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  • UNHAPPY MOTORIST TO DEPUTY: ‘No Wonder You People Get Shot’

    From Facebook video posted by Palm Beach County Sheriff's Office.
    From Facebook video posted by Palm Beach County Sheriff’s Office.

    On Sept. 1, a deputy from the Aggressive Driving Unit of the Palm Beach County (Fla.) Sheriff’s Office ticketed a woman for going 51 MPH in a 20-MPH School zone, the Sheriff’s Office said. The traffic stop was recorded on the deputy’s dashcam.

    “No wonder you people get shot,” the woman told the deputy who ticketed her for going 31 MPH over the speed limit near an elementary school. “You’re absolute assholes.”

    The deputy maintained his calm.

    NBC Miami reports the ticket was for $606. The woman can request a hearing.

    Showing a police presence in school zones is a tradition in American law enforcement, perhaps particularly at the beginning of a new school year. Motorists near the stop almost certainly will know why it occurred and will pay closer attention to their speedometers.

  • BULLETIN: Name Of Herbalife Refugee Anthony Powell Surfaces In Vemma Pyramid-Scheme Case

    breakingnews7252ND UPDATE 4:16 P.M. EDT U.S.A. Former Herbalife President’s Team member Anthony Powell is referenced in a report by the court-appointed receiver in the Vemma pyramid-scheme case filed by the FTC last month.

    The mention is potentially embarrassing to the MLM trade, which has a reputation for recruiters dragging financially strapped prospects from scheme to scheme.

    Powell, an MLM recruiter,  joined Vemma after leaving Herbalife in 2013 and has been a subject of scorn by activist-investor and Herbalife short-seller Bill Ackman. Herbalife is under investigation by the FTC.  Ackman has claimed since 2012 that Herbalife is a pyramid scheme.

    With the FTC calling Vemma a pyramid scheme, Vemma receiver Robb Evans says a firm operated by Powell was the subject of at least 16 complaints to Vemma and that Vemma appears disingenuously to have tried to distance itself from Powell.

    At least one such complaint about Global Pro Systems or GPS — the Powell firm — was submitted to the Arizona Attorney General, according to the report by Evans.

    Trying to play dumb about Powell could constitute a material misrepresentation by Vemma, the receiver opines.

    From the receiver’s report dated Sept. 4 (carriage returns added/formatting may not be precise):

    The Temporary Receiver has made reference to GPS several times in this report. The Temporary Receiver located a document at the premises that stated GPS is operated by Anthony Powell. In a letter to the Arizona Attorney General dated August 29, 2013 wherein the Field Compliance Manager attempted to distance themselves from GPS by stating that, “Global Pro Systems is not owned or operated by Vemma Nutrition Company or BK Boreyko.”

    Similar statements were made by the company in all of the responses sent to the Arizona Attorney General and the Arizona BBB regarding complaints that also involved GPS. While these statements on their face are true and may not be a misrepresentation, they are not completely forthcoming. In an email communication from the field compliance
    manager to the BBB, the company stated, “Unfortunately, since Global Pro Systems (GPS) is not owned or operated by Vemma Nutrition Company or BK Boreyko, we do not have any control over their marketing tactics (emphasis added).”

    The Temporary Receiver has determined that Anthony Powell is in fact a Star Ambassador with Vemma. Assuming Mr. Powell had to sign an Affiliate Agreement like every other Affiliate, he and his business practices would be subject to the same terms and conditions as any other Affiliate. The company made a material misrepresentation when they claimed that they had no control over GPS’ marketing tactics.

    The Temporary Receiver also viewed a video posted by the company showing the defendant, Boreyko personally welcoming Anthony Powell to Vemma. Anthony Powell claims that he made millions with Herbalife and decided to bring his team to Vemma. The video indicated that Mr. Powell was a Star Ambassador. The Temporary Receiver is not aware of any disciplinary action taken against Mr. Powell or any of the other Affiliates associated with GPS. This would indicate that the most successful Affiliates are not subject to the same level of scrutiny as the less successful Affiliates.

    NOTE: Our thanks to the ASD Updates Blog.

     

  • Vemma Called ‘Pyramid Scheme’ By FTC; Direct Selling Association’s Early Response Muted

    recommendedreading1UPDATED 6:44 P.M. EDT U.S.A. The Federal Trade Commission voted unanimously (5-0) to charge Vemma Nutrition Co.  with operating a pyramid scheme. So much for the absurd proposition that Republicans on the commission are like hapless “Wheel of Fortune” contestants who couldn’t form the term “pyramid scheme” if spotted 12 of the 13 letters that comprise it.

    Want to put yourself on the FTC radar? Develop a scheme. Target college students. Plant the seed that a higher education in an academic setting is a waste of time and perhaps even a conspiracy to keep students and their parents chained to college-loan debt. By all means make sure your CEO and most visible figure (Benson K. “B.K.” Boreyko) has a history such as this.

    The PP Blog encourages readers to pay careful attention to the wording of today’s FTC announcement about the Vemma action.  Make no mistake: the agency clearly is calling Vemma a “multilevel marketing company” that is operating a “pyramid scheme.” That’s important because it speaks directly to an absurd claim from practiced hucksters that no MLM can operate as a pyramid scheme because the two terms — MLM and pyramid scheme — are mutually exclusive.

    Put another way: Not all MLM is legitimate.

    Meanwhile, the FTC is seeking a permanent injunction that would prohibit Vemma from continuing to operate a pyramid scheme. As of Aug. 21, the company is in receivership. A federal judge has ordered an asset freeze.

    Vemma is a member of the Direct Selling Association. DSA, notably, did not come out today with word daggers aimed at the heart of the FTC. Such a muted response by the DSA will hardly be a source of comfort to Vemma’s cheerleaders in the field.

    Here is DSA’s initial response in its entirety (italics added):

    “Earlier today, the Federal Trade Commission (FTC) announced action against Vemma Nutrition Company alleging violations of federal law, which, if true, would also constitute violations of DSA’s Code of Ethics. 

    “Every member of our Association, including Vemma, is required to abide by our Code as a condition of membership.  All companies which use the direct selling model must uphold the highest ethical business standards, including polices that protect consumers and members of the salesforce against unrealistic earnings, lifestyle and product claims.

    “The Code’s independent administrator will be alerted to the action and will review the FTC’s allegations against Vemma.  If they are proven to have merit, the administrator may pursue punitive measures to ensure that appropriate standards of consumer protection are enforced. 

    “The allegations against Vemma have yet to be proven, and the company is entitled to due process of law.  Any consumers or salespeople who have concerns regarding any DSA member, including Vemma,  should contact the Code Administrator.”

    Says the FTC:

    “Consumer losses are inevitable because Vemma is an illegal pyramid scheme that rewards affiliates for recruiting participants rather than for selling products, the FTC alleges. The defendants provide affiliates little guidance for selling products, but instead teach them to give away products as samples when recruiting new participants. Vemma offers no meaningful discounts or incentives to encourage retail sales, according to the complaint.

    “In addition to allegedly running an illegal pyramid scheme, the defendants are charged with making false earnings claims, failing to disclose that Vemma’s structure ensures that most people who join will not earn substantial income, and furnishing affiliates with false and misleading materials to recruit others.”

  • TelexFree Members In Massachusetts Get Payout From Bank Fund

    About 14,000 TelexFree members in Massachusetts have received a payout from a $3.5 million fund set up last year as a result of a settlement between the state Securities Division and Fidelity Co-Operative Bank, the office of Commonwealth Secretary William Galvin said today.

    “While this money does not make the TelexFREE victims whole, the distribution does provide the first real monetary relief received by Massachusetts victims of this international pyramid scheme,” Galvin said. “I am very pleased that my office was able to get some money back for these victims.”

    The first distribution consisted of $2.9 million from the fund. Each recipient of the first distribution will receive $205.52, Galvin’s office said.

    From the news release dated today (italics added):

    Under the terms of the consent order, the bank established a Massachusetts Victim Relief Fund and retained Grant Thornton LLP as independent claims administrator. The amount of the fund was set at $3.5 million.

    This first group of claimants was assembled by Grant Thornton based on information provided to the administrator by the Securities Division. These Massachusetts victims were derived from records subpoenaed by the Division from TelexFREE as well as victims who contacted the Division.

    A second group eligible for distribution will be those claimants who submitted claims to the Division but for whom additional information is needed to validate their claim. A third group are those claimants who file a valid claim to the independent claims administrator after July 3, the date the distribution plan was submitted.

    Visit this page set up by Grant Thornton for more info.

  • PP Blog Now 2,700 Posts Strong: Get Your Subscription Today!

    NOTE: This post originally was published June 30 at 8:41 p.m. EDT U.S.A. It was republished in this slot on July 2,  July 20, July 29 and July 30.

    Dear Readers,

    We are pleased to report that this is Post 2,701 on the PP Blog since December 2008.

    There are four “penny-a-post” subscription options in the pull-down menu below. We’re asking readers who believe in what this Blog is doing to take out a one-year subscription for either $25, $50, $75 or $100.

    The $25 fee constitutes a less than a penny a post for our current editorial well of 2,700+ articles. The pull-down menu is in case you decide you’d like personally to value the editorial well at [now less than] 2 cents a post ($50), [now less than] 3 cents a post ($75) or [now less than] 4 cents a post ($100).

    We came up with this idea to celebrate our 2,500th post. As always, it is my hope that newer readers who can afford to subscribe will do so at either the $25 or $50 levels. The higher options may be best suited for readers and researchers who’ve been with us a long time and perhaps have read hundreds or even thousands of stories.

    Because the Blog’s well is so deep, we’re able to provide readers additional context. You’ll often find this reflected in “quick notes” in the Comments threads below stories. The notes point readers to stories on the same topic or to stories that have a similar theme.

    The Blog, of course, also points readers to other sources of information.

    There is no paywall at the PP Blog. By purchasing a subscription that automatically renews in one year, you’ll be helping me personally. And, as I’ve previously, you’ll be helping a Blog that publishes hundreds of stories a year and keeps matters important to readers a bookmark away remain free for other readers.

    This “penny-a-post” idea has helped me scotch the very real concern about affecting readership by offering subscriptions. The readers who subscribe will be helping keep the Blog free for those who cannot afford to subscribe and for those who simply choose not to.

    Our readers of goodwill recognize the PP Blog as a persistent effort to contain harm and to educate the public about matters that destroy pocketbooks and families and, in some cases, affect national security.

    My sincere thank you for your continued interest in the PP Blog.

    Patrick


    PP Blog 2,500th Post Subscriptions



  • BULLETIN: Feds Seek Information From Victims Of ‘Achieve Community’ Scam

    achievelogoBULLETIN: (2nd updated 8:54 p.m. EDT U.S.A.) The office of Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina has published a webpage for victims of the “Achieve Community” scam. Victims are asked to “submit information concerning the amount of your losses to the U.S. Probation Office,” which is compiling a “presentence” report on convicted Achieve Ponzi- and pyramid scammer Kristine Louise Johnson.

    Achieve participants know her as Kristi Johnson.

    Directions on how to submit information are provided on the victims’ site.

    From a statement by prosecutors on the victims’ page (italics added):

    United States v. Kristine Louise Johnson

    Troy Barnes and Kristine Johnson operated a fraudulent Pyramid/Ponzi scheme through Work With Troy Barnes, Inc. (WWTB), an entity they founded and which did business as “The Achieve Community” (TAC). Between April 2014 and February 2015 TAC generated more than $6.8 million. Through online video blogs and written promotional materials on the website, both Barnes and Johnson enticed victim-investors to buy “positions” in TAC and earn extraordinary investment returns of 700 percent. More than 10,000 people invested. Barnes and Johnson repeatedly assured listeners who bought $50 “positions” that they would “cycle” through the matrix and receive $400 in return for each $50 position. There was no requirement that investors do anything. Success depended entirely on sufficient new investors to “retire” early investors positions. The scheme ended when the SEC executed a temporary restraining order (TRO) on February 13, 2015. When it was forced to cease operations due to the TRO, TAC had $2.6 million on deposit but owed more than $50 million to investors.

    The defendant, Kristine Johnson, pled guilty on June 30, 2015 and was released on bail. The case is in the presentence stage of the criminal justice process. The United States Probation Office has been assigned to complete a presentence report.

    Johnson, 60, of Aurora, Colo., was charged criminally in June after an investigation by the U.S. Secret Service. She was sued by the SEC in February. Barnes, 52, of Riverview, Mich.,  is a co-defendant in the SEC’s civil case and has said he faces criminal prosecution.

    Achieve was a Ponzi-board scam that also spread on social media. The reach potentially created thousands of victims. When online scams cast a wide net, it potentially can led to sentencing enhancements.

    Such enhancements can be applied in federal cases if it is determined vulnerable victims were involved. It is known that an elderly woman who called into an Achieve sales pitch online had an 86-year-old husband who had been confined to a nursing home.

    The deadline for submitting a victim-impact statement is Aug. 21. More information is available here.

    To visit the Achieve victims’ website, go here. The body copy on the page includes two links through which to submit information.

    Prosecutors say victims may entitled to restitution as ordered by the court.

    When the SEC shut down Achieve in February, the “program had “$2.6 million on deposit but owed more than $50 million to investors,” prosecutors said.

    “Success depended entirely on sufficient new investors to ‘retire’ early investors positions,” prosecutors said about the “cycler”scam.

  • Filho Listed As Inmate At Federal Detention Center

    Daniel Fernandes Rojo Filho exits a gold Lamborghini in the area of Pine Street in Orlando, Fla. Source: DFRF promo on YouTube, c. April 2015.
    Daniel Fernandes Rojo Filho exits a gold Lamborghini in the area of Pine Street in Orlando, Fla. Source: DFRF promo on YouTube, c. March 2015.

    UPDATED 8:41 A.M. EDT U.S.A. DFRF Enterprises’ and Platinum Trade Bancorp figure Daniel Fernandes Rojo Filho this morning is listed as an inmate at FDC Miami, a federal detention facility.

    His inmate registration number is 08217-104 and he is listed in federal Bureau of Prison records as “Daniel F Rojo Filho.” Some apparent DFRF apologists reportedly have claimed in recent days that Filho, 47, had been released from federal custody and that the DFRF “program” alleged to have gathered nearly $23 million would resume business as usual.

    Filho was arrested July 21 in Boca Raton, Fla., on a warrant from federal court in Massachusetts. He is accused of wire fraud in his alleged operation of DFRF, which the SEC has described as a pyramid- and Ponzi scheme that targeted “Spanish and Portuguese-speaking communities in Massachusetts, Florida, and elsewhere in the U.S.”

    Daniel Fernandes Rojo Filho. Source: DFRF promo on YouTube.
    Daniel Fernandes Rojo Filho. Source: DFRF promo on YouTube.

    Filho is expected to be taken to Massachusetts by the U.S. Marshals Service to face the charge there. It is unclear whether a bail sum has been set for the accused scammer. He is a citizen of Brazil, according to U.S. court filings.

    Scheduling details are unknown. The FBI is leading the criminal probe, with the SEC heading up the civil investigation. DFRF is alleged to have gathered on the order of $23 million fraudulently, putting investors who may speak Spanish or Portuguese in harm’s way.

    Records at the Federal Election Commission show a 2012 donation from Filho to the reelection campaign of President Obama. Those records list his then-employer as Platinum Trade Bancorp.

    DFRF began selling “memberships” last year, the SEC said on July 2.

    “DFRF promoted the investment opportunity through online videos in which Filho falsely claimed that the company had registered with the SEC and its stock would be publicly traded.  As DFRF’s marketing reach widened, membership sales dramatically increased from under $100,000 in June 2014 to more than $4 million in March 2015 alone.”

    Filho has piled up an assortment of expensive automobiles by siphoning millions of dollars from DFRF investors, according to the SEC. At least one of them is a gold Lamborghini that was seen cruising the streets of Boca Raton earlier this year.

    In 2010, Filho was a figure in the Evolution Marketing Group/Finanzas Forex Ponzi case. Some of the money was tied to the narcotics trade.

    The “Fernandes” part of his name sometimes has been spelled “Fernandez.”

     

  • Daniel Fernandes Rojo Filho, Accused In Alleged DFRF Enterprises Ponzi Scheme, Made Donation To 2012 Obama Campaign: What Is Platinum Trade Bancorp?

    Federal Election Commissiobn records list this donation from Daniel Fernandes Rojo Filho to the 2012 relection campaign of President Obama. Red highlights/redaction by PP Blog.
    Federal Election Commission records list this donation from Daniel Fernandes Rojo Filho to the 2012 reelection campaign of President Obama. Filho’s employer is listed as Platinum Trade Bancorp. Red highlight/redaction by PP Blog.

    In 2012, Daniel Fernandes Rojo Filho, purportedly an employee of an entity known as Platinum Trade Bancorp and using the address of a mansion in Boca Raton, Fla., made a $250 campaign contribution to Obama for America, according to Federal Election Commission records.

    The PP Blog is declining to publish the address of the 6,742-square-foot (est.) waterfront property, which appears not to have been owned by Filho. Records suggest the six-bedroom home has at least 6,200 square feet with air-conditioning and a separate quarters for domestic staff.

    It sold for $2.025 million in August 2013, but Filho was listed neither as buyer nor seller. If he ever lived in the mansion, it appears he was a tenant, not an owner.

    The donation to President Obama’s reelection campaign in Filho’s name (and listing the address of the Boca Raton mansion) was recorded on Oct. 16, 2012, just three weeks before the Nov. 6 general election that returned Obama to the White House for four more years. Obama is a Democrat.

    Filho, now implicated criminally and civilly by the FBI and the SEC in the alleged DFRF Enterprises Ponzi- and pyramid scheme that traded on an international gold-mining theme, is not a U.S. citizen, according to court filings. Rather, he is a citizen of Brazil.

    Campaign donations by “foreign nationals” are illegal under U.S. law. There is an exception for U.S. residents who have a green card “indicating his or her lawful admittance for permanent residence in the United States,” according to the FEC.

    It is unclear whether Filho has a green card and is in the country lawfully. Federal prosecutors in Massachusetts described him July 22 as an Orlando resident and fugitive arrested the day before “coming out of a restaurant in Boca Raton.”

    Sann Rodrigues, a defendant in the epic TelexFree Ponzi- and pyramid case and an alleged Filho business associate, was arrested in May 2015 on a charge of immigration fraud. Like Filho, Rodrigues is a citizen of Brazil. Prosecutors said Rodrigues lied to get a green card.

    Both men have listed addresses in Florida and Massachusetts and have been implicated in alleged frauds targeted at people who speak Portuguese or Spanish.

    FEC records show that the donation in Filho’s name lists him as “Chairman of the Board” of Platinum Trade Bancorp. Where the purported business was based is unclear. No such company appears to exist in Florida.

    The name of the purported firm, however, is similar to the name of Platinum Swiss Trust, a company the SEC said played a role in the DFRF fraud.

    Platinum Swiss Trust, the SEC alleged, is a “purported Swiss private bank that is not actually authorized to conduct banking activities in Switzerland.” It purportedly is associated with Heriberto C. Perez Valdes, 46, of Miami. Valdes is a DFRF codefendant in the SEC’s civil case.

    DFRF, the agency said, advanced a story that it has a $3.1 billion line of credit with Platinum Swiss Trust and used investors money to “leverage the credit line and generate a total return of 600%.”

    Darren Covar, a Florida immigration attorney who appeared with Filho and others in a DFRF promo, is listed in FEC records as a contributor to Democratic causes. He has not been accused of wrongdoing.

    FEC records lists Covar as having made $2,800 in 2012 contributions, though none to Obama. These contributions consisted of $300 to the Democratic Executive Committee of Florida, and $2,500 to the Kristen Jacobs for Congress campaign. Jacobs, a Democrat running for seat in the U.S. House, lost the race to Democrat Lois Frankel, the former mayor of West Palm Beach and the former minority leader of Florida’s state house.

    Whether bail has been set for Filho is unclear. The U.S. Attorney’s office in Massachusetts did not return an inquiry on the matter.

    Filho made an appearance in federal court in the Southern District of Florida yesterday. Miami defense attorney David A. Howard made a “temporary” appearance for him, according to the docket of the case.

    Howard did not immediately return an inquiry for comment on Filho’s bail status.

    Court records suggest he is in the custody of the U.S. Marshals Service and will be returned from Florida to face the DFRF-related criminal charge of wire fraud in federal court in Massachusetts.

    NOTE: Our thanks to the ASD Updates Blog.

     

  • DFRF Asset Freeze Affects Accounts At At Least 13 Banks; Judge Orders Repatriation, Blocks Flow Of New Money

    dfrflogoUPDATED 6:55 A.M. EDT JULY 30 U.S.A. In the SEC’s civil case against DFRF Enterprises, a federal judge in Massachusetts has issued an order that freezes accounts at at least 13 banks and enjoins DFRF from soliciting or accepting any more money or opening any new accounts.

    Dated July 28, the order by Chief U.S. District Judge Patti B. Saris also directs DFRF to “take such steps as are necessary to repatriate and deposit into the registry of the Court any and all funds or other assets that were obtained directly or indirectly from any investors in connection with the activities described in the Complaint and that are presently located outside of the United States.”

    At the same time, the order prohibits DFRF from withdrawing, paying, dissipating, selling, encumbering, assigning and transferring assets wherever such assets may exist or diminishing their value “in any way.” The order further prohibits DFRF from charging on or drawing from any credit arrangements it may have.

    In short, the order lays to waste claims from DFRF and certain individual promoters that the purported opportunity would simply conduct business outside the United States — despite the gravity of the pyramid- and Ponzi allegations the SEC filed last month and the arrest in Florida last week of accused operator Daniel Fernandes Rojo Filho.

    The order applies to DFRF, Filho and six promoters charged by the SEC June 30. The case was announced July 2. The SEC’s case is ongoing, and the order is not limited to the 13 identified banks.

    The 13 identified in the order are Bank of America, Central Florida Educators Federal Credit Union, Citibank, Citizens Bank, Eastern Bank, First Bank of Puerto Rico, JPMorgan Chase Bank, Regions Bank, Santander Bank, Suncoast Credit Union, SunTrust Bank, TD Bank and Wells Fargo Bank.

    It was not immediately clear whether any of the banks halted DFRF-related account activity prior to the SEC action. The identities of the individual account-holders also was unclear.

    In its complaint last month, the SEC tied Filho to TelexFree figure Sann Rodrigues, a defendant in the agency’s April 2014 civil case that alleged TelexFree was a massive Ponzi- and pyramid scheme.

    The PP Blog highly recommends that persons interested in the DFRF case visit the website of the U.S. Attorney for the Middle District of Florida to read up on the 2010 Evolution Market Group/Finanzas Forex case.

    Then visit the website of the remissions administrator in the EMG/Finanzas case. You will find that accounts linked to Filho were seized in that case and that a gold theme and expensive automobiles — elements in the DFRF case — also were elements in the EMG/Finanzas case.

    You’ll also find that some of the money tied up in the EMG/Finanzas case also was linked to the narcotics business.

    Also see this story, published May 16, 2010, by the PP Blog: KABOOM! Agents Tie Alleged ‘Evolution Market Group’ Ponzi And HYIP Fraud Scheme To Narcotics Case In Arizona; Tens Of Millions Of Dollars Seized; Firms Promoted On ASA Monitor, TalkGold Forums

    Also see this story, published March 25, 2011, by the PP Blog: URGENT >> BULLETIN >> MOVING: German Cardona Soler, Figure Associated With International Forex Scam Pushed On TalkGold And MoneyMakerGroup, Arrested By Spanish National Police; Agency Alleges $300 Million Ponzi

    As was the case with TelexFree, the SEC said in court filings last month that some DFRF investors paid their sponsors directly, instead of paying DFRF.

    “The amount of checks and cash that the individual defendants collected directly from investors is currently unknown,” the agency said last month.

    Circuitous money flow is a core signature of an online securities scam. So are remarkable earnings tales, hotel pitchfests and sea cruises, all of which are elements in the TelexFree and DFRF cases.

    NOTE: Our thanks to the ASD Updates Blog.

  • Guilty Pleas Entered In eAdgear Ponzi- And Pyramid Criminal Case

    breakingnews72UPDATED 1:10 P.M. EDT U.S.A. Two eAdGear Ponzi- and pyramid-scheme figures have pleaded guilty to federal criminal charges of structuring transactions to evade bank-reporting requirements and conspiracy, according to court filings and records in U.S. District Court for the Northern District of California.

    The SEC charged eAdGear in September 2014, alleging it had gathered $129 million. Among the named defendants were Charles S. Wang of Warren, N.J., and Francis Y. Yuen of Dublin, Calif. In December 2014, news broke that Wang and Yuen had been indicted criminally. They were charged criminally in a superseding information filed on May 26, 2015.

    A application for a preliminary order of forfeiture filed by federal prosecutors July 17 says Wang and Yuen pleaded guilty to the structuring charges on May 27. The superseding structuring complaint alleged they made structured deposits — typically in amounts below $10,000 — and caused others to do so.

    The cases appear to have been resolved via a plea agreement that led to the guilty pleas.

    Structuring is a crime that occurs when individuals make deposits in a way that may dupe banks into not filing Suspicious Activity Reports, thus providing scammers more time to carry out a fraud scheme.

    Structuring also may be an element in the TelexFree MLM scheme, according to Massachusetts investigators.

    The maximum prison sentence for structuring is 10 years. Conspiracy in the context of structuring carries a maximum penalty of five years in prison. Both crimes can lead to large fines.

    Though the plea agreements appear not to be instantly available, the forfeiture application says Wang and Yuen have agreed to pay a money judgment of $731,405.33. This sum represents the alleged amount of structured transactions that passed through banks in California and New Jersey.

    Also see Sept. 28, 2014, PP Blog Special Report: eAdGear ‘Program’ Allegedly Traded Falsely On Names Of Famous Companies And Brands; SEC Contacted Google, Yahoo, Target, Victoria’s Secret (And More) To Refute Claims . . .

    Also see March 19, 2015, PP Blog report: SEC Enforcement Chief References Investor Alert On ‘Pyramid Schemes Posing As Multi-Level Marketing Programs’ In Congressional Testimony Today, Says ‘Coordinated Effort’ To Disrupt Them Under Way

    NOTE: Our thanks to the ASD Updates Blog.

  • BULLETIN: ‘The DFRF Fraud Is Much Larger Than It First Appeared,’ SEC Tells Court

    dfrflogoBULLETIN: (2nd Update 9:46 p.m. EDT U.S.A.) The SEC has gone to federal court in Boston, alleging that “the DFRF fraud is much larger than it first appeared.”

    The agency also alleges that at least one DFRF investor told investigators that he first heard of DFRF in May or June 2014 from TelexFree Ponzi- and pyramid figure Sann Rodrigues, who attended the same church. If the information is correct, it would mean that Rodrigues had knowledge about DFRF within weeks of becoming a defendant in the SEC’s April 2014 action against TelexFree.

    SEC investigators initially tied Rodrigues to DFRF and alleged operator Daniel Fernandes Rojo Filho in a complaint last month. New documents filed by the agency yesterday hint that other DFRF insiders also were involved in TelexFree.

    Filho, described by federal prosecutors in Boston as a fugitive, was arrested July 21 in Boca Raton, Fla.  on a DFRF-related charge of wire fraud. The FBI is leading the criminal investigation.

    From an SEC investigator in a July 23 filing in the agency’s civil case against DFRF Enterprises, Filho, Wanderley M. Dalman of Revere, Mass.; Gaspar C. Jesus of Malden, Mass.; Eduardo N. Da Silva of Orlando, Fla.; Heriberto C. Perez Valdes of Miami; Jeffrey A. Feldman of Boca Raton; and Romildo Da Cunha of Brazil (italics and bolding added/light editing performed):

    Another investor (hereafter “Investor B”) told me that he and his spouse invested a combined $61,000 in DFRF. He first heard about DFRF in May or June 2014 from Sanderley Rodrigues de Vasconcelos (“Rodrigues”). (Rodrigues is the subject of a 2007 consent judgment in a Commission enforcement action concerning the “Universo Foneclub” pyramid scheme and a defendant in the Commission’s pending action concerning the “TelexFree” pyramid scheme.) Investor B knew Rodrigues from his participation in TelexFree and as a fellow member of his church.

    Rodrigues told Investor B that the minimum investment in DFRF was $50,000. Investor B decided not to invest at that time.

    Investor B told me that in July or August 2014, defendants Dalman, Jesus and Silva approached him about investing in DFRF. He knew the three men through TelexFree, because when TelexFree was operating, he would meet with individuals involved in the company on a weekly basis at a hotel in Revere.

    Dalman, Jesus and Silva told Investor B about DFRF, explaining that Investor B could earn up to 15% per month. They also told him that he could earn a 10% commission for referring others to DFRF.

    Investor B told me that Dalman, Jesus and Silva invited him to meet with Filho at a hotel in Boston, Massachusetts in July or August 2014, which he did.

    Investor B told me that, in September 2014, he and his spouse went to a meeting at DFRF’s offices at 60 State Street in Boston. Six to ten other potential investors attended this meeting, at which Dalman, Jesus and Silva spoke about DFRF. Filho later joined the meeting and gave a presentation about investing in DFRF. One of the other attendees asked Filho how DFRF could afford to pay 15% per month. Filho responded that he could take the investors’ money and grow it by a factor of six.

    The Rodrigues tie to DFRF now brings the number of fraud schemes in which he has been involved at least to four: Universo, TelexFree, DFRF and IFreeX, described last year by Massachusetts investigators as a TelexFree reload scheme. By victims count, TelexFree may be the largest Ponzi/pyramid scheme in U.S. history, rivaled only by Zeek Rewards in 2012.

    Rodrigues, a Brazilian, is not a U.S. citizen. He was arrested at a New Jersey airport in May 2015, upon his return from a trip to Israel. He was charged criminally with immigration fraud, amid allegations he lied to get a green card.

    Like DFRF’s Filho, Rodrigues had addresses in Massachusetts and Florida. Filho also is a Brazilian.

    Prosecution filings today in the criminal case against Filho assert that he is not a U.S. citizen. He has not been charged with an immigration crime and apparently has a driver’s license issued by a U.S. state, given that he has been seen driving a Lamborghini in Florida.

    SEC: DFRF Fraud Numbers Rise

    The SEC initially pegged DFRF last month as a fraud that had hauled about $15 million. But further investigation has led to higher numbers — in both total haul and the sum Filho is alleged to have siphoned.

    Dealing with Filho first, who was alleged last month to have siphoned more than $6 million.  From an SEC filing yesterday (italics added):

    The documents we reviewed indicate that, since June 2014, Filho has taken more than $8.6 million from DFRF accounts for himself or his family: He has withdrawn more than $2.7 million in cash. He has used DFRF funds to pay more than $2.2 million of personal and family expenses. He has used DFRF funds to pay more than $2.5 million for luxury automobiles (a 2014 Rolls Royce, a 2015 Lamborghini, a 2014 Lamborghini, a 2013 Mercedes, a 2012 Ferrari, a 2006 Ferrari, a 2015 Cadillac, and a 2014 Cadillac) and automotive-related expenses. He has used DFRF funds to pay nearly $250,000 to members of his extended family. He has used DFRF funds to send more than $1.1 million to the IOLTA account of an attorney in Hollywood, Florida. On June 30, 2015, he used DFRF funds to wire more than $1.1 million to an entity in the Bahamas that is believed to be a law firm. Some of these figures are probably too low, because the documents we have received to date are insufficient to classify approximately $3.5 million of withdrawals from DFRF corporate accounts in June 2015.

    Now, dealing with DFRF, alleged last month to have hauled $15 million. From an SEC filing yesterday (italics added/light editing performed):

    The documents we reviewed indicate that, from June 2014 through June 2015, DFRF received approximately $22.8 million from more than 1,750 investors:  The total may be slightly low, because the documents we have received to date are insufficient to classify approximately $160,000 of deposits to DFRF corporate accounts in June 2015.

    The documents we reviewed indicate that none of the investors’ money has been used to conduct gold mining in Brazil and Mali, and that DFRF has received no proceeds from gold mining operations.

    The documents we reviewed indicate that DFRF has received no proceeds from a line of credit with Platinum Swiss Trust and has had no banking transactions at all with that company.

    The documents we reviewed indicate that DFRF has spent nothing on charitable activities in Africa or anywhere else.

    The documents we reviewed indicate that, from June 2014 through June 2015, DFRF had no independent source of revenue except the money received from investors.

    The documents we reviewed indicate that, from June 2014 through June 2015, DFRF paid approximately $1.94 million to approximately 250 likely investors for the return of investor principal or purported monthly payments.

    Heriberto Valdes, who allegedly hauled $551,403 out of DFRF, has not been served the complaint, the SEC said.

    “Valdes is the only defendant who has not been served and whose location is unknown,” the agency said.

    Records suggest that Valdes, like Feldman, has a criminal record.

    NOTE: Our thanks to the ASD Updates Blog.