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  • URGENT >> BULLETIN >> MOVING: Zeek’s Paul Burks Indicted

    Paul Burks.
    Paul Burks.

    URGENT >> BULLETIN >> MOVING: (3rd update 9:15 p.m. EDT U.S.A.) Alleged Zeek Rewards operator Paul R. Burks has been indicted by a federal grand jury in Charlotte, N.C., on charges of wire and mail fraud, wire- and mail-fraud conspiracy and tax-fraud conspiracy.

    Burks, 67, of Lexington, N.C., is the third Zeek figure to be charged criminally.

    On the tax front, the grand jury charged that Zeek Rewards, the MLM arm, and Zeekler, the penny-auction arm, failed to file corporate tax returns. So did Rex Venture Group LLC, the parent company.

    Burks and “others” caused fraudulent 1099 forms to be issued for the 2011 tax year, which caused victim-investors to file false tax returns that reported “phantom” and “fictional ” income. Burks “engaged attorneys and tax professionals to legitimize the issuance of the 1099s,” the indictment alleged.

    Meanwhile, the grand jury alleged, “Burks and others paid themselves large salaries and other payments from victim-investors’ funds and did not keep accurate and complete records of the payments.”

    And, the indictment alleged, Burks and other used multiple bank accounts and offshore payment processors “to deposit funds from victim-investors and to make Ponzi payments” to them.

    Link to Department of Justice statement.

    More tomorrow on the PP Blog . . .

  • BULLETIN: More TelexFree-Related Raids In Brazil

    breakingnews72BULLETIN: In a follow-up to July’s “Operation Orion,” federal authorities in Brazil today conducted more TelexFree-related raids based on evidence uncovered during the first raids.

    A statement in Portuguese by Receita Federal — the Brazilian equivalent of the IRS — said it was aided by Brazilan federal police (Polícia Federal) and federal prosecutors (Ministério Público Federal). TelexFree is known as Ympactus in Brazil.

    Search warrants were executed and assets were seized, according to the statement.

    GazetaOnline (Brazil) has a report in Portuguese of the raids. So does Abril.com (Brazil).

    Here is the entire Receita Federal statement (italics added):

    Operação ORION: Receita Federal combate esquema de pirâmide financeira no Espírito Santo

    A Receita Federal do Brasil (RFB), a Polícia Federal (PF) e o Ministério Público Federal (MPF) deflagram nesta sexta-feira (24 de outubro de 2014) uma segunda fase da “Operação ORION”, com o objetivo de combater fraudes envolvendo a prática de pirâmide financeira promovida por empresas sediadas no Espírito Santo.

    O pedido de medidas cautelares adicionais decorre da obtenção de diversos documentos e do surgimento de novas informações durante a operação ORION, deflagrada em 24 de julho de 2014.

    As ações ocorrem nos municípios de Vitória e Vila Velha, onde estão sendo cumpridos quatro mandados de busca e apreensão na sede de uma empresa e em três residências de envolvidos. Além dos Mandados de Busca, foi autorizado o sequestro de valores e de bens imóveis.

    Participam da operação 12 servidores da Receita Federal e 20 policiais federais.

    A operação realiza-se como mais um esforço para combater um esquema de investimento conhecido como pirâmide financeira que se sustenta a partir da cobrança de taxas de adesão de divulgadores de um serviço de telefonia. A rede construída pelas empresas não condiciona os ganhos dos divulgadores à venda ou revenda dos serviços de telefonia, mas principalmente à angariação de novas adesões à rede, o que torna o esquema lucrativo somente para os membros que figuram no topo da pirâmide. O número de divulgadores prejudicados com a ação das empresas já ultrapassa um milhão de pessoas.

    A empresa está sendo investigada por diversos órgãos públicos no Brasil e no exterior. Em junho de 2013, a Justiça Estadual do Acre determinou a vedação de novos cadastros de divulgadores e indisponibilidade de todos os bens dos sócios de uma das empresas.

    Há indícios do cometimento de crimes tributários na atuação dos divulgadores, crime contra a economia popular, com suposta formação de pirâmide, estelionato e crime de induzimento à especulação.

    Google’s translation tool is here.

    A sustained misinformation campaign about TelexFree may be occurring among a segment of TelexFree promoters in Brazil.

    U.S. authorities have called TelexFree a billion-dollar Ponzi- and pyramid scheme. Some TelexFree members have alleged that TelexFree engaged in racketeering.

  • Now, A Hatchet Attack On New York City Police Officers

    From CNN video.
    From CNN video.

    Four uniformed New York City police officers were ambushed yesterday afternoon by a murderous man wielding an 18.5-in. hatchet. The sneak attack occurred a day after the sneak attack on Canada’s Parliament in which a duteous sentry standing watch over the Tomb of the Unknown Soldier at the War Memorial in Ottawa was shot and killed.

    In the New York incident, one officer presumptively was brutally cleaved in the head, another in the arm. Both are hospitalized. The two other officers reportedly shot the attacker dead. A bystander exercising the freedom to be out in public reportedly was hit by a stray bullet. All four officers are rookies. They were posing for a picture when attacked, according to reports.

    This, friends, is what anarchy looks like in freeze frame. It can happen in a matter of seconds. The danger is that it can be copy-catted in random locations. At least for now, whether a hardware-store hatchet served as a cheap substitute for the swords of ISIS is just another imponderable.

    As an official matter, terrorism has neither been ruled in nor ruled out in the New York attack. When a man swinging a hatchet like a baseball bat goes after patrol cops on the streets of Queens in broad daylight, however, it’s hard to see it as anything other than an attack on U.S. society itself.

    New York, of course, was a target of grandiose terrorists who caused airliners to crash into the Twin Towers of the World Trade Center on Sept. 11, 2001, destroying both human and brick-and-mortar symbols of freedom and Democracy. The hatchet attack suggests New York City and other cities now may need to be on the lookout for terrorists (officially designated or otherwise) who are less grandiose in choice of weaponry and their instant aims, but equally committed to destroying the symbols of order and the guardians of that order — in this case, four cops on the beat.

    Video of the incident appears to show the attacker could have carved up a civilian on the sidewalk, but darted around him and headed straight for the people wearing badges. But before you get the notion that the hatchet man was interested in giving the pedestrian an even break and didn’t hold him accountable for grievances, remember that the 9/11 attackers also sought to aim planes at the U.S. Capitol or the White House and ultimately struck the Pentagon.

    Despite the fact he thankfully was left physically unharmed, the New York pedestrian nevertheless counts as a casualty: By attacking the cops, the hatchet man was attacking the pedestrian by proxy, just as the American people were attacked by proxy on 9/11 through attacks on the symbols of commerce and freedom itself and the Canadian people were attacked by proxy in this week’s attack against the soldier and Parliament.

    We’re sitting here this morning remembering that Eric Frein, who allegedly ambushed cops at their home barracks in Pennsylvania under cover of darkness last month, is still on the lam.

    Regardless of the varied corrupt ideologies and the tortured psychologies or malignant philosophies of the attackers, all of these attacks are attacks against the keepers of freedom and the people who benefit from that freedom. That some of the attackers chose over-the-counter weapons rather than hijacked airliners matters only in terms of the instant body count and the size of the headline font. The mind-set is the same, even if the official casualty list includes fewer names.

    It’s terrorism at a variety-store discount, the same thing the world observed at the 2013 Boston Marathon. But in New York City yesterday, it was a garden hatchet, not a pressure cooker.

     

  • Canadian Soldier Killed, Prime Minister Unharmed In Attack On Parliament

    Globe and Mail video added at 7:29 p.m. EDT U.S.A.

    Current lede in Ottawa Citizen.

    A terrorist struck at the heart of the nation Wednesday, gunning down a sentry at the National War Memorial and wreaking havoc on Parliament Hill where the marble and stone halls echoed with gunfire and ran with blood.

    The gunman was shot and killed near the Library of Parliament, reportedly by House of Commons Sergeant-at-Arms Kevin Vickers, a former RCMP officer, and the man responsible for security on the Hill.

    It appears the gunman walked right past the Centre Block’s Reading Room, where Prime Minister Stephen Harper was meeting with his caucus Wednesday morning.

    From the AP, via the Boston Globe:

    A gunman with a scarf over his face shot to death a Canadian soldier standing guard at the nation’s war memorial Wednesday, then stormed Parliament in a hail of gunfire before he was killed by the usually ceremonial sergeant-at-arms, authorities and witnesses said.

    The attack immediately raised the specter of terrorism, with Canada already on heightened alert because of a deadly hit-and-run earlier in the week against two Canadian soldiers by a man who police say was fired up with radical Muslim fervor.

  • URGENT >> BULLETIN >> MOVING: Massachusetts Charges 4 Alleged Promoters Of EmGoldEx Scheme, Saying ‘Program’ Was Fraud And That Hucksters Stacked Children In Downlines

    emgoldexURGENT >> BULLETIN >> MOVING: (14th Update 4:33 p.m. EDT U.S.A.) Massachusetts has charged promoters of the EmGoldEx MLM “program” with securities fraud and selling unregistered securities, alleging they “created a complex web entangling investors throughout the Commonwealth” in a “pyramid scheme” that offered “guaranteed returns of up to 1,105% for recruiting more individuals.”

    The civil prosecution was brought by Commonwealth Secretary William Galvin and the Massachusetts Securities Division, which alleged that photos of children “getting paid” by the “program” were used as lures to drive dollars to the scam.

    Children also were used to stack downlines so promoters could “reach the Pay Spot faster,” the state alleged.

    And, the state alleged, “Investors in the EmGoldex Marketing Program are also able to purchase investment positions directly from other investors, rather than through EmGoldex, creating even greater risks for potential new investors.”

    Similar allegations that members could bypass the “program” itself to purchase positions were made in the TelexFree case earlier this year, a circumstance that suggests multilayered criminality in MLM HYIP “programs.”

    Named respondents are EmGoldEx Team USA Inc. of Andover, Mass.; Matthew Michael D’ Agati of Methuen, Mass.; Joseph Zingales of Methuen; James Vincent Piemonte of Methuen; and Jonathan Herman Seigler, formerly of Boston and now of New Hampshire.

    D’ Agati, Zingales, Piemonte and Seigler are accused of recruiting “hundreds of investors into the scheme,” according to the 41 page complaint. MSD is asking for disgorgement and financial sanctions.

    “Using multiple pooled bank accounts, Respondents have collected over $473,000 in Massachusetts for the EmGoldex Marketing Program,” the state alleged, further alleging that “over $282,659 has been wired to EmGoldex financial institutions overseas.”

    The Massachusetts entity was a recruiting arm for EMGX FS Ltd., “an entity purportedly registered in the Seychelles, with a principal place of business located at Suite I, Second Floor, Sound and Vision House Francis Rachel Str. Victoria, Mahe Seychelles[.] EmGoldex maintains an internet website at www.emgoldex.com,” the state alleged.

    Seychelles is a nation associated with money-laundering.

    News that Massachusetts was investigating EmGoldEx broke on Aug. 8.

    Like other HYIP schemes, EmGoldEx was positioned as a “Plan B.”

    “Respondents even use the Team USA Homepage to pitch the EmGoldex Marketing Program as a retirement vehicle, noting that EmGoldex can create a “[p]Ian B to care for you and your family in the later years,” the state alleged. “Respondents further add that membership in the EmGoldex Marketing Program is a fully transferrable asset upon death, providing perpetual residual income for an investor’s family.”

    Facebook and Twitter “at least” were used to drive recruiting, Massachusetts alleged.

    One of the key prongs of the Massachusetts-based pitch was that even “children” could earn through EmGoldEx, the state alleged.

    From the complaint (italics added):

    148. The Team USA Homepage advertises the EmGoldex Marketing Program as a simple and relatively quick way to earn significant residual income.

    149. Respondents also advertise on the Team USA Homepage that through the EmGoldex Marketing Program, even children are able to make significant profits, with little to no effort of their own.

    150. In a section on the Team USA Homepage titled “Local Success Stories,” Respondents feature at least three photos of children, with one caption reading, “Paid $4000 in only 13 weeks! Yes, even your children can get paid!!”

    151. The Team USA Homepage “Local Success Stories” section also includes photos of a number of other EmGoldex investors who are members of Team USA. Each photo is emblazoned on an American flag background, with the title “GOLDEN $4000 CLUB.”

    152. The “successful” investors received their payouts by recruiting new investors into the EmGoldex Marketing Program, not through the sale of any purported product.”

    Like earlier MLM scams such as TelexFree and WCM777, EmGoldEx picked up a local head of steam when the Massachusetts promoters hosted hotel pitchfests, Massachusetts alleged.

    Some local events for EmGoldEx charged admission fees of $10 and $25, and a purported “boot camp” for EmGoldEx held on Saturdays and Sundays charged an admission fee of $79 and $99, the state alleged.

    “According to marketing materials Team USA provided to the Division, Team USA represented EmGoldex as a ‘life changing opportunity’ for new investors. These advertising and marketing materials from Team USA are also adorned with pictures of gold bars, bags of cash and phrases such as ‘NOW YOU GET PAID,’” the state alleged.

    The scheme also took advantage of the popular culture, Massachusetts alleged.

    “For their part, according to documents that Team USA produced to the Division, D’ Agati and Zingales adopted speeches from popular movies, such as ‘Rocky’ and ‘Any Given Sunday.’”

    Moreover, the state alleged, attendees of a launch event were told “the speakers . . . were ‘not bottom feeders,’ and included lawyers, millionaires, and other very successful business people.’”

    Read the complaint.

  • OUTRAGEOUS! Emerging Scheme That Appears To Have TelexFree Ties Is Trading On The Name Of Abraham Lincoln

    8elosUPDATED 12:24 P.M. EDT U.S.A. BehindMLM.com has a story today about an emerging “program” known as “8Elos” that may have ties to TelexFree promoters, including Sann Rodrigues, already charged with fraud in the TelexFree Ponzi- and pyramid case.

    Rodrigues is an alleged recidivist securities- and affinity fraudster who now may be adding a shiny object scheme (emeralds) to his fraud bona fides. The evolving situation is so bizarre it almost defies description. BehindMLM, which reports 8Elos is using addresses in the British Virgin Islands and Switzerland, has published an early review here.

    One of the things that caught the eye of the PP Blog is that 8Elos appears to be trying to loosen American purse strings by trading on the venerated name of Abraham Lincoln through the use of a quote on leadership attributed to the 16th President of the United States.

    The PP Blog could not immediately confirm that Lincoln ever spoke the words attributed to him by 8Elos: “The greatest ability of a leader is to develop extraordinary abilities in ordinary people.”

    By even attributing a quote to Lincoln, however, 8ELos may be trying to sanitize a scam in largely the same way a 2011 MLM scam known as Club Asteria tried to sanitize its scam and bring in large numbers of Indians. Club Asteria leeched off the name of Mahatma Gandhi.

    8Elos may be targeting Brazilians, Brazilian-Americans and Latinos. Based on the flags published on its website, it also may be targeting Chinese, Portuguese, Spaniards and Russians.

    Lincoln was assassinated in 1865; Gandhi was assassinated in 1948.

    Club Asteria put a “JOIN OUR MISSION” button below a quote attributed to Gandhi.  It also placed a “JOIN NOW” button directly below an image of the actor Will Smith — this after months of trading on the names of the American Red Cross and the World Bank.

    8Elos, which implies it has ties to emerald and gemstone deposits in Brazil, curiously describes itself as “the perfect link between everything and everyone, the four elements with the four dimensions, people in search of infinity and its preciousness.”

    Also see PP Blog story from Oct. 2, 2012: “Was This Man Your Zeek Sponsor?”

    Also see this May 29, 2014, Media Alert from the Utah Securities Commission, an arm of the Utah Department of Commerce.

    From the lede (italics/bolding added):

    The Utah Securities Commission issued a Final Order against Jack Phillips, an Oregon resident, for conning Utah investors into several phony investment schemes involving travel cards, foreign currency trading, and importing Brazilian emeralds for sale all while promising guaranteed returns of 300 to 500% with no risk to investors.

  • In 1 Thai Province Alone, 120 Pyramid Schemes May Be Operating, Report Says

    cautionflagIn Lamphun Province in northern Thailand, the Thai government suspects that 120 pyramid schemes may be operating and swindling villagers in and around the district of Li, according to a report at NationMultimedia.com.

    The report suggests this is a specific type of securities swindle in which investors purchase shares in purported construction companies that actually are corporate shells with no real operations. The scammers are left with the money. Investors believing they’re helping themselves and the region drive growth are left with worthless pieces of paper.

    As is typical in pyramid schemes, corporate registrations appear to have been used to dupe investors. The presence of a corporate registration is not proof no scam is occurring.

    As NationMultimedia reports, quoting Director-General Pongpun Gearaviriyapun of the Department of Business Development (italics added):

    “Fraudsters deceive people by allowing them to hold shares in a company and partly own the business by asking for initial investment capital. These frauds tell them that they will benefit from the government’s construction mega-projects, and they do register the new firm with the department, but actually these businesses do nothing.”

    A recent example of an alleged swindle in which corporate registrations were used to dupe investors is the TelexFree case in the United States. Promos for the firm pointed prospects to the registrations, but TelexFree was conducting a billion-dollar, cross-border pyramid- and Ponzi scheme, according to court filings.

    Some of the promos for TelexFree even reproduced images of a government official. Other promos were worded to suggest that the government endorsed the purported opportunity and that recruits were helping drive economic growth to sustain their families and communities.

    TelexFree was promoted in Thailand, according to online promos. One promo was headlined, “Telexfree Thailand Team Number One.”

    In Thailand, the Department of Business Development “is closely inspecting newly registered firms to see if they are really operating,” NationMultimedia reports. “If not, the department will probe these companies in cooperation with local police, chief district officers, and the Department of Special Investigation.”

    Thailand is a nation in the Indochina Peninsula. Neighbors include Myanmar, Laos, Cambodia, Indonesia and Malaysia.

  • REPORTS: Enterprise Known As ‘BitcoinTrader’ Has Collapsed And Management Has Disappeared

    EDITOR’S NOTE: Beginning in late August, some promoters of the Zeek Rewards Ponzi scheme said they were moving to a “program” known as BitClub Network, a purported “mining” venture that purportedly was selling “Founders’” positions for $3,599 and offering memberships at buy-in rates of $500, $1,000 and $2,000. By some accounts, the “program” would pay “passive” earnings of between 0.3 percent and 0.8 percent a day for 1,000 days, with “compounding” possible.

    Regulators have issued repeated warnings about the volatility of Bitcoin values and about scams that seek to tie themselves to Bitcoin.

    **_____________________**

    UPDATED 5:44P.M. EDT U.S.A. There are reports on Bitcoin-themed websites and across Twitter that an enterprise known as “BitcoinTrader” has collapsed and that management has disappeared.

    Activities at BitcoinTrader purportedly included a “mining” venture, according to the reports.

    BitcoinTrader, according to the reports, used a domain name styled bitcoin-trader.biz that now is offline.

    The reports suggest BitcoinTrader was operating as an HYIP and that at least one figure associated with the operation has claimed some sort of hacking or extortion plot occurred and that a bankruptcy filing in Panama is in the offing.

    In what might be an exceptionally optimistic outlook, at least one report suggests that battering winds from Typhoon Vongfong might explain events at BitcoinTrader. Previous HYIPs have blamed the disappearance of websites or the absence of payouts on events such as hurricanes, the contraction of diseases such as Dengue Fever and the sudden need to travel to attend funerals in faraway places.

    From a publication known as CryptocoinsNews (italics added):

    Bitcoin-Trader.biz has disappeared overnight with the only communication being a letter sent out to all of their victims claiming that a hacker stole all of their funds and that they offered to comply with the hacker’s ransom notice. Bitcoin-Trader closed all of their social media accounts as well as their website almost overnight, while ducking under the cover of playing the victim of a hacker and claiming to file for bankruptcy.

    From a Tweet:

  • TELEXFREE BRIEFS: (1) False Claims That ‘Program’ Has Been Cleared Of U.S. Pyramid-Scheme Charges; (2) Name Of Model/Racecar Driver Used In Sanitization Campaign; (3) TelexFree Members Targeted In Ongoing ‘IFreeX’ Reload Scheme

    newtelexfreelogo1.) Reports began to surface late Thursday on Twitter and Facebook that TelexFree has been cleared by a judge of U.S. pyramid-scheme charges. These reports are false. Period.

    Perhaps to add credibility to the claim, a photo that appeared to depict a female TV reporter sitting in a studio was posted on Facebook. A computer to which a TelexFree logo was affixed sat to the reporter’s right. Below these images was a text message in Portuguese.

    The headline was “FORTE VITÓRIA TELEXFREE NOS ESTADOS UNIDOS.” Google’s translate tool (to English) translated it to this: “STRONG Telexfree VICTORY IN THE UNITED STATES.”

    Another Portuguese section read as such: “Corte americana declarou que a empresa não pratica “Pirâmide Financeira” e nomeou um interventor, Stephen B. Darr, que deve dar início ao processo de recuperação judicial, que tem autonomia de liquidar ou manter o funcionamento da empresa.”

    The Google translation tool translated this section to: “American Court stated that the company does not practice “financial pyramid” and appointed a receiver, Stephen B. Darr, who shall initiate the process of bankruptcy, it has autonomy to liquidate or keep running the business.”

    No American court has said that TelexFree was not a pyramid scheme or not a “financial pyramid.” Darr is the court-appointed trustee in the TelexFree bankruptcy case in Massachusetts. He has said he has no intention of reorganizing or reopening the company.

    It is unclear whether the person depicted as a reporter has any association with TelexFree or any of its media outlets. It is not unusual for MLMs and their affiliates to try to create the impression that specific media figures or media brands endorse an “opportunity.”  (See April 7 PP Blog story: “TelexFree, An Alleged Pyramid Scheme, Promotes Itself During Probes By Wrapping Logos Of Local Fox, CBS, ABC, NBC Affiliates Into Video.”) Also see Oct. 15, 2013, PP Blog story: “PROFITABLE SUNRISE CASE: Did Fake Reporter Use Photo Of Real Reporter In ‘Story’ Titled ‘Nanci Jo Frazer WINS in Court – A Case Of Innocent Ignorance?’)

    2.) Some of our readers may recall the flap over TelexFree’s sponsorship of a professional soccer club in Brazil. Could a new flap be in the offing, one that involves a Brazilian model and racecar driver?

    Twitter and Facebook were used today to drive TelexFree visitors to images of Helena Soares. She is wearing an old TelexFree logo on her racing outfit.

    Whether TelexFree had or has sponsored her was not immediately clear. What is clear is that there are a number of references to Soares in the context of TelexFree online. One of them is a YouTube video titled “Deaf Deaf TelexFree.” Promo text appears to be in Russian.

    This may spark questions about whether TelexFree was targeted at members of the international hearing-impaired community. HYIP scams such as Noobing and Imperia Invest have been targeted at investors who cannot hear.

    Today’s Twitter/Facebook references to Soares depict her as a “Campeã” (champion) of TelexFree.

    It is not unusual for Ponzi schemes to seek to associate themselves with celebrities, politicians, business stars and sports stars. This particular form of brand-leeching surfaces in scheme after scheme after scheme. A recent major example of this is the WCM777 scam, which tried to associate itself with the sport of golf, Jesus Christ, Harvard College, the Denny’s Restaurant chain, Apple co-founder Steve Wozniak and former U.S. Vice President Al Gore — and many others.

    The practice is so common that it has become a virtual signature of a scam. Like TelexFree and the Profitable Sunrise scams, WCM777 traded on the image of the Christ the Redeemer statue in in Rio de Janeiro.

    3.) As the PP Blog reported on Sept. 30, 2014, Massachusetts Commonwealth Secretary William Galvin issued a warning on a an emerging “program” known as IFreeX that is being targeted at TelexFree members. iFreeX may be a reload scheme designed to fleece TelexFree members for a second time. On Oct. 1, the Blog reported that IFreeX appears to have lifted branding material of T-Mobile, including images of Carly Foulkes, “the T-Mobile Girl” famous for wearing pink summer dresses in TV spots.

    T-Mobile said it was looking into the situation.

    A large image of Foulkes appeared today on Twitter in an iFreeX promo targeted at TelexFree members.

    The use of the letter “X” in HYIP scams has led to questions about whether purveyors are speaking in a sort of secret code. The OneX scheme used an “X” and an image of a bomb as part of its logo, and HYIP scams have been known to have ties to “sovereign citizens” and antigovernment extremists.

  • Top Official Who Warned About Cross-Border ‘Criminal Enterprises’ And ‘Frivolous Libel Cases’ To Mask Them Is Leaving Justice Department

    Deputy Attorney General James M. Cole, the No. 2 official at the U.S. Justice Department, is leaving after four years, Attorney General Eric Holder confirmed in a statement. (Holder also is leaving, a topic for another day.)

    Cole said something in Mexico City at the High-Level Hemispheric Meeting Against Transnational Organized Crime in March 2012 that is as important today as it was on the day the words were spoken.

    Indeed, Cole said on March 1, 2012, “Because of the sophistication of the world economy, organized crime groups have developed an ability to exploit legitimate actors and their skills in order to further the criminal enterprises. For example, transnational organized criminal groups often rely on lawyers to facilitate illicit transactions. These lawyers create shell companies, open offshore bank accounts in the names of those shell companies, and launder criminal proceeds through trust accounts. Other lawyers working for organized crime figures bring frivolous libel cases against individuals who expose their criminal activities.”

    And Cole also said this: “The advance of globalization and the internet, while hugely beneficial to people everywhere, has also created unparalleled opportunities for criminals to expand their operations and use the facilities of global communication and commerce to carry out their criminal activities across national borders.”

    We wish Deputy Attorney General Cole the best and thank him for his dedicated service to his country.

     

  • CKB/CKB168, WCM777 And TelexFree Prosecutions Make SEC’s 2014 Highlight Reel; Agency Says Its Job In MLM Sphere Isn’t Done

    recommendedreading1The prosecutions of the CKB/CKB168, WCM777 and TelexFree “programs” made the SEC’s highlight reel for fiscal year 2014, which began on Oct. 1, 2013 and ended on Sept. 30 of this year.

    In a statement today, the SEC said “new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.”

    Noting the FY 2014 pyramid-scheme actions against the MLM or direct-sales firms included allegations that the “programs” used social media and targeted immigrant communities, the SEC said its work wasn’t done.

    “The Enforcement Division will continue to root out pyramid and Ponzi schemes that prey on vulnerable investors,” the agency said.

    Not specifically noted in the agency’s statement today were the actions against the eAdGear and Zhunrize “programs” announced just prior to the close of the 2014 fiscal year. The eAdGear case was announced on Sept. 26; the Zhunrize case was announced on Sept. 23.

    Since the Zeek Rewards action in 2012, it has become clear that MLM HYIP schemes have tapped participants for spectacular sums. The Zeek scheme alone gathered on the order of $850 million. Filings suggest TelexFree may have gathered on the order of $1.2 billion.

    CKB/CKB168 appears to have gathered at least $20 million. WCM777 gathered on the order of $80 million. Zhunrize gathered on the order of $105 million, and eAdGear gathered on the order of $129 million, according to court filings.

    Zeek receiver Kenneth D. Bell, who is managing Zeek-related cases that involve hundreds of thousands of victims across the world, described Zeek this week as an attempt to put lipstick on a pig.

    It’s a description that could apply across the MLM HYIP sphere. The cross-border, murky nature of the “programs” raise concerns about both economic security and national security.

    On Sept. 21, the PP Blog reported that a small sampling of data from 95-self-identified victims of TelexFree shows they lost an average of $27,578 each. TelexFree potentially created 1 million victims or more.

    The SEC has broad responsibilities across the securities industry and its sectors — from Wall Street to Main Street.

    From the SEC’s statement today (italics added):

    The Securities and Exchange Commission today announced that in fiscal year 2014, new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.

    In the fiscal year that ended in September, the SEC filed a record 755 enforcement actions covering a wide range of misconduct, and obtained orders totaling $4.16 billion in disgorgement and penalties, according to preliminary figures. In FY 2013, the Commission filed 686 enforcement actions and obtained orders totaling $3.4 billion in disgorgement and penalties. In FY 2012, the Commission filed 734 enforcement actions and obtained orders totaling $3.1 billion in disgorgement and penalties.

    The agency’s enforcement actions also included a number of first-ever cases, including actions involving the market access rule, the “pay-to-play” rule for investment advisers, an emergency action to halt a municipal bond offering, and an action for whistleblower retaliation.

    “Aggressive enforcement against wrongdoers who harm investors and threaten our financial markets remains a top priority, and we brought and will continue to bring creative and important enforcement actions across a broad range of the securities markets,” said SEC Chair Mary Jo White. “The innovative use of technology – enhanced use of data and quantitative analysis – was instrumental in detecting misconduct and contributed to the Enforcement Division’s success in bringing quality actions that resulted in stiff monetary sanctions.”

    “Time and again this past year, the Division’s staff applied its tremendous energy and talent, uncovered misconduct, and held accountable those who were responsible for wrongdoing,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “I am proud of our excellent record of success and look forward to another year filled with high-impact enforcement actions.”