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Tag: Affiliate Strategies Inc

  • Noobing-Connected Firm Discussed In Senate Hearing

    Jon Leibowitz, FTC chairman
    Jon Leibowitz, FTC chairman

    The head of the Federal Trade Commission told a Senate panel yesterday that a firm associated with the Noobing autosurf embarked on a scheme to sell a $59 book and then used a telemarketing company to upsell customers to an expensive program that fraudulently sold “guaranteed” government grants from economic-stimulus funds.

    “Just last week, some of the defendants allegedly responsible for the ‘Grant Writers Institute’ [GWI] grant scam agreed to a preliminary injunction halting their operation pending final resolution of the matter by the court,” FTC Chairman Jon Leibowitz told the Senate Committee on Homeland Security and Governmental Affairs.

    Noobing, which pitched itself to deaf consumers and was promoted by members of AdSurfDaily (ASD), went offline in the aftermath of the FTC lawsuit against Affiliate Strategies Inc., GWI and related companies.

    “The complaint charged that GWI falsely claimed that consumers were eligible for grants as part of the recently announced economic stimulus package,” Leibowitz told the panel. “For example, consumers who called GWI in response to a mass-mailed postcard heard a recording that said, ‘If you’ve been reading the papers you know that recently our government released $700 billion into the private sector. What you probably don’t know is that there is another $300 billion that must be given away this year to people just like you.’ The recording continued, ‘And if you’re one of the lucky few who knows how to find and apply for these grants, you will receive a check for $25,000 or more, and we guarantee it . . . If you don’t get a check for $25,000 or more, you pay nothing.”

    Sen. Joseph Leiberman, chairman,
    Sen. Joseph Lieberman, chairman, Senate Committee on Homeland Security and Governmental Affairs.

    Sen. Joe Lieberman, ID-Conn., presided over the hearing, which was titled “Follow the Money: An Update on Stimulus Spending, Transparency, and Fraud Prevention.”

    Leibowitz updated Lieberman’s panel on efforts by “[c]on artists [who] have sought to exploit the American Recovery and Reinvestment Act of 2009,” according to his testimony.

    He noted that some fraudsters had used images of “President Obama and Vice President Biden to add legitimacy to their misrepresentations.”

    In a forfeiture case against ASD, a Florida company accused of operating an international Ponzi scheme from a former flower shop in a small town, federal prosecutors said promoters of the scheme falsely claimed that ASD President Andy Bowdoin had received an award for a business achievement from President George W. Bush.

    Rather than let the wire-fraud, money-laundering and securities investigation proceed until all the facts of ASD’s business practices were known, some ASD members embarked on a letter-writing campaign to the Senate and asked members of Congress to investigate the prosecutors, not the alleged schemers.

    Others filed court motions that accused a federal judge and the prosecutors of crimes.

    See Reuters story on the Senate hearing.

  • BREAKING NEWS: Judge Orders Offshore Assets Of Firm Associated With Noobing Autosurf Repatriated; Broadens Authority Of Receiver To Pursue Recovery

    In a ruling that may send shockwaves throughout the offshore autosurf “industry,” a federal judge has ordered the parent company of the Noobing autosurf to repatriate to the United States all assets and documents held on foreign soil.

    U.S. District Judge Julie A. Robinson also cleared the way for any safe-deposit boxes to be opened and inspected. Meanwhile, the judge gave Larry Cook, the receiver in the case against Affiliate Strategies Inc., Brett Blackman and other defendants, broad powers to exercise authority over individual and corporate assets of the defendants.

    At the same time, Robinson ordered assets not to be concealed or dissipated and records not to be destroyed.

    The defendants acknowledged no wrongdoing, but agreed to the order in a stipulation with the Federal Trade Commission and the attorneys general of three states. The order appears to apply to Noobing, which is registered both in the United States and the Caribbean island of Nevis, but is not named a defendant in the case.

    Noobing launched last year and was promoted by members of AdSurfDaily Inc., a surf firm from which the U.S. government seized tens of millions of dollars last year in a wire-fraud, money-laundering and Ponzi scheme probe.

    “[W]ithin 5 business days following the service of this Order, each Corporate Defendant and Individual Defendant shall (emphasis added):

    “A. Provide the Commission and the Receiver with a full accounting of all funds, documents, and assets outside of the United States which are (1) titled in the name, individually or jointly, of any Corporate Defendant or Individual Defendant; or (2) held by any person or entity for the benefit of any Corporate Defendant or Individual Defendant; or (3) under the direct or indirect control, whether jointly or singly, of any Corporate Defendant or Individual Defendant;

    “B. Transfer to the territory of the United States and deliver to the Receiver all funds, documents, and assets located in foreign countries which are (1) titled in the name, individually or jointly, of any Corporate Defendant or Individual Defendant; or (2) held by any person or entity for the benefit of any Corporate Defendant or Individual Defendant; or (3) under the direct or indirect control, whether jointly or singly;

    “C. Provide the Commission access to all records or accounts or assets of any Corporate Defendant or Individual Defendant held by financial institutions located outside the territorial United States by signing the Consent to Release of Financial Records attached to this Order as Attachment C.

    In an extraordinary warning titled “NONINTERFERENCE WITH REPATRIATION,” the judge ordered the defendants to walk the straight-and-narrow when repatriating offshore assets.

    She specifically banned “[s]ending any statement, letter, facsimile transmission, e-mail or wire transmission, or telephoning or engaging in any other act, directly or indirectly, which results in a determination by a foreign trustee or other entity that a ‘duress’ event has occurred under the terms of a foreign trust agreement, until all Assets have been fully repatriated . . .”

    And the judge took it one step farther, specifically ordering the defendants not to advise “any trustee, protector or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a court order, until all Assets have been fully repatriated . . .”

    Robinson empowered Cook to assume full “control of the Receivership Defendants by removing, as the Receiver deems necessary or advisable, any director, officer, independent contractor, employee, or agent of any of the Receivership Defendants, including any Individual Defendant, from control of, management of, or participation in, the affairs of the Receivership Defendants.”

    Cook also was empowered to use his discretion to separate alleged perpetrators from alleged victims.

    The receiver “shall have full power to divert mail and to sue for, collect, receive, take in possession, hold, and manage all assets and documents of the Receivership Defendants and other persons or entities whose interests are now under the direction, possession, custody, or control of, the Receivership Defendants,” Robinson said.

    In her order for assets not to be dissipated and records not to be destroyed, Robinson defined documents as “equal in scope and synonymous in meaning to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes, but is not limited to, writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and any other data compilations from which information can be obtained.”

    Read the judge’s order.

  • BREAKING NEWS: Receiver In ASI/Brett Blackman Case Delivers Devastating Preliminary Report; Noobing Autosurf Identified As Part Of ASI Affiliate Fold And Was Registered In Nevis; Belize Used For Other Firm

    A receiver appointed to review financial records of Affiliate Strategies Inc. and related companies named defendants in a fraudulent government-grants scheme last month advised a federal judge that the companies were insolvent and had less than one day’s operating cash requirements in their bank accounts.

    Astonishingly, receiver Larry Cook advised U.S. District Judge Julie A. Robinson that the attorneys he hired to assist in the probe “received thirty two US Mail crates” filled with complaints on Wednesday alone.

    “Although it is difficult to summarize the mass volume of calls and letters, a majority of the communications are from elderly individuals, or their children, who have discovered automatic checking account deductions from their, or their parents’, checking accounts and are requesting refunds,” Cook said in the preliminary report.

    Although Cook advised the judge he has been able to recover about $300,000 through the early weeks of his investigation and expected to recover more as the investigation proceeds, the defendants’ businesses appeared to be broke.

    “The Receiver’s work over the past three weeks 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,” Cook said.

    He observed that the “Defendants’ business operations were high revenue/low margin operations which required significant cash in-flows from new victims to meet current trade creditor and consumer refund obligations.”

    Noobing, an autosurf that targeted people with hearing impairments, was identified by Cook as a company affiliated with ASI. Noobing was not named a defendant in the fraud complaint filed last month by the Federal Trade Commission and the attorneys general of Kansas, Minnesota and North Carolina.

    Cook, though, said he discovered Noobing had registered as a corporation on the Caribbean island of Nevis on March 25, 2009. Noobing launched last year and was promoted by members of AdSurfDaily Inc., a surf firm from which the U.S. government seized tens of millions of dollars last year in a wire-fraud, money-laundering and Ponzi scheme probe.

    Noobing generated more than $590,000 in revenue last year and more than $541,000 this year before going offline, according to Cook’s preliminary report.

    Cook estimated that Noobing was in the hole nearly $550,000 since last year.

    Blackman, according to Cook, recently registered several corporations offshore, including Noobing; 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.”

    “Of immediate concern is the large distributions and salary paid to defendant Brett Black[man] since 2008,” Cook advised the judge in his report. “Per the QuickBooks accounting records, Blackman received $841,545 of distributions from Apex Holdings International, LLC in 2008 and made a net contribution of $491,559 into Affiliate Strategies, Inc. ($581,388 of contributions and $89,829 of distributions) for a total net distribution of $349,986, in addition to salary payments of $118,049.

    “In 2009,” Cook continued, “Blackman has received $253,506 of distributions from Apex Holdings International, LLC and has made a net contribution of $113,000 into Affiliate Strategies, Inc. ($349,000 of contributions and $226,000 of distributions). The total net distributions and salary to Blackman for 2008 and 2009 is approximately $490,000.”

    Cook said his assessment was ongoing. He reported that some of the accounts involved in the investigation had chargeback rates of as high as 77 percent, meaning that better than three of four customers who made credit-card charges requested refunds.

    Read Cook’s preliminary report.

  • UPDATE: Receiver In ASI Case Launches Website

    Larry Cook, the receiver in the Federal Trade Commission case against Affiliate Strategies Inc., Brett Blackman and several co-defendants, has started a website to inform interested parties.

    Visit the receiver’s website in the ASI case.

    The FTC said the defendants were involved in a fraudulent scheme that promised “guaranteed” grants of $25,000 from economic-stimulus funds provided by the government. State attorneys general from Kansas, Minnesota and North Carolina joined in the lawsuit.

    Blackman is ASI’s president, chief executive officer and founding partner, and also president of Noobing, a surf site. Noobing was not named in the FTC complaint, but the site is offline. Noobing targeted members of the deaf community.

    U.S. District Judge Julie A. Robinson issued a temporary restraining order (TRO) and asset freeze July 24.

  • UPDATE: Noobing Surf Site Offline As FTC Fraud Case Against Affiliate Strategies Inc. Proceeds; Receiver Appointed And Expected To File Preliminary Report Soon

    A receiver has been appointed in the case against Affiliate Strategies Inc. (ASI) and Brett Blackman, ASI’s president, chief executive officer and founding partner. Noobing, a surfing site, is in the ASI fold, but has not been named a defendant.

    Regardless, the Noobing site is offline. A federal judge has granted a freeze of ASI’s assets. Noobing, based in Kansas, launched in the aftermath of the seizure of tens of millions of dollars from Florida-based AdSurfDaily Inc. last year and was promoted by some ASD members.

    YouTube videos and other records show that the site was targeted at people with hearing impairments.

    Late last month, the Federal Trade Commision sued ASI; Blackman; Landmark Publishing Group (d/b/a G.F. Institute and Grant Funding Institute); Grant Writers Institute LLC; Answer Customers LLC; Apex Holdings International LLC; Jordan Sevy, individually and as a manager of Landmark Publishing Group; James Rulison, individually and as president of Answer Customers LLC; Real Estate Buyers Financial Network LLC (d/b/a Grant Writers Research Network); Martin Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC; and Alicia Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC.

    Joining the FTC in the lawsuit were the attorneys general of Kansas, Minnesota and North Carolina. The case also appears in federal court dockets in Virginia and Utah.

    A preliminary report by Larry Cook, the court-appointed receiver, was due today. It is possible that the filing will be delayed until Aug. 20, because attorneys for the defendants asked for a delay.

    U.S. District Judge Julie A. Robinson issued a temporary restraining order (TRO) and asset freeze July 24. Based on filings by the defendants, Robinson granted a delay from Aug. 12 until Sept. 1 to conduct a hearing on the TRO. But Robinson denied a motion by the defendants to stay discovery in the case.

    Among other things, the defendants advised the court that they wished “to retain separate counsel for themselves” and noted they needed time to “sort out their financial affairs” and to determine how to pay for separate counsel, Robinson noted.

    And, Robinson noted, “[T]he defendants seek time to attempt to conduct settlement negotiations.”

    The FTC said the defendants were involved in a scheme that promised “guaranteed” grants of $25,000 from economic-stimulus funds provided by the government.

    Kansas Attorney General Steve Six said the alleged scheme was deplorable and that investigators intended to carve back any ill-gotten gains.

    “During this time of economic uncertainty, grant scams are taking advantage of people’s hope for financial assistance and scamming them out of hard earned money,” Six said. “There is no such thing as a guaranteed grant. But to consumers in financial trouble, the chance for extra income can unfortunately be a huge draw.”

    “Scammers like these are using the bad economy to try to get rich at your expense,” Six said. “Beware of anyone who promises to help you win a grant if you pay them first.”

    Blackman, 25, “began trading stocks and bonds at the age of 15,” according to ASI’s website. He also “is involved with numerous civic groups including Business Fellowship International (BFI), Young Life, and Campus Crusades. He also serves on the board of Where Are The Christian Men (WATCM).”

  • Noobing, Surf Site That Pitched Itself To Deaf Community, Goes Missing; Purported President Was Named In FTC Complaint Against Separate Firm Last Month That Alleged ‘Guaranteed’ Government ‘Stimulus’ Grants Of $25,000

    UPDATED 10:48 A.M. EDT (U.S.A.) The Noobing surf site is throwing a server error and will not resolve. The development came in the aftermath of a Federal Trade Commission complaint filed late last month against Brett Blackman and others, although Noobing was not named in the FTC complaint.

    On July 24, a federal judge froze Blackman’s assets and the assets of other defendants in the case.

    Attorneys general from Kansas, Minnesota and North Carolina joined the FTC in the action. One of the claims in the case is that Blackman was part of a scheme to make customers believe they would receive a “guaranteed” $25,000 grant from the government from economic-stimulus funds.

    Web records identified Blackman as Noobing’s president. The precise time the Noobing site vanished is unclear.

    Noobing had a considerable presence in the deaf community, and at least 15 YouTube videos featured sign language.

    Members complained publicly about “bait and switch” in February, saying they were attracted to the program by suggestions of returns of up to 3 percent a day.

    Returns, however, plunged to only a fraction of 1 percent. A Noobing staffer explained at the time that Noobing learned from the AdSurfDaily case that “it became clear that any system that is not SEC registered as an investment that returns more than 100% risks getting shut down and everyone loses everything.”

    What he did not explain is why Noobing chose even to operate in the post-ASD environment.

    The staffer went on to blame the government for the decision to slash the payout rate.

    “The SEC did not contact us,” explained the employee in February, on the ASA Monitor forum. “We are simply being smart and not putting ourselves in a bad position to risk losing everything. Once ASD gave up, and we stood without a firm ruling from the courts, the risk was too high. We’d have preferred that ASD won, or that at least we got a clear ruling, as it is now, cautious action is best.”

    Noobing was popular among some some members of ASD. After the seizure of tens of millions of dollars from ASD President Andy Bowdoin a year ago this month, some promoters turned to Noobing in the fall.

    In the FTC complaint, the agency and the attorneys general seek “a court order permanently stopping the defendants’ illegal conduct and forcing them to return money to consumers injured by the scheme,” the FTC said.

    Named defendants were:

    • Affiliate Strategies, Inc.
    • Landmark Publishing Group, LLC (d/b/a G.F. Institute and Grant Funding Institute)
    • Grant Writers Institute, LLC
    • Answer Customers, LLC
    • Apex Holdings International LLC
    • Brett Blackman, individually and as an officer, manager, and/or member of Affiliate Strategies, Inc., Landmark Publishing Group, LLC, Grant Writers Institute, LLC, Answer Customers, LLC, and Apex Holdings International, LLC
    • Jordan Sevy, individually and as a manager of Landmark Publishing Group
    • James Rulison, individually and as president of Answer Customers, LLC

    In addition, the complaint names the following North Carolina entities as defendants: Real Estate Buyers Financial Network LLC (d/b/a Grant Writers Research Network); Martin Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC; Alicia Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC.

    “Since at least 2007, GWI has mass mailed postcards to consumers across the country falsely claiming that the consumers “are Guaranteed a $25,000 Grant from the U.S. Government,” the FTC said. “Consumers who call the number are pitched a $59 book titled ‘Professional Grant Writer[:] The Definitive Guide to Grant Writing Success.’”

    “The company’s telemarketers falsely claim that the book will explain how to get government grants — including the ‘guaranteed’ $25,000 grant,” the FTC continued. “GWI and its North Carolina-based telemarketers, also named as defendants in the complaint, then call consumers who have bought the book, trying to get them to pay hundreds of dollars or more for grant research, writing, or coaching services, falsely claiming a 70 percent success rate in securing grant funding. In reality, few, if any consumers ever receive any grant money.”

    From federal complaint.
    From federal complaint.

    Meanwhile, the FTC said, “GWI used the current government stimulus package to make its pitch. For example, when consumers called the number on the mass-mailed postcard, they heard a recording that said, ‘If you’ve been reading the papers you know that recently our government released $700 billion into the private sector. What you probably don’t know is that there is another $300 billion that must be given away this year to people just like you.’”

    It did not end there, the FTC said.

    “The recording continues, ‘And if you’re one of the lucky few who knows how to find and apply for these grants, you will receive a check for $25,000 or more, and we guarantee it . . . If you don’t get a check for $25,000 or more, you pay nothing.’”

    Read the FTC news release. Read the federal/state complaint.