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  • Appeals Court Upholds 65-Year Prison Sentence Of Eddie Smith, Alabama Man Who Solicted Murder Of Federal Judge, Prosecutor, Deputy Sheriff And Newspaper Reporter

    Edmond H. “Eddie” Smith IV had two plans: One was to pay a hitman to kill U.S. District Judge William H. Steele, assistant U.S. Attorney Greg Bordenkircher, a deputy sheriff, a former business associate and newspaper reporter.

    Smith’s other plan was to implicate his murder targets in a plot to frame him by planting false evidence on their computers. Part of the framing plot involved smuggling bogus letters out of prison and planting them at the murder scenes of Steele, Bordenkircher and the others.

    Steele and Bordenkircher work in the Southern District of Alabama.

    According to court records, Smith wanted the bodies of Steele, Bordenkircher and at least one other person to be subjected to a complete “erasing.”

    “They need to be wiped off the face of the earth,” Smith said, in a tape heard by the jury.

    “Needs to be no f[!!!!!!]’ skulls. No f[!!!!!]’ teeth. No bones,” Smith said.

    But he wanted to body of Eddie Curran, the reporter, to be found, according to the tape.

    “And the only one they need to have a body for is f[!!!!!]’ Curran,” Smith said.

    Senior U.S. District Judge William H. Stafford Jr. of the Northern District of Florida sentenced Smith to 65 years in federal prison for the murder plot. The 11th Circuit Court of Appeals upheld the sentence last week.

    Steele had been the presiding judge in a 2007 civil case against Smith, and also presided over a 2009 criminal case in which Smith was convicted of being a felon in possession of ammunition. The FBI learned of the murder plot and staged a sting, according to court records.

    The U.S. Attorney’s Office for the Northern District of Florida prosecuted Smith’s murder-for-hire case. The FBI and the Mobile County, Ala., Sheriff’s Office assisted in the probe.

     

  • UPDATE: Accused Thief, Bail-Jumper, Passport Fraudster And Ponzi Fugitive Brian Kim Arrested In Hong Kong And Returned To The United States

    Captured In Hong Kong: Former TV analyst and accused Ponzi schemer Brian Kim.

    UPDATE: On the lam for 10 months, accused Ponzi-scheme fugitive Brian Kim was arrested last month and returned to the United States from Kong Kong, authorities said yesterday.

    Kim, 36, is a former analyst who appeared as a CNBC commentator on issues such as the Dubai debt crisis and so-called “dark pools.” Investigators said he was involved in at least two fraud schemes while holding forth on TV.  Kim high-tailed it out of the United States before he could be tried in early January on state charges of stealing $430,000 from Christadora House, the New York condominium complex at which he resided, authorities said.

    Even as the theft matter was being investigated and prosecuted, Kim was at the helm of a separate, $6 million Ponzi scheme, said Manhattan District Attorney Cyrus Vance. The CFTC also charged Kim in the alleged Ponzi caper, which operated through a firm known as Liquid Capital Management LLC.

    Vance next brought a state grand-jury indictment against Kim for bail-jumping, and federal prosecutors charged him with passport fraud.

    Authorities did not say when Kim was caught in Hong Kong. Vance said the U.S. Marshals Service, the U.S. State Department, the U.S. Consulate in Hong Kong and Chinese officials cooperated in bringing Kim back to the United States to face justice.

    In April, a federal judge ordered Kim to pay restitution and civil penalties of more than $12.5 million in the case brought by the CFTC.

    Like accused Ponzi schemer Andy Bowdoin of AdSurfDaily, Kim will face a civil judgment while battling criminal Ponzi charges.

  • MORE ‘SOVEREIGN’ FAILINGS: Man Who Declared Himself ‘Most Christian Prince’ And ‘Governor’ Of Alabama Before Fleeing To Florida Convicted Of Tax Fraud; Monty Ervin’s ‘Princess’ Wife Also Convicted

    Saying that laws did not apply to him, self-styled “sovereign citizen” Monty Ervin declared himself a “Most Christian Prince” and “governor” of Alabama in its “original jurisdiction” while concealing his tax crimes in 2006 — crimes in which his wife Patricia also was implicated.

    Patricia Ervin declared herself a “Most Christian Princess” who’d been “certified” by Prince George, whom she described as the “Arch Treasurer” for “The United States of America” in the “Treaty of Paris of 1783,” according to records.

    The Ervins were indicted in Alabama in February 2011, and Monty Ervin went on the lam to Florida. He was captured in Naples the following month by the U.S. Marshals Service Fugitive Task Force. When captured, Monty was found to be in possession of a “notebook containing the latitude and longitude coordinates of an island off the coast of Honduras,” federal prosecutors said.

    Among the evidence prosecutors introduced during the two-week jury trial was $350,000 in gold coins that the Ervins apparently buried in their yard while orchestrating a scheme involving bogus real-estate trusts.

    The Ervins were convicted yesterday of three counts of tax evasion. Patricia Ervin also was convicted of a count of structuring banking tranactions to avoid reporting requirements. She faces up to 25 years in federal prison. Her husband faces 20 years. Sentencing for the couple is set for Jan. 23.

    In August 2006, according to public filings, Patricia Ervin — for whatever reason — appeared before a notary public to certify that she was neither a “prisoner of war” nor an “employee of the government.”

    Patricia also claimed not to be a “citizen” of “the United States” and not to be a “numbered member of the communitarian welfare benefit trust called Social Security Administration.”

    In the document, Patricia refers to herself as a “sovereign Christian Princess like me.”

  • A BRIEF STUDY IN CASH-GIFTING CONTRASTS: The Attorney General, The BBB — And Hank Needham (Before The Club Asteria Brainstorm And CONSOB Probe)

    In this June 2008 video, Hank Needham — later to emerge as a Club Asteria principal — counts out a stack of £20 British notes delivered in a cash-gifting scheme. Using the pronoun "we" without defining who "we" was, Needham told viewers that "we" intended to open a cash-gifting "school." About three years later, Club Asteria positioned itself as an online "education" leader. In a March 2008 cash-gifting video, Needham was featured counting out a small stack of U.S. $100 bills. What was needed, Needham coached, was "training" on how to post cash-gifting videos on the Internet. Prosecutors say cash-gifting is illegal. The BBB calls it a pyramid scheme. In May 2011, CONSOB, the Italian securities regulator, blocked promos for Club Asteria in Italy. Needham has called himself a Club Asteria owner, and Club Asteria had described him as the director of sales and marketing “responsible for establishing Country, Regional and Network Team Leaders."

    In this post, we included a March 2008 Dailymotion video of Hank Needham — later to emerge as one of Club Asteria’s purported owners — hawking a cash gifting scheme in which five $100 bills (U.S.) spilled out of an envelope tucked inside an envelope delivered by overnight courier DHL. (Please note that March 2008 video also appears on a separate site. The date notation on that site is May 2008.)

    Another cash-gifting video from Needham — this one  dated June 2008 — has surfaced. In the June 2008 video, Needham is holding an envelope from FedEx, another overnight courier. “Now, we have another [envelope] — I won’t really go through the courier — I don’t think we’re supposed to use this courier anymore,” Needham tells viewers, after making sure they notice what he describes as a “little pile of cash that’s accumulating” to his left.

    As the June 2008 video proceeds, Needham removes cash that has been packed snugly in the FedEx envelope. It’s British pounds as opposed to U.S. currency this time — and this time the money has come from “Robin” (or Robyn?) in the “British Isles.” Unlike the March (and May) 2008 video in which “George,” presumably an American, is reported by Needham to have sent five large U.S. bills, “Robin,” presumably a Brit, has chosen to send 25 twenty-pound notes. Needham counts out all 25 bills, creating five rows with five bills in each row. Why Needham was reluctant the mention the name of FedEx was not made clear in the video. What was clear was the Needham wanted viewers to know that “we’re opening up a website called CashGiftingSchool.com.”

    He did not define “we.” The “school” website, which appears to have been registered in April 2008 while Needham was pushing the AdSurfDaily scheme in addition to cash-gifting, now resolves to a page that beams ads. (It’s worth noting that Needham, in 2008, was wearing casual attire while hawking the cash-gifting “school,” apparently from his home. Flash forward three years to 2011: Club Asteria is positioning itself as an “education” leader and featuring Needham on video. He is wearing a crisp, black suit in the 2011 video — and the backdrop is a board room. A button promoting the 2011 Club Asteria video in which Needham is showcased in the black suit is labeled “ABOUT COURAGE.” The button appears in Club Asteria’s October 2011 recruitment house organ.)

    Various Club Asteria-related entities have been trading on the names of various charities, including the American Red Cross. The Red Cross sent the purported Asteria Philanthropic Foundation a cease-and-desist letter 11 days ago, and the relief agency said yesterday that the foundation agreed to stop using the Red Cross  logo and other materials. How long it will take the Asteria-themed enterprises to comply is unclear.

    Needham’s image also appeared in 2008 promos for AdSurfDaily, an autosurf the U.S. Secret Service called an international Ponzi scheme.

    The Attorney General

    Before you take a look at the June 2008 Needham video — which appears to have been placed on Dailymotion just two months before the spectacular seizure by the U.S. Secret Service of tens of millions of dollars in the ASD Ponzi case — we’d like you to take a look at what the attorney general of Michigan says about cash gifting. Bill Schuette notes that purveyors can be charged with felonies. Mike Cox, Schuette’s predecessor as attorney general, said the same thing.

    Needham does not mention the law in either of his videos; he’s too busy counting bills. He appears to be less than pleased that “Robin,” unlike “George” in the other video, packed the bills tightly. It is unclear in either video whether DHL or FedEx left the envelopes in a secure place before Needham retrieved them. In other words, had the envelopes been left on Needham’s doorstep, they could have been stolen, an outcome sure to have created an unpleasant situation for both the senders and Needham.

    The BBB

    Now — to accent this brief study in contrast before you view Needham’s June 2008 cash-gifting video — take a look at this brief video on cash-gifting fraud by the Better Business Bureau:

    Hank Needham


    The CASH PROOF by hankneedham

  • EDITORIAL: Another Dark Day For ‘Asteria Foundation’ And Related Entities As American Red Cross Issues Statement Suggesting It Was Duped: ‘We Have No Record Of Receiving A Donation From This Organization And Have Not Partnered With Them’ On Japan Earthquake Relief ‘Or Any Other Projects’

    UPDATED 9:36 P.M. EDT (U.S.A.) The American Red Cross is a national treasure whose powerful and noble name never should be diluted or trifled with. But it is now apparent that various Club Asteria-related entities have done exactly that by not revealing certain critical information to the Red Cross while at once shamelessly seeking to build the Asteria brand across multiple platforms by tying it to the Red Cross — beginning in the spring during a period in which the agency was responding to a crisis in Japan.

    To describe what the Asteria entities have done as spectacularly parasitic with equally disgusting measures of greed and ham-handedness thrown in would be a gross  understatement. In any event, the Asteria entities have created a deplorable situation that sparked the Red Cross to issue a statement today. (You’ll see the full statement beginning four paragraphs below.) The statement was issued this afternoon from Washington, D.C., and emailed by the Red Cross to the PP Blog. The statement concerns the purported Asteria Philanthropic Foundation, which is linked to the purported Club Asteria business “opportunity” and other Asteria-themed enterprises. The Asteria enterprises are using the Red Cross name and logo in promos across multiple websites — while calling the Red Cross a partner. No partnership exists, the Red Cross made clear today.

    Members of Club Asteria — participants in any of the Asteria-themed enterprises — need to know that at least one of Club Asteria’s purported owners, Hank Needham, has been linked to promotions for online Ponzi schemes and pyramid schemes. (You’ll see a cash-gifting video starring Needham below.) The stench lives on three years after the taping, and it cannot be dissipated by leeching off the name of the Red Cross.

    This is a story that only is getting uglier. Ten days ago — after becoming concerned that its name and logo were being misused — the Red Cross sent the purported Asteria Foundation a cease-and-desist letter. It later developed that Needham had appeared in a May 2008 video that advertised a cash-gifting scheme. Needham, whose face also appeared in a 2008 promo for the alleged $110 million AdSurfDaily Ponzi scheme, is seen in the video opening an envelope from a courier service. A smaller envelope was packaged in the courier envelope — and five $100 bills spilled out of the smaller envelope. Needham fanned them for the camera. Cash-gifting schemes are prosecutable under pyramid-scheme statutes, despite what prospects are led to believe. U.S. Sen. Richard Blumenthal, D-Conn., called cash-gifters “parasites” when he was attorney general of Connecticut.

    The PP Blog has added the italics to today’s statement by the Red Cross:

    The Asteria Foundation contacted the American Red Cross in April and said it wanted to make a donation to aid relief efforts in Japan after the earthquake and tsunami. At the time, the organization requested information on how the donation might be put to use and we directed their representative to published information on Red Cross recovery efforts. The organization also requested the ability to mention its donation to us in its own press materials, which we felt was appropriate.

    However, we have no record of receiving a donation from this organization and have not partnered with them on that or any other projects. We have requested that the organization remove our logo and other materials from its web site, and they have agreed to do so.

    In September, Club Asteria removed an image and purported “interview” with famed actor Will Smith from its recruitment emagazine amid questions about whether the purported “opportunity” was trying to plant the seed that Smith had endorsed the company.

    Scores of promos for Club Asteria, which trades on the name of the World Bank, have appeared online this year. The promos described Club Asteria as a “passive” investment opportunity that generated a weekly return of up to 10 percent. Club Asteria suspended member cashouts in June, after acknowledging its PayPal account had been suspended — and after claims about Club Asteria came under investigation in Italy.

    Club Asteria was widely promoted on Ponzi scheme forums such as TalkGold and MoneyMakerGroup. Members said payouts were routed through a Hong Kong entity known as Asteria Holdings Limited. When things turned sour at Club Asteria, the Ponzi-forum promoters turned their attentions to other HYIP “programs” that offered absurd returns that translated into purported yearly gains in the hundreds of percent.

    The Asteria Foundation also has used a Hong Kong address — tying it to a fax number in Virginia. Asteria Corp., Club Asteria’s apparent parent company and also the apparent driving force behind the purported Asteria Foundation, is based in Virginia.

    State authorities said last month that neither Club Asteria nor Asteria Corp. was registered to sell securities. Club Asteria has blamed its members for promotional blunders and for PayPal’s decision to suspend its account. That explanation, however, strains credulity — given Needham’s history of pushing multiple fraud schemes. It is inconceivable that Club Asteria did not know that its growth was being fueled by serial hucksters on Ponzi forums and by thousands of promos on the independent websites of Club Asteria affiliates, many of whom preemptively denied Club Asteria was conducting a Ponzi scheme. They could not possibly know whether Club Asteria was on the up-and-up without seeing the books and records from banks and as many as four separate payment processors.

    How much money Club Asteria gained as a result of promos that positioned the company as a cash cow is unclear. Scores of members claimed that paying Club Asteria $19.95 a month would produce a yearly income of more than $20,000. Club Asteria is believed to have gained considerable traction in the Third World. Club Asteria pitchman “Ken Russo,” who also is known as “DRdave” and is believed to operate from the United States, claimed on Ponzi boards to have received thousands of dollars in recruitment commissions via wire from Hong Kong.

    Club Asteria, which has described itself as a revenue-sharing program, does not publish verifiable financial information. The firm now appears to be branching out into social networking, positioning itself as an education leader and “cause” marketing company.

    Ponzi forum promoters, whom some critics describe derisively as “pimps” and “referral whores,” shilled for Club Asteria for months before the company suspended cashouts.

    2008 Hank Needham Video On Cash-Gifting

    Please note that the URL advertised in the Dailymotion video below — ptigift.com — no longer resolves to a server.


    What is all the fuss about Cash Gifting? by hankneedham

  • BULLETIN: Family Of House Majority Leader Eric Cantor Threatened With Murder And Rape, Feds Say; Glendon Swift Of Lenoir City, Tenn., Arrested; FBI Says Cantor Was Called Vile Names And That Swift Threatened To ‘Destroy’ Him

    Rep. Eric Cantor, R-Va., and House Majority Leader.

    BULLETIN: A Tennessee man has been arrested by FBI agents and police after making threats against Rep. Eric Cantor and his family, federal prosecutors said.

    Cantor, R-Va.,  is U.S. House Majority Leader.

    Charged with threatening to assault or murder a member of the immediate family of a U.S. official was Glendon Llewellyn Swift, 62, of Lenoir City. He was arrested by the FBI and Lenoir City Police late yesterday, and made a primininary appearance this afternoon before U.S. Magistrate Judge C. Clifford Shirley Jr. in Knoxville, federal officials said.

    “Threatening to harm the family of a public official is a very serious charge, and we are grateful to the FBI and their law enforcement partners for their quick action in this case,” said U.S. Attorney Neil H. MacBride of the Eastern District of Virgina.

    Events unfolded in this fashion, according to a criminal complaint filed by an FBI agent:

    On Oct. 28 at 9 a.m., a Congressional staffer in Cantor’s office in Glen Allen, Va., called U.S. Capitol Police after listening to two disturbing voicemails left for Cantor the previous evening. Capitol Police contacted the FBI in Richmond.

    In the voicemails, Cantor was called a “Republican son of a bitch.” Religious slurs repeatedly were directed at Cantor, according to the complaint.

    In messages laced with screaming and profanities, the caller said he would “destroy” Cantor, while also threatening to come to Cantor’s home to “murder” his wife and “rape” his daughter.

    Investigators traced the call to Swift’s cellphone, according to the complaint. Yesterday, Swift was stopped by a marked patrol car in Lenoir City for a traffic violation, and FBI agents questioned him.

    Swift admitted making the calls, according to the complaint.

    Lenoir City is in Loudon County in East Central Tennessee. The city has population of about 8,600. One of the state’s largest cities, Knoxville in nearby Knox County, is about 35 miles away from Lenoir City.

     

  • SIDNEY AND CHARLOTTE HANSON FOREX PONZI: Federal Judge Orders Orders Tens Of Millions Of Dollars In Restitution, Penalties And Disgorgement

    Screen shot from federal court files: These relief defendants — all of which were Delaware companies tied to a North Carolina Ponzi scheme that also reached into Florida and Nevada — were ordered to disgorge more than $22 million in ill-gotten gains. Law enforcement increasingly is encountering fraud schemes that use shells in multiple jurisdictions to keep money flowing.

    U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina has ordered tens of millions of dollars in restitution, penalties and disgorgement in the civil Ponzi case against Sidney and Charlotte Hanson. The CFTC charged the North Carolina couple and their “Queen Shoals” companies in 2009, alleging a Forex Ponzi scheme aimed at the individual retirement accounts of seniors and people near retirement age.

    The Hanson scheme has been tied to firms in Nevada and Delaware — and also operators in Florida, Gary D. Martin and his wife Brenda K. Martin, who drove cash to themselves and the Queen Shoals entities and recruited pitchmen.

    Sidney Hanson, 64, is serving a 22-year prison sentence in the same North Carolina facility that houses Bernard Madoff. As the Hanson events infolded, investigators — including an undercover investigator for the state of North Carolina — discovered schemes within schemes that targeted older investors and people of faith in a complex caper involving companies with high-sounding names.

    The Hansons used proceeds from the scheme to purchase an 88-acre farm, use private planes and take luxury vacations, the CFTC said. They also lived in a property “owned” by Queen Shoals.

    Conrad ordered restitution by the firms and the Hansons of $23 million, plus interest, and an interest-accruing civil penalty of $1.2 million. Various relief defendants were ordered to disgorge more than $22 million in ill-gotten gains.

    Among the complexities of the case — which investigators reverse-engineered — were the corporate set-ups of the Queen Shoals and related firms and their reach across multiple jurisdictions.

    Queen Shoals LLC, for instance, was formed in Nevada, but operated from North Carolina. Queen Shoals II LLC was formed in Delaware, but also operated from North Carolina — in the same purported Charlotte “suite” from which the original Queen Shoals operated.

    Select Fund LLC also was formed in Delaware, but used the Charlotte “suite.”

    The relief defendants — Secure Wealth Fund LLC, Heritage Growth Fund LLC, Dominion Growth Fund LLC, Two Oaks Fund LLC, Dynasty Growth Fund LLC and Queen Shoals Group LLC — all were formed in Delaware.

  • EDITORIAL: Bogdan Fiedur Of AdLandPro’s Deplorable Bid To Chill RealScam.com In The Age Of International Mass-Marketing Fraud

    A few weeks prior to the Aug. 1, 2008, seizure of tens of millions of dollars in the personal bank accounts of AdSurfDaily President Andy Bowdoin, Bowdoin apparently believed it prudent to plant the seed that the ASD autosurf had amassed a giant pot of cash and would use it to “hammer” critics. His willfully blind followers helped spread the word on forums that ASD detractors soon would feel the sting of being sued back to the Stone Age.

    Here, according to federal court filings, is what Bowdoin told ASD members at a company rally in Miami on July 12, 2008:

    “These people that are making these slanderous remarks, they are going to continue these slanderous remarks in a court of law defending about a 30 to 40 million dollar slander lawsuit. Now, we’re ready to do battle with anybody. We have a legal fund set up. Right now we have about $750,000 in that legal fund. So we’re ready to get everything started and get the ball rolling.” (Emphasis added.)

    Bowdoin thuggishly suggested that ASD had hired a law firm and that the firm was experienced at “bringing the hammer down on people that need it.” It is worth noting that federal prosecutors included the remarks attributed to Bowdoin in a document labeled “Government Exhibit 5.”

    Meanwhile, it’s also worth noting that “Government Exhibit 1” consisted of the 2006 SEC complaint against 12DailyPro that accused the firm of operating an autosurf Ponzi scheme. It was the government’s way of showing that autosurfs such as ASD rely on willfully blind promoters to proliferate. “Government Exhibit 2,” meanwhile, was the SEC’s 2007 complaint against the PhoenixSurf autosurf. The inclusion of this exhibit was another way to show willful blindness.

    One of the interesting things about the PhoenixSurf complaint was that it referenced Virtual Money Inc., which federal prosecutors in Connecticut later linked to alleged money-laundering by a narcotics cartel in Medellin, Colombia.

    Robert Hodgins, the operator of Virtual Money, is an international fugitive wanted by INTERPOL. ASD also used Virtual Money, according to promos for the firm. In December 2010, federal prosecutors said ASD also had a tie to E-Bullion, a shuttered California payment processor whose operator was accused (and convicted) of arranging the brutal slashing murder of his wife in a Greater Los Angeles parking garage. ASD also had a link to E-Gold, a processor convicted in a money-laundering conspiracy case. So did PhoenixSurf.

    “Government Exhibit 4” in the August 2008 ASD Ponzi case consists of surveillance photos taken in ASD’s hometown of Quincy, Fla. The date upon which the photos were taken is unclear, but it is known that the U.S. Secret Service began to investigate ASD on July 3, 2008, a little more than a week before the Miami rally.

    The entry of the Secret Service in the ASD case fundamentally sent two signals: The U.S. government believed its financial infrastructure might be under attack by an organization — ASD — that was trading on the name of the President of the United States. The SEC has said nothing about the ASD case — at least not in public. Bowdoin was indicted on criminal charges in December 2010. If he is convicted on all counts, the man who once claimed to have a giant pot from which he could draw to “hammer” critics could face up to 125 years in federal prison, fines in the millions of dollars and forfeiture orders totaling at last $110 million.

    In the earliest days of the ASD probe, at least three media outlets — including a local newspaper, a Blog and a regional publication — were threatened with lawsuits. Bowdoin ended up suing no one. In fact, within months he was consumed by litigation directed at him from virtually all fronts. Multiple civil-forfeiture complaints were filed, as was a racketeering lawsuit. These things occurred as a criminal investigation was unfolding slowly.

    For all these reasons and more, Bogdan Fiedur — and members of the AdLandPro online “community” — should perform a sober assessment of Fiedur’s recent threat to sue RealScam.com, an antifraud forum.

    Threats to sue journalists, media outlets, forums, Blogs and other websites that publish information about online schemes are bids to chill speech. These bids are occurring as an epidemic of white-collar crime and securities fraud is sweeping the globe during a period in which government budgets are strained and literally thousands of fraud investigations are under way that reach into all corners of the world.

    It is clear that online fraud is responsible for billions of dollars in global losses. These worlds are exceptionally murky. No one knows for certain where the money goes when fraud schemes disappear — as they so often do. It is equally clear that criminal puppeteers behind the schemes are taunting investigative agencies. From the standpoint of the U.S. government, the government and financial institutions are facing attacks of thousands of tiny cuts.

    Lanny Breuer, the head of the U.S. Department of Justice’s Criminal Division, testified on Capitol Hill yesterday that the “convergence of threats” posed by transnational organized crime is “significant and growing. ”

    “Transnational organized crime is increasing its subversion of legitimate financial and commercial markets, threatening U.S. economic interests and raising the risk of significant damage to the world financial system,” Breuer told the Senate Judiciary Subcommittee on Crime and Terrorism.

    Despite worldwide headlines of one massive fraud scheme after another — and despite the fact that the financial lives of real human beings in all corners of the world are being reduced to rubble by serial Ponzi schemers and scammers — Bogdan Fiedur is threatening to sue RealScam.com.

    At a minimum, it is a PR blunder of the highest magnitude. Bowdoin made the same mistake. So did Data Network Affiliates (DNA), a purported business “opportunity” associated with serial huckster Phil Piccolo, who once planted the seed that, if lawsuits didn’t work, he knew the type of people willing to break legs to silence critics. One apologist for Piccolo and DNA planted the seed that a former federal prosecutor, federal judge and director of the U.S. Department of Homeland Security was a suspect in the 9/11 terrorist attacks.

    It doesn’t get much more bizarre than that — unless one is willing to consider that Bowdoin now is trying to raise funds for his criminal defense on Facebook and claiming that God established a program known as OneX to help him do just that.

    OneX is among the “programs” promoted by members of the AdLandPro “community” — as were ASD and Finanzas Forex (and many others) before it.

    And yet Fiedur apparently believes he can chill RealScam.com into stop doing what it does by registering a domain titled “RealScamClassActionSuit.com.”

    Inverting reality, the purported class-action site ventures that “RealScam encourages cyber-bullying and cyber-stalking by allowing the creation of anonymous accounts and by allowing the users to present of (sic) unproven accusations towards individuals of their targeted organization. The RealScam.com turns out to be just a harassment and bashing site with no verification of facts and indiscriminate attacks at anyone who looks like an easy target.”

    It’s easy to imagine Andy Bowdoin or Phil Piccolo saying the same thing — while doling out accolades to the AdLandPro “community” for its excellent judgment about the types of “programs” the world’s masses should be joining.

    “The wealth generated by today’s drug cartels and other international criminal networks enables some of the worst criminal elements to operate with impunity while wreaking havoc on individuals and institutions around the world,” Breuer of the Justice Department observed yesterday. “Generating proceeds often is only the first step — criminals then launder their proceeds, often using our financial system to move or hide their assets and often with the help of third parties located in the United States. Indeed, international criminal organizations increasingly rely on these third parties and on the use of domestic shell corporations to mask crimes and launder proceeds under the guise of a seemingly legitimate corporate structure.”

    And then Breuer asked the Senate panel to enact legislation that would strengthen money-laundering and asset-forfeiture laws and broaden the federal RICO statute.

    Whether the Senate — and the Congress as a whole — will listen is unclear. What is clear is that, at least in the context of online fraud schemes, victims are piling up in numbers that America’s largest sports stadiums cannot accommodate. Losses are in the billions. Vast sums of wealth have been taken from rightful owners and placed in the hands of criminals.

    It is simply beyond the pale that Fiedur asserts that RealScam.com is a menace, when it is one of the few sites in the world that tasks itself with exposing the menace of international mass-marketing fraud that occurs over the Internet.

    One final thing worth mentioning: A few weeks before Breuer ventured to Capitol Hill to testify before the Senate panel, he carried out another important public duty.

    On Sept. 26, Lanny Breuer joined U.S. Attorney Ronald C. Machen Jr. in announcing that ASD victims who filed successful remissions claims in the civil Ponzi case were getting $55 million back.

    “We will continue to use every tool at our disposal to bring justice to the citizens defrauded by these insidious schemes,” Breuer said.

    Get a clue, Mr. Fiedur.

    Visit RealScam.com.

  • UNBELIEVABLE: In Alarming Fraud Allegations, Feds Say HUD-Insured Loans Issued Through Allied Home Mortgage Corp. Led To Huge Losses For U.S. Taxpayers — While Firm Used Tax Break And Virgin Islands ‘Quality-Control’ Employees Who ‘Did Not Know What HUD Was Or Even What A Mortgage Was’

    BULLETIN: Federal prosecutors in New York have filed a civil complaint against Allied Home Mortgage Capital Corp.,  Allied Home Mortgage Corp. and two Allied executives that alleges the U.S. Department of Housing and Urban Development (HUD) was put on the hook for at least $834 million in losses because of fraud at Allied.

    Part of the fraud involved certifications by Allied that its operations were clean, but investigators discovered that the firm employed “numerous convicted felons” and hired “more than a dozen” in a single year, prosecutors said.

    Losses could exceed $1 billion, and the government may file criminal charges after gathering additional evidence, authorities said.

    Named civil defendants with Allied were President and Chief Executive Officer Jim C. Hodge and Executive Vice President Jeanne L. Stell.

    Among the spectacular allegations — deemed by U.S. Attorney Preet Bharara as an Allied-orchestrated fraud scheme that created a situation of “heads-I-win and tails-you-lose” — was that the firm used a “quality-control” branch in the U.S. Virgin Islands purportedly to assess loan risk and staffed it with people who neither knew what HUD was nor what a mortgage was.

    The workers, prosecutors said, mostly were located in St. Croix and were employed by a company Hodge set up “to obtain tax benefits” — even as the Allied firms were picking the pockets of taxpayers by not accurately assessing default risk on HUD-insured home loans.

    In the past decade, Allied originated more than 110,000 Federal Housing Administration (FHA) mortgages, 30 percent of which are in default. In 2006 and 2007, the default rate mushroomed to 55 percent — and an additional 2,509 government-insured loans through Allied are now in default, potentially putting taxpayers on the hook for another $363 million on top of the $834 million they’ve already shelled out, prosecutors said.

    FHA, which insures the mortgages of customers who may not meet traditional underwriting standards, is a division of HUD. Millions of Americans receive home loans backed by the government, and lenders such as Allied are required to comply with HUD requirements and to assess risk soberly.

    “Allied and its CEO exploited a government insurance program to engage in a wholesale shifting of risk away from itself — playing a lending industry equivalent of heads-I-win and tails-you-lose,” Bharara said. “The losers here were American taxpayers and the thousands of families who faced foreclosure because they could not ultimately fulfill their obligations on mortgages that were doomed to fail. The alleged conduct in this case is egregious and our investigation is ongoing.”

    Allied operated hundreds of “shadow, unapproved branch offices that originated FHA loans,” prosecutors alleged.

    “To deceive HUD about this practice, Allied submitted loans from those branches to HUD substituting the ID number of a HUD-approved branch,” prosecutors continued. “Allied’s undisclosed shadow branches could not be audited by HUD and their default rates were disguised by the default rates of branches whose IDs they were using — IDs that were based on false certifications. While some senior managers questioned this practice, it was continued under the direction of Hodge.”

    Stell, according to prosecutors, knew she and Hodge had exposure to charges,  and “routinely had another senior manager sign the certifications to HUD because she knew they were false.”

  • Alfred Gerebizza Arrested In $105 Million Ponzi Case; PP Blog Received Threatening Communication About Alleged Fraud Caper Last Year

    UPDATED 5:25 P.M. EDT (U.S.A.) Alfred Gerebizza has been charged with mail fraud and tax crimes in a superseding indictment in the Daniel Spitzer Ponzi case, which alleged both domestic and offshore fraud. The SEC initially charged Spitzer civilly in June 2010, accusing him of “moving investor money through a complex network of foreign bank and brokerage accounts” and spending more than $900,000 “in cash at the Wynn Las Vegas Casino.”

    Spitzer later was charged criminally after investigations by the FBI, the U.S. Postal Inspection Service and the IRS.

    Gerebizza, 56, formerly resided in the Chicago suburb of Crystal Lake. A criminal indictment against him was unsealed last month, and Gerebizza surrendered in Atlanta, federal prosecutors in the Northern District of Illinois said yesterday. He is in federal custody at a prison facility in Chicago, according to records.

    The superseding indictment naming Gerebizza as a new criminal defendant with Spitzer alleges that Gerebizza was a pitchman who “held himself out as a trader for a dozen investment funds, known collectively as the ‘Kenzie Funds,’ purportedly operated by Kenzie Financial Management in the U.S. Virgin Islands.”

    Spitzer was a Kenzie principal, prosecutors said. He has been charged with 10 counts of mail fraud.

    Gerebizza faces 10 counts of mail fraud and six counts of filing bogus tax returns. Both men were named in forfeiture allegations that seek $34 million.

    “Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns,” federal prosecutors said of Spitzer and  Gerebizza. “The defendants had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which they concealed and intentionally failed to disclose to both new and earlier investors. Ultimately, between 2004 and July 2010, the defendants allegedly raised approximately $105 million from investors, misappropriated a significant portion of those funds, and caused losses totaling approximately $34 million.”

    On Sept. 12, 2010, the PP Blog received a communication purportedly from Gerebizza that threatened a lawsuit if the Blog did not remove Gerebizza’s name and/or alter or delete comments from readers.

    “I will sue you personally as well as your web site for slander as well as other charges,” the communication read in part.

    The Blog did not submit to the threat. Instead, the Blog reported on the threat.

    It is somewhat common for the PP Blog to receive threatening communications related to its coverage of Ponzi probes.

  • URGENT >> BULLETIN >> MOVING: ALLEGED ‘PUPPETMASTERS’ EXPOSED: Feds Charge 5 Attorneys, 2 Mob Figures And CPA In Extortion Scheme That Led To ‘Illegal Takeover’ Of FirstPlus Financial Group Inc.; Scheme Featured ‘Fraudulent SEC Filings,’ U.S. Attorney Says

    URGENT >> BULLETIN >> MOVING: Thirteen people have been arrested, including five attorneys, a CPA, two alleged mob associates and others in a spectacular case that alleges the mafia and its underlings illegally took over FirstPlus Financial Group Inc., a publicly held company in Texas.

    “[T]he defendants gave new meaning to ‘corporate takeover’ by looting a publicly traded company to benefit their criminal enterprise,” said U.S. Attorney Paul J. Fishman of the District of New Jersey.

    Charged were attorneys William Maxwell, Cory Leshner, David Adler, Gary McCarthy and Donald Manno. Their ages and addresses were not immediately clear. Howard Drossner, whom federal prosecutors described as a CPA, also was charged.

    Nicodemo S. Scarfo, an alleged member of La Cosa Nostra and the Lucchese organized crime family, also was charged, as was Salvatore Pelullo, an alleged LCN and Lucchese family associate.

    “Through rampant self dealing, fraudulent SEC filings and more traditional mob methods, the defendants allegedly stole $12 million from shareholders,” Fishman said. “Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters.  And the public deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime.”

    “The indictment alleges that Mr. Scarfo and Mr. Pelullo used economic extortion and threats of violence to seize and maintain control of a publicly traded company, successfully removing its entire existing board of directors and management,” said Assistant Attorney General Lanny A. Breuer.  “Once in control, they allegedly used their criminal enterprise to extract millions of dollars from the company to fund their lavish lifestyles.”

    Breuer is head of the Justice Department’s Criminal Division.

    Read the Feds’ news release for other names and details.