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Tag: AdSurfDaily

  • SPECIAL REPORT: Forex Firms Named In CFTC Sweep Used Same Offshore Processor As Alleged Imperia Invest Fraud; Name Of Man Linked To ‘Perfect Money’ Appears In Ponzi Forfeiture Complaint In Which Feds Tied Cash To International Narcotics Trade

    InstaForex, a company accused by the CFTC last month of targeting U.S. customers to purchase unregistered offerings and paying through Perfect Money, says participants can win this Lotus — but they have to pay to play by depositing at least $1,000 USD. Sweepstakes that require a purchase by participants are illegal in the United States.

    SPECIAL REPORT: UPDATED 2:27 P.M. ET (U.S.A., FEB. 9) Federal court and web records show that at least three of the 14 purported Forex dealers named defendants in a major sweep of unregistered firms last month by the Commodity Futures Trading Commission advertised that they accepted funds from Perfect Money.

    Perfect Money is a murky money-services business purportedly based in Panama that allegedly was used by a company that defrauded thousands of deaf investors by promising Visa debit cards and returns of 1.2 percent per day, according to federal records. The name of a man purported to be Perfect Money’s contact person in Panama City is referenced in federal court filings that tie money from the alleged EMG/Finanzas Forex fraud scheme to an international narcotics probe that led to the seizure of at least 59 bank accounts in the United States and the companion seizure of 294 bars of gold and at least seven luxury vehicles.

    The number of purported Forex dealers that allegedly accepted Perfect Money and were named defendants in the CFTC sweep could be higher than three because not all of the defendants publicly disclosed the precise mechanisms by which they accepted payments from U.S. customers.

    According to court filings and web records, some of the companies also advertised that they accepted funds from Liberty Reserve, another murky offshore processor, and even PayPal. PayPal’s Acceptable Use Policy specifically bans the use of its services for “currency exchanges,” businesses that support Ponzi and pyramid schemes and businesses associated with “off-shore banking.”

    PayPal says it requires “pre-approval” for any businesses “selling stocks, bonds, securities, options, futures (forex) or an investment interest.” Whether any of the businesses named in the CFTC Forex complaints received approval from PayPal to either use its name in promos or use its services to collect money is unclear.

    Records show (see paragraph 17 of SEC complaint) that Perfect Money payments were accepted by Imperia Invest IBC, the mysterious offshore company accused by the SEC in October 2010 of pulling off a spectacular fraud that fleeced at least 14,000 people of millions of dollars. Included among the Imperia victims were thousands of Americans with hearing impairments, the SEC said.

    Imperia was promoted on Ponzi scheme and criminals’ forums such as TalkGold, which also promoted at least two of the companies named defendants in the CFTC’s Forex sweep. One of the companies — InstaTrade Corp., doing business as InstaForex — is advertising on TalkGold that participants will have a chance in the months ahead to win a Lotus Elise, a sports coupe that carries a price tag of more than $50,000.

    To win the expensive car, however, investors have to pay to play, according to InstaForex. Sweepstakes that require a purchase are illegal in the United States, according to the Federal Trade Commission.

    InstaForex investors can qualify to win the Lotus by replenishing “the real trading account in InstaForex Company with 1000 USD or more during [the] Campaign period,” the company says in stilted English.

    “Participant has a right to register in the Campaign more than 1 account and raise his/her chances for the victory,” InstaForex continues in stilted English. “However, in case contest administration detects more than 100 accounts registered by one person, it reserves the right to decrease the number of accounts till (sic) 100.”

    Meanwhile, the name of Roger Alberto Santamaria del Cid — the purported contact person of Perfect Money — appears in federal court filings in the EMG/Finanzas Forex forfeiture case. The EMG/Finanzas case was brought last year by a federal task force based in Florida and alleges that tens of millions of dollars seized in Arizona as part of the probe were linked to the international narcotics trade. (See Paragraph 10 of the federal affidavit for the reference to del Cid, who is identified as the “Secretary” of EMG. Del Cid is referenced in domain-registration data for PerfectMoney.com as the contact person for Perfect Money Finance Corp.)

    Elements of the prosecution against more than $100 million in assets linked to EMG/Finanzas were brought by members of the same task force that brought civil and criminal prosecutions against Florida-based AdSurfDaily. Some of the members of the task force have experience working with the U.S. Drug Enforcement Administration (DEA), the U.S. Secret Service, the IRS and other agencies to reverse-engineer fantastically complex financial crimes.

    At least one of the investigators, according to records, was instrumental in bringing the successful money-laundering conspiracy prosecution against the e-Gold payment processor in 2007. The e-Gold case was brought in U.S. District Court for the District of Columbia. It resulted in guilty pleas announced on July 21, 2008.

    About two weeks later, the U.S. Secret Service raided ASD’s headquarters in Quincy, Fla. Federal prosecutors later alleged ASD was operating a Ponzi scheme that had gathered at least $110 million — and had ceased using e-Gold “shortly after” the e-Gold indictments were announced in April 2007.

    Federal prosecutors also alleged that 12DailyPro and PhoenixSurf — two autosurfs charged by the SEC with operating Ponzi schemes — also had used e-Gold. In December 2010, prosecutors said that ASD also had the ability to accept money from e-Bullion, yet-another processor accused of accepting and distributing Ponzi funds from various schemes.

    James Fayed, the operator of e-Bullion, was accused of arranging the July 2008 murder of Pamela Fayed, his estranged wife and potential witness against him. Pamela Fayed’s body was found in a California parking garage  just days before the ASD raid in Florida.

    Erma Seabaugh, known among ASD members as the “Web Room Lady,” used E-Bullion in November 2007 to transfer $10,510 to ASD, according to a forfeiture complaint filed in December 2010.

    On Jan. 26, the CFTC sued 14 purported Forex companies simultaneously, alleging that they were unregistered entities that were illegally targeting  U.S. residents. At least three of the companies — ForInvest (Perfect Money reference appears online), InstaTrade Corp. (see Paragraph 21 of CFTC complaint for the Perfect Money reference) and Kingdom Forex Trading and Futures Ltd. (see Paragraph 17 of CFTC complaint for the Perfect Money reference) — accepted Perfect Money, according to records.

    Two of the complaints — InstaTrade and Kingdom Forex — were brought in the U.S. District Court for the District of Columbia, the same venue in which the e-Gold case was brought in 2007. The case against ForInvest was brought in U.S. District Court from the Northern District of Illinois.

    Perfect Money advertised a relationship with at least two of the defendants named in the CFTC cases: InstaForex and FXOpen, according to web records.

    On its website, Perfect Money advertised its relationship with InstaForex and FXOpen, two companies accused by the CFTC of targeting Americans with unregistered Forex offerings. The FXOpen website now appears to be blocked from loading in the United States. It was not immediately clear if the site will load in other parts of the world.

  • EDITORIAL: On Club Asteria, FxPowerPro And DisasterClub — And What The U.S. State Department Could Do To Contain The Danger Posed By The Talk Gold Ponzi And Criminals’ Forum And Others Of Its Ilk Worldwide

    Let’s start with the chaos in Egypt this week. Protesters have streamed into the streets to demand that President Hosni Mubarak step down after three decades of autocratic rule. The government initially reacted by shutting down the Internet. As tensions rose, protesters, activists and journalists covering the events were beaten. Some of the protesters were killed.

    When a government shuts down the Internet and starts chilling its people and journalists, it’s for a reason: It does not want the world to witness events, and it wants journalists to know they’ll pay a price for trying to report anything other than the government line to the masses. State-run TV beamed images of tranquility, not images of unrest. When the chaos became impossible to sanitize or ignore, the government blamed events on impure thinkers and their media lackeys, planting the seed that “foreign agendas” were at work.

    It was the cue the loyalists needed to start threatening journalists with death by beheading. Fearing for their safety, the journalists abandoned the immediate turf — but not the story. They started reporting from “undisclosed locations.” The word was still getting out, just not the pictures in the degree desired.

    The immediate events in Egypt, of course, are much more serious than, say, the immediate events at the TalkGold Ponzi scheme and criminals’ forum. Even so, some of the parallels are striking.

    The Egyptian government, for example, is trying to control the message. So is the TalkGold forum, which wants the Ponzi shills and criminals who’ve involved the worldwide masses in one catastrophic fraud scheme after another to know they have a safe haven. TalkGold also wants the critics to know the Mods regard them as naysayers and trolls who can be “banned” without notice, rather like the Mubarak regime regards those muckraking reporters and their “foreign agendas.”

    It won’t work at TalkGold for the same reason it won’t work in Egypt: People still have eyes and ears and the ability to be discerning. There may be only one Tahrir Square in central Cairo to control, but “undisclosed locations,” voices, cell phones, cameras and reporters’ pads and tape recorders are in plentiful supply. They can’t be controlled.

    Egypt’s bid to control the message has resulted in a catastrophic PR problem on top of a political crisis. Meanwhile, TalkGold’s ineptitude, ham-handedness and arrogance has set the stage for its own PR disaster. You can read about it on RealScam.com, which sides with the afflicted masses, not the people who’d afflict the masses.

    While state-run TV in Egypt is airbrushing the dangers of autocratic rule and beaming images of tranquility as the country’s inhabitants try to figure out how they’ll get by for yet-another year on the wages of poverty, TalkGold is airbrushing the economic and security dangers of viral criminality and seeking to tranquilize (and recruit) the masses by using flowery language and even flattery to tell them that opening an account with an offshore payment processor and sending money to any one of hundreds of schemes is their ticket out of the ranks of hopelessness.

    Poster “Ken Russo,” for example, would have the people of Egypt — and the poverty-stricken people of the United States and other countries  — know that the latest “program” he is promoting is one of the “best” he has ever seen.

    One of “Ken Russo’s” current favorites is Club Asteria, which claims to “care” and contends that its “100,000 PLUS MEMBERS CAN’T BE WRONG.” Meanwhile, Club Asteria further claims to “Empower our Members” and to “help expatriates and immigrants to become more successful in their personal and professional lives and enable them to send money home to their loved ones.”

    Tugging at heartstrings, Club Asteria further claims that “[t]hrough our philanthropic efforts we make an immediate difference for struggling individuals, families and communities by focusing on improving nutrition, housing, health care and education.”

    That performing legitimate due diligence on Club Asteria is virtually impossible doesn’t seem to compute with “Ken Russo” and other affiliates. The mere fact the “program” is being promoted on TalkGold is reason enough to avoid it. Any business the company generates from TalkGold likely is radioactive. Club Asteria, for example, could find itself in possession of money that has flowed from fraud scheme to fraud scheme. Even if Club Asteria were legitimate, the fact it is being promoted on TalkGold puts it at one of the principal intersections of crime and fraud.

    About the only good thing about the Internet being down in Egypt this week while its people took to the streets was that “Ken Russo” and his fellow promoters couldn’t sell Club Asteria and other highly questionable “programs” to the disaffected Egyptian masses. (On a side note, one of the companies named in a Forex lawsuit by the U.S. Commodity Futures Trading Commission(CFTC)  just days ago announced on TalkGold that the shutdown of the Internet in Egypt had disrupted its ability to interact with Egyptian clients and other clients in the region. A poster purporting to represent FXOpen — under an underlined  heading of “Arabic Live Chat Disruption” — noted that “[o]ur hopes and prayers go out to the Egyptian people.”)

    And even as the Egyptian government is inciting violence against journalists — to the degree that the U.S. Department of State issued a special statement on the matter — the TalkGold forum is banning posters who speak ill of Ponzi and fraud schemes that are gathering untold sums of money, channeling cash to some of the darkest corners of the Internet and keeping people in financial bondage.

    Here is an idea for the Department of State and Secretary Hillary Clinton: Warn Americans — and other peoples of the world — about sites such as TalkGold. Mention them at a Congressional hearing. Instruct U.S. diplomats the world over to inform their host governments about the security and economic dangers posed by TalkGold and a sea of similar sites. Tell elected officials that the State Department is serious about monitoring sites that are keeping people in human bondage by spreading financial misery globally. Define Talk Gold as a global pariah, an enterprise without a state that would be proud to claim it. Inform the world regularly that the only form of diplomacy on TalkGold is robbery without a gun.

    TalkGold has been named repeatedly in court filings that identify it as a place from which fraud schemes are openly pushed. The ink on recent CFTC lawsuits that identify two of TalkGold’s paid Forex advertisers as the purveyors of unregistered offerings targeted at U.S. citizens is barely dry, and yet the unabashed cheerleading continues.

    The alleged AdSurfDaily Ponzi scheme, which also was pushed from TalkGold, gathered at least $110 million. It caught the attention of the U.S. Secret Service and resulted in civil and criminal probes that could put people in prison for decades, and yet the unabashed cheerleading continues.

    All the autosurfs prominently touted on TalkGold are just recycled forms of ASD, which itself allegedly was a recycled form of 12DailyPro, which the SEC smashed five years ago this month.

    It’s the same thing with Pathway To Prosperity, yet-another alleged scheme promoted on TalkGold that gathered tens of millions of dollars and could put people in jail for decades. All of the HYIPs promoted on TalkGold are just recycled forms of Pathway to Prosperity, which was busted by the U.S. Postal Inspection Service, and Legisi, which was busted by the SEC after the U.S. Secret Service infiltrated its operations by using an undercover operative. The state of Michigan also used an undercover operative in the Legisi probe.

    The best way to deal with TalkGold and similar sites is to tell the world that they promote global criminality and rank illicit profits above human rights and common human decency.

    Like Egypt in its current state, TalkGold is not about freedom — financial or political. It is about the institutionalization of corruption. If TalkGold were an oncological hospital, its doctors would be cheerleading for the cancer to spread and its nurses would be rooting for the highest death rate because intervening to cure the disease and comfort the afflicted would be bad for institutional and personal profits.

    A purported Forex program known as FxPowerPro currently has a 20-page thread on TalkGold. Among other things, FxPowerPro is claiming that “YOUR STABILITY IS OUR PURPOSE.” Its website appears to come from an editable script kit used by hundreds of sites globally, and it says it will accept any sum between $5 and $20,000. FxPowerPro proudly displays a link the the TalkGold forum.

    A few days ago an eagle-eyed PP Blog reader passed along some information about yet-another incongruous program known as “Disaster Club.” Disaster Club appears to be a new wrinkle on cash-gifting schemes. It purports to arrange member-to-member “grants,” asking visitors if they’d like to turn a “One-Time $100 into $17,700.”

    Bizarrely, Disaster Club uses a presentation by which it names four hypothetical members: “Job,” and “Cain, Abel and Eve.”

    “After joining the Club you will receive the name of your assigned member, and each week on Monday you are to send a grant in the amount shown in the grant schedule directly to that assigned member,” Disaster Club says.

    “Should you join the Club between Tuesday and Sunday, send your grant as soon as you receive your assigned name, do not wait until Monday,” Disaster Club coaxes. “Every grant thereafter will be sent according to the Monday schedule. To create a cash explosion from your home three members will each be given your name to send their $100 grants to ($100 X 3 = $300) and each stage you will keep the stated amount shown from the amount you received from the 3 members $100 + $100 + $100 = $300 you keep $50. Then according to the grant schedule shown, you are to send your grant directly to the same member (Job), and the same three members (Cain, Abel and Eve) will each send their grants directly to you.”

    Disaster Club purports to be headquartered in Florida and claims to be a “club that allows like minded members to pool their resources together to help the hurting and homeless victims of any Disaster in any State, or even help others anywhere in the world.”

    The “opportunity” does not appear to have its own thread at TalkGold yet, but there are plenty of disasters already waiting there for its readers. Just don’t expect to get a warm reception if you have a “foreign agenda” — you know, like those muckraking enemies of the Mubarak regime in Egypt.

    Although it’s not likely you’ll be threatened with beheading at TalkGold, you might get deleted if you tangle with “Ken Russo” and others and challenge readers to use their heads for something other than a hat rack.

    There is nothing decent about Talk Gold and its cancer-spreading cousins worldwide. Only the broadest public-awareness campaign can succeed against the threats they pose to the governments of the world and billions of Internet users globally — and the U.S. State Department could make a difference by describing the criminal forums as places from which human rights are set up to be trampled 24/7/365.

    Any true diplomat from any country worldwide who spent so much as 15 minutes on TalkGold could see the danger to countries, governments and citizens worldwide. The world’s diplomatic corps are uniquely positioned to do something the world’s law-enforcement corps cannot do: be at all places at all times.

    A sustained effort by the world’s diplomats to identify and monitor the fraud sites — and openly share the information with the people of the world — could go a long way toward containing a plague that only will mushroom into a catastrophe if left alone.

  • CFTC Alleges ‘Blatant Effort To Intimidate’ Investors Ripped Off In $50 Million Fraud; Asset Freeze Granted In Case Originally Filed Under Seal; Alleged Bid To Chill Customers Reminiscent Of Actions Taken By Some ASD Members

    UPDATED 12:21 P.M. ET (U.S.A.) In a case that outlines allegations of intimidation reminiscent of efforts undertaken by some members of AdSurfDaily to frighten investors, a Utah federal judge has frozen the assets of a Texas man and entered an order prohibiting the destruction of books and records.

    Robert J. Andres and an unincorporated firm known as Winsome Investment Trust of Houston have been accused of conducting a $50.2 million commodity-pool solicitation fraud and Ponzi scheme. CFTC originally filed the case under seal last week, alleging that the scheme affected at least 243 investors.

    “Recently, Andres personally contacted participants asking them to verify their investments purportedly as part of the process to return funds to participants,” the CFTC alleged. “In a blatant effort to intimidate, Andres is demanding that in order to obtain repayment, participants must acknowledge that they have not taken or assisted others in taking legal action against Winsome. If any participants indicate they have, the return of their funds would be ‘handled by an Attorney.’”

    Some members of AdSurfDaily, a Florida firm accused of operating a Ponzi scheme involving tens of millions of dollars, have sought in recent months to intimidate members who contemplated filing remissions claims with the claims administrator approved by the U.S. Department of Justice.

    An email received by some ASD members included a purported “legal opinion” and implied that ASD members who filed for restitution may face legal action from a “group” of ASD members.

    In the CFTC case, Andres also is accused of misappropriation and providing false statements to customers to cover up the fraud.

    Also accused with misappropriation and proving false statements to customers were Robert L. Holloway of San Diego, and a company known as US Ventures LC (USV) of Salt Lake City.

    Senior U.S. District Judge Bruce S. Jenkins has frozen the assets of all of the defendants in the case.

    Read the CFTC complaint.

  • URGENT >> BULLETIN >> MOVING: Accused Fraudster Andy Bowdoin Enters Defense That Could Provide Legal Cover For Autosurf Ponzi Schemes If He Wins Case; ASD Operator Claims Business Model Stands Up To ‘Howey Test’ Scrutiny

    Andy Bowdoin

    BULLETIN: In an argument that almost certainly will give comfort to operators of some of the most corrupt and insidious businesses on the Internet, AdSurfDaily President Andy Bowdoin has advised a federal judge that his company and business practices are legitimate because they stand up to scrutiny when the “Howey Test” is applied.

    Bowdoin, 77, made the argument despite the fact the government claims that he signed a proffer letter at least two years ago in which he acknowledged ASD was operating illegally and that the prosecution’s material allegations were all true. In 2009, Bowdoin acknowledged in his own court filings that he had made statements against his interests over a period of at least four days in the hopes of avoiding a prison sentence by cooperating with investigators.

    But Bowdoin now says criminal charges of wire fraud, securities fraud and selling unregistered securities as investment contracts brought against him last year “must” be dismissed. It is believed that hundreds — if not thousands — of autosurfs are operating over the Internet at any given time.

    Separately, Bowdoin filed a motion to transfer the case to the Northern District of Florida’s Tallahassee Division from the District of Columbia, saying that trying the case in Florida was the fair and most cost-effective thing to do. The government is expected to oppose Bowdoin’s bid to move the case from Washington to Tallahassee.

    U.S. District Judge Rosemary Collyer, who was assigned the civil forfeiture case against Bowdoin’s assets after the U.S. Secret Service raided ASD in August 2008 and ordered $65.8 million found in Bowdoin’s personal bank accounts ceded to the government after nearly a year and a half of litigation, also was assigned the criminal case. Criminal charges against Bowdoin were announced in December 2010.

    Although Bowdoin previously claimed Collyer was biased against him and sought unsuccessfully to have her removed from the civil case, he has not raised the issue of bias so far in the criminal case. Instead, he petitioned Collyer for an order that would remove the case from her courtroom and put it in the hands of a federal judge in Florida, arguing that most of the witnesses in the case resided in Florida and that hearing the case in Collyer’s court would force unnecessary costs and transportation burdens on both Bowdoin and witnesses.

    An affidavit signed by Bowdoin requesting the transfer was filed yesterday. It appears to have been notarized by Judy Harris of Tallahassee, whom some ASD members said operated the AdViewGlobal (AVG) autosurf with her husband, George Harris. George Harris is the son of Bowdoin’s wife, Edna Faye Bowdoin, and a Tallahassee home owned by the Harrises was seized in an ASD-related forfeiture complaint filed in December 2008.

    Both George and Judy Harris benefited from the ASD Ponzi scheme because a $157,000 mortgage on their house was retired with Ponzi proceeds, prosecutors said in December 2008.

    The Harrises also received a car valued at nearly $30,000 from the scheme, and the car also was paid for with Ponzi proceeds, prosecutors said.

    Florida records show that Judy Harris has been a licensed notary since at least October 2008. Why she would notarize a document for Andy Bowdoin when she, her husband and her mother-in-law were alleged to have been a beneficiaries of the ASD Ponzi scheme was not immediately clear.

    AVG, which purported to be headquartered in Uruguay and launched after the seizure of assets linked to Bowdoin and the Harrises, suspended payouts to members in June 2009. The surf blamed members’ greed for its problems. The name of Judy Harris also appears in a document filed in April 2009 with the Florida Department of State that canceled the fictitious registration of AVG, which also was known as the AV Global Association.

    Andy Bowdoin’s New Argument

    Prosecutors have not responded to Bowdoin’s new assertion filed yesterday that ASD can stand up to Howey Test scrutiny. A blistering response is expected in the days ahead because a ruling in Bowdoin’s favor to dismiss the case or an outright win by Bowdoin at trial could have grave economic and security implications for the United States.

    Autosurfs operate in the darkest corners of the Internet, fueled by corrupt promoters and scammers who position them as legitimate  “advertising” businesses that share revenue with participants. Untold sums of money — believed to be in the billions of dollars — have disappeared in recent years, and prosecutors say the enterprises operate as virtually pure Ponzi schemes.

    Purveyors almost certainly would view any win by Bowdoin as a mandate that legalized Internet-based Ponzi schemes and created a virtual license to collect vast sums of money and simply pocket it by claiming member payouts, which ASD called “rebates,” were not guaranteed.

    “[N]o guarantee or promise of any profits, any specific level of rebate payouts, or return on an alleged ‘investment’ occurred during the AdSurfDaily operation,” Bowdoin claimed. He also asserted that the allegations against him were Constitutionally vague and that none of the four civil cases brought against autosurfs — 12DailyPro, PhoenixSurf, CEP Holdings and the forfeiture case against ASD’s assets filed in 2008 — has clarified the legal issues.

    “As none of these actions has proceeded to final judgment, no judicial opinion has yet clarified whether payment of membership fees by advertisers into auto-surf businesses constitute unregistered sales of ‘securities,’ as alleged by the government,” Bowdoin claimed.

    The criminal charges “must be dismissed because the ad-surf business model employed by AdSurfDaily, Inc. and [Bowdoin’s] related businesses, as alleged in the indictment, cannot constitute an SEC-regulated ‘investment contract’ security as defined under the three-prong test established” by Howey, Bowdoin argued.

    The Howey Test is a threshold securities test and litigation benchmark from the 1946 U.S. Supreme Court decision in S.E.C. v. W.J. Howey Co. The decision spoke to the issue of what constitutes an “investment contract.”

    Bowdoin now claims the entire case against him is fatally flawed because he never sold investment contracts as defined under Howey.

    “[T]he Howey test,” Bowdoin argued, “determines whether a particular instrument or transaction is a prohibited, unregistered ‘investment contract’ by searching for the presence of three factors: ‘(1) the investment of money (2) in a common enterprise (3) with an expectation of profits to be derived solely from the efforts of the promoter or a third party.”

    ASD did not meet any of the three prongs of the Howey Test, Bowdoin argued.

    It was not an investment because ASD was an advertising company, not an investment company through which participants placed money at risk in anticipation of profit, Bowdoin argued. Therefore, he asserted, ASD did not meet the first Howey prong.

    Meanwhile, Bowdoin argued that ASD did not meet the second prong because participants did not place their money in a “common pool” put at risk in expectation of a profit.

    “[T]here was no ‘common enterprise’ at work here,” Bowdoin argued.

    And because ASD members had to click on ads and view them to get paid, they performed “actual efforts,” taking the third prong of the Howey Test out of play, Bowdoin claimed.

    “Here, the payment of both rebates and referral commissions were directly tied to the actual efforts of the advertisers,” Bowdoin argued.

    Prosecutors, though, asserted in the ASD forfeiture case that ASD told investors that rebates “will” be paid until investors received back 100 percent of the money they plowed into the scheme, plus a profit of 25 percent.

    Gerald Nehra, an attorney and expert witness for ASD in the forfeiture case, conceded under cross examination in 2008 that the ASD Terms of Service specified that rebates “will” be paid.

    Bowdoin’s most recent arguments also put him with odds with dozens of ASD members who claimed in court filings that the government had no “evidence” and no “witnesses.”

    In his filings yesterday, Bowdoin said he believed that the “vast majority” of the prosecution’s witnesses resided in Florida. He said he planned to counter them with witnesses of his own — as many as 136 — including George and Judy Harris, Rob Cefail of InTouch Marketing of Clearwater, and Tari Steward, who also provided Clearwater-based marketing services.

    At least 56 of ASD’s witnesses were ASD employees, Bowdoin said. The document was notarized by Judy Harris.

  • BULLETIN: CFTC Conducts Major Sweep; 14 Forex Firms Accused Of Illegal Solicitation Of U.S. Citizens; Actions Filed In New York, Chicago, D.C. And Kansas City

    BULLETIN: The Commodity Futures Trading Commission has gone to federal courts in New York, Chicago, the District of Columbia and Kansas City and simultaneously filed 14 lawsuits against Forex companies to enforce registration requirements and provisions of the Dodd-Frank Act.

    One of the lawsuits — one filed in the District of Columbia against a Nevada company known as Kingdom Forex Trading and Futures Ltd. that claims to be a “legally registered company in Belize and Nevis” — alleges that the firm was not registered with the CFTC but that U.S. customers were instructed to send money via wire and credit/debit cards.  Money also can be sent by Liberty Reserve, a payment processor favored by online financial schemes. Liberty Reserve says it operates from Costa Rica.

    The case against Kingdom Forex has been assigned to U.S. District Judge Rosemary Collyer, the same judge assigned to hear the AdSurfDaily autosurf Ponzi scheme cases.

    This morning, Liberty Reserve was advertising on its website a company known as FXOpen.com. FXOpen.com, according to the CFTC, is the website of a firm known as FXOpen Investments Inc. — yet-another of the defendants sued in the sweep.

    FXOpen is described in the complaint as “company of undisclosed origin” that claims “its headquarters is located at Ebene Heights No. 34, Cybercity Ebene, Mauritius.”

    It also claims to have “worldwide regional offices” in Cairo, Egypt; Paris, France; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Almaty, Kazakhstan; and Moscow, Russia, CFTC charged.

    “FXOpen’s websites, including www.fxopen.com, are hosted on servers” in the United States, CFTC charged in the complaint.

    The firm, whose website would not load this morning when visitors clicked the link at the Liberty Reserve page, is accused of directly soliciting U.S. investors and claiming U.S. law does not apply to it.

    “[I]n the ‘Forum’ section of its website, FXOpen representatives specifically solicit United States residents to open accounts with FXOpen, in part by advertising that potential customers in the United States can escape United States laws and regulations by opening accounts with FXOpen,” CFTC charged.

    “For example, on October 5, 2010, in response to a question regarding whether FXOpen could accept applicants from the United States after October 18, 2010 following recent CFTC rulings, an FXOpen representative answered with a post, stating, ‘Since we don’t have an office in the US, nor are we an affiliate of a US based broker, we are not bound by CFTC rulings. Rest assured we will be able to accept US clients for the foreseeable future unless a legal impediment appears,’” CFTC charged in the complaint.

    All of the companies named defendants in the sweep are accused of “illegally soliciting members of the public to engage in foreign currency (forex) transactions and that they are operating without being registered with the CFTC,” the agency said.

    Among the defendants are domestic and offshore companies.

    Here is the lineup of defendants in what the CFTC described as a major nationwide sweep:

    • EuroForex Development LLC, a Delaware LLC.
    • FIG Solutions Limited Inc., a Delaware corporation.
    • ForInvest, a Delaware corporation.
    • FXOpen Investments Inc., a Delaware LLC.
    • FXPRICE, a Delaware LLC.
    • GIGFX LLC., a Delaware company.
    • InovaTrade. Inc., a company with purported offices in Florida.
    • InstaTrade Corp., d/b/a InstaForex, a British Virgin Islands company.
    • InvesttechFX Technologies. Inc., a Canadian corporation located in Toronto.
    • J&K Futures. Inc., a company with purported offices in California and New York.
    • Kingdom Forex Trading and Futures. Ltd., a Nevada company.
    • Prime Forex LLC, a Delaware LLC.
    • Wall Street Brokers LLC, a Delaware LLC.
    • ZtradeFX LLC, a Connecticut LLC.

  • NEW HAVEN REGISTER: Feds, State Investigating Cash-Gifting Schemes In Connecticut; Grand Jury Convenes; State AG Called Gifting Programs The Business Of ‘Parasites’ In Statement About ‘The Women’s Gifting Table’ Last Year

    State and federal probes into cash-gifting schemes are under way in Connecticut, the New Haven Register is reporting.

    Investigators are concerned about so-called “Women’s Gifting Tables,” and women soon will be called before a federal grand jury, the newspaper reported.

    Similar probes are under way in Michigan. Seven women were charged with felonies last month, and the Michigan State Police issued a warning that gifting schemes targeting women were sweeping across the state.

    The Connecticut probe began more than a year ago, when then-Attorney General Richard Blumenthal warned that the schemes were illegal and doomed to collapse. Blumenthal is now a member of the U.S. Senate, and the gifting probe now is under the direction of George Jepsen, Connecticut’s new attorney general.

    Gifting is the business of parasites, Blumenthal said in November 2009, noting that “The Women’s Gifting Table” had been positioned as a “sisterhood” in which women provide a $5,000 gift to another woman in the network.

    Participants were encouraged to take cash advances on their credit cards and even to sell their cars and family heirlooms to grease the “pernicious” pyramid-scheme wheel, Blumenthal said.

    “As new women join the group, others move to higher ‘positions’ to eventually receive their own gifts totaling much more than their initial contribution,” Blumental said.

    “Gifting clubs take more than they gift — often ending in economic ruin for participants and their families,” Blumenthal said. “A gifting club is merely a fancy name for an old-fashioned pyramid scheme that bleeds newcomers to feed the parasites above them. Even as I investigate, I urge all Connecticut citizens to immediately reject and report such schemes.

    “Gifting clubs are the gifts that keep on taking,” he continued. “These fraudulent clubs exploit economic catastrophe — urging newcomers to sell their belongings, jeopardize their credit and assume devastating debt with deceptive and dangerous promises. Citizens facing foreclosure and job loss may risk everything for these ominous opportunities.

    “State and federal law prohibit all pyramid schemes because each one is a house of cards doomed to collapse,” Blumenthal said. “Any offer involving upfront money payments with promises of riches, but no product or service, should be considered suspect.”

    In August 2008 — in the days immediately following the seizure of tens of millions of dollars in the AdSurfDaily autosurf Ponzi scheme probe — some ASD members raced to forums in bids to recruit members for emerging cash-gifting schemes.

    Efforts to recruit members for other autosurf and HYIP schemes also continued after the seizure of assets in the ASD case.

    Some gifting schemes are targeted at people of faith and promoted as an opportunity to “pay it forward” to put cash in the hands of participants while positioning yourself also to get a pile of cash. The language of “pay it forward” increasingly has become a marker that a scam is under way.

  • ‘FRAUD CREEP’: The Two-Word Term That Explains How Crime Expands On The Internet To Affect Tens Of Thousands Of Victims At A Time

    EDITOR’S NOTE: Our definition of “fraud creep” — and suggestions on the context in which the term should be applied — appears lower in this story.

    First, some background . . .

    Investigators now are counting victims of massive, web-based fraud schemes tens of thousands at a time. Such scams pose both budgetary and logistical challenges to law enforcement, bankruptcy trustees and court-appointed receivers — and a single scam may take years to unravel. In recent court filings, federal prosecutors said they had amassed 500,000 pages of emails, 100,000 pages of banking records and 5,000 pages of other records as part of the AdSurfDaily Ponzi probe, which began in July 2008. The U.S. Secret Service raided ASD’s headquarters in August 2008.

    The ASD Ponzi scheme, which operated from Florida, may have defrauded 40,000 or more victims while gathering at least $110 million, prosecutors said.

    Meanwhile, in a civil case brought in Utah in October 2010, the SEC said Imperia Invest IBC defrauded more than 14,000 investors worldwide while gathering small sums that ultimately led to a haul of more than $7 million. Among the victims were thousands of deaf investors in the United States.

    Imperia claimed until late 2009 to be located in the Bahamas, but the Bahamian address was “fictitious,” the SEC said, adding that Imperia later claimed to be located in Vanuatu.

    But Imperia was “not registered to do business in Vanuatu and the address listed on its website appears also to be fictitious,” the SEC said.

    Despite the fact Imperia gathered money from thousands of Americans, “[n]either Imperia nor its securities are registered with the Securities and Exchange Commission,” the SEC said. “Imperia is not licensed or registered with the Commission, with any state, or with any Self Regulatory Organization.”

    In a separate civil case brought in Nevada last month, the FTC accused Utah resident Jeremy Johnson, I Works Inc. and other companies of orchestrating a massive, continuity-billing scheme that used 51 shell companies, maildrops and “straw-figures” as company officers “to keep the scam going.”

    The complaint names as defendants 10 individuals, 10 corporations and the 51 shell companies. Citing court documents, the Salt Lake Tribune reported that Johnson’s companies allegedly took in more than $350 million and ensnared 15,000 consumers a day at the height of the scheme.

    Customers were lured into purchasing “trial” memberships for “bogus government-grant and money-making schemes,” and then were “repeatedly” charged monthly fees “for these and other memberships that they never signed up for,” the FTC said.

    “[T]his scheme has caused hundreds of thousands of consumers to seek chargebacks — reversals of charges to their credit cards or debits to their banks accounts,” the FTC said.

    “The high number of chargebacks has landed the defendants in VISA’s and MasterCard’s chargeback monitoring programs, resulted in millions of dollars in fines for excessive chargebacks, and prevented the defendants from getting access to the credit card and debit card billing systems using their own names,” the FTC said.

    “To keep the scam going, the defendants tricked banks into giving them continued access to these billing systems by creating 51 shell companies with figurehead officers, and by providing the banks with phony ‘clean’ versions of their websites.”

    Like ASD’s Andy Bowdoin, Johnson denies wrongdoing.

    Making Sense Of It All

    Today the PP Blog offers a two-word term, contexts in which we believe the term applies and proposed definitions as a means of educating the public by describing a complex process of organized, international theft and reducing it to its essence. Understanding how online schemes proliferate — and the emotions they trade on and “scam signals” they send — may help consumers protect themselves from the fraudsters.

    fraud creep [frawd kreep]

    1. Principal definition: The tendency of a web-based financial crime undetected by law enforcement to expand across the Internet until it achieves critical mass, reaches the limits of a criminal organization’s ability to manage and forces investigators to respond. Such a crime may creep (advance slowly) to ultimately create thousands or even tens of thousands of victims globally.

    2. Associated definition: A criminal business model (fraud-creep enterprise) that includes a suggestion of exceptional earnings and generous recruiting commissions and the use of tailored messages that appeal to greed, envy, despair or anger. A fraud-creep enterprise also may be characterized by images of wholesome or enticing amenities designed to attract prospects to an illicit scheme whose purpose is hidden or undisclosed.

    3. Associated definition: A form of deceit (fraud-creep plan) employed by hucksters, particularly on the Internet, characterized by efforts to popularize an illicit pursuit by withholding critical information and demonizing market regulators. Profits are reaped by tapping into disillusionment and despair and creating a bogeyman or figure of blame to rationalize participation in a dubious or illegal enterprise. The bogeyman or figure of blame often may be the government, a branch of government, a law-enforcement or regulatory agency or government employee.

    4. Associated definition: A particular instance of such deceit in which an appeal is made to recruit holders of a particular political philosophy into a scam. Politicians and other public figures may be demonized in this form of fraud creep, which may include vicious name-calling or passive-aggressive slime. Images of success may be juxtaposed against images of people or entities cast as barriers to success. This form of fraud creep also may be accompanied by an effort to create marketplace sympathy and to sanitize and expand a fraud scheme by suggesting evil forces are seeking to prevent investors and eager entrepreneurs from creating wealth by erecting barriers or denying them access to the marketplace.

    5. Associated definition: One who practices fraud creep — i.e., a fraud creep.

    Usage example: As the economy struggles and mortgage foreclosures pile up, law-enforcement agencies nationwide are seeing more and more examples of fraud creep in which criminals succeeded in  making Internet scams go “viral” by luring thousands of prospects with images of amenities they’ll purportedly enjoy by registering for a program and sending money.

    Usage example: The ASD fraud-creep and Ponzi scheme gradually expanded to fleece more than 40,000 investors out of at least $110 million, investigators said, noting that participants were lured by the promise that they would be paid $5,000 if a family member or friend they recruited spent $50,000 on “advertising.”

    Usage example: Although Smith routinely bemoaned “Washington” while showing a video of himself behind the wheel of a Maserati parked outside a mansion in a driveway lined by exotic flowers as a groundskeeper toiled nearby, authorities say the investigation uncovered a classic case of fraud creep: Smith simply decided that registering with the SEC was for the “fools who don’t understand the Constitution.” The Maserati, authorities said, was a day rental — and Smith paid the groundskeeper $100 to let him film the driveway and mansion scenes on a Saturday morning when the owners were on the golf course.

    Usage example: The stage was set for fraud creep, authorities said, when the accused huckster — a recidivist who did not disclose his previous conviction for securities fraud in a $20 million scheme  — persuaded  unsophisticated investors that the FBI was forcing the best companies to move offshore and that the SEC and IRS were trying to destroy the middle class.

    Usage example: Authorities began to suspect fraud creep when Jones incongruously explained to investors that the United States was turning into both a “Nazi” and a “Socialist” state and making it impossible for honest “Main Street Capitalists to deliver the American Dream and do what the market does best: get poor people and illegals off Food Stamps and turn them into productive citizens.”  Although Jones, a U.S. resident, frequently talked about his “attorney” and the efforts he had undertaken to ensure his offshore company complied with all laws and regulations,  he refused to provide prospects the name of the attorney, claiming that a previous attorney had been hounded by callers who had sought to verify claims about the program.

    Usage example: Federal agents announced the arrest of yet-another alleged fraud creep today, saying the Florida man was either running or participating in multiple fraud-creep schemes, including autosurfs, HYIPs and penny-stock scams.

    Usage example: Fraud creeps on the fraud-creep forums were urging their marks not to file complaints with regulators or law enforcement — and not to contact the offshore payment processors that had processed all the Ponzi payments for the suddenly defunct HYIP. One forum fraud creep opined that the government would steal any remaining money. Another issued a dire warning that a receiver was sure to be appointed by the court and that the “greedy” receiver and “brain-dead” judge would conspire against the participants. Yet-another fraud creep ventured that the government would use the remaining fraud proceeds to help it finance its own Ponzi scheme: Social Security.

    Usage example: In court documents, federal authorities said fraud-creep forums such as TalkGold, MoneyMakerGroup and ASAMonitor were helping fraud creeps and fraud-creep schemes steal millions of dollars globally.

  • Two Days Before Remissions Deadline, ASD Members Receive Yet-Another Confusing, Highly Questionable Email That Suggests Victims Seeking Restitution Should Tell Administrator That Program Was Not An Investment

    Andy Bowdoin.

    Some AdSurfDaily members have received an email that appears to be attributed in part to Sara Mattoon, the embattled autosurf firm’s former spokeswoman. The most recent correspondence fractures facts, suggests the government has no credible witnesses or evidence in its wire-fraud and securities-fraud case against ASD President Andy Bowdoin and implies suggestions given to recipients are a legal “opinion” from a qualified expert.

    The date upon which the email was sent was unclear. At least one former ASD member reported receiving a copy of it today.

    Like previous emails, the content of the email appears to be a compendium in which Mattoon and perhaps others assembled information and passed it along as though it were fact.

    Among the claims are that federal prosecutors are creating victims out of thin air, that the government is engaging in trickery, that a pyramid-scheme case filed against ASD in Florida “was decided in ASD’s” favor, that “the government is in a very bad position to win a jury trial,” that prosecutors have “have no material tangible evidence and no credible witnesses to prove their case” — and that the remissions program is a “scam.”

    Contrary to the claims in the email, the pyramid case brought by the state of Florida was not decided in ASD’s favor. The case did not go to trial, and no judge ruled that the government’s case was fatally flawed. Moreover, no judgment was issued in ASD’s favor.

    State prosecutors said they dismissed the Florida civil case because two final orders of forfeiture already had been entered by U.S. District Judge Rosemary Collyer in civil litigation in federal court and that victims had a compensation remedy through the federal remissions program.

    The deadline for filing a claim through Rust Consulting Inc. — the official claims administrator — is Jan. 19. There have been repeated attempts by some ASD members to discredit Rust, which is under contract with the U.S. government to administer the program.

    A list of Florida victims already had been submitted to Rust, Florida prosecutors said. In October 2010, Florida confirmed it had dismissed the state-level pyramid case. Two months later, in December 2010, Bowdoin was charged criminally under federal law with wire fraud, securities fraud and selling unregistered securities. An investigation into his business practices has been under way since July 2008.

    Regardless, the most recent email suggests that government evil is afoot.

    “And we all need to be very pragmatic about this,” the email read in part, citing a purported “opinion” without providing the source of the opinion. “We purchased advertising legitimately. … Now it’ll be up to a real jury, and if ASD/Andy have lawyers that are even remotely competent, the verdict will be not guilty.”

    Bowdoin was arrested Dec. 1. Federal prosecutors accused him of operating a Ponzi scheme that had gathered at least $110 million. Bowdoin, 76, is free on bail.

    In the email, the criminal charges against him were pooh-poohed, apparently by the author of the “opinion.”

    “But the bottom line on all of this is twofold,” the email read. “First, the government is in a very bad position to win a jury trial – they have no material tangible evidence and no credible witnesses to prove their case. Second – all these ‘scams’ including the Rust group are ploys, most likely instigated by the government to try and turn up ‘witnesses’ who will say they have been victims of investment fraud. But those who will say that can be torn apart by the ‘Terms and Conditions’ they agreed to during Defense cross-examination. The other witnesses – the government agents (or informers) can also be torn apart during cross examination. The vote by the jury must be unanimous in a felony case BEYOND A REASONABLE DOUBT and the government knows that they simply don’t have the evidence or the witnesses to get by that.”

    Repeated claims have been made by some ASD members for months that the government lacked both witnesses and evidence. Despite the claims, the government announced last week in court filings that it had gathered at least 500,000 pages of emails and at least 100,000 pages of bank records as part of the probe.

    Meanwhile, prosecutors said the U.S. Secret Service had identified at least 40,000 potential ASD victims.

    Like a previous email, the most recent email also suggested that ASD members should use the remissions form to claim ASD was not an investment program. Such an approach potentially could result in a situation in which participants disqualified themselves from receiving restitution from assets seized in the case by the U.S. Secret Service.

    Prosecutors alleged that ASD was an investment business masked as an advertising company.

    Even so, some ASD members are sticking with an assertion that ASD was a legitimate advertising firm.

    “If you feel that you want to fill it out, [the claims form] must be mailed to [Rust] by 1/19/11,” the email read. “If you do choose to fill it out, then where your signature would be, you may want to write the words ‘See Addendum.’ Then attach a statement something like this (in your own words):

    ‘I am very clear that this was not an investment and that I was purchasing advertising. And, since the government shut down my advertising company and I therefore did not get the advertising I paid for, I would like to get my advertising money back from whomever is holding it now.’

    “Sign it and send it in with the forms supplied by Rust,” the email advised recipients.

    At the same time, the email solicited prayers and cautioned against working with AnShell Financial Services, a company that says it is helping some ASD members fill out the remissions form for a fee.

    Rust, the official claims administrator, has specifically disclaimed any affiliation with AnShell and has urged caution in dealing with the firm, which is approved neither by Rust nor the government.

    Some ASD members appear to be as paranoid about the work AnShell is doing for certain members as they are about the government and Rust.

    “The form you received from Sheldon Drobny, CPA/AnShell Financial Services is someone who was retained by a group of ASD/Golden Panda members to get their money back from the government,” the most recent email read. “This is the company that is holding the conference calls. If you feel you want to participate, be careful here also. Use the same attitude there: you didn’t make an investment; you purchased advertising. There is danger that this could be used against ASD also. Pray about it and decide for yourself if you want to participate.”

    The email ended by citing the name “Sara” as the sender.

    “That’s all I have for now,” the email concluded. “I am still very swamped caring for my husband and I am not a lawyer so I can’t really advise you further and answer any questions. Hope this is helpful. I still haven’t been able to process all the emails I received from ASD members in the Fall of 2009, giving me their change of e-address, so please pass it on to all ASD members you know. God’s Blessings, Sara.”

  • EDITORIAL: ASD By The Numbers: Why America And The World Should Be Shocked — And Why Serial Autosurf And HYIP Promoters Should Be Prosecuted

    ASD's Andy Bowdoin.

    UPDATED 12:04 P.M. ET (U.S.A.) In court filings this week in the AdSurfDaily autosurf Ponzi scheme case, federal prosecutors in the District of Columbia revealed a series of jaw-dropping numbers. The biggest of these is 500,000 — the number of pages of emails gleaned so far in the investigation, which began in July 2008.

    Because prosecutors put the qualifier “at least” on the already-staggering number, it is clear the number actually could increase. Each of the pages is subject to the discovery process, meaning that attorneys from both sides and perhaps the court itself faces the monumental challenge of sifting through at least half a million pages of scheme-related correspondence.

    Other big numbers in the alleged $110 million ASD Ponzi include 100,000, the number of pages of bank records, and 5,000, the number of pages of documents that emerged after the U.S. Secret Service searched ASD’s office in Quincy, Fla., and the home of company president Andy Bowdoin.

    To date, investigators have identified 40,000 potential ASD victims. This number also could grow because there is reason to believe that “there may be members who provided funds to ASD but whose information ASD did not enter into its database,” according to prosecutors.

    ASD’s database included information on 97,000 members. Some participants have claimed ASD actually had 120,000 members. Regardless of the final number that emerges, ASD created victims by the tens of thousands, including victims who do not live in the United States, prosecutors said.

    The import — and the danger of these numbers — is that ASD is only one autosurf. There may be hundreds if not thousands of autosurfs operating in the world at any one time, along with hundreds or thousands of HYIPs. Like other autosurfs and HYIPs, ASD was promoted on Ponzi forums such as TalkGold, MoneyMakerGroup and ASA Monitor. The Ponzi pitchmen love American money, and commission-grubbing American salespeople and serial promoters who play dumb to line their pockets at the expense of their fellow countrymen specialize in spreading the misery globally.

    In May, the PP Blog reported on criminal charges filed against Nicholas Smirnow, the alleged operator of the Pathway to Prosperity (P2P) Ponzi and HYIP scheme. The numbers that have emerged from that alleged scheme are equally stunning: $70 million fleeced from 40,000 victims in 120 countries from “all of the permanently inhabited continents of the world,” according to the U.S. Postal Inspection Service.

    The criminal complaint filed against Smirnow specifically references the TalkGold, MoneyMakerGroup and ASA Monitor Ponzi forums — the same forums from which ASD and countless other schemes have been promoted.

    Legisi, yet another alleged scheme pitched at the forums, also produced some big numbers. Among them are $72.6 million fleeced from at least 3,000 victims. Matthew Gagnon, one Legisi pitchman, netted $3.8 million alone from the scheme, according to the SEC.

    So, in just the three alleged schemes referenced in this column — ASD, P2P and Legisi — the numbers shape up like this: at least $252.6 million gathered from at least 83,000 victims. If the P2P and Legisi cases are shaping up like the ASD case from the standpoint of paper production, investigators, attorneys from both sides and the courts may have to go through more than a million pages of documents and corresponding bank records to make sense of it all.

    Meanwhile, the wink-nod, serial promoters continue to ply their trade on the Ponzi boards — all while the U.S. and world economies are trying to navigate the choppiest waters since the Great Depression. While the serial promoters are lining their pockets at the expense of Moms and Pops from virtually every corner of the earth, they are anticipating the danger signs consistent with the implosion of their currently favorite Ponzi — and they are preparing their next round of lies to protect their illicit profit pipeline and explain away the problems that inevitably will emerge.

    Some of the professional criminals will tell their marks that it is their duty to be patient when Ponzi payments slow down. They’ll add that problems affect all enterprises regardless of size, and that it’s not unusual for payment bottlenecks to occur. They’ll explain that it likely is a problem with software or the need to acquire a new server to accommodate traffic. After all, they’ll say, “growing pains” are something to celebrate because they signal the success of the enterprise.

    And the serial criminals also will talk about a doubting recruit’s duty to be loyal to the enterprise. After all, they’ll explain, the company is doing the right thing by acquiring the equipment and manpower needed to streamline operations and thus return to a normal payout schedule.

    While the professional Ponzi criminals are explaining all of this, investors will become further separated from their money before the final round of excuse-making begins. Investors will be cautioned not to contact the authorities and told not to contact the payment processors. After all, the serial pitchmen will explain, if the authorities seize the cash or if the payment processors freeze the accounts, no one will get paid.

    When the scheme ultimately collapses, some of the serial criminals will shrug their shoulders and feign surprise. They’ll explain why they had every reason to believe that this one was different, that they’d been assured by the Christian operator it was different. No matter, they’ll say, perhaps positioning themselves as people of faith. Recruits who invested more than they could afford to lose have only themselves to blame, they’ll claim. (This is if they call it “investing” at all; many serial criminals avoid that word like the plague. After all of these years and all of this Bible-thumping, they still apparently believe that it’s possible to skirt securities laws by avoiding the word “investment” and calling it something else.)

    Then they’ll unapologetically move on to the next scam. After all, they’ll explain, they have a right to make a living. Some of them will explain that the government, which refuses to see the beauty of the autosurf and HYIP models, is to blame. Along the way they’ll create some clone promoters, and the clones will multiply. The clones will add to the purported, pro-Bible (and antigovernment chorus) — and before long, investigators trying to reverse-engineer a single case will be sifting through 500,000 pages of emails, 100,000 pages of bank records and 5,000 pages of records created as the result of the execution of a search warrant or as a result of actual documents seized.

    Agents then will begin the mind-numbing and time-consuming process of identifying victims by the tens of thousands.

    Some of the victims will lose their homes because they borrowed against their equity to take advantage of “bonus” ad packs and to maximize their “earnings” through “compounding.” Others will have lost savings set aside to educate their children. Still others will have lost their life savings and money set aside for retirement.

    Many of the people who created all the pain will sprint back to the Ponzi forums — and the government will be left to clean up the colossal mess. The Ponzi pitchfest is in constant motion as property values decline in neighborhood after neighborhood, driven by the foreclosures glut. The Stepfords among the promoters will write their Congressman or Senator or perhaps the Inspector General at the Justice Department.

    They’ll more or less say that it would be in the interests of America if the Congressman or Senator or Inspector General would see fit to fire all the prosecutors and agents who made these unseemly events occur.

    And then they’ll gather up their lists of suckers and try to recruit them into yet-another MLM, autosurf or HYIP nightmare. This they will call “freedom.” Some of them will be angry. Some of them will write rambling diatribes on forums. Invective will be part of the diatribes. Some of them will call public officials “Nazis” and “Socialists,” perhaps even in the same fractured paragraph. Some of them even will try to sue the government or have the prosecutors and judges charged with crimes. They’ll talk about “treason” and high crimes against the Constitution.

    What they will never do is make any sense.

    It is impossible to imagine that any government agency has the resources to take down all of the corrupt MLMs, autosurfs and HYIPs. But one can imagine a systematic process by which the government identifies the serial promoters and plans a litigation strategy from which will emerge the “shot heard round the world” of corrupt online investment “opportunities.”

    That day cannot come soon enough — and the numbers demand it: more than $250 million gathered from victims of just the three alleged schemes referenced on this page, perhaps 1 million or more emails and other documents produced by the investigations, at least 83,000 victims from virtually all corners of the earth, an untold number of agents/investigators from multiple government entities forced to sift though monumental piles of evidence.

    It is clear that wealth is being drained by the billions. It is equally clear that vast sums of money have gone missing in the Age of Terrorism.

    Clearest of all, however, is that the corrupt MLMs, autosurfs and HYIPs cannot thrive without their greedy and dangerous promoters — and that highly public lawsuits and early morning raids designed to hold the wink-nod Ponzi pitchmen accountable would send an unmistakable message that pain is in your future if you promote these criminally toxic businesses. Serial promoters deserve the same treatment as mid-level drug dealers.

    No economy can thrive if a single case among thousands of potential cases is producing 500,000 pages of emails and creating 40,000 victims while consuming tens of millions of dollars — and if “shell companies,” the “shadow banking system” and wink-nod, serial promoters are driving the wanton criminality and letting the cancers metastasize globally.

    Here’s hoping such an operation aimed specifically at corrupt MLMs, autosurfs and HYIPs already is under way.

  • BULLETIN: 40,000 Potential Victims Identified So Far In ASD Case; Government Says Autosurf Firm May Not Have Entered All Names In Database

    Andy Bowdoin

    BULLETIN: Federal prosecutors now say that a Florida company whose operator is accused of running an international Ponzi scheme may have defrauded 40,000 or more victims and may not have entered all the names of people who gave it money into the firm’s database.

    Andy Bowdoin, the president of AdSurfDaily, was indicted last month on charges of wire fraud, securities fraud and selling unregistered securities. Prosecutors now have revealed in court filings that the U.S. Secret Service seized ASD’s database during the probe, which began in July 2008.

    ASD’s database contains 97,000 names, including the names of members who joined for free, prosecutors said in a motion that asks U.S. District Judge Rosemary Collyer to approve a plan by which websites would be used to help locate additional victims and keep victims in general informed about developments in the case.

    “The government is not certain that this list is a complete list of all people who provided money to ASD and who potentially lost their money,” prosecutors said. “It appears from the investigation that there may be members who provided funds to ASD but whose information ASD did not enter into its database.”

    Some ASD members claimed the company had as many as 120,000 members.

    To date, prosecutors said they had identified “approximately 40,000 known potential victims.” The victims’ list includes “individuals who contacted the U.S. Attorney’s Office directly and identified themselves as losing money in their ASD investment, members who agents identified as potentially losing money with ASD and Golden Panda Ad Builder members.”

    Golden Panda was the purported “Chinese” option for ASD members. It was operated by Clarence Busby of Georgia, according to court filings.

    Bowdoin, prosecutors said in their motion, was operating ASD “essentially as his own piggy-bank.”

    Beyond that, prosecutors said, “as far as the Government is aware, there is no available accurate compilation” of all individuals or entities that lost money in the scheme.

    All victims have the right to be “reasonably heard” and to be kept up to date on proceedings, but the sheer number of ASD victims and a lack of records makes it “impracticable to give individualized notice to each potential victim.

    A web-based system of notification through email and a government site and the remissions site set up by Rust Consulting Inc. of Minnesota will help victims stay informed of their rights, prosecutors said in their motion to Collyer.

    “In light of the fact that Bowdoin operated an Internet based scheme, it is reasonable to assume that victims will have access to the internet and will be able to easily access information on the government’s website,” prosecutors said. “Moreover, the government will include on the remission website a link to the U.S. Attorney’s Office’s website for victims seeking information about public proceedings in the criminal case.

    “The Government respectfully submits that the proposed notice procedure is reasonable to give effect to the rights of the potential victims in this case, and requests that the Court enter the proposed order,” prosecutors said.

    Similar accommodations have been made in other securities-fraud cases, including the Bernard Madoff case, prosecutors said.

  • Georgia Fraud Case Had ASD-Like Elements; Woman Sentenced To 60 Years For Scheme; Cynthia O’Tyson Was Recidivist Offender; TV Camera Captures Sentencing

    Andy and Faye Bowdoin posed for a picture with a Gadsden County (Fla.) Chamber of Commerce official in 2008. Andy Bowdoin later was accused of operating a massive Ponzi scheme. In a separate case in Georgia this week, Cynthia O'Tyson was sentenced to 60 years in prison for a scheme in which she reportedly used contacts at her church and the local Chamber of Commerce to give her scheme an air of legitimacy.

    A Georgia woman with a history of stealing and being placed on probation after serving short stints in custody now has been sentenced to 60 years in prison.

    Cynthia O’Tyson’s sentencing was captured in Superior Court by WRDW-TV, the CBS affiliate in Augusta. The station led its 5 p.m. and 6 p.m. newscasts yesterday with reports about the sentencing, noting that O’Tyson had scammed friends and members of her own family and community into believing she was a supplier of discount electronics.

    Meanwhile, the Augusta Chronicle reported that O’Tyson even had scammed the families of local officials and used members of her church and the Columbia County Chamber of Commerce to give the scheme an air of legitimacy.

    The O’Tyson scheme was reminiscent of the alleged AdSurfDaily Ponzi scheme in Florida. Federal prosecutors said ASD President Andy Bowdoin traded on religion. On July 2, 2008, Bowdoin, who was implicated in securities swindles in Alabama during the 1990s and also had a business partner implicated in a separate swindle during the 1990s, addressed the Gadsden County Chamber of Commerce.

    Initially pleased that ASD, which positioned itself as a jobs-creator and economic turbine, had chosen the struggling small town of Quincy, Fla., as its home, the Chamber touted ASD and the company.

    But the Chamber later called the FBI when questions were raised about Bowdoin’s purported “advertising” firm, according to federal court records. The U.S. Secret Service later described ASD as a massive Ponzi scheme that had gathered at least $110 million. Bowdoin described himself as a “money magnet” and asked members to imagine ASD profits just “flowing” to them after purchasing “ad packs” from the company and committing themselves to have an “attitude of gratitude” with God.

    O’Tyson’s scheme also was reminiscent of the much-larger scheme operated in Minnesota by convicted Ponzi swindler Tom Petters. Petters’ investors believed he sold discount merchandise to Big Box retailers.

    Although Petters’ crime was much larger than O’Tyson’s merchandise scam, he was sentenced to 10 years fewer than the Georgia woman. O’Tyson called her bogus company “Wholesale Liquidators.”

    See the O’Tyson report (video/print) on WRDW-TV.

    Read the O’Tyson sentencing story in the Augusta Chronicle.