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  • DEVELOPING STORY: MPB Today Affiliate Says Firm’s High Shipping Costs For Groceries Good Reason For Federal Food Stamp Recipients To Join 2×2 Cycler Matrix; Also Claims Walmart Gift Cards Convertible To Cash; No Immediate Comment From USDA, Walmart

    UPDATED 4 P.M. EDT (U.S.A.) Former members of AdSurfDaily who lost money in an alleged $100 million Ponzi scheme are not the only prospects being targeted by affiliates of MPB Today. Recipients of federal benefits administered by the U.S. Department of Agriculture (USDA) also are being targeted.

    If you receive federal assistance for food — and if you’re turned off by the shipping costs charged by an online grocery store that is part of a 2×2 cycler matrix operated by a MPB Today, a Florida-based, multilevel-marketing (MLM) program — you should use the high shipping costs as a reason to join the MLM program, according to an MPB Today affiliate.

    And if you are a Food Stamp recipient who needs one more reason to join MPB Today, you should consider that, if you cycle and earn a Walmart gift card from MPB Today, you can use the “gift cards to purchase Walmart Visa Cards, which can be used the same as cash,” according to the affiliate.

    Shopping online for groceries once was a “privilege” reserved “for those in higher income brackets, with more money than time,” according to a Blog titled “Helping Dreams Come True For You!”

    “Granted, shipping charges are usually around 40% of the total grocery bill, but if that seems like too much to pay, you can utilize the marketing plan of the company,” a Blog post aimed at Food Stamp recipients suggests. “And refer your friends to sign up as well.”

    For its part, MPB Today says on its website that shipping costs “can average from 25 – 50%.”

    Under the MPB Today affiliate’s plan, a Food Stamp recipient with a $200 order would be spending up to $300 to gain the same purchasing power offered by a local, walk-in grocery retailer — assuming the local retailer’s prices were the same as MPB Today’s.

    If the local retailer’s prices were lower, the Food Stamp recipient would lose even more purchasing power.

    On average, only about 14 percent of participants “earn” money in 2×2 cycler programs. One such program operating in the Seattle area came under investigation last year by the U.S. Secret Service.

    Walmart did not respond immediately to a request for comment from the PP Blog.

    The Food Stamp program, known as SNAP, is administered by USDA and managed by the U.S. states and territories.

    USDA did not immediately respond to a request for comment from the PP Blog. It was not immediately clear if the agency knows about the MPB Today program and the manner in which it is being marketed to Food Stamp recipients.

    The MPB Today affiliate’s pitch provided no guidance on whether Walmart gift cards could be viewed as reportable income for tax purposes and Food Stamp eligibility purposes. The pitch also did not disclose that the affiliate was in position to earn money if Food Stamp recipients joined MPB Today through the affiliate link on the Blog.

    A promo on MPB Today’s website encourages visitors to “Eat Well Today!” The site shows photos of delicious food, while prompting visitors to click on a video. The video is a sales pitch for the MLM program.

    When visitors click on the video prompt, a dire drum beat begins. The word “foreclosure” flashes on the screen twice in the first 15 seconds. Florida has one of the highest foreclosure rates in the United States.

    Here is how the MPB Today affiliate describes the cycler program’s convenience to Food Stamp recipients:

    “Once at the checkout screen, you enter the number on your EBT,SNAP, or food stamp card, and another credit or debit card to pay for the shipping charges. It’s just that easy.”

    This YouTube promo for MPB Today claims Walmart is affiliated with the program and that the program is "Govt. acknowledged."

    Separately, a MPB Today affiliate is using a video on YouTube to promote the MLM company. The video claims that Walmart is “affiliated” with the firm and that the program is “Govt. acknowledged.”

    “This biz will explode,” the video claims. It does not list a source to substantiate the claim that Walmart is “affiliated” with MPB Today and that the government has “acknowledged” the program.

    The video has received nearly 5,800 views.

    See earlier PP Blog column.

  • Ponzi Pitchman Pleads Guilty To Alleged Role In Massive Oil-And-Gas Swindle; ‘We Will Be Relentless In Our Pursuit’ Of Scammers, Top Federal Prosecutor Says

    A Dallas man accused of fleecing investors in oil-and-gas schemes that gathered $535 million in Texas and Michigan has pleaded guilty to his role in the alleged schemes.

    “Investment fraud is, at its core, a betrayal of trust by one person to another,” said U.S. Attorney John M. Bales of the Eastern District of Texas.  “We will be relentless in our pursuit of those individuals responsible for abusing the trust of others in order to obtain criminal profits.”

    Joseph Blimline, 35, was accused of making “materially false representations” and failing to disclose material facts as a representative of Provident Royalties, which was implicated in a securities swindle by the SEC.

    Blimline, who faces up to 40 years in prison after pleading guilty to two counts of conspiracy,  previously had been charged with securities fraud by the state of Michigan, prosecutors said.

    Provident was accused by the SEC in July 2009 of orchestrating a $485 million offering fraud involving more than 7,700 investors. Blimline was accused of orchestrating a separate fraud in Michigan that involved $50 million.

  • KABOOM! (Florida — Again): FTC Hits Bogus Credit-Repair Firm With $14 Million Judgment; Alleged Schemers Lose Cars, Real Estate In Miami-Dade, Broward Counties

    BULLETIN: (UPDATED 11:27 A.M. EDT (U.S.A.) The Federal Trade Commission has lowered the boom on Clean Credit Report Services Inc. of Florida and three individuals associated with the firm.

    In a settlement from a case brought in October 2008, the FTC has obtained a judgment of $14.4 million. The defendants must surrender their assets, including about $165,000 in frozen funds.

    The settlement agreement also includes “any proceeds received from selling their six commercial and three residential properties under foreclosure in Florida; commercial property in Bogota, Colombia; a 1992 Mercedes S300; and a 1997 Chevrolet Venture.”

    In total, Clean Credit Report Services Inc., Ricardo A. Miranda, Ruthy Villabona and Daniel R. Miranda are giving up “two cars, three houses, and six commercial properties in Broward and Miami-Dade counties in Florida, and in Bogota, Colombia,” the FTC said.

    The defendants admitted no wrongdoing.

    Clean Credit Report operated from North Miami, according to court filings. The company used a website (now defunct), radio ads and televisions ads to fleece customers, the FTC charged.

    Here is how the company pitched its offer on its website, according to the FTC:

    “DEROGATORY ACCOUNTS ARE DISPUTED CCRS will help you to legally dispute all your negative remarks directly with the 3 credit reporting agencies.”

    ***

    “Get ready to see DELETED, DELETED, DELETED, DELETED, DELETED, on the responses from the credit reporting agencies.”

    The alleged schemers targeted people going through rough financial times and illegally charged them upfront fees, the FTC charged.

    They also fraudulently claimed that they could remove accurate and timely information from credit reports, charging $400 to do so and debiting the amount from customers’ bank accounts, the FTC said.

    The agency noted in court filings that eight of nine properties the defendants will be giving up already are in foreclosure.

    Florida has one of the highest foreclosure rates in the United States. Certain MLM and Internet Marketing companies — in efforts to recruit financially strapped customers — routinely use the word “foreclosure” in sales pitches, positioning the business “opportunity” as the remedy for the foreclosure problem.

    Such ads often feature a dire drum beat, as images of people down on their luck flash on the screen. Biz Ad Splash, a failed autosurf, used such an ad. The company disappeared with an unknown amount of money sent in by members earlier this year — and then issued an announcement that it was “sad” about the development.

    Biz Ad Splash and it dire drum beat and “foreclosure” message targeted members of Florida-based AdSurfDaily, which was implicated in a Ponzi scheme by the U.S. Secret Service in August 2008. More than $80 million was seized in the ASD case.

    Some ASD members now are recommending a Florida-based program called MPB Today, which also uses a dire drum beat and the word “foreclosure” in its sales pitch.

    It is known that some members of ASD also were in the credit-repair business. One ASD supporter claimed in court filings that he could undermine a bank’s interest in a foreclosure case by filing “twenty-one dollars in silver coinage” at a courthouse in Missouri.

  • WebsiteTester.biz Delays Launch; Produces Video With Voice, But No Faces; Sends Members To News Release By Unnamed Author; Mysterious Firm Has 18,000 Twitter Followers

    UPDATED 7:26 A.M. EDT (U.S.A.) A Nevada company that advertises “job” openings and is being promoted on Ponzi forums such as TalkGold, MoneyMakerGroup, ASAMonitor and DreamTeamMoney has delayed its launch.

    WebsiteTester.biz made the announcement on its website. Forum posters across the world had expected the launch to be under way fully today, but Website Tester says the launch now will be delayed until the company records 400,000 registrations.

    The mysterious firm says it has 375,000 registrants.

    Adding another layer of mystery, the company posted a video on its website that purports to feature the voice of Michael Anthony DeBias, the “CEO.” Michael A. DeBias is listed in Nevada corporation records as director, treasurer, secretary, and president of Alpha Market Research Inc., the apparent parent company of Website Tester.

    The address listed for Alpha Market Research — 3651 Lindell Rd.,  Las Vegas, NV. — appears to be the address of a company that offers “virtual office” services, meaning Alpha Market may not actually be located in Las Vegas. Promotional material attributed to Website Tester has featured awkward phrasing, including this curious sentence:

    “Potential clients who are disturbed by trifles during the ordering process are often unaware of exactly why.”

    The video includes audio that purports to be of DeBias’ voice, but does not show his face. The video does not explain why a company that is asking people from across the world to register and provide private information — and says citizens of 140 countries have done so — is not showing the face of its CEO.

    Meanwhile, a link at the Website Tester site is adding yet-another layer of mystery. Under a headline of “WebsiteTester.biz – Is it a Scam or Real Business,” the company is sending registrants and prospects to a purported news release posted on PRLog.org, a free news-release service.

    The news release is by an author who did not provide a name, but purported to have conducted an interview with DeBias. The news release author claimed that he or she had conducted “the first official interview” with DeBias.

    Why the author of the news release chose to remain anonymous was unclear. Why WebsiteTester would send traffic to a news release written by an anonymous author also was unclear.

    “We contacted the initiator, Alpha Market Research, Inc. (AMR), to find some answers,” the news release began.

    Although the news release used the word “We,” it did not define who “We” is — an individual, a company, a WebsiteTester affiliate, a company employee. The release included a link to yet-another anonymous release. The domain-registration data for the second anonymous release is unclear, meaning the ownership of the domain cannot be determined immediately.

    Meanwhile, the websites of both WebsiteTester.biz and Alpha Market Research are registered behind proxies. Separately, Alpha Market Research’s Twitter site shows 18,178 followers.

    Precisely what Website Tester and Alpha Market Research do remains unclear — weeks after the prelaunch hoopla began. The launch delay now apparently extends the hoopla.

  • BULLETIN: Ponzi Scheme Figure William Walters To Be Extradited From Argentina, FBI, Colorado AG Say; Another ‘Offshore’ Myth Exposed

    William Walters: Extradited from Argentina to face Ponzi charges in Colorado.

    BULLETIN: (UPDATED 9:32 P.M. EDT (U.S.A.) William L. Walters has been extradited to the United States from Argentina to face Ponzi scheme charges in Colorado, prosecutors announced.

    “This extradition is the culmination of years of work and cooperation between my office and the FBI,” said Colorado Attorney General John Suthers. “In this case, justice delayed will not result in justice being denied. We look forward to presenting our case against Mr. Walters and securing justice for his victims.”

    Walters, 45, fled the United States prior to being indicted in 2007. Interpol “flagged” his passport, and the FBI traced him to Argentina, prosecutors said.

    The Walters’ case exposes a common myth on HYIP and autosurf Ponzi boards that “offshore” locations insulate Ponzi schemes from prosecution and that the schemers themselves can avoid arrest by operating outside the United States or fleeing from the United States to a foreign country after a scheme is exposed.

    “Pursuant to the FBI’s Project Welcome Home, the Denver Division was able to work closely with the Colorado Attorney General’s Office to insure that William Walters was returned to Colorado for prosecution,” said James H. Davis, FBI special agent in charge. “This is yet another example of law enforcement cooperation in Colorado and our commitment to pursue fugitives from justice, even if they attempt to flee outside of the United States.”

    Walters is accused of operating a “day-trading” Ponzi scheme that gathered more than $23 million from investors in Colorado, California, Florida, Hawaii, Illinois, Massachusetts, Pennsylvania, Texas and Wyoming.

    He operated companies known as Samurai Capital and Mana Trading Inc. A court in Argentina approved the extradition to the United States.

    Read the Walters’ indictment.

    Read more about the FBI’s “Project Welcome Home.”

    Read about the U.S. Secret Service case against Vladislav Horohorin, who was arrested in France earlier this month after undercover agents infiltrated an online crime forum.

    Horohorin allegedly operated an overseas fraud scheme targeted at U.S. residents.

    Court records show that the Secret Service infiltrated the AdSurfDaily autosurf by employing undercover agents. Records also show that the agency employed undercover operatives in the investigation of the INetGlobal autosurf.

    In the INetGlobal case, records show that undercover agents attended an INetGlobal function in New York earlier this year. The Secret Service said one of its agents was introduced to INetGlobal by an ASD member.

    In the ASD case, the Secret Service said it believed that ASD President Andy Bowdoin was planning to flee the United States prior to the seizure of tens of millions of dollars in August 2008 — amid Ponzi allegations.

  • BULLETIN: Ponzi Suspect Kills Self, New York Newspaper Reports; Ashvin Zaveri Was Implicated In $35 Million Swindle

    A New York man implicated by the FBI and the IRS in a Ponzi scheme has killed himself, the Democrat and Chronicle of Rochester is reporting.

    It is at least the second Ponzi-related suicide in the United States in recent weeks. Florida Ponzi suspect Wayne McLeod, suspected of bilking federal employees, killed himself in Florida in June.

    In the New York case, Ashvin Zaveri, 71, of Honeoye Falls, N.Y., was indicted in December 2009 for mail fraud, wire fraud and money-laundering.

    Prosecutors said Zaveri defrauded investors in an oil-and-gas scam that gathered $35 million.

    Read the story in the Democrat and Chronicle.

  • Dennis Bolze, Tennessee Ponzi Schemer Who Fled After Fraud Was Exposed, Sentenced To 27 Years In Federal Prison

    Dennis Bolze, a fraudster who silently bolted from Tennessee during the same month Bernard Madoff provided a glimpse of how a shocked nation would come to view Ponzi schemers, has been sentenced to 327 months in federal prison.

    Bolze, 61, was arrested in Pennsylvania on March 12, 2009, about three months after news of Madoff’s Ponzi scheme broke and Bolze’s own scheme collapsed. Even as Bolze was fleeing his Ponzi after it was exposed in a bankruptcy proceeding, Florida Ponzi schemer Arthur Nadel also went missing. For days, America’s attention was riveted on the sudden reality of massive Ponzi schemes — and much of the world wondered how many other shoes would drop as crimes that had been hidden for years or even decades were exposed.

    Nadel and Bolze were among the earliest of the so-called “mini-Madoffs,” Ponzi schemers who orchestrated spectacular frauds that would dominate headlines for weeks were in not for the staggering size of Madoff’s $65 billion fraud. Nadel went missing from Sarasota Jan. 14, 2009, a little more than a month after Madoff’s scheme was exposed. He surrendered to the FBI in Tampa on Jan. 27, 2009.

    After his arrest in Pennsylvania, Bolze — once the toast of Gatlinburg, Tenn. — became reviled. His 16,000-sq.-ft.  mansion in the mountains and three-story tall Christmas tree became the symbols of wretched excess.

    Bolze positioned himself as a successful day trader, but he was really just a scam artist who took $21.5 million from clients and paid back $9.6 million in bogus “returns” to keep the scheme operating, prosecutors said.

    In reality, Bolze invested only $1.6 million and operated the scheme between April 2002 and December 2008. His dash from Tennessee coincided with the Madoff headlines.

    While jailed,  Bolze asked for an opportunity to recoup the money he had fleeced from victims. All he needed, he argued, was the Internet, a computerized program — and a little time.

    Senior citizens and people of faith were among Bolze’s victims, prosecutors said.

  • WRETCHED, TAWDRY AND CHEAP: AdSurfDaily Members Now Targeted In Pitches For An MLM 2X2 Cycler — One That Trades On Walmart’s Name While Affiliate Offers ‘Blessings’

    UPDATED 7:11 P.M. EDT (U.S.A.) When U.S. District Judge James Rosenbaum sentenced Ponzi schemer Trevor Cook to a quarter of a century in federal prison earlier this week, the judge used some powerful words to describe Cook’s colossal fraud.

    Rosenbaum described the scheme that bilked investors out of at least $158 million as “wretched, tawdry and cheap.” Some of the victims were rendered destitute.

    It’s easy to see why a federal judge would use such words. Not only did Cook steal by the tens of millions of dollars, he stole even after the SEC and the CFTC went to court last November to bring the scheme to a halt. Cook spent money that had been frozen by court order, thus thumbing his nose at both victims and the judicial system. He later failed to disclose the whereabouts of assets — this until he failed a lie-detector test.

    All of those acts — and the $190 million scheme itself — easily qualify as “wretched, tawdry and cheap.” One could argue rationally that even stronger adjectives could be applied to Cook’s behavior and still fall within the bounds of decorum.

    And this brings us to the subject of AdSurfDaily — specifically, what at least one member appears to be doing to recruit former ASD members and people interested in ASD into yet-another scheme.

    That’s been done before, of course. AdViewGlobal, itself a scheme that could be described fairly as “wretched, tawdry and cheap,” rose from ASD’s ashes to bilk anew.

    Along those lines, who could forget MegaLido? It was yet another autosurf that became popular in the aftermath of the domestic seizure of tens of millions of dollars in the ASD Ponzi case. One former ASD member described MegaLido as “fool proof.”

    It’s “OFFSHORE!!!” he exclaimed.

    Some ASD members also saddled up and starting promoting the Noobing autosurf, which targeted people with hearing impairments. There were plenty of HYIPs, too. These included Genius Funds, believed to have gathered up more than $400 million; Gold Nugget Invest, which promoted itself as a betting arbitrage and later implied in was in Forex; and CashTanker, which used an image of Jesus in its sales pitch.

    Look here to see a list of some of the “programs” promoted by ASD members. (Most of the programs, by the way, were promoted after the ASD seizure.)

    How To Irritate A Sleeping Dog

    At 9:05 p.m. yesterday, Maddy the Wonder Puppy — always and forever a wonder puppy in my mind, even though she’s two now — was going through her endearing presleep maneuvers under my desk. This is one of those things that make me feel good about the world.

    As Maddy was going through her positioning dance and stretching and yawning routine, an email popped into my box. It proved to be one of those things that make me feel bad about the world.

    “input on opportunity” — all lowercase — was the subject line of the email. So, I knew right away that I was about to get a sales pitch — and I suspected before opening it that was going to a disingenuous pitch at that.

    “I used to belong to ASD,” the email began. “Need your input on UniqueBuyingClub.”

    OK. Here’s what’s important so far: The pitch was completely unsolicited and came through the Blog’s support address; it used ASD’s name (sixth word) to catch my attention; the subject line suggested I was being asked for “input,” as though the sender saw something fishy on the Internet and wanted to get my take on it; and the pitch proved to be for MPB Today, not an entity called “UniqueBuyingClub.”

    Let’s proceed. It gets worse.

    The first affiliate link appeared 12 words into the pitch, meaning I wasn’t really being solicited for input — unless it was input after the fact — because the sender already had registered for MPB Today. (Note: I checked the email address of the sender against the affiliate email addresses on the MPBToday page. They matched, meaning it is highly likely that the sender was an affiliate who was spamming me.)

    There was no way to unsubscribe from the “list” I now found myself on. (BTW, I’m wondering if the sender knows if Warren Buffet and Donald Trump really have endorsed MPB Today, a business that bizarrely mixes the home delivery of groceries with a 2×2 cycler.  Their pictures are right at the top of the sales page, which implies an endorsement. Perhaps MPB Today missed the news about the FTC action last week in a case that alleges an Internet Marketing company that hawks Acai berry products tried to make people believe Oprah and Rachel Ray were on board.)

    But it got worse from there. Not only was the “UniqueBuyingClub” angle confusing, the link asked me to visit a site called WeCreateRiches. Then, a second link asked me to visit the MPB Today site. We are only 14 words into the pitch at this point.

    Let’s take another brief pause. The import of what’s happening here is that a former ASD member who perhaps got bilked in a $100 million MLM and securities scheme that promised riches now is urging me to visit a website called WeCreateRiches to sign up for a company that uses a home-delivered groceries business to promote an MLM scheme that uses a 2×2 matrix cycler. The U.S. Secret Service, which is investigating ASD, also has experience investigating cyclers.

    Prior to receiving the email, I knew about MPB Today, which Rod Cook had written about. I just haven’t gotten around to writing about it yet, mostly because there is only so much time in the day. In some ways, I almost hate to write about it because writing about it potentially means that the MLM Stepfords will come of the woodwork to “defend” the company. It also potentially means the Blog will start getting spam from people angry that I dared mention the MPB Today name on a blog about scams. (Spam, in this context, means people who “defend” the company not by leaving a comment that actually defends the company, but by submitting their affiliate link on the theory that they might be able to cherry-pick a new downline member from the Blog’s readership ranks.)

    In any event, the email went on to inform me that “Walmart is loving the results!!” generated by MPB Today.

    Oh, really? I do hope the sender leaves a comment in this thread to substantiate the Walmart claim. It will spare me some work.

    The email also wished me “Blessings and hope through your connections,” while urging me to “Please get back to me and let us help many ASD members who lost money and hope.”

    Well, email sender, consider this post “getting back” to you.

    It is my view that your email — and I haven’t gotten into the most revolting part yet — is “wretched, tawdry and cheap.” Like Judge Rosenbaum, I feel that way about Trevor Cook’s actions — as I do the actions of ASD’s Andy Bowdoin, who also traded on religion.

    Take your “blessings” and “hope” elsewhere. I think the idea of using religion and identifying yourself as an ASD member to pitch other ASD members on MPB Today is “wretched, tawdry and cheap.”

    Meanwhile, I think that sending a reporter who covers fraud schemes an email titled “input on opportunity” also is “wretched, tawdry and cheap.”

    It makes me believe you’d sell anything for a commission and say anything to gain a commission. My thoughts on this subject were further reinforced this morning when I learned you sent a largely identical email to another forum.

    “Blessings,” the email to the other forum concluded.

    It made me want to retch. Is this what you believe Internet Marketing to be?

    OK. Here’s the part of the pitch that irked me most (emphasis added):

    “Just go online and order. BUT if you introduce club to just TWO and help those two introduce to two that completes ONE cycle for you. YOU – plus those six, Only qualification to be part of this is to introduce to TWO , but you may choose to get crazy and promote to many to inc. cycling. When you finish cycle one – go to backoffice and order grocery.goods BUT now company pays all shipping OR replace that voucher for a $200 WalmartGiftCard to go into the store and PLUS company sends you a $300 check to spend whereever. You NEVER add another dime. You may cycle as often as you please. People here in Orlando are cycling two to seven times in a week. There is so much excitment because people are hurting and now they can go get FREE groceries/goods and FREE gas at SamClub.”

    Yep. Florida. Again.

    Florida was ASD’s home. Florida means retirees — and ASD members again are being targeted in pitches to send money to MPB Today, whose headquarters also happens to be in Florida.

    Here is who runs MPB Today.

    And here’s hoping that no ASD member will submit to the email pitch of the affiliate who contacted the PP Blog and another forum that covers ASD-related issues.

    “Blessings,” the emailer wrote — in pitches to both places — while also claiming her “girlfriend did [a] background check” and that “all is good” in the land of 2×2 cyclers targeted at victims of previous fraud schemes and prospects from a state favored by retirees who saved to get there.

    Florida has one of the highest foreclosure rates in the United States. Just three seconds — three seconds — into the video pitch for MPB Today, the word “Foreclosure” appears on the screen. It appears again at the 11-second mark.

    In MPB Today’s world, the apparent remedy for the foreclosure problem is to get Florida seniors and other struggling residents to join a 2×2 cycler.

    “Wretched, tawdry and cheap” — for sure.

  • Now, A ‘B-Movie’ Ponzi Scheme: Producer Mahmoud Karkehabadi Charged With 89 Felonies, Faces $11 Million Bail, California AG Says

    EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme — as opposed to shrimp — here’s one for your list.

    UPDATED AT 12:33 P.M. June 6, 2013. See Comments thread below. Mahmoud Karkehabadi has been sentenced to 27 years in state prison . . .

    A producer of “B-movies” such as “Confessions of a Pit Fighter” scammed investors in a $9 million Ponzi scheme by accepting “movie production loans” and promising returns of up to 35 percent no matter how the films performed, California Attorney General Jerry Brown said.

    Mahmoud Karkehabadi, also known as Mike Karkeh, was charged with 89 felonies, including grand theft and securities fraud. Two alleged accomplices who helped bring money to Karkehabadi’s film company by selling unregistered securities also were charged.

    Karkehabadi, 53, listed an address in the Orange County, Calif., community of Laguna Niguel.

    Before producing a series of four movie flops, Karkehabadi was charged with ripping off customers in a credit-card venture known as First National Credit, according to records. In the 2001 credit-card scheme, customers were told they’d receive a “gold card” with a $15,000 limit and encouraged to pay up to $43 for “rush processing and delivery.”

    The card proved to be a card that could be used only with a “catalog” business. Authorities secured a $5 million judgment in the case, and Karkehabadi declared bankruptcy, according to records.

    By 2005, he was making B-movies, and never told investors about the huge judgment from the credit-card case or the bankruptcy, Brown’s office said.

    “This con artist sold securities under the guise of a loan to fool investors and try to avoid following the rules,” Brown said. “He ran a cold and calculated scam, making promises he never intended to keep and using the funds of new victims to pay off the earlier ones.”

    Karkehabadi’s bail was set at $11 million.

    His alleged accomplices in the movie scheme were identified as Timothy Cho, also known as Hin-Kong Cho, 54, of Newport Beach, Calif., and Deanna Salazar, 53, of Yucca Valley, Calif. Salazar has agreed to surrender, but Cho “remains at large,” Brown’s office said.

    At least 150 investors were affected by the scheme. Records show that Karkehabadi’s movie company — Alliance Group Entertainment — gathered more than $11 million. The movies generated only $535,000 in revenue, Brown’s office said.

    “Karkehabadi and his agents told investors they would get their money back within a year, regardless of a project’s success, with returns of 18 to 35 percent ,” Brown’s office said. “When the year was up, Karkehabadi convinced investors to roll their ‘loans’ over into the latest movie project or agree to extensions on the date for repayment.”

    Among the movie flops was a film titled “Hotel California,” Brown’s office said.

  • Pyramid Scheme Operated From Building Known As ‘One Pyramid Center’; Pennsylvania AG Says; Universities, Nonprofits Swindled In Alleged Caper With Offshore Tentacles

    Brian J. Murray

    Four Pennsylvania residents have been charged in an alleged pyramid-scheme caper that gathered more than $7.5 million and bilked universities, nonprofits, local governments and other clients, investigators said.

    Charged in the case were Brian James Murray, 67, of Scranton; Murray’s wife, Diane D. Murray, 66; Christine M. Oliver-Shean, 51, of Scranton; and Oliver-Shean’s husband, Timothy G. Shean, 53.

    Brian Murray was the chief executive officer of  the Murray Insurance Agency in Scranton. Christine Oliver-Shean was the president of the company, which is now bankrupt, authorities said.

    The former executives are charged with criminal conspiracy, money laundering, theft, insurance fraud, forgery, participating in a corrupt organization, tampering with evidence, obstructing law enforcement and various tax crimes. Among the allegations was that the executives used a business registered in the British Virgin Islands to conceal more than $10 million in income and avoid paying taxes.

    Diane Murray, meanwhile, was accused of theft and conspiracy in an alleged scheme to divert money from another business to the Murray Insurance Agency. She also is charged with filing false tax returns.

    Timothy Shean was accused of conspiracy, tampering with physical evidence and obstructing law enforcement in an alleged bid to conceal evidence.

    In what may go down in the law-enforcement community as a moment of almost impossible symmetry, Pennsylvania Attorney General Tom Corbett got to deliver the type of line that only can be delivered when the fraud-fighting universe aligns itself perfectly.

    Indeed, Corbett said, “It is interesting to note that the building in Scranton where Murray’s insurance business was headquartered is known as ‘One Pyramid Center,’ because this was a massive illegal pyramid.”

    The pyramid absorbed “millions of dollars from new clients to conceal past thefts and keep the scheme in operation,” Corbett said.

    Also charged criminally in the case were three companies: Murray Insurance Agency and Mallow Holding Co. of Scranton, and Gaffer Insurance Co. Ltd. of Tortola, British Virgin Islands.

    The case demonstrates that underlings and relatives who participate in a fraud scheme and/or help to conceal evidence can be charged with serious crimes. Corbett said the probe sprouted from an earlier investigation in which Brian Murray was accused of stealing more than $1.3 million in customers’ payments for insurance premiums.

    “The losses from large-scale fraud cases such as this one impact everyone who purchases an insurance policy in Pennsylvania, who will face higher premiums and increased costs in the future,” Corbett said.

    In essence, Brain Murray was accused of collecting money for insurance premiums — but not forwarding the money to insurers. If a client made a claim, the claim was paid from money sent in by other clients. The scheme collapsed in September 2009.

    Listed among the victims were the University of Scranton, Marywood University, Loyola College of Maryland, St. Joseph’s University, Moses-Taylor Hospital, the Borough of Phoenixville, and the Lackawanna County Multi-Purpose Stadium.

    Other nonprofits and unsuspecting businesses also were fleeced in the scam, investigators said.

  • BULLETIN: Trevor Cook Sentenced To 25 Years In Federal Prison; Victims Lost At Least $158 Million In International Forex Ponzi Scheme That Traded On Religion

    Trevor Cook

    BULLETIN: Ponzi schemer Trevor Cook has been sentenced to 25 years in federal prison for his role in an international Forex Ponzi scheme that gathered more than $190 million and fleeced victims out of more than $158 million.

    In ordering the prison term, U.S. District Judge James Rosenbaum sided with the prosecution’s recommendation of a quarter of a century. It is believed to be the longest prison term ever imposed in a Minnesota financial-fraud case in which the defendant pleaded guilty.

    “Such a sentence fairly, adequately, and justly punishes the defendant for his offense, reflecting the seriousness of the offense, his willingness to plead guilty and provide information to law enforcement, and the need to protect the public,” prosecutors said last week in a sentencing recommendation to Rosenbaum.

    “Over the course of a few years, the defendant executed an investment fraud, victimizing approximately 923 victims and defrauding them of over $158 million,” prosecutors said. “As is all too common, the defendant often used victims’ religious beliefs as a means of enticing them to give him their money.”

    Cook, 38, is not out of legal harm’s way — even with the sentence of 25 years. Prosecutors disclosed last week that he has signed a waiver that would subject him to further punishment if the ongoing investigation shows he has “somehow secreted undisclosed assets.”

    Victims have expressed concerns that Cook could have stashed money from the scheme anywhere on earth. Cook failed a lie-detector last month about the whereabouts of assets.

    FBI and IRS agents later found more than $400,000 in undisclosed assets under the control of Graham Cook, Trevor Cook’s brother.

    Despite Cook’s lack of disclosure, prosecutors contended that it made no sense to delay Cook’s sentencing any longer as the asset search by the government and R.J. Zayed, the court-appointed receiver in a civil case filed against Cook and former Christian radio host Pat Kiley last year by the SEC and the CFTC, continued.

    Cook had been scheduled to be sentenced last month. Kiley, who called his radio listeners “truth seekers,” has not been charged criminally in the case.

    “The government has worked closely with the court-appointed receiver to assist its efforts in finding and identifying assets,” prosecutors said of Cook. “The government and the receiver now agree that any additional time prior to sentencing will not result in any additional information or assistance to the receiver’s efforts.”

    It is possible that Cook could prove to be a valuable source of information for the government — in the same sense that disbarred attorney, convicted racketeer and Ponzi schemer Scott Rothstein has become an information source.

    Rothstein, who presided over a $1.2 billion Ponzi scheme in Florida, was sentenced to 50 years in federal prison earlier this year. It is known that Rothstein has provided information helpful to the government.

    Cook “has been repeatedly debriefed by law enforcement in an effort to identify assets and to provide information regarding other individuals,” prosecutors said. “He has done so. The information has been of assistance to law enforcement in its ongoing investigation.”

    Ponzi schemes are toxic — and frequently are incredibly elaborate. Court documents in case after case show that the schemes frequently feature schemes within schemes and elaborate money-laundering networks. Criminals often go to fantastic lengths to disguise the conduits of the schemes, using shell companies and multiple bank accounts to funnel money and make the schemes difficult to reverse-engineer.

    FBI Director Robert Mueller has warned Congress at least twice this year about a “shadow” banking system criminals employ and an increasing reliance on “shell corporations” to commit crimes and hide from investigators.

    Cook’s scheme featured companies with confusingly similar names.

    Records show that Cook had a tie to a company the AdViewGlobal (AVG) autosurf claimed to be its facilitator of offshore wires.

    KINGZ Capital Management, AVG’s purported facilitator, denied any affiliation with AVG, which has close ties to the AdSurfDaily autosurf. ASD is implicated in a Ponzi scheme alleged to involve tens of millions of dollars.

    AVG collapsed in June 2009, after running a virtually nonstop promotion that advertised matching bonuses of 200 percent for both recruits and their sponsors.

    The National Futures Association said last year that Cook was managing money for KINGZ. AVG made the claim KINGZ was its wire facilitator on May 4, 2008 — the same day the Obama administration announced a crackdown on offshore fraud.