UPDATED 10:40 A.M. ET (U.S.A.) Federal and state agents have raided the Minneapolis offices of Inter-Mark Corp., seeking evidence of a Ponzi scheme, the Star Tribune of Minneapolis/St. Paul is reporting.
Inter-Mark Corp. is operated by Steve Renner, who also operates a purported “advertising” service known as INetGlobal. In a scene that resembled the August 2008 raid at the headquarters of Florida-based AdSurfDaily, agents in Minnesota were seen carting boxes of documents and computers.
ASD was implicated in a $100 million Ponzi scheme.
Renner has been under investigation for at least 17 months and likely longer. He was indicted on charges of tax evasion in September 2008, about a month after the ASD raid. He was convicted in December 2009 of evading more than $332,000 in taxes between 2002 and 2005.
Renner, 54, “diverted substantial funds from his business, Cash Cards International (CCI), between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps, and vintage musical instruments,” prosecutors said in December.
He also used CCI funds to promote his musical band, “Stevie Renner and the Renegades,†prosecutors said.
“From 2001 to 2006, Renner owned CCI, an Internet-based stored-value card and money
transmission business, with locations in Minnesota, South Dakota, and Hawaii,” prosecutors said. “Although he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to file his income tax returns with the Internal Revenue Service for tax years 2002 through 2004 until March 5, 2006, the date on which he also filed his 2005 federal income tax return.”
“Tax evasion is not a victimless crime,†said Julio La Rosa of the IRS, upon Renner’s conviction.
“Honest, hardworking taxpayers pay the price when others choose to evade their tax obligations,” La Rosa said. “As this verdict shows, those that cheat will get caught.â€
Renner faces up to 20 years in federal prison in the tax case.
Renner also is associated with a domain known as AdPacs.com, which is throwing a server error. It is believed that AdPacs promoters also promoted the AdViewGlobal (AVG) autosurf, which had close ties to ASD.
Affiliates of Steve Renner's AdPacs.com pushed AdViewGlobal just prior to its February 2009 launch. This screen shot of search result that appeared online more than a year ago lists the name of Juan Fernandez, the CEO of AdSurfDaily. ASD is implicated in a $100 million Ponzi scheme. AVG launched AFTER the federal seizure of tens of millions of dollars in the ASD case. Like ASD President Andy Bowdoin, Fernandez took the 5th Amendment at an evidentiary hearing in September 2008. Now, Renner's company is the subject of a major federal probe. ASD sold "ad-packs." AVG referred to its version of "ad-packs" as "viewer impressions" after the phrase "ad-packs' became radioactive.
As was the case with the ASD raid in Florida, local media caught the events at Renner’s office yesterday on video. Minnesota has been plagued by Ponzi schemes. Some ASD members from Minnesota have been among the loudest advocates for ASD President Andy Bowdoin.
The Minnesota Financial Crimes Task Force assisted in the raid.
Earlier this month, the Secret Service announced the formation of an Electronic Crimes Task Force (ECTF) based in Memphis. The agency also has ECTFs in St. Louis, Kansas City, New Orleans and Europe.
“One of the top priorities for the Secret Service continues to be combating the computer
related crimes perpetrated by domestic and international criminals that target the U.S.
financial infrastructure,†said Secret Service Director Mark Sullivan.
“The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by working closely with experts from all affected sectors to constantly refresh and adapt our investigative methodologies.â€
Robert Guenther and a woman referenced as “Jane Doe” are listed as defendants in a shareholder lawsuit filed Feb. 2 in Arizona by investors in Cheyenne Mountain Games (CMG) and Cheyenne Mountain Entertainment (CME).
Guenther is the de facto head of the ASD Members Business Association (ASDMBA), an entity that came to life in the aftermath of the federal seizure of tens of millions of dollars from AdSurfDaily and a related company, Golden Panda Ad Builder. ASDMBA collected contributions from ASD members, saying it sought to protect their interests in the ASD litigation.
Some ASDMBA members complained that its operations were less than transparent and that Guenther did not provide adequate accounting of how more than $100,000 collected through individual contributions was spent.
Also named a defendant in the Arizona lawsuit was Jaffa Partners, a Texas entity with which Guenther is associated. The plaintiffs said they believed “Jane Doe” was Guenther’s wife. They are among more than 30 defendants listed in the case, which centers on alleged misconduct by Gary Whiting, a CME executive.
Guenther, “Jane Doe,” Jaffa and the other defendants are accused of RICO violations for “participating in a scheme or artifice to defraud”; conversion of assets and refusing to return the assets with an “evil mind”; unjust enrichment for “failing to pay” or provide consideration for assets; and fraudulent transfer/conveyance “with the actual intent to hinder, delay, or defraud.”
CME and CMG are involved in the development of an online game known as “Stargate Resistance.” CME has declared bankruptcy amid a sea of allegations of mismanagement and financial manipulations by Whiting and financial manipulations by others that harmed shareholders, according to court filings.
“Whiting has used CME and CMG as though they were his own piggy bank,” the shareholders alleged.
Among the allegations are that CME stopped paying employees and that Whiting instructed company officers to stop paying payroll taxes, racking up more than $1.5 million in unpaid taxes. More than $3.8 million on other bills also were not paid, according to the shareholders.
Whiting’s actions threatened the release of Stargate Resistance and the viability of the company itself, according to the shareholders.
Side deals kept from shareholders diluted the value of shares, the plaintiffs claimed. They also claimed Whiting may have caused “listening devices” to be planted in CME’s offices in Arizona and telephone calls of key employees to be recorded without their knowledge or consent.
In the ASD case, federal prosecutors alleged that the Florida-based company was a Ponzi scheme. After the seizure of ASD’s assets in August 2008, Guenther solicited contributions for ASDMBA.
Some ASDMBA members demanded their money back, criticizing Guenther for rude and obnoxious behavior and claiming they had received nothing in return for their contributions. They also complained that Guenther did not disclose that he had a felony conviction for bank fraud.
Guenther dismissed his critics as “left wing liberal no balled people,” calling one an “ignorant mouthy broad.” He also claimed ASDMBA was instrumental in returning money to ASD victims, saying the group retrieved funds for retired and active-duty police officers in Texas and California, and for a “high profile Dallas Cowboy†executive.
ASDMBA’s website urged association members to make an ASD’s promoter’s life “miserable” until he returned funds due another member.
Prosecutors filed a two forfeiture complaints against ASD and Golden Panda’s assets, saying they were in the process of establishing a compensation pool for ASD victims.
Guenther’s name is not listed in court filings as a person empowered to return assets to ASD victims.
Read the Arizona lawsuit filed by CME shareholders in which Guenther was named a defendant. The principal plaintiffs on behalf of shareholders are Keith Deering, Mark Renberg and Chris Lombardo, according to the verified complaint.
A sworn affidavit filed today by AdSurfDaily President Andy Bowdoin appears to make claims that are the polar opposite of claims he made in a sworn affidavit witnessed by a notary public and filed in federal court Sept. 15.
Separately, Bowdoin’s lawyer, Charles A. Murray, filed a brief that may be the opening volley in a bid to challenge the Constitutionality of the government’s forfeiture case, suggesting the U.S. Secret Service had no “probable cause” to seize tens of millions of dollars from Bowdoin’s bank accounts in August 2008.
Murray also said that Bowdoin had not received fair notice about court rulings and did not challenge the rulings previously because of an email glitch that affected Murray’s computer between Nov. 10, 2009, and “early January” of this year.
“I experienced as yet unidentified computer/server issues, wherein multiple email messages apparently never loaded to the firm’s Inbox,” Murray said.
Bowdoin, 75, now flatly claims he was told by a former defense attorney that, if he submitted to the forfeiture of tens of millions of dollars, he would face no jail time if criminal charges were filed in the ASD Ponzi scheme case.
He did not name the attorney in today’s filing, referring to him obliquely as “prior counsel.” In an earlier filing, Bowdoin identified his counsel as Stephen Dobson.
“I was assured by my prior counsel that, if I released my claims in this [civil-forfeiture] action, I would not be facing any incarceration,” Bowdoin claimed today. “My January 2009 motion to withdraw my claim . . . was solely based upon prior counsel’s unilateral mistaken belief that my release of claims would unequivocally assure that any subsequent criminal sentence entered would not include any prison time.”
Today’s filing was witnessed by Florida notary public Joe B. Cox of Lee County.
But in a sworn affidavit Bowdoin signed Sept. 15 before a different notary public — Patricia C. Sanson of Lee County — Bowdoin repeatedly said Dobson had said only that there was a possibility Bowdoin would not be sentenced to prison if criminal charges emerged.
In the Sept. 15 affidavit, Bowdoin repeatedly swore that Dobson had not promised him no jail time.
These are among the phrases Bowdoin swore to in the Sept. 15 affidavit (emphasis added):
Dobson represented to me that I could possibly avoid prison or get a reduced sentence if I agreed to disclose details concerning ASD and releasing the assets.
I also signed a document stating that I would release my claims in the abovecaptioned civil in rem forfeiture proceeding, again thinking that necessary for a possible avoidance of a prison term.
I did all of this on the understanding that by cooperating I could possibly avoid a prison sentence.
I agreed not to exercise my rights in the civil forfeiture proceeding, anticipating from representations made by Dobson that this could possibly keep me out of prison.
Dobson lead [sic] me to believe that if I cooperated there was a possibility that I would not be incarcerated or imprisoned.
I believed that my cooperation would still result in a criminal sentence that could possibly not include imprisonment or incarceration.
I slowly came to understand what I understood from Dobson not to be the case: that my agreement to cooperate provided me no benefit in the criminal matter except the possibility of a reduced sentence if the judge desired which would still be a life sentence.
Bowdoin’s filing today leads to questions about whether he deliberately chose to appear before a different notary to swear to the affidavit. At the same time, it leads to questions about whether Bowdoin somehow was unaware that U.S. District Judge Rosemary Collyer already had cited Bowdoin’s Sept. 15 sworn affidavit in a major ruling that Bowdoin no longer had standing in the case.
On Nov. 10, Collyer noted Bowdoin’s repeated use of the words “possibly,” “possible” and “possibility” in the Sept. 15 affidavit when referring to the advice Dobson had given him on the matter of jail and and finding that Dobson had behaved responsibly while representing Bowdoin.
“Such an approach from counsel could be seen as the norm when the Government’s evidence is strong,†Collyer said. “What Mr. Bowdoin hoped to gain from his release of claims/early acceptance of responsibility and his debriefing with the Government was a promise of no jail time. When that was not forthcoming from the Assistant United States Attorney, Mr. Bowdoin balked and tried to back up, as if he had not already released his claims and talked to the Government.â€
UPDATED 12:01 P.M. ET (U.S.A.) Has the pressure of being challenged on multiple legal fronts led to a split in the extended family of AdSurfDaily President Andy Bowdoin?
The depths of any split are unclear, and it is believed that Bowdoin has the continued support of some members of the Bowdoin/Harris family.
But interviews conducted by the PP Blog and information obtained through sources suggest Bowdoin is unable to travel internationally, no longer is living in Quincy, Fla., does not enjoy the uniform support of the extended Bowdoin/Harris family and has been blamed by some for engulfing them in the flames of a legal nightmare.
At least one family member has contacted federal prosecutors, according to a source. How prosecutors responded to the overture, which was said to have been made in the summer of 2009, is unclear.
On Saturday, numerous vehicles were parked at a Florida property associated with Bowdoin’s wife, Edna Faye Bowdoin, according to a source. Edna Faye Bowdoin is the mother of George Harris, the reputed co-owner of Bowdoin/Harris Enterprises and the AdViewGlobal autosurf, as well as the head of ASD’s purported “real-estate” division.
Several women were present, but Bowdoin was not seen, the source said.
A second source knowledgeable about the Bowdoin/Harris family described the family as a “family divided.” The PP Blog interviewed the second source in August 2009, and has not published comments from the interview until today.
The source spoke with the PP Blog on the condition of anonymity, and demonstrated knowledge of the family by voluntarily answering questions posed by the Blog prior to the interview and during the interview. The Blog was satisfied that the source could offer insight into the thinking of certain family members.
“There is already an unbelievable amount of friction in the family right now because of everything that Andy has done,” the source said. “This is very much a family divided.”
Less than a month after the Blog conducted the interview, the state of Florida revoked the corporate registrations of ASD and Bowdoin/Harris Enterprises Inc. because neither company filed annual reports despite the continuing presence of active litigation involving both firms and despite being given a five-month window to file required documents.
Neither Bowdoin nor family members explained why the corporate registrations were permitted to lapse. Only four days prior to the revocation, which could have been prevented by the simple filing of papers, Bowdoin told ASD members in a conference call that he had big plans for ASD.
On the same date Florida revoked the corporate registrations — Sept. 25, 2009 — federal prosecutors turned up the heat on Bowdoin by accusing him in court filings of trying to lie his way back into the federal forfeiture case against ASD’s assets.
Prosecutors made a veiled reference to AdViewGlobal in their filings, saying Bowdoin perhaps “was just buying time while searching for a different exit strategy that failed to materialize. Maybe Bowdoin thought that before the government brought its charges he (like some of his family members) could move to another country and profit from a knock-off autosurf program that Bowdoin funded and helped to start.”
Three days later, on Sept. 28, prosecutors turned up the heat again, filing a Secret Service transcript of an ASD conference call and advising a federal judge that Bowdoin was telling her one story and members another.
In the weeks that followed, U.S. District Judge Rosemary Collyer ruled that Bowdoin no longer had standing in the case. Bowdoin then attempted unsuccessfully to have Collyer removed as the judge.
Collyer has granted the government’s forfeiture petition in a case filed in August 2008 involving tens of millions of dollars. Bowdoin now is seeking a reversal of that order, claiming it came as a result of judicial error. Prosecutors, however, said the judge did not err and that Bowdoin’s arguments are “impenetrably illogical.”
Purportedly headquartered in Uruguay, AdViewGlobal, which crashed and burned in June 2009, had close family, membership and promotional ties to ASD.
In the August 2009 interview, the source described George Harris and his wife, Judy Harris, as “very worried.”
“Judy heard that the Secret Service was staring to investigate [AdViewGlobal,]” the source said.
Certain family relationships are fractured beyond repair, the source said.
“These relationships are done,” the source said. The source said that paranoia was gripping certain family members and that there were efforts to compartmentalize knowledge and limit use of the telephone.
“They became very shady,” the source said.
Andy Bowdoin led family members and members of ASD and AdViewGlobal down the primrose path, the source said.
AdViewGlobal was described by Bowdoin as a “wonderful idea,” the source said, noting that Bowdoin described the successor autosurf as ASD with tweaks.
AdViewGlobal launched after ASD’s assets were seized amid Ponzi, wire-fraud, securities fraud and money-laundering allegations.
Andy Bowdoin wanted to proceed with AVG, according to the source, “because, with a few little tweaks, this company can make it.”
In June 2009, less than a year after ASD’s assets were seized, AdViewGlobal announced a suspension of cashouts, exercising its version of a “rebates aren’t guaranteed” clause.
How much money the surf collected and how much it paid out are unclear.
David Krywenky of KINGZ Capital Management: Source: Marketwire
UPDATED 5:25 P.M. ET (U.S.A.) KINGZ Capital Management Corp. (KCM) might have been used or contemplated for use as a tool in two far-reaching, incredibly elaborate Ponzi schemes, according to an analysis of public records and other information.
One of the schemes ultimately appears to have consumed tens of millions of dollars in a squalid venture that used a royalty theme trading off the name “Crown.” It involved purported forex trading in Switzerland under the name “Crown Forex SA” and an American namesake called “Crown Forex LLC” allegedly set up to confuse investors and perhaps authorities.
The other scheme, which appears to have been nipped before it could mushroom on a grand scale, sought to kickstart a rapidly collapsing autosurf believed to be an offshoot of an existing criminal enterprise desperately seeking to extend its reach from the United States into the Caribbean, Central America, South America and perhaps Europe to keep itself alive.
The first scheme, which included other confusingly similar corporate names such as Oxford Global Partners LLC and Oxford Global Advisors LLC, became the subject of fraud charges filed by the SEC and the CFTC in November. Investors appear to be out tens of millions of dollars.
Charged in the $190 million November case were Trevor Cook, former Christian radio host Pat Kiley and several other companies. The allegations paint the picture that Crown Forex LLC set up a U.S.-based bank account to siphon money investors believed was destined for the Swiss entity, which they knew as Crown Forex SA.
“Cook and [Pat] Kiley, directly and acting through others, deposited checks from many investors, into a U.S. bank account in the name of a domestic shell company, with a name — Crown Forex, LLC –Â that was misleadingly similar to the Swiss firm Crown Forex, S.A.,” the SEC said.
Cook was jailed earlier this week for violating a court order that required him to turn over assets.
Separately, the National Futures Association (NFA) charged KCM in September with permitting Cook — who was not accredited and previously was disciplined by NFA for highly questionable business practices — to manage a KCM fund that purportedly contained “somewhat above and below $300 million” between September 2008 and July 2009.
KCM now has been permanently banned from NFA membership. David Krywenky, KCM’s vice president, has been banned for three years.
It’s anybody’s guess how much money the fund actually contained and what happened to the money. The SEC, the CFTC and a court-appointed receiver are turning over numerous domestic and international rocks to find assets of Cook and Kiley’s alleged epic fraud.
NFA’s allegations against KCM are disturbing. Not only was Cook managing a KCM pool known as KCI, according to the allegations, Cook’s Oxford Global Partners “appeared to be the only investor” in the KCI pool and all of the pool’s money was dumped into Crown Forex SA, a company in which Cook purportedly owned a majority stake and a company Swiss authorities declared bankrupt.
Was Cook At The Intersection Of A Second Scheme?
The second scheme to which KCN’s name has been linked was called AdViewGlobal (AVG), an autosurf purportedly headquartered in Uruguay but believed actually to have operated from inside the United States, most likely from Florida but perhaps also from Arizona. Autosurfs pose as “advertising” companies to skirt securities laws, authorities say.
AVG had close family, membership and promoters’ ties to AdSurfDaily, a Florida company implicated by the U.S. Secret Service in a $100 million Ponzi scheme. Federal prosecutors are well aware of AVG. So are attorneys suing ASD President Andy Bowdoin and ASD attorney Robert Garner for racketeering.
KCM’s tie to AVGÂ — according to AVG — was as the surf’s new facilitator of offshore wire transfers after AVG earlier had lost access to a bank whose name was not disclosed. AVG, among other things, claimed to own a payment processor known as eWalletPlus.
Records suggest eWalletPlus was an extension of corporate shells in Nevada and Arizona. At least two other companies claimed to own eWalletPlus during the same time period in which AVG claimed ownership. In March 2009, AVG announced its back account had been suspended. Problems with eWalletPlus were reported at the same time.
AVG identified KCM as its new wire facilitator on May 4, 2009, the same day the Obama administration announced a crackdown on international financial fraud. KCM denied AVG’s claim on May 7, saying it believed AVG had targeted it in a scam and perhaps was tying to use a third company based in Florida to route money to itself.
KCM identified the third company as Living Legacy One LLC. Records in Florida identified Gerald Castor as Living Legacy One’s principal, and a communication from AVG identified Castor as an employee of the surf’s “Compliance” department.
Michael P. Krywenky, David Krywenky’s father, denied any AVG ties in an interview with the PP Blog. The interview was conducted in May 2009, after Michael Krywenky contacted the Blog and asked it to remove a story citing AVG’s wire claim.
The Blog declined to remove the story. Instead, it published a story about Michael Krywenky’s denial. The story was based on an interview the Blog conducted with Michael Krywenky and an email Michael Krywenky sent the Blog on May 7, 2009.
“I think that we may be victims of a scam here and we are investigating this further at our end as well,” Michael Krywenky said in the email. “Thank you for bringing this to our attention. In the meantime, we please (sic) remove this posting since it contains false information that is detrimental to our company.”
A month later, in June 2009, the SEC began to investigate the Cook/Kiley entities. By September 2009, the NFA was accusing David Krywenky and KCM of permitting Cook to manage an investment fund and not making a claim for money lost when the Swiss entity went bankrupt.
Whether NFA questioned David Krywenky and KCM about AVG is unclear.
“KCM and D. Krywenky failed to act in the best interests of KCI’s participants, both known and unknown, in that when they knew or should have known that funds on deposit at Crown Forex, SA were frozen pursuant to that firm’s bankruptcy they took no action on behalf of the KCI pool to participate in the bankruptcy as a creditor or otherwise protect KCI’s equity,” NFA said.
NFA further accused David Krywenky and KCM of turning a blind eye to Cook, now implicated with Kiley in a colossal fraud.
AVG, which shielded members from knowing the identities of its owners by signing communications “The AVG Management Team,” never explained how it had identified KCM as a possible facilitator. The surf also ignored Michael Krywenky’s public denial that it had any business relationship with AVG, explaining that the wire deal it had announced as completed only days earlier — up to and including providing detailed wiring instructions — had fallen through as a result of failed negotiations.
Meanwhile, the surf also did not address Michael Krywenky’s claim that AVG appeared to be trying to route money to itself through Living Legacy One, the entity associated with Castor.
Michael Krywenky said KCM was consulting with attorneys to address AVG’s false claims and that the company had taken steps to ensure AVG could not receive money through KCM. AVG spent the balance of May promoting the launch of a new website and telling both prospects and recruiters that they could earn matching bonuses of 200 percent for sending money to the company or causing money to be sent to it.
Like ASD, AVG used offshore payment processors such as Canada-based Solid Trust Pay.
AVG collapsed in June, taking an unknown amount of money with it. Before the collapse, AVG identified George and Judy Harris of Tallahassee, Fla., as its owners. They previously had been identified as “Trustees” of AVG’s “private association,” which had cited U.S. Constitutional protections while purporting to he headquartered in Uruguay.
AdSurfDaily members later said ASD President Andy Bowdoin was a silent partner in AVG, claiming that Bowdoin had dispatched George Harris to Switzerland to establish bank accounts.
George Harris is Bowdoin’s stepson. The Harrises were named beneficiaries by the U.S. Secret Service of ASD’s illegal conduct in December 2008. AVG formally launched two months later, in February 2009, after the Harrises and Bowdoin’s wife, Edna Faye Bowdoin, had been named recipients of ill-gotten ASD gains — and after a major court ruling went against ASD, and after Bowdoin had been named a defendant in a racketeering lawsuit brought by members.
In May 2009 — the month during which AVG purportedly had turned to KCM to establish a wire facility and during a period in which Trevor Cook allegedly was managing money for a KCM entity known as KCI — the alleged Cook/Kiley Ponzi scheme appears to have been collapsing.
Cook has not been publicly linked to AVG. At a minimum, however, someone within AVG appears to have identified Barbados-based KCM as a solution to the company’s wire problem — and the NFA allegations establish a tie between KCM and Cook.
At least for a few days in May 2009, AVG was sufficiently confident that its wire problem was solved, so much so that it provided members detailed wire instructions with KCM’s name and an account number.
Given the nature of NFA’s allegations that Cook somehow had wormed his way into KCM’s purported forex operations with KCM turning a blind eye, it is reasonable to ask whether Cook also somehow had wormed his way into an intersection at which he could have cherrypicked funds from other KCM customers — and whether AVG and other autosurfs and HYIPs had turned to KCM to solve domestic banking and wire problems.
Investigators might be interested in determining if Cook somehow positioned himself to cherrypick fresh autosurf cash and apply it to his alleged existing Ponzi scheme, thus funding it with proceeds from other Ponzi schemes. Indeed, it is reasonable to ask if Cook’s influence with KCM extended from the forex fund to other areas of the business.
Why?
Because KCM, which became an NFA member in November 2007, issued two news releases less than a year later — in October 2008 — announcing it was managing more than $330 million. In a release dated Oct. 15, 2008, KCM said it had “received investment subscriptions of $334,263,000.” In a release eight days later — on Oct. 23, 2008, KCM said “clients who participated in their first raise of just over $330 Million US . . . have reported a very steady and consistent cash flow and rate of return.”
The Star-Tribune of Minneapolis/St. Paul, quoting a lawyer for KCM, reported in November 2009 that Cook offered to provide KCM start-up funding. KCM executives met Cook at a function in West Palm Beach, Fla., according to the attorney. Florida has become Ground Zero for Ponzi schemes.
A Mysterious Investor
NFA asserted in this filing that Cook perhaps peeled off $75 million from the purported Swiss fund and directed it to a mysterious investor. Cook also was alleged to have changed “passwords” on KCI “accounts” as part of the scheme.
KCM, according to the NFA allegations, “permitted Cook to effectuate a purported $75 million withdrawal from KCI’s trading accounts for a purported [Oxford Global Partners] investor who was identified to them by Cook only as “Fased.”
KCM is said to be cooperating with investigators from more than one state and federal agency.
It is unclear if “Fased” is a person, a business, an acronym, a proper name, a misspelling of the word “phased” or a slang spelling of “phased,” an amalgamation of some sort or a complete fiction.
What is clear is that Cook allegedly was managing money for KCM, a company to which AVG said it had turned last year to facilitate offshore wire transfers. AVG’s announcement — and the subsequent actions by the NFA, the SEC and the CFTC, may put KCM at the intersection of two murky worlds — the worlds of underground currency-trading schemes and offshore autosurf and HYIP schemes that promise enormous returns.
It’s worth investigators’ time to check it out — if for no other reason than to rule out the possibility that Cook also was playing the autosurf and HYIP games either as an investor or by somehow positioning himself at an intersection in these noxious worlds to siphon funds and divert them to his alleged principal Ponzi scheme.
What’s more, an HYIP known as Gold Nugget Invest (GNI) collapsed earlier this month, several weeks after NFA brought its action against KCM, and the SEC and CFTC brought their actions against Cook and Kiley.
GNI reportedly was having trouble accessing needed funds in a European bank, but announced a “Re-organization” plan that would reduce payouts from 7.5 percent a week to a mere 20 percent a month.
No, it’s not a misprint. GNI purportedly launched in October 2006, the same month AdSurfDaily was preparing for launch. ASD promoters advertised returns of 1 percent a day for viewing “advertisements.” Prosecutors said it operated as a virtually pure Ponzi scheme.
Some GNI members have referred to money — or representations of money — in their “ewallets.” It is unclear if the “ewallets” to which they refer have any connection to eWalletPlus or if the term “ewallet” is being used as a generic.
What is clear is that HYIP, autosurf and forex schemes have many players in common — and that tremendous sums of money go missing routinely.
The Biz Ad Splash (BAS) autosurf has tanked, taking participants’ money with it, members said tonight.
Members reported receiving a platitude-filled email from Clarence Busby announcing the surf’s closure. The email, which included a pep talk and invoked God, did not say if, when or how members would be compensated.
“Now what about the future?” the email said. “No matter what, there is a future. There are many things on the internet that will help you in this future, so don’t give up. Make the effort and success is just right around the corner. May your life be full of faith, hope and love. This is where you will find your best rewards. May God bless you all!”
Busby’s name appeared at the bottom of the email, which carried a business address of Acworth, Ga. The surf, which purported upon its 2009 launch to be headquartered offshore, came to life in the wake of the seizure of tens of millions of dollars from AdSurfDaily Inc. and Golden Panda Ad Builder. Busby is the former president of Golden Panda, which ceded more than $14 million to the government in the ASD/Golden Panda case.
Known for syrupy communications, Busby described the BAS staff as “sad,” according to the email.
“Our staff has been sad, not just because of losing a job, but because they have developed friendships with many of you and are very sad to ‘break up the party,’” the email said. “With anything that has had life, it is very sad to have that life taken away.”
Busby was identified in the email as the owner of BAS. In earlier communications, he was identified as “chief consultant.” It was not immediately clear how he purportedly had ascended from consulting work to ownership.
“As owner of this company, I have had many, many hours that I sincerely enjoyed working with you, and of course, a few ‘witching’ hours that were just plain scary,” the email said. “After many sleepless nights over the past few weeks, trying to come to the correct conclusion, I have made a decision to ‘pull the cord and turn out the lights.’ The party is over.
“No decision like this comes easy, at least not for me,” the email continued. “I know many people have had tremendous success, while others have just learned another of life’s lessons in their loss. With a heart that is very heavy and sad, I have come to realize that not every plan brings success. But I do know that every failed plan does bring you a tremendous amount of knowledge in lessons learned, that will bring you closer to the success you are reaching to achieve.”
One BAS member who contacted the PP Blog said her family was out tens of thousands of dollars with the closure — and also out the value of advertising they purchased.
“I am retired and I did not get involved in this company just to give money away for we need the money to retire,” the member said. “Mr. Clarence Busby is nothing but a dishonest crook.”
Busby, who used the title “Rev.” at least 120 times in a court filing involving Golden Panda last year, was implicated by the SEC in three prime-bank schemes in the 1990s, according to records. He agreed not to break securities laws in a settlement with the SEC.
Despite the failure of BAS and the problems Golden Panda had that resulted in the seizure of more than $14 million in five Busby/Golden Panda bank accounts, Busby had he was better for having operated BAS.
“Please accept my humble appreciation to all of you who have encouraged, supported and worked so diligently with all of us this past year. Also, for those who prayed for me when I was in the hospital, I will never forget your calls, your letters and your friendships. It really did help move me to get well.”
BAS paid out more than $2 million during its operations, according to the email. The email did not say how much the surf had taken in.
“Biz Ad Splash has been online as an internet advertising business for one year this very week,” the email said. “During that time, BAS has paid out over $2,000,000 in commissions and has almost 9000 members.
“This year has brought many new friends who have believed in BAS and whose efforts gave BAS a chance for success,” the email continued. “Your encouragement and commitment was well received, and with sincere appreciation for the opportunity we had working with each of you, we honorably salute you.
“You are the reason that we have delayed this closing, hoping that there would be enough that believed in the program to see it through,” the email said. “The past 120 days BAS’ balance sheet as continually gone in the red, and at this time, we do not have the funds to continue with our program. The past few weeks our sales have not been strong enough to pay out reasonable commissions with our RRSP program, or enough funds to handle overhead and continue operations.”
The ruling by a federal judge yesterday that put alleged Minnesota Ponzi schemer Trevor Cook behind bars until he surrenders tens of millions of dollars in offshore bank accounts includes some interesting details.
For one, Cook, accused by the SEC and the CFTC in a $190 million fraud, had access to a bank account in Antigua. Money connected to Cook was transferred to Antigua Overseas Bank LTD, according to an exhibit Chief U.S. District Judge Michael Davis cited in the case.
AdSurfDaily, a Florida firm implicated in a $100 million Ponzi scheme, also had money in Antigua. ASD, according to court filings, had at least $1 million in a bank on the Caribbean island — in an account under a different name. The name of ASD’s bank has not been disclosed. Neither has the name under which the account was opened.
Meanwhile, Cook also had access to bank accounts in “Denmark, the Middle East, Sweden, Switzerland, Germany and Central America,” according to court filings.
Gold Nugget Invest (GNI), an online HYIP that recently went bust, also purportedly relied on Eurpoean banks. One of GNI’s principals purportedly is named “Jurgen,” and GNI cited a problem with deposits at a “Correspondent Bank” of Yesilada Bank. Money GNI purportedly relied on was frozen “by the German Authorities,” GNI participants said, relying on a convoluted email from the company as their source.
“This particular frozen account contains all of Yesilada’s client’s foreign exchange funds,” GNI said in a lengthy message to members. It did not identify the “Correspondent Bank.”
No public documents suggest Cook’s operations were connected to GNI or ASD. But do you wonder just how many players these alleged schemes have in common?
The documents in the Cook case outline an alleged elaborate fraud that occurred internationally and involved multiple international banks. Those elements have become common in Ponzi scheme probes, some of which are giving new meaning to the phrase “paper chase.”
Willfull Blindness
Members of GNI appear not even to know for certain what business the company is in and appear not even to be certain about with whom they’re actually doing business, a sort of willful blindness. Members seem to believe that GNI is in the sports “arbitrage” business, which apparently uses a hedging system to minimize betting risk, but the company also has made references to forex trading.
GNI members receive nothing that resembles proof of what the company does with investors’ money. Some members suggest that the only thing that mattered to them was that GNI “paid” — before it stopped paying earlier this month, that is.
GNI began to show signs of an impending failure in the days after Judge Davis froze the assets of the alleged Cook/Pat Kiley scheme in Minnesota, though no linkage has been established between the Cook/Kiley operations and GNI.
Actions the SEC and federal prosecutors took last year against Antigua banking magnate Allen Stanford — himself implicated in an international Ponzi scheme that perhaps involved as much as $8 billion — appear to have had a ripple effect across the world of online autosurfs and HYIPs.
Several failed in the wake of the federal actions against Stanford, who is jailed in Texas. The BizAdSplash (BAS) autosurf, for example, reported problems in the aftermath of the alleged Stanford Ponzi.
Incredible Challenge For Investigators
What does it all mean? The big picture is far from clear. The autosurf and HYIP landscape is littered with carcasses from one side of the world to another. This universe is dominated by spectacularly corrupt businesses and individuals, many of whom exist in the shadows.
Last year, the Obama administration announced an initiative to crack down on offshore fraudsters. Some of the litigation that has emerged — or already was in the pipeline when the initiative was announced — produces legal tales that hardly can be believed. The litigation also demonstrates the incredible amount of investigative work and reverse-engineering that is required to prepare a case against defendants.
Here are some examples from the Cook/Kiley case, which is still very much an investigation in progress:
There are multiple defendants or relief defendants that allegedly received ill-gotten gains from the scheme, including Cook and Kiley, UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC, Basel Group LLC, Crown Forex LLC, Market Shot LLC, PFG Coin and Bullion, Oxford Developers, S.A., Oxford FX Growth LP, Oxford Global Managed Futures Fund, L.P., UBS Diversified FX Advisors LLC, UBS Diversified FX Growth L.P., UBS Diversified FX Management LCC, Clifford and Ellen Berg and other unspecified individuals and companies.
Note the multiple references to company names that use the word “Oxford” and references to famous corporate initials such as UBS, which investigators believe is a bid to create the appearance of legitimacy by milking off the names of legitimate companies.
Notice also the reference to PFG Coin and Bullion. Many recent scams have included references to precious minerals or precious metals. Other schemes have mixed purported forex trading — notice the FX references — and gambling in one form or another.
The task of unraveling the Cook/Kiley network has fallen chiefly to Scott Hlavacek, an SEC accountant.
Here are some words from Judge Davis, citing allegations and Hlavacek’s early work on the case, a paper chase if ever there was one:
“From his review of bank records and other documents, Mr. Hlavacek determined that from July 2006 through July 2009, the Defendants’ bank accounts received at least $190 million from at least 1,000 investors,” Davis said, citing records. “Mr. Hlavacek further determined that from August 2006 through July 2009, Cook and Kiley used $108 million of the investors’ money to fund banking and trading accounts, and to trade in foreign currencies.”
The judge continued (emphasis added):
“Hlavacek further determined that Cook and Kiley used $42.8 million of investors’ money for their own use: $18 million was diverted to buy ownership interests in two trading firms; $12.8 million to finance the construction of a casino in Panama; $4.8 million that Cook lost through gambling; $2.8 million that Cook used to acquire the Van Dusen mansion [in Minneapolis]; $2.7 million withdrawn in cash and cashier’s checks; $1.3 million to make payments to lawyers; $1 million to a private investment firm; and $1 million to pay personal credit cards and bank payments.”
Cook, according to investigators, had a Barclay’s credit card that he used to purchase hard-to-trace gift cards after the asset freeze.
“On December 1, 2009, Cook obtained $2,700 in gift cards from the Cub Foods store in Eagan [Minn.] by charging such purchase to a Barclay’s credit card,” Davis said, citing records. “On December 3, 2009, Cook incurred purchases at the same Cub Foods store totaling $2,784.51 using the Barclay’s credit card.
“Thousands of dollars were charged to Target Stores to obtain gift cards using the same Barclay’s credit card used at the Cub Foods Store,” Davis said. “On October 20, 2009, Cook sold a car to Morrie’s Motors and received a cashier’s check in the amount of $37,500. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders.
“On October 15, 2009, Cook sold a car to Premier Marketing and received a cashier’s check in the amount of $16,500. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders,” the judge said.
“On July 2, 2009, Cook withdrew $600,000 from the Oxford Global FX, LLC account at Associated Bank. Neither the money nor an accounting was turned over to the Receiver as required by the Agreed Orders.”
Worn out yet? If so, you likely won’t gain any comfort from the fact that the litigation is only two months old and that the investigation still is in its early stages — with the world as the stage.
On a day a federal judge ordered alleged Minnesota Ponzi schemer Trevor Cook jailed — in part for not turning over a two-passenger submarine allegedly purchased on eBay with Ponzi proceeds — the following things happened:
A would-be PP Blog poster attempted to post the same news release about AdSurfDaily mainstay “Professor” Patrick Moriarty in 10 separate threads over a span of 26 minutes. The early indications are that the spammer was associated with both the alleged ASD Ponzi scheme and Gold Nugget Invest (GNI), an HYIP that tanked earlier this month after advertising tax-free returns of 7.5 percent a week. (One poster after another on the Ponzi boards has defended GNI, saying the program was “real” and “honest” because it paid. The same defenses have been uttered for ASD.)
The FBI announced the Ponzi scheme arrests of two Greater Chicago men, alleging they had met in federal prison while serving time for previous fraud schemes. After they emerged from prison, they started a Ponzi scheme involving comic books and movies that bilked investors out of $4 million.
Just how crazy are things going to get in the Ponzi universe? It’s a universe that already includes figures associated with bizarre litigation centered on bizarre claims they are immune from U.S. law because they are adopted members of “Indian” tribes purported to be “sovereign” and that their sovereignty not only is absolute, but also is portable; figures who claim Ponzi schemes are legal as long as participants get “paid”; figures who claim the presence of convicted felons in one scheme after another is mere coincidence; figures who claim prosecutors are not permitted Constitutionally to interfere with commerce even if the commerce is illegal; figures who believe the United States passed secret legislation in the 1990s in anticipation of a visit by reptilian aliens; figures who claim the answer to Ponzi schemes that plague America is even more Ponzi schemes.
First, a few paragraphs about the would-be serial poster on the PP Blog earlier today:
We were working on a story this afternoon when our Comments Box in the Blog’s administrative panel began to bulge from spam from a would-be poster. We always check the spam box several times a day in case our filter flags a legitimate comment as spam. When we took a peek this afternoon, the filter had collected 10 consecutive posts from the same sender.
Each of the would-be posts was targeted at separate Comments threads below stories. Each was a duplicate of a Justice Department news release on “Professor” Patrick Moriarty’s guilty plea to tax charges earlier this month, a story we covered 15 days ago. (If you’re new to the PP Blog, Moriarty was a member of the alleged ASD Ponzi scheme. His tax case was separate from the alleged scheme masterminded by ASD President Andy Bowdoin, and Moriarty is not listed as a defendant in the ASD Ponzi case. He became notable, however, for advancing a theory that the ASD prosecutors had interfered with commerce. Moriarty also once established a nonprofit entity in the name of a man accused of murdering a woman in cold blood and shooting a Missouri police officer four times.)
In any event, none of the threads the would-be poster selected to copy and paste the news release pertained to Moriarty. Near as we can tell, the poster may have a link to both the alleged ASD scheme and the GNI “arbitrage” program, an HYIP that tanked recently. The would-be poster did not include an actual comment with his copy-and-paste news release; he simply copied and attempted to paste it in 10 separate threads over a period of 26 minutes.
The first attempt occurred at 3:03 p.m. ET; it was followed by attempts at 3:24 in two separate threads; 3:25 in two separate threads; 3:26 in a separate thread; 3:27 in two separate threads; 3:28 in a separate thread; and 3:29 in a separate thread.
As often is the case with ASD, the question is why. Based on a preliminary analysis of data, we believe the would be-poster was a member of the now-defunct Surf’s Up forum, a Pro-ASD site that railed against the government and advocated on behalf of Ponzi schemes. Surf’s Up went missing earlier this month. A forum with Surf’s Up ties that had advocated for a surf known as AdViewGlobal (AVG) went missing last summer — after AVG, which had close ASD ties, suspended payouts.
We’ll update readers on the would-be serial poster if we develop more information. At the moment, the data suggest his effort is connected in some form or fashion to this story. His name may or may not be “joe.”
Turning now to the alleged “comic book” Ponzi scheme, the FBI said it operated in the Chicago area and was known as Sundown Entertainment Inc.
Charged with wire fraud in the case were Daniel Parrilli, 59, of Carol Stream, and Christopher Andersen, 59, of Westmont.
Parrilli and Anderson allegedly met while serving time for fraud in federal prison earlier this decade.
The alleged Parrilli/Andersen Ponzi scheme was the second to touch Carol Stream in recent weeks. On Jan. 8, the SEC charged Steve Salutric, 51, a church treasurer, with operating a Ponzi scheme by raiding the Charles Schwab accounts of clients of Results One Financial LLC.
Salutric is accused of misappropriating at least $1.8 million in clients’ funds, including more than $400,000 from a 96-year-old woman with dementia. The woman, identified by the SEC as “Client A,” resided in a nursing home.
Fearing his fraud was about to be exposed, Salutric began to approach clients with offers to pay them “hush money,†the SEC said.
UPDATED 11:46 A.M. ET (U.S.A.) Final judicial action in the second forfeiture case filed against assets connected to AdSurfDaily “is not expected for at least several months,” federal prosecutors said.
The second action was filed in December 2008. It identified family members of ASD President Andy Bowdoin as beneficiaries of a Ponzi, wire-fraud and money-laundering scheme operated by ASD.
Among the family members identified in the December complaint were Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris. Judy Harris, the wife of George Harris, also was identified in the complaint as a beneficiary of ASD’s alleged illegal conduct.
Prosecutors filed the initial action against ASD’s assets in August 2008. That case concluded with the Jan. 4 issuance of a final forfeiture order by U.S. District Judge Rosemary Collyer, prosecutors said.
The government now has title to nearly $80 million seized in the August 2008 case — the lion’s share of the liquid assets (cash) from the combined cases. Only about $635,000 in cash was listed as seized in the December case, meaning prosecutors have control of more than 99 percent of the money targeted in the combined cases.
Prosecutors did not explain why they anticipated a considerable delay in finalizing the December 2008 case. (UPDATE: 11:46 A.M: Citing an investigation in progress, a Justice Department spokesman declined to comment.)
Nothing so far suggests, however, that the December case has been delayed as a result of an appeal by Bowdoin in the August case. The record does not reflect an appeal. The delay appears to be procedural.
The December complaint alleged that Edna Faye Bowdoin and George Harris used money from two ASD Bank of America accounts to open an account at a third bank.
The new account was funded with an opening deposit of more than $177,000 — more than $157,000 of which was used to pay off the mortgage of the Tallahassee home George and Judy Harris shared, according to the complaint.
EDITOR’S NOTE: Claims often are made that it’s “safe” for U.S. residents to invest in “offshore” opportunities and that offshore enterprises are outside the reach of U.S. regulators and law-enforcement agencies. This column refutes those assertions — and also includes information on Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon.” Alishtari operated an investment scheme known as FEDI and was convicted in September of stealing millions of dollars from participants and of financing terrorism.
UPDATED 3:58 P.M. ET (U.S.A.) Lots of people say that HYIPs are harmless. They continue to promote the programs even though they’d never encourage their children to hop into a car driven by a stranger or tell their parents or friends it was OK to hire a roofing contractor who was not registered at City Hall.
Why purported operators of online High Yield Investment Programs (HYIPs) get a pass when strangers driving cars and fly-by-night home-improvement contractors do not is a matter for great introspection. It’s a pretty safe bet, though, that it comes down to reckless — and even criminal — greed.
The Gold Nugget Invest (GNI) HYIP tanked Friday, after collecting untold sums. GNI’s website disappeared for a while after an announcement by the company that it was embarking on a “Re-organization.” The site now is back online. The “Re-organization” appears to be just another way to collect money by changing the distribution scheme.
“Earn up to . . . 20% monthly,” the site says. “No Risk Wager.” There is no corresponding announcement on the site’s landing page that it changed the rules, withheld payouts to members under a previous scheme and, apparently, lost access to a hefty sum of its cash when assets linked to Yesilada Bank through a purported “Correspondent Bank” purportedly were frozen by “German Authorities” on an unspecified date.
GNI’s announcement about the purported actions by “German Authorities” was vague and ambiguous.
“This particular frozen account contains all of Yesilada’s client’s foreign exchange funds,” GNI said Friday. “There are dozens of legitimate clients, along with GNI, whose lives have been put on hold pending the resolution of an investigation which has NOTHING to do with GNI. It’s a matter of being at the wrong place at the wrong [] time.”
GNI’s claims could not be independently verified. The company does not publish financial information that could help investors make an informed decision. Its announcement was so overwrought with florid language that members still don’t know what it means.
Even if the claims are true, however, the only thing they demonstrate is that the company is responding to a purported crisis caused by unspecified third parties by advertising a “No Risk Wager” that implies a payout of 20 percent a week.
Good grief. (Look in the Comments section below for GNI’s entire announcement about its problem and its “Re-organization” plan. It is one for the ages.)
As we reported yesterday, the conspiracy theorists already have surfaced in an apparent bid to help GNI deflect attention from the fact it collected money under one set of rules, changed the rules — and now intends to continue to collect money (while holding onto earlier money it collected), thus further distancing its original investors from their money and not informing new investors in plain sight about the previous problems.
Incredibly, some existing members of GNI are applauding GNI’s actions, saying they are consistent with a company that is “honest.” Some of the same cheerleaders are saying the United States does not have jurisdiction in matters pertaining to GNI or its purveyors. Why the apologists would tout the company’s “honesty” while also saying the SEC can’t touch it is just another one of the many incongruities of the HYIP world.
If you are on the fence about GNI — if you find yourself desperately wanting to believe the cheerleaders and apologists — perhaps you’ll find this story at Canada.com informative. It’s a brief on Brian David Anderson, a Canadian citizen who was just sentenced to federal prison in the United States for targeting U.S. citizens in a financial-fraud scheme.
Anderson, by the way, originally was arrested by Spanish authorities in Madrid. He was jailed in the United States and pleaded guilty in August 2008 . It is not even remotely unusual for governments to cooperate when investigating fraud and Ponzi schemes. The British Columbia Securities Commission noted Anderson was in a U.S. jail when it issued this news release on his penalty for targeting Canadians in a securities scheme.
“Anderson told the panel in a letter that he was ‘unable to appear in response’ to the findings because he is incarcerated in a New York prison,” BCSC said. “He also said he is not in a position to pay the [$250,000] fine.”
He was not in position to pay the restitution, either. Many HYIP promoters know that, if the operator goes to jail, no one gets paid. Investors are told not to raise a ruckus, the suggestion being that raising a ruckus might capture the attention of authorities — and if the authorities swoop in, well, game over.
Under this reasoning, it is best to stay quiet, even if it means a schemer has to steal from others to make payments to his or her original investors. Many of the promoters suspect a theft has occurred. They ignore it or talk around it because no gun was used. They’d call the police if a roofing contractor ever scammed their widowed mother. They’d join a posse if — heaven forbid — their missing child last was seen getting into the car of a stranger. The HYIP schemer get a pass because personal investment cash or commission cash is on the line.
Know Who Your HYIP Neighbors Are?
Anderson helped pitch a scheme known as Flat Electronic Data Interchange (FEDI). The FBI identitied Abdul Tawala Ibn Ali Alishtari as the operator of FEDI. Alishtari pleaded guilty in September 2009 to fleecing investors in the scheme — and also to charges of financing terrorism and conspiracy to commit wire fraud.
Alishtari, who used the name “Michael Mixon,” facilitated the “transfer of $152,000, with the understanding that the money would be used to fund training for terrorists,” the FBI said. “In the latter half of 2006, Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”
Anderson was not linked to terrorism, but his ties to FEDI are documented in one filing after another in Canada. Here is a mention of FEDI from the Alberta Securities Commission.
International law enforcement regularly shares information and works cooperatively. Here are some more examples:
Colombia recently handed over to the United States Colombian citizen David Murcia, whose pyramid scheme caused rioting in South America and later was linked to international narcotics trafficking. Authorities in Panama recently arrested U.S. citizen Jeffrey Lane Mowen, who is now in a U.S. jail awaiting trial on Ponzi charges and charges he plotted to have four witnesses against him murdered.
John and Marian Morgan were arrested in Sri Lanka and brought to the United States. Their alleged financial scheme purportedly operated out of Europe, although the Morgans are U.S. citizens who allegedly targeted U.S. customers.
Web records suggest that GNI’s servers are in the United Kingdom and that almost 57 percent of GNI’s website traffic originates in the United States. Other countries driving measurable traffic are Canada, Australia, the U.K., Italy and Japan. The records, however, strongly suggest that traffic from the United States dwarfs traffic from other countries.
This almost certainly means that GNI was reliant on U.S. dollars to sustain itself. Much of the cheerleading for the company appears to come from U.S.-based investors. The most probable reason for their continued support of the company is the fear that they’ll lose their current stakes and perhaps even get sued by people they enrolled in the program if they don’t spin the recent GNI events as a positive.
The Gag Reflex
The behavior of cheerleaders in murky HYIP circles is enough to make a person want to hurl. The most offensive cheerleaders are the ones who position themselves as “experts.” They are experts only in the same sense that Charles Ponzi and Bernard Madoff were experts. They are people who prey on ignorance to line their pockets with commissions. The arguments are an embarrassment to any person with a functioning brain, so utterly pretentious — and often so utterly passive-aggressive — that they trigger the gag reflex.
A common tactic is to position people concerned about their funds as troublemakers or whiners. The worried parties are told that they are immature, that responsible adults don’t whine — and that responsible adults never put in more money than they can afford to lose. Such insults, which often are encased in smiles and expressed with great confidence, often include the claim that the SEC has no jurisdiction or that the “opportunity” is a “game” and therefore cannot be regulated by government.
Professional HYIP pushers are at risk of being charged under U.S. law with selling unregistered securities as investment contracts — at a minimum. The Ponzi board “experts” argue that no contract exists and that it therefore follows that no charges can be brought. The argument does not pass the giggle test. Among the reasons it’s made is because the purveyors don’t want investors to call the SEC — or the FBI or state attorneys general or state securities regulators or provincial securities regulators or international law-enforcement agencies.
The purveyors also are at risk of being criminally charged under U.S. law with wire fraud. GNI operated over the Internet — just like AdSurfDaily, an alleged autosurf Ponzi scheme based in Florida. It is known that some ASD members also promoted GNI. They announced their participation even after the U.S. Secret Service seized tens of millions of dollars from ASD in August 2008 amid allegations of selling unregistered securities and operating a wire-fraud and money-laundering scheme.
A racketeering statute also is cited in two forfeiture complaints against ASD-connected assets. When the Secret Service filed the ASD allegations, federal prosecutors included copies of successful complaints filed against 12DailyPro and PhoenixSurf, two autosurf firms prosecuted under securities statutes.
GNI’s apologists would rather you not know about these things.
Bottom line: The cheerleaders don’t want to give up their commissions or profits. At the same time, they don’t want to be sued or named a defendant in a civil-enforcement action or a criminal complaint. They know the programs are illegal and that they have vast exposure, so they make excuses for the company and just plain lie — or pass along deceptions such as the SEC has no jurisdiction over the enterprises.
Let us say it plainly: You do not have an idea of who your HYIP neighbors are. You do not have a clue about what happens to the money after it leaves your bank account or your payment processor. If you claim otherwise, you are deluding yourself. If you race to announce to forums to exclaim you “got paid,” you are setting the stage for others to get fleeced.
This applies to virtually all the online HYIPs.
If you are a U.S.-based GNI investor, you likely bought an unregistered security from a person who was not licensed to sell securities or are the victim of some sort of commodities or forex fraud. As noted above, web records suggest that nearly 57 percent of GNI’s traffic originated in the United States. It is likely that more than 57 percent of GNI’s money pool was comprised of U.S. dollars because of the ready supply of U.S.-based promoters, sometimes called referral “whores.”
It’s an offensive description, to be sure. The “industry” itself is offensive. It leads to one ugly result after another. Eventually it’s going to lead to a result that is so unquestionably ugly that it cannot be pooh-poohed or explained away by greedsters and scammers posing as “experts” on Internet forums.
Did we mention that Brian David Anderson, who pushed FEDI and whose name now is linked with the name of a man convicted of financing terrorism, was a Christian minister — and that he is in his 60s, and that he pitched FEDI in a hotel room and that he claimed repeatedly that it was “backed by gold?”
Make sure you get a copy of our PDF compilation of President Obama’s Executive Order establishing the Interagency Financial Fraud Enforcement Task Force and remarks on the Task Force by U.S. Attorney General Eric Holder. Read this story, and get the PDF near the bottom.
EDITOR’S NOTE: Conspiracy theories quickly became part of the AdSurfDaily story after federal agents seized tens of millions of dollars from the company in August 2008 amid Ponzi scheme allegations.
Yesterday reports surfaced that Gold Nugget Invest (GNI), a High Yield Income Program (HYIP) positioned as a betting arbitrage, had collapsed. GNI reportedly announced that it had engaged in forex trading, an announcement that surprised some members who apparently believed they had invested in a sports-betting enterprise.
As was the case with ASD, conspiracy theories surfaced quickly after GNI’s purported collapse. The post below summarizes some of the early, tortured claims.
Here, now, the post . . .
UPDATED 10:26 A.M. ET (U.S.A.) Did you know any of the following things:
That Interpol had unearthed a complex plot by Former President George W. Bush to undermine the world economy and install banking puppets?
That Bush had started “drug trafficking operations,” funding them with Ponzi proceeds and profits from manufacturing weapons?
That Interpol was investigating the SEC for financial crimes and that others were suing the SEC for $3.87 trillion because the agency and President Bush somehow had established a secret trading platform and were operating their own Ponzi scheme on Wall Street?
That at least one member of President Obama’s cabinet recently had been secretly arrested for a crime related to “sabotage” and then, apparently, secretly released and permitted to continue in his old job?
That Obama himself had been warned that he faced arrest for the manner in which he was running the country?
That U.S. Attorney General Eric Holder and the attorneys general of the U.S. states have been warned secretly that they face arrest?
That the U.S. government and its clandestine operatives somehow had staged the attempt to blow up a Northwest Airlines flight bound for Detroit on Christmas Day?
That it was OK for GNI to collect large sums of money from new members — even if it knew it did not have the resources to pay its current members — because members’ first duty was to the company and not to themselves?
That an apparent decision by GNI to lock up members’ funds for 14 months was entirely appropriate because its first duty was to save itself so it later could redistribute the funds through a scheme with different rules?
That members who placed money with the company and pulled it out with interest after 30 days were in no small part responsible for GNI’s problems?
That criticizing GNI management in any way demonstrates that the critics are immature and not responsible adults?
We knew none of these things until reports of GNI’s collapse and its hard-too-decipher “Re-organization” program surfaced yesterday. The reference to Interpol’s purported SEC probe seems to be tied to SEC-initiated litigation against CMKM Diamonds and other individuals and companies.
CMKM Diamonds was a Pinksheet stock.
How all of the other conspiracy theories evolved is unclear.
UPDATED 10:40 A.M. ET (U.S.A.) Federal and state agents have raided the Minneapolis offices of Inter-Mark Corp., seeking evidence of a Ponzi scheme, the Star Tribune of Minneapolis/St. Paul is reporting.
