Multiple media outlets are reporting that two Los Angeles police officers were ambushed by a gunman early this morning outside the Wilshire Division police station. Early reports suggest the officers were injured — but not seriously. A manhunt is under way for their alleged assailant.
See KTLA coverage.
BULLETIN: The SEC has asked a federal judge to permit the receiver in the Legisi HYIP Ponzi-scheme case to pursue funds tied up after the arrest of James Fayed, the operator of the e-Bullion payment processor. Fayed was convicted in 2011 of ordering the murder of his wife, a potential witness against him. Pamela Fayed was slashed to death in a Greater Los Angeles parking garage in July 2008. The SEC brought the Legisi fraud prosecution in May 2008, just two months before Pamela was killed.
E-bullion has been linked to several Ponzi schemes. In court filings on June 6, receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through the defunct processor. Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for an order “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.
The SEC now says Steeh should issue the order because Gordon’s efforts could “lead to the recovery of millions of dollars for the Receivership Estate, funds which ultimately could be distributed to victims pursuant to a Court-approved formula.”
Under Gordon’s plan, the SEC said, Legisi’s “winning investors” would be provided a process to dispute claims for the e-Bullion money.
“As a result,” the SEC said, “any investors who assert that they are entitled to money claimed by the Receiver would have an opportunity to have their arguments heard and decided by the Court. No moneys would be disbursed until after the Court hears and decides such disputed claims.”
The agency also said that Gordon earlier had successfully claimed $1.7 million from e-Gold, an e-Bullion rival charged in a 2007 money-laundering case. In May 2013, federal prosecutors in New York charged Liberty Reserve — yet another payment processor linked to online fraud schemes and other crime — in an alleged $6 billion money-laundering conspiracy.
With a take of $72 million, Legisi was a “program” pitched on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — forums from which “programs” such as AdSurfDaily ($119 million), Zeek Rewards ($600 million), Pathway To Prosperity ($70 million) and Profitable Sunrise also were pitched. The combined scams gathered at least $861 million, according to federal court records. The number could be significantly higher because the final take of Profitable Sunrise — estimated in the tens of millions of dollars — is unknown. If Profitable Sunrise gathered $140 million, it would mean that the take of the five scams combined exceeded $1 billion.
Similar scams continue to be promoted on the Ponzi boards by commission-based hucksters. The condition is comparable to “whack-a-mole” in the sense that one scam rises to replace another. The “offers” frequently are targeted at victims of previous schemes and positioned as a means investors can “earn” back funds lost in the earlier scams.
Federal court records show that prosecutors asserted an AdSurfDaily pitchwoman funded her ASD account through e-Bullion, which also has been tied to mysterious scams such as Gold Quest International, the “Alpha Project” and Flat Electronic Data Interchange, known as FEDI. FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.
Cash associated with the ASD Ponzi scheme was seized on Aug. 1, 2008, about four days after Pamela Fayed was murdered in Los Angeles. Erma Seabaugh, the ASD promoter who funded her account with e-Bullion, also pitched a scam known as StreamlineGold, according to federal records.
In November 2007, a MoneyMakerGroup poster claimed this about StreamLineGold (italics added):
StreamLine Gold is literally what it says. [I]t can provide you with an unlimited income through the combination of Precious Metals and Cash with a business model whose time has come PLUS the most advanced and lucrative pay plan ever devised.
Seabaugh, according to records, was promoting ASD through an entity known as Carpe Diem, a purported “religious” nonprofit firm in Oregon.
Separately, the receiver in the Zeek Rewards Ponzi case has said that he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”
An evidence exhibit in the Legisi case shows that investors had to affirm they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.
Macy’s, the American department-store chain famous in real life and in fiction, was the victim of a $218,000 theft at the hands of purported “sovereign citizen” Richard Reyes Duenas and four others, the Los Angeles County Sheriff’s Department said.
Duenas, 30, recently was arrested in Las Vegas and taken back to Los Angeles to face trial on charges of grand theft, conspiracy to commit fraud, acquiring access card account information to commit grand theft and access card forgery. He is jailed. Bail was set at $218,000, the amount of the alleged theft.
Also charged (and already successfully prosecuted) for their roles in the scheme were Brent Justin Delgadillo, Noemi Fuentefria, Geovani Vegaion and Daniel Alvarez, LASD said.
As often is the case with “sovereigns,” deputies encountered Duenas during a 2010 traffic stop, LASD said.
Duenas “became resistive and was subsequently arrested,” LASD said. A search of his vehicle led to the discovery of “16 fraudulent Macy’s Department Store gift cards,” LASD said.
From a June 21 statement by the sheriff’s department (italics added):
A subsequent investigation determined that Richard Reyes Duenas was obtaining Macy’s Department Store gift card account numbers and associated PIN codes, which he utilized to prepare forged Macy’s gift cards, via inactive Macy’s gift cards stolen from Macy’s Department Stores. The forged Macy’s Department Store gift cards were sold at street level to consumers by Richard Reyes Duenas’ associates. The fraudulent gift cards were also utilized by Richard Reyes Duenas, and his associates, to make Macy’s Department Store purchases of Apple electronics. Richard Reyes Duenas had been connected to the theft of approximately $218,000 in Macy’s Department Store gift card dollars.
Duenas, though, left Los Angeles before he could be prosecuted on the charges. But deputies discovered he was in Las Vegas, and asked police there to arrest him, LASD said.
A total of 41 Macy’s Department Stores were targeted in the scam, LASD said, “ranging from the Oakland area to San Diego.” Because Oakland is in Northern California and San Diego is in Southern California, the circumstances suggest a criminal network targeting Macy’s was operating virtually throughout the entire state.
Here is a list of the cities in the scammers’ wakes, according to LASD. Los Angeles, Burbank, Chula Vista, Torrance, El Cajon, San Diego, Culver City, Glendale, Santa Barbara, Laguna Hills, Lakewood, North Hollywood, Cerritos, Manhattan Beach, Mission Viejo, Montclair, Montebello, Newport Beach, Escondido, Northridge, National City, Pleasanton, City of Industry, San Bernardino, Daly City, Redondo Beach, Costa Mesa, Hayward, Sunnyvale, Thousand Oaks, Canoga Park, La Jolla, Ventura, Rancho Cucamonga, and Woodland Hills.
Macy’s sponsors the annual Macy’s Thanksgiving Day Parade in New York City. It also is immortalized in the 1947 movie “Miracle on 34th Street,” a Christmas classic that suggests a man hired by Macy’s to play Santa Claus is the real Santa.
“Sovereign citizens” have been implicated in all sorts of commercial crimes. In 2011, for instance, Christopher H. Cannon was found guilty in federal court in the Northern District of Indiana of using counterfeit currency to pay for big-screen TVs from Sears.
In November 2012, four purported “sovereigns” were arrested in Florida on charges they were passing counterfeit checks.
Purported “sovereigns” also have been known to participate in tax scams, bids to scam banks and extort money from public officials, Ponzi schemes, securities-fraud schemes and scams involving purported “bonded promissory notes.”
Anthony Vassallo pulled a page from Ponzi schemer Andy Bowdoin’s playbook when he advanced a conspiracy theory that his own defense counsel was working with the government to sell him down the river.
It didn’t work for Bowdoin, the 78-year old recidivist securities fraudster now serving a 78-month prison term after claiming he’d been “hoodwinked” by his lawyer.
Now, a similar claim hasn’t worked for Vassallo, 34. He is one of the purveyors of the Equity Investments Management & Trading (EIMT) Ponzi scheme in California, a crime that served up a heaping helping of the bizarre. Three individuals who led an alleged shakedown bid to recover money for investors were charged criminally in 2009, amid allegations they posed as federal agents.
The Sacramento Bee reported that Vassallo pleaded guilty to wire fraud on Feb. 1. After that, he tried to change his plea, claiming that government prosecutors and agents and a defense attorney “ganged up on him to extract a guilty plea to a crime he didn’t commit.”
But U.S. District Judge Garland E. Burrell Jr. called Vassallo a “liar” in court on Friday, sentencing him to 16 years in federal prison, prosecutors said.
“This lengthy sentence is justice served, though it is small comfort to the victims of Vassallo’s crimes, many of whom lost their homes, health, and retirements to this fraud,” said U.S. Attorney Benjamin B. Wagner of the Eastern District of California. “This case was unusual in its scope, but not in the nature of the fraudulent conduct.”
EIMT gathered more than $80 million before it began to unravel in late 2008, prosecutors said.
With EIMT foundering, “Vassallo continued to recruit new investments,” prosecutors said. “One investor transferred $250,000 to Vassallo’s account less than two weeks before Vassallo admitted to a group of investors that he had ceased trading and their money had been lost.”
“This was a classic Ponzi scheme, where you rob Peter to pay Paul,” said José M. Martínez, IRS-Criminal Investigation special agent in charge. “Eventually, you run out of Peters and Pauls.”
There has been another mass-shooting incident in the United States. Early reports suggest the alleged gunman shot four people and was shot by police after he fled a parking lot outside of a law firm in Greenville, N.C., and made his way to the parking lot of a nearby Wal-Mart store.
One person appears to have been shot outside the law firm, while four people appear to have been shot outside the Wal-Mart.
This video report of a news conference conducted by Greenville Police Chief Hassan Aden is from WITN.
The Dispatch of Lexington, N.C., published a story June 7 to update readers on Zeek Rewards-related litigation — specifically the date of a hearing on a motion by certain Zeek members (alleged net winners) to dissolve the receivership. (See link to story/Comments below.) As of this morning, about 27 comments appear below the story. The comments appear to be from Zeek supporters. Zeek was based in Lexington.
Zeek, the SEC said in August 2012, was a $600 million Ponzi- and pyramid fraud that duped investors into believing they were receiving a legitimate return averaging about 1.5 percent a day. Zeek’s business model was similar to AdSurfDaily, a Florida-based Ponzi scheme that collapsed in 2008. Federal prosecutors said ASD had gathered about $119 million.
ASD became infamous not only for its purported payout of 1 percent a day, but also for the extremely strange behavior of some of its supporters. Curtis Richmond, one of the scheme’s cheerleaders, was a purported “sovereign” being once sued successfully under the federal racketeering statute for his role in various bizarre plots advanced by a purported “Indian” tribe in Utah known derisively as the “Arby’s Indians.” (The “tribe” once held a meeting in an Arby’s restaurant.) Among other things, the “tribe” issued arrest warrants for public officials and litigation opponents and used the address of a Utah doughnut shop as the address of its purported “Supreme Court.”
Richmond accused the judge presiding over the ASD case of dozens of felonies, saying she was guilty of “TREASON.” Moreover, Richmond claimed the judge’s supervising judge was conspiring with the judge to deny ASD members justice. For these claims (and more), Richmond was accorded the title of “hero” on the “Surf’s Up” forum, an ASD cheerleading site set up after the U.S. Secret Service raided ASD in August 2008. Among the Surf’s Up faithful was Terralynn Hoy, who later presided over at least one conference call for Zeek. (See this PP Blog Comments thread from June 2012. Props to GlimDropper of RealScam.com.)
Many highly peculiar narratives were advanced by ASD supporters. One of them held that the U.S. government took about $80 million seized in the ASD case and plowed it into a secret fund through which it almost immediately generated $1 billion in interest that the United States used to pay for black ops. Another held that all commerce is lawful as long as the parties agree that it is lawful, a position that would legalize slavery. Yet another held that the ASD judge was on the take and “brain dead” if she ruled against ASD. Still another held that undercover agents who joined ASD to get the lay of the land had a duty to inform ASD management.
On Surf’s Up, an ASD supporter claimed that a “militia” should storm Washington with guns. Another claimed a federal prosecutor should be placed in a medieval torture rack. Beyond that, a purported “prayer” was circulated that called for federal prosecutors to be struck dead.
Given that ASD operator Andy Bowdoin once described himself (from a stage in Las Vegas) as a Christian “money magnet” and later claimed that the Secret Service was “Satan” and compared the agency to the 9/11 terrorists who killed nearly 3,000 people in New York, Pennsylvania and Washington, it’s no surprise that it became next-to-impossible to keep track of all of the ASD conspiracy theories.
What is surprising is that any number of Zeekers seem willing to buy into the same sort of mind-numbing mind-set.
At The Dispatch site, apparent Zeek supporters are claiming that:
Friends, a 1.5-percent-a-day “program” pushed on well-known fraud forums such as TalkGold and MoneyMakerGroup is a scam. Period. The SEC acted in the best interest of Zeek investors — and in the best interest of the people of the United States who are sick and tired of seeing their country used as a playground for HYIP scammers or worse. The security condition created by “programs” such as Zeek, Profitable Sunrise, JSSTripler/JustBeenPaid and others is untenable.
Kenneth D. Bell, the court-appointed receiver for Zeek, has been doing a commendable job amid extremely trying circumstances. (In terms of the number of victims, Zeek may be the largest Ponzi scheme in U.S. history.) Bell is a former federal prosecutor known for having once successfully prosecuted a Hezbollah terrorist cell operating in the United States. He was appointed by a federal judge who is a former Naval officer. Claiming Bell should be put on trial is pure idiocy. So is clinging to a belief that the government somehow has outlawed the growth of business in the United States.
No one got “paid off” to do anything against Zeek — and the evidence that Zeek had an insurmountable mountain of unfunded liabilities and was paying members with money from other members is overwhelming.
Claims about Gestapo, KGB and SS tactics also were made by ASD members. Dwight Owen Schweitzer, later of Zeek, sued the United States (with fellow ASD and Zeek member Todd Disner). Among other things, Schweitzer and Disner claimed they were “unaware of any remission payments having been made” through the government-sponsored restitution program — this despite the fact the government had returned tens of millions of dollars to ASD investors and had issued news releases repeatedly about the program.
For good measure, Schweitzer and Disner also claimed that undercover agents who joined ASD “should have reported their own violations of the ASD terms of service” to ASD management. The pair made this bizarre claim long after ASD lost in the District Court and in the U.S. Court of Appeals. Amazingly, the claim also was made after prosecutors pointed out that some ASD members were recruiting for ASD even though they knew it was a Ponzi scheme and that Andy Bowdoin’s silent partner in ASD was his sponsor in the 12DailyPro Ponzi scheme broken up by the SEC in February 2006 — months before ASD launched and years before Zeek launched.
So, if you’re inclined to call accused Ponzi schemer and Zeek operator Paul R. Burks a genius while ranting against the government, you are according that title to a man who appears to have learned nothing from the ASD and 12DailyPro (and Legisi and PhoenixSurf and CEP and Imperia Invest IBC) prosecutions. If you are unhappy that the government’s Zeek action froze money you were counting on — well, that’s understandable. At the same time, however, there is a good chance you don’t understand the context of your own unhappiness. Zeek and Burks are to blame, not the SEC and the receiver.
If you joined another Zeek-like “program” after the SEC action, the best that can be said is that you are slow to learn. The worst is that you are a budding “Ken Russo,” perhaps the most intransigent Ponzi-board scammer in the Western Hemisphere. Zeek member “Ken Russo” sells people into Ponzi misery for a fee.
Repeatedly.
What ASD and Zeek both appeared to be was a bid to dupe investors into believing that, if 12DailyPro’s return of 12 percent a day for 12 days for thousands of members was impossible, the “smaller” daily returns of ASD (1 percent) and Zeek (1.5 percent) for between 90 and 150 days for hundreds of thousands of members somehow were more plausible.
Read story and Comments thread in The Dispatch. While you’re doing so, remember that Zeek once auctioned sums of U.S. currency (while wrapping itself in the American flag) and told successful bidders they could pick up their cash via offshore payment processors that enable fraud schemes like JSSTripler/JustBeenPaid and its 2-percent-a-day “program” globally.
UPDATED 5:08 P.M. EDT (U.S.A.) How dangerous and bereft is HYIP Ponzi Land? More than 85 percent of the $72.6 million directed at the Legisi HYIP Ponzi scheme before its May 2008 collapse flowed through the now-shuttered e-Bullion payment processor operated by convicted murderer James Michael Fayed, according to the court-appointed receiver in the Legisi case.
Receiver Robert D. Gordon — noting he has consulted with federal prosecutors — now is asking a federal judge in Michigan for an order that would authorize him “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.
Fayed is sitting on California’s Death Row after his May 2011 conviction for ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Pamela Fayed was stabbed 13 times in a Greater Los Angeles parking garage on July 28, 2008. The Los Angeles Times reported her husband was seated on a nearby park bench “texting” on his cell phone while his alleged accomplices carried out the slaying.
Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for the order on June 6. About two weeks earlier, federal prosecutors in New York brought criminal charges against the Liberty Reserve payment processor, alleging that it had orchestrated a $6 billion money-laundering conspiracy. Both Liberty Reserve and E-Bullion were popular with HYIP scammers and other criminals.
Legisi was a “program” promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. The “program” resulted in both criminal and civil charges being filed against operator Gregory N. McKnight and online pitchman Matthew John Gagnon of Mazu.com. In 2010, the SEC described Gagnon as a serial pithman for fraud schemes and a “danger to the investing public.”
Sentencing for Gagnon had been scheduled for yesterday. It now has been moved to July 9. McKnight, whom prosecutors said engaged in “semantic obfuscation” to raise millions of dollars in his HYIP fraud scheme, is scheduled to be sentenced Aug. 6.
In his June 6 filing, Gordon alleged that McKnight “used e-Bullion as the vehicle to hold, receive and distribute funds from and to Legisi investors” and that McKnight used investor funds to invest in “various High-Yield Investment Programs.” He further alleged that Gagnon was a “prolific” user of e-Bullion and that “Mazu and Gagnon published on the mazu.com website how-to instructions for prospective Legisi investors to fund their accounts by opening an e-Bullion account.”
From the receiver’s June 6 filing (italics added):
The Department of Justice has established a remission process in the Central District of California to administer claims of former accountholders of e-Bullion a/k/a “Goldfinger Coin & Bullion.” McKnight, Legisi, and the majority of Legisi investors held accounts with e-Bullion. Mr. Gordon has made claims against the seized funds for the benefit of the Estates. In addition to direct claims on behalf of the Legisi-related entities, Mr. Gordon seeks to recover funds relative to Legisi investor accounts. To authorize such claims, officials at the Department of Justice have suggested an order from the Receivership Court stating: “Receiver is authorized to receive and collect any remission or restoration of forfeited funds recoverable by or payable to [Legisi Investors] pursuant to any civil or criminal forfeiture action brought by the United States in any federal jurisdiction.” Such an order would assist Mr. Gordon in recovering funds owed by net winner investors and in compensating victims of the Legisi scheme.
E-bullion has been linked to multiple Ponzi schemes, including AdSurfDaily, Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.
When a jury sentenced Fayed to death in 2011, Los Angeles Superior Court Judge Kathleen Kennedy described him as “one cold, calculating human being.”
Here is how the U.S. Department of Justice is describing e-Bullion. (Note: this is reproduced verbatim from Gordon’s June 6 filing — with italics/bolding added):
e-Bullion was a web-based money transmitting business operated by James Michael Fayed. e-Bullion allowed individuals to deposit money and purchase virtual “e-currency” that was purportedly backed by precious metal reserves maintained by Fayed’s companies in the United States and Australia. Accountholders could use e-currency to trade in goods and services with other accountholders. Federal investigators determined that many operators of fraudulent investment schemes used e-Bullion to collect millions of dollars from victims, much of which was wired to overseas accounts.
In May 2011, Fayed was convicted of murdering his wife and is currently awaiting execution on California’s death row. On July 30, 2012, the United States Attorney’s Office for the Central District of California obtained a judgment in federal district court that resulted in the forfeiture of approximately $3.6 million in bank funds and $5.4 million worth of gold, silver, and platinum seized from two entities formerly controlled by Fayed – Goldfinger Coin and Bullion (GCB) and Goldfinger Bullion Reserve Corp (GBRC). In a related matter, the Australian Federal Police obtained a judgment resulting in the forfeiture of approximately $13 million in precious metals that were purchased and stored by Fayed in the Perth Mint in Australia. The funds forfeited in the Australia matter are also expected to be distributed to qualified e-Bullion accountholders through this remission process.
The PP Blog was hit by a bot attack today bearing multiple IP signatures from Singapore. Dozens of Singapore IPs maintained open connections to the Blog for approximately three minutes. Why the Blog was targeted was unclear. The bots sought to call up individual stories and a number of archive URLs. In at least a few instances, the bots appear to have sought unsuccessfully to execute code.
Over the years, the PP Blog has been targeted multiple times with DDoS attacks and traffic floods. The Blog also is targeted by spammers at a rate that now is approaching 2,000 per day. In March, for example, the Blog received 34,310 spams. That number increased in April to 51,165. In May, it increased to 56,489, or roughly 75 per hour.
Here is a screen shot of part of today’s attack from Singapore:
Meanwhile, here is a screen shot showing the increase in spam since February 2013.
The bitter reality of traffic floods and bot attacks is that they drive up costs and may cause readers to experience slow loading times. With more time spent on maintenance chores, less time is spent on reporting on fraud schemes.
That, of course, is exactly what the scammers want — even as some of them try to advance bizarre conspiracy theories.
Global Corporate Alliance (GCA) was not an MLM or HYIP firm. Even so, some of the allegations against the Dallas-based company read like U.S. government complaints filed against Zeek Rewards, Profitable Sunrise and AdSurfDaily. Perhaps most notable is the SEC’s allegation that GCA had no underlying profitable business through which it generated payments to investors, making the payments it did generate Ponzi payments. Moreover, the SEC alleged that the scheme spread in large part because commission-based pitchmen selling GCA’s unregistered securities repeated “false information that [Duncan] MacDonald [III] told them when introducing them to the program.”
“MacDonald and [Gloria] Solomon knew that the brokers were repeating their false claims to potential and existing investors, and intended for them to do so,” the SEC charged.
MacDonald, GCA’s President and CEO, is 50; Solomon, GCA’s chief administrative officer, is 71. She now joins a long list of alleged senior-citizen Ponzi schemers. Both Solomon and MacDonald are Dallas residents and have been charged civilly and criminally, the SEC said.
With the scheme in a state of collapse, GCA allegedly concocted excuses to explain why investors were not getting paid. Among the excuses, according to the SEC, was that “GCA’s legal department needed to suspend payments to confirm that the program was following all regulations.”
Such an excuse could have come straight out of HYIP Ponzi Land. GCA, according to the SEC, also told investors that money “was stuck in GCA’s overseas account.” If that weren’t enough, GCA also allegedly created numbers on a screen to dupe investors, something that HYIP Ponzi schemes promoted on various forums and social-media sites do every day.
Just how made-up were GCA’s numbers?
“MacDonald and Solomon created fake monthly statements to falsely portray GCA as a thriving health insurance company successfully enrolling thousands of premium-paying policyholders each month,” said David Peavler, associate director of the SEC’s Fort Worth Regional Office. “In reality, they never had more than 40 policyholders, and half of those were GCA’s own employees.”
GCA also tried to escape its bitter Ponzi reality by falsely claiming it “previously sold a portion of its revenue stream from paying members to a Chinese hedge fund,” the SEC charged.
But if there is a topper — if there is one thing that investors contemplating joining an HYIP can learn from the experience of GCA — it’s that heavy marketing perhaps can produce Ponzi-sustaining cash flow for a limited time, but it cannot undo what effectively is a criminal business plan.
Like its MLM-style HYIP cousins, GCA allegedly launched as a Ponzi and only made the Ponzi deeper by burning through money to put on a show for investors and prospects. At this precise moment, any number of schemes promoted on the Ponzi boards are using an HYIP/MLM version of the very “plan” GCA used in the brick-and-mortar world. They’re launching/operating with no underlying profitable business, perhaps trading on the names of famous business entities to create legitimacy by osmosis and even claiming they’ve been vetted by attorneys. And they’re relying on commission-based salespeople to create cashflow for their schemes.
Whose name did GCA trade on? None other than IndyCar. MacDonald even cited the name of “Danica” in a video playing on YouTube, although he did not use her last name of “Patrick.” News stories in 2010 tout GCA as “the official insurance program of IndyCar.”
Like GCA, each and every one of the HYIP schemes will end in disaster. The only real question is how much money they’ll steal before the inevitable collapse, how much damage they’ll do to business partners and how much cash the operators will siphon.
From the SEC’s GCA complaint (italics added):
19. MacDonald believed that the new venture required $15 million of initial capital and envisioned that this funding would come from a single investor. During 2008 and 2009, MacDonald was introduced to and spoke with a number of people he understood to have access to these kinds of funds, including potential investors and brokers. But MacDonald and Solomon began spending money on the business before raising any capital. They began hiring employees, heavily marketing the program, and pursuing sponsorship agreements with large groups. Indeed, by June 2010, GCA had entered into a multi-year, multi-million dollar sponsorship.
20. MacDonald tried for months to find a single investor, but was unsuccessful. Accordingly, MacDonald decided to fractionalize the program—for example, seeking 15 investors to invest one million dollars each, rather than a single $15 million investment. When pitching the business to a least some of these investors, and to brokers who were assisting him in identifying investors, MacDonald significantly misrepresented the history and state of GCA and NACA’s business. First, MacDonald led them to believe that NACA already had more than 100,000 premium-paying members. Further, he told them that GCA had previously sold a portion of its revenue stream from these paying members to a Chinese hedge fund. MacDonald told them that these kinds of purchases were normally not offered to individual investors but were typically reserved for large institutional investors. In reality, when MacDonald made these statements, GCA and NACA had no paying members, no revenue, no history of selling interests in a revenue stream, and no relationships with institutional investors or a Chinese hedge fund.
An emerging scheme that butchers the English language and contends it opposes spam also bizarrely says it intends to build its business by requiring members to post ads on Facebook and Twitter.
Equally bizarrely, the scheme says it accepts Liberty Reserve, the now-shuttered payment processor implicated by the United States last month in an alleged $6 billion money-laundering conspiracy.
The scheme is known as Earn Profit Click — or EPC for short. The PP Blog observed ads for the “program” over the weekend on a Profitable Sunrise Facebook site. The ads now appear to have been removed. Profitable Sunrise was a murky international pyramid scheme that may have gathered tens of millions of dollars by using offshore bank accounts, the SEC said in April.
Since that time, pitches for reload scam after reload scam have appeared on the still-active Profitable Sunrise Facebook site. Both the SEC and FINRA have warned that scams are spreading via social media such as Facebook, Twitter, YouTube and others. EPC’s full name is similar to “ProfitClicking,” a scam that rose from JSSTripler/JustBeenPaid, an earlier scam that also used social media to spread.
EPC is similar to Zeek Rewards in the sense that “members” are required to place ads for the “program.” In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid fraud. Unlike Zeek, EPC appears to be trying to force members to post ads on specific social-media sites that may have heavy viewership. (Many Zeek ads were placed on classified-ad sites with low traffic; such also appeared to be the case with Profitable Sunrise.)
Here is a verbatim snippet from the purported Terms of EPC (italics added):
19. You have to post face book ads in a group which have at least 500 members. If you want to post the ad on any of your friends’ wall, then the condition is that your particular friend must have at least 300 friends in his friends list.
20. If you post the ad on LinkedIn or twitter in a group then there should be at least 200 members in this group. If you post the ad on a friend’s wall then there should be 100 friends in his friends list.
21. In a group, you can post maximum 2 ads in 24 hours.
22. On a friend’s wall, you can post only one ad during 24 hours.
23. By accepting terms and conditions, you will be bound to keep the marketing material confidential provided on website.
Elsewhere on its site, EPC claims to be a “Rapidly spread advertising company” through which members can “earn thousands of free entry [sic] that are changing lives [sic] of thousands people [sic] . . .”
Meanwhile, EPC makes this text declaration: “We are a win-win game players [sic], as we provide our members a suitable era [sic] to win high financial benefits and helps [sic] to make their financial future [sic] splendid. We have the best minds from the field of IT to assist you and to handle the operations of EPC. Our mature, dedicated and wonderful team has twenty years [sic] experience in the field of online home-based business.”
A graphic on the site declares, “We are growing fastly [sic].”
The site reproduces famous logos and appears to trying to plant the seed that well-known companies such as GoDaddy, HostGator and the Ernst & Young accounting firm somehow have endorsed EPC’s operations. (The PP Blog’s research suggest GoDaddy is the EPC domain registrar and that HostGator servers are being used.) Promos for various HYIP scams appear on the same page as the logos of the famous companies. The HYIP scams include FastCashMega (“Turn $10 Into $20,010 Without Recruiting”); “NonStopPayments” (“6% Daily For 180 Business Days”); and “WorldConsumerAlliance,” a “program” once known as “WealthCreationAlliance” that launched as a Zeek Rewards reload scam in 2012 and published ad after ad for HYIP scams.
Raymond Leo Jarlik Bell, a 70-year-old purported “sovereign citizen” linked to AdSurfDaily figure Kenneth Wayne Leaming, has been sentenced to 97 months in federal prison for a tax scam.
In July 2011, federal agents found records of bogus liens filed by Leaming against public officials while executing a search warrant at Jarlik Bell’s residence in Yelm, Wash., according to court records. Bell was under investigation for his tax scam at the time the records were found. Leaming, 57, later was charged with filing bogus liens, harboring federal fugitives from Arkansas in Washington state and being a felon in possession of firearms, including a “street sweeper” shotgun and an assault rife.
Leaming was sentenced in May to eight years in federal prison. David Carroll Stephenson, another Leaming associate and purported “sovereign citizen” from Washington state, was sentenced in May to 10 years for filing bogus liens against two U.S. prison officials. Stephenson, 57, already was serving time for a tax scam when those liens were filed.
Jarlik Bell’s scam centered on filing for false tax refunds “using a scheme known as OID fraud,” prosecutors said.
OID fraud may include claims that the U.S. government maintains secret accounts for citizens and that such accounts can be tapped to receive tax “refunds” in the tens or even hundreds of thousands of dollars at a time if paperwork is filed in a certain manner.
“No matter what the promoter calls it, a scheme to file bogus tax returns claiming outrageous tax ‘refunds’ that don’t belong to you, is just fraud,” said Kenneth J. Hines, special agent in charge of IRS Criminal Investigation in Seattle.
“This defendant held himself out as a tax expert with contacts at the IRS – when both the IRS and a federal judge told him repeatedly that his conduct was criminal,” said U.S. Attorney Jenny A. Durkan of the Western District of Washington. “Mr. Jarlik Bell believed he was above the law, and aggressively promoted and spread his scheme to others looking to duck their fair share and steal tax dollars through fraudulent refunds.”
From a statement by prosecutors (italics added):
In 2006, BELL obtained a tax refund in excess of $30,000 using the scheme. Numerous others who were advised by JARLIK BELL also filed for and received fraudulent refunds they did not deserve. One woman received a tax refund of more than $590,000. In 2005, JARLIK BELL was ordered by U.S. District Judge Robert J. Bryan to stop promoting fraudulent tax schemes. Less than three years later, he was back promoting another massive tax fraud among friends, family and strangers.
Ute Christine Jarlik Bell, Jarlik Bell’s wife, also is a purported “sovereign citizen” and tax scammer, prosecutors said. She is scheduled to be sentenced tomorrow on four counts of filing false, fictitious and fraudulent claims.
Jarlik Bell was convicted in March 2013 of five counts of filing false, fictitious and fraudulent claims, 15 counts of assisting in filing false tax returns, three counts of mail fraud, and one count of criminal contempt, prosecutors said.
U.S. District Judge Ronald B. Leighton described Jarlik Bell’s scheme as “fraud at its core,” prosecutors said.
“You are hurting people intentionally, regardless of your adherence to [your beliefs],” prosecutors quoted Leighton as saying.
Leaming filed bogus liens against a federal judge, federal prosecutors and a U.S. Secret Service agent involved in the prosecution of the the ASD Ponzi scheme. The Secret Service has described ASD as a “criminal enterprise” that gathered about $119 million by duping people into believing that ASD’s purported payout of 1 percent a day came from legitimate means. ASD operator Andy Bowdoin, 78, is serving a 78-month prison term.
When Leaming was arrested in November 2011, investigators discovered he’d been harboring two federal fugitives from Arkansas charged with mail fraud in a separate home-business scheme that allegedly had gathered millions of dollars.
Leaming, who previously had sued President Obama and Attorney General Eric Holder on a theory that Obama was not born in the United States and was an unlawful President who’d appointed Holder unlawfully, went on to claim that Leighton owed him 208,000 ounces of silver.
The lawsuit against Obama and Holder was tossed out of court by a federal judge.