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  • BULLETIN: Club Asteria Says Revenue Has Plunged ‘Dramatically’; Firm Blames Member Lies For Crisis, Compares Situation To Run On The Bank

    BULLETIN: UPDATED 6:44 A.M. EDT (U.S.A.) Club Asteria, a Virginia-based company that claims to elevate people out of poverty globally by involving them in an MLM-like income and recruitment scheme, has acknowledged a revenue plunge and described it as dramatic.

    In an audio recording posted online, the firm blamed its current state on lies from members and bad publicity. The audio is dated June 24.

    “It’s taken our revenue, and it has hurt it dramatically,” the company said.

    Club Asteria, which described itself as a ’cause’ marketing company concerned about the impoverished people of India and other countries across the world, conceded it has been swamped by “thousands” of support tickets from members.

    Eight weeks ago, approximately a year after its launch, Club Asteria discovered that it had liars in its ranks, the company claimed in the recording. The liars created problems, according to the firm.

    Among other places, Club Asteria is being promoted on forums linked to numerous Ponzi schemes. A Club Asteria thread on TalkGold, for example, has been active since April 5, 2010. Meanwhile, a Club Asteria thread on MoneyMakerGroup has been active since May 29, 2010. Both forums are referenced in federal court filings as places from which Ponzi schemes are promoted.

    Club Asteria did not say in the recording precisely where it believed its problems with untruthful promoters had begun. Nor did the company say how much money it believed it had collected as a result of lies told by its freelance sales staff or what it planned to do with tainted proceeds.

    “The challenge that occurred is that, all of a sudden, we found that our membership — many of our members — were presenting Club Asteria in an inaccurate, untruthful manner,” the company said.

    False claims and “all kinds of distortions” were being made “all over the Internet” that Club Asteria provided “passive” income of $400 per week, the company said.

    Members — and not the company itself — were responsible for the false claims, the revenue plunge and putting the firm at risk, the company suggested in the recording.

    “It’s like a bank where somebody says, ‘They have no money left.’ And everybody runs to the bank and takes their money out,” the company said. “Of course, the bank is going to be in serious trouble . . .”

    Many Club Asteria members have claimed preemptively in promos for the firm that Club Asteria was not operating a Ponzi scheme. Why the firm chose a bank-run analogy to describe its problems was not immediately clear.

    Some Ponzi schemes topple — the Bernard Madoff scheme, for instance — when a company encounters cash-flow problems and cannot meet redemption requests, the Ponzi equivalent of a run on the bank. In a classic Ponzi scheme, no real business exists — and a firm takes money from “new” members to meet the payout expectations of “old” members.

    Club Asteria said it hoped to reverse its financial course by inspiring members to sell more products and services to increase revenue. Meanwhile, the firm said it hoped to sell a tablet computer to members on time payments beginning on a date uncertain. Club Asteria did not identify a manufacturer for the computer, but said the device would help members become better equipped to run successful businesses.

    Whether impoverished members of Club Asteria could afford a tablet computer or whether such a computer would be operable in all the countries of the world was not made clear in the recording.

    Pricing for the tablet was not revealed. The firm also said it planned to offer apparel, vitamins and other products.

    There have been claims in recent weeks that Club Asteria has slashed cashouts, which some members claimed provided a return of 10 percent a week. Other members said Club Asteria normally paid between 3 percent and 4 percent a week.  In recent days, there have been claims that the firm suspended cashouts altogether. These claims followed on the heels of claims that Club Asteria had offered bonuses convertible to cash to lure members to join.

    Club Asteria did not say in the recording whether it believed its bonus program had contributed to its problems. Nor did the firm say why it had come to recognize only weeks ago that false claims about its business opportunity were appearing online.

    In a strange turn-of-phrase, however, the company did say this: “We offer them products and services to purchase under the guise of ’cause’ marketing.”

    The firm described “cause” marketing as an inspirational “concept” that targets people globally who may be enduring personal poverty and motivates them to climb the ladder of economic success by giving them something in which to believe.

    Two of the problems the company is experiencing are that fewer people now believe in it because of the lies told by members and because members were complaining in public about the firm, Club Asteria said.

    Listen to the recording.

  • UPDATE: Blurb For Club Asteria Executive Reappears On Website; Separately, Promoter ‘Ken Russo’ Says On TalkGold Ponzi Forum That The ‘Next Couple Of Months Will Tell The Story’

    A blurb for Hank Needham has reappeared on the Club Asteria website after having been missing for days. The blurb appears to have gone missing sometime between June 19 and June 24, but is back on the site today.

    Separately, promoter “Ken Russo,” who posts as “DRdave” on the TalkGold Ponzi scheme and criminals’ forum, announced in a TalkGold post dated yesterday that he’d received $400 by wire from “Asteria Holdings Limited (Hong Kong)” yesterday.

    The payment was described as a “cashout.” Other members, however, claimed that Club Asteria suspended cashouts last week and had been paying only pennies or low-dollar sums prior to the purported suspension.

    TalkGold is referenced in federal court filings by the U.S. Postal Inspection Service as a place from which Ponzi schemes are promoted.

    In the month of June, “Ken Russo” has claimed on TalkGold that his Club Asteria cashouts have totaled at least $2,032. The cashouts appear to have occurred after Club Asteria’s PayPal account reportedly was frozen last month and after Italian authorities began to investigate claims made about the company.

    Few details are known about the Italian probe. Whether Russo’s purported payments as outlined on TalkGold could be considered ill-gotten gains if a prosecution emerges was not immediately clear.

    “The next couple of months will tell the [Club Asteria] story,” Ken Russo opined in his cashout claim on TalkGold yesterday. The post suggests the enterprise is in danger, but “Ken Russo” did not say whether he would return his cashout money voluntarily if authorities in Italy or elsewhere file a fraud action against the firm.

    Nor did “Ken Russo” say whether he’d provide refunds for his downline members.

    Some ClubAsteria members claim they are filing disputes with Alert Pay in a bid to reclaim money directed at Club Asteria.

    A Twitter site in the name of “Hank Needham” claims Needham is the “owner” of Club Asteria. On the Club Asteria website, Needham is described as director of sales and marketing.

    After the PayPal freeze, Club Asteria encouraged members to use offshore processors. Many Club Asteria promoters preemptively claimed that the Virginia-based firm was not operating a Ponzi scheme.

    How they could be certain never has been made clear, and a cash crisis appears to have engulfed Club Asteria after the claims were made. The company, which trades on the name of the World Bank,  may have hundreds of thousands of members globally, including members from Third World countries, developing nations and nations subjected to political dictatorships.

    Many Club Asteria members claimed the firm offered a “passive” investment opportunity, which led to questions about whether Club Asteria was selling unregistered securities to some of the poorest people on earth.

  • TV, Web Pitchman Donald Lapre Arraigned In ‘Medical Facility’ After Arrest By Federal Agents; Accused Huckster Recovering From ‘Self-Inflicted’ Wounds To Legs After Missing Court Date

    Donald Lapre. From vitamin promo.

    He called it “The Greatest Vitamin in the World.” Federal prosecutors in Arizona, however, called it conspiracy, mail fraud, wire fraud, promotional money-laundering and transactional money-laundering, accusing Donald Lapre of selling “essentially worthless” Internet businesses to more than 226,000 victims.

    And now Lapre, 47, is under arrest. Prosecutors said he skipped a June 22 court date, a decision that caused an arrest warrant to be issued, a “Wanted” poster to be created and a brief manhunt to ensue.

    Lapre was arrested on June 23. Prosecutors, who earlier advised the public that Lapre may be suicidal, said he was found with “self-inflicted” wounds to his legs and taken to a hospital. He was arraigned inside a “medical facility” by a federal magistrate judge yesterday.

    Tens and tens of thousands of Lapre’s customers were defrauded out of nearly $52 million after responding to his TV and web pitches, prosecutors said.

    Customers lured by the prospect of receiving “$1,000 checks” were dubbed “independent advertisers,” but Lapre provided them “false vitamin sales records” and sold them “bulk,” untargeted web traffic while claiming the traffic was targeted, prosecutors said.

    “The ‘business’ primarily consisted of selling the Greatest Vitamin in the World . . . over the Internet and the opportunity to sell the opportunity to do the same thing to others,” prosecutors said.

    Sales reps “regularly” signed up “independent advertisers” even if they did not own a computer, prosecutors said.

    “Mr. Lapre used incessant nationally televised infomercials to hawk his vitamins and worthless websites as a way to get rich quick without working hard,” said U.S. Attorney Dennis K. Burke of the District of Arizona. “His scams swindled a sea of victims, but thanks to the efforts of the [U.S.] Postal Inspection Service and the IRS, he will face justice.”

    Lapre was charged in a 41-count indictment issued by a federal grand jury earlier this month. He potentially faces decades in prison, if convicted on all counts.

    Fox 10 News in Phoenix reported that Lapre hid from authorities in a 24-hour gym.

    Read a 2005 enforcement letter from the FDA to Lapre.

    Marshals: Wanted Man Camped Out Inside Gym: MyFoxPHOENIX.com

  • Affinity-Fraud Victim, 72, Tells Newspaper He ‘Won’t Trust Anybody’ For The Rest Of His Life; Ohio Real-Estate Ponzi Scheme That Spread By Word-Of-Mouth Was Discovered After Suicide Of Church ‘Praise Band’ Member

    UPDATED 9:47 A.M. EDT (U.S.A.) A 72-year-old man and his 60-year-old wife built up a $400,000 retirement nest egg through hard work over decades at a cosmetics factory — only to see it consumed in a real-estate Ponzi scheme operated by two church members, including one who killed himself when the scheme was unraveling, the Cincinnati Enquirer reports on Cincinnati.com.

    The story provides some details about other local Ponzi schemes, but focuses on the scheme operated by the late Dave Colwell and his business partner, James “Jamie” Powell. Ninety-one people, including retirees now in their sixties, seventies and eighties, were ensnared in the scam, according to the newspaper.

    Colwell, a member of the church “praise band,” was found slumped over the guardrail of an Indiana causeway. The weapon with which he killed himself was found by police divers in the frigid water below, the newspaper reported.

    “Colwell and Powell employed nearly every one of the most common schemes used to separate investors from their money,” the newspaper reported. “Colwell wasn’t even supposed to be selling securities; he had lost his securities license three years earlier.”

    Powell is in federal prison.

    Read the story at Cincinnati.com.

  • Government Refuses To Say Whether Return Of INetGlobal Funds Means The Firm Has Been Cleared And The Probe Into Its Business Practices Has Concluded

    UPDATED 9:24 P.M. EDT (U.S.A.) A spokeswoman for U.S. Attorney B. Todd Jones of the District of Minnesota refused to say today whether the government’s probe into the business practices of Inter-Mark Corp. and INetGlobal is over.

    “[W]e never confirm or deny the existence of investigations,” said Jeanne Cooney.

    The firms announced yesterday that prosecutors had agreed to return more than $20 million seized by the U.S. Secret Service in a Ponzi scheme probe in February 2010. Some INetGlobal members instantly seized on the news, claiming the government’s release of the funds validated the company’s business practices as they existed at the time of the seizure.

    Separately, INetGlobal members circulated a statement from Inter-Mark Board Chairman Bob Kinsella. The PP Blog was sent a copy of the statement by an INetGlobal member, under a subject line of “Gov. Releases funds Lets Rock!”

    “Today’s outcome is validation of the Inter-Mark Corporation business model,” the statement quoted Kinsella as saying. “I wonder if any business has been more researched and analyzed as Inter-Mark in the last year. Sales Associates all over the world should have complete confidence in the future of Inter-Mark Corporation.”

    Kinsella was quoted in the Star Tribune newspaper as saying the same thing.

    Cooney had no immediate comment today on Kinsella’s statement that the firm’s business model had been validated.

    But Cooney did say that she believed a claim on the INetGlobal Blog that the firm had been validated had been made in “error” by the company — and that the firm “removed” the claim from its Blog.

    Agreement

    The money is not being released to INetGlobal directly, under the terms of an agreement approved by U.S. District Judge Donovan Frank. Instead, it is being released to attorney R.J. Zayed, who was appointed Temporary Administrator of Seized Funds.

    Zayed, who also is the court-appointed receiver in the Trevor Cook Ponzi scheme, will distribute the funds under judicial supervision to INetGlobal affiliates owed money at the time of the February 2010 seizure.

    Frank gave the government up to 45 days to turn over the money to Zayed. Prosecutors can petition for an extension of time beyond 45 days for “good cause,” according to the order.

    “The Administrator shall conserve, hold, and manage the Seized Funds transferred by the United States as part of the Court’s Order, and shall perform all acts reasonably necessary or advisable to preserve the value of the Seized Funds until they are validly distributed to the members of Inter-Mark,” according to the order.

    “If the Administrator is satisfied, in his sole discretion, that the identity of the Inter-Mark member is correct, that the amount due and owing to the member is correct, and that the name, address, government identification documents, and IRS tax forms of that member are proper, the Administrator shall wire transfer from the Seized Funds to that member’s ‘e-wallet’ account with International Payout Systems the amount due and owing to that member,” according to the order.

    Funds that remain after Zayed pays INetGlobal affiliates will be returned to the company, according to the agreement.

    No one has been charged criminally in the INetGlobal probe. Former executive Steve Renner, who denied wrongdoing, was sentenced in 2010 to 18 months in federal prison in an unrelated tax case. He is scheduled to be released in October.

    The firm says it will have an exciting future.

    “InetGlobal will use the remaining funds to launch a new and exciting array of products, many of which have been delayed due to the seizure of the funds,” the company announced on its Blog.  “What working capital was available was used to service the existing business and to pay for the expensive process required to convince the United States government that iNetGlobal’s business is legal.”

    An INetGlobal supporter who emailed the PP Blog this afternoon included a link to the Star Tribune story, which included Kinsella’s comment that the firm had been validated.

    “Wow, it looks like you have some explaining to do,” the sender opined, referring to the Blog’s coverage of the allegations against the firm.

    The sender then imagined a fantasy conversation in which the Blog would say “oh uh uh well uh” — and which he would say in return, “THAT’S WHAT I THOUGHT!!”

  • BULLETIN: FLORIDA — AGAIN: CFTC Says Man With 3 Aliases Ripped Off Church Members And Prayer-Group Attendees In Forex Ponzi Scheme And Then Moved To Canada

    BULLETIN: The CFTC has gone to federal court in the Southern District of Florida, alleging that a former Miami man who conducted prayer services in his home ripped off church members, friends, neighbors and others in a Forex Ponzi scheme.

    Some investors bought into the scheme with cash payments that totaled in the hundreds of thousands of dollars, the CFTC alleged.

    Charged in the alleged caper were Juvenal Eduardo Machado and his Miami-based company, Invers Forex LLC. Invers was in the interior-remodeling business prior to morphing into a Forex firm, and Machado used at least three aliases, according to the CFTC.

    The aliases included Juvenal Eduardo Machado Bogadi, Edward Kaufman and Eduardo Machado, the CFTC said. Machado moved to Canada after the scheme collapsed and customers demanded their money, and is believed to be living in Ontario.

    Machado and his firm gathered at least $786,000 from customers, but did not open individual trading accounts for customers and deposit their money into individual accounts as promised, the CFTC said.

    Rather, Machado and the firm opened a “single” trading account in Machado’s name. Although customers had forked over at least $786,000, Machado deposited only about $135,000 of that sum — and lost almost 90 percent in trading.

    When the scheme apparently was collapsing in March 2010, Machado made excuses about why customers weren’t receiving their promised payouts, the CFTC said. In at least one instance, a customer who’d originally been told she could withdraw her money with 30 days’ notice was told she could not have her money for six months.

    When the six months expired, the customer was told she needed to wait another 30 days to get her money, the CFTC said.

    Authorities believe Machado moved from Miami to Canada during the summer of 2010. Despite demands from customers to return their money, the money has not been returned, the CFTC said.

    Neither Invers nor the interior-remodeling firm — Interior Remodeling USA Inc. — was registered with the CFTC  “in any capacity,” the agency said, alleging that the scheme began in December 2008 and operated “at least” through March 2010.

    Machado, who allegedly solicited Forex funds from church members and people who attended prayer meetings in his home, told prospects that a “God had put him on the earth to help people financially,”  the CFTC said.

    Among Machado’s other claims was that he was “one of the best [F]orex traders in Miami”  and that people paid him to share his techniques, the CFTC said, alleging that Machado offered “guaranteed” profits of 5 percent a month.

    At least 28 customers invested with Machado — and three customers alone turned over $344,000 in cash to him, the CFTC said.

    Investigators believe some customers received disbursements in cash from Machado, the CFTC said.

    Meanwhile, Machado and his firm used an accountant that also was a Forex customer and “caused” the accountant to send “false IRS forms” with earnings information to customers, the CFTC alleged.

  • UPDATE: Is Club Asteria Missing An Executive? Blurb For ‘Director Of Sales And Marketing’ Goes Missing From Website Amid Reports Firm Has Suspended Cashouts

    A blurb for a key leader of an online “program” that claims to elevate people out of poverty globally has gone missing.

    The blurb for Hank Needham, whom Club Asteria identified as its director of sales and marketing, appears to have vanished between June 19 and today. Also missing from the Club Asteria webpage that identifies its leaders is Needham’s photograph.

    Club Asteria has not announced Needham’s departure. Why the blurb has been removed from the website was not immediately clear. Also unclear is whether Needham remains a Club Asteria employee and continues to hold an executive post at the Virginia-based firm, which trades on the name of the World Bank.

    In general, companies announce the departure of a key executive long in advance of the departure for the purposes of maintaining continuity and stakeholder trust.

    Needham, Club Asteria noted prior to the removal of the blurb, was “responsible for establishing Country, Regional and Network Team Leaders.

    “Hank has 22 Years (sic) experience in building Sales Teams throughout Europe, United States, Asia and Africa with special emphasis in the Network Marketing and Communications Industry (sic),” according to the now-removed blurb.

    In May, Club Asteria announced that its PayPal account had been frozen. There are reports today that the company has suspended member payouts for up to 60 days, but the company has not confirmed the reports on the news section of its website. Members have been grumbling on Ponzi scheme forums for weeks about drastically reduced cashouts from the firm.

    Remarks attributed to Andrea Lucas, Club Asteria’s managing director, appeared on Ponzi forums today. Lucas was quoted as saying, “We have made the decision to accumulate revenue share disbursements for the next 30 to 60 days.”

    Such a statement — if true — may signal that Club Asteria is having a serious cash crisis.

    On April 11, Club Asteria announced on its news website that it takes “very seriously our responsibility to remain financially solvent.”

    Many Club Asteria members preemptively claimed in promos for the firm that it was not operating a Ponzi scheme. The claims were juxtaposed against competing claims that a $19.95 monthly payment to Club Asteria could result in guaranteed earnings of $400 a week — nearly $21,000 a year for a 12-month outlay of about $240.

    See story from earlier today.

  • UNCONFIRMED: Club Asteria Suspends Member Cashouts; If Ponzi Forum Reports On Payout Halt Are True, Then Decision Was Made Virtually 2 Years To The Day After AdViewGlobal Autosurf Collapsed

    A Virginia-based company that trades on the name of the World Bank and claims to help lift some of the poorest people on earth out of poverty by involving them in an income and MLM-like recruitment scheme has suspended member cashouts, according to posts on Ponzi scheme and criminals’ forums.

    If the news about Club Asteria is true — and the company is not confirming it on its news webpage — then the firm may be following the AdViewGlobal (AVG) autosurf into the darkness virtually two years to the day after AVG suspended cashouts after collecting an unknown sum of money and declaring member payouts never were guaranteed.

    Club Asteria, according to chatter on infamous Ponzi forums such as MoneyMakerGroup, did not call its decision not to pay members a suspension. Rather, the firm described it as a “decision to accumulate revenue share disbursements for the next 30 to 60 days.”

    Members have claimed in promos for months that Club Asteria provided a “passive” investment opportunity and that earnings were guaranteed. The company itself has implied as much, according to promotional materials. Club Asteria is under investigation by Italian authorities, and confirmed in May that its PayPal account had been frozen.

    After the PayPal freeze, which involved an unspecified sum of money, Club Asteria slashed its weekly payout rate to less than 1 percent and urged members to use offshore payment processors.

    Like AVG, Club Asteria blamed negative developments on its own members. The firm does not publish verifiable financial data, and members say payments come via wire from an entity known as Asteria Holdings Limited in Hong Kong.

    Why a Virginia-based company would route money through an apparent Hong Kong-based subsidiary to both U.S.-based members and international members never has been clear. Some members have published spreadsheets and ads that state plainly or imply that Club Asteria members can count on earning $400 a week for a payment of $19.95 a month, with earnings projected at a rate of 10 percent a week.

    Other members have claimed Club Asteria pays 3 percent to 4 percent a week, numbers that project to a return of between 156 percent and 208 percent per year. References to a “passive” earnings opportunity with guaranteed payouts gave rise to questions about whether Club Asteria and its members were selling unregistered securities as investment contracts.

    Meanwhile, the presence of promotions and “I got paid” posts on infamous Ponzi forums led to questions about whether Club Asteria had come into possession of funds tainted by one or more Ponzi or fraud schemes.

    When AVG collapsed two years ago this week, the firm said it was retooling and would make an 80/20 program mandatory upon relaunch. Club Asteria, whose domain name appears to have been registered on June 25, 2009,  reportedly incorporated an 80/20 program into its business model upon its launch in 2010.

    Club Asteria’s domain, according to web records, was registered on the very same day news about the collapse of AVG surfaced. On June 30, 2009 — five days after its collapse — AVG’s name was referenced as an iteration of Florida-based AdSurfDaily in a racketeering lawsuit filed against ASD President Andy Bowdoin.

    Bowdoin was arrested by the U.S. Secret Service for wire fraud, securities fraud and selling unregistered securities in December 2010. In August 2008, prior to the launches of both AVG and Club Asteria, tens of millions of dollars were seized from Bowdoin’s 10 personal bank accounts by the Secret Service.

    It is believed that ASD, AVG and Club Asteria had promoters and members in common.

    In the online Ponzi world, 80/20 programs are used to minimize cash outflow and disguise the nature of the programs. Club Asteria members preemptively have claimed the firm was not operating a Ponzi, a highly dubious claim given that the company does not publish audited financial information and that members — perhaps particularly members from Third World countries, countries ravaged by war or countries governed by dictators or strongmen — likely lacked the means or ability to visit Club Asteria’s U.S. headquarters to examine the books in person.

  • URGENT >> BULLETIN >> MOVING: 2 Men Arrested In Alleged Plot To Attack Military Processing Center In Seattle; Military Enlistees Allegedly Were Subjects Of Planned Mass Murder With Grenades And Machine Guns

    URGENT >> BULLETIN >> MOVING: Two men were arrested in Washington state last night after the FBI disrupted a planned attack on a Seattle military intake center that included a daycare center for the children of federal employees, the Justice Department said.

    Arrested were Abu Khalid Abdul-Latif,  33, of Seattle, and Walli Mujahidh, 32, of Los Angeles. Abdul-Latif also is known Joseph Anthony Davis, and Mujahidh also is known as Frederick Domingue Jr.

    Both subjects had been under surveillance, and federal agents “took possession of machine guns that they purchased and planned to use in an attack on the Military Entrance Processing Station (MEPS) located on East Marginal Way, Seattle,” the Justice Department said.

    MEPS screens and processes military enlistees.

    “The complaint alleges these men intended to carry out a deadly attack against our military where they should be most safe, here at home,” said U.S. Attorney Jenny A. Durkan.

    Investigators said the Joint Base Lewis-McChord military facility in Pierce and Thurston counties was the original target of the plot, which later was changed to target the Seattle facility. The men were arrested after taking possession of machine guns, the Justice Department said.

    Both machine guns and grenades would be used to murder members of the military under the plan, which law enforcement intercepted when a person contacted authorities to say that “he/she” had been approached to participate in the attack and supply weapons, the Justice Department said.

    The person agreed to cooperate with law enforcement, and the weapons were rendered inoperable, the Justice Department said.

    “We were able to disrupt the plot because someone stepped forward and reported it to authorities,” Durkan said.

    “Since early June the conspirators were captured on audio and videotape discussing a violent assault on the Military Entrance Processing Station,” the Justice Department said.

     

  • Star Tribune, Minnesota’s Largest Newspaper, Targeted In International ‘Scareware’ Cyberattack; 2 Suspects Arrested In Latvia; Bogus Ad Agency Purportedly Based In Miami Allegedly Used To Dupe Famous American Publishing Company

    EDITOR’S NOTE: This is one of those stories that can cause people to scream. The U.S. publishing industry has been deeply affected by the Internet. Print advertisers — the people who pay the bills — now can communicate directly and immediately with readers, a development that is sucking the life out of traditional print publishers. Publishers large and small are seeking ways to monetize electronic versions of print publications because that’s what much of the audience prefers.

    But switching in whole or in part to electronic publications has exposed the industry to a whole new set of problems, including wanton theft of entire editorial wells, theft of other intellectual property and trademark infringement. The story below details another new threat: the targeting of a famous journalism brand to drive traffic to an electronic fraud scheme.

    In 2009, the PP Blog suspended publication of a companion Blog on Ponzi schemes and securities fraud because of the theft of its entire editorial well. Earlier this year, the Blog suspended the publication of ads provided by Google because of chronic harassment directed at the Blog and some of its readers by a cyberstalker on YouTube. The PP Blog also has experienced sustained DDoS attacks, threats of “war” and threats believed to have originated with people sympathetic to online criminals.

    On April 6, the PP Blog reported such an incident to a federal law-enforcement agency.

    One of the most prominent publishing companies in America’s heartland was duped in a scheme  in which international criminals fabricated an “advertising agency” purportedly based in Miami and placed an ad by posing as media buyers for a major hotel chain, federal prosecutors said.

    When the Star Tribune newspaper tested the ad, the criminals initially covered their tracks by causing the ad to appear to be a normal ad for the Best Western hotel chain, the purported client of the purported advertising agency.

    Within two days of the Feb. 19, 2010, placement of the “ad,” however, Star Tribune readers interested in what they believed was a Best Western offering were subjected to a browser hijack in the Netherlands and Latvia that caused their computers to freeze and display pop-up messages for a purported “antivirus” software product.

    Such “scareware” attacks have been responsible for tens of millions of dollars in losses globally by duping computer-users into believing their machines have been infected with a virus or malware and making purchases of software to eliminate the problem.

    After the Star Tribune realized it had been duped, the newspaper pulled all of its online ads, isolated the problem, contacted law enforcement “immediately” and let its readers know about the infected ad.

    Federal prosecutors now say “RevolTech Marketing,” the purported  “advertising agency” in Miami, was bogus. The ad allegedly was placed by a media buyer who identified herself as “Lisa Polowski.”

    Moreover, Best Western “had not retained RevolTech to place online advertisments on its behalf,” according to prosecutors. They added that losses from the scam targeted at the Star Tribune and its readers totaled “at least” $2 million.

    Two people — Peteris Sahurovs, 22, and Marina Maslobojeva, 23 — were arrested yesterday in Rezekne, Latvia, federal prosecutors said. They are charged with wire fraud, conspiracy and computer fraud for creating the phony agency, falsely claiming they represented Best Western, duping the Star Tribune and causing scareware to load on the personal computers of its readers.

    The Star Tribune is Minnesota’s largest newspaper. It covers news in multiple categories across the Minneapolis/St. Paul region, state, nation and world, and in recent years has been covering spectacular local Ponzi scheme cases with wide readership interest, including the Tom Petters’ and Trevor Cook cases.

    Prosecutors did not say why the Star Tribune had been targeted in the cyberattack. Scammers, spammers and online criminals, however, are known to monitor publications for cultural references and specific “keywords” — and then seek ways to use the publications to drive traffic to fraud schemes.

    The PP Blog, for instance, has received 2,859 unwanted communications in June 2011 alone, mostly from keyword spammers trying to publish ads on the Blog and leech off its traffic. In the Internet Age, criminal networks monitor coverage of any number of topics and seek ways to piggyback off the topics to create illegal profits.

    “The global reach of the Internet makes every computer user in the world a potential victim of cybercrime,” said U.S. Attorney B. Todd Jones of the District of Minnesota. “Addressing cybercrime requires international cooperation; and in this case, the FBI, collaborating with our international law enforcement and prosecution partners, has worked tirelessly to disrupt two significant cybercriminal networks. Their efforts demonstrate that no matter the country, Internet criminals will be pursued, caught and prosecuted.”

    Jones’ reference to a second disruption of international cybercrime was in the context of a case brought in Washington state in which the United States seized 22 domestic computers and servers and arranged to have 25 international computers and servers disabled in a scareware probe known as “Operation Trident Tribunal.”

    Federal prosecutors said a scareware network had racked up $72 million in sales over three years by duping people into buying fake antivirus software.

    At least 960,000 computer users were duped in the scareware fraud, prosecutors said. Latvian authorities seized at least five bank accounts linked to the scheme.

    “This case shows that strong national and global partners can ensure there is no sanctuary
    for cyber-crooks,” said U.S. Attorney Jenny A. Durkan of the Western District of Washington.

    Read the Minnesota indictment.

  • FLORIDA — AGAIN: Miami Attorney Awaiting Sentencing In Ponzi Scheme Charged With Stealing From Employee Benefit Plan

    A Miami attorney awaiting sentencing in a Ponzi scheme case now has been accused of stealing from an employee benefit plan, federal prosecutors in the Southern District of Florida said.

    Lorn Leitman, 61, was charged with stealing from the South Florida Emergency Physicians P.A. Profit Sharing Plan. He faces up to 20 years in federal prison after pleading guilty to a mail-fraud offense in the Ponzi case, and now faces up to another five years on the theft charge, prosecutors said.

    The Ponzi scheme operated for 10 years, prosecutors said. The sentencing phase of the Ponzi case against Leitman was under way Monday when the new indictment on the theft charge was announced. The sentencing phase in the Ponzi case is scheduled to resume July 6.

    Leitman was indicted on the theft charge after an investigation by the U.S. Department of Labor.

    “This case reaffirms the Labor Department’s commitment to protect workers’ benefits by identifying criminal activity wherever and whenever it occurs,” said Isabel Colon, acting regional director of agency’s Employee Benefits Security Administration Atlanta Regional Office and the Miami District Office.

    In addition to being an attorney, Leitman also is a CPA, prosecutors said. The Florida Bar previously sanctioned Leitman for misconduct in a case in which it was alleged members of the military were targeted in a loan scheme that charged usurious interest rates.

    In 2007, the Florida Supreme Court ordered Leitman to attend Ethics School.