“We are writing you today and requesting your assistance. It has come to our attention that your website Hubpages.com is broadcasting and delivering content that is both copyrighted and, [sic] Trademark Protected. In addition, the content constitutes a tortuous [sic] interference with us and our 1.2 million independent advertising reps around the world.” — From communication dated July 22 and allegedly sent to HubPages. (Bolding added by PP Blog.)
UPDATED 10:23 A.M. EDT (U.S.A.) Using the pronouns “we,” “our” and “us” — while butchering a legal term and implying he had the authority to act on behalf of Rex Venture Group LLC — a purported Rex Venture “consultant” appears to have caused HubPages.com to disable a Hub written by “K. Chang” that is critical of the Rex-owned Zeek Rewards MLM “program.”
How long the “K. Chang” Hub will remain offline and whether it even will return are unclear. A Hub is an article on a specific topic. The “K. Chang” Hub questioned whether Zeek was a legal and viable business.
Zeek, which operates a penny-auction site known as Zeekler, plants the seed affiliates of the Zeek MLM “program” can earn a return in the hundreds of percent per year by sending it sums up to $10,000 and placing a daily ad for the company online. The firm has preemptively denied it is operating a “pyramid scheme.” And it claims it will ban members who describe Zeek as an investment program, despite the implication of a spectacular return and despite the fact Zeek’s business model closely resembles that of AdSurfDaily.
ASD, like Zeek, advised members not to describe the “program” as an investment program. Moreover, both ASD and Zeek had (or have) a purported “advertising” component. Zeek members place ads as part of the “program”; ASD members clicked on ads. The U.S. Secret Service seized more than $80 million from ASD-related bank accounts in 2008. ASD President Andy Bowdoin later was accused of operating a massive online Ponzi scheme that had ensnared tens of thousands of people globally.
Bowdoin faces sentencing on a Ponzi-related charge of wire fraud next month and has been banned from multilevel marketing, Internet programs and mass marketing. Zeek has listed some known ASD participants as “employees.”
In what is emerging as the latest bizarre drama involving Zeek, the “K. Chang” Hub about Zeek went missing earlier this week in the aftermath of a purported complaint for “Copyright, Trademark infringement” dated July 22 and submitted to HubPages.
The complaint, according to information “K. Chang” said he received from HubPages, was submitted by “Robert Craddock” and implied “Craddock” was acting on behalf of Rex Venture Group LLC, Zeek’s purported parent company.
Whether “Craddock” actually had the backing of Rex Venture/Zeek when submitting the complaint is unclear. “K. Chang” now says he’s trying to get the answer to that question.
The PP Blog was unable to reach Zeek for comment.
“Craddock,” according to the complaint, advised HubPages that the phrases “Zeekler; Zeek Rewards; Shopping Daisy” were protected by copyright and that “K. Chang” somehow was violating those purported copyrights. The complaint also alleged trademark infringement and libel.
Whether “Craddock” had the backing of Rex Venture/Zeek to make those claims also is unclear. Rex is not listed as the owner of any of the three trademarks allegedly cited by “Craddock” in the complaint to HubPages. “K. Chang,” meanwhile, says he’s willing to correct his Zeek Hub if there are errors of fact.
New Confusion Emerges
Screen shot: Source: Justia.com
Perhaps the biggest of the early issues surrounding the Hub flap is whether North Carolina-based Rex Venture or its Zeek arm even owns the trademarks “Craddock” allegedly brought to the attention of HubPages as part of a bid to bring down the “K. Chang” site.
Information on Justia.com, which tracks trademark applications, suggests the marks are owned by Ebon Research Systems LLC. A federal database maintained by the U.S. Patent and Trademark Office, meanwhile, references Ebon Research as “Owner” and “(APPLICANT).”
Ebon Research is a company based in Florida. The firm lists Dr. Florence Alexander and Stanley Alexander Sr. as its managing members, which leads to questions not only about whether “Craddock” had the backing of Rex Venture/Zeek to bring the complaint, but also whether he had any standing to complain to HubPages about any Zeek-related matter.
Reached by the PP Blog for comment yesterday and told about the “K. Chang” circumstance and the copyright/trademark complaint at HubPages, a woman who identified herself as Dr. Florence Alexander of Ebon Research said she had “no knowledge” of any trademark or copyright complaint filed at HubPages against “K. Chang.”
“I don’t even know what HubPages is,” she said. Alexander added that she “certainly” knew of Zeek, but declined to answer questions about whether Ebon Research had a business relationship with Zeek or Rex Venture. She then ended the call, explaining that a family matter required her immediate attention.
Compare the trademark numbers listed in this screen shot of a section of the infringement complaint attributed to Rex Venture Group to the numbers in the screen shot above.
The PP Blog reached Ebon Research by dialing a phone number published for the company on the website of a U.S. government agency that identifies the firm as an “interested vendor” of the U.S. Environmental Protection Agency. A separate, nongovernment website styled “EbonResearchSystems.com” uses the same phone number for Ebon Research published on the government website and the same street address for Ebon Research published in Florida corporation records.
The nongovernment website that uses the Ebon Research name to form its URL publishes the logos of several government agencies, including the U.S. Department of Justice, and the agencies are identified on the website as members of a “federal client list.” Ownership of the domain is unclear because it is registered through Domains By Proxy.
Whether Alexander will have additional comments later that could clarify the Zeek issues is unknown.
“K. Chang” noted yesterday that “Craddock” had identified himself in an email as a Rex Venture Group “consultant” interested in obtaining “K. Chang’s” phone number to discuss Zeek-related matters.
“I’m following up about the content you published on HubPages, regarding Zeek Rewards and companies connected with or believed to be connected with,” “Craddock” wrote, according to “K. Chang.” If you would respond with a number so I can discuss this matter with you.”
“K. Chang” added that “Craddock” used a Gmail address when contacting him, not an address linked to any of the Rex Venture domains.
That communication was signed “Robert Craddock” on one line, with the name of “Rex Venture Group LLC” appearing on the next line, according to “K. Chang,” who posts on the PP Blog in addition to maintaining the now-missing HubPages site.
After “K. Chang” received that communication, “K. Chang” received another one from “Craddock” that introduced the specter that a “corporate attorney” for Zeek “will also want to weigh in on this discussion if that is what it takes to keep your posting from being re-published on Hub Pages or anywhere else, as we believe and know this story contains false information and is disruptive to our affiliates.”
Like the actual complaint to HubPages by “Craddock,” the emailed communication to “K. Chang” also used pronouns such as “we” and “our.”
The actual complaint to HubPages, according to “K. Chang,” ended with these words (italics added):
“Rex Venture Group LLC has not given authorization, past or present, for any use, [sic] of its trademarks, [sic] copyrighted phrases. Nor does it allow, or has authorized any publication of material that is defaming and causes a business disruption for is [sic] affiliates around the world. Again I would like to thank you for your prompt attention to this matter.
EDITOR’S NOTE: Just when you thought AdSurfDaily-related events could not get any stranger . . .
** _____________________________ **
Kenneth Wayne Leaming
Jailed near Seattle and awaiting trial in September on charges he filed false liens against at least five public officials involved in the AdSurfDaily Ponzi case, purported “sovereign citizen” Kenneth Wayne Leaming has sued “Barrack Hussein Obama” and U.S. Attorney General Eric Holder in federal court in the Western District of Washington.
The complaint was written in longhand and names Leaming business associate and fellow federal prisoner David Carroll Stephenson a co-plaintiff. In addition to Obama and Holder, the complaint names as defendants “J. Doe #1 (U.S. Atty)” and “John Does 2-10.”
It is believed that “J. Doe” refers to U.S. Attorney Jenny A. Durkan of the Western District of Washington. Durkan’s office has been involved in the prosecution of a number of purported “sovereign citizens,” including David Russell Myrland. Myrland was convicted last year on charges of threatening the mayor and officials of the Seattle suburb of Kirkland.
Obama, according to the Leaming/Stephenson complaint, is not a U.S. citizen and therefore is ineligible to be President. And because an ineligible President appointed Holder, it follows that Holder is “Personating [sic] the Attorney General of the United States” and therefore “cannot lawfully appoint or delegate authority to “Any United States Attorney.”
It further follows, according to the complaint, that the charges against Leaming and Stephenson brought by the U.S. Attorney for the Western District of Washington should be declared “VOID For FRAUD” because the U.S. Attorney also is “personating” [sic] a federal officer.
In court filings after Leaming’s arrest, the FBI cited a passage from an alleged Leaming email that referenced the children of U.S. Chief Justice John Roberts and their “school.”
“In this email,” the FBI agent who sought Leaming’s arrest wrote, “I believe that LEAMING is offering to file documents on Stephenson’s behalf, including sending them to the Chief Justice, via his minor children.”
Investigators discovered a paperwork trail that linked Leaming and Stephenson to a purported $10 million lien against Harley Lappin, the former director of the Federal Bureau of Prisons, and a purported lien for $20 million against Dennis R. Smith, the warden of the Federal Correctional Institution in Phoenix.
As the probe that led to Leaming’s arrest proceeded, agents found bogus liens filed in Pierce County, Wash., against other public officials, including at least five officials involved in the ASD Ponzi case. Liens against Mary Peters, the former U.S. Secretary of Transportation, and Cutler Dawson, president and CEO of Navy Federal Credit Union, also were discovered.
Leaming and Stephenson are demanding 100 “ounces of .999 fine silver” from each defendant as “compensatory damages ” for each day the government allegedly holds them unlawfully. In addition, they are demanding 1,000 “ounces of .9999 fine gold” from “each defendant” for “Punitive and Exemplary damages.”
Screen shot: From the Stephenson/Leaming complaint.
With two defendants formally named and 10 “Does,” it appears as if Leaming and Stephenson are demanding 12,000 ounces of gold. Gold is trading at roughly $1,600 an ounce, meaning the duo is asking for about $19.2 million at today’s approximate rate.
Leaming was arrested in November 2011, after an investigation by an FBI Terrorism Task Force. Stephenson — already a federal prisoner at the time of Leaming’s arrest — later was indicted with Leaming on a charge of retaliating against a federal judge or federal law enforcement officer.
In addition to the charges of filing false liens, Leaming also faces charges of harboring two federal fugitives, being a felon in possession of firearms and uttering a bogus “Bonded Promissory Note” with a purported face value of $1 million.
The U.S. Secret Service has described AdSurfDaily as a $110 million Ponzi scheme and a “criminal enterprise.” ASD President Andy Bowdoin is jailed in the District of Columbia, pending formal sentencing Aug. 29 in the ASD Ponzi case.
One of the individuals against whom Leaming allegedly filed false liens is the Secret Service agent who led the ASD investigation. False liens also allegedly were filed against three federal prosecutors who worked on the ASD case and the federal judge who presided over it.
Leaming has a prior federal felony conviction for piloting an aircraft without a license.
URGENT >> BULLETIN >> MOVING: A federal judge has granted the government’s request to transfer from Florida to the District of Columbia a lawsuit against the United States filed by AdSurfDaily figures Todd Disner and Dwight Owen Schweitzer.
The ruling today by U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida deals a blow to Disner and Schweitzer, who earlier argued that federal prosecutors had gone shopping for a “frendly [sic] forum” in the District of Columbia when bringing the ASD Ponzi case in 2008 after an investigation by the U.S. Secret Service.
Altonaga’s ruling may mean that U.S. District Judge Rosemary Collyer — whom ASD President Andy Bowdoin and purported “sovereign” being Curtis Richmond tried unsuccessfully to have removed from the case for alleged bias — will preside over the Disner/Schweitzer complaint.
Disner and Schweitzer, who raised the prospect they could be charged with tax evasion, argued to Altonaga that their Constitutional rights were violated when the government seized the ASD database in 2008.
” . . . the Court finds that Plaintiffs can litigate their claims in the District of Columbia without undue inconvenience or prejudice,” Altonaga ruled. “The public interest factors also favor transfer, given the District of Columbia’s extensive familiarity with the forfeiture proceedings that gave rise to this action. In view of that familiarity, the District of Columbia is in a better position to efficiently judge whether Plaintiffs’ case warrants dismissal or whether the Government’s actions constituted an unreasonable search and seizure of Plaintiffs’ property in violation of the Fourth Amendment and other statutory requirements.”
In her ruling today, Altonaga noted that Disner and Schweitzer already have claimed they’d try to have Collyer removed from the case if made its way from Florida into her courtroom.
Disner and Schweitzer sued the government in November 2011, bringing their action in the Southern District of Florida and arguing that ASD was not a Ponzi scheme and that prosecutors and the Secret Service had authored a “tissue of lies” in the District of Columbia. About seven months later — in May 2012 — Bowdoin pleaded guilty to wire fraud before Collyer, who’d earlier ordered the forfeiture of more than $80 million in the civil portion of the case.
In a statement of offense, Bowdoin acknowledged ASD was a Ponzi scheme that never operated lawfully from its 2006 inception. He remained free after his guilty plea, but Collyer ordered him jailed in June 2012, after prosecutors presented evidence that Bowdoin continued to foist scams (AdViewGlobal and OneX) on the public even after the seizure of tens of millions of dollars in the ASD case and even after he was arrested on Ponzi charges in December 2010.
Bowdoin has been held at a local jail facility in the District of Columbia since last month. His formal sentencing on the Ponzi-related charge of wire fraud is set for Aug. 29 before Collyer.
After their ASD days, Disner and Schweitzer became pitchmen for the Zeek Rewards “program,” which has an ASD-like compensation scheme. In arguing that ASD was not a Ponzi scheme, Disner and Schweitzer relied on an opinion from purported MLM expert Keith Laggos, whom Zeek now claims as a consultant.
Screen shot: I-Payout website showing logos of "Global Strategic Partners." In April, federal prosecutors described a murky enterprise known as "OneX" as a "fraudulent scheme" and "pyramid" that was recycling money to members in a fashion similar to the AdSurfDaily Ponzi scheme. Now jailed, ASD President Andy Bowdoin was a OneX pitchman, saying he intended to use his "earnings" from the "program" to pay for his criminal defense in the ASD Ponzi case. Like ASD, OneX conducted business with SolidTrustPay, an offshore payment processor linked to one HYIP fraud scheme after another. Mysterious OneX pitchman "J.C." now says the "program" is turning to I-Payout.
Back in April, federal prosecutors described the purported OneX “program” as a “fraudulent scheme” and “pyramid” pushed by former AdSurfDaily President Andy Bowdoin, the author of the $110 million ASD Ponzi scheme.
Bowdoin, 77, now is jailed in the District of Columbia — in part because of his OneX pitches. He’d initially been free of bond while awaiting his criminal trial in September 2012 on charges of wire fraud, securities fraud and selling unregistered securities in the ASD Ponzi case. Bowdoin was arrested by the U.S. Secret Service in December 2010.
The ASD patriarch pleaded guilty in May to wire fraud in the ASD Ponzi case, acknowledging that ASD was a Ponzi scheme and never operated lawfully from its 2006 inception. Bowdoin remained free after his guilty plea. But a federal judge ordered him jailed in June — pending an August 2012 sentencing date — after prosecutors linked Bowdoin both to OneX and a scam known as AdViewGlobal.
Bowdoin, according to prosecutors, chose to continue to commit crimes — even after the August 2008 seizure by the U.S. Secret Service of $65.8 million in his 10 personal bank accounts at Bank of America and even after he was arrested on Ponzi charges. In October 2011, Bowdoin told OneX conference-call listeners that they could make $99,000 very quickly and that he intended to use his profits from OneX to pay for his criminal defense in his ASD-related Ponzi scheme trial.
College students were excellent prospects for OneX, Bowdoin ventured.
Much remains murky about OneX, including the identity of its purported operator and precisely where the company operates from. A male referred to as “J.C.” presides over OneX conference calls, which occasionally continue to be held despite prosecutors’ assertions against the firm in April. “J.C.” has described himself as a “consultant,” even though he apparently is empowered to make financial decisions for the murky enterprise.
OneX has announced it no longer is using SolidTustPay, the Canadian payment processor linked to one HYIP fraud scheme after another.
But “J.C.” announced during a OneX conference call this week that the “program” was switching to I-Payout, according to a source.
Part of the presentation by “J.C.” in the conference call included the presentation of a screen shot that showed I-Payout’s name in the back offices of OneX members who’d been wondering if and when the company would find a substitute for SolidTrustPay, according to a source.
It is unclear if OneX has an actual account at I-Payout. What is clear is that it is encouraging members to register for I-Payout accounts, only three months after prosecutors described OneX as a scam that was recycling money to members in ASD-like fashion.
Among the clients I-Payout touts on its website is TextCashNetwork. (See Feb. 14, 2012, PP Blog story on TextCashNetwork.)
I-Payout’s website publishes the logos of HSBC, Deutsche Bank, Bank of America, Barclays and other “Global Strategic Partners.”
Bloomberg/Businessweek is reporting this morning that HSBC and Deutsche Bank employees are under investigation for alleged manipulation of the LIBOR interest rate in a growing scandal that also involves Barclays and other major financial institutions.
From a post Friday at the Payza Blog at the close of U.S. business hours in the East. Companies sometimes make announcements late on Fridays to minimize PR fallout. Payza's announcement may put it at odds with customers who populate well-known forums whose members push HYIP and other scams that help fraud spread globally on the Internet
EDITOR’S NOTE: Payza seems to have taken an important step Friday in the battle against online fraud. The payment-processing company perhaps deserves an accolade for that. But it’s too soon to heap praise on Payza. We are particularly concerned about the phrasing of a specific line in Payza’s altered User Agreement. More on that below . . .
** ___________________________________ **
UPDATED 7:29 A.M. EDT (JULY 17, U.S.A.) Is Payza, the payment processor operating in Canada that recently changed its name from AlertPay, finally doing the right thing?
Or is it just lip service?
Payza has announced on its Blog that it is banning programs that show “[a]ny indication or demonstration of a literal rate of return on a contribution, payment or investment, while not being licensed to sell or solicit.”
Notice the phrasing (emphasis added): “any indication of a literal rate of return . . .”
What, precisely, does Payza mean? That expressing a literal return rate no longer is OK, but all can be cured if Payza’s current HYIP purveyors and Ponzi-board hucksters hide veiled or direct references to the return (perhaps in the back offices of HYIP affiliates or someplace else out of view of the public and search engines) or somehow find a word combination that avoids a literal expression of a return and instead relies on a deeply couched expression?
This is an important question because the HYIP “industry” cannot exist without the financial vendors that enable it, either by turning a blind eye or choosing not to peel back a single layer of the onion because choosing to see is bad for profits.
The last thing the “industry” needs is an invitation to become even more clandestine in its dealings, even more clever in its use of linguistic deception, information suppression or outright misinformation. The threat to individuals and the world’s financial infrastructure posed by con men and teams of accomplices in the thousands or hundreds of thousands already is untenable.
Payza needs to reassess its use of the phrase “literal rate of return.” Left untouched, that phrase easily could turn what’s already a dangerous, wink-nod “industry” into even more of one, thus providing scammers a new back door and actually making the problem of international financial chicanery on the Internet even worse.
Because AlertPay basically chose for years to gorge itself on HYIP fees and not to take the clues offered by the prosecution of e-Gold in the United States (by members of the same team that prosecuted the AdSurfDaily autosurf HYIP, BTW) and the disintegration of e-Bullion (while its operator stood accused of arranging the brutal contract slaying of his wife, a potential witness to e-Bullion’s Ponzi-sustaining fraud), we cannot yet offer Payza three cheers.
Owing to AlertPay’s history of choosing in e-Gold and e-Bullion-like fashion to see no evil, we question whether use of the word “literal” is just a means of signaling the scammers to do a better job of using language to disguise an investment program as something else or to hide and/or otherwise bury language that speaks to the investment elements. In the past few weeks, for example, the Payza-dependent JSS Tripler/JustBeenPaid “program” suddenly changed the language on its home page to say it offers a “LEGALLY COMPLIANT & PATENTED SYSTEM.”
Let’s pause for a moment to state the obvious, something that somehow often gets overlooked by HYIP apologists: Real people — living, breathing human beings — are being sucked into these utterly contemptible “programs” that are being enabled by processors such as Payza and SolidTrustPay.
And suddenly — out of the blue — JSS/JBP announced it was using a “WORLD RENOWNED LAW FIRM” to assure compliance. These things bizarrely clashed with recent claims by Frederick Mann, the purported operator of JSS/JBP, that attorneys could not be trusted, that government employees weren’t welcome in the “program,” that registering with securities regulators was a sign “you’ve signed up to be a slave, part of the slave system, and then they have jurisdiction over you and can shut you down” and that JSS/JBP members had nothing to fear because the “program” had no presence in the United States.
Now, all of a sudden, JSS/JBP has found the religion of compliance — or at least the language of the religion of compliance.
The New Religion Of Compliance
The Payza-dependent Zeek Rewards MLM “program” also is preaching the religion of compliance, even as it plants the seed that it can provide a JSS/JBP-like annual return of between 365 percent and 730 percent without being the Bernard L. Madoff Investment Securities LLC of multilevel marketing.
Part of what Zeek appears to be doing falls along the lines of not expressly stating a literal return. Welcome to the world of vomitous MLM in the year 2012. The players are eager to tell you what they’re not, less eager or completely unwilling to tell you what they are, and can bring a virtually unlimited supply of Stepfordians to the fore to help them cloud the issues.
Zeek has told the public it is not a “pyramid scheme.” It now says it will ban members who describe the “opportunity” as an investment program, despite the seed Zeek plants that participants can earn a return of between 1 percent and 2 percent a day. Some Zeek affiliates are practically tripping over themselves these days in what strikes us as a bizarre race to see how many times they can fit the words “attorneys” and “compliance” in their forum “defenses” for Zeek.
This Blog has not seen one instance in which a Zeek attorney has described the “program” as legal. Even so, we’ve seen plenty of examples in which Zeek affiliates implied that attorneys had given Zeek the all-clear and at least a few examples in which affiliates implied that agencies such as the SEC and FTC had scrubbed Zeek for compliance and found it in fine fettle. There have been hugely disingenuous claims from Zeek affiliates in this area — everything from describing the lack of any action against Zeek by the SEC or FTC as evidence that the agencies had examined Zeek and found nothing lacking to planting the seed that the lack of any action by the agencies is proof that Zeek is operating lawfully.
Zeek itself played this miserable game. In June, a North Carolina television station carried a report that suggested Zeek had been found to be operating lawfully by the office of North Carolina Attorney General Roy Cooper. Zeek linked to the TV station’s video report on its news Blog and certain Zeek promoters pointed to the report as proof of Zeek’s legitimacy.
But Cooper’s office said it never said Zeek was operating lawfully. After the TV station was contacted by Cooper’s office, which was concerned about the clarity and accuracy of the video report, the station removed the report. The incident produced one of those awkward moments that too often accompany the MLM trade: Zeek plainly liked the TV report because it construed Zeek as operating lawfully. The report then became a tool in Zeek’s PR arsenal — and Zeek wanted to make sure its affiliates had the same tool. It used its Blog to point affiliates to the video, and some of them predictably used it as evidence the Zeek critics were wrong and to plant the seed that Zeek had passed muster in North Carolina.
By linking to the report, Zeek tried to maximize its PR hand. When the report was removed, Zeek had nothing to say. The post on Zeek’s news Blog in which the company originally crowed that “Zeek Makes the Channel 2 News” now has been removed. Although the precise date and time in which Zeek removed the post are unclear, a Zeek affiliate with his own Blog sought to capitalize on the TV station’s report in a post that still remains.
That post featured a three-tiered headline that screamed, “Zeek Reward [sic] featured on Chanel [sic] 2 News[.] Zeek Reward [sic] featured on Chanel [sic] 2 News[.] Zeek Reward [sic] makes it on TV. Get In On the Action!”
This post on the "Empower Network" Blog of a Zeek affiliate included a three-tiered headline and a link that pointed readers to a TV station's report about Zeek. Like Zeek itself, the "Empower Network" is an MLM "opportunity."
The affiliate’s post included a graphic that described Zeek as a “Passive Income!” opportunity. One link on the site pointed to the now-removed TV station video. Another link, however, pointed to post that included a YouTube version of the TV station’s report. That YouTube report included a headline and “crawler” in a language other than English.
Like the post that included the three-tiered headline about Zeek’s TV appearance, the second post included the graphic that described Zeek as a “Passive Income!” program. The claim about passive income speaks to the heart of the issue of whether Zeek is selling unregistered securities as investment contracts and trying to disclaim its way out of an encounter with regulators.
Although a TV station took down its link to a video report on Zeek, a YouTube version apparently existed.
The Culture Of Willful Blindness
Confusing messages appeared repeatedly when the AdSurfDaily Ponzi case was playing out. All of it was monumentally embarrassing to MLM. In one instance — while it was awaiting a key ruling from a federal judge in October 2008 on whether it had demonstrated it had sufficient income and was not a Ponzi scheme at a hearing it requested and the judge granted in the interests of justice — ASD insiders leaked a story that ASD expected a revenue infusion of $200 million from a penny-stock company.
The ASD Stepfordians immediately raced to forums to spread the good news. But skeptics immediately questioned the claim, pointing out that Praebius Communications — the penny-stock firm that supposedly was going to provide ASD a $200 million injection — did not even publish audited financials. SEC records later showed that, in October 2008, the same month ASD was awaiting the court decision and claiming a new $200 million was coming on board, Praebius stock was being pumped in a fraudulent-touting scheme.
Over time, serious questions were raised about whether certain MLMers within ASD were engaging in bids to obstruct justice. Rumors were planted that federal prosecutors had secretly admitted ASD was not a Ponzi scheme but were clinging to the case as part of a bid to save face. In 2008, ASD members who did not even question the bizarre claims coming from ASD or ASD insiders raced to forums and spread a false report that Ponzi charges had been dropped against ASD in Florida. That development prompted the attorney general of Florida to issue a statement that, not only had Ponzi charges not been dropped against ASD in the state, they’d never been brought to begin with. Indeed, Florida charged ASD with operating a pyramid scheme.
The names of both AlertPay and SolidTrustPay appear in court filings in the ASD Ponzi case. It is hardly coincidental that both Zeek and JSS Tripler/JustBeenPaid also have ties to the same processors, which are offshore from a U.S. perspective. These processors are the e-Golds and e-Bullions of Canada. They also are referenced in the Pathway to Prosperity Ponzi case, which the U.S. Postal Inspection Service called a global fraud affecting 40,000 people from 120 countries. In December 2010, the federal prosecutors handling the ASD case made the first public filing that referenced e-Bullion in the context of ASD.
In 2011, e-Bullion operator James Fayed was convicted of arranging the contact slaying of Pamela Fayed, his estranged wife who was found slashed to death in a Los Angeles-area parking garage. There is absolutely no doubt — zero — that e-Bullion was enabling Ponzi schemes. James Fayed has been sentenced to death for arranging the brutal killing of his wife, a potential witness against him.
It is beyond the pale — and almost beyond belief — that certain MLMers continue to insist there is something noble about these miserable money games, that they somehow represent the best of the free market and the entrepreneurial spirit, that they’ve somehow succeeded where other MLMs have failed.
What they are are recipes for financial and personal destruction that operate as slow-motion Ponzi schemes. They need to be destroyed, not duplicated. Far from being exciting, new niches — as some MLMers tell the story — they are form-shifting monsters that spread the greatest financial cancers devised in the history of mankind. They are so dangerous that external fraudsters target them as a means of unloosing secondary frauds — everything from the issuance and passing of bogus checks to organized credit-card fraud. Some of them have been linked to narcotics-trafficking or money-laundering operations. Some of the investigators who assisted in the ASD Ponzi case also developed this case.
From our May 16, 2010 report on the EMG/Finanzas Forex case (italics added):
Research by the PP Blog suggests the purported investment program was so sordid that promoters even claimed some of the funds were being used for the “humanitarian” purpose of assisting kidnapping victims in Colombia. In a sickening display of marketing theatrics, a claim was made that investors could “adopt” kidnapping victims for a payment of $1,000 and that the company would set aside $500 in corporate funds for each victim so that their families could have bright futures if the victims ultimately were released by their captors . . .
The HYIP scheme allegedly was associated with an entity known as Evolution Market Group (EMG), which purportedly had a Forex component known as FinanzasForex. Investigators alleged in January that there were schemes within schemes in a tangled web of domestic and international deception that featured dozens of bank accounts, shell companies and various fronts for money-laundering enterprises, including companies purportedly in businesses such as real estate and car washes.
The scheme was so corrupt, according to court filings, that some investors were told that, in order to leave the program whole, they had to recruit new investors, have the new investors pay them directly — and use the proceeds from the new investors to “recover” their initial outlays . . .
A Glimmer Of Hope
We do find a glimmer of hope in Payza’s announcement because Payza’s use of the phrase “any indication” implies it actually intends to exit the fraud-enabling business and intends to protect its reputation moving forward and make it harder for viral scammers who use its service to rob people without the aid of a gun.
A return — plainly stated or implied — would seem to fall under the “any indication” umbrella. Another indication is the presence of a “program” on the Ponzi boards. (Like ASD and EMG/Finanzas Forex, Zeek and JSS/JBP have a presence of the Ponzi boards.)
Yet another indicator of fraud is disclaimer language that seeks to cloud regulatory issues by planting the seeds that payouts are not guaranteed and that joining a “program” with a plainly stated or implied return does not constitute making an investment.
Much of the HYIP fraud “industry” exists because of the wink-nod deal and the willful blindness of the purveyors, including serial scammers with global reach and payment processors that gorge themselves on fees while serving what effectively are criminal combines consisting of like-minded individuals and “teams.”
Also banned, according to the Payza Blog post, is the the “[s]elling of Unregistered/Unlicensed Stocks, bonds, securities, options, futures, or investments in any entity or property, including (but not limited to) corporations and partnerships or sole proprietorship . . .”
Meanwhile, Payza says this (italics added):
“Solicitation, marketing campaign, direct selling or any other comparative effort will be considered a violation of the User Agreement. If you are registered or licensed to take such action, you may be requested to present documentation demonstrating authority to do so from a Securities Exchange Commission, Commodities Futures Trading Commission or other equal and comparative agency.”
Language in the full, six-paragraph announcement is exceptionally formal, bordering on the florid. But if the aim is for Payza to say no to fees and wrest itself from the wretched, pain-producing universes of HYIPs, autosurfs, cycler matrices and other “programs” that reach across national borders and fleece people on a global scale, the ornate language will become only a tiny footnote.
What’s far more important is that Payza will have said no to the scammers and a subculture of eager, greedy pitchmen who help financial crime spread globally and line their pockets on the current (or pending misery) of their marks.
It is possible these days for a scammer hiding in the darkest corners of the Internet to pick the pocket of a “customer” and contribute to a mortgage foreclosure or even the failure of a bank a continent away. Such “programs” often are pushed in the purported name of freedom itself, as a purported means of helping a neglected Everyman escape the shackles of poverty and become a free man who’s escaped his tyrannical captors.
But because the scammers’ schemes constantly evolve and because they often rely on overblown prose to disguise the fraudulent nature of their “programs,” it is going to take more than just words from Payza to incorporate any real change.
For example, could an “opportunity” that simply comes up with different naming conventions and avoids the traditional language of investments fool the checkers at Payza? Or could an “opportunity” that shields Payza from information perhaps by publishing it only in the back offices of the “opportunity’s” members escape scrutiny?
And because HYIPs and their willfully blind, serially disingenuous promoters already are infamous for wink-nod presentations, the use of disclaimers and even outright denials that an investment program of any sort is being offered, will the criminal minds who dominate this cancerous space go into overdrive to come up with new and more clever ways to disguise fraud schemes?
What To Watch For
Will panic engulf the HYIP sphere because of the Payza annoucement? Here are some things to look for:
Masked investment “programs” — perhaps aware they are under scrutiny — taking once-public forums offline and engaging in bids to further compartmentalize information and scrub negative information.
Management and affiliates of such “programs” making veiled or direct references to “attorneys” and “compliance” as a means of suggesting they are wholly lawful and embrace responsible corporate citizenship.
Increased lead times between “program” payment cycles, perhaps initially explained away as “growing pains.”
Payment bottlenecks to develop as “programs” horde cash or cash equivalents and become fearful that once-reliable enablers are hopping off the wink-nod fraud train because they realize the real world no longer is going to tolerate international lawlessness so a scammer on the TalkGold or MoneyMakerGroup forums can get rich by picking the pockets of senior citizens, deaf people, the unemployed and the struggling. (Also known as the AdSurfDaily problem.)
An uptick by scammers in the use of floridspeak as a means of talking around serious legal issues and masking the investment elements of a “program.”
The creation of bogus “regulatory agencies” and “trade groups” to create the appearance that a responsible party with legal authority is monitoring the store. (Note: A bogus regulator was an element of the George Theodule Ponzi scheme in Florida.)
The sale of purported memberships in these purported “regulatory agencies” and “trade groups.”
Read the Payza post, which was made Friday at the close of traditional business hours in the Eastern United States.
UPDATED 8:42 A.M. EDT (JULY 14, U.S.A.) It’s beginning to look as though the Zeek Rewards’ MLM “program” has within it a large downline consisting of members of the AdSurfDaily Ponzi scheme. And in what may go down as one of the most spectacular PR blunders in the history of multilevel marketing, some former ASD promoters who now are Zeek promoters are encouraging their email contacts and downline members to wire money to jailed ASD President and recidivist securities huckster Andy Bowdoin — while using Zeek’s name in the appeal and describing Bowdoin as a pioneer who inspired “programs” such as Zeek to model themselves after ASD.
“You are also all aware that I believe those of us in Zeek and other programs that modeled themselves after the business model that Andy pioneered owe this man a great deal of gratitude and more,” the email read in part. “Please get in touch with your down lines as well.” (The email is reproduced below.)
For good measure, the email described Bowdoin as the man who’d provided MLMers the “path to success.” It also included a link to join the Zeek “program” under a headline of “Tired of Recruiting and Selling?” and this text teaser: “Get Rewarded DAILY for Placing Ads just like this one! Get Paid Every 24 Hours.”
A second ad in the email encouraged readers to “Get your FREE Gold Savings Account here and qualify to receive Free Gold.”
The PP Blog received news of the email early last evening, as it was preparing a post that reported an alleged HYIP purveyor in Ohio had been named in a 49-count federal indictment charging him with wire fraud and money-laundering. Terrance Osberger, 48, of Genoa, Ohio, was accused of pushing HYIP Ponzi schemes through an enterprise known as Eagle Trades LTD.
The returns Osberger allegedly offered were on par with the returns suggested by both ASD and Zeek: in the hundreds of percent per year. And like ASD and Zeek, Osberger allegedly used SolidTrustPay, an offshore payment processor, and issued a preemptive denial that a fraud scheme was under way. The alleged Eagle Trades HYIP fraud appears to have gathered at least $1.8 million, a relatively modest sum compared to HYIP frauds such as ASD ($110 million), Legisi ($72 million), Pathway To Prosperity ($70 million) and Genius Funds (an estimated $400 million).
In February 2012 — while announcing the guilty plea of Gregory McKnight in the Legisi HYIP Ponzi scheme — a special agent of the U.S. Secret Service noted that such schemes engage in form-shifting.
“Fraudulent schemes such as this have evolved significantly over the last several years,” said Jeffrey Frost, special agent in charge of the U.S. Secret Service Detroit Field Office.
AdSurfDaily was an online Ponzi scheme that said it set aside 50 percent of its daily revenue to share with affiliates. Those affiliates received an unusually consistent return of 1 percent a day. ASD described itself as a revenue-sharing program and encouraged members not to describe the “opportunity” as an investment.
Zeek also says it is a revenue-sharing program. Like ASD, Zeek claims it sets aside 50 percent of its daily revenue to share with affiliates. Affiliates have said they are earning between 1 percent and 2 percent a day, a percentage that corresponds to an annualized return of between 365 percent and 730 percent.
And like ASD, Zeek tells affiliates not to describe the “opportunity” as an investment program. Some Zeek affiliates are said to earning $1 million a month. Similar to ASD, which preemptively denied it was a Ponzi scheme, Zeek has preemptively denied it is a “pyramid scheme” — all while planting the seed that the U.S. government is running a pyramid scheme through its Social Security program.
In May, ASD’s Bowdoin pleaded guilty to wire fraud in the ASD Ponzi case. The ASD patriarch admitted his “program” was a Ponzi scheme, saying in a statement of offense the company never operated lawfully from its 2006 inception. As part of a plea bargain, Bowdoin has been banned from multilevel marketing, Internet programs and mass-marketing.
The email circulating yesterday disclosed none of these things, instead painting Bowdoin as an MLM pioneer and inspirational figure.
Nor did the email disclose Bowdoin’s felonious history as a securities huckster in Alabama a decade before he rolled out ASD in 2006. And it did not disclose that one of his business partners in ASD was implicated by the SEC in the 1990s in three prime-bank swindles, including one that suggested prospects could earn a return of 10,000 percent. In court documents originally filed under seal in February 2009 — as an upstart autosurf known as AdViewGlobal was launching — the U.S. Secret Service alleged that Bowdoin also had a “silent partner” in ASD.
That silent partner, according to the Secret Service, was Bowdoin’s sponsor in the 12DailyPro Ponzi scheme that sucked in tens of millions of dollars before the SEC destroyed it just months before ASD launched in the late summer and fall of 2006. Bowdoin and his silent partner simply tweaked the 12DailyPro business model, reducing the daily payout rate to about 1 percent and using linguistic sleight of hand in a failed bid to keep ASD under the radar, according to court filings.
Bowdoin’s nearly four-year-long legal saga began in July 2008, with the U.S. Secret Service starting an undercover probe. That probe has led to the filing of at least three civil forfeiture complaints, the seizure of tens of millions of dollars, court actions and seizures of bank accounts against certain individual ASD members, special statements by the U.S. Department of Justice and the U.S. Secret Service and the ultimate filing of criminal charges against Bowdoin.
In 2009, Bowdoin and former ASD attorney Robert Garner were accused of racketeering in a proposed class-action lawsuit filed by three former ASD members. That lawsuit was placed on hold because of all the other litigation piling up against Bowdoin and ASD-related assets.
All of it appears to be meaningless to certain ASD members now promoting Zeek.
Also apparently meaningless is Bowdoin’s record of criminality in Alabama in the 1990s in at least three counties
In June 2012, Bowdoin’s bond was revoked after federal prosecutors proffered evidence that he continued to promote scams after the seizure of more than $80 million in the ASD case by the U.S. Secret Service in August 2008 and after Bowdoin was arrested on the ASD-related Ponzi charges in December 2010. One of the alleged “programs” linked to Bowdoin by investigators was AdViewGlobal, an ASD-like autosurf that collapsed during the summer of 2009.
Bowdoin also was linked to a “program” known as “OneX,” which prosecutors described as a “fraudulent scheme” and “pyramid” that was recycling money in ASD-like fashion. Some Zeek promoters also are known to have been OneX promoters. It also is known that some Zeek promoters also are pushing JSS Tripler/JustBeenPaid, a “program” that purports to pay 2 percent a day (730 percent a year) and may have ties to the “sovereign citizens” movement.
In recent days, JSS/JBP published a claim that it had hired a criminal defense lawyer in Salt Lake City. Like ASD, Zeek, OneX and Eagle Trades, JSS/JBP has a business relationship with SolidTrustPay. (NOTE: OneX now claims it no longer uses SolidTrustPay and is trying to get a new processor after a deal it thought it had with another processor fell through. In a conference call earlier this week, OneX blamed its members for the developments and claimed it had been targeted by fraudsters. Now under indictment in Ohio, Eagle Trades’ Osberger told investors in Massachusetts that his “program” also had been targeted by fraudsters, according to records.)
The email some ASD members received last night that references Zeek appears to have forwarded by former ASD pitchman Todd Disner, who became a Zeek promoter. Former ASD member Barb Alford — also a Zeek promoter — appears to have been the author. The email’s “To” line also references Jerry Napier, another former ASD promoter who became a Zeek promoter.
Napier once was featured in a promo on Zeek’s Blog. Records suggest he signed a petition in 2008 — after two forfeiture complaints were filed against ASD-related assets — that asked the U.S. Senate to investigate the ASD prosecution team and the U.S. Secret Service agent who developed the ASD Ponzi case with the assistance of a Florida-based Task Force consisting of investigators from the IRS, the Secret Service and other agencies.
Alford is a former moderator of the pro-ASD Surf’s Up forum, which disappeared mysteriously in 2010. Teralynn Hoy, another former Surf’s Up moderator, hosted a conference call for Zeek last year. Zeek once listed Hoy as an “employee.”
In 2011, Disner joined with former ASD member Dwight Owen Schweitzer — who also became a Zeek promoter — in a lawsuit against the United States for alleged misdeeds in bringing the ASD Ponzi case. Disner and Schweitzer, who have raised the prospect in court filings that they could face prosecution for tax evasion in the aftermath of the the ASD investigation, continue to press the lawsuit — despite Bowdoin’s guilty plea to wire fraud in the ASD Ponzi case and acknowledgement he was operating a Ponzi scheme.
Here is the email circulating last night (italics/bolding added):
As you all are aware, Andy, is now sitting in a DC jail ward. He is in need of funds in his account so that he can purchase shoes, tooth brushes, tooth paste etc. the prison system charges ridiculous prices for this stuff. A pair of shoes alone in there costs 65.00.
You are also all aware that I believe those of us in Zeek and other programs that modeled themselves after the business model that Andy pioneered owe this man a great deal of gratitude and more. Please get in touch with your down lines as well.
I have received info where funds can be wired into his account to help him with his daily needs.
We can do this one of two ways. Anyone wishing to assist in the effort can send the money to me and I will wire all at once or we can do it individually. I have enclosed the wiring information below.
Let’s not drop the ball on this one. Anyone willing to do the right thing, one more time, please contact me.
I would appreciate any help you can give. It is not right that this man sits alone in jail hundreds of miles from home with no end in sight when it was he who gave us the path to success.
Respectfully Barb Alford [Phone number deleted by PP Blog]
It has to go through Western Union to be placed on his account.
City Code: [Deleted by PP Blog] State: Tennessee Senders Acct # [Deleted by PP Blog] Sender: Thomas Bowdoin
Here is his address if you want to write him Correction Treatment Facility 1901 East St. SE Med-96 Inmate 335084 Washington DC 20003
George said he gets his mail on Tuesdays and Saturdays.
Anyway, GF, I know you said a few people might want to donate to help him. I know he would love to get a letter from YOU. I am sending one tomorrow so he can get it on Saturday, I hope.
BULLETIN: The operator of an alleged HYIP fraud known as Eagle Trades LTD has been indicted on 49 Ponzi-related charges of wire fraud and money-laundering after a probe by the IRS, federal prosecutors in the Northern District of Ohio said.
Terrance Osberger, 48, of Genoa, Ohio, has been charged with one count of wire fraud and 48 counts of money-laundering, the office of U.S. Attorney Steven M. Dettelbach said.
Records show that the “program,” which allegedly offered returns in the hundreds of percent over 190 days, was promoted in 2009 on the TalkGold and MoneyMakerGroup forums. Separately, records show that state securities regulators in Massachusetts filed civil charges against Eagle Trades in 2011, alleging that two investors in the state were instructed by Osberger to send “their joint $103,000 investment through SolidTrustPay.”
SolidTrustPay is a Canadian payment processor favored by HYIP scammers.
The money sent through SolidTrustPay appears to have made its way into an Eagle Trades’ bank account in Ohio “over the course of several successive days,” according to the Massachusetts filing. But due to the “high volume of transactions and the intermingling of funds” in the account, Massachusetts investigators said they were “unable to definitely determine the ultimate destination of the $103,000 investment.”
Another Massachusetts investor was instructed by Osberger to wire $50,500 to a Cyprus entity known as F.B.M.E. Bank Ltd. That transaction proved to be difficult to reverse-engineer because of international red tape, according to the Massachusetts complaint.
The Massachusetts filings speak to the recovery difficulties investors may encounter when doing business with murky enterprises that may have one or more offshore arms, the ability to send and receive money via offshore payment processors and a corresponding ability to dump the money into domestic or international bank accounts — before moving it again.
Eagle Trades, according to an evidence exhibit prepared by Massachusetts investigators, told investors that they “will quickly notice that we have reengineered the mold regarding High Yield Investment Programs [HYIPs], making it easier than ever for you to be more informed regarding your investment options and earn a realistic, yet sustainable investment return.”
Current HYIPs such as JSS Tripler/JustBeenPaid are making similar claims about purported sustainability and reengineered platforms while also luring prospects by advertising returns that correspond to annualized returns in the hundreds of percent — and all while using SolidTrustPay and other offshore processors.
JSS/JBP purportedly is operated by Frederick Mann, a former pitchman for the AdSurfDaily Ponzi scheme, which also had a presence on the Ponzi boards, also used SolidTrustPay and also planted the seed that annualized returns in the hundreds of percent were possible.
ASD President Andy Bowdoin, 77, is jailed in the District of Columbia. He pleaded guilty to wire fraud in May and acknowledged ASD was a Ponzi scheme that never operated legally from its 2006 inception.
Over time, Eagle Trades told Massachusetts investors waiting for their payouts that it had been targeted in a”massive, seven-figure fraud” and provided a series of excuses about why investors were not getting paid. But federal prosecutors in Ohio now say Osberger was using Eagles Trades to defraud customers.
He potentially faces decades in prison.
“Osberger misused investor funds for his own personal use,” federal prosecutors said. “In other cases, he misused investor proceeds to repay earlier investors in what is commonly known as a Ponzi scheme, according to the indictment.”
And, federal prosecutors said, “Osberger listed Eagle as a subsidiary of Falcon Financial Group Limited, with addresses in Belize and the Commonwealth of Dominica and utilitzed Aurum Capital Holdings, which maintained several offshore bank accounts during the scheme, according to the indictment.
From "Exhibit 1" in the state-level case against the Eagle Trades HYIP in Massachusetts.
Screenshot: Part of a promo for Zeek translated from Portuguese to English by Google Translate
UPDATED 1:59 P.M. EDT (U.S.A.) An article on Google News by an apparent Portuguese-speaking affiliate of the U.S.-based Zeek Rewards MLM “program” that is married to a penny-auction site known as Zeekler claims that Zeek has more than 100,000 members in Brazil alone.
Meanwhile, a promo by an American affiliate dated July 7 on YouTube describes Zeek as an investment program — before the affiliate backtracks and says Zeek is not an investment program. The YouTube development first was reported by BehindMLM.com. (Link at bottom of story.)
Portuguese is the official language of Brazil, the largest country in South America. The claim of 100,000 Brazilian members could not immediately be confirmed, and no breakdown of the specific Zeek membership ranks Brazilian members had chosen was provided in the article. Zeek categorizes members as “Free,” “Silver” ($10 a month), “Gold” ($50 a month) and “Diamond” ($99 a month).
In addition to selecting a membership rank within the Zeek MLM organization, affiliates can opt to send the company up to $10,000 as a means of gaining a daily share of what is known as the Retail Points Pool (RPP). Those shares later can be converted to cash payouts that correspond to an annualized return in the hundreds of percent. The RPP program has led to questions about whether Zeek is selling unregistered securities as investment contracts and using linguistic sleight-of-hand in a bid to avoid regulatory scrutiny.
Zeek, purportedly part of Rex Venture Group LLC, is based in North Carolina. On June 20, the office of North Carolina Attorney General Roy Cooper said it had concerns about the company, which plants the seed that members can earn a return of between 1 percent and 2 percent a day but denies it is offering an investment program. Zeek’s business model resembles that of AdSurfDaily, which the U.S. Secret Service said in 2008 was a massive, online Ponzi scheme that was offering securities and disguising itself as an “advertising” program.
Andy Bowdoin's booking photo in the District of Columbia.
ASD President Andy Bowdoin is now jailed in the District of Columbia after pleading guilty to wire fraud in the ASD Ponzi case in May 2012. ASD’s purported payout of 1 percent a day was on par with Zeek’s purported daily payout. Because it is known that some affiliates of the ASD Ponzi scheme also are promoting Zeek and because Zeek has highlighted some of those ASD promoters on its website, questions have been raised about whether a core group of MLMers who move individually or as part of “teams” from one investment scheme to another is engaging in willful blindness by promoting Zeek, which is similar to ASD in key respects.
And because the U.S. government returned millions of dollars to ASD victims last year in the form of remissions payments that came from funds seized in the ASD Ponzi case, questions have been raised about whether Zeek’s growth has been fueled at least in part by the funds originally seized in the ASD case. The government is believed to have returned about $59 million to former ASD members.
Although Zeek says it is not offering a return on investment and instead is offering revenue-sharing program, the resultant payouts correspond to figures typically associated with HYIP Ponzi investment schemes. Like Zeek, ASD also claimed to be a revenue-sharing program.
The English version of the Portuguese article for Zeek, according to Google Translate, includes this line: “The easiest way to earn money is by posting at least one ad per day to earn a daily rebate.” (Emphasis added by PP Blog.)
ASD also called its payouts to members “rebates.” The affiliate article for Zeek in Portuguese includes this phrase: “uma bonificação diária.” The phrase, according to Google Translate, means “a daily subsidy” or “a daily rebate.”
In the ASD case, federal prosecutors said use of the word “rebate” was a means of masking the investment element of the ASD “program.”
Zeek also may have a presence in Portugal itself, according to text below a YouTube video (www.youtube.com/watch?v=w07uP5XF39w) in which former ASD pitchman Todd Disner appears. Disner speaks in English in the video, but others appear to be speaking Portuguese and a link below the video points to a website styled in part as zeekportugal.com. Other text at the YouTube site points to a YouTube site styled “parttimezeekrewards’s channel.”
Disner and former ASD member Dwight Owen Schweitzer sued the United States in November 2011, claiming that ASD was a legitimate business and that government undercover agents who joined ASD had a duty to identify themselves to ASD management. Schweitzer also is promoting Zeek, according to an online promo on a classified-ad site.
ASD’s Andy Bowdoin’s guilty plea and acknowledgement ASD was a Ponzi scheme were recorded in May 2012, about six months after Disner and Schweitzer sued the government. Both men are seeking to press forward with the lawsuit, despite Bowdoin’s guilty plea to wire fraud and Ponzi concession. The duo claims the seizure of information from ASD’s database by the government was unconstitutional under the 4th Amendment. A federal judge in Florida is expected to rule soon on whether the Disner/Schweizer claims can proceed.
Virality And Customer-Service Concerns
The article on Google News that claims that Zeek has 100,000 members in the Portuguese-speaking country of Brazil may speak to the virality of the “program” on the Internet. At the same time, it may explain — at least in part — why Zeek’s customer-support systems appear to be severely taxed if not broken, with Zeek instructing its members to go to their uplines for support. Requests for help through Zeek itself have backed up for weeks or even months. Some English-speaking members of Zeek have complained their support tickets were ignored or closed without explanation.
Having thousands or even tens of thousands of affiliates in countries whose citizens may not be fully conversant in English leads to questions about whether Zeek has both the resources and the infrastructure to support a global membership base, even as some Zeek members who may not speak English are sending the company one-time sums of up to $10,000 and monthly fees on top of that. It also leads to questions about whether Zeek can police its own global network of affiliates, whether Zeek has the capacity to adequately monitor claims about the “program” in languages other than English and whether Zeek can determine whether its U.S. domestic and international affiliates are operating in “teams” to engage in downline “stacking” designed to concentrate earnings in favored familial or local pools.
Like ASD, Zeek has instructed members not to describe the “opportunity” as an investment program. But BehindMLM reported yesterday that a Zeek member on YouTube was doing just that before catching himself and going into backtrack mode. From BehindMLM.com, quoting from a Zeek affiliate’s July 7 YouTube promo (italics added):
[8:58] Do it, I did it! Do it and you’ll see how quickly you can recoup your investm..recoup your investment-ahh, I’m sorry, it’s not an investment – your original purchasing of bids.
From YouTube sales pitch for BidsThatGive by Randy Jeffers. (Children's faces masked by PP Blog.)
EDITOR’S NOTE: It is true that far too many of the world’s children live in poverty. It also is true that children may become the objects of criminals who engage in human trafficking and that children are exploited in the sex trades. It is equally true that legitimate charities exist to combat these horrific situations and that one MLM “program” after another has tried in recent times to tug at the human heart and “marry” their “programs” to a purported cause. If you desire to improve the human condition for the masses of children, it likely is best to donate directly to a legitimate charitable organization, rather than joining a get-rich-quick scheme that says it is doing good work behind the scenes.
** __________________________________________ **
UPDATED 6:57 P.M. EDT (U.S.A.) WARNING: The following development in MLM La-La Land may be harmful to your gag reflex.
Zeek Rewards, the U.S.-based MLM “program” that wraps itself in the American flag, collects sums of up to $10,000 from participants, plants the seed affiliates can earn a return of between 1 percent and 2 percent a day while insisting it is offering neither securities nor an investment program, has a payout scheme similar to the AdSurfDaily Ponzi scheme and securities swindle, is married to a penny-auction site known as Zeekler that has told successful bidders for sums of U.S. cash that they can receive their money via offshore payment processors and preemptively denies it is a pyramid scheme, has some emerging, U.S.-based competition.
The name of the “program” is “BidsThatGive” — and it unabashedly tugs at heartstrings while at once asking prospects to imagine themselves behind the wheel of a grand automobile and feeling good because they also could become a “Contributor” for $10 a month, a “Guardian” for $50 a month, a “Benefactor” for $100 a month” or a Global Ambassador” for $250 a month and pile up mountains of cash while they’re displaying a social conscience.
Two of the core aims of the “program,” according to a nine-minute video promo running on YouTube, are to help impoverished children and children who’d been exploited and became “sex slave[s].” The prelaunch of BidsThatGive appears to have been timed to coincide with the Independence Day holiday period in the United States.
One of the assertions in a the YouTube video is that the “rewards” the company provides include “an orphanage and a school, church or hospital built in your name.” All of this apparently is possible because BidsThatGive has a “global business model” and employes a “concept” known as “PPSC,” which stands for Private Profit Sharing Company.
But before we get to the uber bizarre, let’s address the run-of-the-mill bizarre in this latest entry in MLM La-La Land.
BidsThatGive is a little bit Andy Bowdoin. Indeed, the emerging penny-auction company with an MLM-style compensation plan, claims it’s not an MLM program and tells prospects they’re “probably not going to sleep at night” once they understand the profit potential. Bowdoin, the infamous AdSurfDaily Ponzi schemer, told prospects that ASD was not a “network marketing company” and used largely the same line about all the sleepless nights excited prospects would experience.
Meanwhile, BidsThatGive is a little bit like AdViewGlobal (AVG), a collapsed 1-percent-a-day Ponzi autosurf federal prosecutors said in April 2012 had ASD ties. AVG once claimed that one of its desires was to save the rainforest through charitable contributions. BidsThatGive also resembles ClubAsteria, which offered outsize weekly returns ranging from 3 percent to 8 percent and told prospects that its charitable arm would provide relief to victims of the devastating earthquake in Japan last year. ClubAsteria also purported to provide aid to children and claimed its mission was to elevate the word’s poor out of poverty.
And BidsThatGive also resembles DataNetworkAffiliates (DNA), which tied itself to the U.S. AMBER Alert system for rescuing abducted children and said its “token system” could help prevent child poverty.
“Help DNA Feed A Million. OVER 1000 AN HOUR DIE. The DNA Token System Can Prevent This!” the company exclaimed.
Among other things, DNA used a YouTube video to trade on the name of Adam Walsh, the 6-year-old who was abducted and murdered in Florida in 1981. Adam’s father, John Walsh, became a prolific advocate for children and later became the host of the “America’s Most Wanted” television series.
DNA, which was associated with longtime MLM huckster Phil Piccolo, appears not to have helped a single abducted child or a single child living in poverty. Affiliates, though, tried to plant the seed that the DNA “program” was backed by Oprah Winfrey and Donald Trump. When DNA’s CEO resigned suddenly in 2010, the company waited nearly a week to announce the departure — and then misspelled the former CEO’s name.
BidsThatGive Operator
Randy Jeffers, an MLM aficionado, is the purported operator of BidsThatGive, according to promo videos on YouTube. Jeffers also presides over a nonprofit entity known as “Liberty Kidz,” which says its “[v]ision is to empower a child to be all that he or she is created to be, by providing homes, help and hope for discouraged, displaced and distressed children of the world.”
A similarly named Jeffers’ entity known as Liberty International LLC filed for bankruptcy in August 2010, listing about $1.94 million in debt and $641 in assets, according to federal records. The assets consisted of the balance of a business checking account.
What follows are comments from Jeffers in the nine-minute sales pitch for BidsThatGive on YouTube (italics added):
You know, there are so many terrible things that happen to children all over the world. Right now a little boy is dying of hunger, a little girl just got sold by her mother and is being forced into life as a sex slave.
Right now, children are being physically abused, and then there’s so many children that are just left by themselves and there’s no one there to love or care for them. I don’t know why bad things happen to innocent little children, but they do. But here’s what I do know: All of us can do something about it.
You see, that’s our No. 1 purpose. This company was founded to be a true partnership between those children, the children’s charities that it supports and its affiliates who make it all happen.
A ‘Founding Member’
One of the founding members of BidsThatGive is Glen Woodfin, according to 6:56 promo video dated July 2 and running on YouTube.
Woodfin describes himself in the video as an American who once moved to Brazil to be with his “multimillionaire” fiance who had 90 employees. Enjoying the “good life” on the beach while sitting around drinking “coconut milk” was fun for a while, but ultimately led to a desire to become more productive and to develop an online skill set. Woodfin ultimately discovered he had a talent for search engine optimization and that clients were interested in those services.
Glen Woodfin, who says he's done SEO for a Presidential candidate, does a little dance in his Bids That Give sales pitch on YouTube.
His SEO skills ultimately became so good that “I was hired by somebody running for President . . .,” according to Woodfin, who narrates the video. He did not identify the candidate.
Woodfin, however, goes to to explain that he was fortunate to know author and White House adviser Doug Wead, who wrote “All The President’s Children,” a New York Times Bestseller. (Wead’s Wikipedia entry says he advised GOP Presidents George H.W. Bush and George W. Bush.)
Apparently in the market for SEO advice, Wead turned to Woodfin, according to the video.
“He said, ‘Glen, we’ve got one of the Presidential children about to get married in three weeks, and we don’t have a website up. Can we get in there and get to the top of the search engines with it?’” Woodfin recalled.
That Presidential child, according to Woodfin, was Chelsea Clinton, daughter of former President Bill Clinton and U.S. Secretary of State Hillary Clinton.
Over the weekend Chelsea Clinton got married, Woodfin said, his SEO techniques on Wead’s behalf put a site known as ChelseaClintonWeddingWatch.com at the top of the rankings. (Chelsea Clinton was married on July 31, 2010.)
When NBC News anchor Lester Holt was interviewing Wead, Woodfin said, Holt mentioned the website Woodfin had put at the top of the rankings, apparently attributing the feat to Wead.
Neither BidsThatGive nor Jeffers is mentioned in the first three minutes of the Woodfin video. But at roughly the 3:03 mark, Woodfin announces, “I’m going in business with a gentleman named Randy Jeffers. Randy Jeffers started the No. 1, fastest-growing MLM of all time, called Destiny. They put in 1 million distributors in 18 months.”
Woodfin goes on to say that Jeffers recently called him and offered him a “founder’s membership” in BidsThatGive.
“While he’s talking, the hair start[s] standing up on my arm, and I got thrilled,” Woodfin recalled. “As a matter of fact, every time I get off the phone with him now, I’m just, ‘Thank you for putting this together.’ It’s based on penny auctions . . .”
It’s not known whether Woodfin contacted the White House, Wead, Clinton and Holt as a courtesy to let them know he’d be using their names in a YouTube pitch for Jeffers’ BidsThatGive. What is known is that namedropping is common in the MLM sphere — often without the knowledge of those whose names are dropped.
Although the Woodfin pitch did not imply that any of the celebrities or institutions mentioned in the pitch endorsed BidsThatGive, the implication was clear that BidsThatGive prospects who joined under Woodfin would gain access to an SEO expert who’d worked for a Presidential candidate and knew a Presidential adviser.
Neither the Jeffers’ video nor the Woodfin video referenced the Liberty International LLC 23-month-old bankruptcy filing. Nor did either video address any of the potential problems BidsThatGive could encounter from regulators.
Like the Zeek Rewards’ business model, the BidsThatGive model resembles that of ASD. In 2008, the U.S. Secret Service seized more than $80 million from ASD-related bank accounts, including $65.8 million in the personal accounts of Andy Bowdoin.
Court records showed that ASD was trading on the name of then-President George W. Bush. Analysts saw it as a transparent bid to sanitize the “opportunity” by trying to link it to the White House.
Major politicians from both sides of the aisle have seen their names used in promos for “opportunities” that proved to be Ponzi schemes.
Former President Clinton’s name and image were used by the Mantria Corp. Ponzi scheme. Clinton is a Democrat.
U.S.-based Xocai features attractive products in attractive packaging. The behavior of some of its supporters is decidedly less than attractive, something that is generating negative headlines in Europe and the United States.
From the Stepfordian cheerleading for the Zeek Rewards MLM “program” (and its purported nonguaranteed, nonreturn return of between 1 percent and 2 percent a day) to the mind-bending and long-running circus surrounding AdSurfDaily (1 percent a day with an operator who was a recidivist securities huckster and now has pleaded guilty in the ASD MLM Ponzi case) and JSS Tripler/JustBeenPaid (2 percent a day while fretting about “cruise missile” attacks on its server by purported criminal governments bent on destroying free enterprise), a certain sphere of the MLM universe has been serving up a symphony of the bizarre.
But what reportedly occurred in Norway recently in the MLM sphere not only is bizarre, but also makes some MLMers look like a gang of out-of-control, conspiring thugs and extortionists.
BehindMLM.com is reporting today on lawsuit threats and other hair-raising taunts directed at a Norwegian critic who raised questions about how the Xocai MLM “opportunity” was being presented in Norway.
Xocai is a brand of chocolate marketed by Nevada-based MXI Corp. MXI stands for Marketing Xocolate International Corp., according to the company.
No legitimate MLM company or MLM affiliate should tolerate or model this fantastically ill-advised behavior, which can have severe repercussions and is creating negative headlines for both Xocai and MLM.
It is the worst possible sort of “public relations” in “defense” of a company. Not only does it smack of a bid to force mob rule in the Internet Age and speak to issues of extortion, emotional blackmail and the disingenuous whitewashing of ill intent, it raises very real concerns about how a mob can undermine free speech and jeopardize the security of individual MLM critics and their family members, friends and associates.
It is worth noting that supporters of AdSurfDaily also threatened to sue critics. At the same time, it’s worth noting that a threat to sue an ASD critic for $40 million in July 2008 became part of a government series of exhibits in the ASD Ponzi case.
But the story about the negative PR Xocai suddenly is experiencing goes far beyond simple lawsuit threat reportedly made in its name. Indeed, the story of the lawsuit threat is gathering attention because of companion threats, even as company says it is trying to build a powerful brand.
Xocai says it recently obtained a trademark on the phrase “Healthy Chocolate” and seeks to become a business icon. These things are commendable, and the company has made its accomplishments and goals part of its PR stable.
“Approval of the ‘Healthy Chocolate’ trademark represents a significant milestone for MXI,” said Andrew Brooks, founder and chief operating officer of MXI Corp., in a May 21 news release on the company’s website.
“We’ve increasingly become known as the ‘Healthy Chocolate’ company, utilizing proprietary formulations of premium ingredients, along with cold-processing techniques, to retain the nutritional potency of cacao and açai berries,” said Brooks. “With this milestone, we now have another important tool to establish ourselves as the icon for Healthy Chocolate, both inside and outside our industry.”
We’re wondering today whether the company, which plainly states it seeks to become a business icon and clearly values its brand and its new trademark, finds the BehindMLM story disturbing enough to repudiate the behavior that is the subject of the story.
The PP Blog will provide space to Xocai should it choose to speak to the events in Norway. It could score a lot of PR points by denouncing those events and putting it on the record that it will not tolerate MLM thuggery in its name.
Every word of the BehindMLM story is worth reading. (Link below.)
The upshot is this: An apparent Xocai “defender” unhappy about a series of Blog reports planted the seed that the company would be filing a “a seven digit lawsuit” against the Blogger. The lawsuit, according to the “defender,” was backed by the majority of a trade association consisting of 9,000 Norwegian Xocai members.
But the menacing reportedly didn’t stop there.
In fact, according to the BehindMLM story, it devolved into a situation in which the “defender” planted the seed that other Xocai “defenders” would make trouble for the Blogger with his private employer. To maximize the chill, the “defender” made sure the critic knew that an intelligence-gathering operation was occurring behind the scenes and that Xocai supporters might just appear at his gate and at the gates of his loved ones.
Of course, the Xocai “defender,” a purported “association,” washed its hands of any suggestion its intent was anything less than noble. The seeds planted that the life of the Blogger, his personal security and the security of his loved ones could be ruined in an instant if he didn’t behave in a certain way — well, those things apparently were not to be viewed as threatening. It was just business, or so the disingenuous, vomitous talking points of the “defender” go.
Our view is that is just the latest example of something we’re inclined to describe as an evolving MLM radicalism. It is particularly dangerous because certain parts of the MLM universe are known to reflexively model anything that “works” with complete disregard for the consequences.
It reminded us of what happened to this police chief in Georgia earlier this year. The chief allegedly was targeted in an intimidation campaign by a “sovereign citizen.”
The bid to “defend” Xocai by trying to make a Blogger believe everything he valued in life could be gone in an instant is deplorable. It is ugly past comparison. Unfortunately it is hardly unique in the recent annals of MLM’s Thug Wing.
BULLETIN: Frederick Mann, the purported operator of the JSS Tripler/JustBeenPaid HYIP “program,” has acknowledged once again — this time by implication — that JSS/JBP pays members from funds received from new members. And Mann, who said the “program” had about a million members and acknowledged that nonmembers could not make purchases, has gone a step farther, saying that all payouts to members came from the funds of other members.
During the June 28 JSS/JBP call, however, Mann again returned to the claim that members were getting paid by other members.
“I was just curious about . . . those million members,” a caller on the June 28 JSS/JBP conference call asked Mann. “So, those payments coming in from the million members right now are just being redistributed to . . . the group of the million members. None of the money is coming into the program from other nonmembers and none of the money is going out of the program to other companies? It’s just circulating in the program. Is that right?”
Mann replied, “That’s essentially right, yes.”
Paying “old” members with funds from “new” members is the central element of a Ponzi scheme.
But Ponzi schemes often also exist within systems in which a “program” effectively pools the funds of all members and then makes disbursements from the common pool to members who qualify for disbursements. Prosecutors and regulators may describe such an “opportunity” as a money-cycling scheme. Such schemes typically feature either the “classic” Ponzi stucture (money flow from “new” to “old” members) or a structure that is less-than-classic but still is a Ponzi (money from “all” to “all” members) — with the money coming from common contributors of an enterprise that has no meaningful income streams (or, indeed, no income streams at all) beyond what members contribute.
AdSurfDaily, which became engulfed in Ponzi litigation in 2008 that led to a plea of guilty to wire fraud in May 2012 by ASD President Andy Bowdoin, had elements of both “new to old” and “all to all.” ASD had income streams external to the Ponzi, but they were insignificant. Court records show that ASD had no underlying, profitable business to sustain its advertised payout rate of 1 percent a day. Like JSS/JBP, ASD operated a closed system — and JSS/JBP purports to pay a daily return double that of ASD’s while also advertising an ASD-like commission structure.
JSS/JBP announced on its website last week that it had hired a law firm in Utah.
That announcement followed on the heels of a statement by Mann last month that JSS/JBP members perhaps should avoid words such as “compound” when presenting the “program.” Despite Mann’s suggestion, JSS/JBP features a video on its website that — within the first 11 seconds — advertises, “Daily Compounding to give yourself an Automatic Pay Raise!”
Internal inconsistencies are one of the hallmarks of HYIP fraud schemes.
