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Tag: ASD

  • Default Notice Entered In December 2008 Forfeiture Action Against AdSurfDaily-Connected Assets; Final Forfeiture Is Pending

    UPDATED 8:31 P.M. ET (U.S.A.) Federal prosecutors today asked the Clerk of U.S. District Court for the District of Columbia to enter a default notice for assets seized in the December 2008 forfeiture complaint against AdSurfDaily.

    The clerk entered the notice, and the forfeiture of the property is pending. It will be finalized when U.S. District Judge Rosemary Collyer enters a forfeiture order. Collyer issued an order last week for the forfeiture of ASD assets seized in the August 2008 case.

    Seized in the December 2008 complaint were the Tallahassee home of George and Judy Harris; a 2008 Honda car registered to the Harrises; a 2009 Lincoln luxury sedan registered to Bowdon/Harris Enterprises; a 2009 Acura registered to Hays Amos, an $800,000 building in Quincy, Fla. paid for in cash; jet skis; a Cabana boat; marine equipment; computers; and $634,266.13 surrendered by Golden Panda Ad Builder.

    No claimant ever came forward in the December 2008 case, prosecutors said.

    With Collyer’s forfeiture order in the August case, prosecutors now have title to about 99.2 percent of the liquid assets in the overall forfeiture case (August 2008 and December combined). A forfeiture order in the December case, which included only a fraction of the liquid assets, would give them title to 100 percent.

    The real-estate, automobiles, computers, boat, jet skis and marine equipment are illiquid assets that must be sold before they can become part of a compensation pool for ASD victims.

    Prosecutors alleged that ASD was operating a Ponzi scheme, while selling unregistered securities under the guise of being an “advertising” service and engaging in wire fraud and money-laundering.

  • RECEIVER REPORT: Jet Ski Owned By Noobing Autosurf’s Parent Company Fetches $1,800 At Auction; Office Equipment Fetches $12,500

    A court-appointed receiver has described the accounting records of Affiliate Strategies Inc. (ASI) as a mess, saying “an opinion on the accuracy of these records is not possible without an extensive audit that would require significant additional costs.”

    ASI is the parent company of the Noobing autosurf, which targeted deaf people in sales promotions. ASI and its president, Brett Blackman, were sued by the Federal Trade Commission last year for their alleged roles in a scheme that promised guaranteed government grants of $25,000 from economic-stimulus funds.

    Several other companies and individuals were named in the FTC complaint. Although Noobing was not named in the FTC complaint, receiver Larry Cook examined Noobing’s records last year and made a preliminary determination that it was insolvent. The Noobing website has been offline for months.

    Attorneys general from Kansas, North Carolina, Minnesota and Illinois joined the FTC in the action.

    In October, U.S. District Judge Julie A. Robinson authorized Cook to sell ASI’s assets, including office equipment, a vehicle and a jet ski.

    In a report to Robinson filed last week, Cook said the office equipment fetched $12,500 at auction. Meanwhile, the vehicle — a 2003 Saturn L200 — fetched $2,500. The jet ski — a 2005 Yamaha — brought in $1,800.

    In August 2009, Cook said in a preliminary report to the court that “the ASI defendants have formed and operated eighteen additional Kansas LLCs as subsidiaries of Defendant Apex Holdings International LLC.” One of the companies was Noobing, which listed registrations in both the United States and Nevis.

    Kris Rogers, who was the comptroller for ASI and president of an affiliate company known as Custom Accounting Services LLC, told Cook that “the expenses of [the] combined companies have exceeded the revenues since October or November 2008,” according to court filings.

    If Rogers’ assertions are true, it means that both Noobing and ASI — its parent company — were insolvent when the Noobing autosurf was collecting money with the suggestion that participants could earn a return of up to 3 percent a day. Noobing slashed daily payouts in early 2009, an act that caused an uproar on the Ponzi boards.

    Noobing blamed the slashed payout on what it described as an unclear ruling in the AdSurfDaily case. The company did not say why it chose to collect money using a business model that U.S. government has challenged in repeated court cases. After Noobing members complained, the company explained that payouts never were guaranteed.

    Noobing became popular after the August 2008 seizure of tens of millions of dollars from Florida-based ASD amid Ponzi scheme allegations. After the FTC and the attorneys general took the action against ASI and other defendants in the alleged grants scheme, Cook made a preliminary determination that Noobing was nearly $550,000 in the hole.

    When the financial records of the ASI-affiliated records were examined as a whole in Cook’s preliminary analysis last year, he found that “over twenty-five thousand accounting
    transactions, including several thousand intercompany transfers” had oocuured.

    “The transfers between the various LLCs make it difficult to sort out the net result and profits or losses sustained by each LLC,” Cook said.

    “The Receiver’s work over the past three weeks,” Cook said in August 2009, “suggests the Defendants’ operations were insolvent on the date [July 24] the [Temporary Restraining Order] was entered and that for at least all of 2009, Defendants operated only by signing up new victims faster than the old victims could obtain refunds.”

  • ‘Professor’ Patrick Moriarty, AdSurfDaily Mainstay, Pleads Guilty In Federal Tax Case; April Sentencing Date Set

    AdSurfDaily mainstay “Professor” Patrick Moriarty has pleaded guilty in federal court in Missouri to filing a false tax return, federal prosecutors said.

    “The total tax loss admitted by [Moriarty] is $135,697,” prosecutors said.

    Prosecutors initially brought multiple tax-fraud counts against Moriarty, saying in March 2009 that he had filed false returns for the years 2002, 2003, 2004 and 2005. He pleaded guilty to the 2003 count, and faces a maximum sentence of three years in prison and a fine of up to $250,000.

    Moriarty’s trial had been set to get under way this week, but he entered a plea instead. Prior to trial, prosecutors said they had “voluminous” evidence, including seven 4-inch binders of records and records from an unspecified casino.

    Moriarty entered the plea before U.S. District Judge Jean C. Hamilton of the Eastern District of Missouri, according to Acting U.S. Attorney Michael W. Reap.

    Along with members of the Pro-AdSurfDaily Surf’s Up forum, Moriarty formed a nonprofit organization known as ASD Members International (ASDMI) in October 2008. Among ASDMI’s claims was that it would litigate against the government in the ASD case, even if the government was behaving legally.

    At least 167 ASD members gave money to ASDMI, but no litigation ever was filed. ASDMI disbanded in January 2009, less than three months after organizing.

    Records showed that Moriarty, who professed tax expertise, once started a nonprofit in the name of a Missouri man accused of murdering a woman in cold blood and shooting a police officer four times.

    Moriarty, who once sold fake academic degrees on eBay, explaining they were gag gifts, used the title “Rev” and purported to be the “minister” of the Universal Life Church (ULC) of Troy, Mo. He listed his qualifications as a Ph.D. and a D.D., and noted he also is an accountant and “Tax Return Specialist.”

    The credentials were listed on a church-provided website, which included a link by Moriarty to MLM opportunities.

    ULC has been the subject of controversy. The church ordains up to 10,000 individuals per month, without charging a fee or holding any classes. Advanced degrees can be obtained for as little as $29.95 with little academic effort, according to ULC’s Wikipedia entry.

    Moriarty advanced the legal theories of Curtis Richmond in the ASD case. Among Richmond assertions were that prosecutors were guilty of interference with commerce for disrupting ASD’s operations.

    Dubbed a “hero” on Surf’s Up, Richmond is associated with a Utah “Indian” tribe a federal judge ruled a sham in a separate case. Public officials successfully sued Richmond and other “tribe” members under federal mail fraud and racketeering statutes, saying they had been targeted in a vexatious legal campaign that resulted in a bogus judgments for spectacular sums being placed against the officials.

    A bogus judgment of $250 million was placed against a local prosecutor in the Utah case.

    Richmond signed a bogus “arbitration” award of more than $300,000 against a family-services worker, according to court records.

    Moriarty and Surf’s Up led a letter-writing campaign to Sen. Patrick Leahy, chairman of the Senate Judiciary Committee. The campaign sought Leahy’s support in advocating for ASD, an alleged Ponzi scheme, and sought the Senate’s help in investigating the ASD prosecutors.

    Prior to his Senate career, Leahy had been named one of the top three local prosecutors in the United States. Even as Moriarty and Surf’s Up members were writing letters, Leahy was calling for U.S. fraud laws to be strengthened.

    See this story from February 2009 about the Moriarty/Surf’s Up letter-writing campaign to Leahy. In a letter to Leahy, Moriarty claimed that “[o]ver 50 individual and notarized DEMAND[S] FOR LEGAL EVIDENCE were sent to Jeffrey Taylor, US Attorney; William Cowden, Assistant US Attorney; and Roy Dotson, Special Agent, US Secret Service.”

  • SUNDAY NEWS AND NOTES: South Carolina Ponzi Victims Included Widows, Alzheimer’s Patients, Seniors And Amputee; ‘Shocks The Conscience,’ FINRA Says

    EDITOR’S NOTE: These briefs are based on information from recent Ponzi or fraud schemes. As noted yesterday and previously, the United States has formed a Financial Fraud Enforcement Task Force. Cases such as the ones below are part of the reason why.

    SOUTH CAROLINA AND TENNESSEE: Among the more than 30 victims in the Oren Eugene Sullivan Ponzi scheme case in South Carolina were five widows, two Alzheimer’s patients and an individual with developmental impairments, the Financial Industry Regulatory Authority (FINRA) reported.

    Separately, The Herald newspaper of Rock Hill, S.C., reported that one of the victims was a “woman in a wheelchair, legs amputated, who is retired from a Christmas ornament plant.

    “She gave Sullivan tens of thousands of dollars,” the newspaper reported.

    “At least eight of the affected clients were over 80 years old and another four were over 70 years of age,” FINRA reported. “Numerous victims considered Sullivan a close family friend.”

    Sullivan’s case “shocks the conscience,” said Susan L. Merrill, FINRA executive vice president and chief of enforcement.

    FINRA banned Sullivan, who pleaded guilty last week to mail fraud, in October. Authorities said he operated the Ponzi scheme for 20 years.

    At the same time FINRA banned Sullivan, it also banned William Walter Spencer Sr., of Franklin, Tenn.

    Over 11 years, Spencer “borrowed” nearly $2 million in a promissory notes Ponzi scheme from elderly members of his church and from customers of his employing broker-dealer, Wiley Bros.-Aintree Capital LLC, FINRA said.

    “All of the individuals from whom Spencer borrowed funds were of modest means,” FINRA said.

    Among his targets was a 62-year-old school bus driver for special-needs children who gave Spencer $60,000 after her husband’s death.

    “Spencer used the loan to repay other customers,” FINRA said. “Another customer faced the threat of foreclosure on his home due to Spencer’s failure to repay the $12,250 loan he made. To avert the pending foreclosure, Spencer used funds from another customer to make the payment owed. An 80-year-old customer loaned Spencer $20,500. She later needed to make repairs to her home, but was unable to do so because of Spencer’s failure to repay the principal and interest due.”

    Merrill did not mince words when describing the Spencer and Sullivan schemes.

    “The misconduct of these brokers was nothing short of egregious — and their financial exploitation of the elderly, the infirm and people who considered them trusted friends shocks the conscience,” she said.

    OKLAHOMA: On Nov. 25, we published an early report on an alleged financial and affinity-fraud scheme in Oklahoma that targeted ethnic Chinese. Named in litigation by the CFTC was Kenneth Lee, who was imprisoned between 1996 and 2001 after being convicted in Texas of two financial felonies.

    Lee also had a $3 million civil judgment placed against him in the 1990s in a fraud case, CFTC said. Also named in the complaint was Lee’s alleged business partner, Simon Yang, who was accused of hatching a new scheme with Lee in 2003 that targeted members of Yang’s church in Edmond, Okla.

    Information shown prospects to get them to join the scheme claimed Lee was an exceptional trader. But when investigators reverse-engineered literature about Lee’s alleged prowess, they discovered that Lee was in prison during a time in which Lee and Yang claimed Lee was “achieving great returns,” CFTC said.

    Investors were told accounts were “insured,” CFTC said. It’s a common claim in various fraud schemes, and sometimes the schemers claim or imply that banks, other lending institutions and even the government protects individual investment accounts against trading or investment losses.

    Or, put simply, the schemers say or imply there is no way an individual investor can lose because a lending institution or the government backs the program. Such claims were present in both the alleged Lee/Yang fraud scheme in Oklahoma and the alleged AdSurfDaily Ponzi scheme in Florida.

    In ASD’s case, an upline group implied that the FDIC insured individual members’ ASD accounts. The same upline group also claimed that ASD provided “shelter” from the FTC and the SEC.

    The Edmond Sun newspaper — as part of its reporting on the alleged Lee/Yang fraud — interviewed experts who said such claims should be viewed as a red flag.

    “There are never any kind of guaranteed investment returns associated with any investment account and no investment account of any kind is ever FDIC insured by the financial institution,”  Nick Massey told the newspaper.

    Massey is regional vice president of Edmond, Householder Group Financial Advisors.

    “If anyone ever suggests that, you should turn around and run, and then run to the authorities to report it,” Massey said.

    See this story to get a free PDF that compiles President Obama’s Executive Order forming the Financial Fraud Enforcement Task Force and a speech by Attorney General Eric Holder.

  • FREE: PDF Handout On Financial Fraud Enforcement Task Force; Document Compiles President’s Executive Order And Attorney General’s Speech In Florida

    Dear Readers,

    UPDATED 11:50 A.M. ET (U.S.A.) There were reports yesterday that things have become so strange at Florida-based AdSurfDaily that a convicted sex offender has emerged as a sort of PR voice for the company. ASD is implicated by the Department of Justice in a $100 million Ponzi scheme, amid allegations of wire fraud, money-laundering and the sale of unregistered securities. Two forfeiture complaints filed against the firm in 2008 also cite a racketeering statute.

    After 17 months, more than 165 court filings — some of which can only be described as bizarre — and more than $1 million spent on legal fees by ASD President Andy Bowdoin, the company lost one of the forfeiture cases this week. It was filed by federal prosecutors and the U.S. Secret Service in August 2008, and is the “bigger” of the two cases.

    “Bigger,” of course, is a relative term. For the purposes of this post, “bigger” is defined only as involving more money. A second forfeiture case filed by federal prosecutors and the Secret Service in December 2008 involves less money — but is equally grave. In some ways, the second case, which had not been adjudicated to conclusion but may be soon, is even graver than the August 2008 case. The December case defines Bowdoin family members and unnamed others as the beneficiaries of ASD’s fraud. The December case puts the alleged beneficiaries of the fraud squarely in the sights of a potential criminal prosecution for felonies that could lead to prison time.

    We believe Bowdoin is more worried about the December case than he is the August case — even though no claims ever were filed in the December case. The names of his wife, his stepson and his stepson’s wife are mentioned repeatedly and prominently in the December case. Prosecutors also have hinted that they are very well aware of the AdViewGlobal (AVG) autosurf, which has Bowdoin family and promotional ties and rose to early prominence after ASD’s assets were seized, a racketeering lawsuit was filed against Bowdoin, a key court ruling went against ASD — and after Bowdoin had chosen to surrender his claims to the money seized in the August 2008 complaint.

    Bowdoin then changed his mind, attempting to reassert his claims to the money seized in the August complaint by re-entering the case as a pro-se litigant.  Bowdoin’s former paid counsel — a prominent law firm — informed the court that Bowdoin did not consult with it before filing the series of pro se motions.

    None of Bowdoin’s pro se motions made an ounce of sense. They were so unclear, in fact, that the judge had to construe a meaning, which is to say what Bowdoin was attempting to do was not clear on the face of the motions. At one point, he appears to have attempted to reverse a decision he never made — namely, to submit to the forfeiture outlined in the December 2008 case. Bowdoin did not file a single document to gain standing in the December case or to make a claim — in fact, no potential claimant did.

    And yet Bowdoin seems initially to have tried to overturn a forfeiture to which he never had submitted. Only later did Bowdoin file a specific pro se motion to overturn the August forfeiture. ASD members were so fixated on the August complaint — the “bigger” one in money terms — that they missed the nuclear danger of the December complaint. Lots of potential jail time is described in the December complaint.

    Here is Bowdoin’s initial pro se filing to rescind the forfeiture, which was entered into the record Feb. 27, 2009.  This motion addresses only property seized in the December 2008 complaint. Bowdoin never even established standing in the December case.  Neither he nor attorneys employed by him or family members filed a single document in the case. So, as noted above, Bowdoin initially tried to overturn a forfeiture in a case in which he had no standing and perhaps would have trouble even gaining standing.

    His pro se motions were a trainwreck and created even more problems for ASD. The judge ordered Bowdoin’s soon-to-be-former counsel to state their intentions and to instruct Bowdoin on important matters of law before asking for formal permission to withdraw from the case. One of the important matters was that corporate litigants cannot proceed pro se. Corporate litigants must use professional counsel. It is clear from the filings that Bowdoin’s pro se helpers overlooked this obvious flaw in the initial filings. Bowdoin later hired two new paid lawyers to help him navigate the choppy waters and to attempt to undo some of the damage caused by the pro se pleadings.

    Now, it’s important to point out here that the Pro-ASD Surf’s Up forum — now suddenly defunct — championed Bowdoin’s pro se pleadings and was positively giddy for days after he attempted to re-enter the case. Bowdoin was heaped with praise. Prayers went out. People cheered him on as though his pro se advisers had scored some sort of dramatic win. As always was the case on Surf’s Up, the prosecution was condemned. Bowdoin urged ASD members to write to President Obama to gain his support in Bowdoin’s fight against the Secret Service.

    The disconnect was both startling and troubling.

    At some point during the late summer or early fall of 2009, someone apparently sympathetic to Bowdoin’s cause started this site at IContact; it’s called “Official ASD Update” and, from what we can tell, has all of one post. One of the names referenced on the site is “Edna Bowdoin” — the name of Bowdoin’s wife — but it is not clear that Ms. Bowdoin ever was at the site. Even so, her name appears in this Dec. 28, 2009, reference.

    On some days, it is hard to quantify all the sadness associated with the ASD case.

    One thing that is not hard to quantify is the madness. That madness finally eroded the lion’s share of Bowdoin’s support base. Prosecutors deserve a lot of credit for neatly undermining the wink-nod nature of autosurfs in a series of court filings. These filings showed the autosurf “industry” for what is: a cesspool that relies on the repetition of lies to suck new money into the schemes.

    The IContact site, which perhaps was conceived as a new channel through which Bowdoin would communicate with members to keep them on his side as his court challenge continued, never emerged as a “voice” for Bowdoin. The madness had driven away the vast, vast majority of the ASD constituency. He even had lost much of the Surf’s Up crowd — something he must have realized. Why even start a second site if you’re confident in the existing communications network?

    These days Bowdoin appears to be relying on a small network of insiders to stay in communication with the troops. Surf’s Up is gone. The second forum never gained a following.

    Now, according to members, a person with a conviction for sex crimes involving children, is doing PR work for ASD. Whether it’s “official” or not is beside the point. The mere fact it is being done puts the madness associated with ASD on full display for any person on the email list of the promoter to see.

    Yesterday (and previously) we wrote about the Interagency Financial Fraud Task Force established by President Obama in November 2009. We also wrote about a speech yesterday by Attorney General Eric Holder outlining responsibilities of the Task Force. Holder gave the speech in Florida, which was no accident. Florida is Ground-Zero for mortgage fraud, Ponzi schemes and various forms of securities and financial fraud — not that other states also do not have the same problems.

    We compiled the President’s Executive Order establishing the Task Force and Holder’s speech into a PDF. The document includes the entire Executive Order and the entire speech.

    We’ve titled the document, “So, You Want To Join A Ponzi Scheme? Two Good Reasons To Say ‘No’ When A Friendly Upline Sponsor Approaches You In Person Or Via Email And Asks You To Join A Paid-To-Click ‘Advertising’ Program Online Or A ‘High-Yield Income Program’ (HYIP).”

    Many, many people have turned their backs on the so-called autosurf “industry” because of their experiences with Andy Bowdoin and ASD. That’s a good thing, of course: Ponzi = Pain. We write about the pain caused by Ponzi schemes every day on this Blog.

    Despite the daily news on Ponzi schemes and financial fraud, however, many, many people continue to participate in the schemes. They do so at their own peril, as Holder said yesterday. The White House and the Justice Department clearly have thrown down the gauntlet on mortgage fraud, securities fraud, Ponzi schemes and other types of financial fraud that can undermine local, regional and national economies — and the economy in the homes of families across the world.

    Here is a free copy of our distillation of Obama’s Executive Order and Holder’s speech in Florida. It perhaps will make a handy desktop reference for you and members of your family. The document is based on public information released by the U.S. government.

    What the government is doing is dreadful news to the Ponzi pushers — but it is good news for the global economy and to families across the world. We provide the document in the spirit of education, and sincerely hope that it can make at least a small difference in the lives of people who continue to believe there is something noble about collecting commissions for selling people into misery.

    Thank you, Readers, for your daily visits.

    Patrick

    P.S. In case you missed the link above to the PDF, here it is again. Forum owners are invited to make a copy of this document and post the document in their respective forums.

  • Judge Signs Forfeiture Order In AdSurfDaily Case; Gives Government Title To $65.8 Million In Bowdoin Bank Accounts; Case Resolved In ‘Entirety’

    Andy Bowdoin

    After more than 17 months, more than 165 court filings and more than $1 million in legal fees, ASD President Andy Bowdoin has lost the August 2008 civil forfeiture case and the government has been granted title to $65,838,999.70 seized from Bowdoin’s 10 Bank of America accounts.

    U.S. District Judge Rosemary Collyer, whom Bowdoin attempted to have disqualified from the case last month, has entered a default judgment and final order of forfeiture in the case.

    In a footnote, Collyer said the order decreeing forfeiture “resolves all remaining issues and this forfeiture action in its entirety.”

    As PatrickPretty.com first reported last year, three of Bowdoin’s accounts contained the exact same sum: $1,000,388.91. Why the accounts contained the exact same sum remains a mystery.

    Another mystery is why Bowdoin, 75, initially submitted to the forfeiture on Jan. 13, 2009 — a year ago next week — but then changed his mind more than a month later and attempted to reassert his claims as a pro se litigant. Bowdoin’s former attorneys, Akerman Senterfitt, said in court filings that Bowdoin began to file pro se “without consulting with counsel and without bothering to advise counsel that he would be submitting motions on his own.”

    Akerman Senterfitt filed a motion to withdraw as Bowdoin’s counsel, saying its representation of him had become unreasonably difficult.

    Bowdoin’s pro se re-entry in the case coincided with the shift by the AdViewGlobal (AVG) autosurf to a “private association” structure. This shift was announced to AVG members on Feb. 26, 2009, after AVG said it had consulted with a company known as Pro Advocate Group.

    Bowdoin signed the first of his pro se pleadings just one day before, on Feb. 25, 2009. Pro Advocate Group, which says it can help people practice law and medicine without a license through a private-association structure, is associated with Karl Dahlstrom.

    In 1997, Dahlstrom was sentenced to 78 months in federal prison for his participation in a securities scheme. In court documents in a tax case, Karl Dahlstrom is described as having  “been in the abusive trust business for many years.”

    Bowdoin has not publicly revealed the identities of his pro se advisers, describing them as members of a “group.” Nor has Bowdoin revealed how much he paid for the pro se advice.

    Bowdoin, however, told members in a letter published on the now-defunct Pro-ASD Surf’s Up forum in March 2009 that he had paid his professional lawyers $800,000 before firing them. In September 2009, Bowdoin said his legal fees had exceeded $1 million.

    “Now I’ve spent over a million dollars in legal fees to get your money back, and to stay out of prison,” Bowdoin said on Sept. 21, according to a transcript by the U.S. Secret Service. Bowdoin made the remark in a conference call with members. The Secret Service transcribed the call, and then filed the document  in court.

    Collyer refused to disqualify herself last month, saying Bowdoin no longer had standing in the case.

    Read the final order of forfeiture in the August 2008 case against assets connected to ASD.

    Collyer earlier ordered the forfeiture of more than $14 million from the bank accounts of Golden Panda Ad Builder, whose assets also were seized in the ASD case.

    Bowdoin did score a win of sorts in the forfeiture litigation. He asked for — and was granted — an evidentiary hearing in 2008 to refute the government’s Ponzi allegations and to ask for the emergency release of $2 million because the company could not pay its rent and hosting bills and needed money to implement a new business plan.

    Prosecutors did not object to the hearing, but pointed out that Bowdoin had $1 million in a bank on the Caribbean island nation of Antigua in an account under a different name.

    Bowdoin asserted his 5th Amendment right against self-incrimination, advising the court through counsel that he would not testify at the evidentiary hearing he had requested. Surf’s Up described the performance of ASD’s witnesses at the hearing as uniformly “excellent,” while at once describing the government’s case as “not so much.”

    At the same time, the forum helped spread the rumor that the government had admitted that ASD was not a Ponzi scheme.

    In November 2008, Collyer ruled that ASD had not demonstrated at the hearing that it was a lawful business and not a Ponzi scheme. A month later, prosecutors filed a second forfeiture complaint against ASD-connected assets, restating the Ponzi allegations despite the Surf’s Up claim that prosecutors had admitted ASD was not a Ponzi scheme.

    The AVG autosurf was laying the groundwork for launch within days of Collyer’s November 2008 ruling against ASD. Promoters highlighted its purported location in Uruguay as a reason to join.

    AVG suspended cashouts in June 2009, exercising its version of a “rebates aren’t guaranteed” clause.

    Dozens of pro se litigants attempted to intervene in the ASD case, largely causing the court docket to swell from about 40 entries in January 2009 to its current total of 166.

  • North Carolina Man Adds To List Of Alleged Schemers Who Bought Jet Skis With Fraud Proceeds; J.V. Huffman Jr. Also Faces Trial On Weapons Charge

    J.V. Huffman Jr. Source: Catawba Country Sheriff's Office

    It’s not as though alleged fraudster J.V. Huffman Jr. did not have the expensive cars and real estate often associated with Ponzi schemes or financial frauds.

    Huffman, jailed awaiting trial in North Carolina on Ponzi and weapons charges, had plenty of those, according to William Walt Pettit, the court-appointed receiver. He had an Aston Martin ($100,000+), three Mercedes (nearly $180,000 combined), and a Prevost motor home (insured against loss for $825,000) , for example. And Huffman had at least 14 parcels or properties, including a $765,000 property in North Carolina and multiple interests in time-shares at Walt Disney World in Orlando.

    But Huffman also had jet skis, which oddly seem to have become a signature purchase among operators of alleged Ponzi schemes or financial frauds. Disbarred Florida attorney Scott Rothstein, implicated in an alleged $1.2 billion Ponzi scheme, had jet skis.

    Affiliate Strategies Inc., a Kansas company under whose umbrella the shuttered Noobing autosurf fell, had a jet ski. ASI is among a number of companies sued by the Federal Trade Commission and the attorneys general of four states for operating a grant-writing scheme.

    Florida-based AdSurfDaily, whose president is implicated by the U.S. Secret Service in a $100 million Ponzi scheme, also had jet skis — two of them. Andy Bowdoin told his members that the jet skis (and a lakefront home) were for their benefit, but the statement was met with anger, the jet skis and Bowdoin’s other marine equipment dismissed derisively as “water toys.”

    Huffman’s next court appearance in North Carolina has been delayed until Jan. 25. He also faces a civil prosecution by the SEC, which said his Ponzi scheme began in 1991 and operated for 17 years before collapsing.

    The weapons charge was added when guards found a razor blade hidden in Huffman’s Bible in his jail cell. Prosecutors said the alleged financial scheme largely was targeted at Lutherans.

    SEC investigators said Huffman and his company — Biltmore Financial Group — gathered as much as $25 million from 500 investors. At first, Huffman told investors he operated a mutual fund.

    After the 9/11 terrorist attacks and the ensuing volatility in financial markets, Huffman changed his story, telling investors that he pooled funds to purchase and sell safe mortgages that had strong equity positions and were insured, the SEC said.

    “Contrary to his representations, Huffman and Biltmore did not invest the funds as represented,” the SEC said. “Instead, Huffman spent investor funds to subsidize his lavish lifestyle. Returns to investors were paid from money invested by new investors. The purported insurance protecting the investments did not exist and much of the principal has been dissipated or used to purchase real estate for Huffman and/or his wife, expensive automobiles or other luxuries.”

    In another claim reminiscent of the AdSurfDaily case, the SEC said Huffman dropped famous acronyms such as “FDIC” to get people to invest with him.

    North Carolina Secretary of State Elaine F. Marshall is spearheading the criminal prosecution.

    “People who are knowledgeable in the investment industry came to us saying that the
    promises being made sounded ‘too good to be true,’” she said, after agents arrested Huffman in November 2008. “In most cases, when an investment sounds too good to be true, it usually is.”

  • BizAdSplash Now Says It May Be Offline Until Jan. 11; Surf Says It Wishes Members A Happy New Year

    UPDATED 12:04 P.M. ET (U.S.A.) BizAdSplash (BAS) now says it may be offline until Jan. 11. “due to the challenges of the transfer of our servers.”

    A message website visitors see is confusing because it does not state plainly when the autosurf will return. Rather, it says BAS will come back online “on or before January 11th.”

    The message is unsigned. BAS, which suspended member cashouts and declared a “crisis” in July because it had overpaid members, later returned. The site appears to have gone offline again Dec. 23, but initially reported that it would return today.

    BAS lists its “chief consultant” as Clarence Busby, the former president of Georgia-based Golden Panda Ad Builder, the so-called “Chinese” option for AdSurfDaily members. The U.S. Secret Service seized tens of millions of dollars in a civil-forfeiture case against ASD and Golden Panda assets in August 2008.

    After reconciliations, about $14 million was attributed to Golden Panda. More than $65 million was attributed to ASD.

    All three of the so-called AdSurfDaily clone surfs that promoted “offshore” locations after the seizure of ASD and Golden Panda’s assets — BAS, AdViewGlobal and AdGateWorld — now have either have gone offline or are existing in unclear forms.

    All three of the surfs tried to implement reconfigurations. None appears to have been able to sustain itself in a new form. BAS repeatedly has cited server problems as a reason for its absence.

    See Dec. 30 story.

  • DEVELOPING STORY: Is It All Over For Surf’s Up? Pro-AdSurfDaily Forum Shows Same Message Former AdViewGlobal Forum Displayed When It Vanished

    UPDATED 5:25 P.M. ET (U.S.A.) Has the Pro-AdSurfDaily Surf’s Up forum followed in the footsteps of a Pro-AdViewGlobal forum and disappeared for the ages?

    The URL for Surf’s Up — http://asdmembers.ning.com — is displaying the same message the AVG forum displayed when it vanished last summer after the controversial autosurf with close ASD ties stopped paying members. Surf’s Up also is known as the ASD Member Advocates Forum.

    Surf’s Up received the official endorsement of ASD in November 2008, just days after a pivotal court ruling went against ASD.

    “This social network has been taken offline by its owner,” the Surf’s Up site now says. Although there is an additional note that “It’s likely that the owner will bring it back online shortly,” the AVG site had the same note and never returned.

    Other autosurfing-related sites hosted on ning.com have displayed the same message — never to return.

    The note on Surf’s Up began to appear at some point today today. A “Page Not Found” message is found in the upper-left corner of the screen. The precise time the site went offline is unclear.

    Also unclear are why the site went offline and who took it offline.

    At one point, Surf’s Up had moderators in common with the AVG site. Recently, though, the Surf’s Up Mods who maintained the AVG forum have made few — if any — appearances on Surf’s Up.

    The AVG forum debuted in the early days of AVG’s existence. References to AVG began to appear online in December 2008, less than a month after a Nov. 19, 2008, ruling by U.S. District Judge Rosemary Collyer that ASD had not demonstrated it was a lawful business and not a Ponzi scheme at an evidentiary hearing it requested.

    AVG said it was headquartered in Uruguay. Members promoted it as a safe, offshore alternative to ASD that was outside the jurisdiction of U.S.-based regulators and law-enforcement agencies. Some participants later said Bowdoin was the silent head of AVG.

    AVG suspended members cashouts in June 2009.

    Surf’s Up made news during the Christmas holiday by publishing holiday greetings from ASD President Andy Bowdoin, implicated in an alleged $100 million Ponzi scheme. The forum also published a third-party note in which Bowdoin purportedly asked members for help in obtaining video of ASD “rallies” that might be helpful to his case.

    Some ASD members said they were shocked that Bowdoin appeared to be addressing members as though it was business-as-usual for the embattled firm, which may owe members millions of ad impressions. Federal prosecutors said the surf engaged in wire fraud, money-laundering and the sale of unregistered securities — all while operating a massive Ponzi scheme.

  • Better Business Bureau Revokes Accreditation Of Speed Of Wealth After SEC ‘Green’ Ponzi Action; Firm Experiences ASD-Like PR Disaster In Wake Of Allegations

    The accreditation of a Colorado company implicated in an alleged $30 million “green” Ponzi scheme by the SEC has been revoked by the Denver/Boulder branch of the Better Business Bureau.

    BBB now gives Speed of Wealth a rating of “F” — the worst possible score on a scale of “A+” to “F” — and says the accreditation was revoked because the company did not comply with BBB standards.

    Speed of Wealth’s BBB accreditation was revoked on Dec. 16, precisely one month after the SEC accused the firm of selling a Ponzi scheme for Philadelphia-based Mantria Corp. A rating for Mantria was not immediately available. The BBB of the Mid-Atlantic region, Metro Washington, D.C., and Eastern Pennsylvania says on its website that the organization is in the process of updating its report on Mantria.

    Under “Government Actions” in Speed of Wealth’s BBB listing, the organization summarizes the SEC allegations against Speed of Wealth and Mantria and provides links to the SEC’s charging document and news release in the case (emphasis added):

    On November 16, 2009 the U.S. Securities and Exchange Commission “SEC” filed a complaint with charges against Mantria Corporation, Troy B. Wragg, Amanda Knorr, Speed of Wealth LLC, Wayde M. McKelvy, and Donna M. McKelvy alleging that they are involved in perpetrating a $30 million Ponzi Scheme, which they persuaded more than 300 investors nationwide to participate in purported environmentally- friend[ly] investment opportunities.

    Click below view the entire press release and the complaint from the “SEC”:

    http://denver.bbb.org/Storage/33/Documents/9-16-09%20SEC_Complaint_Speed%20of%20Wealth.pdf

    http://www.sec.gov/news/press/2009/2009-247.htm

    PR Disasters Mark Speed Of Wealth, AdSurfDaily Cases

    Speed of Wealth’s website now throws a server error and appears to have been disabled. In a column in the Denver Business Journal last month, reporter Renee McGaw said she attempted to email Wayde McKelvy, a Speed of Wealth principal, to get his comments on the SEC action.

    McGaw reported that her email to McKelvy resulted in a steady stream of pitches to join wealth-building programs.

    “YOU MUST START YOUR OWN BUSINESS Renee!” McKelvy exclaimed to McGaw in one email. “What You Have Been Taught About Building Wealth is DEAD WRONG!”

    The Denver Post also wrote about the Trump Network emails from McKelvy in the wake of the SEC action. A college professor interviewed by the newspaper said words such as “amazing,” “unbelievable” and “phenomenal” used by McKelvy to describe the Trump Network should be considered red flags.

    The emails demonstrated that a crisis affecting one company can bring an unwanted spotlight on wholly separate brands. Indeed, the Denver Post reported that it contacted the Trump Network for comment on McKelvy’s emails. The calls were not returned.

    Even the names of President Obama, former President Bill Clinton and Secretary of State Hillary Clinton became part of the Mantria/Speed of Wealth story. The companies used a video that included images of Obama, the Clintons and other politicians and media figures in promotional materials.

    Meanwhile, the McKelvy emails were reminiscent of the experiences reporters had when they tried to contact Florida-based AdSurfDaily for comment after federal prosecutors seized tens of millions of dollars from the firm amid Ponzi allegations in August 2008.

    Like Speed of Wealth, ASD also has a rating of “F” from the BBB, which cites government actions against the autosurf firm. Unlike Speed of Wealth, ASD has unresolved consumer complaints, according to the BBB.

    Reporters who called ASD got a recording featuring the voice of ASD President Andy Bowdoin. Bowdoin, whom prosecutors later said had “followers,” intoned in the recording that that God was on the company’s side.

    Thirteen months later, Bowdoin told an audience listening to a conference call that his ongoing legal fight against the government was inspired by the story of a former Miss America who now operates a Christian organization. The PP Blog contacted both the Miss America Organization and the Christian organization for comment.

    The Miss America Organization did not return the call; the Christian organization, Salem Family Ministries, responded by saying it had no comment, except to say it did not recognize Bowdoin’s name. The Secret Service transcribed Bowdoin’s remarks in the conference call and presented them to the federal judge hearing the forfeiture cases against the firm.

    Companies in legal crisis can lose the PR war quickly if their initial actions lead to more questions than answers. Within days of the federal action against ASD, Bowdoin invoked “Satan,” comparing the U.S. Secret Service to the 9/11 terrorists who killed nearly 3,000 people.

    In a Nov. 19 conference call with participants, McKelvy described the SEC allegations as “ridiculous,” but at the same time acknowledged he possibly sold securities without a license, according to the Denver Business Journal.

    But in the same conference call — just days after the SEC action — McKelvy also said he was turning his attention to the Trump Network, an MLM opportunity. The comment — and the emails Speed of Wealth sent out to promote the Trump Network — led to more headlines in newspapers, forums and Blogs.

    Read Speed of Wealth’s BBB report.

    Read ASD’s BBB Report.

  • BizAdSplash Website Offline For ‘Upgrades,’ But Surf Says It Is ‘Excited’; BAS Also Was ‘Excited’ After Announcing Meltdown In Summer

    BizAdSplash, one of the so-called AdSurfDaily autosurf clones, always is “excited” about something.

    This time it’s “excited” about 2010. The surf, however, says it will be offline for the first four days of the new year — and a note on the site suggests members could not log in for the final eight days of 2009.

    BAS said the site was down “For Server Upgrades and other changes in our system.”

    Known for going heavy on the syrup, BAS said “We are excited and look forward to a tremendous 2010. God Bless You All.”

    BAS, which lists its “chief consultant” as former Golden Panda Ad Builder President Clarence Busby, also was “excited” after it crashed and burned last summer. In July, reports surfaced that BAS was behind on payments to members. On July 24, Busby, who is listed in Georgia corporation records as the surf’s registered agent, announced BAS was in a “crisis situation.”

    BAS also says it is registered in Panama. Its Georgia address is UPS Store No. 2644 in Kennesaw.

    Busby blamed the July crisis on overpayments to members — one of the excuses AdSurfDaily used in March 2007 to explain why it was not paying members. With Busby at the helm, Golden Panda’s assets were seized in 2008 as part of the ASD probe.

    BAS launched after the federal action against ASD and Golden Panda in August 2008.

    After BAS suspended payouts in July 2009, Busby announced the company was performing an audit. In August, the planned launch of a new site was delayed, but Busby explained exciting developments were in the offing.

    By the middle of August, he promised, the company would show members how to make “instant money, very, very quickly.”

    “We need you to believe in us,” Busby said. “You’ll see why we’re excited. You’ll see why it’s important to hang on.”