EDITOR’S NOTE: This story is about a policy at a healthcare facility, not an MLM. Even so, some MLMs HYIPs seek to enforce positivity rules, a circumstance that drives robotic thinking, also known as Stepfordianism.
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We’re thinking the uber-bizarre Banners Broker “program” here, but Banners Broker hardly is the only HYIP “opportunity” that reaches across America and behaves as though North Korea’s dear leader Kim Jong-un is on the policy board.
What to do if you answer the phones/email for an MLM HYIP and you sense something is seriously amiss with the “program” — but management has let it be known that the company has an enforceable positivity policy that gags “negative” talk and perhaps implies the enterprise must be protected at the exclusion of rational thought?
A recent decision by the National Labor Relations Board (NLRB) went against a Michigan hospital that had the following prongs in its policy manual:
employees will not make “negative comments about our fellow team members,” including coworkers and managers.
employees will “represent [the Respondent] in the community in a positive and professional manner in every opportunity;”
employees “will not engage in or listen to negativity or gossip.”
If you work for an HYIP — and if the boss or bosses tell you to avoid reading all those negative blogs — perhaps its time to speak with a labor lawyer familiar with the case of Hills and Dales General Hospital.
MLM HYIPs create scores of Stepfordians enrolled as independent contractors. Banners Broker threatened earlier this year to gag negative members and seize their “earnings.” It also threatened to send out reliable Stepfordians to monitor members predisposed to behave like thinking, feeling human beings.
A man asserted to be a promoter of at least three fraud schemes, including TelexFree, has been hauled in front of TV cameras in Uganda. The report below is from NTV Uganda.
The embarrassing appearance of the suspect may raise the stakes for promoters of online fraud schemes and create even more disastrous PR for cross-border MLM schemes. TelexFree has been accused in the United States of operating a $1.2 billion pyramid- and Ponzi scheme. In court filings, the SEC repeatedly has pointed to TelexFree promos that appeared on YouTube.
Whether TelexFree, which now is batting civil and criminal fraud charges in the United States, would provide counsel for the alleged Ugandan affiliate was not immediately clear. Accused HYIP purveyors typically find themselves on their own, perhaps facing prosecution and the need to hire attorneys at their own expense.
Some HYIP promoters proceed from scheme to scheme to scheme. At least eight alleged TelexFree managers/executives and promoters face civil charges in the United States. Two of those — James Merrill and Carlos Wanzeler — face criminal charges. The various probes are ongoing.
The United States had labeled Wanzeler a fugitive.
BULLETIN: (1st update 7:58 p.m. EDT U.S.A.) The SEC has filed an amended complaint in the alleged WCM777 pyramid- and Ponzi scheme. The complaint ups the WCM777 haul from roughly $65 million to more than $80 million and names an “inactive” Florida attorney a relief defendant as the alleged recipient and distributor of fraud proceeds.
Vincent Messina, the attorney, allegedly is associated with an entity known as International Market Ventures (IMV) “based in Washington, D.C.” with asserted offices in Los Angeles, Shanghai, Hong Kong, United Arab Emirates, Nigeria, Congo, Benin, and South Africa, the SEC says.
Messina also was the asserted “general counsel” of World Capital Market, a company associated with WCM777 and accused Ponzi schemer Ming Xu, the SEC said. An affidavit included with the SEC’s amended complaint includes a copy of an email allegedly sent by Ming Xu to Messina inquiring about how to get WCM777 money out of Brazil.
“Vincent,” the alleged Ming Xu email to Messina began. “We have lots of members for our social capital company, WCM777 in Brazil. They paid us in Brazil. How to move the money legally from Brazil to USA or Hong Kong?”
Whether Messina replied to the email was not immediately clear.
“In June 2013, Messina was named as in-house legal counsel of ‘World Capital Market,’” the SEC said in its complaint. “Messina is also the general counsel of Relief Defendant IMV. Messina holds himself out as duly licensed to practice law in the State of Florida; however, the Florida Bar Internet site lists Messina as ‘inactive’ and ‘Not eligible to practice in Florida.’ Messina has an office in Los Angeles, California.”
Messina appears also not to be licensed in California, the SEC said in the affidavit. WCM777 operated from California.
WCM777, the SEC said, “is the umbrella name that Defendants use for their multilevel marketing scheme.”
The SEC initially sued WCM777 in March 2014. The “program” is known to have promoters in common with TelexFree, which the SEC sued on April 15. Both complaints were filed on an emergency basis. Both “programs” allegedly targeted speakers of Portuguese and Spanish, with WCM777 also allegedly targeting speakers of Chinese.
Portuguese is the main language spoken in Brazil.
On April 10, the PP Blog reported that the court-appointed receiver in the WCM777 case advised a federal judge that she’d halted an apparent WCM777 reload scheme and that Ming Xu, also known as Phil Ming Xu, transferred $5 million to Messina as part of a “sham” designed to stash cash.
Messina, the SEC alleged in the May 7 amended complaint, “disbursed those funds to, among others, IMV and possibly entities affiliated with IMV.”
Certain money disbursed by Messina ended up with “persons in Canada, Abu Dhabi, and to an entity in Hong Kong,” the SEC alleged.
Brazil-based TelexFree figure Carlos Costa harrumphed for both TelexFree and Botafogo.
BULLETIN: (2nd update 5:10 p.m. EDT U.S.A.) The Botafogo professional soccer club in Rio de Janeiro has canceled its sponsorship contract with TelexFree and will strip the TelexFree logo from team jerseys, according to an announcement on the team website.
TelexFree figure James Merrill was jailed in the United States last week. Fellow TelexFree figure Carlos Wanzeler was labeled a fugitive by the U.S. Department of Justice. The company is alleged to have operated a massive Ponzi- and pyramid fraud that gathered more than $1.2 billion.
News that Botafogo had dumped TelexFree came on the same day it was learned that some TelexFree promoters sought to explain to a U.S. federal judge that TelexFree provided a valuable “branding” opportunity.
Botafogo’s stripping of TelexFree’s name from its jerseys appears to show that the soccer club now believes differently. Some Brazilians expressed concerns months ago that any association with TelexFree by the team could backfire.
TelexFree already was under investigation in Brazil when the company and Botafogo announced the sponsorship in January. Court records in the United States now show that TelexFree became the subject of an undercover probe in America months before the purported opportunity and team announced the deal in a video that showed a limousine, a press event and Merrrill and Wanzeler wearing team jerseys.
Some TelexFree promoters had pointed to the Botafogo sponsorship as supposed proof that TelexFree was legitimate.
See earlier PP Blog stories that reference the Botafogo deal:
Some TelexFree members sent doodles to the federal judge presiding over the SEC’s fraud case. Redaction by PP Blog.
(UPDATED 9:24 am EDT MAY 14 U.S.A.) The PP Blog previously has reported on campaigns by members to petition judges to “bail out” TelexFree and consider the purported upside of the “program,” which may be the largest combined Ponzi- and pyramid scheme in MLM HYIP history. (Campaigns referenced in this May 10, 2014, PP Blog editorial.)
The docket of U.S. District Judge Nathaniel M. Gorton of the District of Massachusetts now shows that members have written letters to the court in support of TelexFree. Gorton is presiding over the SEC’s civil case against TelexFree. The complaint was brought on an emergency basis on April 15. Assets of TelexFree and alleged managers and certain promoters have been frozen.
At least one TelexFree supporter contended in a letter to Gorton that he can “assure” the judge that “media disinformation” is responsible for the problems at TelexFree and that the company “revolutionized” MLM in a manner that “put out of extreme poverty thousands and thousands of people around the world, if not millions.”
TelexFree, according to the sender, was like a drop of “heaven for poor families.”
Some of the letters appear to be in Spanish, sent to the judge via fax. Some are handwritten. Some are typewritten. A few of them include doodles.
There are letters from the United States. There are letters from the Dominican Republic. Some of the letters appear to have used a shared template, which likely means TelexFree upline/downline groups organized the campaign.
In the 2008 AdSurfDaily case, shared litigation templates were used by certain members who appeared to be more interested in advancing conspiracy theories than understanding the facts of the case. Some of the letters/emails of “support” submitted by ASD in 2008 were used by the government to undermine ASD’s assertion it was not selling securities and was not a Ponzi scheme.
At least one TelexFree member asserted in a letter to Gorton that the “program” gave him an opportunity to earn money from TelexFree by posting ads on the Internet.
On Friday, it became known that the U.S. Department of Homeland Security was involved in an undercover probe of TelexFree that began at least by October 2013.
In a criminal complaint and affidavit filed in support of wire-fraud conspiracy charges against TelexFree figures James Merrill and Carlos Wanzeler, a DHS agent involved in the probe alleged an intelligence research specialist within DHS placed more than 700 ads for TelexFree online.
“The ads have resulted in no retail sales of TelexFree’s VOIP product,” the agent alleged.
And, the agent asserted, “the sites on which these ads were posted contained page after page after page of hundreds of nearly identical ads placed by various TelexFree promoters for the identical VOIP service.”
Zeek Rewards, an $850 million Ponzi- and pyramid scheme shut down by the SEC in 2012, also had an “advertising” component. So did ASD, a $119 million Ponzi scheme shut down by the U.S. Secret Service in 2008.
MLM HYIP schemes have defrauded billions of dollars from participants in recent years. The combined hauls of TelexFree, Zeek and ASD alone may exceed $2.169 billion. That’s nearly double the size of the epic Scott Rothstein Ponzi and racketeering scheme in Florida in 2009.
MLM HYIP swindles typically are aimed at vulnerable populations, with MLMers who have big email lists and experience in one fraud scheme after another scoring tremendous windfalls.
MLM attorney Gerald Nehra at a TelexFree rah-rah event in California last year. Source: YouTube.
In case you missed the big news yesterday, TelexFree figures James Merrill and Carlos Wanzeler were charged criminally.
Unofficially this brings the number of charged MLM HYIP “programs” (or clients) with links to MLM attorney Gerald Nehra to three in recent years. Nehra was an “expert witness” for AdSurfDaily in 2008. He testified that ASD, a 1-percent-a-day “program,” was a legitimate business and not a Ponzi scheme.
ASD operator Andy Bowdoin, who compared the men and women who guard the President of the United States to “Satan” and the 9/11 terrorists and clucked that “God” * was on his side, later was charged criminally and sentenced to a lengthy term in federal prison.
Nehra was brought in for marquee value and as an adviser to Zeek Rewards, Zeek operator Paul Burks said in late 2011 or early 2012. Zeek executives Dawn Wright-Olivares and Daniel Olivares later were charged criminally. Zeek was a 1.5-percent-a-day “program.”
At some point in 2012 or 2013, Nehra began to advise TelexFree. TelexFree executive Steve Labriola, like Zeek’s Burks before him, also saw marquee value in Nehra, according to Labriola’s comments in a TelexFree promo on YouTube. Now, Merrill and Wanzeler face the prospect of jail. Because the investigation is ongoing, others may, too.
TelexFree’s bogus returns were not tied to sales of its VOIP product and computed to more than 200 percent a year, making the “program” a classic Ponzi- and pyramid swindle, according to court filings. Some promoters claimed $15,125 returned $57,200. One promoter allegedly told an undercover federal agent that he’d scored $1.6 million in TelexFree “without selling a TelexFree product.”
This is a column about willful blindness and feigned obtuseness. (Think Faith Sloan.) It’s also a column about missed signals, whether they’re missed purposely or otherwise. (Think: Why would TelexFree hire Nehra after ASD and Zeek — and why would Nehra ever accept the work, which was bound to lead to racketeering allegations? Put another way, if you’re at the scene of too many highly suspicious fires, you shouldn’t be surprised if serious people start to believe you’re the arsonist or the arsonist’s helper. Even assuming Nehra is no MLM arsonist or racketeer, accepting the TelexFree work potentially put him in the position of being extorted or otherwise abused by the trade’s arsonists and racketeers.)
Spot any common themes or information roadmaps in the quoted material below?
AdSurfDaily “is not” a Ponzi scheme. “It is a legally structured, direct selling business model with multilevel compensation.” — Gerald Nehra, MLM attorney, Aug. 18, 2008. (Context: Nehra’s submitted testimony as defense witness in civil forfeiture action in the $119 million AdSurfDaily MLM HYIP Ponzi case. **)
“[AdViewGlobal] is the next iteration of the Ponzi scheme auto-surf programs, which [are] staffed with former [AdSurfDaily] executives and Bowdoin disciples.” — Class-action attorneys suing AdSurfDaily operator Andy Bowdoin and AdSurfDaily attorney Robert Garner of North Carolina, June 30, 2009. (Context: Motion in member-filed lawsuit against Bowdoin and Garner that alleged RICO (racketeering) violations.)
“With all of our efforts to punish and deter this criminal enterprise, the rights of innocent parties are protected and will subsequently be returned.” — A.T. Smith, assistant director, U.S. Secret Service Office of Investigations, Sept. 26, 2011. (Context: Successful forfeiture actions and remission (restitution) in AdSurfDaily MLM HYIP Ponzi case.)
“We will continue to use every tool at our disposal to bring justice to the citizens defrauded by these insidious schemes.” — Assistant Attorney General Lanny A. Breuer, U.S. Department of Justice, Criminal Division, Sept. 26, 2011. (Context: Successful forfeiture actions and remission (restitution) in AdSurfDaily MLM HYIP Ponzi case.)
“Just having him on retainer and having him on our team, it goes a long way from keeping anybody from launching an attack. Because generally when Gerry Nehra is involved, the Feds know that he’s cleaned up the act really well.” — Paul Burks, Zeek Rewards operator, c. December 2011. (Context: Burks’ remarks to early Zeek members that MLM attorney Nehra was on board.)
“I am pleading guilty because I am in fact guilty of the offense(s) identified in this Plea Agreement.” — Andy Bowdoin, AdSurfDaily operator, May 2012. (Context: Plea agreement to wire fraud in which Bowdoin disagreed with MLM attorney Nehra and acknowledged AdSurfDaily was a Ponzi scheme.)
“Capitalizing on the strength of our financial task force partnerships, we aggressively pursue criminals using computer experts, forensic specialists, investigative experts and intelligence analysts.” — Dennis Ramos Martinez, special agent in charge, U.S. Secret Service Orlando Office, Aug. 29, 2012. (Context: Prison sentence imposed on AdSurfDaily operator Andy Bowdoin.)
“While [Gregory] McKnight himself referred to Legisi as a “loan” program, and demanded that “members” not refer to their “loan” and an “investment,” Legisi was, in reality, an investment contract, which is considered a security and therefore regulated by the Securities and Exchange Commission. This semantic obfuscation was quite obviously an attempt to sidestep the securities laws.” — Office of U.S. Attorney Barbara L. McQuade, Eastern District of Michigan, September 2012. (Context: Sentencing memo against Gregory McKnight in Legisi $72 million HYIP swindle.)
“I’m not sure how many of you have heard the name ‘Gerry Nehra.’ But it is a very big name in this industry.” — Steve Labriola, TelexFree executive, Newport Beach, Calif., July 2013. (Context: Labriola introducing Nehra to TelexFree members at “Super Weekend” MLM rah-rah fest.)
“ZeekRewards used the enormous power of the Internet to rip off $850 million from hundreds of thousands of victims in less than two years. We will continue to work with our law enforcement partners to take down greedy scam artists who think nothing of stealing the savings of hard working people.” — U.S. Attorney Anne M. Tompkins, Western District of North Carolina, Dec. 20, 2013. (Context: The filing of criminal charges in the Zeek Rewards MLM/HYIP case.)
“The Massachusetts Securities Division charged TelexFREE Inc., with running a Ponzi scheme targeting Brazilian-Americans that has raised over $90 million from Massachusetts residents and around $1 billion globally.” — U.S. Department of Homeland Security,April 17, 2014. (Context: U.S. financial infrastructure protection. Sourced from DHS Daily Open Source Infrastructure Report.)
“At this [TelexFree] ‘super weekend’ event, Attorney Nehra spoke at length to attending investors, assuring them of the legality of TelexFree’s operation stating: ‘It is legally designed . . . you are on very solid legal ground.’” — Class-action attorneys, May 3, 2014. (Context: The filing of a prospective class-action against TelexFree and Nehra that alleged RICO (racketeering) violations.)
“Attorney Nehra’s extensive experience in multi-level marketing, and particularly his involvement with the Ponzi schemes involving AdSurfDaily and Zeek Rewards, armed him with the knowledge of what constitutes violations of United States securities law. Indeed, Attorney Nehra was well aware that the use of semantics and obscured phraseology to obfuscate securities laws fails to legitimize TelexFree’s illegal Pyramid Ponzi Scheme.” — Class-action attorneys, May 3, 2014. (Context: The filing of a prospective class-action against TelexFree and Nehra that alleged RICO (racketeering) violations.)
“Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities.” — Bruce Foucart, special agent in charge, Homeland Security Investigations, May 9, 2014. (Context: Comment on the filing of criminal charges in the TelexFree Ponzi- and pyramid case.)
“As alleged, these defendants devised a scheme which reaped hundreds of millions of dollars from hard working people around the globe.” — U.S. Attorney Carmen Ortiz, District of Massachusetts,May 9, 2014. (Context: Comment on the filing of criminal charges in the TelexFree Ponzi- and pyramid case.)
* Like jailed AdSurfDaily operator Andy Bowdoin, TelexFree figure Carlos Costa contends God is on his side. While Bowdoin talked of “Satan,” one TelexFree promoter has called a prosecutor in Brazil a “blonde she-devil.”
** Two members of AdSurfDaily who went on to become members of Zeek Rewards liked Nehra’s opinion so much they used it in a failed lawsuit (2011) against the U.S. government. The members, Todd Disner and Dwight Owen Schweitzer, both are listed as “winners” in the $850 million Zeek Rewards’ scheme. Disner’s Zeek haul was alleged to be more than $1.875 million.
Screen shot of part of criminal complaint filed today.
BULLETIN: (18th Update 8:15 a.m. EDT, May 10, U.S.A.) TelexFree figures James Merrill and Carlos Wanzeler have been charged criminally with conspiracy to commit wire fraud.
Merrill, 53, was arrested in Worcester, Mass. Wanzeler, 45, of Northborough, Mass., has been labeled a “fugitive.”
In similar prosecutions, U.S. authorities have notified INTERPOL about the subjects of U.S. arrest warrants in HYIP cases. How authorities intended to proceed against Wanzeler was not immediately clear.
“The scope of this alleged fraud is breathtaking,” U.S. Attorney Carmen Ortiz of the District of Massachusetts said. “As alleged, these defendants devised a scheme which reaped hundreds of millions of dollars from hard working people around the globe.”
From the criminal complaint and affidavit filed by Homeland Security Investigations (HSI), an arm of the U.S. Department of Homeland Security (italics added):
An analysis of the bank and credit card processing accounts behind TelexFree’s publicly-stated income and revenue figures shows that TelexFree was deriving less than 1% of its revenue from its VOIP products, about 99% from investments by new promoters, and that it could not meet its massive payment obligations to existing promoters without equally large infusions of cash from new promoters.
The complaint, among other things, reveals that an undercover probe into TelexFree was under way before the company and certain arms filed for bankruptcy protection in Nevada on April 13.
One undercover agent made a TelexFree purchase on April 9, four days prior to the bankruptcy filing. The complaint/affidavit describes the purchase bid as “cumbersome,” taking “over two hours, including unusual steps like setting up an electronic ‘eWallet’ and uploading to TelexFree copies of [the undercover agent’s] drivers license and credit card.”
Information in the affidavit/complaint shows that the undercover probe began at least by October 2013, months ago:
From the affidavit/complaint (italics/carriage returns/minor editing applied):
During the investigation, a law enforcement officer arranged to have him/herself recruited as a TelexFree promoter, to confirm how portions of the TelexFree system operated.
On October 15, 2013, an undercover HSI task force officer (“UC”) met with a TelexFree promoter (“Person A”). During the conversation, Person A told the UC that the UC could make $100 a week using an “AdCentral Family Package” to post online ads for TelexFree, and could earn additional money by recruiting other people to join TelexFree.
The UC met Person A again the next day, and successfully joined TelexFree as a new promoter. The UC bought the AdCentral Plan for $1,425 (a $50 membership fee plus $1,375 for the AdCentral package), using a check made payable to Person A.
Person B, an associate of Person A, helped the UC register and verify the UC’s new TelexFree “back office” account. This consisted of entering a name, date of birth, Social Security number, cellular telephone number, email address, and mailing/billing address. In order to access the back office, the UC created a unique log-in name and password.
Starting on October 21, 2013, using the UC’s access to the TelexFree system, an HSI Intelligence Research Specialist placed online advertisements as a promoter for TelexFree.
Following the system discussed above, the Specialist copied advertisements created by TelexFree and made available to the Specialist in the back office area of TelexFree’s site, and pasted them to another website TelexFree recommended. As required under the AdCentral Family plan, the Specialist did this five times a day. The entire process took about 25 minutes per day.
Between October 21, 2013, and the date of this affidavit, the Specialist posted more than 700 advertisements. The ads have resulted in no retail sales of TelexFree’s VOIP product. As described above, the sites on which these ads were posted contained page after page after page of hundreds of nearly identical ads placed by various TelexFree promoters for the identical VOIP service.
The document also asserts the government — once inside TelexFree — used an undercover bank account and tied it to a TelexFree “eWallet” — and began to receive payments from TelexFree.
One TelexFree huckster, according to the complaint/affidavit, told an undercover agent that “he [the huckster] had earned $1,600,000 as a TelexFree promoter, without selling a TelexFree product.”
“I am very proud of the tireless efforts of my special agents,” said Bruce Foucart, special agent in charge of HSI. “Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities. While pyramid schemes are nothing new, the potential scope of this case will hopefully serve as an educational lesson for all. The main point is clear; if it sounds too good to be true, it probably is.”
Undercover agents even attended a TelexFree rah-rah fest in Boston on March 9, the day TelexFree announced a new compensation plan. That plan, according to documents, led to an effective storming by affiliates of TelexFree headquarters in Marlborough on April 1.
Bail information for Merrill was not immediately clear. Wire-fraud conspiracy is punishable by up to 20 years in federal prison.
The Massachusetts Securities Division has alleged TelexFree was a combined Ponzi- and pyramid scheme that gathered more than $1.2 billion. The SEC also has sued.
Ortiz is the top federal prosecutor in the District of Massachusetts.
Ortiz’ office confirmed the Merrill arrest to the PP Blog at 3:13 p.m, adding that an arrest warrant has been issued for TelexFree figure Carlos Wanzeler.
The “Swamp Thing.” Source: “Mobile Upload” to Faith Sloan Twitter account dated today.
A federal judge in Boston today imposed a preliminary injunction and maintained an asset freeze on alleged TelexFree promoter Faith Sloan.
Sloan, 51, apparently was bored by the heavy court matters 1,000 miles to the east. A post on her Twitter account asserts she took in a late lunch and swigged a “Swamp Thing” at Pappadeaux, a seafood kitchen. The SEC says Sloan is from Chicago. Pappadeaux has a restaurant there, near Oak Brook Mall.
Whether Sloan plans to defend against the SEC charges continues to be unclear. When contacted April 17, the SEC said, Sloan complained the agency was “picking on” her.
Eight TelexFree figures have been charged with fraud. The Massachusetts Securities Division says the “program” was a combined Ponzi- and pyramid scheme that gathered $1.2 billion.
BULLETIN: The TelexFree Chapter 11 bankrupcy case filed in Nevada last month now has been formally transferred to Massachusetts and has been assigned to U.S. Bankruptcy Judge Melvin S. Hoffman of the Central Division in Worcester.
U.S. Bankruptcy Judge August B. Landis of Nevada ordered the case transferred to Massachussetts earlier this week. The SEC argued successfully for the transfer, saying the state was the “nerve center” of TelexFree.
TelexFree is alleged by the Massachusetts Securities Division and the SEC to be a massive Ponzi- and pyramid scheme.
Like the Nevada court, the Massachusetts court has established a TelexFree information page. Click here.
Hoffman already has issued the first order since the transfer — a status conference May 27 at 2 p.m. in Courtroom 3 of Donohue Federal Building in Worcester.
Housekeeping chores such as transferring docket records from Nevada are under way. Until the transfer is complete, Hoffman has authorized attorneys involved in the case to file emergency pleadings from Boston, Springfield or Worcester.
The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case says his “multitilayered investigation into [Zeek operator Rex Venture Group] and its insiders, advisors, and financial institutions” continues.
Receiver Kenneth D. Bell has been at the helm since the epic collapse of the Zeek MLM HYIP scheme in August 2012. The SEC initially filed civil charges to halt the $850 million fraud. A parallel criminal probe by federal prosecutors in North Carolina to date has resulted in the arrest and prosecution of two Zeek insiders, both of whom pleaded guilty.
Bell did not say in his May 7 report to Senior U.S. District Judge Graham C. Mullen precisely who the receivership was investigating. Zeek is known to have had members and vendors in common with the $119 million AdSurfDaily Ponzi scheme, which collapsed in 2008.
Bell so far has sued several members of ASD who became alleged winners in Zeek. (See March 3, 2014, PP Blog story and Comments thread.) Zeek also had members in common with TelexFree, an alleged Ponzi- and pyramid scheme that gathered more than $1.2 billion. Class-action attorneys have alleged RICO violations at TelexFree involving vendors and MLM attorney Gerald Nehra, who also performed work for Zeek, according to Zeek promos.
“The Receiver has begun to investigate possible claims against financial institutions that facilitated the [Zeek] scheme,” Bell advised Mullen. “If the Receiver becomes convinced that there are colorable causes of action against banks and other financial institutions, he will solicit other law firms to undertake this work.”
And, Bell noted, “The Receiver continues to evaluate potential claims against RVG’s third-party advisors, consultants, and others who received fraudulent transfers but who were not Affiliate Investors.
“These claims,” he continued, “are varied in light of the diverse range of involvement these parties had with RVG. The Receiver intends to file multiple third-party actions, likely grouping defendants in these actions based on the similarity of claims asserted against them.”
Moreover, Bell said, he “has been investigating allegations that certain insiders and net winners may be sheltering, hiding, or dissipating assets fraudulently transferred or held. The Receiver intends to fully pursue legal recourse in these situations so that funds are preserved and may be returned to victims of the ZeekRewards scheme.”
Bids to flummox the receivership were not limited to insiders and winners, Bell said.
“The Receiver Team also identified one creditor that appears to have taken numerous actions that were in direct violation of the Freeze Order and greatly damaged the estate,” Bell said. “The Receiver is in the process of determining what actions should be taken in regard to these violations.”
Bell did not identify the creditor.
An examination of of transactions that occurred at offshore processors such as Payza and SolidTrustPay continues, Bell said.
“The Receiver Team is continuing its investigation of and pursuit of any outstanding funds, including any potential transfers or withdrawals, from Payza and Solid Trust Pay,” Bell said.
Foreign transactions involving Payment World and CyberProfit also are under scrutiny, Bell said.
In addition, he asserted that his team “is investigating potential improper transfers totaling approximately $5.8 million from a Trust Account set up by Preferred Merchants’ CEO Jaymes Meyer for which Rex Venture Group was the beneficiary,” Bell said. “The Receiver Team has issued a subpoena to Preferred Merchants to obtain additional information and is engaged in conversations with Preferred Merchants’ counsel regarding these transfers and the production of this information.”
Transactions at Plastic Cash International also are under scrutiny, Bell said.
‘The Receiver Team is investigating potential improper transfers or withdrawals from Plastic Cash International,” Bell said. “This inquiry includes an analysis of the flow of funds through Network Merchants and SecureNet, which facilitated the flow of funds between Rex Venture Group and Plastic Cash International.”
Meanwhile, scrutiny of transactions involving NXPay, another Zeek Vendor, continues, Bell said.
“The Receiver Team completed its reconciliation of account information for NxPay, determining an outstanding amount of over $13 million, including improper post-freeze Order disbursements, and is analyzing potential options to recover this outstanding amount,” Bell said.
Negotiations with various parties over document production and information-sharing continue, Bell said.
“As part of this effort, the Receiver recently conducted an interview of a key fact witness with knowledge of the scheme,” Bell said.
We’re thinking the uber-bizarre Banners Broker “program” here, but Banners Broker hardly is the only HYIP “opportunity” that reaches across America and behaves as though North Korea’s dear leader Kim Jong-un is on the policy board.
