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  • ASD ALL OVER AGAIN? ‘3 Hebrew Boys’ Accuse U.S. Attorney Of ‘Treason’; Claim Draws Another Parallel To AdSurfDaily

    Three men found guilty in South Carolina last week of operating an $82 million Ponzi scheme accused a federal prosecutor of treason on the same day the jury returned its verdict, the FBI said.

    A treason claim also was made in the federal forfeiture proceeding against assets tied to Florida-based AdSurfDaily, an alleged Ponzi scheme involving $100 million.

    U.S. District Judge Margaret B. Seymour cited the treason claim in the “3 Hebrew Boys” case as a reason to send Joseph Brunson, Tim McQueen and Tony Pough to jail immediately to await sentencing.

    “After the jury’s verdict, Judge Seymour was asked to allow the men to remain free on bond until their sentencing,” the FBI said.  “She denied the request after noting that all three men filed documents [Friday] accusing U.S. Attorney Walt Wilkins of treason and committing acts of war by prosecuting them.”

    Brunson, McQueen and Pough became known as “3 Hebrew Boys” after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.

    Wilkens said the scheme targeted people of faith and members of the military.

    U.S. Attorney W. Walter Wilkins
    U.S. Attorney W. Walter Wilkins

    “By calling themselves the Three Hebrew Boys, these con men tried to disguise their Ponzi scheme as a religious, charitable program of debt elimination in order to gain the trust of unsuspecting investors,” Wilkins said. “Unfortunately many people were victimized by these men, including many in our armed forces.”

    In the ASD case, the treason claim was made against U.S. District Judge Rosemary Collyer. ASD is known to have members who identify with the so-called sovereignty movement.

    California resident Curtis Richmond, a pro se litigant in the ASD case, identified himself in court documents in a separate case as a “sovereign” being who enjoyed diplomatic immunity from prosecution and answered only to Jesus Christ.

    Richmond is associated with a Utah “Indian” tribe ruled a “complete sham” last year by U.S. District Judge Stephen Friot. On the eve of a civil RICO trial last year, Richmond attempted to have Friot removed from the case by claiming he owed Richmond $30 million.

    Friot refused to step down in Utah, as did Collyer in the District of Columbia. Richmond accused Collyer earlier this year of operating a “Kangaroo Court” and violating her judicial oath. Collyer is presiding over the ASD civil-forfeiture case. Other filings in the ASD case suggested Collyer was guilty of as many as 60 felonies, and that an effort had been made by at least one ASD member to start a process to collect $120 million from Collyer, two federal prosecutors and a court clerk for “Interference With Commerce.”

    Screen shot: Section of a pro se filing in the ASD case.
    Screen shot: Section of a pro se filing in the ASD case.

    Such bizarre claims have been popping up more and more in litigation involving securities.

    Gold Quest International (GQI), a company accused by the SEC last year of operating a Ponzi scheme from Las Vegas, claimed it was part of a North Dakota Indian tribe and was immune from U.S. law.

    After the SEC brought the charges against GQI in May 2008, Michael Howard Reed, the purported “attorney general” of the tribe, tried to sue the SEC for $1.7 trillion. The sought-after amount would have exceeded the total of federal income tax paid by individual U.S. filers last year by about $575 billion.

    U.S. District Judge Kent J. Dawson struck a series of pleadings by Reed from the record.

    Meanwhile, Dawson jailed John Jenkins, one of the defendants implicated in the Ponzi scheme, for contempt. Dawson also dispatched the U.S. Marshals Service to arrest David Greene, also known as “Lord David Greene,” in part for violating orders to repatriate money offshore to the United States.

    Despite Richmond’s behavior, he was labeled a hero on the Pro-ASD Surf’s Up forum. Over the weekend, Surf’s Up reinforced an earlier announcement that it would not permit discussion about the AdViewGlobal (AVG) autosurf.

    “[P]lease don’t expect any information that concerns AVGA,” a forum Mod said Saturday. “[I]t doesn’t belong on this forum.”

    Another Mod reinforced the ban on AVG discussion today.

    “In the beginning days of AVG we made it clear this is not an AVG forum and it still will not be,” the Mod said.

    Surf’s Up members repeatedly have said they wanted to discuss AVG, which has close connections to ASD. Their requests have been consistently rebuffed. Some of the Surf’s Up Mods were among the founding members of the AVG surf, which came to life after a major court ruling went against ASD last year.

    AVG purported to be a “private association” that operated offshore. Members used the “offshore” angle as a key selling point, saying the surf’s purported country of operation — Uruguay — insulated it from prosecution.

    Like the “3 Hebrew Boys” operation, AVG sought to prevent members from discussing the company outside the confines of areas it controlled. AVG members were scolded for sharing information and calling the autosurf an “investment” program.

    As AVG was in failure mode in May and June, members were threatened with copyright-infringement lawsuits. Critics were told AVG would contact their ISPs to file abuse reports and suspend service.

  • FBI Asks For Help In Unraveling Connecticut Ponzi; Seeks Information On Michael Goldberg

    ponzinewsThe FBI has asked people who have information on Michael Goldberg, who ran a business in Wethersfield, Conn., known as Acquisitions Unlimited Group (AUG), “to immediately contact the FBI at (203) 777-6311.”

    Goldberg, 38, was arrested today on charges he had operated a $20 million Ponzi scheme over a period of 12 years from his former home in Wethersfield. He surrendered voluntarily, after initially contacting law enforcement last week. Goldberg was freed after posting a bond of $1 million.

    His initial contact with law enforcement occurred Nov. 16, federal prosecutors in Connecticut said today. Investigators preliminarily have determined that victims may exist in Connecticut, New York, Florida, Arizona, California and Vermont.

    A federal magistrate judge adjourned the case for three months “to permit the government to continue to investigate the extent of Goldberg’s alleged scheme,” prosecutors said.

    Goldberg ran AUG between 1997 and 2009, according to court statements today. More than 100 investors directed more than $20 million to the alleged scheme, prosecutors said.

    Goldberg “falsely represented to prospective investors that he and AUG were in the business of liquidating assets held by JP Morgan Chase (formerly Chase Manhattan Bank), and that GOLDBERG induced investors to provide him and AUG funds by promising and paying up to 20 percent quarterly returns,” prosecutors said.

    But Goldberg’s promises to investors were false. He “never had a relationship with Chase, nor did he purchase or liquidate assets as he represented,” prosecutors said.

    “Rather, Goldberg paid old investors with new investor funds,” prosecutors said.

  • BULLETIN: Tom Petters’ Ponzi Case Goes To Jury

    ponzinewsThe fate of Minnesota businessman Tom Petters is in the hands of a jury.

    Petters was accused last year of operating a $3.65 billion Ponzi scheme.  Testimony in the case lasted a little more than three weeks.

    Federal prosecutors blamed the alleged Ponzi on Petters, saying he presided over a colossal fraud that featured phantom sales of consumer electronics to big-box retailers. Petters’ defense counsel blamed the fraud on subordinates.

  • Yet Another Senior Citizen Guilty In Ponzi Scheme That Targeted Fellow Seniors; Crime Was ‘Ruthlessly’ Executed, NJ Attorney General Anne Milgram Says

    A New Jersey financial adviser who created a sham company and operated it for 17 years has pleaded guilty to five felony counts of mail fraud, federal prosecutors said.

    Separately, state prosecutors announced a guilty plea to a felony charge of money-laundering.

    Maxwell B. Smith, 69, of Fairhaven, operated a Ponzi scheme that consumed more than $9 million, said U.S. Attorney Paul J. Fishman of the District of New Jersey.

    Smith faces a maximum sentence in the federal case of 100 years in prison and a maximum fine of $1.25 million. He will be sentenced Feb. 26 and remains free on bail of $1 million.

    Senior citizens were among the victims of a Ponzi scheme operated by a senior citizen, prosecutors said. New Jersey Attorney General Anne Milgram, whose office brought the companion money-laundering prosecution, described the crime as ruthless.

    milgram“This defendant ruthlessly preyed on elderly investors, targeting longtime clients who trusted him to look out for their interests,” Milgram said. “Instead, Smith deceived them and stole their money, in some instances depriving retired investors of their life savings.”

    Part of the deception was to operate the scheme out of a Mail Boxes Etc. “mail drop leased by Smith,” prosecutors said.

    Prosecutors said Smith worked for financial-services companies in Millburn and Tinton Falls, and admitted he created a sham entity known as Health Care Financial Partners (HCFP) in 1992. HCFP purported to be an investment fund with more than $300 million in assets under management, consisting of loans to healthcare facilities such as nursing homes.

    “Using his relationships with his investor clients, Smith admitted that he sold debt securities in HCFP through sham bond offerings ranging in prices from $25,000 to $300,000 per investment,” prosecutors said. “Smith induced individual investors by creating a phony investment prospectus falsely stating that the total value of HCFP’s holdings exceeded $300 million. To further induce individuals to invest in HCFP, Smith falsely claimed that their money would earn yearly dividend interest of between 7.5 and 9 percent, and that the returns on their investments would be tax-free, similar to municipal bonds.”

    Smith duped investors by lulling them into “thinking their investments were legitimate and earning returns” by using their money “to purchase bank checks, which he then sent
    to investors as purported earnings on their investments,” prosecutors said.

    But Smith told U.S. District Judge Mary L. Cooper that, instead of investing the funds as promised, he diverted the investments to his own bank accounts where he used the investors’ money for his personal expenses.”

    Smith spent client funds on dining, entertainment, gambling and international travel, “defrauding HCFP investors out of more than $9 million, prosecutors said.

    He also was charged under state law with money-laundering by Milgram. Smith pleaded guilty in the state case last week, and state prosecutors recommended a sentence of 15 years. The state sentencing is scheduled for March 5 in Morris County. Superior Court Judge Thomas V. Manahan will preside.

    “This investment broker stole millions of dollars from elderly clients, callously betraying the trust they placed in him as their longtime financial advisor,” said Milgram. “In pleading guilty to these charges, Smith faces a lengthy prison sentence and must pay full restitution to his victims.”

  • BLACK COMEDY EMERGES: Petition To Disbar Ponzi Figure Rothstein Arrives At Florida Supreme Court; Lawyer’s Victims Portrayed Unsympathetically In Some Media Accounts; Reporters Dredge Up Old SLAPP Lawsuit

    UPDATED 9 P.M. ET (U.S.A.) The alleged Ponzi scheme operated by Fort Lauderdale attorney Scott Rothstein is the stuff from which lawyer jokes are made. It is enough to make the Atticus Finch wing of the trade long for the days in which being a lawyer meant you were special — and being special meant you’d walk into a meeting with a client wearing your humble dress shoes, not your ostrich-skin boots, you drove a practical car, rather than a Ferrari, you understood that clients weren’t money machines — and perhaps especially understood that a fee paid in hickory nuts or collard greens by an impoverished client could make you feel as good as a big check from a wealthy one.

    A consentual petition to disbar Rothstein has arrived at the Florida Supreme Court. The court has not acted on the petition, but a clerk’s order was issued to attorneys to file an original plus eight copies of any additional motions because of “significant public and media interest.”

    Indeed, Florida is buzzing about the case, in part because it exposed a curious market in which purported sexual improprieties allegedly were presented by Rothstein as multimillion-dollar investment opportunities. Meanwhile, the case has dredged up embarrassing details from previous cases involving Rothstein investment clients or business contacts.

    A company once owned by one of the victims of the alleged Rothstein Ponzi fraud, for example, had a history that included bringing a purported SLAPP (Strategic Lawsuit Against Public Participation) action to chill a consumer advocate when the company itself had been named a defendant in a case in which as many as 900 complaints from customers piled up in Florida in the 1990s.

    The company, GGL Industries, once was owned by Florida businessman George Levin, a Rothstein investor and the registered manager of a Nevada company known as Banyon Investments LLC and other firms that used the Banyon name. There now are allegations that Frank J. Preve, who worked for one of the Banyon entities and had an office at the Rothstein Rosenfeldt Adler (RRA) law firm, played a role in the Rothstein Ponzi fraud.

    GGL did business as Classic Motor Carriages, selling kit cars in the 1980s and 1990s. Customers complained about slow deliveries or partial deliveries. GGL ultimately was charged criminally with wire fraud. Charges were not brought against Levin, but the company was convicted and agreed to pay $2.5 million in restitution.

    Various court actions against Rothstein have been filed this month. The lawsuits include spectacular allegations of fraud. Rothstein has not been arrested, but the FBI says the case could involve more than $1 billion.

    Federal agents have seized property, and new allegations have surfaced that Rothstein transferred millions of dollars in real-estate holdings to shell companies only weeks prior to the exposure of the alleged scheme in October.

    rotsteindisbarmentpetitionOne property acquired for $1.75 million was sold to a shell company for $10. Another property — the residence of Debra Villegas, COO of the RRA law firm — was acquired for $475,000 and sold to Villegas for $100 and “love and affection,” according to real-estate records.

    Worthy Of A Theoretical Seinfeld Movie?

    Unlike Ponzi scheme cases in which it is easy to view victims as sympathetic figures, some of the alleged victims of the Rothstein Ponzi are being portrayed as out-of-touch greedsters and, in the case of Preve, for instance, fraudsters themselves.

    Lawsuits have painted an ugly picture of how the alleged Ponzi scheme worked.

    Some of Rothstein’s purported victims would seem to qualify as the inspirations behind out-of-touch-characters in a theoretical Hollywood production titled “Seinfeld: The Anything-Goes-If-It-Involves-Profits Years.”

    Legal filings, for example, suggest the victims actually conducted detailed due diligence before choosing to participate in Rothstein’s scheme and determined that profits could be harvested from investments in lawsuits involving sexual indiscretions.

    Like would-be Seinfeld characters, however, some of the victims either did not connect dots that plenty of people would find the premise of mining profits from purported sexual indiscretions bundled as securities both bizarre and offensive  — or did connect the dots and decided that the profits were worth risking a PR catastrophe.

    Even victims who purportedly lost tens of millions of dollars by investing in Rothstein’s alleged scheme are not generating much media sympathy because of the presence of Preve, allegedly a convicted felon who worked for Banyon and had an office at Rothstein’s law firm. There also is an allegation that Rothstein’s general counsel — David Boden — did not have a license to practice law in Florida.

    A spokesperson for Levin told the Palm Beach Post that Levin did not know Rothstein was operating a Ponzi scheme and that “George Levin was first to contact the government when he smelled that something was not right with Mr. Rothstein’s purported investments.”

    Both Preve and Boden are alleged to have played pivotal roles in selling the scheme. Toronto Dominion Bank and bank personnel are alleged to have aided and abetted the scheme.

    RRA, which employed 70 attorneys, has been decimated by the scandal. The firm effectively is out of business.

    Perhaps the most spectacular allegation to date is that Rothstein told investors that he paid employees and “former F.B.I. and C.I.A. agents” to dig up dirt on the sexual infidelities of high-profile people — and then used the findings to extract multimillion-dollar legal settlements with the promise of confidentiality to the marks who had been targeted as defendants.

    Investors funded the purported “settlements” with the understanding that the plaintiffs in the case wanted money up front and would accept less than the settlement was worth. In effect, investors got to keep the spread between the settlement amount they funded for plaintiffs and the purported actual settlement amount, which was higher.

    Looking at it in a simple form for the sake of illustration, if a target perhaps was willing to pay $10 million to keep his name out of the newspaper — and if a plaintiff was willing to accept $2 million up front — Rothstein recruited investors to fund the purported $2 million settlement with the promise their profits would come when the case was settled over time for the higher amount.

    Preve, who was convicted of bank fraud in 1985, helped Rothstein line up investors, according to a lawsuit filed by attorney William Scherer.

    Preve’s bank-fraud fraud case in the 1980s had resulted in losses of $2.3 million, and Preve was placed on 10 years’ probation and fined $10,000 for falsifying documents, according to the lawsuit.

    Rothstein’s deals perhaps best are described as “purported,” because there are allegations they were fabricated in whole or in part. Through a practice derisively described as “piggybacking,” Rothstein allegedly sued defendants or monitored news about wealthy people caught up in allegations of sexual improprieties — and then sold interests in settlements, whether or not he had an actual role in the cases or whether or not an actual settlement existed.

    Victim’s Firm Has History Of Fling SLAPP Actions To Mute Critics

    Adding to the drama is the presence of Levin, one of the purported victims of the Ponzi scheme. GGL, which sold classic-car kits, once was owned by Levin. GGL has a felony conviction for wire fraud. GGL’s history includes corporate run-ins with both state and federal prosecutors and the filing of a SLAPP lawsuit against the late consumer advocate Stuart Rado, who helped organize victims in the case in which Levin’s company was convicted of wire fraud.

    Rado, according to court filings, had few financial resources and defended against the SLAPP lawsuit pro se. During the litigation, Rado was diagnosed with cancer. He lost the SLAPP case in which he was accused of violating the Florida Trade Secrets Act for sharing proprietary information about GGL customers, and died from the disease.

    After Rado died, GGL attempted to collect an $80,000 judgment against him for the company’s legal fees even though it had pleaded guilty to a felony, which prompted a court filing by the federal government and an attached exhibit by Rado’s estate that accused Levin’s firm of hounding Rado beyond his grave.

    The exhibit asserts Levin’s company systematically set out to destroy Rado financially for organizing fraud victims by subjecting Rado to an avalanche of legal filings — including notices sent to Rado only days after he was emerging from brain surgery.

    “GGLs suits against Rado were brought for two purposes,” the estate said. “One was to stop Rado from informing defrauded customers of a practical and inexpensive way to possibly obtain restitution, and by stopping Rado, stem the flow of complaints to the Attorney General’s office. The other purpose was to put people on notice that what was happening to Rado could happen to them if they dared challenge GGL.”

    The estate said the case against Rado was an orchestrated legal sham designed to silence him by making his net worth “go South” and to force him to “incur the expenses of defending two lawsuits over 4 years” — and to live “day-to-day with a barrage of pleadings, depositions and other legal maneuvers.”

    GGL persisted even after Rado died, according to the estate.

  • ‘3 Hebrew Boys’ Guilty In $82 Million Ponzi/Affinity Fraud Scheme; Company Operated In Fashion Similar To AdViewGlobal Autosurf, Imploring Members To Maintain Secrecy

    ponzinewsIn yet another case that may cause widespread unease in the autosurf world, three men accused of defrauding participants in a bogus debt-relief “ministry” have been found guilty of 174 counts of mail fraud, money-laundering and transporting stolen goods.

    Parts of the case against “3 Hebrew Boys” were remarkably similar to events engulfing the AdSurfDaily autosurf. In 2007, for example, the defendants filed a court document that described their investment program as an effort to free people from government “bondage” and referred to the investigation as “Satan’s handiwork.”

    In 2008, AdSurfDaily President Andy Bowdoin described the case against his purported Florida “advertising” firm as the work of “Satan,” comparing it to the 9/11 terrorist attacks. Prosecutors said ASD was selling unregistered securities, while engaging in wire fraud, money laundering and operating a $100 million Ponzi scheme.

    In 2007 and 2008, prosecutors brought essentially the same charges against “3 Hebrew Boys” — Joseph Brunson, Tim McQueen and Tony Pough.

    About 100 supporters of the “3 Hebrew Boys” rallied in Columbia, S.C., in the early days of the probe, to demand that investigators leave them alone. Participants told reporters that the government did not understand the program, had overreached in its prosecutorial efforts and refused to deny it was wrong, choosing to move forward with the case in a bid to save face.

    Prosecutors said the “3 Hebrew Boys” scam was targeted at churchgoers and members of the military from South Carolina and North Carolina, and also from other states. The scam got its name from the company’s website name, which was based on a biblical tale of believers who escaped a furnace by relying on their faith.

    At least $82 million was consumed in the scheme, prosecutors said.

    The company attempted to chill law enforcement, regulators and members of the media from scrutinizing operations, prosecutors said.

    In an approach similar to one used by the AdViewGlobal (AVG) autosurf,  members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.

    AVG, which has close ties to ASD, morphed into a “private association” in February 2009. Members were scolded for sharing information and calling the autosurf an “investment” program. As the company appeared to be collapsing in May and June, members were threatened with copyright-infringement lawsuits. Critics were told AVG would contact their ISPs to file abuse reports and suspend service.

    Not only did the plan to force secrecy and mute criticism not work in the “3 Hebrew Boys” case, it resulted in intense scrutiny by federal prosecutors, the FBI, the IRS and other agencies. It also resulted in intense scrutiny on the state level.

    South Carolina Attorney General Henry McMaster filed civil and criminal charges, posting all the documents in the case on his website.

    A court-appointed receiver also published documents, listing an astonishing array of luxury purchases made by the schemers with investors’ money. Among the items were a Gulf Stream jet, a Prevost Motorcoach and automobiles with famous names such as Mercedes, Lexus, BMW, Saab, Cadillac and Lincoln.

    Some of the luxury items are missing, meaning they cannot be sold to compensate victims.

    Brunson, McQueen and Pough were found guilty yesterday. The jury in the case, which was heard in Columbia, S.C., returned the verdict in less than three hours, after listening to testimony for weeks.

    Separately, Lee Otis Fluker was charged with perjury and convicted in 2008 for lying about his knowledge of the scheme. He was sentenced to a year in prison.

    Brunson, McQueen and Pough face decades in prison and fines in the millions of dollars.

    Last month, Beattie B. Ashmore, the court-appointed receiver in the case, warned victims about “companies [that] claim to offer professional services for recovering losses associated with your involvement with CCG,” one of the companies associated with the “3 Hebrew Boys” scheme.

    “Please note that you are not required to respond to these letters in order to be considered for a distribution from the Receiver,” Ashmore said on the receiver’s website.  “In addition, the Receiver takes no position as to any consequential effect filing a claim and recovering funds in this case may have upon any action you have taken or may take with Fraud Recovery Group or any similar type company.

    “Therefore, it is strongly recommended that you seek professional legal and tax advice from a trusted advisor, and that you properly research any professional advice before acting upon it,” Ashmore said.

  • BEYOND BIZARRE: California Man Arrested For Soliciting Teen To Spit In His Face For Cash; Police Say Crime Began On MySpace And Ended In A Sting Operation

    UPDATED 4:27 P.M. ET (FEB. 8, 2012 U.S.A.) Charles Hersel informed the PP Blog today that he has been acquitted of the charges. The AP is confirming the acquittal.

    Here, below, our earlier story . . .

    A California man was arrested on charges he paid a teenager $31 to spit in his face, authorities said.

    Charles Hersel, 39, of Thousand Oaks, was charged Wednesday night with the crime of “child annoying.” He was booked at the Ventura County Jail and released Thursday, after promising to appear in Ventura County Superior Court Dec. 21.

    Ventura County Sheriff Bob Brooks and Thousand Oaks Police Chief Jeff Matson said the arrest was the result of a “sting operation.”

    The alleged crime traces its roots to contacts Hersel made with teens on MySpace.com, a social networking site.

    “[I]t didn’t take long for word to spread among local teens that they could get paid to spit in a man’s face,” police said. “Hersel has been paying young male Westlake High School students in cash to yell profanities at him, slap him in the face, and spit in his face.”

    Police said Hersel also solicited teens to urinate and defecate on him, offering money in return.

    Hersel’s apartment and computer were searched, police said.

    The probe is ongoing. People with information about Hersel’s alleged activities are asked to call Det. Anthony Aguirre at 805-371-8309.

  • BREAKING NEWS: Louisiana Man Indicted In Alleged $20 Million Ponzi Scheme Targeting Senior Citizens; Prosecutors Allege Witness Tampering, Obstruction

    UPDATED 9:44 P.M. ET (U.S.A.) A Louisiana man has been charged in a 64-count indictment with operating a $20 million Ponzi scheme that fleeced retirees, federal prosecutors said today.

    So many fraud counts were filed against Matthew B. Pizzolato that he faces more than 1,100 years in prison if convicted of all of them. As many as 160 people were duped, prosecutors said.

    Pizzolato, 26, of Tickfaw, was charged with 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, and single counts of securities fraud, obstruction of justice and witness tampering.

    It was the second time this week prosecutors alleged witness tampering in a major Ponzi scheme case. Jeffrey Lane Mowen was charged in Utah Nov. 18 with attempting to hire a man to kill four witnesses in a  case against him.

    In the Pizzolato case, prosecutors said he attempted to silence employees with bribes of  $20,000 and get them to destroy records to cover up the scheme. Meanwhile, prosecutors said Pizzolato obstructed justice by stealing documents that could incriminate him from the home of a client.

    pizzolatoartWhen the client called authorities, Pizzolato returned documents that he altered after stealing them,  prosecutors said.

    A veteran FBI agent called the crimes beyond the pale.

    “It is unconscionable that in this stressful economy senior citizens would be targeted and defrauded of their life savings, said Special Agent in Charge David Welker. “We have an obligation to aggressively investigate crimes against those citizens who are most vulnerable. The FBI and our law enforcement partners will continue to aggressively pursue those who target our most vulnerable citizens.”

    Federal agencies are working together to put an end to the Ponzi plague in the United States, said U. S. Attorney Jim Letten of the Eastern District of Lousiana

    “Today’s indictment demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those who seek to take advantage and prey upon those among us, including our senior citizens,” Letten said.

    The Office of the Louisiana Commissioner of Securities assisted in the probe, Letten said.

    Pizzolato had offices in Hammond, Covington, Lake Charles, Baton Rouge, and also conducted business in Greater New Orleans.

    He “lured his potential victims through advertisements in the local daily newspapers in New Orleans, Baton Rouge and Hammond by promising rates of returns that were higher than market rates for CDs or U.S. Treasury Bills, prosecutors said.

    Among the words Pizzolato used to lure investors into a false sense of security were “guaranteed”, “safe”, “conservative”, “insured”, and “no-risk,” prosecutors said.

    Despite his assurances that clients’ money had been placed in U.S. Treasury Bills, CDs and other government-backed securities, Pizzolato “used the investors’ money to purchase luxury items, to make payments totaling millions of dollars to friends and family, to invest in high-risk futures trading and/or commercial real estate, and to provide lulling payments to investors in an effort to conceal the true nature of the Ponzi scheme,” prosecutors said.

    Among the luxury items he purchased with investors’ money were a BMW 750LI, a Mercedes Benz S430V, a Range Rover Sport and a Chevrolet Corvette, prosecutors said. He also bought sports tickets, a $35,000 engagement ring, a $500,000 home in Ponchatoula, La., and spent $35,000 on Carnival cruises.

    All in all, Pizzolato took about $19.5 million from clients and spent “nearly all” of it, prosecutors said.

    Since 2005, prosecutors said, Pizzolato either operated, owned or was affiliated with several companies: Gulf Region Guaranty Inc. (Gulf Region Guaranty); Acadian Guaranty Group LLC; Allegiance Financial LLC; Annuity Presets LLC; Annuity Recovery Services LLC; Anova Marketing Systems LLC; Anytime Fitness of Sulphur LLC; Cornerstone Wealth Management LLC; Global Assured Financial Inc.; Green Pelican Group Inc.; Gulf South Guaranty Inc.; Gulf States Guaranty LLC; GRG Holdings LLC; GRG I LLC; GRG II LLC; Matt P LLC; National Insurance Advisors LLC; Pelican Guaranty Group Inc. (Pelican Guaranty); and Spectrum Lending Group LLC.

    If convicted, he faces up to 20 years in prison for each count of mail fraud, wire fraud, securities fraud and witness tampering, and up to 10 years for each of the money laundering and obstruction of justice charges. Meanwhile, Pizzolato faces fines of up to $16 million.

    Pizzolato was hit with 56 counts that could result in a maximum sentence of 20 years each if convicted of all of them, meaning he potentially faces more than 1,100 years in prison — even more if convicted of the less serious crimes.

    Michael J. De Palma, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division, said law enforcement is prepared to “follow the money” to reverse-engineer Ponzi schemes.

    “Financial Fraud and money laundering are not victimless crimes,” De Palma said. “IRS-Criminal Investigation is united with the rest of the law enforcement community in our resolve to disrupt those who commit crimes against our local citizens. Special Agents of IRS Criminal Investigations are expert financial investigators who ‘follow the money’ trail to identify potential offenders.”

    Read the Pizzolato indictment.

    See video on WWL-TV:

  • BREAKING NEWS: Judge Suggests ASD Forfeiture Could Occur Before Christmas; Finds Bowdoin ‘Knowingly And Voluntarily’ Released Claims To $65.8 Million

    Will the August 2008 forfeiture case against $65.8 million in the personal bank accounts of AdSurfDaily President Andy Bowdoin end before Christmas?

    A federal judge suggested today that it might.

    Bowdoin, 74, knew what he was doing when he submitted in January 2009 to the forfeiture of the cash and “knowingly and voluntarily” agreed never again to raise the claims, Judge Rosemary Collyer said in an order today.

    Collyer added that the time to file claims has expired, thus agreeing

    Andy Bowdoin
    Andy Bowdoin

    with an argument advanced by federal prosecutors earlier this month. But Collyer today left the door open for 30 more days before ordering the final forfeiture of the money to the government, issuing an order that any “potential claimant(s)” must “show cause in writing” before Dec. 20 why she should not grant the final forfeiture.

    Earlier this month Collyer denied a bid by Bowdoin that began in February with his emergence as a pro se litigant to reassert claims to the money. Prosecutors said Bowdoin’s acts — and acts by dozens of other ASD members who had attempted to intervene in the case — were delaying the implementation of a restitution program for victims of the alleged ASD wire-fraud, money-laundering, securities and Ponzi scheme.

    Collyer has denied dozens of bids by ASD members to intervene for money in the case, saying they had no standing and no “cognizable interest” because the money had belonged to Bowdoin alone at the time of its seizure.

    On Nov. 10 alone, Collyer denied 13 such bids to intervene. All were filed by ASD members who shared a pro se litigation template. The judge repeatedly denied pro se attempts to intervene, denying the bids en masse in July, August, September and November. More than 70 such motions were filed in the case, dating back to February 2009.

    Curtis Richmond, a California man, was one of the pro se litigants. Records show Richmond was a member of a Utah “Indian” tribe a federal judge in a separate case last year ruled a “complete sham” that tried to extort money from public officials to gain a favorable litigation result.

    Richmond was hailed a “hero” on the pro-ASD Surf’s Up forum, even as thousands of ASD members were waiting to gain a share of a restitution pool the government is setting up for ASD victims.

    Read today’s order from Judge Collyer.

    Read Judge Collyer’s Nov. 10 mass denial of claims.

  • BREAKING NEWS: Bowdoin Family Knew About December Forfeiture Complaint A Month Prior To Launch Of AdViewGlobal; AdSurfDaily-Connected Assets Seized In December ’08 Case Prepped For Sale

    Even though Andy Bowdoin and his family knew in January 2009 that the government intended to seize the Tallahassee home of his stepson George Harris and an $800,000 building purchased with cash in ASD’s home city of Quincy, Fla., the AdViewGlobal (AVG) autosurf proceeded with its launch in February 2009, according to an analysis of web records and new court filings.

    Although a “Proof of Service” filed by federal prosecutors yesterday did not mention AVG, other records say that Bowdoin was given “direct notice” of a second forfeiture complaint that had been filed in December 2008 against ASD-connected assets. The initial forfeiture complaint against ASD was filed in August 2008.

    Yesterday’s filing by the prosecution showed that the Harris home and ASD building in

    Andy Bowdoin
    Andy Bowdoin

    Quincy were publicly posted for forfeiture on Jan. 8, 2009. AVG launched less than a month later, triggering a virtually relentless series of 200-percent, matching bonus offers to generate cash and events that ultimately led to its collapse after the Harrises were identified by AVG as the owners of the company.

    A Nov. 6 filing by the prosecution states that Bowdoin was given “direct notice” of the December 2008 seizure in January 2009, as were “all known potential claimants.” Prosecutors noted in the Nov. 6 filing that they had “signed receipts” from Bowdoin and others.

    Other records clearly show that AVG’s launch proceeded in February 2009, pushed by former members of ASD despite the filing of two forfeiture complaints against the firm and a racketeering lawsuit.

    Cash and property seized by the U.S. Secret Service in the December 2008 forfeiture complaint against assets tied to Bowdoin, his wife, stepson and Golden Panda Ad Builder are being prepared for liquidation, according to yesterday’s filing in the December case.

    The property includes $634,266.13 in cash seized from a Golden Panda bank account. It is being held in a U.S. Customs Suspense account in Indianapolis.

    The $800,000 building ASD paid for in cash also is being prepared for liquidation. The building is located in Quincy, Fla. It was promoted by Bowdoin as the site to which the company intended to move to accommodate employees and customers, owing to ASD’s rapid expansion.

    ASD’s growth was fueled by both video and written lies that its business was legal, the Secret Service said.

    In only months last year, ASD morphed from a company that earlier said it could not afford to pay members because of a malfunctioning computer script that purportedly had overpaid members and an accompanying  $1 million theft at the purported hands of “Russian” hackers  to a purported cash turbine was was going to buy an interest in an “international bank” and a “call center” in South America, the Secret Service said.

    In August 2008 — in the first forfeiture case filed against ASD’s assets — prosecutors told a federal judge that they believed Bowdoin was preparing to flee the United States. After reviewing a 37-page affidavit filed by the Secret Service and an additional 57 pages of evidence, including surveillance photos taken in Quincy prior to the filing of the application for seizure, a federal magistrate judge ordered Bank of America to freeze 13 bank accounts linked to ASD or Golden Panda and the U.S. Department of Homeland Security to seize the money.

    Prosecutors later seized two additional Golden Panda accounts at Bank of America, as part of the August complaint, bringing the total of accounts seized in the August matter to 15 — 10 from ASD, and five from Golden Panda. Those accounts, after reconciliations, contained more than $79.88 million, according to court filings.

    As the investigation continued, prosecutors established more links to ASD-connected assets. In December 2008, they filed a second forfeiture complaint, naming an additional Golden Panda account maintained by Bartow County Bank, rather than Bank of America. The Bartow County account is the one that contained the $634,266.13 now being held in Indianapolis.

    Prosecutors also seized the Tallahassee home of George and Judy Harris in the December complaint, saying its mortgage of more than $157,000 had been paid off with illegal proceeds from ASD. Records show the mortgage  was paid off about three weeks after a May 31, 2008, ASD rally in Las Vegas had concluded.

    George Harris is the son of Bowdoin’s wife, Edna Faye Bowdoin. Judy Harris is the wife of George Harris. The AdViewGlobal (AVG) autosurf, which came to life four months after the August seizure of tens of millions of dollars from Bowdoin’s bank accounts and approximately one month after a key court ruling went against ASD in November 2008, later identified George and Judy Harris as its owners.

    Bowdoin invoked God at the May 2008 Las Vegas rally, imploring members to imagine themselves wealthy and thanking God for providing him tremendous wealth.

    “And I always say, ‘Thank you, God, for developing me into a money magnet,’” Bowdoin said at the rally. “And I see myself as a money magnet in attracting money and, I say, attracting large sums of money.”

    Within days of the conclusion of the rally, according to court filings, ASD money was used by Edna Faye Bowdoin and George Harris to open a bank account into which more than $177,000 of illegal proceeds were deposited. More then $157,000 of the opening deposit was used to pay off the Harris home, which was seized in the December complaint.

    Neither George nor Judy Harris filed a claim to the home, prosecutors said. In September 2009, prosecutors made a veiled reference to the AVG autosurf in court filings.

    “Maybe Bowdoin thought that before the government brought its charges he (like some of his family members) could move to another country and profit from a knock-off autosurf program that Bowdoin funded and helped to start,” prosecutors said.

    AVG purportedly was headquartered in the South American country of Uruguay. Servers of the purported “advertsing” firm that operated in largely the same form as ASD resolved to Panama.

    Also seized in the December complaint were three automobiles: a 2009 Lincoln luxury sedan that had been acquired in July 2008 for nearly $50,000; a 2008 Honda CRV registered to George and Judy Harris acquired in June 2008 for nearly $30,000 after the Las Vegas rally; and a 2009 Acura TXS registered to former ASD figure Hays Amos for nearly $34,000.

    The check to acquire the Acura registered to Amos was signed by ASD Chief Executive Officer Juan Fernandez, prosecutors said.

    Also seized in the December complaint were computer equipment, two jet skis and a hauling trailer that were purchased with $20,506 of ASD money; and a Triton Cabana boat, Mercury motor and trailer purchased with $23,445 of ASD funds, prosecutors said.

    All of the property seized in December now is being prepared for liquidation, pending an order from U.S. District Judge Rosemary Collyer. Prosecutors said no one made a claim to any of the seized property.

    Based on the lack of claims, it is possible that prosecutors may argue that none of the property was claimed because ASD already had a plan to replace it through AVG.

    ASD’s seized computers are being held at Secret Service headquarters in Orlando, according to to the prosecution court filing. Meanwhile, the Lincoln luxury sedan registered to Bowdoin/Harris Enterprises and the Honda registered to George and Judy Harris are being held at a company in the auto-auction business in Lakeland, Fla.; the Acura registered to Amos is being held at an auto-auction company in Daytona Beach, Fla.; and the marine equipment is being held at auction companies in Fort Lauderdale and Pensacola, Fla.

    The $800,000 building and the Harris home were posted for forfeiture on the same date — Jan. 8, 2009, according to the prosecution filing. Only 5 days later Bowdoin surrendered his claims to the millions of dollars seized in August 2008.

    Regardless, the AVG autosurf proceeded with its formal launch in February 2009 — less than a month after the Harris home in Tallahassee and the ASD building in Quincy were posted for forfeiture.

    By the end of February, Bowdoin attempted to reenter the August case, acting as his own attorney and saying he’d changed his mind about submitting to the August seizure. Coinciding with Bowdoin’s pro se filings was an announcement by the AVG autosurf that it was becoming a “private association” based offshore.

    During the same time period, a poster at the Pro-ASD Surf’s Up forum told members that the Secret Service had seized the bank accounts of ASD promoters. The poster warned members to remove money from their bank accounts before it could be seized.

    By June 25, 2008, AVG announced that it was suspending cashouts. After initially blaming its inability to pay members on the greed of some members, it later changed its story and said $2.7 million had been stolen from the firm.

    The story was remarkably similar to the story the Secret Service said ASD had told about the purported “Russian” hackers to explain why it couldn’t pay members.

    See the prosecution’s filing yesterday that shows ASD’s Quincy building and the Harris home in Tallahassee were posted prior to the February 2009 launch of the AVG autosurf.

    See the prosecution’s Nov. 6 filing that says Bowdoin and family members had “direct notice” of the December 2008 forfeiture case and that the government had “signed receipts” prior to the launch of AVG, which later was linked to George and Judy Harris.