A Florida man who spent time in prison for wire fraud and money-laundering in a previous Ponzi scheme embarked on a new scheme after his release, federal prosecutors said.
Within two years of being released from custody in 1996 — and while still on supervised probation — Michael Greenberg, 50, started a new Ponzi and fraud scheme.
The new scheme operated for more than a decade, gathered more than $53 million, fleeced investors and creditors out of more than $24 million and used the names of at least nine different companies, prosecutors said.
Just days ago FBI Director Robert Mueller III warned Congress that white-collar criminals in the United States increasingly were relying on shell corporations to commit crimes and avoid detection.
The U.S. Secret Service led the investigation, which is centered in Pinellas County, Fla. Greenberg has been charged with wire fraud.
One of his companies existed for “no other purpose than to defraud banks and the U.S. Small Business Administration,” the Secret Service said. The agency described several of the companies as operating “on paper.”
In 1992, Greenberg was sentenced to 46 months in federal prison after being convicted of operating a Ponzi scheme that fleeced his own father out of more than $1 million. Other investors also lost money in the scheme, according to records.
After being released from prison, Greenberg started a company named Pure Class Inc., according to the Secret Service complaint. The business involved the need for an automobile-dealer’s license, something that might be a tall order for a convicted felon to obtain.
Greenberg “hid behind a proxy in both forming the corporation and in obtaining the license,” the Secret Service said.
‘[A]ll business done with Pure Class from its inception was based on a fraud at its inception,” the Secret Service said.
Because of the corporate deception and the proxy, the Secret Service said, persons conducting due diligence on the company would have been shielded from discovering Greenberg’s felony conviction and facts to help them make informed investment and business decisions.
The agency painted a picture of an elaborate deception, alleging that Greenberg assumed the identity of a third person to trick at least one victim and created a bogus email account to correspond with the victim, as though Greenberg were a third party who could verify details about the business.
Greenberg also assumed the identities of his parents to get a loan and created “sham” corporations to keep investors from learning the truth about his business operations, the Secret Service said.
He is accused of creating false tax returns in his parents’ names, forging their signatures on a loan deal, stealing a notary stamp, affixing the stamp to the forged documents, and then forging the name of the notary.
Greenberg formed at least nine different corporations or business names to pull off the scheme, according to the Secret Service. He is accused of fleecing at least 30 investors and banks, and also is accused of swindling the U.S. Small Business Administration.
Among the victims were a real-estate developer and a law firm whose office manager invested the company’s line of credit of $119,000 in the scheme, according to the complaint.
Based on Greenberg’s fraud — and elaborate measures to cover it — he duped the Small Business Administration into backing $1.5 million in loans — loans that were acquired at least in part because Greenberg forged his wife’s signature on documents, according to the complaint.
A Florida man who operated a previous scam has been banned for life from the telemarketing business after state and federal authorities and the Better Business Bureau worked together to expose the operation, the Federal Trade Commission said.
“The FTC received invaluable assistance in this matter from the U.S. Postal Inspection Service, the University of Central Florida Police Department, Largo Police Department, and the Better Business Bureau of West Florida, Inc.,” the FTC said.
James Nicholson, who operated a company known as Group One Network and offered a “Credit Line Gold Card,” was sued by the FTC amid allegations the company charged an up-front fee for a “supposed, general-use credit card,” the agency said.
The card scored an “F” from the BBB — the organization’s lowest-possible rating on a 14-step scale.
It turned out that the card was no general-use card at all; rather, it was a card that only permitted customers to spend money at websites associated with Nicholson.
“Telemarketers working for Nicholson’s chief company, Group One Network, also claimed that consumers would get access to a significant line of credit that could be used for cash advances, and that their payment histories would be reported to the three major credit bureaus,” the FTC said. “In reality, consumers who paid the fee received an online shopping card they could only use to buy products from Group One’s Web sites, they could not get cash advances, and their credit histories were never reported to the credit bureaus.”
Nicholson also participated in a bogus “advance-fee interest-rate reduction/debt negotiation program,” the FTC said.
His recent run-in with law enforcement was not his first. In 1995, Nicholson pleaded guilty to wire fraud in a telemarketing scheme.
Nicholson now has been banned for life from telemarketing. In a settlement with the FTC, Nicholson gave up a 31-foot power boat, a Nissan Pathfinder, and jewelry and art valued at more than $10,000. He also is on the receiving end of a judgment for $17.2 million, which has been suspended because Nicholson and co-defendants are unable to pay.
Denying it was a Ponzi scheme, INetGlobal says a federal judge should release about $25 million, business records and computer equipment seized in an investigation by the U.S. Secret Service last month because the property was “unlawfully seized.”
Meanwhile, INetGlobal has accused its former chief executive officer — whom it describes as a “informant” who lied to the Secret Service — of hatching a plot to extort $500,000 from the company about seven weeks prior to the Feb. 23 raid.
Steven Keough, the former CEO, could not be reached for comment on this story.
INetGlobal also accused the Secret Service of lying.
At the same time, the company said it was part of a family of companies that are “clean, legitimate and profitable businesses,” and it accused the government of leaking the search-warrant affidavit in the case to the media, specifically citing the PP Blog.
INetGlobal and its operator, Steve Renner, are represented by Jon Hopeman. No criminal charges have been filed against Renner or the company.
A spokeswoman for U.S. Attorney B. Todd Jones declined to comment on INetGlobal’s court filings, saying that prosecutors would litigate the case in court and not in the media.
Also filing papers for INetGlobal in the case was attorney Mark J. Kallenbach.
Government Did Not Contact PP Blog; PP Blog Did Not Contact Government
“None of the information we published was obtained as a result of the government or an agent contacting the Blog and providing information for a story,” the PP Blog said. “Nor did the Blog contact the government or an agent to obtain the information.”
An exhibit the company produced for U.S. District Judge Donovan Frank reproduced a story the Blog published at 1:41 a.m. (ET) Feb. 25. The story was based on the Secret Service affidavit, which the Blog obtained from a government website open to any person with an Internet connection.
In its court filings, INetGlobal complained that its attorneys did not get a copy of the affidavit until Feb. 26.
“As of February 25, 2010, I had tried to get a copy of the affidavit,” Kallenbach wrote. “I was informed by the U.S. Attorney’s Office it was sealed. I was not provided a copy until February 26, 2010 at 1:57 p.m., 36 hours after the press had it. Someone leaked the affidavit to the press.”
The PP Blog was the first news outlet to publish information from the affidavit.
No member of government contacted the Blog though any means to arrange for access — exclusive or otherwise — to the material. Nor did the Blog contact any member of government to seek access — exclusive or otherwise — to the material. The Blog obtained the affidavit through the normal course of its reporting.
A Fiery Defense
Attorneys for Renner, INetGlobal and Inter-Mark Corp., the parent company of INetGlobal, appear ready to come out firing.
Among the documents the attorneys plan to present to Frank is a copy of an email dated Jan. 6 from Steven Keough, the former CEO, to attorney Aaron Hall of Minneapolis.
Keough, according to the email, said he was declining to accept a severance proposal offered by the company.
“If your client, Mr. Renner, is serious about resolving this quickly and amicably, then the minimum acceptable severance payment amount must be $500,000 — payable immediately,” the email read. “This reflects the promised signing bonus of $212,000 and promised one year salary of $288,000.”
The email suggested Keough was set on the amount of $500,000 and unwilling to negotiate. Keough proposed that Hall schedule a meeting at a place convenient for Hall on Jan. 8.
“Come with a check and signable documents to the meeting location,” the email read. “After noon on Friday all bets are off as to how this matter will be handled.”
The email was signed “Thank you,” followed by the word “Regards.” Keough’s name appeared below the closing.
INetGlobal argued that the email was evidence of an extortion plot.
“On January 6, 2010, Mr. Keough attempted to extort over $500,000 from iNetGlobal,” Kallenbach argued in a brief. “He demanded payment of the money by 5:00 p.m. that day or all bets are off. According to the Secret Service’s affidavit, Keough contacted the government in this matter for the first time on January 8, 2010.”
Why Kallenbach referenced the time of 5 p.m. — and not noon, as the email referenced — was not immediately clear. Also unclear was the amount INetGlobal offered in the severance package that Keough purportedly rejected.
Whether Keough could argue the amount was too small and did not reflect his understanding of how he would be compensated should be be terminated or choose to leave the company was unclear.
In the Secret Service affidavit, Keough, an attorney and former naval officer, was portrayed as having asserted he was fired for asking too many questions and had come to believe InetGlobal owner Steve Renner had hired him to be a “good face” for the company.
Kallenbach, whose brief said Keough had been fired Jan. 5 — the day before Keough sent the email to Hall — claimed Keough had been fired for cause.
“Mr. Keough was terminated because within a month or so after being hired in late October of 2009, Mr. Keough made no progress in understanding the business, did not fit in with IMC’s rank and file, was unwilling to work with IMC’s board of directors, and attempted to take over IMC’s business from Mr. Steven Renner,” the brief argued.
Secret Service Accused Of Lying
Hopeman asserted in his brief that the Secret Service affidavit contained “intentional and reckless falsehoods” that undermined the probable cause to search.
“In this case, the entire premise of the search warrant affidavit is that little advertising was sold, little was used, and there were no legitimate advertisers,” Hopeman argued. “The search warrant affidavit states that the advertisements ranged from other multi-level marketing sites to affiliate programs, non-English websites, and even iNetGlobal’s home page . . .
“It concluded, without support, that there were ‘few legitimate advertisers,’” Hopeman argued.
At the same time, Hopeman argued that the Secret Service also omitted facts from the affidavit that were favorable to Renner.
“Keough appeared on the company’s website as of January 5, 2010 stating that he intended to recruit new customers from all around the world,” Hopeman asserted. “These are not the same words that Keough spoke to the agents days later when he claimed that the entire business was fraudulent. The agents knew this fact because it is posted on the website, which they studied. This fact if included in the affidavit would have cast substantial doubt on the credibility of the informant, who provided the principal basis for probable cause.”
Hopeman also said the Secret Service painted an unfair picture of how Renner behaved at a January INetGlobal gathering in New York. The Secret Service, which had at least two undercover agents in the room, said Renner often spoke over an interpreter even though many of the attendees had little facility in English, started a pandemonium by handing out $20 bills in exchange for $10 bills, and told at least two different stories about INetGlobal’s revenue figures.
“A viewing of the tapes show that Mr. Renner was very candid about the nature of the business,” Hopeman argued. “During these same presentations, he informed those assembled that this was not an investment, and that one could not earn money by doing nothing. He also explained the internet services that he was selling and made it clear that web hosting, domain registration, and advertising, were his products.”
In previous autosurf prosecutions, the government has argued that surf operators attempt to mask investment programs by calling them something else. Prosecutors in the AdSurfDaily Ponzi case, for example, said that the ASD program was an investment program disguised as an “advertising” program.
It is not uncommon for autosurfs to instruct members to avoid using certain words, including the words “investment” or “investing.” Some autosurf members have scolded others for using the word “investment,” which prosecutors have painted as evidence of the wink-nod nature of autosurfs.
In the ASD case, which was filed in August 2008, the Secret Service described a member speaking to an undercover agent, instructing the agent to be careful not to use certain words.
“Don’t call it investing, you know what I mean, we can get in trouble if we say that, we have to be careful,” the agency quoted an ASD member as saying.
The agency, which asserted in its affidavit in the INetGlobal case that an ASD member tried to recruit an undercover agent to join Renner’s surf, said the ASD member demonstrated the wink-nod nature of the autosurf business.
“The [ASD] member said he had previously been a member of ASD . . . and said, ‘We know what happened there,’” the Secret Service alleged in the INetGlobal affidavit. “The member said he was reluctant to join iNetGlobal due to it being similar to ASD. The member said, ‘we all know what this program is.’ The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out.”
Hopeman, though, said the Secret Service was wrong.
“On February 23, 2010, the United States Secret Service strapped on its guns and raid jackets, searched the premises of Mr. Renner s business, took all of its documents and computers, seized over $25 million in cash belonging to the business and its customers, put 75 people out of work, and seized the money for their paychecks and their children s health insurance,” Hopeman argued. “The sealed affidavit was leaked to the press. This was not a cocaine cartel. It was not a mafia front. It was a legitimate business.”
In the ASD case, prosecutors argued that an ASD filing to counter the government’s Ponzi assertions was”full of sound and fury, [but] signifying nothing.â€
How the prosecution intends to respond to INetGlobal’s arguments is unclear.
Hopeman was the attorney for Tom Petters, implicated in a masssive Ponzi scheme in 2008. Petters was convicted in December.
UPDATED 6:05 P.M. EDT (U.S.A., Jan. 20, 2011.) In yet another case that portends disaster for the so-called “autosurf” industry, a federal judge has ordered the Noobing autosurf to be added as a receivership defendant in a fraud case brought against its parent company.
The FTC and attorneys general from Minnesota, North Carolina and Kansas brought the case against Noobing’s parent — Affiliate Strategies Inc. (ASI) — in July 2009. Several other companies were named defendants in the case, which alleged the firms participated in a scheme that promised guaranteed government grants from economic-stimulus funds.
Brett Blackman, ASI’s head, also was president of Noobing, members said. Noobing was not initially named a receivership defendant.
U.S. District Judge Julie A. Robinson issued an asset freeze Sept. 1, along with stern orders to preserve evidence and repatriate to the United States all assets and documents held on foreign soil. She also broadened the powers of Larry Cook, the court-appointed receiver.
Through his investigation, Cook determined that Noobing was operating under the umbrella of Apex Holdings International LLC, the same company under which ASI operated. Cook also determined that at least 14 other companies were operating under the Apex Holdings umbrella.
Noobing, which was registered in the United States, also had an offshoot in Nevis, according to court filings. Noobing targeted people with hearing impairments.
Cook asked Robinson last month to add Noobing and the other companies as receivership defendants after determining “each of the Subsidiaries used the same post office box as the [initial] Receivership Defendants.”
Moroever, Cook advised Robinson that he had received “receive numerous inquiries from creditors, former independent contractors, and tax authorities for the Subsidiaries.” He further argued that “each of the Subsidiaries was entirely reliant upon the business operations of the [initial] Receivership Defendants.”
Robinson, saying Cook had shown “good cause,” added Noobing and the others as defendants March 18.
No party — including the FTC, the state attorneys general, the initial set of defendants and the new defendants — objected, Robinson noted. In December, Illinois joined the FTC, Minnesota, North Carolina and Kansas in the action.
On the previous day, March 17, FBI Director Robert Mueller III, without naming names, testified before Congress. Mueller said that “shell corporations” are emerging as a threat to the U.S. banking system because owners were using them “to facilitate the concealing of criminal proceeds” and engage in money-laundering.
Neither Noobing not its corporate parent has been accused of a crime.
In February, the U.S. Secret Service alleged in a civil forfeiture complaint that INetGlobal, a company that operates an autosurf, was engaged in money-laundering and wire fraud while operating a Ponzi scheme.
INetGlobal is operated by Steve Renner, under his “umbrella corporation, InterMark,” the Secret Service alleged. The agency identified what it described as “subsidiaries,” specifically referencing “Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local,” as well as a company named “INet Global Productions.”
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 commission by Renner of the federal crimes of wire fraud, in violation of Title 18, United States Code Section 1343, and money laundering, in violation of Title 18, United States Code Section 1957, is essential to the operation of this Ponzi scheme,” the Secret Service alleged.
In August 2008, the Secret Service said AdSurfDaily, a Florida-based autosurf company, also was engaging in wire fraud and money-laundering while operating a Ponzi scheme.
U.S. District Judge Rosemary Collyer — on Jan. 4, 2010 — ordered the forfeiture of more than $65.8 million in the personal bank accounts of ASD President Andy Bowdoin. A little more than a month later, on Feb. 23, the Secret Service moved against INetGlobal.
Records show that ASD’s Bowdoin operated several corporations over the years. In September 2009, the state of Florida revoked the corporate registrations of AdSurfDaily and Bowdoin/Harris Enterprises Inc.
The revocations occurred just four days after Bowdoin told members he had exciting plans for ASD’s future. Despite his claim, Bowdoin never bothered to submit the paperwork to keep the firm’s registration intact, despite having been given a five-month window to do so.
In his remarks to members, Bowdoin said the government had seized the assets of ASD members. In his own sworn court filings, however, Bowdoin said the seized assets belonged to him and his company.
The Secret Service transcribed Bowdoin’s remarks, and presented them to Collyer Sept. 28. Federal prosecutors said Bowdoin’s remarks were evidence that “this con man cannot manage to keep his stories straight.â€
Collyer ordered the ASD asset forfeiture a little more than three months later. In the INetGlobal case, the Secret Service said one of its undercover agents was on the receiving end of a sales pitch from an ASD member who was trying to recruit the agent into INetGlobal.
Renner’s autosurf “began operating just weeks after ASD was put out of business by the Secret Service, and this new entity uses the same terminology and business model as ASD,” the agency said in an affidavit for a search warrant.
At least one of the undercover agents working the INetGlobal case also worked the ASD case, according to court filings. The Secret Service searched the Web for an INetGlobal affiliate site, and the INetGlobal affiliate who pitched the undercover agent also had been an ASD member, according to the affidavit.
“The member asked if [the undercover agent] was a network marketer,” the Secret Service said. “The member said he had previously been a member of ASD . . . and said, ‘We know what happened there.’
“The member said he was reluctant to join iNetGlobal due to it being similar to ASD,” the agency continued in the affidavit. “The member said, ‘we all know what this program is.’” The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out. The member said you convert your earnings to V-cash and then receive payouts by check or through an ATM card you can sign up for.”
Less than a month later, FBI Director Mueller told Congress that “shell corporations” and “stored value” debit devices and “reloadable debit cards” increasingly were being used “to move criminal proceeds.”
“This has created a ‘shadow’ banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers,” Mueller said.
Mueller did not name any companies in his Congressional testimony.
Using language with which followers of the long-running AdSurfDaily Ponzi/pyramid-scheme saga will be familiar, Data Network Affiliates (DNA) has declared its license-plate data program a “loss leader.”
Meanwhile, the company declared it has “no competition” and that members will come to understand its advertising claims are true once it rolls out three-fourths of its program.
“NO ONE or NOTHING could even come close to where we are or where we are going,” the company said in an email laced with sentence fragments and fractured syntax. “When 75% of The D.N.A. Opportunity is fully released. You will know why this statement is more than 100% accurate.”
DNA, a multilevel-marketing (MLM) company, did not say how a statement could be more than 100 percent true. Nor did the company explain why members would not be able to determine it was telling a truth that exceeded 100 percent until 75 percent of the program was released.
At the same time, DNA said “it expects” to pay out more than “$100,000” in “PRO” commissions April 5, adding that the addition of “3rd party” affiliates made it “believe” commissions would “grow to over $1,000,000 (one million weekly).”
Although DNA previously said it has recruited tens of thousands of affiliates for its “free” program that asks members to write down license-plate numbers for entry in a database as a means of helping the “Amber Alert” program recover abducted children, the company now suggests its data may not be all that useful.
“Currently the #1 benefit for D.N.A. collecting such DATA is the small and hopeful chance that it may help save a child or prevent a crime,” the company said in the email.
In a previous email, DNA acknowledged it had erected barriers that made it more time-consuming for “free” members to enter information in the database. The barriers can be removed by paying the company a one-time fee of $97 and a monthly fee of $29.95 for the right to use what the firm describes as a “PRO†data-entry module.
The “PRO” module, DNA says, makes “DATA ENTRY simpler, easier, faster and less time consuming.â€
DNA noted that it was selling other products for which it would pay commissions, including a “$35 to $50 bottle of NUTRITIONAL JUICES at a $10 price” and a “$35 to $50 bottle of LOTIONS & POTIONS at a $10 price.”
In a separate email, DNA said members who came into the company for free because of the license-plate program have nothing about which to complain.
“We receive over 50 e-mails a day saying why did you change from “FREE,’” DNA said. “FACT we have not changed anything from our original ‘FREE’ opportunity except to go from up to SIX LEVELS OF PAY ‘TO’ up to TEN LEVELS OF PAY.
“A person may still sign up as a FREE Affiliate and enter their TWENTY CAR TAGS,” DNA continued. “It will take 5 Minutes per Tag entered since advertising partners is our main source of income from DATA ENTRY. (PRO Affiliates create other sources of income so their per tag data entry time is only 30 to 60 seconds per car tag.[)]”
DNA encouraged members to “be positive.”
Details about how DNA has tied its free data-entry program to “advertising” partners are unclear. Also unclear is why the original group of thousands of members weren’t told when they were signing up for free — while perhaps relying on DNA’s assertion it could help the Amber Alert program — that the company intended to treat the data-entry program as a “loss leader” and make it harder, not easier, for free members to enter data.
Tens of thousands of free affiliates registered for DNA before the “PRO” data-entry module, which comes with an up-front cost of $126.95 and a monthly cost of $29.95 thereafter, was announced.
Using a largely all-caps presentation, DNA said the sky was the limit.
“D.N.A. is so much more than CAR TAG DATA,” the company said. “Many have said it but only one will do it. We will do in 3 to 5 years what took AMWAY 50 YEARS. Here is a partial list of current and future opportunities with D.N.A.
“LOCAL, NATIONAL & INTERNATIONAL ADVERTISING; GOLD FOR CASH; CELL PHONES FOR CASH; LAPTOPS FOR CASH; DIRECT TV; THE DISH NETWORK; SECURITY SYSTEMS; CREDIT REPAIR; DEBT REDUCTION; INTERNET SALES SYSTEMS; 1000’s OF DISCOUNT PRODUCTS; 1000’s OF DISCOUNT SERVICES; ONE STOP SHOPPING; HEALTH BENEFITS; DENTAL PLANS; LIFE INSURANCE; WHOLESALE AUTO BUYING; WHOLESALE TIRES; DISCOUNT DRUGS; TRAVEL and MUCH MORE…”
In the context of MLM, “loss leaders” can be dicey. In August 2008, federal prosecutors referenced AdSurfDaily’s use of the “loss leader” claim in a forfeiture complaint that seized more than $65.8 million from the bank accounts of ASD President Andy Bowdoin.
“In a further attempt to make Bowdoin’s business mode sound legitimate, [ASD attorney Robert] Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.
“[Undercover agents] have not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers to ‘earn their money back, plus a little more.’”
DNA has not been accused of wrongdoing. Whether the company has sufficient revenue streams to defeat a pyramid challenge — if one emerges — is unclear. Also unclear is the number of affiliates who signed up for free and then opted for the “PRO” data-entry module.
What is clear is that DNA knows the famous Emma Lazarus sonnet, “The New Colossus,” which is mounted on the pedestal of the Statue of Liberty. The company has its own take on it:
“Give D.N.A. your MLM tired, your MLM poor, your MLM people who are sick and tired of being sick and tired, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore,” DNA said in its email to members. “Send all of these, all who could not make it where they were, the homeless, tempest-tossed to D.N.A. as we lift our golden opportunity for free to all.”
Another MLM company in the license-plate recording business — Narc That Car — is the subject of an inquiry by the Better Business Bureau in Dallas to substantiate advertising claims and determine if the company is using a pyramid model to pay members.
The BBB now notes that Narc That Car is using the name “Crowd Sourcing International” — or “CSI” for short.
Other names associated with Narc That Car include Narc Technologies Inc. and National Automotive Record Centre Inc.
This post commemorates the life and passing of “Peep.”
Peep, believed to be four, was Maddy’s newly adopted brother. He died Monday at the veterinarian’s office after a lengthy illness that left him unable to process nutrients and gain strength. Peep made his home for the past month with my sister, my brother-in-law and my niece.
Maddy is a small dog; Peep was even smaller. He provided a great deal of love in his short time among us, and received a great deal of love in return.
What I’ll remember about Peep was the way he sat — like a thinker. Although it’s hard to describe, he sat in a way that projected sweetness, innocence and thoughtfulness. It became clear after a few days or so that he has glad to have people again. Maddy was good for him because she taught him how to trust again.
She also taught him how to score table scraps. Peep needed this sort of fun — any sort of fun, really.
His hair was severely matted, and he was just a speck. He must have weighed less than 10 pounds. Despite his youth, Peep had the bearing of a much older dog. Perhaps because he felt insecure or perhaps because he simply was too weak, Peep initially found no joy in his toys.
One beautiful, bright spot for Peep occurred when Maddy showed him how to have fun with his rawhide ball. Peep previously had no interest in the ball. After Maddy started trotting with it and batting it like a hockey puck, Peep suddenly found a spark. He batted it around himself — the first time he behaved in a fashion consistent with freedom.
At one time Peep must have been with a family who loved him. He was house-trained and had a good demeanor. He knew, for example, what it meant to see his leash– and he very agreeably readied himself to go outside. He was very bright.
Peep’s Perfect Freedom
Peep may hold a distinction among all people and animals. In his short time with us, he observed something I’d never seen in all my years: a wide-open Little League field. It was the field of my youth; it is close to a significant deer population, and it always has been fenced in. Workers temporarily removed the fences in late winter, leaving the field wide open. The scene was incongruous to all people and animals — except for Peep. He never saw the field fenced-in.
So, to Peep, no incongruity existed. To him, the wide-open field was a natural state. I drove by the field last night. The fences of my youth, which had been repaired and repainted dozens of times over the years, have been replaced by sparking, new fences. The fences are safer for players and spectators. They’re also much higher. There will be no more cheap home runs. Any balls driven over the fence will require a much higher arc, potentially meaning the current home-run record may never be shattered.
In any event, the fences may not come down again for another 50 or more years. Deer will not have the freedom to graze in the outfield again for decades. Unlike Peep, who had open access to the field, the neighborhood dogs will be blocked for decades from exploration and will need to find a new place to dig holes to hide their prized possessions.
I am not sure how Peep ever ended up at the shelter, but he did — and he had a number of dog maladies. It seems highly likely that he somehow became separated from his family and lived as a street stray for a considerable period of time. His medical situation Monday became incompatible with life.
We loved you, Peep, and you are resting in a beautiful place. You were preceded in death by your dog siblings Gracey, Skippy, Pal and Beef, and the cats Blue and Kitty. You also (presumably) were preceded by the orphaned, unnamed baby raccoon born in the city who followed me home when I was 11, learned to walk on a leash, ate salad and dog food and lived in the old console TV set I hollowed out until the Game Commission made me give him up. They told me he’d grown too big for his TV set and would be happier in the country
You are survived by your people, your dog cousin Allie, and Maddy, your sister.
In loving memory of Peep: 2006 (estimated) – 2010. His late stages of life were mostly about fences — except for that brief, magical time when even the fences at the Little League field came down and provided the neighborhood dogs and deer with a special brand of freedom that will not be seen again until the kids who race to take their positions on the field this spring — as I did long ago — become grandmothers and grandfathers.
If you follow news about the so-called autosurf “industry,” the mind-boggling PR approach by some supporters of Steve Renner’s INetGlobal is apt to remind you of the bizarre approach employed by Florida-based AdSurfDaily and some members of the now-defunct Surf’s Up forum.
If you’re new to the ongoing saga of AdSurfDaily (ASD), the developing story about INetGlobal and the autosurf “industry” in general, ASD’s case is instructive. Although ASD claimed to be a professional advertising and communications firm, one of its first efforts to counter the federal government’s allegations was to compare prosecutors and the U.S. Secret Service to “Satan” and the 9/11 terrorists who killed nearly 3,000 people in New York.
ASD President Andy Bowdoin later asked for an evidentiary hearing in the civil-forfeiture case against the company’s assets — the same sort of case INetGlobal is facing — but Bowdoin then took the 5th Amendment, as did his chief executive officer.
In a comment that will live for the ages, one ASD supporter explained that Bowdoin, who was running the company with 10 bank accounts in his personal name and let it slip that ASD had $1 million in an account under a different name on the Caribbean island nation of Antigua, was “too honest” to testify.
One of the issues in the ASD case was the Ponzi issue — specifically, whether ASD had sufficient revenue to pay members “rebates” without resorting to taking money from new members to pay old ones. ASD’s evidentiary hearing lasted two days. The company did not submit an audited and certified balance sheet to refute the government’s Ponzi claims.
Instead, after the hearing — while ASD was awaiting a decision by U.S. District Judge Rosemary Collyer on whether it was operating lawfully and had demonstrated it was not a Ponzi scheme at the hearing — the company issued a news release.
The news release claimed ASD was expecting a revenue infusion of $200 million from a penny stock company. Performing no due diligence at all, some ASD members immediately raced to forums and websites to announce the company had a business deal worth one-fifth of a billion dollars.
Other ASD members sought to substantiate the company’s announcement and insisted that ASD prove its $200 million claim. The company then deleted the news release.
Meanwhile, ASD also claimed that Ponzi allegations brought against it by Florida Attorney General Bill McCollum had been dropped. Once again, ASD members who did no checking at all raced to forums and websites to announce the good news.
In response, McCollum’s office issued a statement that, not only had Ponzi allegations not been dropped, they’d never been filed to begin with. ASD was accused by McCollum of operating a pyramid scheme.
Earlier, some ASD supporters were part of a bizarre campaign to have McCollum charged with Deceptive Trade Practices for holding the view the company had broken the law. They also wanted to charge a Florida TV station with the same offense, apparently for broadcasting a story they deemed unflattering to ASD.
Like ASD’s Andy Bowdoin, Steve Renner — now ordered by a federal judge to wear a GPS tracking device as he awaits sentencing on federal tax-evasion charges and plans his defense for the civil Ponzi allegations against INetGlobal — is being portrayed as a victim of a corrupt government bent on destroying small business.
The approach is absurd. It did not work for Bowdoin, and it won’t work for Renner.
Renner, of course, is entitled to have supporters. Regardless, his supporters will be hard-pressed to persuade — let alone convince — the Ponzi-hating public that government evil is driving events at INetGlobal when the Secret Service already has produced an affidavit that says a bank closed down Renner-connected accounts prior to the raid because it suspected money-laundering.
Moreover, federal records show that one of Renner’s companies — a money-services business known as Cash Cards International (CCI) — previously had provided services for a Ponzi scheme that resulted in lengthy prison sentences for four people associated with the scheme.
When the receiver in the Ponzi case asked Renner to convert electronic credits to cash to fund the estate for Ponzi victims, Renner could not do it because he had spent the money as though it were his own, according to court filings.
As was the case with ASD, some INetGlobal members are attacking the media, amid claims there has been a rush to judgment.
Blaming Renner’s predicament on the media or suggesting the media have rushed to judgment also won’t work. The media did not invent the allegations; it simply reported them, as it would do in any other case.
Some INetGlobal members are pointing to an opinion piece on The Independent Business News Network (IBNN) website that the Star-Tribune newspaper of Minneapolis/St. Paul was guilty of “bias” in its coverage of the Secret Service raid on INetGlobal.
The IBNN piece, however, did not disclose that Don Allen, the author of the IBNN editorial, also worked as a spokesman for a Renner company. In short, while Allen was opining the Star-Tribune was guilty of bias, he did not make it clear that his own impartiality could be questioned.
IBNN’s Twitter site later reported that the Secret Service was “leaking” information to the PP Blog. It simply did not happen. The Secret Service leaked no information to the Blog.
While bashing the media in this context may provide some red meat for INetGlobal’s supporters, it does nothing to address the compelling reality that the allegations against Renner and his company are serious:
Ponzi scheme. Wire fraud. Co-mingling. Suspicious withdrawals. Accounts closed by a bank that suspected criminal activity. Money-laundering.
It’s the Minneapolis version of the ASD case. As was the case with ASD, INetGlobal is entitled to its day in court. It is entitled to argue passionately in its defense, and it is entitled to poke holes in the prosecution’s case. If the government does not have the goods, INetGlobal is entitled to win the forfeiture case and any future litigation that evolves.
At the same time, INetGlobal members who support the company are entitled to argue their point of view passionately. They are not entitled, however, to be taken seriously if they spin events in ridiculous ways that cannot pass the giggle test.
One difference between the INetGlobal forfeiture case and the ASD forfeiture case is that ASD did not appear to have gained traction in China. INetGlobal, though, does appear to have a substantial base of members in China. One of the issues in the INetGlobal case is language barriers: Can members who speak Chinese and have limited or no facility in English understand the business they joined and the complex litigation now engulfing the Renner companies?
Neither bashing the government nor bashing the media does anything to address those concerns. Such an approach leads to questions about whether INetGlobal’s members who have limited facility in English are being ill-served by the efforts of English-speaking members to spin the story in ways that avoid the unpleasant realities and cloud the critical issues, which can be confusing even if a member has perfect understanding of English.
On March 16, the PP Blog was provided a copy of an email some INetGlobal members received from their upline.
“[T]he first court appearance which took place yesterday [March 15] went in favor of iNetGlobal,” the email claimed. It did not mention that a federal judge ordered Renner to wear the GPS tracking device as he awaits sentencing on four felony counts of income-tax evasion.
Renner was convicted of the tax charges in December, more than two months prior to the Secret Service raid.
Among the other claims in the email was that “[t]he judge in the case ordered the ‘Feds’ to release iNetGlobal payroll monies back to the company.”
No such order appears to have been issued. Federal forfeiture law puts property that has been “arrested” — money in a bank account that has been seized, for example — in a state of limbo.
Judges may entertain motions to have seized money released, but may be reluctant to release it out of concern the money will be “lost” prior to the conclusion of a forfeiture case.
In general, the law seeks to avoid an inequitable result — for example, a decision to free money to pay employees could lead to a result in which less money would be available to compensate people who invested in a scheme and lost money.
In the ASD case, the company asked for $2 million to be released. Collyer said no after hearing live testimony, weighing briefs submitted by attorneys from both sides and deliberating on the issues for several weeks.
“The $2 million that ASD seeks to utilize are funds that were paid to ASD by advertisers and members,” Collyer ruled. “ASD has not demonstrated sufficiently that ASD is a legitimate business. Thus, the Court cannot release the funds to be used by the Company in its current form. And, if the plan to revamp ASD’s business proves unsuccessful, the citizens who paid that money will receive no advertising benefits and no return on their advertisement purchases. Quite simply, the money will be ‘lost’ forever.
“Despite the obvious hardships endured by the employees of ASD and a great number of its members,” Collyer continued, “the Court cannot ignore its oath to uphold the law, nor can it rightly take the hardships of some and transfer them unto others.”
Some of the same legal issues may come into play in the INetGlobal case, although the fact sets are not precisely the same. U.S. District Judge Donovan Frank is hearing the case, and the prosecution already has filed papers that reference ASD and a ruling by Collyer that ordered the forfeiture of more than $65 million to the government.
Another section of the email was worded in a vague way that implied Donovan had arrived at the conclusion that INetGlobal might have the upper hand in the case.
“Also indicated by the judge that inetGlobal should petition the court to have other funds released,” the email said.
The mere act of petitioning a court for a result does not mean the court will rule favorably. That’s already been demonstrated in the INetGlobal case.
Prosecutors sought to jail Renner, arguing he did not abide by the law while awaiting sentencing for his December tax conviction. Instead of jailing Renner, the judge ordered GPS tracking, enabling him to remain free.
In the ASD case, members routinely spread misinformation after Collyer issued orders. When Collyer ordered ASD to file papers by a certain date, some ASD sponsors told downline members the prosecution had been ordered to prove ASD was a Ponzi scheme by the same date or lose the case.
When Collyer ordered the government to file motions in response to Bowdoin’s pleadings by a certain date, ASD sponsors told downline members that the prosecution was in a panic because it could not prove ASD was a Ponzi scheme and was trying to find a way to save face.
For at least a year, the Pro-ASD Surf’s Up forum spread a rumor based on “inside information” that the prosecution had admitted behind closed doors that ASD was not a Ponzi scheme. The rumor persisted, despite the fact that the government filed a second forfeiture complaint against ASD-connected assets after the rumor started.
Like the first complaint, the second complaint alleged the company was operating a Ponzi scheme. Not even the filing of the second complaint stopped the rumor, which was being repeated as though the court filings that disproved it simply did not exist.
EDITOR’S NOTE: Autosurf or HYIP promoter? White-collar fraudster of another stripe? Fan of “stored value” debit devices used in the context of well-publicized, fraudulent business models? Owner of a “shell” company used to disguise the ownership of funds? Figure you’re smarter than the cops and that you’ve perfected your form of deceit as you pocket commissions and other payments based on that deceit?
The director of the Federal Bureau of Investigation was talking about you in his testimony Wednesday before the House Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies. He said you were making it harder for the FBI to do its job and making it easier on people who might want to do harm to the country’s financial system and the country itself.
He didn’t mention your name, of course. But Robert Mueller III did ask for an additional budget outlay of $306.6 million next year as a means of neutralizing you before you could cause any more damage to the financial system and the national security of the United States.
And here, all along, you thought he didn’t know, that the agents who serve under him didn’t know.
They know. Call it anything you like — an “advertising” business, a financial “game,” a nontraditional investment that yields a high return, a new form of “gambling” or “arbitrage,” a multifaceted, multilevel-marketing program that pays a return based on visiting websites and recruiting other participants, a program for “good Christians” — and they still know.
Tell your prospects that the government doesn’t understand either the program or the technology in use — and they still know.
The reason they know is because they’ve seen it all before, watched it evolve, watched the changing explanations and terminology, watched the testimonials, watched the attempts to purify the “opportunities.” What they didn’t know, perhaps, was how devoted you were to your own criminality, how willing you were to put lipstick on a pig, how willing you were to be willfully blind to the obvious financial and security dangers to your neighbors because the money was just too good.
They know now, though — and they also know about your criminal cousins who conduct equally vile businesses and perhaps have ties to the Mob and other groups of organized criminals, perhaps even terrorist organizations.
Quick! Name your autosurfing or HYIP neighbor! What does he do at 3 a.m., when you’re sleeping? Are your commissions worth the risk he potentially poses to the security of the banking system and to the United States itself? What if he’s a [fill in the blank]? What if he’s amassing money to buy [fill in the blank?] What if he’s using the ATM machine to [fill in the blank?]
Is the Cadillac you bought with commissions from a [fill in the bank] worth it? Will it be worth it when it gets seized as the proceeds of a criminal enterprise — and your neighbors wonder aloud how you ever became involved in a criminal enterprise? Will it ring hollow when you try to explain that you didn’t know you were involved in a criminal enterprise — or will it look like an attempt to mask your criminality?
Mueller proposed an additional $232.8 million for salaries and expenses and $73.9 million for construction. If approved, the outlay would create 812 new positions, including 276 special agents, 187 intelligence analysts and 349 professional staff.
Why is the agency seeking a larger outlay? Because the “additional resources will allow the FBI to improve its capacities to address threats in the priority areas of terrorism, computer intrusions, weapons of mass destruction, foreign counterintelligence, white collar crime, violent crime and gangs, child exploitation, and organized crime. Also included in this request is funding for necessary organizational operational support and infrastructure requirements; without such funding, a threat or crime problem cannot be comprehensively addressed.”
The FBI, Mueller said, “saw an unprecedented rise in the identification of Ponzi and other high yield investment fraud schemes, many of which each involve thousands of victims and staggering losses — some in the billions of dollars.”
New threats such as “stock market manipulation via cyber intrusion” also are emerging, Mueller said.
Here, below, is the verbatim statement of Mueller when he was talking about you and other fraudsters. Note that he described you as a criminal, not a vastly misunderstood business person in an exciting, new arena that only few people understand. We have added the emphasis . . .
“Money laundering allows criminals to infuse illegal money into the stream of commerce, thus manipulating financial institutions to facilitate the concealing of criminal proceeds; this provides the criminals with unwarranted economic power.
“The FBI investigates money laundering cases by identifying the process by which criminals conceal or disguise the proceeds of their crimes or convert those proceeds into goods and services. The major threats in this area stem from emerging technologies, such as stored value devices, as well as from shell corporations, which are used to conceal the ownership of funds being moved through financial institutions and international commerce.
“Recent money laundering investigations have revealed a trend on the part of criminals to use stored value devices, such as pre-paid gift cards and reloadable debit cards, in order to move criminal proceeds. This has created a “shadow†banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers.
“This has impacted our ability to gather real time financial intelligence, which is ordinarily available through Bank Secrecy Act filings. Law enforcement relies on this intelligence to identify potential money launderers and terrorist financiers by spotting patterns in the transactions conducted by them.
“The void caused by the largely unregulated stored value card industry deprives us of the means to collect this vital intelligence. Moreover, stored value cards are often used to facilitate identity theft. For example, a criminal who successfully infiltrates a bank account can easily purchase stored value cards and then spend or sell them. This readily available outlet makes it much more unlikely that the stolen funds will ever be recovered, thus costing financial institutions and their insurers billions of dollars each year.”
Here is another snippet from Mueller talking about you . . .
“The FBI focuses its efforts in the securities fraud arena on schemes involving high yield investment fraud (to include Ponzi schemes), market manipulation, and commodities fraud. Due to the recent financial crisis, the FBI saw an unprecedented rise in the identification of Ponzi and other high yield investment fraud schemes, many of which each involve thousands of victims and staggering losses — some in the billions of dollars.
“With this trend and the development of new schemes, such as stock market manipulation via cyber intrusion, securities fraud is on the rise. Over the last five years, securities fraud investigations have increased by 33 percent.”
We’ll close this column with a question or two for you: Did you really think that agencies such as the FBI and the U.S. Secret Service were going to sit back and watch you do this forever?
Did you really think that you had no exposure as a promoter because you always could blame it on your upline and engage in willful blindness as you proceeded from program to program to program, dragging your downline with you from pig to pig to pig as you demonstrated your relentless willingness to paint with lipstick?
Final note: They also know that some of you are penny-stock manipulators, tax-deniers, “sovereigns” and underground “credit-repair” specialists. Just a guess on our part, but we figure Andy Bowdoin’s lasting legacy to the “industry” will be as the man responsible for its long-overdue destruction.
Records show that Bowdoin formed company after company, established corporate shells potentially with co-conspirators, and that ASD and other knockoff autosurfs used “stored value” debit cards, unregulated or lightly regulated payment processors and money-services businesses, and other means to immerse themselves in the shadow banking system.
The destruction of these miserable and dangerous “industries” is not going to happen overnight — but it is happening. The FBI, the U.S. Secret Service, the Justice Department, the SEC, the CFTC, the FTC, the U.S. Postal Inspection Service, the IRS and other agencies at the federal, state and local levels are going to make it happen.
It’s going to happen because it has to happen. There never has been a worse time to be a white-collar criminal. The public at large wants to put you in jail and will not turn you into a folk hero as it did for Bonnie and Clyde and John Dillinger.
You remind the public of Bernard Madoff, and it — the “it” being comprised of the vast majority of Americans and citizens of other countries who celebrate common decency and support the rule of law — simply is not willing to cut you any slack when you’re picking the pockets of your neighbors or the fellow congregants at your place of worship.
Indeed, the public has seen all it is willing to take, and could not care less that you got your money without the benefit of a gun. To the public, you’re worse than Bonnie and Clyde, worse than Dillinger himself, who robbed in the plain light of day.
Robert Mueller wants to hire 276 more G-men and G-women and 187 intelligence analysts — just to come after you and your criminal cousins.
Narc That Car (NTC) told the Better Business Bureau in Dallas that it would take a “few weeks” to respond to the BBB’s request to provide the organization a “comprehensive list of third-party clients,” the BBB said today on its website.
The information was requested from NTC March 3 in an effort “to determine if the company is selling a bona fide product with a true market value,” the BBB reported.
The BBB opened an inquiry into NTC Jan. 18 to determine whether NTC was “functioning as a pyramid promotional scheme.” BBB lowered NTC’s rating to “F” — the worst possible score on the BBB’s 14-step rating scale — earlier this month.
Meanwhile, the BB said it also asked NTC Jan. 18 to “substantiate some claims made in its advertising.”
Two months later, the advertising inquiry remains open, the BBB noted.
Some NTC affiliates said last week that NTC was changing its name to Crowd Sourcing International — or CSI for short. The name-change announcement was made a week after the BBB issued the “F.”
UPDATED 4:48 P.M. EDT (U.S.A.) We’ve been writing about Narc That Car (NTC) and Data Network Affiliates (DNA), two multilevel-marketing (MLM) firms that recruit people to write down the license-plate numbers of cars for entry in a database. The information purportedly is or will be sold to companies in the business of repossessing automobiles.
Neither NTC nor DNA affiliates appear to receive formal training on the propriety, safety and legality of recording plate numbers or any training on the repo business itself — even though they suddenly are part of the repo industry’s information supply chain.
Affiliates for the companies are independent contractors. They use their own vehicles to arrive at places such as Walmart, doctors’ offices, universities, schools and other places cars are parked in a group, and have been instructed by promoters simply to start writing down plate numbers or recording them with video cameras and cell phones for later entry in a database.
Some affiliates have instructed others to behave inconspicuously, which has fueled concerns that the firms are operating as a sort of private Big Brother and are not interested in operating in the plain light of day because the business of recording plate numbers would attract too much attention.
Affiliates’ promotional efforts have focused almost exclusively on how much money can be made by recording plate numbers and recruiting others to record plate numbers. There has been little — if any — training on issues such as whether affiliates need the permission of store managers to record plate numbers on private property, how to behave if confronted by retailers, shoppers and police, whether solicitors’ licenses are required in individual jurisdictions, whether additional insurance protection is required or recommended, whether the videos recording plate numbers should be preserved, whether handwritten notes should be preserved and whether affiliates need to secure a bond, let the police know they are recording plate numbers and make themselves available as witnesses if the information they record later becomes part of an investigation or court case.
Repo cases sometimes lead to spectacular, costly litigation, criminal and civil cases and monumental pain for plaintiffs and defendants. Some litigation has evolved as a result of deaths linked to incidents involving repossessions. Other litigation has evolved because repo agents were alleged to have broken laws.
Unanswered Questions
Paying people to write down license-plate numbers and providing an opportunity to earn additional income by recruiting others to do the same thing is a new business that has surfaced in the context of MLM. Many questions are unanswered:
Who pays if an NTC or DNA affiliate suddenly needs an attorney? Who pays if an NTC or DNA affiliate wrecks his or her car while recording plate numbers and did not tell the insurance company the car was being used for a commercial purpose? Who pays if an NTC affiliate causes a wreck? Who pays if an NTC or DNA affiliate gets struck by a car that is passing through a parking lot or backing out of a space while the affiliate is preoccupied with recording plate data? Who pays if an NTC or DNA affiliate gets involved in a fight with a person who does not want his or her plate number recorded? Who pays if a repo case ends up in court and the repo target subpoenas NTC or DNA or forces discovery to learn how the companies came in possession of the information on where the car was parked? Who pays if a privacy lawsuit gets filed or a lawsuit emerges out of any other context of the NTC and DNA business models?
Some companies that have the need to repossess cars also are in the business of title loans, meaning they finance cars for people with poor credit, arrange weekly or monthly payments and use the vehicle’s title as security to guarantee repayment. The repo man for title-loan companies comes if payments are not made. Banks and other traditional lenders also use repo men.
Context Of Repo Business Vague Or Lacking In Presentations By NTC And DNA Promoters
Three days ago we wrote about “Rena the Realtor,” the mythological borrower depicted and demonized in a video ad for NTC. “Rena,” a blond, blue-eyed, white woman with perfect teeth, presumably overspent to purchase a trophy car to impress her real-estate clients. When she missed her payments, a repo company was able to seize the car — thanks to a mythological NTC member named “John,” also white, who was depicted as having the bearing of a cop.
Implicit in the video was the message that repping for Narc That Car was like being a cop and that NTC affiliates should not feel sorry for “Rena,” who had the money to work out at a gym but not to pay for her car, which she had hidden from the repo man.
Real-life “Renas” do exist, of course — but “Rena’s” depiction as a young, white, single, ambitious Realtor presumably able to qualify for traditional financing who starts hiding her trophy car from the repo man (presumably not parking it at home or her workplace) when she’s not using it to shuttle herself to the gym — may not reflect the experience of a broad set of customers targeted in repo actions, which for the most part are not supervised by law enforcement and the courts.
In real life, people of all races start missing car payments for all sorts of reasons: sudden and unexpected job losses, medical crises, illness, divorce. All of these things can cause a swift descent into poverty.
Is it true that some people buy trophy cars to impress clients and almost immediately find themselves unable to make their payments? Yes. But it is equally true that legitimate misfortune typically plays a role in repo cases — and that people who have their cars repossessed are friends, neighbors, family members and acquaintances who have no ill intent.
Repo Agents Are Not Cops
There have been claims that repo agents have “pulled over” cars as though they were cops, treated subjects of repos as though they were prey and threatened repo subjects with “jail.” Some repo agents have been charged with crimes and put on trial amid allegations they broke the law while repossessing cars. Not all repo agents behave officiously or reprehensibly, but to pretend there is not a Wild West element in the repo business is to discard the truth.
NTC’s mythological “John” recorded “Rena’s” plate number after exiting a hair salon. “Rena” worked out at a gym near the salon. The clear message of the video was that “John” was performing a civic duty that resulted in a happy ending for the company that retrieved its collateral as a result of NTC’s man in the field.
Writing down license-plate numbers was portrayed in the video as fundamentally a carefree and easy business — just another way to make money while performing a critical service. Dollar signs were superimposed over cars in the video.
Sometimes, though, the endings in real-life repo incidents aren’t happy. Heavy machinery is involved. Emotions are involved (on both sides of a repo transaction). Children sometimes are involved. Uncertainty is involved. Unlicensed people (sometimes people with criminal records) are involved. Safety often is ignored.
Repo companies sometimes engage in activity that can be described as prowling late at night on private property or exercising police powers they do not lawfully possess. People sometimes get killed, injured and traumatized. African-Americans and other minority groups have been among the victims of repo cases run amok.
National Consumer Law Center Describes Underbelly Of Repo Business
Screen shot: A report by the National Consumer Law Center notes episodes of violence and instances in which children were towed away in repossessed automobiles in these Midwestern states and other states across the United States..
Six people have been killed in the United States since 2006 in incidents involving the repossession of automobiles. Dozens more have been injured, traumatized or arrested. Children have been hauled away by repo men. Rifles, shotguns, pistols, fists and the cars themselves have been used as weapons — against both the target of the repo and the repo agent.
So says a new report by the National Consumer Law Center (NCLC), a nonprofit advocacy group that concentrates on consumer justice and fair treatment for people “whose poverty renders them powerless to demand accountability from the economic marketplace.”
Poverty and questionable or nonexistent due process often are factors in repo cases, NCLC says. Borrowers who lack access to traditional financing channels may turn to to “buy here, pay here†car dealers.
“Not a single state guarantees automobile owners a day in court before a repossession,†said John Van Alst, a lawyer for NCLC and principal author of the report. “Only a handful of states have even minimal consumer protections such as requiring that repo agents have licenses, bonds or insurance.â€
NCLC’s footnoted report chronicles repo cases that have ended in misery for both the subjects of repos and the repo agents.
“What we have now is vigilante repossession run amok,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety (CARS), a nonprofit organization that advocates for consumer safety and against auto fraud and abuse.
NCLC is calling for states to enact “laws that would require secured lenders to obtain court
orders or at least provide consumers minimal due process prior to seizing automobiles.”
In addition, NCLC says, “states should require that such repossessions, when authorized by courts, be done by sheriffs, police or other law enforcement officials.”
Here are a few of the NCLC’s observations in a March 2010 report titled “Repo Madness”:
Self-help repossession makes automobile loans dangerous — especially for low-income
consumers and others who purchase cars from “buy here pay here†dealer-lenders who promise easy terms but frequently resort to tough tactics to extract payments from borrowers.
Self-help repossession stacks the deck in favor of lenders and dealers. They regularly seize cars without having to prove or even substantiate their claims.
Because self-help repossession does not require a lender to go to court to show it should be allowed to take a car, a car owner usually faces the daunting prospect of bringing a court action after repossession to show he or she is entitled to get their own car back. Without any procedure to ensure due process prior to repossession, a car owner has no opportunity to assert claims or defenses that might entitle him or her to keep possession of the car. Working families, typically without access to a lawyer, often are unable to initiate a court case on their own to get back a repossessed car. Too often, a family is left without a car and unable to afford a replacement.
The current system, unfair to families subject to repossession, also endangers repo agents, other car owners and bystanders. With most repossessions occurring without the involvement of law enforcement, parties often assert their rights in a sort of vigilante justice.
The NCLC report spotlights a number of cases, including the case of a 17-year repo man who pulled over a car targeted for repo by flashing his high beams while driving an ordinary automobile occupied by four teen-aged boys and the youthful repo man’s 20-year-old brother. The target vehicle was a Ford Focus driven by a 25-year-old woman who had purchased the car three months earlier at a “buy here pay here†dealer.
Inside the Focus were the driver, her boyfriend and their five-year-old daughter. The driver, confused and frightened, stopped her car. The youthful repo man approached the car on foot, reached through a window that was partially open to hand the woman paperwork and shift the car into park. The woman drove off, and stopped at a red light. The incident occurred in Massachusetts.
At the red light, another person exited the car driven by the youthful repo man and stood in front of the woman’s Focus. The woman, Sara Bradley, drove off again, and the person standing in front of her “jumped on the hood” and remained there while Bradley drove to the police station.
Bradley’s boyfriend gave this account: A “boy” ran up to the car and barked, “We’re taking your car, and you’re going to jail.†Bradley, meanwhile, described her encounter with the repo man this way, “It was exactly like a car-jacking,†NCLC reports.
No one was killed during the encounter. Two of the repo men — brothers Michael and Robert Simeone — were charged criminally in 2007. They were acquitted last year after nearly two years of living under indictment.
Although the repo men were acquitted, they spent months living under a cloud.
Clouds are not uncommon in the repo business.
“Self-help repossession poses a threat to consumers in every state,” NCLC says.
A case of mistaken identity in Texas led to the repossession of the wrong car, which was towed away with two boys — six and 10 — inside, NCLC reports.
“Only after noticing that the engine was running in the repossessed SUV did the repo man discover the children, and return them to their tearful mother,” NCLC says.
Meanwhile, in a Maryland suburb of Washington, D.C., a 36-year-old man was shot to death after a police dispatcher did not send officers because the victim’s 911 call was treated as a report from a man whose car was being repossessed, NCLC reports.
In 2006, the victim was awakened by the sound of his car alarm, NCLC says. He peered outside and observed his car being hooked up to a tow truck. The victim, Raymond Scott Brown, who was not behind on his car payments, called police to report a theft-in-progress.
“[I]nstead of sending help, one of the [police] operators asked twice whether Brown was late on his payments and whether the car was being repossessed instead of stolen,” NCLC reports. “After barely a minute of conversation, the 911 operator told Brown to ‘call back within two hours’ to find out which tow company had taken his car and why.”
Brown and his wife were reluctant to do nothing, and he and his wife hopped into her car and followed the tow truck. The tow truck was stopped at the side of the road, with the car attached, and Brown approached the truck to explain to the driver that a mistake had been made.
“[A] pistol shot struck him in his chest and mortally wounded him,” NCLC says. “As his wife rushed to his side, the tow truck drove off — with Brown’s car still attached.”
Elsewhere, Jimmy Tanks, 67, was shot and killed by a repo agent in the tiny, predominantly
African-American town of Lisman, Ala.
Kevin Alvin Smith was charged with murder. He is claiming the shooting was in self-defense.
Tanks owed “$10,400 on a car with a ‘loan value’ of $7,400,” NCLC reports, citing an affidavit filed in the case.
The shooting occurred in the middle of the night, NCLC says. Tanks was a retired railroad worker who got married only two weeks before his death.
James Lovette, the sheriff of Choctaw County, said in an interview that Tanks, whom he knew, got “killed over a durn car,â€Â NCLC reports.
Acting Assistant Director in Charge of the FBI’s New York Office George Venizelos announces the arrest.
EDITOR’S NOTE: At the moment, I don’t have the time to do this story justice. The allegations, however, are astonishing. And law-enforcement officials at both the state and federal level are calling it another case that has been solved by the Interagency Financial Fraud Enforcement Task Force.
A New York man has been arrested on charges he tried to prop up a failing bank while fleecing two Florida church pastors and attempting to defraud the Troubled Asset Relief Program (TARP) operated by the government — all while stealing from the bank itself.
The charges against Charles J. Antonucci Sr. read like a work of fiction, painting him as a man who engaged in one deception after another, received first-class transportation on a private plane by approving millions of dollars in overdrafts by a co-conspirator, pocketed money that did not belong to him and hatched a complex scheme to fleece taxpayers.
Investigators said all of these things occurred:
The Park Avenue Bank in New York was failing.
It was seized by the FDIC and New York banking regulators Friday.
Prior to the seizure, Antonucci, who served as the bank’s president and chief executive officer from June 2004 to October 2009 and also was a member of the board of directors, engaged in “self-dealing, bank bribery and embezzlement.”
Antonucci and a co-conspirator participated in an investment scheme that fleeced the pastors of Calvary Springs Chapel in Coral Springs, Fla. out of $103,940 by making them believe they could earn back the principal and a profit of about $500,000 in weeks by investing in a bond. The pastors, who were investing the funds to build a new church, deposited the money into an account in the name of “Park Avenue Insurance.” The account proved to be owned by Antonucci, who split the proceeds with his co-conspirator and did not pay the interest promised the church.
Antonucci was at the center of a fraud in which he caused the bank to lend a company he owned $400,000 by installing a puppet president to hide his ownership of the firm, which was called “Easy Wealth Group Ltd.” The puppet president applied to the bank for a $300,000 line of credit, and Antonucci personally approved it, later increasing it to $400,000. The puppet president drew down the entire line, causing the bank a loss of the entire sum.
Antonucci approved overdrafts totaling more than $8 million tied to an entity of a co-conspirator. (The FBI cryptically referred to this co-conspirator as “CC-1,” an associate of Antonucci’s and part of the “Oxygen-related entities.”) In 2008 and 2009, Antonucci flew on the co-conspirator’s private plane more than 10 times, including trips to Florida, Panama, Arizona (to attend the Super Bowl), and Augusta, Ga. (to attend the Masters golf tournament). When a check from one of the “Oxygen” entities bounced in 2009 — apparently because Antonucci did not intervene — Antonucci was told he no longer could fly on the private plane.
Antonucci caused Park Avenue Bank to lease and pay expenses and upkeep on three properties he personally owned. Each of the properties was in Fishkill, N.Y. The bank had no legitimate need for two of the properties.
Antonucci tried to calm depositors’ concerns about the bank by saying he personally had pumped in $6.5 million. The money he invested, however, came from a series of loans the bank had made to businesses that had relationships with Antonucci. Those businesses then routed the money to Antonucci, who re-deposited the money back into the bank.
Antonucci lied to the FDIC about the source of the $6.5 million.
Antonucci tried to get $11 million in TARP funds, based on his purported, personal capital infusion of $6.5 million. He issued a false press release about the purported infusion, saying the bank was “well-positioned.”
The FDIC declined the bank’s TARP application. Antonucci then lied, saying he had withdrawn the application because of “issues” with TARP and because he did not want to create the “market impression” the bank was weak because it had accepted TARP funds.
To conceal the $6.5 million fraud, Antonucci created a bogus certificate of deposit in the amount of $2.3 million and engaged in an elaborate deception involving at least two companies to conceal the fraud.
A Florida man who spent time in prison for wire fraud and money-laundering in a previous Ponzi scheme embarked on a new scheme after his release, federal prosecutors said.
