UPDATED 3:40 P.M. EDT (U.S.A.) A federal judge said she will not recuse herself from the AdSurfDaily forfeiture case and has denied a motion by Curtis Richmond to disqualify herself. Meanwhile, the judge also denied motions by other pro se litigants in the ASD case.
Richmond filed the motion to disqualify Judge Rosemary Collyer, claiming the judge had displayed “extreme bias.” But Collyer denied the motion this afternoon in a Memorandum Opinion. Richmond is associated with a sham Utah “Indian” tribe and has a history of filing 11th-hour motions to force judges to recuse themselves from cases.
“Mr. Richmond is not a party entitled to seek disqualification,” Collyer said. “Mr. Richmond further contends that he can seek this Court’s recusal under Rule 63 of the Utah Rules of Civil Procedure, erroneously referring to the Utah Rule as a federal rule. The Utah Rules of Civil Procedure do not apply in this Court. Even if Mr. Richmond had attempted to proceed under the applicable federal statute governing disqualification, 28 U.S.C. § 455, he would be barred from proceeding because he is not a party to this case.”
Collyer also denied a motion by Richmond to unseat the judge that accused her of treason, declaring the matter moot.
Other pro se litigants whose motions were denied today include Christian Oesch, Jeffrey Robinson and Joan Hughes.
“Movants here are not the first to attempt to intervene in this case and seek its dismissal,” Collyer said. “The Court addressed previous motions to intervene in a July 16, 2009, Memorandum Opinion, wherein it found that the motions to intervene must be denied because the movants did not have a cognizable interest in the defendant properties, and therefore did not have standing to contest this forfeiture action.”
“The movants here are in the same position,” Collyer said. “Since these movants are ineligible to intervene and seek dismissal, they are not parties to the case and their motions to set aside forfeiture will also be denied.”
Collyer denied seven pro se motions to intervene July 16.
UPDATED 1:23 P.M. EDT (U.S.A.) AdSurfDaily President Andy Bowdoin — through his attorney — is negotiating with federal prosecutors.
Charles A. Murray, Bowdoin’s attorney, has advised U.S. District Judge Rosemary Collyer that the negotiations “could result in an agreement resolving the matters in dispute either in part or whole.”
Prosecutors have consented to Bowdoin being granted a delay until Aug. 28 to respond to an order to show cause why motions he filed to reverse a previous decision he made to cede tens of millions of dollars seized last year should not be denied. Bowdoin’s response was due Aug. 7 by court order.
Collyer has not ruled on the consent motion to delay the response to Aug. 28.
Murray’s motion today was filed on behalf of Bowdoin and AdSurfDaily Inc. The motion did not reference Bowdoin/Harris Enterprises, another corporate entity for which Murray entered a notice of appearance in April.
Why Murray did not list Bowdoin/Harris Enterprises in today’s motion is unclear.
Members of the Bowdoin/Harris family — including Bowdoin’s stepson George Harris — have been identified as the owners of the AdViewGlobal autosurf, which suspended cashouts June 25 and later disabled its forum.
Although BizAdSplash (BAS) said last week that its new website would be up and running yesterday, the launch did not come off as advertised.
A video featuring BAS “chief consultant” Clarence Busby appeared on the old site today, but Busby did not explain the delay in launching the new site. The video opened with Busby watching what he described as the new site in a computer monitor, as piano music played in the background.
Busby then greeted viewers with a Mister Rogers-like “Hello there,” and proceeded to explain that exciting BAS developments were in the offing.
Clarence Busby turns to address video viewers. The content visible in the computer monitor purportedly is the new BizAdSplash website.
By the middle of August, he promised, the company would show members how to make “instant money, very, very quickly.”
Busby, who ceded more than $14 million to the U.S. government in a forfeiture case last year involving Golden Panda Ad Builder, his previous company, and AdSurfDaily Inc., implored customers to continue to believe in BAS. Busby did not mention Golden Panda or ASD. Nor did he mention his run-in with securities regulators who accused him in the 1990s of pushing three prime-bank schemes by promising returns of up to 10,000 percent.
“None of the investors earned the exorbitant returns promised by Busby, the SEC said in May 1998, after U.S. District Judge Thomas W. Thrash ordered Busby not to break securities laws.
“I’m not going to let anybody have a loss” in BAS, Busby said in today’s video. He claimed BAS already had paid out “over $2 million,” but did not say how much the surf firm had collected from customers since its launch early this year.
“We need you to believe in us,” Busby said. “You’ll see why we’re excited. You’ll see why it’s important to hang on.”
UPDATED 3:44 P.M. EDT (U.S.A.) A man the U.S. Secret Service identified as the “driving force” behind the Regenesis 2×2 matrix was released from prison Jan. 13, stole money from clients in a previous securities scheme and was on federal probation for money-laundering, records show.
A domain name the Regenesis matrix uses was registered privately in the Netherlands Jan. 21, just eight days after Jeffrey William Snyder’s release. Less than a month after release, Snyder’s probation was transferred from Nevada to Washington, where he had resettled.
Records show that Snyder, 40, had been on probation only days when Regenesis began to pursue customers, aided by web-based promoters who endorsed the $325 program that promised payouts with no work.
Regenesis now is part of a criminal probe involving at least five agencies.
Snyder, who lives in Snoqualmie, Wash., created The Vanguard Financial Foundation and the Topeka Crescent International Foundation in 2003, soliciting more than $200,000 from 16 different investors, according to his plea agreement in the case.
Snyder, according to the plea agreement, laundered the funds through a third company he “caused” to be set up: Envision Health and Nutrition. Investigators said Snyder used Envision to “conceal his identity and his control over the investor’s funds.”
Parts of the 2006 plea agreement read as though prosecutors were describing an early, small-scale Bernard Madoff.
Snyder provided “investors with false statements of account that purported to show their invested funds and accrued interest,” federal prosecutors said.
“[Snyder] converted the majority of these funds to his own personal use,” prosecutors said.
The case was investigated by the FBI and the Internal Revenue Service. Snyder was arrested in Las Vegas, according to records. Investigators determined that he had deposited investors’ money in a bank account in Encinitas, Calif., and then wired it to an account in Incline Village, Nev.
Part of the scheme was to compose “a solicitation containing materially false information to induce investors to invest money with him,” prosecutors said.
Among other things, Snyder claimed he could produce returns of 10 percent or greater per month, but never told investors he was not registered with the U.S. Commodity Futures Trading Commission.
Snyder signed the plea agreement Sept. 26, 2006, agreeing with the prosecution’s assertions against him. He was sentenced to a year and one day in prison — followed by three years’ supervised probation — on Dec. 11, 2007. He reported to prison in January 2008 and was released on Jan. 13, 2009.
The Secret Service began to investigate Snyder and others in the Seattle area about seven weeks ago, amid assertions that Regenesis was a Ponzi scheme that had gathered at least $1.5 million from customers and used an elaborate network of banks and companies to pull off the fraud.
Agents kept Regenesis under surveillance for five weeks. They observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance, according to court filings.
Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising, according to court filings.
The U.S. Secret Service is conducting yet-another investigation into the practices of an Internet-based business amid Ponzi allegations. Agents have seized computers and business records from Regenesis Marketing Corp., which operates online as Regenesis 2×2 at this website.
A felon on federal probation was an integral part of the company, according to court records. Meanwhile, federal agents said they found the personal records of customers in a Dumpster.
Regenesis 2×2 sells what it calls “commission centers” for $325 and touts itself as “THE ECONOMIC STIMULUS PLAN FOR YOU.”
Seized were envelopes containing credit cards, debit cards and financial statements; 13 Priority Mail envelopes and 10 First Class Mail envelopes; and various computers, computer equipment and business records.
Screen shot of Regenesis 2×2 video
In court documents, the Secret Service revealed Regenesis 2X2 had been under surveillance for five weeks prior to the government applying for multiple search warrants, which were approved by a federal magistrate judge July 17.
The case has featured surveillance at multiple locations, including a UPS Store in Kirkland, Wash., that the company used as a mailing address. Business actually was conducted elsewhere in Washington state, including the town of Snoqualmie, according to court filings.
No charges have been filed and the website continues to resolve to a server. The Secret Service, however, laid out allegations of an elaborate fraud involving multiple individuals, multiple bank accounts, multiple addresses and multiple company names, including a firm known as Streamline Media of both Reno, Nev. and Kirkland.
Agents observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance. Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising, according to court filings.
In one case in which agents were observing one of the adult principals in the case, they observed a youth described as a teenager exiting a vehicle and “struggling with a large arm full of opened business and UPS Priority Mail envelopes,” the Secret Service said in court filings.
The juvenile entered a building and “then immediately came back outside and discarded the materials into an alley [D]umpster,” agents said.
Agents identified the adult under surveillance as a person “arrested by the Internal Revenue Service out of Las Vegas, Nevada[,] for felony violations related to Illegal Money Laundering from Securities Fraud and Wire Fraud” in a previous case.
The subject under surveillance was on federal probation, agents said.
Assisting the Secret Service in the probe are the Federal Trade Commission, the Seattle Police Department, the Kirkland Police Department, and the Washington state Department of Revenue, Employment Security Department and Department of Licensing.
UPDATED 10:48 A.M. EDT (U.S.A.) The Noobing surf site is throwing a server error and will not resolve. The development came in the aftermath of a Federal Trade Commission complaint filed late last month against Brett Blackman and others, although Noobing was not named in the FTC complaint.
On July 24, a federal judge froze Blackman’s assets and the assets of other defendants in the case.
Attorneys general from Kansas, Minnesota and North Carolina joined the FTC in the action. One of the claims in the case is that Blackman was part of a scheme to make customers believe they would receive a “guaranteed” $25,000 grant from the government from economic-stimulus funds.
Web records identified Blackman as Noobing’s president. The precise time the Noobing site vanished is unclear.
Noobing had a considerable presence in the deaf community, and at least 15 YouTube videos featured sign language.
Members complained publicly about “bait and switch” in February, saying they were attracted to the program by suggestions of returns of up to 3 percent a day.
Returns, however, plunged to only a fraction of 1 percent. A Noobing staffer explained at the time that Noobing learned from the AdSurfDaily case that “it became clear that any system that is not SEC registered as an investment that returns more than 100% risks getting shut down and everyone loses everything.â€
What he did not explain is why Noobing chose even to operate in the post-ASD environment.
The staffer went on to blame the government for the decision to slash the payout rate.
“The SEC did not contact us,†explained the employee in February, on the ASA Monitor forum. “We are simply being smart and not putting ourselves in a bad position to risk losing everything. Once ASD gave up, and we stood without a firm ruling from the courts, the risk was too high. We’d have preferred that ASD won, or that at least we got a clear ruling, as it is now, cautious action is best.â€
Noobing was popular among some some members of ASD. After the seizure of tens of millions of dollars from ASD President Andy Bowdoin a year ago this month, some promoters turned to Noobing in the fall.
In the FTC complaint, the agency and the attorneys general seek “a court order permanently stopping the defendants’ illegal conduct and forcing them to return money to consumers injured by the scheme,” the FTC said.
Named defendants were:
Affiliate Strategies, Inc.
Landmark Publishing Group, LLC (d/b/a G.F. Institute and Grant Funding Institute)
Grant Writers Institute, LLC
Answer Customers, LLC
Apex Holdings International LLC
Brett Blackman, individually and as an officer, manager, and/or member of Affiliate Strategies, Inc., Landmark Publishing Group, LLC, Grant Writers Institute, LLC, Answer Customers, LLC, and Apex Holdings International, LLC
Jordan Sevy, individually and as a manager of Landmark Publishing Group
James Rulison, individually and as president of Answer Customers, LLC
In addition, the complaint names the following North Carolina entities as defendants: Real Estate Buyers Financial Network LLC (d/b/a Grant Writers Research Network); Martin Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC; Alicia Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC.
“Since at least 2007, GWI has mass mailed postcards to consumers across the country falsely claiming that the consumers “are Guaranteed a $25,000 Grant from the U.S. Government,†the FTC said. “Consumers who call the number are pitched a $59 book titled ‘Professional Grant Writer[:] The Definitive Guide to Grant Writing Success.’â€
“The company’s telemarketers falsely claim that the book will explain how to get government grants — including the ‘guaranteed’ $25,000 grant,” the FTC continued. “GWI and its North Carolina-based telemarketers, also named as defendants in the complaint, then call consumers who have bought the book, trying to get them to pay hundreds of dollars or more for grant research, writing, or coaching services, falsely claiming a 70 percent success rate in securing grant funding. In reality, few, if any consumers ever receive any grant money.”
From federal complaint.
Meanwhile, the FTC said, “GWI used the current government stimulus package to make its pitch. For example, when consumers called the number on the mass-mailed postcard, they heard a recording that said, ‘If you’ve been reading the papers you know that recently our government released $700 billion into the private sector. What you probably don’t know is that there is another $300 billion that must be given away this year to people just like you.’”
It did not end there, the FTC said.
“The recording continues, ‘And if you’re one of the lucky few who knows how to find and apply for these grants, you will receive a check for $25,000 or more, and we guarantee it . . . If you don’t get a check for $25,000 or more, you pay nothing.’â€
The one-year anniversary of the seizure of AdSurfDaily’s bank accounts and tens of millions of dollars occurred yesterday, but there was no discussion about it on the Pro-ASD Surf’s Up forum. No one appears to have started a thread to commemorate the anniversary.
ASD’s Breaking News site, which recently went offline and now resolves to a parked page that beams ads, gave Surf’s Up its official endorsement Nov. 27. The endorsement occurred eight days after a federal judge ruled ASD had not demonstrated at an evidentiary hearing that it was a legal business and not a Ponzi scheme.
ASD asked for the hearing. The government did not object. ASD President Andy Bowdoin took the 5th Amendment, advising the court through his attorneys that he would not testify at a proceeding his own company requested.
Although some Surf’s Up members continue to blame the government for events and criticize the prosecutors for being slow to issue refunds from seized funds, the ASD side is responsible for slowing the case to a crawl. At the same time, Bowdoin always has claimed in court filings that the money belonged to him and not the members. It’s one of the few areas in which both Bowdoin and the prosecutors are in agreement.
Bowdoin submitted to the forfeiture in January, meaning the case nearly was litigated to conclusion. His forfeiture decision put the government in position to begin an orderly process to implement a restitution program for participants who certified they were crime victims. The first step, according to the government, was to liquidate ASD’s assets. The government advised victims that patience would be required because it would take time to liquidate real estate and other seized assets and to carry out other administrative functions. (See story.)
ASD’s motion to submit to the forfeiture was filed Jan. 13; it was the 39th entry on the case docket, and the judge’s order (Jan. 22) granting Bowdoin’s request to forfeit the money was the 41st. The docket now has 80 entries, meaning it effectively has doubled in size despite the fact the case nearly was litigated to conclusion in January.
Less than two weeks after the judge granted Bowdoin’s forfeiture motion, pleadings by pro se litigants who opposed the government’s point of view and sought to intervene in the case began to appear on the docket. The docket has been dominated since January by pro se litigants, including Andy Bowdoin, who fired his paid attorneys and said he changed his mind about submitting to the forfeiture after consulting with a “group” of members.
As of today, various pro se pleadings have resulted in delays of at least seven months in implementing the orderly restitution process the government said it contemplates for crime victims. ASD has been ordered to show cause by Aug. 7 why Bowdoin’s motions — and why motions filed by a new Bowdoin attorney — should not be denied. The judge said she had heard neither from Bowdoin nor his attorney since May.
Timeline
Judge Rosemary Collyer issued the ruling that ASD had not demonstrated it was a legal business and not a Ponzi scheme Nov. 19. On the same date, ASD said on its Breaking News site that it was “Shaken but Not Stirred!” by the ruling, punctuating its comment with an exclamation point. ASD gave Surf’s Up its official endorsement on the Breaking News site Nov. 27, eight days after Collyer’s ruling.
References to a new surf with ties to ASD — AdViewGlobal (AVG) — began to appear online by mid-December. On Dec. 19, federal prosecutors filed a second forfeiture complaint tied to assets allegedly paid for with money that originated with ASD, including automobiles, a boat, jet skis and marine equipment, and a mortgage on the Tallahassee home of George and Judy Harris. George Harris, whom Bowdoin identified as head of ASD’s real-estate division, is Bowdoin’s stepson.
On June 10 and June 11 alone, prosecutors said, almost $240,000 in ASD funds were used for personal purchases by Bowdoin family members or friends. The purchases were made less than two weeks after ASD concluded a rally in Las Vegas in which Bowdoin told participants that he thanked God for making him a “money magnet.” He implored attendees to visualize themselves wealthy, to “have an attitude of gratitude with God” and to imagine lots of big checks coming in from AdSurfDaily.
By the end of July — after more ASD rallies — Bowdoin plunked down nearly $50,000 to purchase a new Lincoln. His assets were seized days after the purchase.
On a date uncertain in either December or January, some of the Mods and members of Surf’s Up started a forum to promote AVG. Reports suggested that as many as 30 former ASD members were “founders” of AVG.
On Jan. 15, two days after Bowdoin advised the court that he intended to submit to the forfeiture and never reintroduce his claims to tens of millions of dollars and other seized property, three ASD members sued Bowdoin for racketeering. Bowdoin has not responded to the complaint. No attorney has entered an appearance notice for him.
AVG’s graphics were seen on an ASD-controlled website Jan. 31, just hours before AVG’s official launch after operating in prelaunch phase in January — and after AVG had specifically disclaimed any affiliation with Bowdoin or ASD. Pro se filings in the ASD case began to appear within days of AVG’s formal launch.
On Feb. 24, reports surfaced that the U.S. Secret Service had seized the bank accounts of at least four additional participants in ASD, including at least one participant who had joined AVG. On Feb. 25, Bowdoin signed the first of his pro se pleadings. As February drew to a close — and before the world knew about Bowdoin’s shift in strategy to pro se — a Surf’s up Mod implored members to be patient, hinting the case soon would take a turn for the better from ASD’s point of view.
“[J]ust hold on — a little bit longer now baby,†the Mod implored.
On March 20, less than two months after its formal launch, AVG announced that Chief Executive Officer Gary Talbert had resigned but would continue to working in “accounting.” Talbert was an ASD executive who signed a sworn affidavit in the ASD case. In an Aug. 18 docket entry, Talbert identified himself as “Human Resource Manager, Assistant CFO and Website Editor.â€
Although AVG identified Gary Talbert as the CEO of AdSurfDaily, Talbert did not say the same thing about himself in court filings.
On Feb. 3, AVG identified Talbert as ASD’s chief executive officer, despite Talbert’s own court filings in which he noted his titles and never claimed to be ASD’s CEO. AVG continued to insist there was no affiliation with ASD.
On March 23, AVG announced its bank account had been suspended. Members also reported glitches with eWalletPlus, a money-exchange business associated with AVG. On March 26, three days after the announcement of the account suspension, an AVG promoter sent out an email that said $5,000 spent with AVG turned into $15,000 “instantly!” because of a matching-bonus program AVG was running. The promoter was identified as a participant in the CEP Ponzi scheme.
ASD once advertised it accepted CEP Trust as a payment method. CEP Trust was the failed payment processor associated with the CEP Ponzi scheme. AVG advertised huge matching bonus programs for weeks in what some people saw as a bid to collect large sums of cash as quickly as possible. eWalletPlus eventually went offline.
ASD once advertised it accepted CEP Trust, the failed payment processor associated with the CEP Ponzi scheme. A CEP promoter named in court filings sent out a promotion for AVG in March, claiming $5,000 spent with AVG turned into $15,000 'instantly!' The promotion was emailed three days after AVG announced its bank account had been suspended because too many members had wired transactions in excess of $9,500.
On or around May 23, AVG announced the launch of a new website. The launch failed, and members grumbled. On June 1, AVG announced the launch of yet another new website. By June 25, AVG announced that it was suspending member cashouts, making an 80/20 program mandatory and exercising its version of a “rebates aren’t guaranteed” clause that permitted it to keep members’ money.
Thicket Gets Thicker
The AVG site operated by some of the Surf’s Up Mods and members went offline after AVG made the June 25 announcement about suspended payouts. On the same date, AVG threatened members and media outlets with copyright-infringement lawsuits for sharing news about the suspended cashouts.
Four days later — on June 29 — Bernard Madoff was sentenced to 150 years in prison for operating a massive Ponzi scheme.
On June 30, AVG’s name was mentioned in documents filed in the racketeering lawsuit that had been filed against Bowdoin in January. The documents listed the names of some employees or members AVG and ASD had in common, but AVG has not been named a defendant in the RICO case.
July opened in unkind fashion for AVG. On July 1, just days after it announced the suspension of cashouts, AVG announced a new payment plan. Members said the plan was baffling because it appeared not to take into account matching bonuses the company had advertised and also increased the window for earning back money directed at the firm from 150 days to 180 days to 210 days, while at the same time suggesting it might take forever for members to get a return.
AVG identified George and Judy Harris as its owners on July 1. In the hours that followed, it closed its forum, reopened it, and closed it again. The actions occurred over a period of three days — and in the wake of complaints from members who had been pleading with the company to provide understandable explanations and to stop blaming participants for AVG’s seeming inability to explain itself.
In a bizarre communication, AVG advised members that the initial forum closure had occurred because posts by some members were contributing to the confusion of other members. Nearly 50 posts were deleted, members said.
Within days the situation grew murkier. By the end of the month, new questions about AVG were raised after the company was tied to a firm known as Karveck International, a subsidiary of Vana Blue Inc., a Pinksheet stock.
Vana Blue is registered as a corporation in Nevada. The company uses an address in Las Vegas that resolves to a mailing service, and an address in Phoenix that also resolves to a mailing service. VanaBlue says it owns the eWalletPlus payment service, whose website now resolves to a page that beams ads, as does Vana Blue’s own website.
One of the officers of Vana Blue is named a defendant in a counterclaim by the U.S. government that alleges more than $252,000 in federal income tax remains unpaid. The same individual — Donald Rex Gay — is listed in Louisiana records as a person who has been involved in a number of businesses.
Gay denied in pro se court filings that he owed the taxes.
Taking On eBay?
In April 2008, Vana Blue announced that it had “signed an exclusive agreement with Net Auction Plus (an alternative to eBay with lower fees and other eBay processes) to provide online, affordable, and flexible payment services.
“The start-up auction site has already over 200 power sellers from eBay committed to the new site when the site goes live in May,” Vana Blue said. “The fees generated by the new site should tremendously increase monthly revenue based on the business from the power sellers.”
Vana Blue’s TMS Corp. subsidiary — the owner of eWalletPlus — would be a pivotal player in helping Net Auction Plus compete against eBay.
The domain NetAuctionPlus.com throws a server error. But the address listed in the registration data is the same address of the Phoenix mail service Vana Blue used: 4757 E Greenway Rd. Suite 107B-105 Phoenix, Arizona 85032.
It was before Bernard Madoff and before Sir Allen Stanford. President Obama was candidate Obama. Sarah Palin, the little-known governor of Alaska, would not become part of the public consciousness for nearly another month. Few people had heard of the so-called “Arby’s Indians.” Fewer yet could instantly place Uruguay or Panama on a map or understand the acronym “RICO” without a quick trip to Wikipedia. No one had heard of AdViewGlobal, BizAdSplash or AdGateWorld. The 31st Annual Pilgrimage to Graceland to commemorate the life and passing of Elvis Presley would not begin officially until Aug. 9, another eight days.
Regardless, the term Ponzi scheme — which goes missing from the public consciousness for years at a time, despite the nonstop play it recently has received — started making a big comeback late in the afternoon of Aug. 1, 2008. For good measure and to sear the memory, nature treated part of the world to a total eclipse of the sun on Aug. 1. The small town of Quincy, Fla., was too far south to witness the spectacle — but Quincy soon would witness a spectacle of its very own.
Friday, August 1st 2008 afternoon update
Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.
ASD Management.
Yes, ASD signed this life-altering message “ASD Management.” A company that claimed to be a professional advertising and communications firm — one whose promoters claimed had Fortune 500 clients and signed contracts from major advertisers for millions of dollars — lost the PR war with a single, vague posting.
It was only the first of many incongruities. Reporters who called later were told there was nothing to fear because God was on ASD’s side.
Quincy’s spectacle began on Aug. 5, the date agents showed up with search warrants for ASD’s headquarters and the home of ASD President Andy Bowdoin. WCTV was the first media outlet to report the news. Here is how we put it:
WCTV is reporting that agents are executing a search warrant at ASD Cash Generator headquarters in Quincy, Florida.
Details are sketchy. WCTV serves Tallahassee, Thomasville and Valdosta., and is a CBS affiliate.
Our first update came at 3:09 P.M. EDT (U.S.A.):
WCTV is reporting that the U.S. Secret Service and the Gadsden County Sheriff’s Department are conducting the raid at ASD Cash Generator. Agents reportedly are searching for documents and computers.
We obtained a copy of the forfeiture complaint later in the day. Here are the initial quotations and background we published from the complaint.
” . . . there is reasonable cause to believe that ASD, Thomas A. Bowdoin, Jr. and others, devised and intended to devise a scheme or artifice to defraud, or a scheme for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and that he and they transmitted or cause to be transmitted by means of wire, communications in interstate or foreign commerce (including writings, signs, signals, pictures, or sounds), for the purpose of executing such scheme or artifice, to wit: an Internet-based Ponzi scheme, in violation of Title 18, United States Code, Section 1343 (Wire Fraud); and in violation of Title 18, United States Code, Section 371 (Conspiracy to Commit Wire Fraud),” the complaint read in part.
“Further, based on the information provided herein, there is reasonable cause to believe that the defendant properties constitute proceeds of the above-specified offenses or property involved in financial transactions, with wire fraud proceeds, that are prohibited by the federal anti-money laundering statutes.”
ASD sales materials positioned Bowdoin as an accomplished business person who once received a medal for business achievement from President Bush. Federal prosecutors, however, say Bowdoin received no such medal from Bush and that “successes are remarkably absent from his true work history.”
Bowdoin “was arrested in Alabama for one or more felony violations related to Fraud in Connection with the Offer and Sale of Securities by an Unregistered Agent,” prior to his involvement in ASD, prosecutors said.
In the Alabama case, prosecutors said, Bowdoin and co-defendants in a company known as Mobile International Inc. were charged with selling “unregistered securities to investors and with failing to state material facts to the investors that would have impacted the victims’ decisions to invest.
Alabama officials asserted Bowdoin “instigated a scheme by which he took money from some victims to pay off prior investors,” prosecutors said.
Charges were dismissed after Bowdoin agreed to enter Pre-Trial Diversion with three years’ supervised probation. He was ordered to pay $15,000 in restitution to victims. The case was settled in 1997.
Then, in 1999, Bowdoin plead guilty in Wilcox County to one count of selling unregistered securities. He was sentenced to a year in prison and three years’ supervised probation. The prison sentence was suspended, and Bowdoin was ordered to make restitution in the amount of $75,000.
U.S. Attorney Jeffrey A Taylor of the District of Columbia, the U.S. Secret Service, the Internal Revenue Service and other agencies are involved in the ASD probe, which also involves Golden Panda Ad Builder, another autosurf.
An IRS-Secret Service Task Force agent opened an A[SD] account as part of the investigation, according to the complaint. Agents also interviewed a number of ASD members as part of the investigation.
Here is how we followed up on Aug. 6:
Yesterday U.S. Attorney for the District of Columbia Jeffrey A Taylor filed a forfeiture complaint in a case involving Ad Surf Daily Inc., ASD Cash Generator, Thomas “Andy” Bowdoin, Golden Panda Ad Builder, Clarence Busby Jr. and Dawn Stowers.
Meanwhile, some ASD members appear to be acting in organized fashion to criticize the government. This has led some ASD critics to dismiss Bowdoin’s advocates as “Kool-Aid” drinkers. References to Bowdoin, Christianity and religion are common parts of the discussion across the Web.
Federal prosecutors and the U.S. Secret Service, which raided ASD’s Quincy, Florida, headquarters, are seeking $53 million held in various Bank of America accounts, a condominium in Myrtle Beach, S.C., and Bowdoin’s home in Quincy.
The Justice Department called ASD a “massive Internet-based wire fraud scheme,” alleging that ADSurfDaily Inc. was nothing more than a common Ponzi that used incoming money from new ASD members to sustain payouts to earlier members of the program.
Some ASD members appear to be going on the offense, attacking the government and flooding news sites, Blogs and forums with defenses for ASD and Bowdoin. Some of the messages have a fire-and-brimstone quality. The message in many cases is that ASD members have a Christian duty to back ASD and Bowdoin, who has a criminal record in Alabama for selling unregistered securities and bilking investors.
WCTV-TV, a CBS affiliate in Tallahassee, has been flooded by comments from ASD members. Many of the posts are defenses for Bowdoin. Some posters mentioned a medal Bowdoin allegedly received from the Bush administration for business achievement. Prosecutors said Bowdoin received no such award, even though the alleged award was cited in ASD advertising materials.
Other posters compared the government’s actions yesterday to the actions of Nazi Germany. Others suggested the government was involved in a conspiracy to defame Bowdoin and that overzealous prosecutors were trying to destroy private enterprise.
ASD members have contacted this Blog, saying it has a duty to investigate the Social Security program if it is going to report on ASD Cash Generator. The argument — directed at this Blog and at others — is that Social Security is a government-sanctioned Ponzi. It therefore follows that ASD should be let off the hook.
Elsewhere online there are reports of people who’d directed life savings and large sums of cash at ASD. One Blog poster and ASD member asked if anybody could point him in the direction of a bridge from which he could jump. The post appeared to be in jest, but it’s easy to believe that people who have thousands of dollars tied up in ASD are unnerved.
The Government Makes Its Case Against Bowdoin And Busby
Bowdoin once was sentenced to prison for his role in a securities scheme. The sentence was suspended after he agreed to three years’ supervised probation and to make restitution in the amount of $75,000, according to the Feds’ complaint.
Like Bowdoin, Golden Panda’s Busby also had a previous run-in with the law over securities issues.
In 1997, according to prosecutors, the “SEC successfully charged that Busby had violated anti-fraud provisions of the Securities laws by offering and selling investment contracts in connection with three different ‘prime bank’ schemes. Busby was accused of raising money for purported trading programs in ‘prime bank’ notes by fraudulently representing that investments were risk-free and the ventures would result in returns ranging from 750% to 10,000%. In total, Busby raised nearly $1 million from more than 70 investors.
“None of the investors earned the exorbitant returns promised by Busby,” prosecutors said in the forfeiture complaint. “Busby was ordered to pay $15,000 in disgorgement to victims; however, after Busby filed a financial statement to support a professed inability to pay, the court dismissed the order of payment. Busby filed for bankruptcy in 1997. This information was not disclosed on Golden Panda’s webpage or mentioned by Busby during his recent conference call.”
Although Bowdoin positioned ASD Cash Generator as an advertising program, the government said it was a smokescreen.
In July 2008, according to the forfeiture complaint, the Ad Cash Generator website stated that ([emphasis] added):
All payments made to ASD are considered advertising purchases, not investments or deposits of any kind. All sales are final. ASD does not guarantee any earnings or profits. Any commissions paid to Members are for the service of viewing other Member web sites and for referring Members to AdSurfDaily. All advertising purchases are non-refundable.
Prosecutors dismissed the disclaimer language, calling it “ASD’s effort to avoid being recognized as an unregistered issuer of securities and to avoid liability to participants, for breaking promises it makes elsewhere, when the Ponzi is revealed.”
Government Describes Role Of ASD Attorney Robert Garner
It was widely known online that ASD explained to new members that its program was legal — and used an attorney to help make it’s non-Ponzi case.
The attorney, Robert Garner, appeared in a video alongside Bowdoin and is mentioned prominently in the forfeiture complaint.
Here’s what the government had to say about Garner’s video appearance with Bowdoin:
“Mr. Garner proceeds to explain that Bowdoin hired [Garner] to insure that ASD’s operations are legal in all aspects. Garner assures the viewer that he and ‘other attorneys in our offices . . . are dedicated to this work with Andy and his company.’ He continued by saying his attorneys ‘are available at any time to deal with the issues as they arise.’
“Garner address[ed] the concerns that new ASD members sometimes have in the area of the legality of the Ad Cash Generator opportunity, by saying: ([Emphasis] added):
Andy has directed us to ensure that his company is structurally sound today and tomorrow and far into the future. My staff and I are dedicated to Andy’s vision that his company will continue to rapidly grow bigger and stronger, and will continue to be an industry leader in Internet advertising in the years to come.
“According to Garner,” the forfeiture complaint continued, “ASD . . . complies with all laws and regulations that apply to it. In explaining that ASD is not a Ponzi scheme, Garner notes that a Ponzi scheme is ‘illegal, because [it] use[s] money from new investors to pay the first investors in the scheme their promised returns.’”
“On behalf of ASD, on its website,” prosecutors said in the forfeiture complaint, “Garner advises prospective members that ASD is not a Ponzi scheme because, among other things, ASD is developing other revenue sources and ‘[t]here is no continuing obligation to pay returns to infinity.’ Contrary to Garner’s claim that this is not a Ponzi scheme, however, an infinite payment obligation is irrelevant and the lack of a non-member revenue source is a tell-tale sign of a Ponzi.”
In what prosecutors described as a “further attempt to make Bowdoin’s business model sound more legitimate, Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.’”
But an IRS-Secret Secret Service Task Force has “not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers’ to ‘earn their money back, plus a little more,’” the government said in the forfeiture complaint.
Agents discovered that ASD’s “Nevada incorporation documents list Garner as a director. [Garner], however, does not disclose the fact that he is an insider of ASD in his interview, in his typewritten opinion letter that appears on ASD’s webpage, or anywhere else on ASD’s webpage,” the complaint said.
“Furthermore, although Garner is admitted to the North Carolina Bar, it appears that [Garner] works out of his home and that he does not employ the team of lawyers that, he claims, have worked diligently to confirm ASD’s legality,” prosecutors said.
All in all, the government’s forfeiture complaint takes up 101 pages (including exhibits).
A year has passed. The documentation is much thicker now. Andy Bowdoin has fewer people willing to support him publicly. AdViewGlobal is in a state of decay; like AVG, BizAdSplash recently announced the suspension of member cash-outs. AdGateWorld announced it was selling itself to an unnamed party in the Middle East.
The autosurf world continues to alter lives, continues to turn friend against friend and family member against family member. Every day is a total eclipse of the sun.
A firm Vana Blue Inc. said is owned by its treasurer was sanctioned by the Illinois Department of Professional Regulation for practicing public accounting without a license.
Michael Reis and M.R. Reis & Co. of Naperville were ordered by the state to “cease and desist the unlicensed practice of public accounting” in 2000, according to IDPR.
Reis was identified in a March 31 document as treasurer of Vana Blue, a Pinksheet stock that trades under the symbol VBLU. The firm’s web domain — vanablue.com — vanished two days ago and now resolves to a GoDaddy.com page that beams advertisements.
“Mr. Reis currently is the proprietor of M.R. Reis & Co. Naperville, IL Bookkeeping and Tax Firm,” Vana Blue said in the March 31 document.
Vana Blue said it was publishing the information “to Conform with the Provisions of
Subparagraph (a)(5) of Rule 15c2-11 Promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934.”
News releases by Vana Blue identify it as the owner of Karveck International and TMS Corp. TMS Corp. also is known as TMS Association, an Arizona-registered entity purported to own eWalletPlus, a money-exchange business associated with the AdViewGlobal (AVG) autosurf.
AVG suspended member cashouts last month, saying it was conducting an audit of itself, making an 80/20 program mandatory should cashouts resume on a date uncertain and exercising its version of a “rebates aren’t guaranteed clause” that permits it to keep money sent in by members.
The surf firm identified its owners as George and Judy Harris. George Harris is the stepson of AdSurfDaily President Andy Bowdoin. Judy Harris is the wife of George Harris. A Florida home and a car owned by George and Judy Harris are named in a December forfeiture complaint filed by federal prosecutors as the proceeds of illegal conduct by ASD.
ASD’s assets — including tens of millions of dollars — were seized nearly one year ago by federal prosecutors amid allegations of wire fraud, money-laundering, selling unregistered securities and operating a Ponzi scheme from Quincy, Fla. Prosecutors seized automobiles and marine equipment in December.
ASD and AVG have close family, management and promotional ties. AVG purports to be headquartered in Uruguay and launched after the seizure of ASD’s assets.
Vana Blue said it was involved in the oil and gas business in Utah, the VOIP business in the Caribbean and in the international advertising business through Karveck International.
This news release, dated Feb. 21, 2008 — a year and a half ago — vaguely announces a name change for Vana Blue (from what to what isn’t clear) and announced the acquisition of TMS Corp.
Meanwhile, this news release, dated Jan. 30. 2009 — just a few days before the formal launch of AVG — announced the acquisition of “Karveck Corporation” had been finalized.
Vana Blue did not use AVG’s name in the news release. Instead, it described Karveck International as a company that “specializes in internet advertising and promotion in a search engine and ad clicking type environment.â€
UPDATED 10:50 A.M. EDT (U.S.A.) A company that says it owns Karveck International, a firm with purported ties to the AdViewGlobal (AVG) autosurf and eWalletPlus, used an address in Las Vegas that resolves to a mailing service.
The address is 5348 Vegas Dr., Las Vegas, NV 89102. Vana Blue said in a document that purported to be filed to comply with SEC rules that it maintained “its principal executive offices” at the address, which resolves to a mailing service provided by IncParadise.com.
Vana Blue also used a Phoenix address — 4757 E. Greenway Rd Suite 107B-105 — in published materials. The Phoenix address resolves to a mail company known as PostNet, which was described as a “Mailbox Rental, Fax, Passport Photos, Copies, Notary, UPS, DHL, FedEx, USPS†service.
In a document dated March 31, 2009, Vana Blue said it was publishing information “required to Conform with the Provisions of Subparagraph (a)(5) of Rule 15c2-11 Promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934.”
Vana Blue’s website at vanablue.com vanished yesterday. It was replaced by a GoDaddy.com page that beamed advertisements. Vana Blue trades as a Pinksheet stock under the symbol VBLU.
The purported March 31 filing by the firm to comply with SEC regulations said Vana Blue “currently has two subsidiaries TMS Corp and Karveck International.”
TMS Corp., also known as TMS Association, was the purported owner of eWalletPlus, which provided money services for AVG. In March, AVG announced its bank account had been suspended because too many members had wired transactions in excess of $9,500.
Although some AVG members said in March that eWalletPlus was continuing to process transactions for AVG, eWalletPlus said on its website that it no longer was accepting new registrants. The site eventually went offline, and now appears to be listed for sale on sedo.com.
Vana Blue shared details about its naming history in the March 31 document:
“The exact name of the issuer is Crosspoint Group, Inc., (herein sometimes called the “Companyâ€). The Company was organized under the laws of the State of Nevada on September 26, 1997, under the name Valley Excavation and Trucking, Inc. The Issuer changed its name on February 16, 2000 to RX Technolgy (sic) Holdings, Inc. On August 8, (sic) 2005 changed name to Crosspoint Group, Inc. February 2007 to The Employer and Vana Blue, Inc. on (sic) March 2007.”
RX Technology is involved in civil litigation with the U.S. Department of Justice and the Internal Revenue Service over tax issues. On one hand, RX Technology said in court filings that “taxes [were] erroneously and illegally assessed and collected from the Plaintiff.”
On the other hand, the government says a tax bill of more than $252,000 remains unpaid.
UPDATED 9:17 A.M. EDT (U.S.A.) The website for Vana Blue Inc., the purported parent company of Karveck International, has gone offline and now is resolving to a parked GoDaddy.com page that beams advertisements.
Vana Blue is a penny stock that trades under the symbol VBLU. No shares have traded hands since July 23, according to Yahoo Finance.
Why the vanablue.com site now resolves to GoDaddy is unclear. A series of news releases from Vana Blue in the past year and a half placed the company in diverse fields from oil and gas in Utah to Caribbean VOIP telephone service and international “internet advertising and promotion in a search engine and ad clicking type environment.”
Among other things, VanaBlue said it had acquired TMS Corp., an Arizona-registered business also known as TMS Association. TMS Association was the purported parent company of eWalletPlus, a payment processor associated with the AdViewGlobal (AVG) autosurf.
The website for eWalletPlus also now resolves to a page filled with ads. EWalletPlus appears to be for sale on sedo.com. Meanwhile, the website for AdSurfDaily Breaking News also is resolving to a page filled with ads.
ASD and AVG have close family, membership and promotional ties. ASD’s assets were seized in a federal forfeiture complaint last year, and a racketeering lawsuit against ASD President Andy Bowdoin later was filed by members of ASD.
Bowdoin has not responded to the racketeering lawsuit. AVG’s name was mentioned in RICO lawsuit filings that pointed out common ties between the surf firms, but AVG has not been named a defendant.
Last year, ASD announced that it expected a revenue infusion of $200 million from Praebius Communications, another Pinksheet stock. ASD made the announcement while it was awaiting a court ruling on issues pertaining to revenue streams in a Ponzi scheme case.
ASD’s Breaking News site pulled the Praebius announcement after doubting members said they intended to contact Praebius to confirm ASD’s story about the $200 million revenue infusion.
Vana Blue used an address of 4757 E. Greenway Rd Suite 107B-105 in a news release. It is an address that resolves to a PostNet outlet in Phoenix, the home state of TMS Association. PostNet describes itself as a “Mailbox Rental, Fax, Passport Photos, Copies, Notary, UPS, DHL, FedEx, USPS†service.
At a minimum, the information suggests AVG had strong ties in Arizona, particularly in the Phoenix area.
In February, Vana Blue announced that Karveck International posted $1.8 million in revenue in January. That’s when AVG was in prelaunch. Vana Blue did not name AVG in the news release.
AVG was said to have registered in Uruguay as Karveck International, although that information has not been independently confirmed.
Vana Blue’s name has been associated with Donald Rex Gay. Federal records show that Donald Rex Gay was sued by the U.S. government in a tax case that claimed unpaid taxes in the amount of $252,717.12.
Gay said in pro se court filings that he did not owe the taxes and had no means to pay them.
In June, AVG announced it was suspending member cashouts, making an 80/20 program mandatory if and when payouts resume and exercising its version of a “rebates aren’t guaranteed” clause that permits it to keep all money sent in by members.
