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  • Surf’s Up Celebrates One Year As Bowdoin-Endorsed Blather Box; Forum Deletes Another Discussion About AdViewGlobal Autosurf Amid Member Complaints

    A year ago yesterday these words appeared on AdSurfDaily’s Breaking News site:

    “All ASD Members are encouraged to join the ASD Members Advocate forum. The ASD Members Advocate forum should be your source for up-to-the-minute opinions and commentaries about ASD. We encourage you to join and get involved. Log on to http://asdmembers.ning.com/

    “Surf’s Up, Baby!”

    blatherAt about the same time, the AdViewGlobal (AVG) autosurf was preparing to set up shop — purportedly from Uruguay. The announcement by ASD that it had endorsed Surf’s Up occurred eight days after U.S. District Judge Rosemary Collyer issued a devastating ruling that ASD had not demonstrated it was a lawful business and not a Ponzi scheme that had gathered tens of millions of dollars from participants, placing the money in ASD President Andy Bowdoin’s personal bank accounts.

    Some of the Surf’s Up Mods went on to start a forum for AVG. That forum went missing during the summer of 2009, after AVG announced it was suspending cashouts and exercising its version of a “rebates aren’t guaranteed” clause. At first AVG, which had promoted a series of 200-percent, matching-bonus offers virtually nonstop in 2009, blamed its lack of cash on the greed of members.

    It later backed away from that position, saying it had been a victim of a $2.7 million theft. George and Judy Harris were AVG’s purported owners. George Harris is Bowdoin’s stepson. Bowdoin identified Harris as the head of ASD’s “real estate division” at an ASD rally in Miami on July 12, 2008. The company reportedly gathered millions of dollars at the rally.

    Less than three weeks later, the U.S. Secret Service seized 10 Bowdoin bank accounts containing a total of about $65.8 million, according to court filings. Money from two of Bowdoin’s accounts was used to start a new account at a separate bank, and more than $157,000 of the opening deposit was used to pay off the mortgage on the Tallahassee home shared by George and Judy Harris, according to federal prosecutors.

    Prosecutors made the announcement in a forfeiture complaint filed Dec. 19, 2008, exactly one month after Collyer’s November ruling went against ASD. Regardless, AVG launched in February 2009, in the wake of two forfeiture complaints and the filing of a racketeering lawsuit against Bowdoin.

    AVG spent part of the month of December 2008 gathering money from prospects and all of the month of January 2009. By March 20, 2009, AVG was announcing its bank account had been suspended because too many members had wired transactions in excess of $9,500.

    At the same time, AVG also announced the resignation of Gary Talbert, its chief executive officer. In January, AVG said it had no connection to ASD, despite the fact Talbert had been an executive at ASD and filed sworn court filings in the August 2008 forfeiture case against ASD.

    Even as AVG was making its series of announcements about bad financial news, promoter Shad Foss sent out an email claiming that $5,000 spent on ASD turned into $15,000 “instantly!” according to recipients of the email.

    In May 2009 — on the same day the Obama administration announced a crackdown on offshore financial fraud — AVG announced it had found a new company to facilitate offshore wire transfers. The surf provided members detailed wiring instructions. Three days later, the company AVG described as a facilitator of the wire transfers issued a public denial that it had any business relationship with AVG.

    AVG never addressed the denial, choosing instead to say it had removed the new wire facility it had just announced because of a breakdown in negotiations. By June 25, AVG was announcing the suspension of cashouts. The AVG forum set up by the Surf’s Up Mods then went dark, as did a forum set up by AVG itself.

    AVG threatened to sue members who spoke out about the firm, saying its communications were protected by copyright laws. The surf also threatened forum members that it would contact their ISPs and file abuse reports for questioning AVG in public.

    Both Surf’s Up and the AVG forum operated by some of its Mods championed the pro se pleadings of Curtis Richmond in the ASD case. Richmond was convicted of contempt of court for harassing federal judges in a separate case, and was among a number of RICO defendants in a separate lawsuit ordered to pay more than $108,000 in damages and costs for engaging in racketeering and mail fraud by nuisancing public employees with vexatious lawsuits.

    Surf’s Up has a history of deleting posts from members who attempt to raise the issue of AVG. The forum’s official explanation is that it is an ASD forum, not an AVG forum, even though its Mods started the AVG forum. Some Surf’s Up members said they joined AVG because of representations made by the Mods.

    A number of Surf’s Up members participated in letter-writing campaigns on Bowdoin’s behalf. Surf’s Up sent an email to members in February 2009, speaking approvingly of the campaigns.

    The email endorsed a mail campaign led by “Professor” Patrick Moriarty. One month later, Moriarty was indicted on tax-fraud charges in a separate case. Research showed that he once started a nonprofit organization for a Missouri man accused of murdering a woman in cold blood and shooting a police officer four times.

    Dozens of Surf’s Up members congratulated Bowdoin in March 2009, after the forum published a letter from Bowdoin. The letter said Bowdoin was reentering the ASD case as a pro se litigant, even though he had given up his claims to tens of millions of dollars in January, assuring Collyer and the prosecutors that he never intended ever to reassert the claims.

    In April 2009, in their final response to a series of pro se motions from Bowdoin to reenter the case, prosecutors revealed he had signed a proffer letter in the case prior to submitting to the forfeiture in January. Bowdoin, prosecutors said, had admitted ASD was operating illegally at the time of the August 2008 seizure and that the company made up numbers in a bid to keep new money flowing into the firm.

    Regardless, some Surf’s Up members continued to shill for Bowdoin. His critics were referred to as “Rats, Bed Bugs, Maggots, Cockroaches And Everything Else.”

    One Surf’s Up poster called for members to form a militia and take up arms against the government.

    In the fall of 2008 and thereafter, Surf’s Up perpetuated a myth that the government had admitted privately that ASD was not a Ponzi scheme. The claim, which was cited on both the forum and in emails, sustained itself even through the summer of 2009.

    Even after the government filed a second forfeiture complaint in December 2008 that accused ASD of operating a Ponzi scheme, Surf’s Up and some of its members continued to insist that prosecutors had said ASD was not a Ponzi scheme and were filing reckless motions in a bid to save face.

    Surf’s Up has not sought to dispel the myth — and a year into its tenure as a Bowdoin-endorsed blather shop, members have raised questions about why it is improper to discuss AdViewGlobal.

  • Michigan Man Who Claimed Investment Returns Of 131 Percent Guilty In Ponzi Scheme Case; Mark Richard Hamlin’s Day-Trading Scheme Comparable To ASD’s Dangerous ’80/20′ Reinvestment Program

    ponziblotterAs Ponzi schemes go, it was far from the largest. But the case of Mark Richard Hamlin demonstrated that even smaller operators use Ponzi schemes to fuel personal spending that consumes an extraordinary percentage of investors’ funds.

    Hamlin’s day-trading scheme in Michigan gathered about $2 million from at least 90 investors between 2005 and 2008, when it collapsed. Of that, Hamlin used $668,000 for his personal expenses, the SEC said.

    Investors’ funds were dumped into Hamlin’s personal bank accounts, the SEC said.

    “[He] used investor funds to pay, among other things, $66,150 for rent and other rent
    related payments, $67,919 for automobiles, $12,708 for jewelry, $14,185 for his wedding,
    $9,543 for vacations and travel, and $58,553 for cash withdrawals,” the SEC said in May.

    Now Hamlin has pleaded guilty to wire fraud in a criminal case brought by the FBI and U.S. Attorney Donald A. Davis of the Western District of Michigan.

    Hamlin, 28, of Williamston, Mich., faces up to 20 years in prison and a restitution order expected to exceed $1.3 million at his sentencing. The sentencing date was not immediately clear.

    “Hamlin admitted at his plea hearing that he set up a stock trading company known as Kingdom First Trading (KFT) and solicited investors by promising higher than market rate returns,” prosecutors said. “Hamlin consistently lost money in trading, and concealed his insolvency by e-mailing fraudulent account statements to his investors.

    “The statements falsely assured investors that they were earning sizable profits and accumulating large balances,” prosecutors continued. “Hamlin further concealed his insolvency by diverting money from new investors to pay ‘earnings’ to earlier investors. As a result, investors left their money with Hamlin, and in some instances contributed more.”

    Despite assertions that his trading had earned a return of 131 percent in 2005, 116 percent in 2006, 50 percent in 2007 and 17.22 percent in the early part of 2008, Hamlin suffered losses in each of the years — and hid the losses while collecting money from investors to make Ponzi payments.

    “Hamlin’s investments realized losses of $18,118 in 2005, $267,372 in 2006, $218,591 in
    2007, and $140,781 from January 2008 through June 2008,” the SEC said. “His trading was profitable during only nine of the 39 months of the offering, generating a total of $22,150 in profit.”

    During its relatively short lifespan, the scheme sustained itself because investors wooed by Hamlin’s bogus claims kept reinvesting their paper “earnings,” prosecutors said.

    The same thing happens in autosurf Ponzi schemes, which often encourage participants to take out only a small percentage and plow their fictitious balances back into the scheme to preserve a surf’s cash flow.

    Ponzi enablers position themselves as experts when rendering such advice, which often is described as an “80/20” program. Both the AdSurfDaily and AdViewGlobal autosurfs pitched 80/20 programs, and both federal prosecutors and private attorneys have made veiled references to the reinvestment schemes in court filings.

  • A PONZI WORLD FIRST? Regulators Have Evidence Accused Minnesota Schemer Trevor Cook Bought A ‘Submarine’ To Shuttle To Private Island

    You’ve heard about the Ponzi mansions. You’ve heard about the luxury automobiles — Scott Rothstein’s $1.6 million Bugatti and the $350,000 Rolls-Royces he and suspects in other Ponzi schemes enjoyed.

    Now comes word that Trevor Cook, implicated in Minnesota with radio talk-show host Pat Kiley in an alleged Ponzi scheme involving at least $194 million, owned a submarine.

    Not a submarine sandwich, but an actual, two-person, submersible submarine used for underwater transit. It allegedly was purchased on eBay for $40,000 and was used to tool around the waters that surrounded his private island in Canada.

    Yep, he allegedly bought himself his own island, too.

    An old-fashioned speedboat to access the island, perhaps, was too practical. And perhaps building a bridge to the island upon which Cook could pilot his Rolls was too expensive, even for an alleged Ponzi-schemer forcing himself to draw the line somewhere. (Yes, regulators say that Cook, like Rothstein and others, also owned a Rolls.)

    At least two people who’ve been deposed in the Cook case have referenced the submarine. And Cook referenced it himself in an email sent to an associate in Europe last spring, according to the Star Tribune of Minneapolis-St. Paul.

    He appeared to be disappointed after the purchase, the newspaper reported, because the waters surrounding the island were muddy. Not to worry, though: Cook ventured the sub would serve its intended purpose much farther south — in Panama, where he believed the water to be more sub-friendly than those dark waters in Canada.

    We obtained a copy of the Sept. 14 transcript in which SEC attorney Steven L. Klawans was conducting the deposition of witness Gerald Durand. The deposition turned to the matter of Cook’s affinity for expensive things.

    “Does Cook own any boats, planes or anything?” Klawans asked Durand.

    “I heard be bought a sub,” Durand replied.

    The transcript does not capture the emotional feel of the setting, but it’s easy to imagine that people observing the deposition were stunned.

    “A what?” Klawans intoned.

    “Submarine,” Durand reaffirmed.

    A moment later, in response to another question by Klawans, Durand told a story that may become the stuff of legend in the Ponzi world.

    “[Cook] told me . . . he bought the sub because he bought the island, so he needed a submarine to sail around the water up there. It’s a two-man deal. Paid $40,000 for it off of [eBay].”

    Visit the Star Tribune, whose coverage of both the alleged Tom Petters’ Ponzi scheme and the alleged Cook/Kiley Ponzi scheme has been riveting.

    Screen shot: Deposition in Cook/Kiley Ponzi case.
    Screen shot: Deposition in Cook/Kiley Ponzi case.

  • Thanksgiving Thanks For The Word ‘Punters’ . . .

    Dear Readers,

    It is Thanksgiving Day in the United States. We extend to you our warm wishes. Many of you are smarting or downright hurting because of the Ponzi scheme in your life — or, in some cases, schemes. Perhaps this is especially true of our readers who belonged to AdSurfDaily and its so-called clones.

    It is possible that the litigation surrounding the August 2008 seizure of tens of millions of dollars from ASD President Andy Bowdoin’s bank accounts could begin to wind down soon and that a forfeiture order could be granted before Christmas. If that is the case, the ASD affair will become largely ministerial. Rather than having to respond to motions designed to slow down or derail the government’s case, prosecutors will be able to concentrate on getting money back into the hands of victims.

    Many of you have been badly misled by ASD’s cheerleaders and apologists. Andy Bowdoin said he has spent more than $1 million defending your interests in the case and to keep himself out of prison. It very likely is true that the “your” to which he refers includes a small number of people in a universe of 100,000.

    The apologists were able to use 100,000 — and, often, a number that even was higher — as part of a spin campaign. Perhaps you’ve read appeals such as this: “100,000 people can’t be wrong!”

    Or even “120,000 people can’t be wrong!!!!!!!!!!”

    Such words — and their corresponding number of exclamation points — were designed to misinform the public. The figure of 100,000, of course, presumed that Bowdoin had virtually unanimous support among the rank-and-file and that the people who did not support Bowdoin were few in number.

    Dissenters were portrayed as few in number, often as “trolls.” The figure also was designed to set up the government as the bogeyman. ASD wanted you to believe the U.S. Secret Service was in the business of dispossessing widows, instead of chasing down the bad guys who stole their money.

    And this brings us back to our headline: “Thanksgiving Thanks For The Word ‘Punters’ . . .”

    We’ve noticed our readers from the U.K. use “punters” or “punter” as slang to describe the people targeted in Ponzi schemes. Sometimes “punters” or “punter” are used to describe people who choose to become crime victims or people who know they’re part of an illicit scheme and later try to assume the role of victims.

    “Punters” and “punter” are excellent words in multiple contexts of the ASD case. Previously we’ve thanked our U.K. readers for the words “gobsmack” and “gobsmacked” to express utter astonishment.

    Today we thank them for “punters” and “punter.” We were utterly gobsmacked by how well punters and punter described the ASD scheme, reducing a critical element of the case to its essence through the use of a single word.

    While we’re thanking the British on this Thanksgiving Day, we’d also like to thank an American for his use of the word “dreck.” Dreck, too, is a fine word that conveys something that approaches perfect economy in certain contexts. It means “rubbish” or “trash,” and also reminds us of the word “drivel,” which often can be used in the same context as dreck.

    We have used “drivel” to describe various pro se pleadings in the ASD case. We we utterly gobsmacked by the drivel put on full display by some of ASD’s punters. All of it was dreck.

    So much of the ASD scheme came down to the disingenuous use of words — “rebates aren’t guaranteed” and “The U.S. Government has failed to produce any EVIDENCE of alleged wrongdoing,” for instance.

    It turned out that Andy Bowdoin told two different stories about the money. He told a federal judge that it belonged to him. He told members in a Sept. 21, 2009, conference call that it belonged to them. But the money could not possibly have belonged to members if rebates weren’t guaranteed.

    “Rebates aren’t guaranteed” means that only the display of advertising was guaranteed and that Bowdoin’s only duty to members was to display ads in the ASD rotator. It is the core deception of the wink-nod universe of autosurf Ponzi schemes, a deception that creates a license to steal. Strategic punters wanted ASD’s rank-and-file members to believe they were acting in the interests of the members as a whole.

    They weren’t. They were acting in their own interests. The nonpunters posed a risk to them. It’s one of the reasons the government’s case was brought as a conspiracy.

    In the end, Bowdoin didn’t even display the ads. That’s important. Prosecutors now can argue that he wanted to keep the money and not show the ads. In Bowdoin’s world, not only did the money not belong to members, neither did the value of the ads. Showing the ads would have exposed the con.

    Prosecutors have made a veiled reference to the AdViewGlobal (AVG) autosurf. RICO plaintiffs suing Bowdoin for racketeering have made a direct reference to AVG. Both the government and the RICO plaintiffs now have the option of arguing that the real reason ASD decided not to display the ads was that Bowdoin and his in-house punters intended to port them to AVG — just as Bowdoin had done when ASD morphed into ASD Cash Generator.

    It also turned out that the Secret Service filed a 37-page affidavit under seal Aug. 1, 2008, and secured a warrant from a federal magistrate judge to seize the money. The agency said it believed Bowdoin planned to skip the country. Now, put that in the context of AVG and its purported base of operations in Uruguay and ASD’s decison not to show the ads.. It’s hard to imagine a situation more damning to ASD.

    We noted above the screaming pro se claim that “”The U.S. Government has failed to produce any EVIDENCE of alleged wrongdoing.”

    It also turned out that the Secret Service filed 57 pages of evidence on Aug. 1, 2008. The evidence, coupled with the affidavit, was enough to move a federal judge to order Bank of America to freeze the accounts and the U.S. Department of Homeland Security to seize the money as the proceeds of an international crime.

    The no-EVIDENCE-was-produced claim, however, always was disingenuous. Evidence was discussed in open court. Witnesses were cross-examined on the evidence. A judge reviewed the evidence and referred to it in public rulings.

    Some funny things happened after all the public viewing and discussion about evidence: AVG launched (purportedly from an offshore venue); ASD still wasn’t showing ads; Bowdoin tried to reassert claims to money he had surrendered; and dozens of ASD members began to make clumsy, disingenuous and, in some cases, incendiary, attempts to intervene in the case by asserting the government was to blame for trying to preserve assets before they could be plundered.

    Victims waiting for restitution had to wait. Some of the punters then began to tell their downlines that the government was responsible for the delays. A fantastically untrue tale was told that Bowdoin’s efforts were paying off and that the prosecution was on the verge of losing the case. Judicial orders directed at Bowdoin that instructed him to follow up on earlier pleadings were spun by strategic or ignorant punters as orders directing the prosecution to prove ASD was a Ponzi scheme or dismiss the case.

    The punters were Bowdoin’s best friends — not in the sense they regularly broke bread with him or even knew him. The punters were useful to Bowdoin. Widows waiting for their money always could wait.

    So, as Americans break bread today with loved ones, the PatrickPretty.com Blog extends greetings to its readers all over the world — and special greetings to our U.K. readers.

    Indeed, punters is a word that will help victims of autosurf Ponzi schemes see though all the dreck and drivel and emerge gobsmacked by their newfound knowledge base. May they use it to keep themselves out of harm’s way — and, as another year ticks off the calendar, may they have many things to be thankful for in the days and years ahead.

    Thank you, Readers.

    Patrick

  • BREAKING NEWS: Two-Time Convicted Felon With $3 Million Judgment Against Him Emerged From Prison And Targeted Ponzi Scheme At Chinese-Americans In Oklahoma City, CFTC Says

    ponzinewsA man imprisoned between 1996 and 2001 after being convicted in Texas of two financial felonies emerged from the penitentiary and targeted Greater Oklahoma City’s ethnic Chinese in a Ponzi scheme, the U.S. Commodity Futures Trading Commission (CFTC) said.

    Kenneth W. Lee also had a $3 million civil judgment placed against him in the 1990s in a fraud case, CFTC said.

    Despite the felony convictions and the huge judgment against him, Lee and business partner Simon Yang hatched a new scheme in 2003. Yang pitched the scheme to members of his church in Edmond, Okla., CFTC said.

    Information shown prospects to get them to join the scheme claimed Lee was an exceptional trader. But when investigators reverse-engineered literature about Lee’s alleged prowess, they discovered that Lee was in prison during a time in which Lee and Yang claimed Lee was “achieving great returns,” CFTC said.

    CFTC’s announcment of the filing in Oklamoma City came only hours after it had joined with the SEC yesterday in announcing a Ponzi complaint against radio talk-show host Pat Kiley and his colleague Trevor G. Cook in Minnesota.

    The Oklahoma Ponzi scheme operated at least in part from South Carolina and Texas. Two companies named co-defendants along with Lee and Yang claimed to be registered corporations in Panama, CFTC said.

    Charged with Lee and Yang were Prestige Ventures Corp.  and Federated Management Group Inc. (FMG). The Oklahoma Securities Commission joined in the prosecution.

    Regulators said the 13-year-old judgment for $3 million against Lee in Texas also included a company named Federated.

    Lee was convicted of felonies in both 1995 and 1996, CFTC said.

    Yang, the agency said, also used the aliases Simon Chen and Xiao Yang.

    “[T]he defendants fraudulently operated a commodity futures pool that had at least $8.7 million in assets and 140 participants,” CFTC said.

    Lies, Losses, Yacht Fees

    Lee and Yang lied to participants, never telling them about Lee’s felony convictions or the judgment. At the same time, CFTC said, they issued bogus account statements that “consistently showed monthly profits generated by Lee’s purportedly successful trading of commodity futures, foreign currency (forex) and other instruments.

    “However, Lee sustained net losses of approximately $4.3 million trading primarily commodity futures and forex,” CFTC said. “Lee, Prestige and FMG also allegedly misused pool participant funds to pay off other pool participants and for personal use, such as paying for cars and yacht fees and funneling money to family members.”

    Yang was charged with submitting a false declaration to CFTC in response to a subpoena requiring the production of documents and information relating to Yang, Lee, FMG and others.

    “In his declaration, Yang falsely claimed that he solicited only through email based on information on the FMG website, that the persons he solicited did not open accounts and that he no longer solicited for FMG,” CFTC said.

    Both Yang and Lee also failed to tell prospective pool participants that Yang and Lee were under investigation by federal authorities.

    In 2003, just two years after Lee’s release from prison, Yang and Lee reported to prospects that Prestige had $1 billion in assets under management and FMG had up to $379 million, CFTC said.

    They also falsely told participants that Lee “never suffered losses,” that FMG’s marketers or solicitors were members of the National Futures Association and that the accounts of participants were insured by FMG’s credit union.

    U.S. District Judge David L. Russell froze the defendants’ assets and appointed a receiver.

  • BULLETIN: Florida Supreme Court Disbars Scott Rothstein

    UPDATED 3:52 P.M. ET (U.S.A.) The Florida Supreme Court has disbarred Fort Lauderdale attorney Scott Rothstein, who was implicated in a Ponzi scheme that could involve more than $1 billion.

    Here is the Rothstein disbarment order.

    Rothstein had been under investigation by the Florida Bar for stealing clients’ funds. He agreed to the disbarment, which the Supreme Court certified today without comment.

    Federal investigators said Monday that Rothstein’s firm paid attorneys with Ponzi proceeds. Prosecutors pointed to records that showed the firm billed $8 million during an unspecified year, but paid $18 million in salaries to 70 attorneys and about 80 other employees.

    It is not clear if the government intends to claw back the portion of the salaries paid for with Ponzi proceeds.

    Charities also received Ponzi proceeds, as did politicians in both the Republican and Democratic parties, investigators said. Some of the charitable and political donations already have been returned.

    The Florida Bar wasted no time today in updating its website to reflect the formal disbarment of Rothstein by the Supreme Court: “Disbarment – Permanent,” it says — in bold type.

    So ends the legal career of Scott Rothstein, who was admitted to the Florida Bar on Sept. 23, 1988.

  • Conservative Radio Host Allegedly Cited Islamic Law To Dupe Christian Investors; Pat Kiley Issued Dire Warnings About ‘Greed’ Of Former President Clinton And ‘Massive Chaos’ To Come Under Obama

    A radio host pitched his Ponzi scheme to listeners and told some clients that his strategy employed an unnamed Islamic bank that complied with Shariah law in an apparent bid to make investors believe the firm borrowed money to trade currency on international exchanges without having to pay interest, according to the SEC.

    Shariah law prohibits the payment or acceptance of interest.

    Despite Patrick “Pat” Kiley’s assertion that his financial firm took advantage of an Islamic bank to reduce its borrowing costs to zero, Kiley, 71, made no secret that his firm paid spectacular sums of interest to investors, according to the SEC complaint made public yesterday.

    Kiley’s “Follow The Money” radio program was carried on 200 stations and also was available on Christian shortwave radio before going off the air in July, when investors began to raise public concerns about Kiley. The gravelly voiced host and co-defendant Trevor G. Cook now have become the central figures in an alleged $190 million Ponzi fraud in Minnesota.

    Some homemade videos into which the audio of Kiley’s radio broadcasts was dubbed appear on YouTube and other video sites. Kiley’s listener’s appear to have made the videos, rather than Kiley himself.

    One video — with audio from Kiley’s show dubbed in — featured Kiley advising his audience that he was about to share shocking, “confidential” information about an “unprecedented wave of massive, massive social chaos” about to occur in the United States.

    Although the video appears to have been posted in May 2009, the audio appears to have been dubbed from an earlier Kiley program that coincided with Barack Obama’s ascension to the Presidency.

    Things under Obama could get so out of control, Kiley suggested, that the U.S. military was on standby to deal with civilian insurrection through a law-enforcement arm known as the Consequence Management Response Force (CCMRF).

    CCMRF is a real branch of the Army, but it is not designed to engage in war against citizens. Rather, it is designed to respond to “chemical, biological, radiological, nuclear and high-yield explosive” incidents, according to the Army.

    Col. Lou Vogler, quoted on an Army website in September 2008, said CCMRF also was designed to complement local first-responders to disasters and emergencies. The Army cited the 9/11 terrorist attacks as the type of situation to which CCMRF would respond.

    News of the spectacular federal allegations against Kiley and Cook broke yesterday, even as the state was reeling from the alleged $3.65 billion Tom Petters’ Ponzi scheme, the alleged $100 million AdSurfDaily Ponzi scheme and the alleged $53 million Ponzi scheme of Gerard Frank Cellette Jr.

    “Kiley represented to investors that the trading strategy involved investing in a long position in one currency and an offsetting short position in a second currency,” the SEC said. “Kiley also represented to certain investors that the strategy utilized a bank that complied with Shariah law, which forbids the payment of interest, and that because no interest was paid to establish the short position, a greater profit could be earned.

    “Kiley’s representations were false,” the SEC said.

    A scan of the court document showed that investigators had used the word “false” or “falsely” at least 40 times to describe assertions Kiley, Cook and the companies with which they were associated had made to investors to get them to part with money.

    Some of the companies used the initials UBS, but the SEC said the firms had no connection to UBS AG, the famous Swiss firm.

    Screen shot: An audio featuring the voice of radio-talk show host Pat Kiley was dubbed into this YouTube video, which featured a photograph of President Obama meeting with fiscal-policy advisers while Obama was President-Elect. Kiley intoned that the United States seemed ready to return to the "greed and irresponsibility" of fiscal policies advanced by former President Clinton.
    Screen shot: An audio featuring the voice of radio-talk show host Pat Kiley was dubbed into this YouTube video, which featured a photograph of President Obama meeting with fiscal-policy advisers while Obama was President-Elect. Kiley intoned that the United States seemed ready to return to the "greed and irresponsibility" of fiscal policies advanced by former President Clinton.

    Kiley sometimes used his radio show as a platform to rail against the administration of former President Bill Clinton, saying during one broadcast that Clinton’s fiscal policy was based on “greed and irresponsibility.”

    When Barack Obama became President-Elect after winning the White House in November 2008, Kiley warned listeners that Obama’s election signaled the return of Clinton-like financial policy.

    The video was titled, “The Engineers of Financial Disaster.”

    Only months later, Kiley finds himself at the center of a financial storm that may cause some investors and radio listeners to lose tens of millions of dollars.

  • WRAP-UP: Marine Corps Officer Tells Judge Ponzi Schemer Who Fleeced Seniors, Charities ‘Violated Every Character Trait I Hold Dear’

    EDITOR’S NOTE: This column summarizes three Ponzi cases: Joseph Forte, Sean Healy and Tom Petters. Forte has been sentenced; Healy has been convicted, and Petters is waiting to hear his fate from a Minnesota jury. The cases vary widely in size and scope, but demonstrate the terrible consequences of Ponzi schemes on individual investors and charitable institutions

    Joseph Forte scheme.

    A U.S. Marine Corps officer speaking for victims of the Joseph Forte Ponzi scheme in Philadelphia yesterday told a federal judge Forte’s actions caused his family’s charitable foundation to suffer a $15 million loss.

    Lt. Col. William Hooper, a former Marine Corps aviator and member of the U.S. Marine Corps Reserves, said his father suffered a stroke after learning Forte had plundered The Thornton D. and Elizabeth S. Hooper Foundation of Radnor, Pa.

    ponzinewsWilliam Hooper’s father, Bruce Hooper, himself a former Marine, served as president of the Marine Corps University Foundation (MCUF) and is a trustee and member of the Investment Subcommittee, according to the MCUF website. Bruce Hooper is the vice president of the Thornton D. and Elizabeth S. Hooper Foundation and the vice chairman of the Foreign Policy Research Institute of Philadelphia.

    William Hooper, speaking for the Hooper family at Forte’s trial, said Forte’s actions “violated every character trait I hold dear,” according to the Delaware County Times.

    Meanwhile, a woman who lost $109,000 she had inherited from her mother by investing it with Forte called him a “bastard.”

    Forte’s Ponzi scheme unraveled in 2008, after operating for 12 years. George Clark, a U.S. Postal inspector, said in an affidavit that Forte simply made up numbers and collected money until the bitter end.

    “The last statement received by investors for the third quarter of 2008 indicates that the fund had a return of 18.88% for the quarter and that the Joseph Forte LP fund’s total value as of September 30, 2008 was $154,700,189,” Clark said.

    In truth, Clark said, the value of Forte’s trading account was only $150,000. The account was closed in October 2008, but Forte continued to collect money from clients until Dec. 19, Clark said.

    “According to Forte, all reported returns were false in their entirety and were simply numbers that [he] fabricated,” Clark said. “Forte admitted that in every quarter from 1996 through the end of 2008, the reported returns were false.”

    Forte was sentenced to 15 years in prison. He also was ordered to pay $34.8 million in restitution.

    See a story in the Delaware County Times.

    Sean Healy scheme

    Luxury cars and Ponzi schemes go together like money and politics. Federal prosecutors have seized more than 20 cars in the alleged Scott Rothstein Ponzi in Florida, for example. One of them had a price tag of more than $1.5 million.

    Before the Rothstein case came on the Feds’ radar screen last month, there was the case of Sean Healy. It, too, has a Florida tie, although the prosecution occurred in Pennsylvania.

    Healy, 38, of Weston, Fla., was charged in a 55-count indictment unsealed last month with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice.

    Prosecutors said Healy “spent the money to fund a lavish lifestyle.”

    Purchases included “numerous exotic vehicles and sport cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth over $2.3 million,” prosecutors said.

    Obstruction of justice was charged because Healy thwarted a grand jury by providing “phony bank statements and phony trading records, indicating that the Pennsylvania investor’s money was used for legitimate trading activity in stocks and commodities,” prosecutors said.

    “When the authentic records were obtained, they revealed that Healy had simply spent the money on his extravagant lifestyle and used some of it to pay back earlier investors who he defrauded between 2003 and 2008,” prosecutors said.

    The grand-jury probe began in March, after an investor who had been scammed in Pennsylvania sued Healy and his wife, Shalese Rania Healy, in U.S. District Court in the Southern District of Florida, alleging that Pennsylvania investors had lost $14.6 million with Healy between April 2008 and February 2009.

    In addition to the automobiles, Healy also bought a $2.4 million waterfront mansion furnished with more than $2 million of home improvements, plus $1.5 million in men’s and women’s jewelry.

    Healy pleaded guilty Monday in Harrisburg to two counts of wire fraud and one count of unlawful monetary transactions. He faces up to 50 years in prison.

    Tom Petters’ scheme

    Minnesota businessman Tom Petters is accused of operating a $3.65 billion Ponzi scheme. The jury began to deliberate late Monday.

    Deliberations continued Tuesday. No verdict was reached, and the jury was dismissed until Monday because of the Thanksgiving holiday in the United States.

    Prosecutors said Petters presided over phantom sales of consumer electronics to big-box retailers, fleecing investors out of millions. His defense counsel acknowledged that fraud had occurred, but blamed it on subordinates.

  • BREAKING NEWS: Host Of ‘Follow The Money’ Christian Radio Show Patrick Kiley Accused In Minnesota Of Operating Ponzi Scheme That Gathered $190 Million

    ponzinewsRadio talk-show host Patrick “Pat” Kiley is among the defendants accused in an emergency action by the SEC of operating a $190 million Ponzi scheme in Minnesota.

    A federal judge has granted an asset freeze and appointed a receiver. At least $51 million in Ponzi payments were made, the SEC said.

    Also charged were Trevor G. Cook, UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC and four shell companies. Several companies were named relief defendants.

    “Cook and Kiley told investors that their money would be invested safely and profitably,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office. “Instead, they went on a $40 million-plus spending spree with investors’ money and lost another $40 million in risky foreign currency trading.”

    The SEC said “Cook and Kiley misappropriated $42.8 million of investors’ money, including $18 million that Cook used to buy ownership interests in two trading firms; $12.8 million that Cook and Kiley transferred to Panama to purportedly finance the construction of a casino; $2.8 million that Cook used to acquire the Van Dusen Mansion [in Minneapolis] and $4.8 million that Cook lost through gambling,” the SEC said.

    “Cook and Kiley also misspent approximately $51 million to make Ponzi-like payments to earlier investors,” the SEC charged.

    Meanwhile, “Cook and Kiley placed $108 million of investors’ funds into banking and trading accounts in the names of their various shell companies and used some of this money to trade foreign currencies, resulting in losses of at least $48 million,” the SEC said.

    Kiley, 71, hosted a program named “Follow the Money” on 200 stations and Christian short-wave radio.

  • BREAKING NEWS: ‘Billionaire Boys Club’ Attorney In Michigan Ponzi Scheme Case Indicted In North Carolina For Running His Own Securities Scheme

    ponzinewsUPDATED 7:02 P.M. ET (U.S.A.) A Georgia attorney representing defendants in the alleged “Billionaire Boys Club” Ponzi scheme in Michigan has been indicted in North Carolina on charges he ran his own securities-fraud scheme.

    Gregory Bartko, 56, of Berkeley Lake, Ga., was indicted in North Carolina under seal Nov 4, according to U.S. Attorney George E.B. Holding of the Eastern District of North Carolina. The seal was lifted Nov. 18.

    Bartko and a co-defendant were charged with three counts of mail fraud and two counts of making false statements. Prosecutors said the scheme also involved conspiring to commit mail fraud, laundering monetary instruments, engaging in unlawful monetary transactions, making false statements and obstructing proceedings of the United States Securities and Exchange Commission (SEC).

    Bartko is representing “Billionaire Boys Club” (BBC) defendants John J. Bravata, Shari Bravata and Antonio Bravata against civil charges in a case brought by the SEC in Detroit. The SEC said that as many as 400 investors were fleeced in a $50 million Ponzi scheme operated by John Bravata and a co-defendant, alleging the scheme paid for “expensive lifestyles” and “luxury homes, watercraft, jewelry, gambling, exotic vacations and expensive cars.”

    “Indeed, John Bravata used money from the first two investors to buy himself a $90,268 Ferrari,” the SEC said. “John Bravata and [co-defendant Richard] Trabulsy spent at least $7 million of the investors’ money for their own benefit, and for the benefit of John Bravata’s wife, Shari A. Bravata, and son, Antonio Bravata.”

    The 2009 Michigan case became known as the “Billionaires Boys Club” prosecution because a Bravata company was named “BBC Equities,” and the SEC asserted in July 2009 that BBC was intended to stand for “Billionaire Boys Club.”

    A California Ponzi scheme in the 1980s also was known as “The Billionaire Boys Club.”

    Despite the indictment against him in North Carolina, Bartko advised U.S. District Judge David M. Lawson of the Eastern District of Michigan that he intends to proceed as the attorney for the Bravata family members without objection from his clients.

    In North Carolina, prosecutors said Bartko operated a “criminal investment fraud scheme” and “held himself out as an investment banker” to carry out the scheme.

    Darryl Lynn Laws, Bartko’s co-defendant in the North Carolina case, posed as a “Ph.D. in finance” for his role in carrying out the scheme, prosecutors said. Laws, 58, lives in La Jolla, Calif.

    “Bartko and Laws used bank accounts controlled by Bartko in Georgia to collect hundreds of thousands of dollars in proceeds from fraudulent sales of investments,” prosecutors said. “[N]early all of the money collected by Bartko and Laws as part of the scheme had been obtained by a single salesman, [Scott Bradley Hollenbeck].

    “In making these sales, Hollenbeck used numerous materially false statements and omissions, including false promises to investors designed to conceal the true risk of the investment, such as ‘guarantees’ of yearly earnings of at least 12%, and the promise that the investment was insured when it was not,” prosecutors said.

    Hollenbeck is named an unindicted co-conspirator in the North Carolina case.

    Read the “Billionaire Boys Club” complaint by the SEC. Bartko is representing three defendants in the BBC case.

    Read a statement by U.S. Attorney George E.B. Holding announcing the indictment against Bartko in North Carolina.

    The United States Postal Inspection Service, the FBI and the IRS Criminal Investigation Unit are doing the legwork in the North Carolina case, prosecutors said.

  • SPECIAL REPORT: Convicted ‘3 Hebrew Boys’ Ponzi Figure Declares He Is ‘Sovereign’; Joseph Brunson Says Prosecutors Have No Authority Over Him

    Defining himself as “One,” a South Carolina man convicted Friday of operating an $82 million Ponzi scheme with two colleagues has filed a series of pleadings declaring himself “sovereign” and accusing a federal prosecutor of committing treason against the United States.

    The convicted schemer, Joseph B. Brunson of Hopkins, appears to trying to bolster his claim he is sovereign by constructing an argument that he is immune from prosecution because the United States is insolvent and has no jurisdiction over him. The pleadings were filed on the same day a jury found him guilty of mail fraud, money-laundering and transporting stolen goods and issued a special verdict for forfeiture of $82 million — the proceeds of the Ponzi scheme.

    Brunson is one of the so-called “3 Hebrew Boys” who operated a website with the same name. The name is taken from a biblical tale of believers who escaped a furnace by relying on their faith.

    Bond Revoked

    Upon the jury verdicts, prosecutors moved to revoke the bond of Brunson and co-defendants Tim McQueen and Tony Pough, asking a federal judge to jail them immediately, pending sentencing.

    Judge Margaret B. Seymour granted the request, pointing to a Brunson pleading that accused U.S. Attorney Walt Wilkins of treason.

    Screen shot: Joseph Brunson declares that U.S. Attorney is guility of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.
    Screen shot: Joseph Brunson declares that U.S. Attorney Walt Wilkens is guilty of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.

    ‘Pembina’ Tie

    Web references connect Brunson to The Little Shell Pembina Band of North America, a reputed splinter group of a legitimate tribe of Native Americans in Montana. WIS News 10, the news arm of a TV station in South Carolina, reported in 2007 that Brunson was stopped by police for driving with illegal tribal license plates while out on bond after being charged by state authorities in the “3 Hewbrew Boys” case.

    The splinter group is listed by the Anti-Defamation League (ADL) as an “active anti-government extremist group.”

    “Members of the group claim that they belong to a ‘sovereign’ Native American tribe and therefore are not subject to laws and regulations,” ADL reports.

    Activities of the splinter group range from “driving with bogus license plates to perpetrating insurance fraud schemes [and] tax evasion,” ADL reports.

    ADL notes that the Little Shell Band of Montana is a legitimate tribe, but is not recognized by the federal government. It has no connection to extremism or to the Little Shell Pembina Band of North America, according to ADL.

    Bizarre Filings In Securities Cases

    Brunson’s filings in the South Carolina case are similar to pro se pleadings in the alleged AdSurfDaily Ponzi scheme case in the District of Columbia. Filings in both cases have included wild arguments, using words directed at prosecutors or judges such as “treason” and “conspiracy” in bids to short-circuit the government’s efforts to prosecute Ponzi and securities cases.

    Screen shot: Joseph Brunson asserts his purpurted sovereignty in the '3 Hebrew Boys' Ponzi scheme case.
    Screen shot: Joseph Brunson asserts his purpurted sovereignty in the '3 Hebrew Boys' Ponzi scheme case.

    Curtis Richmond, a mainstay pro se litigant in the ASD case, has been associated in court filings with a version of the Pembina tribal name and the name of a separate Utah tribe a federal judge ruled a “complete sham.” The purported Utah tribe filed enormous financial judgments against prosecutors and members of law-enforcement, and was successfully sued under federal racketeering and mail-fraud statutes.

    Richmond was among a group of litigants ordered to pay more than $108,000 in damages and costs for their roles in harassing members of the Utah law-enforcement community with vexatious legal filings. In a separate case, Richmond was found guilty in California of contempt of court for harassing federal judges.

    Despite the RICO ruling that went against him and his contempt conviction, members of the AdSurfDaily autosurf and a closely associated surf known as AdViewGlobal hailed Richmond a “hero.”

    ASD is implicated in an alleged $100 million Ponzi scheme. Federal prosecutors are attempting to force the forfeiture of tens of millions of dollars in the case, which includes two other autosurfs: Golden Panda Ad Builder and LaFuenteDinero. “LaFuenteDinero” means the “fountain of money,” and the surf was the purported Spanish arm of ASD. Golden Panda was the purported Chinese arm.

    For more than a year — at least since May 2008 — various operators or participants in alleged Ponzi schemes have claimed to be immune from U.S. law because they were “sovereign” beings or members of a “sovereign” Indian tribe.

    Screen shot: Joseph Brunson he is 'One' and that U.S. Attorney Walt Wilkins is engaged in acts of war against 'One.'
    Screen shot: Joseph Brunson he is 'One' and that U.S. Attorney Walt Wilkins is engaged in acts of war against 'One.'

    The arguments have been both bizarre and implausible. Gold Quest International (GQI), an alleged multimillion Ponzi scheme operating out of Las Vegas, claimed Panamanian registration and immunity from U.S. law because it was associated with a North Dakota Indian tribe.

    Despite the claim GQI was immune from the law because of its purported tie to the Pembina tribe, one of the alleged operators the Ponzi scheme, John Jenkins, left a Nevada courtroom to go outside to plug a parking meter to avoid getting a ticket.

    GQI attempted unsuccessfully to sue the SEC for the spectacular sum of $1.7 trillion for bringing the prosecution. The company reportedly relied on the services of a nonattorney as its “attorney general” and a nonnotary as its notary public to certify documents.

    “You are in an imaginary world where you belong to an unrecognized Indian group,” a federal judge advised Robert Neilson Baker, the nonnotary notary.

    In the “3 Hewbrew Boys” case, Brunson filed documents that appear to have been designed to force Wilkens, the U.S. Attorney, to default on a contact to which he never had agreed. The approach sometimes is referred to as “paper terrorism” or “mailbox arbitation.”

    A similar approach was used by litigants in the ASD case.

    Brunson wrote in a court filing he described as a “Bill of Peace” last week that Wilkens had a duty to appear before a notary public and acknowledge Brunson’s assertion of sovereignty in “red ink.” The document demanded that Wilkens use his “Christian name” in his response to Brunson.

    A refusal by Wilkens’ to carry out the demands within three days, Brunson said, would result in a contractual agreement that Wilkens was “an enemy of One and the [U]nited States of America and the people, Constitution, and Government thereof.”

    Read Joseph Brunson’s purported “writ” in the “3 Hebrew Boys” case.

    Read Joseph Brunson’s claim U.S. Attorney Walt Wilkens is committing treason against the United States.

    Read the jury’s special verdict ordering the forfeiture of $82 million in the “3 Hebrew Boys” case.

    Read a statement by acting U.S. Attorney Jeffrey Sloman on Audie Watson, a Florida man found guilty of selling bogus memberships in a “Pembina” tribe for $1,500 to illegal aliens.