URGENT >> BULLETIN >> MOVING: (8th Update 2:40 p.m. ET March 4, U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid-scheme case has sued alleged insiders and net winners, including members of the 2008 AdSurfDaily Ponzi scheme.
Parts of the complaint read like a re-living of the ASD scheme, with Zeek Receiver Kenneth D. Bell alleging Zeek’s penny-auction arm (Zeekler) was in trouble early on and that Zeek operator Paul Burks borrowed money from another insider to keep things going. The fraud later expanded massively, Bell alleged.
At one point, according to Bell, former Zeek COO Dawn Wright-Olivares “excitedly” told Burks, “I think we can blow this OUT together — we’ve already attracted a great many big fishes.”
But the insiders “were aware that the payouts to Affiliates would be funded by new participants rather than retail profits from the penny auctions,” Bell alleged.
Named defendant “insiders” were Burks of Lexington, N.C.; Wright-Olivares of Clarksville, Ark.; Daniel Olivares of Clarksville, Ark.; the estate of the late Roger Anthony Plyler of Charlotte; Alexandre “Alex” de Brantes, the husband of Wright-Olivares and a resident of Clarksville, Ark.; and Darryle Douglas of Orange, Calif.
Burks, the receiver alleged, received “in excess” of $10 million from Zeek; Wright-Olivares received more than $7.8 million; Daniel Olivares received more than $3.1 million; Plyler, who once lent money to Burks, received more than $2.3 million; Douglas received more than $1.975 million. An amount was not listed for de Brantes.
Named winners were former AdSurfDaily member Todd Disner of Miami (more than $1.875 million); former ASD member Jerry Napier of Owosso, Mich. (more than $1.745 million); Trudy Gilmond of St. Albans, Vt. (more than $1.75 million); Durant Brockett of Las Vegas (more than $1.72 million); Darren Miller of Coeur d’Alene, Idaho (more than $1.635 million); Rhonda Gates of Nashville (more than $1.425 million); Michael Van Leeuwen, also known as “Coach Van” of Fayetteville, N.C. (more than $1.4 million); David Sorrells of Scottsdale, Az. (more than $1 million); T. Le Mont Silver Sr. of Orlando, Fla. (more than $773,000 under at least two user names, and more than $943,000 through a Florida shell entity known as Global Internet Formula Inc. with one or more Zeek user names).
One of Silver’s usernames was “mentor,” Bell alleged.
Also named winners were Karen Silver, Silver’s wife (more than $600,000); veteran HYIP pitch team Aaron and Shara Andrews of Lake Worth, Fla. (more than $1 million through a Florida shell entity known as Innovation Marketing); David and Mary Kettner of Peoria, Az. (more than $930,000 via one or more user names and shell companies known as Desert Oasis International Marketing LLC and Kettner & Associates LLC); Lori Jean Weber of Land O’Lakes, Fla. (more than $1.94 million through a shell company known as P.A.W.S. Capital Management LLC).
Bell also sued a “Net Winner Class” of as many as 9,000 U.S. residents or entities who allegedly harvested illicit gains of $1,000 or more from Zeek. Lawsuits against international winners will come later, Bell said.
In December 2013, Wright-Olivares and Olivares were charged criminally. They pleaded guilty last month for their roles in the scheme and are liable for more than $11.4 million in restitution and penalties, the SEC said.
As the SEC previously alleged, Zeek relied on a so-called “80/20” program to sustain the Ponzi deception. Bell today built on that theme. From the complaint against insiders (italics added/spacing modified):
Dawn Wright-Olivares explained and promoted the plan in a Skype chat as follows:
Here’s a scenario here where you could be receiving $3,000 per month RESIDUALLY. Let’s use a 1% daily cash-back figure in this example (Please note: This is only an example and the actual amount will vary day to day).
When you reach 50,000 points in your account, then you could start doing an 80/20 cash-out plan. Pay close attention? When you hit 50,000 points in your account, if the daily cash-back percentage is 1%, ZeekRewards will be awarding you with $500.00 each day. First of all, did you catch that? … you’re making $500 per day … it’s your money! Ok, the 80/20 plan works like this, take 80% of that $500 (or $400) and purchase more VIP bids to give away to new customers as samples to continue growing your points balance.
Then, keep doing what you’ve been doing every day, which primarily consists of giving free bids away as samples and placing one free ad per day for Zeekler.com’s penny auctions and submitting into your ZeekRewards back office. Then, pull out 20% of the $500 (or $100) and request a check weekly. That’s $700 per week, or about $3,000 per month in residual income! And keep in mind, these amounts can continue to grow day after day and month after month.
HYIP schemes, including ASD and Zeek, often implement deceptions such as 80/20 programs as part of a bid to reduce cashout amounts to let the scheme continue to live. Insiders and veteran Ponzi pushers typically know they’re a crock.
Daniel Olivares, Bell said, has a Zeek user name of “dcolive.”
On June 14, 2012, about two months prior to the collapse of Zeek, RealScam.com moderator and PP Blog poster “Glim Dropper” posted a link on the PP Blog that established a tie between Zeek promoters and ASD promoters. ASD was a $119 million Ponzi scheme operated by now-jailed operator Andy Bowdoin.
RealScam.com is an antiscam forum.
The link “Glim Dropper” posted was at a URL styled “dcolive.com.”
From “Glim Dropper’s” observations at the time (italics added):
I’d draw your attention to about five minutes into the call when Dawn recalls a conversation with Jerry Napier. Jerry was quoted as loving ZR and never wanting to have to build another organization with another program and mentioned a previous program and the litigation it was still facing and he mentioned “similarities” between ZR and that previous program.
It is common in the HYIP sphere for promoters to move from one fraud scheme to another.
Napier’s exposure to ASD is unknown. But the Zeek receiver now says Napier received illicit gains of more than $1.745 million. The alleged illicit Zeek gains of former fellow ASD member Todd Disner are even higher: $1.875 million.
Precisely how many ASD members went on to join Zeek is unclear. What is clear is that both firms used similar business models and sweetened the deal for certain members.
Bell alleged today that Zeek had a “Sweet 16” deal in which participants paid $999 to mine even more “passive” gains.
“The Sweet 16 was another means by which [Rex Venture Group] made payments on a passive investment,” Bell alleged. “It did not involve the sale of a product, nor did it require a member to recruit other participants into the program.”
Disner once filed suit against the United States, alleging its ASD Ponzi case was a “tissue of lies” and a “house of cards.” A federal judge tossed the lawsuit, after Bowdoin pleaded guilty to wire fraud and admitted ASD was a Ponzi scheme.
In a curious promo, Egyptian pyramids are being used as an art element by cheerleaders for TelexFree, an alleged pyramid scheme. Source: ConventionTelexFree.com. Red highlight by PP Blog.
U.S.-based TelexFree, alleged in Brazil to be a massive pyramid scheme, is serving up a heaping helping of strangeness.
For starters, a promo for TelexFree’s International Convention set for Spain next month is being voiced by Sann Rogrigues, whom the SEC successfully sued in 2006 amid allegations he was operating a pyramid scheme and engaging in affinity fraud aimed at the Brazilian community.
The promo curiously is playing against the backdrop of an image of the Pyramids of Giza. For good measure, images of other famous world landmarks are thrown in. These include St. Basil’s Cathedral (near the Kremlin) in Moscow; Big Ben in London; The Eiffel Tower in Paris; the Empire State Building and the Statue of Liberty in New York; the Leaning Tower of Pisa; and the Burj al Arab Hotel in Dubai.
TelexFree operates out of Marlborough, Mass., and Las Vegas in the United States. Its convention is scheduled for March 1 and 2 in Madrid.
The promo in which Rogrigues dispenses the TelexFree convention wisdom appears on a website styled ConventionTelexFree.com. Among the claims on the site is that American MLM lawyer Gerald P. Nehra will be among the “Special Guests” at the rah-rah fest in Spain.
American MLM lawyer Gerald Nehra will be a special guest at TelexFree’s International Convention in Madrid next month, according to ConventionTelexFree.com.
Serving as an expert witness for AdSurfDaily in 2008, Nehra opined that ASD was not a Ponzi scheme. ASD operator Andy Bowdoin, now serving 78 months in federal prison at the age of 79, later disagreed with his own expert. In 2012, Bowdoin admitted that ASD was a Ponzi scheme that had gathered $119 million and said the “program” never operated lawfully from its inception in 2006.
ASD promoted a return of 1 percent a day. Some TelexFree promoters say that “program” triples or quadruples money in a year. Some promos solicit sums of $15,125.
Nehra’s law firm also was touted by Zeek Rewards. In 2012, Zeek was accused by the SEC of operating a massive international Ponzi- and pyramid scheme that gathered hundreds of millions of dollars by planting the seed that returns would average 1.5 percent a day. At least two Zeek figures potentially now face prison sentences after pleading guilty for their roles in the scheme.
The court-appointed receiver in the Zeek case says he’s on the brink of filing lawsuits against thousands of Zeek promoters.
TelexFree appears recently to have begun operating under the name TelexFree International. Precisely where TelexFree International is based is unclear.
In the past, Nehra has described himself an an attorney for “TelexFREE in the USA,” according to BehindMLM.com. Whether he represents the TelexFree International derivative is unclear. Convention promoters, however, appear to believe he does.
“[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.
“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
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.
_______________________________________
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.
UPDATED 7:36 P.M. ET (U.S.A.) Let’s say you’re out there feverishly flogging the TelexFree MLM even as the pyramid-scheme probe moves forward in Brazil, a judge and prosecutor have been threatened with death and TelexFree executive Carlos Costa is pulling an Andy Bowdoin and telling the world that God used him to bring the purported opportunity to the flock.
There’s always risk associated with HYIP schemes. Now, however, it seems those risks are becoming even greater.
Here is a key fact: The sender used an IP based in France that has been associated by Project Honeypot with comment-spamming — pitches for porn sites and sites that purport to give you a good price on designer goods in advance of a predicted “downturn,” for example. (Basic message: You can look wealthy even if you’re not, even after the economy tanks. Buy your knockoffs now and look good when the sky is falling on your life.)
The sender, now adding HYIP schemes to the porn and designer-good mix from that specific IP, used a handle that incorporated the word “Silver” within its overall handle and sought to plant a URL at the PP Blog to a Panamanian venture that advertises a custody service for precious metals. The PP Blog is declining to publish the URL and the name of the enterprise which, among other things, reproduces on its website the logos of an internationally famous insurer based in London and an internationally famous accounting firm based in Chicago. The site also publishes various contact phone numbers in the United States, Panama, New Zealand, Australia, Switzerland, the United Kingdom and Hong Kong. Although there is a chance that the service is legitimate, the PP Blog questions why someone or some thing is spamming links to the precious-metals site and loading them up further with links to “positive” coverage of seemingly unrelated HYIPs.
For the purposes of this PP Blog post, the Panamanian venture is a sidebar tidbit. Far more interesting was the body content of the spam, which appears to be a compendium of gushing affiliate pitches for TelexFree that appear on the net. The spam appears to have been cobbled together by a human scraper or scraping device of some sort that had visited one or more TelexFree-related websites. Links embedded in the spam are the “real story” in the context of this PP Blog post.
So, for starters, TelexFree’s name is being used as part of a bid to drive traffic to a precious-metals website on which visitors curiously are told they must provide 15 days’ notice if they wish to visit the office in Panama City. The PP Blog likely was targeted by the spammer simply because the word “TelexFree” appears here many times in reports about TelexFree-related events in Brazil and the United States.
The spammer — be it bot or human — appears to have made the calculation that TelexFree members might be the perfect customers for the precious-metals venture. Contained within the spam were three links: One to a site styled TelexFreeUnitedStates and two to a URL-shortening service that redirected visitors to Photobucket, the popular image-hosting and story-sharing website.
Here’s where the story really begins . . .
One of the picture stories told at at the Photobucket site was told inside a subfolder of a folder labeled “aaronsharazeek.” (Emphasis added.) The subfolder was slugged “First Zeek Red Carpet Event April 18th 2012.” Zeek conducted a Red Carpet event on that date.
The SEC moved against Zeek on Aug. 17, 2012. On the same date, the Secret Service said it also was investigating Zeek. Court records suggest the SEC began the Zeek probe at least by April 17, 2012, one day before the April 18 Zeek Red Carpet event highlighted within the “aaronsharazeek” folder on Photobucket.
On April 17, 2012, according to court filings, the SEC tasked an IT specialist to “conduct Website/video capture” of ZeekRewards.com.
Paul Burks appears to have been in deep thought on April 18, 2012, one day after the SEC tasked an IT specialist to capture content from Zeek Rewards.com. This is a slice of a photo from a larger photo that appears on Photobucket in a folder labeled “First Zeek Red Carpet Event April 18 2012.”
Precisely when Zeek operator Paul R. Burks found out about the SEC probe remains unclear. But photos inside the “First Zeek Red Carpet Event April 18th 2012” subfolder at the Photobucket site show a Burks who appears to be in deep thought. One can only wonder what 66-year-old Burks was thinking about on that date. His health? His wife’s stress level, given the noise Zeek was creating in the small town of Lexington, N.C.? His ability to keep Zeek going? The prospect that investigators were closing in?
There are 18 other photos in the Red Carpet event subfolder, some showing Zeek luminaries such as former SEC defendant Keith Laggos, former Zeek COO Dawn Wright-Olivares, former Zeek videographer OH Brown (looking happy), former Zeek trainer Peter Mingils (identified in one photo as the “V.P. of the Association of Network Marketing Professionals”). Other photos of Zeek personalities/staffers appear in the folder, as do photos showing attendees.
Absent the “Silver”/TelexFree spammer, the PP Blog likely never would have seen these photos.
Also within the “aaronsharazeek” folder at Photobucket is a subfolder slugged “Zeek Trip,” and subfolders slugged “Banners Broker” and “telexfree.” The “Zeek Trip” folder appears to contain four photos of Zeek-related real estate in Lexington, N.C. (In the ASD Ponzi case, affiliates suggested that ASD couldn’t possibly be illegitimate because ASD had an office. The same thing has been asserted by TelexFree promoters.)
Meanwhile, the “Banners Brokers” folder contains a video of a sales pitch, and the “telexfree” folder contains images of government documents from the state of Massachusetts and the country of Brazil that appear to have been designed to plant the seed that TelexFree couldn’t possibly be a scam.
Taken as a whole, the various folders and photos demonstrate the interconnectivity of MLM HYIP schemes, regardless of who actually controls the Photobucket site. It is known from other sources that some Zeekers also were in the JSSTripler/JustBeenPaid scam and the exceptionally murky Profitable Sunrise scam shut down by the SEC and various state regulators earlier this year.
Banners Broker is an uber-bizarre Ponzi-board program. On July 2, 2013, the PP Blog reported that MLM attorney Kevin Thompson said that the name of his law firm had been used by scammers in a bid to dupe members of Banners Broker and Profit Clicking, the JSS/JBP-associated “program” linked to Frederick Mann that may have ties to the extremist “sovereign citizens” movement. The July 2 PP Blog post was titled, “Law Firm’s Name Used In Bid To Dupe Members Of Banners Broker, Profit Clicking, MLM Attorney Says.”
Within the July 2 post, the PP Blog reported that it had received menacing messages in apparent “defense” of Banners Broker. As the Blog reported at the time (italics added):
WARNING: The next paragraph includes quoted material from one of the Jan. 18, 2013, spams, and the PP Blog is reproducing it to illustrate the bizarre and often menacing nature of the HYIP sphere. Indeed, the apparent Banner’s Broker supporter wrote (italics added):
” . . . I am Big Bob’s cock meat sandwich. Your mom ate me and made me do press ups until I threw up . . . I am gonna report you. When you make false accusations, you can get done. Maybe you will be seen in court soon . . .”
It is as ugly today as it was on the January date the PP Blog received the communication.
Why “programs” such as TelexFree, Zeek Rewards, BannersBroker and ProfitClicking become popular with people of faith is one of the head-scratching mysteries of current times. Gold fever, of course, is nothing new; it’s been around for centuries. What’s at least relatively new in the Internet Age is that the gold- and silver-sellers appear to be piggybacking off HYIP pitchmen, apparently hoping to rope in customers for shiny-object schemes.
This “comment” sent to the PP Blog on Nov. 22 sought to drive traffic to a precious-metals site by planting a link to the site and also planting links related to TelexFree.
On Oct. 25, the PP Blog reported that an alleged shiny-object scheme had taken root in Zeek’s back yard in North Carolina. On June 19, the PP Blog reported that the receiver in the Legisi HYIP Ponzi case was going after assets linked to E-Bullion, a collapsed payment processor with shiny-object woo. James Fayed, E-Bullion’s operator, is sitting on death row in California after a jury found him guilty of arranging the brutal contract slaying of his own wife.
The Legisi scheme was targeted at Christians, and E-Bullion’s cheerleaders included the Canadian clergyman Brian David Anderson, who was sent to U.S. federal prison in 2010 for the Frontier Assets Ponzi scheme. Anderson also was linked to the Flat Electronic Data Interchange (FEDI) HYIP scheme that put Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” in federal prison after his September 2009 convictions for financing terrorism and fleecing FEDI investors.
Yes, financing terrorism.
Alishtari traded on his purported ties to prominent politicians, just like ASD’s Andy Bowdoin. At least one of the schemes linked to Alishtari and Anderson used the term “rebates,” just like ASD. The narrative surrounding FEDI read like impossibly outrageous fiction, a mind-bending example of a shiny-object scheme. Ten members of purported “Royal families” in the Middle East were said to have set aside “50 Billion in Gold” ($5 billion each) to advance the scheme. Another entity in the Middle East was said to have supplied a “total of 100 Billion in Gold.” Still another entity was said to have put up “500 Million dollars in liquid gold assets.”
FEDI marks were solicited to purchase what effectively were trading desks that somehow would enable them to profit on the coattails of Middle East royals interested in escrowing huge sums to fund worldwide construction projects, with money purportedly flowing to the “labor” force. If that weren’t enough, the scheme purportedly was married to a venture that purportedly would put vending machines in at least 50,000 locations. The vending machines purportedly would sell debit cards, and were purportedly backed by $150 billion in gold and an insurance policy in Canada.
In March 2012, the PP Blog reported on FTC allegations that three Florida companies and a Florida man had roped customers into a shiny-object scam, a precious-metals boondoogle allegedly carried out by telemarketers.
Imagine what would happen if a scamming telemarketing firm had the customer lists for TelexFree, Zeek, Banners Broker, Profit Clicking, AdSurfDaily, Legisi and others.
If the MLM industry seeks to win favor on Main Street and stop being the brunt of jokes, it needs to act forcefully to eradicate these schemes. MLM attorneys need to stop permitting schemes to trade on their names, thus potentially setting the stage for prospects to believe that no scam could be occurring because no lawyer would permit his name to be used in this fashion.
But even today, what does one get when one visits the website of TelexFree? A pitch in which the alleged TelexFree pyramid scheme announces its pride at having MLM lawyer Gerald Nehra on board.
Zeek traded on the name of MLM attorney Kevin Grimes, who comes off in Red Carpet Day shots as a Zeek crowd prop, and also the name of Nehra. Bidify traded on Kevin Thompson’s name. The lawyers should not permit this to happen. And they should stop making personal appearances at “opportunity” events and start questioning why so many of these “programs” are targeted at people of faith and promise or suggest the likelihood of absurd returns.
Profitable Sunrise — perhaps recognizing that an MLM scheme can be made to appear legitimate if affiliates simply are provided the name of a purported lawyer — appears to have conjured up an attorney’s name out of thin air. It then allegedly proceeded to run off with millions and millions of dollars. When ASD’s Bowdoin switched from the two scams that eventually put him in prison (ASD and AdViewGlobal) and began pitching the alleged OneX pyramid scheme, one of the first things he did was assure the former ASD members he was pitching in a webinar that OneX had an “attorney,” adding that the venture was a great fit for college students. Bowdoin, mixing in God talk during the October 2011 webinar, never identified the purported lawyer by name. Neither did a former ASD pitchwoman pitching the OneX scheme alongside Bowdoin.
In the absence of self-imposed, self-regulatory restraints in the MLM industry — lawyers restraining themselves from becoming accidental or purposeful stage props and sanitizers of “programs,” for example — MLM prospects may be well-advised to view any MLM “program” with the highest degree of skepticism, regardless of the programs’ wares.
Every single one of the “programs” referenced in this story has ridden on the coattails of a deity and lawyers. It did not matter whether the lawyers were real or imagined.
And it did not matter that the Gods of many faiths were observing it all, perhaps mournfully wondering how the precious Children of the Earth had come to view MLM money as the maximum deity.
Paul Darby with “President Obama,” apparently on Inauguration Day in 2009 after the U.S. Secret Service infomed the MLM world through the filing of the AdSurfDaily Ponzi case that trading on the name and image of the President of the United States might not be a good idea.
UPDATED 8:37 A.M. EDT (OCT. 21, U.S.A.) Former AdSurfDaily President Andy Bowdoin is continuing to serve 78 months in federal prison at the age of 78 — in part because he borrowed liberally from the MLM scammer’s playbook and planted the seed that the President of the United States (then George W. Bush) backed his “program.” Some MLM prospects joined the ASD fraud scheme — a $119 million Ponzi popularized in part on the Ponzi boards and broken up by the U.S. Secret Service in 2008 — based on pitches highlighting Bowdoin’s purported ties to the White House.
Bush left office on Jan. 20, 2009. Barack Obama then became President.
Records now strongly suggest that Obama was President for only minutes when he became an unwitting salesman for an MLM or affiliate scheme. Indeed, an online pitch featuring “Obama” is dated Jan. 20, 2009, Inauguration Day in the United States and the date upon which Obama took over from Bush.
A Blog on Google’s free Blogspot platform made this headline claim on Jan. 20, 2009: “Barack Obama visits Unimax Services.”
The Blog, which remains online well into Obama’s second term that began on Jan. 20 of this year, features a knockoff of the Seal of the President of the United States. “Presidents Club,” it screams. Recruits for a “program” known as Net Millionaires Club apparently were accorded the title of Presidents — not of the United States, but of the “Unimax States.”
This is straight out of MLM or affiliate scheme La-La Land.
Paul Darby, who describes himself as “President of the Unimax Services Corporation” on the Blogspot site with the “Barack Obama visits Unimax Services” headline, is featured alongside a cardboard cutout of Obama in a video playing on the site. In the bizarre video, Darby bizarrely describes the cutout of Obama as the “featured guest” and suggests the Net Millionaries Club he’s promoting with the knockoff of the U.S. Presidential Seal is an “economic stimulus package.”
If you don’t go any farther than the headline — if you don’t take the time to view the video showing the Obama cutout — you could reasonably conclude that Obama actually visited Unimax Services and endorsed the “program.” Put another way, it’s a contemptible, backdoor way to use the Internet to turn the White House and the Commander-in-Chief into a spokesman for a highly dubious MLM or affiliate scheme.
If all of this seems altogether too much, altogether too bizarre, consider that the Secret Service, through the filing of the ASD Ponzi case in 2008, informed the MLM world that it wasn’t a good idea to go around trying to tie the President of the United States to your scheme. Next consider that the ASD scheme had its own form of a Darby-like Net Millionaries Club; the ASD version was multipronged and was called the “President’s Circle,” the “President’s Advisory Board” and “President’s Advisory Counsel.” Then consider that the Darby Blog — in January 2009, months after the ASD case had been filed — led with the “Barack Obama visits Unimax Services” headline on the date the President was inaugurated.
Did the President of the United States really visit Unimax Services, purveyors of the Net Millionaires Club? And did the White House somehow give Darby permission to alter the Seal of the President of the United States as a means of driving traffic to the “program? Did Paul Darby learn nothing from the ASD case?
But it gets worse . . .
Flash forward to 2013 (while considering that MLM schemes such as BidsThatGive and Lyoness also have tried to tie themselves to the U.S. Presidency or the Presidency of other countries), and you’ll find Darby as the braintrust behind yet another “program.” This one is called “YouGetPaidFast.”
Like ASD before it, YouGetPaidFast has a presence on the Ponzi boards. The new “program” appears to be a cash-gifting scheme. Ponzi-forum pitchman “Ken Russo,” previously of the ASD Ponzi scheme, the GNI and NewGNI Ponzi schemes, the Zeek Rewards Ponzi scheme, the MPB Today pyramid scheme, the Club Asteria fraud scheme and the Profitable Sunrise fraud scheme, is helping lead the YouGetPaidFast charge.
“Ken Russo” appears even to have coined a new acronym to deflect attention away from the critical issues surrounding online fraud schemes. Critics, according to a post attributed to “Ken Russo” at the MoneyMakerGroup Ponzi forum, are “NAG[s].” NAG stands for “Naysayers Anonymous Group.”
According to “Ken Russo,” in apparent defense of YouGetPaidFast (italics added):
“The NAG (Naysayers Anonymous Group) are doing their best to deter you from joining an excellent program which offers one of the best opportunities I have ever seen for average folks to develop a substantial additional income stream. The NAG is relentless in their efforts to denigrate this fine program . . .”
This is occurring after the United States charged three women criminally in Connecticut for pushing a cash-gifting pyramid scheme. Two of the three women were sentenced earlier this year to lengthy terms in federal prison.
It also is occurring against the backdrop of bids earlier this year by enthusiasts of other Ponzi-board “programs” to trade on images of Obama and the prestige of the U.S. Presidency. Those “programs” included Empower Network and “Ultimate Power Profits.”
Unlike his Net Millionaires Club scheme, however, Darby’s YouGetPaidFast scheme appears no longer to be interested in trading on the name of the President of the United States and the seal of the President of the United States.
No, this time Darby is planting the seed that the FBI backs his “program.”
Darby is trotting out some of the same sort of MLM La-La Land talking points advanced by self-styled Zeek Rewards consultant Robert Craddock — that is, if you speak out against a “program,” you’re going to get sued and perhaps even paid a visit by its backers in law enforcement.
As BehindMLM.com is reporting today, Darby now claims to have FBI agents on “speed dial.” And at least one of those agents purportedly has vetted YouGetPaidFast and given it the all-clear.
Beyond that, according to the BehindMLM.com report, one or more Christian pastors is encouraging Darby to sue his detractors.
If that seems altogether too odd, consider that purported Christian pastors also are backing Empower Network and its purported “Badass” content, including the reported death by suicide of a top Herbalife MLM distributor.
David Wood, one of the top dogs at Empower Network, once advised critics to “Back the fuck down.”
“Be warned: BIG, SCARY WARNING,” Wood wrote. “I’m in the process of having lawyers research into whether or not we can sue the shit out of you.”
Whether Wood lost any pastors after the remark is unclear. At least one purported pastor encouraged Empower Network affiliates to overlook the nasty language and simply concentrate on making money. Pastors also backed the ASD Ponzi scheme and the Profitable Sunrise scheme — to cite just two of the MLM fraud schemes that recently have fleeced people of faith. ASD’s Bowdoin, before becoming a pitchman for a scheme known as OneX, once described himself as a Christian “money magnet.”
There is plenty of God talk in YouGetPaidFast, too.
EDITOR’S NOTE: In case you haven’t seen the series finale, there are no spoilers in this post. “Breaking Bad” ended its original run on AMC, and America said goodbye (or good riddance) to Walter White, the money-launderer next door, last night. The fictional White, of course, had been pursuing clandestine wealth, recklessly disregarding the safety of his family, destroying the lives of people who got in the way of his self-consuming greed and risking U.S. national security for five TV seasons. (At one point, he’d amassed at least $80 million in cash — enough to equip a small army of thugs or terrorists had they found its hiding place. Lo and behold, a group of neo-Nazi racketeers/murderers in part supplying Czech narcotics traffickers through a Houston-based methylamine supplier and upstart meth manufacturer did find it. Put another way, a white-supremacist group that openly shot at cops and murdered a bicycle-riding child to prevent him from tattling about the heist of a train carrying a meth precursor gained unwarranted economic power in the tens of millions of dollars.)
Like the world of narcotics traffickers, the HYIP world is filled with Walter White-types, the wire fraudsters and money-launderers next door. Beyond that, claims of great faith in God and miraculous money-making systems often accompany HYIP schemes. If you’re repeatedly joining murky HYIP schemes or pushing them, you’re engaging in the same sort of self-indulgence and self-deception chronicled each week on “Breaking Bad,” a program whose greed- and desperation-driven central character — Walter White — openly defies the U.S. government, helps crime thrive in the United States, Mexico and (now) Europe, sets the stage for political instability and for hostilities to develop among friendly nations, and rationalizes it as a necessary means of making money for his family.
The MLM equivalent of a Walter White could be in your upline or downline. Such a figure also could be very close to the money flow, staying out of sight but positioning himself to influence or even extort the public face of the scheme.
White broke bad when he morphed from a mild-mannered, noble but financially struggling chemistry teacher and family man into a brutal and conniving meth kingpin after his cancer diagnosis — on the theory that manufacturing and selling meth would help him pile up some cash to provide for his family after his death. Bodies in Mexico and the United States have piled up around him ever since, including the bodies of 167 people who perished when two planes collided over Albuquerque after an air-traffic controller who couldn’t concentrate on work accidentally directed them into each other because he’d been reduced to emotional rubble by his daughter’s drug-related death. (She asphyxiated on her own vomit; the airplane death toll in Albuquerque was only one less than the real-life Oklahoma City domestic-terrorist attack in 1995, which killed 168 when the Alfred P. Murrah Federal Building was bombed by Timothy McVeigh.)
Another body was that of White’s own brother-in-law, a DEA agent murdered by a neo-Nazi White had hired to kill his business partner (and onetime chemistry student) Jesse Pinkman, the boyfriend of the woman who drown in her own puke. Yet-another body (actually a body part) was that of a DEA informant’s head mounted on a turtle after being severed by a Mexican cartel to send a message. The head and turtle were booby-trapped with explosives that detonated, killing a DEA agent. Still-another body was that of Gus Fring, a Chilean national, New Mexico drug kingpin and onetime White boss who laundered funds through chicken restaurants, pretended to be a supporter of the DEA and was killed by a wheelchair bomb planted by White in the nursing home in which Fring’s enemy Hector Salamanca, a onetime cartel enforcer, resided.
White’s form of money-laundering was the classic car wash. But the writers easily could have provided him a different front, perhaps that of respected teacher who’d gravitated to the commodities field and relied on MLM-style pitchmen and boiler rooms to drum up business for the side operation and help clean up the cash.
** _______________________________ **
James C. Howard III
Court documents in the Commodities Online Ponzi caper describe “purported” purchases of “iron ore” and “related equipment” by the Florida-based firm in Mexico. The documents also point out that the enterprise was led by two individuals previously convicted of narcotics crimes in the United States and that more than $5 million mysteriously was wired to “accounts in Mexico” in March 2011 after one of the felons approved the wiring “directions” of the other — this after the first felon had received an SEC subpoena and the second had found out about it.
Separately, the court-appointed receiver in the case says that, “after substantial investigation, including extensive interviews, depositions, and on-site investigation conducted both in the United States and Mexico, the Receiver concluded that the Defendants had no recoverable iron ore or related equipment in Mexico.”
What they did have in Mexico, if anything, remains unclear. Also unclear is how much of the money sent to Mexico will be recoverable
More than two years after the SEC moved against Commodities Online, the precise nature of its business remains murky. As noted above, one of the things that is known is that two of the firm’s managers were associated with narcotics earlier in their lives and had criminal records for felonies and and yet somehow had managed to become investment executives.
Now, one of those felons — James Clark Howard III — has pleaded guilty to mail- and wire-fraud conspiracy for his role in the Commodities Online scam.
And, according to Howard’s proffer in the criminal side of the case, he approved the “directions” of fellow felon Louis N. Gallo III to wire millions of dollars to Mexico after Howard had been subpoenaed by the SEC.
Gallo was in Mexico, according to the proffer — and that’s an oddity because he was on U.S. federal probation at the time. The Sun Sentinel newspaper reported in 2012 that “Gallo was sentenced in 2008 in New Jersey for bank fraud, intent to distribute cocaine and transmitting a threat to injure.”
And, according to the proffer, Howard was one of the controllers of an enterprise known as SSH2 Acquisitions Inc., which has been sued amid allegations it, too, was conducting a Ponzi scheme. Howard also has been implicated in a separate Ponzi scheme targeting Haitian-Americans in Florida.
Terralynn Hoy, who has not been accused of wrongdoing, is listed in Nevada as a onetime director of SSH2. SSH2 sued Howard, alleging he was conducting a Ponzi scheme.
Hoy earlier had been a cheerleader for AdSurfDaily, which proved to be a $119 million Ponzi scheme. After that, she became a cheerleader for AdViewGlobal, a 1-percent-a-day Ponzi scheme federal prosecutors linked to ASD President Andy Bowdoin, now serving a 78-month sentence in federal prison for the ASD scam. Hoy later was listed by Zeek Rewards as an “employee.” In August 2012, the SEC described Zeek as a $600 million Ponzi and pyramid scheme.
Bowdoin, like Howard, was a convicted felon, according to court records.
AdViewGlobal launched in 2009, even as ASD was the subject of a major federal investigation. Zeek, whose business model strongly resembled the models of ASD and AVG, launched after both ASD and AVG had collapsed. With two convicted felons linked to the narcotics business at the helm, Commodities Online appears to have gathered more than $20 million.
The FaithSloan Blog bizarrely announces that TelexFree has “killed” GPG, a payment processor.
If continuing to recruit during multiple pyramid-scheme probes even as a judge and prosecutor reportedly had been threatened in Brazil with death were not enough, another MLM PR disaster is unfolding: The Blog of Faith Sloan, late of Zeek Rewards and Noobing, an HYIP Ponzi scheme that ripped off people with hearing impairments, wants TelexFree members to know why the alleged pyramid scheme no longer is using Global Payroll Gateway (GPG).
“We killed them,” FaithSloan.com reports flatly on the fate of GPG.
No so, according to FaithSloan.com, which is claiming TelexFree “killed” GPG because it “Could not handle the 50,000 accounts that came into their system.”
TelexFree now has turned to “ipayout’s globalewallet,” according to FaithSloan.com.
Whether TelexFree planned to “kill” IPayout if any hiccups developed in its purported processing of money for TelexFree was not disclosed in the undated post announcing that TelexFree had “killed” GPG. The apparent message in the TelexFree branch of MLM La-La Land, however, is that affiliates will ignore or downplay unsettling events in Brazil such as the pyramid probes and reported death threats and will blame any company that fails to find favor with TelexFree and its international army of cross-border pitchmen.
TelexFree appears to have sought to transition to GPG in mid-August, with affiliates trumpeting the firm on the web as the answer to TelexFree’s troubles. But problems developed within weeks (if not days), and TelexFree affiliates then announced the firm was switching to IPayout. In about a month, GPG went from the penthouse to the doghouse in the minds of certain TelexFree promoters. Now, IPayout apparently has been given the chance to occupy the penthouse in the incongruous world of TelexFree. Will it slip into the TelexFree doghouse and perhaps be “killed” by the firm, like rival GPG before it?
Within days of the announcement that TelexFree had brought IPayout aboard after the purported failure of GPG, TelexFree executive Carlos Costa announced that TelexFree was seeking bankruptcy protection in Brazil. While making the announcement, Costa curiously waved the flags of Portugal and Mediera. Like former AdSurfDaily President Andy Bowdoin, Costa also suggested God was on the company’s side.
Bowdoin is serving a 78-month prison sentence in the United States. His ASD “program” was a $119 million Ponzi scheme. Among other things, Bowdoin claimed a 2008 raid on his “program” that promised a precompounding payout of 1 percent a day was the work of “Satan.”
Some TelexFree affiliates claim that $15,125 sent to the company fetches a profit of at least $42,075 in a year. Images of Jesus Christ have been used in TelexFree promos.
A court-appointed receiver determined that Noobing was impossibly upside-down. Affiliate Strategies Inc., the U.S.-based parent company, registered several corporations offshore, including Noobing, formed in the Caribbean island of Nevis; 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, the receiver said in 2009, “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.” The receiver proposed a plan by which all assets tied to Noobing’s parent would be sold — right down to a stainless-steel wastebasket in the women’s restroom.
In 2010, the PP Blog interviewed a 64-year-old woman with a profound hearing loss. The interview was conducted through the woman’s interpreter. The woman told the PP Blog she has lost $5,300 in Noobing and could not sleep at night. Noobing later was added as a receivership defendant. The receiver said that Noobing and 14 other companies under the ASI umbrella had become the subjects of “numerous inquiries” from “tax authorities,” creditors and “former independent contractors.”
TelexFree has U.S. footprints in Massachusetts and Nevada. The firm also now purports to be operating in England. TelexFree is the subject of multiple pyramid-scheme probes in Brazil, where it operates through an entity known as Ympactus Comercial Ltd.
There have been reports that at least one judge and one prosecutor involved in the Brazil probe have been threatened with death.
HYIP fraud schemes spread in part because promoters engage in serial disingenuousness and ignore red flags such as unusually consistent returns, claims of guaranteed payouts and the circuitous flow of money. Some TelexFree affiliates have provided ASD-like coaching tips to prospects on how to speed the flow of money to the firm.
“While reviewing the ASD website in the District of Columbia, [an undercover agent] found a posting within ASD’s News section, apparently posted by ASD on July 2, 2008. The title of the posting was, “Alert Pay & Direct Deposit are being phased out July 31, 2008.” According to ASD’s posting, “We have notified BOA not to accept cash or personal checks for deposit account – English or Spanish.” ASD further stated, “Please remember that the preferred method of purchasing Ad Packages is by mailing a Check or by Solid Trust Pay . . . Solid Trust Pay is a Canada based money transmitting and payment company that, like the e-Gold system, operates over the Internet. It appears that beginning August 1, 2008, Solid Trust Pay will be ASD’s preferred method for receiving funds from members, and for paying rebates and commissions to members . . . Within the past two weeks, ASD has wired several million dollars to Solid Trust Pay from its BOA Accounts. A TFA also learned that earlier in July 2008, a bank other than BOA closed the last account that was controlled by Bowdoin or family members after that bank determined, and explained to them, that an investigation by the bank determined that Bowdoin appeared to be operating a Ponzi scheme.” — AdSurfDaily Ponzi scheme forfeiture complaint, August 2008
TelexFree affiliate promos encouraging participants to register for International Payout Systems (I-Payout) began to appear online in recent hours. Just last month, TelexFree affiliates were encouraged to register for Global Payroll Gateway, another e-Wallet vendor that supposedly would solve TelexFree’s payment problems as a pyramid-scheme probe moved forward in Brazil. There now are reports online that GPG has dumped TelexFree, leading to questions about whether TelexFree is trying to port its alleged fraud scheme to yet another vendor — I-Payout. Source: Google search results.
In 2008, the U.S. Secret Service effectively accused the AdSurfDaily MLM “program” of playing a game of payment-processor roulette as U.S. law enforcement put the squeeze on certain money-movers, the willfully blind enablers of online fraud schemes.
ASD, a $119 million HYIP Ponzi scheme that led to a 78-month prison sentence for operator Andy Bowdoin, started out by accepting “e-Gold and Virtual Money,” according to a Ponzi-scheme forfeiture complaint filed in federal court in August 2008.
But ASD, according to the complaint, realized e-Gold had come under investigation for enabling the laundering of money, something that could put the heat on ASD.
“Shortly after publicity surrounding the government’s investigation into e-Gold appeared, ASD discontinued using the e-Gold system as a means for receiving member funds,” the complaint alleged.
And even as these events were occurring, according to court filings in the ASD case and in other cases, Robert Hodgins, a supplier of debit cards and the operator of Virtual Money Inc. — now listed by INTERPOL as an international fugitive — came under investigation in Connecticut amid allegations he was assisting in the laundering of narcotics proceeds in Medellin, Colombia, and prepping himself to assist in the laundering of funds in the Dominican Republic.
Virtual Money, whom some ASD members said was supplying debit cards to ASD, also was linked to the PhoenixSurf Ponzi scheme, according to court filings.
In December 2010, federal prosecutors alleged that ASD also had accepted money from e-Bullion, a California firm that processed payments for Ponzi schemes, including the $72 million Legisi HYIP scheme in Michigan that led to prison sentences for operator Gregory McKnight and pitchman Matthew John Gagnon. E-Bullion operator James Fayed has been sentenced to death for ordering the brutal contract slaying of his wife, a potential witness against him. Pamela Fayed’s throat was slashed repeatedly in the shadows of a Greater Los Angeles parking garage, her husband seated on a nearby park bench “like he doesn’t have a care in the world.”
ASD, according to court filings, also used AlertPay and SolidTrustPay, money-movers based in Canada that have been linked to multiple Ponzi schemes, including the alleged $600 million Zeek Rewards Ponzi scheme broken up by the SEC last year.
Not even Bowdoin’s arrest in 2010 stopped him from pitching fraud schemes, according to court filings. Facing serious criminal charges for his actions in ASD, Bowdoin (in 2011) became a pitchmen for the OneX “program,” which federal prosecutors later alleged to be a pyramid scheme recycling money in ASD-like fashion. Among Bowdoin’s fellow OneX pitchmen was T. LeMont Silver, later of Zeek and later of JubiMax and GoFunPlaces, two MLM “programs” that are suing each other amid allegations of financial fraud.
At one time, OneX claimed to have a relationship with SolidTrustPay. It then claimed to have ended that relationship and to have started a relationship with I-Payout. Earlier, I-Payout had listed the uber-bizarre TextCashNetwork MLM “program” with ties to the Phil Piccolo organization as a “selected client.” TextCashNetwork now appears to have disappeared, but still is operating with the acronym “TCN” — this time as TrueCashNetwork. How the “new” TCN is processing payments is unknown. What is known is that someone associated with the “new” TCN has sent emails to “winners” in the Zeek scheme in an apparent bid to get them to flog for the new iteration, an apparent investment arm of which is being promoted as an opportunity to earn an interest rate of 50 percent.
Now — as incredible as it seems — promoters of the alleged TelexFree pyramid scheme operating in Brazil and the United States now are claiming that TelexFree is using I-Payout, known formally as International Payout Systems Inc. Equally incredibly, this is happening less than a month after TelexFree promoters advised TelexFree participants to register with Global Payroll Gateway (GPG), another eWallet company and supplier of debit cards, as a means of getting paid after payouts to Brazilian members of TelexFree were blocked in Brazil.
Just last month, TelexFree affiliates were encouraging prospects to register with Global Payroll Gateway (GPG). In recent hours — and amid reports GPG has given TelexFree the boot — TelexFree affiliates have been urged to register with I-Payout. Source: Google search results.
There are reports online, including on Facebook from self-identified members of TelexFree, that GPG gave TelexFree the boot in recent days. No sooner did those reports surface than videos went up on YouTube encouraging TelexFree members to register for I-Payout.
One of the reports that TelexFree suddenly had shifted from GPG to I-Payout is published on the MoneyMakerGroup forum. MoneyMakerGroup’s name appears in U.S. court files as a place from which Ponzi and fraud schemes are promoted. Both FINRA and the SEC have warned that HYIP schemes spread in part through social-media sites such as forums, YouTube and Facebook.
Because international MLM HYIP fraud schemes often have promoters in common — and because the schemes are promoted on Ponzi cesspits such as MoneyMakerGroup and TalkGold — proceeds from the schemes can flow into banks at the local level, putting them in the position of becoming warehouses for the ill-gotten gains of participants, including winners and insiders. The use of stored-value debit cards such as those in play in HYIP schemes can lead to the quick dissipation of assets, meaning that victims of an HYIP scheme may have limited hope (or even no hope) that a recovery can be made for their benefit.
The most recent incongruous events involving TelexFree are occurring even as at least one judge and one prosecutor involved in the TelexFree pyramid probe in Brazil reportedly have been threatened with death. And, as was the case with ASD, some promoters of TelexFree have claimed an ability to expedite the flow of money to the scheme — perhaps through back-office transactions within the TelexFree system.
