In a case that drew comparisons to AdSurfDaily because of recidivism, undisclosed bankruptcies and ties to Utah, the three principal figures of the Philip R. Lochmiller Sr. real-estate Ponzi scheme in Colorado will be going to federal prison.
Lochmiller Sr., 63, was found guilty in July after a 10-day trial in which the jurors returned the verdicts in three hours. He will be sentenced after a final computation of losses is completed. The case involved a company known as Valley Mortgage Inc. The case involved about $30 million.
Lochmiller Sr. was found guilty of conspiracy, money laundering conspiracy, money laundering and mail fraud.
His stepson, Philip R. Lochmiller Jr., 38 when charged, has been sentenced to eight years in federal prison for conspiracy to commit securities and mail fraud and money laundering. Business associate Shawnee N. Carver, 33 when charged, has been sentenced to two years for conspiracy to commit securities and mail fraud.
Prosecutors announced the sentences imposed on Lochmiller Jr. and Carver yesterday.
“Philip Lochmiller Jr. helped orchestrate an investment scheme which defrauded over 400 victims out of more than $30 million,” said James Yacone, special agent in charge of the Denver FBI office. “Several elderly victims were financially devastated. [The] sentencing sent a strong message that white collar criminals will not be tolerated. The FBI will continue to aggressively investigate and seek prosecution against the groups and individuals who defraud unwitting victims out of their earnings.”
Lochmiller Sr. was sentenced to three years in a California state prison in the 1980s after he was charged with 60 counts of securities fraud and pleaded guilty to about half of them. Investors in his new scheme at Valley Mortgage were not told of his history as a securities swindler, federal prosecutors in Colorado said.
Federal prosecutors in the District of Columbia said the same thing about ASD President Andy Bowdoin, who was charged with felonies in Alabama in a securities scheme in the 1990s.
Meanwhile, Lochmiller Sr.’s investors also were not told that both Lochmiller Sr. and Jr. had bankruptcies on their records. Federal prosecutors in the District of Columbia alleged in August 2008 that ASD members and members of a companion autosurf known as Golden Panda Ad Builder were not told about the bankruptcy of Golden Panda President Clarence Busby.
Nor were they immediately told that Busby had a run-in with the SEC in the 1990s and was accused of purveying three prime-bank swindles, according to records.
The Lochmiller case also has a tie to Vernal, Utah, a community to which ASD also has a tie. The Lochmiller case was in part about real estate in Vernal. Vernal is the community in which the so-called “Arby’s Indians” got their start.
ASD mainstay Curtis Richmond was a member of the bogus “tribe” based in Vernal. The tribe, which used the address of a Vernal doughnut shop as the address of its purported “Supreme Court” and was ruled a “complete sham” by a federal judge, got its derisive name because it once held a meeting at an Arby’s restaurant in Provo.
Richmond went on to become a pro se litigant in the ASD Ponzi case, accusing the judge overseeing the case in the District of Columbia of “TREASON” and operating a kangaroo court. Richmond claimed the judge overseeing an unrelated case in Utah owed him $30 million. Other ASD figures later claimed government officials owed them sums ranging from the millions of dollars to the trillions.
Another parallel between the ASD case and the Lochmiller case is the presence of the IRS. ASD’s early deceptions were uncovered by a U.S. Secret Service/IRS Task Force operating in Florida, according to court filings.
“Investment fraud is like a ‘house of cards’; the underlying structure can fall apart at any time leaving many investors in financial ruin,” said Sean Sowards, a top IRS agent working the Lochmiller case.
Sowards is the special agent in charge of the IRS-Criminal Investigation unit in Denver.
“These sentences should remind us that defrauding investors is a serious offense and those who do will be held accountable,” Sowards said.
Both Lochmiller Jr. and Carver testified at the Lochmiller Sr. trial, prosecutors said.
BULLETIN: A federal judge in Florida who says she was accused of “abusing” her discretion and “trampling” the Constitutional rights of a man implicated in an alleged multimillion-dollar commodities fraud by the SEC has ordered the defense attorney who made the assertions to explain himself and substantiate claims that his client had been denied due process.
U.S. District Judge Patricia A. Seitz ordered attorney Horecia I. Walker to respond in writing no later than Sept. 9 and explain what kind of investigation he conducted prior to asserting that James Clark Howard III and his counsel present at an Aug. 23 evidentiary hearing did not have adequate time to prepare for the hearing.
Howard, who appeared at the hearing, was represented at the hearing by attorney Mark C. Perry, according to records. Both Howard and Perry had 11 days to prepare for the hearing, Seitz wrote.
In an order issued on the same day as the hearing, Seitz directed Howard and Sutton Capital LLC to turn over $1.45 million to attorney David S. Mandel, the court-appointed receiver in the Commodites Online LLC fraud case filed in April by the SEC.
Seitz gave Howard and Sutton, another firm associated with Howard, until yesterday to turn over the money. It was not immediately clear if either party complied with the order.
What is clear is that Seitz was not amused by an emergency motion filed by Walker on behalf of Howard and Sutton to stay the Aug. 23 order to turn over the money pending an appeal of the order.
“Walker has accused this Court of trampling Howard’s constitutional rights and abusing its discretion in entering the turnover Order,” Seitz wrote. “The factual underpinnings for these accusations are that Howard and Perry had insufficient time to prepare for the August 23, 2011, hearing. To avoid running afoul of Rule 11, Walker should have investigated these factual circumstances before relying on them to accuse the Court of a constitutional affront.”
The judge added that “it appears to the Court that no such investigation occurred.”
Seitz took issue with Walker’s characterization of the Aug. 23 hearing as an “apparent ‘evidentiary hearing,’” according to an order she issued yesterday denying the stay.
“Walker posits that the hearing ‘was not an evidentiary hearing at all’ and the Court’s Order requiring disgorgement amounts to an abuse of discretion,” Seitz wrote. “Lost in all of his hyperbole is the simple fact that Howard and Perry received notice of the hearing eleven days before the hearing commenced.”
Neither Howard nor Perry asked for a continuance, Seitz wrote.
The Commodities Online case has a link to the AdSurfDaily Ponzi scheme case brought by the U.S. Secret Service in August 2008.
SSH2 Acquistions, a Nevada company that listed former ASD member and pro-ASD Surf’s Up moderator Terralynn Hoy as a director, sued Howard and others in September 2010 amid allegations he was part of a massive Ponzi scheme into which SSH2 had plowed $39 million. The lawsuit was filed about six months after the Boca Raton Police Department filed felony charges against Howard in an alleged financial scam that targeted Haitian Americans.
Surf’s Up was a cheerleading site for ASD, and Hoy later became a moderator of a cheerleading forum for the collapsed AdViewGlobal (AVG) autosurf.
While SSH2 claims to be a Ponzi victim of Howard, the Surf’s Up and AdViewGlobal forums both claimed that ASD and AVG were conducting legitimate commerce. With Hoy as a moderator of Surf’s Up, the forum conducted an October 2008 online party complete with images of champagne and fireworks for ASD President Andy Bowdoin.
The U.S. Secret Service described Bowdoin as an international Ponzi schemer and recidivist felon who’d gathered tens of millions of dollars in the ASD caper — most of it in ASD’s final weeks of life in the late spring and summer of 2008. At least $65.8 million was seized from Bowdoin’s 10 personal bank accounts, according to court records. One account alone contained more than $31.6 million. Three accounts contained the exact same amount: $1,000,338.91.
It is unclear if ASD members beyond Hoy had any business ties to Howard and invested any money with the accused schemer. Hoy has not been accused of wrongdoing.
SSH2 said in court filings that it plowed $39 million into the alleged Howard scheme, and received back about $19 million in “fake and fraudulent ‘profits.’” Sutton, Rapallo Investment Group LLC and Patricia Saa also were named defendants in SSH2’s lawsuit.
Howard was sentenced to 57 months in federal prison in the 1990s on narcotics and weapons charges, according to records. ASD’s Bowdoin, meanwhile, narrowly avoided jail time during the same decade when he was implicated in Alabama in a securities swindle, according to records.
Clarence Busby Jr., one of Bowdoin’s alleged business partners, was implicated by the SEC during the 1990s in three prime-bank schemes, according to records.
Some ASD members have been identified as members of the so-called “sovereign citizens” movement. Cheerleading for Bowdoin and ASD continued on the Surf’s Up forum even after it was revealed that Curtis Richmond, one of the purported “sovereign” beings associated with ASD, had a contempt-of-court conviction for threatening federal judges in California and once claimed a federal judge from Oklahoma sitting by special designation in Utah owed him $30 million.
Richmond was a member of the so-called “Arby’s Indians,” an “Indian” tribe that targeted public officials with vexatious litigation. U.S. District Judge Stephen Friot ruled the “tribe” a complete sham.
U.S. District Judge Rosemary Collyer of the District of Columbia is presiding over the ASD Ponzi case. Both Richmond and Bowdoin tried unsuccessfully to have her removed from the case. Richmond accused Collyer of “TREASON” and claimed she may be guilty of 60 or more felonies.
UPDATED 1:46 P.M. EDT (U.S.A.) AdSurfDaily “paid out millions of dollars to operators and insiders,” according to a U.S. Secret Service affidavit originally filed under seal in February 2009.
But ASD President Andy Bowdoin changed the subject when people told him that what Florida-based ASD was doing not only was illegal, but also was “not mathematically possible,” according to the affidavit.
What he was trying to do, according to court filings, was establish at least three autosurfs that would generate Ponzi-extending cash while Bowdoin positioned them as legitimate “advertising” businesses.
And Bowdoin also wanted to persuade members that he had discovered a formula that purportedly made it possible for ASD to set aside 50 percent of its daily revenue and pay participants 125 percent of what they paid in — all while planting the seed that members could expect a return of 8 percent a day on some days.
Investigators saw things a different way, saying ASD was creating a minimum liability of $1.25 for every dollar it took in.
“Try it — it works,” Bowdoin simply told the doubters, changing the subject instead of addressing the mathematical realities, according to the Secret Service.
There was too little profit in operating legitimately, Bowdoin told a consultant, according to the Secret Service.
As ASD was facing a Ponzi abyss, a consultant told Bowdoin there was a way for ASD to clean up its act, according to the Secret Service.
“Bowdoin, however, was dissatisfied with the consultant’s revenue sharing proposal and with the limited revenue a legitimate business would produce,” the Secret Service alleged in the February 2009 affidavit. “Bowdoin rejected the consultant’s plan and terminated his relationship with the consultant.”
Bowdoin had arrived at his 50-in/125-out formula after an earlier formula in which ASD purportedly had set aside 60 percent of its revenue to pay participants 150 percent of what they paid in had brought on a Ponzi collapse that caused the company to cease operations and leave investors in limbo for weeks in 2007, according to the Secret Service.
ASD’s original formula was concocted by Bowdoin and his “silent partner,” a man who recruited Bowdoin into the 12DailyPro autosurf Ponzi scheme, according to the Secret Service.
Both of ASD’s formulas were just a means of hiding ASD’s true nature as a financial beast with a fatal disease, according to court filings.
Despite the spectacular collapse of 12DailyPro amid Ponzi allegations filed by the SEC in early 2006, Bowdoin and his silent partner ruminated that 12DailyPro simply had promised to pay out too much money on a daily basis, according to the Secret Service.
Upstart ASD, Bowdoin and his silent partner speculated, could take regulators out of play and avoid the Ponzi fate of 12DailyPro by telling investors that the firm would pay out less money and by introducing verbal sleight-of-hand to disguise the true nature of the business, according to the Secret Service.
ASD also speculated that it could circumvent the Ponzi problem and law-enforcement scrutiny by suggesting that ASD’s payouts, which the firm called “rebates,” were not “guaranteed,” according to the Secret Service.
Despite telling members to “Try it — it works,” Bowdoin had no confidence in his business model and knew it was still a Ponzi despite the post-12DailyPro tweaking. In the end, according to court documents and other records, ASD still was telling investors they’d get back more than they paid in and, on a yearly basis, would receive a return of 365 percent at a “rebate” rate of 1 percent a day.
Even as ASD was playing in the post-12DailyPro fields and grew eventually to suck in tens of millions of dollars a week, less than 2 percent of its revenue came from external sources. More than 98 percent came from members and was simply being recycled to other members to keep the Ponzi afloat, according federal prosecutors.
At a certain point in time, Bowdoin did away with unlimited purchases and limited the amount investors could pay ASD to $12,000 “because he did not want members to lo[]se too much money should ASD collapse,” according to the February 2009 Secret Service affidavit.
The import of the claim is that prosecutors can argue to a jury that Bowdoin himself was worried about the imminent demise of ASD — a demise Bowdoin brought on through the use of various mathematical concoctions, linguistic fantasies and fabrications designed to separate people from their money to keep the Ponzi afloat.
Meanwhile, the claim sets the stage for prosecutors to tell a jury that Bowdoin anticipated a catastrophe and sought to insulate himself from prosecution by suggesting that ASD did not guarantee rebates and that customers were purchasing “advertising,” as opposed to entering into an investment contract with ASD.
“[T]o ensure that no individual investor monopolized the rebate pool, and to reduce the
likelihood that any individual investor would suffer a catastrophic loss, Bowdoin placed a limit on the amount of ‘advertising’ members could purchase,” the Secret Service said. “Of course, it would have made no sense to impose such limitations if ASD was actually selling, and members actually were purchasing, Internet advertising.”
Bowdoin’s various stories were at odds with themselves, the Secret service alleged. Even as Bowdoin was telling members ASD was not in the investment business and instead was a provider of advertising “rebates,” ASD’s computer systems described member payouts as “ROI” — for Return on Investment.
And even as he positioned himself as a Christian “money magnet” and merchant who’d been recognized by the President of the United States — and even as he purportedly was enforcing a $12,000 purchase ceiling to minimize the chance an individual investor would become engulfed in a calamity — Bowdoin told attendees of company “rallies” in U.S. cities that ASD would match the money they plowed into the firm 50 cents on the dollar.
“At the rallies, to raise more money, Bowdoin concocted the idea of running ‘rally-only promotions,’” the Secret Service alleged. “New members were told they would receive a 50% bonus for joining at the rally. For example, if a new member purchased $500 in ‘ad packages’ as a bonus she would be credited $750 to her account. Representatives of ASD stated this was a ‘World Wide Wealth’ program that was available to anyone with Internet access.”
In early 2008, Bowdoin became a participant in a scheme with a “North Carolina” attorney to assure prospects that ASD had been vetted and was operating lawfully. ASD’s 26-minute legality video and the rallies caused tens of millions of dollars suddenly to flow into the firm, according to the Secret Service.
Just a year earlier, the company suspended operations because it was starved for cash flow and faced a collapsed Ponzi, according to the Secret Service. ASD’s response to the collapse was to launch a new autosurf Ponzi under a new name — and to port the accounts of its original set of victims into the new scheme, where the payouts early loyalists had expected would be funded by incoming participants who did not know their money was being distributed to Bowdoin’s orginal victims.
Later in 2008, as spring and summer warmth returned to northern climes, ASD found people throwing money at it. Some of the people who threw money at ASD did so at rallies in Iowa, according to the Secret Service.
Affidavit For Seizure Targeted At At Least 7 Iowa Bank Accounts
The PP Blog reported in December 2010 that funds traced to Bowdoin and two other ASD members had been targeted in yet-another forfeiture action in the District of Columbia. The action was filed less than three weeks after Bowdoin’s Dec. 1 arrest by federal agents in Florida on Ponzi-related charges of wire fraud, securities fraud and selling unregistered securities.
Prosecutors’ December civil-forfeiture action was at least the third targeted at assets owned by Bowdoin. Assets of two other ASD members — Erma “Web Room Lady” Seabaugh and Robyn Lynn Stevenson (also: Robyn Lynn) of Florida — also were targeted.
The civil case against Bowdoin’s assets is on hold because of the criminal allegations against him. But the cases against the assets of Seabaugh and Lynn remain active. Neither Seabaugh nor Lynn had filed a claim for the money as of Friday.
In the case against Seabaugh’s assets, the government was authorized to seize $213,693 from a bank account, but found only $153,097 in the account. The Secret Service seized $96,525 from two bank accounts linked to Lynn.
Some of the money Seabaugh plowed into ASD originated at E-Bullion, a shuttered California money-services business operated by convicted murderer James Fayed, who ordered the execution of his estranged wife in 2008.
Pamela Fayed, a potential witness against her husband on matters pertaining to E-Bullion and an associated business known as Goldfinger Coin & Bullion, was slashed to death in a Los Angeles-area parking garage on July 28, 2008.
On Aug. 1, 2008, the Secret Service seized tens of millions of dollars from Bowdoin’s bank accounts. The December 2010 claim by federal prosecutors that Seabaugh had used E-Bullion to fund one of her ASD accounts was the first public tie between ASD and E-Bullion, which has been linked to multiple Ponzi schemes.
Seabaugh had multiple ASD accounts with multiple email addresses — and appeared to be “selling her own investment ‘ad packs’ to clients and representing herself as ASD,” the Secret Service alleged.
The PP Blog learned on June 10 that the Secret Service, in February 2009, also targeted proceeds in seven bank accounts belonging to ASD members in Iowa for forfeiture. In an affidavit, the agency said the accounts contained at least $413,018.
How the cases are evolving was not immediately clear. The Secret Service, according to the affidavit, identified the assets as proceeds of an ASD-related wire-fraud scheme.
Acting as pro se pleaders and using a litigation template associated with ASD participant Curtis Richmond, one of the so-called Arby’s Indians, two of the individuals associated with the Iowa accounts cited by the Secret Service in the February 2009 affidavit later attempted unsuccessfully to intervene in the main civil-forfeiture case against Bowdoin’s assets.
The February 2009 Secret Service affidavit identifies the individuals as Joyce and Michael Haws.
“Joyce Haws was an active participant in and large promoter of the ASD wire fraud
scheme,” the Secret Service alleged in the affidavit. “Ms. Haws was one of several people who requested and facilitated one of the first rallies within ASD, in Ankeny, Iowa, on about March 15th, 2008.”
Haws recruited her mother and others into the scheme, according to the affidavit.
Walter Clarence Busby Jr., a Georgia minister and Bowdoin’s alleged business partner in Golden Panda Ad Builder, identified Joyce Haws and her “spouse” in 2008 as “founders” of Golden Panda.
In the same Busby affidavit, filed on Aug. 29, 2008, Busby identified Robyn Lynn as the person who introduced him to ASD.
Curtis Richmond was an early mainstay in the ASD story. He has a contempt-of-court conviction for threatening federal judges, has been banned from the practice of law in Colorado even though he is not an attorney and has been sued successfully under the federal racketeering statute for harassing public officials and participating in schemes to place bogus financial judgments against them.
Richmond, who proclaimed himself a sovereign being answerable only to God, was a member of a Utah “Indian” tribe a federal judge ruled a “sham.” The “tribe” got its derisive name — the Arby’s Indians — because it once held a meeting in an Arby’s restaurant.
The “tribe” also used the address of a Utah doughnut shop as the address of its “Supreme Court,” while threatening public officials with arrest and detention for carrying out their official duties.
It was before Bernard Madoff and before Sir Allen Stanford. President Obama was candidate Obama. Sarah Palin, the little-known governor of Alaska, would not become part of the public consciousness for nearly another month. Few people had heard of the so-called “Arby’s Indians.” Fewer yet could instantly place Uruguay or Panama on a map or understand the acronym “RICO” without a quick trip to Wikipedia. No one had heard of AdViewGlobal, BizAdSplash or AdGateWorld. The 31st Annual Pilgrimage to Graceland to commemorate the life and passing of Elvis Presley would not begin officially until Aug. 9, another eight days.
Regardless, the term Ponzi scheme — which goes missing from the public consciousness for years at a time, despite the nonstop play it recently has received — started making a big comeback late in the afternoon of Aug. 1, 2008. For good measure and to sear the memory, nature treated part of the world to a total eclipse of the sun on Aug. 1. The small town of Quincy, Fla., was too far south to witness the spectacle — but Quincy soon would witness a spectacle of its very own.
Friday, August 1st 2008 afternoon update
Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.
ASD Management.
Yes, ASD signed this life-altering message “ASD Management.” A company that claimed to be a professional advertising and communications firm — one whose promoters claimed had Fortune 500 clients and signed contracts from major advertisers for millions of dollars — lost the PR war with a single, vague posting.
It was only the first of many incongruities. Reporters who called later were told there was nothing to fear because God was on ASD’s side.
Quincy’s spectacle began on Aug. 5, the date agents showed up with search warrants for ASD’s headquarters and the home of ASD President Andy Bowdoin. WCTV was the first media outlet to report the news. Here is how we put it:
WCTV is reporting that agents are executing a search warrant at ASD Cash Generator headquarters in Quincy, Florida.
Details are sketchy. WCTV serves Tallahassee, Thomasville and Valdosta., and is a CBS affiliate.
Our first update came at 3:09 P.M. EDT (U.S.A.):
WCTV is reporting that the U.S. Secret Service and the Gadsden County Sheriff’s Department are conducting the raid at ASD Cash Generator. Agents reportedly are searching for documents and computers.
We obtained a copy of the forfeiture complaint later in the day. Here are the initial quotations and background we published from the complaint.
” . . . there is reasonable cause to believe that ASD, Thomas A. Bowdoin, Jr. and others, devised and intended to devise a scheme or artifice to defraud, or a scheme for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and that he and they transmitted or cause to be transmitted by means of wire, communications in interstate or foreign commerce (including writings, signs, signals, pictures, or sounds), for the purpose of executing such scheme or artifice, to wit: an Internet-based Ponzi scheme, in violation of Title 18, United States Code, Section 1343 (Wire Fraud); and in violation of Title 18, United States Code, Section 371 (Conspiracy to Commit Wire Fraud),” the complaint read in part.
“Further, based on the information provided herein, there is reasonable cause to believe that the defendant properties constitute proceeds of the above-specified offenses or property involved in financial transactions, with wire fraud proceeds, that are prohibited by the federal anti-money laundering statutes.”
ASD sales materials positioned Bowdoin as an accomplished business person who once received a medal for business achievement from President Bush. Federal prosecutors, however, say Bowdoin received no such medal from Bush and that “successes are remarkably absent from his true work history.”
Bowdoin “was arrested in Alabama for one or more felony violations related to Fraud in Connection with the Offer and Sale of Securities by an Unregistered Agent,” prior to his involvement in ASD, prosecutors said.
In the Alabama case, prosecutors said, Bowdoin and co-defendants in a company known as Mobile International Inc. were charged with selling “unregistered securities to investors and with failing to state material facts to the investors that would have impacted the victims’ decisions to invest.
Alabama officials asserted Bowdoin “instigated a scheme by which he took money from some victims to pay off prior investors,” prosecutors said.
Charges were dismissed after Bowdoin agreed to enter Pre-Trial Diversion with three years’ supervised probation. He was ordered to pay $15,000 in restitution to victims. The case was settled in 1997.
Then, in 1999, Bowdoin plead guilty in Wilcox County to one count of selling unregistered securities. He was sentenced to a year in prison and three years’ supervised probation. The prison sentence was suspended, and Bowdoin was ordered to make restitution in the amount of $75,000.
U.S. Attorney Jeffrey A Taylor of the District of Columbia, the U.S. Secret Service, the Internal Revenue Service and other agencies are involved in the ASD probe, which also involves Golden Panda Ad Builder, another autosurf.
An IRS-Secret Service Task Force agent opened an A[SD] account as part of the investigation, according to the complaint. Agents also interviewed a number of ASD members as part of the investigation.
Here is how we followed up on Aug. 6:
Yesterday U.S. Attorney for the District of Columbia Jeffrey A Taylor filed a forfeiture complaint in a case involving Ad Surf Daily Inc., ASD Cash Generator, Thomas “Andy” Bowdoin, Golden Panda Ad Builder, Clarence Busby Jr. and Dawn Stowers.
Meanwhile, some ASD members appear to be acting in organized fashion to criticize the government. This has led some ASD critics to dismiss Bowdoin’s advocates as “Kool-Aid” drinkers. References to Bowdoin, Christianity and religion are common parts of the discussion across the Web.
Federal prosecutors and the U.S. Secret Service, which raided ASD’s Quincy, Florida, headquarters, are seeking $53 million held in various Bank of America accounts, a condominium in Myrtle Beach, S.C., and Bowdoin’s home in Quincy.
The Justice Department called ASD a “massive Internet-based wire fraud scheme,” alleging that ADSurfDaily Inc. was nothing more than a common Ponzi that used incoming money from new ASD members to sustain payouts to earlier members of the program.
Some ASD members appear to be going on the offense, attacking the government and flooding news sites, Blogs and forums with defenses for ASD and Bowdoin. Some of the messages have a fire-and-brimstone quality. The message in many cases is that ASD members have a Christian duty to back ASD and Bowdoin, who has a criminal record in Alabama for selling unregistered securities and bilking investors.
WCTV-TV, a CBS affiliate in Tallahassee, has been flooded by comments from ASD members. Many of the posts are defenses for Bowdoin. Some posters mentioned a medal Bowdoin allegedly received from the Bush administration for business achievement. Prosecutors said Bowdoin received no such award, even though the alleged award was cited in ASD advertising materials.
Other posters compared the government’s actions yesterday to the actions of Nazi Germany. Others suggested the government was involved in a conspiracy to defame Bowdoin and that overzealous prosecutors were trying to destroy private enterprise.
ASD members have contacted this Blog, saying it has a duty to investigate the Social Security program if it is going to report on ASD Cash Generator. The argument — directed at this Blog and at others — is that Social Security is a government-sanctioned Ponzi. It therefore follows that ASD should be let off the hook.
Elsewhere online there are reports of people who’d directed life savings and large sums of cash at ASD. One Blog poster and ASD member asked if anybody could point him in the direction of a bridge from which he could jump. The post appeared to be in jest, but it’s easy to believe that people who have thousands of dollars tied up in ASD are unnerved.
The Government Makes Its Case Against Bowdoin And Busby
Bowdoin once was sentenced to prison for his role in a securities scheme. The sentence was suspended after he agreed to three years’ supervised probation and to make restitution in the amount of $75,000, according to the Feds’ complaint.
Like Bowdoin, Golden Panda’s Busby also had a previous run-in with the law over securities issues.
In 1997, according to prosecutors, the “SEC successfully charged that Busby had violated anti-fraud provisions of the Securities laws by offering and selling investment contracts in connection with three different ‘prime bank’ schemes. Busby was accused of raising money for purported trading programs in ‘prime bank’ notes by fraudulently representing that investments were risk-free and the ventures would result in returns ranging from 750% to 10,000%. In total, Busby raised nearly $1 million from more than 70 investors.
“None of the investors earned the exorbitant returns promised by Busby,” prosecutors said in the forfeiture complaint. “Busby was ordered to pay $15,000 in disgorgement to victims; however, after Busby filed a financial statement to support a professed inability to pay, the court dismissed the order of payment. Busby filed for bankruptcy in 1997. This information was not disclosed on Golden Panda’s webpage or mentioned by Busby during his recent conference call.”
Although Bowdoin positioned ASD Cash Generator as an advertising program, the government said it was a smokescreen.
In July 2008, according to the forfeiture complaint, the Ad Cash Generator website stated that ([emphasis] added):
All payments made to ASD are considered advertising purchases, not investments or deposits of any kind. All sales are final. ASD does not guarantee any earnings or profits. Any commissions paid to Members are for the service of viewing other Member web sites and for referring Members to AdSurfDaily. All advertising purchases are non-refundable.
Prosecutors dismissed the disclaimer language, calling it “ASD’s effort to avoid being recognized as an unregistered issuer of securities and to avoid liability to participants, for breaking promises it makes elsewhere, when the Ponzi is revealed.”
Government Describes Role Of ASD Attorney Robert Garner
It was widely known online that ASD explained to new members that its program was legal — and used an attorney to help make it’s non-Ponzi case.
The attorney, Robert Garner, appeared in a video alongside Bowdoin and is mentioned prominently in the forfeiture complaint.
Here’s what the government had to say about Garner’s video appearance with Bowdoin:
“Mr. Garner proceeds to explain that Bowdoin hired [Garner] to insure that ASD’s operations are legal in all aspects. Garner assures the viewer that he and ‘other attorneys in our offices . . . are dedicated to this work with Andy and his company.’ He continued by saying his attorneys ‘are available at any time to deal with the issues as they arise.’
“Garner address[ed] the concerns that new ASD members sometimes have in the area of the legality of the Ad Cash Generator opportunity, by saying: ([Emphasis] added):
Andy has directed us to ensure that his company is structurally sound today and tomorrow and far into the future. My staff and I are dedicated to Andy’s vision that his company will continue to rapidly grow bigger and stronger, and will continue to be an industry leader in Internet advertising in the years to come.
“According to Garner,” the forfeiture complaint continued, “ASD . . . complies with all laws and regulations that apply to it. In explaining that ASD is not a Ponzi scheme, Garner notes that a Ponzi scheme is ‘illegal, because [it] use[s] money from new investors to pay the first investors in the scheme their promised returns.’”
“On behalf of ASD, on its website,” prosecutors said in the forfeiture complaint, “Garner advises prospective members that ASD is not a Ponzi scheme because, among other things, ASD is developing other revenue sources and ‘[t]here is no continuing obligation to pay returns to infinity.’ Contrary to Garner’s claim that this is not a Ponzi scheme, however, an infinite payment obligation is irrelevant and the lack of a non-member revenue source is a tell-tale sign of a Ponzi.”
In what prosecutors described as a “further attempt to make Bowdoin’s business model sound more legitimate, Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.’”
But an IRS-Secret Secret Service Task Force has “not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers’ to ‘earn their money back, plus a little more,’” the government said in the forfeiture complaint.
Agents discovered that ASD’s “Nevada incorporation documents list Garner as a director. [Garner], however, does not disclose the fact that he is an insider of ASD in his interview, in his typewritten opinion letter that appears on ASD’s webpage, or anywhere else on ASD’s webpage,” the complaint said.
“Furthermore, although Garner is admitted to the North Carolina Bar, it appears that [Garner] works out of his home and that he does not employ the team of lawyers that, he claims, have worked diligently to confirm ASD’s legality,” prosecutors said.
All in all, the government’s forfeiture complaint takes up 101 pages (including exhibits).
A year has passed. The documentation is much thicker now. Andy Bowdoin has fewer people willing to support him publicly. AdViewGlobal is in a state of decay; like AVG, BizAdSplash recently announced the suspension of member cash-outs. AdGateWorld announced it was selling itself to an unnamed party in the Middle East.
The autosurf world continues to alter lives, continues to turn friend against friend and family member against family member. Every day is a total eclipse of the sun.
Using the Curtis Richmond litigation blueprint, two new motions to intervene have been filed in the AdSurfDaily forfeiture case.
The motions were filed by Ronald Breckenfelder of Littleton, Colo., and John R. Moore of Ames, Iowa. The motions accuse U.S. District Judge Rosemary Collyer, U.S. Attorney Jeffrey A Taylor, and Assistant U.S. Attorney William Cowden of committing crimes.
In addition, the motions accuse the judge, the prosecutors and Chief Judge Royce Lamberth of conspiring to deny ASD members justice. Collyer and Lamberth specifically were accused of operating a “Kangaroo Court.”
As was the case in two previous motions to intervene, including a motion filed by Richmond himself, Collyer placed a hand-written note on the cover pages of the motions.
“Let this be filed,” she wrote. Collyer has used the exact same wording on each of four motions to intervene filed in the ASD case in recent weeks.
The documents order Collyer to set aside the ASD forfeiture within 30 days or face criminal or civil prosecution. At the same time, court documents filed with the motions include a list of demands made on prosecutors and Agent Roy Dotson of the U.S. Secret Service to produce “Legal Evidence” within seven days or face legal action.
Richmond is associated with a sham Utah Indian tribe that has been successfully sued under racketeering statutes for bringing vexatious legal proceedings against judges, prosecutors and police officers. He also has been convicted of contempt of court for threatening federal judges.
The tribe is known derisively as the “Arby’s Indians” because it once held a meeting in an Arby’s restaurant in Provo, Utah. A sham “Supreme Court” set up by the tribe used the address of a conference room attached to a doughnut shop in Utah as its chambers.
One prong of the “Indian” strategy is to place enormous judgments against public officials in a bid to extort a litigation result. Recent motions in the ASD case that have used the Richmond blueprint have said an ASD member by the name of Alana Holsted has been prevented from collecting on a $30 million judgment because of conspiratorial actions by the judge and prosecutors.
The Holstead claim appears to seek a total of $120 million in judgments for the alleged offenses of Interference With Commerce and Interference With Interstate Commerce.
In a case that drew comparisons to AdSurfDaily because of recidivism, undisclosed bankruptcies and ties to Utah, the three principal figures of the Philip R. Lochmiller Sr. real-estate Ponzi scheme in Colorado will be going to federal prison.
