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Tag: Andy Bowdoin

  • BREAKING NEWS: Two Madoff Computer Programmers Charged With Conspiracy For Enabling Massive Ponzi Scheme

    Federal prosecutors and the FBI demonstrated again this morning that people who enable Ponzi schemers are subject to arrest and prosecution.

    Today’s announcement that two computer programmers for Bernard Madoff have been charged with serious felonies could send shockwaves across the so called autosurf “industry,” which relies heavily on computers and programming tweaks to fleece participants.

    Charged in New York were programmers Jerome O’Hara, 46, of Malverne, N.Y., and George Perez, 43, of East Brunswick, N.J. If convicted, they each face up to 30 years in prison and fines that could total in the millions of dollars.

    O’Hara and Perez were charged with conspiracy, falsifying books and records of a broker-dealer, and falsifying books and records of an investment adviser.

    “Jerome O’Hara and George Perez allegedly helped construct Bernie Madoff’s house
    of cards,” said U.S. Attorney Preet Bharara of the Southern District of New York. “The computer codes and random algorithms they allegedly designed served to deceive investors and regulators and concealed Madoff’s crimes. Today they have been charged for their roles in Madoff’s epic fraud, and the investigation remains ongoing.”

    An FBI official said Madoff could not have pulled of his Ponzi scheme without the aid of programmers, adding that Madoff bought their silence for a a price.

    “O’Hara and Perez are charged with being instrumental in facilitating the Ponzi scheme that was the Bernard Madoff investment advisory business,” said Joseph M. Demarest Jr., assistant director-in-charge of the FBI’s New York field office.

    “Their subterfuge was designed to conceal the fraud from regulators and others, and when they told Madoff they would no longer lie for him, their continued complicity was bought for a price,” Demarest said.

    It is common knowledge in the autosurf “industry” that the operators install scripts to make the programs functional online and that the scripts are tailored by programmers to the specifications of the operators.

    bowdoinmadoffart2Today’s charges against O’Hara and Perez give surf operators — and their programming employees and contractors — something else to worry about, beyond being forced to give up ill-gotten gains in forfeiture proceedings and being charged with crimes such as wire fraud and money-laundering.

    By charging the programmers who helped Madoff carry out the scheme, the Feds sent a clear message that they view Ponzi-enablers as co-conspirators.

    The website of AdSurfDaily, a Florida company accused of operating a $100 million Ponzi scheme, was offline for much of July 2008, amid reports that programmers were tweaking the website and programming the system to enable it to accommodate higher volumes of traffic and perform more database functions.

    ASD President Andy Bowdoin repeatedly relied on programmers to tweak systems, members said.

  • EDITORIAL: Bowdoin, Family Suffered Second Legal Blow Yesterday; August AND December Cases Will Proceed To An Outcome Apt To Send A Chill Across ‘Surfing’ Universe

    adviewglobalstreetaddressmagnifiedYesterday’s ruling by a federal judge that AdSurfDaily President Andy Bowdoin would not be permitted to change his mind about submitting to the forfeiture of tens of millions of dollars in a case brought in August 2008 dealt the embattled surf firm a crippling blow.

    But a virtually unnoticed ruling yesterday by Judge Rosemary Collyer in a second forfeiture case brought in December 2008 against other ASD-connected assets was equally devastating — at least from the point of view of Bowdoin’s champions on the Pro-ASD Surf’s Up forum and unnamed members of a mysterious “group” of surf participants who had advised him earlier this year to embark on a scorched-earth campaign against the government.

    Yesterday’s ruling by Collyer in the December case did not generate headlines, in part because Bowdoin had managed to rivet the attention of ASD members on the August case and the enormous sum of money involved. The ruling in the December case, though, was the second clear win for prosecutors yesterday because it maximized the leverage they can apply to destroy the alleged ASD Ponzi scheme operation.

    In the December case, Collyer used exactly 13 words to discharge an order that had required prosecutors to defend against dismissal for failure to prosecute the action, which involves assets held by Bowdoin family members.

    Collyer issued the order Oct. 5. Prosecutors responded to it Friday, saying Bowdoin and unnamed others were served “direct notice” in January 2009 of the complaint but did not file claims to property the government intends to seize as proceeds of a crime.

    In short, Bowdoin was defending a case (August) and making personal claims to tens of millions of dollars with great fanfare — but was not defending the second case, which involved family members and far less money, at all.

    Here is a question all ASD members should ask themselves: Why didn’t Bowdoin fight for the money and property seized in December?

    If circumstances warrant, prosecutors now can argue that the reason neither Bowdoin nor family members defended against the second case was because they did not need the money and a plan was in place to generate even more cash — perhaps to replace all the property seized in the December case.

    Prosecutors have suggested in court filings — through a veiled reference to the AdViewGlobal autosurf — that Bowdoin indeed had a plan to replace the lost money and property by operating an autosurf offshore. They could argue, for example, that while Bowdoin was negotiating to settle the August case, he was not negotiating in good faith because of a secret plan to launch a second surf to cover losses sustained by ASD.

    And they could argue that, while Bowdoin was telling members in a conference call that the tens of millions of dollars seized in August belonged to them, he was so unconcerned about the December money and property that he didn’t bother even to stake a claim to it.

    Along those lines, prosecutors could argue that, if the August money belonged to members as Bowdoin claimed, so, too, did the December money.

    Why didn’t he file a claim to it if it belonged to members?

    Prosecutors, in effect, could argue that the December money was chump change to Bowdoin because there already was a plan to replace it.

    The ruling in the December case paves the way for the government to seek a default judgment to more than $1 million in personal property prosecutors said was acquired with illegal proceeds from ASD. Owners of the personal property include George and Judy Harris.

    George Harris is the son of Bowdoin’s wife, Edna Faye Bowdoin. Judy Harris is the wife of George Harris.

    Even Edna Faye Bowdoin had been a potential claimant in the December case. Prosecutors said she and George Harris opened a bank account in June 2008, funding it with an opening deposit of more than $177,000.

    George Harris later called the bank on the telephone and caused more than $157,000 of the opening deposit to be transferred by wire to a third bank to pay off the mortgage on the Harris home in Tallahassee, prosecutors said.

    In the December complaint, prosecutors described the transaction as money that had been obtained illegally by ASD and deposited in Bank of America in a wire-fraud and money-laundering scheme — and money that ultimately left Bank of America through the actions of Bowdoin, his wife and George Harris to be used in a second wire-fraud and money-laundering scheme involving two other banks.

    There’s your answer to the question about why Bowdoin didn’t fight for the money in the December case. Fighting for it would have forced ASD’s rank-and-file to focus on the inconvenient  facts of the twin cases, not the convenient story Bowdoin and his shills were putting out about the August case.

    The December allegation, which laid out a case for wire fraud and conspiracy, put George Harris, Judy Harris and Edna Faye Bowdoin in jeopardy of losing their freedom. Andy Bowdoin had to know that — and yet he focused the attention of members on the August case, even saying he was inspired to keep fighting for them by a former Miss America who had to learn to walk again after being seriously injured in an automobile accident.

    By not explaining to members the gravity of the December complaint — indeed, by virtually ignoring it in communications with members and relying on shills to deflect attention away from the more sinister elements of the case — Andy Bowdoin demonstrated that the rank-and-file was just a tool he used to serve his own ends.

    Some of his most prominent shills even tried to keep members from filling out the government victims’ form. They were not serving the members at large; they were serving only themselves. They didn’t want to give up the money any more than Bowdoin — and they certainly didn’t want to join Bowdoin as a defendant in a criminal prosecution.

    So, they painted the government as evil. And they chose to cloud the issues and not share information that members could use to make informed choices. People who insisted on discussing the actual facts were dismissed as “Rats, Bed Bugs, Maggots, Cockroaches And Everything Else.”

    You can look it up.

    “In keeping with the likely outcome of this notification [of the December complaint], plaintiff also is preparing a motion for default judgment and a final order of forfeiture,” prosecutors said last week. “As things now stand, plaintiff expects that the Court will be in a position to grant such a motion, which should result in the dismissal of this case, by approximately January 15, 2010, that is, in 70 days.”

    No one from ASD filed a claim to an $800,000 building in Quincy, Fla., prosecutors said.

    The building had been paid for in cash and had been described as the new headquarters for ASD and its dozens of employees. Regardless, the building ultimately proved expendable. That’s noteworthy, considering the fact that Bowdoin argued in the August case that the government was responsible for the job losses. He blamed the government — and then didn’t fight for the building he told employees would be their new home.

    Also noteworthy is that neither George Harris nor Judy Harris filed a claim to their own home. At the same time, neither George nor Judy Harris filed a claim for a 2008 Honda automobile with a value of nearly $30,000. Prosecutors said the car also had been acquired with criminal proceeds.

    Claims also were not filed for two other cars — a 2009 Acura and a 2009 luxury Lincoln sedan with a combined value of more than $80,000, prosecutors said. Marine equipment valued at more than more than $44,000 also was not claimed.

    Fighting for members and employees? Hardly. Andy Bowdoin and his crew were lying to them — both overtly and through lies of omission.

    The December case provided plenty of leverage to the prosecutors, and Collyer’s ruling yesterday means the case will proceed to an outcome, rather than dying on the vine.

    Indeed, the “Rats, Bed Bugs, Maggots, Cockroaches And Everything Else” have been exposed.

  • BREAKING NEWS: Judge Denies Bowdoin’s Bid To Reenter AdSurfDaily Case; Says ASD President’s Claims Lack Merit

    UPDATED 5:18 P.M. ET (U.S.A.) A federal judge has denied the bid of AdSurfDaily President Andy Bowdoin to reverse his decision to forfeit tens of millions of dollars to the government in a case that features allegations of wire-fraud, money-laundering and operating a Ponzi scheme.

    Andy Bowdoin ina video for 'Paperless Access.'
    Andy Bowdoin in a video for 'Paperless Access.'

    “As Mr. Bowdoin’s own descriptions of events fail to support these arguments, and there is no other reason to grant reconsideration . . . the Court will deny the motion,” said U.S. District Judge Rosemary Collyer.

    Collyer also denied a motion by Bowdoin for a second evidentiary hearing, saying the matter was moot because she was not permitting him to reenter the forfeiture case after he previously submitted to the forfeiture. Collyer ruled after an evidentiary hearing last year that ASD had not demonstrated it was a lawful business and not a Ponzi scheme.

    “[N]othing in Mr. Bowdoin’s own sworn statement justifies the conclusion that he was mistaken [in releasing the claims in January], that the Government engaged in any misrepresentation or misconduct, or that his attorney provided bad advice,” Collyer ruled. “He also fails to present any meritorious defense.”

    The ruling was a crushing blow to Bowdoin, and Collyer minced no words, saying evidence in the forfeiture case against him “appears to be strong” and that Bowdoin “balked” after submitting to the forfeiture.

    “The Government charges that Mr. Bowdoin operated a Ponzi scheme on the Internet,
    whereby he, using ASD as a vehicle, bilked hundreds of people,” Collyer said. “Presented by affidavit and testimony outside the crucible of a criminal trial, its evidence appears to be strong. In the face of the civil in rem proceedings and the expected criminal prosecution, it is no surprise that his criminal lawyer would recommend a cooperation plea with demonstrated early acceptance of responsibility, i.e., withdrawal of claims to the seized assets, so that Mr. Bowdoin might earn a motion for a downward departure under Section 5K1.1 of the United States Sentencing Guidelines and/or 18  U.S.C. § 3553, both of which allow the Court to impose a sentence below the statutory minimum to reflect a defendant’s ‘substantial assistance’ to a Government investigation.”

    Bowdoin’s former attorney, Stephen Dobson, whom Bowdoin’s current attorney Charles A. Murray claimed served Bowdoin poorly while Bowdoin was meeting with prosecutors last winter to settle the forfeiture case and discuss a potential criminal plea, behaved responsibly, Collyer said.

    “Such an approach from counsel could be seen as the norm when the Government’s evidence is strong,” Collyer said. “What Mr. Bowdoin hoped to gain from his release of claims/early acceptance of responsibility and his debriefing with the Government was a promise of no jail time. When that was not forthcoming from the Assistant United States Attorney, Mr. Bowdoin balked and tried to back up, as if he had not already released his claims and talked to the Government.”

    Collyer cited several claims from Bowdoin himself when issuing her ruling this afternoon, repeating Bowdoin’s own words back to him to demonstrate he had not been ill-served by Dobson or lied to by the government: (Emphasis added.)

    • Dobson represented to me that I could possibly avoid prison or get a reduced sentence if I agreed to disclose details concerning ASD and releasing the assets.
    • I also signed a document stating that I would release my claims in the abovecaptioned civil in rem forfeiture proceeding, again thinking that necessary for a possible avoidance of a prison term.
    • I did all of this on the understanding that by cooperating I could possibly avoid a prison sentence.
    • I agreed not to exercise my rights in the civil forfeiture proceeding, anticipating from representations made by Dobson that this could possibly keep me out of prison.
    • Dobson lead [sic] me to believe that if I cooperated there was a possibility that I would not be incarcerated or imprisoned.
    • I believed that my cooperation would still result in a criminal sentence that could possibly not include imprisonment or incarceration.
    • [Prosecutor William] Cowden explained that I would be subject to the maximum penalty under the statute, but that he would inform the judge that I cooperated.
    • I slowly came to understand what I understood from Dobson not to be the case: that my agreement to cooperate provided me no benefit in the criminal matter except the possibility of a reduced sentence if the judge desired which would still be a life sentence.

    “Each of these statements indicates that Mr. Bowdoin completely understood what he
    was doing: releasing his claims and cooperating to ‘possibly avoid a prison sentence,’” Collyer said.

    In September, prosecutors argued that any thought by Bowdoin that a $100 million, wire-fraud and Ponzi scheme crime would not result in imprisonment upon conviction was ludicrous.

    Collyer said the allegations were serious and easily could result in prison time.

    “If he proceeds to trial and the evidence persuades a unanimous jury beyond a reasonable doubt that Mr. Bowdoin is guilty as charged, he will face a term of incarceration for sure,” Collyer said. “Mr. Dobson’s hope was to avoid such a result by avoiding a trial and persuading the Government to file motions with the Court that could be used to argue for a sentence that did not include jail time.”

    Collyer said Bowdoin’s behavior has been puzzling.

    “It is very strange that Mr. Bowdoin passed that opportunity by, despite clear knowledge that it ‘could possibly keep me out of prison,’” she said. “Perhaps the delay in obtaining an indictment has led Mr. Bowdoin to believe that he will not be indicted after all.”

    Collyer also pointed to a stated belief by Bowdoin that a grand-jury indictment had been returned, saying she hasn’t see one.

    “Mr. Bowdoin believes the Government ‘submitted charges before a grand jury on or about May 2009,’” Collyer said, using Bowdoin’s affidavit as her resource. “[B]ut as of this date no indictment has been returned against him in a federal court.”

    Read Collyer’s ruling.

    Read Collyer’s order denying Bowdoin’s motions.

  • BREAKING NEWS: Prosecution Says It Will Seek Default Judgment Against ASD Assets Named In December 2008 Complaint; Asserts Bowdoin, Others Were Served ‘Direct Notice’ In January 2009, But Did Not File Claims To More Than $1 Million In Property Paid For By Members

    UPDATED 8:09 A.M. ET (NOV. 7 U.S.A.) Easy come, easy go?

    ASD President Andy Bowdoin and unnamed others were served “direct notice” in January 2009 of a forfeiture complaint filed in December 2008 but did not file claims to property the government intends to seize as proceeds of a crime, federal prosecutors said this morning.

    Bowdoin’s failure to file claims to less-valuable items seized in the December complaint are in stark contrast to his aggressive bids to reassert claims to tens of millions of dollars seized from bank accounts in Bowdoin’s name in an August 2008 forfeiture complaint.

    The notice of the December complaint was given “very promptly to known potential claimants in January 2009,” and yet none of them acted to assert an ownership interest over cars, marine equipment, computer equipment and real estate name defendants in the December complaint, prosecutors said.

    The total value of property to which neither Bowdoin nor family members asserted claims exceeded $1 million, according to court filings. Prosecutors said all of the property was paid for by members who participated in Bowdoin’s autosurf Ponzi scheme.

    One of the seized items was a building ASD had paid $800,000 in cash to acquire, prosecutors said. ASD said it planned to move its operations — and its dozens of employees to the building — but never filed a claim for the building, according to records in the December 2008 case.

    How Bowdoin intends to explain to employees and members that an $800,000 building paid for by participants was not worth fighting for is unclear. In a September conference call transcribed by the U.S. Secret Service, Bowdoin said ASD wanted to reopen — and yet never filed a claim to the building, prosecutors said.

    Bowdoin had described the marine equipment — including two jet skis, a Cabana boat and other property — as recreational items for members who came to visit him in Quincy, Fla. — members said.

    Regardless, neither he nor any other ASD insider staked a claim to the items, prosecutors said.

    “In keeping with the likely outcome of this notification [of the December complaint], plaintiff also is preparing a motion for default judgment and a final order of forfeiture,” prosecutors said. “As things now stand, plaintiff expects that the Court will be in a position to grant such a motion, which should result in the dismissal of this case, by approximately January 15, 2010, that is, in 70 days.”

    Today’s filing by prosecutors Barry Wiegand and Deborah Connor may prompt ASD members to question why Bowdoin, who has positioned himself as a champion to participants, is fighting hard for cash seized in August 2008 — but not at all for less-valuable property named in the December 2008 complaint.

    It also raises questions about why Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris, are not fighting for property seized in the December 2008 complaint. At the same time, it raises questions about why Judy Harris, the wife of George Harris, also is not fighting for the property.

    Prosecutors said Edna Faye Bowdoin and George Harris opened a bank account in June 2008, less than two weeks after a May 31, 2008, ASD rally in Las Vegas had concluded.

    The account was funded with an opening deposit of more than $177,000 from illegal proceeds from ASD, prosecutors said.

    The Tallahassee home of George and Judy Harris was seized in the December 2008 complaint, which followed on the heels of an August 2008 complaint against other ASD-connected assets, collectively including huge sums of money in 10 Bank of America accounts in Andy Bowdoin’s name. Prosecutors said the Harris mortgage of more than $157,000 was paid off with criminal proceeds from ASD, from the account opened by Edna Faye Bowdoin and George Harris in June 2008.

    Also seized in the December 2008 complaint was a 2008 Honda automobile registered to George and Judy Harris. Prosecutors said the car also was acquired with criminal proceeds from ASD.

    George and Judy Harris later emerged as the purported owners of the AdViewGlobal (AVG) autosurf, which formally launched in February 2009 — after two forfeiture complaints had been filed against ASD and after Andy Bowdoin had been named a defendant in a separate racketeering lawsuit.

    Bowdoin never responded to the racketeering complaint, which also names ASD attorney Robert Garner a defendant.

    Although Andy Bowdoin eventually submitted (in January 2009) to the forfeiture of the money seized in August 2008, he changed his mind in February and began to file as a pro se litigant to reassert his claims.

    Some members of the Pro-ASD Surf’s Up forum championed Bowdoin’s reemergence as a pro se litigant in the August 2008 case, offering prayers and well-wishes but never asking why Bowdoin and family members appeared to be ignoring the December 2008 forfeiture case and why Bowdoin was ignoring the January 2009 racketeering case.

    Bowdoin chose not to assert an ownership interest in the less valuable marine equipment, computers and other assets seized in the December 2008 complaint, prosecutors said this morning.

    In recent weeks, however, he has aggressively reasserted claims to the tens of millions of dollars seized in August 2008 case, according to court records in the August case.

    But Bowdoin and family members did nothing at all to secure the return of the water equipment, the $800,000 building, the Harris automobile, a model-year 2009, $50,000 Lincoln luxury sedan for presumptive use by Bowdoin and his wife, and a 2009 Acura automobile acquired in the name of a former ASD employee, according to court records in the December case.

    The automobiles had a combined value of more than $110,000, according to court filings. The combined value of the water equipment totaled nearly $44,000. Based on the value of the cars, the water equipment, the building — and the Harris home — neither Bowdoin nor family members filed claims to more than $1 million in property.

    Prosecutors said all of the property was acquired from money directed at ASD by members.

    Prosecutors said they had expected a “global resolution” of both forfeiture cases in 2009, based on assertions by Bowdoin. Early in the year, Bowdoin met in person with prosecutors and admitted ASD had been operating illegally, according to court filings.

    In August 2009, Bowdoin announced in court filings that he was reentering negotiations with prosecutors. Bowdoin asked for at least two extensions to continue negotiations, according to records. U.S. District Judge Rosemary Collyer granted extensions from Aug. 7 to Sept. 14.

    On Sept. 14, Bowdoin filed motions that reasserted his claims to the seized millions, triggering blistering motions by the prosecution that Bowdoin was trying to lie his way back into the case, while also lying to members.

    In September — for the first time — prosecutors made a veiled reference to the AVG autosurf, saying, “Maybe Bowdoin thought that before the government brought its charges he (like some of his family members) could move to another country and profit from a knock-off autosurf program that Bowdoin funded and helped to start.”

    Prosecutors suggested today that, when negotiations broke down, they sought seizure warrants to take possession of the assets named in the December complaint.

    “Promptly when it appeared that a global resolution of all related litigation had become much less likely, the government applied to this court in late October for seizure warrants for several of the defendant properties.” prosecutors said. “Within days of the Court issuing the warrants, federal law enforcement agents had swiftly executed them, and all defendant items of personal property are in the custody of an agency of the U.S. government.”

    All of the property seized in the December complaint now is advertised for forfeiture on the government’s official forfeiture website: forfeiture.gov. Along with the building, boats, cars and other real estate, the government also advertised formal notice of forfeiture of “[a]pproximately Six Hundred Thirty Four Thousand, Two Hundred Sixty Six Dollars and Thirteen Cents ($634,266.13), in U.S. funds previously deposited at the Bartow County Bank, Account #xxx-602, in the name of Golden Panda Ad Builder.”

    Read today’s filing by the prosecution in the December 2008 forfeiture case.

  • Important Filing Deadline In ASD Prosecution Nears

    Andy Bowdoin
    Andy Bowdoin

    Tomorrow is the deadline for prosecutors to advise U.S. District Judge Rosemary Collyer how they plan to proceed with the December 2008 forfeiture complaint filed against assets of AdSurfDaily Inc.

    A month ago Judge Rosemary Collyer pointed out that no person or entity had filed claims to property seized in the complaint, the second tied to ASD-connected assets. The first complaint was filed in August 2008 and was nearly litigated to conclusion in January 2009, with ASD President Andy Bowdoin’s submission to the forfeiture of tens of millions of dollars “with prejudice.”

    Bowdoin, 74, changed his mind about giving up the money in February, and reentered the August case as a pro se litigant after meeting with a mysterious “group” of ASD members.

    Prosecutors now say Bowdoin is a “delusional” con man who “cannot manage to keep his stories straight,” arguing that he is telling Collyer one thing and members another. On Sept. 28, the U.S. Secret Service filed a transcript of a conference call Bowdoin held with members Sept. 21.

    In the transcript, Bowdoin repeatedly told members the government had seized money from them. He specifically used the phrase “your money” four times in the short recording.

    Prosecutors said Bowdoin’s words to members were at odds with his own court filings in which he claimed ownership of the seized assets — and also at odds with the filings of Charles A. Murray, one of Bowdoin’s attorneys.

    Prosecutors quoted from a September filing by Murray, who has been arguing that Collyer should permit Bowdoin to change his mind after advising the court in January that he was giving up the money and did not intend to reassert his claims in the future.

    “Mr. Bowdoin’s release in the above-captioned case is illogical,” prosecutors quoted Murray as saying. “He received nothing of value for the release. Bowdoin has consistently demonstrated an intent to aggressively defend ownership of his property in the civil in rem forfeiture proceeding.”

    Prosecutors were quoting from Page 2 of this Sept. 14 filing on Bowdoin’s behalf by Murray.

    One week later — on Sept. 21 — Bowdoin held the conference call, using the phrase “your money” four times to describe to members the assets he had told Collyer belonged to him,  prosecutors said.

    Bowdoin’s official court claims to the property date back to Aug. 15, 2008, less than two weeks after the seizure. No claims to any of the assets seized in the December forfeiture complaint that followed appear in the record of the case.

    Potential December claimants included Bowdoin, his wife, Edna Faye Bowdoin, George Harris, Judy Harris and Hays Amos. Judy Harris is married to George Harris, the son of Edna Faye Bowdoin and Bowdoin’s stepson. Hays Amos is a former employee of ASD.

    ASD money was used to buy a car registered to Amos, and also a car registered to George and Judy Harris, prosecutors said. It also was used to buy a car for Bowdoin/Harris Enterprises Inc., which prosecutors said was set up by George Harris and Edna Faye Bowdoin to help Andy Bowdoin and Edna Faye Bowdoin hide assets.

    At the same time, prosecutors said, more than $157,000 in ASD money was used to retire the mortgage on the home Judy and George Harris shared in Tallahassee, and to purchase a Cabana boat, jet-skis, haul trailers and other marine equipment. Bowdoin also spent $800,000 cash to purchase a building in Quincy — initially to the delight of the Gadsden County Chamber of Commerce, but later to its embarrassment.

    The Gadsden Chamber went on to contact the FBI about ASD, questioning whether the company was legitimate, prosecutors said.

    George and Judy Harris emerged later as the purported owners of the AdViewGlobal (AVG) autosurf, which launched in the aftermath of two forfeiture complaints filed against ASD’s assets and a separate racketeering lawsuit filed against Bowdoin and ASD attorney Robert Garner.

    Florida now has dissolved both ASD and Bowdoin/Harris Enterprises for failure to file required annual reports. The state gave the firms nearly a five-month window to file, but neither firm — both of which purport to be legitimate — followed through.

    Within hours of the breaking news about Florida’s actions against the firms, a poster on the Pro-ASD Surf’s Up forum described it as a conspiracy between the federal government and state authorities in Florida.

  • BREAKING NEWS UPDATE: New Pro Se Motion To Intervene In ASD Case Lists Phone Number Associated With ASD Figure Nate Boyd

    UPDATED 5:16 P.M. EDT (U.S.A.) NOTE: After additional research, the 10-digit number cited below appears not to be a bank-account number. Rather, it appears to be a telephone number associated with Nate Boyd, a former compliance officer for AdSurfDaily. Boyd’s name also has been associated with the AdViewGlobal (AVG) autosurf.

    See the comments thread below.

    Here, our earlier story . . .

    A pro se motion to intervene just docketed in the AdSurfDaily civil-forfeiture case lists an “electronic transfer to” a bank account number (**Update 1:41 P.M. EDT: it’s actually a telephone number**) not listed in government references to accounts held by ASD President Andy Bowdoin.

    The filing lists the email address of nate@asdcashgenerator.com and a second account number that is associated with ASD in court filings. It was not immediately clear why the filing by Robert and Evelyn Gould included the account number not associated with Bowdoin in court filings. (**Update 1:41 P.M. EDT: it’s actually a telephone number**)

    An account number ending with the digits 1028 — an account number not associated with Bowdoin — is included in the Gould filing, along with the words “electronic transfer to” the account. (UPDATE 2:16 P.M. As noted in the 1:41 P.M. update, the 10-digit number is actually a phone number, as opposed to a bank-account number. The phone number is associated with Nate Boyd and a number of work-at-home opportunities.)

    Nate Boyd is a former compliance officer at ASD, members said. It was not immediately clear if the “nate” mentioned listed in the email address is Nate Boyd. (UPDATE 2:16 P.M. The phone number is associated with Nate Boyd.)

    Some ASD members have said some upline sponsors sold “ad-packs” directly to customers, as opposed to directing them to purchase them through ASD. “Ad-packs” then were transferred from the existing stockpiles of upline sponsors using ASD’s in-house system. The practice is problematic because some upline sponsors could have pocketed the cash, instead of transferring it to ASD, thus generating off-the-books cash sales.

    Such transactions could have transferred the burden of paying for ASD “rebates” to the rank-and-file membership, while destroying the reliability of ASD’s records and giving upline sponsors the opportunity to siphon tax-free profits.

    Actions by upline sponsors to sell “ad-packs” directly to customers could be construed as a form of wire fraud and money-laundering.

    Also unclear is why the Gould claim was filed using the same pro se template used by dozens of other ASD members. U.S. District Judge Rosemary Collyer already has rejected dozens of filings that used the same argument in the template.

    Collyer has not ruled on several templated submissions received after her initial ruling weeks ago that the filers had no standing in the case.

    The filing also referenced an account number ending in the digits 3016 that is associated with ASD.

    gouldinterventionsmall

    Federal prosecutors have listed 10 ASD account numbers in court filings, referencing them in the August 2008 forfeiture complaint and again in May 2009, in a proof of service of all defendants in rem. None of the account numbers ended with the digits 1028.

    Unlike previous pro se filings, the Gould motion included a printout of the government’s form for victims of AdSurfDaily, ASD Cash Generator, LaFuenteDinero and Golden Panda Ad Builder. Check marks on the Gould form are next to the names of AdSurfDaily and LaFuenteDinero. The form submitted to the court by the Goulds appears to have been printed out and filled out in longhand.

    The Gould filing suggests that Robert and Evelyn Gould filled out the government form last month, including the bank-account references.

    Despite the fact the government believes ASD engaged in a wire-fraud and money-laundering conspiracy with unnamed co-conspirators while operating as a Ponzi scheme, the Goulds said in the filing that the government owes them $2,000

  • Madoff Accountant Expected To Plead Guilty; Charges Demonstrate One Of The Pickles In Which ASD Finds Itself

    UPDATED 2:03 P.M. EDT (U.S.A.) Prosecutors have advised a federal judge that the government expects David G. Friehling to plead guilty to charges next week.

    Friehling was the small-shop accountant for Bernard L. Madoff Investment Securities.

    The mere fact that Bernard Madoff’s multibillion firm used a small shop that employed a single accountant — Friehling himself — was enough to make some investors pass on Madoff’s offerings while performing due diligence.

    Other investors ignored the incongruity. Madoff’s empire collapsed in December 2008. In July 2009, prosecutors filed a criminal information against Friehling, accusing him of accounting fraud, securities fraud, investment-adviser fraud and making false filings.

    In a letter yesterday to U.S. District Judge Alvin K. Hellerstein, prosecutors said they expected to file a superseding criminal information Nov. 3 and that Friehling will plead guilty and cooperate in the government’s ongoing probe.

    Read the letter.

    Friehling’s experience demonstrates one of the pickles Florida-based AdSurfDaily — itself implicated in an alleged Ponzi scheme — is in.

    A hearing was held at ASD’s request Sept. 30 and Oct. 1 of last year to demonstrate it was not a Ponzi scheme. ASD, however, did not call either an in-house or external accountant to the witness stand to certify its books and financial statement, thus missing a chance to refute the government’s Ponzi claims by producing audited financials that could withstand scrutiny.

    One of the likely reasons is that no accountant would or could certify ASD’s books under oath in a fashion favorable to the company. To have done so would have been to introduce some of the same elements that led to intense scrutiny directed at Friehling and the criminal information against him.

    ASD published no verifiable financial information. There are major doubts that ASD even knew its own bottom line, amid assertions that members siphoned off money before it even arrived at ASD.

    One of the allegations against Friehling is that he verified information for Madoff that simply was not true.

    Among the assertions against Friehling was that he was not truly independent and was auditing a company in which he had a large personal stake — an investment account dating back to the 1980s that showed an equity balance of more than $500,000 each year.

    If ASD employed accountants or bookkeepers who held large numbers of “ad-packs” or were being paid in “ad-packs,” their independence could be challenged.

    Moreover, prosecutors said, Friehling’s purported audits did not comply with Generally Accepted Accounting Standards. Reports did not comply with Generally Accepted Accounting Principles.

    Any accountant who certified information favorable to ASD, which prosecutors allege was insolvent, almost certainly would have been subjected to the same degree of scrutiny that Friehling later encountered in the Madoff case.

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

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

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

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

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

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

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

    Will it fly with jurors?

    Read pretrial Petters’ coverage by Reuters.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • 68-Year-Old Texas Woman Charged In Alleged Ponzi

    A 68-year-old Texas woman has been charged with running a $500,000 Ponzi scheme.

    Julia Ann Schmidt was indicted in Waco. She now joins a roster of other senior citizens recently implicated in alleged Ponzi schemes or convicted of crimes in which a Ponzi was the modus operandi.

    Federal prosecutors said today that Schmidt posed as an agent for Fortis Investments.

    Between April 2007 and May 2009, Schmidt “solicited money from clients promising to generate an approximate 30% return on their investments,” prosecutors said. “Schmidt informed clients that portions of their investments would involve the Texas Ranger Museum, Hillcrest Hospital and the Waco Riverwalk Project.”

    Unsuspecting investors were fleeced out of more than $500,000, prosecutors said. The FBI is handing the probe. Investors who believe they were scammed by Schmidt are asked to call the Waco office at 254-772-1627, according to Acting U.S. Attorney John E. Murphy.

    Some Recent Ponzi Schemes Featuring Seniors

    Topping the list of seniors implicated in Ponzi schemes, age-wise, is Richard Piccoli, the alleged operator of the Gen-See Ponzi in the Buffalo, N.Y., area. Piccoli is 82.

    Arthur Nadel, implicated in Florida amid allegations more than $300 million in investor funds went missing in a Ponzi scheme, is 76.

    Andy Bowdoin, who presided over the alleged $100 million AdSurfDaily Ponzi scheme in Quincy, Fla., is 74.

    Bernard Madoff, convicted in an alleged $65 billion Ponzi, is 71. In June, Madoff was sentenced to 150 years in prison.

    Ronald Keith Owens, 73, was sentenced in January to 60 years in prison for operating a “prime bank” Ponzi scheme that allegedly was set up in the Bahamas and elsewhere.

    James Blackman Roberts, 71, of Heber Springs, Ark., was sentenced in January to 15 years in prison for running a $43.5 million Ponzi scheme.

    Larry Atkins, 65, was convicted of swindling investors of $3 million in a North Dakota Ponzi scheme. In February, he was sentenced to eight years in prison.

    Judith Zabalaoui, 71, was accused in February of swindling Greater New Orleans clients out of more than $3.2 million in an elaborate Ponzi fraud. In August, she was sentenced to eight years in prison.

    Zabalaoui established a bogus entity known as Paragon Co., which actually was a mailbox Zabalaoui rented at a UPS store in Montrose, Colo., prosecutors said.

    Part of the scheme was to call the mailbox a “suite,” prosecutors said.

    Zabalaoui also set up a fake company known as Omni Clearing, this time using a UPS store in Dover, Del. Prosecutors said she invented “fictitious people,” claiming they were employees, fabricated emails using the names of fictitious employees, and she set up a phone, fax and email systems to help perpetrate the fraud.

    She collected millions in the the scheme by promising “safe” and “guaranteed” returns ranging from 13 percent to 26 percent, prosecutors said.

    Read a prosecution filing on Zabalaoui.