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  • Peter C. Son Sentenced To 15 Years In Forex Ponzi Scheme That Targeted Korean-Americans; Courtroom Spectator Heckled Scammer, Declaring He Deserved Death For Crime

    A California man accused of bilking Korean-Americans in an $80 million Forex Ponzi scheme was sentenced yesterday to 15 years in federal prison.

    Prior to the sentencing of Peter C. Son of Danville, a courtroom spectator yelled in Korean that “You’ve got to kill that bastard!” according to the San Francisco Chronicle.

    In June 2009, the SEC accused Son, 38, and his business partner, Jin K. Chung, of Los Altos, of targeting Korean-Americans in a scheme in which “funds were not traded in the forex market as claimed.”

    Instead, the SEC said, the funds were used to pay cash “returns” to certain investors in “Ponzi-like fashion” and used to make mortgage payments on Son’s multimillion-dollar home.

    “Supposed” Forex returns were “faked,” and investors were given “monthly account statements showing fictitious returns,” the SEC said.

    Some of the funds were used to pay a $3,000 monthly salary to Son’s wife, who “did no work,” the SEC said. As the scheme was collapsing in 2008, funds were transferred “overseas,” the agency charged.

    Investors were invited to the scheme’s offices purportedly to “view work stations with multiple trading monitors, ostensibly set up to allow . . .  employees to monitor market conditions relevant to forex trading,” the SEC said.

    But representations of Forex success were “false,” and the scheme “conducted little or no forex trading,” the SEC charged.

    The “supposed forex investment program was a fabrication used by Son and Chung to attract investors,” the SEC charged.

    Chung has not been not charged criminally.

    The scheme operated through a company known as SNC Asset Management Inc. (SNCA) of Pleasanton, Calif. It also operated through a company in New York that had a similar name — SNC Investments Inc. (SNCI) — investigators said.

    About 500 investors were defrauded, the SEC said.

    It is not unusual for companies to use multiple names — including confusingly similar names — to pull off a fraud scheme. Nor is it unusual for fraudulent companies to claim they have a local, regional, national or international footprint to disarm skeptical investors.

    Son’s scheme, fueled by advertisements and word-of-mouth, pulled in investors from at least five U.S. states, South Korea and Taiwan, the SEC said. His home in a gated community was valued at $2.6 million, and Son used investors’ money to pay “country club dues,” the agency charged.

    Part of the scheme involved an advertisement that had been altered to appear as through it were an article in Business Week magazine.

    It is common in fraud schemes for operators to imply their product or service is endorsed by famous people or companies. In 2009, members of the failed AdViewGlobal autosurf used the logo of Forbes magazine in a sales promo.

    Separately, members of the alleged AdSurfDaily autosurf Ponzi scheme claimed the program’s operator, Andy Bowdoin, received a special award from the White House for business acumen.

    Read the Son story in the San Francisco Chronicle.

  • Kautilya Nandan Pruthi Charged Criminally In $173 Million Ponzi Case After Probe By London Police

    Last month, a  court in the United Kingdom ordered Kautilya Nandan Pruthi to pay more than $135 million to the Financial Services Authority (FSA) for his role in an alleged Ponzi scheme that gathered the U.S. equivalent of $173 million. The FSA is the British equivalent of the U.S. Securities and Exchange Commission.

    Two others accused civilly of unlawfully accepting deposits were ordered to pay more than $37.3 million.

    Now Pruthi has been charged criminally in the case, which is believed to the Britain’s largest Ponzi scheme. The charges were announced by the Crown Prosecution Service Central Fraud Group after an investigation by the London Police Department.

    Pruthi has been charged with participating in a fraudulent business contrary to section 9 of the Fraud Act 2006; 22 counts of fraud contrary to section 1 of the Fraud Act 2006; five counts of obtaining a money transfer by deception contrary to section 15A of the Theft Act 1968; unauthorised regulated activity contrary to sections 19 and 23 of the Financial Services and Markets Act 2000; and concealing, disguising, converting, transferring and removing criminal property contrary to section 327 and 334 of the Proceeds of Crime Act 2002.

    The prosecution labeled the charges “serious offences,” saying they “relate to Mr Pruthi’s activities between 25 August 2005 and 10 June 2009.”

    FSA said last month that it intervened last year to stop the scheme from mushrooming further, adding that victims are not apt to recover much despite the judgment against Pruthi and the others. London police said some of the victims did not want to believe they had been defrauded.

    The Crown Prosecution Service prosecutes criminal cases investigated by police in England and Wales.

  • Paul Greenwood To Forfeit $331 Million; Pleads Guilty In Massive Fraud Scheme That Put Public Pension Funds At Risk While He Collected Teddy Bears

    Perhaps he’ll be remembered best for his collection of Steiff teddy bears paid for by investors, but there now are other reasons to remember Paul Greenwood.

    Greenwood has pleaded guilty to swindling institutional investors, universities and pension funds in a Ponzi-like scheme. He is believed to be cooperating with prosecutors in the ongoing probe of WG Trading Co. — and has agreed to forfeit “at least” $331 million.

    Prosecutors called the sum “the amount of funds that Greenwood and others personally misappropriated and diverted . . .” Greenwood, who potentially faces decades in prison, pleaded guilty to a total of six charges: conspiracy, securities fraud, commodities fraud, wire fraud (two counts), and money-laundering.

    His business partner, Stephen Walsh, also is charged in the criminal case, which was brought by the FBI. The SEC and the CFTC filed civil actions.

    The CFTC described the case as a “$1.3 billion investment scam.”

    “Greenwood and others caused companies that he ran to divert approximately $80 million to Greenwood for his benefit,” the agency said.

    Greenwood, who claimed to own 1,350 collectible teddy bears, is the former town supervisor of North Salem, N.Y.  The CFTC said he and Walsh “misappropriated at least $553 million from commodity pool participants.”

    For its part, the SEC called the scheme “brazen.”

    “[S]ince at least 1996, Greenwood and Walsh promised investors that their money would be invested in a stock index arbitrage strategy,” the SEC said. “Instead, Greenwood and Walsh essentially treated their clients’ investments as their personal piggy bank to purchase multi-million dollar homes, a horse farm and horses, luxury cars, and rare collectibles such as Steiff teddy bears.”

    Federal prosecutors said Greenwood and others told investors they employed a strategy known as “equity index arbitrage,” defining it as “conservative trading strategy that had outperformed the results of the S&P 500 Index for more than 10 years.”

  • CFTC: Convicted Felon Was Running Texas-Based Forex Firm; Robert Mihailovich Sr. And Robert Mihailovich Jr. Charged In Case That Alleges Pattern Of Marketing, Webinar Deception

    Investors turned over more than $30 million to a felon who hid his conviction and even managed to persuade clients to give him power of attorney, the CFTC said.

    Robert Mihailovich Sr. was released from federal prison on June 27, 2007, after serving 21 months for mail fraud, the CFTC said. On Oct. 14, 2008 — while on court-supervised probation — Mihailovich Sr. formed a Texas-based company known as Growth Capital Management (GCM) with his son and namesake, Robert Mihailovich Jr., listed as president.

    Now both father and son are charged civilly with misleading investors and regulatory agencies about GCM’s business practices.

    Mihailovich Jr. is accused of making false statements in regulatory filings and not disclosing that his father was a principal in the firm. Meanwhile, Mihailovich Sr. is charged with fraudulent solicitation.

    Together the father, son and company “fraudulently solicited and accepted more than $30 million from approximately 93 customers,” the CFTC said. Both men reside in Rockwall, Texas.

    Mihailovich Sr. did not disclose his felony conviction to investors, the CFTC charged.

    “There was no disclosure in GCM’s filings concerning Mihailovich, Sr. and/or his involvement with GCM,” CFTC alleged.

    But Mihailovich Sr. “directed the day-to-day business of GCM” and “solicited most, if not all, managed account customers to trade commodity futures and forex,” CFTC charged.

    Mihailovich Sr. used claims about an “electronic trading system” to woo customers on the Internet, the CFTC said.

    Webinars and sales presentations were conducted on Saturdays.

    “Mihailovich, Sr. presented the GCM electronic trading system by employing graphs that purportedly showed trading in live commodity futures accounts and forex accounts,” the CFTC charged. “Mihailovich, Sr. claimed that his GCM electronic trading system virtually guaranteed substantial profits and minimized the risk of loss trading commodity futures and forex. His recurring theme and reassurance was that trading using GCM’s electronic trading system was protected at all times from loss.”

    Actual trading accounts managed and controlled by Mihailovich Sr., however, realized net losses, CFTC said.

    One GCM customer told investigators that Mihailovich Sr. also used a “mass sub-algorithm” to make manual trades and gain extra profits.

    Numerous misrepresentations were made to clients, including a claim that a $1 million investment would result in a $1 million profit and that “it does not matter what the markets do during the trading day for the computerized trading software to make an account profitable,” the CFTC charged.

    Some customers were falsely told that GCM had not closed a trade at a loss since 2000 and that Mihailovich Sr. “had over twenty years of continuous trading experience,” the CFTC charged.

    “Defendants’ marketing materials stated that their software ‘has never closed a managed position at a loss. Not on Forex . . . Not on Bond positions . . . Not on the S&P . . . Or even on the many other types — commodities, stocks and indexes — it has managed over the years,’” CFTC alleged.

    Meanwhile, the agency said Mihailovich Sr. tried to have his felony conviction overturned by claiming ineffective assistance of counsel, “but that petition was denied.”

    Despite claims of safety and assurances that the firm did not lose clients’ money, “approximately half of Defendants GCM’s and Mihailovich, Sr.’s customers lost money from their investments, and overall, their trading resulted in net losses of approximately $2.2 million in customer accounts,” the CFTC alleged.

    “From June 2008 through June 2009, GCM’s and Mihailovich, Sr.’s trading of forex on behalf of customers resulted in overall realized losses of approximately $711,000,” the agency said. GCM and Mihailovich, Sr. received approximately $241,000 in performance and management fees related to this trading.”

    “Between September 2008 and through November 2009, GCM’s and Mihailovich, Sr.’s trading of S&P e-mini futures resulted in realized net losses totaling approximately $1.5 million,” the CFTC said. “GCM and Mihailovich, Sr. received approximately $147,000 in performance and management fees related to this trading.”

    “Despite these mounting losses, GCM and Mihailovich, Sr. continued to solicit new customers by highlighting the profit potential of investing with GCM using GCM’s proprietary trading software, without disclosing the fact that many of their customers lost most, if not all, of their investment,” the CFTC charged.

    Read the CFTC complaint.

  • REPORT: Pyramid Schemes Plaguing China; One Anti-Pyramid Activist Stabbed While Trying To Assist Victim, Another Bitten Repeatedly; Cult-Like Behavior In Spotlight

    An anti-pyramid scheme activist in China was stabbed by both the perpetrator of the scheme and the victim, according to the state-run Xinhua News Agency. The wounds were not fatal, but demonstrate the dangers that confront citizens actively engaged in efforts to help an estimated 10 million Chinese caught up in schemes that use promises of riches and techniques described by independent media as brainwashing to maintain control over investors.

    Separately, an activist with the same group has scars on his arm after being bitten by victims, the news agency reported.

    Quoting government statistics, the news agency reported that the State Administration of Industry and Commerce broke up 10,980 pyramid schemes between 2006 and September 2009.

    In early July, the government made 130 arrests and broke up 29 pyramid schemes in Guangxi Zhuang, an autonomous region that shares a border with Vietnam.  In the capital city of Nanning, 1,306 participants were found in the apartments of pyramid-scheme organizers, the news agency reported.

    A private group known as the China Anti-pyramid Selling Association began its efforts to assist victims in 2006, according to the news agency. A cartoon that accompanies the agency’s story on China’s pyramid plague depicts a man tugging mightily on a rope to help victims scale a cliff to flee from a pyramid schemer holding up a box of worthless products in a valley of pending misery below. A woman is assisting the man, pulling with all her might to help a victim escape the huckster. One woman is clinging to a fellow victim’s shirt as she, too, seeks to flee.

    The cartoon depicts the valley pitchman sanding in front of a blackboard. One man enthralled by the pitchman’s virtuoso performance is holding a wad of cash and reaching toward both the pitchman and the sky. Meanwhile, a woman who may be a doubter appears to be trying to keep her purse secure as she processes information and strains to get a closer look at details. In the deep background of the cartoon, one of the pitchfest attendees is shown with a dumbfounded look on his face — as though he is trying to process too much information from conflicting images in the incongruous scene.

    Experts say pyramid schemes are all about incongruity. Prospects are separated from their money by practiced hucksters who employ razzle-dazzle, groupthink, mathematical sleight-of-hand, envy, jealousy, appeals to faith and greed — and anything that “works” to keep cash flowing to the schemes.

    Also in the news agency’s story today is a photo of police breaking up a pyramid scheme in Anhui province last month.

    Read today’s story by the Xinhua News Agency. (The powerful cartoon is on the third page of the story.)

    Read a September 2009 story in USA Today about pyramid schemes in China. The newspaper reported that many of the schemes have morphed into “bizarre, cult-like underworlds” that have “bankrupted countless young Chinese of modest means.”

    View an editorial and video package from CNN that shows police in China dealing with pyramid schemers by exposing them to public humiliation. The CNN package was produced in November 2009.

  • BULLETIN: Receiver Says Trevor Cook’s Wife Received $103,000 Payout By Wire Day After SEC Came To Minneapolis For ‘Surprise’ Investigation

    Gina Cook, the wife of acknowledged Ponzi schemer Trevor Cook, received a wire transfer of $103,437 on June 23, 2009, one day after six attorneys and accountants from the SEC began a “surprise” investigation at the scheme’s Minneapolis headquarters and served Trevor Cook with a subpoena, according to the court-appointed receiver in the case.

    Receiver R.J. Zayed now has filed a clawback action against Gina Cook, saying the payment was a preferential transfer from the proceeds of her husband’s international Ponzi scheme. Gina Cook is one of 23 parties named in clawback petitions in recent days.

    All in all, Zayed is seeking to claw back $112,410 from Gina Cook, saying she also received a preferential transfer of $8,973 on Feb. 23, 2009 — after Trevor Cook knew that Swiss authorities were investigating one of his firms and were in the process of shuttering it.

    “[Gina Cook] received payments preferentially over hundreds of other investors who were defrauded by Trevor Cook and unable to withdraw the money they had invested in the Trading Program,” Zayed said.

    Gina Cook invested $55,575.52 in her husband’s program, and received back her principal, plus a phantom profit of $56,834.48, according to an exhibit in the clawback action.

    She has not been accused of wrongdoing.

    “The doctrine of unjust enrichment and the principles of law and equity require that the $112,410.00 received by [Gina Cook] on or after February 23, 2009 be returned to the Receiver for equitable distribution to all defrauded investors and other creditors,” Zayed said.

    Any preferential retention of money from the scheme by Gina Cook “violates fundamental principles of justice, equity, and good conscience,” Zayed said.

    Read the clawback petition.

  • Beyond Diamonds Investments Inc., Darial Chatman Subjects Of ‘Cease And Desist’ Order In South Carolina; State Says Firm Was Selling Unregistered Securities And Claiming To Be ‘SEC Compliant’

    UPDATED 12:52 P.M. EDT (USA) A South Carolina man previously ordered by Pennsylvania to stop selling unregistered securities for a real-estate business now has been ordered by South Carolina to stop selling unregistered securities for yet-another business, authorities said.

    Darial Chatman, also known as Darrell Chatman and Darrell Chapman, was ordered by the Pennsylvania Securities Commission in May 2009 to halt the selling of securities for his business, Dream Builders of South Carolina LLC. He also was issued a cease-and-desist order in South Carolina for the same company, according to records.

    Now the office of South Carolina Attorney General Henry McMaster has ordered Chatman to stop selling unregistered securities for a company known as Beyond Diamonds Investments Inc. (BDI), amid allegations it “advertised investment opportunities earning 30% annually” and made statements that were “materially misleading or false.”

    South Carolina authorities said they believed BDI was not registered to do business in any state, but had placed postcards in “newspaper boxes at some residences in the area of Columbia” and mailed postcards to other prospects.

    Among the assertions on the postcard was that BDI was “SEC Compliant.” The company claimed it “Will Financially Out Perform (sic) Your Current Brokerage or Investment Firm,” authorities said, noting that BDI’s postcard advertised an “Account Minimum” of $5,000 and claimed to charge no fees.

    BDI operates a website filled with grammar, spelling and usage errors to recruit investors, South Carolina investigators said. They added that the company claims not to divulge its method of making money.

    “We all know there are hundreds of other ways to make money outside of stocks, mutual funds, cd’s ect ect (sic),” the state quoted the firm as saying. “We have the experience to make you money using all those other ways. Sorry, we do not discuss our methods.”

    Among the other assertions:

    • “Our principle (sic) has over 15 years experience in aggressive investing in high risk projects.”
    • “[O]ur principle (sic) has fifteen years experience in this field and has earned millions of dollars for people just like you[.]”
    • “We can guarantee that you will not lose money working with us.”
    • “[W]e are … still in the process of getting proper compliance with the state. However, we can still get your account set-up and start working for you.”
    • “We are also involved with the Securities Industry Association in the continuing enhancement and standardization of industry practices.”

    But McMaster’s office said it did not believe BDI was a member of the Securities Industry Association, a trade group based in Alexandria, Va.

    On July 12, according to investigators, a person identifying himself as Chatman replied to a message left at the phone number provided on BDI’s postcard.

    “Chatman stated that the investments in question involved organizing and capitalizing concerts by ‘big’ acts in South Carolina, and he specifically cited a concert he claimed to have organized in Florence, South Carolina, with John Michael Montgomery as the headline act,” South Carolina authorities said. “Chatman stated he made only $6,000 on that concert at one dollar per ticket.”

    Investigators said they believed the concert Chatman referenced sold fewer than 700 tickets and that “Chatman continues to owe approximately $6,000 in expenses to the Florence Civic Center.”

    Moreover, authorities said, the concert was promoted as a fundraiser for a charity known as Donate A Blessing Foundation Inc. The charity uses the same address as BDI, and Chatman is listed as its chief executive officer.

    BDI also promotes a purported “scholarship” program on its website, which uses a tag line of, “If it makes since (sic) to us, it makes money for you.”

    Read the South Carolina cease-and-desist order against BDI and Chatman. The order was brought by the Securities Division of McMaster’s office.

  • SEC: ‘Offshore Does Not Mean Off-Limits’; Agency Charges Famous U.S. Firm With Violating Foreign Corrupt Practices Act In Alleged Bribery Scheme

    Cheryl Scarboro, SEC.
    Cheryl J. Scarboro, SEC

    BULLETIN: The Securities and Exchange Commission has charged General Electric Co. and two foreign subsidiaries in an alleged kickback scheme with the Iraq government “to win contracts to supply medical equipment and water purification equipment.”

    Robert Khuzami, director of the SEC’s Division of Enforcement, did not mince words when announcing the charges and a settlement in the case.

    “Bribes and kickbacks are bad business, period,” said Khuzami. “This case affirms that law enforcement is active across the globe — offshore does not mean off-limits.”

    GE, which neither admitted nor denied the allegations, agreed to pay $23.4 million to settle the case. The SEC said GE cooperated in the probe, which crossed into Europe and the Middle East. The United Nations assisted the SEC and the U.S. Department of Justice in the probe.

    “GE failed to maintain adequate internal controls to detect and prevent these illicit payments by its two subsidiaries to win Oil for Food contracts, and it failed to properly record the true nature of the payments in its accounting records,” said Cheryl J. Scarboro, chief of the SEC’s Foreign Corrupt Practices Act Unit.

    For its part, GE said the conduct “did not meet our standards, and we believe that it is in the best interests of GE and its shareholders to resolve this matter now, without admitting or denying the allegations, and put the matter behind us.”

    “GE is committed to the highest standards of conduct in all transactions in all of the jurisdictions where we do business throughout the world,” the company said.

    “In this case, the SEC has identified 18 contracts under the Oil-for-Food Program that it alleges were not accounted for or controlled properly. Fourteen of these transactions involve businesses that were not owned by GE at the time of the transactions,” the company said.  “The SEC alleges that, in acquiring these companies, GE acquired their liabilities as well as their assets.  The other four transactions relate to GE Healthcare units in Europe.  These units declined to make cash payments to the Iraqi Ministry of Health, but they acquiesced when their agent offered instead to make in-kind payments of computer equipment, medical supplies, and services to the Iraqi Health Ministry, and then failed to reflect the transactions accurately in their books and records.”

    Read the SEC civil complaint.

    The case against GE and the subsequent settlement may be seen as a blow to other types of business pursuits that fall under the SEC’s purview. Ventures such as autosurfs and HYIPs  routinely claim that “offshore” locations shelter them from U.S. law enforcement, and commission-based shills and hucksters use the claim to recruit investors.

    GE is an iconic company that traces its roots to 1890, when inventor Thomas Alva Edison founded Edison General Electric Co.

  • INetGlobal Loses Court Appeal; Judge Says Magistrate Judge’s Ruling On Treatment Of Witnesses Was Correct

    Steve Renner

    INetGlobal, a Minneapolis-based autosurf firm under investigation by the U.S. Secret Service and the IRS, has lost an appeal.

    On May 28, U.S. Magistrate Judge Franklin Noel issued an order that permitted investigators to make contact with witnesses in the case under certain conditions.

    Paul Engh, an attorney who said he represented INetGlobal employees, filed an appeal, saying the Noel was misinterpreting the law and that INetGlobal employees are entitled to protection from “isolated and surprise contact” by the government.

    U.S. District Judge Paul A. Magnuson now has affirmed Noel’s ruling, saying the magistrate had applied the law correctly.

    “Because Magistrate Judge Noel’s May 28, 2010, Order is neither clearly erroneous nor contrary to law, the Court affirms the Order,” Magnuson ruled.

    Noel’s ruling permitted the government to continue to contact both former and current INetGlobal employees as the probe into its business practices continues.

    “Before interviewing current and former employees of Inter-Mark and iNetGlobal, law enforcement shall first ask each individual if he or she is represented by an attorney,” Noel wrote in the order.

    “If the individual responds that he or she is not represented by counsel, the interview may proceed,” Noel continued. “If, however, the individual indicates that he or she is represented by an attorney, law enforcement shall ask that individual for the name of his or her lawyer; at that time, questioning must immediately cease until such a time as the Government’s attorney obtains the consent of the lawyer named, whether Mr. Engh or otherwise, to communicate with the individual ‘about the subject of the representation.’”

    Magnuson said the order was valid.

    “Because any individual who has chosen to be represented by counsel will not be questioned, the Government’s contact certainly is not ‘so egregious that it impairs the fair administration of justice,’” Magnuson ruled.

    “Defendants’ Appeal is denied,” Magnuson ruled.

    INetGlobal members have said in recent days that the company is in the process of relaunching. Steve Renner, who formerly operated the firm, began an 18-month term in federal prison last month for tax evasion.

    In February, the Secret Service said it believed INetGlobal was operating a Ponzi scheme. Renner has denied wrongdoing.

  • MAXIMUM KABOOM? Woman Found Guilty On 122,000 Counts In Pyramid Case; Tells Psychologist She Could Have Saved Firm Had Government Not Interfered

    Is it the maximum case of Kaboom! — coupled with the maximum case of denial?

    The government of South Africa hit Maritjie Prinsloo with a whopping 122,000 counts of fraud, racketeering and money-laundering in a pyramid-scheme case that involved an estimated $205 million. (R1.5 billion.)

    Prinsloo was found guilty last month. South African media now are reporting that she is blaming the government and an accounting firm for interfering in her business affairs while at once insisting she could have turned things around.

    It was not immediately clear if the filing of 122,000 counts established a record. Prinsloo has been referred to in local reports as the “Pyramid Scheme Queen” and the “Krion swindler.” Members of her family also have been implicated in the scheme.

    It is not unusual for Ponzi and pyramid schemers to blame the government for their legal predicaments and to claim the government made matters worse by taking action to stop a scheme before it could consume even greater sums of money. Online Ponzi forums, for example, are filled with claims that operators can turn things around if given more time, and victims routinely are discouraged, ridiculed and threatened with banishment by operators and their shills for contacting authorities and filing complaints.

    A psychologist told the the Pretoria High Court that Prinsloo believes she did nothing wrong and could have turned around the business had the government not filed charges, according to this account in the Daily Dispatch.

    Prinsloo was charged with more counts than there are seconds in a day (122,000 counts/86,400 seconds in a day). Had she been charged in the United States — and had she not waived the reading of the complaint — the court official tasked with the duty of ticking off the counts would have left voiceless.

    Had the judge ordered one count read per second — and had the employee magically been able to comply with the order — the employee would have consumed 24 straight hours in reading the counts and still been left 35,600 counts short of finishing the job. The job then would have carried over to consume almost 10 straight hours of a second day, at one count per second.

    During the first 24 hours of the reading of the complaint at the impossible rate of one count per second, the world’s population would have increased by about 220,000, according to estimates.

    In the often bizarre and incongruous world of Ponzi and pyramid schemes, the fact that the world’s birth rate exceeds its death rate has been seized upon by some advocates as purported “proof” that it is impossible to operate such schemes and the government therefore cannot “prove” that a Ponzi or pyramid scheme exists.

    Such claims were made by at least one member of AdSurfDaily, which the U.S. Secret Service described as a Ponzi scheme. Some members of ASD defended the firm by claiming that no Ponzi existed and that the government was interfering with commerce.

    ASD President Andy Bowdoin, meanwhile, told members that the government had seized their money. In court filings, however, he told the presiding federal judge that the money belonged to him.

    Prosecutors called Bowdoin “delusional.”

  • DNA Now Says It Is Selling ‘Protective Spray’ To Block ‘Wrongful Ticketing’ From Red-Light Cameras; Simultaneously Announces ‘Alert Button’ To Protect Abducted Children

    A Florida multilevel marketing (MLM) company that says its license-plate data system can help law enforcement and the AMBER Alert program locate abducted children now says it is working against cities “worldwide” in their efforts to enforce traffic laws.

    Data Network Affiliates (DNA) announced that it was offering “DNA Protective Spray” by the case to distributors. The spray is applied to license plates to obscure the view of cameras that take photographs of cars that run red lights. DNA said the spray protected against “wrongful ticketing by city cameras worldwide.”

    DNA did not explain the incongruity of saying it supported law enforcement in its efforts to locate abducted children while at once working against law enforcement in its efforts to enforce traffic laws.

    Even as DNA was announcing the availability of its purported “Protective Spray,” the company announced it soon would adopt a browser-based “DNA World Wide Alert Button” to let members know when a “child is reported missing in your immediate area.”

    DNA purports also to be in the mortgage-reduction business, claiming it is the “MORAL OBLIGATION” of churches to spread the word about the money-making program and perhaps use it to raise church funds.

    This morning the Federal Trade Commission announced three settlements in cases that banned “deceptive marketers” from selling mortgage-relief services. In one of the cases, a judgment of $11.5 million was entered against one of the marketers. A judgment of $6.2 million was entered in the second case, and a judgment of nearly $5.3 million was entered in the third case.

    DNA said distributors would be able to order its protective spray “very soon.”

    “This product has sold millions for $29.95 a can which is good for up to 3 or 4 applications when done properly,” DNA said.

    The product falls under the umbrella of a series of products that purportedly can help DNA members “RETIRE BY CHRISTMAS 2010,” the company said.

    DNA also said it soon would offer “The New DNA Phone & Fax Module,” which purportedly “will make MAGIC JACK & SKYPE OBSOLETE.”

    In April, DNA announced that it was offering an “unlimited” cell-phone plan with a free phone for $10 a month. The company later withdrew the offer, acknowledging it had not studied cell-phone pricing before announcing it had become the world’s low-price leader.

    Some DNA members have implied the company was backed by Oprah Winfrey, Donald Trump and Apple Inc. No evidence to support the claims has emerged.

    DNA has compared itself favorably to Walmart, Google, Facebook and Amway. Curiously, the company once claimed it offered a Business Benefit Package, which it dubbed the BBP. The company now appears to be referring to the package as the BBB, using the acronym associated with the Better Business Bureau.