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  • KABOOM! Banners Broker MLM ‘Program’ Described As ‘Criminal Enterprise’ That Gathered Tens Of Million Of Dollars

    “Affiliates found to be contributing to the negativity on the Internet will have their accounts locked, they will be banned from participating in the Banners Broker system and they will forfeit all of their inventory and revenue.” —  Banners Broker threat to members, February 2014

    “It is the position of investigators that this business was a pyramid scheme that over time evolved into a straight Ponzi scheme in which new victims were recruited to stave off requests for withdrawals and complaints from older ones.” —  Royal Canadian Mounted Police, July 17, 2014: Source: Affidavit that shows the RCMP, the Toronto Strategic Partnership and the Toronto Police Services Financial Crime Unit are involved in a criminal probe of Banners Broker.

    EDITOR’S NOTE: The double-your-money Banners Broker “program” posed as an online “advertising” company. It appears to have gathered tens of millions of dollars using a series of conduits and employing entities or business identities in money-laundering havens. At least for now, the total sum stolen from participants is unclear. As alleged, funds were “diverted by the suspects and their associated corporations to various offshore and other bank accounts controlled by them.”

    ** _________________________**

    Screen shot from page of court exhibit in Canada.
    How to begin the brainwashing process: Screen shot from page of court exhibit in Canada.

    As an interview subject allegedly told the Competition Bureau of Canada on April 9, 2013, it was all so simple to Banners Broker operator Christopher George “Chris” Smith:

    Indeed, Canadian authorities now have alleged, when the subject “met with Smith [in 2010,] he asked Smith why people lost money in these programs and Smith said it was what the programs were designed for, they bring people in, make some money and then they shut down and people move on to the next one.”

    What was Smith allegedly discussing at the meeting in Toronto? His desire to come up with a “copycat” of Travel Ventures International, a purported “opportunity” also known as TVI Express and described as a scam on multiple continents. (See K. Chang’s MLM Skeptic Blog for a report on how TVI Express spread around the world.)

    This, friends, is whack-a-mole — in the style of MLM huckster Chris Smith. It’s also racketeering MLM-style, whether formally prosecuted as such or not. And so it comes as no surprise that the term “criminal enterprise” to describe Banners Broker and its associated corporations now appears in court filings in Canada. (See links and credits at bottom of this story.)

    In 2011, the U.S. Secret Service described the AdSurfDaily Ponzi scheme, another cross-border MLM fraud, as a “criminal enterprise.”

    Members of the TelexFree MLM “program” allege that racketeering occurred within that enterprise, described by U.S. regulators earlier this year as a billion-dollar, cross-border pyramid- and Ponzi scheme. The Zeek Rewards MLM “program,” alleged to have gathered on the order of $850 million before is August 2012 collapse, launched after the 2008 collapse of ASD. There can be no doubt that TelexFree, Zeek, ASD and Banners Broker had promoters in common.

    There also can be no doubt that “see no evil” MLM cottage industries sprouted up around these foundationally corrupt “programs” and offered services such as “lead” provision and “ad” placement. Victims have piled up in such numbers that, in the TelexFree scam alone, 20,000 Greyhound buses with a 50-seat capacity each would be required to accommodate the fleeced masses.

    But where would they all go to observe events and be acknowledged at once?

    No courtroom can accommodate 1 million victims. Even if Mass-Participation Court existed and were gaveled into session on an unbooked Saturday in Pasadena’s famous Rose Bowl with onetime Tournament of Roses Parade Grand Marshal and U.S. Supreme Court Associate Justice Sandra Day O’Connor coming out of retirement to preside, the huge stadium’s seating capacity of 92,542 still would be far too small to accommodate the injured parties.

    Beyond that, Greyhound’s entire noble fleet consists of only 1,200 buses, not the 20,000 that would be required to transport TelexFree victims to California.

    Despite the best efforts of the courts, victims are being lost as a result of these insidious MLM schemes. Some will be re-victimized in a whack-a-mole reload scam pitched by an MLM predator with a smile on his or her face and a Bible verse at the ready.

    There also can be no doubt that certain members of the “programs” are members of a criminal combine that, whether loosely or closely associated, pushes one racketeering scam after another on the consuming public. It is willful blindness on a global scale. It is so dangerous, so calculating and methodical, so gruesomely injurious to persons and property, that it almost defies description.

    Next time someone tries to recruit you into an HYIP  “program” by telling you the “leaders” are already on board, here’s what to think: The racketeers are either running things or influencing events (again). They’re going to harm me (again). They’re going to harm my community, my country (again). They’re going to say they have been vetted by “attorneys” (again).

    And then, as Chris Smith allegedly said, they’re going to shut down and “move on to the next one.”

    Again.

    Reclaim Your Brain — Right Now!

    Like predecessor scams such as AdSurfDaily and AdViewGlobal and Zeek, the hypnotized and robotic Stepfordians in Banners Broker who’d been brainwashed by cult tactics rose up to “defend” the “program,” including some individuals who continued to champion the scam even after it effectively extorted them into paying more fees to keep their positions intact and to retain any chance of receiving a payout.

    While trying to chill members who remained in control of their gray matter and hadn’t slipped into an MLM trance, Banners Broker naturally counted on the Stepfordians whose brains it had reduced to slush to wage efforts to chill Blogs and websites that report on scams.

    “If you know of a site with content that is negative towards Banners Broker, we ask that you report it to the Community Watch,” the “program” instructed in February 2014.

    Yes. Amazing as it sounds, Banners Brokers called its efforts to cover up its own criminal enterprise a “Community Watch” program. Even earlier than that, it dispatched the Stepfordians to harass and hound a Blogger named Finch, who now says, “I received all kinds of threats, smears and public verbal bashings.”

    On Jan. 17, 2013, the PP Blog reported it was receiving menacing communications about Banners Broker.

    For additional background on bids to chill reporters or program members who publish information about scams and highly questionable “opportunities,” see this Dec. 27, 2012, PP Blog post: Our Choice For The Most Important PP Blog Post Of 2012. (It’s about an effort to chill K. Chang over his reporting on Zeek Rewards.)

    Also read about continuing efforts from the MLM HYIP sphere to destroy the antiscam well at BehindMLM.com and RealScam.com.

    NOTE: A special shout out today to RealScam.com and the Banners Broker Ponzi Scam Community on Facebook. They shared this 275-page court filing in Canada on civil and criminal investigations into Banners Broker.

    ALSO: Visit the website of the msi Spergel inc., the receiver.




  • NEW ENGLAND PUBLIC RADIO: Secretary Galvin Talks TelexFree, Sann Rodrigues And ‘IFreeX,’ Tells Station Accused Huckster’s ‘Current Whereabouts . . . Unknown’

    sannrodriguesUPDATED 8 A.M. EDT U.S.A. New England Public Radio has a minute-long audio report on TelexFree, iFreeX and Sann Rodrigues, including comments from Massachusetts Commonwealth Secretary William Galvin.

    An NEPR text report is available here. Look under the byline of Kari Njiiri for a link to the audio report.

    Rodrigues, accused in April 2014 by the U.S. Securities and Exchange Commission of fraud over his alleged role in TelexFree, earlier (in 2006) was accused of fraud by the SEC in a separate alleged pyramid scheme involving phone products. iFreeX may constitute at least his third dance in securities- and affinity-fraud schemes involving communications products.

    Galvin reportedly told the station that the “current whereabouts” of Rodrigues is unknown. The charged pitchman hails from Brazil, once resided in Massachusetts and also has lived in Florida.

    Rodrigues, according to the SEC, has claimed that “God” started MLM and “binary” MLM “programs.”

    On Dec. 19, 2013, the PP Blog reported that TelexFree puff pieces were appearing in a publication that featured a columnist who asserted Jesus Christ was the person who inspired modern network marketers through his recruitment of 12 disciples.

    Ads for an apparent cash-gifting scheme appeared in the same publication.

    SEC case filings alleged that, on March 15, Rodrigues’ co-defendant Faith Sloan claimed on her website that the TelexFree compensation plan was changing and was not in final form — “[b]ut is Getting BETTER as Jesus said.”

    Regulators have described TelexFree as a billion-dollar pyramid- and Ponzi scheme that operated across national borders.

    Claims of divine authority or inspiration are not unusual in MLM HYIP frauds. In the 2008 AdSurfDaily case, for instance, accused operator Andy Bowdoin claimed God was on his side and compared the U.S. Secret Service to “Satan” and the 9/11 terrorists. Bowoin later was sentenced to federal prison for his $119 million Ponzi scheme.

    Promos showed Bowdoin asserting from a stage in Las Vegas that he was a Christian “money magnet” and that cash would “flow” back to people who gave him tens of thousands of dollars at a time.

    Affinity fraud may occur in many contexts: appeals to religious faith, appeals to common interests, appeals to common heritage, appeals to common political interests and more.

  • SPECIAL REPORT: eAdGear ‘Program’ Allegedly Traded Falsely On Names Of Famous Companies And Brands; SEC Contacted Google, Yahoo, Target, Victoria’s Secret (And More) To Refute Claims; Separately, ‘Bossteam’ Enterprise In Canada Operated In Similar Fashion, Records Show

    From an SEC exhibit filed last week in the SEC's case against eAdgear, an alleged international pyramid- and Ponzi scheme that gathered $129 million said largely to have targeted Asian communities.
    From an SEC exhibit filed last week in the SEC’s case against eAdGear, an alleged international pyramid- and Ponzi scheme that gathered $129 million. Redactions by PP Blog.

    EDITOR’S NOTE: eAdGear, which had entities in California and Hong Kong, “primarily” targeted “investors in the U.S., China, and Taiwan” and gathered $129 million in a combined pyramid- and Ponzi scheme that engaged in brand-leeching, the SEC alleged last week. An MLM scam known as WCM777, which allegedly gathered more than $80 million, also engaged in brand-leeching while targeting Asian communities, according to court filings. The SEC sued WCM777 in March 2014. Among the SEC’s alarming allegations against WCM777 was that it planted a false seed that it had partnerships “with more than 700 major companies such as Siemens, Denny’s, and Goldman Sachs.”

    ** ______________________**

    UPDATED 3:14 P.M. EDT SEPT 29 U.S.A. Irrespective of their primary target audiences and whether their promos are in English, Chinese or another language, HYIPs and investment-fraud schemes often trade fraudulently on the names of famous companies and engage in brand-leeching to create a veneer of legitimacy. In 2008, for example, the purported AdSurfDaily advertising “program” falsely traded on the names of then-U.S. President George W. Bush, Google, Kodak, Pepsi, Macy’s, USA Today, NBC and many more.

    “This new approach to Internet advertising has businesses of all sizes, from small home based businesses to large corporations such as Google, Starbucks, Kodak, etc., joining ASD,” a 2008 promo for ASD read. “Not only are there over 75,000 small businesses advertising with ASD, but now major corporations are as well. Remember, a part of the daily rebate comes from the revenue corporations pay to advertise with ASD.”

    It was all a crock. The U.S. Secret Service, which opened an undercover probe in July 2008, went on describe ASD as a “criminal enterprise.” ASD President Andy Bowdoin was convicted of wire fraud in the ASD Ponzi case. He is serving a lengthy term in federal prison.

    Even while it was operating, ASD talked about a nascent “Chinese” arm known as Golden Panda Ad Builder. In retrospect, it now appears that plans to involve Asian populations in HYIP schemes were well under way at least by 2008 and since have evolved into frauds that were even larger than ASD. (ASD gathered $119 million and has been eclipsed in dollar volume by at least three Internet-based investment scams since then: TelexFree (possibly $1.2 billion); Zeek Rewards (c. $850 million); and eAdGear ($129 million). Falling just short of making this list were Zhunrize (allegedly $105 million) and WCM777 (allegedly $80 million). It is clear from court filings that Zeek also had a presence in Asian communities.)

    There also was a tertiary scam inside the ASD scam. Indeed, promos for an entity known as ASD Offer Universe encouraged members to click on Google ads so ASD would earn fees of up to $5 a click. Here’s now that promo began (italics added):

    “ASD ENTERS INTO AGREEMENT WITH GOOGLE FOR NEW CONSUMER SITE. Months ahead of schedule, Google and ASD Offer Universe are now teaming up to show Google ads on the site. Google, after seeing all of the major advertisers already being shown on ASD Offer Universe agreed to enter into a relationship with ASD.”

    Brand-leeching is a form of  “reputation parasitism.”

    Did the eAdGear “program” channel long-ago events at ASD to help its massive pyramid scheme grow?

    ASD was a purported “advertising” firm that operated a “rotator.”

    Let’s compare what happened at ASD in 2008 to what the SEC now says happened at eAdGear, accused by the agency last week of operating a $129 million pyramid- and Ponzi scheme and positioning itself as an advertising company and an SEO firm.

    By at least March 2014, the SEC says in court filings, investigators learned of a promo for eAdGear that read, “Google and Yahoo are partnering up with eAdGear for SEO services!!”

    In the land of serial promoters of MLM or direct-sales HYIP scams, it’s as though the ASD case never happened.

    The name-dropping and toxic disingenuousness associated with eAdGear hardly were limited to the abuse of the names of Google and Yahoo, according to SEC exhibits filed in the eAdGear case. It appears there were at least 253 incidents of brand-leeching associated with eAdGear. Indeed, eAdGear appears to have planned its ascent to the upper echelon of the fraud sphere by deliberately placing bogus ads for famous companies into its ad “rotator” to create a false sense that its “program” was legitimate.

    Target Corp., the famous retailer, had its brand leeched, the SEC alleged. So did Lbrands, the Columbus, Ohio-based company that owns Victoria’s Secret

    Now, let’s look at some of the behind-the-scenes investigative work performed by the SEC. Court filings by the agency show that, on July 1, 2014, the SEC issued a subpoena to Yahoo to check on the eAdGear-associated claims.

    Yahoo responded on July 10 by advising the SEC that it had “identified no contracts or agreements with eAdGear[].”

    Meanwhile, according to court filings, the SEC made an inquiry at Google on June 30. Google responded on July 22, advising the agency that it “is not aware of any commercial relationship between [eAdGear] and Google.”

    Because ads for famous companies, including Target, Gap Inc. and Victoria’s Secret, had appeared in the eAdGear “rotator,” the SEC contacted those companies. (The response by L Brands Inc., owners of Victoria’s Secret, is shown above.)

    Target responded by searching its database of vendors to which it had issued payments. No records surfaced for eAdGear, according to the SEC. Gap, similarly, informed the SEC that it had no record of doing business with eAdGear.

    What else does the SEC have? Well, according to court records, it has internal eAdGear email correspondence that shows an employee was instructed to place 253 links to famous companies in its rotator.

    These companies included Avon, Sears, Nordstrom, eBay, QVC, HSN, J.C. Penney, Banana Republic, Dillard’s, Kohl’s, Macy’s, Amazon.com, Men’s Wearhouse, Kmart, New York magazine and more.

    Finally, let’s compare the SEC allegations to the August 2014 findings of the British Columbia Securities Commission concerning a “program” known as “Bossteam” that became the subject of a 2012 Ponzi warning in Canada.

    These are among BCSC’s  assertions — under a subheading titled “False impression of paid advertisements and advertising revenue”:

    • Bossteam described itself on its websites, in documents and in presentations as an online advertising business having huge growth potential and ready to become a leading global online advertising company. It referred to well-known online businesses such as Google, Amazon and eBay, and to the fast-growing advertising revenues of these businesses.
    • Although hundreds of “ads” appeared on the advertising platforms, the majority of the ads posted on Bossteam’s websites were associated with Bossteam’s own administrative accounts (accounts accessible by those controlling its systems) and not to accounts for advertisers or members who had paid to post links to their websites on Bossteam’s websites.
    • Ads associated with Bossteam’s administrative accounts included webpages for well-known local and international businesses.
    • Local businesses whose webpages appeared on Bossteam’s websites included a restaurant, a security systems company, a heating company and a private career college. Websites of well-known businesses and personalities included World Wrestling Entertainment, Miriam Webster and Britney Spears.
    • Posting the websites of local and international businesses on Bossteam’s websites without payment created a false impression that such businesses were advertising on Bossteam’s websites and paying Bossteam to do so.

    Because Bossteam and eAdgear were similar businesses and appear largely to have targeted members of the Asian community, one has to wonder whether the schemes had promoters in common. For now, at least, the answer is unclear. What is clear is that some promoters simply move from one fraud scheme to an another when the “program” of the moment craters or encounters regulatory scrutiny.

    Serial HYIP huckster and Zeek figure T. LeMont Silver currently is in name-dropping overdrive for BitClub Network, one of his latest “programs.” Silver’s name has surfaced in private lawsuits involving eAdGear and an interconnected enterprise known as Go Fun Places, which is referenced in the SEC’s eAdGear case. (For one instance, see the reference to Go Fun Places within the letter from L Brands to the SEC in the graphic above.)

    NOTE: Our thanks to the ASD Updates Blog.

  • ANOTHER MLM PR DISASTER: Zhunrize, Alleged Worldwide Pyramid Scheme That Gathered $105 Million, Was Presented As A ‘Plan B’

    From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.
    From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.

    2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”

    The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.

    In 2012, Zeek and ASD figure Keith Laggos pushed the Lyoness “program” as a “Plan B.”

    Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”

    Lyoness is now under investigation in Australia, amid pyramid-scheme allegations.

    “Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”

    Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.

    MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.

    WCM777, meanwhile, collapsed in March 2014 after interventions by the SEC and state-level securities regulators. WCM777 purportedly was a “cloud computing” company  that allegedly gathered more than $80 million. In April 2014, another MLM HYIP scheme — TelexFree — collapsed. The SEC and the Massachusetts Securities Division said it was conducting a billion-dollar, cross-border securities swindle. TelexFree positioned itself as a “VOIP” company that also was in the apps, cellphone and credit-repair businesses.

    The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.

    The SEC yesterday announced fraud charges against the Zhunrize MLM scheme, accusing it of selling unregistered securities and operating a massive international pyramid scheme.

    The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.

    “Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.

    In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”

    One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.

    Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.

    In court filings, Zeek receiver Kenneth D. Bell has suggested that MLM may have a problem with “serial” participants in fraud schemes who tout purported “revenue-sharing” plans.

    Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.

    If someone pitches you on an MLM “Plan B,” run like the wind.

  • Purported ‘Sovereign Citizen’ Who Bizarrely Claimed His Authority Came From ‘The Vatican’ Convicted Of Issuing Bogus Diplomatic Credentials

    From ABC report on James McBride and "Divine Province."
    From ABC News report on James McBride and “Divine Province.”

    EDITOR’S NOTE: U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI) are referenced in the story about purported “sovereign citizen” James T. McBride below. ICE/HSI also are involved in the investigation of the alleged TelexFree Ponzi- and pyramid scheme. Whether TelexFree had any “sovereign citizens” in its ranks is unclear. “Sovereign citizens,” however, have been linked to other HYIP schemes. Wild narratives may accompany such schemes both before and after a government intervention.

    ** __________________________________ **

    James T. McBride first came to our attention in January 2013, after a reader alerted us to a story in the Sun Sentinel about a bizarre incident that occurred during a bankruptcy hearing for a Florida business known as RoboVault.

    As the Sun Sentinel reported at the time (italics added):

    McBride, who claims to derive his authority from the Vatican, sent letters to the judge and trustee demanding the bankruptcy case be dropped. He previously has been profiled in media accounts as a “sovereign separatist,” someone who believes he is not subject to state and federal laws.

    McBride’s name next surfaced in February 2013, as part of a story concerning the arrest near Columbus, Ohio, of a purported “sovereign citizen.” A police officer and police canine reportedly were injured. (See Comments thread below story, which references an entity known as “Divine Province.”)

    So-called “sovereign citizens” — jailed AdSurfDaily figure Kenneth Wayne Leaming is one of them — have an irrational belief that laws do not apply to them.  Leaming became the target of an FBI investigation after filing false liens against various public officials involved in the ASD Ponzi case. Investigators found bogus police credentials in Leaming’s possession.

    Prosecutors said Leaming was a member of the “County Rangers,” the armed-enforcement wing of a group of “sovereign citizens.”

    By May 2014, prosecutors had formally connected McBride, 60, of Columbus, Ohio, to “Divine Province.” He has now been convicted in the Eastern District of Virginia on charges of conspiracy, causing the impersonation of a diplomat and producing false identification documents.

    Yes. You read that right: causing the impersonation of a diplomat.

    Here’s part of what ICE/HSI and federal prosecutors in the office of U.S. Attorney Dana J. Boente of the Eastern District of Virginia had to say about the McBride case (italics added):

    McBride was indicted on May 14, 2014, by a federal grand jury of one count of conspiracy, one count of causing the impersonation of a diplomat and four counts of producing false identification documents. According to the evidence at trial, McBride was the leader of a sovereign citizen group called “Divine Province,” whose members claimed the U.S. government was a “municipal corporation” that did not have authority over them. McBride produced and distributed false diplomatic identification cards to his group’s members, and he encouraged them to make claims of diplomatic immunity to avoid arrest, debts or taxes. None of the group’s members were in fact accredited diplomats.

    McBride started selling the identification cards in September 2012 at a seminar he organized in Herndon, Virginia. Afterwards, he started selling the IDs from a website and shipping them around the country.

    McBride sold the IDs in pairs, one that identified the holder as a “Universal Post Office Diplomat” and another that purported to be an “International Diplomatic Driver Permit,” for approximately $200. The defendant also encouraged his members to send copies of the IDs to governmental agencies to notify them of a member’s “status” as a diplomat. The defendant claimed that his authority to issue the IDs came from the Vatican. The defendant also gave a televised interview on ABC News prior to the filing of charges in the case, in which he reiterated such claims. During the course of the charged conduct, the defendant’s organization earned close to $500,000.

    Watch segment of ABC News video in which McBride bizarrely calls himself the “primary trustee of the world.”

    McBride potentially faces two decades in prison, prosecutors said.

  • BULLETIN: MLM Attorney And Companion Entity Received $843,000 Through Sale Of ‘Bogus Compliance Course’ That Served As ‘Window Dressing’ For Ponzi- And Pyramid Scheme, Zeek Receiver Says

    breakingnews72BULLETIN: (2nd update 9:54 p.m. EDT U.S.A.) MLM attorney Kevin Grimes and a companion entity known as MLM Compliance VT LLC received $843,000 from the Zeek Rewards pyramid- and Ponzi scheme through the sale of a “bogus compliance course,” receiver Kenneth D. Bell has alleged in an amended complaint.

    The amended complaint, filed yesterday, includes MLM Compliance as a defendant. The original complaint filed last month did not. Also new in the amended complaint is the figure of $843,000. The original complaint did not specify a specific sum.

    Co-defendants also include Grimes and the Grimes & Reese law firm.

    “In total, Grimes and MLM Compliance received approximately $843,000 from RVG for the bogus course,” Bell alleged. “The final payment from [Zeek operator Rex Venture Group] to Grimes and MLM Compliance was, upon information and belief, a check rushed to and indorsed by Kevin D. Grimes for $342,510, which posted on August 13, 2012, less than a week prior to ZeekRewards’ shutdown.”

    The course, Bell alleged, served as “window dressing” for the Zeek fraud. The SEC shut down Zeek on Aug. 17, 2012.

    Some MLMers immediately raced to other fraud schemes — after participating not only in Zeek, but in the AdSurfDaily MLM Ponzi scheme and other “programs.”

    Zeek gathered on the order of $850 million in a combined pyramid- and Ponzi scheme that operated for about two years. It was “an internet based so-called ‘MLM’ (multi-level marketing) program,” Bell said.

    Grimes and MLM Compliance engaged in “Unfair and Deceptive Trade Practices” by creating the course, which “served to bolster what they knew to be an unlawful scheme,” Bell alleged.

    Bell is suing Grimes and the Grimes and Reese firm for a sum in excess of $100 million, alleging they were unjustly enriched and engaged in Legal Malpractice, Negligence, Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty.

    Our thanks to the ASD Updates Blog.

    See June 25, 2014, PP Blog story.

  • BULLETIN: Zeek Receiver References AdSurfDaily Ponzi Case

    breakingnews72BULLETIN: (UPDATED 4:29 P.M. EDT U.S.A.) Zeek Rewards receiver Kenneth D. Bell — for the first time — has referenced the AdSurfDaily Ponzi case in a federal court filing. Zeek, believed to have gathered on the order of $850 million, is known to have had participants in common with ASD, a $119 million fraud.

    Some MLM HYIP promoters proceed from fraud scheme to fraud scheme, racking up windfalls along the way.

    Bell’s specific reference to ASD is in the context of alleged Zeek “winner” Todd Disner, already the subject of a clerk’s entry of default in a Zeek receivership lawsuit against Disner and other alleged winners.

    Disner was defaulted for not entering a defense.

    After not defending against the receiver’s claims, Disner then sought to file pro se to set aside the default. Bell is seeking more than $2 million from Disner, including more than $1.8 million in alleged Zeek winnings, plus interest.

    Bell said today in court filings that the default entry should stand. Meanwhile, the receiver strongly suggested that Disner, after earlier having played games in ASD-related litigation, now was trying to do the same thing with Zeek.

    “Mr. Disner is no stranger to litigation,” Bell said. “For instance, as a promoter of the Ad Surf Daily Ponzi Scheme, Disner earned significant funds and filed a twenty-nine page pro se Complaint for Declaratory Relief against the federal government in late 2011 claiming wrongful seizure of his Ad Surf Daily Ponzi scheme winnings . . . ”

    Disner eventually lost the case he filed against the government in the Southern District of Florida — this after he earlier lost a pro se bid to intervene in the ASD case in the District of Columbia.

    Disner’s co-plaintiff in the Southern Florida case was former AdSurfDaily pitchman Dwight Owen Schweitzer, potentially a Bell Zeek target along with Disner. Schweitzer, a former attorney whose license to practice law was suspended in Connecticut, is listed as a “winner” of more than $1,000 on the Zeek receivership website.

    “Mr. Disner also has a history of dilatory action in litigation,” Bell said. “In the [ASD-related] case he filed against the United States, the government filed a motion to dismiss on May 18, 2012. However, Disner failed to provide any response to the motion to dismiss. As a result, the court was forced to order Disner to file a response . . .

    “In light of his history, Mr. Disner was aware of the severe consequences of a failure to plead or defend [in the action against Zeek winners],” Bell said. “Despite this clear knowledge, he nonetheless failed to raise a hand until after default had been entered in this matter. For this reason as well, the motion should be denied.”

    Bell also moved today to certify a class of more than 9,000 net-winner defendants from Zeek, all of whom allegedly won more than $1,000. Schweitzer potentially could be a member of this class, given the appearance of his name in a document on the receivership website maintained by Bell.

    A filing by Bell earlier this month asserted Disner received $7,199.49 from Zeek on Nov. 7, 2011. That’s the same day the ASD-related Disner/Schweitzer lawsuit against the United States was docketed.

    NOTE: Our thanks to the ASD Updates Blog.

     

  • Zeek Receiver Seeks Nearly $2.1 Million From Alleged Winner And Former AdSurfDaily Ponzi Pitchman Todd Disner; Records Show Zeek Paid Him More Than $7,000 On Same Day He Sued United States For Alleged Misdeeds In ASD Case

    Summary of Todd Disner's alleged Zeek winnings. Source: Exhibit by court-appointed receiver.
    Summary of Todd Disner’s alleged Zeek winnings. Source: Exhibit by court-appointed receiver.

    Zeek Rewards “winner” Todd Disner owes the receivership estate $2,079,757.88, according to a motion asking the court clerk to enter a default judgment.

    Receiver Kenneth D. Bell filed for the judgment July 9 in federal court for the Western District of North Carolina, seeking not only Disner’s alleged Zeek haul of $1,800,037.06, but also interest of $279,720.82.

    Zeek’s records show that Disner paid $11,810.49 into the “program,” beginning with an initial outlay of $480 on March 4, 2011, shortly after Zeek started business.

    From that initial outlay and others, $1,811,847.55 flowed back to him, the receiver advised Senior U.S. District Judge Graham C. Mullen and the court clerk. The lion’s share of Disner’s outlay — $10,000 — was paid to Zeek on July 6, 2012. Zeek collapsed six weeks later, on Aug. 17, 2012.

    Disner’s last Zeek withdrawal totaled $102,617.73 and occurred on July 30, 2012, less than three weeks prior to the SEC action that spelled doom for the “program.” His largest withdrawal, according to the receiver’s filing, was for $177,026.27 on July 9, 2012.

    A former AdSurfDaily Ponzi pitchman who once sued the United States for alleged misdeeds in the ASD case, Disner regularly withdrew tens of thousands of dollars at a time from Zeek, according to the receiver’s filing.

    Zeek operated as part of Rex Venture Group.

    Bell also filed today for clerk’s default judgment against alleged winners David Sorrells and Michael Van Leeuwen. The receiver is seeking $1,197,241.12 from Sorrells, including $157,672.63 in interest. Meanwhile, he is seeking $1,617,444.99 from Van Leeuwen, including $213,012.07 in interest.

    Disner’s unsuccessful lawsuit against the United States for allegedly violating his right to privacy in the ASD case was docketed on Nov. 7, 2011.

    Bell’s filing shows that Zeek paid Disner $7,199.49 on the same day.

    A federal judge tossed Disner’s ASD-related lawsuit on Aug. 29, 2012, the same day ASD operator Andy Bowdoin was sentenced to federal prison after admitting ASD was a Ponzi scheme. Only 12 days earlier, the SEC sued Zeek, alleging a massive Ponzi- and pyramid scheme.

    The U.S. Secret Service has been involved in both the ASD and Zeek probes.

     

  • EDITORIAL: On The War In Zeekland And HYIP Rabbit Holes

    From a promo for Zeek online in 2012.
    From a promo for Zeek online in 2012. The “program” operated through Rex Venture Group and later was charged by the SEC with selling unregistered securities as investment contracts.

    EDITOR’S NOTE: On Feb. 5, 2014, Zeek figures and alleged insiders Dawn Wright-Olivares and Daniel Olivares pleaded guilty to federal crimes. Wright-Olivares pleaded guilty to investment-fraud conspiracy and tax-fraud conspiracy. Olivares pleaded guilty to investment-fraud conspiracy. Federal prosecutors in the Western District of North Carolina are maintaining an information site here.

    Kenneth D. Bell, the court-appointed receiver in the SEC civil case, also is the special master in the criminal prosecution. The charging document in the criminal case references unnamed “co-conspirators” who are “known and unknown” to federal prosecutors.

    UPDATED 5:10 P.M. EDT U.S.A. In court filings apt to find favor in MLM HYIP Ponzi Land, some alleged “winners” in the Zeek Rewards “program” have tried to turn the tables on the court-appointed receiver by claiming he owes them “treble” damages for alleged violations of the North Carolina Unfair and Deceptive Trade Practices Act.

    Similar claims were made from the sidelines of the AdSurfDaily MLM Ponzi scheme in 2008. Some ASD members contended that then-Florida Attorney General Bill McCollum should be charged with Deceptive Trade Practices, apparently for having the temerity to bring a pyramid-scheme action against ASD.

    Other ASD members contended at the time that federal prosecutors and a U.S. Secret Service agent should be investigated and charged with crimes for their roles in the ASD Ponzi prosecution.

    Among the alleged winners in Zeek who’ve filed a counterclaim against receiver Kenneth D. Bell are Rhonda Gates of Nashville, an alleged winner of more than $1.425 million; Durant Brockett of Las Vegas, an alleged winner of more than $1.72 million; and Aaron and Shara Andrews of Lake Worth, Fla., alleged winners of more than $1 million through a Florida shell entity known as Innovation Marketing.

    In addition to claiming Bell owes them damages for Deceptive Trade Practices, the counterclaimants assert Bell interfered in contracts with payment processors such as Payza and NXPay and violated their rights under the Fourth Amendment to the U.S. Constitution.

    Bell sued them in late February, alleging in a clawback action that their gains were illicit because Zeek was illicit. He also sued several other Zeek alleged winners, including former ASD members Todd Disner of Miami and  Jerry Napier of Owosso, Mich. Disner allegedly received more than $1.875 million through Zeek; Napier allegedly received more than $1.745 million.

    Disner, in 2011, sought unsuccessfully to sue the United States for alleged violations of his Fourth Amendment rights in its prosecution of the ASD Ponzi case. His co-plaintiff in the case was Dwight Owen Schweitzer, whom filings by Bell described as a Zeek winner of more than $1,000. Several alleged Zeek winners ventured into the “program” after earlier stints at ASD, including Terralynn Hoy, a Florida MLMer who moderated a forum that called purported “sovereign” being Curtis Richmond a “hero” for his efforts to derail the civil-forfeiture action against ASD-related assets.

    Richmond, a Californian, was a member of a “sham” Utah “Indian” tribe that once sought to have U.S. Marshals serve bogus arrest warrants against federal judges. ASD figure Kenneth Wayne Leaming later was arrested by an FBI Terrorism Task Force, after allegedly harboring federal fugitives from a separate home-business caper, being a felon in possession of firearms and filing false liens against a judge and prosecutors involved in the ASD case.

    Other alleged Zeek winners sued by Bell in clawback litigation include Trudy Gilmond of St. Albans, Vt. (more than $1.75 million); Darren Miller of Coeur d’Alene, Idaho (more than $1.635 million); Michael Van Leeuwen, also known as “Coach Van” of Fayetteville, N.C. (more than $1.4 million); David Sorrells of Scottsdale, Az. (more than $1 million); T. Le Mont Silver Sr. of Orlando, Fla. (more than $773,000 under at least two user names, and more than $943,000 through a Florida shell entity known as Global Internet Formula Inc. with one or more Zeek user names); Karen Silver, Silver’s wife (more than $600,000); David and Mary Kettner of Peoria, Az. (more than $930,000 via one or more user names and shell companies known as Desert Oasis International Marketing LLC and Kettner & Associates LLC); and Lori Jean Weber of Land O’Lakes, Fla. (more than $1.94 million through a shell company known as P.A.W.S. Capital Management LLC.)

    Whether other alleged winners would join Gates, Brockett and Aaron and Shara Andrews in asserting claims for damages against Bell was not immediately clear.

    What is clear is that a legal war has broken out over Zeek, with alleged winners challenging Bell’s clawback claims by asserting Zeek wasn’t selling unregistered securities as alleged in 2012 by the SEC, that they worked for the money they received or were due, that the alleged winners were not investors, that the SEC’s case against Zeek cannot withstand scrutiny under the “Howey Test” for what constitutes a security, that the SEC had a duty to catch Zeek much earlier — and, in any event and if all else fails, attorneys Bell sued last week and Bell himself are to blame for the unpleasantness.

    On June 25, Bell sued MLM attorney Kevin Grimes and tax attorney Howard N. Kaplan, alleging they helped Zeek thrive while helping Zeek gain unwarranted credibility by lending their professional reputations to a fraud scheme.

    From Brockett’s June 30 “affirmative defenses” to the receiver’s clawback claims (italics added):

    The Receiver has filed suit against two attorneys who provided legal advice to [Zeek operator Rex Venture Group] and Affiliates, including Brockett. Brockett relied on that advice in concluding that RVG was a legitimate business and in committing over $100,000 in his personal resources to grow his now defunct business. Because Brockett’s damages were caused in part by the conduct of the two lawyers, Brockett is entitled in equity at and at law to a credit for all money the Receiver recovers from the two attorneys as a result of his claims against them.

    Also from Brockett’s “affirmative defenses” (italics added):

    On information and belief, the SEC knew or should have known of the RVG Ponzi scheme, but delayed unreasonably in its prosecution of claims against RVG. Alternatively, the SEC knew for some time that RVG was operating as a Ponzi scheme but intentionally delayed disclosing that information to Affiliates and to the public. That unreasonable delay has prejudiced Brockett because he has paid taxes on the money he earned working on behalf of RVG, contributed a significant portion of his earnings to his retirement plan, and has incurred business expenses as a part of his work on behalf of RVG. The Receiver in this action stands in the SEC’s shoes and also delayed to Brockett’s detriment and now seeks return of all monies Brockett earned in connection with RVG, with no credit for the taxes or business expenses that Brockett legitimately paid, but that could have been avoided had the SEC or the Receiver timely advised Brockett of RVG’s true nature or acted in a more expeditious manner.

    And from Brockett’s counterclaims against the receiver (italics added/editing for space performed):

    On information and belief, RVG was not involved in the sale or marketing of any securities, so the SEC was without jurisdiction and the Court did not have subject matter jurisdiction over the SEC Action. Consequently, the appointment of the Receiver was void and of no effect, and all of the Receiver’s actions in his capacity as receiver for RVG have been unlawful and without justification . . .

    RVG’s and the Receiver’s conduct described above and in the Complaint constitutes unfair methods of competition, unfair trade practices, and deceptive trade practices in violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. GEN. STAT. § 75-1.1, et seq.

    The conduct was illegal, offends public policy and is immoral, unethical, oppressive, unscrupulous, and deceptive.

    Bell, the Zeek receiver, is a former federal prosecutor who once received a prestigious award from the U.S. Department of Justice for his work prosecuting a Hezbollah terrorist cell operating in North Carolina.

    But some of the alleged Zeek winners now describe him with adjectives that could peel paint.

    And as they do this, they seek to gut or circumvent the SEC’s authority to prosecute HYIP schemes while contending the agency fumbled the ball in investigating and prosecuting Zeek — that is, if anything was worth investigating and prosecuting at all.

    It is a narrative apt to go over well in MLM HYIP Ponzi Land, the latest major expression of which  is TelexFree, a rabbit hole case if ever there was one.

    NOTE: Our thanks to the ASD Updates Blog.

     

  • BULLETIN: Merrill May Be Turning Against Wanzeler

    James Merrill. Source: YouTube
    James Merrill. Source: YouTube

    BULLETIN: (5th Update 10:06 p.m. EDT U.S.A.) A defense filing by alleged TelexFree co-owner James Merrill may signal a serious divide between Merrill and Carlos Wanzeler, now described by the United States as an international fugitive.

    At the same time, new defense filings by Merrill say arguments made in bankruptcy court that suggest TelexFree could restore its business in a new form should be considered at a hearing to free Merrill on bail.

    Merrill, 53, of Ashland, Mass., has been detained since his May 9 arrest on charges of wire-fraud conspiracy.

    “Indeed, unlike his co-defendant in this case, Mr. Merrill did not attempt to flee or avoid this prosecution, despite clear notice and knowledge of the government’s ongoing criminal investigation,” a lawyer for Merrill said in court filings today.

    Government filings have said Wanzeler, 45, of Northborough, Mass., ducked into Canada under cover of darkness on April 15, and flew to Brazil two days later. Like Merrill, Wanzeler was charged criminally with wire-fraud conspiracy on May 9.

    Wanzeler allegedly fled into Canada on the same day TelexFree’s headquarters in Marlborough, Mass., were raided. Two days later — on April 17 — he allegedly boarded a plane in Toronto bound for Brazil.

    From the defense filing (italics/bolding/carriage returns added):

    On May 9, 2014, more than three weeks after execution of the search warrants, the government filed a criminal complaint and arrested Mr. Merrill. He was still here, in Massachusetts, driving his car on Route 9 at the time of his arrest. At no time during the intervening three weeks did Jim Merrill ever attempt or consider fleeing the jurisdiction. Instead, he was in the process of preparing to lawfully defend himself, fully confident in the legal process.

    The fact that his co-defendant chose to leave the United States on April 15, 2014, or that Mr. Merrill allegedly spoke to Mr. Wanzeler on that date, facts relied upon extensively by the government at the original bail hearing . . . do not remotely support detention in this case. To the contrary, given the inference the government apparently seeks to draw from the telephone records (i.e., that Mr. Merrill spoke to Mr. Wanzeler on April 15, 2014, and was therefore aware he was leaving the country), the logical conclusion to draw from the government’s suggested inference is that Mr. Merrill deliberately chose to remain in the United States.

    In any event, whether they spoke that date or not, and whatever they discussed, the fact of the matter is that Mr. Merrill had the same opportunity as Mr. Wanzeler to leave the country, but he did not do so, with full knowledge he was the subject of a criminal investigation, and fully cognizant that the government believed (rightfully or wrongly) that the company was a massive pyramid scheme . . .

    Through his attorney Robert M. Goldstein, Merrill also is arguing that certain claims made in U.S. Bankruptcy Court by interim TelexFree CEO Stuart MacMillan and turnaround specialist William Runge should be considered in a bail application by Merrill.

    “Indeed,” Goldstein argued, “Stuart MacMillan, a person with over 25 years of management experience who was hired to serve as Interim Chief Executive of TelexFree in February 2014 . . . has averred under oath his belief ‘that through a revamped model [TelexFree] will be able to leverage their uniquely situated product to provide valuable and dependable services to their customers while ensuring that their operations are profitable.’”

    And, Goldstein noted, Runge has contended that TelexFree participants used approximately 11 million minutes of VoIP service in February 2014.

    MacMillan was hired by Merrill and Wanzeler on April 13, and also caused Merrill’s resignation and the firing of Wanzeler on April 17, according to bankruptcy court records.

    With respect to bail, Goldstein argued, friends and family of Merrill would agree to post real estate as security for his appearance at trial and Merrill himself would agree to house arrest and electronic monitoring.

    Today’s defense motion also signals that Merrill may introduce a “reliance of counsel” defense, specifically the counsel of MLM attorney Gerald Nehra.

    Some TelexFree members have painted Nehra as a racketeer who helped fraud schemes such as TelexFree and Zeek Rewards thrive. Zeek, the SEC said in 2012, was a Ponzi- and pyramid scheme that had gathered hundreds of millions of dollars.

    Nehra also was an expert witness for AdSurfDaily in 2008, asserting that ASD was not a Ponzi scheme. In 2012, ASD President Andy Bowdoin pleaded guilty to wire fraud and admitted ASD was a Ponzi scheme that had never operated lawfully from its inception in 2006.

    Merrill’s latest motion to be freed on bail coincidentally occurred on the same day the U.S. Court of Appeals for the 9th Circuit agreed with both a lower court and the FTC that the BurnLounge MLM “program” was a pyramid scheme — despite the fact that a certain percentage of retail sales could have occurred.

    In a lawsuit against TelexFree by the SEC, the agency contended that members could make money through TelexFree without selling anything at all because of an attached passive investment scheme in which members were told they were getting paid for posting ads online about TelexFree. The investment program was known as “AdCentral” and was a sham to mask the pyramid scheme, the SEC alleges.

    Among other things, the SEC contends that credit-card and banking transactions “indicate that, from August 2012 to March 2014, TelexFree received slightly more than $1.3 million from the retail sale of approximately 26,300 monthly VoIP contracts. During the same period, TelexFree received more than $340 million from hundreds of thousands of investors who purchased AdCentral or AdCentral Family contracts. Through the sale of those one-year contracts, TelexFree effectively promised to pay more than $1.1 billion to the investors who posted the required ads.”

    Goldstein argued today that retail sales of TelexFree’s VOIP product may be much higher than the government believes.

    “Most critically,” Goldstein argued, “significant doubt exists regarding the accuracy of the government’s main contention—i.e., that TelexFree sales of its VoIP product amounted to approximately 1% of total revenue, and the company therefore constitutes an unlawful pyramid scheme. In fact, the company’s revenue from the sales of its VoIP product may have amounted to more than two hundred million dollars ($200,000,000.00), a sales-to-revenue ratio in line with accepted industry practice and certainly well beyond the 1% figure the government has stressed to the Court.”

    NOTE: Our thanks to the ASD Updates Blog.

  • Realty Firm Linked To Carlos And Katia Wanzeler Also Linked To Former TelexFree CFO Joe Craft

    (2nd Update 2:12 P.M. EDT U.S.A.) Acceris Realty Estate LLC, a Massachusetts company that listed Katia Wanzeler as its registered agent, was formed by Joe H. Craft in February 2013, according to corporation records in Massachusetts.

    Craft, accused by the SEC last month of securities fraud at TelexFree, is TelexFree’s former CFO. The appearance of Craft’s name in the Acceris document raises new questions about the length and breadth of his ties to TelexFree. It also raises questions about his knowledge of ancillary businesses with ties to TelexFree and his objectivity when appointed TelexFree CFO on April 13 in what effectively was a board meeting conducted by  co-owners Carlos Wanzeler and James Merrill.

    Both Carlos Wanzeler and Merrill now are accused of felonies in the operation of TelexFree, with federal prosecutors alleging they engaged in a wire-fraud conspiracy. Merrill was arrested and jailed on May 9. Carlos Wanzeler has been labeled a fugitive. Records show both men also are under criminal investigation for securities fraud and money laundering.

    Massachusetts resident Katia Wanzeler, the wife of Carlos Wanzeler, was arrested last week on a material-witness warrant at John F. Kennedy International Airport in New York by the U.S. Department of Homeland Security. Court papers link her name to Acceris and say she sought to board a plane bound for Brazil.

    The extent of her knowledge about TelexFree, Acceris and her husband’s business activities is unclear. A court document in the material-witness case signed by Katia Wanzeler asserts her husband “owns [a] real estate company” and that “some houses” may be in the name of Katia Wanzeler.

    The document further asserts that Katia Wanzeler received an “unknown” amount of compensation from a real-estate business and had $3,000 in cash on her person when arrested in New York. The source of the cash and how she had traveled to JFK Airport are unclear in court filings.

    Carlos Wanzeler ducked into Canada and flew to Brazil after raids on TelexFree’s office in Marlborough (Mass.) and his home in Northborough (Mass.) in April, according to prosecution filings.

    Records in Worcester, Mass., link Acceris to at least four properties: two on Coburn Avenue, and one each on Barnard Road and Mount Avenue. The $162,600 Barnard Road property lists “WANZEIER, CARLOS” as the assessed owner, apparently misspelling the TelexFree co-owner’s last name. “WANZELER, CARLOS” is listed as the assessed owner of the $120,300 property on Mount Avenue. The two Coburn Avenue properties list Aurora Loan Services LLC, a Colorado firm in the mortgage-lending and servicing business, as the assessed owner. The properties have an estimated combined value of $337,100. Aurora appears to have no ties to TelexFree.

    The Craft link to Acceris may suggest that TelexFree money was diverted to acquire real estate, not for operational purposes at TelexFree, which says it is a VOIP company. A TelexFree-related entity in Brazil (Ympactus) linked to Carlos Wanzeler and TelexFree figure Carlos Costa also purportedly was in the real-estate development business, perhaps using funds from TelexFree members to fund a purported project involving Best Western Hotels.

    “The representation and other suggestions that TelexFree has a business relationship with Best Western is false,” the SEC alleged last month.

    It is somewhat common in the HYIP sphere for “programs” to plant the seed they have ties to major companies as a means of leeching off famous brands and sanitizing purported opportunities. It also is common for “programs” quietly to divert resources and plow them into investments or acquisitions external to the “opportunities.”

    Much to the surprise of members of the AdSurfDaily “advertising program” taken down by the U.S. Secret Service, now-jailed ASD operator Andy Bowdoin suddenly announced at a 2008 “rally” in Florida that ASD had a real-estate division. ASD later was alleged to have peeled off money from members to retire the mortgage on a Florida home occupied by Bowdoin’s stepson and the stepson’s wife, both of whom later emerged as alleged players in an ASD reload scheme known as AdViewGlobal.

    Other ASD money allegedly was peeled off to purchase a building and a lakefront property in Florida equipped with a Cabana boat, jet skis and other marine equipment. The Feds seized the properties and equipment as fraudulent proceeds of ASD’s $119 million scam.

    It is believed that AdViewGlobal’s start-up capital consisted at least in part of money not seized in the Secret Service probe of ASD because Bowdoin and others had hidden it to avoid capture by law enforcement. AdViewGlobal, for instance, appears to have had at least one bank account in Switzerland, along with access to cash held by offshore processors such as AlertPay and SolidTrustPay. Both AlertPay and SolidTrustPay later were linked to the $850 million Zeek Rewards Ponzi- and pyramid scheme.

    Acceris marks at least the second possible TelexFree offshoot linked to Craft. In April, the SEC said Craft incorporated an entity known as TelexFree Financial Inc. of Coconut Creek, Fla. TelexFree Financial, TelexFree Inc. of Massachusetts and TelexFree LLC of Nevada filed for bankruptcy two days before the SEC brought its fraud action.

    When federal agents raided TelexFree’s Marlborough (Mass.) headquarters on April 15, they allegedly found Craft in possession of 10 TelexFree-related cashier’s checks, including one made out to Katia Wanzeler for more than $2 million.

    New TelexFree CEO Stuart MacMillan said in bankruptcy court that he did not believe that “Mr. Craft was attempting to divert any of the Debtors’ cash or other resources.”

    Both MacMillan (as CEO) and Craft (as CFO) were appointed to their TelexFree positions by Carlos Wanzeler and James Merrill during what effectively was an emergency board meeting in the hours immediately before TelexFree’s April 13 bankruptcy filing.

    The Acceris corporation record in Massachusetts that identifies both Katia Wanzeler and Craft was filed 14 months before Craft was appointed TelexFree CFO and raises questions not only about his objectivity when appointed, but also whether he knew TelexFree had planned to divert resources into real estate.

    Under certain conditions, such diversions can constitute securities fraud and embezzlement.

    MacMillan said during the bankruptcy proceeding earlier this month that Craft resigned as CFO on April 17.

    NOTE: Thanks to the ASD Updates Blog.