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  • BREAKING NEWS: Atlanta Securities Attorney Gregory Bartko Jailed Immediately After Guilty Verdicts In North Carolina Fraud Case; Judge Finds That Lawyer Committed Perjury While Testifying

    The Atlanta securities attorney who was defending clients in the alleged Billionaire Boys Club Ponzi case in Detroit and then was indicted in North Carolina on charges that he was running his own fraud scheme has been found guilty.

    Gregory Bartko was immediately jailed by U.S. District Judge James C. Dever III, who found that Bartko had committed perjury on the witness stand in the North Carolina case. Jurors had just returned guilty verdicts against Bartko for conspiracy, mail fraud and selling unregistered securities.

    How the Detroit case in which Bartko was representing accused Ponzi schemer John J. Bravata against civil charges filed by the SEC will proceed is unclear.

    Prosecutors said the North Carolina case against Bartko was one in which an attorney tried to hide behind criminals to insulate himself from prosecution.

    “We should not let criminals get away simply because they have carefully covered their tracks,” said U.S. Attorney George E.B. Holding of the Eastern District of North Carolina.

    “Complicated and difficult crimes by sophisticated and careful criminals may not be easy to investigate or prosecute, but they are some of the most important cases our office handles,” Holding said. “In this case, an experienced Atlanta securities attorney had used other criminal players to insulate himself from prosecution. He had evaded SEC audits, avoided examination by the bar association, and managed to fool nearly everyone, keeping both his license to practice law and his securities licenses.

    “The Defendant was involved in a scheme to defraud victims of millions of dollars but yet was still representing clients before the SEC,” Holding said. “Such a defendant deserves to be prosecuted to the full degree under the law.”

    Assisting in the Bartko case were the FBI, the U.S. Postal Inspection Service, the IRS and the North Carolina Secretary of State’s Office.

    See earlier story on the PP Blog.

    See Holding’s news release on the conviction and jailing of Bartko.

    The 2009 Michigan case became known as the “Billionaires Boys Club” prosecution because a Bravata company was named “BBC Equities,” and the SEC asserted in July 2009 that BBC was intended to stand for “Billionaire Boys Club.”

    A California Ponzi scheme in the 1980s also was known as “The Billionaire Boys Club.”

  • THE BIG CHILL: PP Blog Gets ‘Dear Rat Bastard’ Email With Repeated ‘Doomsday’ References; Blog Considers Note A Threat And Will Share It With Law-Enforcement Agencies

    EDITOR’S NOTE: This post quotes content from an email received early this evening by the PP Blog. Some readers may find the language objectionable.

    UPDATED 11:16A.M. ET (U.S.A., Nov. 22) In what it views as part of a continuing pattern of harassment and a bid to chill its reporting on online fraud schemes and Internet crime, the PP Blog apparently was fraudulently registered as a new member of an online “opportunity” and has received an email that apparently “confirms” the registration. The email, which was received at 6:01 p.m. (ET) today, was sent to the Blog’s support address — specifically to the attention of “RatBastard Fucktard.”

    “Dear Rat Bastard,” the “registration” email began.

    It is possible that the email originated off a server in Michigan that is associated with a cash-gifting program.

    The person who used the Blog’s address fraudulently appears to have caused a fraudulent “affiliate” site for the “opportunity” to be created with the Blog’s address, while causing the word “Doomsday” to appear in the body of the “registration” email to further hector the Blog.

    In late October and early November, the PP Blog was subjected to sustained DDoS attacks. The Blog shared specific details of the attacks with law enforcement.  At 8:29 p.m. today, the Blog forwarded the “header” information from the “registration” email to law enforcement.

    After the “Dear Rat Bastard” greeting, the “registration” email continued:

    “Everyone in our community welcomes you as a valuable and productive member. You will now be able to share the message and mission of ‘Winners 2011’ which is spreading like a wildfire across the globe. We are grateful of your decision and assure you that the entire community will support you at all times as well as those you help by inviting them to also become members of ‘Winners 2011’.”

    The PP Blog made no decision to register for a program known as Winners 2011 and has no knowledge about a program by that name, except for cursory knowledge it gained this evening after being registered fraudulently for the program. Moreover, the Blog never agreed to receive email from Winners 2011 or subscribe to a list controlled by the program. The “registration” email received by the Blog this evening did not include an unsubscribe link.

    The Blog’s address appears to have been entered into a form by a criminal who made a calculation that the “Rat Bastard” and “Doomsday” references would chill the Blog’s reporting while at once creating maintenance chores for the Blog.

    “WE urge you to login to your back office and become very familiar with all the information it offers so you will be able to speak to potential new members intelligently and knowledgably,” the  “registration” email continued. “Stay in close contact with your inviter and their inviter as well as teach your people to do the same, this is a team effort.

    “Remember: Winners have simply formed the habit of doing things losers don’t like to do,” the email concluded.

    The Winners 2011 program may be associated with a gifting program known as 14Eagles, which is being pitched from websites, social-media sites and forums.

    Today’s false registration of the PP Blog as a member of Winners 2011 follows a pattern of strange events that have occurred on Sundays. Read earlier story based on events that occurred on Sunday, Oct. 3.

  • Egg-Themed Domains Used To Promote HYIPs That Flushed Hundreds Of Millions Of Dollars Go Missing — Plus, An Update On Data Network Affiliates Amid Suggestion Thyroid Cancer Sufferers Can Benefit From Product Called ‘O-WOW TurboMune’

    Four egg-themed domain names used to drive business to HYIPs that ended in spectacular flameouts and foreshadowed a warning from the Financial Industry Regulatory Authority (FINRA) have gone missing.

    The domains — including one that redirected to an HYIP site known bizarrely as Cash Tanker, which used an image of Jesus Christ to promote a purported payout of 2 percent a day — first were promoted on the pro-AdSurfDaily Surf’s Up forum  by a poster who used the handle “joe” in December 2009.

    The egg-themed promo featured a pitch that HYIP participants were wise to spread risk by not keeping all of their eggs in “ONE BASKET.” It also hawked Gold Nugget Invest (7.5 percent a week); Saza Investments (9 percent a week); and Genius Funds (6.5 percent a week).

    Despite an active criminal investigation into the business practices of ASD President Andy Bowdoin and alleged co-conspirators — and despite a RICO lawsuit filed by members against Bowdoin and repeated warnings from various regulators about the dangers of HYIPs and autosurfs — the egg-themed promo claimed in all-caps that “I MAKE 2000.00 A WEEK” and directly solicited ASD members to part with their money.

    One Surf’s Up member dissed critics of the promo, calling them “dead wrong.”

    “I also make a lot of money from those four and your remarks tell me you don’t know anything about them,” the member claimed. “[T]hey are very reputable [companies] who have been around for years….and the money is NOT made from ‘new’ people’s money….google them and look at various forums and see what others have to say about them….I don’t even know Joe, but I can vouch for the programs!”

    A  series of spectacular collapses that consumed each of the HYIPs then followed over a period of just weeks, demonstrating that spreading risk across multiple HYIPs by putting eggs in multiple HYIP baskets was spectacularly poor advice that had produced a recipe for financial disaster.

    In July, FINRA said that Genius Funds cost investors about $400 million. The regulator launched a public-awareness campaign, one component of which was an ad campaign on Google designed to educate and inform the public about HYIP fraud.

    “Open the cyber door to HYIPs, and you will find hundreds of HYIP websites vying for investor attention,” FINRA said. “It is a bizarre substratum of the Internet.”

    Records show that the government of Belize had issued a warning about Gold Nugget Invest nearly a month before the egg-themed promo had appeared on Surf’s Up and at least two members had vouched for the program.

    FINRA also pointed to criminal charges filed by the U.S. Postal Inspection Service in May against Nicholas Smirnow, the alleged operator of an HYIP Ponzi scheme known as Pathway To Prosperity that fleeced more than 40,000 people across the globe out of an estimated $70 million.

    Gold Nugget Invest (GNI) collapsed in early January 2010, about a month after the egg-themed promo had appeared on Surf’s Up. Surf’s Up went offline just days prior to the collapse of GNI, which was explained in bizarre fashion.

    Using baffling prose, a purported GNI manager claimed the program ended after it had attempted to gain “a crystal clear vision of our financial vortex” during the fourth quarter of 2009.

    After the collapse of the programs in the original egg-themed pitch on Surf’s Up, the domains then were set to redirect to other HYIPs.

    Some ASD members later turned their attention to promoting MLM programs such as Narc That Car/Crowd Sourcing International (CSI), Data Network Affiliates (DNA) and MPB Today.  CSI and DNA purport to be in the business of paying people to write down the license-plate numbers of cars for entry in a database. MPB Today purports to be in the grocery business.

    DNA, which once instructed people of faith that it was their “MORAL OBLIGATION” to hawk a purported mortgage-reduction program offered alongside the purported license-plate program, now appears to have morphed into a program known as One World One Website or “O-WOW.”

    An email received by members of the O-WOW program this weekend purported that a man suffering from terminal thyroid cancer had derived benefit from an O-WOW product known as “TurboMune” and that members somehow can earn “24% Annual Interest on their money” by giving it to O-WOW.

    If members don’t pay O-WOW before Nov. 30, they’ll earn a lower rate of interest (18 percent), according to an email received by members.

    Like DNA, O-WOW is associated with Phil Piccolo. During a radio program in August, Piccolo threatened critics with lawsuits and planted the seed that he could cause critics to experience physical pain. DNA has an “F” rating from the Better Business Bureau. So does CSI. So does United Pro Media, a company formerly operated by MPB Today’s Gary Calhoun.

    See the PP Blog’s Dec. 4, 2009, story on the egg-themed pitches on the Surf’s Up forum.

  • BREAKING NEWS: OLINT Boss David A. Smith Extradited To United States From Turks And Caicos Islands; Faces Charges In Spectacular Forex-Fraud Case In Orlando Region

    BULLETIN: Agents from U.S. Immigration and Customs Enforcement (ICE) traveled to the Turks And Caicos Islands to take accused Ponzi schemer David A. Smith into custody. Smith has been transported to the United States and is jailed in Florida.

    Smith, who was serving a prison term in the islands for fraud and conspiracy, became the subject of an official request by the United States to extradite him to face federal charges in Florida for bilking investors out of more than $220 million.

    The director of ICE said the Smith fraud posed a danger to the U.S. banking system, and the Department of Homeland Security is involved in the probe of Smith’s business activities.

    “One of ICE-Homeland Security Investigations’ critical missions is investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money,” said ICE Director John Morton. “Not only do these kinds of financial schemes damage the lives of the thousands of victims, but the international money laundering involved poses a direct threat to the security of the U.S. financial system.”

    Smith was at the head of a Jamaican company known as Overseas Locket International Corp. (OLINT), prosecutors said. In 2006, he started another firm known as OLINT TCI Corp. Ltd. in the Turks and Caicos Islands.

    Both firms were described as “private investment clubs,” prosecutors said.

    Smith also was the majority owner in a Lake Mary, Fla., firm known as I-Trade FX LLC, prosecutors said.

    The scheme was pulled off with the help of unindicted co-conspirators in the United States, prosecutors said.

    The conspiracy was carried out in Seminole County, Fla., and was designed to channel money from the scheme into U.S. banks, prosecutors said.

    Residents of Orange County were affected by the scheme, prosecutors said. They noted that the unindicted co-conspirators were affiliated with a Florida company known as JIJ Investments. Prosecutors did not name the unindicted co-conspirators, describing them as “Directors” of JIJ.

    Federal prosecutors in the Middle District of Florida are involved in several actions targeted at alleged purveyors of massive fraud schemes.

    Assisting in the Smith case are U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service (IRS), Federal Bureau of Investigation (FBI), Commodity Futures Trading Commission (CFTC), National Futures Association (NFA), U.S. Customs and Border Protection (CBP) and the Royal Turks and Caicos Islands Police Force.

    See earlier story.

  • DEVELOPING STORY: Tina M. Hall, VP Of Firm Linked To Kenneth Wayne Leaming, Had Notary License Revoked For ‘Professional Misconduct’; Woman With Same Name Sought To Intervene In AdSurfDaily Case

    A document that appears online features this purported likeness of Kenneth Wayne Leaming and purports to explain why he shortens his given name to "Kenneth Wayne."

    The state of Washington revoked the notary license of Tina M. Hall of Spanaway last month for “professional misconduct,” according to the Department of Licensing.

    Hall also is listed as vice president of American International Business Law Inc., a Spanaway company some AdSurfDaily members have said is performing legal work for a group of members.

    Separately, a woman identified as Tina M. Hall was denied leave to file pleadings in the AdSurfDaily forfeiture case by U.S. District Judge Rosemary Collyer on Jan. 27, 2010, and Feb. 12, 2010, according to the docket of the case. Each of the denied filings was styled “Claim by Notary Presentment.”

    Hall’s notary license was revoked about eight months later, according to records. Why the state took the action was not immediately clear. An entry on the state’s website notes a “finding” of professional misconduct and a revocation until March 3, 2015.

    The nature of the pleadings Hall apparently attempted to file in the ASD case was not immediately clear. Several weeks earlier, on Jan. 4, 2010, Collyer issued a forfeiture order that granted the government title to more than $65.8 million seized by the U.S. Secret Service from the personal bank accounts of ASD President Andy Bowdoin in August 2008.

    “Kenneth Wayne,” whose full given name is Kenneth Wayne Leaming, is listed as president of American International. The court docket in the ASD case shows that “Kenneth Wayne” was denied leave to file by Collyer on July 2, 2010. The denied pleading was styled “Notice of Final Determination and Judgment by Christian Oesch and Kenneth Wayne.”

    Oesch earlier had sought to intervene in the case by filing a pleading styled “MOTION to Set Aside Forfeiture & Civil Asset Forfeiture Reform Act of 2000 as Facts and Law will Prove.” Collyer denied the motion.

    Dozens of pro-se litigants sought unsuccessfully to intervene in the ASD case.

    Leaming, who goes by the nickname “Keny,” is believed to be the author of a purported “legal opinion” that some ASD members are using to discourage victims from filing a claim for restitution through the official claims administrator.

    Although Leaming advertised himself as a lawyer and published a fee structure of $250 an hour or $150 an hour for prepaid clients on websites operated by Justia.com, Oyez.org and Cornell University Law School, he does not appear to be a licensed attorney. Justia, Oyez and Cornell subsequently removed the listings, which used an address in Spanaway and the name of American International.

    Research by the PP Blog suggests Leaming began publishing the ad just days after Collyer denied him leave to file on July 2. The Washington State Bar Association sent Leaming a letter in 2005 that accused him of the unauthorized practice of law and being physically and emotionally abusive toward a notary public and coercing her to notarize documents.

    A document dubbed “Evidence of Name and Nationality” with Leaming’s full name (first, middle and last) and purported likeness appears online. The photo used in the document is similar to the photo used in the now-removed ads on the Justia, Oyez and Cornell websites. Using exceptionally formal language and stilted prose, the document purports to explain why Leaming drops his surname except for “familial” use.

    “On or about 20 December A.D. 1955 Edna Lottie and Raymond Roy, family LEAMING, begot an offspring son as a gift granted by the Almighty Creator, only known as ‘I Am’, granted it the proper name Kenneth Wayne, and the Nationality of an American National,” the document reads.

    “Kenneth Wayne also inherited the right to the family name LEAMING according to the historic practice of customs and usages,” the document continues. “Kenneth Wayne, having knowledge of the historic practice of customs and usages, and to avoid the confusion inherent in only being known as a son of ‘I Am’, presents himself according to is given name ‘Kenneth Wayne’ when acting as and for himself, and elects to only reference the family name (surname) when acting in a familial capacity.”

  • A CHILL ACROSS THE PONZI LANDSCAPE: Two Women Arrested, Charged With Helping Bernard Madoff Pull Off Epic Ponzi Scheme; ‘House Of Cards Is Almost Never Built By One Lone Architect,’ U.S. Attorney Says

    Madoff

    BULLETIN: The FBI has arrested Joann Crupi of Westfield, N.J., and Annette Bongiorno of  Boca Raton, Fla.

    The women were charged with helping Bernard Madoff pull off his Ponzi scheme by both actively participating in and concealing the epic fraud, federal prosecutors in New York said. The women had worked for Madoff for a combined total of 65 years and routinely “executed” client trades “only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg.”

    “Those trades achieved annual rates of return that had been pre-determined by Madoff,” prosecutors charged.

    The scheme was so foundationally corrupt that Bongiorno “processed exceptional gains in the IA [investment-advisory] accounts that occurred months before the IA accounts even had been established,” prosecutors said.

    Meanwhile, she “also asked IA clients to return previously-issued BLMIS [Bernard L. Madoff Investment Securities] account statements so that she could alter them, and often include additional backdated trades. She received specific instructions from IA Clients about the amount of appreciations and gains they wanted to be reflected in their IA accounts,” prosecutors said.

    At the same time, Crupi “prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors,” prosecutors said. “Among other things, by keeping track of BLMIS’s daily cash balance, Crupi became aware that client redemption requests bore no relationship to [BLMIS’s] cash on hand, which by late 2008 was woefully insufficient to meet those requests.”

    Now, Bongiorno, 62, faces a maximum prison sentence of 75 years if convicted on all counts. Crupi, 49, potentially faces 65 years behind bars.

    “As everyone knows, Bernard Madoff perpetrated the largest financial fraud in history, but as we allege again today, others criminally assisted his epic crime,” said U.S. Attorney Preet Bharara of the Southern District of New York.

    In a comment that could send chills across the spines of Ponzi concealers and apologists across the United States, Bharara added that “A house of cards is almost never built by one lone architect.”

    Crupi and Bongiorno were charged with a series of felonies.

    Among the charges were conspiracy, securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and tax evasion.

    “Bongiorno and Crupi were both long-time Madoff employees who played vital roles in the scheme and its concealment,” said Janice K. Fedarcyk, FBI assistant-director-in-charge. “We knew early on that a fraud of this scale could not have been the work of one person alone.”

    Both defendants “personally benefited” from the fraud, prosecutors charged.

    Bongiorno stacked the deck in her own favor by creating “numerous backdated trades in her own IA accounts,” prosecutors said.

    “From 1975 to 2008, [she] deposited only approximately $920,000 into her own IA accounts; however, she withdrew more than $14 million during that same time period,” prosecutor said, adding that Bongiorno also received “more than $325,000 in off the books income” from the scheme — on top of her salary.

    Crupi “received payments of more than $2.7 million from Madoff directly out of the [BLMIS] bank account that held investor funds,” plus more than $270,000 in off-the-books income,” prosecutors charged.

  • BULLETIN: SEC Files Emergency Action To Halt Alleged ‘Diamond-Themed’ Ponzi Scheme And Related Fraud In Colorado; Richard Dalton Of Golden Accused Of Running Bizarre Multistate Scheme

    BULLETIN: (UPDATED 7:49 P.M. ET (U.S.A.) A Golden man ran a diamond-themed Ponzi scheme as part of a larger fraud, the SEC has charged in an emergency court action in federal court in Colorado.

    The agency said it filed the lawsuit to halt the actions of Richard Dalton and his company: Universal Consulting Resources LLC (UCR).

    Among the explanations for delayed payments to investors were that an airplane the firm used to shuttle diamonds from Africa lost an engine and had to make an emergency landing in Amsterdam and that the firm ultimately had been sold 18,000 fake gems, according to the complaint.

    Dalton’s age was not immediately clear. Regulators said he lived in Golden, and had been operating the diamond scam and a related fraud dubbed the “Trading Program.”

    UCR “solicited investors for two fraudulent offerings that were generally referred to as the ‘Trading Program’ and the ‘Diamond Program’ and promised returns of between 60% to 120% per year,” the SEC charged.

    “Dalton acted as an unregistered broker-dealer in actively soliciting investors to purchase securities – and commissioning finders and brokers to do the same – and Dalton and UCR offered and sold securities in violation of the registration provisions of the federal securities laws,” the SEC charged.

    The scheme began in March 2007 and operated through June 2010, the SEC alleged.

    Regulators charged that the scheme began to collapse in March and April of 2010.

    “From that time until at least November 12, 2010, Dalton and UCR have made false and misleading statements to investors to try to lull them into complacency and delay the disclosure of their fraudulent scheme,” the SEC charged.

    The diamond-themed fraud evolved from the initial fraud, the agency alleged. All in all, about 130 investors from 13 states plowed approximately $17 million into the schemes, according to the emergency filing.

    Dalton “funded his personal life at the expense of investors and also transferred more than $900,000 in order to purchase a home in the name of his wife,” the SEC charged.

    The SEC identified Marie Dalton as Dalton’s wife. She is named a relief defendant, meaning the agency believes she received ill-gotten gains from the scheme. Richard Dalton doled out thousands of dollars in cash as part of the scheme, including $936,000 in cash to purchase a home in his wife’s name, $35,000 for cosmetic dentistry, $38,000 for  Toyota truck and $5,000 for his daughter’s wedding, the SEC charged.

    The agency is seeking an asset freeze.

    “[I]n early 2009, UCR began offering the Diamond Program, which Dalton claimed would profit by using investor funds for diamond trading,” the SEC charged. “Similar to the Trading Program, Dalton claimed that investor funds would be safely held in an escrow account. Under the Diamond program, Dalton enticed investors with a guaranteed ten percent monthly return – or 120% yearly return.”

    Commission-based salespeople helped Dalton sell the scam, the agency said.

    “Investors typically learned about UCR’s investment programs from ‘finders’ or ‘brokers’ who were paid commissions by UCR, or from earlier investors who had received what they believed to be monthly distributions of profits from UCR, some of whom also received commissions for bringing in new investors,” the SEC said.

    “According to one investor,” the SEC continued, quoting the investor, “[A]s a result of the consistent returns from this investment, I started telling my friends and family about the investment I had made with Dalton. My friends and family started meeting with Dalton and some of them eventually invested with Dalton.”

    Some investors invested funds from their self-directed IRA retirement accounts, the SEC said.

    “As part of soliciting investors for the Trading Program, Dalton and UCR falsely told prospective investors that their invested funds would be held safely in an escrow account at a bank in the United States, and that a European trader (often referred to simply as ‘the Trader,’ but never known or referred to by name) would use the value of that account, but not the actual funds, to obtain leveraged funds to purchase and sell bank notes,” the SEC charged.

    The diamond-themed scheme operated in similar fashion, the SEC said.

    Read the emergency complaint.

    The complaint includes a reference to a Q&A session the SEC conducted with Dalton while investigating the case.

    Dalton refused to answer the following questions, according to the SEC:

    • Q Has UCR earned a profit in any year between 2007 and 2010?
    • Q How much revenue has UCR earned between 2007 and 2010?
    • Q Is it true that you currently have insufficient money to repay investors the
      outstanding principal and returns they are owed in the [Trading Program]?
    • Q Is it true that some of the money that you raised for the [Trading Program] was used to repay other investors rather than being invested in foreign . . . notes?
    • Q Is it true that some of the money you raised for the [Trading Program] was used for your own personal benefit to cover your personal expenses
      instead of for the benefit of that investment?
    • Q Is it true that the foreign note investment was a Ponzi scheme?
    • Q Is it true the mid-term note investment was a Ponzi scheme?
    • Q Did UCR ever buy any diamonds?
    • Q Have you ever bought any diamonds?
    • Q Has any investor money ever been used as collateral for the purchase of
      diamonds?
    • Q Have you ever engaged a bank to purchase diamonds?
    • Q Do you currently have any diamonds in your possession?
    • Q Do you have diamonds at your home?
    • Q Do you any diamonds in storage?
    • Q Have you moved diamonds to a foreign country?
    • Q Have you ever made any profit from the diamond investment business?
    • Q Isn’t it true that the diamond program is a Ponzi scheme?

    If the SEC’s allegations are true, it means that Dalton and the company were telling tall tales to investors even after the agency had questioned him under oath. Indeed, the agency said, the Q&A session took place in August 2010 — and Dalton and the company made “false and misleading statements to investors” right up until last week.

    Among the claims made as recently as last week was that investors could expect their funds   “soon,” the agency said.

    The “soon” explanation was part of a long-running pattern, and “after ‘soon’ had passed,” Dalton provided “a different excuse for why investors have not been repaid.” the SEC charged.

    One of the excuses was that the “number three engine” on the plane the company used to transport diamonds from Africa went out “and [the plane] had to land in Amsterdam for repair,” the SEC charged.

    Dalton next claimed the company discovered after the plane finally made its way to New York that “18,000 fake diamonds” were included in its cargo.

    He also did not turn over documents, according to the complaint.

    “Dalton produced no documents to the SEC,” the agency alleged. “He provided no evidence that the Trading Program and Diamond Program were legitimate investment programs. UCR did not produce a single accounting record.”

  • BULLETIN: Profiles Of Purported Attorney With AdSurfDaily Tie Removed From Cornell, Justia, Oyez Websites; Notary Public Told Washington Law Practice Board In 2005 That Kenneth Wayne Leaming Was ‘Physically And Emotionally Abusive’ And Coercive

    UPDATED 2:33 P.M. ET (U.S.A.) Cornell University Law School, Justia.com and Oyez.org have removed the online profiles of Kenneth Wayne Leaming. Leaming previously had been listed as an attorney who practiced law and advertised a fee structure of up to $250 an hour from Spanaway, Wash.

    Visitors were encouraged to “schedule a free introductory consultation.”

    Cornell said Sunday that it would remove Leaming’s profile if he proved not to be a licensed attorney. The university began checking into the matter after it learned a man by the same name had been accused in Washington state in 2005 of engaging in the unauthorized practice of law.

    The Washington State Bar Association (WSBA) said yesterday that it was continuing to research matters pertaining to Leaming. Leaming was the subject of a letter sent in 2005 by the Practice of Law Board of the State of Washington. The Law Board made a determination in December 2005 that Leaming’s conduct in cases it was investigating “constitutes the unauthorized practice of law.”

    In one case, the Law Board said, a notary public accused Leaming of coercing her into “notarizing documents that resulted in the loss of her notary license.”

    A final deposition of the case was not immediately available.

    “When [the notary] questioned you about the legality of notarizing the documents you drafted, you were physically and emotionally abusive to her,” the Law Board wrote in its letter to Leaming, citing the notary’s allegations. “[The notary] voluntarily resigned her notary license as a consequence of the acts you directed. She has also obtained an order of protection against you.”

    A purported business entity known as “AMERICAN-INTERNATIONAL BUSINESS LAW INC.,” which some AdSurfDaily members claim is providing legal representation to a group of members, is associated with Leaming, according to records.

    Unlawful practice of law can be charged as a crime in the state of Washington. Leaming is not listed as a member of the state bar, and has been described by the Anti-Defamation League (ADL) as a “self-described ‘recognized international lawyer’” and member of an extremist group known as the “Little Shell Pembina Band.”

    The ASD case has been filled with oddities since the U.S. Secret Service seized tens of millions of dollars from the Florida-based firm in August 2008, accusing ASD in a forfeiture complaint of operating a massive Ponzi scheme.

    Some ASD members have been associated with the “sovereign,” “Patriot” and tax-denial movements. The case has featured dozens of bizarre, pro-se pleadings filed by ASD members, some of whom claimed the prosecutors and judges involved in the case were guilty of crimes.

    One ASD member — Curtis Richmond — has been associated with a Utah  “Indian Tribe” a federal judge ruled a “sham” after members of the bogus tribe placed enormous financial judgments against public servants and members of law enforcement in the performance of their duties. The sham tribe was known as “Wampanoag Nation, Tribe of Grayhead, Wolf Band.” Richmond was successfully sued under the federal racketeering statute for his sham activities.

    Regardless, Richmond was hailed a “hero” on the now-defunct Surf’s Up forum, a pro-ASD website that had members who openly jeered and condemned prosecutors and the Secret Service. One forum member described ASD critics as “rats” and “maggots” and “cockroaches.” Some members heckled a federal prosecutor, calling him “Gomer Pyle.” One member wrote that the prosecutor should be placed in a medieval torture rack, suggesting fellow members should draw straws to determine who got the honor of turning the screw.

    ASD President Andy Bowdoin said the prosecution was the work of “Satan.”

    Many of the pro-se filings in the case are at odds with the public record, conflating realities that simply do not exist about matters pertaining to evidence and witnesses. Recent emails circulated by some ASD members suggest that a group of members is trying to cloud issues and intimidate victims into not filing complaints or making a claim for restitution.

    ASD also is the subject of a racketeering lawsuit brought by members against  Bowdoin and attorney Robert Garner of North Carolina.

    See story from Sunday.

    See story from Saturday.

  • Settlement With FTC Bans Scientist From Making Snakeoil Claims About POM Wonderful 100% Pomegranate Juice And POMx Supplements

    Now cooperating with an FTC probe into POM Wonderful, Mark Dreher has been barred from making misleading claims about the product. Two evidence exhibits in the case showed a newsletter in which Dreher allegedly made unsubstantiated claims about the juice and related products.

    UPDATED 2:31 P.M. ET (U.S.A.) The chief science officer of POMWonderful LLC knew as early as May 2007 that a company-funded, placebo-controlled study showed that there was  “no significant difference” between consumption of pomegranate juice and a control beverage after 18 months in reducing arterial plaque and the risk of heart disease but continued to tout “POM Wonderful’s cardiovascular research and benefits despite the negative testing results,” the FTC said.

    In addition to being touted as a treatment for heart disease, POM Wonderful also allegedly was pitched as a treatment for prostate cancer despite a lack of scientific proof that the juice prevented or reduced disease risk.

    Now Mark Dreher, a Ph.D. who was vice president of Science & Regulatory Affairs for POM Wonderful and allegedly help spread unproven claims about its products, has been barred from making “any disease treatment or prevention claim” that is misleading, the FTC said.

    In a settlement with the agency in a false-advertising case brought in September, Dreher acknowledged no wrongdoing.

    An order that accompanies the case “further prohibits Dreher from making other health claims for a food, drug, or dietary supplement for human use, including as an expert endorser, without competent and reliable scientific evidence to support the claim,” the FTC said.

    Dreher also agreed to a “cooperation clause” in the FTC’s ongoing case against POM Wonderful.

    Brought as an administrative action, the case alleged that POM Wonderful also was touted as a treatment for erectile dysfunction.

    “Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled,” David Vladeck, director of the FTC’s Bureau of Consumer Protection, said in September.

    “When a company touts scientific research in its advertising, the research must squarely support the claims made,” Vladeck said. “Contrary to POM Wonderful’s advertising, the available scientific information does not prove that POM Juice or POMx effectively treats or prevents these illnesses.”

    As has been the case with Internet-related frauds, the FTC gathered evidence that included photographs and written claims about the products as part of its probe, according to administrative filings.

    Visit the FTC site for case information.

  • CFTC: South Carolina Pastor Ran Forex Ponzi Scheme From House Of Worship; Historic Church Property In Charleston Has Seen It All — From Lincoln Presidency And Civil War To Kennedy Assassination And Election Of Obama

    The religious facility that ultimately became St. John’s Reformed Episcopal Church has seen a lot of history in its 160 years on Anson Street in Charleston, S.C. Construction predated the Civil War by 11 years. The facility opened in 1850 as the Anson Street Chapel for black Presbyterians, according to records maintained by the Charleston County Public Library.

    During this time, the United States was transitioning after the sudden death in office of President Zachary Taylor in 1850. Taylor was the 12th President of the United States. He was succeeded in office by Vice President Millard Fillmore, who never gained election in his own right after filling out Taylor’s term because voters in the North viewed him as willing to appease the South on the issue of slavery.

    When the Anson Street Chapel opened in 1850, Abraham Lincoln was a prairie lawyer in Illinois, his ascension to the Presidency still four administrations away and the Great Civil War still more than decade away. The church, renamed St. Joseph’s Roman Catholic Church in 1861, was hit by shells during the Civil War and “badly damaged,” but was rebuilt, according to library records. The facility survived to serve congregants for more than 100 years, before closing in 1965 — two years after the assassination of President John F. Kennedy and 20 years after the end of World War II.

    St. John’s Reformed Episcopal Church bought the property and restored it in 1971, during the Vietnam War-era administration of President Richard M. Nixon and about a year before the word “Watergate” became part of the national consciousness. Barack Obama was 10 years old in 1971, 37 years away from his election as the 44th President and 28 administrations removed from Lincoln’s Civil War-era Presidency.

    Now the church has seen another sort of history: Its pastor, the Rev. Ronald Satterfield, has been accused by the CFTC of operating a Forex Ponzi scheme from inside the facility. One of the company’s he allegedly formed — Graham Street Forex Group LLC — used the church’s address of 91 Anson Street, according to documents.

    Co-defendant Nicholas Bos of Ludington, Mich., used a business card that depicted a “one million dollar bill” and described the scam as an opportunity to earn “24% a year” as a participant in “Special programs,” CFTC alleged.

    Also named a defendant was an entity known as Shore-2-Summit Financial LLC.

    Satterfield “independently solicited acquaintances, members of his church congregation and their friends and family, and others in North Carolina, South Carolina, and Maryland, for funds to trade forex,” CFTC alleged.

    The scam operated “at least” between March 2006 and March 2009, CFTC alleged.

    To conceal the fraud, “Satterfield and Bos issued false customer account statements reflecting the promised returns and forex trading profits, when in fact Satterfield’s forex trading resulted in losses almost every month,” CFTC said.

    “The false statements also allegedly concealed their misappropriation of customer funds. In total, the complaint charges Satterfield and Bos with misappropriating more than $850,000 of customer funds for personal use,” CFTC said.

    More than 70 customers were fleeced in a scheme that gathered about $3.3 million, CFTC said.

    Satterfield told the Post and Courier of Charleston that CFTC had mischaracterized his trading activities.

  • UPDATE: Cornell University Seeks To Determine If Man Referenced In Email Circulated By ASD Members’ Group Is Licensed Attorney; Website Listing For Kenneth Wayne Leaming Under Review

    UPDATED 11:04 A.M. ET (U.S.A.) Cornell University said Sunday that it will remove a listing on its Law School website for Kenneth Wayne Leaming of Spanaway, Wash., if Leaming proves not to be a licensed attorney. A review of the listing and the circumstances under which Leaming’s name was added to a database of attorneys’ names is under way.

    A person named Kenneth Wayne Leaming of Spanaway, Wash., was accused in 2005 of engaging in the unauthorized practice of law, according to a document that appears on the website of the Washington State Bar Association (WSBA.) Meanwhile, a person by the same name is referenced by the Anti-Defamation League (ADL) as a “self-described ‘recognized international lawyer’ and a member of an “extremist group” known as “Little Shell Pembina Band of North America.”

    The group is known to have ties to Washington state, according to ADL.

    Leaming, according to ADL, once served as a deputy sheriff and member of the Civil Rights Task Force, a “sovereign citizen group that has used badges and raid jackets to resemble law enforcement officers.”

    Cornell noted that Leaming should “have provided us with documentary proof of his law license” before his name was published on a website the Law School runs in partnership with Justia.com.

    “[O]bviously that needs to be double-checked at this point for validity or alterations,” said Thomas R. Bruce, director of Cornell’s Legal Information Institute. “Of course we’ll remove him if he’s not what he claims to be.”

    As part of its partnership with Justia, Cornell publishes free listings for licensed attorneys across the United States. Leaming’s name appears in listings on both the Cornell Law School site and the Justia site.

    Leaming’s name also appears in a listing at Oyez.org, another Justia-affiliated site that publishes information on cases before the U.S. Supreme Court.  Whether Leaming, whose listings advertise a practice in Spanaway, is a licensed attorney is unclear.

    The listings, which advertise a fee structure and areas of practice such as Admiralty/Maritime, Business Law, Estate Planning and Native American Law, do not reference any law school attended by Leaming or law degree obtained. Bruce said the university would work with Justia to review “verification procedures used to make sure that those who claim to be attorneys actually are.”

    Whether Leaming has a law degree and is licensed to practice law in any state remains unclear. Bruce said the document published on the WSBA website “certainly paints an unfavorable picture.”

    Leaming goes by the nickname “Keny” and is associated with an entity known as “AMERICAN-INTERNATIONAL BUSINESS LAW INC.,” according to the listings on the Justia-connected sites.

    Last week members of Florida-based AdSurfDaily received an email that referenced “Keny” and the same business entity referenced in the attorney listings published by Cornell and others.

    The email, which appears to be a compendium that cobbles together communications from members of a group within ASD and asks ASD members to pass along the information, implies that ASD members who file for restitution through a government-approved process may face legal action from the group, which has or will file claims against the “illicit UNITED STATED (sic) OF AMERICA INC. et al” for its prosecution of the ASD Ponzi scheme case brought by the U.S. Secret Service in August 2008.

    “The Secret Service does not comment on or discuss ongoing investigations,” an agency spokesman said this morning.

    A purported “legal opinion” by “Keny” was contained within the email received by ASD members, which was circulated by an ASD member referred to as “Sara.”

    ASD is known to have ties to the so-called “Patriot” and “sovereign” movements. The movements are known to engage in what has been described as “paper terrorism” designed to rattle the government and litigation opponents.

    The U.S. Secret Service seized tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin in August 2008, alleging he was at the helm of a massive Ponzi scheme.

    An attorneys’ database at Martindale.com appears to have no listing for a lawyer named “Kenneth Leaming,” “Ken Leaming” or “Keny Leaming.”

    See earlier story.