000.
At one point, one of the Garfield Taylor firms had “less than” $1,000 in its account, but an investor “wired approximately $590,000.” Garfield Taylor used the incoming money to make Ponzi payments.
3.) Jamie Campany, 48, of Palm Beach County, Fla., sentenced to federal prison in $29.5 million fraud.
Key allegations:
More than 1,400 investors defrauded.
Multiple companies operating in South Florida and elsewhere involved, including Global Bullion Exchange LLC of Lake Worth. Scam also used name of “Barclay.”
Fraud fueled by telemarketing.
FBI, U.S. Postal Inspection Service and Florida Office of Financial Regulation handled probe.
John Mattera: Source: Mattera Foundation Nov. 2. 2011, news release
EDITOR’S NOTE: So, you recognize the power of the names of Groupon and Facebook and want to trade on their magnetism to drive traffic to your purported “opportunity” — and you want to further sanitize your scheme by describing yourself as a philanthropist and trading on the name of a charity such as the American Red Cross?
And you perhaps want to give money from your scheme to your wife and your mother, a senior citizen?
What follows is a story about the allegations against John Mattera and some of his activities in Florida . . .
John A. Mattera of Boca Raton, Fla., pleaded guilty in 2003 to seven counts of grand theft in three separate Florida criminal cases, according to court records. Among other things, “Mattera stole $34,000 from two Florida investors by promising to provide them with shares of stock that Mattera falsely represented he owned,” the SEC said of the 2003 cases.
In 2009, the SEC charged Mattera “with fraudulently attempting to avoid registration requirements by backdating promissory notes to obtain improperly unrestricted shares of a company,” according to the agency.
And now Mattera, 50, has been sued civilly by the SEC and charged criminally by federal prosecutors in New York in yet another alleged scheme — this one involving claims that Mattera traded on the names of Groupon, Facebook and others in a scam that netted between $11 million and $12.6 million.
The SEC said it is seeking an emergency court order to freeze the assets of Mattera; John R. Arnold, 61, of Florida; Joseph Almazon, 22, of Hicksville, N.Y.; David E. Howard II, 32, of New York City; Bradford Van Siclen, 43, of Montclair, N.J., and eight different business entities. (Ages in this paragraph approximate.)
Authorities said Mattera and “cohorts” duped investors into believing that they could convert shares in Mattera’s purported hedge fund — a company that happened to be pushed by “a web of registered and unregistered broker-dealers” — into shares of companies such as Groupon and Facebook in advance of the famous firms’ IPOs.
Both the SEC and federal prosecutors used descriptive verbs when describing what is alleged to be Mattera’s latest scam — a scam that allegedly involved a network of associates and a company with the high-sounding name of “The Praetorian Global Fund.”
(Emphasis added to SEC’s choice of verbs.)
“By conjuring up a seemingly prestigious hedge fund and touting the safety of an escrow agent, these men exploited investors’ desire to get an inside track on a wave of hyped future IPOs,” said George S. Canellos, director of the SEC’s New York Regional Office. “Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.”
(Emphasis added to U.S. Attorney’s choice of verbs and other descriptors.)
“As alleged, John Mattera duped investors into believing they had bought rights to shares of coveted stock in Facebook and other highly visible and attractive companies which had not yet gone public,” said U.S. Attorney Preet Bharara of the the Southern District of New York. “As the complaint describes, Mattera told elaborate lies about stock he did not own and about how he would keep investors’ money safe in escrow accounts. Instead, Mattera took the investors’ money to fund his own extravagant lifestyle. With today’s charges, his charade is exposed and he will be held to account for his alleged crimes.”
Named relief defendants in the SEC case are Ann Mattera, Mattera’s 71-year-old mother, and Lan T. Phan, Mattera’s wife. Phan, 43, is a physician and yoga practitioner. Authorities say the women, who are not charged with an offense, were beneficiaries of the scheme. (Ages in this paragraph approximate.)
The publicity surrounding John Mattera’s alleged business misdeeds has caused embarrassment for a local chapter of the American Red Cross in South Florida. John Mattera, who is linked on the web to numerous companies or philanthropic organizations even in the wake of previous lawsuits and criminal charges against him, was on the Red Cross board in Broward County until last month, according to the Sun-Sentinel.
On Nov. 2, just days before the SEC and the Feds came knocking, John Mattera was quoted in this news release about an entity known as the Mattera Foundation, which purported to look “to support those in need” by making it easier for them to find grant funding.
“John Mattera hopes that organizations across South Florida will use the new grant application tool to contact The Mattera Foundation and secure funding for their causes,” the news release read in part.
On March 24, 2011, meanwhile, John Mattera was quoted in this news release about a Red Cross golf tournament sponsored by the Mattera Foundation.
From March 2011 news release by the Mattera Foundation.
“Investor and American Red Cross board member John Mattera announced today that his eponymous The Mattera Foundation will sponsor the upcoming American Red Cross Golf Tournament,” the release read in part. “The tournament will be held at the Inverrary Country Club on April 1, and all proceeds will benefit the American Red Cross, South Florida Region.”
It was not immediately clear if Mattera plowed investors’ money into charities. What is clear, according to federal prosecutors, is that he had high appetites and caused investors to believe their money was going into escrow accounts.
“Based on the misrepresentations of Mattera and others, investors sent more than $11 million into escrow accounts maintained at a Florida bank,” prosecutors charged. “Mattera reassured investors that their money would be held in the escrow accounts until either the offering was completed or another triggering event took place, at which time the investors would receive their ownership interest in the particular special purpose entity. However, instead of maintaining the investor money in the escrow accounts as he promised, Mattera caused the vast majority of it to be transferred to other entities with which he was associated. Ultimately, Mattera misappropriated more than $11 million of investor money and spent nearly $4 million on personal items for his family and himself, such as expensive jewelry, interior decorating and luxury cars.”
A veteran IRS agent also used strong language when describing Mattera’s latest alleged fraud scheme. (Emphasis added.)
“The allegations against Mr. Mattera show that the appearance of success can be a tangled web of financial lies,” said Victor W. Lessoff, special agent-in-charge of the Newark (N.J.) Field Office of the IRS Criminal Investigation Unit (IRS-CI).
Such descriptions also surfaced in the epic Scott Rothstein Ponzi caper, which also operated in South Florida.
David R. Lewalski, the Florida man who ran a $30 million commodities Ponzi and fraud scheme known as Botfly LLC and persuaded at least one investor to pony up cash to pay for his defense, has been sentenced to 20 years in federal prison.
Elements of the Lewalski caper were reminiscent of elements of the alleged AdSurfDaily Ponzi scheme, which also operated from Florida. Vile language was directed at investigators in both cases, and Lewalski urged victims not to cooperate with authorities. One person gave Lewalski $50,000 to pay for a lawyer — after Lewalski jetted to Europe on a private Gulfstream IV a day after Florida investigators implicated him in a Ponzi scheme, according to court filings.
ASD President Andy Bowdoin also is asking his members to pony up for his defense to Ponzi charges. A number of ASD members have urged fellow members not to cooperate with authorities.
After his European junket, Lewalski eventually came back to the United States and ensconced himself in a swanky hotel suite overlooking Central Park in New York while pretending to be elsewhere, according to court filings.
The U.S. Postal Inspection Service alleged that Lewalski complained to investors he defrauded about “recent ‘Orwellian’ totalitarian tactics” employed by U.S. investigators in Ponzi scheme cases, instead of accepting accountability for his fraud.
Assistant U.S. Attorney General Lanny A. Breuer joined U.S. Attorney Robert E. O’Neill of the Middle District of Florida in making the announcement about Lewalski’s prison sentence.
In September, Breuer joined with U.S. Attorney Ronald C. Machen Jr. of the District of Columbia in announcing that $55 million had been returned to ASD victims. The U.S. Secret Service seized the money in August 2008.
Bowdoin called investigators “Satan.” Other ASD members called them “Nazis” and “goons.”
In the Botfly case, Lewalski described a victims’ advocate a “c[$%!]” and a “Nazi,” according to court filings. In one rant, Lewalski allegedly said, “So f[$%!] her what a bitch.”
Court documents also allude to a woman who allegedly was called an “FDLE chick” and described by Lewalski as “nuts” and a “bitch.”
FDLE is the acronym of the Florida Department of Law Enforcement, which assisted in the state and federal probes of Lewalski.
BULLETIN: The Los Angeles Times is reporting (link below) that James Fayed has been formally sentenced to the death penalty for arranging the brutal slashing death of Pamela Fayed, his estranged wife and a potential witness against him.
James Fayed, 48, is an emerging figure in the AdSurfDaily Ponzi case. Federal prosecutors in the District of Columbia said in December 2010 that E-Bullion was used to forward money to ASD, which the U.S. Secret Service described as a massive international Ponzi scheme that used multiple payment venues to amass at least $110 million.
Erma Seabaugh, an ASD member who used E-Bullion, was an ASD trainer, according to the government. Records in Oregon show that Seabaugh, whose assets were seized in the ASD case, was operating a purported “religious” nonprofit firm from Missouri. The purported religious entity was known as Carpe Diem.
Seabaugh’s assets were seized in February 2009, during a period of time in which the AdViewGlobal (AVG) autosurf was launching and ASD President Andy Bowdoin was morphing into a pro-se litigant and trying to undo his January 2009 decision to submit to the forfeiture of $65.8 million seized by the Secret Service from 10 Bowdoin bank accounts in August 2008. AVG had close ASD ties, according to members.
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.
FEDI participants could expect to receive payouts deemed “rebates,” according to documents obtained by the Ontario Securities Commission from a FEDI promoter who simultaneously was promoting a mysterious business known as the “Alpha Project.” ASD also used the word “rebates” to describe its payouts, according to court filings.
Ali Alishtari, like ASD’s Bowdoin, contributed money to Republican causes and heralded a purported GOP award for his business acumen, according to documents.
Seabaugh used ASD’s advertising “rotator” to promote an apparent “pyramid scheme” known as StreamlineGold.net, according to federal court filings. Like ASD, Legisi and GoldQuest International, StreamlineGold.net was promoted on Ponzi boards such as TalkGold and MoneyMakerGroup.
Pamela Fayed was stabbed 13 times in a Greater Los Angeles parking garage on July 28, 2008. The Times reported today that James Fayed was seated on a nearby park bench “texting” on his cell phone while his alleged accomplices carried out the slaying.
Los Angeles Superior Court Judge Kathleen Kennedy described James Fayed as “one cold, calculating human being,” according to the Times. Kennedy formally imposed the death sentence yesterday. The jury that convicted James Fayed in May recommended the sentence.
From the Times (italics added):
The only person within earshot who didn’t react was the victim’s estranged husband who was sitting on a nearby bench “texting on his cellphone, like he doesn’t have a care in the world,” Los Angeles County Superior Court Judge Kathleen Kennedy said Thursday, moments before sentencing James Fayed to death for the contract killing.
Oscar Ramiro Ortega-Hernandez: Source: U.S. Park Police.
Oscar Ramiro Ortega-Hernandez has been charged by the FBI with attempting to assassinate President Obama by firing repeated rounds from a car at the White House after dark and then fleeing the Veterans Day shooting scene in Washington.
Ortega-Hernandez, 21, of Idaho Falls, Idaho, also is known as Oscar Ramiro Ortega. He was arrested in western Pennsylvania on Wednesday and made a preliminary court appearance in Pittsburgh yesterday. The case against him was filed in Washington, and he’ll be returned there to face the charges. (Demonstrating that it’s a small world and that judges have overlapping duties and encounter cases of all types, the arrest warrant for Ortega-Hernandez was issued by the same U.S. Magistrate Judge in the District of Columbia who issued the seizure warrants in the August 2008 AdSurfDaily Ponzi case. Meanwhile, the U.S. Secret Service is involved in the Ortega-Hernandez prosecution, as is the office of U.S. Attorney Ronald C. Machen Jr. The Secret Service and Machen’s office also are prosecuting the ASD case. )
An FBI agent who prepared the affidavit noted that investigators had found witnesses at the shooting scene — and also had interviewed Idaho witnesses who know Ortega-Hernandez. One witness, according to the affidavit, told investigators that the suspect had come to believe that the government was conspiring against him.
The same Idaho witness told investigators that Ortega-Hernandez wanted to “hurt” Obama and referred to him as “the anti-Christ.” Another witness, relating a conversation about Ortega-Hernandez, said that Ortega-Hernandez had been heard expressing that he “needed to kill” the President.
Yet another witness told investigators that Ortega-Hernandez claimed Obama was “the devil” and that that Ortega-Hernandez was “preparing for something” and would not stop “until it’s done.”
Ortega-Hernandez, according to the affidavit, told the witness that Obama “needed to be taken care of.”
Investigators said a witness told them that Ortega-Hernandez owned a black gun with a “huge butt” — and that the gun was missing from the bedroom of Ortega-Hernandez when he left Idaho last month driving a black Honda Accord. The gun was described by another witness as a black “AK-47-like gun” with a “scope-like thing” on top.
A witness in Washington observed shots being fired toward the White House “through the passenger-side window” of a dark car that had stopped in front of her. The car then sped away, according to the account of the witness in the affidavit. Another witness described hearing approximately eight sounds of a “popping noise” coming from the car and observing “puffs of air” coming from the passenger side.
Ironically, police found the car abandoned on the lawn of the U.S. Institute of Peace. A witness in that area said the operator of the car fled on foot after trying to restart it. Inside the car, a black Honda Accord in which Ortega-Hernandez was one of two registered owners, investigators found a Romanian Cugir SA semiautomatic assault rifle with a large scope, three magazines loaded with cartridges and “several additional boxes” of ammunition.
They also found a hooded jacket emblazoned with the letters “LA, ” a baseball bat, brass knuckles, and a sales receipt from a Walmart in Fairfax, Va. The receipt was dated Nov. 11 — the day of the shooting — at “approximately” 5 p.m. Investigators went to Walmart and retrieved the surveillance video, which revealed Ortega-Hernandez had been inside the store wearing the “LA” jacket at roughly 5 p.m., according to the affidavit.
Authorities did not describe what Ortega-Hernandez had purchased at Walmart.
Investigators discovered that police in Arlington County, Va., had encountered Ortega-Hernandez and his car about six hours earlier — at 11 a.m. — after receiving a report about a suspicious person. Arlington police recorded the plate number of the Honda Accord and took photos of Ortega-Hernandez.
Although Arlington officers sought permission to search the car, Ortega-Hernandez refused, the FBI said in the affidavit.
Six hours later, Ortega-Hernandez was at the Walmart — and four-plus hours after that, he was opening fire at the White House after dark and speeding away, according to the affidavit. Sunset in Washington on Nov. 11 occurred at approximately 4:57 p.m. ET. The shots rang out at approximately 9:04 p.m., according to the affidavit.
Investigators found nine spent shell casings in the car, according to the affidavit. Because Ortega-Hernandez apparently was wearing the “LA” attire prior to his alleged 5 p.m. Walmart visit, it seems possible that one part of the ongoing probe will focus on what he purchased at the store and what he did for the next four-plus hours before opening fire.
Investigators found “several confirmed bullet impact points” at or above the second story of the White House, according to the affidavit. The First Family’s living quarters are on the second and third stories.
Although the President was not home at the time of the shooting, the White House is occupied around the clock. Whether other members of the First Family were home is unclear. What is clear is that investigators believe Ortega-Hernandez had contempt for the government in general and Obama in specific — and opened fire on the White House from an automobile and made sure he had plenty of ammunition and a means of getting away
Two assistant U.S. Attorneys from Machen’s office supervised the preparation of the documents that led to the issuance of the arrest warrant for Ortega-Hernandez. The FBI agent who prepared the affidavit has more than 15 years’ experience in law enforcement and was assisted in the early hours of the probe by the U.S. Secret Service, the U.S. Park Police and other agencies, according to the affidavit.
Oscar Ramiro Ortega-Hernandez: Source: U.S. Park Police.
BULLETIN: Oscar Ramiro Ortega-Hernandez, an Idaho man suspected of using an assault rifle and shooting at the White House after dark on Veterans Day from hundreds of yards away, was arrested early this afternoon by Pennsylvania State Police troopers who patrol a four-county area near Pittsburgh.
At least two bullets are believed to have penetrated the White House perimeter. One of the bullets was stopped by protective glass. President Obama was not at the White House when the shooting occurred, and U.S. Park Police obtained an arrest warrant for Ramiro Ortega and listed him as wanted on Saturday.
Ramiro Ortega, 21, was arrested at a hotel near Indiana, Pa., a college town in the western part of the state. The arrest occurred at roughly 12:35 p.m. ET today, after U.S. Secret Service agents developed information on the suspect. Whether Ramiro Ortega was visiting someone in the Indiana area or simply intended to rest at the hotel was not immediately clear.
The Park Police said their probe — which has been joined by the Secret Service and other agencies — began Friday at about 9:30 p.m., after officers heard gunfire in the “1600 block of Constitution Avenue NW Washington, DC.”
The area, Park Police said, “is between the White House and the Washington Monument.”
Officers located a crashed vehicle in the area, and “[e]vidence in the vehicle led to us obtaining an arrest warrant for Oscar Ortega,” Park Police said.
ABC News is reporting that Ramiro Ortega is from Idaho and may be mentally ill.
Investigators have not said whether they believed Ramiro Ortega was on his way back to Idaho when he was arrested in Pennsylvania. The area in which the arrest was made is about a four-hour drive from Washington.
