From the 2010 MPBToday MLM scam. Like Zeek Rewards, MPBToday traded in part on Walmart gift cards.
Ah, those serially disingenuous MLM hucksters and commission-based Ponzi pitchmen: They’ll ultimately destroy their own brands while picking millions of pockets. Before doing so, they’ll use your brand as a temporary means of sanitizing themselves, bring PR disasters to your legitimate company and perhaps even find an insidious way to turn the government into their banker.
Longtime PP Blog readers will recall the outrageous scam of MPBToday. MPBToday duped the MLM masses in part by planting the seed that Walmart gift cards or prepaid Visa cards would flow to members in unlimited supply if they sent $200 to the Florida-based “program” for a “one-time” purchase of “groceries” and if the members recruited two others who’d also recruit two others to do the same.
In addition to being a pyramid scheme that sent operator Gary Calhoun to prison in Florida on a racketeering charge, MPB Today could have been a scam that disguised “program” earnings as nontaxable “gifts” to dupe Uncle Sam.
It’s almost axiomatic in MLM Scam Land that an “opportunity” and/or its Stepfordian promoters will imply a tie to a major brick-and-mortar business or even the government, when no such ties exist or the ties are no more official than ties any consumer can enjoy — purchasing a gift card from a major retailer, having a bank account or renting a room at a major hotel chain, for instance. It happened at MPB Today in 2010, and it’s happening now within the Stepfordian wing of TelexFree — a wing in which promoters have suggested that TelexFree has been “authorized” or “approved” by the government.
It also happened both internally and externally at WCM777, now the subject of cross-border investigations in both North America and South America. In an apparent bid to sanitize the WCM777 scheme, alleged operator Ming Xu arranged to have himself photographed with celebrities such as former U.S. Vice President Al Gore and Apple co-founder Steve Wozniak. Meanwhile, WCM777 promoters rushed to YouTube and other social-media sites to claim that WCM777 had ties to famous businesses such as Siemens and a host of hospitality companies with famous flags.
Such rank MLM disingenuousness also occurred within the $850 million Zeek Rewards scheme. In the PP Blog’s view, Zeek’s maximum expression of such deception occurred when it was auctioning sums of U.S. cash and telling successful bidders they’d get paid through offshore payment processors such as AlertPay and SolidTrustPay. By divining sums up for auction and accepting bids for U.S. currency, Zeek implied it had been approved by the U.S. government, perhaps specifically the Treasury Department.
And by sending the incongruous (and bizarre) message that the Treasury-approved Zeek MLM scheme would pay members via offshore processors linked to the equally outrageous AdSurfDaily Ponzi scheme broken up by a Task Force consisting of the U.S. Secret Service and the Treasury Department (IRS) in 2008, Zeek served up another colossal mess for MLM.
Zeek, of course, followed the footsteps of MPBToday — whose operator lost his liberty after pushing all those Walmart cards out the door — by leeching off the names of major American retailers. In addition to auctioning cash, Zeek auctioned gift cards.
And this brings us to an interesting footnote in a quarterly report filed Jan. 30 by Kenneth D. Bell, the receiver in the Zeek Rewards Ponzi-scheme case. Zeek operated through Rex Venture Group (RVG).
“Unlike other retailers the Receiver Team approached, Wal-Mart and Home Depot readily agreed to refund the full amount of their gift cards held by RVG at the time of shut-down,” Bell advised Senior U.S. District Judge Graham C. Mullen. “The remaining gift cards were sold at auction, and their value is included in the gross receipts from the personal property portion of the Receivership auction.”
Walmart and Home Depot know a PR disaster when they see one. They ponied up quickly when the receiver asked them, thus making his job of gathering funds for Zeek victims a bit easier. Some other companies that perhaps have less PR savvy did not. The receiver auctioned their gift cards in public.
Bell’s examination of Zeek’s money flow continues, according to the Jan. 30 report. The report reveals that lawsuits against alleged insiders and winners had not been filed as of the 30th, but remain pending.
The receivership is “on the brink of filing,” Bell said.
Some Zeekers who choose to see instead of turning a blind eye perhaps can gain an understanding of just how dangerous the “program” was to the U.S. financial system — and not just the relatively small segment in which retailers that issue gift cards reside. Not only did Zeek create legal and PR dilemmas for itself, it created them for others, including gems of U.S. commerce and banking.
During 2013’s fourth quarter, attorneys for the receiver “sent demand letters to fifty-four (54) financial institutions seeking reimbursement for teller’s checks on which financial institutions were believed to have improperly stopped payment under Section 3-411 of the Uniform Commercial Code and in violation of the Freeze Order,” Bell advised the court.
“As of December 31, 2013, thirty-one (31) financial institutions had not responded to the Receiver’s demand(s) for payment of stopped payment cashier’s checks and bank money orders,” Bell continued. “Additionally, fifteen (15) issuers of teller’s checks had not responded to demand letters.”
Let’s hope these financial institutions develop the PR savvy of Wal-Mart and Home Depot. Zeek not only was a train wreck unto itself, it set the stage to involve legitimate enterprises in its own bizarre drama. Company after company that conducted business with Zeek or whose customers did so has had to lawyer up or at least rely on in-house counsel to determine how much exposure the “program” brought to legitimate enterprises.
The Zeek story is far from being over and likely will reverberate for years in the financial community. Bell now says that he’s “discovered additional RVG financial accounts during the fourth quarter.”
Zeek money, according to the report, circulated onshore and offshore.
“All transactional information received from financial institutions through the end of the fourth quarter has been included in the creation of the financial books and records,” Bell advised the court. “However, communications with financial institutions are ongoing, and there are outstanding requests by the Receiver for transactional information.”
When will other shoes drop?
“The Receiver Team continued its investigation into potential claims against RVG insiders and third-party advisers as a part of its ongoing fact investigation, continuing its analysis of documentary evidence that will be used in proving such claims,” Bell advised the court. “The Receiver Team also responded to requests for assistance and information from the U.S. Attorney’s Office that aided the government in obtaining plea agreements from both Dawn Wright-Olivares and Daniel Olivares.”
Wright Olivares, Zeek’s former COO, was charged criminally and civilly in December 2012 2013 (Feb. 5, 2014 edit). Olivares, her stepson, also was charged criminally and civilly. They are expected to appear in court this week to enter formal guilty pleas to criminal conduct.
Federal prosecutors say tax fraud occurred at Zeek.
Here, we’ll point you to an unrelated story by Jordan Maglich at PonziTracker.com. The story is about an alleged pitchman for Ponzi schemer Nicholas Cosmo, now serving 25 years in federal prison for his epic Agape World fraud. (Quick side note: Agape World was a purported “bridge lender,” similar in some ways to the outrageous “Profitable Sunrise” MLM fraud scheme broken up by the SEC last year.) The PonziTracker story on Agape World developments is titled, “Ponzi Associate Jailed For ‘Mind-Boggling’ Money Laundering Scheme.”
The story explains why alleged Cosmo pitchman Anthony Ciccone now is in jail. A snippet from the story:
According to prosecutors, Ciccone overpaid approximately $1.7 million in federal and state income taxes beginning in 2008 that was comprised of Ponzi scheme proceeds. Several years later, the funds were returned to Ciccone in the form of tax refunds, and Ciccone subsequently had his wife and mother-in-law launder the refund money through their bank accounts.
We wonder: Could some of the Zeekers effectively have been doing the same thing — deliberately overpaying taxes and using the government as a de facto bank that temporarily would conceal and warehouse Ponzi proceeds for return later in the form of tax refunds?
And for the 2011 tax year, according to the charging documents, “P.B.,” Wright-Olivares and others reported to the IRS that Zeek investors had received more than $108 million from the scheme when Zeek had paid out only about $13 million.
This caused Zeek victims to file “false tax returns with the IRS reporting phantom income that they never actually received,” according to the charging documents.
Zeek used the “false tax notices to perpetuate the Ponzi scheme,” according to the charging document.
The “Aunt Ethels” in the United States — older people with money — will be thrilled to join TelexFree once they see how their relatives, friends and neighbors are prospering, according to a promo.
A columnist at Jornal.US News Service is reporting in Portuguese that TelexFree members are receiving instructions on how to register for the “program” by using location-masking proxies and bogus information on their countries of residence.
TelexFree has been the subject of a pyramid-scheme probe in Brazil since at least June 2013.
The Jornal.US News column raises the prospect that tax fraud aimed at the U.S. government could be occurring. TelexFree has U.S. footprints in Massachusetts and Nevada. Some American promoters have ignored the probe in Brazil and continue to enlist recruits. They’ve also ignored reports of death threats targeted at public officials in Brazil involved in the TelexFree probe.
In December 2013, federal prosecutors said tax fraud had occurred at Zeek Rewards, an MLM “program” that has features similar to TelexFree.
Whether TelexFree is under investigation in the United States is unknown. Some U.S.-based promoters have claimed that $15,125 sent to the “program” fetches a return of at least $42,075 in a year, plus the full return of the initial outlay.
As the PP Blog reported on Aug. 4, 2013, the math of the claim is basically this: After recruits send in $15,125, they purportedly receive at least $1,100 a week for 52 weeks. That computes to $57,200. Subtract the original outlay of $15,125, and emerge $42,075 on the plus side, with the principal also fully returned. In this context, TelexFree essentially triples or quadruples the initial outlay over the course of a year, according to the promos.
Like the 2008 AdSurfDaily Ponzi scheme ($120 million) and the 2012 Zeek Rewards’ scheme (at least $850 million) that led to Ponzi charges in the United States, the TelexFree “program” has a purported “advertising” component. In ASD, members purportedly got paid for clicking on ads; in Zeek and TelexFree, members purportedly get (or got) paid for posting ads online, according to narratives by promoters.
As was the case with Zeek, puff pieces are being used in TelexFree to help the scheme spread.
And as was the case with ASD and Zeek, TelexFree “supporters” are singing the praises of the company and clashing with messengers of “negative” news. There have been at least two instances in Brazil in which apparent TelexFree promoters targeted media reports about suicide deaths of TelexFree members with offers to join the “program.”
On Sept. 9, 2013, the PP Blog reported that TelexFree promoters were encouraging prospects in Brazil to fabricate an address in England to register for the “program” and may be encouraging fellow members to menace public officials.
There were reports last month that a Brazilian prosecutor involved in the TelexFree probe had been targeted in a ghastly intimidation campaign.
Hearty cuisine and the Internet are the things at The Healthy Hog. Source: 5News video.
EDITOR’S NOTE: A “razorback” is a wild (feral) hog present in certain U.S. states, including Arkansas. The University of Arkansas calls its sports teams the “Razorbacks.” Zeek Rewards Ponzi-scheme figure Dawn Wright-Olivares, an Arkansas resident, recently opened a Clarksville restaurant called “The Healthy Hog.” Though the words “healthy” and “hog” may appear to be in conflict, the marriage of such incongruous-sounding words might be perfectly at home, completely inoffensive and good for business in Arkansas, which is known as “The Razorback State.”
Until a TV report aired yesterday, Clarksville residents may not have known that Ponzi history has touched their town of fewer than 10,000 residents in a big way. The Johnson County community is known for its scenic beauty and annual Peach Festival.
5News (KFSM-TV in Fort Smith and KXNW-TV in Fayetteville) sent a crew to The Healthy Hog after Wright-Olivares was charged criminally and civilly in the Zeek Rewards Ponzi-scheme case in December 2013.
Zeek, the SEC says, gathered at least $850 million. Wright-Olivares appears to have parachuted into Lexington, N.C., from time to time as part of her role as Zeek’s onetime marketing maven.
Kenneth D. Bell, the court-appointed receiver in the civil case and the special master in the criminal case, has noted that Zeek operated from Lexington and drew in participants from at least 100 countries around the globe.
In terms of the number of victims and the creation of net losers (an estimated 800,000), the Internet-driven Zeek scheme may be the largest Ponzi scheme in U.S. history. By comparison, the 2008 AdSurfDaily Ponzi scheme — at the time considered the largest Internet-based Ponzi scheme in U.S. history — affected about 100,000 people and gathered about $120 million.
Wright-Olivares, 45, was Zeek’s former COO. She has settled the SEC civil case against her and agreed to plead guilty to Zeek-related criminal charges of investment-fraud conspiracy and tax-fraud conspiracy, federal investigators said. Her stepson, Daniel Olivares, 31, also has settled the SEC’s civil allegations and agreed to plead guilty to a criminal charge. In Daniel’s case, it’s a charge of investment-fraud conspiracy.
The criminal charges were the first in the long-running Zeek probe, which became public in August 2012 and also involves the U.S. Secret Service, the IRS and the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina. The SEC filed its first Zeek-related civil case on Aug. 17, 2012, naming Zeek operator Paul R. Burks of Rex Venture Group LLC a defendant.
Bell has identified Alexandre “Alex” De Brantes, the husband of Wright-Olivares, as member of a group of alleged Zeek insiders. Images of De Brantes appear briefly in the 5News report. Bell is expected to file lawsuits against alleged Zeek insiders and “net winners” soon.
“[Former State Rep. Brian] Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.” — Office of Michigan Attorney General Bill Schuette, Dec. 20, 2013
A onetime Michigan statehouse member who’d earlier lost $400,000 in an offering fraud and responded by becoming a cheerleader for the thief who swindled him has pleaded no contest to a criminal charge of Neglect of Duty by a Public Official.
Strange as it sounds, it is not unusual in the fraud sphere for crime victims to turn into supporters of those who ripped them off or even to follow them to another scam in the hope of making up losses. The case against former Michigan Rep. Brian Palmer demonstrates that a victim’s behavior after a scam could have criminal consequences if he or she doesn’t break ties with a scammer.
Palmer, 64, of Romeo, reasoned that he could make up his losses in the offering fraud by assisting Jeffrey Ripley, who ran API Worldwide Inc. But API Worldwide proved to be a $9 million Ponzi scheme overseen by Ripley and fellow scammer Danny Lee VanLiere, the office of Michigan Attorney General Bill Schuette said.
“Ripley lost Palmer’s $400,000 on the investment and assured Palmer that he would get his money back if Palmer helped him with API,” prosecutors said. “Ripley gave Palmer credit for the $400,000 in API investments and Palmer cooperated with API because he believed he would receive a return on his lost funds.”
Palmer cooperated with investigators in the state probe conducted by Department of Attorney General’s Corporate Oversight Division and Public Integrity Unit and the Department of Insurance and Financial Services, Schuette’s office said.
In the API Worldwide scam, investigators said, senior citizens were lured into cashing out CDs and other investments and plowing the money into the purported “high-return” opportunity operated by Ripley, 61, of Sparta, and Danny Lee VanLiere, 62, of Grand Rapids.
From a statement by prosecutors (italics added):
Palmer met with potential investors on behalf of Ripley and API. With the knowledge that Ripley was attempting to circumvent the Securities Act, Palmer did not report the conduct to proper authorities.
Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.
“Public officials are sworn to uphold the law,” said Schuette. “Those who break the public trust should face the consequences.”
The charge of Neglect of Duty by a Public Official to which Palmer pleaded no contest is a misdemeanor. Ingham County Judge Patrick Cherry sentenced the former legislator to “320 hours of community service that shall be served in a capacity helping seniors and the homeless,” Schuette’s office said.
A fine and costs totaling $405 also were assessed against Palmer, who conceivably could have been fined up to $1,000 and ordered to spend a year in jail.
Ripley and VanLiere pleaded no contest earlier this year to racketeering and selling unregistered securities.
Ottawa County Circuit Court Chief Judge Edward R. Post sentenced both men to serve six to 20 years in prison. Ripley was ordered to pay more than $5.3 million in restitution. VanLiere was ordered to pay more than $3 million.
The API Worldwide scam has resulted in at least two other convictions, bringing the total conviction count to five.
On Dec. 13, Schuette said Douglas Kacos, 58, of Grand Rapids, and Thomas Doctor, 53, of Grand Rapids, pleaded no contest to misdemeanor Money Laundering, which is punishable by up to two years in prison and/or a $10,000 fine or twice the value of the proceeds, whichever amount is greater.
Kent County Circuit Court Judge James R. Redford is scheduled to sentence Kacos and Doctor on Jan. 27.
Bizarre levels of detachment and reservoirs of denial may accompany fraud schemes. In the $82 “Three Hebrew Boys” scam in South Carolina in which victims’ funds were used to acquire a party bus, a jet aircraft and expensive sports tickets, for example, some victims asserted that the scammers should not be prosecuted. Meanwhile, in the $21.5 million Dennis Bolze Ponzi scheme in Tennessee, Bolze told a federal judge that he could make up the losses if permitted access to the Internet and a computerized program — and a little time.
In the $119 million AdSurfDaily Ponzi case in Florida in 2008, thousands of victims initially expressed support for now-convicted Ponzi schemer Andy Bowdoin — even after prosecutors pointed out that he’d previously been convicted of crimes tied to securities swindles with a Ponzi element in Alabama and had a business partner implicated by the SEC in three prime-bank swindles. At least one purported “opportunity” (PaperlessAccess) appears to have hired Bowdoin in 2009 to be a commercial pitchman during an active criminal investigation into ASD and while the ASD Ponzi indictment against him was pending. While awaiting his ASD-related criminal trial in 2011, Bowdoin became a pitchman for OneX, a “program” federal prosecutors later called a scam.
In June 2013, a company known as iWowWe brought in Zeek Rewards figure Dawn Wright-Olivares as its chief marketing officer after the SEC alleged in August 2012 that Zeek was a Ponzi- and pyramid scheme that had gathered hundreds of millions of dollars and after the U.S. Secret Service announced it also was investigating Zeek. Wright-Olivares was charged criminally last week for her role in Zeek, creating a PR problem for iWowWe.
Zeek receiver Kenneth D. Bell at a Dec. 13 news conference in Lexington, N.C. Source: Screen shot from video at receivership website.
The court-appointed receiver in the Zeek Rewards Ponzi-scheme case has announced he is in the process of sending a batch of more than 80,000 Notices of Claims Determination. This is the first batch of such notices, which the receiver began to issue yesterday. The first batch is expected to take through Dec. 31 to be fully sent.
Zeekers not included in the first group of 80,000 should remain calm.
“Not receiving a Claim Determination notice at this time does not mean that your Claim is not valid,” receiver Kenneth D. Bell said in an update posted on the receivership website and dated Dec. 27. “Certain Claims will take additional time to evaluate and may require us to make further contact with you before we issue a Claim Determination. We are and will be working hard to reconcile all Claims and send all Claims Determination as soon as we are able to do so.”
More than 175,000 claims were filed in the Zeek case, Bell said in Dec. 13 letter.
The sending of the first batch of notices, though good news, does not mean that a distribution from the receivership estate is imminent. What it means is that individuals who receive a notice can log into the Claim Determination Portal to review the determination and follow the instructions provided to either accept or object to the determination. (Read the Dec. 27 update at the receivership website.)
“We’ll be able to get, I think, more than 50 cents on the dollar back to people,” Bell said at Dec. 13 news conference.
One or more distributions may come from the receivership. The first is contemplated for the first quarter of 2014, though more reconciliation work needs to be done before it is scheduled, Bell said.
Top Ponzi Winners’ Alleged Hauls
On the clawback front, Bell said on Dec. 13 that Zeek’s Top 10 net winners each received at least $900,000 from the Ponzi scheme.
The biggest net winner received on the order of $1.8 million, Bell said.
Clawback lawsuits are contemplated against roughly 9,000 net winners in the United States alone, Bell said.
“They’re in all 94 U.S. District Courts, they’re in every state in the country,” Bell said. He noted that the U.S. winners have combined clawback exposure on the order of $200 million.
Another 6,000 or so net winners are not U.S. residents and may have exposure of “several tens of millions of dollars,” Bell said.
“We are trying to figure out who we can sue and where,” Bell said of Zeek’s international winners.
Zeek operated through Rex Venture Group LLC of Lexington, N.C.
‘Like The World’s Biggest Chain Letter’
“This Ponzi scheme is just fascinating to me in a lot of ways,” Bell said of Zeek. “It only lasted for about 20 months, from January 2011 [to] mid-August of 2012. During that time, it brought in something north of $800 million from about 900,000 people from 100 countries around the world. I mean, it’s like the world’s biggest chain letter, if you will.”
The AdSurfDaily Ponzi scheme exposed by the U.S. Secret Service in 2008 brought in about $120 million and ensnared about 100,000 participants, also in less than two years of operation. Zeek, which launched after ASD was exposed and had promoters in common with ASD, appears to have brought in more than seven times the dollar volume of ASD while roping in about nine times the number of participants.
More than $850 million was directed at Zeek, the SEC said last week.
Zeek and ASD both operated MLM “programs” and had strikingly similar business models. Although ASD posed logistical challenges to the U.S. courts and victims seeking restitution, Zeek’s enterprise appears to have established an unprecedented challenge.
Bell has called Zeek “one of the largest — if not the largest — Ponzi and pyramid schemes in history.”
On Dec. 20, federal prosecutors charged former Zeek COO Dawn Wright-Olivares and former Zeek programmer Daniel Olivares criminally, marking the first criminal prosecutions in the case. The SEC sued Wright-Olivares and Olivares civilly on the same day. The former Zeek pair settled with the SEC, agreeing to pay more than $11.4 million.
On the criminal side of things, Wright-Olivares agreed to plead guilty to investment-fraud conspiracy and tax-fraud conspiracy. Olivares agreed to plead guilty to investment-fraud conspiracy.
The SEC sued Zeek operator Paul R. Burks in 2012.
Various Zeek probes are ongoing, investigators said last week.
Bell said that most individuals who filed Zeek claims “did an excellent job.” He added, however, that some individuals filed “fraudulent claims” and that some “net winners” appear to have filed claims that state losses.
“We want to make sure we’re not paying claims to people who ought to be paying the money back to the receivership,” Bell said.
“So tell me what I see when I look in your eyes. Is that you baby or just a brilliant disguise?” — Bruce Springsteen, Jersey Shore poet, lyricist, singer, musician, philanthropist and American icon. From “Brilliant Disguise” on the “Tunnel of Love” album, Columbia Records, 1987
That something can become an embarrassment to an entire nation — while somehow not becoming one to an entire industry — is the most important takeaway from the monumentally bizarre tale of Zeek Rewards.
Involuntarily forced by the SEC last year to abandon Zeek’s criminally gushing spigot, some of Zeek’s greatest purported “leaders” simply took their winnings and hitched their wagons to other MLM HYIP scams-in-progress. Those actions finally are catching up to them. The court-appointed receiver in the Zeek Ponzi- and pyramid case is expected to start suing them within hours for being the beneficiaries of tens of millions of dollars in fraudulent transfers.
Some Zeek insiders and winners may have criminal exposure. Two were charged criminally last week, marking the first instance in the long-running Zeek probe in which the prospect of jail time has been used publicly as a deterrent.
And this brings us to today, Christmas Day 2013.
There is no holiday joy or bogus claims of patriotism today in the criminal and prefelony wings of Zeekland. A ticking clock now has fully replaced the outrageously tacky Zeek penny-auction flag, an insult to free-market commerce masked as a call to liberty. That Zeek wrapped itself in Old Glory while ripping off tens and tens of thousands of Americans and other peoples of the world made its $850 million fraud a crime for the ages. Active civil and criminal investigations continue on at least five fronts. Zeek’s jungleland has been exposed, its brilliant disguise is in tatters.
Mysteries remain. When the SEC went to federal court last week to charge former Zeek COO Dawn Wright-Olivares with securities fraud and selling unregistered securities and her stepson (Daniel Olivares) with securities fraud, the agency left dangling the answer to a most-intriguing question: When did Dawn and Daniel find out Zeek’s dividend that averaged about 1.5 percent daily “bore no relation to the company’s net profits” and that Zeek operator Paul R. Burks allegedly had “unilaterally and arbitrarily” determined the payout?
In its Wright-Olivares/Olivares civil complaint filed Dec. 20, five days before Christmas, the SEC says the pair found out while they were working for Zeek that Burks allegedly was concocting figures to scam the Zeek masses — but the agency doesn’t say precisely when the Olivareses learned.
The SEC’s “unilaterally and arbitrarily” line about Burks strikes us as a polite way of saying he made up the numbers out of thin air. One would think that any COO worth the title would have questioned from Day One the numbers Burks supplied. Such unusually consistent and utterly preposterous daily gains were obvious markers of fraud, to say the least. And preposterous numbers manufactured from thin air to dupe the MLM masses were a major part of the AdSurfDaily Ponzi prosecution in 2008. If ever there was an MLM cautionary tale, it was the ASD story.
If Wright-Olivares somehow didn’t know about the ASD case and the striking similarities between ASD and Zeek, she ranks among the most clueless American business executives of all time. If she did know about Zeek’s similarities to ASD and turned a blind eye, she is one of the MLM world’s most predatory hucksters.
Although Daniel Olivares, a programmer, conceivably could have argued that his inherent geekiness kept him focused on code rather than the math behind the scheme, such a superficially plausible argument ultimately would have failed. As an MLM executive with a COO title, his stepmother had no argument, not even a superficially plausible one.
The bitter reality for Dawn and Daniel is that there’s no good answer to the “what did they know and when did they know it” question, likely a contributing factor to their decisions to settle with the SEC and to plead guilty to criminal charges filed by federal prosecutors in the Western District of North Carolina. If they discovered early on that Burks was fabricating profitability numbers in the same fashion that jailed ASD Ponzi-schemer Andy Bowdoin had manufactured them in 2008 and earlier, it means that they sat back and watched as Zeek created victims by the tens and tens of thousands in a combined Ponzi- and pyramid scheme and tax fraud.
If they found out later — say, within the final weeks of Zeek’s operation before its August 2012 collapse — it means that they still planned to benefit from the fraud despite the pain Zeek was about to inflict on a community of hundreds of thousands of people. In the settled SEC case filed against Dawn and Daniel last week, the agency alleged that they were “[a]ware that the ZeekRewards was under investigation by several law enforcement agencies and that the business was in serious trouble in 2012.”
Indeed, the agency alleged that “Wright-Olivares, Olivares and others accepted, substantial sums of money from the scheme (or had prior loans forgiven) before it was shut down without advising investors.” The SEC further alleged that once the Olivareses learned Burks was pulling numbers out of a hat, they did the same thing in his absence.
Had the SEC not acted on Aug. 17, 2012, to stop the Zeek Ponzi monster in its tracks, it likely would mean that Zeek would have hosted a wallet-pilfering “Red Carpet” event as planned on Aug. 22. Had Dawn, for example, been in that room on Aug. 22, it very much appears that she’d have been there with full knowledge that she intended to steal from attendees she greeted with a smile. She might have done the same thing at earlier Red Carpet events. The earliest was held on April 18, 2012. Others followed.
Of course, the alleged fabrication of the daily dividend rate makes for interesting conversation, but it was hardly the only concern about Zeek. It is inconceivable that Dawn and Daniel did not understand even before they allegedly learned that Burks had fabricated numbers that Zeek was a Ponzi scheme. The SEC covers these elements thoroughly in its complaint last week. Outtakes (bolding added):
Both Defendants also learned, and Wright-Olivares and other RVG [personnel] failed to disclose, that without new investor deposits (in the form of VIP Bid purchases and subscription fees), revenues would dwindle substantially as only approximately 2% of daily revenues came from actual retail sales, and the scheme would likely collapse.
Wright-Olivares knew, and Olivares learned in the course of working for RVG, that daily award payments from the Retail Profit Pool – which were credited to investor accounts, supposedly making such sums available for cash withdrawal – were unsustainable absent a constant influx of new investor money.
Based on the average 1.5% daily dividend on 3 billion Profit Points outstanding by the time ZeekRewards was shut down in August 2012, ZeekRewards would owe nearly $45 million per day in profit share awards to investors (ZeekRewards Qualified Affiliates) if all investors requested cash rewards instead of points. Both Wright-Olivares and Olivares knew that the company’s actual daily revenues — which averaged approximately $5 million per day (based almost entirely on new affiliate subscriptions and VIP bid purchases) at the time ZeekRewards was shut down – could not support such daily cash payouts, but neither did anything to warn investors.
In order to discourage investors from withdrawing too much cash from the scheme, Wright-Olivares and other RVG personnel encouraged affiliates to reinvest at least 80% of their daily awards into a point compounder, and to withdraw no more than 20% in cash. By convincing affiliates that they could compound their earnings by reinvesting daily awards, RVG slowed the outflows of cash and sustained the ZeekRewards fraud for longer.
Wright-Olivares and other RVG personnel failed to disclose to investors that the company would quickly become insolvent if more Qualified Affiliates elected to take daily awards in cash from the Retail Profit Pool rather than converting their awards into ever-increasing accumulated Profit Points.
Wright-Olivares and other RVG personnel also failed to inform investors of the substantial risk that the Matrix was prone to collapse if the promoters were unable to recruit ever-increasing numbers of paid affiliates into the Matrix pyramid, because, as both Wright-Olivares and Olivares knew, without new investors there would be no source of revenue to pay existing investors.
In order to conceal from investors and regulators the true nature of the ZeekRewards scheme, Wright-Olivares and others directed several superficial or nominal changes to certain ZeekRewards features, which Olivares implemented. This included removing any references on the website to the terms “investment” and “ROI”; substituting a daily award percentage that in the aggregate approximated 125% every 90 days rather than “guaranteeing” a 125% return; and requiring investors to give away VIP bids to foster the illusion of contributing efforts to the enterprise.
As the PP Blog reported in an editorial on June 10, 2012, two months before the collapse of Zeek, Wright-Olivares had been a guest on ACES Radio Live two days earlier, on Friday, June 8, 2012. During the broadcast, she contended to co-hosts Jim Gillhouse and Troy Dooly that “Paul manages all that,” meaning that Burks uniquely managed Zeek’s daily dividend rate and purported revenue-sharing calculations.
If she was telling the truth, it means that she found out only after the broadcast that Burks allegedly had fabricated the numbers. But if she knew prior to uttering those words, it means that she lied to Gillhouse and Dooly and their entire audience of MLMers.
Credit is due Gillhouse for not knuckling under to the Zeek PR machine. He used the radio show to try to get to the truth about Zeek’s murky math and revenue-sharing calculations. Dooly later settled SEC allegations that he failed to disclose that he was part of Zeek’s PR machine when he was delivering Zeek-related puffery on the radio and on his Blog.
It seems clear that the SEC used the radio program to explore the issue of when Wright-Olivares found out that Burks allegedly was manufacturing numbers. At a minimum, the “Paul manages all that” answer gave the agency a starting point at which it could begin the process of pinning down the former Zeek COO. If she goes to prison, her various comments on ACES Radio Live could be part of the reason. There simply was no more wiggle room left for Zeek by that fateful Friday in June 2012, and court filings suggest the SEC probe had begun at least two months earlier, on April 17, 2012, one day prior to Zeek’s first Red Carpet Event.
One or more Zeek insiders could have been spilling the beans to investigators even before the radio program aired.
The danger Zeek posed to investors and the U.S. financial system was untenable, which likely is precisely why the U.S. Secret Service became involved in the Zeek probe after earlier spearheading the ASD probe. It is simply beyond the pale that former ASD investors also became involved in Zeek. Both “programs” polluted banks and financial vendors with tainted proceeds from scams whose rotten cores were fundamentally the same.
The ASD enterprise raked in about $120 million, according to court filings. Zeek gathered at least $850 million, the SEC says. When the proceeds from the two scams are combined, the receipts allegedly total at least $970 million — nearly $1 billion. The combined victims’ count numbers in the hundreds of thousands. Wealth fundamentally was stolen from a vast number of people and placed in the hands of a virtually preordained few.
Perhaps most remarkable of all is that some of the people who involuntarily left Zeek because of the SEC action didn’t miss a beat: They almost immediately starting pushing other “revenue sharing” MLM scams, likely using tainted money from Zeek to buy into those “programs.”
For X number of people in Zeek’s inner circle or in the “net winner’s” club, the “what did they know and when did they know it” question was answered in 2008, when they were promoting AdSurfDaily.
Dawn Wright-Olivares and Daniel Olivares should not take the Zeek criminal fall alone. They had plenty of helpers. ASD’s Andy Bowdoin is sitting in prison at the age of 79 with some of his helpers who went on to help Zeek still on the outside.
If Wright-Olivares, Olivares and Burks go to jail, some of the ASDers who later promoted Zeek deserve to join them there. It was not stupidity; it was willful blindness and incredibly brazen and ongoing criminality ported from one fraud scheme to another. # # #
NOTE TO ‘OZ’: You deserve high praise for your exceptional work on Zeek. Regardless, I have read many comments on your Blog from people who’d prefer that you shill, rather than educate and illuminate. For close to 40 years, I have found inspiration in the line from Bruce Springsteen highlighted below. Here’s hoping it will inspire you if you ever find yourself wondering if you’ve made a difference.
On this Christmas Day, I wish you my best and congratulate you on your 1,000th post at BehindMLM.com. For good measure, I wish you the best piano sounds of Roy Bittan, the best violin sounds of Soozie Tyrell, the best guitar sounds of Nils Lofgren, Garry Tallent and Steven Van Zandt, the best drum beats of Max Weinberg, the best saxophone tones from the late and immortal Clarence Clemons, the combined talents of the gifted but lesser-known players in the E Street Band — and the best Jersey Shore poetry of Bruce Springsteen.
May you always be a giant Exxon sign that gives your fair city light. And may you always remain a writer who doesn’t just stand back and let it all be. Happy Holidays to you, Oz, and to all of my readers.
“[A]nd the poets down here don’t write nothing at all, they just stand back and let it all be.” — Bruce Springsteen. From “Jungleland” on the “Born to Run” album, Columbia Records, 1975
This note concerning Obopay and Payza is appearing on the website of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia this morning.
EDITOR’S NOTE ADDED AT 10:09 A.M. Federal prosecutors in the District of Columbia now have confirmed that an investigation is under way, but declined to provide details. “The U.S. Attorney’s Office is involved in a pending investigation and we are unable to state the subject of the investigation or provide details,” the office of U.S. Attorney Ronald C. Machen Jr. said moments ago.
Original story below . . .
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The office of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia (Washington, D.C.) did not immediately respond to a request for comment this morning on a note concerning Payza and Obopay that is appearing on its website.
The two-sentence note, which appears under a headline of “Obopay/Payza,” reads as such: “If you have questions or concerns about your Obopay or Payza account, please call 202-252-1903 and leave your name and contact information. Someone will return your call within 3 business days.”
A PP Blog reader reported the existence of the note at 8:58 a.m. today. How long the note had been posted was not immediately clear. Nor was it immediately clear why Machen’s office was involved in an Obopay/Payza matter.
Machen’s office, working with the U.S. Secret Service, successfully prosecuted the $119 million AdSurfDaily Ponzi scheme. ASD used AlertPay, Payza’s predecessor brand.
And Machen’s office, again working with the Secret Service, also successfully prosecuted the eGold payment processor.
Payza/AlertPay also were processors used by the alleged $600 million Zeek Rewards Ponzi- and pyramid scheme. The Secret Service also is investigating Zeek.
See Nov. 28, 2013, PP Blog post on conflicting reports concerning the unavailability of Payza funds in the United States.
EDITOR’S NOTE: The PP Blog is back — after its most recent brush with death led to a suspension of publishing that lasted through all or parts of six days. You’ll read more in the days ahead about certain changes the Blog plans to implement to safeguard its right to publish, to improve revenue, to make it less reliant on a small group of dedicated readers to put out fires and to keep its archives open to the people who can benefit most.
As for the editorial below: Some of it is based on “Government Exhibit G” and other government exhibits in the criminal prosecution of AdSurfDaily Ponzi schemer Andy Bowdoin. Exhibit G was filed on Aug. 13, 2012, four days before the SEC went to federal court in Charlotte, N.C., and alleged that the Zeek Rewards MLM “program” was a $600 million Ponzi- and pyramid fraud that had victimized hundreds of thousands of participants. Among other things, Exhibit G addressed Bowdoin’s participation as a silent partner in the AdViewGlobal reload scam. Another court document filed by prosecutors on the same day addressed Bowdoin’s participation in OneX, which prosecutors described as yet-another MLM-style scam in which Bowdoin had participated after the U.S. Secret Service moved against ASD in August 2008 and eventually seized more than $80 million.
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The evidence sticker from “Government Exhibit G” in the criminal prosecution of AdSurfDaily Ponzi schemer Andy Bowdoin. (Red bar added by PP Blog.)
Let’s talk about pollution and how it may be flowing to a bank near you:
AdSurfDaily Ponzi schemer Andy Bowdoin used a secret hushmail address in 2009 to discuss a bank wire for $38,750 that was to be sent to an account at Regions Bank in Fort Lauderdale, Fla., to pay for servers and programming required by AdViewGlobal.
AVG, as it was known, was an ASD reload scam that began to unfold in October 2008, just two months after the U.S. Secret Service began the process of seizing more than $65.8 million from at least 10 Bank of America accounts linked to ASD, according to government records.
The Secret Service, according to court filings, also had its eyes on separate Bank of America accounts linked to an ASD-connected enterprise known as Golden Panda Ad Builder. Golden Panda was operated by Rev. Walter Clarence Busby Jr., a Bowdoin business partner and Georgia grifter implicated by the SEC 11 years earlier in three prime-bank swindles, including one that promised to pay interest of 10,000 percent. Some of the Golden Panda money also made its way into Bartow County Bank, a small Georgia bank that later failed, costing the Federal Deposit Insurance Corp. an estimated $70 million, according to government records.
From this fact set, one can plainly see that ASD and related scams had caused polluted money to flow to Bank of America and Bartow — and that the noxious and ever-evolving ASD enterprise now had its sights on causing polluted money to flow to Regions. That’s three banks put in harm’s way by what effectively was an evolving ASD criminal enterprise.
There were more.
At least $413,018 in ASD-infected funds also had made their way into accounts at First National Bank in Ames, Iowa. Another $96,525 in polluted proceeds flowed to two accounts at Wachovia Bank. (The U.S. state in which Wachovia was used to stockpile $96,525 in fraudulent proceeds directed at an ASD member is unclear. What is clear, according to federal court filings, is that the ASD member allegedly was using ASD to promote a “multi-level marketing site that listed classified job postings” and that 17 checks from ASD were deposited into the Wachovia account on a single, fateful day.)
That day was July 31, 2008.
History shows that the Secret Service moved against ASD the very next day, Aug. 1, 2008, as a means of stopping the ASD Ponzi monster from sucking in any more cash and from polluting any more banks. The ASD member with the Wachovia accounts had “sponsored 6-8 people to get into the ASD system,” and somehow had managed to receive nearly $100,000 in tainted proceeds after paying ASD only $500 and working as a “consultant” to ASD “for a brief period,” according to court records.
Because ASD used infected proceeds to pay members with accounts at banks across the U.S. spectrum of hundreds of institutions, each of those institutions became places at which wire-fraud proceeds were deposited. The total flow of fraudulent proceeds linked to Bowdoin and follow-up scams exceeded $120 million, according to federal court files.
But it gets worse . . .
At Least 2 Swiss Accounts Discussed In Exchanges Over Hushmail And Gmail
Why not infect Europe with American Ponzi proceeds?
This is the clincher, the one event that — in the context of other ASD-related events — shows the rampant criminality within the ASD enterprise and this particular wing of MLM. This criminality caused federal prosecutors to describe Bowdoin as a man who roped in at least 96,000 people in part by asserting that his “programs” reflected “God’s will.”
Bowdoin, prosecutors said, indeed was the personification of a con man and affinity fraudster who “boldly continued or expanded his criminal conduct” even after the Secret Service raid in August 2008.
Just two months later, in October 2008, Bowdoin and a former ASD insider held discussions aimed at launching AVG, the ASD reload scam that allegedly sucked in millions of dollars — in part by targeting ASD members all over again. The sources for this information are a government sentencing memo and “Government Exhibit F,” filed on Aug. 13, 2012, four days before the SEC’s Zeek action and confirmation by the Secret Service that it also was investigating Zeek.
Exhibit F is styled “Summary of AdView Global by T. Andy Bowdoin, Jr.” Precisely when and how the government obtained the document is unclear, but prosecutors say Bowdoin drafted it in “memo” form. Agents are known to have seized ASD-related computers. It also is believed that the government seized at least one AVG-related computer.
The undated document features a narrative in which Bowdoin, despite the Secret Service raid of ASD and ongoing civil and criminal investigations, suggests he was still sticking to a cover story that ASD was an “advertising” company, not an investment company offering securities that paid a preposterous interest rate of 1 percent a day while magically constituting neither a Ponzi scheme nor an investment firm. In fact, according to the document, AVG hoped to ward off the U.S. government by establishing some sort of presence in Uruguay.
Another part of the AVG launch plan was to attract “30 founders” in December 2008. In the Exhibit F document, Bowdoin also planted the seed that the nascent AVG MLM program had been vetted by “attorneys.”
These unidentified “attorneys” purportedly had advised Bowdoin that prosecutors would not be interested in establishing whether the AVG upstart “was OK,” even if Bowdoin submitted an AVG business plan, according to Exhibit F. Bowdoin then moved forward with AVG, despite all that had happened at ASD. Both before and after the ASD debacle, according to assertions by prosecutors, Bowdoin claimed he had acted “on the advice of counsel” and therefore had done nothing wrong.
“Bowdoin’s reliance on the ‘advice of counsel’ defense became a theme in both the civil and criminal litigation,” prosecutors advised a federal judge.
It was a defense that failed miserably, as various entries on the public record show. And when Bowdoin got in trouble again — this time for promoting an alleged pyramid scheme known as “OneX” while out on signature bond in the ASD criminal case even as he asserted the OneX “program” had been vetted by attorneys and passed muster and that recruits could earn to the limits of their imaginations — Bowdoin again defaulted to an advice-of-counsel defense.
This time, however, Bowdoin appears to have merely repeated false assertions that he’d heard from OneX or someone within OneX. The government responded by producing an affidavit from an attorney who’d performed work for OneX but never had drawn a conclusion the “program” was lawful and had never examined the actual business practices of OneX. The attorney swore in an affidavit filed under pain of perjury that the law firm through which he represented MLM clients “has never represented” Bowdoin. (The PP Blog is declining to identify the attorney, a partner in a Southern California law firm.)
Back to AVG, the scheme Bowdoin helped launch before later trying to sanitize the alleged OneX pyramid scheme by claiming it had been scrubbed clean by attorneys: Bowdoin was to own two-thirds of AVG; the former ASD insider would own the remaining third, according to Exhibit F.
Among other things, the document shows some of the fractured thinking and incongruities so often associated with HYIP scams. Despite the purported need for an offshore presence to ward off U.S. investigators, for instance, the document asserts that Gary D. Talbert, identified elsewhere as an ASD insider and one-time executive, had hired AVG “customer service people in the U.S.” (Bolding added by PP Blog.)
Web records show that AVG had come out of the gate with two impossible (if not insane) propositions: The first was that AVG was just like the NBC television network, an absurdity on its face in that NBC doesn’t pay its advertisers to watch ads. Moreover, NBC, unlike the collapsed AVG, doesn’t operate a closed network in which only NBC’s advertisers and not the public at large can view ads. Nor does NBC try to recruit advertisers by telling them they’ll receive a dividend of 125 percent (or more) on their ad spend within a few months and that its advertisers can earn downline commissions two levels deep by recruiting competitors to advertise on NBC’s closed network.
The second proposition was even more absurd: that AVG had nothing to do with ASD. The absurdity of this obvious lie was exposed before January 2009 even had ticked off the calendar. Indeed, after earlier asserting that AVG had no ties to ASD, the company — using a U.S.-based AVG customer-service rep who’d actually testified on ASD’s behalf in federal court — announced that ASD’s Talbert was its CEO. If this weren’t absurd enough, AVG insisted through the former ASD member now working as a AVG spokesman that the appearance of AVG graphics in an ASD-controlled webroom was an “operational coincidence.”
AVG went on to pile on the absurdities, according to court filings. In Exhibit F, the document prosecutors say was Bowdoin’s draft memo of his AVG reflections, members of Bowdoin’s family who allegedly benefited from ASD Ponzi proceeds are described as heroes who tried to save AVG from the thieves.
With ASD’s Bowdoin’s knowledge, Talbert, according to Exhibit F, also purchased an Arizona “company named TMS” that owned a payment processor named “eWallet.” (Other records strongly suggest that the payment processor actually was named “eWalletPlus” and was operating from servers AVG was using in Panama.)
“TMS used a bank in the Caribbean,” according to the document. The signatory on the Caribbean account somehow never was changed after the asserted change in ownership at TMS, and two former TMS associates allegedly stole nearly $2.7 million from AVG. The theft of nearly $3 million led to the collapse of AVG, according to the telling attributed to Bowdoin in the document.
To date, the PP Blog has been unable to ascertain the truthfulness of the assertions about the thefts allegedly committed by the alleged former TMS insiders.
What is clear, however, is that as much ASD money that could be found in August 2008 was seized. AVG then launched with cash that hadn’t been seized, and in part was targeted at ASD members. AVG members then were left holding the bag, with the blame placed on former TMS associates.
And something else is clear, which brings us to “Government Exhibit G”: AVG, the follow-up scam to ASD that involved Bowdoin and ASD insiders and alleged thefts of millions of dollars by outsiders, had at least two Swiss bank accounts.
One of AVG’s Swiss bank accounts allegedly was discussed in this email between Andy Bowdoin and Gary Talbert. Bowdoin was ASD’s operator; Talbert was an ASD insider who allegedly became Bowdoin’s business partner in the AVG Ponzi scheme that sucked away millions of dollars. (Red lines inserted by PP Blog.)
On Jan. 28, 2009, just days before AVG’s scheduled launch date in early February and less than six months after the Secret Service raid on ASD’s headquarters and Bowdoin’s home in Quincy, Fla., Gary Talbert used a Gmail address to email Andy Bowdoin at a hushmail address, according to Exhibit G.
Talbert advised Bowdoin that an individual — presumptively one of the 30 AVG founders — had conducted a “Wire Transfer to AVG Swiss Bank Account” and needed assurances that it had posted. The inquiry about the asserted wire transfer appears to have been initiated by another AVG insider who’d emailed Talbert from his Gmail address to Talbert’s Gmail address. Through Gmail, Talbert then checked with Bowdoin at Bowdoin’s hushmail address, instructing the ASD patriarch that someone wanted to “verify that a bank wire hit the Swiss bank account.”
Upon verification, the customer would make “another large wire,” Exhibit G suggests.
Another email within the January 2009 chain says that AVG had at least two Swiss accounts.
What It Means
Walking this back and assuming the Exhibit G communications were truthful, what it means is that the ASD enterprise — this time in the form of AVG — had set up a banking operation in Switzerland, a secrecy haven. At the same time, it means that the ASD enterprise did this after it earlier had polluted U.S. banks in multiple states with fraudulent proceeds and now was taking its act not only to Switzerland, but also to South America, Central America and the Caribbean.
Less clear is whether ASD had a preexisting banking network in Switzerland before effectively morphing into AVG. Regardless of when the Swiss accounts were opened, however, the mere presence of them suggests that ASD and AVG insiders had the means to move fraudulent proceeds from U.S.-based crimes offshore and perhaps tap into them later.
And this brings us to Zeek Rewards, which also used domestic and offshore facilitators and the same fundamental business model of ASD and AVG. It also brings us to Profitable Sunrise and other MLM “programs” such as Better-Living Global Marketing. The now-disappeared Profitable Sunrise scheme allegedly used U.S. bank wires and offshore facilitators to drive tens of millions of dollars to the scheme. BLGM, still active, clearly has U.S. promoters and facilitators while purportedly operating from Hong Kong.
Meanwhile, BLGM, like ASD, AVG, Profitable Sunrise and Zeek Rewards, has Stepfordian “defenders” running interference online.
One of those “defenders” is over at the BehindMLM.com antiscam Blog asserting that he “met a guy online. I know him well now. I deposited $6500 into his Bank Of America account at my local branch.”
Another BLGM defender is at BehindMLM.com asserting that (italics added):
Got my Hongkong wire/remittance of 6,000 USD at Bank of America, have all my questions and concerns answered by Luke Teng, the teleconference helped a lot, disregard all the unnecessary comments of non-members.
Get all your transparent answers from Luke Teng, or else you will die of stress reading all the negative comments of people who are not engaging, and guys remember this is our freewill and our own money, our decision, our own risk.
TelexFree, a scheme more or less operating globally that has U.S. footprints in Massachusetts and Nevada and is under investigation in Brazil, also used Bank of America, according to members. Some TelexFree promoters instructed recruits to walk deposits meant for TelexFree into a Bank of American branch in Massachusetts or TD Bank locations elsewhere. TD Bank, of course, was the bank of Florida Ponzi schemer and racketeer Scott Rothstein. Four years after Rothstein’s $1 billion-plus scam brought great shame to the banking community, it’s still causing ripples.
The PP Blog previously reported that a former Zeeker who also was associated with Profitable Sunrise — an alleged international pyramid scheme that funneled tens of millions of dollars to Europe, China and Panama amid the murkiest of circumstances — also was pushing BLGM.
All of these “programs” are operating or have operated within the MLM sphere, the same sphere that produced the incredibly toxic ASD/AVG Ponzi schemes. All of the “programs” either have or had access to the wire facilities of various nations around the globe while using Ponzi- and pyramid schemes as their business model.
The Piggybackers
Various destructive forces are piggybacking on the scams, including attack bots and spambots that are keying on the names of HYIP enterprises and HYIP story figures to promote other scams or to drive traffic to other highly questionable “opportunities.”
Even after the PP Blog announced the temporary suspension of the publication of new stories last week, it continued to be targeted by resources-draining bots. One wave knocked the Blog offline for about an hour two days ago. During the involuntary outage, legitimate readers and researchers could not access the Blog.
One of the spammers left the signature of an IP associated with the country of Indonesia. A spam bid from the specific IP keyed on a PP Blog story about ASD figure and purported “sovereign citizen” Kenneth Wayne Leaming, now in federal prison for targeting U.S. federal officials and a Secret Service agent in an abuse campaign, harboring fugitives and possessing firearms as a convicted felon. Records in Washington state show that a Leaming-connected enterprise once traded on the name of JPMorgan, a famous banking concern. (“Sovereign citizens” are becoming increasingly infamous for harassing banks.)
Another spammer — one that left an IP signature from Belarus — also targeted a Leaming story thread at the PP Blog.
In recent weeks, the Blog has recorded data that plainly show that botnets, spambots or human spammers are circling antiscam sites and attempting to execute command strings that — if enough volume is applied — can cause databases to malfunction or even cause the sites to go offline.
This creates an atmosphere that affects the publishing of information not only on current scams, but also on emerging scams and scams of the past. The downstream effects are potentially ruinous — and yet it continues.
ASD and AVG were discredited long ago. But scams that use their core business model not only are launching, but in some cases thriving. Serial promoters are racing from one fraud scheme to the next. This sets the stage for schemes to fill up the world’s largest sports stadiums eight or 10 times over with victims. In 2008, ASD could have filled the Rose Bowl to capacity with victims one time. By 2012, Zeek could have filled the Rose Bowl with victims 10 times.
The “defenses” for these various schemes range from the bizarre to the utterly mindless — and they absolutely must be decimated with the full, combined weight of the various world governments.
It is in the interest of the worldwide public to connect the dots of these schemes and to eradicate them through the maximum application of the force of law. Left unchecked, they will erode the very foundations of freedom and permit the criminal underworld of MLM to thrive.
BULLETIN: UPDATED 8:17 P.M. ET (DEC. 10 U.S.A.) A federal judge in Washington state has issued a final order of forfeiture that awards title to items seized from AdSurfDaily story figure and purported “sovereign citizen” Kenneth Wayne Leaming to the U.S. government.
Judge Ronald B. Leighton of the Western District of Washington signed the order on Nov. 22, the two-year anniversary date of Leaming’s arrest by an FBI terrorism task force. Federal prosecutors later said the Leaming probe was part of a larger investigation into “sovereign citizens” nationwide.
Prosecutors asked for the order on Nov. 13, noting that Leaming had consented to the forfeiture.
Included in the order are six firearms possessed by Leaming, a convicted felon, at the time of his arrest. Also included is police equipment found with Leaming, including badges, credentials, law-enforcement identification documents, light bars, crime-scene tape, handcuffs, vests, nightsticks and similar items.
Leaming, 57, was a member of the purported “County Rangers,” the alleged armed-enforcement wing of a group of “sovereign citizens.”
The order also applies to computers, external hard drives, documents and “client” files linked to Leaming.
Some ASD members said Leaming was performing legal work for them after the ASD Ponzi scheme was exposed by the U.S. Secret Service and federal prosecutors in the District of Columbia in 2008. Leaming later was convicted on charges of filing false liens against government officials involved in the ASD Ponzi investigation and prosecution. In the same case, he was convicted of assisting another “sovereign citizen” in the filing of false liens against other government officials. Leaming also was convicted of being a felon in possession of firearms and harboring two federal fugitives from Arkansas wanted in a fraud scheme separate from ASD.
The government has not said what it intends to do with the seized “client” files and documents, some of which conceivably could be used to link Leaming to the ASD members who were using his services. Leaming’s history includes being accused in Washington state of engaging in the unauthorized practice of law.
ASD was a $119 million Ponzi scheme. ASD operator Andy Bowdoin, 79, pleaded guilty to wire fraud in May 2012 and now is serving a 78-month sentence in federal prison.
BULLETIN: Federal prosecutors in the Western District of Washington have asked a federal judge to issue a final order of forfeiture against the property of AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming.
Leaming has agreed to forfeit the property, and a preliminary order of forfeiture already has been entered, according to prosecution filings.
The property includes six firearms, bogus law-enforcement badges and other false credentials, light bars, crime-scene tape, vests, handcuffs and nightsticks. It also includes documents related to Leaming’s “performance of legal services for third parties,” including “‘client’ files, counterfeit instruments, and similar materials,” prosecutors said.
At the same time, prosecutors are seeking the final forfeiture of “All digital devices, including computers, external hard drives, and other storage media” linked to Leaming
Leaming, 57, of Spanaway, Wash., is serving an eight-year prison sentence at the Federal Correctional Institution in Terre Haute, Ind. He was sentenced in May 2013 on charges of filing false liens against government officials involved in the prosecution of the $119 million AdSurfDaily Ponzi scheme, harboring federal fugitives from a separate scheme and being a felon in possession of firearms. His previous felony conviction was for piloting an aircraft without being licensed.
Leaming was arrested by an FBI Terrorism Task Force in November 2011, after he filed false liens against the officials. Agents also uncovered evidence that suggested Leaming intended to serve a writ on U.S. Chief Justice John Roberts by monitoring the school his children attended. Roberts presides over the U.S. Supreme Court and is America’s top judicial officer.
Precisely how many ASD clients Leaming had is unknown. In 2010, Leaming promoted himself as an attorney on the website of Cornell University Law School, advertising a fee structure and saying he practiced “Admiralty/Maritime, Business Law, Estate Planning and Native American Law.” Cornell removed the listing after the PP Blog reported that Leaming was accused in Washington state in 2005 of engaging in the unauthorized practice of law.
In 2009, Leaming filed involuntary bankruptcy petitions against the Washington State Bar Association and a Franciscan healthcare facility in the state. (Among Leaming’s assertions was that the bar association owed him $32 billion. Through a notary public in a different venue, Leaming earlier had asserted that the hospital owed him $9.24 billion. In short, Leaming sought to attach “all tangible and intangible property” of the hospital, including its fixtures, furnishings, motor vehicles, bank accounts, passbooks, saving certificates, stock certificates, lines of credit, inventories, promissory notes, office equipment, educational equipment — and even its mineral and water rights, according to records. The hospital serves several communities in Pierce County, including Lakewood, Spanaway, Steilacoom, DuPont, University Place and others.)
Judges tossed the preposterous claims, and a federal bankruptcy judge ordered sanctions against Leaming.
In October 2011, the PP Blog reported that a Leaming-associated company — American-International Business Law Inc. — was listed in records as the registered agent of at least 73 companies. One of the firms was known as “Presidential Detail.” Another was known as “Homeland Security Service.” Two others were known as “Federal Asset Management Service” and “Federal Fleet Management.”
At least two other Leaming-connected firms used the names of the famous JP Morgan banking concern.
“Sovereign citizens” are known to engage in what has been described as “paper terrorism” against the government and its officials, banks and litigation opponents. Earlier this year, Leaming asserted the judge presiding over his criminal charges in the liens, harboring and firearms case owed him 208,000 ounces of “fine silver.”
“No!” Make that “Hell no!” — or, as Gen. Anthony McAuliffe once famously scribbled at the prompting of Gen. Harry W.O. Kinnard during the Battle of the Bulge, after soldiers for the Nazi Third Reich demanded surrender: “Nuts!”
At 12:11 a.m. ET today, the PP Blog inexplicably received five duplicate emails from an IP in the vicinity of Tiffin, a city in North Central Ohio. The emails were sent through the Blog’s contact form and threatened that “the authorities” would get involved if the Blog did not remove content about Nanci Jo Frazer and other Profitable Sunrise story figures by Nov. 15, nine days from today. The emails were signed “Nanci Jo Frazer,” but the Blog cannot independently confirm Frazer was the sender.
Why the Blog received five emails is unknown. The Blog tested the form after receiving the duplicated submissions, and it appears to be working properly, meaning it does not appear to be sending multiple copies of inquiries from readers. The Blog, however, did experience an outage that lasted approximately two hours yesterday. The outage occurred shortly after an IP from Ukraine made an appearance here at approximately 1:50 p.m. (Bots that leave a Ukranian signature have been circling the Blog for weeks.) The precise cause of yesterday’s outage, which occurred after the Blog reported on an HYIP/prime-bank scam in California outed as part of an FBI undercover operation that began in 2006, remains unclear.
In any event, the Blog will not remove any Frazer or Profitable Sunrise-related content unless ordered to do so by a U.S. federal judge. Nor will it submit to threats that incongruously are mixed with appeals to the Christian faith to make posts go missing. HYIP schemes are all about incongruities and preposterous constructions: “secret” or “safe” or “guaranteed” or “insured” investments that purportedly are “offshore” and able to deliver Christians and other people of faith legitimate interest rates of hundreds or even thousands of percent each year, for instance.
For security reasons, the Blog will not reply to the emails at the Gmail address entered by the sender. Instead, it will publish the content of the emails in this space. The FBI is free to make its own assessment about acts attributed to the agency by the sender in or around Tiffin. The Blog also will continue to publish Profitable Sunrise-related stories. Such stories are in the public interest.
The emails build on a conspiracy theory that has been circulating for weeks: that the Blog somehow acts in concert with fraudsters, cyberstalkers and at least one felon posing as a Christian do-gooder to subject Nancy Jo Frazer and her ministry to harm. Meanwhile, the emails plant the equally false seed that the Blog is part of a group involved in Bitcoin scams.
Among other things, the emails seek to chill the Blog’s reporting by contending that “The FBI is fully aware of all your consistent attempts to keep my name and our FocusUp Ministries Board members, our staff, voluteers and even my husband (who had no connection) tagged to negative , damaging words (such as scam, fraud and Ponzi) along with negative press and stories we are not connected to at all.” (No editing performed by PP Blog.)
“Last week through a phone conversation, the Senior investigator from the FBI, instructed me to have my attorney send you a Cease and Desist and demand for immediate removal of your unauthorized usage of materials, videos, audio, all radio & TV media, articles and all types of communication connected to FocusUp Ministries and our Board Members, staff and volunteers: including Nanci Jo Frazer (Nancy Frazer) and Albert Rosebrock, David Steckel (volunteer), Jon Simmons (staff pastor) also my husband David Frazer,” the emails read in part. (No editing performed by PP Blog.)
The emails did not identify the purported “Senior investigator from the FBI” who purportedly gave the sender instructions on how to accomplish the deletion of PP Blog content the apparent Frazer group supporter finds both objectionable and actionable. The PP Blog is willing, however, to voluntarily provide the IP address of the sender to the FBI, the SEC, the Ohio Office of the Attorney General or other law-enforcement agency in the United States that has an interest in the Profitable Sunrise case.
No subpoena will be necessary; we’ll simply provide the information and copies of the email, once the Blog verifies the request is genuine.
Over the years, the PP Blog has encountered various bids to chill its reporting on the HYIP sphere, including a sustained DDoS attack in 2010 and traffic floods in 2011 for which the Blog received a claim of responsibility. The Blog forwarded the claim to a U.S. law-enforcement agency.
In 2012, during a period of heavy reporting on two specific HYIP schemes, the Blog received repeated threats believed to be from different senders. Two of the threats were not aimed at the Blog. The first was received Aug. 6, 2012, and was aimed at three prominent U.S. politicians: one Democrat and two Republicans. This communication appeared to have been sent from Switzerland and questioned why the American politicians are “still alive and running around.” The email further described an American subject of the PP Blog’s crime reporting as a “true Patriot[]” who, like other purported “Patriots,” believed in “sending out mercenaries to take out those corrupt bankers, USG politicians, agents, judges and attorney’s [sic].”
Such content is consistent with members of the so-called Patriot Movement or similar U.S. extremists who identify themselves as “sovereign citizens.” Because the communication appears to have originated in a country famous for banking secrecy, it leads to questions about whether U.S. domestic extremists were networking with counterparts in Europe or perhaps were there themselves to “defend” HYIP schemes and chill reporting on the outrageous frauds by suggesting that mercenaries and assassins were at their disposal.
The second communication, received Aug. 29, 2012, was aimed at the alleged operator of a huge international Ponzi scheme. This communication appears to blame the accused operator for not properly defending the purported opportunity from investigations by the U.S. government.
“why you don’t stand to back [program name deleted by PP Blog][?]” the communication read in part.
“we lost our money. we will kill you . . .”
The communication concluded by slurring the alleged Ponzi operator as a “dog.” It appears to have been sent from Pakistan.
Yet-another 2012 communication believed to be from a different sender suggested that members of the PP Blog’s family might die if the Blog continued to report on HYIP schemes. The Blog forwarded all of these communications to a U.S. law-enforcement agency.
In 2009, the Blog repeatedly was stalked by an apologist for the AdSurfDaily and AdViewGlobal Ponzi schemes who sought to engineer an SEO campaign against the Blog. This tactic was repeated in 2012 by an apologist for the JSSTripler/JustBeenPaid scheme which, like ASD and AVG, may have ties to the “sovereign citizens” movement.
This specific individual appears to have been inspired in part by an infamous troll whose posts and visits bear an IP signature from the United Kingdom. The troll has been attacking antiscam sites since at least 2009, often incorporating sexual innuendo, antiChristian themes and elements of misogyny into his bizarre and vulgar game plan. In any event, the JSS/JBP apologist he inspired asserted he’d defend purported operator Frederick Mann “so help me God.” He also targeted specific PP Blog readers in an SEO campaign carried out on a free Blogger site — all while spreading absurd conspiracy theories and utterly preposterous lies. At the same time, he appears to have embedded code in certain communications as a means of trying to identify potential federal witnesses and perhaps even obtain/isolate the identities undercover federal agents may use online.
Requests for the Blog to delete content are not always menacing, but can be described fairly as mind-bogglingly bizarre. In 2010, an affiliate of the MPB Today MLM scheme asked the Blog to delete a story that reported President Obama and former Secretary of State Hillary Rodham Clinton were being depicted as Nazis in a promo designed to recruit MPB Today affiliates. A separate script from the same MPB Today recruiter described the Obama family as welfare recipients who aspired to eat dog food and put these words into the mouth of First Lady Michelle Obama: “Hmm, I should prolly call my Food Stamp worker now that I’ve joined MPB.”
The Blog declined the deletion request.
MPB Today operator Gary Calhoun later was jailed in Florida on state-level racketeering charges. Federal prosecutors contended in July 2012 that crimes such as access-device fraud and fraud in connection with identification documents had occurred. Some MPB Today affiliates claimed the purported grocery “program” had been endorsed by the U.S. government and Walmart and that impoverished prospects should sell their Food Stamps to raise the $200 needed to join MPB Today. At least one MPB Today affiliate referenced pipe bombs in a promo.
In May 2009, the PP Blog reported that the AdViewGlobal scam announced it had secured a deal with a new offshore wire facilitator. The AVG announcement was made on the same day the President of the United States announced a crackdown on offshore fraud. The PP Blog later was asked by AVG’s purported facilitator to remove the story. The Blog refused.
The purported AVG facilitator — KINGZ Capital Management Corp. — later was linked to the epic Trevor Cook Ponzi scheme in Minnesota and was booted from the National Futures Association. AVG earlier had collapsed in a pile of Ponzi rubble. Even as it was going down, critics of the “program” and even members concerned about where their money had gone were threatened with lawsuits and ISP terminations for speaking out online.
Federal prosecutors later linked the AVG scam to the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. ASD story figure Kenneth Wayne Leaming, a purported “sovereign citizen,” is serving a federal prison sentence for targeting federal employees involved in the ASD case with bogus liens seeking billions of dollars, assisting a known tax fraudster in the filing of false liens, harboring federal fugitives in a case unrelated to ASD and being a felon in possession of firearms.
HYIP schemes are a cancer on America and the rest of the globe because they permit the murkiest of figures to acquire tremendous sums of money that endanger the United States and other nations. They are a scourge on society in no small measure because they attract “sovereign citizens” and other extremists whose intent is to undermine legitimate markets and create widespread confusion, if not anarchy. People of faith often are targets of HYIP scammers. The scams often switch forms, but the criminality remains largely the same.
In the case of Profitable Sunrise, the SEC has alleged that potentially tens of millions of dollars were driven to an individual potentially operating overseas. This individual’s identity may not be known. The allegations alone are chilling.
Frazer and her associates are not named in the SEC civil action. But Frazer and two of her alleged business associates — husband David Frazer and Nancy Frazer business associate Albert Rosebrock — are named in a Profitable Sunrise-related civil fraud action filed by the state of Ohio in July.
As noted above, the PP Blog will not remove any Frazer or Profitable Sunrise-related content. Here, now, the verbatim content of the emails received by the Blog at 12:11 a.m. today. (The Blog added carriage returns to make the contents more readable.)
The Emails
Dear Patrick;
I am send you this private (not to be published or shared) email to you as a Christian brother, from your Christian sister, in hopes to have your assistance to stop all media coverage concerning our Ministry and our volunteer board members without having to get the authorities involved to get this accomplished.
We understand that you have been trying to find the truth about Profitable Sunrise. The FBI has fully reviewed every document, communication and record we have and has returned everything to us. Our lead investigator stated that it is clear that we were a victim of “innocent ignorance”.
The investigation resulted in no criminal charges being filed. The Federal Government has confirmed we are not being named in this case. Kansas is in the process of dismissing the case and Ohio has stated they do not have enough information to move forward (after losing the majority of the assets at our hearing on August 30th, 2013). We are so thankful that we are finally being vindicated and can speak out soon.
2013 has been a refining year but so many awesome miracles have occurred that I cannot just feel there was no positive purpose. We believed that Profitable Sunrise was the “real deal”. We know that many of you believe that BitCoin is the “real deal” but in Texas, it is now declared a security and to some- part of a Ponzi? We sometimes learn things the hard way.
The FBI is fully aware of all your consistent attempts to keep my name and our FocusUp Ministries Board members, our staff, voluteers and even my husband (who had no connection) tagged to negative , damaging words (such as scam, fraud and Ponzi) along with negative press and stories we are not connected to at all. Thus driving traffic to your website for your own purpose.
Last week through a phone conversation, the Senior investigator from the FBI, instructed me to have my attorney send you a Cease and Desist and demand for immediate removal of your unauthorized usage of materials, videos, audio, all radio & TV media, articles and all types of communication connected to FocusUp Ministries and our Board Members, staff and volunteers: including Nanci Jo Frazer (Nancy Frazer) and Albert Rosebrock, David Steckel (volunteer), Jon Simmons (staff pastor) also my husband David Frazer.
I am requesting that Patrickpretty.com and all associate websites, blogs and media… Cease and Desist immediately from using images, text, tags,YouTubes, Powerpoints, articles, documents and recordings associated in any way with the patrickpretty.com website, which is containing or referring to Nanci Jo Frazer, Nancy Frazer, David Frazer, Albert Rosebrock, David Steckel, Jon Simmons and FocusUp Ministries and/or any of our associate Ministries, as you are not authorized to use our names or image for any purpose without written permission.
We have spent hundreds of hours of research to help authorities in everyway to fully understand and solve this case. We are almost to the point whereas I can share what I have learned to help avoid this event from happening again. I believe in going to my Christian brother first to resolve an issue. I believe that your heart is in the right place.
We need to see that everything is deleted and completely removed from the Internet by Friday, November 15th, 2013 so we can all move on. I hope you honor this and that we can start over and have this be a much better story for all.
