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  • EDITORIAL: ASD By The Numbers: Why America And The World Should Be Shocked — And Why Serial Autosurf And HYIP Promoters Should Be Prosecuted

    ASD's Andy Bowdoin.

    UPDATED 12:04 P.M. ET (U.S.A.) In court filings this week in the AdSurfDaily autosurf Ponzi scheme case, federal prosecutors in the District of Columbia revealed a series of jaw-dropping numbers. The biggest of these is 500,000 — the number of pages of emails gleaned so far in the investigation, which began in July 2008.

    Because prosecutors put the qualifier “at least” on the already-staggering number, it is clear the number actually could increase. Each of the pages is subject to the discovery process, meaning that attorneys from both sides and perhaps the court itself faces the monumental challenge of sifting through at least half a million pages of scheme-related correspondence.

    Other big numbers in the alleged $110 million ASD Ponzi include 100,000, the number of pages of bank records, and 5,000, the number of pages of documents that emerged after the U.S. Secret Service searched ASD’s office in Quincy, Fla., and the home of company president Andy Bowdoin.

    To date, investigators have identified 40,000 potential ASD victims. This number also could grow because there is reason to believe that “there may be members who provided funds to ASD but whose information ASD did not enter into its database,” according to prosecutors.

    ASD’s database included information on 97,000 members. Some participants have claimed ASD actually had 120,000 members. Regardless of the final number that emerges, ASD created victims by the tens of thousands, including victims who do not live in the United States, prosecutors said.

    The import — and the danger of these numbers — is that ASD is only one autosurf. There may be hundreds if not thousands of autosurfs operating in the world at any one time, along with hundreds or thousands of HYIPs. Like other autosurfs and HYIPs, ASD was promoted on Ponzi forums such as TalkGold, MoneyMakerGroup and ASA Monitor. The Ponzi pitchmen love American money, and commission-grubbing American salespeople and serial promoters who play dumb to line their pockets at the expense of their fellow countrymen specialize in spreading the misery globally.

    In May, the PP Blog reported on criminal charges filed against Nicholas Smirnow, the alleged operator of the Pathway to Prosperity (P2P) Ponzi and HYIP scheme. The numbers that have emerged from that alleged scheme are equally stunning: $70 million fleeced from 40,000 victims in 120 countries from “all of the permanently inhabited continents of the world,” according to the U.S. Postal Inspection Service.

    The criminal complaint filed against Smirnow specifically references the TalkGold, MoneyMakerGroup and ASA Monitor Ponzi forums — the same forums from which ASD and countless other schemes have been promoted.

    Legisi, yet another alleged scheme pitched at the forums, also produced some big numbers. Among them are $72.6 million fleeced from at least 3,000 victims. Matthew Gagnon, one Legisi pitchman, netted $3.8 million alone from the scheme, according to the SEC.

    So, in just the three alleged schemes referenced in this column — ASD, P2P and Legisi — the numbers shape up like this: at least $252.6 million gathered from at least 83,000 victims. If the P2P and Legisi cases are shaping up like the ASD case from the standpoint of paper production, investigators, attorneys from both sides and the courts may have to go through more than a million pages of documents and corresponding bank records to make sense of it all.

    Meanwhile, the wink-nod, serial promoters continue to ply their trade on the Ponzi boards — all while the U.S. and world economies are trying to navigate the choppiest waters since the Great Depression. While the serial promoters are lining their pockets at the expense of Moms and Pops from virtually every corner of the earth, they are anticipating the danger signs consistent with the implosion of their currently favorite Ponzi — and they are preparing their next round of lies to protect their illicit profit pipeline and explain away the problems that inevitably will emerge.

    Some of the professional criminals will tell their marks that it is their duty to be patient when Ponzi payments slow down. They’ll add that problems affect all enterprises regardless of size, and that it’s not unusual for payment bottlenecks to occur. They’ll explain that it likely is a problem with software or the need to acquire a new server to accommodate traffic. After all, they’ll say, “growing pains” are something to celebrate because they signal the success of the enterprise.

    And the serial criminals also will talk about a doubting recruit’s duty to be loyal to the enterprise. After all, they’ll explain, the company is doing the right thing by acquiring the equipment and manpower needed to streamline operations and thus return to a normal payout schedule.

    While the professional Ponzi criminals are explaining all of this, investors will become further separated from their money before the final round of excuse-making begins. Investors will be cautioned not to contact the authorities and told not to contact the payment processors. After all, the serial pitchmen will explain, if the authorities seize the cash or if the payment processors freeze the accounts, no one will get paid.

    When the scheme ultimately collapses, some of the serial criminals will shrug their shoulders and feign surprise. They’ll explain why they had every reason to believe that this one was different, that they’d been assured by the Christian operator it was different. No matter, they’ll say, perhaps positioning themselves as people of faith. Recruits who invested more than they could afford to lose have only themselves to blame, they’ll claim. (This is if they call it “investing” at all; many serial criminals avoid that word like the plague. After all of these years and all of this Bible-thumping, they still apparently believe that it’s possible to skirt securities laws by avoiding the word “investment” and calling it something else.)

    Then they’ll unapologetically move on to the next scam. After all, they’ll explain, they have a right to make a living. Some of them will explain that the government, which refuses to see the beauty of the autosurf and HYIP models, is to blame. Along the way they’ll create some clone promoters, and the clones will multiply. The clones will add to the purported, pro-Bible (and antigovernment chorus) — and before long, investigators trying to reverse-engineer a single case will be sifting through 500,000 pages of emails, 100,000 pages of bank records and 5,000 pages of records created as the result of the execution of a search warrant or as a result of actual documents seized.

    Agents then will begin the mind-numbing and time-consuming process of identifying victims by the tens of thousands.

    Some of the victims will lose their homes because they borrowed against their equity to take advantage of “bonus” ad packs and to maximize their “earnings” through “compounding.” Others will have lost savings set aside to educate their children. Still others will have lost their life savings and money set aside for retirement.

    Many of the people who created all the pain will sprint back to the Ponzi forums — and the government will be left to clean up the colossal mess. The Ponzi pitchfest is in constant motion as property values decline in neighborhood after neighborhood, driven by the foreclosures glut. The Stepfords among the promoters will write their Congressman or Senator or perhaps the Inspector General at the Justice Department.

    They’ll more or less say that it would be in the interests of America if the Congressman or Senator or Inspector General would see fit to fire all the prosecutors and agents who made these unseemly events occur.

    And then they’ll gather up their lists of suckers and try to recruit them into yet-another MLM, autosurf or HYIP nightmare. This they will call “freedom.” Some of them will be angry. Some of them will write rambling diatribes on forums. Invective will be part of the diatribes. Some of them will call public officials “Nazis” and “Socialists,” perhaps even in the same fractured paragraph. Some of them even will try to sue the government or have the prosecutors and judges charged with crimes. They’ll talk about “treason” and high crimes against the Constitution.

    What they will never do is make any sense.

    It is impossible to imagine that any government agency has the resources to take down all of the corrupt MLMs, autosurfs and HYIPs. But one can imagine a systematic process by which the government identifies the serial promoters and plans a litigation strategy from which will emerge the “shot heard round the world” of corrupt online investment “opportunities.”

    That day cannot come soon enough — and the numbers demand it: more than $250 million gathered from victims of just the three alleged schemes referenced on this page, perhaps 1 million or more emails and other documents produced by the investigations, at least 83,000 victims from virtually all corners of the earth, an untold number of agents/investigators from multiple government entities forced to sift though monumental piles of evidence.

    It is clear that wealth is being drained by the billions. It is equally clear that vast sums of money have gone missing in the Age of Terrorism.

    Clearest of all, however, is that the corrupt MLMs, autosurfs and HYIPs cannot thrive without their greedy and dangerous promoters — and that highly public lawsuits and early morning raids designed to hold the wink-nod Ponzi pitchmen accountable would send an unmistakable message that pain is in your future if you promote these criminally toxic businesses. Serial promoters deserve the same treatment as mid-level drug dealers.

    No economy can thrive if a single case among thousands of potential cases is producing 500,000 pages of emails and creating 40,000 victims while consuming tens of millions of dollars — and if “shell companies,” the “shadow banking system” and wink-nod, serial promoters are driving the wanton criminality and letting the cancers metastasize globally.

    Here’s hoping such an operation aimed specifically at corrupt MLMs, autosurfs and HYIPs already is under way.

  • BULLETIN: 40,000 Potential Victims Identified So Far In ASD Case; Government Says Autosurf Firm May Not Have Entered All Names In Database

    Andy Bowdoin

    BULLETIN: Federal prosecutors now say that a Florida company whose operator is accused of running an international Ponzi scheme may have defrauded 40,000 or more victims and may not have entered all the names of people who gave it money into the firm’s database.

    Andy Bowdoin, the president of AdSurfDaily, was indicted last month on charges of wire fraud, securities fraud and selling unregistered securities. Prosecutors now have revealed in court filings that the U.S. Secret Service seized ASD’s database during the probe, which began in July 2008.

    ASD’s database contains 97,000 names, including the names of members who joined for free, prosecutors said in a motion that asks U.S. District Judge Rosemary Collyer to approve a plan by which websites would be used to help locate additional victims and keep victims in general informed about developments in the case.

    “The government is not certain that this list is a complete list of all people who provided money to ASD and who potentially lost their money,” prosecutors said. “It appears from the investigation that there may be members who provided funds to ASD but whose information ASD did not enter into its database.”

    Some ASD members claimed the company had as many as 120,000 members.

    To date, prosecutors said they had identified “approximately 40,000 known potential victims.” The victims’ list includes “individuals who contacted the U.S. Attorney’s Office directly and identified themselves as losing money in their ASD investment, members who agents identified as potentially losing money with ASD and Golden Panda Ad Builder members.”

    Golden Panda was the purported “Chinese” option for ASD members. It was operated by Clarence Busby of Georgia, according to court filings.

    Bowdoin, prosecutors said in their motion, was operating ASD “essentially as his own piggy-bank.”

    Beyond that, prosecutors said, “as far as the Government is aware, there is no available accurate compilation” of all individuals or entities that lost money in the scheme.

    All victims have the right to be “reasonably heard” and to be kept up to date on proceedings, but the sheer number of ASD victims and a lack of records makes it “impracticable to give individualized notice to each potential victim.

    A web-based system of notification through email and a government site and the remissions site set up by Rust Consulting Inc. of Minnesota will help victims stay informed of their rights, prosecutors said in their motion to Collyer.

    “In light of the fact that Bowdoin operated an Internet based scheme, it is reasonable to assume that victims will have access to the internet and will be able to easily access information on the government’s website,” prosecutors said. “Moreover, the government will include on the remission website a link to the U.S. Attorney’s Office’s website for victims seeking information about public proceedings in the criminal case.

    “The Government respectfully submits that the proposed notice procedure is reasonable to give effect to the rights of the potential victims in this case, and requests that the Court enter the proposed order,” prosecutors said.

    Similar accommodations have been made in other securities-fraud cases, including the Bernard Madoff case, prosecutors said.

  • British Con Man Pleads Guilty In £14 Million Ponzi Scheme; Terry Freeman ‘Archetypal Fraudster Happy To Steal Money And Ruin Lives,’ London Detective Says

    British fraudster Terry Freeman of Essex.

    An Essex trader jailed in 1997 for financial fraud emerged from prison with a new name and swindled investors of £14 million ($28.8 million), the City of London Police Department said.

    Terry Freeman, 62, known as Terrence Sparks when he was jailed 14 years ago, pleaded guilty in Southwark Crown Court  to fraudulent trading, engaging in business while bankrupt, acting as a director when bankrupt and acting in contravention of an earlier disqualification order, investigators said.

    Up to 700 people were fleeced in Freeman’s forex Ponzi scheme, which he operated through a company known as GFX Capital Ltd. Investors were promised “no risk and high returns on the foreign exchange markets,” police said.

    “Rub away the sheen and you find Freeman is the archetypal fraudster happy to steal money and ruin lives,” said Detective Superintendent Bob Wishart of the City of London Police Department’s Economic Crime Directorate. “People invested their futures with GFX only to find they had been horribly conned by this criminal.

    “Even after being caught Freeman was still trying to blame anyone but himself,” Wishart added. “It was only after a long and painstaking investigation that he finally admitted to the huge amount of personal and financial damage he has caused.”

    The scheme unraveled in February 2009, when Freeman complained to police that his investors were threatening him. He was arrested within days.

    “Freeman’s deception began to be exposed in 2008 when, expecting a US government bail out of Lehman Brothers, he kept millions of his clients money invested in dollars,” investigators said. “Days later the company went bankrupt, the value of the dollar plummeted and he lost half his total investment fund.

    “To try and ease investor concerns, and while at the height of the financial crisis,” investigators continued, “GFX announced 12 per cent profits for the month.”

    Believing Freeman to be legitimate, “one mortgage broker handed up to 100 clients and £3.5 million to Freeman, before finally realising the true nature of the GFX operation,” investigators said.

    Despite the appearance of legitimacy, “millions of pounds” of investors’ money disappeared through botched trades and overspending. Freeman’s office accommodations alone cost £14,000 per month, investigators said.

    And Freeman used investors’ cash to buy “holiday homes in Cyprus and France, a top of the range land rover, an executive box at Spurs and lavish gifts for his new bride, including a £120,000 diamond ring,” investigators said.

    Sentencing is scheduled for Feb. 14 — Valentine’s Day.

    As Terrence Sparks, Freeman was released from jail in 2000 “and quickly established his new financial operation,” investigators said.

    His 1997 conviction stemmed from “eight offences relating to bankruptcy and being a disqualified director,” investigators said.

  • FTC: Company Sold Bogus ‘Green’ Certifications To ‘Anyone Willing To Pay A Fee’; Firm Known As ‘Tested Green’ Hawked ‘Worthless Labels,’ Agency Says

    A company that called itself “Nonprofit Management LLC” and did business as “Tested Green” sold bogus environmental certifications and ramped up the deception by implying it was independently endorsed by the National Green Business Association and the National Association of Government Contractors, the FTC said.

    Not only were the environmental certifications bogus, the purported endorsements were deceptive because Jeremy Ryan Claeys, who owned both Nonprofit Management and Tested Green, also owned the purported associations that provided the endorsements, the FTC said.

    “It’s really tough for most people to know whether green or environmental claims are credible,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

    The purported “green” operation was designed to harvest money, the FTC said.

    “Tested Green never tested any of the companies it provided with environmental certifications, and would ‘certify’ anyone willing [to] pay a fee of either $189.95 for a ‘Rapid’ certification or $549.95 for a ‘Pro’ certification,” the FTC said. “After customers paid, Tested Green gave them its logo and the link to a ‘certification verification page’ that could be used to advertise their ‘certified’ status. The agency charged that the respondents violated the FTC Act by providing the means to deceive consumers.”

    Although Tested Green billed itself “the nation’s leading certification program for businesses that produce green products or use green processes in the manufacture of goods and services,” the labels it sold were worthless, the FTC said.

    Claeys settled the FTC civil case by agreeing to a ban on making deceptive claims.

  • LETTER TO READERS: PP Blog Calls Police, Turns Off Google AdSense Ads After Search Giant Refuses To Take Report About Chronic Harassment From YouTube Cyberstalker ‘unclefesta26’

    Dear Readers,

    YouTube and Google apparently are unwilling to do anything about the cyberstalker “unclefesta26,” who appears to be harassing the PP Blog (and others) from an IP in the United Kingdom.

    First, though, let me share some of reasons for this post.

    The PP Blog is a Google AdSense publisher. On Nov. 17, Google invited me to participate in a beta test of a tool designed to give publishers more control over the AdSense ads that appear on their sites. I eagerly registered for the beta program on the day I received the invitation because I sensed a gathering storm.

    Indeed, one of the reasons I quickly registered for the beta program was that “unclefesta26” had used YouTube as a platform from which to poison the Blog’s brand by planting the seed that it cannot be trusted because of some of the AdSense ads that have appeared here. Here is one example. Here is another. I saw the beta program as both a welcome tool and a means of minimizing harassment from “unclefesta26.”

    The PP Blog has thousands of readers. I have received only a tiny number of complaints about AdSense ads. By “tiny,” I mean no more than three in the past two and a half years.

    If you’ve never had a stalker, these matters perhaps will seem trivial to you. But I necessarily have to spend time and energy monitoring this situation, which is chilling my ability to publish and earn a living in an atmosphere free of extortion — emotional or financial.

    It’s important to note that “unclefesta26,” who previously was banned from posting on the PP Blog, also has used the name “Pistol” and “Pistol’s Pal” online. Stalking never should be taken lightly, especially when one has used the name “Pistol.”

    A search of YouTube associates “unclefesta26” with approximately 311 videos. Virtually all of them harass his targets in one way or another. YouTube is providing the stage, contrary to its own Community Guidelines.

    In any event, the new AdSense tool has been helpful in blocking certain types of ads from appearing on the Blog. The tool, however, is not perfect. Owing to a large number of variables that may trigger ads, I am not certain any tool can do a perfect job. One of the biggest variables of all is taste. What some readers may view as objectionable could be perceived by others as something worthy of embrace. The PP Blog does not establish the rules by which Google accepts advertisers.

    What “unclefesta26” is doing is at the edge of irrationality, another thing wholly consistent with stalking. His IP has appeared on the PP Blog hundreds of times in recent weeks, according to our database — this after I had banned an earlier IP. I detected the new IP only days ago. It has become clear that “unclefesta26” is persistently videotaping the Blog, narrating passages from the Blog, scraping content to which he adds provocative sexual innuendo and employing a keyword strategy to poison the brand of the Blog.

    How bizarre have things gotten? Well, “unclefesta26” is using the keyword phrase “anal exam” to confuse the YouTube public about the PP Blog. He is taking the PP Blog’s content, changing it to suit his ends — and then publishing commentary attributed to the Blog on YouTube.

    I offer no apologies for seeking to make a living in my profession — in an environment that is affecting operations large and small as publishers scramble to remain relevant and even to hang on in the Internet Age. I have used the tool — and a previous tool provided by Google — to try to minimize the publication of ads inconsistent with the aims of the PP Blog. I cannot make it perfect — and now I have to deal with “unclefesta26” poisoning the PP Blog’s brand on YouTube.

    In one of his YouTube videos, “unclefesta26” videotaped headlines that scrolled across the top of the PP Blog. He used software to insert a bogus headline, changed the wording on the Blog’s “Breaking News” graphic — and added text that a reader of the Blog conducts “Anal” exams — “That’s Arsehole or Asshole To You And I,” he noted — “On Person Or Persons Unknown.”

    Here are some questions YouTube and Google should contemplate: What if “unclefesta26” and others like him go after other AdSense publishers? What if he poisons the brands of other AdSense-participating journalists? Will publishers become reluctant to carry AdSense ads because the price of carrying them is to be pilloried on a stage that Google itself provides? How many small publishers such as the PP Blog will become discouraged when they come to realize that Google apparently is unwilling to act in the interests of its own publishers?

    Among the ad categories I have blocked are “Get Rich Quick,” “Drugs & Supplements” and “Weight Loss.” I also have blocked “Brokerages & Day Trading,” “Securities,” “Retirement Investments,” “Spread Betting” and about 18 other categories pertaining to finance, investments and pharmaceuticals/healthcare. I cannot make the system fool proof. I do not believe that Google can, either.

    “unclefesta26’s” stock-in-trade is to lie in wait until he sees an ad on the PP Blog that displeases him — and then to produce a video of the story in which the ad appears. His general allegation against the Blog is one of hypocrisy: If I write about a court case in which damages were ordered against a company in a false-advertising case — and if Google places an ad in the story from a company he perceives to be objectionable — “unclefesta26” races to YouTube to skewer the Blog. At the same time, he is using his YouTube site to ridicule actual living, breathing human beings who support the Blog’s editorial mission.

    Yes, “unclefesta26” even is using YouTube to harass the Blog’s readers. Looking at it another way, not only is “unclefesta26” attacking an AdSense publisher, he also is attacking the very people the AdSense program is designed to attract: readers interested in buying things and comparing options.

    What he is doing is wholly unnatural and disturbing — and I say this as a person who spent seven years in the law-enforcement trenches before embarking on my writing career more than two decades ago. I have seen great harm come to the objects of stalkers — both physical and emotional. Stalking is never to be taken lightly. There is no doubt — absolutely none — that the behavior of “unclefesta26” is consistent with an obsession to inflict distress. It also is consistent with a pattern of refusing to stop no matter what — and that makes it dangerous. It is vulgar, to be sure.

    “unclefesta26” was banned from posting on the PP Blog in June 2009 for chronic harassment of the Blog and its readers. The very nature of his cyberstalking site on YouTube demands that YouTube and Google pay attention. If I were David Letterman — and if this harassment were occurring in or near my home — “unclefesta26” already would have a date with a judge. He then could explain to the judge why he believes it legal to lift a person’s image off the Internet and create an animated video that depicts the person as a breast-squeezing pole dancer wearing what appears to be a diaper when he isn’t dancing in the buff.

    I contacted Google by phone at its corporate headquarters in Mountain View, Calif., Friday at 3:31 p.m. (PT) to file a cyberstalking complaint against  “unclefesta26,” who has produced yet-another video designed to harass the Blog. It is possible — though not certain — that the video was made after “unclefesta26” made a fraudulent click on an AdSense ad that appeared on the Blog.

    Even if the video “unclefesta26” produced did not use footage he accessed after making a fraudulent click, it still constitutes cyberstalking and harassment. I am not going to take it — especially not after the DDoS attacks by still-unknown parties against the Blog in 2010. They increased the Blog’s monthly costs tenfold.

    Here, below, is “unclefesta26’s” most recent effort to harass. (The person depicted in the YouTube video is not “unclefesta26.” Rather, the person appears to be a Google advertiser whose ad appeared on the PP Blog):

    Google No Help

    You’ll note in the video above that “unclefesta26” took a screen shot of a story that appeared on the PP Blog Jan. 5. The screen shot includes a slice from an AdSense ad that appeared in the post. “unclefesta26” used the following keywords on YouTube to plant the seed that the Blog was engaging in illegal conduct: “patrick pretty hypocrite scammer ponzi scam fraud.”

    In the past, “unclefesta26” has used a gmail address to email the Blog to nuisance it and to announce his latest YouTube efforts. Not only is he a cyberstalker, he also is proud of his efforts to use Google-owned properties to annoy and harass his targets. The part of the story that he does not tell is that he has been banned from multiple online sites for behavior consistent with cyberstalking and relentless hectoring.

    Rather than hosting his own sites, “unclefesta26” relies on free services provided by Google. In the past, he used a free Ning.com website as a platform of harassment. He has a documented history of ignoring rules of decorum and of creating multiple identities to keep his nuisance campaigns intact. A moderator at one forum told me that “unclefesta26” created more than a dozen user identities in a single day. He created at least two user identities at the PP Blog and also appears to have the ability to use proxies to enter sites from which he has been banned.

    My most unsatisfactory call to Google Friday lasted four minutes and 29 seconds. Google refused to transfer me to a person authorized to speak about security- and fraud-related matters and its AdSense program. Incredibly, Google explained there was no way to speak with a person who actually could listen to and field my complaint. In my frustration after hearing canned responses and after having had no luck in the past with getting YouTube to do anything, I voiced my displeasure, testily saying that I insisted on being transferred to someone in authority.

    What I got was another canned response. It was like talking to a person who’d been programmed by geeks to say the same thing no matter what. It’s not a stretch to believe that the phone-answerer at Google would have told me to send an email had I called to report I’d just been mugged on the Mountain View campus or had seen a woman thrown forcibly into a car. The company seemed to care less that we had a common business problem.

    I am not happy. The PP Blog produces revenue for Google and content that it eagerly indexes. The Blog is being harassed on Google-owned YouTube by a cyberstalker in no small measure because of its participation in Google’s AdSense program — and yet Google cannot or will not put me through to a person in authority.

    “unclefesta26” apparently believes that any revenue the Blog receives is too much because Google sometimes delivers ads to the Blog that he deems objectionable — this while he uses phrases such as “blow job” and “flasher” and engages in bizarre sexual innuendo on his YouTube stalking site, which is equally unfriendly to women.

    PP Blog Calls Police

    At 3:42 p.m., after getting off the phone with Google, I called the Mountain View (Calif.) Police Department and asked to speak with a police officer. I identified myself and the location from which I was calling, providing a brief summary of what I sought to report. The woman who answered the phone did not identify herself as a police officer. Eventually I was placed on hold. The woman then came back on the line and told me the Mountain View department could not take my complaint, that I had to call my local police department.

    So, at least for now, “unclefesta26” has demonstrated that people who wish to use YouTube to harass AdSense publishers and others have a safe haven. It will do absolutely no good to call my local police department in the United States. I had hoped that the Mountain View police would take a report and contact Google on my behalf to at least start the ball rolling — and that Google would call me back. It became next to impossible for me Friday night to think of Google as a company that cares.

    At least temporarily, the Blog has removed the code that produces the AdSense ads. If Google is unable or unwilling to accept a phone call from an AdSense publisher who is being harassed on a Google-owned site, Google is not looking out for me. The run-around one gets when one seeks to speak with an actual human being in authority about legitimate issues of cyberstalking and fraud is unacceptable. At the same time, YouTube has permitted “unclefesta26” to create a stalking and hectoring site — one that not only is targeting this Blog, but also subjecting people who interact with the Blog to ridicule. One of his targets is a registered 501(c)3 corporation that works proactively with the U.S. Secret Service and other law-enforcement agencies to educate the public about scams.

    I have sent three complaints about “unclefesta26” using the YouTube system of screens. The complaint system, which I first used months ago, is worthless in my view. I have never even received a response. The harassment has continued for well more than a year and even has been dialed up.

    Given my background, I do not subscribe to the belief that the best thing to do about “unclefesta26” is to ignore him. He has been banned from multiple online forums for harassing behavior, which demonstrates a troubling pattern of persistence. The only other people ever banned from the PP Blog were “joe,” who threatened to start “fires” that Blog could not put out, and ASD mainstay Bob Guenther, who threatened to take measures to defeat the Blog’s security systems.

    Given the DDoS attacks that were launched against the PP Blog in October and November — and a subsequent email it received that referenced “Doomsday” — the Blog has legitimate security concerns.

    What “unclefesta26” is doing is both revolting and shameful.

    And what Google and YouTube have done in response is equally revolting and shameful. They are permitting YouTube to be used as an agent of hurt. Both YouTube and Google have erected barriers that make it difficult for users to communicate with them in a meaningful way.

    This, Readers, is what “unclefesta26” is doing to the chairman of a 501(c)3 corporation. The chairman proactively works with the U.S. Secret Service to combat fraud online:

    YouTube and Google should be horrified. So should all advocates for safety on the Internet.

    “Things like predatory behavior, stalking, threats, harassment, intimidation, invading privacy, revealing other people’s personal information, and inciting others to commit violent acts or to violate the Terms of Use are taken very seriously,” YouTube notes in its Community Guidelines.

    Those words ring hollow to the PP Blog today.

    Patrick

  • Federal Judge, 5 Others Shot And Killed In Arizona; Suspect Lamented About ‘Gold Standard’ And ‘Currency’; Rep. Gabrielle Giffords Shot At Close Range, Survives Emergency Surgery

    Rep. Gabrielle Giffords.

    A federal judge was shot and killed in Arizona yesterday in an attack apparently aimed at a member of Congress who was holding a constituent event outside a supermarket in Tucson, an official said.

    Rep. Gabrielle Giffords was shot in the head at close range. President Obama said she was battling for her life after undergoing emergency surgery. The president announced the death of U.S. District Judge John Roll in a special statement at the White House.

    Roll had just attended Mass and had stopped by the supermarket on his way home. The Wall Street Journal reported that he stopped at the event to thank Giffords for signing a letter to the Ninth Circuit Court of Appeals that a judicial emergency existed in Arizona because of a high number of immigration cases and a lack of judges to hear them.

    Also killed in the attack were a nine-year-old girl, three senior citizens in their seventies and a 30-year-old Congressional aide engaged to be married.

    In 2009, Roll was under the 24-hour protection of the U.S. Marshals Service for about a month because of threats made against him, the Washington Post reported.

    The alleged shooter used a semiautomatic handgun, authorities said. He was identified as Jared Loughner, 22, of the Tucson region. This is believed to be his YouTube site.

    Obama dispatched FBI Director Robert Mueller to Arizona to coordinate the investigation.

    “We are going to get to the bottom of this,” the President pledged.

    Judge Roll was appointed to the federal bench by President George H.W. Bush in 1991.

    Giffords, a Democrat, was serving as the host of the constituent event, which was dubbed “Congress On Your Corner.”

    She is the wife of Capt. Mark Kelly, a naval officer, U.S. astronaut and Space Shuttle commander. Kelly’s brother, Scott Kelly, also is an astronaut. He is currently aboard the International Space Station in a mission that began in October.

    A disturbing portrait of Loughner was emerging in the early hours. The YouTube site and remarks attributed to him elsewhere suggest he was a burgeoning conspiracy theorist who authored or uttered incoherent ramblings on subjects such as the gold standard, government trickery and how one properly defines terrorism.

    “If I define terrorist then a terrorist is a person who employs terror or terrorism, especially as a political weapon. I define terrorist,” Loughner appears to have written. “If you call me a terrorist then the argument to call me a terrorist is ad hominem. You call me a terrorist.”

    Loughner also appears to have pondered the fractured thoughts that college was “illegal” under the U.S. Constitution and that people should be provided “accurate information of a new currency.”

  • Spectacular Ponzi Scheme Alleged In Utah By SEC; Attorney Who Didn’t Do Homework Helped Fraudster Grease Money Wheel By Calling Investment ‘One Of The Best He Had Ever Seen,’ Agency Says

    EDITOR’S NOTE: If you’re an autosurf or HYIP promoter — or a person who is accepting fees for driving business to an investment opportunity based on assertions you cannot independently verify to be truthful — the story below should be instructive. It perhaps will be particularly instructive if part of your fraud game plan is to improve upon the lies told by the fraudster-in-chief.

    In the first major Ponzi case brought in 2011, the SEC has charged a Utah man with presiding over a spectacular promissory-notes fraud involving at least $60 million and several co-defendants, including an attorney.

    When the scheme started to collapse, delayed payments were blamed on “Homeland Security” and banking red tape caused by the Madoff Ponzi, the SEC charged, alleging that investors were discouraged from contacting authorities and told lies to keep hope alive that their money was safe.

    Raymond P. Morris, 42, of Draper, conducted an unregistered offering and operated the Ponzi scheme “at least” between March 2007 and January 2009. The scheme defrauded “at least 90 investors” and was a Ponzi out of the gate, the agency said.

    Three other Utah men, including attorney Luc D. Nguyen, 40, of Draper, helped the fraud spread by conducting no due diligence, recklessly repeating assertions made by Morris as though they were truthful and coming up with their own lies to drive money to the scheme, the agency alleged.

    Also charged were James L. Haley, 49, of Draper, and Jay J. Linford, 49, of Orem. At the same time, several companies also were charged: E & R Holdings LLC, Wise Financial Holdings LLC, Momentum Leasing LLC, Cornerstone Capital Fund LLC, Vantage Point Capital LLC and Freedom Group LLC.

    Ponzi Scheme Collapses

    The Morris Ponzi scheme began to unravel in April 2008, when he stopped making regular payments to investors, the SEC charged.

    “Morris gave many explanations to investors, including that Homeland Security had frozen the accounts, that the Madoff case had caused banks to hold funds and that typographical errors in wire request forms had caused delays,” the SEC charged.

    “Morris told Haley, Nguyen and Linford to pass these explanations on to investors, and they did so without questioning Morris or conducting due diligence on Morris or the Fund,” the agency charged. “As investors complained and threatened to go to the Commission and other government agencies, Morris began disseminating phony bank statements falsely showing that he had over $200 million deposited with Wachovia Bank.

    “In late October 2008, Morris gave Nguyen a purported ‘Bank Confirmation Letter’ from Wachovia,” the SEC continued. “This fraudulent letter states that Wachovia ‘currently holds funds in the amount of . . . $201,782,567.89 . . . [and] Mr. Raymond Paul Morris is the signatory on this account.” The letter also says ‘the funds are good, clean and of non-criminal origin, are unencumbered and freely disposable.’”

    Meanwhile, the agency charged, Morris gave Nguyen a phony ‘Verification of Depository,’ also purporting to be from Wachovia Bank, showing that $201,827,067.89 was in Morris’s account.

    “After Nguyen received the bogus ‘Bank Confirmation Letter’ and ‘Verification of Depository,’ he agreed to draft a letter to Morris’s investors, assuring them their funds were safe.

    “Nguyen’s October 30, 2008 letter states that ‘Mr. Morris is in possession of funds that will allow for the return of the principal amount of your investment along with any back interest in the anticipated redemption of your Promissory Notes(s),’” the SEC continued.

    “This letter further confirmed that Nguyen was ‘in possession of a copy of an official bank letter confirming that the funds are in a specified account under Mr. Morris [sic] signatory control at such bank,’” the SEC said. “Nguyen did not conduct reasonable due diligence prior to sending this October 30, 2008 letter. The letter caused investors to delay their attempts to contact government authorities regarding Morris, Haley, Linford and Nguyen and their investment activities.

    “By the time the Ponzi scheme unraveled, Morris, Haley, Linford and Nguyen, and their respective entities, had defrauded at least 90 investors out of $60 million or more by offering and selling unregistered and non-exempt promissory notes based on material misrepresentations and omissions,” the SEC charged.

    Other Misrepresentations

    Lies fueled the scheme, the SEC charged.

    “Morris told investors that their principal would only be used for ‘verification of deposit’ purposes by certain private traders,” the SEC charged. “Morris further told investors these private traders would obtain large lines of credit and invest the proceeds in ways that would generate a guaranteed 20% per month interest rate.

    “In reality, Morris used investor money for personal expenses, including a luxurious home and several sports cars, and for making Ponzi payments to create an illusion of a successful investment,” the SEC said.

    Haley took the base story and improved upon it, the SEC said.

    “From about August 2007 through June 2008, Haley, through his entities Cornerstone Capital and Vantage Point, raised at least $20 million for Morris’s Fund. In soliciting investments, Haley repeated Morris’s misrepresentations to investors and made additional misrepresentations, including that he was the sole owner of the Fund,” the SEC charged.

    “Out of the approximate $20 million Haley raised, Haley used at least $700,000 for personal expenses, including payments on a new home and $25,000 per month rental payments while building this new home,” the SEC charged.

    Linford, accused of collecting about $1 million for the scheme, added to the lies, as well, the SEC charged.

    “Linford also knowingly misrepresented to some investors that he controlled the secure account where their funds would be held,” the SEC charged. “Contrary to what Linford told investors about their funds being secure, the wiring instructions he gave investors were instructions to deposit funds into an account Morris controlled. Linford had no authority to verify what was being done with investor funds once they were deposited into Morris’s account.”

    Nguyen held himself out as an “SEC attorney” and told investors the fund was “one of the best he had ever seen,” the SEC charged.

    “Nguyen told investors he had personally met with the attorneys representing the supposed trading companies involved in the Fund and that he had received copies of all operating agreements between the leasing companies and the trading companies,” the SEC charged. “In fact, Nguyen performed no due diligence on Morris or the Fund, never met with anyone affiliated with the Fund or a leasing company or trading company involved with the Fund and never received any documents associated with the Fund.”

    Read the complaint.

  • SEC: Broker Ripped Off Elderly Nuns In New York; Paul George Chironis Targeted Sisters Of Charity In Churning Scam, Agency Says

    A Long Island, N.Y.-based broker ripped off  “a congregation of mostly elderly nuns in the Bronx” in a churning scheme in which he repeatedly executed trades that eroded the value of two accounts held by the Sisters of Charity to line his own pockets, the SEC said.

    Paul George Chironis, 58, of Melville, N.Y.,  has settled the SEC’s administrative action by agreeing to pay the Sisters of Charity $350,000. He further was barred from associating with with any broker, dealer, investment adviser, municipal securities dealer, transfer agent, municipal adviser or nationally recognized statistical ratings organization.

    “Chironis took advantage of the trust placed in him by the Sisters of Charity and convinced the nuns to engage in a high turnover trading strategy unfit for their investment needs,” said George S. Canellos, director of the SEC’s New York Regional Office. “Chironis’s irresponsible actions virtually guaranteed the convent’s accounts would lose money due to the undisclosed and excessive costs being incurred while Chironis focused on generating substantial commissions for himself.”

    Meanwhile, Chironis was barred from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter.

    The Sisters of Charity used the investment accounts to pay “for the care of members of the Congregation living in assisted living facilities” and to support the Congregation’s charitable endeavors, the SEC said.

    Chironis, who neither admitted nor denied the allegations as part of a settlement agreement, had a history of churning, the SEC said.

    “Chironis has worked in the securities industry since 1981 and maintained Series 7 and 63 licenses since 1983,” the SEC said in administrative filings. “Prior to his association with Capital Growth [Financial Inc.,] Chironis received seven customer complaints filed with the NASD/FINRA, including complaints for churning and unsuitability.

    “As a result of customer complaints, in January 2006, the Michigan Securities Division required that Chironis be placed on heightened supervision, and in March 2006 the Vermont Securities Division prohibited Chironis from soliciting investors in Vermont. Chironis was associated with Capital Growth from November 2005 until February 2008, when Capital Growth ceased business operations. Since March 2009, Chironis has been associated with another registered broker-dealer located in New York, New York.”

    Capital Growth, which had offices in New York and Boca Raton, Fla., now is defunct, the SEC said.

    Chironis’ scheme targeting the nuns occurred between Jan. 1, 2007, and Jan. 31, 2008, the SEC said.

    Here is one example of how Chironis ripped off the nuns, according to the SEC administrative filing (emphasis added):

    “Chironis frequently replaced one bond with a bond or bonds of similar duration and yield. For example, on July 24, 2007, Chironis sold a Ginnie Mae bond with a 6% coupon rate, a maturity date of 2033 and a principal amount of $258,504.43. The very next day, Chironis purchased a Ginnie Mae bond with the same 6% coupon rate, the same 2033 maturity date and a principal amount of $201,636.05, along with a second Ginnie Mae bond with a 6% coupon rate, a 2032 maturity date and principal amount of $199,956.51. Capital Growth, through Chironis, charged the Accounts approximately $18,352 in transaction fees – in the form of markups and markdowns – on these three transactions. On September 26, 2007, Chironis sold one of the two bonds he purchased two months earlier, and on October 24, 2007, he sold the second.”

    During a 13-month period, the SEC said, the Sisters of Charity paid nearly 11 percent of the value of the nuns’ accounts to Chironis in the form of transaction fees.

  • BULLETIN: Incendiary Devices Sent To Two State Buildings In Maryland; Workers Being Evacuated; Probe Under Way

    BULLETIN: Two incendiary devices apparently mailed to state-government buildings in Annapolis and Hanover, Md., have detonated without causing a large explosion or widespread damage, according to published reports.

    Early reports are sketchy. No one appears to have been injured seriously, but the bomb squad, firefighters and ambulances are at the scene — and there are reports that the FBI is on the way.

    People are being evacuated from the buildings, described in published reports as the Maryland Department of Transportation headquarters in Hanover and the Jeffrey Building in Annapolis.

    ABC News is reporting that the packages “looked like a small padded envelope or a book” and “bust into flames” when opened. The packages emitted a “sulfuric odor” and resembled “devices recently mailed to embassies in Rome and in Greece.”

    ABC News early coverage.

    Eye on Annapolis early coverage.

    WBAL-TV early coverage.

    Baltimore Sun early coverage.

  • RECOMMENDED READING: Blogger Recalls His Real-Life Encounter With An MLM Stepfordian And Wonders Whether The Cadillac Ever Will Arrive At His House

    EDITOR’S NOTE: Blogger Chuck Miller, who posts on the website of the Albany (N.Y.) Times Union, has a post today on the unique circumstances under which he became a self-described “mark” for an MLM pitch nearly 20 years ago. Seems Miller’s MLM memories linger after nearly two decades. (You’ll learn why by clicking on the link to Miller’s column at the bottom of this post.)

    First, though, some introductory remarks are in order . . .

    Although Miller’s column is not on point with this August 2010 PP Blog column on the unique circumstances under which it was invited to check out the purported MPB Today “grocery” MLM, it reminded me that some MLM purveyors simply live for the pitch: Any person — at any time and in any context — is viewed as the warm market by the Stepfordians of the trade.

    Miller’s column also reminded me of a December 2009 column by Renee McGaw of the Denver Business Journal. McGaw got pitched to join the Trump Network after she sent an email to Wayde McKelvy, a figure in the alleged Mantria/Speed of Wealth Ponzi scheme.

    McKelvy is a defendant in the Mantria/Speed of Wealth case, which the SEC filed in November 2009. Just days after the case was filed, McGaw began to receive a steady stream of email from McKelvy, who had a $30 million Ponzi scheme case hanging over his head and still was pitching offers for MLMs.

    “How the heck can I help you become financially independent if you do not take the action steps that I recommend to you?” McKelvy memorably nudged the columnist just days after the SEC announced its intent to sue McKelvy back to the Stone Age.

    Of course, untold numbers of Stepfordian members of Florida-based AdSurfDaily continued to pump autosurf MLMs — even after ASD President Andy Bowdoin had tens of millions of dollars seized from his personal bank accounts and was accused by some of his own members of racketeering.

    Read Chuck Miller’s post about the circumstances under which he was cornered by a Stepfordian MLMer.

  • Is Andy Bowdoin Renewing His Efforts To Have Federal Judge Removed From Case? Accused Ponzi Swindler Faces New Filing Deadline To Argue For Case Transfer

    Andy Bowdoin

    Accused Ponzi swindler Andy Bowdoin of Florida-based AdSurfDaily has been granted an extra two weeks to argue that the criminal case against him should be transferred from U.S. District Court for the District of Columbia.

    Through his attorneys, Bowdoin informed U.S. District Judge Rosemary Collyer on Jan. 3 that he intends to file a Rule 21 motion to transfer his trial to another federal court. Under Rule 21, a defendant can argue that he cannot receive a fair and impartial trial in a specific district. Meanwhile, a defendant can argue that the trial should be moved for the convenience of the parties and witnesses.

    It was not immediately clear if prosecutors would oppose the motion. Bowdoin initially was ordered by a federal magistrate judge to file his motion within two weeks of his Dec. 17 arraignment in Washington. Collyer now has granted Bowdoin’s request for an extension to file. The new deadline is Jan. 18.

    In December 2009, Bowdoin sought to have Collyer removed from the civil-forfeiture case in which the U.S. Secret Service seized tens of millions of dollars from his personal bank accounts. Collyer refused to step down. In January 2010, she decreed the money forfeited to the U.S. government, which has established a process through which ASD victims can file a claim for a share of the seized proceeds.

    In an affidavit in support of his 2009 disqualification motion, Bowdoin claimed Collyer had a “deep seated animosity” toward him and that the judge “has a personal bias and prejudice” against him.

    Ironically, Bowdoin’s motion to disqualify Collyer in the civil case was docketed on Dec. 17, 2009. Exactly one year to the day later — on Dec. 17, 2010 — Bowdoin made his first appearance in the criminal case in the District of Columbia. Federal agents arrested Bowdoin in Florida on Dec. 1, 2010, after an indictment from a grand jury that began meeting in May 2009 was unsealed.

    Collyer did not preside over Bowdoin’s initial appearance in Washington, but has been assigned the criminal case. She issued her first ruling yesterday: a minute order that granted Bowdoin’s request for the two-week extension to file his Rule 21 motion.

    ASD member Curtis Richmond, who emerged as a figure in the civil litigation after filing pro se pleadings that accused Collyer and Chief U.S. District Judge Royce Lamberth of operating a “Kangaroo Court,” also sought unsuccessfully to have Collyer removed from the case in 2009.

    Richmond has been linked to a sham Utah “Indian” tribe that once sought unsuccessfully to have a federal judge removed from a different case on the eve of trial by claiming the judge owed Richmond $30 million.