Tag: AdSurfDaily

  • OCT. 28 PONZI NEWS AND NOTES: Tom Petters Trial To Open; Employee Of Sir Allen Stanford Purportedly Criticized, Ostracized, Fired For Being Too Honest

    NEWS: In the world of high finance, Tom Petters was Bernard Madoff before Bernard Madoff was Bernard Madoff — at least with respect to shocking headlines about Ponzi schemes.

    Jury selection is under way in Minnesota in the Petters case. The allegations that Petters presided over a $3.65 billion Ponzi were unfathomable in September 2008. The allegations dwarfed the August 2008 assertions by the U.S. Secret Service that Florida pitchman Andy Bowdoin of AdSurfDaily Inc. had operated a then-unfathomable $100 million Ponzi scheme.

    But with Madoff’s overnight ascent to the stratosphere of infamy in December 2008 amid allegations that he had operated a $50 billion Ponzi scheme, Petters faded from the headlines.

    Bowdoin would have faded, too, except he could not stop doing things such as comparing the Secret Service and federal prosecutors to the 9/11 terrorists; taking the 5th Amendment at a hearing his company requested to present evidence that it was not a Ponzi scheme, even as his supporters agreed he was “too honest” to testify; announcing a $200 million deal with a penny-stock company few people ever had heard of (while the penny-stock firm continued its practice of not publishing verifiable financial information and Bowdoin was awaiting a ruling on whether unaudited financial information he had supplied the court was reliable enough to make the Ponzi allegations go away); trying to sell members of AdSurfDaily VOIP telephone service after the Ponzi ruling went against him; negotiating with federal prosecutors; submitting to the forfeiture less than a month after prosecutors filed a second forfeiture complaint that asserted his wife and family had benefited from the illegal actions of his company and that Bowdoin had not reported a purported theft of $1 million by “Russian” hackers to authorities; and trying to get back in the case about six weeks later by saying he’d changed his mind, fired his attorneys and now was relying on a mysterious “group” of amateur attorneys to help him do his legal bidding.

    Not even Petters, who owned Polaroid and operated what prosecutors described as a multibillion-dollar Ponzi scheme involving a separate electronics company, could top Bowdoin in terms of relentless strangeness.

    Petters, however, easily topped Bowdoin in terms of the size of the alleged Ponzi he operated. And now the Petters trial is set to begin. One of the expected defenses in the case is a Bowdoin-like assertion that his hands were clean.

    Will it fly with jurors?

    Read pretrial Petters’ coverage by Reuters.

    Read this column by Jon Tevlin in the Star Tribune of Minneapolis/St. Paul. It includes comments from Barry Minkow, whose life once took a Ponzi turn.

    NOTE: Sir Allen Stanford now is accused of running a Ponzi that was larger than even the alleged Petters’ Ponzi. Stanford’s alleged crimes also are dwarfed by the Madoff Ponzi.

    Stanford was regarded as a sort of king of Caribbean banking, perhaps particularly on the island nation of Antigua.

    Federal prosecutors say ASD’s Bowdoin told the Secret Service that the company had $1 million in an account under a different name on Antigua. The claim was strange, considering that Bowdoin had told members in 2007 that he could not pay them because his purported advertising company had become insolvent after it overpaid members and was looted by the previously mentioned “Russian” hackers.

    The claim became Über Strange in 2008, when Bowdoin asked a federal judge to free up $2 million from the tens of millions of dollars seized because ASD could not pay its hosting bill or rent or employees and had no money to implement a compliance plan — while apparently forgetting he had told the Secret Service about the $1 million on deposit in Antigua.

    Some of Bowdoin’s friends and employees remained staunch allies, always willing to support the company, call the prosecutors Nazis, diss doubters and even work for free to demonstrate their loyalty to the boss.

    An employee of Allen Stanford had a different idea about how to behave when a company’s words could not be reconciled with its actions.

    Charles Satterfield, an investment adviser, couldn’t make sense of things in the months after he joined Stanford Financial Group in 2005 as managing director of fixed income.

    Stanford stressed sales of its CD, regardless of the profiles of its customers. Old ladies were to be sold CDs. Young mothers were to be sold CDs. All people in between were to be sold CDs — at the virtual exclusion of all other financial products that perhaps were better suited for the unique situations of individual customers.

    On a business trip? Sell the CD. Sitting down with Grandpa or Junior? Sell the CD.

    When Satterfield asked his bosses to reduce their instructions to writing, he was fired the next day.

    He told the Financial Industry Regulatory Authority (FINRA) in 2007 that some strange things were going on inside Stanford Financial Group. The company said no — that Satterfield had gotten it all wrong, that he was incompetent and disgruntled.

    Satterfield was described as disloyal, incapable of recognizing that tremendous growth at companies causes problems and that the problems sort themselves out in the end.

    The experience of Charles Satterfield at Stanford will sound like a familiar refrain to many people who have followed the AdSurfDaily saga and observed a pattern of dissing critics as though they were simpletons, marginalizing their voices and authoring ad hominem attacks — before ostracizing them completely and banning them to the hinterlands.

    Read this column on Charles Satterfield by Al Lewis of Dow Jones Newswires, as it appears in the Denver Post. It is an eye-opener.

  • HYIP/AUTOSURF SHOCKWAVES: Regulators Order Canadian Ponzi Schemers To Pay Penalties Totaling $26 Million And To Disgorge Illegal Profits Of $16 Million; Case Has Parallels To AdSurfDaily And AdViewGlobal

    The British Columbia Securities Commission (BCSC) has ordered four respondents in a civil action to pay penalties of $26 million for operating a Ponzi scheme and to surrender $16 million in illegal profits.

    In forceful findings that may echo throughout the HYIP and autosurfing universe, BCSC said the schemers tried to skirt securities laws by selling a fraudulent HYIP currency-trading program in Canada through an MLM-syle operation while hiding behind “non-disclosure” agreements and operating in an environment of secrecy.

    AdViewGlobal (AVG), an autosurf firm with close ties to the alleged AdSurfDaily (ASD) Ponzi scheme in the United States, created a similar structure in which participants were advised to keep news within “association” walls and not to disclose information to outsiders.

    BCSC also found that the companies named in the Canadian complaint disseminated false information and used intimidation tactics in a bid to prevent participants from cooperating with authorities.

    “Because of those [non-disclosure] agreements, and because of false but intimidating statements made to them by the respondents, many investors refused or were reluctant to cooperate with the Commission’s investigation,” BCSC said.

    In recent weeks, some ASD members have circulated emails that suggested participants should not cooperate with the U.S. Secret Service in the ASD probe. During the summer, AVG, which had suspended member cashouts, threatened to sue members for sharing information with outsiders and also threatened to contact the Internet Service Providers of participants who complained on a company forum.

    In yet another similarity to the ASD case, some of the purveyors of the Canadian scheme also pushed what Canadian authorities described as a “private common law spiritual trust.”

    Some of ASD’s and AVG’s most ardent supporters have used similar phrasing and referenced common law in defending the surfs.

    BCSC minced no words as it laid out the penalties against Hal (Mick) Allan McLeod, David John Vaughan, Kenneth Robert McMordie (also known as Byrun Fox) and Dianne Sharon Rosiek.

    BCSC pegged losses at $13 million, saying the respondents “fraudulently distributed securities and made misrepresentations” through Legacy Capital Inc., Legacy Trust Inc. and Manna Trading Corp Ltd.

    The Canadian respondents also cited a tie to an entity known as the Manna Humanitarian Foundation.

    AVG, in promotional material, cited a tie to the World Rain Forest Movement in what some observers saw as a bid to sanitize the AVG business by linking it to a worthwhile cause.

    “At AVGlobal Association we believe we should go beyond the basics of ethical business practices and embrace our responsibility to people and to the planet,” AVG said on its website. “We believe this brings sustained, collective value to our members, our employees, our customers and society.”

    AVG announced a suspension of payouts June 25. It is unclear if any worthwhile cause ever received money from the company.

    A BCSC panel fined McLeod $8 million. Vaughan, Rosiek and McMordie were dispensed penalties of $6 million each. The panel also ordered each respondent, including the companies, to disgorge the $16 million the scheme obtained from investors.

    The suggested payout percentages of the Canadian entities actually were significantly lower than the suggested payout percentages of both ASD and AVG.

    “Manna promised investors 7 [percent]  monthly returns (later reduced to 5 [percent]), sometimes compounded,” BCSC said.

    ASD and AVG both promoted compounding. Some ASD members promoted returns of 365 percent a year, claiming $100,000 in ASD returned $1,000 a day.

    Similar to ASD and AVG, investors who became “affiliates” or “consultants” of the Canadian companies could bring in new investors.

    “When they did so, they earned a commission on the amount invested and a continuing share of the return on the new investment,” BCSC said.

    The private, common-law spiritual trust “was a mechanism Fox concocted ostensibly to avoid the application of tax and securities laws to investments in the Manna scheme,” BCSC said.

    BCSC pegged losses in the Canadian scheme at $13 million, saying as many as 800 people lost money.

    “They created a multi-level marketing structure to maximize distribution of the Manna securities,” BCSC said.

    “The respondents knew exactly what they were doing when it came to dealing with securities laws,” a BCSC panel said. “They were well aware of the requirements of the Act, and of the role of the Commission in enforcing the Act. They took numerous actions calculated to escape detection. They attempted, unsuccessfully, to construct the Manna scheme in a form that would fit within a specific exemption in the Act.”

    Authorities said the scheme was inexcusable.

    “Nothing strikes more viciously at the integrity of our capital markets than fraud, and this case represents a particularly aggressive and flagrant assault on the public’s confidence in our markets,” BCSC said.

    BCSC’s announcement followed on the heels of announcements Oct. 15 by the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission that they were targeting a Florida company that allegedly tried to hide behind a corporate registration in Panama.

    The actions by the SEC and CFTC expose the vulnerability of autosurfs that register as corporations offshore and arrange web-hosting overseas, but do not comply with securities laws of the United States and foreign countries in which they have a paper footprint or are not regulated in the foreign countries.

    The moves also demonstrate that U.S. securities regulators — no matter where a company arranges webhosting — intend to treat American owners who flout laws as issuers of unregistered securities, unregistered investment advisers and operators of unregistered foreign investment companies from inside the United States

    Named defendants in emergency actions filed Oct. 15 in U.S. District Court for the Middle District of Florida were David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc.

  • NO AUTOSURF ENVY: Newspaper Circulation Plunges; Top Publications Hemorrhage Print Readers As Industry Looks To Harness Power Of Internet Advertising

    EDITOR’S NOTE: If you’ve been approached by individuals or a downline “team” and invited to join an online “surfing” program that purports to be an “advertising” company, this column may be of some value to you. Extremely well-known publishing companies — companies that produce titles you know and love, and companies that know advertising and business inside and out and through and through — are having trouble keeping readers’ eyes glued to print publications. Many of the famous companies have experienced serious revenue declines. Almost all of them have experienced spectacular print circulation declines even as actual readership was increasing. These famous companies are struggling to find ways to compete online and monetize their hugely popular websites, almost all of which get tremendous traffic.

    And yet none of them has turned to the so called “autosurf” model — even though the companies could crush “advertising” firms such as Florida-based AdSurfDaily, which is confronting allegations that it engaged in wire-fraud and money-laundering while operating a $100 million Ponzi scheme.

    Despite the fact these famous publishing companies have professional talent, audited readership, audited financials and the economies of scale to destroy so-called “advertising” firms such as ASD or BizAdSplash or AdViewGlobal — and scores of others — these companies do not position themselves against the surfs.

    Some of the surfs are collecting millions of dollars — if not tens or hundreds of millions of dollars — during a time the traditional publishing/advertising business is awash in a sea of red ink. All of the traditional companies could use the money autosurf participants are throwing at the surfs.

    Autosurf promoters would have you believe traditional publishing/advertising companies are struggling because the famous brands don’t understand the autosurf business model. Surf promoters position people such as ASD President Andy Bowdoin as vastly misunderstood geniuses and visionaries being picked on by the government. The surfs are positioned as cash cows for both the operators and members, and the “new” way to advertise.

    Promoters would have you believe that these celebrated publishing/advertising companies just don’t “get it” — and that the people promoting autosurfs in the hyped-up style of MLMs are the modern-day Henry Fords and Thomas Edisons — people who do get it.

    Surf promoters are unable to explain rationally why famous companies that could crush the surfs and take away all of their business — while delivering content that gives people a nonfinancial reason to visit highly professional sites and later share in hundreds of millions of dollars in revenue — have not leveraged their marketplace advantages and enormous volume of website traffic to make the companies and their readers rich by opening an autosurf.

    The reason is simple: The model as practiced in the so-called autosurf advertising “industry” is plainly illegal. It flouts securities laws, wire-fraud laws, mail-fraud laws, racketeering laws, banking laws, money-services laws and other laws — and the surfs try to sanitize it all by saying “rebates aren’t guaranteed,” which is just a contractual disclaimer designed to legalize theft.

    When reading the story below, keep in mind that each of the companies mentioned has advantages none of the surfs can offer, including some of the most highly talented writers, editors, designers and advertising-sales executives in the world — people who can deliver millions of eyeballs to websites and produce good results for advertisers both in product sales and branding.

    And yet these companies have not turned to Andy Bowdoin of ASD or Clarence Busby of BizAdSplash for guidance.

    Now, after this lengthy introduction, the story . . .

    Circulation at USA Today plunged 17.15 percent in the six-month period ending in September, compared to the same period in 2008, according to figures released today by the Audit Bureau of Circulations (ABC).

    Circulation losses experienced by the San Francisco Chronicle (-25.82 percent), the Star Ledger of Newark (-22.22 percent), the Dallas Morning News (-22.16 percent), the Boston Globe (-18.48 percent) and the New York Post (-18.77 percent) were even steeper, ABC reported.

    Elsewhere, the Houston Chronicle lost 14.24 percent of its print circulation during the period, and The Daily News (New York) lost 13.98 percent.

    Meanwhile, the Arizona Republic (-12.30 percent), the Cleveland Plain Dealer (-11.24 percent), the Los Angeles Times (-11.05 percent), the St. Petersburg (Florida) Times (-10.70 percent), the San Diego Union Tribune (-10.05 percent), the Chicago Tribune (-9.72 percent), the Detroit Free-Press (-9.56 percent) and the Pittsburgh Post-Gazette (-9.50 percent) also lost significant print circulation, ABC reported.

    The Post-Gazette explained today that much of its loss is attributable to an April decision to quit delivering the newspaper to certain outlying areas. The Post-Gazette says its website “remains the region’s most visited site.”

    Between the site and the print publication, the Post-Gazette reaches more than 1 million people every week, the newspaper reported.

    ABC’s numbers do not mean that actual readership of the publications is plunging. Many print-publishing companies have the dominant websites in their regions. And because the Internet has introduced the sort of immediacy once available only to TV and radio stations — and because print publications generally have larger news-gathering operations than their local competitors — the websites of newspapers and magazines have become enormously popular.

    What has not followed — at least not across the board — is an increase in revenues. Some famous print publications have declared bankruptcy, switched to an online-only model or a combination of online and print — or even folded.

    Print, in general, is struggling in every corner of the United States — and yet readership and reach never have been higher.

    Despite the advantages of readership, reach and talent pools autosurf companies only could dream about, there continues to be great stress in the worlds of publishing and advertising.

    No famous publishing house has adopted the autosurf model, even though promoters of the model would have would-be members/advertisers believe it is the magic cure.

  • BREAKING NEWS: Florida Revokes Corporate Registration Of Andy Bowdoin’s AdSurfDaily Inc.; Dissolves Bowdoin/Harris Enterprises Inc. On Same Date

    UPDATED 10:47 P.M. EDT (U.S.A.) The state of Florida has revoked the corporate registration of AdSurfDaily Inc.

    Meanwhile, the state has dissolved Bowdoin/Harris Enterprises Inc. Both actions were taken Sept. 25 by the Florida Department of State’s Division of Corporations because neither company filed required paperwork.

    ASD’s registration is marked “REVOKED FOR ANNUAL REPORT.” The registration for Bowdoin/Harris Enterprises is marked “ADMIN DISSOLUTION FOR ANNUAL REPORT.” In each case, the required filings were nearly five months’ past due.

    Florida law requires all corporations, limited liability companies, limited partnerships and limited liability limited partnerships to file an annual report with the Division of Corporations between Jan. 1 and May 1 of each year.

    ASD is registered in Florida as a foreign corporation because the surf initially registered as a corporation native to Nevada. ASD’s Nevada registration is marked “default.”

    Ironically, Florida made the moves against the Bowdoin entities on the same date — Sept. 25 — a dramatic filing by federal prosecutors became public on the PACER U.S. Party Case Index. The federal filing accused ASD President Andy Bowdoin of trying to lie his way back into a civil-forfeiture case sparked by August 2008 allegations that ASD had engaged in wire fraud and money-laundering while operating a Ponzi scheme.

    In December 2008 — in a second forfeiture case filed against ASD’s assets — prosecutors said Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris, opened a bank account at Capital City Bank on June 10, 2008, in the name of Bowdoin/Harris Enterprises Inc.

    The account was funded with an opening deposit of $177,900.12 from two ASD accounts at Bank of America. More than $157,000 of the sum was used to retire the mortgage on the home of George Harris and his wife, Judy Harris, prosecutors said.

    Prosecutors named the Harris home in the December forfeiture complaint, saying it had been acquired with illegal proceeds from ASD. The Capital City Bank account was opened less than two weeks after ASD concluded a rally in Las Vegas at which Andy Bowdoin exhorted the crowd to internalize the thought of acquiring large sums of money.

    Florida’s actions against ASD and Bowdoin/Harris Enterprises are potentially problematic for the companies and Bowdoin.

    Prosecutors could argue, for example, that no company claiming to be legitimate in court and encouraging members to continue to support it would fail to complete the minimal amount of paperwork required to keep its corporate registration intact.

    On Sept. 28 — three days after Florida revoked ASD’s corporate registration and dissolved the registration of Bowdoin/Harris Enterprises — federal prosecutors filed a U.S. Secret Service transcript of a conference call ASD had recorded Sept. 21.

    In the call, Bowdoin told members that the government had seized their money. In his court filings, however, Bowdoin claimed the money was his.

    Prosecutors said the recording was evidence that Bowdoin could not keep his stories straight, arguing that he had told members one story and a federal judge another.

    In December 2008, prosecutors said Andy Bowdoin and Edna Faye Bowdoin had set up Bowdoin/Harris Enterprises to conceal expenditures and assets from the government. In July 2008, according to court filings, a cashier’s check for $48,244.03 from Bowdoin/Harris Enterprises was used to purchase a 2008 Lincoln MKS luxury sedan.

    Prosecutors named the Lincoln in the forfeiture complaint, along with two other automobiles, a Cabana boat, jet skis and marine equipment. All of the purchases were made with ASD funds or ASD funds that had been funneled through Bowdoin/Harris, prosecutors said.

    Bowdoin has left behind a string of failed businesses, prosecutors said. Florida has dissolved at least seven of them — now including ASD — a company Bowdoin asked members to support in post-seizure testimonials and letter-writing campaigns.

  • Bowdoin’s New Lawyer Has Another Big Case; Feds Charge Florida Home-Builder Scott Fawcett In Multi-Agency Operation Dubbed ‘The Mortgage Fraud Surge’

    Michael R.N. McDonnell is the attorney for a Florida man charged Tuesday with obtaining $388,000 in a mortgage-fraud scheme, according to the Naples Daily News.

    McDonnell, a lawyer for nearly 40 years, recently was retained to represent AdSurfDaily President Andy Bowdoin in a civil-forfeiture case involving tens of millions of dollars seized from Bowdoin’s bank accounts by the U.S. Secret Service last year in a wire-fraud, money-laundering and Ponzi scheme probe.

    Scott Fawcett, McDonnell’s client in the mortgage-fraud case, was accused of saying he had an account balance of $353.209.09 at Bank United when he had only $13.57 in the account, according to an information filed by federal prosecutors.

    The charge against Fawcett is part of a federal law-enforcement operation known as “The Mortgage Fraud Surge,” a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the FBI in Tampa and Jacksonville, “and numerous other federal, state, and local law enforcement agencies,” prosecutors said.

    Foreclosures are piling up in Florida, which has experienced nine bank failures this year, including three yesterday. Florida trails only California in foreclosure volume. Bank United’s predecessor company — Bank United FSB — failed in May 2009, costing the FDIC’s Deposit Insurance Fund an estimated $4.9 billion.

    The charge against Fawcett is filed in the Fort Myers Division of U.S. District Court for the Central District of Florida.

    Fawcett’s name is associated with more than a dozen foreclosure filings in Collier County, Fla., court records show. A person identified only as “H.F.” was named in the information as a co-applicant and co-owner of the account, but was not named a defendant.

    Fawcett is married to model Heather Fawcett, once listed as a member of the Miami Caliente of the upstart Lingerie Football League. Heather Fawcett’s listing on a website known as Model Mayhem includes a note that she was expecting a baby in September.

    Separately, Debra Landberg, a notary public, was indicted earlier in October — also in Fort Myers — on charges of fraud for helping “S.F.” and “H.F” get the loan that resulted in the charge against Scott Fawcett. The indictment against Landberg accuses her of helping “S.F.” get about $2.27 million in fraudulent loans by verifying fraudulent balances in accounts.

    Landberg was indicted on three counts of fraud and one count of lying to FBI agents. In the other fraudulent mortgage deals, according to the indictment, “S.F.” was said to have an account balance of $177,655.58, when the actual balance was $957.18, and an account balance of $146,264.77, when the actual balance was $1,774.50.

    Prosecutors are seeking forfeitures against Landberg and Scott Fawcett. The first fraudulent transaction involving Bank United occurred on July 19, 2006; the second transaction occurred April 17, 2007, according to court filings.

    The third — and largest fraudulent transaction — involved Citibank and the sum of $1.5 million, according to the indictment against Landberg.

  • Bank Failure Brings 2009 Total To 99; Foreclosures Pile Up In California, Florida; Prosecutors Battle Mortgage Fraudsters And Ponzi Schemers

    Andy Bowdoin
    Andy Bowdoin

    UPDATED 1:33 P.M. EDT (U.S.A.) The failure yesterday of San Joaquin Bank in Bakersfield, Calif., brought the total of bank failures in the United States this year to 99.

    With weeks remaining in the year, it is a virtual certainty that failures will top the 100 mark. Banks have been failing at an average rate of slightly less than 10 per month in 2009. Last year, 25 banks failed in the United States. In 2007, only three banks failed.

    As many as 416 names of other troubled banks appear on a confidential list maintained by the Federal Deposit Insurance Corp. (FDIC). The hemorrhage of bank failures — in large measure caused by a severe recession, consumer and business defaults, a collapse of real-estate prices in many parts of the country, brazen fraud in the mortgage sector and a contraction of development — is not over.

    Although banks and the government are working together to find ways to curb an explosion in the mortgage-foreclosure rate, foreclosures continue to suck wealth from the economy.

    “Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,” said James J. Saccacio, chief executive officer of RealtyTrac.

    RealtyTrac tracks foreclosure activity in the United States. On Oct. 14, the company said foreclosures in the third quarter set a record and were up 23 percent from the total reported in the third quarter of 2008.

    Foreclosure filings, default notices, scheduled auctions and bank repossessions totaled 937,840 in this year’s third quarter, RealtyTrac reported.

    Although foreclosure filings in September totaled 343,638 — a 4 percent decrease from August’s total — the number still represented a 29 percent increase from September 2008.

    September’s monthly total was among the highest figures reported since January 2005, trailing only July and August of this year.

    “REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties,” Saccacio said.

    Florida, California Battered By Foreclosures

    Six states — California, Florida, Arizona, Nevada, Illinois and Michigan — accounted for 62 percent of the foreclosure total in the third quarter, RealtyTrac reported. Foreclosures in the six states totaled 579,541.

    Foreclosures in California totaled 250,054 in the third quarter; Florida posted 156,924 foreclosures, a 23 percent increase from the total reported in the third quarter of 2008.

    Because Florida is an attractive state for retirees — and because those retirees have friends and loved ones in all corners of the United States — the state is an attractive target for scammers.

    Florida also has a large population of immigrants, another attractive target of scammers.

    Agencies Battle Florida Ponzi Fraud

    In the past 72 hours alone, the SEC, the CFTC, the FBI, the U.S. Postal Inspection Service, and federal prosecutors have announced three Florida Ponzi scheme prosecutions, a conviction in a separate Ponzi case — and a conviction in a fraud case in which a Florida man created more than 260 identities on eBay and fleeced customers out of $717,000.

    On the Florida Ponzi front:

    • David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc. were named defendants in emergency actions in U.S. District Court for the Middle District of Florida. Merrick, 61, of Apopka, is accused of operating a $22 million Ponzi scheme with ties to Panama, Mexico, Malaysia, Switzerland and the Netherlands.
    • HomePals Investment Club LLC, HomePals LLC (Home Pals), Ronnie Eugene Bass Jr., Abner Alabre and Brian J. Taglieri were charged in South Florida with securities fraud, conspiracy to commit securities fraud, wire fraud and money laundering. The defendants were accused of targeting Haitian-Americans in a $14.3 million Ponzi scheme that promised investment returns of 100 percent every 90 days. The scheme gathered money from as many as 64 “investment clubs,” the SEC said.
    • Sean Healy, 38, of Weston, Fla., was charged in a 55-count indictment unsealed in Pennsylvania with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice. The Florida-based scheme led to at least $14.6 million in losses in Pennsylvania alone, prosecutors said, adding that Healy purchased “numerous exotic vehicles and sport cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth over $2.3 million.” Healy also bought a $2.4 million waterfront mansion furnished with more than $2 million of home improvements, plus $1.5 million in men’s and women’s jewelry, prosecutors said.
    • Michael Riolo, 38, of Boca Raton, was sentenced to more than 24 years in prison for bilking investors in a $44 million Ponzi scheme. Prosecutors accused Riolo of cooking the books and sending false statements to investors that reported “consistent trading profits and increasing account balances.” In reality, Riolo “misdirected money he received from some investors to make distributions to other investors who sought to withdraw money from their investment accounts,” prosecutors said.
    • Andy Bowdoin, 74, of Quincy, Fla., continued his efforts to get back into a Ponzi case in which he had already submitted to the forfeiture of tens of millions of dollars seized last year by the U.S. Secret Service in an international wire-fraud and money-laundering probe. Bowdoin, who submitted to the forfeiture in January, fired his attorneys and began to file as his own attorney in February. In April, federal prosecutors announced that Bowdoin had signed a proffer letter in the case prior to acting as his own attorney and acknowledged his company, AdSurfDaily Inc., had been operating illegally. “Mr. Bowdoin also confirmed that the revenue figures of the enterprise were managed to make it appear to prospective members that the enterprise called Ad Surf Daily was a consistently profitable, and brilliant, passive income opportunity,” prosecutors said. Despite his own acknowledgments of illegal conduct, despite the proffer — and despite the fact Bowdoin had asked the court to grant his request to submit to the forfeiture and that the court granted Bowdoin’s request — Bowdoin climbed back on the litigation saddle. “Mr. Bowdoin says that after discussing this case with his supporters, and concluding that they were smarter than his attorneys, he has changed his mind,” prosecutors said.

    Total funds gathered in the alleged Bowdoin, Merrick, Bass, Alabre, Taglieri and Healy Ponzi schemes in Florida are estimated at $156.3 million, during a period in which U.S. banks are failing, the U.S. economy is confronting the worst business conditions since the Great Depression and mortgage foreclosures are piling up across the country, including hard-hit Florida.

    With the Riolo conviction added to the estimate, the number totals $200.3 million. The estimate does not reflect the massive, $65 billion Ponzi fraud of Bernad Madoff, who wiped out clients in Florida and elsewhere. Nor does it take into account allegations that Arthur Nadel, another man implicated in a large-scale fraud in Florida, may be responsible for tens — if not hundreds — of millions of dollars of Ponzi pain.

    “During these tough economic times, it is more important than ever that those who lie to and steal from the investing public be held accountable for their misconduct,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida, commenting on the 24-year prison sentence Riolo received.

    “The United States Attorney’s Office will continue to investigate and prosecute those who perpetrate these large-scale fraud schemes,” Sloman said.

  • EDITORIAL: Our Best Wishes To ‘Gomer Pyle,’ AUSA

    William R. Cowden is the man some supporters of AdSurfDaily Inc. love to hate.

    Cowden’s middle name is “Rakestraw.” Such a name posed an altogether too enticing opportunity for one ASD apologist. The apologist opined that Cowden, a federal prosecutor acting on behalf of victims of an alleged $100 million Ponzi scheme, should be placed in a medieval torture “rack” and that ASD members should draw “straws” to determine who got the honor of turning the screw.

    It was only a hint of the deeply troubling excess that would follow.

    After an evidentiary hearing last fall requested by ASD to to explain its business model and to ask for emergency release of funds seized by the U.S. Secret Service in August 2008, Cowden was derided by ASD’s apologists as a hapless, clueless “Gomer Pyle.”

    It didn’t matter that ASD President Andy Bowdoin had entered guilty pleas to felony charges of securities fraud in Alabama a decade previously, the apologists explained. Nor did it matter that Bowdoin’s business partner had been implicated in a securities scheme of his very own in the 1990s.

    What mattered, the apologists explained, was that Bowdoin was a fine “Christian” man who’d invented a miraculous business system for people of faith.

    Cowden, they insisted, didn’t understand technology or the business model. When Andy Bowdoin took the 5th Amendment at the evidentiary hearing, one of his apologists explained that he was “too honest” to testify.

    Another Christian apologist — in a hail of fire and brimstone — called for God to strike the prosecutors dead. Yet another described Cowden as a “Nazi.”

    During the time  ASD’s apologists were deriding Cowden as “Gomer Pyle,” they described Bowdoin’s attorneys as the “Perry Mason” team.

    Perry had reduced Gomer’s case to rubble, the apologists claimed. For good measure, one of them later added that U.S. District Judge Rosemary Collyer would have to be “brain dead” or “taking a payoff” if she ruled against ASD.

    Earlier, Collyer had been made the subject of a prayer chain that admonished God to intervene so she would do the right thing — namely, rule in ASD’s favor.

    Here is how a Mod who related one-sided reports to members of the Pro-ASD Surf’s Up forum assessed the performance of ASD’s witnesses and attorneys from both sides at the conclusion of the evidentiary hearing:

    [ASD] Witnesses:
    Bob Grayson – Excellent
    Gerald Nehra – Excellent
    Chuck Osmin -Excellent
    ASD Legal Team – Excellent

    US Attorney – Cowden – Not so much.
    Witnesses for the Prosecution: … … … Zero –
    Victims prior to 8/01/08:… … … Zero

    Collyer ruled Nov. 19 that ASD had not demonstrated at the hearing that it was a legal business and not a Ponzi scheme. She chastised ASD’s expert witness — an MLM attorney who had been paid a retainer of $24,000 and opined that ASD was not a Ponzi scheme — for relying on one-sided information from ASD and not performing a thorough analysis of ASD’s business operations before arriving at his opinion.

    ASD did not produce an audited balance sheet at the hearing, thus failing to dent the prosecution’s claim the company was insolvent and using money from new members to pay old ones in a shell game.

    No release of funds would be forthcoming, Collyer said.  Her ruling can be summarized in two words:

    Gomer won.

    After ASD suffered the stinging blow, Bowdoin apologists who once gleefully described his attorneys as the “Perry Mason” team and their performance as “Excellent” apparently decided they’d been too generous in their praise.

    The apologists ignored the fact that Andy Bowdoin had more than two months to produce an audited balance sheet and failed to do so. They also ignored the fact that Bowdoin had failed to provide documentation to his own lawyers when requested to do so and that testimony at the hearing was contradicted by information on ASD’s own website.

    Under a theory that emerged later, both Bowdoin’s attorneys and the prosecution were worthy of condemnation. The only people who could be trusted were among a “group” of ASD members with whom Bowdoin consulted in private. Members of the “group” advised Bowdoin to become his own lawyer.

    “The group said that my attorneys had taken the wrong approach,” Bowdoin said. “The group was very confident that they could help because the government had broken so many laws and had violated our rights as citizens of the United States.”

    This year and last, dozens of advocates for ASD wrote letters to the Inspector General at the U.S. Department of Justice to have Cowden and his then-boss — former U.S. Attorney Jeffrey A. Taylor — investigated and perhaps even fired. One Bowdoin apologist said Cowden would be lucky to find work in a fast-food restaurant after ASD members were done destroying his legal career.

    Some ASD apologists also wrote letters to Sen. Patrick Leahy, chairman of the Senate Judiciary Committee.

    Thirteen U.S. banks failed during the period in which ASD’s apologists were composing those letters and Leahy’s staff was fielding them in the opening days of the year. That number now has increased to 98, with weeks remaining in 2009. There were three bank failures in all of 2007.

    The ASD case, of course, is about keeping banks clean and safe from those who would pollute them with dirty money gathered in domestic and international fraud schemes.

    To describe the smear campaign by some ASD members against Cowden as unjustified does not do it justice. It was insidious, plain and simple. Later, Cowden was attacked by Curtis Richmond , a man hailed a “hero” on the Surf’s Up forum, the site from which the torture rack was proposed.

    Richmond, who once declared that he was immune from U.S. law because he was a “sovereign” being, accused Cowden, Taylor and Collyer of a money grab.

    “The U.S. Atty. and/or U.S. Judge Had No Authority or Jurisdiction to Steal Most of the $93 million of ASD Member Ownership Interest,” Richmond said, using his trademark mix of uppercase and lowercase letters. “All of the ASD Members had a Constitutional Right to Make A Contract With ASD and None of the ASD Members had a Contract With the U.S. Government.”

    Richmond, who has a contempt conviction for threatening federal judges in a separate case and holds the distinction of having been banned from the practice of law in Colorado even though he is not an attorney, advanced his theory of the ASD case:

    “Since the U.S. Atty. could not present any court order giving him Authority to Seize the $40 million of Cashier Checks and deposit them in an Account Of His Choosing, he is Guilty of Misappropriation of Funds [at] a minimum and very possibly Embezzlement,” Richmond claimed.

    Richmond also claimed he had “irrefutable” evidence against the prosecutors and suggested Collyer was conspiring with another federal judge and the government to deny justice to ASD members.

    “This was accomplished by sending by Return Receipt with a ‘Demand For Legal Evidence Affidavit’ to William Cowden, Assist. U.S. Atty., Jeffrey Taylor, U.S. Atty., and Roy Dotson, Special Agent, U.S. Secret Service[,] giving them 7 Days to present Legal Evidence that the Statements Made in the Demand For Legal Evidence[,] including the Listed Constitutional Rights, WERE FALSE,” Richmond claimed.

    “The Demand for Legal Evidence [was] part of Notarized Affidavits and clearly stated “Your Silence will be an Admission that you do not have the Legal Evidence,” he said.

    Cowden, Taylor and Dotson knowingly and willingly defaulted on his demands “because they had no Legal Evidence or believed they were above the law,” Richmond said. “Attorneys & Judges Are Not Above The Law. A Lawful Default Is a Lawful Default.”

    In short, Richmond’s theory of the ASD case is that you can demand a litigation result from federal judges and federal prosecutors by stating what you’d like to see occur, putting a letter containing the demand in the mail, giving the recipients a few days to submit to the demand — and then claim they’ve broken the law by not playing the game you brought to their doors.

    It was not the first time he had played the game. Richmond was among a group of litigants from a sham Utah “Indian” tribe sued for racketeering and ordered last year to pay damages for their conduct, which targeted judges, prosecutors, police officers — and even a family-services worker — in a scheme to place enormous financial judgments against them.

    Acting as an “arbitrator” for a sham company, Richmond signed a fraudulent award against the family-services worker for more than $300,000. The “tribe” placed a sham judgment for $250 million against a county prosecutor. Richmond claimed the federal judge hearing the case owed him $30 million, and the tribe drew up fraudulent arrest warrants against two other judges and Richmond’s litigation opponents in a banking case.

    The tribe fabricated a “Supreme Court,” which used the address of a Utah doughnut shop,  and tried unsuccessfully to force the U.S. Marshals Service to serve fraudulent court documents that called for the imprisonment of judges and Richmond’s opponents.

    After Richmond began to file pro se pleadings in the ASD case in February, others followed, including ASD President Andy Bowdoin, who had fired his attorneys after consulting with the “group” of members. Bowdoin’s pro se pleadings were not as far out as Richmond’s, which is not to say they were grounded on terra firma.

    Bowdoin rewrote the facts of a civil case against money and property seized from him, declaring himself a “defendant” in a quasi-criminal case and saying his paid attorneys had been incompetent. Bowdoin later publicly smeared one of his attorneys.

    Prosecutors now say Bowdoin, who apparently forgot he’d told the Secret Service that ASD had $1 million in a bank on the Caribbean island nation of Antigua before later claiming ASD needed emergency funds to operate, is “delusional.”

    Bowdoin, a defendant in a separate racketeering lawsuit to which he never has responded, claims a former Miss America is one of the inspirations behind his renewed litigation efforts against the government. He’d press on, he said, because Miss America didn’t give up after being denied the title in four previous bids to earn the crown.

    She finally won in her fifth attempt, Bowdoin explained to ASD members.

    He also explained that he was trying to get the government to return money the Secret Service seized from members, even though he always has maintained in court filings that the seized money belonged to him.

    By August, dozens of pro se litigants who sought to paint the prosecution as an unwanted Orwellian Big Brother had joined in the fray. An ASD upline shared a litigation template in which names were swapped in and out. Filers claimed they had been victimized by the government, not ASD.

    Cowden’s name was misspelled as “Crowden” in each of the fill-in-the-blank claims that began to flood the courthouse in August. They were still coming in last week, despite the fact Collyer already had denied the argument contained in the litigation template.

    With a new administration now in power in Washington, new U.S. Attorneys are being appointed and some assistant U.S. Attorneys (AUSAs) are leaving government service.

    There are reports today that William Cowden, AUSA, has left the Justice Department to join the private sector. We wish him the best in his pursuits  — and propose a special honor for his exceptional service to the victims of AdSurfDaily.

    We were unable to determine immediately if “Gomer Pyle” had a middle name on either The Andy Griffith Show or a spinoff, Gomer Pyle, USMC.

    Regardless, it would be nice — if only for today — if the thousands of ASD victims Cowden so capably represented would honor his government service by ascribing the middle initial “R” to the name of the character played by Jim Nabors.

    “Gomer Rakestraw Pyle” has a nice ring to it. “Gomer R. Pyle.”

    No one should be confused: Adding Rakestraw to the noble name of Gomer Pyle is a gesture of high esteem for William Cowden, who has been vilified, ridiculed and scorned by people who said nothing when it was suggested that he be placed in a rack, that straws be drawn and that a winner be declared to carry out the medieval torture.

    Delusional does not begin to describe this behavior. Some of the apologists appear to be constitutionally incapable of accepting the premise that Andy Bowdoin involved them in a criminal enterprise. At the same time, they have displayed the ceaseless constitutional capability of conflating one reality after another to provide cover for a fraudster and to smear one of the career prosecutors trying to bring him to justice.

    In the end, Bowdoin’s apologists could not even get their insults to make sense. Gomer Pyle, USMC, indeed, was a very good man — one held in the highest esteem.

    To the ASD critics of William Cowden, AUSA, we say, Honi soit qui mal y pense.

    And to William Cowden we ascribe the highest titular honor — “Gomer Pyle, AUSA” — and pay our highest regard:  Shazam!

    May there be many more Gomer Pyles at the Department of Justice in the years ahead.

    You see, “Gomer Pyle, USMC”  went off the air as a prime-time TV show in 1969. But the character of Gomer Pyle went on to become synonymous with virtue, a trait sorely lacking among Andy Bowdoin’s apologists.

    In 2001, 32 years after the fictional Private First Class Gomer Pyle left prime time, the real U.S. Marine Corps promoted him to lance corporal. In 2007, Gen. John F. Goodman, commander of the real U.S. Marine Corps Forces in the Pacific, promoted the fictional Gomer Pyle to full corporal.

    Real Marines stood at attention during the ceremony. Gomer Pyle was lauded for honesty, loyalty and devotion to duty.

    You have done well and were in good company, Mr. Cowden.

  • Street Address Of ASD Site That Made Odd Claims Before Vanishing Tied To Major Insurance-Fraud Investigation

    The street address listed for the domain ASD2Day.com appears in Florida records as the address of a woman charged with patient brokering and solicitation in a major insurance-fraud sting.

    Records show that a woman named Barbara Cruz was charged with four felony counts of insurance fraud in 2000. The name Barbara Cruz was listed as the name of the registered owner of the ASD2Day site, which now is offline.

    The Florida Insurance Commission described the case as a complex probe that involved staged automobile accidents, false Personal Injury Protection (PIP) claims against insurance companies and “runners” hired by unscrupulous medical clinics to recruit people involved in accidents — real or staged — into the insurance scam.

    Bill Nelson, Florida’s insurance commissioner when the sting was conducted, said the scheme was sucking wealth from Florida’s economy.

    “Our investigators estimate that more than half of the auto insurance PIP claims in the Miami area are fraudulent,” Nelson said, in 2000. “So far, we’ve identified at least $10 million that these suspects alone allegedly bilked from insurers at the expense of consumers throughout Florida.”

    Nelson, who served as a payload specialist on the space shuttle Columbia in 1986, previously was a member of the U.S. House and is now a U.S. Senator.

    Barbara Cruz was among a group of 51 people in the Greater Miami area in south Florida to be charged after a year-long investigation by the Insurance Commission. Docket entries show a person by the same name with the same birth date was charged in a case slugged “ANIMAL/FIGHT/OWN/SEL” in 1989.

    How the case involving animals was disposed is unclear. A docket entry is marked “NO ACTION” and the file location is marked “DESTROYED.” The insurance charges are marked “NOLLE PROS,” which suggests the case ultimately was dropped.

    ASD2Day.com appeared online in August, taking a Pro-AdSurfDaily point of view. ASD was implicated by the U.S. Secret Service in a $100 million Ponzi and fraud scheme in August 2008.

    Among the claims on the site was a puzzling assertion that U.S. District Judge Rosemary Collyer was on an Aug. 28, 2009 deadline “to determine if the US Attorney General’s case against ASD should move forward.”

    Collyer was on no such deadline.

    See earlier story.

  • Site That Used ASD’s Name And Made Odd Claims While Bowdoin Was Negotiating With Prosecutors Goes Offline

    A website known as ASD2Day.com that was registered Aug 19 in the name of a Florida woman now is throwing a server error and appears to be offline.

    ASD President Andy Bowdoin was in negotiations with federal prosecutors when the ASD2Day domain name was registered, and some ASD members were participating in a PR campaign that positioned themselves and Bowdoin as victims of a government prosecution run amok.

    Among the claims on the site was a puzzling assertion that U.S. District Judge Rosemary Collyer was on an Aug. 28 deadline “to determine if the US Attorney General’s case against ASD should move forward.”

    Collyer was on no such deadline, and the prosecution’s case was not teetering on the edge of disaster. At the time, Bowdoin was the subject of an order from Collyer to follow-up on pleadings he had made earlier in the case. On July 24, Collyer, noting that neither Bowdoin nor his attorney had followed up on pleadings made in May, ordered them to respond by Aug. 7.  That deadline, which applied to Bowdoin, later was extended to Aug. 28 — and then until Sept. 14 — when Bowdoin’s attorney notified the court that Bowdoin was negotiating with prosecutors.

    The ASD2Day site featured Pro-ASD content by an unnamed writer and a headline titled “Inside Information.” It described ASD’s “business concept” as a “proven reality” and used meta descriptions such as “Picture of a Flight Simulator Plane, to give an emotional feel.”

    ASD2Day.com claimed, among other things, that ASD could not be a Ponzi scheme because the script employed by the autosurfing firm could not be programmed to permit a Ponzi scheme to occur.

    Using overblown, confusing reasoning and language, the site claimed:

    “As we all know, ASD has been ruled for an irrelevant acquisition of `PONZI SCHEME OR PYRAMID` ruling. ASD Utilized a well known Traffic Exchange Script in the Online Marketing industry. The Script was named Pats Pro. I myself am a Programmer as well. I have worked with this script before to develop websites and add-ons. By the pure mechanics or functions in the Pats Pro system, there is no function of, that such can be ruled ponzi or pyramid. The PATS PRO system does not work as Ponzi, the written code in the software has no leads to such acquisition either.”

    Although the language appeared to be an attempt to suggest that ASD President Andy Bowdoin could not be guilty of operating a Ponzi because the script did not support a Ponzi model, federal prosecutors always have argued that the internal actions of ASD and Bowdoin — not the actions of a script — resulted in criminal instances of wire fraud and money-laundering.

    The writer did not say how the script would protect Bowdoin and ASD from another core allegation in the case: that ASD was engaging in the sale of unregistered securities, meaning the company was selling investment contracts and operating as an unregistered issuer and dealer of securities.

    Meanwhile, the site claimed that “The well known Internet Giant `Google` Ad sense service is not all that different from the ASD Advertising System (Pats Pro).”

    Many ASD supporters have argued that Google and ASD employed a similar business model, but have never explained why Google founders Sergey Brin and Larry Page — both of whom have personal fortunes estimated at $15.3 billion by Forbes magazine and are tied for 11th spot on the list of the richest Americans — never plunked down $100 for a script that would permit Google to do things like ASD.

    Why the ASD2Day site now is offline is unclear. The site included at least two calls to action: “Defend Our Business, Defend Our Rights!” and “ASD2DAY · For a Free Country.”

    Among the featured links were:

    • Join our stand
    • Learn about Defending ASD
    • Meet the team

    A subhead prompt instructed members to “Find out the Truth” and to “Read Articles, comment [on] them and learn the truth the US goverment doesn’t want you to hear..” The site also included a link to a Meebo chatroom.

    The chatroom link still is accessible:

    http://widget-cdn.meebo.com/mcr.swf?id=ySKbgEjiEw&eurl=

    Two links are visible in the chatroom. One is a link to a failed organization known as ASD Members International (ASDMI), which was formed in October 2008 by members of the Pro-ASD Surf’s Up forum.

    Another link is to a URL for a business owned by “Professor” Patrick Moriarty, now under indictment for tax fraud. Moriarty was a founder of ASDMI.

  • TEA LEAVES: AdSurfDaily Case About To Come To A Head?

    EDITOR’S NOTE: Reading the tea leaves in court cases often is an iffy proposition, and there often is no way to know what will happen when. Readers are advised to keep those thoughts in mind when considering the information in this story.

    UPDATED 7:03 P.M. EDT (U.S.A.) Recent court filings suggest — although it is far from clear — that dramatic events could occur soon on at least three fronts in the AdSurfDaily case.

    Consider:

    • The government today added two prosecutors to its roster in the main civil-forfeiture case against tens of millions of dollars and real estate seized in August 2008 from ASD President Andy Bowdoin. Both new members of the team are experienced in criminal prosecutions, including appeals. One of the prosecutors has served in complex cases involving international banking and money-laundering, as well as cases involving the Federal Bureau of Investigation and the Drug Enforcement Administration.
    • A federal judge, noting that no claimants have stepped forward in a second forfeiture case filed in December 2008 and targeted at assets tied to ASD, now has ordered prosecutors to state their intentions by Nov. 6 on how they intend to proceed in the December case. Potential claimants included Bowdoin and his wife, Edna Faye Bowdoin, and her son, George Harris. Judy Harris, the wife of George Harris, also was a potential claimant, as was Hays Amos, a former ASD employee.

    The Harris home in Tallahassee was seized in the December complaint, as was a car registered to George and Judy Harris. Prosecutors said a mortgage of more than $157,000 on the Harris home was retired with illegal proceeds from ASD, adding that Edna Faye Bowdoin and George Harris worked together to establish a bank account into which ASD funds were deposited and quickly wired to a third bank to pay off the mortgage.

    Prosecutors said the account was opened June 10, 2008, at Capital City Bank, less than two weeks after ASD concluded a rally in Las Vegas at which Andy Bowdoin exhorted the crowd to internalize the thought of acquiring large sums of money.

    The account was opened in the name of Bowdoin/Harris Enterprises Inc. and was funded with an opening deposit of $177,900.12 from two ASD accounts at Bank of America.

    Less than two weeks later, the lion’s share of the money was used to retire the mortgage on the Harris home — a home for which the couple has not filed a claim.

    (Emphasis added in the paragraph below.)

    “On or about June 23, 2008, George Harris requested via a telephone call that an electronic wire for $157,216.79 be sent from his Capital City Bank account to Citi Mortgage Inc.,” prosecutors said. “The reference that Mr. Harris provided was ‘REF: PAYOFF JUDY HARRIS #XXXXXX2292.’”

    The clear implication from the language of the complaint was that money from ASD — money prosecutors said Andy Bowdoin had acquired through a wire-fraud and money-laundering scheme — had been used a second time to commit wire fraud, this time by George Harris with help from his mother, Bowdoin’s wife.

    Four members of the Bowdoin/Harris family were involved in one way or another in the transaction, with George Harris becoming a supplemental beneficiary and Judy Harris becoming the final beneficiary. The mortgage on the property was recorded in Leon County, Fla, as paid on July 11, 2008, with the filing of a “satisfaction of mortgage.”

    Another way to look at the transaction is that it put each of the principal members of the Bowdoin/Harris family at great risk of getting arrested and, upon conviction, going to prison.

    George and Judy Harris later emerged as “Trustees”  — and then the purported owners of the AdViewGlobal (AVG) autosurf. Bowdoin was the silent head of AVG, members said.

    AVG purported to he headquartered in Uruguay. It launched in the wake of the filing of both forfeiture complaints, and also the filing of a racketeering lawsuit against Bowdoin and ASD by individual members. The racketeering lawsuit first was filed in November 2008 in Florida — in the immediate aftermath of a major court ruling against ASD in which a federal judge said ASD had not demonstrated it was a legal business and not a Ponzi scheme at an evidentiary hearing last fall.

    Attorneys for the plaintiffs dismissed the case in Florida, and refiled it in the District of Columbia in January 2009. AVG formally launched in February 2009, despite all the litigation that had piled up around Bowdoin and the Bowdoin/Harris family.

    On Sept. 25, prosecutors made a veiled reference to AVG in a court filing in which they accused Bowdoin of trying to lie his way back into the August 2008 civil-forfeiture case after he had already submitted to the forfeiture in January 2009.

    Here, in its entirety, is the Sept 25 reference: (Italics added.)

    “Maybe Bowdoin mistakenly thought that he could con the government into believing that he was just a harmless, foolish old man. Ironically, after telling thousands of investors that he intended to build the world’s preeminent advertising company for them, in order to make them 100,000 millionaires, Bowdoin tries to con this Court, telling it that because he’s 74 and has a heart condition, any incarceration amounts to a death sentence. See Document #132 ¶8. Was he lying then, or now?

    “Or, it may be the case that Bowdoin never intended to plead guilty when he agreed to debrief, and was just buying time while searching for a different exit strategy that failed to materialize. Maybe Bowdoin thought that before the government brought its charges he (like some of his family members) could move to another country and profit from a knock-off autosurf program that Bowdoin funded and helped to start.

    “Or, maybe other attorneys Bowdoin employed, or ASD’s other promoters convinced Bowdoin that if he paid some of the fraud proceeds the government had missed to them (the money laundering as Mr. Murray reports), they could help to circle the wagons or otherwise do a better job than Akerman Senterfitt did when it tried to prove that free advertising was a true profitable sale and not a poorly disguised, and unsustainable, investment opportunity.

    “But what is clear from Bowdoin, himself, is that neither the government, nor Bowdoin’s experienced criminal defense counsel, ever told Bowdoin that it was reasonable for a defendant convicted of operating a $100 million wire fraud scheme to expect probation.”

    Three days later, on Sept. 28, prosecutors returned to court, filing a supplemental brief and a U.S. Secret Service transcript of an audio recording Bowdoin or a person who aided him posted online.

    (Italics added.)

    “Remarkably, Bowdoin even suggests to those members participating in the conference call that the money taken from his bank accounts and, supposedly, never constituting an investment, belongs, not to Bowdoin, but to the membership. It is clear that this con man cannot manage to keep his stories straight,” prosecutors said.

    Bowdoin’s claim in the transcript of the audio recording is at odds with his own court filings — filings in which he claims to be the owner of the seized funds. It is clear from the language prosecutors used in their supplemental filing that they now have the option of arguing that Bowdoin’s statement to the membership was tantamount to a confession that he was selling unregistered securities as investment contracts, not advertisements as he had claimed.

    In the hours that followed, some ASD members appeared to suggest in various emails that ASD members should not cooperate if contacted by the Secret Service.

    Given the nature and the content of recent filings from parties on both sides of the case, the ASD prosecution could be building to a crescendo. Prosecutors have many options, and appear to be preparing to use them — up to and including acting on the December forfeiture complaint at the moment that best suits their strategy.

    There could be dramatic developments — and surprises — ahead.

  • U.S. Employment Numbers Worst Since 1983; Social Security Takes A Hit From Discouraged Early Retirees; FDIC Seeks To Recapitalize In Wake Of Nearly 100 Bank Failures In 2009

    When the AdViewGlobal (AVG) autosurf — now failed — was in prelaunch phase in December 2008, it positioned itself as an offshore cure for what ails the U.S. and world economies.

    Less than two years earlier, promoters of the AdSurfDaily autosurf — which has close ties to AVG — implied that the individual surf accounts of ASD members were insured by the FDIC and that ASD provided “shelter” from the FTC and the SEC.

    ASD’s assets were seized by the U.S. Secret Service in August 2008, amid allegations of wire-fraud, money-laundering and selling unregistered securities via a Ponzi scheme. Only months later AVG began its ignoble task of encouraging members to move cash offshore and permit it to be managed by unknowns, thus separating participants from even more wealth.

    The result was a colossal failure AVG announced in June, before it disabled its forum to prevent members from asking uncomfortable questions. AVG even threatened members who shared the news with copyright-infringement lawsuits. Indeed, AVG went from a much ballyhooed cure to a thuggish disease that attacked its own participants in only weeks.

    Neither ASD nor AVG created any new wealth or cured anything. About the only thing the surfs managed to do was siphon wealth from one group and transfer it to another, all during a time a global recession was rearing its ugly head and putting jobs and lifetimes of hard work in harm’s way.

    The U.S. economy shed 263,000 jobs in September, and the unemployment rate edged up to 9.8 percent, the Labor Department said yesterday.

    Unemployment virtually has doubled since December 2007. The number of persons looking for work now totals 15.1 million, and the unemployment rate is the highest since June 1983.

    When discouraged workers and workers who’ve accepted part-time jobs in the absence of full-time employment are factored into the numbers, the so-called “real” unemployment rate is 17 percent. The number could be distorted — meaning the true employment numbers could be masked to a degree — because older workers separated from their jobs have been applying for Social Security, rather than continuing their struggle to find work when the odds are against them.

    The Social Security Administration told Bloomberg News that it had expected an increase of 315,000 applications for the one-year period ending Sept 30, but instead received 465,000, an increase of 150,000 applications.

    Meanwhile, regulators seized three more U.S. banks yesterday, bringing the year-to-date total to 98. Because the FDIC  is close to operating in the red, the agency is in the process of recapitalizing and has proposed a plan that would force banks to pay insurance premiums early to protect customer deposits, rather than pass along the cost of the recapitalization to taxpayers.

    “First and foremost, bank customers should know that their insured deposits have and always will be 100 percent safe, no matter what,” said FDIC Chairman Sheila Bair. “This commitment to depositors is absolute. The decision today (Sept. 29) is really about how and when the industry fulfills its obligation to the insurance fund. It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem. In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”

    At risk, however, are banking profits when the industry already is struggling, but the FDIC insists that “banks overall have enough liquid assets to make the proposed prepayment.”

    U.S. regulators have not confronted a challenge of this magnitude since the late 1980s and early 1990s, when the savings and loan industry recorded 745 failures, in no small part due to fraud, mismanagement and regulatory laxity.

    Here is the bank-failure list so far in 2009: