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Tag: Affiliate Strategies Inc

  • Email Address In Faith Sloan’s DMCA Complaint Against BehindMLM.com Appears In 2010 Promo About Purported $10,000 Payout From Matrix Cycler; ‘You Can Do That Over And Over Again,’ Veteran HYIP Huckster Claims

    More than two minutes and forty seconds of a special version of "I Gotta Feeling" recorded by the Black Eyed Peas to honor Oprah Winfrey plays in this "team" promo for a matric-cycler "program" known as "Diamond Holiday Feeder." Neither the group nor Winfrey is credited.
    More than two minutes and 40 seconds of a special version of “I Gotta Feeling” recorded by the Black Eyed Peas to honor Oprah Winfrey plays in this “team” promo for a matrix-cycler “program” known as “Diamond Holiday Feeder.” Neither the group nor Winfrey is credited. Source: screen shot from DailyMotion.com.

    The Gmail address used by TelexFree figure Faith Sloan in a Sept. 23 DMCA takedown notice filed against BehindMLM.com appears below a 2010 video promo for a “program” known as “Diamond Holiday Feeder,” part of a larger “program” purportedly engaged in the travel business while also operating a matrix cycler.

    Matrix cyclers sometimes are known as 2x2s or “get two who get two.” MPB Today, a collapsed matrix cycler that led to racketeering charges in Florida against the “program” operator, is an example of a 2×2. Another example is Regenesis 2×2, which led to a U.S. Secret Service probe in Washington state in 2009.

    In a 3:44 video whose publication date is listed as April 8, 2010, Sloan claims to have made $10,000 in the Diamond Holiday Feeder program and further claims “you can do that over and over again.” The headline of the video is, “Ten Thousand Dollars Proof – Diamond Holiday Feeder – BYC.”

    Another Sloan video for a “team” build of the Diamond Holiday “program” uses nearly three full minutes of a special version of “I Gotta Feeling” recorded by The Black Eyed Peas to honor Oprah Winfrey and the 24th year of The Oprah Winfrey Show in September 2009. Neither Winfrey nor the group is credited in the “team” promo. The “team” build video is dated March 21, 2010.

    Ironically, Sloan has accused BehindMLM.com of copyright infringement, amid allegations it used photos to which she owned the copyright on its website.

    BehindMLM.com says Sloan’s claims are bogus.

    Though TelexFree would come later — after the apparent collapse of Diamond Holiday Feeder, with Sloan blaming events on management  — an image of Sloan posing in front of a TelexFree logo appears on the Diamond Holiday Feeder video site. The site appears now to be driving traffic to a “program” known as “RE247365.” (BehindMLM.com is back online after being offline for all or parts of three days. Read its “RE247365” review.)

    In the current TelexFree case in which she is accused of securities fraud, Sloan likewise is blaming management.

    Sloan’s narration in the April 2010 video shows her Diamond Holiday Feeder back office and suggests she did not withdraw her purported earnings of $10,000 all at once to her bank account, but rather in smaller increments. Such a practice may lead to questions about whether she was engaged in structuring transactions to avoid bank-reporting requirements. In a civil action against TelexFree in April, the Massachusetts Securities Division raised the issue of structuring.

    Other information suggests Sloan gravitated to Diamond Holiday Feeder after the collapse of the Noobing MLM scam in 2009. Noobing, in part, was targeted at people with hearing impairments, including a California woman the PP Blog interviewed in 2010 through her interpreter.

    On a website deemed “The Official Web Blog” of Noobing, the program was described as a “hit” among deaf people. Noobing, according to the Blog, was promoted at Deaf Expos in Kansas, Missouri, New Jersey and Texas in 2008 “to connect with the often overlooked hearing impaired business community.”

    Noobing was under the umbrella of an enterprise known as Affiliate Strategies Inc. that was running a government-grants swindle and was sued by the FTC and three state-level attorneys general for fraud. ASI went into receivership, taking Noobing with it. The enterprise had offshore conduits in Belize and Nevis.

    On one August day in 2009, attorneys assisting the ASI receivership “received thirty two US Mail crates” filled with complaints from scam victims, receiver Larry Cook said at the time.

    “The Receiver’s work over the past three weeks suggests the Defendants’ operations were insolvent on the date [July 24, 2009] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds,” Cook said at the time.

     

  • BULLETIN: CFTC Says California Man At Helm Of Ponzi Scheme Targeted At Deaf Christians; Marc Perlman Charged With Fraud Amid Claim He Advised Investor To Sell House Quickly And Plow Proceeds Into Forex Scheme

    BULLETIN: The CFTC has gone to federal court in the Southern District of New York, alleging that Marc Perlman of Rancho Cucamonga, Calif., and his firm, iGlobal Strategic Management LLC, were running a commodity-pool and Forex Ponzi scheme targeted at deaf Christians.

    Perlman and the company have been charged with fraud. The CFTC said the scheme sucked in “at least $670,000 from at least 17 people.”

    In at least one instance, the CFTC charged, Perlman encouraged an investor “to sell a house at a price that would result in a quick sale, stating that the profits that the iGlobal Investor would earn with iGlobal would make up for the lost equity.”

    It is at least the third major fraud scheme targeted at the deaf community since 2009. In October 2010, the SEC charged an entity known as Imperia Invest IBC in a caper that sucked in millions of dollars and affected thousands of people with hearing impairments. In 2009, the FTC charged Affiliate Strategies Inc. (ASI) in a government-grants scam. The Noobing autosurf was in the ASI stable of companies, and promotions were targeted at the deaf.

    Both Imperia Invest and Noobing were promoted on the MoneyMakerGroup and TalkGold Ponzi forums — the same venues from which Ponzi schemes such as AdSurfDaily and alleged Ponzi schemes such as Zeek Rewards were promoted.

    “Perlman furthered his and iGlobal’s fraudulent scheme by playing upon the Christian faith of certain iGlobal investors, using claims about his own faith and references to scripture to obtain the trust of certain iGlobal investors,” the CFTC charged.

    Victims hailed from Arizona, California, Florida, Georgia, Michigan, Oregon, Utah, Washington and Pennsylvania, the CFTC said, noting that Perlman is deaf.

    “Perlman offered to have calls with certain potential iGlobal Investors through a video phone system that enables communication through sign language,” the CFTC charged. “During these calls, Perlman told certain potential iGlobal Investors that he was offering them the opportunity to invest in a forex investment system that would yield profits of 10 percent each month. He later revised this projected number to 5 percent after certain iGlobal Investors invested funds.”

    The U.K. Financial Services Authority assisted in the CFTC probe, CFTC said.

    Read the complaint.

  • URGENT >> BULLETIN >> MOVING: Brett Blackman, President Of Collapsed ‘Noobing’ Autosurf, Subjected To $27 Million Judgment In ‘Grants’ Scheme And Banned From Marketing Money-Making ‘Opportunities,’ FTC Says; Blackman Firm Faces Separate $27.2 Million Judgment

    URGENT >> BULLETIN >> MOVING: The price of Brett Blackman’s serial scamming finally has been determined: $54.2 million.

    Blackman, the president of an autosurf known as “Noobing” that targeted people with hearing impairments, has been subjected to a personal judgment of $27 million and banned from marketing money-making “opportunities,” the FTC said.

    Blackman also has been kicked out of the telemarketing business, the agency said.

    Noobing was among a group of companies that operated under the banner of Affiliate Strategies Inc. (ASI), which the FTC and the attorneys general of three states sued in 2009 in an alleged scam that offered “guaranteed” government grants of $25,000.

    ASI has been subjected to a judgment of $27.2 million. It also has been banned from offering money-making “opportunities” and telemarketing, the FTC said.

    Although Noobing was not named in the complaint, the surf collapsed from the strain and got dragged into the ASI mess. Larry Cook, a court-appointed receiver, said in 2009 that Noobing was upside down to the tune of $550,000 when the FTC brought the fraud action against ASI and other defendants.

    Noobing became popular after the seizure of tens of millions of dollars in the AdSurfDaily autosurf case in 2008. ASD members helped popularize the purported “opportunity.” During Cook’s ASI investigation, he determined that U.S.-based Noobing also had an offshore arm on the Caribbean island of Nevis.

    A federal judge ordered all offshore cash repatriated.

    The ASD and ASI cases have strange parallels. Both firms displayed a zeal for religion that incongruously clashed with romantic thoughts about offshore autosurf profits, as though involving people of faith in fraud schemes somehow was consistent with Biblical principles and offshore insolvency somehow was less problematic than insolvency in Florida or Kansas.

    Meanwhile, both firms had acquired jet skis, according to court records. Both firms later lost their water toys through forfeiture or seizure.

    Both Noobing and ASD positioned themselves as victims of an out-of-control government. After shills helped Noobing gain a head of steam on the Ponzi scheme forums — as though the ASD seizure never had occurred — enthusiasts proceeded to engage in spectacular fantasies of building wealth by viewing ads in Noobing’s rotator.

    Those fantasies collapsed when Noobing suddenly slashed payouts, bizarrely citing a purported unclear ruling in the ASD case months after a federal judge said ASD had not demonstrated at an evidentiary hearing that it was not operating as a Ponzi scheme. Noobing’s former wink-nod cheerleaders then advanced a scheme by which they’d file for credit-card chargebacks amid claims Noobing did not perform as advertised.

    Noobing, though, turned the tables by denying refunds and claiming surfing rebates never were guaranteed — a strategy ASD itself allegedly had employed to insulate itself from prosecution for selling unregistered securities. Former Noobing cheerleaders became livid, creating a Ponzi forum PR disaster for the firm.

    Former Noobing cheerleaders wanted their money — and they wanted it right now.

    Noobing’s turning of the tables, however, did not last long. Within months the FTC brought the fraudulent grants case — and what remained of the wreckage of Noobing was consumed in a sea of litigation that had grown to include a fourth state attorney general joining the case against ASI and the other defendants.

    Blackman is unable to pay the $27 million judgment, the FTC said, adding that ASI is unable to pay its $27.2 million judgment.

    In the end, not even Noobing’s offshore plan, Ponzi forum presence and autosurf cash cow were enough to prevent the collapse of the ASI marketing machine because the surf itself was insolvent and the companies were recycling money back and forth.

    “The Receiver’s work over the past three weeks suggests the Defendants’ operations were insolvent on the date [July 24, 2009] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds,” Cook said in a devastating preliminary report in August 2009.

     

  • Forex Ponzi Schemers Who Targeted Deaf Investors Hit With $6.2 Million In Sanctions; ‘Billion Coupons’ Case Drew Comparisons To Defunct Noobing Autosurf

    A Hawaii man and his company were hit with sanctions totaling $6.2 million in a case that alleged they targeted people with hearing impairments in a Forex Ponzi scheme.

    Both the SEC and the CFTC filed actions against Marvin Cooper and his Honolulu-based firm, Billion Coupons Inc. (BCI). The CFTC announced the judgment against Cooper and the company.

    Investigators said Cooper and BCI “solicited funds from deaf American and Japanese individuals for the sole purported purpose of trading forex,” luring them with payout promises of up to 25 percent per month.

    For his part, Cooper took “more than $1.4 million of customer funds for personal use, including for flying lessons and to purchase a $1 million home,” investigators said.

    He was ordered to pay $3.9 million in restitution to customers and more than $2.3 million in penalties. The company is liable for the same amounts.

    The “Billion Coupons” case drew comparisons to the now-defunct Noobing autosurf, which also targeted the deaf. Noobing became popular in the aftermath of the August 2008 federal seizure of tens of millions of dollars in the AdSurfDaily Ponzi scheme case.

    Despite the federal seizure, some ASD members promoted Noobing. Noobing effectively went bust in July 2009, when the FTC charged its parent company — Affiliate Strategies Inc. — with pushing a scheme that promised “guaranteed” government grants of $25,000 from economic stimulus funds.

    Noobing later was named a receivership defendant in the case. Receiver Larry Cook sold the company’s assets lock, stock and barrel — right down to a lavatory wastebasket. Like ASD, Noobing’s parent firm also owned a jet ski. Cook sold that, too.

    Despite dramatic asset seizures and the federal actions against ASD and Noobing’s parent — and despite previous actions against autosurfs, including 12DailyPro, PhoenixSurf and CEP — some ASD members have continued to promote autosurfs.

    This has occurred against the backdrop of a racketeering lawsuit against ASD President Andy Bowdoin and public filings in which prosecutors claimed Bowdoin had signed a “proffer” letter in the case and met with members of law enforcement over a period of four days in December 2008 and January 2009.

    It also is known that Interpol is seeking the arrest of Robert Hodgins, whose Dallas-based debit-card company, Virtual Money Inc., is alleged to have agreed to launder drug money in the Dominican Republic and assist a Colombian drug operation launder money at ATMs in Medellin.

    ASD members said Hodgins’ company supplied debit cards to AdSurfDaily, and web records suggest that Hodgins or a Virtual Money designate attended an ASD function in the Orlando area in late 2006.

    Even though Bowdoin acknowledged in court filings that he had given information against his interests to the government, some ASD members continue to promote autosurfs and HYIPs. After signing the proffer letter and surrendering his claims to more than $65.8 million seized from his personal bank accounts, Bowdoin later reentered the case as his own attorney.

    One of Bowdoin’s 10 personal bank accounts contained more than $31 million, according to court filings. Another contained more than $23 million. Three other bank accounts contained the exact same amount — a little over $1 million.

    After submitting to the forfeiture in January 2009, Bowdoin fired his attorneys without notice and attempted to reenter the case weeks later as his own attorney. This set in motion a series of bizarre pleadings from Bowdoin, including one in which he claimed he had not been provided “fair notice” of his illegal conduct by the government. ASD members by the dozens then filed their own bizarre, pro se pleadings. U.S. District Judge Rosemary Collyer ruled against each of the filers, saying they had no standing in the case.

    Collyer since has ruled against Bowdoin, awarding title to more than $80 million seized in the case to the government, which said it intends to implement a restitution program. Bowdoin is appealing Collyer’s forfeiture decisions.

    Court filings show that Bowdoin told Collyer the seized money belonged to him. In September 2009, the U.S. Secret Service presented Collyer a transcript of a conference-call recording in which Bowdoin told members the money belonged to them. Although Bowdoin insisted he had big plans for ASD, records show that he let the firm’s registration lapse in the state of Florida — even as he was telling members they should be excited about the company’s future.

    In the recording, Bowdoin claimed his fight against the government was inspired by the compelling personal story of a former Miss America.

  • BULLETIN: Autosurf Biz Takes Another Pounding; Federal Judge Adds Noobing As Receivership Defendant In Fraud Case Against Parent Company; 14 Other Subsidiaries Named

    UPDATED 6:05 P.M. EDT (U.S.A., Jan. 20, 2011.) In yet another case that portends disaster for the so-called “autosurf” industry, a federal judge has ordered the Noobing autosurf to be added as a receivership defendant in a fraud case brought against its parent company.

    The FTC and attorneys general from Minnesota, North Carolina and Kansas brought the case against Noobing’s parent — Affiliate Strategies Inc. (ASI) — in July 2009. Several other companies were named defendants in the case, which alleged the firms participated in a scheme that promised guaranteed government grants from economic-stimulus funds.

    Brett Blackman, ASI’s head, also was president of Noobing, members said. Noobing was not initially named a receivership defendant.

    U.S. District Judge Julie A. Robinson issued an asset freeze Sept. 1, along with stern orders to preserve evidence and repatriate to the United States all assets and documents held on foreign soil. She also broadened the powers of Larry Cook, the court-appointed receiver.

    Through his investigation, Cook determined that Noobing was operating under the umbrella of Apex Holdings International LLC, the same company under which ASI operated. Cook also determined that at least 14 other companies were operating under the Apex Holdings umbrella.

    Noobing, which was registered in the United States, also had an offshoot in Nevis, according to court filings. Noobing targeted people with hearing impairments.

    Cook asked Robinson last month to add Noobing and the other companies as receivership defendants after determining “each of the Subsidiaries used the same post office box as the [initial] Receivership Defendants.”

    Moroever, Cook advised Robinson that he had received “receive numerous inquiries from creditors, former independent contractors, and tax authorities for the Subsidiaries.” He further argued that “each of the Subsidiaries was entirely reliant upon the business operations of the [initial] Receivership Defendants.”

    Robinson, saying Cook had shown “good cause,” added Noobing and the others as defendants March 18.

    No party  — including the FTC, the state attorneys general, the initial set of defendants and the new defendants — objected, Robinson noted. In December, Illinois joined the FTC, Minnesota, North Carolina and Kansas in the action.

    On the previous day, March 17, FBI Director Robert Mueller III, without naming names, testified before Congress. Mueller said that “shell corporations” are emerging as a threat to the U.S. banking system because owners were using them “to facilitate the concealing of criminal proceeds” and engage in money-laundering.

    Neither Noobing not its corporate parent has been accused of a crime.

    In February, the U.S. Secret Service alleged in a civil forfeiture complaint that INetGlobal, a company that operates an autosurf, was engaged in money-laundering and wire fraud while operating a Ponzi scheme.

    INetGlobal is operated by Steve Renner, under his “umbrella corporation, InterMark,” the Secret Service alleged. The agency identified what it described as “subsidiaries,” specifically referencing “Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local,” as well as a company named “INet Global Productions.”

    NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.

    “The commission by Renner of the federal crimes of wire fraud, in violation of Title 18, United States Code Section 1343, and money laundering, in violation of Title 18, United States Code Section 1957, is essential to the operation of this Ponzi scheme,” the Secret Service alleged.

    In August 2008, the Secret Service said AdSurfDaily, a Florida-based autosurf company, also was engaging in wire fraud and money-laundering while operating a Ponzi scheme.

    U.S. District Judge Rosemary Collyer — on Jan. 4, 2010 — ordered the forfeiture of more than $65.8 million in the personal bank accounts of ASD President Andy Bowdoin. A little more than a month later, on Feb. 23, the Secret Service moved against INetGlobal.

    Records show that ASD’s Bowdoin operated several corporations over the years. In September 2009, the state of Florida revoked the corporate registrations of AdSurfDaily and Bowdoin/Harris Enterprises Inc.

    The revocations occurred just four days after Bowdoin told members he had exciting plans for ASD’s future. Despite his claim, Bowdoin never bothered to submit the paperwork to keep the firm’s registration intact, despite having been given a five-month window to do so.

    In his remarks to members, Bowdoin said the government had seized the assets of ASD members. In his own sworn court filings, however, Bowdoin said the seized assets belonged to him and his company.

    The Secret Service transcribed Bowdoin’s remarks, and presented them to Collyer Sept. 28. Federal prosecutors said Bowdoin’s remarks were evidence that “this con man cannot manage to keep his stories straight.”

    Collyer ordered the ASD asset forfeiture a little more than three months later. In the INetGlobal case, the Secret Service said one of its undercover agents was on the receiving end of a sales pitch from an ASD member who was trying to recruit the agent into INetGlobal.

    Renner’s autosurf  “began operating just weeks after ASD was put out of business by the Secret Service, and this new entity uses the same terminology and business model as ASD,” the agency said in an affidavit for a search warrant.

    At least one of the undercover agents working the INetGlobal case also worked the ASD case, according to court filings. The Secret Service searched the Web for an INetGlobal affiliate site, and the INetGlobal affiliate who pitched the undercover agent also had been an ASD member, according to the affidavit.

    “The member asked if [the undercover agent] was a network marketer,” the Secret Service said. “The member said he had previously been a member of ASD . . . and said, ‘We know what happened there.’

    “The member said he was reluctant to join iNetGlobal due to it being similar to ASD,” the agency continued in the affidavit. “The member said, ‘we all know what this program is.’” The member said his daughter and wife surfed the websites and the member did not care about the services provided. The member said he just wanted to put his money in and get it out. The member said you convert your earnings to V-cash and then receive payouts by check or through an ATM card you can sign up for.”

    Less than a month later, FBI Director Mueller told Congress that “shell corporations” and “stored value” debit devices and “reloadable debit cards” increasingly were being used “to move criminal proceeds.”

    “This has created a ‘shadow’ banking system, allowing criminals to exploit existing vulnerabilities in the reporting requirements that are imposed on financial institutions and international travelers,” Mueller said.

    Mueller did not name any companies in his Congressional testimony.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • RECEIVER REPORT: Jet Ski Owned By Noobing Autosurf’s Parent Company Fetches $1,800 At Auction; Office Equipment Fetches $12,500

    A court-appointed receiver has described the accounting records of Affiliate Strategies Inc. (ASI) as a mess, saying “an opinion on the accuracy of these records is not possible without an extensive audit that would require significant additional costs.”

    ASI is the parent company of the Noobing autosurf, which targeted deaf people in sales promotions. ASI and its president, Brett Blackman, were sued by the Federal Trade Commission last year for their alleged roles in a scheme that promised guaranteed government grants of $25,000 from economic-stimulus funds.

    Several other companies and individuals were named in the FTC complaint. Although Noobing was not named in the FTC complaint, receiver Larry Cook examined Noobing’s records last year and made a preliminary determination that it was insolvent. The Noobing website has been offline for months.

    Attorneys general from Kansas, North Carolina, Minnesota and Illinois joined the FTC in the action.

    In October, U.S. District Judge Julie A. Robinson authorized Cook to sell ASI’s assets, including office equipment, a vehicle and a jet ski.

    In a report to Robinson filed last week, Cook said the office equipment fetched $12,500 at auction. Meanwhile, the vehicle — a 2003 Saturn L200 — fetched $2,500. The jet ski — a 2005 Yamaha — brought in $1,800.

    In August 2009, Cook said in a preliminary report to the court that “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.” One of the companies was Noobing, which listed registrations in both the United States and Nevis.

    Kris Rogers, who was the comptroller for ASI and president of an affiliate company known as Custom Accounting Services LLC, told Cook that “the expenses of [the] combined companies have exceeded the revenues since October or November 2008,” according to court filings.

    If Rogers’ assertions are true, it means that both Noobing and ASI — its parent company — were insolvent when the Noobing autosurf was collecting money with the suggestion that participants could earn a return of up to 3 percent a day. Noobing slashed daily payouts in early 2009, an act that caused an uproar on the Ponzi boards.

    Noobing blamed the slashed payout on what it described as an unclear ruling in the AdSurfDaily case. The company did not say why it chose to collect money using a business model that U.S. government has challenged in repeated court cases. After Noobing members complained, the company explained that payouts never were guaranteed.

    Noobing became popular after the August 2008 seizure of tens of millions of dollars from Florida-based ASD amid Ponzi scheme allegations. After the FTC and the attorneys general took the action against ASI and other defendants in the alleged grants scheme, Cook made a preliminary determination that Noobing was nearly $550,000 in the hole.

    When the financial records of the ASI-affiliated records were examined as a whole in Cook’s preliminary analysis last year, he found that “over twenty-five thousand accounting
    transactions, including several thousand intercompany transfers” had oocuured.

    “The transfers between the various LLCs make it difficult to sort out the net result and profits or losses sustained by each LLC,” Cook said.

    “The Receiver’s work over the past three weeks,” Cook said in August 2009, “suggests the Defendants’ operations were insolvent on the date [July 24] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds.”

  • North Carolina Man Adds To List Of Alleged Schemers Who Bought Jet Skis With Fraud Proceeds; J.V. Huffman Jr. Also Faces Trial On Weapons Charge

    J.V. Huffman Jr. Source: Catawba Country Sheriff's Office

    It’s not as though alleged fraudster J.V. Huffman Jr. did not have the expensive cars and real estate often associated with Ponzi schemes or financial frauds.

    Huffman, jailed awaiting trial in North Carolina on Ponzi and weapons charges, had plenty of those, according to William Walt Pettit, the court-appointed receiver. He had an Aston Martin ($100,000+), three Mercedes (nearly $180,000 combined), and a Prevost motor home (insured against loss for $825,000) , for example. And Huffman had at least 14 parcels or properties, including a $765,000 property in North Carolina and multiple interests in time-shares at Walt Disney World in Orlando.

    But Huffman also had jet skis, which oddly seem to have become a signature purchase among operators of alleged Ponzi schemes or financial frauds. Disbarred Florida attorney Scott Rothstein, implicated in an alleged $1.2 billion Ponzi scheme, had jet skis.

    Affiliate Strategies Inc., a Kansas company under whose umbrella the shuttered Noobing autosurf fell, had a jet ski. ASI is among a number of companies sued by the Federal Trade Commission and the attorneys general of four states for operating a grant-writing scheme.

    Florida-based AdSurfDaily, whose president is implicated by the U.S. Secret Service in a $100 million Ponzi scheme, also had jet skis — two of them. Andy Bowdoin told his members that the jet skis (and a lakefront home) were for their benefit, but the statement was met with anger, the jet skis and Bowdoin’s other marine equipment dismissed derisively as “water toys.”

    Huffman’s next court appearance in North Carolina has been delayed until Jan. 25. He also faces a civil prosecution by the SEC, which said his Ponzi scheme began in 1991 and operated for 17 years before collapsing.

    The weapons charge was added when guards found a razor blade hidden in Huffman’s Bible in his jail cell. Prosecutors said the alleged financial scheme largely was targeted at Lutherans.

    SEC investigators said Huffman and his company — Biltmore Financial Group — gathered as much as $25 million from 500 investors. At first, Huffman told investors he operated a mutual fund.

    After the 9/11 terrorist attacks and the ensuing volatility in financial markets, Huffman changed his story, telling investors that he pooled funds to purchase and sell safe mortgages that had strong equity positions and were insured, the SEC said.

    “Contrary to his representations, Huffman and Biltmore did not invest the funds as represented,” the SEC said. “Instead, Huffman spent investor funds to subsidize his lavish lifestyle. Returns to investors were paid from money invested by new investors. The purported insurance protecting the investments did not exist and much of the principal has been dissipated or used to purchase real estate for Huffman and/or his wife, expensive automobiles or other luxuries.”

    In another claim reminiscent of the AdSurfDaily case, the SEC said Huffman dropped famous acronyms such as “FDIC” to get people to invest with him.

    North Carolina Secretary of State Elaine F. Marshall is spearheading the criminal prosecution.

    “People who are knowledgeable in the investment industry came to us saying that the
    promises being made sounded ‘too good to be true,’” she said, after agents arrested Huffman in November 2008. “In most cases, when an investment sounds too good to be true, it usually is.”

  • Deaf Woman, 64, Says She Lost $5,300 In Noobing Autosurf And ‘Can’t Sleep At Night’; Contacts FBI And San Bernardino Sheriff’s Office For Help

    Noobing promoter Jim Beach pitched the program using sign language on YouTube.
    Noobing promoter Jim Beach pitched the program using sign language on YouTube.

    EDITOR’S NOTE: “Carolyn,” the subject of this story, is deaf. She uses a videophone and a human interpreter. The interpreter served as Carolyn’s voice for the interview, translating the Blog’s questions for Carolyn and her responses.

    Here, now, the story . . .

    A 64-year-old California woman — “Carolyn” — said she lost $5,300 in the Noobing autosurf.  Carolyn is deaf. She described herself as a person of limited means financially, saying her experience with Noobing is keeping her awake at night and that the company simply pretended she did not exist when she repeatedly sought answers.

    Carolyn, who lives in the Mojave Valley community of Needles in San Bernardino County, said she was introduced to Noobing, part of the Affiliate Strategies Inc. (ASI) umbrella of companies, in January 2009.  The introduction was made by another deaf person who had 18 members in her downline.

    Carolyn’s sponsor was in the downline of Noobing promoter Jim Beach, Carolyn said. The sponsor lost more than $6,000 in Noobing, Carolyn said.

    ASI was named a defendant in a fraud lawsuit filed by the Federal Trade Commission in July 2009. Neither Noobing nor Beach is a defendant in the FTC action, but Noobing is mentioned in court documents filed by Larry Cook, the court-appointed receiver.

    In a preliminary report, Cook said Noobing generated more than $590,000 in revenue in 2008 and and more than $541,000 in 2009 before going offline. He estimated that Noobing was in the hole nearly $550,000 since 2008, and noted that the ASI network of companies “were high revenue/low margin operations which required significant cash in-flows from new victims to meet current trade creditor and consumer refund obligations.”

    Beach used sign language and promoted the autosurf on YouTube, according to web records. Carolyn, who described herself as “fairly new” to the Internet, said she became increasingly worried about the money she had entrusted to Noobing.

    On a website deemed “The Official Web Blog” of Noobing, the program was described as a “hit” among deaf people. Noobing, according to the Blog, was promoted at Deaf Expos in Kansas, Missouri, New Jersey and Texas in 2008 “to connect with the often overlooked hearing impaired business community.”

    Deaf people “waited in long lines just for a chance to check out Noobing,” according to the Blog.

    Beach, whom the Blog described as “Noobing Sales Manager” and a CODA — the child of a deaf adult — traveled extensively to recruit  deaf members, according to the Blog.

    Carolyn communicated with Beach at least three times in her early days with Noobing in 2009,  but he told her he “left the management of Noobing in April 2009,”  Carolyn said. He then asked her if she wanted to join a program involving the sale of vitamins. Carolyn declined to join the vitamin program.

    Noobing was no help when she called to get answers, Carolyn said.

    “Whenever I called Noobing, they would just hang up on me,” Carolyn said, adding that her sponsor also has ceased communicating with her.

    She added that she “had to go to a debt counselor.”

    “It’s a frustrating road to hoe,” Carolyn said. “It has been very frustrating.”

    “It was on my [credit] card,” she said. “I just racked up my debt unbelievably.”

    Carolyn provided this URL as an example of a site at which hearing-impaired members discussed and promoted Noobing:

    http://www.alldeaf.com/introduce-yourself/60136-hi-deafies-new-here-today-want-friends-affiliate-noobing.html

    Noobing was popular among members of AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme. Carolyn said she was not a member of ASD, adding that she has contacted the Internet Crime Complaint Center operated by the FBI, the National White Collar Crime Center and the Bureau of Justice Assistance to complain about Noobing.

    She also contacted the San Bernardino County Sheriff’s Department, and will meet with an investigator tomorrow, Carolyn said.

    “I feel depressed,” she said. “I feel I’ve been really victimized. It’s hard to make ends meet. I can’t sleep at night; I’m constantly worried over my finances.”

    Read an Aug. 3, 2008, story about the litigation against ASI and other defendants. The case largely centers around an alleged grant-writing scheme.

    Visit the site of Larry Cook, the court-appointed receiver in the FTC case against ASI and other defendants.

    Visit the site of Kansas Attorney General Steve Six, one of four state attorneys general who have joined the FTC in the ASI action.

  • Receiver In Gold Quest International Ponzi Scheme Case Settles With Charles Capps Ministries For $100,000; Other GQI Money Is Part Of California Homicide Investigation

    breakingnewsAll that glitters was not gold in the seedy world of Gold Quest International (GQI), according to the receiver in the GQI Ponzi scheme case.

    Corrupt money was given to a ministry in the form of a gift, and other corrupt money is part of a homicide investigation in Los Angeles, according to court filings.

    Receiver Larry Cook has informed a federal judge that he has accepted a settlement of $100,000 from Charles Capp Ministries, saying the Oklahoma-based Christian organization unwittingly received fraudulent transfers of “at least” of $201,517 between January 2006 and August 2008 from the Ponzi scheme, according to court filings.

    “No allegations of fraud or securities violations were alleged against Charles Capps Ministries in the complaint filed by the SEC in this action,” Cook said. “Based on the information and belief of the receiver, Charles Capps Ministries was the unwitting recipient of investor funds from Defendant David Greene. Upon learning of the source of the funds it received from Greene, Charles Capps Ministries agreed to return the $100,000 settlement amount.”

    David Greene also is known as “Lord David Greene.” He is one of four named defendants in the SEC case. The others are GQI, John Jenkins and Michael McGee. The SEC filed the action in May 2008, and was hit almost immediately with a bizarre effort to undermine the prosecution.

    A litigant purporting to be the “attorney general” of a purported “sovereign” Indian tribe attempted unsuccessfully to file a lawsuit against the SEC for $1.7 trillion for enforcing securities laws. The GQI entity may have links to an extremist group — The Little Shell Pembina Band of North America — monitored by the Anti Defamation League.

    The ‘Goldfinger’ Murder

    Cook, who performed an international paper chase in the GQI case, further informed the judge that certain GQI assets are tied up in a homicide investigation in California.

    “The owner of E-Bullion was arrested in August 2008 for arranging the murder of his wife, a co-owner of E-Bullion,” Cook said. “The Receiver and the Commission have made numerous inquiries regarding future access to the E-Bullion business records and funds, and we have been advised the U.S. Attorney’s office has not made a decision on when or how these records and funds will be administered.”

    E-bullion co-founder James Fayed, 46, was charged with murder by the Los Angeles District Attorney’s office in September 2008. Prosecutors said he paid Jose Luis Moya, 49, a sum of $25,000 to arrange the murder of his wife, Pamela Fayed. The case has been dubbed the “Goldfinger Murder” in California.

    E-bullion was one of the payment processors used by GQI, which the SEC says operated a $28 million Ponzi scheme with Panamanian registration from Las Vegas. GQI purported to be immune from U.S. law because it was part of a “sovereign” Indian tribe in North Dakota.

    More than 2,100 investors from the United States and Canada participated in GQI. Participants perhaps received as much as $19 million in Ponzi payments, according to investigators in the United States and Canada.

    Cook reported that he had recovered only $389,145.57 to date by tracking money all over the world. Much of the money simply disappeared after making its way to New Zealand, he said.

    “Defendant David Greene has testified that he believed that GQI was going to pay investors the returns promised to them via the profits earned by GQI’s investments in Topaz Group Ltd., an entity based in New Zealand,” Cook said. “The Receiver has identified approximately $3.15 million in payments to Topaz Group from the Tri Fund Inc. account, David Greene[‘s] personal account, and John Jenkins[‘] personal account.

    “The Receiver identified and contacted the owner of Topaz Group Ltd., John Davies, in New Zealand,” Cook continued. “Davies advised the Receiver that the funds he received from David Greene were sent to him on behalf of David Greene. Davies stated that Greene always represented that the investment was Greene’s personal investment and it was not until February 2008 that Greene disclosed the funds belonged to an investment group. Davies stated the funds were not for a specific investment, but were used to fund the expenses of individuals working in Europe to complete various banking transactions that were scheduled to close and pay large profits. Davies further stated that none of these transactions were successful.

    “The Receiver, with the Commission’s assistance, has obtained copies of the Topaz Group Ltd. bank account records in New Zealand,” Cook said. “The Receiver has examined and analyzed this account and determined the majority of the funds transferred by Greene to Topaz were immediately transferred from the Topaz Group business account to the account of Wendy Smurthwaite Davies, the wife of John Davies. A small percentage of the funds Greene sent to Topaz were wired to the individuals identified by John Davies as working on the banking transactions in Europe, and the remainder appear to be used for Topaz Group’s miscellaneous expenses.

    “The Receiver and the Commission have participated in conference calls with the New Zealand law enforcement authorities,” Cook said. “The Receiver has provided the New Zealand investigators with information concerning transfers of investor funds from Defendants Greene and Jenkins to Topaz Group Ltd.”

    For additional information see this document from the Alberta Securities Commission.

    See this filing by the SEC.

    Cook also is the receiver in the case against Affiliate Strategies Inc., the parent company of the Noobing autosurf. Noobing pitched itself to individuals with hearing impairments.

  • BREAKING NEWS: Receiver In FTC Case Against Parent Company Of Noobing Autosurf Seeks Wholesale Demolition Of Firm; Asks Judge To Approve Plan To Sell Assets — Right Down To Restroom Wastebasket

    Assets of the parent company of an autosurf firm that targeted customers with hearing impairments would be sold at auction — up to and including a stainless-steel wastebasket in the women’s restroom, according to a plan proposed by the receiver in the case against Affiliate Strategies Inc. (ASI) and other companies.

    ASI is the parent company of the Noobing autosurf. U.S. District Judge Julie A. Robinson of the District of Kansas would have to approve the plan submitted by Larry Cook, the court-appointed receiver.

    Screen shot from court filings: Part of the inventory of Affiliate Strategies Inc.
    Screen shot from court filings: Part of the inventory of Affiliate Strategies Inc.

    Robinson previously ordered ASI to repatriate to the United States all assets and documents held on foreign soil, and cleared the way for any safe-deposit boxes to be opened and inspected. The judge also ordered assets not to be concealed or dissipated and records not to be destroyed.

    In a coincidence that conjures images of another autosurfing company embroiled in litigation, Cook revealed in the plan that ASI owns a jet-ski. Federal prosecutors said in December that money from Florida-based AdSurfDaily Inc. (ASD) was used to purchase two jet-skis.

    Prosecutors seized ASD’s jet-skis in a forfeiture complaint and may choose to liquidate them later, if court approval is gained.

    Cook’s plan would sell ASI’s jet-ski, a 2005 Yamaha, along with a 2003 Saturn automobile owned by the firm.

    “[Cook] previously determined the Receivership Defendants’ business operations could not be operated legally and profitably,” the receiver’s attorney, Brian M. Holland, said in a court filing.

    The Grant Writer’s Institute — another company affiliated with ASI — was accused in August of charging a 70-year-old Philadelphia man $995 for the names and addresses of three benevolent entities that could help him repair the home he shares with his wife.

    One of the addresses proved to be the address of the Philadelphia Regional Office of the U.S. Department of Housing and Urban Development, which had been misidentified by the Grant Writer’s Institute as a benevolent organization known as “World Changers,” according to court filings.

    In July, ASI, the Grant Writer’s Institute and several affiliated firms and individuals were accused by the FTC and the attorneys general of Kansas, Minnesota and North Carolina of participating in a scheme that promised “guaranteed” grants of $25,000 from economic-stimulus funds provided by the government.

    Brett Blackman, president of Noobing, is the head of ASI.

    In August, Cook advised Robinson that the companies were insolvent and that attorneys had received “thirty two US Mail crates” filled with consumer complaints on a single day.

    Blackman, according to Cook, recently registered several corporations offshore, including Noobing, which was registered on the Caribbean island of Nevis on March 25, 2009; ASI Management Inc., formed in Belize on March 24, 2009; Landmark Publishing Group LLC, formed in Nevis on March 25, 2009; Landmark Publishing LLC, formed in Nevis on March 25, 2009; International Research and Writing Group LLC, formed in Nevis on July 1, 2009; and International Publishing Group LLC, formed in Nevis on July 1, 2009.

    All in all, Cook said, “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.”