URGENT >> BULLETIN >> MOVING: (5th Update 5:35 p.m. ET U.S.A.) The “Achieve Community” money-cycling scheme is under investigation in Colorado.
“We do have an open investigation,” said Lillian Alves, Colorado’s Deputy Securities Commissioner.
It is the first official public confirmation that Achieve Community, a Ponzi-board program that claims to turn $50 into $400, is under investigation in the United States. In Colorado, the Division of Securities operates as part of the Department of Regulatory Agencies (DORA).
In a story earlier today, BehindMLM.com reported that Colorado appeared to be setting the stage to open a probe. Alves confirmed the investigation to the PP Blog at 4:23 p.m. today.
For the time being, she said, Colorado would not provide additional details. In January 2014, Colorado issued a cease-and-desist order against the WCM777 “program” operated by Ming Xu. The U.S. Securities and Exchange Commission later accused Xu of orchestrating a massive fraud scheme.
Achieve Community purportedly is operated by Kristi Johnson of the Denver area and Troy Barnes of the Detroit area.
At least one Achieve Community promoter recorded an ad for Achieve and two other Ponzi-board “programs.” The ad included footage from the SEC’s website. The SEC declined Jan. 12 to comment on the ad, which implied Achieve would have no trouble with securities issues.
Colorado officially confirmed a securities investigation 10 days later.
BULLETIN: (3rd Update 4:16 p.m. ET U.S.) Profitable Sunrise HYIP figures Nancy Jo Frazer and Albert Rosebrock have admitted they sold securities, the state of Ohio said.
As part of a settlement agreement with prosecutors, a charitable enterprise known as Defining Vision Ministries Inc. (formerly known as Focus Up Ministries Inc.) will be dissolved, with its assets turned over to the Ohio Attorney General’s Office “to be used for charitable purposes,” the office of Attorney General Mike DeWine said.
Frazer and Rosebrock further agreed “not to hold a position with a charitable organization and not to sell securities in Ohio,” DeWine’s office said.
If the terms of an injunction are violated, Frazer and Rosebrock “will be subject to a judgment in the amount of $710,000,” DeWine’s office said.
“The Ohio Attorney General’s Office is charged with ensuring that charitable funds are used as intended,” DeWine said. “Under this settlement, these individuals agree to dissolve their charity, to cease all charitable activities in Ohio, and to stay out of the securities business in Ohio. We believe this is a fair resolution to a case that underscores the importance of researching charities and being skeptical of claims that are too good to be true.”
Ohio, through DeWine’s office and the Ohio Department of Commerce’s Division of Securities, charged Frazer and Rosebrock civilly in July 2013.
News broke last week that a settlement agreement had been reached, but details were not immediately available. The Division of Securities said today that the injunction was entered yesterday in Williams County, Ohio, and that “Frazer and Rosebrock admitted they sold securities in a manner that violated the Ohio Securities Act.”
“Through the hard work and teamwork of the Division of Securities enforcement staff and the Ohio Attorney General’s office, we were able to prevent any more Ohioans from falling victim to this scheme,” said Ohio Division of Securities Commissioner Andrea Seidt. “We would encourage any potential investors in Ohio to call the Division’s Investor Protection hotline before they invest.”
Profitable Sunrise purportedly was operated by “Roman Novak” and used a mail drop in England, the SEC said in 2013. The “program” purported to pay up to 2.7 percent a day.
Frazer also is known as Nanci Jo Frazer.
From a statement by the Ohio Division of Securities today (italics added):
Profitable Sunrise was prohibited from the further sale of securities by a federal court in Georgia inApril, 2013. Profitable Sunrise operated as a pyramid scheme by paying investors referral bonuses upto 5 percent for any new investors who invested funds through the website. The website offered ratesof return between 1.6 percent and 2.7 percent compounded daily. Thousands of investors nationwide invested in Profitable Sunrise through local solicitors like Frazer and Rosebrock.
The Ohio Division of Securities would like to hear from anyone who may have been affected by this scheme who have not yet come forward. They can call the Division’s Investor Protection Hotline at (877) 683-7841.
2ND UPDATE 3:23 P.M. ET U.S.A. In another swipe at Herbalife and perhaps MLM recruiting schemes in general, activist investor Bill Ackman says he’s out to combat pyramid schemes by creating one himself.
Ackman’s apparent tongue-in-cheek approach adopts a typical “tell five” MLM marketing technique as part of a bid to create Internet virality for a video released last week that is designed to educate the public about pyramid schemes. The video is available in English and Spanish. It was produced by Ackman’s Pershing Square Capital Management LP.
“This video will help consumers avoid being defrauded,” Ackman said today in a news release issued through BusinessWire. “I encourage you to send it to five friends and encourage them to send it to five friends who can send it to five friends and so on, and we can fight pyramids with our own pyramid.”
BusinessWire is a subsidiary of Berkshire Hathaway, the Warren Buffett-led company that also owns Pampered Chef, an MLM company. Pershing Square previously has used BusinessWire to spread Ackman’s long-running contention that Herbalife is a pyramid scheme that incentivizes recruits to gather more recruits.
Buffett’s name has been used in any number of promos for commission-based MLM or network-marketing schemes, even when the legendary investor has no ties to the “opportunity” being promoted. The disingenuous message has been that Buffett’s corporate interest in Pampered Chef means that all MLM schemes pass muster.
In 2011, Buffett’s image was hijacked by the JSSTripler/JustBeenPaid scheme, a Ponzi-board “program” with possible ties to the “sovereign citizen” movement. Earlier, in 2010, Buffett’s image was appropriated by MPBToday, a “get two” MLM “program.”
As the PP Blog reported last week, Ackman’s video also channels an approach used by promoters of TelexFree, an alleged Ponzi/pyramid scam that may have gathered more than $1.2 billion in about two years of operation. The video also may provide a subtle reminder of Zeek Rewards, an MLM venture and alleged Ponzi/pyramid scheme that traded on images of the American Flag on its way to raising about $897 million in less than two years.
Ackman’s video also shows a representation of the American Flag, suggesting that franchise companies such as Burger King, H&R Block and Midas legitimately are part of the American Dream but that MLM schemes such as Herbalife may not be.
“Some of the start-your-own business offers you’ll see are legitimate opportunities,” according to the narration in the Ackman video. “But some are scams, designed to take advantage of you.”
Herbalife is not mentioned in the video, but one of the animated characters looks suspiciously like Herbalife CEO Michael O. Johnson.
The accompanying news release from Ackman does mention Herbalife, noting that “Funds managed by Pershing Square are short the stock of Herbalife Ltd and own put options on the Company. Pershing Square may increase, decrease, dispose of, or change the form of its investment in Herbalife for any or no reason, at any time.”
Racing legend Emerson Fittipaldi somehow ended up in a car with TelexFree figure Sann Rodrigues. Source: Video on DailyMotion.
UPDATED 2:14 P.M. ET U.S.A. It is not unusual for financial fraudsters to seek to rub elbows with famous people or to imply ties to them as a means of sanitizing purported “opportunities” or accenting their own bona fides. Recent examples of this include Florida-based Ponzi-schemer/racketeer Scott Rothstein, who mixed with the elite as his epic fraud scheme spiraled out of control.
Florida-based AdSurfDaily Ponzi schemer Andy Bowdoin (and any number of his promoters) falsely implied that then-President George W. Bush was on ASD’s train. The Mantria Corp. Ponzi scheme in Colorado traded on images of former President Bill Clinton and famous politicians or business executives.
The WCM777 scam traded on purported ties to Siemens and scores of famous companies. Siemens publicy refuted the WCM777 claims.
TelexFree, alleged to have gathered hundreds of millions of dollars in a combined Ponzi- and pyramid scheme targeted in no small measure at Brazilians and people who speak Portuguese or Spanish, aligned itself with the Botafogo soccer club in Brazil. The PR results were disastrous.
Now comes word that Sann Rodrigues, a figure in both the TelexFree and iFreeX schemes, is seen in a video in which he is driving a car. That in itself wouldn’t be unusual, in that Rodrigues previously has recorded one or more videos that put him behind the wheel of a flashy ride.
But in this case the passenger in the car is Emerson Fittipaldi, the Brazilian racing legend who won the Formula One World Championship twice and also is a two-time winner of the Indianapolis 500.
The PP Blog has sought comment from Fittipaldi through multiple channels and hopes to hear back from the legend. If Fittipaldi or his organization responds, we’ll make sure you see that response.
In September 2014, Galvin issued a warning about iFreeX, another “program” associated with Rodrigues. T-Mobile, the famous phone company, later said it was checking to see if its branding material was being misused by iFreeX.
Precisely how Fittipaldi ended up in a car with Rodrigues is unclear. Early research suggests Fittipaldi made an appearance at a hotel in the area of Orlando, Fla., on or around Jan. 6 of this year. Rodrigues may reside in the Orlando area.
The Orlando event appears to have been arranged by a venture known as DFRF. The asserted operator of that venture is Daniel Fernandez Rojo Filho. (The Ferdandez name also has been spelled with a trailing “s,” as opposed to a “z.”) His name surfaced as part of the Evolution Market Group/Finanzas Forex case in 2010.
It is clear that some Brazilians interested in the TelexFree case are closely following the appearance of Fittipaldi alongside Rodrigues, wondering if the racing legend is being duped by an alleged recidivist swindler.
DEVELOPING STORY: (Updated 8:43 p.m. ET U.S.A.) The Press Democrat of Santa Rosa, Calif., is reporting that detectives in Napa County have linked the kidnapping and murder of 44-year-old Reynaldo Pacheco to the WCM777/Kingdom777 MLM scam and as many as four suspects.
From the Press Democrat in a story dated Jan. 15 about the arrest of Angela Martinez Arias, 41, of Petaluma (italics added):
According to investigators, Pacheco had been involved in a business scam known as WCM777, or Kingdom 777. Early last year, the U.S. Securities and Exchange Commission announced it to be an illegal pyramid scheme targeting Asian and Latino communities worldwide. Assets were frozen.
Pacheco apparently had gotten Arias to invest an undisclosed amount of money in Kingdom 777, according to detectives. Pacheco “owed her money from a failed business relationship,” [Napa County Sheriff’s Capt. Doug] Pike said.
The other suspects, according to the newspaper, are Mauricio Tovar-Telles, 24, and Norberto Guerrero Gonzalez, 29. Both are in custody.
A fourth suspect, Miguel Angel Garcia, reportedly shot and killed himself last year after a standoff with SWAT officers.
At Davey’s sentencing Thursday, U.S. District Judge Robert Conrad focused on how Davey’s actions caused “life-wrecking damage” to the scheme’s elderly and vulnerable clients.
Salim Damji. Source: York Regional Police Major Fraud Unit
The York Regional Police Major Fraud Unit in Ontario, Canada, has arrested Salim Damji and a female accomplice in an alleged “romance and investment Ponzi scheme” that fleeced at least eight victims out of about $400,000.
Damji, 45, allegedly uses multiple names. Police have released a photo of him and have asked the public for assistance in the probe “as investigators believe victims may recognize his image as he was known to use various aliases.”
The aliases include Sal Palermo, Sal Darsee, Santos Palermo, Rico Palermo and Santos Salvatore, police said.
His female accomplice was identified by police as Tatiana Krainova, 39, of Whitchurch-Stouffville. Damji allegedly resided in the same town. Damji and Krainova were arrested Monday at the same residence in Whitchurch-Stouffville.
In April 2014, the York Regional Police Major Fraud Unit became aware of a suspect who had befriended a victim at a bar in Aurora. After several meetings with the victim, the suspect convinced her that if she invested money with him, he could generate significant short-term returns on those investments. The victim agreed and gave the suspect more than $50,000 which was transferred into various accounts the suspect provided.
It is believed the suspect used portions of funds collected from victims to pay other victims smaller amounts of money to show return on their investments with him. As the investigation continued, seven additional victims were identified who had all in vested similar amounts of money.
In these cases, once the money had been sent by cheque, cash or wire transfer, the suspect could no longer be reached. The investigation also revealed that the suspect was working with a female accomplice who was assisting the suspect with accepting funds from victims and depositing the funds into various accounts. She would then transfer portions of those funds back to the suspect.
Damji is charged with Fraud Over $5,000, Public Laundering Proceeds of Crime and False Pretence. Krainova is charged with the same offenses.
A Facebook site that claims an association with Rockwell Partners asserted in March 2014 that “[w]e would like to remind you that Rockwell Partners is not just another fly-by-night HYIP but a stable and safe place to invest your funds!”
Rockwell Partners purportedly was based in Costa Rica.
The first post in a MoneyMakerGroup thread in which Rockwell Partners was pushed in March 2014 claims a daily payout of between 1 percent and 3.5 percent. By June 2014, reports surfaced that the “program” was on the rocks. The website no longer resolves to a server.
Current schemes being promoted at MoneyMakerGroup include Achieve Community, which claims $50 turns into $400.
Any number of Achieve Community promoters now are pushing other Ponzi-board schemes.
Although the court docket in Williams County, Ohio, indicates that a settlement has been reached in a July 2013 civil case brought against Profitable Sunrise figure Nancy Jo Frazer and others, the office of Ohio Attorney General Mike DeWine said this afternoon that there was nothing to announce immediately.
The PP Blog contacted DeWine’s office today, after reports surfaced online last night that a settlement had been reached in advance of a three-day trial that had been scheduled to get under way next month. No details of any settlement appear on the docket
Kate Hanson, a spokeswoman for DeWine, said today that “the parties have been in negotiation,” but noted that “the State of Ohio does not have a final settlement document at this time.”
She added that “further updates” could be forthcoming.
With no final settlement document available, it remains unclear if any fines, restitution or disgorgement were ordered or whether there was any finding or acknowledgement of fault.
DeWine’s office, working with the Ohio Department of Commerce’s Division of Securities, accused Frazer and a related entity known as Focus Up Ministries of serving as a “front” for the Profitable Sunrise HYIP scheme purportedly operated by “Roman Novak.”
The SEC described Novak as a possible ghost who was targeting Christians in a cross-border securities-fraud scheme that used a “mail drop” in England.
“Profitable Sunrise operates for the benefit of unknown individuals and/or organizations doing businesses through companies formed in the Czech Republic and using bank accounts in the Czech Republic, Hungary, Latvia, and China, among other places,” the SEC alleged in April 2013.
Like many other fraud schemes, Profitable Sunrise was a Ponzi-board “program.” Its asserted “Long Haul” plan purported to provide a daily interest rate of 2.7 percent, plus compounding.
The SEC said Profitable Sunrise spread on social media through “numerous promoters in the United States.”
Moving forward, it might become harder for willfully blind, serial promoters of MLM HYIP schemes to claim surprise that the “programs” they’re pitching are engaging in securities fraud and the sale of unregistered securities.
Indeed, the U.S. Securities and Exchange Commission’s halting of the TelexFree MLM scheme in April 2014 was the “#1 most-viewed news” on the SEC’s website last year, according to a tweet from the agency.
Perhaps you remember the TelexFree ad by a promoter who introduced “Aunt Ethel” by way of an artist’s rendering and accompanying narration. Ads for MLMs and network-marketing “programs” that depict an artist’s hand “drawing” the story are somewhat common.
The ads are designed to make you want to jump right in. After all, if the Aunt Ethels of the world see the value after being introduced to a “program” by a loved one or friend, well, who would question Aunt Ethel?
In a swipe at Herbalife, activist investor Bill Ackman has introduced an ad in which an artist’s hand draws the story on how to avoid pyramid schemes. One of the characters in the ad bears a striking resemblance to Herbalife CEO Michael O. Johnson.
The 6:22 ad is running on YouTube and Vimeo and is titled, “Pyramid Schemes: A Primer.” A 6:27 version in Spanish also is available.
From an ad for TelexFree.
The SEC accused TelexFree last year of operating a massive pyramid scheme. The case is important because it demonstrates that the presence of a “product” in a scheme does not take pyramid concerns off the table.
TelexFree appears to have channeled Herbalife in some ways. Herbalife, for example, called meetings “extravaganzas.” So did TelexFree. Herbalife also has been a soccer sponsor. TelexFree did the same thing.
Meanwhile, TelexFree is alleged to have targeted communities whose first languages were ones other than English. Ackman contends Herbalife targets Latinos and other members of minority communities.
Ackman has alleged for more than two years that Herbalife is a pyramid scheme. Herbalife says it is not.
URGENT >> BULLETIN >> MOVING: (5th Update 5:35 p.m. ET U.S.A.) The “Achieve Community” money-cycling scheme is under investigation in Colorado.
