Whether you’re an alleged Zeek “winner” or a “loser” hoping the court will force the return of tens of millions of dollars in gains, this is one to bookmark: http://www.zeeknetwinnerclass.com/index
It’s the website of J. Kevin Edmundson, the lawyer appointed by the court in essence to defend thousands of alleged Zeek Rewards winners sued by court-appointed receiver Kenneth D. Bell. In a Nov. 5 announcement on the receivership page, Bell himself pointed his litigation opponents to the site.
“As instructed by the Court, Mr. Edmundson will be communicating with the Net Winner Class primarily through a website and collective emails,” Bell wrote.
Bell alleges the winnings are Ponzi proceeds and thus must be returned. Any number of Zeekers hope to keep the alleged gains.
The case is known as Bell v. Disner. Disner is Todd Disner, an alleged pitchman for both Zeek and the AdSurfDaily Ponzi scheme in 2008. The winner’s site includes an FAQ’s section, copies of court filings and more.
“Class counsel has established this website as the primary means of communicating with members of the class,” Edmundson notes on the site. “Please check back frequently for updates as new information becomes available.”
What once was only theoretical in the context of MLM HYIP schemes — that a receiver appointed by a court could simultaneously sue thousands of “winners” from disparate locations for return of funds received from an alleged Ponzi or pyramid scheme — is now a reality.
This reality was cemented [March 17] by the posting of a “Notice of Certification of Defendant Class Action” by Zeek Rewards receiver Kenneth D. Bell. The four-page document is posted on the receivership website.
Bell is suing more than 9,000 individuals in the United States alleged to have received more than $1,000 from the “program.”
EDITOR’S NOTE: Officials in the Philippines not only are using securities laws in the EmGoldEx prosecution, but also a relatively new law against cybercrime in that nation. This potentially could stiffen penalties. As noted below, EmGoldEx also caused trouble in the United States.
UPDATED 10:43 A.M. ET U.S.A. EmGoldEx was a Ponzi scheme that morphed into entities known as Global Intergold (GIG) and Prosperous Infinite Philippines Holdings, Corp. (PIPHC), the Securities and Exchange Commission of the Philippines is alleging.
Among the victim-investors and recruiters were two “officials” of the Philippines National Police, the SEC said. One of the individuals allegedly joined “in desperation after his house burned down early this year.”
The allegations appeared today, in advance of an EmGoldEx-related event scheduled for Sunday at the SMX Convention Center at 5 p.m. Officials issued a warning about the event, saying that 2,000 people were expected to attend.
“Suspects” identified by the SEC include Kevin Miranda, Ryan Manuit, Charles Juiz Padilla, Rabel Ymas, John Rafael Calicdan and Paul Alviar. Their places of residence were not listed.
Lalaine Monserate, assistant director of the SEC’s Enforcement and Investor Protection Department, said the entities operated “a classic Ponzi scheme of getting cash investments and giving high return payouts [through] the recruitment of people. As more people are recruited into the scheme, it eventually reaches a point wherein it can no longer sustain its payouts, and payments will stop thereby leaving investors penniless.”
As for EmGoldEx operations in the Philippines, officials there have issued a cease-and-desist order and made a criminal referral to the nation’s Department of Justice. Among the allegations are selling or offering for sale or distribution unregistered securities to the public and and doing so without a license.
Each violation of the [Securities and Regulation Code] is punishable, upon conviction, with a fine of not more than Php 5 Million or imprisonment of 7-21 years, or both,” the SEC said.
Officials are treating the matter not only as a securities fraud, but also as a cybercrime, the SEC noted.
“The selling and marketing of unregistered securities by EmGoldex, GIG, and PIPHC are largely done online,” the SEC said. “Crimes committed in cyberspace and through the use of Information and Communication Technologies (ICT) carry a higher penalty as provided under the Cybercrime Prevention Act of 2012.”
From the SEC (italics added):
Originally, the entity which employed the Ponzi scheme was EmGoldex. However, in response to SEC’s Advisories warning investors against EmGoldex, the original entity renamed itself to GIG. PIPHC was then incorporated sometime on August 2015 to aid and assist GIG investors who were unable to obtain a return on their investment. Currently, EmGoldex is already banned in other countries based on international media reports.
From a 2014 YouTube promo for The Achieve Community. Authorship is unclear.
Still promoting your securities scam on YouTube?
As the PP Blog reported on Oct. 3, YouTube promos for the alleged DFRF Enterprises’ Ponzi scheme were cited in two of three wire-fraud counts against accused operator Daniel Fernandes Rojo Filho. Filho, allegedly at the helm of a fraud that gathered tens of millions of dollars, has been in federal custody since his July 21 arrest in Boca Raton, Fla.
It turns out that YouTube videos also are playing a role in the criminal prosecution for wire fraud and wire-fraud conspiracy of Troy Barnes of The Achieve Community — or TAC. That prosecution was announced Nov. 3 by the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
Among other things, the indictment against Barnes alleges that “YouTube communications” played a role in duping Achieve participants and therefore constituted part of a wire-fraud conspiracy.
Barnes, 53, resided in Riverview, Mich. He is free on bond, pending trial. In addition to the conspiracy count against him, Barnes also faces three counts of wire fraud for three transactions in 2014 involving the purchase of Achieve “positions” by victims, according to the indictment.
“By the time the scheme collapsed in February 2015, the conspirators had defrauded over 10,000 investors in the Charlotte-area and worldwide, and owed victim-investors at least $51 million in purported investment returns, yet only had available approximately $2.6 million,” prosecutors said. “According to court records, over the course of the scheme, Barnes used over $140,000 of the victims’ money for his own enrichment.”
Barnes co-conspirator was Kristi Johnson, 60, who resided in Aurora, Colo., prosecutors said. She has already pleaded guilty to wire-fraud conspiracy and is scheduled for sentencing Nov. 19, before U.S. District Judge Max O. Cogburn Jr.
Achieve offered a 700 percent ROI, according to the SEC and federal prosecutors. Barnes and Johnson also face a civil action by the SEC.
In December 2014, the PP Blog reported that Achieve boosters parroting each other were circulating a YouTube promo that read, “We are not investing in a stock or buying shares in a company. We are using our God given universal right to spend our money the way we want. We choose not to sell out to the banking system for their tiny little 1% annual return.”
Said Rose’s office on Tuesday: “According to court filings, as the scheme grew in size and scope, Barnes and his conspirators concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term ‘investment’ would draw scrutiny from regulators, they instructed victim-investors that ‘We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.’”
Scammers from AdSurfDaily in 2008 tried the same tactic. It backfired, as it later would do with Achieve and other “programs,” including Zeek Rewards.
Among other things, Achieve claimed $50 turned into $400. The U.S. Secret Service brought the Achieve criminal case and the ASD prosecution. ASD was a 1-percent-a-day “program.”
UPDATE 7:22 P.M. ET U.S.A. Scheduled for sentencing Nov. 19, Kristi Johnson today asked the court for a sentencing delay. Specifics were filed under seal. This is from a motion on the public record (italics added):
1. Pursuant to Local Rule of Criminal Procedure 55.1, Ms. Johnson respectfully requests this Court to seal the Joint Motion to Continue Sentencing because it contains sensitive information regarding a criminal investigation.
2. Public dissemination of the Joint Motion to Continue Sentencing may interfere with the administration of justice. Therefore, there is good cause for the Court to seal said motion.
A Jeunesse rep may be using Twitter in a bid to raid downlines of other MLMers.
On Oct. 24, the PP Blog reported that Truth In Advertising (TINA.org) had raised concerns about health-related claims surrounding the Jeunesse MLM, including a claim from an apparent rep that a product known as Jeunesse Reserve had reversed the course of gangrene in a patient with diabetes who was facing an amputation.
Today the PP Blog is reporting that an apparent Jeunesse rep with a Twitter handle and email addresses that suggests he is a lawyer may be trying to raid downlines at MLMs such as Vemma, Usana, Amway, Mary Kay, Zhulian and others.
Jeunesse did not respond immediately to a request for comment from the PP Blog. We’ll publish the comment, if received.
Earlier today the Blog observed a Twitter promo from an account under the name “DH-mlm-lawyer.tk.” This was the headline in part: “ZHULIAN, VEMMA,USANA,AMWAY,MARYKAY [SIC] -REGSITER [SIC] AND CONVERT DOWN-LINES INTO OVERNITE WEALTH.” Included was a link to an affiliate site at JeunesseGlobal.com. The affiliate ID was “smcmktg,” with the rep listed as “David.”
Included among the graphics of the promo was one that read “MLM Transfer Your Downline Into Overnight Millions.” Another graphic suggested that MLMers who moved to Jeunesse and took their downlines from other companies with them could earn more than $270,000 in two weeks and $800,000 in a month.
Another graphic listed the names of Zhulian, Avon, Amway, Mary Kay, Herbalife, Shaklee, Nuskin, Vemma and Usana. It further claimed Jeunesse produced “OVERNIGHT MILLIONAIRES” and that people who moved their downlines from other companies to Jeunesse could “convert” those downlines into “millions” of dollars.
Avon, Herbalife, Shaklee, NuSkin and Usana are publicly-traded companies. Vemma is the current subject of an FTC pyramid-scheme prosecution.
Another promo for Jeunesse on the “DH-mlm-lawyer.tk” Twitter account suggested that Jeunesse somehow was affiliated with the Nobel Prize.
The “DH-mlm-lawyer.tk” Twitter account also promoted a URL styled “mlm-lawyer.tk.”
This post read, “Need MLM-Network marketing Help or advise? [Sic] How about an answer to EBAY PROBLEMS:”
When the PP Blog visited the site, it was greeted by images of law books and a prompt that read, “FREE INITIAL 1/2-HOUR CONSULTATION.” “TK” is the top-level domain for Tokelau, a New Zealand territory of 1,300 inabitants CNN described in 2012 as “The tiny island with a huge Web presence.”
The purported MLM law site, however, appears to use a phone number in Thailand while not listing any professional credentials commonly associated with attorneys or a street address. A headline on a Blog associated with the site reads, “JEUNESSE GLOBAL DARLING OF WALL STREET.”
UPDATED 7:51 EDT U.S.A. Let’s start by giving you the roster of federal agencies involved in the investigations and prosecutions of William M. Apostelos, 54, and Connie M. Apostelos, 50, his wife:
(1.) The Office of U.S. Attorney Carter M. Stewart of the Southern District of Ohio. (2.) Internal Revenue Service Criminal Investigation. (3.) The FBI. (4.) The U.S. Postal Inspection Service. (5.) U.S. Department of Labor Office of Inspector General. (6.) U.S. Department of Labor Employee Benefits Security Administration.
In addition to the six federal agencies, the Ohio Department of Commerce Division of Securities joined in the probe that uncovered an alleged $70 million Ponzi scheme.
So, how does Ponzi-forum legend “Ken Russo” fit into all of this? Here we’ll turn to a Nov. 1, 2014, story at BehindMLM.com. The story quotes “Ken Russo” on yet-another scam he is pushing. (Italics added.)
I am very firm in my belief that this is the real deal and I get no sense whatsoever that any kind of scam is intended here. It is very seldom that we can find an opportunity as transparent and viable as the Genesis Acquisitions International, LLC. investment club.
It turned out that William Apostelos was linked to Genesis Acquisitions and a sorry cast of other companies, including WMA Enterprises LLC, Midwest Green Resources LLC and Roan Capital.
Connie Apostelos, also known as Connie Coleman, also operated and oversaw multiple companies in the Dayton area, including Coleman Capital Inc. and Silver Bridle Racing LLC, prosecutors said.
“These companies were allegedly operated through improper use of investor funds to William Apostelos’ companies,” Stewart’s office said.
William and Connie Apostelos are charged with one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud and 13 counts of wire fraud, each crimes punishable by up to 20 years in prison. They were also charged with two counts of money laundering, which each carry a potential 10-year prison sentence. They were also charged with one count of theft or embezzlement from employee benefit plan, which carries a maximum penalty of up to five years imprisonment. Finally, Connie Apostelos is charged separately with one count of making a false statement, which carries a maximum penalty of up to five years imprisonment.
5th Update 8:04 p.m. EDT U.S.A. New York state Sen. Jeffrey D. Klein of the Bronx has called Herbalife a pyramid scheme whose “house of cards is tumbling down.”
Klein’s comments came in the context of an “undercover investigation” conducted by his office into Herbalife nutrition clubs in “The Bronx, Queens, and Brooklyn,” according to a PDF report released today. It is titled, “The American Scheme: Herbalife’s Pyramid ‘Shake’down.”
Partners in the probe, according to the report and a statement by Klein, were the New York City Office of the Public Advocate Letitia James and Make The Road New York, an advocacy group that consists at least in part of former Herbalife distributors.
Said Klein, in perhaps the most hostile words to date directed at Herbalife by an American politician (italics added):
“Herbalife’s house of cards is tumbling down. This fraudulent company’s efforts to lure in vulnerable New Yorkers and recent immigrants in pursuit of the American Dream is downright shameful. With false promises of wealth and extravagance, a disproportionate number of Hispanic families are falling prey to these schemes and sacrificing their hard earned dollars.”
Klein added that he intended to sponsor legislation that “will significantly boost protections for consumers and distributors, drastically strengthen financial reporting requirements for Herbalife independent members and increase oversight of this deceptive company in New York.”
Herbalife has been under investigation by the FTC for more than a year. No charges have been announced, and the Klein report raises the prospect that Herbalife has found a way to hoodwink regulators.
From the report (italics/bolding added):
As applicable to Herbalife International, the FTC does not classify the organization as an illegal pyramid scheme because the required $60 to $100 fee to receive a membership kit is not money used to compensate higher up distributors who recruit. Furthermore, once an Herbalife member becomes a supervisor, she is allowed to maintain the title and royalty collecting privilege for an entire year before having to re-qualify. However, our research and investigation reveal that Herbalife distributors do not follow the rules set by the FTC and are in fact running an illegal pyramid scheme. Our analysis demonstrates that higher up distributors encourage recruits to make large first-time product purchases, which the recruiters stands to gain on. And once the new members are unable to sell off their inventory, recruiters encourage them to recruit other members to increase their compensation claims and maintain operation. By contractually following FTC guidelines, Herbalife International has managed to skirt the law, but in reality their lack of proper financial disclosure and supervision over their members allows distributors on the ground to operate illegal pyramid schemes to the benefit of Herbalife International.
Uncharged in the Zeek Rewards’ case, Robert Craddock nevertheless has received prison time after pleading guilty to swindling more than $117,000 from the Deepwater Horizon oil-spill fund.
U.S. District Judge Gregory A. Presnell of the Middle District of Florida yesterday sentenced Craddock to two six-month terms in federal prison to be served concurrently, followed by three years’ supervised release. During his period of probation, Craddock additionally must serve 15 days at the “Brevard County Work Farm,” according to the docket of the case. (See 2013 News13 story on one of the purposes of the work farm.)
Presnell also ordered Craddock to make restitution of $117,700.
Craddock had asked for no jail time, BehindMLM.com reported Oct. 21.
Craddock had a storied history in Zeek, including a bid to silence Zeek critic K. Chang just weeks before the SEC and U.S. Secret Service moved against Zeek in 2012. After that, the SEC accused Craddock of trying to stifle the court-appointed receiver in the Zeek case.
Sentencing for Dawn Wright-Olivares, a former Zeek Rewards’ executive who pleaded guilty in February 2014 to investment-fraud conspiracy and tax-fraud conspiracy, has been postponed, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said today.
Wright-Olivares, whose age was listed as 45 by federal prosecutors at the time of her guilty plea, was to have been sentenced yesterday at 2:30 pm EDT before U.S. District Judge Max O. Cogburn Jr., according to the government’s Victim/Witness site for the Zeek Ponzi- and pyramid case.
No new sentencing date has been scheduled for Wright-Olivares, prosecutors said.
Sentencing delays are not unusual in federal cases. The plea agreement for Wright-Olivares requires her to be a prosecution witness if called by the government in “any trial, hearing, or grand jury proceeding, including, but not limited to, testimony against any co-defendants, as the United States designates.”
Zeek’s alleged haul clocked in at about $897 million. In terms of the number of victims, it appears to one of the two largest Ponzi schemes in U.S. history, possibly trailing only the TelexFree MLM scheme.
From an Oct. 23 TINA Tweet warning about Jeunesse-related health claims.
Truth In Advertising (TINA.org) reported yesterday that a website styled JeunesseReserve at a WordPress site had positioned the MLM juice offering Jeunesse Reserve as a product that will reverse the course of gangrene in patients with diabetes who are facing amputations.
According to the product claim, a woman with diabetes had developed gangrene of the finger and no longer could bear the pain. Apparently requesting an amputation ASAP and waiting for a surgeon to schedule one, the woman started “taking 2-3 packs of RESERVE” daily.
In the claim, the trademark symbol appeared alongside the word “RESERVE.”
At a point uncertain after the “taking” of RESERVE had begun, the patient was told by the doctor that her blood flow had returned and an amputation no longer was necessary.
Plenty of other health claims surrounded the gangrene claim, TINA reported.
Over-the-top and potentially illegal health claims in the MLM realm are hardly new.
“Achieve Community” Ponzi scheme figure Rodney Blackburn — who’d been pushing multiple cross-border HYIP scams simultaneously and even used video footage from the SEC’s website in one of his promos — ended up pushing a tea product amid claims it was “good for reducing diabetes” and mitigated the virus that causes AIDS.
Piccolo’s target audience additionally was told that the magnetic product could be used to help tomatoes, vegetables and fruits grow to “twice the size” while helping dairy farmers “produce more milk per cow.”
Beloved family pets hearing a call from the grim reaper could extend their lives if their owners used the products, Piccolo ventured.
“Your pets? If you have a pet and your pet’s on its last leg[s], bring them a Magnetic Shower,” Piccolo coached. “You won’t believe what it will do for your pet.”
As the PP Blog reported Oct. 19, federal prosecutors have opened a criminal probe involving Obopay and Payza and successfully asked a federal judge to pause civil litigation involving both payment-processing companies.
The Blog is reporting today that federal prosecutors in the Northern District of California and the District of Columbia specifically intervened in a lawsuit filed by Payza against Obopay and others on March 25, 2015. Payza’s lawsuit alleged Obopay had engaged in a multimillion-dollar fraud during business dealings. Prosecutors asked a judge to halt the case on June 23, advising her that a criminal investigation was under way.
The targets of the probe are unclear. It could be one or more parties involved in the litigation between Payza and Obopay.
One part of prosecutors’ filings — and it’s a part that appears before the actual motion to intervene is presented — reads: “The basis for this motion is that the United States Attorney’s Office for the District of Columbia in connection with Homeland Security Investigations and the Washington, D.C. Financial Crimes Taskforce, is actively conducting a criminal investigation into the illegal activities of [REDACTED.]”
On July 20, U.S. District Judge Phyllis J. Hamilton, presiding in Oakland, granted the intervention and ordered the case stayed until Jan. 22, 2016, according to docket entries.
The public portion of prosecutors’ filing is heavily redacted, leaving the targets of the criminal probe unclear.
This is a screen shot of one such redaction in the 16-page filing:
Among other things, prosecutors contended “there are a number of issues in the instant action that may be resolved by the criminal case.” After another redaction, prosecutors continued: “Given the high degree of overlap and interrelatedness of the cases, dual litigation does not serve the interests of efficiency or judicial economy.”
Here is another redaction:
In her July 20 ruling, Hamilton found that “proceeding with the present action would likely force one or more parties into the position of having to choose between waiving their Fifth Amendment rights or invoking the privilege (but with knowledge that adverse inferences could be drawn in the civil action).”
In the United States, the Fifth Amendment is a Constitutional protection against self-incrimination.
The judge also found that the government had an “interest in the stay because discovery in the civil action could affect its ability to pursue a parallel criminal investigation or could compromise existing confidential informants.”
Back then, a site styled obopayusa.com claimed “[t]he US Department of Homeland Security has seized all MH Pillars dba Payza money on deposit with UltraLight FS.”
Payza, meanwhile, contended that “we are unable to complete any requests to withdraw or transfer funds for a part of our U.S. members at this time, since they are being withheld by Ultralight Financial Services (formerly known as Obopay Inc.) a licensed U.S. money transmitter of which Payza was an agent.”
Federal prosecutors in the District of Columbia confirmed earlier this month that Homeland Security Investigations is conducting the criminal probe.
URGENT >> BULLETIN >>MOVING: (Updated 3:03 p.m. EDT U.S.A.) The United States has opened a criminal investigation involving Obopay and Payza, a Ponzi-forum darling.
Details of the probe are unclear. But the office of U.S. Attorney Channing D. Phillips of the District of Columbia confirms on its website that the U.S. Department of Homeland Security through Homeland Security Investigations (HSI) is involved in the investigation. So is the Washington, D.C. Financial Crimes Task Force.
The PP Blog first reported in December 2013 that matters pertaining to Obopay and Payza were under investigation. At the time, however, authorities did not say it was a criminal probe.
In an Oct. 15 update, the U.S. Attorney’s office says a criminal probe is under way and that prosecutors successfully asked a judge to stay civil litigation until early next year.
“The United States government, including Homeland Security Investigations and the Washington, D.C. F[i]nancial Crimes Task Force, is currently conducting a criminal investigation. As part of that investigation, the United States Attorney’s Office for the District of Columbia has requested a United States District Judge to pause curr[en]t civil litigation relating to Payza and Obopay. The Judge has paused the litigation until January 22, 2016. Shortly after that date, additional information will be made available on this website about the status of this investigation.”
Prosecutors’ update includes an email link and phone number.
