UPDATED 5:18 P.M. ET (U.S.A.) A federal judge has denied the bid of AdSurfDaily President Andy Bowdoin to reverse his decision to forfeit tens of millions of dollars to the government in a case that features allegations of wire-fraud, money-laundering and operating a Ponzi scheme.
Andy Bowdoin in a video for 'Paperless Access.'
“As Mr. Bowdoin’s own descriptions of events fail to support these arguments, and there is no other reason to grant reconsideration . . . the Court will deny the motion,” said U.S. District Judge Rosemary Collyer.
Collyer also denied a motion by Bowdoin for a second evidentiary hearing, saying the matter was moot because she was not permitting him to reenter the forfeiture case after he previously submitted to the forfeiture. Collyer ruled after an evidentiary hearing last year that ASD had not demonstrated it was a lawful business and not a Ponzi scheme.
“[N]othing in Mr. Bowdoin’s own sworn statement justifies the conclusion that he was mistaken [in releasing the claims in January], that the Government engaged in any misrepresentation or misconduct, or that his attorney provided bad advice,” Collyer ruled. “He also fails to present any meritorious defense.”
The ruling was a crushing blow to Bowdoin, and Collyer minced no words, saying evidence in the forfeiture case against him “appears to be strong” and that Bowdoin “balked” after submitting to the forfeiture.
“The Government charges that Mr. Bowdoin operated a Ponzi scheme on the Internet,
whereby he, using ASD as a vehicle, bilked hundreds of people,” Collyer said. “Presented by affidavit and testimony outside the crucible of a criminal trial, its evidence appears to be strong. In the face of the civil in rem proceedings and the expected criminal prosecution, it is no surprise that his criminal lawyer would recommend a cooperation plea with demonstrated early acceptance of responsibility, i.e., withdrawal of claims to the seized assets, so that Mr. Bowdoin might earn a motion for a downward departure under Section 5K1.1 of the United States Sentencing Guidelines and/or 18 U.S.C. § 3553, both of which allow the Court to impose a sentence below the statutory minimum to reflect a defendant’s ‘substantial assistance’ to a Government investigation.”
Bowdoin’s former attorney, Stephen Dobson, whom Bowdoin’s current attorney Charles A. Murray claimed served Bowdoin poorly while Bowdoin was meeting with prosecutors last winter to settle the forfeiture case and discuss a potential criminal plea, behaved responsibly, Collyer said.
“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.”
Collyer cited several claims from Bowdoin himself when issuing her ruling this afternoon, repeating Bowdoin’s own words back to him to demonstrate he had not been ill-served by Dobson or lied to by the government: (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.
[Prosecutor William] Cowden explained that I would be subject to the maximum penalty under the statute, but that he would inform the judge that I cooperated.
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.
“Each of these statements indicates that Mr. Bowdoin completely understood what he
was doing: releasing his claims and cooperating to ‘possibly avoid a prison sentence,’” Collyer said.
In September, prosecutors argued that any thought by Bowdoin that a $100 million, wire-fraud and Ponzi scheme crime would not result in imprisonment upon conviction was ludicrous.
Collyer said the allegations were serious and easily could result in prison time.
“If he proceeds to trial and the evidence persuades a unanimous jury beyond a reasonable doubt that Mr. Bowdoin is guilty as charged, he will face a term of incarceration for sure,” Collyer said. “Mr. Dobson’s hope was to avoid such a result by avoiding a trial and persuading the Government to file motions with the Court that could be used to argue for a sentence that did not include jail time.”
Collyer said Bowdoin’s behavior has been puzzling.
“It is very strange that Mr. Bowdoin passed that opportunity by, despite clear knowledge that it ‘could possibly keep me out of prison,’” she said. “Perhaps the delay in obtaining an indictment has led Mr. Bowdoin to believe that he will not be indicted after all.”
Collyer also pointed to a stated belief by Bowdoin that a grand-jury indictment had been returned, saying she hasn’t see one.
“Mr. Bowdoin believes the Government ‘submitted charges before a grand jury on or about May 2009,’†Collyer said, using Bowdoin’s affidavit as her resource. “[B]ut as of this date no indictment has been returned against him in a federal court.”
Gerard Frank Cellette Jr. is suspected of operating a Ponzi scheme that involved tens of millions of dollars and was based on bogus printing contracts, prosecutors in Minnesota said yesterday.
Cellette, 44, of Andover, Minn., owes investors at least $53 million, according to the felony complaint filed by the office of Hennepin County Attorney Mike Freeman.
Prosecutors charged Cellette with 36 counts of fraud in the offer or sale of securities, saying the scheme extended from Minnesota to California, Georgia, and Illinois, and that Cellette has “admitted” he engaged in a pattern of fraudulent conduct from 2005 through September 2009.
News about the Cellette charges broke as accused Ponzi schemer Tom Petters was being tried in Minnesota, amid allegations he orchestrated a $3.65 billion fraud. Minnesotans’ attention has been riveted on the Petters’ case, which includes allegations he fleeced investors by tricking them into believing their money was being used to finance the sale of huge quantities of electronics to big-box retailers.
Prosecutors described the Cellette allegations as a Petters-like operation, only on a smaller scale. The allegations also were reminiscent of allegations against Florida-based AdSurfDaily because Cellette held hotel meetings with participants in Minneapolis to promote the investment program.
Like ASD’s program, Cellette’s program had elements of revenue-sharing, with participants believing profits stemmed from the sale of a legitimate service. ASD was operated by Andy Bowdoin.
Bowdoin’s ASD purported to be an “advertising” company. Federal prosecutors said it sold unregistered securities and engaged in wire fraud and money-laundering while operating a $100 million Ponzi scheme. ASD was popular in Minnesota, members said.
Cellette ran a company known as Minnesota Print Services. In 2004, he sought capital to expand, promising “to split the profits with the investor.” Investors expected a return of about 10 percent in 60 days, prosecutors said.
But “in fairly short order,” prosecutors said, Cellette started selling “fictitious contracts,” paying earlier investors with money received from “new investors for new fictitious contracts.”
Eventually Cellette began to offer the contracts through Steve Quarles, a California man, prosecutors said. They described Quarles as “the brother of a friend of a previous Minnesota investor.”
Cellette “reports that he has never told Quarles, or anyone other than his attorney and the Hennepin County Attorney’s Office, that fictitious contracts were the primary foundation” of the scheme.
Prosecutors said Cellette is cooperating in the probe.
The FBI and federal prosecutors said last week that Scott told investors their funds would be used to purchase or finance the purchase of high-speed commercial printers that would be sold to third-party buyers at a profit. The machines were said to be valued in excess of $100,000, and Scott claimed his mark-up of 20 percent led to big profits, the FBI said.
Scott, 50, of Elmhust, Ill., was charged with mail fraud. His Chicago-area company, Gelsco, neither purchased nor financed such printers, the FBI said.
“Instead, Scott allegedly fabricated false purchase orders, invoices, promissory notes and other documents that he provided to investors,†the FBI said.
The Scott scheme collected at least $28 million between early 2000 and March 2009 before unraveling, the FBI said. At least 60 investors were fleeced. The initial loss estimate was pegged at $4.5 million.
“Throughout the duration of the alleged scheme, Scott had to continually raise funds from investors to make payments to earlier investors, all of which he concealed and intentionally failed to disclose to new and old investors alike,†the FBI said.
All of the cases — Petters, Cellette, Scott and ASD — lead to troubling questions about how many other companies are engaging in similar schemes that have not been detected.
UPDATED 5:16 P.M. EDT (U.S.A.) NOTE: After additional research, the 10-digit number cited below appears not to be a bank-account number. Rather, it appears to be a telephone number associated with Nate Boyd, a former compliance officer for AdSurfDaily. Boyd’s name also has been associated with the AdViewGlobal (AVG) autosurf.
See the comments thread below.
Here, our earlier story . . .
A pro se motion to intervene just docketed in the AdSurfDaily civil-forfeiture case lists an “electronic transfer to” a bank account number (**Update 1:41 P.M. EDT: it’s actually a telephone number**) not listed in government references to accounts held by ASD President Andy Bowdoin.
The filing lists the email address of nate@asdcashgenerator.com and a second account number that is associated with ASD in court filings. It was not immediately clear why the filing by Robert and Evelyn Gould included the account number not associated with Bowdoin in court filings. (**Update 1:41 P.M. EDT: it’s actually a telephone number**)
An account number ending with the digits 1028 — an account number not associated with Bowdoin — is included in the Gould filing, along with the words “electronic transfer to” the account. (UPDATE 2:16 P.M. As noted in the 1:41 P.M. update, the 10-digit number is actually a phone number, as opposed to a bank-account number. The phone number is associated with Nate Boyd and a number of work-at-home opportunities.)
Nate Boyd is a former compliance officer at ASD, members said. It was not immediately clear if the “nate” mentioned listed in the email address is Nate Boyd. (UPDATE 2:16 P.M. The phone number is associated with Nate Boyd.)
Some ASD members have said some upline sponsors sold “ad-packs” directly to customers, as opposed to directing them to purchase them through ASD. “Ad-packs” then were transferred from the existing stockpiles of upline sponsors using ASD’s in-house system. The practice is problematic because some upline sponsors could have pocketed the cash, instead of transferring it to ASD, thus generating off-the-books cash sales.
Such transactions could have transferred the burden of paying for ASD “rebates” to the rank-and-file membership, while destroying the reliability of ASD’s records and giving upline sponsors the opportunity to siphon tax-free profits.
Actions by upline sponsors to sell “ad-packs” directly to customers could be construed as a form of wire fraud and money-laundering.
Also unclear is why the Gould claim was filed using the same pro se template used by dozens of other ASD members. U.S. District Judge Rosemary Collyer already has rejected dozens of filings that used the same argument in the template.
Collyer has not ruled on several templated submissions received after her initial ruling weeks ago that the filers had no standing in the case.
The filing also referenced an account number ending in the digits 3016 that is associated with ASD.
Federal prosecutors have listed 10 ASD account numbers in court filings, referencing them in the August 2008 forfeiture complaint and again in May 2009, in a proof of service of all defendants in rem. None of the account numbers ended with the digits 1028.
Unlike previous pro se filings, the Gould motion included a printout of the government’s form for victims of AdSurfDaily, ASD Cash Generator, LaFuenteDinero and Golden Panda Ad Builder. Check marks on the Gould form are next to the names of AdSurfDaily and LaFuenteDinero. The form submitted to the court by the Goulds appears to have been printed out and filled out in longhand.
The Gould filing suggests that Robert and Evelyn Gould filled out the government form last month, including the bank-account references.
Despite the fact the government believes ASD engaged in a wire-fraud and money-laundering conspiracy with unnamed co-conspirators while operating as a Ponzi scheme, the Goulds said in the filing that the government owes them $2,000
UPDATED 2:03 P.M. EDT (U.S.A.) Prosecutors have advised a federal judge that the government expects David G. Friehling to plead guilty to charges next week.
Friehling was the small-shop accountant for Bernard L. Madoff Investment Securities.
The mere fact that Bernard Madoff’s multibillion firm used a small shop that employed a single accountant — Friehling himself — was enough to make some investors pass on Madoff’s offerings while performing due diligence.
Other investors ignored the incongruity. Madoff’s empire collapsed in December 2008. In July 2009, prosecutors filed a criminal information against Friehling, accusing him of accounting fraud, securities fraud, investment-adviser fraud and making false filings.
In a letter yesterday to U.S. District Judge Alvin K. Hellerstein, prosecutors said they expected to file a superseding criminal information Nov. 3 and that Friehling will plead guilty and cooperate in the government’s ongoing probe.
Friehling’s experience demonstrates one of the pickles Florida-based AdSurfDaily — itself implicated in an alleged Ponzi scheme — is in.
A hearing was held at ASD’s request Sept. 30 and Oct. 1 of last year to demonstrate it was not a Ponzi scheme. ASD, however, did not call either an in-house or external accountant to the witness stand to certify its books and financial statement, thus missing a chance to refute the government’s Ponzi claims by producing audited financials that could withstand scrutiny.
One of the likely reasons is that no accountant would or could certify ASD’s books under oath in a fashion favorable to the company. To have done so would have been to introduce some of the same elements that led to intense scrutiny directed at Friehling and the criminal information against him.
ASD published no verifiable financial information. There are major doubts that ASD even knew its own bottom line, amid assertions that members siphoned off money before it even arrived at ASD.
One of the allegations against Friehling is that he verified information for Madoff that simply was not true.
Among the assertions against Friehling was that he was not truly independent and was auditing a company in which he had a large personal stake — an investment account dating back to the 1980s that showed an equity balance of more than $500,000 each year.
If ASD employed accountants or bookkeepers who held large numbers of “ad-packs” or were being paid in “ad-packs,” their independence could be challenged.
Moreover, prosecutors said, Friehling’s purported audits did not comply with Generally Accepted Accounting Standards. Reports did not comply with Generally Accepted Accounting Principles.
Any accountant who certified information favorable to ASD, which prosecutors allege was insolvent, almost certainly would have been subjected to the same degree of scrutiny that Friehling later encountered in the Madoff case.
NEWS: In the world of high finance, Tom Petters was Bernard Madoff before Bernard Madoff was Bernard Madoff — at least with respect to shocking headlines about Ponzi schemes.
Jury selection is under way in Minnesota in the Petters case. The allegations that Petters presided over a $3.65 billion Ponzi were unfathomable in September 2008. The allegations dwarfed the August 2008 assertions by the U.S. Secret Service that Florida pitchman Andy Bowdoin of AdSurfDaily Inc. had operated a then-unfathomable $100 million Ponzi scheme.
But with Madoff’s overnight ascent to the stratosphere of infamy in December 2008 amid allegations that he had operated a $50 billion Ponzi scheme, Petters faded from the headlines.
Bowdoin would have faded, too, except he could not stop doing things such as comparing the Secret Service and federal prosecutors to the 9/11 terrorists; taking the 5th Amendment at a hearing his company requested to present evidence that it was not a Ponzi scheme, even as his supporters agreed he was “too honest” to testify; announcing a $200 million deal with a penny-stock company few people ever had heard of (while the penny-stock firm continued its practice of not publishing verifiable financial information and Bowdoin was awaiting a ruling on whether unaudited financial information he had supplied the court was reliable enough to make the Ponzi allegations go away); trying to sell members of AdSurfDaily VOIP telephone service after the Ponzi ruling went against him; negotiating with federal prosecutors; submitting to the forfeiture less than a month after prosecutors filed a second forfeiture complaint that asserted his wife and family had benefited from the illegal actions of his company and that Bowdoin had not reported a purported theft of $1 million by “Russian” hackers to authorities; and trying to get back in the case about six weeks later by saying he’d changed his mind, fired his attorneys and now was relying on a mysterious “group” of amateur attorneys to help him do his legal bidding.
Not even Petters, who owned Polaroid and operated what prosecutors described as a multibillion-dollar Ponzi scheme involving a separate electronics company, could top Bowdoin in terms of relentless strangeness.
Petters, however, easily topped Bowdoin in terms of the size of the alleged Ponzi he operated. And now the Petters trial is set to begin. One of the expected defenses in the case is a Bowdoin-like assertion that his hands were clean.
NOTE: Sir Allen Stanford now is accused of running a Ponzi that was larger than even the alleged Petters’ Ponzi. Stanford’s alleged crimes also are dwarfed by the Madoff Ponzi.
Stanford was regarded as a sort of king of Caribbean banking, perhaps particularly on the island nation of Antigua.
Federal prosecutors say ASD’s Bowdoin told the Secret Service that the company had $1 million in an account under a different name on Antigua. The claim was strange, considering that Bowdoin had told members in 2007 that he could not pay them because his purported advertising company had become insolvent after it overpaid members and was looted by the previously mentioned “Russian” hackers.
The claim became Ãœber Strange in 2008, when Bowdoin asked a federal judge to free up $2 million from the tens of millions of dollars seized because ASD could not pay its hosting bill or rent or employees and had no money to implement a compliance plan — while apparently forgetting he had told the Secret Service about the $1 million on deposit in Antigua.
Some of Bowdoin’s friends and employees remained staunch allies, always willing to support the company, call the prosecutors Nazis, diss doubters and even work for free to demonstrate their loyalty to the boss.
An employee of Allen Stanford had a different idea about how to behave when a company’s words could not be reconciled with its actions.
Charles Satterfield, an investment adviser, couldn’t make sense of things in the months after he joined Stanford Financial Group in 2005 as managing director of fixed income.
Stanford stressed sales of its CD, regardless of the profiles of its customers. Old ladies were to be sold CDs. Young mothers were to be sold CDs. All people in between were to be sold CDs — at the virtual exclusion of all other financial products that perhaps were better suited for the unique situations of individual customers.
On a business trip? Sell the CD. Sitting down with Grandpa or Junior? Sell the CD.
When Satterfield asked his bosses to reduce their instructions to writing, he was fired the next day.
He told the Financial Industry Regulatory Authority (FINRA) in 2007 that some strange things were going on inside Stanford Financial Group. The company said no — that Satterfield had gotten it all wrong, that he was incompetent and disgruntled.
Satterfield was described as disloyal, incapable of recognizing that tremendous growth at companies causes problems and that the problems sort themselves out in the end.
The experience of Charles Satterfield at Stanford will sound like a familiar refrain to many people who have followed the AdSurfDaily saga and observed a pattern of dissing critics as though they were simpletons, marginalizing their voices and authoring ad hominem attacks — before ostracizing them completely and banning them to the hinterlands.
The British Columbia Securities Commission (BCSC) has ordered four respondents in a civil action to pay penalties of $26 million for operating a Ponzi scheme and to surrender $16 million in illegal profits.
In forceful findings that may echo throughout the HYIP and autosurfing universe, BCSC said the schemers tried to skirt securities laws by selling a fraudulent HYIP currency-trading program in Canada through an MLM-syle operation while hiding behind “non-disclosure” agreements and operating in an environment of secrecy.
AdViewGlobal (AVG), an autosurf firm with close ties to the alleged AdSurfDaily (ASD) Ponzi scheme in the United States, created a similar structure in which participants were advised to keep news within “association” walls and not to disclose information to outsiders.
BCSC also found that the companies named in the Canadian complaint disseminated false information and used intimidation tactics in a bid to prevent participants from cooperating with authorities.
“Because of those [non-disclosure] agreements, and because of false but intimidating statements made to them by the respondents, many investors refused or were reluctant to cooperate with the Commission’s investigation,” BCSC said.
In recent weeks, some ASD members have circulated emails that suggested participants should not cooperate with the U.S. Secret Service in the ASD probe. During the summer, AVG, which had suspended member cashouts, threatened to sue members for sharing information with outsiders and also threatened to contact the Internet Service Providers of participants who complained on a company forum.
In yet another similarity to the ASD case, some of the purveyors of the Canadian scheme also pushed what Canadian authorities described as a “private common law spiritual trust.â€
Some of ASD’s and AVG’s most ardent supporters have used similar phrasing and referenced common law in defending the surfs.
BCSC minced no words as it laid out the penalties against Hal (Mick) Allan McLeod, David John Vaughan, Kenneth Robert McMordie (also known as Byrun Fox) and Dianne Sharon Rosiek.
BCSC pegged losses at $13 million, saying the respondents “fraudulently distributed securities and made misrepresentations” through Legacy Capital Inc., Legacy Trust Inc. and Manna Trading Corp Ltd.
The Canadian respondents also cited a tie to an entity known as the Manna Humanitarian Foundation.
AVG, in promotional material, cited a tie to the World Rain Forest Movement in what some observers saw as a bid to sanitize the AVG business by linking it to a worthwhile cause.
“At AVGlobal Association we believe we should go beyond the basics of ethical business practices and embrace our responsibility to people and to the planet,” AVG said on its website. “We believe this brings sustained, collective value to our members, our employees, our customers and society.”
AVG announced a suspension of payouts June 25. It is unclear if any worthwhile cause ever received money from the company.
A BCSC panel fined McLeod $8 million. Vaughan, Rosiek and McMordie were dispensed penalties of $6 million each. The panel also ordered each respondent, including the companies, to disgorge the $16 million the scheme obtained from investors.
The suggested payout percentages of the Canadian entities actually were significantly lower than the suggested payout percentages of both ASD and AVG.
“Manna promised investors 7 [percent]Â monthly returns (later reduced to 5 [percent]), sometimes compounded,” BCSC said.
ASD and AVG both promoted compounding. Some ASD members promoted returns of 365 percent a year, claiming $100,000 in ASD returned $1,000 a day.
Similar to ASD and AVG, investors who became “affiliates†or “consultants†of the Canadian companies could bring in new investors.
“When they did so, they earned a commission on the amount invested and a continuing share of the return on the new investment,” BCSC said.
The private, common-law spiritual trust “was a mechanism Fox concocted ostensibly to avoid the application of tax and securities laws to investments in the Manna scheme,” BCSC said.
BCSC pegged losses in the Canadian scheme at $13 million, saying as many as 800 people lost money.
“They created a multi-level marketing structure to maximize distribution of the Manna securities,” BCSC said.
“The respondents knew exactly what they were doing when it came to dealing with securities laws,” a BCSC panel said. “They were well aware of the requirements of the Act, and of the role of the Commission in enforcing the Act. They took numerous actions calculated to escape detection. They attempted, unsuccessfully, to construct the Manna scheme in a form that would fit within a specific exemption in the Act.”
Authorities said the scheme was inexcusable.
“Nothing strikes more viciously at the integrity of our capital markets than fraud, and this case represents a particularly aggressive and flagrant assault on the public’s confidence in our markets,” BCSC said.
BCSC’s announcement followed on the heels of announcements Oct. 15 by the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission that they were targeting a Florida company that allegedly tried to hide behind a corporate registration in Panama.
The actions by the SEC and CFTC expose the vulnerability of autosurfs that register as corporations offshore and arrange web-hosting overseas, but do not comply with securities laws of the United States and foreign countries in which they have a paper footprint or are not regulated in the foreign countries.
The moves also demonstrate that U.S. securities regulators — no matter where a company arranges webhosting — intend to treat American owners who flout laws as issuers of unregistered securities, unregistered investment advisers and operators of unregistered foreign investment companies from inside the United States
Named defendants in emergency actions filed Oct. 15 in U.S. District Court for the Middle District of Florida were David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc.
UPDATED 10:47 P.M. EDT (U.S.A.) The state of Florida has revoked the corporate registration of AdSurfDaily Inc.
Meanwhile, the state has dissolved Bowdoin/Harris Enterprises Inc. Both actions were taken Sept. 25 by the Florida Department of State’s Division of Corporations because neither company filed required paperwork.
ASD’s registration is marked “REVOKED FOR ANNUAL REPORT.” The registration for Bowdoin/Harris Enterprises is marked “ADMIN DISSOLUTION FOR ANNUAL REPORT.” In each case, the required filings were nearly five months’ past due.
Florida law requires all corporations, limited liability companies, limited partnerships and limited liability limited partnerships to file an annual report with the Division of Corporations between Jan. 1 and May 1 of each year.
ASD is registered in Florida as a foreign corporation because the surf initially registered as a corporation native to Nevada. ASD’s Nevada registration is marked “default.”
Ironically, Florida made the moves against the Bowdoin entities on the same date — Sept. 25 — a dramatic filing by federal prosecutors became public on the PACER U.S. Party Case Index. The federal filing accused ASD President Andy Bowdoin of trying to lie his way back into a civil-forfeiture case sparked by August 2008 allegations that ASD had engaged in wire fraud and money-laundering while operating a Ponzi scheme.
In December 2008 — in a second forfeiture case filed against ASD’s assets — prosecutors said Bowdoin’s wife, Edna Faye Bowdoin, and her son, George Harris, opened a bank account at Capital City Bank on June 10, 2008, in the name of Bowdoin/Harris Enterprises Inc.
The account was funded with an opening deposit of $177,900.12 from two ASD accounts at Bank of America. More than $157,000 of the sum was used to retire the mortgage on the home of George Harris and his wife, Judy Harris, prosecutors said.
Prosecutors named the Harris home in the December forfeiture complaint, saying it had been acquired with illegal proceeds from ASD. The Capital City Bank account was opened less than two weeks after ASD concluded a rally in Las Vegas at which Andy Bowdoin exhorted the crowd to internalize the thought of acquiring large sums of money.
Florida’s actions against ASD and Bowdoin/Harris Enterprises are potentially problematic for the companies and Bowdoin.
Prosecutors could argue, for example, that no company claiming to be legitimate in court and encouraging members to continue to support it would fail to complete the minimal amount of paperwork required to keep its corporate registration intact.
On Sept. 28 — three days after Florida revoked ASD’s corporate registration and dissolved the registration of Bowdoin/Harris Enterprises — federal prosecutors filed a U.S. Secret Service transcript of a conference call ASD had recorded Sept. 21.
In the call, Bowdoin told members that the government had seized their money. In his court filings, however, Bowdoin claimed the money was his.
Prosecutors said the recording was evidence that Bowdoin could not keep his stories straight, arguing that he had told members one story and a federal judge another.
In December 2008, prosecutors said Andy Bowdoin and Edna Faye Bowdoin had set up Bowdoin/Harris Enterprises to conceal expenditures and assets from the government. In July 2008, according to court filings, a cashier’s check for $48,244.03 from Bowdoin/Harris Enterprises was used to purchase a 2008 Lincoln MKS luxury sedan.
Prosecutors named the Lincoln in the forfeiture complaint, along with two other automobiles, a Cabana boat, jet skis and marine equipment. All of the purchases were made with ASD funds or ASD funds that had been funneled through Bowdoin/Harris, prosecutors said.
Bowdoin has left behind a string of failed businesses, prosecutors said. Florida has dissolved at least seven of them — now including ASD — a company Bowdoin asked members to support in post-seizure testimonials and letter-writing campaigns.
Michael R.N. McDonnell is the attorney for a Florida man charged Tuesday with obtaining $388,000 in a mortgage-fraud scheme, according to the Naples Daily News.
McDonnell, a lawyer for nearly 40 years, recently was retained to represent AdSurfDaily President Andy Bowdoin in a civil-forfeiture case involving tens of millions of dollars seized from Bowdoin’s bank accounts by the U.S. Secret Service last year in a wire-fraud, money-laundering and Ponzi scheme probe.
Scott Fawcett, McDonnell’s client in the mortgage-fraud case, was accused of saying he had an account balance of $353.209.09 at Bank United when he had only $13.57 in the account, according to an information filed by federal prosecutors.
The charge against Fawcett is part of a federal law-enforcement operation known as “The Mortgage Fraud Surge,” a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the FBI in Tampa and Jacksonville, “and numerous other federal, state, and local law enforcement agencies,” prosecutors said.
Foreclosures are piling up in Florida, which has experienced nine bank failures this year, including three yesterday. Florida trails only California in foreclosure volume. Bank United’s predecessor company — Bank United FSB — failed in May 2009, costing the FDIC’s Deposit Insurance Fund an estimated $4.9 billion.
The charge against Fawcett is filed in the Fort Myers Division of U.S. District Court for the Central District of Florida.
Fawcett’s name is associated with more than a dozen foreclosure filings in Collier County, Fla., court records show. A person identified only as “H.F.” was named in the information as a co-applicant and co-owner of the account, but was not named a defendant.
Fawcett is married to model Heather Fawcett, once listed as a member of the Miami Caliente of the upstart Lingerie Football League. Heather Fawcett’s listing on a website known as Model Mayhem includes a note that she was expecting a baby in September.
Separately, Debra Landberg, a notary public, was indicted earlier in October — also in Fort Myers — on charges of fraud for helping “S.F.” and “H.F” get the loan that resulted in the charge against Scott Fawcett. The indictment against Landberg accuses her of helping “S.F.” get about $2.27 million in fraudulent loans by verifying fraudulent balances in accounts.
Landberg was indicted on three counts of fraud and one count of lying to FBI agents. In the other fraudulent mortgage deals, according to the indictment, “S.F.” was said to have an account balance of $177,655.58, when the actual balance was $957.18, and an account balance of $146,264.77, when the actual balance was $1,774.50.
Prosecutors are seeking forfeitures against Landberg and Scott Fawcett. The first fraudulent transaction involving Bank United occurred on July 19, 2006; the second transaction occurred April 17, 2007, according to court filings.
The third — and largest fraudulent transaction — involved Citibank and the sum of $1.5 million, according to the indictment against Landberg.
UPDATED 4:30 P.M. EDT (U.S.A.) No shares of Vana Blue were reported traded today. No trades have occurred since Oct. 8, a period encompassing seven full trading days. Some shares of Praebius did trade today, so its string of no trading since Oct. 9 ended.
Here, below, our earlier post . . .
Two Pinksheet penny stocks whose names became associated with the so-called autosurf “industry” have not recorded any trading of shares for days.
No shares of Vana Blue have traded hands since Oct. 8, a period that includes six full trading days and part of a seventh. No Praebius Communications shares have traded hands since Oct. 9.
In news releases, Vana Blue identified itself as the owner of eWalletPlus, a payment processor later linked to the AdViewGlobal (AVG) autosurf.
Vana Blue, which used mailing services in Phoenix and Las Vegas as its address, is a registered corporation in Nevada. Its website now resolves to a server that beams ads.
The company has claimed to own a company that variously has been described as TMS Corp. and TMS Association, which purportedly developed eWalletPlus. In January, Vana Blue also claimed to own a company that variously has been described as Karveck Corp. or Karveck International, a purported advertising and media company.
In February, Vana Blue reported that Karveck had posted $1.8 million in revenue in January — the month AVG was in prelaunch.
In an August news release, Vana Blue said it “has canceled all agreements with Karveck Int’l and has no affiliation with [the] company or its affiliates.â€
The company claimed to own Karveck International in February 2009, declaring it a “newly acquired asset†that had produced $1.8 million in revenue in January. Karveck was described as a company that “specializes in internet advertising and promotion in a search engine and ad clicking type environment.â€
Vana Blue’s August news release, however, said the deal once described as completed never was finalized and that the cancellation came as a result of “further due diligence.â€
AVG, an autosurfing company with close ties to AdSurfDaily Inc., suspended member cashouts in June. The U.S. Secret Service seized tens of millions of dollars from ASD President Andy Bowdoin in August 2008, amid allegations of wire fraud, money-laundering and operating an international Ponzi scheme.
On Sept. 30 and Oct. 1 of last year, an evidentiary hearing in the ASD forfeiture case was held in U.S. District Court for the District of Columbia. The hearing centered on the Ponzi allegations, ASD’s “rebate” program and issues of income streams and solvency.
In August, prosecutors said ASD was insolvent.
“According to its own records, ASD sold ad packages worth approximately $39 million during the Miami rally, worth over $29 million from the Tampa convention, and worth over $27 million from the Chicago rally,” prosecutors said. “Even without including ad ‘sales’ that occurred over the Internet and the bonuses offered to rally participants, ASD would need assets of more than $118 million to pay these individuals their 125% return,” prosecutors said.
At the evidentiary hearing, ASD introduced an unaudited balance sheet that showed it had posted approximately $100.88 million in revenue in the first seven months of 2008. Prosecutors countered by saying ASD had promised to pay out more money than it had taken in, producing evidence showing ASD “will” pay rebates until members received 125 percent of what they had paid for “advertising.”
U.S. District Judge Rosemary Collyer did not make a ruling from the bench at the conclusion of the hearing, instructing attorneys from both sides to prepare additional briefs and noting she would take the testimony and evidence introduced by both sides at the hearing under advisement.
During the period in which Collyer was deliberating the Ponzi and solvency issues, ASD announced on its Breaking News website that it expected a $200 million capital infusion from Praebius. Some ASD members raced to forums and websites covering the ASD case to share the news about the purported Praebius venture.
Some ASD members, however, questioned the news. ASD then removed its announcement about Praebius from the Breaking News website.
Shares of Vana Blue traded hands during 11 straight trading days between Sept. 10 and Sept. 24. After Sept. 24, shares traded hands in six of the 10 trading days through Oct. 8. No trades have posted since Oct. 8.
UPDATED 9:39 P.M. EDT (U.S.A.) A thread at the Pro-AdSurfDaily Surf’s Up forum went missing this morning after a days-long debate in which federal prosecutors were called “goons” and a member repeatedly insisted that a government attorney had acknowledged that ASD was not a Ponzi scheme.
The thread was titled “William Cowden Resigned.”
Various Surf’s Up posters have claimed for a more than a year that ASD prosecutor William Cowden, now in private practice, had said ASD wasnot a Ponzi scheme. The claim was made prior even to an evidentiary hearing held on Sept. 30 and Oct. 1 of last year, and has been made repeatedly since then.
On Oct. 10, 2008, nine days after the evidentiary hearing had concluded, for example, ASD mainstay Robert Fava circulated an email in which the claim was made. Fava’s email contained an analysis of the evidentiary hearing and post-hearing filings by attorneys from both sides by an ASD member named “Ken.”
“Everything really hinges on the fact that it was not a Ponzi and the AG has already admitted to the fact that it WAS NOT A PONZI,” Fava’s email quoted “Ken” as saying. Another section of the email noted that Judge Rosemary Collyer would have to be “brain dead or taking a payoff” if she ruled against ASD.
The claim appears to be part of a disinformation campaign to keep hope alive that the government does not believe in its own case and that the Ponzi elements could unravel at any moment, thus voiding the prosecution’s claim that ASD had engaged in wire-fraud and money laundering.
Some Surf’s Up members have asserted that, if the government can’t prove a Ponzi, then it cannot prove other crimes occurred inside ASD.
At the same time, some Surf’s Up posters have claimed prosecutors are guilty of an Unconstitutional money-grab and denying ASD due process. The claims have been made repeatedly, even though a federal judge reviewed search-warrant applications before approving them and issued warrants to “arrest” ASD’s assets — and even though ASD has argued its case in the forfeiture proceeding in court — a court open to the public and a court in which ASD members themselves attended the proceeding.
Despite the claim against Cowden, nothing in the record of the case suggests he ever said ASD was not a Ponzi scheme. In fact, the hearing on the Ponzi issues was held without objection from Cowden.
Then-prosecutor Cowden even cross-examined ASD’s expert witness — MLM attorney Gerald Nehra — who asserted ASD was not a Ponzi scheme.
Cowden cross-examined Nehra on Nehra’s opinion ASD was not a Ponzi scheme and on the subject of ASD’s “rebate” program. Cowden demonstrated in the courtroom — with Nehra on the witness stand — that ASD had said rebates “will” be paid until a customer received 125 percent of his or her ad spend — in other words, 25 percent more than the customer had paid ASD for “advertising.”
“Now,” Cowden asked Nehra, who was on the witness stand, “have you ever seen in the ASD rebate program the representation that [ASD] makes that rebates will (emphasis added) be paid up to a hundred and twenty-five percent, correct?”
“We have discussed that in the — ” Nehra answered.
“Is that correct?” Cowden asked, returning to his question about whether ASD had said rebates “will” be paid.
“Yes,” Nehra reponded, “I have seen that.”
“Mr. Nehra, yes or no answer, that’s what it says, rebates will be paid up to a hundred and twenty-five percent?” Cowden asked again, in a bid to solidify the answer for the record.
“It does say that, counselor,” Nehra answered.
“One hundred twenty-five percent is more money than you put in, right?” Cowden asked.
“Yes,” Nehra answered.
Months after the evidentiary hearing concluded, dozens of ASD pro se litigants filed templated court documents that accused the government of not producing “any EVIDENCE of alleged wrongdoing.”
The government, however, introduced evidence at the evidentiary hearing, including evidence upon which Nehra had been cross-examined by Cowden. The government also introduced video evidence and written evidence. The first government filing of evidence occurred on Aug. 5, 2008, and included eight separate exhibits.
Had Cowden or the government told a federal judge or ASD’s attorneys that ASD was not a Ponzi scheme — before the hearing or after — one of the key prongs of the government’s strategy in the case would have collapsed. There would have been no reason for Cowden to cross-examine Nehra on the Ponzi elements. Bowdoin’s attorneys would have had Cowden for lunch.
It does not seem even to have occurred to the ASD members making the claim about Cowden that, in the early hours after the hearing concluded, they also snickered about Cowden returning again and again to the subject of ASD paying a rebate of 125 percent. One of the key issues of the 125 percent promise was how ASD was funding the payouts. The prosecution always has argued that the payouts were made in classic Ponzi fashion, with money taken from new members to pay earlier members.
By snickering about Cowden’s consistent return to the 125 percent theme, the ASD members were disproving their own argument that Cowden had said ASD was not a Ponzi scheme.
Not only did the Ponzi theory not collapse, the government used information gleaned from the testimony at the evidentiary hearing in a second forfeiture complaint filed against ASD’s assets. The second complaint was filed more than two months after the Surf’s Up posters first asserted that Cowden had said ASD was not a Ponzi scheme — and Cowden signed the December complaint, arguing again that ASD had operated as a Ponzi.
“ASD operated as a ‘Ponzi’ operation whereby it took money from investors — it termed its investors ‘members’ and ‘advertisers’ — by promising its investors that it would pay to those investors 125% of their out-of-pocket investment,” argued Cowden in December, along with former U.S. Attorney Jeffrey Taylor and Assistant U.S. Attorney Vasu B. Muthyala.
The court filing was verified by Roy Dotson, a special agent for the U.S. Secret Service.
Cowden, Taylor and Dotson — at various times — became the subjects of a certified-mail campaign by ASD members to discredit them. They also became the subjects of a letter-writing campaign to Sen. Patrick Leahy in which the senders asked the U.S. Senate to investigate not an alleged $100 million Ponzi scheme, but the public servants who stopped the scheme before it could mushroom globally.
In the fall of 2008, Surf’s Up hinted that a secret weapon against the government soon would come into play. In October, ASD Members International (ASDMI) was formed. ASDMI’s founders consisted of Surf’s Up members.
“Professor” Patrick Moriarty was listed in Missouri records as the registered agent of the organization, which had registered as a nonprofit. Surf’s Up Mod Barb McIntyre was listed as Secretary.
ASDMI solicited money from ASD members to do battle with the government. The organization made the odd claim that it would litigate against the government even if the government was behaving legally.
If civil litigation did not work, ASDMI suggested, it would see about having the prosecutors charged with crimes.
Patrick Moriarty, a co-founder of ASDMI, instructed ASD visitors to his personal website to make checks and money orders for $50 payable to “P.M.G.Int.,†which stands for Pacific Ministry of Giving International, Curtis Richmond’s Utah-based entity.
Moriarty instructed participants in a mail campaign against the prosecutors and Secret Service to mail the checks and money orders to him in Missouri. The $50 fee would be used to defray the costs of notarization, “several certified mailings, typing, paper and other necessary administrative costs.â€
ASDMI itself charged a $20 fee for its own version of presumptive litigation against the government.
Richmond, who said in court filings that Pacific Ministry of Giving International had lost $41,000 as a result of the government seizure of ASD’s funds, is associated with a Utah “Indian” tribe a federal judge in a separate case ruled a “complete sham.” At least two people who used the services of a sham “arbitration” panel connected to the tribe to litigate against the Internal Revenue Service or other creditors were convicted of federal crimes such as tax evasion and mail fraud and sentenced to prison.
Moriarty was a key participant in a certified-mail campaign involving the ASD prosecutors, asking ASD members to make checks and money orders payable to Richmond’s Pacific Ministry of Giving International, which is registered in Utah as a “Corporation – Sole” under “Religious Organizations.”
In March 2009, Moriarty was indicted in Missouri for alleged tax crimes that occurred between 2002 and 2006. In February 2009 — at Surf’s Up — he was positioned as the leader of a letter-writing campaign to Leahy
“Over 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,†Moriarty said in a letter to Leahy, D.-Vermont. “Not once did any of these three Government Servants respond.â€
Leahy is chairman of the Senate Judiciary Committee.
“Innocent Americans have suffered and continue to suffer because of these incredulous and despicable acts†by prosecutors, Moriarty said.
Screen shot: Snapshot of section from Government Exhibit 3, which has been in the public record since Aug. 5, 2008. The exhibit reproduces the AdSurfDaily Terms of Service as the document existed on July 24, 2008, in the opening weeks of a U.S. Secret Service investigation into the company's business affairs. The exhibit shows ASD advertised that advertisers "will be paid rebates until they receive 125% of their ad purchases" and that "Your ad purchase will expire when you receive a 125% rebate of your advertising cost."
Despite the August 2008 forfeiture complaint in which the U.S. Secret Service and federal prosecutors first made the Ponzi claim — and despite the fact ASD asked for a hearing to demonstrate it was not a Ponzi and that the prosecution did not object to the hearing — and despite the fact Cowden cross-examined Nehra on the Ponzi issues and that Nehra acknowledged on the stand that ASD said rebates “will” be paid up to 125 percent — some Surf’s Up members continue to argue that Cowden said ASD was not a Ponzi scheme.
Perhaps most striking of all is that the government, including Cowden, reasserted the Ponzi argument in the December complaint (filed 10 months ago tomorrow) — and some Surf’s Up members still are arguing that Cowden had said ASD was not a Ponzi scheme.
All of the court information contained in this post is in the public record of the case.
Judge Rosemary Collyer’s ruling that ASD had not demonstrated at the evidentiary hearing that it was a lawful business and not a Ponzi scheme — coincidentally, 11 months old tomorrow — is in the public record. The August 2008 filing in which the government reproduced the ASD Terms of Service showing the surf had said rebates “will” be paid up to 125 percent is in the public record. So are the initial eight exhibits of government evidence against ASD.
ASD was permitted to continue to sell advertising after the seizure of its assets, but chose not to do so. It is not illegal to sell advertising online. One of the key issues of the ASD case is how the company funded rebates — which generally are not illegal — but can become illegal if a company is skirting securities laws by purporting to be an “advertising” company when it actually is an unregistered issuer of securities sold as investment contracts.
But the securities allegation is just one of allegations against ASD. Prosecutors said the company was engaging in wire fraud and money-laundering. Meanwhile, private litigants have accused the company of racketeering.
ASD President Andy Bowdoin has never responded to the racketeering complaint, which was filed in Florida November 2008, in the immediate aftermath of Collyer’s ruling against the firm. The initial racketeering lawsuit was dismissed by the plaintiffs in Florida and refiled in U.S. District Court for the District of Columbia in January 2009, in the immediate aftermath of Bowdoin’s decision to submit to the government forfeiture.
Attorneys for the racketeering plaintiffs — consisting of three ASD members who seek class-action certification in the lawsuit against Bowdoin — referenced the AdViewGlobal (AVG) autosurf in a June filing, saying the surf was the next iteration of ASD and employed individuals who worked for ASD.
On Sept. 25, the government made a veiled reference to AVG in court filings.
Both ASD and AVG potentially face a ton of trouble in the coming weeks and months — but more than a year after the evidentiary hearing was held, some Surf’s Up posters continue to argue that the government itself, despite all the evidence to the contrary, had said ASD was not a Ponzi scheme.
At the same time, posts and entire threads continue to go “poof” at Surf’s Up, perhaps especially when other posters argue that the government just might have a legitimate point of view.
UPDATED 1:33 P.M. EDT (U.S.A.) The failure yesterday of San Joaquin Bank in Bakersfield, Calif., brought the total of bank failures in the United States this year to 99.
With weeks remaining in the year, it is a virtual certainty that failures will top the 100 mark. Banks have been failing at an average rate of slightly less than 10 per month in 2009. Last year, 25 banks failed in the United States. In 2007, only three banks failed.
As many as 416 names of other troubled banks appear on a confidential list maintained by the Federal Deposit Insurance Corp. (FDIC). The hemorrhage of bank failures — in large measure caused by a severe recession, consumer and business defaults, a collapse of real-estate prices in many parts of the country, brazen fraud in the mortgage sector and a contraction of development — is not over.
Although banks and the government are working together to find ways to curb an explosion in the mortgage-foreclosure rate, foreclosures continue to suck wealth from the economy.
“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,†said James J. Saccacio, chief executive officer of RealtyTrac.
RealtyTrac tracks foreclosure activity in the United States. On Oct. 14, the company said foreclosures in the third quarter set a record and were up 23 percent from the total reported in the third quarter of 2008.
Foreclosure filings, default notices, scheduled auctions and bank repossessions totaled 937,840 in this year’s third quarter, RealtyTrac reported.
Although foreclosure filings in September totaled 343,638 — a 4 percent decrease from August’s total — the number still represented a 29 percent increase from September 2008.
September’s monthly total was among the highest figures reported since January 2005, trailing only July and August of this year.
“REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties,†Saccacio said.
Florida, California Battered By Foreclosures
Six states — California, Florida, Arizona, Nevada, Illinois and Michigan — accounted for 62 percent of the foreclosure total in the third quarter, RealtyTrac reported. Foreclosures in the six states totaled 579,541.
Foreclosures in California totaled 250,054 in the third quarter; Florida posted 156,924 foreclosures, a 23 percent increase from the total reported in the third quarter of 2008.
Because Florida is an attractive state for retirees — and because those retirees have friends and loved ones in all corners of the United States — the state is an attractive target for scammers.
Florida also has a large population of immigrants, another attractive target of scammers.
Agencies Battle Florida Ponzi Fraud
In the past 72 hours alone, the SEC, the CFTC, the FBI, the U.S. Postal Inspection Service, and federal prosecutors have announced three Florida Ponzi scheme prosecutions, a conviction in a separate Ponzi case — and a conviction in a fraud case in which a Florida man created more than 260 identities on eBay and fleeced customers out of $717,000.
On the Florida Ponzi front:
David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc. were named defendants in emergency actions in U.S. District Court for the Middle District of Florida. Merrick, 61, of Apopka, is accused of operating a $22 million Ponzi scheme with ties to Panama, Mexico, Malaysia, Switzerland and the Netherlands.
HomePals Investment Club LLC, HomePals LLC (Home Pals), Ronnie Eugene Bass Jr., Abner Alabre and Brian J. Taglieri were charged in South Florida with securities fraud, conspiracy to commit securities fraud, wire fraud and money laundering. The defendants were accused of targeting Haitian-Americans in a $14.3 million Ponzi scheme that promised investment returns of 100 percent every 90 days. The scheme gathered money from as many as 64 “investment clubs,†the SEC said.
Sean Healy, 38, of Weston, Fla., was charged in a 55-count indictment unsealed in Pennsylvania with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice. The Florida-based scheme led to at least $14.6 million in losses in Pennsylvania alone, prosecutors said, adding that Healy purchased “numerous exotic vehicles and sport cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth over $2.3 million.†Healy also bought a $2.4 million waterfront mansion furnished with more than $2 million of home improvements, plus $1.5 million in men’s and women’s jewelry, prosecutors said.
Michael Riolo, 38, of Boca Raton, was sentenced to more than 24 years in prison for bilking investors in a $44 million Ponzi scheme. Prosecutors accused Riolo of cooking the books and sending false statements to investors that reported “consistent trading profits and increasing account balances.” In reality, Riolo “misdirected money he received from some investors to make distributions to other investors who sought to withdraw money from their investment accounts,” prosecutors said.
Andy Bowdoin, 74, of Quincy, Fla., continued his efforts to get back into a Ponzi case in which he had already submitted to the forfeiture of tens of millions of dollars seized last year by the U.S. Secret Service in an international wire-fraud and money-laundering probe. Bowdoin, who submitted to the forfeiture in January, fired his attorneys and began to file as his own attorney in February. In April, federal prosecutors announced that Bowdoin had signed a proffer letter in the case prior to acting as his own attorney and acknowledged his company, AdSurfDaily Inc., had been operating illegally. “Mr. Bowdoin also confirmed that the revenue figures of the enterprise were managed to make it appear to prospective members that the enterprise called Ad Surf Daily was a consistently profitable, and brilliant, passive income opportunity,” prosecutors said. Despite his own acknowledgments of illegal conduct, despite the proffer — and despite the fact Bowdoin had asked the court to grant his request to submit to the forfeiture and that the court granted Bowdoin’s request — Bowdoin climbed back on the litigation saddle. “Mr. Bowdoin says that after discussing this case with his supporters, and concluding that they were smarter than his attorneys, he has changed his mind,” prosecutors said.
Total funds gathered in the alleged Bowdoin, Merrick, Bass, Alabre, Taglieri and Healy Ponzi schemes in Florida are estimated at $156.3 million, during a period in which U.S. banks are failing, the U.S. economy is confronting the worst business conditions since the Great Depression and mortgage foreclosures are piling up across the country, including hard-hit Florida.
With the Riolo conviction added to the estimate, the number totals $200.3 million. The estimate does not reflect the massive, $65 billion Ponzi fraud of Bernad Madoff, who wiped out clients in Florida and elsewhere. Nor does it take into account allegations that Arthur Nadel, another man implicated in a large-scale fraud in Florida, may be responsible for tens — if not hundreds — of millions of dollars of Ponzi pain.
“During these tough economic times, it is more important than ever that those who lie to and steal from the investing public be held accountable for their misconduct,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida, commenting on the 24-year prison sentence Riolo received.
“The United States Attorney’s Office will continue to investigate and prosecute those who perpetrate these large-scale fraud schemes,†Sloman said.
