This is a video of Lt. Jim Seebok Seebock (updated Aug. 23, 2013) of the Las Vegas Metropolitan Police Department announcing the arrests of David Allen Brutsche, 42, and Devon Campbell Newman, 67. They are accused of hatching a plot to kidnap and kill at least one police officer in Nevada.
Also see Aug. 22 story in the Las Vegas Sun.
As of today, there are only two weeks left to file a claim in the Zeek Rewards Ponzi scheme case. The deadline to file is 11:59 p.m. (prevailing Eastern time) on Sept. 5, 2013.
Kenneth D. Bell is the court-appointed receiver in the Zeek case. The Zeek receivership website is here. The claims portal is accessible through the receiver’s website and also has a separate URL. The claims portal opened May 15, more than three months ago.
Bell said this in an Aug. 2 letter from the receiver (italics added):
To date, while more than 100,000 claims have been submitted or are in the process of being submitted through the Claims Process, hundreds of thousands of affiliates of ZeekRewards and other entities that hold potential claims against ZeekRewards have not filed claims.
Perhaps you are one of these affiliates who has not submitted a claim because you believe that fully completing and submitting a claim will take too much time, the Claims Process is too complex, the amount of your claim is too small, or that your potential recovery will not be in a large enough amount to make the effort of pursuing your claim worthwhile.
Regardless of these concerns, I would encourage you to submit your claim prior to the close of the Claims Process if you believe ZeekRewards owes you money for amounts that you invested in ZeekRewards. I anticipate that a substantial percentage of valid claims will be refunded. Moreover, I have made every effort to make the Claims Process as simple and user friendly as possible for all claimants and have only sought the information necessary to enable us to establish the amount each claimant is owed by ZeekRewards. Please also remember that even if you do not have all of the information requested, you may still complete and fully submit your claim. Any deficiencies with a particular claim will be addressed in the claim determination process.
Sick: A mute swan owned by Queen Elizabeth II was discovered “killed, cut up and cooked on a river bank close to Windsor Castle in Berkshire,” MailOnline (The Daily Mail) is reporting.
Sicker: Georgia shooting suspect Michael Brandon Hill, accused of holding two school employees captive and firing an assault rifle at police, had nearly 500 rounds of ammunition when he entered Ronald E. McNair Discovery Learning Academy yesterday, CBS News is reporting.
“Hill was arrested earlier this year for allegedly threatening on Facebook to shoot his older brother in the head ‘and not think twice about it,’” the network reported, citing a document from police.
The school is named after Ron McNair, an American astronaut and hero who perished with six other American astronauts and heroes in the Space Shuttle Challenger disaster in 1986. (See speech by President Reagan on RealClearPolitics.com; the speech in remembrance of the astronauts brought a country to tears and will be remembered by many for capturing the essence of Reagan’s views on what it means to be an American.)
Sickest: Christopher Lane, a 22-year-old Australian living his dream of playing college baseball in America, was shot and killed yesterday in Duncan, Okla., allegedly by three “bored” teenagers.
Lane was killed for “the fun of it,” the Washington Post is reporting, quoting prosecutors.
Baseball is America’s national pastime. Lane fell in love with the sport from far, far way. Several Australians have played in Major League Baseball, following their dreams to America. Dave Nilsson made the MLB All Star team and played in the Olympics for Australia. The PP Blog also has memories of Australian Craig Shipley, who played in the majors and now works for MLB’s Arizona Diamondbacks franchise.
CNN is reporting that some people in Australia have called for a boycott of America over concerns of being shot.
The killers of the Queen’s swan, the gunman inside the Georgia school, the murderers of Lane while he was jogging on an American street . . . well, even President Reagan would have a hard time helping the freedom-pursuing people of the world see these actors and these acts in a context that made any sense at all.
It is just sick — and it makes Americans and people across the world sick at heart and left to wonder where it all is headed and where it will stop.
Three residents of Placerville, Calif. — Teresa Marie Marty, Charles Tingler and Victoria Tingler — have been charged in a superseding indictment with filing false liens against government officials performing their duties.
In what may be an emerging form of menacing aimed at government officials, one government worker was targeted with a fabricated $500,000 lien and two other bogus liens — and “Harris and Marty engaged a commercial collection agency” to collect on one of the fabricated debts, prosecutors said.
“Harris” refers to Pamela Harris, also of Placerville. She was described by prosecutors as an “office manager” at Advanced Financial Services (AFS), Marty’s company.
Marty has been charged with “filing liens against the property of three Internal Revenue Service (IRS) employees,” prosecutors said.
She also “filed liens of at least $84 million against the property of two Justice Department attorneys involved in a lawsuit filed against her in 2009 to enjoin her” and AFS from preparing tax returns, prosecutors said.
From a statement by the U.S. Department of Justice (italics added):
According to the superseding indictment, the Tinglers were clients of Marty and AFS, who filed a false tax return in 2008 fraudulently claiming a refund of $358,415. The indictment charges the Tinglers, as well as Marty, with filing this tax return. When the IRS tried to collect the fraudulently obtained refund, both Mr. and Mrs. Tingler filed multiple liens against the IRS revenue officer who was handling their collection case.
According to the charging documents the liens disclosed the social security numbers of the respective government employees. Marty and the Tinglers are also charged with multiple counts of unlawfully using the social security numbers of the government employees in the liens they filed with the California Secretary of State.
Finally, the indictment charges Marty, Mr. Tingler and AFS office manager Pamela Harris, of Placerville with participating in a conspiracy to defraud the IRS. The indictment alleges that as part of the conspiracy, Harris and Marty engaged a commercial collection agency to collect one of the three false liens that Mr. Tingler had filed, one of which was in the amount of $500,000.
Marty, Harris, and Marty’s daughter, Rebecca Bandera-Marty, had previously been indicted in June 2013 for a large-scale tax-fraud scheme. Those charges are included in this superseding indictment. According to the superseding indictment, in 2008 and 2009 Marty, Bandera-Marty, and Harris conspired to file at least 250 false individual federal income tax returns on behalf of individuals who resided in twenty-six states, and which claimed more than $60 million in false federal income tax refunds.
Cases involving the alleged filing of false liens against government employees have surfaced across the United States. The tactic, which has been described as “paper terrorism,” may involve the filing of purported UCC Financing Statements and has been associated with tax fraudsters and members of the so-called “sovereign citizens” movement.
Records show that, in 2011, a federal magistrate judge in California ordered that eight “UCC Financing Statements” filed by Marty “be declared null, void, and of no legal effect.” At least three of the statements targeted IRS workers. A fourth targeted a former U.S. Attorney who became a judge in California. A fifth targeted a Justice Department attorney.
Kenneth Wayne Leaming, a purported “sovereign citizen” and a figure in the AdSurfDaily Ponzi-scheme story, was convicted in March of filing bogus liens against public officials involved in the ASD prosecution.
The HYIP world is known for promoters’ bids to change the storyline, but this one may take the cake — or at least be a sweet complement.
There are reports in Brazilian media that a promoter of the TelexFree MLM scheme — alleged to be a massive pyramid — has named an ice cream after TelexFree to show support for the embattled firm.
“The ice cream is not a pyramid,” a person was quoted as saying in DiarioDigital, according to a translation — and neither is its namesake.
Here is a link to the story in Portuguese; here is a link to the English translation by Google Translate.
Recruitment by TelexFree is banned in Brazil while investigations by at least seven Brazilian states proceed. Payments to Brazilian participants by TelexFree likewise are blocked. The purported “opportunity,” however, still is operating in other countries and apparently gathering money and issuing payments.
Separately, Veja.com is reporting that undercover investigators in Brazil have noticed that some Brazilian promoters of TelexFree have crossed national borders into Bolivia and Paraguay to keep TelexFree investment money flowing. Here is a link to the story in Portuguese; here is the link to the English translation by Google Translate.
The United States long has warned about cross-border fraud such as was present in PathwayToProsperity, an alleged $70 million Ponzi scheme whose operator is listed by INTERPOL as an international fugitive. P2P, as the “program” was known, made its way across multiple continents and 120 countries, according to court filings.
Meanwhile, U.S. promoters of TelexFree have been busy watching a promoter’s Aug. 16 YouTube video titled, “How to register your GPG account with TelexFree.”
GPG, according to the video, stands for Global Payroll Gateway.
The company, according to its website, provides services such as loading payrolls onto debit cards. TelexFree, according to the affiliate’s video, is now a GPG client and TelexFree affiliates must “connect” their account to GPG to get paid.
A screen shown in the TelexFree affiliate’s video shows an apparent executive of TelexFree announcing that the changeover to GPG’s services “is causing a delay in our payment process for the first run.”
The FBI long has warned that certain types of debit cards can be abused and that a “shadow banking system” is playing a role in fraud schemes that affect national security.
If TelexFree is adjudicated a scam, it may be difficult for the governments of the world or the receivers/trustees they may appoint to gather proceeds for victims. HYIP money may dissipate quickly, perhaps particularly quickly if it is offloaded with debit cards. In a money-laundering case brought in 2008, federal prosecutors in Connecticut said that millions of dollars in narcotics proceeds were offloaded at ATMs in Colombia.
Robert Hodgins, a Canadian currently listed by INTERPOL as an international fugitive in the Connecticut money-laundering case, reportedly supplied the debit cards through a firm known as Virtual Money Inc. and had ties to the HYIP world and schemes such as PhoenixSurf and AdSurfDaily.
Another screen in the TelexFree affiliate’s video shows folders with titles such as “telexfree,” “Banner[s] Broker, “hyip monitors,” “forex”and “Passive peeps.”
The context of the folders shown in the video is unclear. Banners Broker, however, is a bizarre HYIP scheme. HYIP monitors are websites that monitor whether a particular HYIP site is “paying.” Meanwhile, the word “passive” often is used in HYIP scams that promote tremendous returns for investors inclined to sit back and wait for the payments to flow in, instead of recruiting other investors to earn downline commissions from a “program.”
TelexFree has been promoted on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. The names of both forums appear in U.S. court filings as places from which fraud schemes are advanced.
Zeek Rewards, an alleged $600 million Ponzi- and pyramid scheme that had a Ponzi-forum presence and became the target of an SEC action last year, was promoted as a “passive” program. Like Zeek, TelexFree purportedly has a requirement that participants post ads for the “program” online.
There have been reports in Brazil that a judge and prosecutor involved in the TelexFree case have been threatened with death.
But not even those disturbing reports were enough to cause TelexFree to cancel a rah-rah event in California last month. The company says it also plans an “at sea” event in December. Earlier, some TelexFree pitchmen provided AdSurfDaily-like coaching tips to enrollees, especially on matters of how to speed the flow of money to the company.
ASD was a $119 million MLM Ponzi scheme broken up by the U.S. Secret Service in 2008. Like Zeek and TelexFree, the ASD “program” also had a Ponzi-forum presence and was promoted as an opportunity for “passive” participants.
Some TelexFree promoters in Brazil appear to believe that TelexFree has been deemed legal in the United States by the U.S. government. This errant belief may in part have been instilled by promoters of TelexFree who worded MLM HYIP pitches to suggest that the U.S. government had authorized the “program.”
Some TelexFree promoters have claimed a payment of $15,125 to the firm will fetch a return of more than $42,000 in a year. Even the cautious “Aunt Ethels” of the world will grow to become keen on TelexFree, according to a promo.
If you’re an MLM company facing a PR problem or a crisis involving the firm and its distributors, don’t expect fellow MLM firm Empower Network to solve it for you. In fact, it’s probably prudent to expect that Empower Network will only magnify your bad press or virally blab the things you’re trying to keep in-house.
To the uber-bizarre Empower Network, the sudden death of a top Herbalife distributor is “badass content” that plays well alongside other Empower Network “badass content” such as a story posted by “Team America” and titled, “Ingredients for Success: An Interview with Nu Skin President and CEO Truman Hunt.”
Herbalife, according to BehindMLM.com, notified distributors last week about the death of John Peterson, saying in an email that Peterson had died as a result of “a tragic accident at his home in Steamboat Springs, Colorado.”
“Tragic” was an apt descriptor, to be sure, especially since the New York Post reported that authorities were looking at the death as a suicide carried out with a gun while the MLM trade tries to come to grips with assertions by Bill Ackman that Herbalife is a pyramid scheme. Peterson was 58, married and the father of three children. He reportedly had earned millions of dollars through Herbalife, in part by driving business to the firm through a purported “leads” program.
Herbalife denies it is a pyramid scheme and has sought to distance itself from such “leads” programs.
But returning to the subject of all this purported “Badass Content”: The “Team America” post about Nu Skin on Empower Network appears to have been lifted in its entirety from the trade publication Direct Selling News by an Empower Network affiliate interested in getting more sign-ups for Empower Network by using DSN’s Nu Skin story as a lure.
Meanwhile, Herbalife’s in-house announcement about the death of Peterson appears also to have been cherry-picked by Empower Network affiliates, reposted on Empower Network’s Blogging platform, repurposed as “Badass Content” and used to lure sign-ups for Empower Network.
When one clicks the incongruous “Badass” button above the Empower Network postings about Peterson’s death, one is taken to a page that in part reads, “Share this Badass Content Now! Click the social network buttons above so all your friends can see this badass content.”
Yes, really. The death of an Herbalife pitchman in the prime of his life while his family grieves qualifies as “Badass Content” on Empower Network.
Another part of the message points visitors to a domain styled “BadassContent.com,” which is registered in the name of David Sharpe of Empower Network LLC. Sharpe is one of EmpowerNetwork’s purported founders, and the LLC is listed as a Florida company with Sharpe as one of its two managers. When the PP Blog tried to visit the “badass” URL about Peterson’s death, the McAfee SiteAdvisor security software used by the Blog issued a “Suspicious Site” warning and a message that in part read, “When we visited this site, we found it exhibited one or more risky behaviors.”
Empower Network also appears to control a domain styled BadassButton.com.
On Aug. 12, the PP Blog reported that a video playing on YouTube sought to drive traffic to Empower Network by depicting U.S. Vice President Joe Biden as a recent enrollee in the bizarrely named CashCropCycler HYIP “program” who confesses to President Obama that he’s “[j]ust out bumbling around and sticking my foot in my mouth.”
But if you complain to YouTube about Empower Network, according to David Wood, another of the purported founders, there may be hell to pay, so you should “Back the fuck down.”
“Be warned: BIG, SCARY WARNING,” Wood wrote. “I’m in the process of having lawyers research into whether or not we can sue the shit out of you.”
Yes, really. Welcome to the MLM La-La Land of Empower Network. It’s like the La-La Lands of Zeek Rewards and AdSurfDaily and MPB Today needed a replacement and that some of MLM’s purported greatest thinkers have decided that what the MLM world really needs is even more madness.
Read the Salty Droid swearing back at the purported Empower Network “badasses.” (Salty can curse with the best of them, even when they’re planting the seed he should be executed with a shotgun.)
Can there be any doubt that MLM is just asking for it?
One self-described Christian pastor and Empower Network promoter on YouTube tells his audience that there’s money to be made in Empower Network, despite all the swearing. Just tune it out and recognize that swearing is a personal choice and hardly is limited to the MLM sphere, he instructs.
“This is just an open environment where we accept everybody of all types of beliefs, whether you’re a Christian or an Atheist or a Jew or a Muslim — or, you know, you . . . believe in Scientology and all that good stuff,” the pastor explains.
He added that he looked at network marketing in general as an “opportunity to be able to advance the kingdom of God” and at Empower Network in specific as a “vehicle to help you to get the money that God wants you to have so that you can advance the kingdom of God.”
Had the pitch for Empower Network appeared on Empower Network instead of YouTube, the pastor could have given his God talk its very own “Badass” button (with a representation of a human skull included) to drive traffic.
The only remaining mysteries, we suppose, is whether God, being God, would have cared enough to solve the little problem McAfee has with the “badass” domain — and whether He’d be offended that His name, once again, was being used to promote an MLM “program.”
Did we tell you that the PP Blog received information today that strongly suggested that some “sovereign citizens” were pitching a scheme by which winners in the Zeek Rewards MLM scheme, which the SEC has described a year ago as a $600 million fraud, could short-circuit “clawback” litigation from the court-appointed receiver?
We’ll keep you up to date as that MLM La-La Land story develops.
TelexFree, an MLM “opportunity” under investigation in Brazil amid allegations it is orchestrating a massive pyramid scheme, says on its website that it is conducting an “at sea” event Dec. 15-18.
Perhaps accidentally providing an awkward hint of dire portent, the promo shows the TelexFree logo superimposed on the side of a luxury ocean liner that is nearly beached in the tropics. Even more incongruously, it is being published not only against the backdrop of the pyramid probe, but also against reports that a judge and prosecutor in Brazil have received death threats related to the investigation.
Promoters of MLM HYIP scams such as JSSTripler/JustBeenPaid (2 percent a day) and AdViewGlobal (1 percent a day) previously have advertised sea cruises. It is unclear if the JSS/JBP cruise ever came off.
AVG’s 2009 cruise coincided with a bid (apparently unsuccessful) by the “program” to line up another bank and wire facilitator to assist in the swindling of investors who’d previously been swindled in AdSurfDaily’s $119 million Ponzi scheme that advertised a 1-percent-a-day payout.
AdViewGlobal, which purported to operate from Uruguay, bizarrely announced its new scam on the same day the President of the United States announced a crackdown on offshore fraud. Federal prosecutors later said they’d tied AVG to ASD President Andy Bowdoin.
Some TelexFree promoters say a payment of $15,125 to the program results in a profit of at least $1,100 a week for a year. Other promoters claim they’re “100% telexfree,” which apparently means they’ll stand by their “program” no matter what.
EDITOR’S NOTE: The PP Blog reported yesterday about a massive alleged penny-stock scam married to an advance-free fraud scheme in which investors were duped into believing they were interacting with IRS employees trying to collect taxes and a law firm interested in recovering funds from the stock swindle. Federal prosecutors in Brooklyn said the scammers simply posed as IRS agents and fabricated the law firm. Some of the money from the $140 million, multipronged caper ended up in Beirut.
There now is word that investors in Canada’s province of British Columbia were swindled in a similar 2012 scheme in which they were instructed to wire money to Costa Rica.
The British Columbia Securities Commission is investigating an alleged cold-call swindle in which three investors in the Canadian province lost a total of $80,000 to an entity using a poached virtual office and purporting to operate from Chicago.
The name of the entity, according to BCSC, was Strategic Global Investments (SGI).
SGI claimed to be “a Chicago-based investment firm in the business of foreign exchange and commodities trading,” BCSC said.
Regardless, SGI asked investors to wire money “to the company’s bank account in Costa Rica,” BCSC said.
The purported firm called investors with an offer for “gold options,” BCSC said.
But SGI was not registered with BCSC. Nor was it registered with the National Futures Association and the Commodities Futures Trading Commission.
Moreover, BCSC said, “SGI’s claimed head office belongs to a Virtual Office Company that never leased it to SGI.”
Although any number of scams have used virtual offices, the allegations in British Columbia suggest that scammers now are simply claiming to be virtual-office lessees without actually renting space.
But it gets even more disturbing than even that. Indeed, BCSC is alleging that SGI lulled investors who sought the return of their money by telling them that :
“One victim sent $13,000 to deal with the U.S. taxes but still did not get any money back,” BCSC said.
In fact, BCSC said, “To date, not a single investor has recovered a cent from SGI.”
SGI’s website “is no longer accessible,” BCSC said.
Prior to going missing, BCSC said, the site claimed that:
At least one investor sent SGI an additional $58,000 after being told that the initial purchase had earned huge returns, BCSC said.
Coupled with the investigation in New York, the investigation in British Columbia may demonstrate that fraudsters not only are creating new and better ways to steal, but also are extorting money from their marks by using the names of government agencies and the names of specific crimes such as money-laundering to instill fear.
UPDATED 12:29 P.M. EDT (U.S.A.) TelexFree, which operates through Ympactus Comercial Ltd. and is under investigation amid allegations in Brazil it is running a massive pyramid scheme, has no license with Brazil’s telecommunications regulator to offer VOIP services, according to this report in Brazilian media. The regulatory agency is known as Anatel.
Here is a translation from Portuguese to English by Google Translate.
Although the degree to which Anatel regulates VOIP providers in Brazil was not immediately clear, the assertion was reminiscent of one the U.S. government made against AdSurfDaily Ponzi schemer Andy Bowdoin last year: that Bowdoin, now in federal prison for ASD’s $119 million fraud, earlier had sold contracts for a telecommunications company that wasn’t licensed by the U.S. Federal Communications Commission.
TelexFree denies it falls under Anatel’s regulatory framework.
Bowdoin, 78, pleaded guilty to wire fraud in the ASD case in May 2012, less than a month after the U.S. government made the assertions that he’d ignored FCC regulations in a pre-ASD securities scam in Alabama in the 1990s. Prosecutors also linked Bowdoin to the AdViewGlobal HYIP scam and a purported venture known as OneX that allegedly recycled money in ASD-like fashion.
ASD, an MLM company, promised to pay members 1 percent a day. A grand jury charged Bowdoin with selling unregistered securities as investment contracts, securities fraud and wire fraud. He was arrested in December 2010.
Like ASD, TelexFree is an MLM company. Some TelexFree promoters claim a payment of $15,125 to the firm for the purchase of a “contract” fetches a profit of more than $42,000 in a year.
There have been reports of death threats against a judge and prosecutor involved in the TelexFree case in Brazil.
AdViewGlobal and OneX also were MLM companies. In 2011, Bowdoin claimed he was pushing OneX to pay for his criminal defense in the ASD Ponzi case. Prosecutors described OneX as a pyramid scheme.
A judge banned Bowdoin from MLM in 2012. The same judge earlier had been targeted with false liens by Kenneth Wayne Leaming, a purported “sovereign citizen” who allegedly was performing legal work for certain ASD members while harboring two federal fugitives from Arkansas wanted in a separate home-business caper.
Leaming, 57, was arrested by an FBI terrorism Task Force in 2011. He was convicted of the charges in March 2013 and was sentenced to eight years in federal prison.
URGENT >> BULLETIN >> MOVING: UPDATED 10:18 P.M. EDT (U.S.A.) Two Connecticut women convicted of wire fraud and filing false tax returns in a multimillion-dollar cash gifting scam have been sentenced to a combined 10.5 years in federal prison, federal prosecutors announced tonight.
Donna Bello, 57, was sentenced to six years. Jill Platt, 65, was sentenced to four and a half years years. Both women reside in Guilford and were ringleaders in the Women’s Gifting Tables scam, prosecutors said.
Bello and Platt both were ordered to serve three years’ supervised probation after their release. Bello also was fined $15,000. Both women were ordered to pay a combined total of $32,000 in restitution to several victims
“These significant sentences are appropriate for two individuals who profited from an illegal pyramid scheme and conspired to conceal their income from the IRS,” said Acting U.S. Attorney Deirdre M. Daly. “The investigation into this and other Gifting Tables schemes in Connecticut is ongoing. Hopefully, this successful prosecution and the prison terms imposed today will serve as a strong deterrent and end this criminal activity.”
Chief U.S. District Judge Alvin W. Thompson imposed the sentences.
From a statement tonight by prosecutors (italics added):
See prosecution sentencing memo at RealScam.com, courtesy of wserra of Quatloos.
BULLETIN: Songkram Roy Shachaisere, a sidebar figure in the AdSurfDaily Ponzi scheme story, has been indicted with several others in what federal prosecutors in the Eastern District of New York are calling “one of the largest international penny stock frauds in history.”
The probe “used wiretaps in the United States and undercover agents in foreign countries,” prosecutors said.
Chillingly, prosecutors said some of the scammers impersonated IRS employees. Others joined forces to scam victims a second time by creating a “fake law firm.” Some of the money allegedly ended up in “an account maintained in Beirut, Lebanon.”
Indeed, prosecutors said, some of the scammers branched off from the penny-story scheme to orchestrate a scheme “in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses,” the office of U.S. Attorney Loretta E. Lynch said. “In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.”
“The criminals behind this scheme were shameless in heartlessly defrauding hundreds of victims out of their savings and retirement accounts for their own enrichment,” said James C. Spero, special agent in charge of Immigration and Customs Enforcement Homeland Security Investigations (HSI) in Buffalo.
All in all, the scams netted at least $140 million and defrauded victims in 35 countries, prosecutors said.
Fake news releases, bogus announcements about nonexistent ventures, bribes and fake posts on social-media sites were used to dupe the masses, prosecutors said.
Shachaisere allegedly was involved in a massive pump-and-dump scheme. In 2010, according to the SEC, Sahachaisere fraudulently touted the stock of Praebius Communications. That’s the company ASD once conveniently announced was providing it a $200 million revenue infusion. ASD made the claim while awaiting a key ruling by the federal judge presiding over the ASD Ponzi case brought by the U.S. Secret Service in 2008.
Even as critics were voicing concerns that ASD was advancing yet-another story that was too good to be true, members of the now-defunct Pro-ASD Surf’s Up forum were cheerleading ASD’s purported revenue infusion from Praebius.
Some ASD members sprinted to forums to announce the news, but the information could not be verified. ASD later removed the announcement from its website.
ASD’s name was not referenced in the SEC’s 2010 complaint against Shachaisere, and Praebius was not listed as a defendant in the case. Praebius was referenced in the case as a client that paid Sahachaisere and his company in stock “to provide investor relations services.”
All in all, seven defendants were arrested today, with nine indicted. Before the bust, one of the defendants bragged, “We know enough to be subtle,” prosecutors said.
Here is a list of the defendants:
Here’s how prosecutors described the pump-and-dump scheme (italics added):
As alleged in the indictment, defendants Sandy Winick, Gary Kershner, Joseph Manfredonia, Cort Poyner, Songkram Roy Shachaisere and William Seals orchestrated one of the largest international penny stock frauds in history. First, the defendants gained controlling interests of huge quantities of worthless stock in 11 public companies known in the industry as ‘file cabinet businesses’ – thinly traded companies with minimal assets and non-existent business operations, which in many cases were mere shell companies. They then ‘pumped up’ the share prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which included distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on social media sites and bribing stock promoters and brokers.
And here’s how prosecutors described the advance-fee component of the scam (italics/bolding added):
As the indictment alleges, defendants Winick, Gregory Curry, Kolt Curry and Gregory Ellis perpetrated a second scheme in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses. In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.
To facilitate the scheme, the defendants established boiler rooms or call centers from which members of the conspiracy would solicit advance fees from the unsuspecting penny stock victims. The call centers were located in various locales around the world, including Canada, Thailand and the United Kingdom. Recently, the defendants began planning to open a new call center in Brooklyn, New York. Some of the victims were told that they either needed to pay the advance fee to remove restrictions that were placed upon their penny stock, which prevented the victims from selling their stock in the market, or to join investors in a pending or anticipated lawsuit to recover losses that they incurred while owning the penny stock. Victims were then told that the advance fees were needed to convert the warrants of their stocks to a saleable security. In several instances, the advance fee defendants even pretended to be IRS employees collecting a bogus advance tax from victim investors before they could unload their penny stocks. The victims were directed to send payment of the advance fees to banks around the world, including bank accounts in New York City. The fraud proceeds were then transferred through a funds transfer network, located in Getzville, New York, to an account maintained in Beirut, Lebanon. Ultimately, these defendants generated more than $20 million in fraudulently obtained advance fees.
Defendant Kolt Curry described the Advance Fee Scheme in the following way over an intercepted wire communication: “I would say that 100 percent of these stocks are like uh pink uh… just dumps . . . . so … ya know they’re totally, they’re like, so a lot of these guys are dying . . . . to get rid of this crap. . . . The money is good, it’s easy. It’s easy money. Definitely easy money, and it’s good money.” In fact, while bragging about his prowess as a fraudster, defendant Kolt Curry further stated, “I had a guy send me a million dollars over one phone call . . . . He actually sent me almost two million dollars over the period of the hit . . . . I guess in the industry they coin it as a smash and grab.” As for the group’s recent plans to open a call center in Brooklyn, New York, defendant Kolt Curry said, “I tell you what man . . . hitting the Americans would be like taking money from a baby.”
Lynch’s office thanked various U.S. agencies for their worked on the probe. She also thanked the Royal Canadian Mounted Police, Financial Crime Intelligence Unit in Vancouver and the Integrated Market Enforcement Team in Toronto, and the Serious Organized Crime Agency in the United Kingdom. Meanwhile, prosecutors said that significant assistance was also provided by the United States Embassies in Ottawa, Toronto, London, Bangkok and Beijing.