BULLETIN: A Florida jury found that TD Bank assisted now-disbarred and imprisoned attorney Scott Rothstein in his epic Ponzi scheme and has found the bank liable for $67 million in damages.
The victorious attorney in the civil case is David S. Mandel, who represented the plaintiffs against the bank.
If Mandel’s name seems familiar to PP Blog readers, it’s because he also is the court-appointed receiver in the Commodities Online LLC fraud case brought by the SEC last year.
Separately, a company known as SSH2 Acquisitions Inc. had sued Commodities Online figure James C. Howard III on Sept. 15, 2010, alleging that Howard and others were running a massive Ponzi scheme into which SSH2 had plowed $39 million.
Records in Nevada show that former AdSurfDaily member and “Surf’s Up” forum moderator Terralynn Hoy was a “director” of SSH2.
Hoy has not been accused of wrongdoing.
The private lawsuit against Howard and the others became notable because of the clashing images: Although SSH2 was complaining about the alleged Ponzi scheme directed at it by Howard and others, it was doing so in the months after Hoy had helped lead cheers on Surf’s Up for accused ASD Ponzi schemer Andy Bowdoin, who was implicated by the U.S. Secret Service in an alleged Ponzi scheme even larger than Howard’s alleged scheme. Hoy also was a moderator on a forum that supported AdViewGlobal, an autosurf that vanished mysteriously in June 2009.
Now defunct, Surf’s Up was known for unapologetic, unabashed cheerleading for Bowdoin, whom federal prosecutors said had swindled investors in Alabama in a previous securities caper during the 1990s and took in at least $110 million through ASD. Clarence Busby, an alleged business partner of Bowdoin and the operator of the Golden Panda Ad Builder autosurf, swindled investors in three prime-bank schemes in the 1990s, according to the SEC.
More than $14 million linked to Golden Panda was seized as part of the ASD case — and yet the cheerleading for autosurf schemes continued on Surf’s Up. The forum labeled ASD pro-se litigant Curtis Richmond a “hero” after he accused the judge and prosecutors of crimes in 2009.
On Nov. 22, 2011, AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by the FBI in Washington state on charges he filed bogus liens against at least five public officials involved in the ASD Ponzi case.
Some ASD members apparently have relied on Leaming for legal advice, even though he is not an attorney.
Leaming was found with two federal fugitives implicated in an Arkansas-based, home-business scheme involving envelope-stuffing, federal prosecutors said. Those fugitives — Timothy Shawn Donavan and Sharon Jeannette Henningsen — were indicted on mail-fraud charges in February 2011, according to federal records.
Whether Donavan and Henningsen were ASD members is unclear. Also unclear is whether they relied on Leaming for legal advice at any point in time. Their filings, however, appear to be consistent with filings in cases involving purported “sovereign citizens.”
Although Leaming remains jailed, Donavan, 63, and Henningsen, 67, were released on bond in Washington state several days after their arrests and kept a court date in Arkansas on Dec. 8. During their initial Arkansas appearance, both defendants suggested they’d defend themselves — while also ambiguously suggesting they might hire a lawyer, according to court filings.
They again were released on bond, with the judge ordering them as a bond condition “to report to the court within 10 days o[n] whether they had hired an attorney or intended to pursue representing themselves.”
They did not do so, according to federal court records. The judge then set a hearing date for Dec. 27 and required Donavan and Henningsen to formally explain whether they’d rely on attorneys or themselves to defend the case.
On Dec. 27 — the date of the hearing and nine days after the initial deadline to inform the court on how they intended to defend the case — Donavan and Henningsen filed a bizarre pleading styled, “Notice: Forgive Me Request; Constructive Notice of Conditional Acceptance and Request to Continue Public Proceedings.”
In the pleading, Donavan and Henningsen apparently argued that they needed “80” more days to make up their minds. Their trail date, however, already had been scheduled for Jan. 19, 2012. Both defendants were aware of the trial date, according to court records.
It got stranger yet.
“At the hearing and in their Notice the Defendants stated that they were appearing as ‘Authorized Representatives for the Secured Party Creditor having a security interest in the collateral belonging to the Debtor-Defendant, SHARON JEANNETTE HENNINGSEN AND TIMOTHY SHAWN DONAVAN, and also accommodation parties, hereinafter, ‘Offerees.’” according to an order issued by the judge.
“The Offerees,” the strange pleading continued, “are in receipt of INDICTMENT a copy attached hereto and incorporated herein as if full reproduced herein as ‘Exhibit 1’ dated February 24, 2011 in Case #2:11-CR-20008, hereinafter ‘offer’, (sic) from UNITED STATES OF AMERICA via M.W. FLEMING, Assistant United States Attorney, U.S. Attorney’s Office . . ., hereinafter `Offerer’”. (sic)
Donavan and Henningsen then apparently ventured that they’d accept appointed counsel if the appointed counsel would “hold them harmless” for anything they suffered.
The judge denied the motion for an 80-day continuance and appointed provisional counsel.
How the case will proceed was not immediately clear.
EDITOR’S NOTE: Our first reference to JSS Tripler 2 (T2), which is trading on the name of an obvious fraud scheme known as JSS Tripler, is here. JSS Tripler is part of a larger fraud scheme known as JustBeenPaid, which was pushed by members of the alleged AdSurfDaily Ponzi scheme and any number of Ponzi-forum scammers. ASD President Andy Bowdoin was indicted 13 months ago for wire fraud, securities fraud and selling unregistered securities. He faces a maximum term of 125 years in federal prison, if convicted on all counts of a seven-count indictment.
We published a T2 follow-up here, and an update to the follow-up here. We also published a story on a decision last week by the U.S. Court of Appeals for the Sixth Circuit that upheld the 27-year prison sentence of Tennessee-based Ponzi schemer Dennis Bolze, whose operation recruited senior citizens and resulted in a two-level “vulnerable victim” sentencing enhancement for Bolze.
Online Ponzi purveyors and forum fraudsters may be particularly susceptible to the vulnerable-victim enhancement. Indeed, their “programs” cast with a wide net, gain a head of steam through willful blindness and practiced, serial disingenuousness on Ponzi boards and within the purveyor and promotional ranks — and often mushroom to involve thousands of participants, thus increasing the odds they’ll recruit vulnerable members of society into their schemes . . .
“Dave,” the purported operator of an increasingly bizarre HYIP that advertises a daily payout rate that projects to an annualized return of 730 percent, appears now to be blaming an unidentified law-enforcement agency for standing “idly by” as trouble engulfed his “program” after a onetime business partner’s AlertPay account was frozen.
Oddly, though, “Dave” now appears to be grateful his business partner was not arrested on “Dave’s” word, asserting that the partner “is working with us to put this situation back on track.”
At the same time, “Dave” asserts T2 is implementing a restructuring plan amid reality-bending claims it is “NOT in a weak position” despite a “month of no withdrawals” caused by “Chris,” the onetime business partner whose AlertPay account apparently was used to gather funds for T2 and now cannot be accessed.
T2 members have been left in the lurch for weeks.
The T2 “program” purportedly will restart on Feb. 1 with a new “algorithm” and a new name: T2MoneyKlub. The name change, according to a T2 members’ update, will occur because the program “no longer wish[ed] to be confused with Justbeenpaid.com.”
Claims about “algorithms” and other mathematical magic frequently accompany fraud schemes. So do name changes at mid-stream. AdSurfDaily, for example, allegedly changed its name to ASD Cash Generator after a Ponzi collapse and did not inform incoming members that their funds were being used to pay back investors scammed when the original iteration collapsed.
Ponzi collapses can be brought on by theft, account closures or seizures by banks and payment processors or by actions by law-enforcement to freeze accounts to stop a scheme from mushrooming. Details surrounding AlertPay’s apparent decision to freeze the account of “Chris” are unclear.
“Dave’s” move to change the program’s name is in stark contrast to earlier, mind-bending claims that trading on the name of JustBeenPaid’s JSS Tripler arm somehow was appropriate. The T2MoneyKlub domain was registered Jan. 12 — as T2 members were publicly fretting about not getting paid. The new domain is being powered by servers that use JSS Tripler 2’s name, according to records.
Existing T2 Members May Face New Risk
Even now, according to “Dave’s” members’ update, the program is taking advantage of an “SEO” strategy to expand its audience. If true, the program could be expanding its own risk of attracting vulnerable investors.
“We will be setting up a quantity of forums and blogs, and each one will need to receive page views from the members, also there will be blog commenting tasks and forum posting tasks,” “Dave” asserts.
“This is to build up a high alexa rank with a massive amount of original content and high pageview count which sets a great foundation for SEO and advertising revenue etc,” he continues in the members’ update. “We will give attention to each website for approx one month for forums and 2 weeks per blog.”
Separately posting on the MoneyMakerGroup Ponzi forum as “Peakr8,” “Dave” painted himself a man of considerable business experience who’d been condemned unduly by the media and left twisting in the wind by an unidentified “police” agency.
‘Police Standing Idly By’
“Yes we have had a few problems both technical and the [AlertPay] problem,” “Dave” conceded as “Peakr8” in a post yesterday on MoneyMakerGroup. “[T]his is not unlike any business offline or online, apart from it’s like trying to run your business with a mob walking up and down outside your business premises waving banners screaming ‘scam, scam, scam’ and also the newspapers saying you are a liar and a cheat with absolutely no evidence to back up their claims… when you have done nothing wrong and the police standing idly by saying that they are allowed to do it.”
“Dave” has not identified the police agency to which he allegedly complained about “Chris” and apparently now is complaining about. He earlier asserted that his complaint would result in the arrest of “Chris.”
“Dave’s” public complaint on MoneyMakerGroup followed on the heels of his apparent decision to block the public from the T2 forum and a separate claim by “Dave” that he would “viciously” oppose a T2 member who declared the program a “SCAM,” encouraged fellow members to file an AlertPay dispute and said he’d try to get his money back from SolidTrustPay, another payment processor used by T2.
Whether the member “Dave” claimed he’d oppose “viciously” for trying to get back his money and complaining about the program planned to file a consumer complaint with any of the world’s law-enforcement agencies is unclear.
What is clear is that it is common for fraud purveyors and their forum shills to discourage members from filing payment disputes amid claims that such complaints harm a “program” and its members.
MoneyMakerGroup Doles Out Suspensions To Naysayers
Separately, MoneyMakerGroup announced it had suspended some members who’d raised questions about T2. Those suspensions were attributed to “mmgcjm,” a “Global Moderator.”
“Dave,” who purports to be posting from Thailand after jetting from England several days ago while T2 members were clamoring for their cash, appears to have approved of the suspensions.
“Isn’t it nice here[?],” he crowed. “Should have been done months ago and they also ought to get a life ban for their dreadful behaviour.”
T2 sells “dream positions” and “dream matrices” amid claims that even “passive” members can earn returns of 2 percent a day over the course of 75 days. The “program” has asserted it has “multiple income streams,” and “Dave” has preemptively denied T2 was operating a cross-border Ponzi scheme. T2 says its has 8,838 members, a claim that leads to troubling questions about whether vulnerable victims were reeled in by T2’s wide net on the web.
“Chris,” a onetime business partner of “Dave,” is responsible for the “program’s” troubles, according to “Dave,” who earlier asserted that “Chris” would be arrested.
If a police investigation actually ensues, it almost certainly would lead to questions about the extent of T2’s purported income streams, whether those purported ventures were profitable enough to sustain themselves — let alone T2’s (precompunding) annualized return of 730 percent on top of referral commissions — and whether Dave’s public pleas for members not to file AlertPay disputes were designed to keep a Ponzi scheme intact.
Another possible area of inquiry is whether “Dave” — who appears to have closed the T2 forum to public viewing even as he suggests on MoneyMakerGroup that people who file disputes with SolidTrustPay will be opposed “viciously” — is trying to chill his own members.
The MoneyMakerGroup suspensions of T2 doubters attributed to “mmgcjm” appear to involve at least three members and were carried out after a poster asserted that “[a]lmost 3 dozen opportunities” that mmgcjm “promoted as being “good”, “Great”, “Fantastic” and so on in 2011″ are now in the SCAM/CLOSED folder.”
“mmgcjm” justified the suspensions by asserting that, under the guidelines of the MoneyMakerGroup forum, “programs” in the folder were not necessarily scams.
As an advertisment on the right side of the T2 thread at MoneyMakerGroup lured readers with a suggestion that another program known as “Moon Fund” paid 8,850 percent “After 24 Hours,” “mmgcjm” claimed that the T2 critic was posting “false information.”
The suspensions followed a short time later, with a prompt from “mmgcjm” for the T2 naysayers to “Enjoy your vacations!”
UPDATED 6:31 P.M. ET (U.S.A.) A website collecting money through PayPal for the criminal defense of accused Ponzi schemer Andy Bowdoin of AdSurfDaily appears to have lost its ability to gather funds designated for an attorney’s “trust account.”
This message (next paragraph) appears if would-be Bowdoin sympathizers click on any of a number of payment buttons on the site, which is known as “Andy’s Fundraising Army.”
“This recipient is currently unable to receive money.”
The message originates on PayPal’s server.
Why the trust account lost the ability to collect money via PayPal is unclear. The office of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia said this afternoon that it “typically does not comment on pending cases, and has no comment on this particular matter.”
Machen’s office is leading the Bowdoin prosecution.
Bowdoin, 77, is awaiting a September 2012 trial on charges of wire fraud, securities fraud and selling unregistered securities. The U.S. Secret Service said the ASD patriarch was presiding over a Ponzi scheme involving at least $110 million and thousands of victims.
In September 2011, the Secret Service and federal prosecutors returned to members more than $55 million seized in 2008 in the civil portion of the case. The agency described ASD as a “criminal enterprise.”
Bowdoin began to solicit money through the fundraising website last summer, after repeated delays. Information published on the site suggests Bowdoin collected about $26,800, far short of this stated goal of $500,000. The site positioned Bowdoin as “David,” with the government as “Goliath.”
In recent months, Bowdoin has been pushing a mysterious scheme known as OneX, claiming God had delivered OneX to enable him to pay for his criminal defense.
ASD figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was arrested by the FBI in November 2011. He is detained in a federal facility near Seattle on charged he filed fraudulent liens against at least five public officials involved in the ASD Ponzi case.
Online huckster “Ken Russo,” also known as “DRdave,” appears once again to have backed an HYIP fraud scheme and recruited a downline into a Ponzi morass. This one is known as JSS Tripler 2 — T2 for shorthand — and the backstory is just plain bizarre.
Several cross-border crimes punishable by jail time already may have occurred, and there are reports that T2 somehow was operating through an AlertPay account that was not owned by T2 or T2’s purported operator, another person known as “Dave.”
Like virtually all HYIP schemes, details are fuzzy and ambiguous. But “Dave” apparently was operating T2 through an AlertPay account owned by “Chris,” and the Canada-based payment processor — according to Ponzi board posts — has frozen the account.
“Dave,” meanwhile, asserted that the account contained $200,000 and that “Chris” will “be in police custody by the end of the day,” according to Ponzi-board posts.
Although the “police” assertion appears to have been made earlier this month, there appears to be no corresponding information about what police agency “Dave” called to have “Chris” taken into custody. Nor has “Dave” explained why police should consider “Chris” a criminal at the exclusion of “Dave,” whose T2 program claims to pay members a return of 2 percent a day plus referral commissions.
The purported daily payout rate is double that claimed by AdSurfDaily, which the U.S. Secret Service said more than three years ago was operating a massive international Ponzi scheme on the Internet. Like T2, ASD also offered referral commissions on top of absurd daily returns.
Such a “confluence” of payment schemes and an apparent lack of outside revenue are markers of a pure or virtually pure Ponzi scheme — even though criminals on the Ponzi forums turn a blind eye to the fundamental mathematical reality and the virtual certainly that members are being paid from the funds of other members.
It is unclear if anything about T2 is real.
What is clear is that ASD President Andy Bowdoin was indicted on charges of wire fraud, securities fraud and selling unregistered securities in December 2010. He faces up to 125 years in federal prison if convicted on all counts, a fact virtually ignored by T2 promoters. ASD also was promoted on Ponzi boards such as MoneyMakerGroup and TalkGold.
At the same time T2’s “Dave” was claiming to have alerted police about “Chris,” “Dave” appears not to have explained what he intended to do if “Chris” called police on him.
Also apparently absent from the police claim is any sort of real-world explanation of how it apparently came to be that “Dave” had come to believe it somehow was appropriate for a program “admin” such as himself to run a scheme through a third-party’s AlertPay account, not an account in the name of T2.
“Dave” appears also to have asserted he had the power to exact “a lifetime ban from internet access” against “Chris” while further asserting that he somehow could authorize AlertPay to pay T2 members with money in the frozen account held by “Chris.”
Ponzi-forum posts from October assert T2’s server was located in Thailand, with “Dave” being “from the UK.” It appears now, however, that the server is in the United States. “I Got Paid” posts on the Ponzi boards suggest payments have come from a Gmail address that uses the name of “Chris” in its makeup, not an email address from the JSSTripler2 domain.
Such mechanics also were in place for JustBeenPaid and JSSTripler (see link below), “programs” that appear to have used multiple domains and addresses in multiple jurisdictions to funnel payouts to participants.
For his part, “Ken Russo” — who earlier introduced members to the Club Asteria disaster and any number of fraud schemes — is describing T2 members who are demanding real-world answers as individuals who should be “deleted.”
“The relatively few members who are demonstrating impatience along with their demand for a refund should be taken care of and deleted from the program and this forum,” “Ken Russo” ventured, according to RealScam.com, an antifraud site that concentrates on mass-marketing fraud. “Their continued presence here will only create more anxiety and frustration.”
T2 was almost impossibly bizarre from the moment it came out of the gate. The “program” apparently believed it prudent to adopt the name of an existing program in the fraud stable of JustBeenPaid: JSS Tripler. Ponzi-board supporters of the emerging T2 “program” asserted that, since JSS Tripler apparently had not trademarked its name, that using the name as the calling card of a new “program” was perfectly acceptable.
Why any legitimate entity would want to adopt the name of an obvious fraud scheme such as JSS Tripler was left to the imagination — as are so many things in the foundationally corrupt worlds of HYIPs.
In any event, “Dave” now claims that he’s traveling to Thailand to try to right the T2 ship because he was having trouble concentrating from his undisclosed earlier location, according to Ponzi forum posts. Some T2 cheerleaders appear to be urging T2 members not to file disputes with AlertPay, a common occurrence when HYIP Ponzi schemes begin to tank.
T2 apparently also has licensed itself to ban members and seize money (or the representations of money) in their accounts for speaking ill of the purported “program.”
EDITOR’S NOTE: This post contains links to recommended reading on Barry Minkow and Travis Wright — the former a classic narcissist and con man doing his second stint in federal prison after having played the redemption circuit for years, the latter a man who used other people’s money to ensconce himself in the lap of luxury, surround himself with gaudy taxidermy such as a full-body African lion — and once reportedly paid $150,000 to have a swimming pool at his tony digs moved eight feet to make his life more perfect.
The stories on Minkow in Fortune magazine and Travis Wright in Deseret News are intriguing and, we believe, socially significant. Both provide plenty of fodder for rumination as America continues to confront an epidemic of white-collar fraud . . .
Barry Minkow first rose to national infamy as a con man who’d managed to dupe investors and Wall Street before he was old enough to sip a cocktail legally in many jurisdictions. The spectacular rise and fall of his ZZZZ Best carpet-cleaning business became one of the great cautionary tales of the 1980s.
Minkow was sentenced to federal prison for the ZZZZ Best caper, but reportedly embraced Christianity while jailed and later was freed. He became a pastor who doubled as a fraud analyst and television commentator.
But Minkow, now 45, is back in prison. Fortune magazine explains why in its Jan. 16 issue — and also reports that Minkow appears to have let it slip during the filming of a movie on his life that he was up to no good again. Here is an outtake:
“Finally, one day in September 2009, recounts Meyers, he was in the production booth with headphones on when Minkow and James Caan were schmoozing between takes. Perhaps forgetting about the open mike in his lapel, Minkow leaned over to Caan and whispered, “I financed this movie by clipping companies,” Minkow said.
“Clipping,” of course, is a slang word for “swindling.” Minkow says the incident “never happened.” “Not ever,” he wrote Fortune in an e-mail in September. “And have him produce the tape.”
Fortune reports that the tape was produced and that “Minkow said it.”
And Fortune reports plenty of other things, including an assertion that some people working on the film were getting paid in strange ways.
Separately, Deseret News is reporting that Utah Ponzi schemer Travis Wright has been sentenced to 10 years in federal prison.
Here is an outtake from the story in the Deseret News:
“A couple of rows of Eagle Scouts in court to support a former Scoutmaster-turned-criminal might have backfired against a convicted Ponzi scheme operator Friday.”
Going to court to observe proceedings as part of a civics lesson is one thing. But should Eagle Scouts assemble in court to show “support” for a man facing sentencing for one of the largest frauds in Utah history?
In Ponzi schemes — as longtime observers and victims know all too well — the visuals often are incongruous. In the AdSurfDaily case, for instance, some members who openly described themselves as people of faith looked on and said nothing as ASD President Andy Bowdoin claimed the prosecution was the work of “Satan” and compared the U.S. Secret Service to the 9/11 terrorists.
It’s our hope that the scouts were present at Wright’s sentencing to receive an education on how Ponzis alter lives and futures, not as stage props for Wright. And we also hope that Wright, post-release, shows the scouts that redemption is not just a religious or penal theory and that he doesn’t backslide like Minkow and become a slave to self-absorption.
NOTE ON ADDITIONAL RECOMMENDED READING: “The Salon of Famous Babies,” a classic poem by Irving Feldman, is not about Ponzi schemes. But if a Ponzi schemer or narcissist’s “daydream of glory” has sucked the joy from your life, you very well might find that the poem gives voice to your feelings of anger and provides a measure of comfort.
“As well teach ducks to drown as teach him not to take it all as owed the world’s own son and heir.” — From “The Salon of Famous Babies” by Irving Feldman, American poet
EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme as opposed to shrimp, here is an entry: an alleged “merchant portfolio” Ponzi scheme.
Ponzi and fraud schemes often use impressive-sounding terminology to separate people from their money. Schemes typically mushroom to consume millions of dollars when investors — who sometimes become commission-based promoters and effectively act as unregistered brokers and dealers — accept a firm’s extraordinary claims at face value, ignore red flags such as outsized returns or engage in willful blindness because choosing to see is bad for profits.
In June 2010, the SEC charged Joseph A. Nelson, Anthony C. Zufelt, David Decker, Cache Decker and five companies “in connection with three related Ponzi schemes largely targeting the Mormon community.” The complaint was filed in Utah and alleges schemes within schemes dating back at least to 2005.
As 2011 came to a close, the SEC named three additional defendants in a separate, Nelson-related complaint also filed in Utah. Named in the year-end complaint were Kevin J. Wilcox, Jennifer E. Thoennes and Eric R. Nelson.
Eric Nelson is Joseph Nelson’s brother. He is accused of deceiving investors by creating “fictitious bank account statements reflecting balances in his brother’s accounts that were far in excess of the actual amounts in those accounts.”
Wilcox and Thoennes are accused of solicitation fraud
Joseph Nelson, Wilcox and Thoennes told investors “that Joseph Nelson and his companies were engaged in the business of purchasing ‘merchant portfolios’ of credit card processing accounts, holding them for a certain period of time, and then selling them for a profit to financial institutions, such as banks.”
“Many” of the investors were “fellow members of the Church of Jesus Christ of Latter Day Saints” whom Joseph Nelson “identified and targeted through church connections and during church functions,” the SEC charged.
But “Joseph Nelson and his companies never purchased or sold a single merchant portfolio,” the SEC charged.
“The money invested with Joseph Nelson and his companies was instead used by Nelson to make incremental payments to investors in a Ponzi-scheme fashion, to pay his associates, including Wilcox and Thoennes, and to pay his own lavish personal expenses, as well as those of other family members,” the SEC charged.
Affinity fraud is a major problem in Utah. In June 2010, the FBI said thousands of people in the state had been victimized by Ponzi schemes and cases of investment fraud that caused Utah residents to lose an estimated $1.4 billion.
SEC Warns About Scams That Use Social-Media Sites To Fleece The Masses
In a separate, unrelated action yesterday, the SEC charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn, a social-media site.
Social media increasingly are being used to sanitize schemes and help them mushroom, a top SEC official said.
“Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, co-chief of the SEC Enforcement Division’s Asset Management Unit.
Charged in an SEC administrative action yesterday was Anthony Fields, 54, of Lyons, Ill.
The agency alleged he “offered more than $500 billion in fictitious securities through various social media websites.”
On LinkedIn, for example, he allegedly used “discussions to promote fictitious ‘bank guarantees’ and ‘medium-term notes.’”
Revisit this July 2010 PP Blog story on a FINRA warning about HYIPs and scams that use social media to proliferate. See this Nov. 2, 2011, PP Blog editorial on a threat by AdLandPro — a purported social-media site — to sue RealScam.com, an antifraud forum.
Among other collapsed schemes, the alleged AdSurfDaily and Pathway To Prosperity Ponzi schemes were promoted on AdLandPro. A recent thread at AdLandPro is promoting OneX, which also is being promoted by ASD President Andy Bowdoin while he awaits trial on criminal charges of wire-fraud, securities fraud and selling unregistered securities.
Among the screaming headlines in OneX-related content on AdLandPro is this one:
UPDATED 6:59 A.M. ET (DEC.29, U.S.A.):The OneX site now is resolving to a server, although the site still appears to be down. (UPDATE 6:25 P.M. ET DEC. 29: The OneX site now appears to be back online after an absence of days. Whether is is fully functional is unclear.) Web data now suggest OneX is using a server in the United States. It previously used a server in Europe. Here, below, our post that reflected earlier events . . .
At the time of this post, the website for “OneX” — a “program” pushed by AdSurfDaily President Andy Bowdoin — will not resolve to a server.
Nor will the site return a ping. The ping returns “Timed out” error messages. Because the site will not resolve to a server, a message that the site “will be available in the next 24 hours” no longer appears at the URL for OneX.
The development means that some or all OneX members and prospects are in an even greater information vacuum. The site has been inaccessible for days, although the PP Blog has learned OneX conducted a conference call yesterday and assured listeners the site would return after server problems caused by “inexperience” were solved.
The call featured various cheerleaders, including a man identified as “J.C.,” apparently a company official.
“J.C.,” explaining that he did not enjoy hype, assured listeners that “God” was on the side of OneX and that he anticipated 2.5 million riders on the OneX train by March.
It was revealed during the call the OneX is using Canada-based Solid Trust Pay (STP).
STP was one of the payment processors used by ASD and has a reputation for fueling Ponzi and fraud schemes. STP was among the processors used by alleged international swindler Nicholas Smirnow of Pathway To Prosperity, which the U.S. Postal Inspection Service said last year had defrauded tens of thousands of people from 120 countries.
During the OneX conference call, J.C. explained that many members were showing “unbelievable tolerance” for the website problems.
“Those who are not being patient do not understand what’s there,” J.C. asserted.
Among other things, J.C. appealed to callers not to send in support tickets.
“We’re having some — it’s load problems,” J.C. asserted, calling the development “teething problems.”
J.C. also assured listeners that the company was “a thousand times” more frustrated than OneX members who cannot access the site.
The OneX IT team was inexperienced in the area of “load testing” and wished to apologize for its lack of experience, J.C. said.
“. . . We don’t know how to do heavy load-testing,” J.C. asserted.
That the OneX website was being “slammed” by traffic was a “good thing,” J.C. asserted.
“Hey,” he insisted, “these are pioneering days.”
“We’re on a mission from God,” J.C. asserted.
Bowdoin, who is facing trial on criminal charges of operating a Ponzi scheme through ASD that gathered at least $110 million, told conference-call listeners in October that God created OneX to help him win his criminal case.
Although J.C. apparently agrees with Bowdoin that God is steering the OneX ship, J.C. told listeners that they should expect no support from their sponsors.
Bowdoin has claimed that he is providing “leads” to his OneX recruits and that enrollees could make nearly $100,000 by paying $5.
A woman on yesterday’s OneX call, which apparently was organized by a downline group with access to OneX management, claimed there were plenty of reasons to be excited about OneX.
“In three months, we can look back . . . and laugh,” the woman claimed, later asserting the company started out “on horseback.”
“You’re pioneers,” J.C. asserted. “This is huge.”
OneX “leadership” will “roll up their sleeves” to solve problems, another woman asserted.
J.C. said the firm would provide a “paved road” for members one day.
UPDATE: “OneX,” the mysterious “program” AdSurfDaily President Andy Bowdoin claimed in October would pay for his criminal defense and help former ASD members “earn $99,000 very quickly,” has been offline for days.
The reason for the extended outage, which coincided with the run-up to the holidays and now has extended beyond Christmas, is unclear. Messages viewed by visitors to the OneX site have varied. The most recent message claims the site “will be available in the next 24 hours.”
But the site has beamed that message for days. The message is signed, “OneX/Qlxchange Administration” — without naming the operators of OneX.
Bowdoin, 77, claimed in October that God had led him to his strategy of using OneX to pay for his criminal defense.
“I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin said in a conference call. Bowdoin was charged with wire fraud, securities fraud and selling unregistered securities in December 2010. His trial is scheduled for September 2012.
OneX, which uses a domain extension assigned to the European country of Montenegro and a webserver apparently positioned in the Irish Sea nation of Isle of Man, is described in MLM-style web promos as a 4X4 matrix feeder program for a Panamanian investment firm and commodities enterprise known as QLxchange.
Bowdoin has participated in multiple OneX pitchfests, using a presentation that appears to have been scripted heavily.
“Tonight we’ll be talking about a financial bailout program for the average person,” Bowdoin said during an October pitchfest.
ASD’s own site was chronically offline before the U.S. Secret Service brought Ponzi scheme allegations in 2008. When Bowdoin’s 10 personal bank accounts were seized on Aug. 1, 2008, the message on the ASD site was signed, “ASD Management.”
During the extended outage, the OneX site has been using this strange headline: “Under A Little Maintenance.”
A tagline below the logo for QLXchange on the site reads, “Investing To Achieve Your Dreams.”
Screen shot: The logo for Qlxchange is appearing in a maintenance message on the OneX site. The site has been inaccessible for days.
Screen shot from Dec. 14 evidence exhibit filed as part of an emergency motion in the Jeremy Johnson/IWorks fraud cause brought by the FTC. The site shown in the exhibit and described in the emergency motion by an attorney for the court-appointed receiver in the case is not the actual site of the receiver. Rather, it is an imposter site that uses the receiver’s name and is designed to intercept traffic and undermine the receivership estate, according to the emergency motion. The bogus site later was altered further and the words “Thieves,” “Lairs” (sic) and “Crooks” were placed near the top of the page, according to a separate evidence exhibit.
EDITOR’S NOTE: This story originally was published Dec. 22, 2011, 10:41 a.m. It was updated at 8:11 a.m. on Dec. 23, 2011. The PP Blog temporarily “unpublished” the story on March 23, 2012. Explanation of why it was taken offline temporarily is here. On March 23, 2012, the PP Blog’s security software recorded a “mass injection attack” as the Blog visited a domain styled CollotGuerard.com while researching matters pertaining to Jeremy Johnson. Collot Guerard is an attorney for the FTC and an alleged subject of harassment by Johnson or people close to Johnson because of the FTC actions against Johnson. The PPBlog is not revisiting the CollotGuerard.com domain and believes it is imprudent for readers to visit the domain.
Our Dec, 22, 2011, story is republished below. The republication date is Jan. 15, 2013 . . .
UPDATED 8:11 A.M. ET (DEC. 23, U.S.A.) Robb Evans, the court-appointed receiver in the Jeremy Johnson/IWorks Internet Marketing fraud case filed by the FTC a year ago, first came to national prominence as a liquidator in the Bank of Credit and Commerce International case in the 1990s. If the bank’s name alone doesn’t spark your memory, think of the acronym by which it was known: BCCI.
If you’re, say, over 40, images of BCCI and the spectacle it created perhaps are seared in your memory. The bank’s criminality and 1991 collapse created a scandal royale on both sides of the Atlantic and all over the world, including the Middle East. BCCI, the Wall Street Journal (Europe) wrote on Aug. 3, 2001 — a little more than a month before the 9/11 terrorist attacks — was a “renegade bank” that had relied on secrecy and had been designed to be “offshore everywhere” to evade regulatory scrutiny. The stunning collapse amid allegations of international money-laundering and a disguised takeover of U.S. banks initially put customers on the hook for $9 billion in losses.
BCCI, which allegedly conducted business with the terrorist Abu Nidal (died 2002) and the now-dead or imprisoned dictators of Iraq and Panama (Saddam Hussein [died 2006] and Manuel Noriega) — and also could not say no to the Medellin Cartel and Colombian narcotics traffickers — went on to become perhaps the most infamous acronym in the history of banking. Evans has testified before Congress on the subject of offshore banking, corruption and the war on terrorism. His bona fides and expertise in unraveling the affairs of companies implicated in complex fraud schemes are firmly established in the courts.
U.S. District Judge Joyce Hens Green of the District of Columbia once described Evans’ efforts as “remarkable.” In 1998, noting that she had presided over elements of the multibillion-dollar BCCI case for eight years and calling it the “longest-running forfeiture proceeding in the history of federal racketeering law,” the judge thanked Evans and others publicly for helping preserve $1.2 billion in U.S. assets for distribution to defrauded BCCI customers.
Evans is the namesake of Robb Evans & Associates LLC. What does the company do?
“What we do in my organization is we trace money, and we try and recover it for the victims of fraud, and we do it mostly on behalf of the United States Government,” Evans told the House Subcommittee on Oversight and Investigations in 2006.
Despite his bona fides — despite his record as a court-appointed receiver in numerous cases and his testimony before the U.S. Congress on critical matters of U.S. and international financial security — someone with a Google AdWords account and perhaps some knowledge about SEO planted the seed earlier this month that Evans was presiding over a fraudulent company, according to new federal court filings in the Johnson/IWorks case.
For a yet-to-be-determined period of time, the names of Evans and his company were pushed down in Google search results and replaced at the top of the rankings by a domain styled RobbEvansFraud.com — with a paid AdWords ad to the right of the No. 1 search result driving traffic to the faux Evans site, according to an evidence exhibit filed in federal court on Dec. 14.
The faux site planted the seed that Robb Evans & Associates consisted of “Thieves,” “Lairs” (sic) and “Crooks,” according to to an emergency motion filed by an attorney for Evans.
“Warning,” the first sentence on the faux site blared, “this website is dedicated to collecting information from victims of Robb Evans and Associates.”
In June, Johnson, 35, was arrested at the Phoenix airport at which federal agents allegedly found him in possession of $26,400 in cash and a one-way ticket to Costa Rica. He asserts his innocence to both the criminal and civil charges brought in the case. Johnson now is free on bond.
Stop The Madness
The FTC moved against Johnson, IWorks and other companies in December 2010, alleging an Internet-fueled fraud involving hundreds of millions of dollars. Evans was appointed receiver by a federal judge in Nevada, the venue from which the action was brought. The agency alleged that at least 51 shell companies were set up to dupe banks and to carry out the fraud, which resulted in “hundreds of thousands” of chargebacks and threats to consumers who filed chargebacks.
FBI Director Robert Mueller III warned Congress in March 2010 and again a month later about the dangers of shadowy banking practices, noting that that shell companies often play a role in disguising fraudulent proceeds.
“Money laundering allows criminals to infuse illegal money into the stream of commerce, thus manipulating financial institutions to facilitate the concealing of criminal proceeds; this provides the criminals with unwarranted economic power,” Mueller said.
IWorks operated out of an office at 249 E. Tabernacle St. in St. George, Utah. The street intersects with nearby South Main, home of the historic St. George Tabernacle. The Tabernacle opened in 1876. The city of St. George is famous for its geology, its climate and for its historic ties to Brigham Young and The Church of Jesus Christ of Latter-day Saints.
The city, unfortunately, also is becoming increasingly known as the town from which Johnson allegedly carried out a fraud involving hundreds of millions of dollars, in part by manipulating the banking system through dozens of shell companies in Nevada and other states.
In the emergency motion, an attorney for Evans now says that Johnson and perhaps others are seeking to interfere with the courts and the receivership estate by using the Internet to slime Evans, the FTC and Collot Guerard, an attorney for the FTC. The FTC has filed its own emergency motion.
Despite Hunt’s order, Johnson sued Evans in Utah state court. On Dec. 7, Hunt ordered the Utah state action brought by Johnson dismissed.
Johnson also asked Hunt to order the FTC to pay the legal fees of corporate defendants. The judge refused.
Of all the troubling developments, perhaps the most troubling is the allegation that Johnson and perhaps others have weaponized the Internet to interfere with the administration of justice. The site that attacks Guerard — a career civil servant — clams she has been “accused of fraud and corruption.” The site was created on Oct. 7, 2011, months after Hunt issued the preliminary injunction and order not to interfere. The site appears to operate from servers in Utah, with the registration hidden behind a proxy.
“[W]e are collecting information related to any wrongdoing on her part,” the site informs visitors.
The attack on Guerard is just the latest in a string of attacks or veiled threats against law enforcement. AdSurfDaily figure Kenneth Wayne Leaming, for example, is jailed near Seattle on federal charges he filed bogus liens against public officials in the ASD Ponzi case, including a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service.
Vincent McCrudden, meanwhile, was arrested and jailed in January 2011 amid allegations he threatened to kill 47 regulators and government officials while using a website and emails to terrorize public servants. Just last week, federal prosecutors in Virginia said that Roger Charles Day Jr., who endangered the U.S. military and others in an offshore scam and was sentenced to 105 years in federal prison, had “filed hundreds of billions of dollars of fraudulent default judgments against more than 100 people who Day claimed had prosecuted him unfairly.”
The Day procurement scheme involved at least 18 companies, prosecutors said. When the scheme was exposed, Day simply “directed his conspirators to discontinue bidding through those companies and instead form and use new companies,” the Justice Department said.
In the new filings by the attorney for Evans in the FTC’s case against Johnson and IWorks, is is alleged that Johnson had a role in the posting of “false and scurrilous” material on the Internet in a bid to hamstring the administration of the receivership estate.
Among other things, one of the websites tied to Johnson “makes false allegations concerning ‘mass fraud and corruption by Robb Evans and Associates,’” according to the attorney’s emergency motion to disable the site.
Gmail addresses using the names of Evans and Guerard were created and were designed to “impersonate and/or interfere” with the receiver and others associated with the case, according to the emergency motion.
Johnson and others created other websites — including EvilFTC, FTCTactics and a site in Guerard’s name — to further undermine the legal process, according to the receiver’s emergency filing. Two other sites in the names of other FTC attorneys also were created, according to the receiver’s emergency motion.
Those sites, according to records, both were created on Dec. 1. Like the site in Guerard’s name, the servers appear to be based in Utah.
When the receiver’s attorney contacted Johnson to demand the site targeted at Evans be taken offline, Johnson claimed he did not own, host or control the site while insisting that “the domain has not been used for anything deceptive.”
“It is a constitutional right to be able to speak freely even if your client does not like it,” Johnson informed the receiver’s attorney in an email, according to an exhibit attached to the receiver’s emergency motion.
EDITOR’S NOTE: Any number of ventures have tied themselves to claims of remarkable returns made possible by purchasing “advertising” products and services or agreeing to watch or receive “advertisements” in a closed environment. Longtime readers will recall that AdViewGlobal (AVG) came out of the gate in late 2008 and early 2009 by claiming what it did was the equivalent of what the NBC television network does. The claim was pure hogwash.
Here is a story about more pure hogwash involving a purported “advertising” opportunity . . .
An investment scheme involving claims about outsized returns from a purported “advertising” business gathered $6.2 million and has resulted in the guilty plea of its operator, federal prosecutors in Maryland said.
Edward J. Lawson, 67, of Silver Spring, Md., pleaded guilty last week to wire fraud after an investigation by the FBI and IRS uncovered evidence that Lawson was running a scam through companies known as Automated Revenue Creation LLC and Guaranteed Results Advertising LLC (GRA), prosecutors said.
Lawson and the firms purported to be in the business of beaming “Narrow Cast television commercials” to LCD television monitors at gas stations and convenience stores. The scheme operated at least between May 2006 and September 2008, prosecutors said.
“Edward J. Lawson’s promises of ‘automatic revenue’ and ‘guaranteed results’ were entirely fraudulent,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland.
“In financial fraud schemes the promoter eventually runs out of other people’s money and the scheme collapses like a house of cards,” added Jeannine Hammett, acting special agent in charge of the IRS Criminal Investigations Unit in Washington, D.C.
Lawson positioned himself as an entrepreneur with 30 years’ experience, encouraged GRA investors to roll over their purported earnings amid assertions the screens were generating “so much revenue” and explained checks had bounced “due to conditions beyond [his] control,” prosecutors said.
At least 60 investors plowed money into the scheme, initially lured by claims that a screen purchased for $15,800 would lead to “a monthly return over a 10 year period that began at $3,000 and escalated to approximately $30,000 after 15 months,” prosecutors said.
As the scheme advanced, the price of the screens kept going up and the purported returns they’d fetch kept changing, prosecutors said.
“Later in the scheme,” prosecutors said, “an investor who purchased a screen for $23,800 was guaranteed a monthly return of $3,000 and escalated to approximately $15,000 after 12 months. In GRA’s final phase, an investor who purchased a screen for $89,800 was guaranteed a monthly return of $13,950 over a five or 10 year period.”
Lawson pitched the scheme from metro Washington hotels and at GRA’s office in Rockville, Md., prosecutors said.
U.S. District Judge Roger W. Titus scheduled sentencing for April 6 , 2012.
Various investment schemes involving “advertising” have been on the radar screens of federal investigators.
Andy Bowdoin, 77, the president of Florida-based AdSurfDaily, was arrested by the U.S. Secret Service a year ago this month and is awaiting trial. Prosecutors said Bowdoin positioned himself as a successful entrepreneur and was at the helm of an “autosurf” advertising fraud that had gathered at least $110 million by operating as a Ponzi scheme and dangling suggestions of huge returns.
ASD and AVG had promoters and members in common, according to online promos. Among the bizarre claims associated with AVG was that members who advertised in AVG’s closed system with about 20,000 members would achieve a conversion rate of 37 percent of their sales copy didn’t “totally suck.”
Based on the claim, a member who advertised a doughnut for free and a doughnut priced at $10,000 each would achieve the same conversion rate of 37 percent, an utterly preposterous assertion.
The rate would be achieved within the same closed universe of prospects, according to the claim.
BULLETIN: A Florida jury found that TD Bank assisted now-disbarred and imprisoned attorney Scott Rothstein in his epic Ponzi scheme and has found the bank liable for $67 million in damages.
