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  • Receiver In Gold Quest International Ponzi Scheme Case Settles With Charles Capps Ministries For $100,000; Other GQI Money Is Part Of California Homicide Investigation

    breakingnewsAll that glitters was not gold in the seedy world of Gold Quest International (GQI), according to the receiver in the GQI Ponzi scheme case.

    Corrupt money was given to a ministry in the form of a gift, and other corrupt money is part of a homicide investigation in Los Angeles, according to court filings.

    Receiver Larry Cook has informed a federal judge that he has accepted a settlement of $100,000 from Charles Capp Ministries, saying the Oklahoma-based Christian organization unwittingly received fraudulent transfers of “at least” of $201,517 between January 2006 and August 2008 from the Ponzi scheme, according to court filings.

    “No allegations of fraud or securities violations were alleged against Charles Capps Ministries in the complaint filed by the SEC in this action,” Cook said. “Based on the information and belief of the receiver, Charles Capps Ministries was the unwitting recipient of investor funds from Defendant David Greene. Upon learning of the source of the funds it received from Greene, Charles Capps Ministries agreed to return the $100,000 settlement amount.”

    David Greene also is known as “Lord David Greene.” He is one of four named defendants in the SEC case. The others are GQI, John Jenkins and Michael McGee. The SEC filed the action in May 2008, and was hit almost immediately with a bizarre effort to undermine the prosecution.

    A litigant purporting to be the “attorney general” of a purported “sovereign” Indian tribe attempted unsuccessfully to file a lawsuit against the SEC for $1.7 trillion for enforcing securities laws. The GQI entity may have links to an extremist group — The Little Shell Pembina Band of North America — monitored by the Anti Defamation League.

    The ‘Goldfinger’ Murder

    Cook, who performed an international paper chase in the GQI case, further informed the judge that certain GQI assets are tied up in a homicide investigation in California.

    “The owner of E-Bullion was arrested in August 2008 for arranging the murder of his wife, a co-owner of E-Bullion,” Cook said. “The Receiver and the Commission have made numerous inquiries regarding future access to the E-Bullion business records and funds, and we have been advised the U.S. Attorney’s office has not made a decision on when or how these records and funds will be administered.”

    E-bullion co-founder James Fayed, 46, was charged with murder by the Los Angeles District Attorney’s office in September 2008. Prosecutors said he paid Jose Luis Moya, 49, a sum of $25,000 to arrange the murder of his wife, Pamela Fayed. The case has been dubbed the “Goldfinger Murder” in California.

    E-bullion was one of the payment processors used by GQI, which the SEC says operated a $28 million Ponzi scheme with Panamanian registration from Las Vegas. GQI purported to be immune from U.S. law because it was part of a “sovereign” Indian tribe in North Dakota.

    More than 2,100 investors from the United States and Canada participated in GQI. Participants perhaps received as much as $19 million in Ponzi payments, according to investigators in the United States and Canada.

    Cook reported that he had recovered only $389,145.57 to date by tracking money all over the world. Much of the money simply disappeared after making its way to New Zealand, he said.

    “Defendant David Greene has testified that he believed that GQI was going to pay investors the returns promised to them via the profits earned by GQI’s investments in Topaz Group Ltd., an entity based in New Zealand,” Cook said. “The Receiver has identified approximately $3.15 million in payments to Topaz Group from the Tri Fund Inc. account, David Greene[‘s] personal account, and John Jenkins[‘] personal account.

    “The Receiver identified and contacted the owner of Topaz Group Ltd., John Davies, in New Zealand,” Cook continued. “Davies advised the Receiver that the funds he received from David Greene were sent to him on behalf of David Greene. Davies stated that Greene always represented that the investment was Greene’s personal investment and it was not until February 2008 that Greene disclosed the funds belonged to an investment group. Davies stated the funds were not for a specific investment, but were used to fund the expenses of individuals working in Europe to complete various banking transactions that were scheduled to close and pay large profits. Davies further stated that none of these transactions were successful.

    “The Receiver, with the Commission’s assistance, has obtained copies of the Topaz Group Ltd. bank account records in New Zealand,” Cook said. “The Receiver has examined and analyzed this account and determined the majority of the funds transferred by Greene to Topaz were immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies. A small percentage of the funds Greene sent to Topaz were wired to the individuals identified by John Davies as working on the banking transactions in Europe, and the remainder appear to be used for Topaz Group’s miscellaneous expenses.

    “The Receiver and the Commission have participated in conference calls with the New Zealand law enforcement authorities,” Cook said. “The Receiver has provided the New Zealand investigators with information concerning transfers of investor funds from Defendants Greene and Jenkins to Topaz Group Ltd.”

    For additional information see this document from the Alberta Securities Commission.

    See this filing by the SEC.

    Cook also is the receiver in the case against Affiliate Strategies Inc., the parent company of the Noobing autosurf. Noobing pitched itself to individuals with hearing impairments.

  • SHOCKING: A Ponzi Scheme Suicide In Canada; A Ponzi Scheme Death Sentence Reported In China

    EDITOR’S NOTE: Here is some recommended reading. Be prepared to be shocked. We will provide an introduction to the stories, but only a brief one.

    ponziblotterEdna Coulic killed herself, worn down by the pressures of trying to get her money back from a Ponzi scheme, her family told the Calgary Herald.

    The Royal Canadian Mounted Police and other authorities in America’s neighbor to the north are investigating the Ponzi case against Milowe Brost and Gary Sorenson.

    We recommend that you read the comprehensive report in the Calgary Herald and view the videos the newspaper has posted.

    Gold and silver production have played a prominent role in the case. Investors were shown bars being manufactured, but authorities said the scheme collapsed and investors were not paid.

    Some U.S-based Ponzi schemes, including autosurf Ponzi schemes, have members linked to movements involving the purported production of gold and silver or the desire to trade in gold in silver, as opposed to paper currency.

    Meanwhile, Shanghai Daily is reporting that a citizen of China has been sentenced to death for perpetrating a Ponzi scheme. The story, which appears to be based on on a report that originated with a government-run news service, could not immediately be confirmed independently.

    But the story suggests that China is prepared to put Ponzi promoters to death for grand-scale fleecings of the population. Fraud laws and punishments vary from country to country.

    In July 2008, a U.S.-based autosurf known as Golden Panda Ad Builder launched. It was described as the so-called “Chinese” option for members of AdSurfDaily. Federal prosecutors in the United States seized the assets of both Golden Panda and ASD in August 2008.

    ASD also had a “Spanish” option known as LaFuenteDinero, “the fountain of money.”

  • SEC Seeks Contempt Order Against Trevor Cook; Minnesota Man Said To Have Bought Two-Person ‘Submarine’ With Ponzi Proceeds

    ponziblotterTrevor Cook, the Minnesota man implicated with Christian radio host Pat Kiley in a Ponzi and currency-trading scheme that collected at least $190 million, already has taken the 5th Amendment in a civil case brought by the SEC.

    The SEC now is seeking a contempt ruling against Cook, amid allegations he violated the asset freeze and receivership orders entered by a federal judge last month.

    A hearing on the contempt allegations began Dec. 11, but was continued to Jan. 5. The SEC said Cook, whom investors said bought a submarine on eBay for $40,000 and used it to access a private island he bought in Canada, hid assets from the court “by using an undisclosed credit card to make thousands of dollars of retail purchases.”

    Screen shot: Deposition in the Trevor Cook case.
    Screen shot: Deposition in the Trevor Cook case.

    Chief U.S. District Judge Michael Davis ordered Cook to surrender his passport.

    The Star Tribune of Minneapolis – St. Paul, which finds itself covering at least three major Ponzi scheme cases in the state, reported that Cook bought “gift cards” after the asset freeze.

    An attorney for the SEC argued that the gift cards smack “of money laundering,” the newspaper reported.

    The gift-card purchases occurred after the asset freeze was ordered, the SEC said. The agency also alleged that Cook failed “to turn over assets to the Court appointed receiver, to repatriate assets held in foreign countries, and to produce an accounting of investor funds.”

  • Purported Andy Bowdoin Christmas Email With Prayerful Message Causes A Stir Among Members; ASD President Has Not Refuted Authenticity Of Greeting

    Andy Bowdoin
    Andy Bowdoin

    Several PP readers reported Thursday and Friday that they’d received a prayerful email purportedly sent as a Christmas greeting by AdSurfDaily President Andy Bowdoin.

    We did not receive a single correspondence from a reader who was happy about receiving the email. In one way or another, the readers questioned the prudence of sending such an email.

    “Does this mean he is fighting the govt. and there will be more court dates over the next year?” one reader inquired.

    “I just received an email Christmas Card from Andy,” another reader wrote. “He wishes me a year of prosperity and believes that this year he will prove that ASD is NOT a ponzi and that they will be back in business during 2010. If you did not receive it, I will be happy to forward it to you.”

    We are skeptical that the email came from Bowdoin, despite the fact ASD’s address in Quincy, Fla., appears at the bottom. Regardless, Bowdoin, so far, has not publicly refuted the authenticity of the email. The more time that passes, the more it will look like Bowdoin sent the email, authorized it to be sent or could not prevent it from being sent.

    It’s bad news for him whether or not he is the author.

    If Bowdoin waits too long to issue a statement, then people will question why he did not refute the authenticity of the email earlier and why someone other than Bowdoin seems to have control over the ASD database. If he acknowledges the email came from him, then he’ll appear to be every bit as delusional as federal prosecutors said he was in a September court filing.

    Some ASD members say they are viewing the email as a sick joke by an unknown person. Others say they believe that Bowdoin actually sent it, speculating that he is so out of touch that he actually believes that ASD will return to business next year, as the email suggests. The email also implores members to rely on their religious faith.

    A few lines in the email don’t strike as Bowdoin-like, perhaps particularly an exultation that ASD will rise again and “will blow your socks off.”

    That sounds more like a prankster or amateur than it does Bowdoin. Even so, it would have to be a prankster or amateur who had access to names and email addresses in an ASD database.

    Or it might not be a prankster at all. ASD was fundamentally corrupt from top to bottom. The email could be from someone who has the database in whole or in part and is testing it to achieve an end that is unclear.

    There are lots of interesting possibilities — something always in play with ASD because of its history of sending impossibly mixed messages. Although it purports to be a professional communications firm, the company has displayed remarkable tone-deafness and a tin ear for anything even remotely resembling an understanding of real-world PR.

    If there is a lightning rod, ASD will touch it. If there is a speeding train bearing down on ASD,  the company will not step out of harm’s way. In September, for instance, Bowdoin informed members in a conference call that the money the government has seized in the Ponzi scheme forfeiture case was seized from participants, a story completely at odds with a story he told a federal judge in court filings.

    Indeed, Bowdoin had insisted in sworn court documents that the money belonged to him, not the members. The U.S. Secret Service transcribed the conference call and presented it to the judge in a filing.

    Bowdoin’s erratic behavior and history as a con man leads to all sorts of questions about the purported Christmas greeting. Could Bowdoin or someone else be using the ASD database to test support or weed out perceived spies and critics to eliminate them from the database?

    Could people who respond to the email with anything other than “You rock, Andy!” be deleted for posing a continuing danger to the next enterprise?

    Paranoia runs high in the ASD enterprise and among its promoters. The only truly safe members under this scenario are those who can be relied on not to rat. Some of ASD’s more ardent supporters have used thuggish language, calling critics and doubters “rats” and “maggots” and “cockroaches,” for instance.

    Such words generally are not used by legitimate enterprises or enterprises that have a core understanding of public relations. They are more consistent with enterprises that are trying to enforce cohesiveness through fear of reprisal.

    Could another form of deception be in play? Could it somehow serve a useful purpose for Bowdoin to have sent the email or silently approved its sending, only to refute it later and suggest others within the enterprise have hijacked the business?

    Bowdoin and a progeny autosurf known as AdViewGlobal (AVG) have a history of blaming members for unsettling developments in the companies. Prosecutors said Bowdoin had at least one “silent” partner in ASD, which leads to the possibility there was more than one. Meanwhile, ASD members now say Bowdoin was the silent head of AVG.

    In March 2009,  AVG blamed the reported suspension of its bank account on members. It later blamed members for its inability to pay members. At one point, AVG appeared to be using some of the same arguments ASD had used to explain troubling events, suggesting that members who questioned the company and insisted AVG operate in transparent fashion by identifying its owners and managers and providing proof of its geographic location were responsible for the company’s troubles.

    Is someone using the ASD database to try to build an All-Criminal Team or to determine the identities of members who’d be most inclined to do business with criminals?

    Could Andy Bowdoin be the victim of a practical joke or an effort to make him look as bad as possible in the eyes of the membership at large?

    We don’t know.

    What we do know is that the very nature of ASD has led to scores of questions, a laundry list of possibilities and one unqualified PR and legal disaster after another.

    For now, we’re going with the theory that a person or entity unknown to the email recipients is trying to determine the identities of ASD members most inclined to do future business with criminals.

    That would be very useful information — so useful, in fact, that it could aid an unknown person or entity to create a list consisting of the names of people who don’t mind doing business with criminals. That would not be a bad thing if prosecutors could obtain such a list and use it as a filter to segment the names of criminal perpetrators from the names of actual victims of ASD’s corruption.

  • The ‘Festa Effect?’ Comments, Interactivity Stats Plunge As Cyberstalker Uses YouTube To Pillory PP Blog, Posters

    Key statistics about reader interaction with the PatrickPretty.com Blog have plunged dramatically during the past 30 days.

    Comments posted by readers during the 30-day statistical snapshot have decreased markedly from 10.2 per day to 3.8 per day. Meanwhile, the number of words in comments has fallen more than 1,000 — from an average of 1,462 per thread to just 431.

    festaeffectThe drop-off coincides with the holiday season, a period in which readers may have less time to interact with the Blog. It also coincides with a harassment campaign being conducted on YouTube against the Blog by the cyberstalker “unclefesta26.”

    Some readers have expressed a reluctance to share their comments, citing concerns that “unclefesta26” would nuisance them on YouTube.

    The 30-day snapshot suggests “unclefesta26” is contributing to a significant decay in reader interaction and having a chilling effect on speech. “unclefesta26” has dialed up his cyberstalking campaign against the Blog and some of its readers during the period.

    In a new video today, “unclefesta26” heckled posters who congratulated the Blog for surpassing the 500-post milestone in the past year.

    “Some of his posts are simple one- or two-liners,” unclefesta26 said about the Blog.

    There are few — if any — one- or two-line posts on the PatrickPretty.com Blog. The Blog has produced 380,258 words — enough to fill two or even three novels — between Dec. 18, 2008, and Dec. 18, 2009. The average post length during the 12-month period was 751 words, the typical length of a newspaper column.

    During the past 30 days, the Blog has produced 38,396 words, an average of 738 words per post. Since December 18, 2008, the Blog has published 740,010 words from readers — almost three-quarters of a million words from the Blog’s audience.

    All of the content on the Blog’s main page and in its archive is free. “unclefesta26,” who has been banned by multiple websites for chronic nuisancing and once used the handle “Hugh Jorgan” on one, has repeatedly railed against the Blog for publishing advertisements and offering a paid product for $27. A Family License that accommodates six users is available for $47.

    The PatrickPretty.com Blog averages 42.2 article-length posts per month — all free. Between the Blog and its readers, PatrickPretty.com has published more than 1.12 million words in the past 12 months — all free.

    In addition to researching, writing, reporting and providing a forum for readers, PatrickPretty.com manages maintenance of the Blog. The Blog has received 17,480 spam communications since December 2008, while also receiving and reading thousands of legitimate communications from readers. Many of the communications from readers require return correspondence.

    PatrickPretty.com has received numerous communications from readers whose lives have been affected by Ponzi schemes. The Blog has become an important resource to them.

    “unclefesta26” was blocked from posting on the Blog in June 2009 for posing a chronic maintenance problem. He responded by pilloying the Blog on YouTube, sending the Blog a message to “Enjoy!” his work. In November, upon the Blog’s release of a paid information product, “unclefesta26” dialed up his YouTube attacks on the Blog, again sending links to his videos that skewer the Blog.

    Also known as “Pistol” and “Pistol’sPal” — an identity he created after being blocked from posting here — “unclefesta” has been blocked from posting on at least three websites for disruptive behavior. He attempted to re-register at one site from which he was banned 12 times on a single day, according to the website manager.

  • EDITORIAL: Think ‘Offshore’ Means ‘Shelter’ From The SEC Or The FBI Or The IRS? Don’t Tell That To John And Marian Morgan — Or Jeffrey Lane Mowen

    You’ve seen the ads or heard the pitches trying to persuade you to put money in “offshore” ventures such as the AdViewGlobal, AdGateWorld and MegaLido autosurfs. You’ve been told they were safe. You’ve been told the people who run them are out of the reach of U.S. securities regulators and law-enforcement agencies.

    And you’ve been told your investment, which the surf purveyors call an “advertising” purchase, provides shelter from the FTC, the SEC and state attorneys general.

    Don’t tell John and Marian Morgan of Florida that “offshore” means “safe” and that “offshore” provides a blanket of protection from law enforcement.

    And don’t tell it to Jeffrey Lane Mowen, either.

    John and Marian Morgan were charged by the SEC in June with running a prime-bank scheme. They skipped the country rather than appear for a hearing in July, first going to Europe and later to Sri Lanka.

    Guess where they are now?

    John and Marian Morgan are in separate cells in a U.S. jail. In addition to the SEC’s civil charges, they now face criminal charges after being indicted by a federal grand jury. They did not outmaneuver the SEC. They did not outmaneuver the U.S. Marshals Service. They did not outmaneuver the FBI. They did not outmaneuver the IRS. They did not outmaneuver Interpol.

    Nor did John and Marian Morgan outmaneuver the government of Sri Lanka. They were arrested and jailed on the island, which is situated about 20 miles off the southern coast of India, in August. Sri Lanka deported them, and the United States brought them home earlier this month.

    morgansrilankaIt’s big news in Sarasota — and it should be big news among the autosurf or forex/HYIP schemers who are telling you the United States is powerless to act against “offshore” enterprises or people inclined to start a get-rich-quick program and then scurry offshore one step ahead of what surf promoters derisively describe as the “sheriff” or “Big Brother.”

    Do yourself a favor and read this story in the Sarasota Herald Tribune. Longtime opponents of the autosurf “industry” — in this upside-down world, the opponents are called “naysayers” and the Ponzi advocates are called “leaders” — will recognize the utter absurdity.

    Sadly, though, most of the “leaders” likely will be too busy “leading ” the troops to even bigger and better catastrophes to take the time to read it.

    Or they simply won’t care because leading people into catastrophes pays too well.

    If you missed it earlier, take the time to read this story on how the FBI brought home Jeffrey Lane Mowen from Panama to face charges in a Utah Ponzi case that now has morphed into murder-for-hire investigation.

  • NY ATTORNEY GENERAL: Unlimited Wealth Associates Pulled Off ‘Seemingly Limitless Fraud And Deceit’ In Ponzi And Pyramid Scheme That Operated Nationwide

    New York Attorney General Andrew Cuomo
    New York Attorney General Andrew Cuomo

    A company known as Unlimited Wealth Associates operated Ponzi and pyramid schemes that obtained at least $7 million, New York’s top prosecutor said today.

    “While this company promised unlimited wealth, our investigation found seemingly limitless fraud and deceit as they went after investors’ savings,” said Attorney General Andrew M. Cuomo.

    Prosecutors “will continue to have zero tolerance for financial schemers trying to set up shop in New York,” Cuomo said.

    Unlimited Wealth Associates is controlled by Robert Donald and Annette Stuart Donald, Robert Donald’s wife. Investigators obtained an asset freeze amid allegations that the Donalds were running a “series of get-rich-quick schemes” from their home in Brooklyn.

    Company names under which the schemes operated  included Unlimited Wealth Associates, United Wealth Associates, Unlimited Enterprises and Wealth Associates Group, prosecutors said.

    Among the allegations were that the Donald-connected companies had been operating Ponzi and pyramid schemes since at least 2004 and violating a state securities law known as the “Martin Act.”

    More than 1,000 investors across the United States were affected, prosecutors said.

    When the schemes began to collapse, Robert Donald lied to keep investors at bay, prosecutors said.

    Investigators determined that “Donald was covering up the fraudulent operation by informing investors that their investments have been lost or stolen by those with whom Donald purportedly invested the victims’ funds,” prosecutors said. “Donald told victims that he was raising new funds that would be invested so that both new and old investors would recover their principal and receive handsome profits.”

    As part of the probe, prosecutors said, investigators obtained “emails, newsletters and Web site pages” showing the companies “routinely made false and misleading representations that investors could earn enormous profits on modest investments, with little or no risk involved.”

    The website for Unlimited Wealth Associates now appears to be throwing a server error.

    Prosecutors said the scheme included over-the-top hype. Investors in one program were told that $5,000 could turn into $1.2 million in 18 months.

    Here is how investigators described the false claims:

    • Investors in a so-called “Wealth Units” program were falsely informed that they would “earn 2% per business day, payable every 60 business days, for a total of 180 business days.”
    • Investors in an “Infinite Cycle of Wealth” program were falsely informed that the program “provides you with UNLIMITED INCOME FOR LIFE! You can receive thousands of dollars over and over again – to INFINITY!” and “With a ONE TIME INVESTMENT contribution of $5,000 you can earn over $1.2 million, once you complete 7 phases which takes approximately eighteen months.”
    • Investors in a “Capital Growth Program” were falsely informed that they could “receive up to 100% return every month” and would “have the opportunity to MAKE WELL OVER $500,000 for each $1000 that you deposit, within 15 months from the day the funds enter into trade.”
    • Investors in a “40 Week Proposal” were falsely informed that their expected return would be “40 payments of UP TO 50% for each $1000 contribution. That’s a total of $20,000 per $1000.”
    • Many of the representations falsely claimed that there was no risk involved in the investments. One such false statement promised “The Unlimited Wealth Units is an ingenious RISK FREE way to LET YOUR MONEY WORK FOR YOU!” (emphasis in original).

    The SEC and U.S. Postal Inspection Service assisted in the probe.

  • Judge Enters Injunction Against Mantria/Speed Of Wealth Figure Donna McKelvy In ‘Green’ Ponzi Scheme Case; Speed Of Wealth Website Goes Missing

    breakingnewsA federal judge has issued an order that enjoins Speed of Wealth principal Donna McKelvy from breaking securities laws and disgorges her ill-gotten gains from the alleged Mantria Corp./Speed of Wealth Ponzi scheme.

    McKelvy, 43, of Parker, Colo., consented to the order without admitting or denying the allegations in a complaint filed by the SEC Nov. 16. The Speed of Wealth website, which once prominently featured a video containing images of President Obama, former President Clinton and Secretary of State Hillary Clinton, now is returning a server error and will not load.

    U.S. District Judge Christine M. Arguello entered the order against McKelvy yesterday.

    “Donna M. McKelvy is prohibited, directly or indirectly, from accepting funds from investors for investment in any investment program,” Arguello wrote in the order.

    She further ordered McKelvy to “pay disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty.” The amounts will be determined later, and Arguello said McKelvy “will be precluded from arguing that she did not violate the federal securities laws as alleged in the Complaint” and “may not challenge the validity of the Consent or this Order of Permanent Injunction.”

    The SEC said McKevly was a principal in Speed of Wealth and used “the titles of president of Speed of Wealth in charge of investor relations and vice president of Speed of Wealth in charge of investor relations.

    “She is a 25 percent owner of Mantria Industries LLC, one of the Mantria subsidiaries that has actively raised funds from investors, as well as three other Mantria subsidiaries. She does not hold any securities licenses, and she has never been associated with a registered broker-dealer,” the SEC said.

    Also charged in the SEC complaint last month were McKelvy’s ex-husband, Wayde McKelvy, 46, of Sunny Isle Beach, Fla.; Mantria CEO Troy Wragg, 28, of Philadelphia, and Amanda Knorr, 26, also of Philadelphia. Knorr is Mantria’s COO.

    Wayde and Donna McKelvy “particularly targeted elderly investors or those approaching retirement age to finance” Mantria’s “green initiatives,” the SEC said.

    The SEC alleged that Mantria operated a $30 million Ponzi scheme pushed by Speed of Wealth.

    Mantria’s biochar, a carbon-negative charcoal, was used to appeal to environmentally conscious investors, the SEC said.

    “Despite claims that Mantria was the world’s leading manufacturer and distributor of biochar and had multiple facilities producing it at a rate of 25 tons per day,” the SEC said, “Mantria has never sold any biochar and has just one facility engaged in testing biochar for possible future commercial production.”

    Both Mantria and Speed of Wealth showcased a video assembled in part from materials published by the Clinton Global Initiative (CGI), one of President Clinton’s signature undertakings since leaving office in 2001.

    Wragg appeared alongside President Clinton and Secretary of State Clinton at the CGI annual meeting in New York in September, and images of prominent attendees were placed in the video, including an image of President Obama.

    Less than two months later the SEC alleged that Mantria was a Ponzi scheme.

    Mantria and Wayde McKelvy have denied wrongdoing.

  • Raymond Frank Joseph Convicted On All 36 Counts In Michigan Ponzi Scheme; Federal Judge Revokes Bond

    ponziblotterFederal prosecutors have scored another dramatic win in a Ponzi scheme case.

    Raymond Frank Joseph, 55, of Bloomfield Hills, Mich., was convicted of three counts of wire fraud, nine counts of interstate transportation of stolen money or property and 24 counts of conducting monetary transactions in criminally derived property.

    Judge Gerald E. Rosen immediately revoked Joseph’s bond after a federal jury returned guilty verdicts on all 36 counts. Joseph was ordered detained, pending sentencing next year.

    “Investors or lenders should be wary of unreasonably high promises of massive profits,” said U.S. Attorney Terrence Berg of the Eastern District of Michigan. “Ponzi schemes prey on the expectations of big returns, and use the next person’s money to pay previous investors. In this case, the jury saw through the defendant’s fraudulent scheme.”

    Prosecutors said Joseph fleeced $5 million in the scheme.

    “Joseph solicited loans of money from several individuals to invest in a number of business ventures,” prosecutors said. “To induce the lenders to give him their money, Joseph fraudulently promised the victims a specific date of repayment with interest resulting from his claimed business investment of the money.”

    But Joseph did not invest the the money, prosecutors said. Instead, he used it to make payments to earlier investors and to pay his personal expenses such as credit card bills, household expenditures and vehicle costs.

    A veteran IRS criminal investigator said investors have a duty to be cautious.

    “Although the economics of Ponzi schemes are simple, today’s swindlers artfully conceal their greed with sophisticated marketing and numerous misrepresentations,” said Maurice Aouate, special-agent-in-charge of the Internal Revenue Service Criminal Investigation Division.

    “Beware, for if is sounds too good to be true, it probably is,” Aouate said.

    The FBI also had a leading role in the Joseph probe.

    “Investors generally understand that there’s a correlation between risk and reward, and Ponzi scheme cases like this one reinforce the fact that investing money is inherently risky,” said Andrew Arena, FBI special-agent-in-charge.

    “Before handing hard-earned money to investors, individuals should know who they are dealing with and how their money will be invested,” Arena said. “In light of recent large scale Ponzi schemes, public awareness is at the forefront. The FBI and its partners will aggressively investigate people who swindle money from others, whether it involves hundreds of thousands or millions of dollars.”

    Joseph potentially faces decades in prison. Sentencing is scheduled for March.

  • PP Blog Marks Milestone In A Year Filled With Ponzi Schemes And Nonfiction That Reads Like Fiction

    EDITOR’S NOTE: We were going to publish this post to commemorate our 500th post since December 2008, but breaking news intervened. So, this is now Post No. 501.

    milestoneThis is the PP Blog’s 500th post (actually it’s now No. 501) since December 2008, the month we switched to WordPress.

    It has been a year filled with nonfiction that reads like fiction. Some of the Ponzi tales and allegations are so incredible they require readers to suspend their disbelief — and occasionally even to suspend their disbelief at multiple levels.

    A year ago, most members of the reading public knew very little about Ponzi schemes. News junkies and television viewers alive during the 1980s perhaps had a fleeting memory of the “Billionaire Boy’s Club” (BBC) Ponzi scheme from that decade. Joseph Gamsky’s operation led to murders and a TV miniseries.

    Ponzi schemes, though, generally were localized stories, and it was easy to miss news about them. Bernard Madoff changed that a year ago. Although authorities were well-acquainted with Ponzi schemes, the public at large was not. Since Madoff’s arrest, the seamy underbelly of one of the world’s hidden cultures of criminality has been exposed. Ponzi schemes now regulary lead to national and international headlines.

    Just last week the FBI announced it was investigating at least 1,500 cases of securities fraud, including 314 HYIP schemes in which a Ponzi scheme appears to be an element. Prosecutors now are using racketeering laws to address some of the schemes, while continuing to use mail-fraud, wire-fraud, money-laundering and securities laws to combat the plague.

    Some of the cases are just plain bizarre. Many mysteries and questions remain. Here are some of them.

    Did Florida Ponzi suspect Scott Rothstein really attract investors by saying he employed former FBI and CIA operatives to dig up dirt on the sexual infidelities or workplace sexual misconduct of wealthy people so he could target them in lawsuits?

    Did investors really throw hundreds of millions of dollars at such a business, viewing it as just another way to make money and not even questioning the moral, ethical or legal ramifications of such a bizarre marketplace approach — the packaging of sexual indiscretions as a security?

    Did Minnesota Ponzi suspect Trevor Cook really buy a private island and a submarine to access it with part of his loot?

    Did Mantria Corp. and Speed of Wealth LLC, now accused by the SEC of promoting a “green” Ponzi scheme, really believe that it was prudent to beam videos and trade off the reputations of a current President of the United States, a former President of the United States, a current U.S. Secretary of State and a former Secretary General of the United Nations?

    And did a Ponzi defendant in the Mantria/Speed of Wealth case really try to recruit a reporter into an MLM by calling her a “fellow Wealthalete” and USING ALL CAPS in the sales pitch — after the SEC brought the charges in the Mantria/Speed of Wealth case?

    Did members of the alleged AdSurfDaily Ponzi scheme in Florida really write to the Senate Judiciary Committee in the post-Madoff Ponzi era to elicit support for the Ponzi scheme business model — while fortunes were being destroyed by Ponzi schemes and people in their 80s and 90s were being dispossessed as a result of investing in Ponzi schemes?

    Did ASD members really believe that one of the best ways to stay under the Feds’ radar when pitching a Ponzi scheme was to claim the President of the United States personally endorsed the business acumen of the man running the Ponzi scheme? (And did Mantria/Speed of Wealth not have any knowledge of the ASD case and how quickly the government reacted when it learned that institutions such as the Presidency were being used in advertising pitches?)

    Did the Pro-ASD Surf’s Up forum and a forum some of its Mods established to promote the AdViewGlobal (AVG) autosurf really label Curtis Richmond a “hero” for his pro se legal efforts to derail the forfeiture aspect of the ASD Ponzi prosecution?

    Did some ASD members really send President Andy Bowdoin brownies and delicious baked goods after federal prosecutors and the U.S. Secret Service said he was at the helm of an international wire-fraud and money-laundering scheme whose key component was a $100 million Ponzi scheme?

    Think that’s weird? See this story on attempts by AVG to explain it had no ties to ASD.

    Did the Noobing autosurf really think it prudent to pitch an autosurf to deaf people after the government seized tens of millions of dollars in the ASD case?

    Is it really possible that thousands of people believe the answer to Ponzi schemes and the wealth they destroy is even more Ponzi schemes, including ones launched while Bowdoin was under investigation for serious crimes and already had been sued for racketeering?

    Indeed, it has been an amazing year in the world of the Ponzi scheme.

    You’ve heard about the convicted Ponzi schemer who declared himself a “sovereign” being, right?

  • PONZI ADVOCATES’ NIGHTMARE: Victims Line Up To Address Judge Who Will Sentence California Man In ‘Offshore’ Scheme; Jeffrey Gordon Butler Faces Up To 300 Years In Prison

    EDITOR’S NOTE: As you’re reading this story, keep in mind that the Ponzi scheme “industry” actually has advocates who advance the theory that all commerce should operate under the principle of caveat emptor (“let the buyer beware”), that the government should not be empowered to “interfere” with “commerce” and that “offshore” options are the best.

    ponzishameSo many victims fleeced out of their life savings in California by Jeffrey Gordon Butler wish to make statements at the sentencing phase of his trial that it may take a week or more to accommodate them.

    Eighty two of Butler’s Ponzi scheme victims were “elderly,” Orange County prosecutors said, noting gloomily for the record that  “[a]t least six victims died during the course of the trial and 52 victims died prior to the case being brought before the jury.”

    The Ponzi crime raised more than $11 million and affected at least 121 senior citizens. Family members of the deceased victims will speak on behalf of their departed loved ones during the sentencing phase.

    Butler, 51, of San Juan Capistrano, was convicted in June of 693 felony counts of securities and tax-related crimes. A jury in Orange County, Calif., returned the verdict after a trial that lasted nearly eight months. Butler faces a maximum sentence of 300 years in state prison.

    His wife, Peggy Warmath Butler, 49, faces up to 10 years. She was convicted of four felony tax counts.

    So many charges were brought against Jeffrey Butler that it took “two days for the verdict to be read,” prosecutors said.

    The sentencing phase now is under way. Prosecutors expect it may consume this entire week and extend into next week because the surviving victims or their family members want to tell the judge their stories about how the scheme affected them.

    Part of the scheme involved clients’ money being moved offshore without authorization to a “telecommunications company supposedly located on the eastern Caribbean island of Grenada,” prosecutors said.

    Because so many of the victims were nearing the end of their life spans or in poor health, prosecutors recorded their testimony prior to the trial “to ensure that the victim’s testimony was preserved in the event that they were unavailable to testify at trial due to death or illness.”

    When the scheme started to collapse, Butler lied to hold investors at bay,  prosecutors said.

    “Jeffrey Butler first met many of his victims while operating a company called Senior Information Services, which offered to assist senior citizens in the creation of living wills, trusts and other estate planning structures for a fee,” prosecutors said.

    “Through this business, the defendant gained the trust of many of his clients, whom he later victimized. Between 1995 and 2004, in a series of businesses that changed forms and names, Jeffrey Butler failed to provide his investors with any documents or other information about his companies, how the companies made money, or any of the risks of investing in the companies as required by law to protect consumers and investors,” prosecutors said.

    Butler used all the tricks in the book, including moving money between companies, keeping investors in the dark and skimming, prosecutors said.

    He “transferred investments between companies on several occasions without informing or providing only limited information to his elderly investors,” prosecutors said. “[Butler] immediately took 10 percent of the investors’ money for himself without their knowledge or consent.”

    And it only got worse from there.

    “Investors were not made aware that these investments were not authorized to be sold in California,” prosecutors said. “Some of the victims agreed to invest after being misled into believing that [the offshore company, Global Network Providers] was an Individual Retirement Account (IRA) qualified investment, when in reality the investments were not IRA qualified. In an effort to fool his investors, Jeffrey Butler simply had ‘IRA’ typed at the top of the promissory notes.”

    As the scheme was unraveling, Butler blamed his inability to make payments on Mother Nature.

    “Butler eventually ran out of funds to maintain his scheme and sent his victims a letter in which he continued to lie to investors, claiming that Hurricane Ivan had caused a delay in payments,” prosecutors said.