PatrickPretty.com

Blog

  • DISTURBING: Email Received By Some ASD Members Suggests They Could Be Sued For Participating In Refund Program; Records Suggest ‘Legal Opinion’ Was Offered By Man Named In Complaints For ‘Unauthorized Practice Of Law’ And Linked To ‘Extremist Group’ By Anti-Defamation League

    In a bizarre and unsettling development, some members of AdSurfDaily who may be planning to file for restitution through the official claims administrator have received a confusing and threatening email from a “group” of ASD members.

    The email, which appears to be a compendium that cobbles together communications from the group and asks ASD members to pass along the information, implies that ASD members who file for restitution through the 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 lawsuit threat appears to be targeted at ASD members who are planning to file a restitution claim through Rust Consulting Inc. of Minneapolis. Rust Consulting is under contract with the government to administer the restitution program through a process known as remission in which ASD members must certify they are crime victims.

    Pasted into the email is a purported “legal opinion” by a person described as “Keny” of “AMERICAN-International Business Law inc. (sic).”

    “Keny” does not appear to be the source of the lawsuit threat. Rather, the email quotes a purported “legal opinion” by “Keny” — and then implies members who file through Rust Consulting may be sued by members of the group. The email asks members not to file for a refund through the official process.

    “Please send me your response(s) and I will manage the feedback timely,” says an email signed “MYHUB.” “Again, we are asking that our Claimants do not engage in the DOJ’s Remission Process, as long you want to maintain being part of our Group Claims whatsoever. If you are indeed wanting to eat on the other side of the fence, you must let us know before you submit anything to the DOJ, without causing us potential harm and further damages. In case you were to fail to notify us, we would have a possible claim against you, and that’s not what you want us to do in the first place.

    “We very much appreciate your understanding in this rather sensitive time of legal dealings,” the email continues. “No worries, we are just getting started to fight for and along with you. If you feel that this email could help some of your friends in ASD that are not part of our Group Claims, we are allowing you to share and forward this email as long it doesn’t end up in Blogs et al., but then again, people need to be informed since they can’t read and or understand the legal language or the meaning of words any longer.”

    Google search results include multiple references to “AMERICAN-INTERNATIONAL BUSINESS LAW INC” and a person referenced as “Keny.”

    One of the references appears on a website operated by Cornell University Law School under a heading of “Legal Services & Lawyers.” The Cornell reference identifies a person named Kenneth Wayne Leaming of AMERICAN-INTERNATIONAL BUSINESS LAW INC. of Spanaway, Wash. The Cornell site notes that correspondence should be sent to the attention of “Keny” and that Kenneth Wayne Leaming practices “Admiralty/Maritime, Business Law, Estate Planning and Native American Law.”

    Records at the Practice of Law Board at the Washington State Bar Association (WSBA) say that Kenneth Wayne Leaming, also known as Kenneth Wayne, was accused of the unauthorized practice of law by clients in 2005.

    One client accused Leaming of “actively market[ing] legal services via seminars and the internet” and of providing “legal advice” and preparing “pleadings for many clients,” according to WSBA.

    Another client accused Leaming of contracting with him “to assist him in avoiding an IRS lien on his home” and failing to provide the services.

    On Dec. 20, 2005, WSBA said in a letter to Leaming that his “conduct constitutes the unauthorized practice of law.” The final disposition of the matter was not immediately clear. Also unclear is whether Leaming ever was a licensed attorney or authorized to practice law in any state.

    Separately, the Anti-Defamation League (ADL) lists Leaming as a member of an “extremist group” known as “Little Shell Pembina Band of North America.”

    Leaming, according to ADL, is a “self-described ‘recognized international lawyer’ who 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.”

    “His CRTF partner, David Carroll Stephenson, was ordered by a federal court in March 2004 to stop promoting an alleged tax scam that allowed people to avoid an estimated $43 million in federal income taxes,” according to ADL.

    The identity of “MYHUB” was unclear in the email received by ASD members. Portions of the email were pieced together by a sender known as “Sara.” A person named Sara Mattoon once served as ASD’s official spokeswoman and is referenced in a court filing by the Secret Service in 2009.

    In the email, “Sara” referenced remarks attributed to “Keny” as a “legal opinion about why it may be unwise for you to fill out the [Rust Consulting] form, aside from it working against ASD.”

    The “Sara” email then reproduces the “MYHUB” email and the purported “legal opinion” by “Keny.”

    The purported legal opinion describes the Rust Consulting website, which is listed in court documents as the official site for ASD victims, as “almost exclusively a propaganda site to get the viewer to ‘believe’ the gov’t LIE that advertising via network marketing on the internet is somehow bad business and fraudulent, and solicit false testimony from the viewer based on the false information!”

    In yet-another email received by ASD members, a fellow member referenced as “Robert” also referred to the claims program administered by Rust Consulting. The email from “Robert” includes an unattributed opinion, meaning the identity of the person who offered the opinion is unclear.

    “If members feel it absolutely necessary to complete the remission form now instead of waiting a little longer for the legal process to be completed then they may want to write on a separate piece of paper and have it notarized saying that they were not an investor,” according to the opinion contained within the email from “Robert.”

    Members also should swear that “they purchased advertising for their website and that they were happy with their purchase,” according to the unattributed opinion circulated by “Robert.”

    “The govt is trying to trick people into saying it was an investment,” the opinion claimed.

    Separately, an apparent ASD member known as MMG7 who posts on the MoneyMakerGroup Ponzi forum left a scathing missive yesterday in an ASD thread at the forum.

    “The same people who abused their power, under the color of law, back in August of 2008 and basically *shut down* the company without due process are up to yet additional tactics to *CREATE VICTIMS* out of thin air,” the post read in part.

    “The general consensus is that once they can *create victims* they can then turn around and use it against ASD or even YOU.

    “It is VERY HEALTHY to question their motives. Remember, these are the same people that ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.

    “Could it be they thought ASD would roll over and play dead so they could put a feather in their cap and claim victory? Not to mention being able to keep a hefty sum of members monetary property.”

    The MoneyMakerGroup forum is referenced in a May filing by the U.S. Postal Inspection Service as a place from which Ponzi schemes are promoted. The filing accused an entity known as Pathway To Prosperity of conducting an international Ponzi scheme that defrauded more than 40,000 investors across the globe.

    MMG7 did not explain in his post how he arrived at the conclusion that ASD was denied due process in a court case that has featured more than 175 filings and a hearing called at ASD’s request to free seized money.

    ASD’s request was denied in November 2008 because it did not demonstrate at the hearing it requested to prove its legitimacy that it was operating lawfully and was not a Ponzi scheme, according to court records.

    ASD President Andy Bowdoin later met with federal prosecutors over a period of at least four days. Bowdoin, according to court filings, signed a proffer letter and acknowledged the government’s material allegations in the case were all true.

    Although Bowdoin initially contested the forfeiture of tens of millions of dollars seized in the case, he submitted to it in January 2009. By the end of February 2009, however, Bowdoin reentered the case, acting as his own attorney and seeking to reassert his claims to the money. Months of legal wrangling followed, and Bowdoin was forced to hire new attorneys. A federal judge ruled last fall that Bowdoin would not be permitted to reenter the case, and an order of forfeiture was signed in January 2010.

    Nor did MMG7 explain how he had arrived at his conclusion that the government “ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.”

    Court records plainly show that that the government explained in considerable detail to at least two federal judges why it sought the authority to seize tens of millions of dollars contained in the personal bank accounts of Bowdoin, who was accused of swindling investors in an Alabama securities caper in the 1990s. Moroever, the government has said all along that it intended to establish a restitution pool from the assets seized in the case.

    The implementation of both the pool and the restitution/remission process were delayed by appeals filed by Bowdoin.

    Bowdoin was sentenced to prison in the Alabama case, but avoided jail time by agreeing to make restitution, according to records.

    Clarence Busby, his business partner in the AdSurfDaily/Golden Panda Ad Builder venture, also swindled investors in a separate securities scheme in the 1990s, according to the SEC.

    At the same time, MMG7 did not explain how he arrived at his conclusion that the government “shut down” ASD. Records show that ASD was permitted to continue to display advertising after the seizure, but that Bowdoin chose not to do so.

    Prosecutors say that, despite ASD’s claims to a federal judge that it had no money to operate, the company had $1 million in an account under a “different name” on the island nation of Antigua.

    Records show that Bowdoin did not reveal the existence of the Antigua money to members until after ASD had asked the court for emergency cash to pay its rent and webhosting bill.

    U.S. District Judge Rosemary Collyer, whom Bowdoin and another member later tried to have removed from hearing the case, refused to release funds to ASD.

  • PRIVACY A CASUALTY OF MPB TODAY? Promo Shows Snapshot Of Customer In Walmart’s Pharmacy Section; Slide Show Shows 32 Snapshots Of MPB Affiliates Waving Checks And Walmart Cards, 15 Snapshots Taken Inside A Walmart Store

    An online side show for MPB Today includes images of Walmart customers shopping inside a Walmart store. One of the departments featured in the slide show was the Pharmacy Department. (The image in this post has been cropped by the PP Blog to exclude a woman standing near the pharmacy counter.)

    UPDATED 3:38 P.M. ET (U.S.A.) A 52-frame slide show accessible online may lead to questions about whether the privacy of Walmart customers and Walmart itself has been invaded in a sales promo for the purported MPB Today “grocery” program.

    At least nine of the slides show customers, including people who appear to be senior citizens, shopping inside a Walmart store. The promo also appears to capture the images of Walmart employees. Fifteen photos of various Walmart departments are displayed in the presentation.

    One of the snapshots taken inside the store includes the image of a woman standing inside the pharmacy section. The woman appears to be holding a cell phone to her left ear. The snapshot is dated Aug. 28, 2010 and time-stamped at 13:47.  It is unclear if the date and time reflect the actual date and time the photo was taken. Several of the photos in the promo are date – and time-stamped. It is possible that all of the photos displaying Walmart shoppers, employees and departments were taken on the same day.

    The promo opens with 32 consecutive photos of MPB Today members displaying checks and Walmart cards. The photos appear to have been taken in or around the members’ homes. An image of business titan Warren Buffet is visible on a laptop-computer screen in one of the slides.

    Buffet is not believed to have any affiliation with MPB Today. Walmart also is believed to have no affiliation with the MLM company. Regardless, images of Buffet and Walmart’s intellectual property have been widely featured in MPB Today promos.

    The promo is at least the third in which MPB Today affiliates appear to have produced or contributed to sales promos shot in whole or in part on Walmart property. Whether any of the affiliates obtained permission from the company or its employees and customers is unclear.

    Concerns about privacy also have been raised about Data Network Affiliates (DNA) and Narc That Car/Crowd Sourcing International, two other MLM programs whose affiliates shot promos on properties owned by major U.S. retailers, including Walmart.

    Both DNA and Narc That Car/Crowd Sourcing International purport to be in the business of paying MLM affiliates to record the license numbers of automobiles. Affiliates of both firms advised incoming members to take photos of license plates or write down license-plate numbers in the parking lots of retail outlets. One promo for DNA recommended that members also record license-plate numbers at doctors’ offices and churches.

    DNA appears to be morphing into another business known as One World One Website or “O-WOW.”

  • Want To Plant The Seed That Famous Brands Back Your MLM Product If They Do Not? Get Ready To Pony Up For Legal Bills: Evolv Banned From Using Trademarks Of M.D. Anderson Cancer Center, University Of Texas

    UPDATED 1:18 P.M. ET (U.S.A.) An MLM company that allegedly planted the seed that its bottled-water product had passed muster with a prestigious university and medical-research facility has agreed to stop making the claims and pay its own costs of litigation after agreeing to a settlement.

    The Board of Regents of the University of Texas System and the M.D. Anderson Cancer Center alleged last year that EvolvHealth LLC and HealtH2O Products LLC had infringed their trademarks and made confusing claims about limited research performed on behalf of the firms.

    M.D. Anderson is one of the most recognizable names in the world in the field of cancer research. The MLM firms used the center’s name to hoodwink the marketplace into believing it had conducted “extensive testing” of Evolv, a product whose base was Houston tap water infused with a formula known as Archaea Active, according to the lawsuit.

    Cancer patients were being misled and potentially harmed by the claims, and the value of the university and center’s trade names and their standing in the scientific community were being harmed through bids by the defendants to plant the seed that the prestigious facilities endorsed the product after examining it thoroughly.

    Nearly 800,000 cancer patients have sought treatment at M.D. Anderson since 1944, and neither the facility nor the university ever endorsed Evolv, despite published suggestions that they had, according to the lawsuit.

    M.D. Anderson claimed in the lawsuit that it had conducted only “preliminary” and “limited” testing under contract with HealtH2O to look at the anti-inflammatory properties of the Archaea Active formula and had conducted no conclusive, comprehensive research.

    Regardless, the product was positioned in the MLM sphere as having undergone “rigorous” testing. M.D. Anderson’s trademark even was placed on the “label of the Evolv product” and on websites operated by the defendants, according to the lawsuit.

    The defendants’ claims planted the seed that “M.D. Anderson performed more extensive testing than actually occurred, and that M.D. Anderson has made scientific findings regarding the Evolv product’s efficacy, safety or beneficial value in treating or preventing cancer,” the lawsuit alleged.

    Even the preliminary testing trumpeted as rigorous and extensive by MLM pitchmen was not scientifically confirmed, according to the lawsuit.

    After the university complained to the defendants, it then was asked to enter into an agreement that would give Evolv and HealtH2O a “worldwide, royalty-free license” to use M.D. Anderson’s name in a marketing material for a product largely consisting of common tap water, according to the lawsuit.

    Neither the university nor the center agreed to the licensing proposal that occurred after the fact, but the defendants kept using the prestigious names in their pitches, according to the lawsuit.

    Eventually HealtH2O tried to turn the tables by asserting counterclaims against the university and M.D. Anderson, but that effort collapsed with the settlement.

    To settle the case, the defendants now have agreed to a permanent injunction that bars them from using the famous trademarks and “any iteration or variation thereof.”

    Under the terms of the settlement, the defendants acknowledged no wrongdoing, but agreed neither to state nor imply that the university or M.D. Anderson endorsed the product.

    Had the case gone to trial and the university and M.D. Anderson prevailed, the defendants could have faced treble damages.

    Read a discussion thread on RealScam.com.

  • Book By Lynn Edgington, Chairman Of Eagle Research Associates Inc. And Regular Contributor To PP Blog, Now Available On Amazon.com; ‘Robbing You With A Keyboard Instead Of A Gun: Cyber Crime — How They Do It’

    DISCLOSURE: The PP Blog is referenced in Lynn Edgington’s new book and provided a comment about the good works undertaken by Eagle Research Associates Inc., a Public Benefit Nonprofit Corporation registered in California. Eagle, which researches Internet investment scams, was formed Aug. 3, 2007. It is an approved 501(c)3 Corporation.

    The PP Blog was not compensated for the comment it provided Eagle and, at various times, has given Eagle permission to reproduce articles that have appeared on the PP Blog. The Blog did not charge Eagle a fee. Lynn Edgington is a regular contributor to the PP Blog and is not compensated for his contributions. The PP Blog is not being compensated for providing the link to Lynn’s book (below photograph). The book is titled, “Robbing You With A Keyboard Instead Of A Gun: Cyber Crime – How They Do It.”

    Get more info on Lynn’s book at Amazon.com.

  • Are ASD Members Waging Ongoing Misinformation Campaign To Suppress Victims’ Count And Obstruct Justice? Note Instructs Members NOT To File For Restitution

    Andy Bowdoin

    The now-defunct Surf’s Up forum was AdSurfDaily’s officially endorsed news venue. It became so on Nov. 27, 2008, a little more than a week after a key court ruling went against ASD, a Florida company implicated by the U.S. Secret Service in an alleged $100 million Ponzi scheme. Surf’s Up routinely deleted posts that challenged ASD President Andy Bowdoin, and routinely suppressed information unfavorable to ASD.

    Surf’s Up was known for conflating fantastic realities to accommodate unpleasant fact sets. Among the unanswered questions as the ASD investigation proceeds is whether the forum and some of its members were/are engaging in efforts to obstruct justice by asking victims to spread misinformation.

    Some ASD and Surf’s Up members recently received the email below, which fractures facts and appears to encourage members to spread misinformation and not to participate in the federal restitution program. (Italics and carriage returns added. PP Blog’s Notes in Bold.)

    “Please pass this on to your group and ask them to pass it on to others who were in ASD. The lawsuit filed against ASD, Andy and his wife Faye was decided in ASD’s, Andy’s & Faye’s favor a few months ago. (PP Blog Notes: The lawsuit was not decided in favor of ASD, Andy Bowdoin or Faye Bowdoin. Florida dropped the lawsuit “without prejudice,” meaning it can be refiled. The state said it had turned over a victim’s list to the federal government for the purposes of securing restitution from funds seized by the U.S. Secret Service.)

    “In October the state of FL dropped all charges against ASD. (PP Blog Notes: See note above.)

    “The Federal charges are all that is left to be addressed and progress will be made on that this month. Unfortunately if members respond to this notice and file a claim, they will be contributing to ASD losing its case because the government will use it as evidence that ASD created these “victims.” (PP Blog Notes: Is this a deliberate attempt to suppress the victims’ count and a bid to obstruct justice? Beyond that, Andy Bowdoin’s appeal of the forfeiture of money he advised a federal judge belonged to him is hardly the sole, unsettled legal issue. It is known, for example, that a criminal grand-jury probe has been under way. Bowdoin references the criminal probe in his own court filings. It is possible that criminal indictments against multiple individuals could be returned.)

    “I have told this man that but he persists because he will make money from ‘helping.’ If ASD loses its case, THEN it would be appropriate to follow up these options, but not until then.

    “My husband was hit by a car while he was bicycling and I have been struggling to care for him at home alone. I am 63, 105 lbs and he is functionally quadriplegic (which means that there is much to be hopeful for but, in the meantime, it is very challenging). For this reason I am unable to keep everyone updated as I had hoped to do and I have been unable to spearhead a member campaign to help the effort as I had also hoped to.

    “God’s Blessings,
    Sara”

    (PP Blog Notes: The section of the note above even could bring things such as practicing law without a license into play because it introduces an “if, THEN” proposition that lays out a legal strategy. For example, “if” ASD loses the forfeiture proceeding in the appeals court, only “THEN” should victims register for the restitution program. One of the core problems is that there may be no way of knowing precisely when the appeals court will issue its ruling (oral arguments scheduled for this month have been canceled, and the appeals court will decide the issues based on briefs from both sides). Meanwhile, the restitution/remission forms victims must file are due by Jan. 19, 2011. Victims who follow the advice in the email could be denied a refund.)

    See related story.

  • Justice Department Using Undercover Agents To Battle White-Collar Criminals; Top Official Says Investigative Tactics Normally Used To Prosecute Organized Crime Figures Useful In Battling Fraud Epidemic

    EDITOR’S NOTE: The remarks below are excerpted from a speech last week in New York by Assistant U.S. Attorney General Lanny A. Breuer. As the PP Blog has previously reported, the Justice Department and agencies such as the FBI and U.S. Secret Service have been using undercover operatives to infiltrate criminal operations and networks used by the criminals.

    One of the FBI investigations Breuer referenced was the Trevor Cook Ponzi scheme in Minneapolis. The scheme consumed tens of millions of dollars, defrauding victims of at least $158 million. Many mysteries remain in the case.

    Meanwhile, undercover operatives also recently were used to expose penny-stock schemes operating in Florida.

    It also is known that the Secret Service used undercover operatives in the AdSurfDaily case, the INetGlobal case, the Regenesis 2×2 case, the Legisi case and a case involving alleged international fraudster Vladislav Horohorin, accused of using criminal forums to peddle stolen credit-card information.

    Here, now, some excerpts from Breuer’s speech . . .

    Part of Trevor Cook's stash.

    “Now, as I’m sure you know, financial criminals can be extraordinarily innovative, and they are often expert at covering their tracks. So we are always looking for creative ways to gather the evidence we need to bring financial criminals to justice. To that end, we have begun increasingly to rely, in white collar cases, on undercover investigative techniques that have perhaps been more commonly associated with the investigation of organized and violent crime.

    “As part of this effort, we have significantly strengthened the Criminal Division’s Office of Enforcement Operations (known as OEO), which is the office in the Justice Department that reviews and approves all applications for federal wiretaps from across the country. We have a dynamic new OEO Director, Paul O’Brien, and we’ve substantially increased the number of attorneys at OEO who review these wiretap applications, adding to their ranks experienced prosecutors and recent graduates who have completed federal clerkships. As a result, the number of wiretaps we authorize – in all types of cases – has gone up.

    “Let me give you just two examples of white collar cases in which we have used undercover techniques, both of which also highlight areas in which we have stepped up our white collar enforcement efforts more generally.

    “The first example is the case of Trevor Cook, which was prosecuted by the U.S. Attorney’s Office in Minneapolis. Mr. Cook is just one of dozens of individuals whom we’ve prosecuted in recent months for participating in investment fraud schemes. Over the course of several years, Mr. Cook schemed to defraud at least 1,000 people out of approximately $190 million by pretending to sell them investments in a foreign currency trading program.

    “In reality, he was pocketing the money or using it to pay off other investors. As was recently reported in the New York Times, we gathered evidence against Mr. Cook by using an undercover informant to record his transactions and conversations. [Cook] pleaded guilty earlier this year and was recently sentenced to 25 years in prison.

    “Trevor Cook is one of literally hundreds of financial criminals who have preyed upon vulnerable, individual investors and bilked them out of their savings using investment fraud schemes. And as with Mr. Cook, we have been prosecuting these people aggressively, all over the country – from New Jersey and Connecticut to Texas and California, and everywhere in between.

    “The second example comes from our enhanced efforts in the area of FCPA enforcement. Earlier this year, as I’m sure many of you know, we indicted 22 defendants in the military and law enforcement products industry for their participation in widespread schemes to bribe foreign government officials. These indictments resulted from the Department’s most extensive use ever of undercover law enforcement techniques in an FCPA investigation, and they represent the single largest prosecution of individuals in the history of our FCPA enforcement efforts. In September, one of the defendants in the case, Richard Bistrong, pleaded guilty . . .

    “Over the last 18 months, we’ve devoted significant additional resources to the Criminal Division’s Fraud Section. We’ve recruited talent not only from white shoe law firms, but also from a deep pool of prosecutors around the country who bring with them extensive experience in prosecuting everyone from violent mobsters to dangerous terrorists. We are now bringing that extraordinary talent and experience to bear on prosecuting financial fraudsters.”

    See related story on alleged Pathway To Prosperity Ponzi scheme.

    See related story on alleged Legisi Ponzi scheme.

    See related story on Matt Gagnon and Mazu.com.

  • Feds Charge Robert Stinson Criminally On Heels Of SEC Lawsuit; Prosecutors Say ‘Life’s Good’ Operator Stole More Than $17 Million In Ponzi Scheme, Wired Money Even As FBI Was Conducting Raid

    Even as the FBI was executing search warrants in the case of Life’s Good Inc. operator Robert Stinson Jr., Stinson was “wiring stolen funds out of Life’s Good bank accounts to other accounts,” federal prosecutors said.

    That act alone led to criminal charges of obstruction of justice. In a 26-count indictment in an alleged Ponzi scheme in which Stinson was accused of stealing more than $17 million from more than 260 investors, Stinson also was charged with wire fraud, mail fraud, money-laundering, bank fraud, filing false tax returns and making false statements to federal agents.

    At 12:06 p.m. on June 29 — the date of the raid and while federal agents were executing search warrants — Stinson began a series of wire transactions in which he moved at least $225,000 to prevent the cash from being seized, according to the indictment.

    Two of the transactions occurred during the same minute and involved two separate banks, according to the indictment.

    The scam involved promises of fixed returns of between 8 and 16 percent in four bogus real-estate hedge funds, prosecutors said. They added that Stinson was not a graduate of the Massachusetts Institute of Technology or Pennsylvania State University, as he had claimed.

    Although Stinson, 55, of Berwyn, Pa., told a tale of fabulous business success, he actually was a recidivist securities offender and had multiple fraud convictions. Part of his most recent fraud involved and online “webinar” and a PowerPoint presentation, according to the indictment.

    Stinson claimed to have “funded millions of dollars in real estate rehab and improvements as well as saved over 1,500 families from foreclosure free of charge,” according to the indictment.

    “Advisors” who drove business to the criminal firm were paid commissions of between 5 percent and 10 percent of the money they brought in.

    In 1986, he was convicted of wire fraud and larceny in U.S. Court in Delaware, according to records. In 1987, he was convicted of forgery and larceny in New Jersey state court. During the same year, he was convicted of mail fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Meanwhile, in 1996, he was convicted of criminal conspiracy in state court in Pennsylvania. In 2001, he was convicted of bank fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Stinson filed two bankruptcy petitions in 1999, one in October and another in December, according to records.

    Nine years earlier, in 1990, he was charged with fraud by the SEC. He was ordered to pay a judgment of $7,680, but the judgment remains unpaid, according to court filings.

    The SEC sued Stinson in June. The criminal probe was conducted by the FBI, the IRS and the U.S. Postal Inspection Service.

    If convicted on all counts, Stinson faces a maximum sentence of 329 years in federal prison and a fine of $6.8 million.

  • NOTE TO READERS: PP Blog Back Again; Criminals Try To Make Mincemeat Out Of 1st Amendment; CEO Of Small Company In North Carolina Stands Up For Press Freedom

    UPDATED 1:42 P.M. ET (U.S.A.) The PP Blog has returned. A major series of assaults on the Blog — and press freedom under the 1st Amendment to the U.S. Constitution — have been turned back. Five federal agencies are aware of the attacks. Evidence has been preserved.

    The Blog has established a satellite presence and certain redundancies, enabling its content to be published across multiple platforms. All content has been preserved, including more than 9,000 comments from readers, some of whom are victims of Ponzi schemes, pyramid schemes, MLM-style frauds and other forms of fraud.

    It is said that the last couple of months leading up to an election in the United States is the “Silly Season” in which political operatives get downright dirty.

    Unlike the Silly Season for political operatives, however, the Silly Season for online criminals has no generally restrained window of opportunity and no generally accepted beginning or end. It never really ends. Criminals want to continue to steal from senior citizens and people of faith, for instance. They want to shackle and hamstring the law-enforcement community. They want to position poison as candy and coopt people through appeals to greed — and they want to disable megaphones large and small.

    One week ago today, a new assault against the PP Blog began, the second in eight days. The Blog’s online “signature” was removed for security reasons. The signature popped back online briefly Friday, and a massive assault that ultimately consumed hundreds of MB of data (just to record the first couple of hours of the attack in text form) began instantly. Again the Blog’s signature was removed for security reasons.

    The Blog’s signature returned Saturday; yet-another assault began.

    Over the past several days, the data and security challenge were analyzed. A specialist painstakingly deployed an approach designed to thwart the attack. The Blog’s signature returned yesterday afternoon, as did the attackers. The attack was professionally managed and suppressed.

    Owing to the intervention of an entity and certain individuals who do not trivialize the Blog’s editorial mission and the 1st Amendment, the PP Blog has survived to publish this post.

    We confess that we were overcome with emotion when the Blog and its editorial well of 965 stories and thousands of links appeared back online yesterday afternoon.

    One of the great ironies of the situation is that some criminals and fraudsters on the Internet insist that they are the victims of Big Brother and what has become known as the “evilGUBment.” They rationalize egregious criminal behavior, in some cases portraying themselves as patriots and modern-day freedom-fighters.

    Some of them, apparently, trash the very same Constitution they claim to support by summoning hidden armies and weaponizing data packets to attack the very Constitutional principles they purport to embrace.

    The PP Blog was attacked to make the world safer for criminals — this while wealth in Florida and many other places on the map is bleeding out into the Caribbean and elsewhere and terrorists are creating toner bombs and underwear bombs and hoping to rivet the world’s attention on a detonation.

    Our heartfelt thanks to Kevin Kwasnik, CEO and Founder of USA Domains, a hosting company in Hickory. N.C., that stood up for the principle that a free press will not be denied in a Democracy.

    In a world in which criminals and hucksters paint investigators who probe domestic and international fraud and journalists who write about it as Nazis, Kevin Kwasnik stood up for a small Blog in a sea of Blogs.

    His family understands attempts to silence voices, and the lessons have been passed down through succeeding generations from a place known as Auschwitz, the largest of the concentration camps operated by the real Nazis.

  • KABOOM! Federal Judge Was Right When He Ordered Marketers To Pay $48.2 Million In False-Advertising Case Brought By FTC, Appeals Panel Rules; ‘Complete Absence Of Support’ For Most Claims Made About Supreme Greens And Coral Calcium Dietary Supplements

    The name of infomercial pitchman Kevin Trudeau is cited in an unsuccessful appeal of an order to pay $48.2 million for false advertising. Trudeau, a convicted felon who has clashed with the FTC multiple times, is not a party to the order.

    UPDATED 11:44 A.M. EDT (U.S.A.) So, you want to tell customers that your products cure diseases ranging from cancer to Parkinson’s and multiple sclerosis? And when critics and investigators and lawyers begin to ask tough questions, you want to deflect?

    And when a federal judge orders you to pay $48.2 million for making deceptive claims, you want to turn to the U.S. Court of Appeals and claim the critics got it all wrong, the FTC got it all wrong, expert witnesses got it all wrong  and the judge who ordered you to pay got it all wrong — and you want the appeals court to believe your claims were “mere puffery and were mollified by disclaimers?”

    Get ready to write a big check and return your ill-gotten gains: The U.S. Court of Appeals for the First Circuit has upheld the order to pay issued by U.S. District Judge George O’Toole in a case involving what the FTC described as the “phony health claims” made by marketers of dietary supplements known as “Supreme Greens” and “Coral Calcium.”

    Infomercial pitchman Kevin Trudeau hawked the purported benefits of coral-derived calcium on TV, settling the FTC claim for $2 million and a ban from making infomercials for products other than books. The FTC action that led to the appeal by other defendants was brought in 2004.

    The ruling by the appeals court upholding the $48.2 million penalty, however, cites passages from an infomercial in which Trudeau asked Robert Barefoot — referred to in court filings as a “purported” expert — questions.

    “Barefoot claimed that all diseases are caused by a condition called acidosis,” according to court documents. Here is part of what Barefoot said  (red added):

    “Are you getting the minerals? And if you’re not, you will become acidic and you will get one of the major diseases. You can have heart disease, cancer, lupus, fibromyalgia, multiple sclerosis. Name the disease, they’re all caused by acidosis.”

    Barefoot then claimed that calcium derived from Okinawan coral cured cancer and helped multiple-sclerosis patients emerge from their wheelchairs.

    “[W]e’ve been studying the coral calcium and I can tell you there are tens of millions of people, millions of testimonials. I’ve had 1,000 people tell me how they’ve cured their cancer. I’ve witnessed people get out of wheelchairs with multiple sclerosis just by getting on the coral.”

    “Barefoot asserted that coral-derived calcium was an effective cure for these diseases because it renders the body more alkaline, thereby curing acidosis,” according to court filings.

    The appeals filing cites infomercial exchanges between Trudeau and Barefoot (bolding added):

    Trudeau (host ): Pain, talk about pain. Read in your book if a person has pain, muscle
    pain, joint pain –

    Barefoot: Yes, yes.

    Trudeau: – they take calcium –

    Barefoot: Yes.

    Trudeau: – their body turns from acid to alkaline, pain goes away.

    Barefoot: That’s exactly –

    Trudeau: Is that common?

    Barefoot: Yes, yes, very common.

    Deflections and ambiguities then became part of the case, according to court filings (bolding added):

    “Barefoot went on to claim that coral-derived calcium is superior to other sources of calcium because it is 100% bioavailable, meaning that all coral-derived calcium that is ingested is also absorbed into the body.

    “To bolster his claims, Barefoot noted that unspecified articles from the Journal of the American Medical Association and the New England Journal of Medicine ‘said that calcium supplements reverse cancer . . . that’s a quote.’”

    “The infomercial directed potential customers to call an 800 number, on the other end of which DMC-employed telemarketers would follow a script directing them to tell potential customers that the product Coral Calcium would be 100% absorbed by their bodies and would combat degenerative diseases by rendering an acidic body more alkaline.

    “Telemarketers were also directed to tell sick customers that they should take higher doses of Coral Calcium, up to three times the standard dose. During the relevant time period (from January 2002 to July 2003), the Coral Calcium infomercial generated $54,034,394.82 in sales . . .”

    In a passage from the appeal documents in which the panel referred to a deposition by Barefoot in the case, the panel raised again the issues of defection and ambiguity (bolding added):

    “Indeed, Barefoot’s deposition testimony primarily relies on appeals to generic authority; his standard rhetorical practice is to assert that there are myriad studies that support a given claim, without identifying any specifically,” the appeals panel noted.

    It footnoted two examples:

    “For example, Barefoot claims that he ‘hired the No. 1 scientist in America . . . and he did a peer-review study all over the world and came up with thousands and thousands of references’”; and that ‘I could load you up where it would take you ten years to get out of this building before you read all the people that say calcium prevents cancer’”; and that “[t]ens of thousands of scientists are saying that [calcium prevents cancer], and I can show you the documents.’”

    “For example, when asked about the public availability of these uncountable studies, Barefoot said ‘I have just finished a book called Let’s Cure Humanity, in which I give you 1,000 scientific references. You’re asking for them. I’m giving them to you. I will also give you 100 scientific quotations from the world’s best scientists, and the quotations are startling: reverses PMS, it reverses cancer; that it reverses diabetes . . . ..”

    In upholding Judge O’Toole’s findings and the $48.2 million judgment, the appeals panel ruled that he had applied the court’s “equitable authority to fashion an appropriate remedy, ordering the Defendants to cure their customers in a way that their bogus supplements could not.”

    O’Toole issued the payment order in August 2009, requiring infomercial pitchman Donald W. Barrett, Robert Maihos and their two companies — Direct Marketing Concepts Inc. and ITV Direct Inc. — to pony up for false advertising.

    Read the decision by the appeals panel.

    In a settlement with the FTC in 2004, Barefoot agreed not to make deceptive claims. He disputes that he ever did anything wrong in touting the efficacy of coral calcium.

    “We have cooperated with the FTC, and have reached a settlement, whereby, even though Barefoot is innocent, he pleads guilty and thereby avoids a very expensive trial, which even if he won, would not compensate him for his losses,” his website notes.

  • Fugitives Charged In Michigan Ponzi Scheme Captured By U.S. Marshals, Police In Tennessee; Rita Gosselin And Husband Had Been On The Lam Since April

    CAPTURED: Rita Gosselin

    In December 2009, Rita Gosselin was indicted for racketeering in Michigan. Michigan Attorney General Mike Cox said she was at the helm of a real-estate Ponzi scheme involving promissory notes.

    In April 2010, Gosselin, 58, was alleged to have cut a monitoring device and fled the the state with her husband, Richard Gosselin, 62.

    The couple was captured yesterday in Tennessee by the U.S. Marshals Service and the Humboldt Police Department.

    Meanwhile, a Nevada couple charged earlier this week in a Ponzi case remains on the lam. Perry and Rachelle Griggs disappeared in January 2010.

    Perry Griggs operated the scheme while he was incarcerated in federal prison for another Ponzi scheme, authorities said.

    See earlier story on Rita Gosselin.

    See earlier story on Perry and Rachelle Griggs.

  • BULLETIN: FBI Seeks Arrest Of Perry and Rachelle Griggs; Agency Alleges Husband-And-Wife Team Ran Ponzi Scheme While Husband Was Federal Prisoner In Nevada; Manhunt Under Way

    WANTED BY FBI: Perry and Rachelle Griggs

    BULLETIN: UPDATED WITH INFORMATION FROM THE CFTC AT 7:03 P.M. EDT (U.S.A.) Perry and Rachelle Griggs are on the lam after running a Ponzi scheme while Perry Griggs was a federal prisoner in Nevada, the FBI said.

    The alleged commodities scheme consumed about $3 million and was targeted principally at inmates and family members of inmates, the FBI said.

    Separately, the CFTC said Perry Griggs ran a previous Ponzi scheme that resulted in convictions for wire fraud and money-laundering, a restitution order for more than $3 million and a 96-month prison sentence. Perry Griggs began serving the sentence in 2003, but hatched the new scheme while incarcerated.

    Yet-another scheme grew out of the scheme Perry Griggs hatched from prison, according to the CFTC. If the allegations are true, it means that Perry Griggs has been at the center of at least three fraud schemes since 2003, and launched two of them while in federal custody.

    The scheme for which Perry Griggs began serving time in 2003 involved coffee futures, the CFTC said. Even as he was serving time, Perry Griggs executed trades for the new scheme from prison by using the Internet and a telephone, according to court filings.

    Perry Griggs and his wife lost investors’ money in the new scheme and made Ponzi-style payments to cover up the fraud, while also stealing about $1 million to pay “for personal expenses, including luxury car leases, renting a home in Hawaii, purchasing jewelry and chartering a private jet,” the CFTC said.

    The couple went missing from a halfway house after Perry Griggs’ release from prison. Perry Griggs was on parole for the earlier Ponzi scheme when he fled while the second scheme was unraveling, the CFTC said.

    Perry Griggs was housed “with a large number of inmates from Hawaii,” the FBI said. He was released from prison in late 2008, and went missing with his wife from Las Vegas in January 2010.

    Indictments against the husband and wife were returned by a federal grand jury in Hawaii yesterday.

    The FBI has launched what it described as a “national fugitive manhunt with a primary focus on the states of Nevada, Washington, and California.”

    PERRY JAY GRIGGS is 49 years old, 5’10” tall, 180 pounds, with grey hair and blue eyes. He is known to have expensive tastes in sports cars, high-end clothing, cigars, and golf, the FBI said.

    RACHELLE LOUISE GRIGGS, also known as RACHELLE RUTLEDGE, is 42 years old, 5’4” tall, 150 pounds with blonde hair and green eyes.

    Anyone recognizing PERRY and RACHELLE GRIGGS or having information as to their current location is asked to call the Honolulu FBI at 808-566-4300.

    Perry Griggs also spent time in federal prisons in California and Texas. The Ponzi that put the couple on the lam operated through a scam company known as Aloha Trading Co., which purported to be in the business of trading commodities, the FBI said.

    Meanwhile, the CFTC said investors in the second scheme were lured by the promise of high returns. Some investors refinanced their homes and liquidated retirement accounts to invest with Perry and Rachelle Griggs.

    A third scheme grew from the second scheme and involved a company known as Paradise Trading LLC, the CFTC said.

    Read the CFTC complaint.