Kaboom! It has happened again. Explosive court filings by the government show that kneejerk apologists and defenders of High Yield Investment Programs (HYIPs) and autosurfs are quickly running out of cover when they assert that anything is noble or even real about the programs they relentlessly push for their share of purported profits from introducing others to the schemes.
A law-enforcement task force consisting of the U.S. Secret Service, the IRS and veteran investigators from other agencies that specialize in reverse-engineering complex money-laundering networks have tied funds from a widely promoted online HYIP to the international narcotics trade and a murky money-services business. Research shows that the program and offshoots could have gathered between $100 million and $200 million before the wanton criminality was exposed after exhaustive investigations. The program was advertised as lucrative and harmless on the Ponzi-friendly ASA Monitor and TalkGold forums.
Research by the PP Blog suggests the purported investment program was so sordid that promoters even claimed some of the funds were being used for the “humanitarian” purpose of assisting kidnapping victims in Colombia. In a sickening display of marketing theatrics, a claim was made that investors could “adopt” kidnapping victims for a payment of $1,000 and that the company would set aside $500 in corporate funds for each victim so that their families could have bright futures if the victims ultimately were released by their captors.
The HYIP scheme allegedly was associated with an entity known as Evolution Market Group (EMG), which purportedly had a Forex component known as FinanzasForex. Investigators alleged in January that there were schemes within schemes in a tangled web of domestic and international deception that featured dozens of bank accounts, shell companies and various fronts for money-laundering enterprises, including companies purportedly in businesses such as real estate and car washes.
The scheme was so corrupt, according to court filings, that some investors were told that, in order to leave the program whole, they had to recruit new investors, have the new investors pay them directly — and use the proceeds from the new investors to “recover” their initial outlays.
Members of the same Florida-based task force also are involved in the AdSurfDaily autosurf Ponzi scheme investigation. In the ASD case, records show that the company once advertised a debit card federal prosecutors in Connecticut say was offered by a Dallas-based firm that laundered money for a narco business in Medellin, Colombia. The Dallas firm, known as Virtual Money Inc. (VM), also agreed to launder purported drug proceeds in the Dominican Republic, according to court filings.
Robert Hodgins, the operator of VM, is now an international fugitive wanted by INTERPOL.
ASA and TalkGold are infamous for promoting international financial frauds, with posters routinely describing the programs as legitimate. The very first post about the alleged EMG scheme at ASA referenced yet another Ponzi scheme — 12DailyPr0 — and informed prospects that they could earn commissions by introducing the alleged Forex component of EMG to others.
“I have been in internet business for 3 years now and in autosurf industry from 12dailypro,” an ASA poster began, while promoting EMG’s Finanzas Forex arm, which investigators now say was part of a grandiose scheme with tentacles in Central America, South America and Europe.
“And the (sic) you can earn also money from people under you if you want, you get 0,5% (sic) from every one that you bring (0,5% (sic) from his investment),” the poster said in April 2008.
Court filings in the EMG case paint a picture of an incredibly elaborate maze of companies and bank accounts set up to confuse both investors and law enforcement. At least 59 bank accounts, 294 bars of gold and nine luxury vehicles have been seized in the case. One of the cars was a 2008 Lamborghini Murcielago valued at more than $430,000.
The EMG allegations are explosive because they showcase the now-undeniable fact that people who promote programs such as HYIPs and autosurfs because such programs may pay “commissions” to recruit new members may be operating as fronts or conduits for international drug dealers and money-launderers.
Although ASD is not mentioned in a Task Force affidavit in the EMG case, forfeiture complaints against assets tied to both companies include similar allegations of wanton, relentless fraud. Compellingly, EMG allegedly sponsored “rallies” of members, an allegation in common with allegations in the ASD case. At the same time, research suggests that EMG touted offshore events in exotic locations.
AdViewGlobal, an autosurf with close ties to ASD, also touted offshore venues and once sponsored at least one meeting on a ship at sea, according to members.
Meanwhile, research suggests that both EMG and ASD went to great lengths to mask the schemes just prior to interventions by law enforcement and that both schemes had ties to narcotics traffickers and professional money-launderers.
Both the alleged EMG and ASD schemes were operating during the same general time period, roughly between 2006 and 2008, according to court filings. Each of the schemes had components of investment fraud that targeted people who spoke Spanish or English. Task Force agents have been investigating entities and individuals linked to EMG since June 1, 2008, including a mysterious entity known as DWB Holding Co.
“The conspiracy to commit wire fraud offenses that gives rise to this action is an international Ponzi/Pyramid scheme operated by Evolution Market Group (EMG) d/b/a Finanzas Forex, DWB Holding Company (DWB), Superior International Investments Corporation (SIIC), German Cardona (Cardona), Daniel Fernandez Rojo Filho (Rojo Filho), Pedro Benevides (Benevides) and others in which investors have been defrauded out of millions of dollars,” federal prosecutors said.
Federal agencies, including the U.S. Drug Enforcement Administration (DEA), seized “financial accounts” in DWB’s name during a drug investigation in Arizona, according to court filings in Florida. One account seized during the drug probe contained more than $24 million. The money was seized on Aug. 22 and Aug. 26, 2008, about three to four weeks after agents seized more than $80 million in the ASD case.
A section of U.S. law referenced in the EMG forfeiture complaint refers to “cocaine” and “marihuana,” among other drugs.
As the investigation progressed, agents established additional money-laundering links — and other bank accounts were seized, according to court filings. The precise mechanism by which purported investment money ended up in accounts seized in the drug case was not immediately clear.
Shameful Behavior By HYIP And ‘Surf Advocates
Still promoting autosurfs and HYIPs? Still selling yourself on the delusional theory that they’re harmless and that only “Socialists” or “Nazis” would support the government’s efforts to destroy them? Still arguing that journalists who write about the cases are “liberal” lackeys, have no understanding of the “real” issues and won’t be pleased until every single American entrepreneur is assigned an individual bureaucrat to make their lives miserable?
Still calling for federal prosecutors and Secret Service agents to be investigated because you love your downline commissions gleaned from Ponzi proceeds and the sale of unregistered securities, don’t want to part with them and figure that, if only you scream loudly enough and long enough, you’ll be able to persuade your fellow Americans that the cops are the real crooks?
In August 2009, the PP Blog reported that members of ASD, which is implicated in an autosurf Ponzi scheme involving tens of millions of dollars, advertised that the company used the debit-card services of VM in Dallas. Research suggests that Hodgins or a VM designate attended an ASD function in Florida shortly after ASD’s launch in late 2006.
Prosecutors said that VM helped the Colombian drug operation offload at least $7.1 million in illegal proceeds at automated teller machines in Medellin. Medellin once was home base of the infamous Medellin Cartel, operated by drug lord and terrorist Pablo Escobar. Escobar was killed by Colombia National Police in 1993.
Escobar was implicated in the assassination of Colombian presidential candidate Luis Carlos Galán and the bombing of Avianca Flight 203 over Colombia, which killed 110 people.
Autosurf and HYIP promoters long have claimed that participation in the illegal enterprises is harmless. The indictment against VM — and the allegations that it laundered money for a Colombian drug organization — demonstrates the dangers of participating in murky businesses in which participants have no way of knowing what is in the hearts and minds of other participants.
It was not immediately clear how long ASD used the VM debit card, which was heavily promoted in early 2007 when ASD said it was having cash-flow problems. By 2008, ASD said it was generating tens of millions of dollars of revenue per week. Some members said they observed huge sums of cash and brief cases full of cashier’s checks at ASD rallies in Florida cities.
Two Colombian conspirators “directed their agents in the United States to provide proceeds of sales of controlled substances to agents of VIRTUAL MONEY, INC. to be sent to Colombia so the proceeds could be made available to the clients,†according to the indictment against Hodgins.
VM “stored value cards were used by the members of the conspiracy to make available at a Daviviendo Bank ATM in Medellin, Colombia the peso equivalent of US $2,430,810.24 in April 2006; US $2,437,023.53 in June 2006; and US $2,257,761.45 in August 2006,†prosecutors charged.
VM and its president, Robert Hodgins, were indicted under seal in 2008 in a case brought by the DEA. The seal was lifted in September 2008, a month after the U.S. Secret Service seized 15 bank accounts in the ASD case.
ASD was accused by the Secret Service of operating an international Ponzi scheme.
One of the alleged components of the ASD scheme was an autosurf named LaFuenteDinero, which targeted people who spoke Spanish. Records show that one of the Secret Service agents involved in the ASD investigation formerly was a member of a DEA Task Force in Florida and was experienced in “investigating large criminal organizations that distributed and sold controlled substances.â€
In November 2009, the PP Blog reported that the Secret Service expressed a fear in court documents originally filed under seal that ASD President Andy Bowdoin had become aware of scrutiny into his business affairs in 2008 and planned to flee the United States.
“Based [on] ASD’s indication that it intends to cease accepting funds into [Bank of America] at the end of July 2008, Bowdoin’s indication that he has relinquished his interest in Golden Panda [Ad Builder], and an indication that Bowdoin intends to establish his offshore presence, and the recent complaints governmental authorities have received, I believe that Bowdoin is aware of increasing scrutiny and that he intends to move himself, his proceeds, and, until it collapses possibly his operation, offshore,†the Secret Service wrote in an affidavit.
Golden Panda was the purported “Chinese” arm of ASD, according to court filings.
The agency said Bowdoin had moved millions of dollars into Canada just prior to the seizure of his assets.
Read a warrant originally issued under seal Aug. 1, 2008, by U.S. Magistrate Judge Alan Kay, who ordered the U.S. Department of Homeland Security to seize a Bowdoin bank account that contained more than $31.6 million. The entire sum was in an account under Bowdoin’s name. Agents eventually seized at least nine other Bowdoin accounts that, in the aggregate, contained more than $34.2 million.
In recent days, the PP Blog reported that the alleged INetGlobal autosurf Ponzi scheme in Minnesota, which allegedly targeted Chinese prospects, had ties to at least three other Ponzi cases, including ASD and a separate Florida case in which it was alleged that the same debit-card company that provided services for INetGlobal provided services for a company implicated in a $22 million Ponzi scheme with ties to Panama.
Some INetGlobal members provided Chinese prospects instructions on how to offload profits onto debit cards that could be used to withdraw cash at ATM machines, according to promotional material for INetGlobal. About $26 million has been seized in the INetGlobal case.
INetGlobal-related entities such as Cash Cards International (CCI) and V-Cash now have been linked to a fourth financial-fraud scheme known as Megafund. In the $13 million Megafund case, it was alleged that CCI and V-Cash provided services for certain participants in the Megafund HYIP scheme. At least $175,000 purportedly transferred by a mysterious entity known as MexBank S.A. de C.V. passed through CCC and V-Cash, according to court filings.
The money was described in court filings as commission payments for the Megafund scheme. Authorities later determined that MexBank was “neither a bank nor a legitimate financial institution licensed” in Mexico, despite its official-sounding name.
Bradley C. Stark, one of the defendants in the Megafund case, was convicted in 2003 of possessing counterfeit government securities. He was released from prison and was on probation while participating in the Megafund scheme, according to court records. The scheme targeted Christians, and investors were told money was being directed to humanitarian causes.
Forbes magazine wrote about the Megafund case in July 2005, in a story titled “Too Good To Be True.”
Less than four years later, the AdViewGlobal autosurf sent an email to members that included Forbes’ logo in a sales pitch. Research showed that the logo had been hotlinked from Forbes’ website and that AdViewGlobal members were attempting to create the appearance that the famous publishing company had endorsed the autosurf scheme. Like the Megafund and EMG schemes, participants in AdViewGlobal were told a portion of the money was devoted to humanitarian causes, including a purported fund devoted to preserving the rainforest.
In the AdSurfDaily case, members said the company touted a contribution of 100,000 “ad packs” to a charity. The donation was used by promoters to position Bowdoin as a benevolent human being.
At an ASD rally in Las Vegas in 2008, Bowdoin asserted that he thanked God daily for making him a “money magnet,” and he implored members to imagine themselves coming into large sums of money through rebates on ASD advertising purchases that not only would return 100 percent of the cost of the members’ advertisements, but also pay them at least 25 percent beyond that — more if they rolled over a percentage of their purchases.
The payment-processing arm of INetGlobal also has been tied to a Ponzi scheme known as Learn Waterhouse, which purportedly advertised a presence in Mexico, according to court filings. Four people have been sentenced to lengthy prison terms in the Learn Waterhouse case, some of the underpinnings of which led to the successful prosecution of INetGlobal operator Steve Renner for income-tax evasion in December 2009.
Filings in the Learn Waterhouse case assert that Renner, who operated both CCI and V-Cash, used customers’ funds as though they were his own.
When the Learn Waterhouse receiver tried to reclaim the funds to make Ponzi victims as whole as possible, the money was not available because Renner had spent it on personal purchases, according to court filings.
If you are playing the HYIP and autosurf games, the PP Blog suggests you read these documents from the alleged EMG Ponzi case.
This promo by a Narc That Car member appeared on a .org website that used AMBER Alert's name in its URL. The U.S. Department of Justice, which administers the AMBER Alert program, denied in February that it had any affiliation with Narc. Days later, Narc removed a reference to AMBER Alert in its own video production to advertise the opportunity. The actions of both Narc and its promoters have led to questions about whether the company had come into possession of money based on misrepresentations that caused prospects to believe they were helping out worthwhile causes by joining Narc. The very first Narc promotions observed by the PP Blog were authored by members of AdSurfDaily and Golden Panda Ad Builder, companies implicated in a Ponzi scheme involving tens of millions of dollars.
EDITOR’S NOTE: Narc That Car says it is a private company and has no duty to reveal the names of its data clients. This essay challenges Narc’s arguments.
UPDATED 4:33 P.M. EDT (U.S.A.) The public has a compelling interest not only in learning the identities of Narc That Car’s clients through appropriate channels, but also in learning the identities of the company’s data-gatherers who may hold jobs in the public sector and are supplementing their income by moonlighting for Narc as consultants.
Narc is a highly questionable business. Moonlighting by public employees in highly questionable ways is one of the elements in the Scott Rothstein Ponzi scheme in Florida. Rothstein is alleged to have employed off-duty members of law enforcement as bodyguards while he orchestrated a $1.2 billion fraud. Moonlighting also is an element in a recent case in which investigators in Georgia probed allegations of sexual assault against Pittsburgh Steelers’ quarterback Ben Roethlisberger, who employed off-duty police officers as bodyguards.
The assault allegedly took place in the women’s restroom of a nightclub. Roethlisberger was not charged in the case, but was suspended for six games by the NFL for conduct detrimental to society and the league. Two Pennsylvania police officers working for him potentially face disciplinary action for sullying the reputations of their departments and not extricating themselves from a situation in which a crime or crimes might have been committed in their presence.
Why Wouldn’t The BBB Have Questions?
Today the PP Blog challenges its readers, including its critics, to read this essay, observe the sampling of graphics and answer a few simple questions: Why would the Better Business Bureau, responsible businesspeople, journalists, law-enforcement agencies and taxpayers not have questions about Narc That Car? (Now suddenly known as Crowd Sourcing International after issuing checks to members under at least two different names earlier in the year.)
And why isn’t the company stepping forward with answers that enlighten, not deflect or hop-scotch, around key issues? The company should supply the information to the Better Business Bureau and any law-enforcement agency that asks for it. Information Narc provides could be kept private while any investigation ensues and released by the government if it is determined that wrongdoing has occurred.
Narc says it is in the business of paying people to record the license-plate numbers of cars for entry in a database that will be used by “lien holders” and companies that repossess automobiles when owners default on loans.
Members of Narc say they record plate numbers randomly — in places such as parking lots — on the off-chance the vehicle is or later will become a target of the repo man. Narc’s data-gatherers are required to provide the address at which the plate number was viewed and recorded. Because the location data likely will be stale and the car likely will be moved before it becomes the subject of a repo bid, there are legitimate concerns about the actual usefulness of the data to lien-holders and concerns about whether Narc is just an excuse for a business, not an actual business capable of making profits from retail sales to database clients.
There also are significant concerns about privacy, and the propriety, safety and legality of the Narc program. Some Narc members have advertised that they collect “extra” plate numbers and use them as incentives for prospects to qualify for commissions without gathering data themselves, a practice that leads to troubling questions about whether Narc members have provided corrupt data to the company. An unknown number of plate numbers recorded in Narc’s database may be third-party sightings passed along to incoming members who entered bogus addresses at which plates purportedly were sighted — all to qualify for payments.
Equally troubling is that Narc, which has to know that some members are providing plate numbers for downline recruits, does not reveal the names of its database clients, saying the information is proprietary. There may be no way for existing Narc clients to know whether the data Narc reportedly is selling has been corrupted by the practices of members so eager to earn money that they’re giving away plate numbers and the recipients of the plate numbers are fabricating addresses at which the plates were spotted.
Corrupt data is worthless data.
There are reports that Narc can verify the validity of a plate number — but it is inconceivable that Narc has the means to verify that the plate actually was spotted at a specific address. Adding to the ripples of a potentially corrupt data stream is that some Narc members have instructed incoming members in purported “training” videos not to bother noting the address at the time the plate number was sighted. Rather, the prospects have been told to go home and look up the address on the Internet or refer to a store receipt if they happened to be shopping at, say, Walmart or Giant Eagle, when they were doing their side business for Narc.
These practices introduce not only the potential for abuse, but also an undeniable element of “wink-nod” into the business proposition. Gather extra numbers. Give them away. It doesn’t really matter if the car was parked there or not. Any address will suffice. Just get an address off the Internet.
Members appear to be able to enter any address they please, whether the car was spotted there or not. Meanwhile, some members have openly said they don’t like their neighbors knowing they’re recording plate numbers for a fee, so they record the numbers in the same fashion a character in a spy novel hides behind a newspaper or makes himself invisible in plain sight. The casualty is transparency at virtually all levels, meaning clients don’t know if they’re buying reliable data, members of the public don’t know if their cars are being watched and if profiles are being created, and Narc members don’t know anything other than the information Narc chooses to share.
Public Esteem For Police At Stake Amid Confusing Claims
Narc members say police officers have joined the Narc program as data-gatherers and upline sponsors. If true (and the PP Blog believes that police officers are involved in Narc), it is incumbent upon Narc to publicly identify the police departments for which the officers work.
Because of claims made by Narc promoters, the public has the right to determine if officers who belong to Narc are collecting data while on “city time” or during their off-duty hours and assisting Narc in ways that nonpolice members of Narc cannot.
Why? Because Narc largely operates in the shadows. Moreover, some of the public claims of its promoters have been beyond reckless — and only Narc knows the truth about how it is paying members and using the data they collect. If Narc has police officers among its ranks amid these circumstances, it means the officers are promoting a business they may know very little about.
Police officers should not be promoting a business they know very little about, especially amid these circumstances. That Narc is paying members is not evidence that no wrongdoing is occurring. All successful pyramid and Ponzi schemes pay members. Moreover, the advertising and “training” claims of Narc promoters alone give officers all the information they need to pull out of Narc today and potentially spare themselves and their departments embarrassment later — just as Rothstein’s bodyguards and Roethlisberger’s bodyguards should have pulled out.
That the officers are repping for Narc and not providing security services is immaterial. Narc emits the same kind of stink. It stinks even if it’s legal.
Few people would begrudge a police officer for supplementing his or her income in legitimate fashion — but that is not the issue here. The issue is whether Narc and many of its data-gatherers are legitimate. The Better Business Bureau has expressed concerns that Narc might be a pyramid scheme. Whether Narc is a pyramid scheme is not the only issue, however. This essay points out some of the other issues.
Only Full Transparency Can Lead To Clarity For Narc Members
Absent full transparency from Narc, no police officer or nonpolice officer gathering data, asking people to send money to Narc and building Narc downlines can determine if they are promoting a scam.
Period.
There have been reports in recent days that Narc — through its own unfiltered channels — has claimed the reason it does not publish data clients’ names is because such clients got “incessant” calls when it did publish the names.
This claim strikes us as the precise kind of dreck that cannot pass the giggle test on Main Street but somehow passes the plausibility test in the most florid hallways of MLM, which much of America and the world already view as a cesspool. Not only is the claim absurd, it also is contrary to promoters’ claims that Narc was employing a revolutionary MLM concept by which members would build the database product first and Narc would sell it to retail customers later. This approach could be illegal if Narc does not have “true” customers (database clients) in sufficient volume to destroy the pyramid concerns. Although some Narc promoters have claimed the company has “investors,” the claim itself only leads to more questions: Who put up the purported investment money if investors actually exist?
Narc promoter “Jah” (see below) has been telling prospects for months that Narc reps engage in “No Selling, Trying, Switching, or Using Anything” — in short, Narc’s data-gatherers do not buy the retail database product. Rather, they pay an up-front fee to earn the right to submit plate numbers, become Narc recruiters and have the prospect of earning more money by sponsoring more fee-paying members who pay for the right to submit plate numbers and become recruiters themselves, and Narc sells the database to another set of customers.
These claims and similar claims have led to concerns that Narc was operating a pyramid scheme. Such an approach also can be viewed as a Ponzi scheme. Absent continuous membership growth and real profits from sales to retail database customers to support the payments to Narc’s data-gatherers, the business could collapse.
A video promotion in February by another Narc member showed a tab labeled “Clients.” The video was recorded inside the member’s Narc back office and appeared on YouTube — after Narc had been operating for months. “Don’t worry about that right now,†he said of the “Clients” tab. He did not explain why members should not concern themselves about the tab, which led to questions about whether Narc had data clients in sufficient volume to quash concerns that members were getting paid exclusively or almost exclusively with money from other members — not retail sales to database clients.
This Is ‘Training?’
The promo was described as a teaching tool in a YouTube headline titled, “NarcThatCar Training Video.†In the same video, viewers were told that the parking lots of libraries, schools and universities provided a steady stream of license-plate numbers to be harvested and entered into the Narc database.
“So, carry a pen and paper with you,†the narrator instructed. “You can go to parking lots. You can go to libraries. You can go to schools. My wife goes to the university, and just goes through the parking lot and collects license-plate numbers.â€
An address in the video suggests plate data was recorded in or around the University of Nevada, Las Vegas. The address is the same street address as the UNLV campus. Indeed, one Narc promoter after another has pointed one prospect after another to sources of license-plate data, implying that cars parked on both public and private property were fair game for downline commissions.
Not even public schools, universities and libraries were off limits in Narc’s universe of members. Narc itself has said its database will be used to locate people, boats, cars and any item imaginable. Data is being mined on both private and public property, and Narc itself says the plate numbers are checked against “the DMV,” commonly known in many U.S. states as the Department of Motor Vehicles.
If Narc’s data is checked against the DMV, then Narc’s business is the public’s business. The public has an interest in determining the identities of Narc’s data clients in no small measure because the data potentially could be used to monitor private citizens and people who hold sensitive jobs in government, science, research and the military.
Narc’s explanation that its clients’ names are proprietary is unacceptable. Its own members are claiming plate numbers are “public” information and “training” prospects to drive through “university” parking lots and the lots of retail stores and restaurants to get a supply of tags, which are checked against DMV records.
If you’re shopping at Walmart, for example, your plate number could be recorded and entered in Narc’s database by a Narc participant in search of MLM commissions and interested in recruiting prospects who could record your plate number elsewhere, leading to even bigger commissions and an even greater loss of your privacy. Incredibly, some Narc promoters have anticipated the public’s objection to such a pursuit, answering it with a chilling argument that people who’ve done nothing wrong have nothing to fear.
That is just downright creepy. Is it any of Narc’s business where you park your car because it wants to help the repo man repossess your neighbor’s car? And what if the repo man isn’t Narc’s only client?
What if a company poses as a repo company or a “lien holder” company and has an objective totally unrelated to the repossession of collateral? What if a suspicious husband with a violent streak, for example, wants to monitor sightings of his wife’s car? What if a private investigator wants to determine where you spend your time? What if the government wants to determine if you’re seeing a shrink? What if an unfriendly government wants to monitor the whereabouts of an important government official or scientist?
Narc’s purported assurance that members don’t record the plate numbers of government vehicles is hollow because government employees own private cars and do not always travel in government vehicles. The sensitivity of their jobs does not vanish if they are in their private cars whether on-duty or off, and the prospect that a data profile on the movement of these cars can be created and offered for sale is unacceptable.
It is unacceptable whether the target for monitoring is employed by the government or is just an ordinary citizen employed by any private company. Cars are inexorably linked to their owners. To track the car is to track the owner. Left unchecked, Narc could be used as a data source by private and public entities to monitor people. That is inconsistent with liberty and privacy. It is offensive by its very nature because it potentially puts people who don’t know they are being watched under a microscope, and it is offensive to any notion of propriety because it potentially puts private citizens in the business of spying on other private citizens to qualify for downline commissions. That Narc’s own members are cheerleading for the supposed riches to be made by helping the repo man theoretically get the neighbor’s car causes one to wonder if America is taking leave of its senses and willing to package and sell anything.
What’s next? News releases from Narc that announce yet-another successful repo brought about by the company’s army of commission-based spies?
A World-Class Example Of MLM Excess
MLM has served up a doozy this time: Peel away the hype and Narc emerges as a private spy-agency-in-waiting. At last count, 52,000 people have expressed a willingness to help Narc build the database and share in the joy of knowing they’ve helped the repo man separate a struggling, stay-at-home Mom from the car she shares with her laid-off husband who lost his job when the economy went in the tank.
Lien-holders do have the right to seize their collateral if a car owner is in default. Lenders do have a corresponding duty to be responsible to investors and depositors to protect assets. But to create a cheerleading section for the repo man when unemployment is at 10 percent is something only the darkest minds in MLM could serve up. That people seem actually to be comforting themselves with the thought that they’ve performed some sort of civic duty by ratting out their neighbor to the repo man and somehow made America a better place is one of the surest signs yet that a big pocket of U.S. commerce has become morally bankrupt.
And that’s before the Narc privacy and security issues are examined in any detail.
Does anyone really want Narc to come into possession of data that could be used to create movement profiles on private citizens in any context — all under some implausible theory that the repo man needs extra help?
Sensitive research — including research paid for by the government — is performed by some universities. The data could be used to monitor people who hold sensitive jobs. This makes it the public’s business to determine precisely what Narc is doing and how and why it is doing it.
A ‘GOOGLE Opportunity Like Never Before’
Narc, according to an email members received, also is blaming the media for not understanding what it is doing. Its response to the bad press it has received recently was to tell members not to worry, that Narc remains a “GOOGLE Opportunity like Never before” — and then close the email with insipid, flowery motivational drivel, including this gem: “EVERYTHING is funny when you [sic] making MONEY!”
Even dispossessing your cash-strapped neighbor of his car, apparently, is funny as long as it pays a downline commission.
The email reminded us of the now-defunct Surf’s Up forum, which promoted the now-defunct AdSurfDaily Ponzi scheme by instructing members that “there are no prizes for predicting rain, only for building arks.” Perhaps finding the fuel they needed in Surf’s Up’s trite prose, many members of ASD pressed forward, introducing prospects susceptible to the harmful power of trite prose to one Ponzi scheme after another.
As we proceed in this essay, we ask readers to note that check-waving videos and “earnings” reports produced by some members of MLM programs are not evidence of success or honesty. It often is the case in the MLM sphere that promoters who throw caution to the wind and pitch programs they know little or nothing about end up the biggest winners, with the vast majority of participants breaking even or losing both money and time that could be better spent trying to make ends meet by other means.
Moreover, it often is the case that willfull blindness and forced ignorance are the dominant traits displayed by promoters. Incongruously, a lack of knowledge about companies and products is what often drives MLM profits.
Practiced hucksters often prefer ignorance themselves, while also preferring prospects who will not ask hard questions and are willing to pass along hype and unchecked information as though they were the high gospel of truth.
BBB’s Concerns Grow
Although Narc That Car provided the identity of a single, purportedly “major” client to the Better Business Bureau April 27, the BBB now says “the client’s identity only raises more concerns” about the company.
The BBB did not disclose the name of the Narc client or reveal why its doubts were heightened after Narc provided the information. On its website, however, the organization said it is “communicating” its concerns about the client to Narc. The BBB also noted its inquiry into Narc advertising claims remains open. The advertising inquiry began Jan. 18. It has been unresolved for nearly four months.
On March 3, the BBB noted, the organization asked Narc to provide a “comprehensive” list of clients. Narc responded April 27 by providing the name of “one of its major clients,” a development that not only did not dampen the BBB’s concerns that Narc was using a pyramid business model and did not have a product with true value, but also ramped them up.
Narc That Car has identified Rene Couch as its vice president of marketing. He also has been listed by titles such as executive vice president and chief field advisor, leading to questions about whether Narc and its promoters were making things up as they went along.
Narc already has an “F” rating from the BBB, the lowest score on the organization’s 14-point scale. In the past two weeks, at least two television stations in major markets in the United States have aired reports about Narc, questioning Narc’s business practices, the level of knowledge Narc’s promoters have about the Dallas-based company and Narc’s willingness to address the questions in an atmosphere of transparency.
Meanwhile, some Narc promoters have been attacking the BBB and accusing the TV stations of biased reporting — instead of insisting that Narc get out in front of the stories and concerns and put the issues to rest.
BBB Under Attack
One of the promoters attacking the BBB is Ajamu M. “Jah” Kafele. Kafele once was accused in Ohio of practicing law without a license and ordered to pay a civil penalty of $1,000 by the Ohio Supreme Court after the bar proved its case against him.
Attorney or not, Kafele is no stranger to the courts. What follows in the passage below is an exchange between Kafele and the attorney for a law firm he had sued for attempting to collect a debt. The exchange started after the lawyer asked Kafele how old he was. In response, Kafele attempted to assert his 5th Amendment right not to answer the question — in a case in which he was the plaintiff, not the defendant, and a case in which a federal judge admonished him that his “invocation of the Fifth Amendment in response to that question was improper.”
A. [Kafele]. I don’t recall my age. Next question. Q. [Defense counsel]. What was your date of birth? A. I don’t recall my date of birth. Q. Do you have a driver’s license on you? A. No, I don’t. Q. Do you have any form of identification on you? A. No, I don’t. Q. Where were you born? A. I don’t recall. Q. Do you have parents? A. I don’t recall. Q. Do your parents — are your parents living or deceased? A. I don’t recall. Are you going to ask me some relevant questions to the defense and claims or are you going to find out about my livelihood for your personal gain? Q. You’ve indicated you don’t recall whether — A. That’s right. Q. — or not you have parents. Do you have siblings? A. I don’t know. Q. Are you married? A. I don’t recall. Q. Where do you live? A. I don’t recall. Q. What’s your home address? A. I don’t recall. Q. How long have you lived there? A. I don’t recall. Q. What’s your current occupation? A. Who said I had an occupation? Q. Are you gainfully employed? A. Who said I was employed? Q. I’m asking you a question. A. I’m asking you, who said I was employed? Q. Are you employed? A. I don’t recall being employed.
Three-figure, check-waving YouTube video by "Jah," who publicly announced his downline group was "not going to be out here flashing, you know, five-figure checks.†The video, which featured a claim that repping for Narc was like working for the "Census Bureau," later was removed from YouTube's public site. Why it was acceptable to publish a three figure-check but not a five-figure check was never explained.
Strikingly, Kafele, who once believed it was prudent to sue lawyers who were trying to collect on a debt, now has thrown in his lot with Narc That Car, which says it wants to help repossession companies collect their collateral when buyers default on loans. The case cited above did not have a happy ending for Kafele: A federal judge tossed the preposterous lawsuit he had brought, saying Kafele had engaged in “egregious” conduct.
“Plaintiff’s repeated and persistent refusal to participate in the discovery process has clearly been willful and done in defiance of the express and unambiguous orders of this Court,” U.S. District Judge John D. Holschuh said. “As a result, the defendants have been denied virtually all discovery in this case. Moreover, plaintiff has been warned — most recently in the April 4, 2005, Opinion and Order granting defendants’ motion to compel and awarding monetary sanctions against plaintiff, . . . that his continued refusal to participate in the discovery process would result in the dismissal of the action. Nevertheless, plaintiff persists in attempting to transform the litigation process initiated by him into a game. Under these circumstances, no sanction other than dismissal of the action is appropriate.”
Kafele now is telling prospects he is an authority on Narc That Car. He said he has hundreds of members in his downline. He has been conducting meetings in Ohio to recruit even more prospects, according to his website.
Fox TV Reports Exposed Promoters’ Willful Blindness
Not a single Narc promoter approached by Fox 5 in Atlanta in a package aired recently could identify a single Narc data client — and yet the promoters were out in force recruiting people for the firm. Meanwhile, Fox 11 in Los Angeles recently visited YouTube and reported on unsubstantiated claims passed long by Narc promoters to a worldwide audience, noting that California Attorney General Jerry Brown was seeking information on the firm.
It is known that attorneys general from at least three states — Georgia, California and Texas — are aware of growing doubts about Narc’s business practices.
Narc’s approach — and the approaches of its promoters — have caused even longtime proponents of multilevel marketing (MLM) to question whether the often-controversial industry had reached an all-time low and whether participants would buy into any scheme under the sun. It is clear that promoters either do not know if Narc is engaging in legitimate commerce or do not care if it is not
Narc promoter shows prospects that parking lots at the University of Nevada Las Vegas are an excellent source of license-plate data. Narc prospects in this promoter's YouTube video were given no guidance on whether the university or campus police needed to be consulted before recording the plate numbers of students, faculty and employees. The promoter said "libraries" were excellent sources of license-plate data.
— as long as commission checks for recruiting members keep streaming in.
As things stand, there is no way to determine if Narc is operating legally. The reason there is no way is that Narc does not reveal the names of clients, will not step out of the shadows, put an executive and attorney on TV or consent to a probing interview by a print journalist to answer the doubters and publish verifiable financial data audited by a CPA that shows inputs and outputs and the sources of revenue.
Any argument that suggests members are not entitled to this data or that the data is proprietary because Narc is a “private” company is not going to fly. The company’s promoters are saying that license-plate numbers are “public” information available for the harvesting by a membership roster of 52,000 people for the purpose of populating a database that Narc itself has said is going to be used to locate people, cars, boats and any item imaginable. That alone makes it the public’s business. Beyond that, promoters say Narc is using government databases to verify data. The assertion that Narc is using the DMVs of America’s 50 states to verify registration data gives the public a compelling reason to demand answers from the company.
Narc has a duty to tell the public through appropriate channels precisely what database it is using to cross-check data entered by members and how it is accessing the database. It also has a duty to reveal the names of its clients, explain how it screens clients, explain how it screens its data-gatherers, explain whether Narc is able to connect a car to a person when members enter license-plate numbers and explain how the data is secured.
Absent complete transparency, the privacy of every person whose tag number is entered by a Narc member is a potential casualty. It is inconceivable that Narc is empowering itself to collect your license-plate number — no matter where you park — because it has secret clients in the business of repossessing cars and there is a small chance that you are behind on your car payments or a person you do not even know parks his or her car in the same parking lot as you and is behind on his or her car payments.
This is the business Narc has chosen to enter — and the public has a compelling interest in knowing precisely how it operates.
Narc Subjecting Own Promoters To Embarrassment; Promoters, Company Blame It On Media
Narc exposed its own Atlanta-area members and prospects to embarrassment after a Fox 5 reporter showed up to a pitchfest with a hidden camera and could not get answers even to basic questions, but the company has not issued a statement that addresses the concerns in any real way and is suggesting the media is to blame.
No part of the Narc story is consistent with transparency or ordinary business practices — and the media attention likely is only now beginning. Viewers in Atlanta and Los Angeles — two of the largest markets in the United States — now have been treated to an appalling lack of professionalism in the MLM sphere, which only will fuel the public’s legitimate doubts about the industry as a whole.
Why wouldn’t the public believe the Internet is just one giant cesspool after viewing the reports on Fox here and here? If you’re a Narc fan and want to argue that Narc was ambushed, you need to know that Narc had plenty of opportunities to answer questions from journalists before they started hiding their cameras. The PP Blog, for instance, has attempted to contact Narc multiple times. The Blog is aware that other news sites have met dead ends in bids to get Narc executives and knowledgeable employees to answer questions, including NBC-5 of Dallas-Fort Worth and others.
The Fox 5 Atlanta report neatly exposed promoters’ willingness to cheer for a program, duck responsibility for their claims and then hide behind the skirt of a company when the heat became too intense.
The trouble with hiding behind Narc’s skirt, however, was that the skirt provided no cover for members. Promoters found themselves in the awkward position of taking heat for a company that did not defend them in any credible way. Narc’s skirt provided no cover at all, and yet some members merrily continue to promote the opportunity and apparently see no incongruity at all.
Let us spell it out: If you’re going to say the media must get answers from the company rather than promoters in the field, you are hiding behind the company’s skirt. And if the company does not provide the answers, you have no cover at all. This creates the appearance that the prospect of making money is the only thing you value. You certainly don’t value transparency if you’re hiding behind the company’s skirt, and the company certainly does not value transparency by ducking questions, avoiding them altogether or spinning things to create the appearance that the media are responsible for Narc’s lack of transparency.
The media are not responsible for Narc’s bad press; Narc and its promoters are. One Narc promoter created a red banner on a .org site to create the appearance that sending money to Narc was like donating to the Red Cross. Other promoters appropriated the name of the AMBER Alert program to do the same thing on a .org website. At one point the message became so impossibly butchered that a promoter urged prospects to “Help AmberAlert and other organizations find repossessed cars.â€
Some Narc members made much ado about a TV anchor referring to Narc as a “job,” but dozens of Narc members posted ads on craigslist that advertised Narc as a job. Promos for Narc have been reprehensible. One member claimed Narc would be used to help the Department of Homeland Security find terrorists. Others claimed that the FBI and the AMBER Alert program endorsed Narc.
These were blatant misrepresentations — plain and simple. If the MLM world wants the rest of the world to take it seriously, it has to quit serving up this slop and stop apologizing for its chefs and the seemingly mindless cheerleaders who cheer for the chefs even when roaches are swimming in the soup.
In the AdSurfDaily case, for instance, the Secret Service said the chef served up a Ponzi scheme. How did the cheerleaders respond? They called the Secret Service, the agency that guards the President and the Treasury, Nazis and “Satan.”
Now, amid a circumstance in which the BBB — one of America’s most recognized business organizations — has questioned whether the Narc chef is serving up a pyramid scheme that potentially affects tens of thousands of people, the cheerleaders are responding by trying to plant the seed that the BBB has a secret agenda and is infested with roaches. It is reprehensible — and it must not stand.
Myriad questions about Narc remain, including these:
Why are Narc promoters so willing to represent a company they know so little about?
Does Narc not understand that vague, ambiguous claims on its own website and its apparent unease in addressing media questions are what’s driving the story?
Why has a Narc PR spokesman not emerged to address media inquiries and become the face of the company? Why aren’t Narc executives stepping out in front of the cameras?
Why have the statements Narc has issued not explained the incongruity of insisting that license-plate data is “public” information while at once insisting the public has no right to know who its clients are, how they are being screened, how data-gatherers are being screened and how the information is being indexed and sold?
Why does Narc insist it has the right to collect your license-plate number and offer it for sale to a third party whose identity and motives are unknown to you?
Why do tens of thousands of Americans suddenly seem so willing to waltz through parking lots of major retailers to record the plate numbers of their neighbors and to recruit others to do the same — when they have knowledge in advance that troubling questions are being asked about the firm?
Why does the repo man suddenly need the help of a commission-hungry MLM army to dispossess people going through lean times?
Any chance that the “buy here, pay here” car business and the title loan business are backing Narc because the industry’s practice of approving anyone for a loan actually is driving repos?
Why are prospects so willing to hand over money when neither sponsors nor Narc itself are willing to provide information that could make the concerns go away?
How many data clients does Narc have and when did the clients become clients? How much revenue do the data clients generate for Narc weekly and monthly?
Is it possible that Narc is selling data to itself through a process in which it formed another company to become a Narc client or is relying on an alter ego of some sort or close association with another firm to create a client out of thin air?
Is Narc closely connected to the “buy here, pay here” automobile business, meaning an entity with a close association with Narc is making high-risk, front-loaded, usurious loans to disadvantaged consumers?
Is Narc closely connected to the title-loan and payday loan business?
Is Narc closely connected to the repossession business?
Does Narc have an investment angel? If so, what is the source of the money and was a private offering involved?
Is Narc making pyramid or Ponzi-style payments to members?
Narc promoter tells prospects the company was started to provide data to the Amber Alert system.
Who are Narc’s executives beyond CEO William Forester?
What are their names, job descriptions and backgrounds?
Do they have high positions in the MLM organization and rely mostly or exclusively on commissions or do they draw a salary?
Who are the members of Narc’s board of directors?
Are police officers involved in Narc? If so, are they collecting information off-duty or on-duty — and are they complying with the policies of their departments and their cities in their efforts to increase their income?
Promoters have claimed that Narc is authorized to verify license-plate data through the DMVs of all 50 states. Is that true? If so, is Narc able to view the names and addresses of vehicle owners and the makes and models of vehicles as police officers could do? If untrue, is Narc verifying the data entered by members through another process — for example, querying databases to determine if a plate number already is “taken” in a state and thus unavailable to any other party, and then concluding the plate is valid simply because it is unavailable to another party?
Is is possible that police officers are querying restricted databases on Narc’s behalf?
The parking lots of these famous companies are sources of license-plate data for Narc affiliates, according to a promoter. Whether any permission is required of store managers or motorists to record plate numbers for entry in a private, for-profit database is left to the imagination.
Are police officers and nonpolice officers alike collecting scores of plate numbers and using their supplies as incentives for people to join Narc? (The PP Blog has observed multiple instances in which Narc sponsors suggested they would supply the first 10 plate numbers to incoming recruits, thus qualifying them for an immediate payment from Narc.)
What part of the approach in the question above is consistent with an attempt to build a valid database, especially if Narc cannot verify that a “gift” plate number actually was viewed in a specific location by the recipient of the gift?
Why has Narc not publicly and loudly renounced the practice of providing the “gift” of plate numbers to incoming prospects? Can Narc tell if entire downline groups are simply trading or recycling existing plate numbers among members and instructing members and prospects to fabricate an address where the plate was sighted?
How can Narc possibly know if the cars members say were parked at a specific location actually were parked there?
What specific event occurred that caused Narc to remove a reference to AMBER Alert in a video promotion and insert the name Code Amber instead?
About Data Network Affiliates . . .
We’ll close this essay by asking a few questions about Data Network Affiliates, Narc’s purported competitor in the business of collecting license-plate numbers:
Is is possible that DNA saw that Narc’s new business of recruiting members to record license-plate numbers was resonating in the MLM universe? And did DNA then engage in a cynical ploy to build a customer base by incorporating Narc’s message — including references to law enforcement and AMBER Alert — simply because it was “working” for Narc?
DNA declares "GAME OVER – WE WIN" repeatedly in a hype-filled email pitch to announce a $10 unlimited cell-phone plan. The company had been in the cell-phone business only days when it claimed to be able to beat virtually every other competitor on earth on cell-phone pricing. Only weeks later DNA claimed it had been hoodwinked into believing it could offer such a price, removing the offer and claiming to be excited about its future.
DNA quickly backed away from emphasizing data collection after it observed Narc becoming the focus of critics who raised concerns about the propriety, safety and legality of Narc — and then DNA morphed into a sort of anti-Narc, saying it existed to help law enforcement only and would never share data with repo companies that wanted to take away cars owned by poor people.
What follows are DNA’s own words (italics added):
“DNA Affiliates STAY ALERT – They are watching out for their neighbors children. If DNA has 1 million affiliates that is 1,000,000 more people watching out for and caring about children world-wide.
“Other companies may collect data to sell to REPO COMPANIES to take cars away from many people who are just down on their luck. A single mom, a dad out of work or 100 other good reasons why good people just can not make a payment. One DNA Affiliate just had his car repossessed because he owed 3 payments and offer to pay two of them and they said no and picked up his car.
“DNA will have no part in such cases. At DNA we collect car data for one purpose and that purpose is that there is a small chance that this data in the right hands could help save a child or help prevent or solve a crime.
“We do not boast of 6 figure contracts with REPO COMPANIES. At the end of the day a DNA Affiliate knows that what they are trying to do will only be a FORCE FOR GOOD in their community…â€
DNA also positioned itself as the “free” Narc, before springing a $127 upgrade on customers to purchase a data-entry tool that worked faster than the clunker provided the “free” members at no cost. Free members were not told they were getting a clunker until the upgrade program was announced. Before long, DNA announced it was in the cell-phone business — and plenty of other businesses willing to sell products to members who thought they were joining a “free” business.
Could DNA’s approach be the most cynical, ribald effort in the entire history of MLM? And does the DNA braintrust not recognize that MLM has so many critics precisely because of the obnoxious and absurd approach of the man behind the green curtain and the men letting him get away with serving up ceaseless, hyperbolic slop?
In our view, DNA is the worst example of wretched excess the MLM trade has ever served up — and Narc is close on its heels for enshrinement in the Hall of Shame. To be sure, Narc is not the next Google, DNA is not the next anything — and the industry has demonstrated once again that many, many of its members think that trite talk about arks is the same thing as building one.
This promo by a Narc That Car member appeared on a .org website that used AMBER Alert's name in its URL. The U.S. Department of Justice, which administers the AMBER Alert program, denied in February that it had any affiliation with Narc. Days later, Narc removed a reference to AMBER Alert in its own video production to advertise the opportunity. The actions of both Narc and its promoters have led to questions about whether the company had come into possession of money based on misrepresentations that caused prospects to believe they were helping out worthwhile causes by joining Narc. The very first Narc promotions observed by the PP Blog were authored by members of AdSurfDaily and Golden Panda Ad Builder, companies implicated in a Ponzi scheme involving tens of millions of dollars.
EDITOR’S NOTE: Narc That Car says it is a private company and has no duty to reveal the names of its data clients. This essay challenges Narc’s arguments.
The public has a compelling interest not only in learning the identities of Narc That Car’s clients through appropriate channels, but also in learning the identities of the company’s data-gatherers who may hold jobs in the public sector and are supplementing their income by moonlighting for Narc as consultants.
Narc is a highly questionable business. Moonlighting by public employees in highly questionable ways is one of the elements in the Scott Rothstein Ponzi scheme in Florida. Rothstein is alleged to have employed off-duty members of law enforcement as bodyguards while he orchestrated a $1.2 billion fraud. Moonlighting also is an element in a recent case in which investigators in Georgia probed allegations of sexual assault against Pittsburgh Steelers’ quarterback Ben Roethlisberger, who employed off-duty police officers as bodyguards.
The assault allegedly took place in the women’s restroom of a nightclub. Roethlisberger was not charged in the case, but was suspended for six games by the NFL for conduct detrimental to society and the league. Two Pennsylvania police officers working for him potentially face disciplinary action for sullying the reputations of their departments and not extricating themselves from a situation in which a crime or crimes might have been committed in their presence.
Why Wouldn’t The BBB Have Questions
Today the PP Blog challenges its readers, including its critics, to read this essay, observe the sampling of graphics and answer a few simple questions: Why wouldn’t the Better Business Bureau, responsible businesspeople, journalists, law-enforcement agencies and taxpayers not have questions about Narc That Car? (Now suddenly known as Crowd Sourcing International after issuing checks to members under at least two different names earlier in the year.)
And why isn’t the company stepping forward with answers that enlighten, not deflect or hop-scotch, around key issues? The company should supply the information to the Better Business Bureau and any law-enforcement agency that asks for it. Information Narc provides could be kept private while any investigation ensues and released by the government if it is determined that wrongdoing has occurred.
Narc says it is in the business of paying people to record the license-plate numbers of cars for entry in a database that will be used by “lien holders” and companies that repossess automobiles when owners default on loans.
Members of Narc say they record plate numbers randomly — in places such as parking lots — on the off-chance the vehicle is or later will become a target of the repo man. Narc’s data-gatherers are required to provide the address at which the plate number was viewed and recorded. Because the location data likely will be stale and the car likely will be moved before it becomes the subject of a repo bid, there are legitimate concerns about the actual usefulness of the data to lien-holders and concerns about whether Narc is just an excuse for a business, not an actual business capable of making profits from retail sales to database clients.
There also are significant concerns about privacy, and the propriety, safety and legality of the Narc program. Some Narc members have advertised that they collect “extra” plate numbers and use them as incentives for prospects to qualify for commissions without gathering data themselves, a practice that leads to troubling questions about whether Narc members have provided corrupt data to the company. An unknown number of plate numbers recorded in Narc’s database may be third-party sightings passed along to incoming members who entered bogus addresses at which plates purportedly were sighted — all to qualify for payments.
Equally troubling is that Narc, which has to know that some members are providing plate numbers for downline recruits, does not reveal the names of its database clients, saying the information is proprietary. There may be no way for existing Narc clients to know whether the data Narc reportedly is selling has been corrupted by the practices of members so eager to earn money that they’re giving away plate numbers and the recipients of the plate numbers are fabricating addresses at which the plates were spotted.
Corrupt data is worthless data.
There are reports that Narc can verify the validity of a plate number — but it is inconceivable that Narc has the means to verify that the plate actually was spotted at a specific address. Adding to the ripples of a potentially corrupt data stream is that some Narc members have instructed incoming members in purported “training” videos not to bother noting the address at the time the plate number was sighted. Rather, the prospects have been told to go home and look up the address on the Internet or refer to a store receipt if they happened to be shopping at, say, Walmart or Giant Eagle, when they were doing their side business for Narc.
Members appear to be able to enter any address they please, whether the car was spotted there or not. Meanwhile, some members have openly said they don’t like their neighbors knowing they’re recording plate numbers for a fee, so they record the numbers in the same fashion a character in a spy novel hides behind a newspaper or makes himself invisible in plain sight. The casualty is transparency at virtually all levels, meaning clients don’t know if they’re buying reliable data, members of the public don’t know their cars are being watched and if profiles are being created, and Narc members don’t know anything other than the information Narc chooses to share.
Public Esteem For Police At Stake Amid Confusing Claims
Narc members say police officers have joined the Narc program as data-gatherers and upline sponsors. If true (and the PP Blog believes that police officers are involved in Narc), it is incumbent upon Narc to publicly identify the police departments for which the officers work.
Because of claims made by Narc promoters, the public has the right to determine if officers who belong to Narc are collecting data while on “city time” or during their off-duty hours and assisting Narc in ways that nonpolice members of Narc cannot.
Why? Because Narc largely operates in the shadows. Moreover, some of the public claims of its promoters have been beyond reckless — and only Narc knows the truth about how it is paying members and using the data they collect. If Narc has police officers among its ranks amid these circumstances, it means the officers are promoting a business they may know very little about.
Police officers should not be promoting a business they know very little about, especially amid these circumstances. That Narc is paying members is not evidence that no wrongdoing is occurring. All successful pyramid and Ponzi schemes pay members. Moreover, the advertising claims of Narc promoters alone give officers all the information they need to pull out of Narc today and potentially spare themselves and their departments embarrassment later — just as Rothstein’s bodyguards and Roethelisberger’s bodyguards should have pulled out.
That the officers are repping for Narc and not providing security services is immaterial. Narc emits the same kind of stink. It stinks even if it’s legal.
Few people would begrudge a police officer from supplementing his or her income in legitimate fashion — but that is not the issue here. The issue is whether Narc and many of its data-gatherers are legitimate. The Better Business Bureau has expressed concerns that Narc might be a pyramid scheme. Whether Narc is a pyramid scheme is not the only issue, however. This essay points out some of the other issues.
Only Full Transparency Can Lead To A Clean Bill Of Health For Narc
Absent full transparency from Narc, no police officer or nonpolice officer gathering data, asking people to send money to Narc and building Narc downlines — can determine if they are promoting a scam.
Period.
There have been reports in recent days that Narc — through its own unfiltered channels — has claimed the reason it does not publish data clients’ names is because such clients got “incessant” calls when it did publish the names.
This claim strikes us as the precise kind of dreck that cannot pass the giggle test on Main Street but somehow passes the plausibility test in the most florid hallways of MLM, which much of America and the world already view as a cesspool. Not only is the claim absurd, it also is contrary to promoters’ claims that Narc was employing a revolutionary MLM concept by which members would build the database product first and Narc would sell it to retail customers later. This approach could be illegal if Narc does not have “true” customers (database clients) in sufficient volume to destroy the pyramid concerns. Although some Narc promoters have claimed the company has “investors,” the claim itself only leads to more questions: Who put up the purported investment money if investors actually exist?
Narc promoter “Jah” (see below) has been telling prospects for months that Narc reps engage in “No Selling, Trying, Switching, or Using Anything” — in short, Narc’s data-gatherers do not buy the retail database product. Rather, they pay an up-front fee to earn the right to submit plate numbers, become Narc recruiters and have the prospect of earning more money by sponsoring more fee-paying members who pay for the right to submit plate numbers and become recruiters themselves, and Narc sells the database to another set of customers.
These claims and similar claims have led to concerns that Narc was operating a pyramid scheme. Such an approach also can be viewed as a Ponzi scheme. Absent continuous membership growth and real profits from sales to retail database customers to support the payments to Narc’s data-gatherers, the business could collapse.
A video promotion in February by another Narc member showed a tab labeled “Clients.” The video was recorded inside the member’s Narc back office and appeared on YouTube — after Narc had been operating for months. “Don’t worry about that right now,†he said of the “Clients” tab. He did not explain why members should not concern themselves about the tab, which led to questions about whether Narc had data clients in sufficient volume to quash concerns that members were getting paid exclusively or almost exclusively with money from other members — not retail sales to database clients.
This Is ‘Training?’
The promo was described as a teaching tool in a YouTube headline titled, “NarcThatCar Training Video.†In the same video, viewers were told that the parking lots of libraries, schools and universities provided a steady stream of license-plate numbers to be harvested and entered into the Narc database.
“So, carry a pen and paper with you,†the narrator instructed. “You can go to parking lots. You can go to libraries. You can go to schools. My wife goes to the university, and just goes through the parking lot and collects license-plate numbers.â€
An address in the video suggests plate data was recorded in or around the University of Nevada, Las Vegas. The address is the same street address as the UNLV campus. Indeed, one Narc promoter after another has pointed one prospect after another to sources of license-plate data, implying that cars parked on both public and private property were fair game for downline commissions.
Not even public schools, universities and libraries were off limits in Narc’s universe of members. Narc itself has said its database will be used to locate people, boats, cars and any item imaginable. Data is being mined on both private and public property, and Narc itself says the plate numbers are checked against “the DMV,” commonly known in many U.S. states as the Department of Motor Vehicles.
If Narc’s data is checked against the DMV, then Narc’s business is the public’s business. The public has an interest in determining the identities of Narc’s data clients in no small measure because the data potentially could be used to monitor private citizens and people who hold sensitive jobs in government, science, research and the military.
Narc’s explanation that its clients’ names are proprietary is unacceptable. Its own members are claiming plate numbers are “public” information and “training” prospects to drive through “university” parking lots and the lots of retail stores and restaurants to get a supply of tags, which are checked against DMV records.
If you’re shopping at Walmart, for example, your plate number could be recorded and entered in Narc’s database by a Narc participant in search of MLM commissions and interested in recruiting prospects who could record your plate number elsewhere, leading to even bigger commissions and an even greater loss of your privacy. Incredibly, some Narc promoters have anticipated the public’s objection to such a pursuit, answering it with a chilling argument that people who’ve done nothing wrong have nothing to fear.
That is just downright creepy. Is it any of Narc’s business where you park your car because it wants to help the repo man repossess your neighbor’s car? And what if the repo man isn’t Narc’s only client?
What if a company poses as a repo company or a “lien holder” company and has an objective totally unrelated to the repossession of collateral? What if a suspicious husband with a violent streak, for example, wants to monitor sightings of his wife’s car? What if a private investigator wants to determine where you spend your time? What if the government wants to determine if you’re seeing a shrink? What if an unfriendly government wants to monitor the whereabouts of an important government official or scientist?
Narc’s purported assurance that members don’t record the plate numbers of government vehicles is hollow because government employees own private cars and do not always travel in government vehicles. The sensitivity of their jobs does not vanish if they are in their private cars whether on-duty or off, and the prospect that a data profile on the movement of these cars can be created and offered for sale is unacceptable.
It is unacceptable whether the target for monitoring is employed by the government or is just an ordinary citizen employed by any private company. Cars are inexorably linked to their owners. To track the car is to track the owner. Left unchecked, Narc could be used as a data source by private and public entities to monitor people. That is inconsistent with liberty and privacy. It is offensive by its very nature because it potentially puts people who don’t know they are being watched under a microscope, and it is offensive to any notion of propriety because it potentially puts private citizens in the business of spying on other private citizens to qualify for downline commissions. That Narc’s own members are cheerleading for the supposed the riches to be made by helping the repo man theoretically get the neighbor’s car causes one to wonder if America is taking leave or its senses and willing to package and sell anything.
What’s next? News releases from Narc that announce yet-another successful repo brought about by the company’s army of commission-based spies?
A World-Class Example Of MLM Excess
MLM has served up a doozy this time: Peel away the hype and Narc emerges as a private spy-agency-in-waiting. At last count, 52,000 people have expressed a willingness to help Narc build the database and share in the joy of knowing they’ve helped the repo man separate a struggling, single, stay-at-home Mom from the car she shares with her laid-off husband who lost his job when the economy went in the tank.
Lien-holders do have the right to seize their collateral if a car owner is in default. Lenders do have a corresponding duty to be responsible to investors and depositors to protect assets. But to create a cheerleading section for the repo man when unemployment is at 10 percent is something only the darkest minds in MLM could serve up. That people seem actually to be comforting themselves with the thought that they’ve performed some sort of civic duty by ratting out their neighbor to the repo man and somehow made America a better place is one of the surest signs yet that a big pocket of U.S. commerce has become morally bankrupt.
And that’s before the Narc privacy and security issues are examined in any detail.
Does anyone really want Narc to come into possession of data that could be used to create movement profiles on private citizens in any context — all under some implausible theory that the repo man needs extra help?
Sensitive research — including research paid for by the government — is performed by some universities. The data could be used to monitor people who hold sensitive jobs. This makes it the public’s business to determine precisely what Narc is doing and how and why it is doing it.
A ‘GOOGLE Opportunity Like Never Before’
Narc, according to an email members received, also is blaming the media for not understanding what it is doing. Its response to the bad press it has received recently was to tell members not to worry, that Narc remains a “GOOGLE Opportunity like Never before” — and then close the email with insipid, flowery motivational drivel, including this gem: “EVERYTHING is funny when you [sic] making MONEY!”
Even dispossessing your cash-strapped neighbor of his car, apparently, is funny as long as it pays a downline commission.
The email remided us of the now-defunct Surf’s Up forum, which promoted the now-defunct AdSurfDaily Ponzi scheme by instructing members that “there are no prizes for predicting rain, only for building arks.” Perhaps finding the fuel they needed in Surf’s Up’s trite prose, many members of ASD pressed forward, introducing prospects susceptible to the harmful power of trite prose to one Ponzi scheme after another.
As we proceed in this essay, we ask readers to note that check-waving videos and “earnings” reports produced by some members of MLM programs are not evidence of success or honesty. It often is the case in the MLM sphere that promoters who throw caution to the wind and pitch programs they know little or nothing about end up the biggest winners, with the vast majority of participants breaking even or losing both money and time that could be better spent trying to make ends meet by other means.
Moreover, it often is the case that willfull blindness and forced ignorance are the dominant traits displayed by promoters. Incongruously, a lack of knowledge about companies and products is what often drives MLM profits.
Practiced hucksters often prefer ignorance themselves, while also preferring prospects who will not ask hard questions and are willing to pass along hype and unchecked information as though they were the high gospel of truth.
BBB’s Concerns Grow
Although Narc That Car provided the identity of a single, purportedly “major” client to the Better Business Bureau April 27, the BBB now says “the client’s identity only raises more concerns” about the company.
The BBB did not disclose the name of the Narc client or reveal why its doubts were heightened after Narc provided the information. On its website, however, the organization said it is “communicating” its concerns about the client to Narc. The BBB also noted its inquiry into Narc advertising claims remains open. The advertising inquiry began Jan. 18. It has been unresolved for nearly four months.
On March 3, the BBB noted, the organization asked Narc to provide a “comprehensive” list of clients. Narc responded April 27 by providing the name of “one of its major clients,” a development that not only did not dampen the BBB’s concerns that Narc was using a pyramid business model and did not have a product with true value, but also ramped them up.
Narc That Car has identified Rene Couch as its vice president of marketing. He also has been listed by titles such as executive vice president and chief field advisor, leading to questions about whether Narc and its promoters were making things up as they went along.
Narc already has an “F” rating from the BBB, the lowest score on the organization’s 14-point scale. In the past two weeks, at least two television stations in major markets in the United States have aired reports about Narc, questioning Narc’s business practices, the level of knowledge Narc’s promoters have about the Dallas-based company and Narc’s willingness to address the questions in an atmosphere of transparency.
Meanwhile, some Narc promoters have been attacking the BBB and accusing the TV stations of biased reporting — instead of insisting that Narc get out in front of the stories and concerns and put the issues to rest.
BBB Under Attack
One of the promoters attacking the BBB is Ajamu M. “Jah” Kafele. Kafele once was accused in Ohio of practicing law without a license and ordered to pay a civil penalty of $1,000 by the Ohio Supreme Court after the bar proved its case against him.
Attorney or not, Kafele is no stranger to the courts. What follows in the passage below is an exchange between Kafele and the attorney for a law firm he had sued for attempting to collect a debt. The exchange started after the lawyer asked Kafele how old he was. In response, Kafele attempted to assert his 5th Amendment right not to answer the question — in a case in which he was the plaintiff, not the defendant, and a case in which a federal judge admonished him that his “invocation of the Fifth Amendment in response to that question was improper.”
A. [Kafele]. I don’t recall my age. Next question. Q. [Defense counsel]. What was your date of birth? A. I don’t recall my date of birth. Q. Do you have a driver’s license on you? A. No, I don’t. Q. Do you have any form of identification on you? A. No, I don’t. Q. Where were you born? A. I don’t recall. Q. Do you have parents? A. I don’t recall. Q. Do your parents — are your parents living or deceased? A. I don’t recall. Are you going to ask me some relevant questions to the defense and claims or are you going to find out about my livelihood for your personal gain? Q. You’ve indicated you don’t recall whether — A. That’s right. Q. — or not you have parents. Do you have siblings? A. I don’t know. Q. Are you married? A. I don’t recall. Q. Where do you live? A. I don’t recall. Q. What’s your home address? A. I don’t recall. Q. How long have you lived there? A. I don’t recall. Q. What’s your current occupation? A. Who said I had an occupation? Q. Are you gainfully employed? A. Who said I was employed? Q. I’m asking you a question. A. I’m asking you, who said I was employed? Q. Are you employed? A. I don’t recall being employed.
Three-figure, check-waving YouTube video by "Jah," who publicly announced his downline group was "not going to be out here flashing, you know, five-figure checks.†The video, which featured a claim that repping for Narc was like working for the "Census Bureau," later was removed from YouTube's public site. Why it was acceptable to publish a three figure-check but not a five-figure check was never explained.
Strikingly, Kafele, who once believed it was prudent to sue lawyers who were trying to collect on a debt, now has thrown in his lot with Narc That Car, which says it wants to help repossession companies collect their collateral when buyers default on loans. The case cited above did not have a happy ending for Kafele: A federal judge tossed the preposterous lawsuit he had brought, saying Kafele had engaged in “egregious” conduct.
“Plaintiff’s repeated and persistent refusal to participate in the discovery process has clearly been willful and done in defiance of the express and unambiguous orders of this Court,” U.S. District Judge John D. Holschuh said. “As a result, the defendants have been denied virtually all discovery in this case. Moreover, plaintiff has been warned — most recently in the April 4, 2005, Opinion and Order granting defendants’ motion to compel and awarding monetary sanctions against plaintiff, . . . that his continued refusal to participate in the discovery process would result in the dismissal of the action. Nevertheless, plaintiff persists in attempting to transform the litigation process initiated by him into a game. Under these circumstances, no sanction other than dismissal of the action is appropriate.”
Kafele now is telling prospects he is an authority on Narc That Car. He said he has hundreds of members in his downline. He has been conducting meetings in Ohio to recruit even more prospects, according to his website.
Fox TV Reports Exposed Promoters’ Willful Blindness
Not a single Narc promoter approached by Fox 5 in Atlanta in a package aired recently could identify a single Narc data client — and yet the promoters were out in force recruiting people for the firm. Meanwhile, Fox 11 in Los Angeles recently visited YouTube and reported on unsubstantiated claims passed long by Narc promoters to a worldwide audience, noting that California Attorney General Jerry Brown was seeking information on the firm.
It is known that attorneys general from at least three states — Georgia, California and Texas — are aware of growing doubts about Narc’s business practices.
Narc’s approach — and the approaches of its promoters — have caused even longtime proponents of multilevel marketing (MLM) to question whether the often-controversial industry had reached an all-time low and whether participants would buy into any scheme under the sun. It is clear that promoters either do not know if Narc is engaging in legitimate commerce or do not care if it is not
Narc promoter shows prospects that parking lots at the University of Nevada Las Vegas are an excellent source of license-plate data. Narc prospects in this promoter's YouTube video were given no guidance on whether the university or campus police needed to be consulted before recording the plate numbers of students, faculty and employees. The promoter said "libraries" were excellent sources of license-plate data.Â
— as long as commission checks for recruiting members keep streaming in.
As things stand, there is no way to determine if Narc is operating legally. The reason there is no way is that Narc does not reveal the names of clients, will not step out of the shadows, put an executive and attorney on TV or consent to a probing interview by a print journalist to answer the doubters and publish verifiable financial data audited by a CPA that shows inputs and outputs and the sources of revenue.
Any argument that suggests members are not entitled to this data or that the data is proprietary because Narc is a “private” company is not going to fly. The company’s promoters are saying that license-plate numbers are “public” information available for the harvesting by a membership roster of 52,000 people for the purpose of populating a database that Narc itself has said is going to be used to locate people, cars, boats and any item imaginable. That alone makes it the public’s business. Beyond that, promoters say Narc is using government databases to verify data. The assertion that Narc is using the DMVs of America’s 50 states to verify registration data gives the public a compelling reason to demand answers from the company.
Narc has a duty to tell the public through appropriate channels precisely what database it is using to cross-check data entered by members and how it is accessing the database. It also has a duty to reveal the names of its clients, explain how it screens clients, explain how it screens its data-gatherers, explain whether Narc is able to connect a car to a person when members enter license-plate numbers and explain how the data is secured.
Absent complete transparency, the privacy of every person whose tag number is entered by a Narc member is a potential casualty. It is inconceivable that Narc is empowering itself to collect your license-plate number — no matter where you park — because it has secret clients in the business of repossessing cars and there is a small chance that you are behind on your car payments or a person you do not even know parks his or her car in the same parking lot as you and is behind on his or her car payments.
This is the business Narc has chosen to enter — and the public has a compelling interest in knowing precisely how it operates.
Narc Subjecting Own Promoters To Embarrassment; Promoters, Company Blame It On Media
Narc exposed its own Atlanta-area members and prospects to embarrassment after a Fox 5 reporter showed up to a pitchfest with a hidden camera and could not get answers even to basic questions, but the company has not issued a statement that addresses the concerns in any real way and is suggesting the media is to blame.
No part of the Narc story is consistent with transparency or ordinary business practices — and the media attention likely is only now beginning. Viewers in Atlanta and Los Angeles — two of the largest markets in the United States — now have been treated to an appalling lack of professionalism in the MLM sphere, which only will fuel the public’s legitimate doubts about the industry as a whole.
Why wouldn’t the public believe the Internet is just one giant cesspool after viewing the reports on Fox here and here? If you’re a Narc fan and want to argue that Narc was ambushed, you need to know that Narc had plenty of opportunities to answer questions from journalists before they started hiding their cameras. The PP Blog, for instance, has attempted to contact Narc multiple times. The Blog is aware that other news sites have met dead ends in bids to get Narc executives and knowledgeable employees to answer questions, including NBC-5 of Dallas-Fort Worth and others.
The Fox 5 Atlanta report neatly exposed promoters’ willingness to cheer for a program, duck responsibility for their claims and then hide behind the skirt of a company when the heat became too intense.
The trouble with hiding behind Narc’s skirt, however, was that the skirt provided no cover for members. Promoters found themselves in the awkward position of taking heat for a company that did not defend them in any credible way. Narc’s skirt provided no cover at all, and yet some members merrily continue to promote the opportunity and apparently see no incongruity at all.
Let us spell it out: If you’re going to say the media must get answers from the company rather than promoters in the field, you are hiding behind the company’s skirt. And if the company does not provide the answers, you have no cover at all. This creates the appearance that the prospect of making money is the only thing you value. You certainly don’t value transparency if you’re hiding behind the company’s skirt, and the company certainly does not value transparency by ducking questions, avoiding them altogether or spinning things to create the appearance that the media are responsible for Narc’s lack of transparency.
The media are not responsible for Narc’s bad press; Narc and its promoters are. One Narc promoter created a red banner on a .org site to create the appearance that sending money to Narc was like donating to the Red Cross. Other promoters appropriated the name of the AMBER Alert program to do the same thing on a .org website. At one point the message became so impossibly butchered that a promoter urged prospects to “Help AmberAlert and other organizations find repossessed cars.â€
Some Narc members made much ado about a TV anchor referring to Narc as a “job,” but dozens of Narc members posted ads on craigslist that advertised Narc as a job. Promos for Narc have been reprehensible. One member claimed Narc would be used to help the Department of Homeland Security find terrorists. Others claimed that the FBI and the AMBER Alert program endorsed Narc.
These were blatant misrepresentations — plain and simple. If the MLM world wants the rest of the world to take it seriously, it has to quit serving up this slop and stop apologizing for its chefs and the seemingly mindless cheerleaders who cheer for the chefs even when roaches are swimming in the soup.
In the AdSurfDaily case, for instance, the Secret Service said the chef served up a Ponzi scheme. How did the cheerleaders respond? They called the Secret Service, the agency that guards the President and the Treasury, Nazis and “Satan.”
Now, amid a circumstance in which the BBB — one of America’s most recognized business organizations — has questioned whether the Narc chef is serving up a pyramid scheme that potentially affects tens of thousands of people, the cheerleaders are responding by trying to plant the seed that the BBB has a secret agenda and is infested with roaches. It is reprehensible — and it must not stand.
Myriad questions about Narc remain, including these:
Why are Narc promoters so willing to represent a company they know so little about?
Does Narc not understand that vague, ambiguous claims on its own website and its apparent unease in addressing media questions are what’s driving the story?
Why has a Narc PR spokesman not emerged to address media inquiries and become the face of the company? Why aren’t Narc executives stepping out in front of the cameras?
Why have the statements Narc has issued not explained the incongruity of insisting that license-plate data is “public” information while at once insisting the public has no right to know who its clients are, how they are being screened, how data-gatherers are being screened and how the information is being indexed and sold?
Why does Narc insist it has the right to collect your license-plate number and offer it for sale to a third party whose identity and motives are unknown to you?
Why do tens of thousands of Americans suddenly seem so willing to waltz through parking lots of major retailers to record the plate numbers of their neighbors and to recruit others to do the same — when they have knowledge in advance that troubling questions are being asked about the firm?
Why does the repo man suddenly need the help of a commission-hungry MLM army to dispossess people going through lean times?
Any chance that the “buy here, pay here” car business and the title loan business are backing Narc because the industry’s practice of approving anyone for a loan actually is driving repos?
Why are prospects so willing to hand over money when neither sponsors nor Narc itself are willing to provide information that could make the concerns go away?
How many data clients does Narc have and when did the clients become clients? How much revenue do the data clients generate for Narc weekly and monthly?
Is it possible that Narc is selling data to itself through a process in which it formed another company to become a Narc client or is relying on an alter ego of some sort or close association with another firm to create a client out of thin air?
Is Narc closely connected to the “buy here, pay here” automobile business, meaning an entity with a close association with Narc is making high-risk, front-loaded, usurious loans to disadvantaged consumers?
Is Narc closely connected to the title-loan and payday loan business?
Is Narc closely connected to the repossession business?
Does Narc have an investment angel? If so, what is the source of the money and was a private offering involved?
Is Narc making pyramid or Ponzi-style payments to members?
Narc promoter tells prospects the company was started to provide data to the Amber Alert system.
Who are Narc’s executives beyond CEO William Forester?
What are their names, job descriptions and backgrounds?
Do they have high positions in the MLM organization and rely mostly or exclusively on commissions or do they draw a salary?
Who are the members of Narc’s board of directors?
Are police officers involved in Narc? If so, are they collecting information off-duty or on-duty — and are they complying with the policies of their departments and their cities in their efforts to increase their income?
Promoters have claimed that Narc is authorized to verify license-plate data through the DMVs of all 50 states. Is that true? If so, is Narc able to view the names and addresses of vehicle owners and the makes and models of vehicles as police officers could do? If untrue, is Narc verifying the data entered by members through another process — for example, querying databases to determine if a plate number already is “taken” in a state and thus unavailable to any other party, and then concluding the plate is valid simply because it is unavailable to another party?
Is is possible that police officers are querying restricted databases on Narc’s behalf?
The parking lots of these famous companies are sources of license-plate data for Narc affiliates, according to a promoter. Whether any permission is required of store managers or motorists to record plate numbers for entry in a private, for-profit database is left to the imagination.
Are police officers and nonpolice officers alike collecting scores of plate numbers and using their supplies as incentives for people to join Narc? (The PP Blog has observed multiple instances in which Narc sponsors suggested they would supply the first 10 plate numbers to incoming recruits, thus qualifying them for an immediate payment from Narc.)
What part of the approach in the question above is consistent with an attempt to build a valid database, especially if Narc cannot verify that a “gift” plate number actually was viewed in a specific location by the recipient of the gift?
Why has Narc not publicly and loudly renounced the practice of providing the “gift” of plate numbers to incoming prospects? Can Narc tell if entire downline groups are simply trading or recycling existing plate numbers among members and instructing members and prospects to fabricate an address where the plate was sighted?
How can Narc possibly know if the cars members say were parked at a specific location actually were parked there?
What specific event occurred that caused Narc to remove a reference to AMBER Alert in a video promotion and insert the name Code Amber instead?
About Data Network Affiliates . . .
We’ll close this essay by asking a few questions about Data Network Affiliates, Narc’s purported competitor in the business of collecting license-plate numbers:
Is is possible that DNA saw that Narc’s new business of recruiting members to record license-plate numbers was resonating in the MLM universe? And did DNA then engage in a cynical ploy to build a customer base by incorporating Narc’s message — including references to law enforcement and AMBER Alert — simply because it was “working” for Narc?
DNA declares "GAME OVER – WE WIN" repeatedly in a hype-filled email pitch to announce a $10 unlimited cell-phone plan. The company had been in the cell-phone business only days when it claimed to be able to beat virtually every other competitor on earth on cell-phone pricing. Only weeks later DNA claimed it had been hoodwinked into believing it could offer such a price, removing the offer and claiming to be excited about its future.
DNA quickly backed away from emphasizing data collection after it observed Narc becoming the focus of critics who raised concerns about the propriety, safety and legality of Narc — and then DNA morphed into a sort of anti-Narc, saying it existed to help law enforcement only and would never share data with repo companies that wanted to take away cars owned by poor people.
What follows are DNA’s own words (italics added):
“DNA Affiliates STAY ALERT – They are watching out for their neighbors children. If DNA has 1 million affiliates that is 1,000,000 more people watching out for and caring about children world-wide.
“Other companies may collect data to sell to REPO COMPANIES to take cars away from many people who are just down on their luck. A single mom, a dad out of work or 100 other good reasons why good people just can not make a payment. One DNA Affiliate just had his car repossessed because he owed 3 payments and offer to pay two of them and they said no and picked up his car.
“DNA will have no part in such cases. At DNA we collect car data for one purpose and that purpose is that there is a small chance that this data in the right hands could help save a child or help prevent or solve a crime.
“We do not boast of 6 figure contracts with REPO COMPANIES. At the end of the day a DNA Affiliate knows that what they are trying to do will only be a FORCE FOR GOOD in their community…â€
DNA also positioned itself as the “free” Narc, before springing a $127 upgrade on customers to purchase a data-entry tool that worked faster than the clunker provided the “free” members at no cost. Free members were not told they were getting a clunker until the upgrade program was announced. Before long, DNA announced it was in the cell-phone business — and plenty of other businesses willing to sell products to members who thought they were joining a “free” business.
Could DNA’s approach be the most cynical, ribald effort in the entire history of MLM? And does the DNA braintrust not recognize that MLM has so many critics precisely because of the obnoxious and absurd approach of the man behind the green curtain and the men letting him get away with serving up ceaseless, hyperbolic slop?
In our view, DNA is the worst example of wretched excess the MLM trade has ever served up — and Narc is close on its heels for enshrinement in the Hall of Shame. To be sure, Narc is not the next Google, DNA is not the next anything — and the industry has demonstrated once again that many, many of its members think that trite talk about arks is the same thing as building one.
An attorney who represented AdSurfDaily President Andy Bowdoin in state court in Florida has been nominated by President Obama to become the new U.S. Attorney for the Northern District of Florida.
If confirmed by the Senate, Pamela Cothran Marsh would replace Thomas F. Kirwin as the top federal prosecutor in the region, which encompasses 23 counties.
Marsh, who holds the title of “of counsel” at the Akerman Senterfitt law firm, was among a number of attorneys employed by Bowdoin to contest civil charges that he had operated a pyramid scheme from a former floral shop in Quincy, Fla.
Bowdoin went on to fire an unclear number of attorneys representing him in state or federal court in ASD-related litigation. It was not immediately clear if Bowdoin had fired Marsh, whose name appears in Leon County Court records as one of Bowdoin’s lawyers.
There has been no docketed action in the Florida case since Jan. 20.
At least three Bowdoin attorneys have been subpoenaed to appear in a separate case involving ASD that was filed under seal in federal court. The PP Blog has tentatively identified the subpoenaed attorneys but is withholding publication of their names pending verification.
Marsh and members of her firm who formerly represented Bowdoin are not among the attorneys who have been subpoenaed. Bowdoin contested the subpoenas in a federal appeals court, but the court dismissed the appeal Friday for lack of jurisdiction, according to records.
How the case will proceed is unclear.
Bowdoin is known to have fired at least two attorneys without notice, acted as his own attorney briefly, and then hired at least two new attorneys, according to court filings.
Marsh received Obama’s endorsement to replace Kirwin on April 14, according to the White House. She is a former assistant U.S. Attorney currently in private practice.
The pyramid case against Bowdoin was filed in August 2008 by Florida Attorney General Bill McCollum. Assets connected to ASD — including more than $80 million seized from bank accounts — are part of Ponzi scheme litigation brought by federal prosecutors in the District of Columbia just prior to McCollum’s filing of the pyramid allegations.
Like the federal prosecution against ASD’s assets, Florida’s prosecution of Bowdoin has been marked by strange developments. During a conference call, Bowdoin told ASD members that Ponzi allegations had been dropped against ASD in Florida, a claim that prompted some members to race to forums to announce the good news.
McCollum’s office responded to Bowdoin’s claims by saying that, not only had Ponzi allegations not been dropped in Florida, they had not been brought to begin with. Earlier, some ASD members participated in campaign to have McCollum charged with Deceptive Trade Practices for holding the view ASD had broken the law. The members also campaigned to have a Florida television station charged with the same offense for broadcasting news they deemed unflattering to ASD.
Bowdoin’s forays into federal court in the Ponzi litigation have been equally strange. Documents he has filed frequently have been at odds with themselves.
Mantria CEO Troy Wragg in a music video by ICEBLOC.
A federal judge has issued an order that effectively puts a court-appointed receiver in control of dozens of entities related to Mantria Corp. and Speed of Wealth LLC in a search for “recoverable assets.”
One of the receiver’s duties is to determine if fraudulent transfers occurred between or among companies, according to the order.
The order, which is designed to prevent the dissipation of assets and maneuvering to hide or transfer money, is breathtaking because it covers not only Mantria and Speed of Wealth, but also “all of their subsidiaries, parent companies, and. . . interests in any affiliated entities of any kind.”
All in all, the order applies to a staggering total of at least 55 entities, a figure that demonstrates the enormous task of unraveling a modern-day fraud amid a maze of corporations.
The SEC sued Mantria and Speed of Wealth in November, amid allegations that Mantria was running a “green” Ponzi scheme that focused on biochar and a “carbon negative” housing community in rural Tennessee that purported to be environmentally friendly. Speed of Wealth allegedly helped Mantria get investment clients.
Appointed receiver in the case was John Paul Anderson of Alvarez & Marsal Dispute Analysis & Forensic Services LLC.
U.S. District Judge Christine M. Arguello listed dozens of names, perhaps signaling that the order could become even broader by noting that it was “not limited to” the names on the initial list. She also ordered Anderson to come up with a liquidation plan and warned the entities and their agents not to meddle in receivership affairs.
Anderson was granted the authority to seek the court’s permission to place the entities in bankruptcy if the circumstances warrant such an approach. Arguello minced no words when ordering parties not to meddle. She specifically warned them not to “harass” Anderson or interfere in his duties as receiver (italics/bold added).
“The Receivership Defendants and all persons receiving notice of this Order by personal service, facsimile or otherwise, are hereby restrained and enjoined from directly or indirectly taking any action or causing any action to be taken, without the express written agreement of the Receiver, which would:
A. Interfere with the Receiver’s efforts to take control, possession, or management of any Receivership Property; such prohibited actions include but are not limited to, using self-help or executing or issuing or causing the execution or issuance of any court attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any Receivership Property;
B. Hinder, obstruct or otherwise interfere with the Receiver in the performance of his duties; such prohibited actions include but are not limited to, concealing, destroying or altering records or information;
C. Dissipate or otherwise diminish the value of any Receivership Property; such prohibited actions include but are not limited to, releasing claims or disposing, transferring, exchanging, assigning or in any way conveying any Receivership Property, enforcing judgments, assessments or claims against any Receivership Property or any Receivership Defendant, attempting to modify, cancel, terminate, call, extinguish, revoke or accelerate (the due date), of any lease, loan, mortgage, indebtedness, security agreement or other agreement executed by any Receivership Defendant or which otherwise affects any Receivership Property; or
D. Interfere with or harass the Receiver, or interfere in any manner with the exclusive jurisdiction of this Court over the Receivership Estates.
Here is the initial list of entities covered under Arguello’s order:
Mantria Realty LLC
Mantria Communities Inc.
Mantria Real Estate Opportunities Group LLC
Mantria Investments LLC
Mantria Financial LLC
Mantria Capital Advisors LLC
Mantria Industries LLC
Carbon Diversion Inc.
Mantria Records LLC
The Mantria Foundation Inc.
Mantria Realty FL LLC
Mantria Communities LP
Mantria Real Estate Opportunities Group I LP
KITN Investments LLC
The Mantria Renewable Energy Fund LP
The Mantria Place Renewable Energy Site Development LP
The Mantria Industries Hohenwald Tennessee Eco-Industrial Center Site Development L.P.
Earth Mate Technologies LLC
Clean Energy Components LLC
EternaGreen Capital LLC
The EternaGreen International Carbon Economy Network LLC
EternaGreen University
EternaGreen Global Corporation
C&M Industrial Center LLC
Mantria Industries II LLC
Carbon Diversion Carlsbad New Mexico Manufacturing Plant LLC
Indian Trail Estates LLC
Mantria Village LLC
Mantria Bluffs LLC
IronBridge Properties LLC
Legacy Ridge LLC
Iris Village LLC
Mantria Place LLC
The Mantria Group LLC
Mantria Indian Trail Development LLC
Indian Trail Estates Phase I LLC
Indian Trail Estates Phase II LLC
Indian Trail Estates Phase III LLC
Indian Trail Estates Homeowners Association Inc.
Legacy Ridge Homeowners Association Inc.
The Mantria Place Homeowners Association Inc.
SOW Trust Deed LLC
SOW Hard Money Loans Investment Club LLC
SOW Hard Money Loans II LLC
SOW Trust Deed Group II LLC
Trust Deed Group I LLC
SOW Hard Money 50 Economic Stimulus Investment Club LLC
SOW Mantria Income LLC
SOW Mantria Diversification LLC
SOW Mantria 5% LLC
SOW Mantria Place 25% LLC
SOW Mantria 25% LLC
Speed of Wealth Investments Gold Club LLC
Trust Deed 3.0 LLC
SOW MI 25% Sale of Systems LLC
Arguello said she recognized “that not all of Speed of Wealth, LLC’s assets and/or business may be related, directly or indirectly, to the conduct alleged in the Commission’s Complaint.”
Named individual defendants in the alleged $30 million fraud by the SEC in November were Mantria CEO Troy Wragg and Mantria COO Amanda Knorr, along with the company itself. Also named defendants were Speed of Wealth and its principals, Wayde and Donna McKelvy, formerly husband and wife.
One of the companies under the Mantria umbrella was Mantria Records LLC, which purportedly promoted a hip-hop duo known as ICEBLOC.
Two months after Troy Wragg accepted a kudo from former President Bill Clinton for environmentally friendly business practices, Wragg was implicated by the SEC in an alleged "green" Ponzi scheme. The Financial Industry Regulatory Authority (FINRA) later issued an Investment Alert warning the public about a relatively new form of fraud: “green energy investments†that trade on investors’ affinity for keeping the planet clean.
The case became notable for reasons beyond its size and scope. Wragg, for instance, appeared alongside former President Bill Clinton at the 5th Annual Meeting of the Clinton Global Initiative (CGI) in New York Sept. 25.
CGI had lauded Mantria in part for helping to “mitigate global warming” through its business practices. Just two months later Mantria and Speed of Wealth were accused of a colossal fraud.
After the CGI event in New York, Mantria and Speed of Wealth seized on Clinton’s name and the names of prominent individuals who attended the event to produce marketing materials used to entice investors.
Even after the SEC brought the charges, reporters who tried to contact Speed of Wealth received email pitches to join money-making opportunities.
Video promotions by Mantria and Speed of Wealth were notable for dropping the names of President Obama, former U.N. Secretary General Kofi Annan, President Laurent Gbagbo of the Ivory Coast, Mike Duke, CEO of Wal-Mart, Muhtar Kent, CEO of the Coca-Cola Co. and actor Matt Damon.
Leeching off the names of celebrities, famous businesspeople and politicians to sell fraudulent financial schemes is a common tactic among multilevel marketing (MLM) and Ponzi scammers. By implying that prominent people endorse a product or service, the fraudsters hope to turn skeptics into clients.
Claims were made in the AdSurfDaily Ponzi scheme case, for example, that ASD President Andy Bowdoin had received an award from President George W. Bush for a lifetime of business achievement. The award proved to be the so-called Congressional “Medal of Distinction,” which is given for campaign contributions to the National Republican Congressional Committee and signifies only the ability to write a check for the purchase of banquet tickets.
In an SEC case last month, the agency alleged that a Staten Island investment-advisory business known as Gryphon Holdings Inc. told clients that famed businessman George Soros backed the company. A purported “testimonial” from Soros was fraudulent, the SEC said.
The litigation against INetGlobal amid Ponzi scheme allegations is turning into a legal slugfest in multiple venues. On one side, federal prosecutors are seeking to disqualify INetGlobal attorney Mark Kallenbach, claiming that he is attempting to be both a lawyer and a witness in the same case.
Now, employees of INetGlobal are seeking a protective order that effectively would block the U.S. Secret Service and other law-enforcement agencies “from contacting these represented individuals and requesting interviews.”
Attorney Paul Engh filed the motion in federal court on behalf of INetGlobal’s 70 employees, arguing that he is the gatekeeper for the employees’ legal interests and that the government has approached an unspecified number of employees without going through him.
“These approaches have been made on a cold-call basis, at [employees’] homes, at night or in the early morning hours, and all without notice to counsel,” Engh said in a brief.
His request that the practice stop was “refused,” Engh argued, asserting that the government claims “that since the employees are on laid off status. . . they are no longer employees.”
“Having been an employee is a status that doesn’t disappear because the Government wants it to,” Engh asserted. “None were fired.”
At least one employee — Donald Allen, a former vice president of a company related to INetGlobal and its operator Steve Renner — said earlier this week that he had his own attorney and was cooperating with the Secret Service and federal prosecutors.
Allen said he was approached by the Secret Service, which appeared at his home unannounced a week ago today, and was asked by the agency if he wanted an attorney. Allen said that he answered yes, and described his first meeting with the agency as “excellent.”
Allen said he was advised he had “exposure” in the case. He denied he had done anything wrong, saying he was not privy to INetGlobal’s internal financial workings.
On Tuesday, Allen said he had a second meeting with the Secret Service April 26, adding that he is cooperating in the investigation “100 percent.”
Also on Tuesday, Steve Renner went to Hennepin County Court in Minneapolis and obtained a restraining order against Allen, claiming that Allen was harassing and threatening him and trying to extort $100,000 from the company.
Allen said that what Renner claimed to be extortion was actually an attempt to work out a severance package.
The extortion claim was the second against a former INetGlobal employee. Former CEO Steven Keough was accused in court filings by Renner last month of trying to extort $500,000 from the company. Keough may be the government’s star witness in the case. The Secret Service said Keough had come to believe that Renner had hired him to be a “good face” for the company and that Renner had fired him for asking too many questions.
Engh argued in his brief yesterday that the government appeared to be ignoring his duty as counsel to INetGlobal employees “on some federalist notion of superiority or entitled sense of un-accountability.”
Separately, some members of INetGlobal have asserted the government is not playing fair. Similar claims were made in the prosecution of the assets of the AdSurfDaily autosurf. The government ultimately won three separate orders of forfeiture totaling more than $80 million in the ASD case.
ASD President Andy Bowdoin, whose company has been linked to international fugitive Robert Hodgins, who allegedly laundered money for a Colombian drug cartel, has filed an appeal. The ASD case has been in litigation since the Secret Service raided the company’s Florida headquarters in August 2008. The ASD case is referenced in filings by the prosecution in the INetGlobal case that allege an undercover agent was introduced to INetGlobal by an ASD member who promoted the program despite describing it as a wink-nod enterprise.
Renner, who was convicted in December of four felony counts of income-tax evasion and is awaiting sentencing, has not been charged in the INetGlobal case. The government seized about $26 million in its investigation into Renner’s business practices, and prosecutors have argued that Renner is attempting to get the government to expose its case before a formal action is brought.
Renner has denied wrongdoing, and the companies have said they are legitimate enterprises.
EDITOR’S NOTE: The story below includes an assertion by Donald Allen that his IBNN.org website was knocked offline Sunday by a company with ties to INetGlobal. Moments before the story was set for publication, the IBNN website returned. The story does not reflect this later event, and it is possible that the site is not viewable in all parts of the world owing to an apparent change in nameservers. Events surrounding the apparent change in nameservers are unclear.
Acknowledging he had been advised that he potentially has “exposure” in the INetGlobal Ponzi scheme investigation, Donald Allen II said this morning that he had nothing to hide and would cooperate with the U.S. Secret Service and federal prosecutors “100 percent.”
That cooperation already has begun, Allen said. He added that his thinking about INetGlobal has evolved since the Feb. 23 raid of company headquarters in Minneapolis, and he insisted he was out of the loop on INetGlobal’s financial affairs and that his efforts to promote the firm were legitimate.
“Let me make it perfectly clear,” Allen said this morning. “I did the Global News Distribution and was never let in to the ‘workings’ of iNetGlobal. I met with the US Secret Service and [its] position is that I ‘shielded’ [Steve Renner] to operate a Ponzi, which is untrue.”
Allen, a vice president with V-Newswire, an entity in the INetGlobal family controlled by Renner, claimed this morning that the company had blocked his access and the access of readers to a public-affairs Blog he operates. The Blog is known as the Independent Business News Network (IBNN).
The company, Allen asserted, was penalizing him “for coming forward to answer ANY questions the Government has regarding iNetGlobal.”
Renner has not been charged with a crime and has denied wrongdoing. The Secret Service said in court documents filed in February that “there is probable cause to believe that Renner is operating a large, Internet-based, Ponzi scheme through his umbrella corporation, InterMark, and some of its subsidiaries, particularly Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local.”
NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.
The Secret Service alleged INetGlobal was the “primary vehicle for the perpetration of this fraud.”
INetGlobal, which features an advertising rotator, is the so-called “autosurfing” platform of the Renner companies. The government has prosecuted several autosurf companies in recent years, saying they were selling investment programs disguised as advertising programs and engaging in wire fraud and money-laundering.
Renner’s company has a high concentration of Chinese members who may have limited or no facility in English, the agency said. At least one INetGlobal member has said Americans flocked away from Renner’s autosurfing enterprise after the Secret Service, in August 2008, raided a similar company in Florida known as AdSurfDaily (ASD).
The ASD litigation is referenced in court papers in the INetGlobal case.
Allen said this morning that he also had performed work for V-Media and V-Local — both of which the Secret Service said had ties to the alleged INetGlobal fraud — but he insisted that he had done nothing wrong.
“I wasn’t privileged to know anything about the compensation program” of InetGlobal, Allen said. “I could not explain it to this day.”
An error message that reads “This Account Has Been Suspended: Please contact the V-Webs.com billing/support department as soon as possible” now appears on the IBNN site. In the early hours after Allen lost control of the Blog, the site would not return a ping and produced a “bad destination” error message, according to records.
Even though Allen moved the content of the site from a hosting company controlled by Renner weeks ago, Renner controlled the domain registration and thus has the ability to block access, Allen asserted this morning.
Allen’s access to the site was blocked sometime after “noon on Sunday,” two days after he met with the Secret Service, Allen said.
Agents appeared at his home Friday unannounced, Allen said.
He described his initial meeting with agents as “excellent.” Allen added that he is consulting with an attorney.
“[The Secret Service] asked me if I would like legal representation,” Allen said. “I said yes.”
A second meeting with the Secret Service occurred yesterday. Allen said he was consulting with his attorney again today, saying a characterization that described him as cooperating with the agency was “totally accurate.”
The move to block IBNN also followed on the heels of a letter Allen gave to Renner April 22, Allen said. The letter claimed that Allen had “clear and documented” evidence of violations of the Federal Equal Employment Opportunity laws in a hiring decision it made.
In the letter, Allen suggested he was not given an opportunity to interview for a job that went to an INetGlobal member with a large downline. The letter also questioned the operations of the company’s board of directors and claimed an INetGlobal “receptionist” was performing “confidential” work that should have been handled by the firm’s Human Resources department.
Moreover, Allen said this morning that nothing in his employment contract with the Renner entity permitted the company to block access to the IBNN site. He claimed that the company now wants him to sign an agreement not to write about INetGlobal and also to inspect his computer.
Allen Questions INetGlobal’s Operations
Allen said this morning that he questioned how the company was paying its bills in the aftermath of the federal seizure of its assets. He claimed a member of INetGlobal with a Chinese name had received a promotion to a position that purportedly paid $120,000 a year after the seizure. This member, Allen said, also may have a seat on the board of directors and also purportedly had a downline organization in the company that purportedly paid $10,000 a day.
His first question for Renner, Allen said, is “how is that possible with the current funds frozen by the US Government?”
Allen said his position with the company was supposed to pay $75,000, but that he had not seen “a penny.”
“I’m a little upset, a little traumatized by this attempt to shut me down, because I had one hell of a story,” Allen said. “I’m kind of devastated; I have a civil-rights Blog. A lot of people read it.”
No Stranger To Controversy
Allen and his IBNN Blog have been the subjects of controversy. He used an offshoot of the Blog to claim in March that “federal officials” were leaking information about the INetGlobal case to the PP Blog. After the PP Blog began to report on INetGlobal, Allen began to post comments on the PP Blog without initially identifying himself as a Renner employee, claiming that the PP Blog was “minor league” and engaging in a “witch hunt.”
Separately, Allen used the IBNN Blog to attack the Star Tribune newspaper of Minneapolis St. Paul for its coverage of the INetGlobal raid. Meanwhile, Allen’s name is listed in the Secret Service affidavit filed in February to obtain search warrants at the firm’s headquarters. In the affidavit, the agency painted Allen as a person who provided confusing information to an INetGlobal prospect at a January event in Flushing, N.Y.
Undercover agents attended the Flushing event, and one agent’s observations of Allen are noted in the affidavit.
An INetGlobal prospect “stated she was struggling to understand how the business worked and explained that the person who brought her to the conference was not able to explain it either,” the agency said in the affidavit. “She asked what would happen if she sold iNetGlobal products to someone who had a website and they did not see an increase in their profits.
“Donald Allen asked her what type of products the person was selling and the woman gave the example of beauty products,” the agency continued in the affidavit. “Donald Allen replied that if she was advertising beauty products and not selling any, then maybe she should be in a different business. The woman further challenged Donald Allen on people not truly viewing the websites, just simply opening them. Patricio Diez, iNetGlobal’s marketing director for Spanish-speaking countries, then stated that ‘that doesn’t matter for you.’
“When the woman pressed further, stating that it does matter to whomever she sold the package to, Donald Allen simply stated ‘we have solutions for that’ but failed to expand upon those solutions,” the agency said.
After the raid at INetGlobal’s offices in Minneapolis, Allen used the IBNN Blog to criticize both the media and the government for what he described as unfair treatment of the company — without disclosing his tie to the firm. Allen later told the PP Blog he should have disclosed the tie.
Allen said this morning that his thinking about INetGlobal has evolved. He added that he also had revisited certain events at INetGlobal and had come to believe that things were not quite right.
At an event in Las Vegas last year, for example, Allen was not given time to talk to attendees about V-Local, he said. In recent days he has publicly questioned why few if any members were interested in purchasing the company’s editorial products.
“I can’t recall ever selling a press release to a Chinese member of iNetGlobal,” Allen said in a comment on the PP Blog April 23. “My yearly budget was in-part based on iNetGlobal members buying a press release from V-Newswire — hasn’t happened yet.”
Meanwhile, Allen said this morning that he was sympathetic to Steven Keough, INetGlobal’s former chief executive officer and potentially the government’s star witness in the case. The company has claimed Keough tried to hatch an extortion plot after he was dismissed for incompetence.
“Keough understood that INetGlobal members needed to buy the products,” Allen said this morning. “Steven Keough was the best thing that ever happened to that company,” adding that he believed Keough saw “noncompliance” with laws and was dismissed for pointing them out.
The man who supplied debit cards to the AdSurfDaily autosurf is wanted by INTERPOL on an arrest warrant issued by U.S. District Court for the District of Connecticut, the international police agency says on its website.
INTERPOL has published two photographs of Robert Hodgins, 65. People with information on Hodgins are urged to contact the General Secretariat of INTERPOL.
individuals from Medellin, Colombia, according to records. Medellin was the home base of the late drug lord and terrorist Pablo Escobar.
Web records suggest VM supplied debit cards to other autosurfs and HYIPs, and the company’s name in mentioned in the Ponzi scheme litigation against ASD and in court papers in the PhoenixSurf Ponzi scheme.
PhoenixSurf was sued successfully by the SEC in 2007.
The criminal case against Hodgins was brought by the U.S. Drug Enforcement Administration after an undercover operation.
In September 2008 — about a month after the U.S. Secret Service seized tens of millions of dollars from ASD President Andy Bowdoin amid wire-fraud, money-laundering and Ponzi scheme allegations in the District of Colombia — the indictment against Hodgins was unsealed in Connecticut.
Some ASD members said they saw huge sums of cash and suitcases full of cashier’s checks at ASD “rallies” in American cities, leading to questions about whether the company was being used as a front for criminal enterprises.
Regulators in Cyprus have referred Genius Funds for criminal investigation and released a warning that the company “[is] not permitted to provide investment and ancillary services in the Republic.”
Genius Funds, a darling of the HYIP world, was heavily promoted on the Ponzi boards. The program also is known as Genius Investments. The program was referred for criminal investigation by the Cyprus Securities and Exchange Commission, which also issued the warning. The announcement that the case was referred for criminal investigation was made Friday in Cyprus.
One of the matters referred for criminal investigation pertained to a question about whether Genius Funds used a “falsified document that possibly stated that it possessed an operational license which was not authentic,” the Cypriot regulator said.
Separately, Canadian securities regulators also have acted against Genius Funds, permanently banning the HYIP “for illegally selling securities,” the British Columbia Securities Commission (BCSC) said.
Genius Funds’ website is throwing a server error.
The program was pitched on the pro-AdSurfDaily Surf’s Up forum in December by a poster who dubbed himself “joe.” Genius Funds was one of four HYIP’s pitched by “joe” in an egg-themed promotion. The egg-themed domains redirected to HYIP programs.
All of the programs appear to have failed or gone missing, but the egg-themed domain names now redirect to other HYIPs.
“ALL MY EGGS ARE NOT IN ONE BASKET,” the Surf’s Up pitchman said in all-caps. “I MAKE 2000.00 A WEEK.â€
Some ASD members continued to promote autosurfs and HYIPs after the federal seizure of tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin in August 2008. The Surf’s Up forum went missing earlier this year.
In recent weeks, the Golden Panda Ad Zone forum (also known as the Online Success Zone forum), another website from which ASD members pitched autosurf and HYIP programs, also went missing.
BCSC opened its probe into Genius Funds after receiving a tip from “a financial institution,” the agency said.
Federal prosecutors have announced five convictions in an international money-laundering case involving drug proceeds and the use of “stored-value” debit cards. (See subhead below.)
The cases were brought by the Drug Enforcement Administration in 2008 as a result of an undercover operation. The debit cards used in the transactions were provided by Virtual Money Inc., according to court records in Connecticut.
Records show that Virtual Money, known simply as VM, was the same company that provided debit cards to AdSurfDaily and other autosurf companies. VM’s operator, Robert Hodgins, also was indicted in the drug-related cases and “is being sought by law enforcement,” federal prosecutors said.
News about the convictions in Connecticut was announced about two weeks after FBI Director Robert Mueller III testified before Congress that “stored value devices” such as reloadable debit cards increasingly were being used to move criminal proceeds through a “shadow banking system” that endangered the United States.
The PP Blog reported in August 2009 that VM’s name appeared in advertising materials for ASD in 2007. Research showed that VM also provided cards to other autosurfs and HYIPs, including the PhoenixSurf autosurf Ponzi scheme.
Records suggest that Hodgins or a VM designate attended an ASD function in Orlando in November 2006, about a month after ASD began its rollout.
During that same year, according to the DEA court filings unsealed in September 2008 after a two-year investigation, VM cards were used in Medellin, Colombia, to withdraw millions of dollars in drug proceeds at ATMs between April and August.
The drug-related, money-laundering indictments against VM initially were filed under seal in April 2008 and then superseded under seal in June 2008. The documents were made public in September 2008, about a month after the federal seizure of tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin, amid Ponzi scheme, wire-fraud, money-laundering and securities allegations in an autosurf case.
Some ASD members said they observed large sums of cash at ASD “rallies” and suitcases full of cashier’s checks.
After purportedly operating in the hole throughout much of its existence and allegedly experiencing an unreported theft of $1 million at the hands of “Russian” hackers, ASD suddenly came into possession of tens of millions of dollars in the first half of 2008, leading to questions about whether it was serving as a front to launder proceeds from criminal organizations.
References to VM appear in ASD advertising materials dating back to at least February 2007, and other ASD references to VM date back to the fall of 2006, when ASD was just getting off the ground.
In March 2008, according to records, a DEA informant gave Hodgins $100,000 in undercover funds, saying an uncle needed drug money laundered in the Dominican Republic. Hodgins allegedly agreed to perform the service for a fee of 10 percent of the amount, and the DEA alleged it has audio and photographic evidence of the transaction.
If the allegations are true, it means the DEA has audio and photographic evidence of the man who provided debit cards to ASD and other surf enterprises accepting money to participate in international drug transactions and international money-laundering.
Convictions In Drug/Money-Laundering Cases
On March 30, 13 days after Mueller testified before Congress on the dangers of stored-value devices, Juan Merlano Salazar, 35, of Medellin, Colombia, pleaded guilty in U.S. District Court in Connecticut to 11 counts of money-laundering and one count of conspiracy to commit money laundering.
Merlano was named in the same indictment that charged VM’s Hodgins and the company itself. Merlano was extradited from Colombia in June 2009, a year after he, Hodgins, VM and seven other defendants were charged in the superseding indictment. Merlano has been detained since his extradition and faces sentencing in June.
He faces a maximum penalty of 240 years in prison and a maximum fine of $6 million.
Four other defendants also have pleaded guilty to date to “charges stemming from this conspiracy,” prosecutors said.
Guilty pleas were entered by Francisco Dario Duque, 49, of Medellin, Colombia; Gonzalo Bueno, 72, of Brooklyn, New York; Juan Chavarriaga, 45, of Fort Lauderdale, Florida, and Jose Manotas, 46, of New York, New York.
Each of the defendants is detained and awaiting sentencing, prosecutors said.
“[T]he [drug]organization employed operatives in the United States and funneled millions of dollars in drug proceeds from the U.S. to Medellin, Colombia,” prosecutors said. “The investigation, which utilized a variety of traditional and sophisticated investigative techniques, including court-authorized interception of international e-mail, disclosed that the money laundering organization used direct deposits of cash into third-party bank accounts, as well as payment of third-party debt obligations to move cash drug proceeds from the New York metropolitan area out of the country.
“The organization also used ‘stored value cards,’ which function like debit cards and enabled cardholders to deposit U.S. dollars into accounts locally, to be withdrawn later from banks in Medellin as Colombian pesos,” prosecutors said. “The Government has alleged that the scheme resulted in the laundering of more than $7 million in drug proceeds.”
Hodgins was president and chief executive officer of VM, a Texas-based business.
“Hodgins is being sought by law enforcement,” prosecutors said.
In addition to the DEA, the case is being investigated by the Criminal Investigation Division of the IRS, prosecutors said.
UPDATED 7:52 A.M. EDT (April 13, U.S.A.) On the very day Tom Petters was sentenced in Minnesota to 50 years in prison for operating a colossal Ponzi scheme, a federal judge froze the assets of Renee Marie Brown after the SEC accused her of ripping off clients by persuading them to invest in a mysterious vehicle known as “Fund X.”
U.S. District Judge Donovan W. Frank issued a temporary restraining order against Brown and her company, Investors Income Fund X LLC. The order was issued April 8.
Brown, 46, of Golden Valley, was accused of operating a “sham” fund into which investors plowed more than $1.1 million between July 2009 and March 2010.
“Brown told her investors that Fund X is a ‘bond fund’ with fixed annual returns of 8% or 9%,” the SEC said. “[S]he distributed fictitious ‘returns’ to investors, furthering the fiction that Fund X was a legitimate and successful investment opportunity.”
But Brown “misappropriated most of the $1.1 million she raised from investors to, among other things, purchase a condominium for herself and build . . . office space for her new business,” the SEC said.
Investors Income Fund X LLC was registered as a corporation in South Dakota, the SEC said.
“Unbeknownst to her victims, Fund X is a sham — Brown’s alter ego,” the SEC said.
The case features allegations of siphoning, forgery, cherry-picking clients of Brown’s former employer and issuing fraudulent “returns” in Bernard Madoff-like fashion. It also occurred against the backdrop of March 17 Congressional testimony by FBI Director Robert Mueller III that U.S. companies increasingly were relying on shell corporations to commit fraud.
Minnesota Fraud Cases
In recent months, investigators and prosecutors in Minnesota have opened up a number of major fraud probes. The combined cases are alleged to have drained hundreds of millions of dollars from investors. In some instances, prosecutors and regulators have asserted that companies used multiple names to commit fraud.
Petters was convicted last week of presiding over that was described as the largest financial-fraud case in Minnesota history: a $3.65 billion Ponzi scheme.
Petters displayed “stunning criminality,” prosecutors said. One of the victims wrote, “Our society, unfortunately, is becoming plagued with too many people like this, and like Bernard Madoff. Tom Petters needs to learn that there are severe consequences for his incomprehensible behavior.”
Meanwhile, the SEC, the CFTC, the FBI, prosecutors and a court-appointed receiver are poring over records to reverse-engineer the alleged Trevor Cook/Pat Kiley Ponzi scheme. Court records suggest multiple company names were involved and that the scheme involved at least $190 million and caused investor losses of at least $139 million.
Money was moved “all over the world,” according to court filings.
Cook and Kiley were sued by the SEC and the CFTC in November. Cook was charged criminally last month. Prosecutors said he was “aided and abetted by others.†In this document, the National Futures Association, which also filed an action that references Cook, asserted that $75 million from a purported Swiss fund may have been directed at a mysterious investor known only as “Fased.”
The purported payment occurred while Cook, a Minnesota resident, allegedly was managing money for a Canadian company known as KINGZ Capital Management Corp. KINGZ name also has been linked to an autosurf known as AdViewGlobal (AVG), which had close ties to an autosurf known as AdSurfDaily (ASD).
On May 4, 2009 — on the same day the Obama administration announced a crackdown on international financial fraud — AVG announced that KINGZ had become its facilitator for international wire transfers. KINGZ denied the assertion, saying it believed it had been targeted in a scam. The company painted the picture that AVG was attempting to route money to itself through a U.S. shell company.
AVG purportedly operated from Uruguay.
Florida-based ASD, which members said was popular in Minnesota, was implicated in August 2008 by the Secret Service in a Ponzi scheme. A federal judge has issued orders of forfeiture totaling more than $80 million in the ASD case. ASD used at least three names, according to records: AdSurfDaily, AdSalesDaily, and ASD Cash Generator.
Prosecutors also linked ASD to at least two other autosurfs: LaFuenteDinero (the “fountain of money”) and Golden Panda Ad Builder, the so-called “Chinese” option for ASD members.
In February, the U.S. Secret Service alleged that Minnesota resident Steve Renner was operating a Ponzi scheme through a company known as INetGlobal and companies related to the firm. The scheme, the Secret Service said, largely targeted Chinese members who may have little or no facility in English.
Renner denies the allegations. Prosecutors described the case as a “major fraud and money laundering investigation,” saying INetGlobal came to life during a period in which federal agents were seizing tens of millions of dollars in the ASD case amid Ponzi, wire-fraud and money-laundering assertions.
An ASD member introduced an undercover Secret Service agent to INetGlobal, the agency said in court filings.
Other recent fraud cases in Minnesota include the Gerard Cellette Jr. Ponzi case ($53 million); the Charles “Chuck†E. Hays case ($20 million); and the Kalin Thanh Dao case (up to $10 million).