Blog

BULLETIN: A federal judge in Florida who says she was accused of “abusing” her discretion and “trampling” the Constitutional rights of a man implicated in an alleged multimillion-dollar commodities fraud by the SEC has ordered the defense attorney who made the assertions to explain himself and substantiate claims that his client had been denied due process.

U.S. District Judge Patricia A. Seitz ordered attorney Horecia I. Walker to respond in writing no later than Sept. 9 and explain what kind of investigation he conducted prior to asserting that James Clark Howard III and his counsel present at an Aug. 23 evidentiary hearing did not have adequate time to prepare for the hearing.

Howard, who appeared at the hearing, was represented at the hearing by attorney Mark C. Perry, according to records. Both Howard and Perry had 11 days to prepare for the hearing, Seitz wrote.

In an order issued on the same day as the hearing, Seitz directed Howard and Sutton Capital LLC to turn over $1.45 million to attorney David S. Mandel, the court-appointed receiver in the Commodites Online LLC fraud case filed in April by the SEC.

Seitz gave Howard and Sutton, another firm associated with Howard, until yesterday to turn over the money. It was not immediately clear if either party complied with the order.

What is clear is that Seitz was not amused by an emergency motion filed by Walker on behalf of Howard and Sutton to stay the Aug. 23 order to turn over the money pending an appeal of the order.

“Walker has accused this Court of trampling Howard’s constitutional rights and abusing its discretion in entering the turnover Order,” Seitz wrote. “The factual underpinnings for these accusations are that Howard and Perry had insufficient time to prepare for the August 23, 2011, hearing. To avoid running afoul of Rule 11, Walker should have investigated these factual circumstances before relying on them to accuse the Court of a constitutional affront.”

The judge added that “it appears to the Court that no such investigation occurred.”

Seitz took issue with Walker’s characterization of the Aug. 23 hearing as an “apparent ‘evidentiary hearing,’” according to an order she issued yesterday denying the stay.

“Walker posits that the hearing ‘was not an evidentiary hearing at all’ and the Court’s Order requiring disgorgement amounts to an abuse of discretion,” Seitz wrote. “Lost in all of his hyperbole is the simple fact that Howard and Perry received notice of the hearing eleven days before the hearing commenced.”

Neither Howard nor Perry asked for a continuance, Seitz wrote.

The Commodities Online case has a link to the AdSurfDaily Ponzi scheme case brought by the U.S. Secret Service in August 2008.

SSH2 Acquistions, a Nevada company that listed former ASD member and pro-ASD Surf’s Up moderator Terralynn Hoy as a director, sued Howard and others in September 2010 amid allegations he was part of a massive Ponzi scheme into which SSH2 had plowed $39 million. The lawsuit was filed about six months after the Boca Raton Police Department filed felony charges against Howard in an alleged financial scam that targeted Haitian Americans.

Surf’s Up was a cheerleading site for ASD, and Hoy later became a moderator of a cheerleading forum for the collapsed AdViewGlobal (AVG) autosurf.

While SSH2 claims to be a Ponzi victim of Howard, the Surf’s Up and AdViewGlobal forums both claimed that ASD and AVG were conducting legitimate commerce. With Hoy as a moderator of Surf’s Up, the forum conducted an October 2008 online party complete with images of champagne and fireworks for ASD President Andy Bowdoin.

The U.S. Secret Service described Bowdoin as an international Ponzi schemer and recidivist felon who’d gathered tens of millions of dollars in the ASD caper — most of it in ASD’s final weeks of life in the late spring and summer of 2008. At least $65.8 million was seized from Bowdoin’s 10 personal bank accounts, according to court records. One account alone contained more than $31.6 million. Three accounts contained the exact same amount: $1,000,338.91.

It is unclear if ASD members beyond Hoy had any business ties to Howard and invested any money with the accused schemer. Hoy has not been accused of wrongdoing.

SSH2 said in court filings that it plowed $39 million into the alleged Howard scheme, and received back about $19 million in “fake and fraudulent ‘profits.’” Sutton, Rapallo Investment Group LLC and Patricia Saa also were named defendants in SSH2’s lawsuit.

Howard was sentenced to 57 months in federal prison in the 1990s on narcotics and weapons charges, according to records. ASD’s Bowdoin, meanwhile, narrowly avoided jail time during the same decade when he was implicated in Alabama in a securities swindle, according to records.

Clarence Busby Jr., one of Bowdoin’s alleged business partners, was implicated by the SEC during the 1990s in three prime-bank schemes, according to records.

Some ASD members have been identified as members of the so-called “sovereign citizens” movement. Cheerleading for Bowdoin and ASD continued on the Surf’s Up forum even after it was revealed that Curtis Richmond, one of the purported “sovereign” beings associated with ASD, had a contempt-of-court conviction for threatening federal judges in California and once claimed a federal judge from Oklahoma sitting by special designation in Utah owed him $30 million.

Richmond was a member of the so-called “Arby’s Indians,” an “Indian” tribe that targeted public officials with vexatious litigation. U.S. District Judge Stephen Friot ruled the “tribe” a complete sham.

U.S. District Judge Rosemary Collyer of the District of Columbia is presiding over the ASD Ponzi case. Both Richmond and Bowdoin tried unsuccessfully to have her removed from the case. Richmond accused Collyer of “TREASON” and claimed she may be guilty of 60 or more felonies.