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Tag: Andy Bowdoin

  • ASD: Spending Spree Coincided With 2-for-1 Las Vegas Rally

    Less than two weeks after a May 31 AdSurfDaily rally concluded in Las Vegas, ASD funds were used to retire a $157,000 mortgage. Another $62,000 was used to purchase two cars — a 2008 Honda CRV and a 2009 Acura, federal prosecutors said.

    The beneficiaries of the mortgage retirement and the Honda were George and Judy Harris. George Harris is the son of Edna Faye Bowdoin, the wife of ASD President Andy Bowdoin.

    On June 10, Edna Faye Bowdoin worked with her son to establish an account at Capital City Bank. More than $177,000 in ASD funds were transferred from Bank of America and deposited into the Capital City account, prosecutors said.

    On June 23, George Harris used $157,216 of the money to pay off the mortgage. Earlier, on June 11, an ASD check for $28,607 was used to purchase the Honda. The vehicle was registered in the names of George and Judy Harris, prosecutors said.

    On June 10 and June 11 alone, prosecutors said, almost $240,000 in ASD funds were used for personal purchases by Bowdoin family members or friends, the home and two cars included.

    The timing of this is important. In December 2007, only six months prior to the Las Vegas rally, ASD was struggling. Within days of the conclusion of the Las Vegas rally, however, company funds were used to go on a buying spree and the company was scurrying to find ways to hide assets, prosecutors said.

    ASD used matching bonuses to lure prospects to Las Vegas. Some prospects excidedly talked about spending $35,000 at the rally and emerging with 70,000 “ad packs.”

    Two-for-one deals, of course, put even more strain on Ponzis because $35,000 now has the compounding power of $70,000, and $50,000 has the compounding power of $100,000.

    Give ASD $50,000. Receive a matching bonus, effectively doubling the power of your spend. Emerge with the purported capacity to earn $1,000 a day (1 percent of $100,000) by clicking on ads.

    People saw a way to turn their $50,000 spend into a $365,000-a-year job — a job that required only minutes a day and computes to $7,260 an hour in paper “profit.”

    That’s what Bernard Madoff allegedly did — showed people “profits” on paper to keep them coming back for more. Bowdoin showed the “profits” electronically, in members’ back offices.

    It was always absurd. It was absurd from Day One. It can be dressed up to seem plausible, even smart, but it is always and forever absurd.

    “Rebates aren’t guaranteed” sanitizes none of this; it’s just a way for an autosurf operator to live very well while money is flowing in and to license himself to keep all the cash when when the enterprise begins to collapse.

    Coupled with hundreds of thousands of dollars that were exiting ASD for personal purchases by family members — and profits taken by other insiders — ASD was adding new layers of impossibility to its already-impossible mathematical structure.

    And rank-and-file members were shouldering the burden — first for additional deficits created by two-for-one deals, and later for personal purchases and rewards given insiders.

    A review is in order (emphasis added):

    “Mr. Bowdoin and associates issued ad packages to friends and family (who  paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said.

    “Mr. Bowdoin, and others working with or associated with ASD, also gave ad packages to employees/workers as compensation for services performed for ASD,” prosecutors said.

    “These individuals also were able to pull out considerable funds from the so-called rebate program even though in many cases they put little, if any, of their own money into the scheme,” prosecutors said.

    “For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,” prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.”

    In their December forfeiture complaint, prosecutors told the stories of some ASD insiders. One of the claims was about a claim Andy Bowdoin made about Russian hackers stealing $1 million from ASD. He didn’t report the theft to police, even though a tremendous sum allegedly had been stolen from the company.

    But Andy Bowdoin did sponsor rallies, after seeing how well they worked in Iowa. And after the rally concluded in Las Vegas, hundreds of thousands of dollars left ASD and was used for personal purchases by family members, prosecutors said.

    And when rallies in Chicago, Miami and Tampa concluded, they added, a $50,000 Lincoln was purchased with ASD funds. Bowdoin had found a way to make up an alleged $1 million theft and buy lots of new things — a boat and jet skis included.

  • Follow-Up: No Autosurf Cure For Struggling Newspapers

    Our site has been serving more pages, fueled in large measure by readers’ interest in the AdSurfDaily case and our reports on Ponzi fraud and securities fraud.

    We got a mention in the Seattle Post-Intelligencer last week (and later on Google News, which picked up the P-I column) in response to our column on whether the paper could save itself by employing the autosurf business model.

    Lots of people want folks to believe that autosurfing is a perfect machine that cures all financial ills. We asked why a famous newspaper such as the Post-Intelligencer, at death’s door, wasn’t installing an autosurf script to save itself if this purportedly curative model was all it was cracked up to be.

    After all, the P-I actually is a professional advertising business, one with an actual product — not a company that pretends to be a professional advertising business, as is the practice of virtually all autosurfs. The P-I employs professional sales people, professional accountants, professional designers, professional artists, professional writers — people who know advertising inside and out.

    Why not leverage its marketplace advantages and existing readership base and enter the autosurf business? To hear autosurf operators tell it, thousands of small business owners in Greater Seattle — and the entire audience of the newspaper — could earn handsome sums if the paper installed a script that rotates ads that people click on to earn “rebates.”

    So easy a six-year-old could do it!

    The P-I, according to autosurf operators, could keep 50 percent of the take and use the money to subsidize the print publication, save lots of jobs, save money for a Rainy Day and make Hearst’s balance sheet the envy of Wall Street.

    We speculated that the P-I, even at death’s door, didn’t install a surf script because it had no interest at all in harming people and destroying the credibility it had accumulated through its storied history. People getting harmed is perhaps the most common result of the autosurf trade.

    The notion that the paper even would consider a surf model always was just plain silly. But we raised the question because lots of people would have you believe there is something noble about the model, something magical, something curative.

    If the print edition of the P-I dies, it will die with its nobility, its honor, its rich history of service and value intact.  So will a lot of print publications that also have websites and the same marketplace advantages as the P-I.

    Good people get hurt — good people lose jobs — when one technological age ends and another begins. Some people will recover quickly. Others will recover as the overall economy improves. There are no guarantees that the salary levels they once enjoyed will be reached again.

    People perhaps will have to learn new skills and find new ways to compete. They might have to work twice as hard to earn half as much money. The reality is that legitimate wealth can be created only through legitimate effort. It is possible, of course, to accumulate large sums of money through illegitimate effort, but it’s not legitimate wealth; it is the proceeds of a crime.

    Legitimate Firms Won’t Drink From The Autosurf Well

    The New York Times yesterday carried a story about upheaval at America’s top newspapers. The Times interviewed editors and publishers. Not a single one of them even mentioned the word “autosurf.”

    When the ailing newspaper business isn’t willing to take the autosurf cure to save itself, it gives people contemplating spending money with a surf lots of useful information.

    Elsewhere yesterday, though, plenty of autosurf operators were telling the Web-viewing public that advertising riches were right around the corner if only business owners — advertisers — would plunk down sums ranging from $6 to $9,500.

    Advertisers simply could view other advertisers’ ads for 10 minutes a day, and receive back a daily “rebate” ranging from 1 percent to 12 percent. In short order — at daily interest rates that would cripple banks — the advertisers would receive back 100 percent of their ad spend and profits in excess of the spend.

    Some of the autosurf sites excitedly tell advertisers not to worry, that they don’t have to buy anything from the other advertisers. The only thing they have to do is view ads.

    Yes, “Look at the ads but don’t worry about buying anything” is part of the autosurf sales pitch — a pitch that normally includes tortured construction after tortured construction, messages at odds with themselves. Don’t people already know they don’t have to buy anything if they choose to look at an ad — in an autosurf or elsewhere?

    Viewers of the autosurfs are called “qualified consumers,” members of a highly appealing “captive audience.” A new wrinkle is to give them important-sounding titles such as “Account Executive” and “VIP.”  The surf’s gambit is that you’re dumber than a box of rocks and actually will be overcome with joy to become a qualified consumer and account executive yourself — perhaps even one with VIP status for an additional fee.

    Should you do any of these things, of course, the knowledge that you don’t have to buy anything from anybody is certain only to add to your joy. This means, of course, that nobody has to buy anything from you, either. Everyone just sits around clicking on ads. Fabulous profits stream in so long as you continue to purchase ads while not worrying about buying or selling anything.

    Sometimes the surfs say things such as, “Better than Google!” or “Is this the new Microsoft?” or “Web 3.0 has arrived!” or they’re “Revolutionizing” advertising or they have a “Unique” revenue-sharing model.

    What the autosurf operators don’t tell prospects is that the U.S. government views them as purveyors of unregistered securities that are taking money from incoming investors to pay older investors — the classic Ponzi set-up. And they don’t tell prospects that federal prosecutors never have lost a Ponzi case against an autosurf.

    They also won’t tell prospects that some of their autosurf colleagues set up the business by installing a simple script, throw up some graphics, pay people for a while to keep new money coming in — and then run with large sums of cash, only to set up shop elsewhere and repeat the scam.

    No television station will touch the autosurf model. No radio station will touch the autosurf model. No dying newspaper will touch the autosurf model, not even to save jobs. It is the exclusive province of scam artists and practiced hucksters — as well it should be.

    They Read It In The Newspaper

    The big news in the autosurf world last week was the surrender to forfeiture of Andy Bowdoin and AdSurfDaily, which gave up its claims to tens of millions of dollars seized by the government in August amid wire-fraud, money-laundering and Ponzi allegations.

    Members read about it in the newspaper — and on websites and Blogs. ASD didn’t announce its capitulation on its Breaking News website.

    It also didn’t announce that a second forfeiture complaint had been filed last month to seize other assets tied to the firm. Members again read about it in the newspaper — and on websites and Blogs. The St. Petersburg Times has done some fine reporting on the ASD case.

    Among the property the government seeks in the second forfeiture complaint is a home whose mortgage allegedly was retired with $157,000 in Ponzi proceeds; it’s the home Andy Bowdoin’s stepson shares with his wife. Prosecutors said the couple also obtained a 2008 Honda CRV with Ponzi proceeds.

    On June 10 and June 11 alone, prosecutors said, Bowdoin family members used nearly $240,000 in Ponzi proceeds to make personal purchases. The purchases were made just days after a company rally in Las Vegas had concluded. Millions of dollars were collected at the rally.

    Prosecutors also noted that Andy Bowdoin bought a $50,000 Lincoln shortly after another multimillion-dollar rally in Miami, and that ASD funds were used to purchase a 20-foot Triton Cabana boat, jet skis, trailers — and another car, an Acura.

    The December forfeiture complaint also cites a claim that Russian hackers stole $1 million from the company and that Bowdoin didn’t call the police or other authorites to report the theft. In addition, it paints a picture of ASD insider’s plotting ways to steal even more money.

    Insiders already had removed hundreds of thousands of dollars from the company, thus making ASD even more of a Ponzi, prosecutors said. “Ad packs” were given away like cash, and rank-and-file members — unbeknownst to them — were shouldering the burden to pay for all of the insider manipulations.

    ASD’s experience should have been a huge setback to the autosurf trade — you know, the trade that pitches a miracle cure for small businesses.

    But the surf operators are a resilient bunch who’ve reportedly taken their show on the road, locating surf sites in Panama and Uruguay. The cure is portable it seems, and yet we can’t cite a single example of a prominent company willing to stake it reputation and bet the value of its brand by taking a drink from the well.

  • Prosecutors: Bowdoin Knew ASD Was Illegal Prior To Rallies That Collected Tens Of Millions Of Dollars

    Andy Bowdoin knew AdSurfDaily was illegal in 2007, months before the company conducted rallies in major U.S. cities and collected tens of millions of dollars from members, according to court documents.

    Instead of becoming legally compliant, Bowdoin introduced new layers of deception in 2008, prosecutors said.

    Included in the deception was a video made in response to a survey of existing promoters. Survey results suggested new promoters and members weren’t joining ASD out of fear it was a Ponzi or pyramid scheme, prosecutors said.

    Prosecutors made the assertions in a second forfeiture complaint seeking to seize other assets linked to ASD. The complaint, which has a different case number than the still-active August forfeiture complaint, was filed last month.

    It cites multiple instances in which Bowdoin family members allegedly used ASD funds for personal purchases. The money was used to buy real estate, luxury automobiles, a boat, jet skis and trailers to haul the water equipment.

    “In December 2007, more than six months before the government intervened, Mr. Bowdoin decided to tell an associate (a silent partner) in the ASD venture, whose share of ASD’s revenue Mr. Bowdoin had decided to reduce from 5% to 1%, that, ‘[I]f we can change the site and marketing plan before [the regulators] attack, everyone will be safe,’” prosecutors said.

    “Mr. Bowdoin and several associates knew [in 2007] they were breaking the law operating ASD,” prosecutors said. “They knew that Mr. Bowdoin was lying to ASD participants in order to get more of their money — so that the ASD fraud could continue, and expand, to the point where its operators could start pulling out significant  income for operators, their friends, and family members,” prosecutors said.

    Working with the survey producer and attorney Robert Garner, ASD produced a video featuring Bowdoin and Garner and placed the video on ASD’s website.

    Rather than addressing prospects’ concerns by focusing on compliance or even hiring a compliance attorney, ASD instead used the video to trick members into believing all was well and that the company complied with all laws.

    Prosecutors said that almost every assertion made in the video was false, including assertions that Garner and a team of lawyers had vetted ASD and determined it was operating legally and not a Ponzi scheme.

    The video was created in response to the survey findings and was a ruse to disarm skeptical promoters and recruit more members, prosecutors said.

    “ASD actually [employed] Garner to participate in a marketing video that ASD crafted to reassure hesitant prospects of ASD’s lawfulness, not for his expertise in ensuring ASD’s compliance with applicable laws,” prosecutors said.

    “Messrs. Bowdoin and Garner said that ASD’s operations had been reviewed carefully by a team of legal experts to ensure compliance with all applicable laws,” prosecutors said.

    “Messrs. Bowdoin and Garner knew the representations made in the video were material to prospective participants, made-up, and false,” prosecutors said. “The misrepresentations led to a significant expansion of investment in ASD and related auto-surf investment programs.”

    In fact, prosecutors said, ASD didn’t hire compliance attorneys during the first 20 months of its existence, waiting until after it started to collect enormous sums at rallies to address compliance with federal securities laws and other laws.

    Bowdoin told members throughout the first half of 2008 that ASD complied with all laws, despite the fact the company did not have a compliance attorney, prosecutors said.

    ASD’s assets were seized in early August. At the time, attorneys hired to ensure its compliance had been involved with the company for only days, according to the complaint.

    Prior to the hiring of the attorneys, ASD had deposited millions of dollars in banks and was sitting on a pile of undeposited checks, according to court filings. The U.S. Secret Service said at least $93.5 million was seized in the ASD probe.

    Prosecutors said ASD had masked itself as an advertising company, but really was selling “unlawfully sold investment contracts — unregistered securites that were not exempt from registration.”

    ASD collected tens of millions of dollars at rallies during the summer of 2008, engaging in multiple layers of deception to gather magnificent sums, according to court filings.

    “ASD made up the daily revenue numbers that it published,” prosecutors said. “The revenue numbers were manufactured to deceive members into believing they could reasonably expect to receive an average daily return on their investment with ASD of about 1%. ASD’s operation was neither sustainable nor legal.”

    Even as Bowdoin was professing to be wealthy, his only interest in creating easy wealth for other “good Christain people,” prosecutors said, “he still owed his ex-wife thousands of dollars from a previous failed venture.”

    During a conference call last summer, Bowdoin told members he’d taken only about $50,000 out of ASD.

    What he failed to mention, according to the December forfeiture complaint, was that family members were using ASD to make personal purchases totaling in the hundreds of thousands of dollars, including the retirement of a $157,000 mortgage.

  • Breaking News: More ASD-Connected Assets Seized; Bowdoin Blamed Company Troubles On Russian Hackers

    Federal prosecutors quietly went to court last month, filing a second forfeiture complaint against assets tied to AdSurfDaily Inc. The complaint paints a jaw-dropping picture of insider dealings, special favors, a “silent” ASD partner, people getting paid large sums for doing virtually nothing — and a claim that Russian hackers broke into ASD’s servers and stole more than $1 million.

    ASD President Andy Bowdoin never reported the theft to police or other authorities. He also told different people different stories about the cash struggles ASD was having before the autosurf changed its name to ASD Cash Generator, prosecutors said.

    “Mr.  Bowdoin told some individuals that he had to stop operating the program over the Internet as AdSurfDaily after one or more Russians hacked into his program and caused the ASD operation to issue approximately $1 million to one or more Russians,” prosecutors said.

    Bowdoin explained the money was taken “before [he] discovered that the Russians had not paid any money to ASD to secure for themselves a portion of its revenue stream (as so-called ‘rebates’),” prosecutors said.

    The new forfeiture complaint, which is filed in the District of Columbia but has been assigned a different case number than the still-active August forfeiture complaint, names currency, real estate, luxury vehicles, a 20-foot Triton Cabana boat, jet skis, trailers and computer equipment as the property the government seeks to seize as additional proceeds of an illegal Ponzi scheme.

    Prosecutors seek $634,266 previously deposited in Bartow County Bank in the name of Golden Panda Ad Builder. The money previously was ceded to the government by ASD President Clarence Busby and his daughter, Dawn Stowers.

    In addition, they seek a 2009 Lincoln MKS in the name of Bowdoin/Harris Enterprises; a 2009 Acura registered to Hays McDougal Amos; a 2008 Honda CRV registered to Judy Shriver Harris and George Franklin Harris; a 20-foot Triton Cabana boat, Mercury outboard motor and trailer; two 2007 Bombardier jet skis and a 2008 Confab trailer.

    At the same time, they seek the old Masonic Hall building Bowdoin purchased for $800,000 cash in Quincy, and a home in Tallahassee that was purchased with ASD funds that Bowdoin’s wife diverted to her son, George Harris, with the assistance of Harris.

    On June 10 and June 11 alone, Bowdoin’s family members and employees used $239,957 derived from ASD funds to make personal purchases, prosecutors said.

    Bowdoin’s wife, Edna Faye Bowdoin, worked with her son on June 10, 2008, to create an account at Capital City Bank, into which more than $177,000 in ASD funds were transferred from Bank of America, prosecutors said.

    On June 23, 2008, Harris used $157,216 of the money to pay off the mortgage on the Tallahassee home he occupied with his wife, Judy Harris, prosecutors said.

    “In short, Edna Faye Bowdoin and her son, George Harris, created an entity that funneled ASD proceeds into a bank account from which funds were provided to George Harris, and his wife, to pay off their home mortgage,” prosecutors said.

    Andy Bowdoin and Edna Faye Bowdoin created Bowdoin/Harris Enterprises to help “conceal from the government their expenditures and assets they purchased,” prosecutors said.

    Insider Dealings

    It is clear from the new forfeiture complaint that investigators have interviewed many people, including Bowdoin relatives, and spent considerable time chasing paper. The brackets in the quoted passages below are emphasis we added.

    “Mr. Bowdoin and associates [note the use of the plural] issued ad packages to friends and family (who  paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said.

    “Mr. Bowdoin, and others [note the plural] working with or associated with ASD, also gave ad packages to employees/workers as compensation for services performed for ASD,” prosecutors said.

    “These individuals also were able to pull out considerable funds from the so-called rebate program even though in many [note the use of the word “many”] cases they put little, if any, of their own money into the scheme,” prosecutors said.

    “For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,” prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.”

    Family Spending Spree

    Here is a list of major family transactions last summer that used ASD funds, according to prosecutors.

    • June 10, 2008: Edna Faye Bowdoin and her son, George Harris, opened at account at Capital City Bank, funding it with $177,900 transferred from ASD’s Bank of America accounts. Harris later used $157,216 of the deposit to pay off the Tallahassee home he shared with his wife, Judy Harris.
    • June 11, 2008: Judy Harris and George Harris used $28,607 to purchase a 2008 Honda CRV. The vehicle was paid for with ASD company check No. 1337. On Aug. 8 — about a week after ASD’s assets were seized in the initial complaint — a lien was placed on the vehicle to secure a $5,000 loan Judy Harris took out with a family member.
    • June 11, 2008: ASD Chief Executive Officer Juan Fernandez issued an ASD check for $33,450 that was used to pay for a 2009 Acura registered to Hays McDougal Amos.
    • June 28, 2008: ASD Check No. 2708, for $20,506, was used to purchase the jet skis and a trailer. The bill of sale was made out to ASD, and Edna Faye Bowdoin signed for the goods.
    • July 1, 2008: A check from Bowdoin/Harris Enterprises for $23,445 was used to purchase the Triton boat and other equipment. The funds Bowdoin/Harris used originated in ASD’s Bank of America accounts.
    • July 28, 2008: A cashier’s check from Bowdoin/Harris for $48,244 was used to pay for the Lincoln. The funds originated in ASD’s accounts.

  • AdSurfDaily: Bowdoin The Envy Of Con Artists Worldwide

    andybowdoinbwASD President Andy Bowdoin demonstrated that any person with access to an autosurf script can put tens of millions of dollars on the table if he or she can meet two minimal conditions: the ability to recruit a few key MLM promoters, and the ability to be influenced by MLM promoters who know how to take the business to the next level by playing fast and loose with the truth.

    One of the reasons autosurfs continue to proliferate is because other con men can’t stand the thought that Bowdoin — himself a con man — relieved people of nearly $100 million in a matter of only weeks.

    “Con man envy” perhaps is Bowdoin’s greatest contribution to the autosurf trade. He is proof of the nefarious dream. Surfs have been popping up left and right since people learned Bowdoin had huge amounts of money stockpiled in banks (and in the form of uncashed checks) and had gone on a real-estate and vehicle-buying frenzy.

    Did you think they were popping up because the model was the product of genius and a utopian desire to let all people share in wealth created by a perfect machine?

    Bowdoin surrendered tens of millions of dollars to the government yesterday, demonstrating the machine is not perfect and no healthy ingenuity is involved. Bowdoin, for instance, spent $500,000 to place a deposit so ASD could process credit-card transactions from Antigua. He didn’t seek members’ approval; he simply did it, thus placing his enterprise in even greater danger of collapse. Members also paid for the properties, vehicles and toys he or insiders bought — each one of them weighting down the Ponzi even more.

    Andy, who deposited corporate funds into personal accounts over which he had sole signatory authority, had new houses and new cars, places to go and people to meet. He’d finally arrived at age 74, and some people even were happy to trade wages for the earning power of all those “ad packs,” which became a new form of currency in Quincy and elsewhere.

    And Bowdoin’s donation of 100,000 “ad packs” to a charity? That also weighted down the Ponzi, putting even more stress on members. The donation alone created a $365,000 liability for ASD at the advertised pay-out rates, even more over time with compounding.

    Any volunteer or employee who’d accept “ad packs” instead of cash was a friend to Bowdoin, who simply could transfer the responsibility to pay for the “ad packs” and their earning power to members.

    Still think ASD had a prayer of surviving?

    Bowdoin also was spending money like a sailor who’d been at sea for six months and suddenly, excitedly, unexpectedly found himself in possession of a big paycheck on shore in the Bright City.  Lots of sailors spend money not because they need to, but because they can. Andy had become a big man in Quincy: Realtors and auto dealers couldn’t wait to see him or members of his family.

    Some of the new surfs have ties to ASD, either directly or through sentiment. We know this because some of the people promoting the new enterprises traded on ASD’s pain to create buzz for the upstarts.

    Cynical does not even begin to describe it.

    A “Poor Andy” theme has been an early selling point in promotions. Part of it is because folks with big downlines don’t want to get sued by people they brought into the program, and they don’t want to have their “profits” disgorged by the government or a receiver it appoints. By casting Bowdoin as a victim of a foundationally corrupt government, promoters hope to keep the heat off themselves while launching new enterprises that essentially are ASD packaged with different words.

    ASD was a Ponzi; the new autosurfs soon will become Ponzis, if they’re not already Ponzis. “Rebates aren’t guaranteed” is a Ponzi signature, a disclaimer the companies use on the theory it will insulate them from claims. It didn’t work for ASD; it won’t work for the new companies.

    Why? Because it’s the equivalent of saying that bank-robbery laws don’t apply to you simply because you make a formal statement that bank-robbery laws don’t apply to you. To the Ponzi purveyor, however, the words themselves are self-validating. We aren’t a Ponzi because rebates aren’t guaranteed. They also serve the secondary purpose of sounding reasonable, putting the onus on you to recognize you’re granting the operator license to keep your money and become rich when the Ponzi math becomes too inconvenient.

    Virtually all Ponzis pay in the early stages; it’s what keeps money flowing into the system. But “rebates aren’t guaranteed” is the “out” — one that can be exercised at any point in time and for any reason, including “We just want to keep the money now.”

    Shame on prosecutors for not understanding “rebates aren’t guaranteed” are the magical words that make the enterprise wholesome, a business of which society can be proud  — even as family members are shunned and lose the esteem and respect of other family members for introducing them to such a wholesome pursuit.

    There’s a good chance your friendly autosurf promoter is in deep trouble with his or her own family for ASD and Golden Panda losses and the grief associated with a court battle –and that the promoter is selling the new autosurf in a bid to recover losses and get back in the good graces of people they love.

    And there also is a chance the promoter is trying to recover personal losses by selling yet another autosurf.

    The Bowdoin Roadmap

    By getting caught, Bowdoin accidentally provided a roadmap on how not to get caught — at least not right away. Few autosurf promoters these days would dare claim that Google endorsed the enterprise after entering into a “partnership.” Fewer yet would dare claim that the President of the United States had given the autosurf operator  his stamp of approval at a White House dinner.

    There is shorthand for this: President = Secret Service, and Secret Service = No Stone Unturned.  Thus — at least temporarily — ends the ridiculous notion that the President is on board the autosurf ship. It was nothing more than a lie that achieved virality. The Google lie also went viral.

    And the rallies, the ones at which faithful volunteers collected members’ money and paperwork on camera and laid it neatly in plastic baskets? Thanks to Bowdoin, new owners will put the lid on rallies and the collection of money by volunteers — customers, after all, might have trouble reconciling why a professional advertising company is using volunteers to round up the loot. (The irony of placing money in plastic baskets in a case what went on to become a money-laundering prosecution is almost too much to contemplate.)

    But don’t rest easy, even as you’re reverse-engineering Bowdoin’s mistakes to make sure your operation doesn’t repeat them and get on the Feds’ radar screens.

    Here’s how the new autosurf operators will get caught, despite what they’ve learned from Bowdoin’s experience and despite reportedly moving to “offshore” locations such as Panama and Uruguay:

    • The word “offshore” itself will signal investigators that the new enterprise studied the ASD case and determined one of ASD’s core “weaknesses” was its domestic location. Some people already are bragging about this. Early promoters of “offshore” surf sites have claimed the sites provide protection from the SEC, the IRS and state attorneys general. Some of these people are the same people who promoted Google “partnerships” and White House ties.
    • A hiccup by a payment processor or an international probe of payment processors could neuter autosurfs and leave tens of thousands of participants holding the bag. There is a distinct possibility that governments worldwide will crack down on processors that do business with autosurfs. In the post-Bernard Madoff Ponzi era — and with the global economy shedding jobs as wealth continues to evaporate — nations will take a closer look at the international wire business.
    • Credit-card issuers and banks will more closely monitor transactions. They’re tired of posting hundreds of billions of dollars of losses. Shareholders will demand additional controls and regulation.
    • Some autosurf promoters are trading so heavily on government resentment that it has become a signature of Ponzi fraud. Even at this moment, promoters are trying to build your resentment so you’ll give them more money. They’ll tell you that the government is antibusiness, anti-little guy, antiwealth, and they’ll point to the $700 billion U.S. corporate bailout and employ other populist rhetoric to make you believe that real patriots play the autosurf game. The loudness, coupled with the brazen conduct of promoters, will put them squarely in the sights of regulators and prosecutors.
    • The U.S. government is well aware that autosurfs exist, but agencies lack the money to police them individually. One possible approach is to work with domestic and international agencies to engineer a sting operation. Such an approach has political support because voters are tired of reading about Ponzi schemes and how wealth is being depleted by people with smiles on their faces and access to a computer. It’s not outside the realm of possibility that the government will work proactively with a TV network to record the actual planning and final execution of the sting. The networks live for this kind of thing, and the public loves to see it. (One new autosurf already is using a reference to the NBC television network to sanitize the opportunity, an act as reckless as claiming the President is your buddy when he is not. The shorthand for the pitch is Autosurf = NBC, an utterly preposterous claim. NBC doesn’t pay viewers, and NBC doesn’t tell its advertisers that they’ll get back 125 percent of their ad spend for viewing ads on NBC for a few minutes a day.)
    • Bernard Madoff fallout is having a profound effect on individuals and the government. Madoff fallout alone is bad news for Ponzi operators. The word is positively nuclear. People now understand what a Ponzi scheme is and the dangers of such schemes because they can put a face to it.
    • Autosurf operators will not be able to control the behavior of the most unscrupulous promoters, an age-old song. Despite ASD headlines — despite Madoff headlines — the seamy underbelly of this underground business once again will emerge.

    The traditional autosurf pattern already is in play at the up-and-coming sites. Have you noticed roll-outs being called “Phase One” and the promises that more and more good things will follow?

    And, hey, no sense insulting you by referring to you as a plain member. Puff out your chest and proudly wear the new title of “account executive” or “VIP.” Feel good about yourself knowing your friendly promoter thinks so highly of you.

    Just be ready to feel the scorn of your family and friends — and perhaps even see yourself on TV — when the post-Bowdoin breed of autosurfs meets its inevitable fate.

    In any event, you’ll still have the “rebates aren’t guaranteed” defense” to make you feel better.

  • Ad Surf Daily Surrenders; Bowdoin Removes Claim To Tens Of Millions Of Dollars As Autosurf Ponzi Members Grumble

    BREAKING NEWS (UPDATED 9:03 P.M) Dogged by the government since August and a loser in early skirmishes with prosecutors, AdSurfDaily has done what it said it wouldn’t do: surrendered claims to tens of millions of dollars seized by the Secret Service in a Ponzi scheme investigation.

    Lawyers for ASD President Andy Bowdoin have filed a motion with U.S. District Judge Rosemary Collyer of the District of Columbia to consent to the forfeiture — and also to forfeit real estate prosecutors said was purchased with proceeds from the scheme.

    Collyer ruled in November that ASD had not demonstrated it was a legal business and not a Ponzi scheme. The ruling was handed down after a Sept. 30-Oct. 1 evidentiary hearing requested by ASD.

    GoldenPandaAdBuilder, which was implicated in the federal probe, surrendered its claim to seized money in September. At the time, Golden Panda’s surrender was condemned as the act of a traitor by some ardent ASD supporters.

    Clarence Busby, the president of Golden Panda, was villified by ASD members who said they believed ASD never would surrender.

    Map picture

    Now ASD itself has surrendered.  Some members are grumbling on forums, at once complaining about prosecutors but also questioning their support for Bowdoin over the past six months.

    Some people maintained from the beginning that ASD — and Bowdoin — would be vindicated and that prosecutors would be lucky to find jobs in fast-food restaurants after Bowdoin systematically destroyed their case and countersued.

    Prosecutors said in court filings today that they intended to aid victims though a liquidation process. “Meanwhile, plaintiff explores mechanisms to identify victims and losses attributable to the AdSurfDaily and Golden Panda Ad Builder Ponzi operations so that property sued because of its involvement in the fraud schemes alleged in the complaint (or the value of property upon its liquidation) may be used to compensate the frauds’ victims,” prosecutors said in a motion.

    From ASD’s court filings (emphasis added). . . Claimants, AdSurfDaily, Inc., Thomas A. Bowdoin, Jr. and Bowdoin & Harris Enterprises, Inc. (hereinafter “Claimants”), by undersigned counsel, hereby request leave of the Court to withdraw and release claims previously filed, consent to forfeiture, as follows.

    1. Claimants withdraw and release with prejudice the verified claims they filed in this civil forfeiture action.

    2. Claimants consent to the forfeiture of the properties for which they have asserted claims (i.e., the real property at 8 Gilcrease Lane and the bank account balances at the Bank of America in the names of Thomas. A. Bowdoin Jr., sole proprietor, d/b/a AdSurfDaily) and expressly announce their intention to not contest the Government’s forfeiture efforts against the properties for which they have asserted claims.

    See this TampaBay.com story.

    Bowdoin’s Surrender View

    Prosecution’s Motion View

  • Roster: Are These Autosurfs In Litigation? Troubled?

    miseryindexBack in August we began to cover AdSurfDaily Inc., a Florida company accused of being an illegal enterprise. Federal prosecutors said ASD, an autosurf, was selling unregistered securities by calling itself an “advertising” company and running a $100 million Ponzi scheme.

    A sister site, LaFuenteDinero, was named in the same federal forfeiture complaint. So was GoldenPandaAdBuilder, a site reportedly conceived on a Georgia fishing lake as a “Chinese” option for ASD members. The site reportedly came to fruition after talks between ASD President Andy Bowdoin and Clarence Busby, who went on to become the operator of Golden Panda.

    Golden Panda has officially dissolved its articles of incorporation and removed its claim to funds seized in the ASD probe. The case still is in litigation.

    Since August, a number of other autosurfs have appeared, some positioning themselves as attractive alternatives to ASD. At least two of them — MegaLido and Frogress — already have failed.

    We decided to keep a running chart of autosurfs. Names will be added over time, as readers contact us or we learn independently of their operations. One of the purposes of this chart is to get a sense about how many autosurfs are involved in litigation, are operating in troubled fashion or are operating freely.

    Autosurf Roster (Updated Jan. 14, 2009)

    NAME LITIGATION (Y/N) NOTES
    AdSurfDaily (Andy Bowdoin) Y Ongoing
    GoldenPandaAdBuilder (Clarence Busby) Y Ongoing
    LaFuenteDinero (Andy Bowdoin) Y Ongoing
    MegaLido (“Michael?”) N DOA
    Frogress (“Jake?”) N DOA
    CEP Y Ongoing/DOA
    PhoenixSurf Y DOA
    12DailyPro Y Ongoing/DOA
    DailyProfitPond N Offline/DOA?
    AdGateWorld (No owner takes credit) N (Debuted Jan. 14) Panama?
    AdViewGlobal (Some former ASD members) N (Prelaunch Buzz) Uruguay?
    Bernard Madoff Y (Nonautosurf Ponzi) $50 B Ponzi
    American Investors Network (AIN) Y (Nonautosurf Ponzi) Bogus Ad. Co.
    Biz Ad Splash (Ownership undeclared) N Panama?
    Increaser.biz (Ownership undeclared) N Netherlands?
    Instant2u (“Billy?”) N DOA. Uzbekistan?
    Noobing (Ownership undeclared) N Kansas?
    Premium Ads Club (135% over 15 days) N DOA 2-23-09
    Aggero Investment (Tied to Premium Ads Club) N Slow-mo DOA 3/1-09
    Name Name Name
    Name Name Name

  • 2008 Concluded With ‘Ponzi-Equals-Pain’ Message

    Bernard Madoff
    Bernard Madoff

    Dear Readers,

    Our best to you with the dawning of the new year — and our thanks for making this Blog one of your stopping points.

    If you have a moment in the coming days, think about leaving a comment that answers this question: What will you remember most about 2008?

    One of the things we’ll remember most is the AdSurfDaily, LaFuente Dinero and Golden Panda Ad Builder case. As mentioned in a previous post, we never intended to do more than a few posts on the subject.

    The ASD case kept itself in the news, though, mostly because of the behavior of some of its more ardent supporters. Andy Bowdoin’s own declaration that Satan was at work — as well as comparing what the company was confronting to the 9/11 terrorist attacks — set the standard for some of the oddities that followed.

    There were Kool-Aid campaigns to Bill O’Reilly of Fox News; letter-writing campaigns to the

    Elie Wiesel, Ponzi Victim
    Elie Wiesel, Ponzi Victim

    Inspector General for the Justice Department; petition drives to the U.S. Senate; a call for a million-person march on Washington; prayer campaigns; name-calling; rants; a gleeful forum party after the Sept. 30-Oct. 1 evidentiary hearing concluded; claims that the prosecutors, Secret Service agents and judge were brainless.

    None of these messages was consistent with a comprehensible PR strategy or the behavior one normally would expect from a company that called itself a professional advertising firm. The presence of numerous other autosurfs also didn’t help. ASD’s claim of offering an exciting, new business model was just plain silly. Scam.com and other sites have been covering autosurfs for years.

    Another thing that didn’t help ASD were the Ponzi allegations against financier Bernard Madoff. The accusations alone brought the word “Ponzi” into widespread public use. The Wall Street Journal and Bloomberg News, in particular, have been providing exceptional coverage of the Madoff case. Practically everyone knows what a Ponzi is now, something that could affect juror pools in the ASD case. Madoff has become a national disgrace, a punch-line for late-night comics and a source of global disgust and heartache.

    “Ponzi” has become a radioactive word. In short, “Ponzi” = “pain” — the kind of pain that destroys people, dreams, fortunes and the good works of charities, endowments and universities.

    The word “Ponzi” became central to many lives in 2008. It is our sincere hope that 2009 will be defined by a much better word:

    Prosperity.

    Our warm wishes to you.

    Sincerely,

    Patrick

  • Madoff Case Sparks Talk Of ‘Clawbacks’

    Bernard Madoff
    Bernard Madoff

    BLOG UPDATE 2:19 P.M. EST (U.S.A.): La Tribune, a French business newspaper, is reporting that a founder of Access International Advisors, a hedge fund with large sums invested with Bernard Madoff, has been found dead in his New York City office building.

    Rene-Thierry Magon de la Villehuchet, 65, was found this morning. The French newspaper called it a suicide, as have other media outlets, but the medical examiner hasn’t listed a cause of death.

    Here, below, our earlier post . . .

    In the CEP autosurf Ponzi scheme case, a court-appointed receiver filed dozens of lawsuits against program “winners,” forcing them to return profits on the theory there can be no winners in an illegal enterprise. The receiver, William F. Perkins, placed CEP in bankruptcy and then methodically went about the task of clawing back money for the estate.

    Perkins, who effectively is running CEP as a debtor-in-possession, has negotiated settlements with a number of winners.

    Last month he triumphed over CEP’s owners, Clayton Kimbrell and Trevor Reed, in a civil trial for fraud and breach of fidiciary duty.

    Judge James E. Massey ordered Kimbrell and Reed to return about $1.5 million in fraudulent transfers they made to themselves, family members, employees and other CEP principals.

    Some of the clawback cases against CEP winners still are being heard, about 17 months after the initial filing. More than 20 trials against individual defendants are scheduled next month in U.S. Bankruptcy Court in Atlanta.

    CEP was declared a Ponzi by a federal judge, while Madoff remains an alleged Ponzi operator who told authoritites that the Ponzi could amount to $50 billion in losses.  The July 2007 SEC complaint against CEP said about $12 million flowed through the firm in an illegal securities offering.

    Perkins maintains a CEP website from which visitors may access all the court documents. It’s well worth a visit.

    Talk in the Madoff case has turned to what the court-appointed receiver might do to recover cash. Owing to the size of the alleged scheme, things could get downright ugly. In theory, people who made withdrawals could be ordered to return them — and this group includes individual investors, money managers and charities.

    Lawyers are apt to use terms such as “fictitious profits” and “fraudulent conveyance” to describe redemptions by investors before the Ponzi collapse. The prospects are horrifying because investors didn’t know anything untoward was occurring behind the scenes, and many of them likely have spent all or part of the money.

    See this Bloomberg News story.

    If the case follows the CEP model, Madoff and insiders — if any — could be forced to return illegal transfers. Prior to his arrest, Madoff said he wanted to distribute up to $300 million to employees. If such transfers were made — recently or in years past in the form of bonuses — it’s possible that the money could be ordered returned even if spent.

    Ugly doesn’t even begin to describe the battles that could ensue. Charities that relied on Madoff to manage money used for good deeds and took dedemptions could be targeted to pay the money back. There is the potential for pain in many, many places, and it’s possible the clawbacks could go back six years.

    Blinded to the reality that Ponzi schemes can have devastasting consequences, some autosurf supporters still are arguing that the government has no business sticking its nose in where it doesn’t belong.

    Incredibly, an autosurf whose launch is set for next year has targeted nonprofits in early promotions. Promoters have suggested it’s a great way to publicize the business and get cash flow.

    AdSurfDaily, which has ceased to operate in the wake of the government’s August seizure of nearly $100 million, promoted at least one nonprofit, funding it with $100,000 in “ad packs” and asking members to contribute.

    “ASD President, Andy Bowdoin, has generously donated 100,000 ad packages to this organization,” the ASD Breaking News site said on July 5, about a month prior to the seizure.

    ASD encouraged members to send donations for the charity to ASD headquarters and even to transfer “donations from your [ASD] Cash Balance.”

  • Ad View Global, New ‘Advertising’ Program, Debuts

    This morning we read an early pitch for Ad View Global (AVGlobal), a new “advertising” company that is coming online in the wake of the $100 million government seizure of assets tied to AdSurfDaily Inc.

    AVGlobal, according to the promoter’s ad we read, is positioning itself as a guarantee against the recession and poor economy. You’ll have to plunk down a minimum of $360 to get paid for viewing ads. ASD’s minimum purchase was $10, so AVGlobal wants 36 times more to get you started earning fabulous amounts of money for viewing ads while the economy is in the tank.

    Talk about stoking the furnace.

    AVGlobal, which for shorthand purposes also is called AVG, is headquarted in Uruguay, according to the promoter. You shouldn’t worry about this, he implied, because the company has banking relationships throughout the free world and “many” of its employees are “citizens” of the United States or other affluent countries.

    It’s not clear if the “citizens” employed by AVG will continue to live in the United States while they’re running a business from South America.

    At least two of the employees are identified in the promotion, and at least one is an ASD executive: “Gary,” whose last name wasn’t mentioned, appears to be the head man, and Juan Fernandez, chief executive officer of AdSurfDaily, is listed as “national sales manager.”

    Whether Fernandez’ job is to serve exclusively as “national sales manager” for a single country is unclear. One would think a company headquartered in Uruguay might appoint an “international sales manager,” as opposed to a more localized “national sales manager.”

    “National Sales Manager” is an interesting title, to be sure.

    Fernandez, through counsel, notified the federal judge in the ASD case that he would take the 5th Amendment against self-incrimination if called to testify at the Sept. 30-Oct. 1 evidentiary hearing. The judge ruled last month that ASD had not demonstrated it was operating legally and not a Ponzi scheme at the hearing.

    Just two paragraphs below the place in the pitch where the promoter mentions “Gary” and Fernandez by name, he insists “there is no connection with the company ASD . . .”

    There is no disclosure at any point in the pitch about ASD’s legal troubles and the risk associated with participating in an autosurf. What’s important, according to the promoter, is that you can “Make Your Financial Life Recession Proof” by joining Ad View Global, which permits you to plunk down up to $9,500 a day for ad purchases.

    One of the reasons ASD put itself on federal radar screens is because it permitted purchases of $10,000 or more, something that catches the attention of banks, the U.S. Secret Service and the IRS. Banks and the Secret Service and the IRS can become suspicious even of $9,500 transactions, though. They’re smart enough to understand that, if $10,000 is viewed as the magic cutoff to avoid suspicion, some folks just might dial it down a bit.

    It appears that everyone who joins AVGlobal gets dubbed an “account executive,” but if you want to earn you have to become a “VIP” account executive. VIP stands for “Viewing Incentive Program.”

    The promoter stressed that AVGlobal is selling “page impressions,” not simple advertisements.

    “Imagine if NBC paid you to watch their station during the hours of 4:00pm – 8:00 pm each evening, regardless of time zone?” the promoter droned. “What if they had hundreds of thousands of people worldwide that they could guarantee to be watching NBC during this time period? Just how valuable would this time be worth?”

    Exciting stuff, to be sure.

    Hmmm. Perhaps NBC should start paying people for viewing ads, only after making a minimum $360 purchase, registering as account executive VIPs and running things out of South America, of course. If the venture proved to be a Ponzi scheme, NBC could use its own news division to sanitize its own Bernard Madoff or Andy Bowdoin-like scandal.

    Here’s a headline idea: “Make Your Financial Life Recession Proof.”

    Oops. Already taken by AVGlobal. Regardless, NBC has lots of talented writers. Someone will be able to come up with a good headline if the network enters the paid-to-view-ads fray.

    It’s a plain fact that people are hurting as a result of poor economic times. It’s also a plain fact that many folks are turning to the Web to learn ways to supplement their income. Here’s hoping they decide against viewing “page impressions” for a living.

    The Feds believe that ASD President Andy Bowdoin was running a criminal enterprise that sold unregistered securities, called them “advertisements” and operated as a Ponzi scheme. Bowdoin’s own attorneys say he is the target of a criminal probe, and he has been sued in a separate action under federal racketeering laws.

    As pointed out above, Juan Fernandez, Bowdoin’s own CEO, took the 5th at the ASD evidentiary hearing. So did Bowdoin.

    Bowdoin also has been sued by Bill McCollum, the attorney general of Florida, under pyramid statutes. Not long ago Bowdoin claimed during a conference call that “Ponzi” allegations had been dropped in Florida, but “Ponzi” allegations never even were brought in Florida, McCollum’s office said. The state always used pyramid statutes, unlike the federal government, which brought Ponzi allegations.

    Now AVG has emerged, using a similar business model, changing a few things, running things offshore and asking for at least $360 up front so people can play. Perhaps they’ll even get the chance to meet the “national sales manager.”

  • EDITORIAL: $7,260 An Hour: The Dangerous Allure Of Autosurfs

    I first learned about Ad Surf Daily and Andy Bowdoin in July, prior to the asset seizure, back when I served as a Moderator at the Warrior Forum. ASD members swore by the company, flocking to the forum in droves when Andy Bowdoin had become a topic of widespread conversation on the Web.

    Some of the Warrior Forum discussions became heated, and people who had no previous connection to the forum suddenly registered as members. ASD supporters, it seemed, couldn’t even fathom that other people might have opposing points of view. Few senior Warriors have anything good to say about autosurfs and cash-gifting programs. In general, they see them as poor excuses for a business pursuit, let alone an actual business.

    Lots of Warriors make their own information and/or software products, largely eschewing cash-gifting and autosurfs as the playgrounds of hype purveyors. The dream of many senior Warriors is to make products that fill an information vacuum and add value to customers’ lives. Some of them are “How To” publishers. Others write software and scripts or sell MRR, rebrandables or Affiliate products. Virtually all of them are resigned to the fact that actual work is involved. It takes time to build a brand and a business. Very few see the act of plunking down $12,000 and surfing for six minutes to claim a daily paper profit of $120 a noble pursuit.

    Walking Back The Claims

    One of the first claims we read about ASD was that a member was making $1,000 a day ($365,000 a year) passively by surfing a handful of websites with a daily time investment of only a few minutes. If true, it would have meant the member had directed about $100,000 at the company or accumulated that amount by surfing and reinvesting. The most shocking extrapolation, however, was that $100,000 could morph into $365,000 in a year’s time.

    No legitimate company offers such a return. It was a dead giveaway that ASD’s days were numbered, even though people were citing the $1,000-a-day profit claim in promotions as a reason to join. They might as well have taken out an ad in the New York Times that read, “We Are Just Dying For The Government To Investigate Our Favorite Autosurf Because It Likely Is A Ponzi Scheme.”

    Some of the biggest Warrior Forum fights involved cash-gifting programs. Perhaps the biggest of all occurred when an ad for a gifting program accidentally got approved by a tired, overworked Mod in the Warrior Special Offers (WSO) forum. WSOs are supposed to be products you created. This particular WSO was a 30-page PDF ad for a gifting program, complete with pictures of fabulous homes, fabulous cars and fabulous piles of money. Senior members went nuts, and the ad was deleted quickly with a sincere apology.

    Naturally some opportunistic members stepped in to speak out in support of gifting programs, defending them with velvet talk and claims of superior knowledge and unquestioned propriety, despite very public warnings from the Federal Trade Commission. Senior members don’t let that kind of talk go unchallenged. Gifting as a business? You’re kidding, right?

    Most senior members feel the same way about autosurfs.

    Due Diligence?

    All kinds of declarations were made that people had done comprehensive due diligence on ASD. The thought alone was preposterous, as are current claims about comprehensive due diligence having been performed by investment companies that directed money at disgraced financier Bernard Madoff, now accused of running a massive Ponzi scheme.

    It is simply impossible to perform due diligence on a financial product absent verifiable financial data. “Trust” is not a synonym for “due diligence,” no matter now many times promoters confuse the terms, either deliberately or because a neuron misfires and instructs them to invest based on feeling, not fact.

    The phrase “I got paid” used in autosurf promotions also is not due diligence. Ponzi schemes thrive precisely because they pay people. Then those people tell other people they got paid. The cycle repeats itself until:

    • A.) The mathematical deception no longer is sustainable because too many people want too much money simultaneously. (Madoff reportedly faced $7 billion in simultaneous redemptions and had run out of shells to move.)
      B.) The Ponzi becomes too worrisome for the operator or technological problems become unmanageable and drain interest or create a run on the bank.
      C.) The autosurf Ponzi operator decides he is going to keep all the money he’s collected because he’s reached a secret target and covered himself in the Terms of Service.
      D.) The government intervenes.

    Echoes On The Web

    The same defenses that surfaced for Andy Bowdoin have surfaced in other autosurf Ponzi schemes. Research the scheme, and you’ll find the defenses, up to and including the all-caps, screaming, deflection defenses.

    “IT’S NOT A PONZI SCHEME, [EXPLETIVE!]” is, perhaps, the signature deflection, with the “HOW DARE YOU EVEN SUGGEST THIS UPSTANDING BUSINESS PERSON WOULD BE INVOLVED IN SOMETHING UNTOWARD?” deflection coming in a close second. “GET READY FOR THE LAWSUIT” comes in a close third.

    Some purveyors of autosurfs are so accustomed to people saying “yes” and settling for velvet talk in response to legitimate questions that they reflexively demonize anyone who strays from the company line. They’ll try to maintain the veneer of superior knowledge even if the autosurf is in failure mode, explaining that such occurrences are a natural part of doing business online and demonstrate the need to have a “diverse” portfolio.

    They’ll sell autosurfs as an investment in one breath and, in the next, deny that customers had purchased an investment. Why? Because they don’t want to get sued by their downlines and don’t wanted to be named a defendant in a fraud or a securities beef.

    It’s common for them to suggest they pitched a failed autosurf in good faith, pointing out that nobody should have invested more than they could afford to lose. Forum posters, including people who got fleeced, want to think the best of their sponsors and even thank them for their “candor.” It’s a curious online cousin to Stockholm Syndrome.

    What’s lost in the discussion is the fact the government clearly views the autosurf model as illegal, because virtually all autosurfs operate as Ponzi schemes that sell unregistered securities and because they raise concerns about criminality.

    Anyone can purchase an autosurf script or even find one for free. Plug in the variables — the daily “rebate,” for example — and you’re the owner of your very own Ponzi scheme. A terrorist could join and you wouldn’t know. A criminal surfing team could join and you wouldn’t know. A criminal or terrorist could be the autosurf operator and you wouldn’t know.

    Another common defense is that the government doesn’t understand the model. Yet another is that the autosurf operator has discovered the magic pill that makes the model legal, separating it from illegal programs that use a similar model but exclude the magic pill. Still another is the selective-enforcement defense: With so many other autosurfs out there, why go after this one? When all else fails, of course, the most ardent defenders always can attack the prosecutors as mindless fools, free-market opponents, Socialists, perhaps even calling them names and comparing them to Satan.

    One defense staple is the argument that the government has no right to mess with autosurf Ponzi schemes if it continues to permit Social Security to operate. Indeed, changing the subject is a critical skill if your aim is to defend the autosurf trade.

    $7,260 An Hour

    One particularly desperate defense for Bowdoin, uttered by a supporter in the aftermath of Bowdoin’s decision to take the 5th Amendment at the Sept. 30-Oct. 1 evidentiary hearing, was that he was “too honest” to testify.

    One of the questions prosecutors could have asked is how it was possible to morph $100,000 into $365,000 in a year’s time — simply by clicking on ads — when there were no additional profit centers that generated huge amounts of revenue.

    Walk it back: Give Bowdoin $100,000. Surf for six minutes a day (2,190 minutes over the course of the year, or 36.5 hours). Emerge with your $100,000 principal back, and a tidy profit of $265,000. Your profit computes to $7,260 an hour. ($265,000/36.5 hours.)

    Yes, $7,260 in profit per hour from clicking on ads. Where did that money come from? Work just three hours and you’ve topped the yearly earnings of an average Walmart employee. In just nine hours you’ve topped the average yearly earnings of a middle-class manufacturing worker or teacher in the United States. See, now, why selling the autosurf dream is so important?

    It’s always convenient to hate bureaucrats and the cops until you need them.

    Smoke And Mirrors

    The argument that Bowdoin was selling “advertising” and not a financial product is absurd. So is the corresponding argument that ASD was an autosurf like none other, the one that figured out how to get everything nice and legal. The ASD Terms of Service (TOS) was among the most consumer-unfriendly documents we have ever read.

    Basically, participants were agreeing to give Bowdoin license to collect amounts from $10 to $12,000 (or more, with special permission), while empowering him to keep the money even if he chose to quit paying rebates. “Advertising” purchases were nonrefundable. Rebates weren’t guaranteed. Essentially all he had to do was show ads to honor the contract.

    Boxed In

    What’s interesting about the Feds’ approach to Bowdoin is that, to date, they’re not trying to bust the contract. They’re saying, in effect, “OK, Mr. Bowdoin. Want to hide behind your contract? Well, start showing your customers’ ads without paying a corresponding rebate. Let’s see how happy somebody who paid you $40,000 will be if you run off 40,000 ads, one painful $1 click at a time.”

    As a side note — and using a figure of $50 million as a conservative estimate of Bowdoin’s advertising liability — Bowdoin would have to deliver 50 million clicks if ASD came back online. Where is the audience going to come from if the deal doesn’t include rebates for viewing? It could take forever for the ads to be displayed.

    Nice contract, huh?

    What the government did by telling Bowdoin he was permitted to show ads is neatly expose the wink-nod nature of autosurfs. Imagine the insurrection that would result if ASD suddenly came back online and began to run off 50 million ads — $50 million worth of ads backed up in the queue — one painful click at a time. Every person who complained to the government would neatly expose himself or herself as a co-conspirator, a wink-nod participant. After all, rebates weren’t guaranteed. Only ad views were guaranteed. You paid for advertising only, right?

    What Bowdoin’s TOS seems to have done is box in participants as possible co-conspirators.

    In our view, prosecutors’ best card is the assertion he was selling securities and calling them advertisements.  We base this view on the fact the government is 3-0 in autosurf prosecutions, dating back to 12DailyPro and including CEP and PhoenixSurf.

    One difference — and it’s a notable one — is that Bowdoin didn’t surrender upon seizure and has a well-known law firm challenging the government’s forfeiture case on his behalf.

    That ASD is lawyered up, however, does not change the plain fact that the government believes — as it did in previous auotsurf cases — that the autosurf model involves the sale of unregistered securities disguised as advertisements.

    Prosecutors weren’t born yesterday. They lack the budget and manpower to chase down all autosurfs, but they understand the game. And, in this particular area of law, they have significant advantages over defense lawyers because the law is weighted toward them. It’s that way by design: Ponzi schemes and the sale of unregistered securities on a mass scale pose a clear and present danger to the economy.

    From the government’s point of view, a security is a security no matter what you call it. You can call it an “advertisement” until the cows come home and it still will be a security.

    Emerging Models

    “New” autosurf models emerging in ASD’s wake appear to be incorporating even more smoke and mirrors to skirt regulation, perhaps even moving offshore or adding gaming or social-networking elements. The rebate underpinnings still appear to be in place, which means they, too, will come under scrutiny. It’s highly likely that their own promoters will bring them down because they won’t be able to restrain themselves from using glutonnous hype.

    Remember that $1,000-a-day claim? New operators won’t be able to stop the hype purveyors, any more than Bowdoin could stop them.

    I never planned to do more than a few stories on ASD’s troubles. What kept my focus riveted were constant attacks against this Blog by ASD supporters. Almost all of it was drivel, nonsense of the highest order, often served up in ad hominem or passive-aggressive fashion. I never minded posting opposing points of view. What I minded was a lack of sober thought and the stunning commitment to intellectual dishonesty. In all the time I’ve published news and opinion on ASD, I have not received a single comment from an ardent ASD supporter that did not attempt to change the subject in some way.

    Not one.