American Integrity Financial Co. existed in name only, the SEC said today. Its operator, Matthew J. Ryan, 45, of Troy, N.Y., used the bogus company to fleece senior citizens in a Ponzi scheme by telling them they’d earn “guaranteed” return rates of 3.85 percent to 9 percent each year.
It was the second Ponzi scheme to rock the Albany area — and the third major case of financial fraud in New York state — in the past two weeks.
“Ryan obtained these investments by fostering the false impression that American Integrity is a legitimate, substantial financial services firm, with numerous employees and for which he was merely an employee,” the SEC charged.
‘Phony Manhattan Address’
“To perpetrate this fraud, Ryan used devices such as a phony Manhattan address, and fictitious names and titles of purported American Integrity employees, and he misrepresented to investors that their investments were safe and insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC) and that American Integrity was qualified to offer IRAs and other tax-deferred investments,” the SEC charged.
American Integrity was a “classic Ponzi scheme,” the SEC said.
‘Merely The Name On A Bank Account’
The firm “is not even an entity, let alone an operating financial company and investments in it are not in any way insured,” the SEC said. “It is merely the name on a bank account that Ryan opened and controls. Ryan simply took investors’ money and deposited the money into the bank account. When he needed money to pay investors the returns he had promised or principal amounts they sought to withdraw, Ryan simply withdrew funds from the same bank account.
Investor funds were used to pay Ryan’s lenders “and to pay for his own personal expenses, including luxury cars,” the SEC said. “As of March 31, 2010, it appears that American Integrity owed investors at least $3.5 million, while it had less than $8500 in cash on hand.”
Recent New York Frauds
Just days ago, the SEC charged McGinn, Smith & Co. of Albany in a fraud case investors said was a Ponzi scheme. Separately, the SEC charged Gryphon Holdings Inc. in a bizarre stock-tips scheme. Five people were arrested by federal agents in the Gryphon Holdings case.
Gryphon “touted offices on Wall Street and around the world while, in reality, defrauding investors from a strip mall on Staten Island,†David Rosenfeld, associate director of the SEC’s New York Regional Office, said on the day the complaint was filed.
The SEC said Gryphon was a “sham designed to separate clients from their money.â€
Attorney General Eric Holder briefs reporters on the Times Square bomb plot.
A naturalized U.S. citizen born in Pakistan was arrested at JFK Airport in New York late last night after he was removed from a flight bound for Dubai, authorities said.
U.S. Attorney General Eric Holder announced the arrest of Faisal Shahzad in an extraordinary news conference in the middle of the night. President Obama was informed about the arrest at 12:05 a.m., the White House said.
The arrest was made by the FBI and officers of the New York Police Department, authorities said.
Shahzad is suspected of packing a Nissan Pathfinder purchased through craigslist from a seller in Connecticut with propane tanks, fertilizer, firecrackers and gasoline to make an alarm-clock triggered bomb that would detonate in Times Square when it was filled with people.
The New York Daily News reported that the craigslist transaction was an all-cash deal.
A disposable cell phone also was part of the planned terror attack. Investigators were able to link the cell phone to Shahzad, according to reports.
Here is Holder’s early statement on Shahzad’s arrest (italics added):
Earlier this evening, Faisal Shahzad was arrested in connection with the attempted car bombing in New York on Saturday. Mr. Shahzad, an American citizen, was taken into custody at JFK Airport in New York as he attempted to board a flight to Dubai.
Since this plot was first uncovered on Saturday night, the FBI, prosecutors and intelligence lawyers in the National Security Division of the Justice Department and the U.S. Attorneys Offices in Manhattan and Connecticut, along with the NYPD have worked night and day to find out who was responsible for what would have been a deadly attack had it been successful. Over the course of the day today, we have gathered significant additional evidence that led to tonight’s arrest, which was made by agents from Department of Homeland Security’s Customs and Border Protection.
This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads. But it’s clear that the intent behind this terrorist act was to kill Americans.Â
FBI agents are working with their state and local counterparts in New York, Connecticut and other jurisdictions to gather evidence and intelligence related to this case. We are also coordinating with other members of the President’s national security team to ensure we use every resource available to the United States to bring anyone responsible to justice.
We continue to gather leads in this investigation, and it’s important that the American people remain vigilant. The vehicle in Times Square was first noticed on Saturday by a citizen who reported it to authorities, and, as always, any American who notices suspicious activity should report it to the appropriate law enforcement agencies.
This investigation is ongoing, it is multi-faceted, and it is aggressive. As we move forward, we will focus on not just holding those responsible for it accountable, but also on obtaining any intelligence about terrorist organizations overseas.
Because of the fast-moving nature of this investigation, I am not able to make any further information public at this time. But the American people should know that we are deploying every resource available, and we will not rest until we have brought everyone responsible to justice.
Here is a special statement issued by U.S. Attorney Preet Bharara of the Southern District of New York, FBI Special Agent-in-Charge George Venizelos, and New York City Police Commissioner Raymond W. Kelly (italics added):
At approximately 11:45 p.m., Faisal Shahzad was taken into custody. Agents of the Federal Bureau of Investigation and detectives of the New York City Police Department arrested Shahzad for allegedly driving a car bomb into Times Square on the evening of May 1, 2010.
Shahzad, a naturalized U.S. citizen born in Pakistan, was taken into custody at John F. Kennedy International Airport after he was identified by the Department of Homeland Security’s U.S. Customs and Border Protection while attempting to take a flight to Dubai.
The defendant will appear in Manhattan federal court (500 Pearl Street, 5th Floor, New York, N.Y.) tomorrow [meaning today] at a currently undetermined time to be presented on formal charges. No further details are available at this time.
We applaud the collective work of the New York Joint Terrorism Task Force and the prosecutors and investigators in the Southern District of New York, who have worked around-the-clock for the last two days in this investigation. We would also like to recognize the diligent work of the Customs and Border Protection agents and the U.S. Attorney’s Office for the District of Connecticut.
EDITORIAL ASIDE: The PP Blog writes about Ponzi schemes, including “autosurf” Ponzi schemes and their close cousins: HYIP frauds.
These schemes are pushed by serial promoters and routinely defended as legitimate businesses, despite the fact that the purveyors do not have a clue about the motives of the operators or the identities of their autosurfing or HYIP neighbors.
Tremendous sums of money pass through the schemes, which mostly operate in the shadows and rely heavily on offshore-payment processors, debit cards and what the FBI describes as a “shadow” banking system.
Someone tried to detonate a bomb in New York City Saturday to kill people and destroy property. That the bomb did not “go off” is not the point.
The point is that the bomb could have gone off and that the source of funding for the bomb-making materials is unknown. The money has to come from somewhere. From the terrorist’s point of view, the less traceable the source, the better.
If you are participating in an autosurf or an HYIP, it is possible you are funding terrorism. This is the only reason you should need to say no — even if you know some of the people involved in the autosurf/HYIP, even if it “pays,” even if the payments you’ve received have improved your quality of life, even if the payments you’ve received are the only things that are keeping the wolf from your door. The purveyors want to play on your greed and/or desperation.
What will it take to get you to stop promoting these filthy, miserable, dangerous businesses that operate in the shadows? A successful detonation? (And what will you think of next to defend your downline commissions in these frauds if people are blown to bits?)
This Blog is well aware that many autosurf/HYIP participants want to feel “good” about what they are doing. We are equally well aware that some autosurf/HYIP participants believe that shutting down such schemes is an abuse of government power and some perceived affront to the Constitution.
Our view is that participants should not feel “good” at any time and that the purported abuse of government power in the autosurf/HYIP context is a red herring and, in some cases, code to recruit people who’d prefer the government not regulate any form of commerce.
This Blog has not arrived at its view in a vacuum. It has assessed all the contrarian points of view and views them as arguments that should be accorded no weight at all. In many cases, the arguments have been revealed to be the ravings of people so out of touch with the realities of the various cases — and often so out of touch with reality itself — that they’d advance any argument if they deemed it as helpful to their “cause.”
Mantria CEO Troy Wragg in a music video by ICEBLOC.
A federal judge has issued an order that effectively puts a court-appointed receiver in control of dozens of entities related to Mantria Corp. and Speed of Wealth LLC in a search for “recoverable assets.”
One of the receiver’s duties is to determine if fraudulent transfers occurred between or among companies, according to the order.
The order, which is designed to prevent the dissipation of assets and maneuvering to hide or transfer money, is breathtaking because it covers not only Mantria and Speed of Wealth, but also “all of their subsidiaries, parent companies, and. . . interests in any affiliated entities of any kind.”
All in all, the order applies to a staggering total of at least 55 entities, a figure that demonstrates the enormous task of unraveling a modern-day fraud amid a maze of corporations.
The SEC sued Mantria and Speed of Wealth in November, amid allegations that Mantria was running a “green” Ponzi scheme that focused on biochar and a “carbon negative” housing community in rural Tennessee that purported to be environmentally friendly. Speed of Wealth allegedly helped Mantria get investment clients.
Appointed receiver in the case was John Paul Anderson of Alvarez & Marsal Dispute Analysis & Forensic Services LLC.
U.S. District Judge Christine M. Arguello listed dozens of names, perhaps signaling that the order could become even broader by noting that it was “not limited to” the names on the initial list. She also ordered Anderson to come up with a liquidation plan and warned the entities and their agents not to meddle in receivership affairs.
Anderson was granted the authority to seek the court’s permission to place the entities in bankruptcy if the circumstances warrant such an approach. Arguello minced no words when ordering parties not to meddle. She specifically warned them not to “harass” Anderson or interfere in his duties as receiver (italics/bold added).
“The Receivership Defendants and all persons receiving notice of this Order by personal service, facsimile or otherwise, are hereby restrained and enjoined from directly or indirectly taking any action or causing any action to be taken, without the express written agreement of the Receiver, which would:
A. Interfere with the Receiver’s efforts to take control, possession, or management of any Receivership Property; such prohibited actions include but are not limited to, using self-help or executing or issuing or causing the execution or issuance of any court attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any Receivership Property;
B. Hinder, obstruct or otherwise interfere with the Receiver in the performance of his duties; such prohibited actions include but are not limited to, concealing, destroying or altering records or information;
C. Dissipate or otherwise diminish the value of any Receivership Property; such prohibited actions include but are not limited to, releasing claims or disposing, transferring, exchanging, assigning or in any way conveying any Receivership Property, enforcing judgments, assessments or claims against any Receivership Property or any Receivership Defendant, attempting to modify, cancel, terminate, call, extinguish, revoke or accelerate (the due date), of any lease, loan, mortgage, indebtedness, security agreement or other agreement executed by any Receivership Defendant or which otherwise affects any Receivership Property; or
D. Interfere with or harass the Receiver, or interfere in any manner with the exclusive jurisdiction of this Court over the Receivership Estates.
Here is the initial list of entities covered under Arguello’s order:
Mantria Realty LLC
Mantria Communities Inc.
Mantria Real Estate Opportunities Group LLC
Mantria Investments LLC
Mantria Financial LLC
Mantria Capital Advisors LLC
Mantria Industries LLC
Carbon Diversion Inc.
Mantria Records LLC
The Mantria Foundation Inc.
Mantria Realty FL LLC
Mantria Communities LP
Mantria Real Estate Opportunities Group I LP
KITN Investments LLC
The Mantria Renewable Energy Fund LP
The Mantria Place Renewable Energy Site Development LP
The Mantria Industries Hohenwald Tennessee Eco-Industrial Center Site Development L.P.
Earth Mate Technologies LLC
Clean Energy Components LLC
EternaGreen Capital LLC
The EternaGreen International Carbon Economy Network LLC
EternaGreen University
EternaGreen Global Corporation
C&M Industrial Center LLC
Mantria Industries II LLC
Carbon Diversion Carlsbad New Mexico Manufacturing Plant LLC
Indian Trail Estates LLC
Mantria Village LLC
Mantria Bluffs LLC
IronBridge Properties LLC
Legacy Ridge LLC
Iris Village LLC
Mantria Place LLC
The Mantria Group LLC
Mantria Indian Trail Development LLC
Indian Trail Estates Phase I LLC
Indian Trail Estates Phase II LLC
Indian Trail Estates Phase III LLC
Indian Trail Estates Homeowners Association Inc.
Legacy Ridge Homeowners Association Inc.
The Mantria Place Homeowners Association Inc.
SOW Trust Deed LLC
SOW Hard Money Loans Investment Club LLC
SOW Hard Money Loans II LLC
SOW Trust Deed Group II LLC
Trust Deed Group I LLC
SOW Hard Money 50 Economic Stimulus Investment Club LLC
SOW Mantria Income LLC
SOW Mantria Diversification LLC
SOW Mantria 5% LLC
SOW Mantria Place 25% LLC
SOW Mantria 25% LLC
Speed of Wealth Investments Gold Club LLC
Trust Deed 3.0 LLC
SOW MI 25% Sale of Systems LLC
Arguello said she recognized “that not all of Speed of Wealth, LLC’s assets and/or business may be related, directly or indirectly, to the conduct alleged in the Commission’s Complaint.”
Named individual defendants in the alleged $30 million fraud by the SEC in November were Mantria CEO Troy Wragg and Mantria COO Amanda Knorr, along with the company itself. Also named defendants were Speed of Wealth and its principals, Wayde and Donna McKelvy, formerly husband and wife.
One of the companies under the Mantria umbrella was Mantria Records LLC, which purportedly promoted a hip-hop duo known as ICEBLOC.
Two months after Troy Wragg accepted a kudo from former President Bill Clinton for environmentally friendly business practices, Wragg was implicated by the SEC in an alleged "green" Ponzi scheme. The Financial Industry Regulatory Authority (FINRA) later issued an Investment Alert warning the public about a relatively new form of fraud: “green energy investments†that trade on investors’ affinity for keeping the planet clean.
The case became notable for reasons beyond its size and scope. Wragg, for instance, appeared alongside former President Bill Clinton at the 5th Annual Meeting of the Clinton Global Initiative (CGI) in New York Sept. 25.
CGI had lauded Mantria in part for helping to “mitigate global warming” through its business practices. Just two months later Mantria and Speed of Wealth were accused of a colossal fraud.
After the CGI event in New York, Mantria and Speed of Wealth seized on Clinton’s name and the names of prominent individuals who attended the event to produce marketing materials used to entice investors.
Even after the SEC brought the charges, reporters who tried to contact Speed of Wealth received email pitches to join money-making opportunities.
Video promotions by Mantria and Speed of Wealth were notable for dropping the names of President Obama, former U.N. Secretary General Kofi Annan, President Laurent Gbagbo of the Ivory Coast, Mike Duke, CEO of Wal-Mart, Muhtar Kent, CEO of the Coca-Cola Co. and actor Matt Damon.
Leeching off the names of celebrities, famous businesspeople and politicians to sell fraudulent financial schemes is a common tactic among multilevel marketing (MLM) and Ponzi scammers. By implying that prominent people endorse a product or service, the fraudsters hope to turn skeptics into clients.
Claims were made in the AdSurfDaily Ponzi scheme case, for example, that ASD President Andy Bowdoin had received an award from President George W. Bush for a lifetime of business achievement. The award proved to be the so-called Congressional “Medal of Distinction,” which is given for campaign contributions to the National Republican Congressional Committee and signifies only the ability to write a check for the purchase of banquet tickets.
In an SEC case last month, the agency alleged that a Staten Island investment-advisory business known as Gryphon Holdings Inc. told clients that famed businessman George Soros backed the company. A purported “testimonial” from Soros was fraudulent, the SEC said.
Brian Alexik, 33, is wanted by Los Angeles police, and the police department and the U.S. Secret Service have opened a probe after an AK47 assault rifle, ammunition, a camera tripod, narcotics, counterfeit currency and other contraband was found inside Alexik’s apartment.
The apartment overlooks a branch of the U.S. Federal Reserve in Los Angeles, and Alexik fled the apartment carrying duffel bags, escaping through a rear window. Officers had come to the apartment to investigate a report of “noxious fumes,” police said.
Police did not say whether they believed Alexik was plotting a bigger crime involving the Federal Reserve, but have told local media they regard the location of the apartment as an element of their investigation.
Alexik is known to use at least two aliases: Briane Alexia and Ken Shurin. He is listed as “armed and dangerous.”
Police described him as a “white man of Russian descent, brown hair, hazel eyes, 5 feet 10 inches tall, and 180 lbs.”
Alexik is believed to be in the business of manufacturing both weapons parts and narcotics, police said. A known associate of Alexik has been arrested and booked on charges of possession of crystal methamphetamine.
The associate’s name is Gregory Charles Koller, 32. Police say he faces additional charges of weapons violations and possession of marijuana.
Police who executed a search warrant at Alexik’s apartment found “several loaded weapons, misc live ammunitions, US currency, fraudulent ID cards, counterfeit US currency, misc narcotics,” authorities said.
Alexik is a convicted felon.
“Based on the evidence recovered at the location it was apparent that . . . Alexik . . . was illegally manufacturing weapon parts for illegal weapons, and printing counterfeit currency,” police said. “He had escaped through a rear window of the apartment complex prior to officers’ arrival.
“Alexik is wanted on three felony counts stemming from this investigation; possession of assault weapons, possession of a short barrel shotgun, and convicted felon with a gun,” police said.
Anyone with information about Alexik is asked to contact LAPD Major Crimes Division, Det. Daniel Logan at 213-486-7386. During nonbusiness hours or on weekends, calls should be directed to 1-877-LAPD-24-7. Anyone wishing to remain anonymous should call Crimestoppers at 1-800-222-TIPS (800-222-8477).
At least four people died in Sudan today after gunfire erupted at a rally at which an estimated 1,000 people had gathered to protest against a Ponzi scheme that devastated investors, Reuters is reporting.
Sudanese security forces fired on the crowd, and members of the crowd also had weapons and exchanged gunfire with the forces, witnesses told Reuters.
Early reports are sketchy. Witnesses told Reuters that as many as 10 people had been killed and up to 40 people injured. Fighting was described as intense. The clash broke out in Sudan’s strife-ridden Darfur region.
Early reports described the financial scheme as a regional one that resembled the Tom Petters’ Ponzi scheme in Minnesota and other schemes in which investors are told their money is being used to purchase goods but instead is being used to pay other investors.
“They said they were taking the money, going to Khartoum and other places outside Sudan to buy goods to sell in the markets,” a person told Reuter’s last week, after police used tear gas to break up the crowd. “That is how they said they made their money.”
Petters was sentenced to 50 years in prison for his scheme. Last week, the SEC charged Miami Beach businessman Nevin K. Shapiro in a scheme in which investors allegedly were told their money was being used to purchase groceries at a lower price in one market and sell them at a higher price in another.
EDITOR’S NOTE: We encourage readers of the PP Blog to view these new reports on Fox 5 in Atlanta, which hit a stone wall when investigative reporter Dana Fowle tried to get answers from Narc That Car members and company management.
One of the striking things about the reports below is that not a single Narc member Fowle interviewed could name a single client of the company. Some members got testy with Fowle, despite the fact her questions were reasonable. She asked for minimal information. No one provided it.
Some people Fowle attempted to interview seemed offended that she dared even to ask questions. Despite the fact that Narc promoters routinely claim that lots of money can be made, there is an information vacuum on the company’s business practices. Some Narc members answered Fowle’s questions with questions, not providing a single, verifiable shred of information.
A woman who sponsored a well-attended Narc meeting said Fowle would have to get answers from Narc management — even though the woman was promoting the opportunity. No answers were forthcoming from the company, meaning no one with executive authority has come forward to answer even a single question.
Meanwhile, Narc reps are in the field promoting the company while both promoters and management remain mum. People literally appear to be promoting an opportunity they know absolutely nothing about — except that there is a way to make money with Narc. NOTE: Some readers may be interested in what Georgia Attorney General Thurbert E. Baker says in Part 2 of the Fox 5 package below.
The litigation against INetGlobal amid Ponzi scheme allegations is turning into a legal slugfest in multiple venues. On one side, federal prosecutors are seeking to disqualify INetGlobal attorney Mark Kallenbach, claiming that he is attempting to be both a lawyer and a witness in the same case.
Now, employees of INetGlobal are seeking a protective order that effectively would block the U.S. Secret Service and other law-enforcement agencies “from contacting these represented individuals and requesting interviews.”
Attorney Paul Engh filed the motion in federal court on behalf of INetGlobal’s 70 employees, arguing that he is the gatekeeper for the employees’ legal interests and that the government has approached an unspecified number of employees without going through him.
“These approaches have been made on a cold-call basis, at [employees’] homes, at night or in the early morning hours, and all without notice to counsel,” Engh said in a brief.
His request that the practice stop was “refused,” Engh argued, asserting that the government claims “that since the employees are on laid off status. . . they are no longer employees.”
“Having been an employee is a status that doesn’t disappear because the Government wants it to,” Engh asserted. “None were fired.”
At least one employee — Donald Allen, a former vice president of a company related to INetGlobal and its operator Steve Renner — said earlier this week that he had his own attorney and was cooperating with the Secret Service and federal prosecutors.
Allen said he was approached by the Secret Service, which appeared at his home unannounced a week ago today, and was asked by the agency if he wanted an attorney. Allen said that he answered yes, and described his first meeting with the agency as “excellent.”
Allen said he was advised he had “exposure” in the case. He denied he had done anything wrong, saying he was not privy to INetGlobal’s internal financial workings.
On Tuesday, Allen said he had a second meeting with the Secret Service April 26, adding that he is cooperating in the investigation “100 percent.”
Also on Tuesday, Steve Renner went to Hennepin County Court in Minneapolis and obtained a restraining order against Allen, claiming that Allen was harassing and threatening him and trying to extort $100,000 from the company.
Allen said that what Renner claimed to be extortion was actually an attempt to work out a severance package.
The extortion claim was the second against a former INetGlobal employee. Former CEO Steven Keough was accused in court filings by Renner last month of trying to extort $500,000 from the company. Keough may be the government’s star witness in the case. The Secret Service said Keough had come to believe that Renner had hired him to be a “good face” for the company and that Renner had fired him for asking too many questions.
Engh argued in his brief yesterday that the government appeared to be ignoring his duty as counsel to INetGlobal employees “on some federalist notion of superiority or entitled sense of un-accountability.”
Separately, some members of INetGlobal have asserted the government is not playing fair. Similar claims were made in the prosecution of the assets of the AdSurfDaily autosurf. The government ultimately won three separate orders of forfeiture totaling more than $80 million in the ASD case.
ASD President Andy Bowdoin, whose company has been linked to international fugitive Robert Hodgins, who allegedly laundered money for a Colombian drug cartel, has filed an appeal. The ASD case has been in litigation since the Secret Service raided the company’s Florida headquarters in August 2008. The ASD case is referenced in filings by the prosecution in the INetGlobal case that allege an undercover agent was introduced to INetGlobal by an ASD member who promoted the program despite describing it as a wink-nod enterprise.
Renner, who was convicted in December of four felony counts of income-tax evasion and is awaiting sentencing, has not been charged in the INetGlobal case. The government seized about $26 million in its investigation into Renner’s business practices, and prosecutors have argued that Renner is attempting to get the government to expose its case before a formal action is brought.
Renner has denied wrongdoing, and the companies have said they are legitimate enterprises.
Narc That Car promoter “Jah,” who previously declared that repping for the company was like working for the “Census Bureau” and that his downline group would cap earnings claims in check-waving videos on YouTube at three figures because “we’re not going to be out here flashing, you know, five-figure checks†now suggests at Scam.com (see link below) that the firm’s critics merit a promotion.
If you criticize Narc That Car, which also is known as Crowd Sourcing International, you’re no longer a simple “naysayer.” According to Jah, you’re a “naysayer scammer.”
It was not immediately clear if other Narc That Car promoters or promoters of other questionable business opportunities would follow Jah’s lead and add the word “scammer” after the word “naysayer” in their efforts to cloud issues and discredit critics.
Also unclear is whether Jah had come to believe that the word “naysayer” alone had run out of steam and needed a boost from a word that packed an extra wallop.
At one time, Jah incorporated a strategy of actually calling Narc That Car a scam to refute claims that the company might be using a questionable business model associated with pyramid schemes. That approach apparently fizzled. His NarcThatCarIsAScam.info website has not been updated since it bashed the Better Business Bureau March 27, and Jah apparently has turned to an approach that labels NarcThatCar critics as scammers, as opposed to calling the company itself a scam to prove his point that it is not.
It is too soon to tell whether “naysayer scammer” will gain traction and emerge as a sort of perfect insult that will cause critics to acknowledge they’d lost both the PR war and the intellectual confrontation before retreating and scattering to the winds to nurse their wounds in private.
Jah also is persistently attacking the Better Business Bureau, which gave Narc That Car an “F” rating. And he has attacked the PP Blog, repeatedly asserting that the Blog lied about Narc That not being affiliated with Code Amber in a bid to discredit the company.
The PP Blog never asserted NTC had no relationship with Code Amber, which means Jah is arguing against a claim the Blog never made. The Blog reported that the U.S. Department of Justice denied that the federally managed AMBER Alert program, which NTC referenced in a promotional video, had any affiliation with NTC.
Jah previously has dismissed critics as simple “naysayers” and “haters.” He has never explained how such terms were consistent with a professional approach to public relations. Oddly, Jah persistently attacks critics for producing what he describes as hearsay — all the while attempting to bolster his hearsay case against critics by passing along third-party assertions purportedly from his upline.
Narc That Car says it is in the business of paying people to record license-plate numbers for entry in a database purportedly used by companies in the business of repossessing automobiles. Tactics employed by some repo companies are controversial, and the National Consumer Law Center has linked the repo trade to six deaths since 2006.
Meanwhile, the repo business has ties to to so-called “buy here, pay here” business in which used-car lots finance purchases for high-risk borrowers, often in areas of high poverty and unemployment.
Like members of the AdSurfDaily, AdViewGlobal and AdGateWorld autosurfs, Jah has seized on the name of the PP Blog to discredit it, describing it on the WorkAtHomeForum as authored by “Patrick the pretty guy.”
Other critics of the Blog have referred to it as “Pretty Patrick.” Some have suggested it should be dismissed because its author either is gay or confused about his gender. Among other things, the author had been called a “fag,” an “it” and just plain “ugly.” One critic of the Blog suggested the world might have been a better place had the author’s mother aborted him.
Virtually all of the Blog’s critics have purported to be professional business people. Regardless, many of them have raced from one scam to the next, dragging their downlines with them and subjecting themselves and their downline members to both civil and criminal prosecution.
Visit Scam.com to observe Jah toiling with the critics.
Sign of the apocalypse? The headquarters of the “3 Hebrew Boys” Ponzi scheme in Columbia, S.C., was gutted in a fire Monday and Tuesday. Firefighters spent 19 hours over two days battling the blaze, but the “building and all contents . . . were completely destroyed,” according to Beattie B. Ashmore.
Ashmore is the court-appointed receiver in the case. Proof-of-claim forms for victims of the $80 million Ponzi swindle became available April 15, only 11 days before the fire broke out. The cause of the fire is under investigation, and the building was an asset of the receivership estate.
“All computers and documents have been stored off-site since the Receiver took possession of the building in October 2007,” Ashmore said. “The building was being managed by a reputable property management company, fully insured and continuously monitored by a security company. The Receiver will make a claim immediately with the Hartford Insurance Company for the full value of the building with the insurance proceeds going to the benefit of the victims.”
The 3 Hebrew Boys case is one of the strangest in the United States, drawing comparisons to the alleged AdSurfDaily Ponzi scheme owing to elements of affinity fraud and antigovernment rhetoric.
Joseph Brunson, Tim McQueen and Tony Pough were convicted in November of swindling tens of millions of dollars in a bogus debt-relief “ministry.” The purported aim of the program was to free people from government “bondage,†and the investigation was referred to as “Satan’s handiwork.â€
In the earliest days of the 3 Hebrew Boys case, more than 100 people protested on behalf of the scheme at a rally in Columbia, saying the government did not understand the program, had overreached in its prosecutorial efforts, refused to deny it was wrong and had chosen to move forward with the case in a bid to save face.
In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.
AVG, which has close ties to ASD, morphed into a “private association†in February 2009. Members were scolded for sharing information and calling the autosurf an “investment†program. As the company appeared to be collapsing in May and June, members were threatened with copyright-infringement lawsuits for sharing information published by the firm.
Brunson, McQueen and Pough are jailed awaiting sentencing. After they were found guilty of 174 counts mail fraud, money-laundering and transporting stolen goods, the men filed documents accusing former U.S. Attorney Walt Wilkins of treason and committing acts of war by prosecuting them.
The men became known as “3 Hebrew Boys†after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.
Minnesota Ponzi Sentencing
A Ponzi scheme operator in Rosemount, Minn., has been sentenced to 117 months in prison and ordered to pay $21.8 million in restitution to victims.
Charles “Chuck†E. Hays, 56, has been detained since his arrest in February 2009. He pleaded guilty last year to one count of mail fraud, one count of wire fraud and one count of structuring transactions to avoid financial reporting requirements.
Among the items seized in the case was a $3 million yacht acquired with investors’ money. Hays operated a firm known as Crossfire Trading LLC and bilked investors out of more than $20 million by operating a Ponzi scheme.
“Hays told potential investors he was a day trader in stock index futures and other futures contracts,” federal prosecutors said.
Investors plowed money into the scheme based on lies told by Hays, and he “admitted he diverted and converted those funds for his personal use and other unauthorized purposes,” prosecutors said.
The sentencing judge in the case was U.S. District Judge Donovan Frank.
California Ponzi Sentencing
Milton Retana, 46, of Huntington Park, was sentenced to 25 years in prison for a $62 million Ponzi scheme that bilked mostly Spanish-speaking investors out of at least $33 million.
The case became known as the “Best Diamond case.” Retana operated a purported real-estate investment company known as Best Diamond Funding. It was yet another instance another in which the name of a precious metal or mineral was used in a Ponzi scheme.
Evidence of the fraud was hidden in the back of a religious bookstore operated by Retana’s wife, prosecutors said. When investigators searched the bookstore, they found millions of dollars in cash. Best Diamond was located next door to the bookstore.
The scheme — like many other Ponzi schemes — featured an appeal to religion, prosecutors said.
“Best Diamond Funding solicited money through advertisements in Spanish-language magazines, on the Internet, and during weekly investment seminars at locations across Los Angeles. The raucous investment seminars often had as many as 300 potential investors and incorporated religious messages,” prosecutors said.
“Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit,” prosecutors said. “However, records obtained by federal investigators showed that Retana used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money.”
The sentencing judge in the case was U.S. District Judge R. Gary Klausner.
Former INetGlobal CEO Steven Keough now has some company on the list of people alleged to have tried to extort money from the Steve Renner family of companies.
Renner went to court yesterday in Minnesota to seek a restraining order prohibiting Donald Allen from harassing him. The order was granted after Renner asserted Allen tried to extort $100,000 and had engaged in a pattern of abusive behavior, including raising “havoc” with employees, threatening “to destroy him and his family,” posting libelous and defamatory material on the Internet and engaging in verbal harassment.
Allen also was accused to taking pictures of Renner’s offices and employees without their consent.
“[Allen] has attempted to extort $100,000 from Petitioner’s businesses [and] if not paid will go to the FBI and Secret Service,” Renner asserted.
A judge ordered Allen not to harass Renner, not to have any contact with Renner and to stay away from Renner’s home. The judge also ordered Allen to stay one “city block” away “in all directions” from Renner’s businesses in Minneapolis.
Should Allen violate the order, he could be arrested, jailed for up to 90 days and fined up to $1,000, according to the order. Subsequent violations of the order could result in stiffer measures, including the filing of felony charges that could land Allen in jail for for up to 10 years and force him to pay a fine of up to $20,000.
Allen is referred to in court papers as a previous employee of a Renner company.
In a story published yesterday on the PP Blog, Allen said he was cooperating with the U.S. Secret Service “100 percent” in a probe of Renner’s business practices. The Secret Service said in February that it believed Renner was operating a Ponzi scheme and engaging in wire fraud and money laundering.
Renner has not been charged with a crime and denies wrongdoing. Allen was vice president at V-Newswire, one of the “V” entities in the Renner family of companies. The Secret Service said in February that Allen had given confusing information to a customer of INetGlobal, another Renner entity.
Allen denies wrongdoing, and now says he has met with the Secret Service twice and is cooperating fully in the Ponzi probe. The first meeting with the Secret Service occurred Friday, after agents showed up unannounced at his home, Allen said yesterday.
In March, Renner accused Steven Keough, the former CEO of INetGlobal, of trying to extort $500,000 from the company. Keough may be the government’s star witness if charges are filed.
“This is the same move they tried on Steve Keough,” Allen said this morning. “I never tried to extort anything.”
EDITOR’S NOTE: The story below includes an assertion by Donald Allen that his IBNN.org website was knocked offline Sunday by a company with ties to INetGlobal. Moments before the story was set for publication, the IBNN website returned. The story does not reflect this later event, and it is possible that the site is not viewable in all parts of the world owing to an apparent change in nameservers. Events surrounding the apparent change in nameservers are unclear.
Acknowledging he had been advised that he potentially has “exposure” in the INetGlobal Ponzi scheme investigation, Donald Allen II said this morning that he had nothing to hide and would cooperate with the U.S. Secret Service and federal prosecutors “100 percent.”
That cooperation already has begun, Allen said. He added that his thinking about INetGlobal has evolved since the Feb. 23 raid of company headquarters in Minneapolis, and he insisted he was out of the loop on INetGlobal’s financial affairs and that his efforts to promote the firm were legitimate.
“Let me make it perfectly clear,” Allen said this morning. “I did the Global News Distribution and was never let in to the ‘workings’ of iNetGlobal. I met with the US Secret Service and [its] position is that I ‘shielded’ [Steve Renner] to operate a Ponzi, which is untrue.”
Allen, a vice president with V-Newswire, an entity in the INetGlobal family controlled by Renner, claimed this morning that the company had blocked his access and the access of readers to a public-affairs Blog he operates. The Blog is known as the Independent Business News Network (IBNN).
The company, Allen asserted, was penalizing him “for coming forward to answer ANY questions the Government has regarding iNetGlobal.”
Renner has not been charged with a crime and has denied wrongdoing. The Secret Service said in court documents filed in February that “there is probable cause to believe that Renner is operating a large, Internet-based, Ponzi scheme through his umbrella corporation, InterMark, and some of its subsidiaries, particularly Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local.”
NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.
The Secret Service alleged INetGlobal was the “primary vehicle for the perpetration of this fraud.”
INetGlobal, which features an advertising rotator, is the so-called “autosurfing” platform of the Renner companies. The government has prosecuted several autosurf companies in recent years, saying they were selling investment programs disguised as advertising programs and engaging in wire fraud and money-laundering.
Renner’s company has a high concentration of Chinese members who may have limited or no facility in English, the agency said. At least one INetGlobal member has said Americans flocked away from Renner’s autosurfing enterprise after the Secret Service, in August 2008, raided a similar company in Florida known as AdSurfDaily (ASD).
The ASD litigation is referenced in court papers in the INetGlobal case.
Allen said this morning that he also had performed work for V-Media and V-Local — both of which the Secret Service said had ties to the alleged INetGlobal fraud — but he insisted that he had done nothing wrong.
“I wasn’t privileged to know anything about the compensation program” of InetGlobal, Allen said. “I could not explain it to this day.”
An error message that reads “This Account Has Been Suspended: Please contact the V-Webs.com billing/support department as soon as possible” now appears on the IBNN site. In the early hours after Allen lost control of the Blog, the site would not return a ping and produced a “bad destination” error message, according to records.
Even though Allen moved the content of the site from a hosting company controlled by Renner weeks ago, Renner controlled the domain registration and thus has the ability to block access, Allen asserted this morning.
Allen’s access to the site was blocked sometime after “noon on Sunday,” two days after he met with the Secret Service, Allen said.
Agents appeared at his home Friday unannounced, Allen said.
He described his initial meeting with agents as “excellent.” Allen added that he is consulting with an attorney.
“[The Secret Service] asked me if I would like legal representation,” Allen said. “I said yes.”
A second meeting with the Secret Service occurred yesterday. Allen said he was consulting with his attorney again today, saying a characterization that described him as cooperating with the agency was “totally accurate.”
The move to block IBNN also followed on the heels of a letter Allen gave to Renner April 22, Allen said. The letter claimed that Allen had “clear and documented” evidence of violations of the Federal Equal Employment Opportunity laws in a hiring decision it made.
In the letter, Allen suggested he was not given an opportunity to interview for a job that went to an INetGlobal member with a large downline. The letter also questioned the operations of the company’s board of directors and claimed an INetGlobal “receptionist” was performing “confidential” work that should have been handled by the firm’s Human Resources department.
Moreover, Allen said this morning that nothing in his employment contract with the Renner entity permitted the company to block access to the IBNN site. He claimed that the company now wants him to sign an agreement not to write about INetGlobal and also to inspect his computer.
Allen Questions INetGlobal’s Operations
Allen said this morning that he questioned how the company was paying its bills in the aftermath of the federal seizure of its assets. He claimed a member of INetGlobal with a Chinese name had received a promotion to a position that purportedly paid $120,000 a year after the seizure. This member, Allen said, also may have a seat on the board of directors and also purportedly had a downline organization in the company that purportedly paid $10,000 a day.
His first question for Renner, Allen said, is “how is that possible with the current funds frozen by the US Government?”
Allen said his position with the company was supposed to pay $75,000, but that he had not seen “a penny.”
“I’m a little upset, a little traumatized by this attempt to shut me down, because I had one hell of a story,” Allen said. “I’m kind of devastated; I have a civil-rights Blog. A lot of people read it.”
No Stranger To Controversy
Allen and his IBNN Blog have been the subjects of controversy. He used an offshoot of the Blog to claim in March that “federal officials” were leaking information about the INetGlobal case to the PP Blog. After the PP Blog began to report on INetGlobal, Allen began to post comments on the PP Blog without initially identifying himself as a Renner employee, claiming that the PP Blog was “minor league” and engaging in a “witch hunt.”
Separately, Allen used the IBNN Blog to attack the Star Tribune newspaper of Minneapolis St. Paul for its coverage of the INetGlobal raid. Meanwhile, Allen’s name is listed in the Secret Service affidavit filed in February to obtain search warrants at the firm’s headquarters. In the affidavit, the agency painted Allen as a person who provided confusing information to an INetGlobal prospect at a January event in Flushing, N.Y.
Undercover agents attended the Flushing event, and one agent’s observations of Allen are noted in the affidavit.
An INetGlobal prospect “stated she was struggling to understand how the business worked and explained that the person who brought her to the conference was not able to explain it either,” the agency said in the affidavit. “She asked what would happen if she sold iNetGlobal products to someone who had a website and they did not see an increase in their profits.
“Donald Allen asked her what type of products the person was selling and the woman gave the example of beauty products,” the agency continued in the affidavit. “Donald Allen replied that if she was advertising beauty products and not selling any, then maybe she should be in a different business. The woman further challenged Donald Allen on people not truly viewing the websites, just simply opening them. Patricio Diez, iNetGlobal’s marketing director for Spanish-speaking countries, then stated that ‘that doesn’t matter for you.’
“When the woman pressed further, stating that it does matter to whomever she sold the package to, Donald Allen simply stated ‘we have solutions for that’ but failed to expand upon those solutions,” the agency said.
After the raid at INetGlobal’s offices in Minneapolis, Allen used the IBNN Blog to criticize both the media and the government for what he described as unfair treatment of the company — without disclosing his tie to the firm. Allen later told the PP Blog he should have disclosed the tie.
Allen said this morning that his thinking about INetGlobal has evolved. He added that he also had revisited certain events at INetGlobal and had come to believe that things were not quite right.
At an event in Las Vegas last year, for example, Allen was not given time to talk to attendees about V-Local, he said. In recent days he has publicly questioned why few if any members were interested in purchasing the company’s editorial products.
“I can’t recall ever selling a press release to a Chinese member of iNetGlobal,” Allen said in a comment on the PP Blog April 23. “My yearly budget was in-part based on iNetGlobal members buying a press release from V-Newswire — hasn’t happened yet.”
Meanwhile, Allen said this morning that he was sympathetic to Steven Keough, INetGlobal’s former chief executive officer and potentially the government’s star witness in the case. The company has claimed Keough tried to hatch an extortion plot after he was dismissed for incompetence.
“Keough understood that INetGlobal members needed to buy the products,” Allen said this morning. “Steven Keough was the best thing that ever happened to that company,” adding that he believed Keough saw “noncompliance” with laws and was dismissed for pointing them out.
American Integrity Financial Co. existed in name only, the SEC said today. Its operator, Matthew J. Ryan, 45, of Troy, N.Y., used the bogus company to fleece senior citizens in a Ponzi scheme by telling them they’d earn “guaranteed” return rates of 3.85 percent to 9 percent each year.
