UPDATED 7:52 A.M. EDT (April 13, U.S.A.) On the very day Tom Petters was sentenced in Minnesota to 50 years in prison for operating a colossal Ponzi scheme, a federal judge froze the assets of Renee Marie Brown after the SEC accused her of ripping off clients by persuading them to invest in a mysterious vehicle known as “Fund X.”
U.S. District Judge Donovan W. Frank issued a temporary restraining order against Brown and her company, Investors Income Fund X LLC. The order was issued April 8.
Brown, 46, of Golden Valley, was accused of operating a “sham” fund into which investors plowed more than $1.1 million between July 2009 and March 2010.
“Brown told her investors that Fund X is a ‘bond fund’ with fixed annual returns of 8% or 9%,” the SEC said. “[S]he distributed fictitious ‘returns’ to investors, furthering the fiction that Fund X was a legitimate and successful investment opportunity.”
But Brown “misappropriated most of the $1.1 million she raised from investors to, among other things, purchase a condominium for herself and build . . . office space for her new business,” the SEC said.
Investors Income Fund X LLC was registered as a corporation in South Dakota, the SEC said.
“Unbeknownst to her victims, Fund X is a sham — Brown’s alter ego,” the SEC said.
The case features allegations of siphoning, forgery, cherry-picking clients of Brown’s former employer and issuing fraudulent “returns” in Bernard Madoff-like fashion. It also occurred against the backdrop of March 17 Congressional testimony by FBI Director Robert Mueller III that U.S. companies increasingly were relying on shell corporations to commit fraud.
Minnesota Fraud Cases
In recent months, investigators and prosecutors in Minnesota have opened up a number of major fraud probes. The combined cases are alleged to have drained hundreds of millions of dollars from investors. In some instances, prosecutors and regulators have asserted that companies used multiple names to commit fraud.
Petters was convicted last week of presiding over that was described as the largest financial-fraud case in Minnesota history: a $3.65 billion Ponzi scheme.
Petters displayed “stunning criminality,” prosecutors said. One of the victims wrote, “Our society, unfortunately, is becoming plagued with too many people like this, and like Bernard Madoff. Tom Petters needs to learn that there are severe consequences for his incomprehensible behavior.”
Meanwhile, the SEC, the CFTC, the FBI, prosecutors and a court-appointed receiver are poring over records to reverse-engineer the alleged Trevor Cook/Pat Kiley Ponzi scheme. Court records suggest multiple company names were involved and that the scheme involved at least $190 million and caused investor losses of at least $139 million.
Money was moved “all over the world,” according to court filings.
Cook and Kiley were sued by the SEC and the CFTC in November. Cook was charged criminally last month. Prosecutors said he was “aided and abetted by others.†In this document, the National Futures Association, which also filed an action that references Cook, asserted that $75 million from a purported Swiss fund may have been directed at a mysterious investor known only as “Fased.”
The purported payment occurred while Cook, a Minnesota resident, allegedly was managing money for a Canadian company known as KINGZ Capital Management Corp. KINGZ name also has been linked to an autosurf known as AdViewGlobal (AVG), which had close ties to an autosurf known as AdSurfDaily (ASD).
On May 4, 2009 — on the same day the Obama administration announced a crackdown on international financial fraud — AVG announced that KINGZ had become its facilitator for international wire transfers. KINGZ denied the assertion, saying it believed it had been targeted in a scam. The company painted the picture that AVG was attempting to route money to itself through a U.S. shell company.
AVG purportedly operated from Uruguay.
Florida-based ASD, which members said was popular in Minnesota, was implicated in August 2008 by the Secret Service in a Ponzi scheme. A federal judge has issued orders of forfeiture totaling more than $80 million in the ASD case. ASD used at least three names, according to records: AdSurfDaily, AdSalesDaily, and ASD Cash Generator.
Prosecutors also linked ASD to at least two other autosurfs: LaFuenteDinero (the “fountain of money”) and Golden Panda Ad Builder, the so-called “Chinese” option for ASD members.
In February, the U.S. Secret Service alleged that Minnesota resident Steve Renner was operating a Ponzi scheme through a company known as INetGlobal and companies related to the firm. The scheme, the Secret Service said, largely targeted Chinese members who may have little or no facility in English.
Renner denies the allegations. Prosecutors described the case as a “major fraud and money laundering investigation,” saying INetGlobal came to life during a period in which federal agents were seizing tens of millions of dollars in the ASD case amid Ponzi, wire-fraud and money-laundering assertions.
An ASD member introduced an undercover Secret Service agent to INetGlobal, the agency said in court filings.
Other recent fraud cases in Minnesota include the Gerard Cellette Jr. Ponzi case ($53 million); the Charles “Chuck†E. Hays case ($20 million); and the Kalin Thanh Dao case (up to $10 million).
The Justice Department has opened a probe into the political donations of R. Allen Stanford, according to the Miami Herald.
Stanford is jailed in Texas amid allegations he presided over a $7 billion Ponzi scheme on the Caribbean island nation of Antigua.
Among the first names to surface were the names of the National Republican Congressional Committee (NRCC) and its chairman, Rep. Pete Sessions, R-Texas. The names of Democratic politicians also have surfaced, according to the newspaper.
NRCC is the organization to which AdSurfDaily President Andy Bowdoin — himself implicated in a Ponzi scheme by the Justice Department — donated money in 2007 and 2008 as the purported head of two companies and received the Congressional “Medal of Distinction.”
Despite its important-sounding name, the medal is part of an NRCC marketing plan and signifies only an individual’s ability to write a check for what amounts to the purchase of banquet tickets.
In a story apt to embarrass Sessions and others, the Miami newspaper reported yesterday that, on Feb. 17, the date Stanford was indicted, Sessions sent an email to Stanford.
“I love you and believe in you,” the newspaper quoted Sessions as writing. “If you want my ear/voice — e-mail.”
Today the newspaper reported that Rep. Gregory Meeks, D-N.Y., traveled to Venezuela in 2006 after Stanford asked him to carry a message to President Hugo Chávez.
Stanford was concerned that a former employee in Venezuela who had been accused of fraud was questioning whether Stanford’s operation itself was a fraud, the newspaper reported. A year after Meeks carried the message to Chavez, the Stanford employee was indicted by Venezuelan prosecutors and charged with swindling money.
The story raises questions about whether Meeks’ purported intercession with Chavez might have helped Stanford delay the inevitable exposure of the alleged Ponzi scheme and whether he was relying on politicians to run interference for him prior to the exposure of the scheme.
Stanford’s empire, which prosecutors and regulators said was a Ponzi scheme propped up by Certificates of Deposit that paid above-market rates and lured investors into unsafe, uninsured offshore banking instruments, collapsed less than two months after the Bernard Madoff Ponzi collapsed in December 2008.
Meeks traveled to Venezuela in April 2006, according to the newspaper.
The extent of prosecutors’ interest in linking Ponzi money to politics and determining if corrupt money influenced votes and policy is unclear. At a minimum, however, prosecutors are known to have peeled back layers of the onion in Florida.
In an announcement dripping with the word “co-conspirators” last month, Acting U.S. Attorney Jeffrey Sloman of the Southern District of Florida, the FBI and the IRS said that money from disbarred Florida attorney Scott Rothstein’s alleged Ponzi scheme was “used to make contributions to federal, state, and local political candidates.”
In the Rothstein case, investigators are seeking to determine if the scheme existed in part as a means to evade campaign-finance laws. Rothstein Ponzi money also was used “to provide gratuities to high ranking members of police agencies,” officials said.
In August 2008, prosecutors said that ASD’s Bowdoin had donated money to NRCC and that ASD members claimed the “Medal of Distinction” Bowdoin received for the donations was an important award from the White House.
Federal Election Commission (FEC) records show that Bowdoin gave money to NRCC and claimed to be the owner of two companies: AdSurfDaily and AdSalesDaily.
On Feb. 27, 2007, the Federal Election Commission recorded a $250 donation from “Mr. T. Bowdoin†in the name of “AdSalesDaily Inc.†The FEC recorded another $250 donation from “Mr. T. Bowdoin†in the name of “AdSalesDaily Inc.†on March 27, 2007.
Both 2007 donations were targeted to NRCC and used an address — 13 S. Calhoun Street, Quincy, FL 32351 — federal prosecutors later said was bogus.
Although the donations listed Bowdoin as the “owner†of Florida-based AdSalesDaily Inc., the corporation appears not to have been registered in Florida. Records in Georgia list “Ad Sales Daily, Inc.†as a corporation that initially was registered in Georgia May 8, 2007, more than two months after Bowdoin identified himself as the owner in federal campaign records.
The Georgia entity does not list Bowdoin as an owner, officer or filer for the corporation — or as a person involved in any capacity. Rather, “Ad Sales Daily, Inc.†is listed as a Delaware foreign corporation, with J. Heardy Myers listed as the corporate filer and Myers (of Marietta, Ga.) and Otis Whitcomb (also of Marietta) listed as officers.
AdSalesDaily Inc. was incorporated in Delaware on March 22, 2007, about 24 days after Bowdoin made his initial NRCC donation, according to filings.
FEC records show that Bowdoin — under the name of “Mr. T. Andy Bowdoin, Jr†and “AdSurfDaily Inc. and AdSurfsDaily Inc.” (the second “s†is an apparent typo) — gave $5,000 to NRCC in 2008. Two donations of $2,500 were recorded — one on June 6, 2008, and another on July 7, 2008.
Even as the FEC was recording the donation on July 7, undercover agents from an IRS/Secret Service task force based in Florida were beginning to scrutinize ASD.
Bowdoin has a tie to a bank in Antigua, although it is unclear whether the tie is to a bank controlled by Stanford because Bowdoin has not identified the bank. Prosecutors, however, said ASD had $1 million on deposit in Antigua in an account under a different name.
Records suggest that the alleged Bowdoin Ponzi scheme might have operated under as many as four names dating back to early 2006: DailyProSurf, AdSurfDaily, AdSalesDaily and ASDCashGenerator.
Litigation surrounding tens of millions of dollars seized from ASD in August 2008 has turned into Theater of the Absurd, with dozens of pro-se litigants attempting to enter the legal skirmish between the Justice Department and Bowdoin.
One of the great mysteries of the case is why Bowdoin suddenly started donating money to NRCC in 2007 — during a time in which the company was not making payments to members and said it needed to issue a stock offering in which shares would be sold for $10,000 to raise funds.
“But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil.” — From 1 Timothy 6:9-10
He was hailed a Christian “genius,” and AdSurfDaily President Andy Bowdoin often invoked God during his sales pitches.
“We need to have an attitude of gratitude with God,” Bowdoin told an ASD gathering in Las Vegas last year. “And I always say, ‘Thank you, God, for developing me into a money magnet.’ And I see myself as a money magnet in attracting money and, I say, attracting large sums of money.”
Many of his admirers portrayed him as the forward-thinking inventor of a miraculous business system for “good Christian people.” To prosecutors who had seen it all before, however, he was neither a genius nor an inventor.
Bowdoin, they said, was nothing more than a felonious imitator who had modeled his business on at least one multimillion-dollar Ponzi scheme that had traded on dreams before regulators reduced it to ruins.
AdSurfDaily almost wasn’t called AdSurfDaily. “Initially,” prosecutors said, “Mr. Bowdoin had intended to operate” under a different name.
It is little known, but on Aug. 24, 2006, Andy Bowdoin registered that name with the state of Florida. It used two of the three words that comprised the title of the infamous 12DailyPro autosurf Ponzi scheme — and, as it turned out, one of two words that comprised the title of the infamous PhoenixSurf autosurf Ponzi scheme.
The highly imitative name Bowdoin selected for his venture was “DailyProSurf,” according to records in Florida.
In a widely publicized case, 12DailyPro had been accused just six months earlier by the Securities and Exchange Commission of operating a $50 million Ponzi scheme from Charlotte, N.C. The allegations against 12DailyPro were brought on Feb. 20, 2006.
Two days later — on Feb. 22, 2006 — PhoenixSurf launched from the Atlanta suburb of Marietta, Ga. The surf collected more than $41.9 million before flaming out three months later, in May 2006. In 2007, it became the subject of yet another SEC Ponzi scheme investigation.
During its brief run, PhoenixSurf averaged nearly $14 million a month in revenue. Like 12DailyPro, PhoenixSurf purported to be an “advertising” service and was charged with the sale of unregistered securities as investment contracts.
SEC Introduces World To The Autosurf Ponzi . . .
The SEC’s prosecution of 12DailyPro in 2006 made headlines. The context of the case was alarming, and the numbers were jaw-dropping. A woman operating out of an apartment in North Carolina had managed to disguise a securities business as an advertising service, collecting more than $50 million on the Internet in only eight months’ time while allegedly siphoning $1.9 million into her own bank account and paying old customers with money received from new members.
The SEC announced the 12DailyPro prosecution on Feb. 27, 2006, issuing a news release on the SEC website and providing a copy of the complaint. Perhaps like no Internet fraud case before it, the 12DailyPro case demonstrated it was possible for hucksters to deploy technology to collect staggering sums quickly and convert all or part of the proceeds to their own use.
12DailyPro and PhoenixSurf took in a combined amount of at least $91.9 million in only months of operation, prosecutors said. Bowdoin’s ASD, at its peak, collected tens of millions of dollars weekly. Federal agents conducted a raid in August 2008 and found at least $93.5 million. After a slow start, ASD had surpassed both 12DailyPro and PhoenixSurf as a cash machine.
What new ASD members by the thousands didn’t know, prosecutors said, was that they were paying for abuses Bowdoin had built into the system and for liabilities he had accrued when at least one previous iteration of the surf had gone bust.
To explain slow or absent ASD payouts during the many dark days before ASD took off, Bowdoin at one point told some members that $1 million had been stolen from ASD by “Russian” hackers, but he never filed a police report, prosecutors said.
Naturally the claim led to questions about whether hackers actually had stolen the money — or whether it had been stolen by somebody else.
Bowdoin deliberately set up his program so ASD insiders effectively could steal from the company and pass along the cost of the thefts to the latest crop of recruits, prosecutors said in December.
DailyProSurf Domain Appears Online During Height Of 12DailyPro Craze, Then Vanishes Mysteriously
It is unclear if Bowdoin ever registered a website in the name of DailyProSurf, operated a forerunner to ASD under that name or benefited from from an operation that used the DailyProSurf name.
What is clear is that someone registered .com and .net sites in the DailyProSurf name — and that DailyProSurf references continue to appear alongside references to 12DailyPro in search results even to this day. It also is clear that DailyProSurf graphics were ordered and delivered by a company that catered to surf sites — including autosurf script sales — and autosurf promoters pushed traffic to the sites in early 2006, during the height of the 12DailyPro craze and while PhoenixSurf was just getting off the ground.
The presence of DailySurfPro raises an intriguing question: Did ASD have a predecessor site?
The DailyProSurf domain name was operational — and affiliates were pushing the site — at least eights months before Bowdoin registered the DailyProSurf name with the Florida Department of State.
Bowdoin registered the DailyProSurf name in Florida in August 2006. But references to DailyProSurf.com from as early as January 2006 appear online. References later in 2006 include a report about members not getting paid and a theory the surf was a “scam” that had ceased operations and gone offline. One web service captured a screen shot of a “suspension” notice from the hosting company for DailyProSurf.com. Both the .com and .net domain names now appear to be available for repurchase.
It also is known that both DailyProSurf and ASD used the same format to create affiliate links — the domain name, followed by a slash and then followed by code in this format: ?ref=[affiliate ID number]
In early 2006, the affiliate ID numbers for DailyProSurf were low numbers such as 30 and 75, which means the program was just getting started, likely using the same script that powered other autosurf sites. (Type dailyprosurf.com/?ref= into Google to see some of the search results. You’ll also see 12DailyPro affiliate links using the same format in the search results.)
Within a month of Bowdoin’s October 2006 launch of AdSurfDaily –Â just two months after Bowdoin had registered the DailyProSurf name in Florida — members complained about not getting paid by ASD. ASD provided a number of excuses, according to members, telling participants that script problems were at fault.
By February 2007, ASD was coming apart at the seams. Bowdoin announced the formation of a new corporation that would be known as “AdSalesDaily” — as opposed to “AdSurfDaily” — and he offered “stock” in the company to buyers willing to pay the minimum price of $10,000, according to participants.
A similar pitch had almost landed Bowdoin in prison in Alabama in the 1990s; investigators attributed 89 separate instances of fraud to Bowdoin, including an assertion that he had used money from new investors to pay off older ones, the central element of a Ponzi scheme.
Feeling the heat from early ASD members in February and March 2007, Bowdoin sought to keep them at bay. Bowdoin ventured from Florida to Atlanta to speak with unnamed “leaders” and work on solutions, he told members.
The solution he ultimately arrived at, prosecutors said, was to relaunch the surf under the name of ASD Cash Generator, port old accounts to the new surf — and not tell new members that they were paying for liabilities racked up by the original ASD.
The Beginning Of The End
During the months of February and March 2007 — a full year before ASD began to rake in the kind of money 12DailyPro and PhoenixSurf had raked in — Bowdoin made a catastrophic mistake that ultimately would come back to haunt him and lead to ASD’s undoing: He started donating money to the National Republican Congressional Committee (NRCC), even as ASD members were complaining about not getting paid.
In 2008, a false story pushed by ASD members that Bowdoin had received a special award from the White House for a lifetime of business achievement began to circulate online, prosecutors said. What members pushing the story did not know — because Bowdoin did not tell them — was that the award was for NRCC campaign contributions, not business achievement, and that there was a paper trail to prove it.
It is a virtual certainty that Bowdoin’s NRCC contributions came from the proceeds of a Ponzi scheme.
Because of his political donations and business filings, Bowdoin’s name and address appeared in both federal and state databases accessible to any person with an Internet connection.
The paper trail led to the campaign donations — and it also led to what prosecutors called a fraudulent address: 13 S. Calhoun St., Quincy, Fla. It was the address Bowdoin had used for AdSurfDaily, AdSalesDaily and DailyProSurf in public filings. Crucially, however, it was not the actual address of the former flower shop owned by Bowdoin’s wife that went on to become Bowdoin’s headquarters for various businesses, including ASD.
Older filings in the Florida Department of State database listed the address of the building as 11 S. Calhoun, but newer filings in the Florida database and the Federal Election Commission database listed the address as 13 S. Calhoun.
ASD also used the 13 S. Calhoun address on its website.
“[T]he address listed on ASD’s webpage is not a valid mailing address,” prosecutors said. “The address 13 S. Calhoun Street, Quincy, Florida does not exist. A building located at 11 S. Calhoun Street is a now defunct flower shop that used to be run by Bowdoin’s wife. It appears that Bowdoin or one of his associates merely posted the number 13 on another door attached to the same building.
“ASD has been receiving mail there.” (Emphasis added).
Bowdoin, a man who registered a hybrid surf that borrowed from the names of two infamous Ponzi schemes that had raked in nearly $100 million practically overnight, found himself in a trap of his own making because of the allegations he had fabricated a mailing address.
ASD told members it was impossible to operate because the government seized its money and its computers, but prosecutors returned the computers at ASD’s request and did not object to a hearing the company requested to have some of its money unfrozen. ASD lost the hearing because it could not demonstrate it was operating legally. Its clear route out of the Ponzi thicket was to produce an audited balance sheet that demonstrated solvency. ASD did not do so.
Why did ASD not restart after its computers were returned if it truly was an “advertising” business? One of the reasons is that it knew its audience would flee unless it was getting paid to surf, prosecutors said.
But there could be another reason that is equally revealing.
Because Bowdoin allegedly had used a bogus address to set up ASD, had publicized the address on the ASD website and had received mail at the address, any further business activity from the former flower shop involving mail could be construed as additional evidence of mail fraud.
If prosecutors are correct that 13 S. Calhoun was a bogus address, count after count of mail fraud could have piled up had Bowdoin reopened ASD and continued to use the address. Changing the address could have been construed as an acknowledgment that mail fraud had occurred earlier.
Although ASD owned another building in Quincy outright after having paid $800,000 cash for it, prosecutors said the building had been acquired with the proceeds of a crime. Moving wasn’t a good option because it could not undo the damage that had been done by using the 13 S. Calhoun mailing address.
Federal Election Commission (FEC) records show that Bowdoin, using the name “AdSalesDaily” and the address of 13. S. Calhoun, made the first of his political donations on Feb. 27, 2007, even as ASD members were clamoring for their cash. His first donation was for $250. He matched it in March 2007, with another $250 donation. In 2008, using the name “AdSurfDaily” and the address of 13 S. Calhoun, Bowdoin donated $5,000 to the NRCC.
Missing Dreams Now, ‘See Those Checks’ Then
As was the case with 12DailyPro, many ASD dreams have gone missing.
Although the DailyProSurf domain name also went missing, the public filing Bowdoin made in Florida using the 13 S. Calhoun address did not. And neither did records pertaining to his campaign donations in the names of “AdSalesDaily” and “AdSurfDaily,” both of which also used the 13 S. Calhoun address.
Andy Bowdoin, indeed, demonstrated a remarkable capacity to attract money.
“Thank you, God, for destining me to great wealth,” he exhorted the Las Vegas crowd to internalize and recite during the day.
And he exhorted members to picture themselves wealthy.
“See a big check coming in from AdSurfDaily,” he urged. “I signed a check the other day, about $22,000. See those checks like that coming for you constantly, just flowing to you.”
UPDATED 2:26 P.M. EDT (U.S.A.) A purported transcript of remarks in March 2007 by AdSurfDaily President Andy Bowdoin paints a picture of a startup company with serious problems Bowdoin tried to solve by offering “stock” in the firm.
The “minimum purchase” of the stock was set at “$10,000,” and the the money would be used to help the company get back on its feet, according to the transcript, which was dated March 12, 2007, and posted in the asamonitor forum.
ASD had been operating only a few months at the time of Bowdoin’s remarks and already was in over its head, according to the purported transcript and other records.
AdSurfDaily also would undergo a name change to “AdSalesDaily,” according to the transcript.
Just two weeks earlier — on Feb. 27, 2007 — the Federal Election Commission recorded a $250 donation from “Mr. T. Bowdoin” in the name of “AdSalesDaily Inc.” The FEC recorded another $250 donation from “Mr. T. Bowdoin” in the name of “AdSalesDaily Inc.” on March 27, 2007, two weeks after the purported stock offering.
Screen shot of Federal Election Commission record showing 'Mr. T. Bowdoin' was the 'owner' of 'Adsalesdaily, Inc' and made a political donation under that name in 2007.
Both donations were targeted to the National Republican Congressional Committee (NRCC) and used an address — 13 S. Calhoun Street, Quincy, FL 32351 — federal prosecutors later said was bogus.
Although the donations listed Bowdoin as the “owner” of AdSalesDaily Inc., the corporation appears not to have been registered in Florida. Records in Georgia list “Ad Sales Daily, Inc.” as a corporation that initially was registered in Georgia May 8, 2007, more than two months after Bowdoin identified himself as the owner in federal campaign records.
The Georgia entity does not list Bowdoin as an owner, officer or filer for the corporation — or as a person involved in any capacity. Rather, “Ad Sales Daily, Inc.” is listed as a Delaware foreign corporation, with J. Heardy Myers listed as the corporate filer and Myers (of Marietta, Ga.) and Otis Whitcomb (also of Marietta) listed as officers.
AdSalesDaily Inc. was incorporated in Delaware on March 22, 2007, according to filings.
In posts from March 2, 2007 at a forum known as stacontact.myfastforum.org, Myers is referred to as “Executive Vice President” and “Chief Information Technology Officer” of Ad Sales Daily Inc., with Bowdoin listed as “president.” A “write-up” that resembled a news release on Bowdoin and Myers was published in the forum.
Within the same thread later in the month, however, a poster said Myers had resigned as executive vice president to “focus on getting the other website completed. He will continue to be a member of the President’s Circle.”
A person who identified himself as a member of an ASD downline group known as “oneteam” started the forum thread. “oneteam” used free hosting at homestead.com to promote ASD. At one time, “oneteam” displayed an ad that said ASD deposits were insured by the FDIC and that ASD provided “shelter” from the SEC and the FTC.
On March 22, 2007, a forum poster quoted Bowdoin as saying, “We should have all the stock money coming in this week.”
On July 17, 2008, a Blog known as “Otitis’s Weblog” (sic) included a denial that Ad Sales Daily Inc. had been affiliated with Bowdoin, saying “Any Bowdin (sic) has made false public statements in late 2006 to beginning 2007, that he had a company named Ad Sales Daily. Andy Bowdin (sic) has never done business as Ad Sales Daily, or incorporated this name or filed for a business license in Florida where he resides.”
The denial on “Otitis’s Weblog” appears to be the only post on the Blog.
Why Bowdoin would claim to own a company he did not own — and make two campaign donations recorded by the FEC in the name of AdSalesDaily Inc. — is unclear. The federal filings recorded in February and March 2007 specifically list Bowdoin as the “owner” of AdSalesDaily Inc. (See the screen shot above of the February 2007 FEC record.)
Bowdoin, according to the transcript at asamonitor, had been in Atlanta in March 2007 to get “input” from “leaders” on the company’s problems. It is unclear if Bowdoin actually sold any stock in ASD. There does not appear to have been any public filings concerning an offering, although an offering could have been conducted privately.
“Hi Folks,” the transcript began. “My name is Andy Bowdoin, President of AdSurfDaily. We are not having an opportunity call tonight, but it will be an update call instead.
“I am in Atlanta Georgia tonight and I have been up here this afternoon meeting with some of our leaders getting some input on some of the issues we have,” Bowdoin continued, according to the transcript.
The transcript did not identify the leaders.
“We have known that we should have shut down the site for a long time, because of the issues we continually have with the site, but we have been putting band aids on it to keep it going until the new site was ready,” Bowdoin said, according to the transcript. “We have been using a lot of our programmers time to repair it and keep it going. That is expensive and wasting money and prolonging the development of our new site. But now the existing AdSurfDaily site is beyond repair.”
Script problems “drained” money from ASD, according to the transcript.
“[T]he mathematical formula that governs the payouts are wrong,” Bowdoin was quoted as saying in the transcript. “The site has been paying out 63%, 67% and 72% instead of the normal 60%. This has drained the money we had for pay outs. Therefore all pay outs are on hold at this time.”
Bowdoin did not say if people who benefited from extra payout amounts were asked to return the money, according to the transcript. Instead, ASD stopped payouts altogether.
“We have frozen all accounts,” Bowdoin said, according to the transcript. “We have disabled the ability to make upgrades and purchase new ads. You can still view ads and earn credits to show your site. You can still look at you history and referral page. You can print out your information in your History page and Referral page. We will use this information to make everyone whole when we launch the new site. Our goal is to launch the new site during the month of May and make everyone profitable.”
Bowdoin next pitched a stock offering, according to the transcript (emphasis added).
“We will be selling stock in the new corporation AdSalesDaily to finish paying for the development of the new site and make the current payouts. The minimum purchase for the stock is $10,000. We are looking for people who share our vision, and are willing to invest toward the continued development and completion of the new AdSalesDaily website. If you are interested in purchasing some of the stock or if you know someone that might be interested in listening to the stock presentation, call the home office at 850-627-2206.”
The transcript and political donations in the name of AdSalesDaily may mean that ASD operated under three different names — not just two — between October 2006 and August 2008, the month certain assets tied to the firm were seized by the U.S. Secret Service. The assets were seized when ASD was operating as ASD Cash Generator.
A second forfeiture complaint filed in December 2008 against assets tied to ASD cites at least one unidentified “silent partner.” The December complaint references a purported theft of $1 million from ASD at the hands of “Russian” hackers, alleging that no police report ever was filed despite the loss of a magnificent sum.
The complaint describes the transition from the name AdSurfDaily to ASD Cash Generator. It does not reference “AdSalesDaily,” but federal records show that Bowdoin gave two campaign donations in that name.
“Mr. Bowdoin told some individuals that he had to stop operating the program over the Internet as AdSurfDaily after one or more Russians hacked into his program and caused the ASD operation to issue approximately $1 million to one or more Russians,†prosecutors said.
Bowdoin explained the money was taken “before [he] discovered that the Russians had not paid any money to ASD to secure for themselves a portion of its revenue stream (as so-called ‘rebates’),†prosecutors said.
The December complaint also alleges that Bowdoin blamed the company’s problems on “cash reserves that had been drained because surfing commissions were overpaid” — a possible reference to Bowdoin’s remarks in the March 2007 transcript about script problems.
But Bowdoin and ASD insiders, according to the December complaint, arranged for ASD money to be stolen.
“Mr. Bowdoin and associates issued ad packages to friends and family (who paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said. “Mr. Bowdoin also gave free ad packages to a son and former daughter-in-law, by which they pulled funds out of ASD without paying any money to ASD. In his son’s case, he arranged for another employee to ‘surf’ the program in order to qualify for a share of the daily rebates.”
Select individuals “were able to pull out considerable funds from the so-called rebate program even though in many cases they put little, if any, of their own money into the scheme,†prosecutors said.
“For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,†prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.â€
FEC records show that Bowdoin — under the name of “Mr. T. Andy Bowdoin, Jr” and “AdSurfDaily Inc. and AdSurfsDaily Inc. (the second “s” is an apparent typo) ” — gave $5,000 to the National Republican Congressional Committee in 2008. Two donations of $2,500 were recorded — one on June 6, 2008, and another on July 7, 2008.
Bowdoin’s NRCC donations resulted in the issuance of a “Medal of Distinction,” which Bowdoin and ASD promoters positioned as an important award for business accomplishments from the White House. The “medal,” however, is issued for campaign donations and signfies only one’s ability to write a check for what amounts to the purchase of banquet tickets.
Even as the FEC was recording the donation on July 7, undercover agents from an IRS/Secret Service task force based in Florida were beginning to scrutinize ASD.
Prosecutors said last month that Bowdoin had signed a proffer letter and acknowledged to law enforcement that the material allegations in the government’s August complaint all were true. The government did not reveal the entire contents of the proffer letter or the date it was signed.
Given the allegations in the December forfeiture complaint and direct quotations attributed to Bowdoin, it is possible that the December complaint itself is based at least in part on Bowdoin’s proffer.
UPDATED 7:52 A.M. EDT (April 13, U.S.A.) On the very day Tom Petters was sentenced in Minnesota to 50 years in prison for operating a colossal Ponzi scheme, a federal judge froze the assets of Renee Marie Brown after the SEC accused her of ripping off clients by persuading them to invest in a mysterious vehicle known as “Fund X.”
