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Tag: AdSurfDaily

  • DATA NETWORK AFFILIATES: License-Plate Data A ‘Loss Leader’; Company Statements Will Prove To Be ‘More Than 100% Accurate’

    Using language with which followers of the long-running AdSurfDaily Ponzi/pyramid-scheme saga will be familiar, Data Network Affiliates (DNA) has declared its license-plate data program a “loss leader.”

    Meanwhile, the company declared it has “no competition” and that members will come to understand its advertising claims are true once it rolls out three-fourths of its program.

    “NO ONE or NOTHING could even come close to where we are or where we are going,” the company said in an email laced with sentence fragments and fractured syntax. “When 75% of The D.N.A. Opportunity is fully released. You will know why this statement is more than 100% accurate.”

    DNA, a multilevel-marketing (MLM) company, did not say how a statement could be more than 100 percent true. Nor did the company explain why members would not be able to determine it was telling a truth that exceeded 100 percent until 75 percent of the program was released.

    At the same time, DNA said “it expects” to pay out more than “$100,000” in “PRO” commissions April 5, adding that the addition of “3rd party” affiliates made it “believe” commissions would “grow to over $1,000,000 (one million weekly).”

    Although DNA previously said it has recruited tens of thousands of affiliates for its “free” program that asks members to write down license-plate numbers for entry in a database as a means of helping the “Amber Alert” program recover abducted children, the company now suggests its data may not be all that useful.

    “Currently the #1 benefit for D.N.A. collecting such DATA is the small and hopeful chance that it may help save a child or prevent a crime,” the company said in the email.

    In a previous email, DNA acknowledged it had erected barriers that made it more time-consuming for “free” members to enter information in the database. The barriers can be removed by paying the company a one-time fee of $97 and a monthly fee of $29.95 for the right to use what the firm describes as a “PRO” data-entry module.

    The “PRO” module, DNA says, makes “DATA ENTRY simpler, easier, faster and less time consuming.”

    DNA noted that it was selling other products for which it would pay commissions, including a “$35 to $50 bottle of NUTRITIONAL JUICES at a $10 price” and a “$35 to $50 bottle of LOTIONS & POTIONS at a $10 price.”

    In a separate email, DNA said members who came into the company for free because of the license-plate program have nothing about which to complain.

    “We receive over 50 e-mails a day saying why did you change from “FREE,’” DNA said. “FACT we have not changed anything from our original ‘FREE’ opportunity except to go from up to SIX LEVELS OF PAY ‘TO’ up to TEN LEVELS OF PAY.

    “A person may still sign up as a FREE Affiliate and enter their TWENTY CAR TAGS,” DNA continued. “It will take 5 Minutes per Tag entered since advertising partners is our main source of income from DATA ENTRY. (PRO Affiliates create other sources of income so their per tag data entry time is only 30 to 60 seconds per car tag.[)]”

    DNA encouraged members to “be positive.”

    Details about how DNA has tied its free data-entry program to “advertising” partners are unclear. Also unclear is why the original group of thousands of members weren’t told when they were signing up for free — while perhaps relying on DNA’s assertion it could help the Amber Alert program — that the company intended to treat the data-entry program as a “loss leader” and make it harder, not easier, for free members to enter data.

    Tens of thousands of free affiliates registered for DNA before the “PRO” data-entry module, which comes with an up-front cost of $126.95 and a monthly cost of $29.95 thereafter, was announced.

    Using a largely all-caps presentation, DNA said the sky was the limit.

    “D.N.A. is so much more than CAR TAG DATA,” the company said. “Many have said it but only one will do it. We will do in 3 to 5 years what took AMWAY 50 YEARS. Here is a partial list of current and future opportunities with D.N.A.

    “LOCAL, NATIONAL & INTERNATIONAL ADVERTISING; GOLD FOR CASH; CELL PHONES FOR CASH; LAPTOPS FOR CASH; DIRECT TV; THE DISH NETWORK; SECURITY SYSTEMS; CREDIT REPAIR; DEBT REDUCTION; INTERNET SALES SYSTEMS; 1000’s OF DISCOUNT PRODUCTS; 1000’s OF DISCOUNT SERVICES; ONE STOP SHOPPING; HEALTH BENEFITS; DENTAL PLANS; LIFE INSURANCE; WHOLESALE AUTO BUYING; WHOLESALE TIRES; DISCOUNT DRUGS; TRAVEL and MUCH MORE…”

    In the context of MLM, “loss leaders” can be dicey. In August 2008, federal prosecutors referenced AdSurfDaily’s use of the “loss leader” claim in a forfeiture complaint that seized more than $65.8 million from the bank accounts of ASD President Andy Bowdoin.

    “In a further attempt to make Bowdoin’s business mode sound legitimate, [ASD attorney Robert] Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.

    “[Undercover agents] have not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers to ‘earn their money back, plus a little more.’”

    DNA has not been accused of wrongdoing. Whether the company has sufficient revenue streams to defeat a pyramid challenge — if one emerges — is unclear. Also unclear is the number of affiliates who signed up for free and then opted for the “PRO” data-entry module.

    What is clear is that DNA knows the famous Emma Lazarus sonnet, “The New Colossus,” which is mounted on the pedestal of the Statue of Liberty. The company has its own take on it:

    “Give D.N.A. your MLM tired, your MLM poor, your MLM people who are sick and tired of being sick and tired, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore,” DNA said in its email to members. “Send all of these, all who could not make it where they were, the homeless, tempest-tossed to D.N.A. as we lift our golden opportunity for free to all.”

    Another MLM company in the license-plate recording business — Narc That Car — is the subject of an inquiry by the Better Business Bureau in Dallas to substantiate advertising claims and determine if the company is using a pyramid model to pay members.

    The BBB now notes that Narc That Car is using the name “Crowd Sourcing International” — or “CSI” for short.

    Other names associated with Narc That Car include Narc Technologies Inc. and National Automotive Record Centre Inc.

  • ANALYSIS: Another Troubled Autosurf, Another Bizarre PR Approach; Some INetGlobal Supporters Attack The Messenger

    Steve Renner

    If you follow news about the so-called autosurf “industry,” the mind-boggling PR approach by some supporters of Steve Renner’s INetGlobal is apt to remind you of the bizarre approach employed by Florida-based AdSurfDaily and some members of the now-defunct Surf’s Up forum.

    If you’re new to the ongoing saga of AdSurfDaily (ASD), the developing story about INetGlobal and the autosurf “industry” in general, ASD’s case is instructive. Although ASD claimed to be a professional advertising and communications firm, one of its first efforts to counter the federal government’s allegations was to compare prosecutors and the U.S. Secret Service to “Satan” and the 9/11 terrorists who killed nearly 3,000 people in New York.

    ASD President Andy Bowdoin later asked for an evidentiary hearing in the civil-forfeiture case against the company’s assets  — the same sort of case INetGlobal is facing — but Bowdoin then took the 5th Amendment, as did his chief executive officer.

    In a comment that will live for the ages, one ASD supporter explained that Bowdoin, who was running the company with 10 bank accounts in his personal name and let it slip that ASD had $1 million in an account under a different name on the Caribbean island nation of Antigua, was “too honest” to testify.

    One of the issues in the ASD case was the Ponzi issue — specifically, whether ASD had sufficient revenue to pay members “rebates” without resorting to taking money from new members to pay old ones. ASD’s evidentiary hearing lasted two days. The company did not submit an audited and certified balance sheet to refute the government’s Ponzi claims.

    Instead, after the hearing — while ASD was awaiting a decision by U.S. District Judge Rosemary Collyer on whether it was operating lawfully and had demonstrated it was not a Ponzi scheme at the hearing  — the company issued a news release.

    The news release claimed ASD was expecting a revenue infusion of $200 million from a penny stock company. Performing no due diligence at all, some ASD members immediately raced to forums and websites to announce the company had a business deal worth one-fifth of a billion dollars.

    Other ASD members sought to substantiate the company’s announcement and insisted that ASD prove its $200 million claim. The company then deleted the news release.

    Meanwhile, ASD also claimed that Ponzi allegations brought against it by Florida Attorney General Bill McCollum had been dropped. Once again, ASD members who did no checking at all raced to forums and websites to announce the good news.

    In response, McCollum’s office issued a statement that, not only had Ponzi allegations not been dropped, they’d never been filed to begin with. ASD was accused by McCollum of operating a pyramid scheme.

    Earlier, some ASD supporters were part of a bizarre campaign to have McCollum charged with Deceptive Trade Practices for holding the view the company had broken the law. They also wanted to charge a Florida TV station with the same offense, apparently for broadcasting a story they deemed unflattering to ASD.

    Like ASD’s Andy Bowdoin, Steve Renner — now ordered by a federal judge to wear a GPS tracking device as he awaits sentencing on federal tax-evasion charges and plans his defense for the civil Ponzi allegations against INetGlobal — is being portrayed as a victim of a corrupt government bent on destroying small business.

    The approach is absurd. It did not work for Bowdoin, and it won’t work for Renner.

    Renner, of course, is entitled to have supporters. Regardless, his supporters will be hard-pressed to persuade — let alone convince — the Ponzi-hating public that government evil is driving events at INetGlobal when the Secret Service already has produced an affidavit that says a bank closed down Renner-connected accounts prior to the raid because it suspected money-laundering.

    Moreover, federal records show that one of Renner’s companies — a money-services business known as Cash Cards International (CCI) — previously had provided services for a Ponzi scheme that resulted in lengthy prison sentences for four people associated with the scheme.

    When the receiver in the Ponzi case asked Renner to convert electronic credits to cash to fund the estate for Ponzi victims, Renner could not do it because he had spent the money as though it were his own, according to court filings.

    As was the case with ASD, some INetGlobal members are attacking the media, amid claims there has been a rush to judgment.

    Blaming Renner’s predicament on the media or suggesting the media have rushed to judgment also won’t work. The media did not invent the allegations; it simply reported them, as it would do in any other case.

    Some INetGlobal members are pointing to an opinion piece on The Independent Business News Network (IBNN) website that the Star-Tribune newspaper of Minneapolis/St. Paul was guilty of “bias” in its coverage of the Secret Service raid on INetGlobal.

    The IBNN piece, however, did not disclose that Don Allen, the author of the IBNN editorial, also worked as a spokesman for a Renner company. In short, while Allen was opining the Star-Tribune was guilty of bias, he did not make it clear that his own impartiality could be questioned.

    IBNN’s Twitter site later reported that the Secret Service was “leaking” information to the PP Blog.  It simply did not happen. The Secret Service leaked no information to the Blog.

    While bashing the media in this context may provide some red meat for INetGlobal’s supporters, it does nothing to address the compelling reality that the allegations against Renner and his company are serious:

    Ponzi scheme. Wire fraud. Co-mingling. Suspicious withdrawals. Accounts closed by a bank that suspected criminal activity. Money-laundering.

    It’s the Minneapolis version of the ASD case. As was the case with ASD, INetGlobal is entitled to its day in court. It is entitled to argue passionately in its defense, and it is entitled to poke holes in the prosecution’s case. If the government does not have the goods, INetGlobal is entitled to win the forfeiture case and any future litigation that evolves.

    At the same time, INetGlobal members who support the company are entitled to argue their point of view passionately. They are not entitled, however, to be taken seriously if they spin events in ridiculous ways that cannot pass the giggle test.

    One difference between the INetGlobal forfeiture case and the ASD forfeiture case is that ASD did not appear to have gained traction in China. INetGlobal, though, does appear to have a substantial base of members in China. One of the issues in the INetGlobal case is language barriers: Can members who speak Chinese and have limited or no facility in English understand the business they joined and the complex litigation now engulfing the Renner companies?

    Neither bashing the government nor bashing the media does anything to address those concerns. Such an approach leads to questions about whether INetGlobal’s members who have limited facility in English are being ill-served by the efforts of English-speaking members to spin the story in ways that avoid the unpleasant realities and cloud the critical issues, which can be confusing even if a member has perfect understanding of English.

    On March 16, the PP Blog was provided a copy of an email some INetGlobal members received from their upline.

    “[T]he first court appearance which took place yesterday [March 15] went in favor of iNetGlobal,” the email claimed. It did not mention that a federal judge ordered Renner to wear the GPS tracking device as he awaits sentencing on four felony counts of income-tax evasion.

    Renner was convicted of the tax charges in December, more than two months prior to the Secret Service raid.

    Among the other claims in the email was that “[t]he judge in the case ordered the ‘Feds’ to release iNetGlobal payroll monies back to the company.”

    No such order appears to have been issued. Federal forfeiture law puts property that has been “arrested” — money in a bank account that has been seized, for example — in a state of limbo.

    Judges may entertain motions to have seized money released, but may be reluctant to release it out of concern the money will be “lost” prior to the conclusion of a forfeiture case.

    In general, the law seeks to avoid an inequitable result — for example, a decision to free money to pay employees could lead to a result in which less money would be available to compensate people who invested in a scheme and lost money.

    In the ASD case, the company asked for $2 million to be released. Collyer said no after hearing live testimony, weighing briefs submitted by attorneys from both sides and deliberating on the issues for several weeks.

    “The $2 million that ASD seeks to utilize are funds that were paid to ASD by advertisers and members,” Collyer ruled. “ASD has not demonstrated sufficiently that ASD is a legitimate business. Thus, the Court cannot release the funds to be used by the Company in its current form. And, if the plan to revamp ASD’s business proves unsuccessful, the citizens who paid that money will receive no advertising benefits and no return on their advertisement purchases. Quite simply, the money will be ‘lost’ forever.

    “Despite the obvious hardships endured by the employees of ASD and a great number of its members,” Collyer continued, “the Court cannot ignore its oath to uphold the law, nor can it rightly take the hardships of some and transfer them unto others.”

    Some of the same legal issues may come into play in the INetGlobal case, although the fact sets are not precisely the same. U.S. District Judge Donovan Frank is hearing the case, and the prosecution already has filed papers that reference ASD and a ruling by Collyer that ordered the forfeiture of more than $65 million to the government.

    Another section of the email was worded in a vague way that implied Donovan had arrived at the conclusion that INetGlobal might have the upper hand in the case.

    “Also indicated by the judge that inetGlobal should petition the court to have other funds released,” the email said.

    The mere act of petitioning a court for a result does not mean the court will rule favorably. That’s already been demonstrated in the INetGlobal case.

    Prosecutors sought to jail Renner, arguing he did not abide by the law while awaiting sentencing for his December tax conviction. Instead of jailing Renner, the judge ordered GPS tracking, enabling him to remain free.

    In the ASD case, members routinely spread misinformation after Collyer issued orders. When Collyer ordered ASD to file papers by a certain date, some ASD sponsors told downline members the prosecution had been ordered to prove ASD was a Ponzi scheme by the same date or lose the case.

    When Collyer ordered the government to file motions in response to Bowdoin’s pleadings by a certain date, ASD sponsors told downline members that the prosecution was in a panic because it could not prove ASD was a Ponzi scheme and was trying to find a way to save face.

    For at least a year,  the Pro-ASD Surf’s Up forum spread a rumor based on “inside information” that the prosecution had admitted behind closed doors that ASD was not a Ponzi scheme. The rumor persisted, despite the fact that the government filed a second forfeiture complaint against ASD-connected assets after the rumor started.

    Like the first complaint, the second complaint alleged the company was operating a Ponzi scheme. Not even the filing of the second complaint stopped the rumor, which was being repeated as though the court filings that disproved it simply did not exist.

  • Death Cycle For BizAdSplash Complete; Site Resolves To Blank Page On U.S. Server; Members’ Losses Unclear

    It entered the autosurf world in January 2009 with the stern bang of a drum in a promotional video. The message was dire: “The World Is In Crisis,” it warned. “Turn On The News, And You’ll See. The Stock Market Is At A Record Low. Foreclosures Are At An All-Time High. Thousand’s (sic) Are Losing Their Jobs. Banks Are Closing. There Has To Be A Solution!”

    The dire bang of the drum faded, replaced by a riff from an organ. The riff grew frantic, building toward a crescendo. The video never said the tones were from a 1999 work by Fatboy Slim: “Right Here, Right Now.”

    Messages flashed in front of viewers’ eyes for more than a minute before the video announced the company’s name — BizAdSplash — and positioned the surf as the cure for all the economic misery in the world.

    “Biz Ad Splash Has The Answer,” it said. “The Plan Is Simple. Advertise Your Business, A Product Or Service, Introduce Others To The Value Of Advertising. View A Few Ads For A Few Minutes A Day. Earn Profits. It’s That Simple!”

    Except it wasn’t, of course.

    BizAdSplash, whose “chief consultant” Clarence Busby was implicated by the U.S. Secret Service in the AdSurfDaily Ponzi scheme probe as the operator of Golden Panda Ad Builder, was in the throes of death out of the gate. The company started out by promoting its offshore location; its servers resolved to Panama.

    Payments slowed, then vanished. The site appeared, then disappeared, then reappeared. Even as BizAdSpash was in the throes of death, Busby talked about how “excited” he was — and how “excited” members who were not getting paid should be.

    The site disappeared again over 2009’s Christmas holiday and into the new year. It then reappeared. In late January, members said they received a platitude-filled note from Busby that BizAdSplash had tanked.

    “Now what about the future?” the email said. “No matter what, there is a future. There are many things on the Internet that will help you in this future, so don’t give up. Make the effort and success is just right around the corner. May your life be full of faith, hope and love. This is where you will find your best rewards. May God bless you all!”

    Busby’s name appeared at the bottom of the email, which carried a business address of Acworth, Ga. The surf came to life in the wake of the seizure of tens of millions of dollars from AdSurfDaily Inc. and Golden Panda Ad Builder. Busby is the former president of Golden Panda, which ceded more than $14 million to the government in the ASD/Golden Panda case.

    Known for syrupy communications, Busby described the BAS staff as “sad,” according to the January email.

    “Our staff has been sad, not just because of losing a job, but because they have developed friendships with many of you and are very sad to ‘break up the party,’” the email said. “With anything that has had life, it is very sad to have that life taken away.”

    Busby was identified in the email as the owner of BAS. In earlier communications, he was identified as “chief consultant.” It was not immediately clear how he purportedly had ascended from consulting work to ownership.

    The site remained online. It now has vanished, however, and has been resolving to a blank page for at least three days. (It might have disappeared earlier.) The site’s server signature is in the United States.

    Now, it seems, the death dance is complete — offshore to onshore, and a fade to nothing but white.

    But the Biz Ad Splash video, the dire beat of the drum and Fatboy Slim’s pulsating tones remain on YouTube: It’s just that there no longer is anything to sell.

    Busby’s simple cure for the world’s economic ills — clicking on ads and introducing others to click on ads — did not work. The extent of Biz Ad Splash member losses is unclear.

    Busby, who used the title “Rev.” at least 120 times in a court filing involving Golden Panda last year, was implicated by the SEC in three prime-bank schemes in the 1990s, according to records.

  • AdSurfDaily’s Bowdoin Says He’s Appealing Forfeiture Order Issued By Federal Judge; Notice Filed 6 Days After INetGlobal Raid; Riddle Of Bowdoin’s Competing Affidavit Claims Unsolved

    Andy Bowdoin

    The president of a Florida-based autosurf company implicated in a Ponzi scheme by the U.S. Secret Service says he is appealing a forfeiture order that gave the government title to more than $65 million seized from his personal bank accounts in 2008.

    Notice of the appeal by Andy Bowdoin of AdSurfDaily was filed by his attorneys March 1, about six days after federal agents — citing the Jan. 4 forfeiture order by U.S. District Judge Rosemary Collyer of the District of Columbia — raided the Minneapolis offices of INetGlobal.

    In an affidavit for a search warrant last month, the Secret Service said INetGlobal, a company operated by Steve Renner, was operating a similar autosurf Ponzi scheme and also engaging in wire fraud and money laundering.

    The INetGlobal affidavit asserts, among other things, that a member of ASD attempted to recruit an undercover Secret Service agent into INetGlobal despite the member’s own reservations about ASD.

    INetGlobal was described by the ASD member as a wink-nod enterprise, according to the Secret Service affidavit. The company “uses the same terminology and business model as ASD,” the agency said.

    In court filings prior to the INetGlobal raid, Bowdoin’s attorneys laid the groundwork for an appeal of Collyer’s Jan. 4 forfeiture order on the grounds of judicial error, arguing that Bowdoin had not received proper notice about orders Collyer issued last year and did not react to them because of computer glitches at the office of one of his attorneys, Charles A. Murray.

    “I experienced as yet unidentified computer/server issues, wherein multiple email messages apparently never loaded to the firm’s Inbox,” Murray said in court filings on Feb. 17.

    The glitches occurred between Nov. 10 and “early January” of this year, Murray said.

    Paperwork for Bowdoin’s appeal shows a “minute order” issued by Collyer Feb. 21, denying earlier motions by Bowdoin.

    A “minute order” is a document that encapsulates legal issues before a judge. Minute orders sometimes are used when paperwork among the parties in a case is flying and a judge memorializes rulings by addressing them in a short entry, as opposed to issuing lengthy orders for each issue.

    “The Court’s Order of November 10, 2009 . . . was not a final, appealable order,” according to Collyer’s minute order. “Nor has Mr. Bowdoin shown that the Court erred in entering . . . the November 20, 2009, Order to Show Cause. The order granting default judgment and final order of forfeiture . . . is the final order in this case.”

    On Nov. 10, Collyer ruled that Bowdoin no longer had standing in the case after he had battled for 10 months to reenter the case. Bowdoin submitted to the forfeiture in January 2009 — and then changed his mind, first acting as his own attorney and later acting with Murray’s help because Bowdoin had fired his previous paid counsel.

    On Nov. 20, Collyer issued an order that gave potential claimants in the case 30 days to come forward. No claimant emerged. On Dec. 17, however, Bowdoin filed a motion to disqualify Collyer, saying she was biased. Collyer denied the motion Dec. 18. She issued the forfeiture order Jan. 4.

    In February, Bowdoin, 75, flatly claimed in a sworn affidavit that he was told by a former defense attorney that, if he submitted to the forfeiture in January 2009 of tens of millions of dollars, he would face no jail time if criminal charges were filed in the ASD Ponzi scheme case.

    He did not name the attorney in the February filing, referring to him obliquely as “prior counsel.” In an earlier filing, Bowdoin identified his counsel as Stephen Dobson.

    “I was assured by my prior counsel that, if I released my claims in this [civil-forfeiture] action, I would not be facing any incarceration,” Bowdoin claimed last month. “My January 2009 motion to withdraw my claim . . . was solely based upon prior counsel’s unilateral mistaken belief that my release of claims would unequivocally assure that any subsequent criminal sentence entered would not include any prison time.”

    Last month’s filing was witnessed by Florida notary public Joe B. Cox of Lee County.

    But in a sworn affidavit Bowdoin signed Sept. 15 before a different notary public — Patricia C. Sanson of Lee County — Bowdoin repeatedly said Dobson had said only that there was a possibility Bowdoin would not be sentenced to prison if criminal charges emerged.

    In the Sept. 15 affidavit, Bowdoin repeatedly swore that Dobson had not promised him no jail time.

    These are among the phrases Bowdoin swore to in the Sept. 15 affidavit (emphasis added):

    • Dobson represented to me that I could possibly avoid prison or get a reduced sentence if I agreed to disclose details concerning ASD and releasing the assets.
    • I also signed a document stating that I would release my claims in the abovecaptioned civil in rem forfeiture proceeding, again thinking that necessary for a possible avoidance of a prison term.
    • I did all of this on the understanding that by cooperating I could possibly avoid a prison sentence.
    • I agreed not to exercise my rights in the civil forfeiture proceeding, anticipating from representations made by Dobson that this could possibly keep me out of prison.
      Dobson lead [sic] me to believe that if I cooperated there was a possibility that I would not be incarcerated or imprisoned.
    • I believed that my cooperation would still result in a criminal sentence that could possibly not include imprisonment or incarceration.
    • I slowly came to understand what I understood from Dobson not to be the case: that my agreement to cooperate provided me no benefit in the criminal matter except the possibility of a reduced sentence if the judge desired which would still be a life sentence.

    Bowdoin’s filing last month led to questions about whether he deliberately chose to appear before a different notary to swear to the affidavit. At the same time, it led to questions about whether Bowdoin somehow was unaware that Collyer already had cited Bowdoin’s Sept. 15 sworn affidavit in a major ruling that Bowdoin no longer had standing in the case.

    On Nov. 10, Collyer noted Bowdoin’s repeated use of the words “possibly,” “possible” and “possibility” in the Sept. 15 affidavit when referring to the advice Dobson had given him on the matter of jail and finding that Dobson had behaved responsibly while representing Bowdoin.

    “Such an approach from counsel could be seen as the norm when the Government’s evidence is strong,” Collyer said. “What Mr. Bowdoin hoped to gain from his release of claims/early acceptance of responsibility and his debriefing with the Government was a promise of no jail time. When that was not forthcoming from the Assistant United States Attorney, Mr. Bowdoin balked and tried to back up, as if he had not already released his claims and talked to the Government.”

    There may be other news associated with Bowdoin’s appeal: The filings suggest that William Cowden, who spearheaded the forfeiture case for the Department of Justice as an assistant U.S. Attorney and then accepted a job in the private sector, may be returning as a special prosecutor while maintaining his job in the private sector.

    Cowden was derided by Bowdoin supporters as “Gomer Pyle,” but piloted the case through an evidentiary hearing that resulted in a ruling from Collyer in November 2008 that ASD had not demonstrated it was a legal business and not a Ponzi scheme.

    With the Secret Service leading the investigation, Cowden then filed a second forfeiture complaint against assets linked to ASD. The second complaint was filed in December 2008 and named members of Bowdoin’s family as beneficiaries of ASD’s illegal scheme.

  • Timeline Suggests INetGlobal Was Pounding Clickbank Vendors With Traffic From China In Months Proceeding Raid While Sucking Bandwidth And Destroying Conversion Stats

    EDITOR’S NOTE: Untargeted, unfocused traffic and participants who did not have websites to advertise are two of the issues in the AdSurfDaily autosurf Ponzi scheme case. They also are issues in the INetGlobal case.

    UPDATED 8:20 A.M. ET (March 10, U.S.A.) Public records and other information suggest INetGlobal was becoming largely dependent on cash from Mainland China and was routing unwanted traffic that did not convert into sales to the sites of Clickbank vendors — while passing along the bandwidth costs to the vendors and grossly distorting  their conversion statistics.

    In an affidavit for a search warrant, the U.S. Secret Service, citing an analysis of INetGlobal’s money stream by an unnamed employee, said “at least 87% of the company’s revenue was generated from sale of memberships to members residing in China.”

    The affidavit also describes an INetGlobal function in Flushing, N.Y., on Jan. 23 that was attended by at least two undercover agents.

    About 400 people attended the function, the Secret Service said. The “majority” were Chinese. Attendees to whom an undercover agent spoke “had either little or no facility in English.” The agent noted that that “conference registration took a long time because nobody at the registration desk spoke Chinese, and many of the conference attendees could not make themselves understood in English.”

    Moreover, the agent said, when INetGlobal owner Steve Renner “asked, through an interpreter, how many people in attendance had their own business . . . only two raised their hands.”

    One attendee — an existing INetGlobal member — was asked by the second undercover agent if she had a website to advertise in INetGlobal’s rotator.

    The INetGlobal member — a woman Renner had identified as a “New Jersey resident making $6,000 per day, or $180,000 per month” — said she had no site to advertise in the rotator because having a website “was not required,” the Secret Service said.

    A second INetGlobal member approached by the same undercover agent was asked if he had a website to advertise in the rotator. This member — a man described as telling the agent he made $3,000 a month in INetGlobal — explained that he had a website, but did not post it because “it was ten years old,” the Secret Service said.

    Renner was observed telling different stories, the Secret Service said. One version had INetGlobal posting $25 million in revenue in December; another version “a short time later” pegged the figure at $20 million. Renner also said “iNetGlobal’s search engine, Access, would soon rival Google’s.

    “Renner did not explain to the crowd that Access was simply a link to another search engine, and that an Access web search was just the same as a web search on this other search engine,” the Secret Service said.

    Despite the claim that INetGlobal’s search engine would rival Google’s, the Secret Service said, internal company emails discussed “the possibility of the other search engine cutting the link and thus taking down Access.”

    A Public Tip-Off From Renner Himself That INetGlobal Was Up To No Good?

    Meanwhile, web records suggest that INetGlobal — at least for a time — either took it upon itself to add the sites of Clickbank vendors to its advertising rotator or instructed members who did not own businesses to add Clickbank links, an act that resulted in a surge of traffic from China that led to few if any sales. The apparent lack of sales suggests that Chinese members viewing the ads either did not understand what they were viewing or were viewing the ads simply to get paid.

    At the same time, web records suggest that INetGlobal was relying on the websites of individuals and companies that had no tie to the firm to provide surfers something to see in the firm’s advertising rotator — at the bandwidth expense of the unaffiliated companies and individuals, at least some of whom were Clickbank vendors.

    One of the Clickbank vendors — writing on the Digital Point Forum Sept. 26 — reported that he was studying his Clickbank affiliate stats and discovered something “REALLY messed up.”

    The vendor reported on Digital Point that the ID “inetgbal’ suddenly was sending  junk traffic that “appears to be coming from China.”

    The vendor published screen shots to support his claim and noted, “If you do a ‘surfin demo’ on the iNetGlobal website, you’ll see it takes you to random CPA offers and Clickbank products.”

    On Sept. 27, the vendor reported on Digital Point that he considered the traffic problematic and was considering a means of blocking it at the server level with the use of an .htaccess file.

    Working with .htaccess files, which can be used to block traffic from an IP or IP range, is not for the faint of heart. It is not uncommon for inexperienced webmasters to bring down their own servers or create an endless loop of error messages when attempting to tweak server behavior with an .htaccess file.

    Recognizing the dilemma, the Clickbank vendor put out a call for “good coders” to walk him through a fix for a problem he believed INetGlobal was causing for him.  Other posters inquired about the possibility of asking Clickbank to block the unwanted affiliate link.

    The discussion on the forum suggests INetGlobal was creating a situation in which Clickbank affiliates might have to incur an expense simply to block unwanted traffic — while creating the additional burden of polluting conversion statistics, potentially making the products less attractive to affiliates.

    If, say, a product ordinarily made one sale per each 100 views of an affiliate link — and if INetGlobal suddenly sent through 1,000 page views from China (er elsewhere) that did not convert because the traffic was untargeted or people simply were surfing to get paid — a vendor’s conversion rate could drop from one in 100 to one in 1,100.

    On Nov. 6, 2009, a person posting as Steve Renner — the “Director” of INetGlobal — appeared at Digital Point. A little more than a month later, Renner was convicted of income-tax evasion in a case brought in September 2008.

    Less than three months after Renner’s tax conviction, the Secret Service asserted that INetGlobal was part of an international Ponzi scheme that had engaged in wire fraud and money-laundering.

    “The problem was we had no Daily Budget in place and so traffic was running rampant,” the Digital Point poster purporting to be Renner explained on Nov. 6.

    The Clickbank vendor did not mince words in his response to the Nov. 6 post. Others were equally unhappy.

    Visit the intriguing thread on Digital Point.

  • Website Of Spokesman For Renner Entity Claims Government ‘Leaking’ Info To PP Blog About INetGlobal Ponzi Probe; ‘Didn’t Happen — Ever,’ Blog Says; Meanwhile, A Bogus ‘Apology’ Claim

    UPDATED 2:20 P.M. ET (U.S.A.) Did people associated with a company implicated by the U.S. Secret Service in a Ponzi scheme, wire-fraud and money-laundering case participate in a misinformation campaign?

    A Twitter website with a tie to the Inter-Mark companies operated by Steve Renner claims that federal officials are “leaking” information to the PP Blog.

    “Didn’t happen — ever,” the PP Blog said today. “The information we published was not leaked to the Blog. The Blog obtained the information from a public source, through the normal course of its reporting, and the information was available to reporters and the public before the Blog even published its first story based on the information.”

    Meanwhile, another website with a tie to a Renner’s Inter-Mark Corp. is making the claim that a Blogger Inter-Mark is targeting in a lawsuit for calling INetGlobal a “scam” issued an “apology.”

    The apology claim appears on a domain titled CheapClix.net, whose domain registration lists V-WEBS.COM as its nameserver. A Renner company dubbed V-Webs LLC appears to be an inactive Minnesota corporation that used the same Minneapolis street address as InetGlobal and other Renner companies, according to public records.

    A CheapClix.net post headlined “HOSPITALERA.COM APOLOGIZES TO iNetGlobal” and dated Feb. 4 claims that the Hospitalera Blog issued an apology to INetGlobal on a date uncertain and implies that Hospitalera now even endorses INetGlobal.

    “We are deeply saddened by the actions taken by this blog to defame iNetGlobal,” the CheapClix.net site says, apparently quoting from the purported apology. “iNetGlobal is one of the top Internet Marketing firms in the United States. We reach out to them with a sincere apology in hopes that we too can use the iNetGlobal products and services.

    “After careful review of iNetGlobal’s services and products, we find the company is real and the services are true to what iNetGlobal represents. Again, we apologize.”

    The apology claim is dubious because Sybille Yates, who operates the Hospitalera Blog from the Czech Republic, told the PP Blog last week that she was not even aware that Renner’s company was suing her until Feb. 25 — three weeks after the date of her purported apology.

    Yates did not immediately return an email from the PP Blog today seeking comment on the apology claim and whether she had, in fact, apologized. A Feb. 16 post  from Yates on the Hospitalera Blog, however, describes the news release that announced the apology as “faked.”

    Whether the apology claim somehow sprouted from some fantastic reshaping of facts by an INetGlobal supporter or was just an outright lie that was part of a misinformation campaign was not immediately clear.

    It has been common in the so-called autosurf “industry” for lies, misstatements, misrepresentations, misinformation and claims not based on facts to spread virally on the Internet as though they were truth.

    In the AdSurfDaily case, for instance, claims were made that the prosecution admitted ASD was not a Ponzi scheme, that ASD President Andy Bowdoin had received an award from the President of the United States for business acumen, that Google and ASD were partners and that ASD had the backing of huge corporations with huge advertising budgets.

    All of the claims were untrue.

    The CheapClix.net claim about the purported apology adds another strange twist to the INetGlobal story. If Yates never issued such an apology — and Yates’ Blog says no such apology was issued — it leads to questions about why someone would claim such an apology had been issued and even go so far as to issue a news release to announce an apology that had not been made.

    The introduction to Hospitalera’s purported apology as reported by CheapClix net begins, “We appreciate this step taken by the people at the hospitalera web-site to make amends for their erroneous publications.”

    The CheapClix.net post from Feb. 4 includes a link to what appears to have been a news release issued by an unknown party to herald Hospitalera’s purported apology. The news release link to PRLog.org resolves to an error page. PRLog.org is a free news-release distribution service.

    Yates’ Blog says she contacted PRLog to have the fake news release removed, and that PRLog took down the bogus release “in a heart beat.”

    UPDATE 2:20 P.M. Yates has confirmed she never issued an apology.

    “I never issued said apology, nor did I ever authorize anybody to do so in my name,” Yates said.

    “I never issued or published a press release on prlog.org. As I came across the forged and false press release, I contacted prlog.org immediately and they took it down. I have no information who published/submitted said press release to prlog.org.”

    A second link in the CheapClix.net post that heralded the purported apology resolves to TweetMeme.com, a site that aggregates Twitter links. A small icon that reads “V News Network” appears below a headline of “iNetGlobal Scam: Hospitalera Blog apologizes to iNetGlobal.”

    Records suggest that “V News Network” may be yet another Renner entity.

    A headline heralding a purported apology from the Hospitalera Blog for calling INetGlobal a scam appears on a website known as CheapClix.net. The Hospitalera Blog says the apology was "faked."

    ‘Leaking’ Claim

    Why the Twitter site, which is tied to IBBN.org, made the claim of that the government was “leaking” to the PP Blog is unclear. The Twitter post is dated Feb. 28. IBNN, which stands for The Independent Business News Network, is registered in Renner’s name. The site is operated by Donald W.R. Allen II, IBNN’s editor-in-chief and the the vice president and director of public relations for V-Newswire — a company in Renner’s INetGlobal family.

    Renner is listed as the IBNN domain registrant.

    Allen did not comment Friday when the PP Blog advised him that the government leaked no information to the Blog. The Twitter site does not list a source for its claim that federal officials “leaked” information to the Blog, but asserts that such an event was possible “Only in America!” The Twitter site continues to make the claim.

    The site also claims “iNetGlobal not a Ponzi.” No source is listed for the denial. It is unclear if IBNN has access to audited and certified balance sheets and financial statements of the Renner enterprise that could destroy the government’s Ponzi assertions.

    IBNN previously skewered the Star-Tribune newspaper of Minneapolis/St. Paul, asserting that the paper, which covered the INetGlobal raid, was displaying  “defamatory contempt [for the Renner entities] prior to a full investigation and a Grand Jury inquiry.”

    Allen, who signed the IBNN opinion piece, did not disclose his tie to the Renner companies when the piece was published. The piece went missing after the PP Blog published a story in IBNN’s tie to Renner, but since has been restored — with a few lines added.

    The U.S. Secret Service, which raided Renner’s operations in Minneapolis last month, asserted that INetGlobal and other Renner companies were part of an international Ponzi scheme that was engaging in wire fraud and money-laundering.

    The PP Blog cited as its source a Secret Service affidavit for a search warrant. The affidavit was published openly on a government website.

    At various times in its history, the PP Blog has been accused by participants in alleged Ponzi schemes of being part of a government operation. The Blog has reported on paranoia that often accompanies Ponzi scheme participants, some of whom become preoccupied with thoughts about government “plants.”

    Such claims about the PP Blog have been made from one Ponzi scheme case to the next, but they simply are not true. Ponzi promoters have accused the Blog of idiocy, occasionally resorting to name-calling or posting under multiple identities in a bid to create the appearance that a particular company caught up in Ponzi allegations the Blog was covering had more supporters than it actually had.

    As was the case with AdSurfDaily, a Florida company implicated in an autosurf  Ponzi scheme by the Secret Service in 2008, the Secret Service used undercover agents as part of the investigation into INetGlobal, according to a court affidavit. At least one of the undercover agents also was involved in the ASD investigation, according to court filings.

    Other court filings reviewed by the PP Blog have described various investigative techniques the agency uses, including surveillance from automobiles of subjects under investigation at places such as residences, parking lots and post offices — and even trash Dumpsters.

    At least two Secret Service agents were in the room to observe an INetGlobal function in New York, according to court filings. Agents also observed an ASD function in Miami in 2008, according to court filings.

    An agent involved in the ASD case listened to an INetGlobal sales pitch by an ASD member, according to the affidavit in the case.  It is plain from multiple public filings that the Secret Service is well aware of the so-called autosurf “industry” — and also the so-called “matrix” industry.

    It was publicly known that Renner had been under federal indictment for income-tax evasion since September 2008, a month after the ASD raid. There also is a considerable, public paper trail consisting of court filings, news releases and other information that links Renner to a Ponzi scheme known as Learn Waterhouse, elements of which were prosecuted by both the SEC and the U.S. Department of Justice.

    The public paperwork in the Learn Waterhouse case dates back to 2004. A Renner entity known as CCI provided payment-processing services for the Learn Waterhouse Ponzi scheme.

    Visit the Hospitalera site.

    Read about the purported apology on CheapClix.net.

  • SECRET SERVICE: INetGlobal Forced Members To Keep Money In The Company With ‘Automatic Repurchasing’ Scheme; Undercover Agent Sent Email To Support, Which Verified Repurchase Was Mandatory

    UPDATED 11:07 A.M. ET (U.S.A.) One of the undercover Secret Service agents who joined INetGlobal discovered that the company had implemented an “automatic repurchasing” program by default and that the program could not be switched off, thus distancing participants — many of whom may not have understood English — from their money.

    Although it is unclear when the automatic-repurchasing program began, it was in operation in the weeks after INetGlobal owner Steve Renner was convicted on Dec. 8, 2009, of four felony counts of income-tax evasion, according to court filings.

    Other filings show that another Renner company — Cash Cards International (CCI), a money-transmission business  — was upside down by more than $2.5 million when a court-appointed receiver in a Ponzi scheme case sought to convert electronic credits to cash to compensate victims of the scheme.

    Beginning on Feb. 1, the Secret Service agent — a woman — repeatedly tried to turn off INetGlobal’s automatic-repurchasing feature, but it “came back on” each time. The agent, who speaks and writes in English, attempted to disable the feature “several times on different days,” failing each and every time, according to an affidavit for a search warrant filed in the case.

    INetGlobal had a high concentration of Chinese members who did not speak English, according to the affidavit. How they even could understand the automatic-repurchasing scheme or fully comprehend INetGlobal’s operations and English-language website is far from clear, and has led to questions about whether the company deliberately was targeting members who could not understand what they were purchasing and would have both a language and a geographic disadvantage when seeking explanations or filing complaints with authorities.

    The company generated “at least” 87 percent of its revenue from the sale of memberships to members “residing in China,” according to an analysis referenced in the affidavit. The analysis was performed by an unnamed INetGlobal employee.

    On Feb. 17, the undercover agent sent an email to INetGlobal customer service, asking if the feature could be turned off.

    “Customer service replied in the negative,” the agent said, suggesting that the automatic-repurchasing feature was forcing participants to keep at least 40 percent of their money in the company.

    In the affidavit, the Secret Service said a “high level iNetGlobal member” from Nevada was becoming increasingly frustrated by an inability to withdraw funds. The member complained to management that “for over one week [in January] they had been unable to get a money order payment from the company for value they are owed.”

    “The victim contacted iNetGlobal’s customer service on several occasions only to get excuses,” the Secret Service said.

    Eventually, the victim spoke with former InetGlobal CEO Steven Keough.

    Keough, according to the Secret Service, told the victim on Jan. 11 to “cash out” of the system.

    “We can’t cash out,” the victim said. “[I]t is not possible, due to mandatory repurchasing built into the system.”

    On the very next day — Jan. 12 — Keough, an attorney and former naval officer, met with the Secret Service. He had contacted federal prosecutors Jan. 8 to express concerns about the company’s business practices. His first contact occurred only two months after he was appointed CEO on Nov. 7, 2009, according to the affidavit.

    Steve Renner’s Tax Convictions, Link To Previous Ponzi Scheme

    Renner was found guilty Dec. 8 of four felony counts of federal income-tax evasion.

    Prosecutors said he “diverted substantial funds” from CCI between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments.

    CCI, which once served as a money-transmitter for a California Ponzi scheme known as “Learn Waterhouse,” used the same office facility in Minneapolis as INetGlobal, the Secret Service said.

    When a court-appointed receiver in the Learn Waterhouse case attempted to get Renner to return money due Ponzi scheme victims, he explained that he could not do so because it had been “invested,” according to the affidavit.

    Thomas Lennon, the receiver in the Learn Waterhouse case, met with Renner, who “provided . . . financial statements indicating that the assets of Cash Cards and Renner are insufficient to cover all outstanding vcredit balances and obligations to other creditors.

    “Specifically, the statements show that Cash Cards and Renner have assets with an estimated value of $2,946,000 and an outstanding v-credit liability of $5,450,000,” Lennon said in court filings in 2007. “Renner has also informed the Receiver that he is currently being audited by federal and state taxing authorities which may result in large additional liabilities and liens on his property.”

    Lennon’s name is well-known among victims of financial crimes. He also was the court-appointed receiver in the 12DailyPro autosurf Ponzi scheme.

    Repurchasing programs, which autosurf operators employ to minimize the outflow of cash, are one of the oldest tricks in the Ponzi book. “Trainers” for Florida-based AdSurfDaily, implicated in a $100 million Ponzi scheme, routinely pushed a so-called “80-20” program whereby members would remove no more than 20 percent of money they were due and plow 80 percent back into the surf.

    In June 2009, AdViewGlobal, an autosurf with close family, management and promotional ties to ASD, announced it was ceasing payouts and making an 80/20 program mandatory should payouts ever resume. AdViewGlobal promptly crashed and burned.

    In January, according to the affidavit, Keough told investigators that he could not make sense out of what was going on inside INetGlobal and had observed instances in which Renner appeared to be gaming the payout system.

    “Keough said he was concerned that large amounts of money were flowing through bank accounts related to iNetGlobal and that unusual system manipulation was being conducted by . . . Renner,” the Secret Service said. “Keough had recently been fired by Renner. Keough believed he had been fired because he continually questioned iNetGlobal’s business practices.”

    On Jan. 20, according to the Secret Service, the agency received information that TCF National Bank was closing the accounts of a Renner entity known as Inter-Mark Corp. after an investigation by the bank led to “suspicions that the activity in the accounts might be money laundering,” according to the affidavit.

    “TCF Bank had given notice to Renner that the accounts were going to be closed,” the Secret Service said. It is unclear if Renner ever advised INetGlobal members that the bank had closed the accounts, citing suspicions they were being used to commit crimes.

    TCF prepared a cashier’s check for “for a little over $5 million,” presenting it to a Renner employee.

    Later that day, the check was deposited into Bremer Bank, which also held Renner-connected accounts, according to the Secret Service.

    Balances in Renner-connected accounts began “moving up sharply in August 2008,” the Secret Service said.

    August 2008 was the month in which the Secret Service raided the headquarters of ASD — and the month in which Renner’s autosurf was coming onto the stage. Golden Panda Ad Builder, a surf that is part of the ASD litigation, positioned itself as a company that sought to cater to Chinese members.

    Golden Panda’s operator — Clarence Busby — was implicated by the SEC in a prime-bank investment scheme in the 1990s, the same sort of scheme that engulfed Learn Waterhouse and later resulted in the determination that Renner’s CCI money-services business was impossibly upside down because he had used customers’ money to make personal purchases.

    INetGlobal issued a statement yesterday that acknowledged the Secret Service probe, but did not mention Renner’s tax conviction in December or the trouble he encountered when he could not fund a payment to the Learn Waterhouse receivership estate in the Ponzi case.

    “iNetGlobal offices will remain open to provide support to our 1,000’s of customers from around the world,” the company said. “iNetGlobal will continue to provide the level of quality service our customers have come to expect now and into the future.

    “We would like to thank all of our Members and Customers for their support and well wishes in this trying time,” the company said.

  • BULLETIN: Receiver In Affiliate Strategies Inc. (ASI) Case Asks Federal Judge To Add Noobing Autosurf To Receivership Probe After Inquiries By ‘Tax Authorities’

    The court-appointed receiver in the fraud case against the parent company of the Noobing autosurf has asked a federal judge for the authority to add Noobing to the receivership probe.

    Larry Cook, the receiver, said that Noobing and 14 other companies under the Affiliate Strategies Inc. (ASI) umbrella have become the subjects of “numerous inquiries” from “tax authorities,”  creditors and “former independent contractors.”

    Cook did not identify specific parties that made inquiries, but noted that “each of the Subsidiaries used the same post office box as the Receivership Defendants.”

    Noobing targeted people with hearing impairments in its promotions. It is known that some Noobing members have contacted the Federal Trade Commission, which is spearheading the ASI probe, along with the attorneys general of Kansas, Minnesota, North Carolina and Illinois.

    At least one deaf member of Noobing says she has contacted a sheriff’s department in California about the company.

    News that Cook is seeking judicial approval to add Noobing to his receivership probe came on the same day that the U.S. Secret Service said it was conducting an intense probe of INetGlobal, which operated a Minneapolis-based autosurf.

    In an application for a search warrant in a Ponzi case against INetGlobal, the Secret Service referenced the AdSurfDaily Ponzi scheme case, saying a member of ASD had attempted to recruit an undercover Secret Service agent into the INetGlobal scheme.

    ASD members and members of a closely connected surf known as AdViewGlobal also promoted Noobing, as did INetGlobal members, according to web records.

    Steve Renner, the owner of INetGlobal, was convicted in December of four felony counts of income-tax evasion for his conduct with other companies earlier this decade.

    Autosurfs are notorious for keeping poor records or no records at all, and autosurf participants are notorious for engineering schemes to milk tax-free income.

    Cook said tax reporting is required, and is seeking an order that pertains to Noobing and 14 other ASI umbrella companies. Cook listed Noobing’s name at the top of the list.

    “In order to complete the tax reporting requirements and otherwise address the creditors’ and other claims, the Receiver seeks a clear order that he is the Receiver for the Subsidiaries,” Cook said.

    And, he added, “Counsel for the [FTC] has reviewed this Motion and concurs.”

    ASI and a number of companies were sued last year in a scheme involving government grants. Noobing went offline in the immediate aftermath of the FTC probe.

  • AdSurfDaily Cited In INetGlobal/Steve Renner Search Warrant Application; Former Company CEO Helped Agents Prior To Raid; Undercover Agent Joined Surf Program; Agents Witnessed Spectacle At New York Function

    The U.S. Secret Service observed Minnesota-based INetGlobal’s operations for weeks in January, dispatched undercover agents to join the autosurf, learned that a bank recently had closed accounts tied to the firm amid money-laundering suspicions — and already had received incriminating information from the firm’s former chief executive officer prior to executing multiple search warrants Tuesday, according to records.

    Agents even traveled to a company function in New York, mixed in with the audience and observed INetGlobal owner Steve Renner, according to records. The function was known as “Freedom Conference 2010.”

    Most of the attendees were Chinese, the Secret Service said.

    “[C]onference registration took a long time because nobody at the registration desk spoke Chinese, and many of the conference attendees could not make themselves understood in English,” the agency said.  “There was an interpreter in the main hall, but Renner often spoke over the interpreter.”

    At one point, Renner started a pandemonium by holding up $20 bills, which he began handing out to attendees in exchange for $10 bills, the agency said.

    “This caused a crush of people to approach the front of the hall, and Renner eventually needed assistance moving people back,” the Secret Service said. “Renner asked, through an interpreter, how many people in attendance had their own business, and only two raised their hands.”

    Steven Keough, a retired naval officer who was INetGlobal’s CEO for only weeks before being fired by Renner, contacted federal prosecutors Jan. 8 to report concerns about Renner and the company, according to court documents.

    Meanwhile, the search-warrant application cites the government’s prosecution of assets tied to Florida-based AdSurfDaily and a Jan. 4 order of forfeiture by U.S. District Judge Rosemary Collyer to bolster the case against INetGlobal and related companies. The application also cites the successful prosecution of the 12DailyPro and Phoenix Surf Ponzi schemes by the SEC.

    As was the case in the ASD prosecution, the Secret Service raised allegations of Ponzi fraud, wire fraud and money-laundering against INetGlobal, saying the company had grossly overstated its membership numbers, had co-mingled funds and operated the business in slipshod fashion.

    Agency Assigns Veteran From ASD Case To INetGlobal Case

    At least one of the Secret Service agents involved in the INetGlobal investigation also was involved in the ASD investigation, according to the search-warrant affidavit. Agents located an INetGlobal sales pitch online, and the agent involved in the ASD probe called the INetGlobal member.

    Out of the gate, INetGlobal was described by the member as a wink-nod proposition, the Secret Service said — and it turned out that the INetGlobal member also had been an ASD member.

    “The member said he had previously been a member of ASD . . . and said, ‘We know what happened there,’” the Secret Service said. “The member said he was reluctant to join iNetGlobal due to it being similar to ASD.

    “The member said, ‘we all know what this program is.’ The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out. The member said you convert your earnings to V-cash and then receive payouts by check or through an ATM card you can sign up for. The member said members earn a daily return on their investment but that he was not sure what he exactly earned. The member said he has not been able to figure out the percentage of return due to the convoluted information provided on the iNetGlobal website.”

    Regardless of the member’s own concerns about the program, the member nonetheless was eager to recruit the undercover Secret Service agent, according to the affidavit.

    “The member pushed [the undercover agent] to join and wanted to conduct a three way call with his sponsor,” the Secret Service said. “The member said bringing in new members under you was the best way to earn maximum returns.”

    CEO Met With Secret Service Prior To Raid

    Keough’s holds a Bachelor of Science in Chinese from the U.S. Naval Academy at Annapolis, Md.; a Master of Arts in Congressional Studies from the Catholic University of America, Washington, D.C.; and a law degree from Boston College Law School.

    After working for INetGlobal for only weeks, Keough said things going on inside the firm made no sense and he had come to believe Renner had hired him as a “good face” for the company, according to the search-warrant application.

    Keough told agents he believed Renner fired him for asking too many questions, according to the filings.

    “Keough described what he called his first ‘red flags,’ which were the reported size (50,000 members) and purported revenue ($100 million) of iNetGlobal; the complete disarray and disorganization of the businesses; and the seemingly small outside legitimate income,” the Secret Service said. “Keough further stated that the companies’ website never seemed to work properly, making him question what customers who purchased the advertising service alone, without the possibility of rebates, were getting for their money.

    “Keough said on occasion he witnessed Renner manually manipulating the iNetGlobal system to pay out percentages that were different, and smaller, from the percentage listed on the iNetGlobal website,” the Secret Service continued. “Keough also wondered how, with so little outside income, the company could pay these outlandish returns. Keough said Renner would explain away his concerns by telling him how beneficial the advertising was and about all the different levels a member could achieve. Keough said, ‘I never really understood how it could work.’

    “Renner told him iNetGlobal had 50,000 members, had been in business for 10 years, was debt free, and had made over $100 million in revenue. Keough said he later learned all these facts were ‘lies.’

    “Keough further stated that Renner used the misleading information in power point presentations and webinars to recruit others,” the agency said.

    Once becoming CEO, “Keough conducted his own internal audit and found, contrary to Renner’s statements, that iNetGlobal had only approximately 30,000 members, iNetGlobal had only been in business for 14 months, there were huge liabilities associated with the members’ ‘investments’ and the company’s estimated revenue was approximately $28 million, not the $100 million in revenue claimed by Renner.

    “Keough said he was particularly alarmed because he knew Renner and/or representatives of iNetGlobal were using these false statements to promote and market iNetGlobal to would-be members (investors),” the Secret Service said. “Keough believed these false statements caused individuals to invest with iNetGlobal.’

    “Keough said he had an iNetGlobal employee conduct an analysis to determine the member liability,” the Secret Service said. “The employee reported back to Keough that at least 87% of the company’s revenue was generated from sale of memberships to members residing in China.”

    The search-warrant application also claimed that a company Renner owned provided payment-processing services for a Ponzi scheme called “Learn Waterhouse,” which was smashed by the SEC in 2004.

    When a court-appointed receiver asked Renner to turn over funds to the receivership estate by converting electronic credits to cash, it was learned that Renner could not do it because he had “invested” more than $2.5 million in Learn Waterhouse V-Credits on “stamps, coins, Salvador Dali sculptures, autographed letters, guitars and amplifiers, fractional interests in motion picture companies, and fractional interests in oil wells, among other things.

    “Additional sums of customers’ money had been spent by Renner personally, including on daily living expenses,” the Secret Service said.

  • Secret Service, FBI, IRS Raid Steve Renner’s INetGlobal Operations In Minneapolis; Scene Resembled AdSurfDaily Raid In Florida

    UPDATED 10:40 A.M. ET (U.S.A.) Federal and state agents have raided the Minneapolis offices of Inter-Mark Corp., seeking evidence of a Ponzi scheme, the Star Tribune of Minneapolis/St. Paul is reporting.

    Inter-Mark Corp. is operated by Steve Renner, who also operates a purported “advertising” service known as INetGlobal. In a scene that resembled the August 2008 raid at the headquarters of Florida-based AdSurfDaily, agents in Minnesota were seen carting boxes of documents and computers.

    ASD was implicated in a $100 million Ponzi scheme.

    Renner has been under investigation for at least 17 months and likely longer. He was indicted on charges of tax evasion in September 2008, about a month after the ASD raid. He was convicted in December 2009 of evading more than $332,000 in taxes between 2002 and 2005.

    Renner, 54, “diverted substantial funds from his business, Cash Cards International (CCI), between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments,” prosecutors said in December.

    He also used CCI funds to promote his musical band, “Stevie Renner and the Renegades,” prosecutors said.

    “From 2001 to 2006, Renner owned CCI, an Internet-based stored-value card and money
    transmission business, with locations in Minnesota, South Dakota, and Hawaii,” prosecutors said. “Although he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to file his income tax returns with the Internal Revenue Service for tax years 2002 through 2004 until March 5, 2006, the date on which he also filed his 2005 federal income tax return.”

    “Tax evasion is not a victimless crime,” said Julio La Rosa of the IRS, upon Renner’s conviction.

    “Honest, hardworking taxpayers pay the price when others choose to evade their tax obligations,” La Rosa said. “As this verdict shows, those that cheat will get caught.”

    Renner faces up to 20 years in federal prison in the tax case.

    Renner also is associated with a domain known as AdPacs.com, which is throwing a server error. It is believed that AdPacs promoters also promoted the AdViewGlobal (AVG) autosurf, which had close ties to ASD.

    Affiliates of Steve Renner's AdPacs.com pushed AdViewGlobal just prior to its February 2009 launch. This screen shot of search result that appeared online more than a year ago lists the name of Juan Fernandez, the CEO of AdSurfDaily. ASD is implicated in a $100 million Ponzi scheme. AVG launched AFTER the federal seizure of tens of millions of dollars in the ASD case. Like ASD President Andy Bowdoin, Fernandez took the 5th Amendment at an evidentiary hearing in September 2008. Now, Renner's company is the subject of a major federal probe. ASD sold "ad-packs." AVG referred to its version of "ad-packs" as "viewer impressions" after the phrase "ad-packs' became radioactive.

    As was the case with the ASD raid in Florida, local media caught the events at Renner’s office yesterday on video. Minnesota has been plagued by Ponzi schemes. Some ASD members from Minnesota have been among the loudest advocates for ASD President Andy Bowdoin.

    The Minnesota Financial Crimes Task Force assisted in the raid.

    Earlier this month, the Secret Service announced the formation of an Electronic Crimes Task Force (ECTF) based in Memphis. The agency also has ECTFs in St. Louis, Kansas City, New Orleans and Europe.

    “One of the top priorities for the Secret Service continues to be combating the computer
    related crimes perpetrated by domestic and international criminals that target the U.S.
    financial infrastructure,” said Secret Service Director Mark Sullivan.

    “The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by working closely with experts from all affected sectors to constantly refresh and adapt our investigative methodologies.”

    Read the Star-Tribune’s coverage of the Steve Renner raid.

  • BULLETIN: New Affidavit Filed By Andy Bowdoin Appears To Be At Odds With Claims He Made In September

    Andy Bowdoin

    A sworn affidavit filed today by AdSurfDaily President Andy Bowdoin appears to make claims that are the polar opposite of claims he made in a sworn affidavit witnessed by a notary public and filed in federal court Sept. 15.

    Separately, Bowdoin’s lawyer, Charles A. Murray, filed a brief that may be the opening volley in a bid to challenge the Constitutionality of the government’s forfeiture case, suggesting the U.S. Secret Service had no “probable cause” to seize tens of millions of dollars from Bowdoin’s bank accounts in August 2008.

    Murray also said that Bowdoin had not received fair notice about court rulings and did not challenge the rulings previously because of an email glitch that affected Murray’s computer between Nov. 10, 2009, and “early January” of this year.

    “I experienced as yet unidentified computer/server issues, wherein multiple email messages apparently never loaded to the firm’s Inbox,” Murray said.

    Bowdoin, 75, now flatly claims he was told by a former defense attorney that, if he submitted to the forfeiture of tens of millions of dollars, he would face no jail time if criminal charges were filed in the ASD Ponzi scheme case.

    He did not name the attorney in today’s filing, referring to him obliquely as “prior counsel.” In an earlier filing, Bowdoin identified his counsel as Stephen Dobson.

    “I was assured by my prior counsel that, if I released my claims in this [civil-forfeiture] action, I would not be facing any incarceration,” Bowdoin claimed today. “My January 2009 motion to withdraw my claim . . . was solely based upon prior counsel’s unilateral mistaken belief that my release of claims would unequivocally assure that any subsequent criminal sentence entered would not include any prison time.”

    Today’s filing was witnessed by Florida notary public Joe B. Cox of Lee County.

    But in a sworn affidavit Bowdoin signed Sept. 15 before a different notary public — Patricia C. Sanson of Lee County — Bowdoin repeatedly said Dobson had said only that there was a possibility Bowdoin would not be sentenced to prison if criminal charges emerged.

    In the Sept. 15 affidavit, Bowdoin repeatedly swore that Dobson had not promised him no jail time.

    These are among the phrases Bowdoin swore to in the Sept. 15 affidavit (emphasis added):

    • Dobson represented to me that I could possibly avoid prison or get a reduced sentence if I agreed to disclose details concerning ASD and releasing the assets.
    • I also signed a document stating that I would release my claims in the abovecaptioned civil in rem forfeiture proceeding, again thinking that necessary for a possible avoidance of a prison term.
    • I did all of this on the understanding that by cooperating I could possibly avoid a prison sentence.
    • I agreed not to exercise my rights in the civil forfeiture proceeding, anticipating from representations made by Dobson that this could possibly keep me out of prison.
      Dobson lead [sic] me to believe that if I cooperated there was a possibility that I would not be incarcerated or imprisoned.
    • I believed that my cooperation would still result in a criminal sentence that could possibly not include imprisonment or incarceration.
    • I slowly came to understand what I understood from Dobson not to be the case: that my agreement to cooperate provided me no benefit in the criminal matter except the possibility of a reduced sentence if the judge desired which would still be a life sentence.

    Bowdoin’s filing today leads to questions about whether he deliberately chose to appear before a different notary to swear to the affidavit. At the same time, it leads to questions about whether Bowdoin somehow was unaware that U.S. District Judge Rosemary Collyer already had cited Bowdoin’s Sept. 15 sworn affidavit in a major ruling that Bowdoin no longer had standing in the case.

    On Nov. 10, Collyer noted Bowdoin’s repeated use of the words “possibly,” “possible” and “possibility” in the Sept. 15 affidavit when referring to the advice Dobson had given him on the matter of jail and and finding that Dobson had behaved responsibly while representing Bowdoin.

    “Such an approach from counsel could be seen as the norm when the Government’s evidence is strong,” Collyer said. “What Mr. Bowdoin hoped to gain from his release of claims/early acceptance of responsibility and his debriefing with the Government was a promise of no jail time. When that was not forthcoming from the Assistant United States Attorney, Mr. Bowdoin balked and tried to back up, as if he had not already released his claims and talked to the Government.”

    Read the sworn affidavit Bowdoin filed today after appearing before notary Joe B. Cox.

    Read the Sept. 15, 2009, sworn affidavit Bowdoin filed after appearing before notary Patricia C. Sanson.

    Read a story from earlier today on a possible split in the Bowdoin/Harris family.