2ND UPDATE 4:16 P.M. EDT U.S.A. Former Herbalife President’s Team member Anthony Powell is referenced in a report by the court-appointed receiver in the Vemma pyramid-scheme case filed by the FTC last month.
The mention is potentially embarrassing to the MLM trade, which has a reputation for recruiters dragging financially strapped prospects from scheme to scheme.
Powell, an MLM recruiter, joined Vemma after leaving Herbalife in 2013 and has been a subject of scorn by activist-investor and Herbalife short-seller Bill Ackman. Herbalife is under investigation by the FTC. Ackman has claimed since 2012 that Herbalife is a pyramid scheme.
With the FTC calling Vemma a pyramid scheme, Vemma receiver Robb Evans says a firm operated by Powell was the subject of at least 16 complaints to Vemma and that Vemma appears disingenuously to have tried to distance itself from Powell.
At least one such complaint about Global Pro Systems or GPS — the Powell firm — was submitted to the Arizona Attorney General, according to the report by Evans.
Trying to play dumb about Powell could constitute a material misrepresentation by Vemma, the receiver opines.
From the receiver’s report dated Sept. 4 (carriage returns added/formatting may not be precise):
The Temporary Receiver has made reference to GPS several times in this report. The Temporary Receiver located a document at the premises that stated GPS is operated by Anthony Powell. In a letter to the Arizona Attorney General dated August 29, 2013 wherein the Field Compliance Manager attempted to distance themselves from GPS by stating that, “Global Pro Systems is not owned or operated by Vemma Nutrition Company or BK Boreyko.”
Similar statements were made by the company in all of the responses sent to the Arizona Attorney General and the Arizona BBB regarding complaints that also involved GPS. While these statements on their face are true and may not be a misrepresentation, they are not completely forthcoming. In an email communication from the field compliance
manager to the BBB, the company stated, “Unfortunately, since Global Pro Systems (GPS) is not owned or operated by Vemma Nutrition Company or BK Boreyko, we do not have any control over their marketing tactics (emphasis added).”
The Temporary Receiver has determined that Anthony Powell is in fact a Star Ambassador with Vemma. Assuming Mr. Powell had to sign an Affiliate Agreement like every other Affiliate, he and his business practices would be subject to the same terms and conditions as any other Affiliate. The company made a material misrepresentation when they claimed that they had no control over GPS’ marketing tactics.
The Temporary Receiver also viewed a video posted by the company showing the defendant, Boreyko personally welcoming Anthony Powell to Vemma. Anthony Powell claims that he made millions with Herbalife and decided to bring his team to Vemma. The video indicated that Mr. Powell was a Star Ambassador. The Temporary Receiver is not aware of any disciplinary action taken against Mr. Powell or any of the other Affiliates associated with GPS. This would indicate that the most successful Affiliates are not subject to the same level of scrutiny as the less successful Affiliates.
California-based WCM777, an MLM “program,” got booted out of Massachusetts in November 2013, amid allegations of securities fraud and affinity fraud targeted at the Brazilian community through hotel pitchfests. WCM777, purportedly operated by Ming Xu and recruiting affiliates to conduct business over the Internet, later got booted out of California. In addition to the Brazilian community, WCM777 targeted people who speak Spanish and people who speak Chinese, perhaps Christians in particular.
Massachusetts launched a probe into TelexFree, another MLM “program” associated with hotel pitchfests and affiliate recruitment over the Internet, at least by Feb. 28 of this year — probably sooner, given the nature of WCM777. TelexFree largely is targeting speakers of Portuguese and Spanish, perhaps Christians in particular. It also has an affiliate presence in India and Africa (at least).
Although the schemes do not appear to have common ownership, both WCM777 and TelexFree offered plans that encouraged recruits to buy in at higher levels to get higher “earnings.” Affiliates of each scheme appear to have engineered subschemes in which their recruits could buy in at higher levels than the “programs” themselves advertised, potentially introducing a second layer of fraud.
What this means, in essence, is that neither TelexFree nor WCM777 may know their real bottom lines and that the firms created an environment that encouraged back-alley, illegal sales of securities and secret deal-making among individual promoters. Individuals ostensibly acting as brokers for TelexFree and WCM777 could be cherry-picking cash and not even sending it to the “program” operators. In short, certain people could be creating personal and organizational underground economies and fleecing TelexFree and WCM777 even as they fleece their own marks and recruits.
Hidden members of both “programs” may be getting paid in cash by their upline sponsors or ostensible brokers, with no record of their participation — even if they supplied cash or an equivalent to join the “programs.”
The only safe assumption in HYIP Ponzi Land is that any system that can be abused will be abused. That’s why these “programs” necessarily must be viewed through the lens of national security.
Presented below are some screen shots that demonstrate promotional ties between TelexFree and WCM777. In certain instances, the websites pictured below are promoting not only TelexFree and WCM777, but also other “programs.” One of them, for instance, is promoting the almost indescribably insidious and bizarre Banners Broker “program.”
As always is the case in HYIP investigations, the concern is that banks locally, regionally, nationally and internationally are being used by corporate scammers first as warehouses to store illicit proceeds — and later, by individual promoters at potentially thousands and thousands of locations, as virtual ATMs that provide the service of offloading the “earnings” of the promoters.
The interconnectivity of these schemes endangers local, regional, state, provincial and national economies. In many cases, promoters engage in willful blindness and simply move to another MLM HYIP scam when the current “hot” one encounters regulatory intervention or craters on its own.
It’s often the case that promoters plant the seed that a scheme has been endorsed by a government or that a corporate registration is surefire “proof” that no scam exists. Social media invariably is used to help a scheme proliferate or achieve Internet virality.
One of the shots below is from a YouTube video in which a TelexFree promoter seeks to plant the seed that TelexFree is backed by the Better Business Bureau. The narrator’s words in the video suggest he sought to plant the same seed about WCM777 but had to backtrack when he discovered a BBB listing that referred to WCM777 as a Ponzi scheme.
“Today we’re going to compare two of the most dynamic companies out there taking over right now,” the narrator said.
After recording a search of the BBB site for a TelexFree listing and finding one, the narrator suggested that the listing alone was proof that TelexFree was not a scam. He thereafter performed a search for WCM777 and found a Ponzi reference, thus triggering what appeared to be backtracking from his earlier claims that TelexFree and WCM777 were “dynamic companies.”
It also could be the case, we suppose, that he already knew about the WCM777 Ponzi listing before performing the search and that the design all along was to get people to go with TelexFree because WCM777 was a scam. Even under that interpretation, however, the video still demonstrates the underhandedness within the HYIP sphere.
The HYIP sphere always screams incongruity. Keeping that in mind, we’ll point out that one of the screen shots below shows TelexFree executive James Merrill in the same affiliate-manufactured frame as Massachusetts Commonwealth Secretary William Galvin. It was a clear bid to suggest that because TelexFree was registered as a corporation in Massachusetts, the “program” couldn’t possibly be a scam.
That is hogwash, of course. Galvin did not endorse TelexFree when his office approved a corporate registration. Besides, Galvin — as Commonwealth Secretary — oversees both the Massachusetts Corporations Division and the Securities Division. The Securities Division is probing TelexFree and possibly can rely on various documents in the Corporations Division to help investigators connect dots.
Beyond that, the website from which the screen shot promoting TelexFree by marrying images of Merrill and Galvin was taken also is promoting WCM777. Also shown below is an image from the same site in which Merrill is shown posing beside a giant SUV. Contrast that image against the image of Merrill posing in front of a large Massachusetts building as though TelexFree were its only occupant. TelexFree promoters have used the same approach, planting that seed that TelexFree owns the building and has a large physical presence in the United States.
That’s hogwash, too. TelexFree was an occupant of Suite 200 at a Regus center in Marlborough, along with dozens of other companies.
Finally, before observing the shots below, recognize that MLM itself — never a stranger to scandal — may be on the verge of experiencing a PR and legal crisis of unprecedented proportions.
People have harshly criticized hedge-fund manager Bill Ackman for attacking Herbalife. Among his contentions is that Herbalife is a pyramid scheme that targets vulnerable populations. Say what you will about Ackman’s Herbalife claims, but it is crystal clear that affinity fraud and the viral looting of impoverished/disadvantaged people have existed in the MLM realm for a long time and continues to be seen. One might even be inclined to say a market-making fraud blueprint exists within MLM: mow down one affinity cluster or population group and then move to another.
At a minimum, “programs” such as TelexFree and WCM777, which clearly have positioned themselves as wealth recipes for immigrants and vulnerable populations, can help Ackman shape and inform his Herbalife hypothesis.
James Merrill is TelexFree’s president and thus an MLM executive. TelexFree and Merrill, to date, have played into virtually every MLM stereotype that exists — everything from private jets, monster SUVs and stretch limos to business registrations and mail drops in Nevada.
Most disturbingly, though, Merrill represents an American MLM company that has been banned in Rwanda, an African nation that is trying to reverse poverty and receives aid from the World Bank. It’s hard to conceive that MLM — particularly American MLM — could card a worse PR disaster. Regardless, one could be in the offing.
Picture Story
1.
A TelexFree promoter who also promoted WCM777 extends the myth that TelexFree has a large physical presence in the United States and plants the seed that Massachusetts Commonwealth Secretary William Galvin endorsed TelexFree. Galvin’s office is investigating TelexFree after previously booting WCM777 from the state.
2.
A promoter simultaneously pitches TelexFree and WCM777. This shot is from the same site described in the photo above. The site may be based in Ecuador.
3.
This shot is from the same two sites described in the captions above — and features TelexFree President James Merrill posing with a giant SUV.
4.
This shot was taken on the same site described in the three preceding captions above. In this fourth shot, a person promoting both TelexFree and WCM777 claims that the purported parent company of WCM777 provided a loan of $20 million to a restaurant chain that sells Mexican food. The PP Blog has deleted an image of the chain’s logo that appears in the WCM777 promo. The same site plants the seed that WCM has provided hundreds of millions of dollars in loans to jewels of American business.
5.
This site features promos for various purported “opportunities,” including TelexFree and WCM777. Though not shown in the photo, the site also is promoting the uber-bizarre Banners Broker “program.” The site may be based in Italy.
6.
This site also is simultaneously promoting TelexFree and WCM777.
7.
This YouTube site describes TelexFree and WCM777 as “dynamic companies” and plants the seed that TelexFree is endorsed by the Better Business Bureau.
The unofficial total of jurisdictions or regulatory agencies filing actions or issuing Investor Alerts against WCM777 stands at seven: The country of Peru, the state of Massachusetts, the state of California, the state of Colorado, the state of Louisiana, the state of New Hampshire, the province of New Brunswick.
In addition, the Canadian Securities Administrators — an umbrella organization of 13 provinces/territories of Canada that is responsible for developing a harmonized approach to securities regulation across the country — has published the New Brunswick warning. The Better Business Bureau, meanwhile, has given WCM777 an “F,” its lowest score.
Despite the regulatory actions, WCM pitchfests are continuing online.
NOTE: Our thanks to a reader who let us know about the Telemundo report.
YouGetPaidFast, a Texas-based “program” that plants the seed it has the blessing of the FBI, is benefiting from a pitchman who is handing out flyers at an “unemployment office,” according to a post from an apparent naysayer at the MoneyMakerGroup Ponzi forum.
The poster says his friend is the one handing out the flyers — and won’t listen to reason because he is desperate for money.
If the claim is true, it would follow an incendiary circumstance that surfaced in the Women’s Gifting Tables pyramid scheme in Connecticut that resulted in lengthy prison sentences for two pitchwomen.
Such schemes typically target vulnerable populations. Similar schemes such as HYIP frauds have been known to target people facing mortgage foreclosures and recent job losses.
YouGetPaidFast is operated by Paul Darby, a Texan who claims he is friendly with FBI agents and has them on “speed dial.”
At least one FBI agent has vetted his “program,” Darby has claimed.
Unlike the Women’s Gifting Table scheme, which asked for $5,000 at a time, YouGetPaidFast appears to be seeking the much-smaller sum of $28. Participants reportedly are instructed to mail $7 to each of four names of individuals or entities that appear on a list and advised they are purchasing products.
Gifting and other fraud schemes that assert they sell inexpensive “products” appear somewhat regularly on the Internet. Such an approach is consistent with micro-fraud, a scam by which hucksters gather small sums from participants, rather than seeking large sums. The hope is that the small sums will add up to a large sum over time and investigators will perceive a micro “program” as less toxic than a jugular-vein fraud and won’t bother to look into it.
The JSSTripler/JustBeenPaid HYIP “program” purportedly operated by AdSurfDaily Ponzi pitchman and cash-gifter Frederick Mann was an example of micro fraud. Participants were told that JSS/JBP would give them $10 to get started in the “program.” After payout and other problems developed at JSS/JBP, the “program” started seeking “purchases” of tens of thousands of dollars at a time.
Claims that a “program” sells “products” and that participants make “purchases” long have been associated with bids to mask the true nature of the “program” — a gifting scam or HYIP fraud disguised as a merchant doing legitimate business, for example. Meanwhile, claims that the government or an important politician or business person have vetted or endorsed a “program” are common in the fraud sphere.
An earlier Darby “program” featured a knockoff of the Seal of the President of the United States and suggested that something called Net Millionaires Club was an “economic stimulus package.”
The marketing efforts of Net Millionaires Club were reminiscent of those of the AdSurfDaily Ponzi scheme exposed by the U.S. Secret Service in 2008. (ASD traded on the name of former U.S. President George W. Bush; Darby has traded on the name of President Obama.) In 2010, a Phil Piccolo-linked scam known as Data Network Affiliates planted the seed that it had been endorsed by Oprah Winfrey and Donald Trump.
Meaningless, Bizarre, Piccolo-Like Claims
YouGetPaidFast now screams it is “SETTING RECORDS WORLD WIDE,” pointing to an Alexa traffic ranking and “Video Views by You Tube 30 Days” as purported proof of legitimacy. Despite the claim it is setting records, however, YouGetPaidFast does not appear to specify precisely what records it is setting. Nor does it appear to say precisely what authority had certified the marks as “records.”
Such incongruities litter the cash-gifting and HYIP landscapes, which are lined with the carcasses of collapsed “programs.” Sometimes the “programs” come back with a new name or a name designed to instill new confidence such as XXX Scheme 2.0 XXX Scheme Web 3.0.
The Financial Industry Regulatory Authority (FINRA) warned in 2010 that fraud schemes were spreading online through social-media sites such as YouTube. A year earlier — in 2009 — the Better Business Bureau reported there were 22,974 cash-gifting videos on YouTube.
Those videos, the BBB said at the time, had garnered an “astounding 59,192,963 views.” (Also see June 2009 report on cash-gifting by KIII-TV. The report includes an interview with an official from the Better Business Bureau of Central Texas.)
Cash-gifting purveyors are “targeting people with some form of an affinity — such as as women’s clubs, community groups, church congregations, social clubs and special interest groups,” the BBB warned four years ago.
On Oct. 8, BehindMLM.com, citing a Darby claim, reported that one or more Christian pastors was encouraging Darby to sue his detractors.
Pointing to Alexa rankings and YouTube videos to sanitize frauds is one of the oldest tricks in the scammer’s playbook in the Information Age. Veteran online huckster Phil Piccolo, known for bizarre schemes such as Data Network Affiliates, OWOW and Text Cash Network, has been doing it for years.
Piccolo also has planted the seed he’ll sue his critics. In 2010, he planted the seed on Troy Dooly’s radio program that he could bring in leg-breakers if lawsuits didn’t work. Piccolo earlier had threatened to sue Dooly.
This affiliate page for the purported Banners Broker “advertising” program claims members can double their money.
UPDATED 8:54 P.M. ET (U.S.A.) Rumors abound online that authorities in India have carried out some sort of action against the Banners Broker “advertising” program. As of the time of this post, the PP Blog has been unable to confirm the rumored action with a law-enforcement source.
“Advertising” scams long have been associated with the HYIP sphere. The $119 million AdSurfDaily Ponzi scheme, for instance, was such a “program.” Such scams are associated with the unlawful sale of unregistered securities and claims by law enforcement of members’ money being siphoned by operators. “Winners” in such schemes can be sued for their ill-gotten gains. There also have been instances in which key pitchmen have been sued by regulatory agencies and even charged with crimes.
Several things the PP Blog has noticed:
A “welcome page” Banners Broker URL exists for the United States but is throwing this error message: “Unable to locate template file welcome_us.tpl.”
The nonworking US URL is http://www.bannersbroker.com/main/welcome_us. It is listed on an apparent Banners Broker affiliate’s website with a headline of “BANNERS BROKER INDIA.” The site also lists a U.S. address for the company in Ocala, Fla. Other addresses and welcome URLs for other countries appear on the same page. Welcome URLs for India, Canada, Ireland and the United Kingdom appear to be working. Only the URL for the United States appears not to work.
Whether Banners Broker removed the U.S. “welcome” URL in a bid to distance itself from U.S. regulatory scrutiny is unclear.
Regardless, the Banners Brokers site is viewable in the United States from the URLs for other countries and by connecting directly to the Banners Broker dotcom address. Although Banners Broker lists the flags of several countries on its homepage, the American flag is not listed. (Or at least wasn’t viewable by the PP Blog from the United States.)
At least one Banner’s Broker affiliate site is calling itself “Banners Broker Brief” and using the BBB acronym long associated with the Better Business Bureau. (A 2010 Phil Piccolo scam known as Data Network Affiliates arranged for one of its products to be called BBB. Such approaches sometimes are used to leech off of the Better Business Bureau’s famous acronym and to distort search-engine results and make “negative” information harder to find. It also is common in certain MLM schemes for affiliates to use the word “scam” when presenting the “opportunity” — and they then explain why it’s purportedly not a scam. This approach also may make it difficult to find “negative” information about a “program” because information can become buried in page after page of claims that the “program” is not a scam.)
Any number of affiliate YouTube videos exist for Banners Broker. Some are of the check-waving variety. Instead of featuring checks, however, they appear to feature screen shots of payments that purportedly originated at SolidTrustPay. SolidTrustPay has a reputation for doing business with scam after scam. Zeek Rewards, which the SEC described in August as a $600 million Ponzi- and pyramid scheme, used SolidTrustPay.
Banners Broker appears to have been popular among Zeek promoters. One video exists in which a Banners Broker affiliate tells the audience about the SEC’s Zeek case, but the affiliate claims he believes Banners Broker is not a fraud scheme. Even so, he allows that it could be.
Banners Broker has a major presence on the Ponzi boards — again like Zeek. Some promoters race from scam to scam to scam.
There are claims about Banners Broker “doubling” money.
Check-waving is used as a form of “proof” that an “opportunity” that “pays” is not a scam.
“Giddy up,” intoned Trudy Gilmond of Vermont. “Get involved. [It’ll] be the best decision you ever made.”
Gilmond, according to the video she narrated while waving two checks from Regenesis 2X2 totaling $1,200, sent by Priority Mail and drawn on Bank of America, was “fired up.”
She’d been in Regenesis 2X2 only since May 1, and already had received a nice payout, Gilmond explained.
“Knew this company would work,” she said, before alluding to a Biblical tale of an apostle who insisted on proof of the resurrection of Jesus.
“A lot of people are nonbelievers, doubting Thomases, didn’t believe it,” Gilmond said. She then presented checks as a form of proof that Regenesis 2X2 paid.
About two months later — in July 2009 — the U.S. Secret Service applied for search warrants in federal court in Washington state, the purported home of Regenesis 2X2. From a PP Blog story on Aug. 3, 2009 (italics added):
Agents, according to court filings, observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance. Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising.
In one case in which agents were observing one of the adult principals in the case, they observed a youth described as a teenager exiting a vehicle and “struggling with a large arm full of opened business and UPS Priority Mail envelopes,” the Secret Service said in court filings.
The juvenile entered a building and “then immediately came back outside and discarded the materials into an alley [D]umpster,” agents said.
Agents identified the adult under surveillance as a person “arrested by the Internal Revenue Service out of Las Vegas, Nevada[,] for felony violations related to Illegal Money Laundering from Securities Fraud and Wire Fraud” in a previous case.
How the Regenesis 2X2 probe proceeded is unclear.
What is clear is that Zeek eventually came to the fore. In court filings, Sorkin has noted that Gilmond has potential clawback exposure of more than $1.364 million from the court-appointed receiver in the Zeek Rewards Ponzi scheme case.
Gilmond once was listed on a Zeek website as both an “Employee” and “Official Rep.” So, too, was Zeek pitchman OH Brown of USHBB Inc., which produced ads for both Zeek and the collapsed Narc That Car pyramid scheme. For a while, at least, Zeek and Narc That Car appear to have used the same North Carolina-based bank: NewBridge.
Checks displaying the name of NewBridge showed up in independent affiliate promotions on YouTube in 2010. After one Narc affiliate quit the program, he moved to another one. The check-waving for the new “program” began at the one-second mark. Literally.
BehindMLM reported yesterday that Brown may have a tie to a burgeoning “opportunity” known as Offer Hubb. AdSurfDaily and Zeek promoters Todd Disner and Jerry Napier also appear to be in the communication chain of Offer Hubb. The U.S. Secret Service has described ASD as a “criminal enterprise.” The U.S. Department of Justice has described ASD as “insidious.”
A source told the PP Blog last week that Zeek figure Robert Craddock now was pitching Offer Hubb. Craddock is a purported Zeek “consultant” raising money to contest elements of the SEC’s Ponzi-scheme complaint and the court-appointed receivership. In July, Craddock sought to have the website of Zeek critic K. Chang removed from the Internet. Craddock was successful briefly, but the “K. Chang” Hub at HubPages returned.
For years, questions have been raised about whether fraud schemes within the MLM sphere were recycling money between and among schemes and putting banks and other financial-service companies in possession of tainted funds. Purported “Wiring Instructions” of Offer Hubb imply that the Wyoming-based entity is soliciting sums of up to $10,099 from prospects and is using City National Bank.
From a section of the BehindMLM report that describes an address used by Offer Hubb (italics added):
As mentioned in the introduction of this review, “1712 Pioneer Avenue” is the headquarters of “Corporations Today”. The address is apparently so well-known in tax haven circles that Reuters used the 1712 Pioneer Avenue building itself for a 2011 article on corporate secrecy in the United States.
The SEC’s complaint against “Her Majesty’s Credit Union” lists the URL for the purported CD business. This screen shot by the PP Blog was taken at the URL.
A scammer known by three names who’d earlier presided over an “insolvent” credit union in Georgia before being forced out of business in eight months went on to start a bogus credit union in the U.S. Virgin Islands, the SEC said.
The Virgins Islands enterprise was known as “Her Majesty’s Credit Union” (HMCU) and sold bogus CDs, duping investors by trading on the names of Lloyd’s of London and government entities to sanitize the fraud, the SEC said.
Charged in the alleged $532,000 caper was Stanley B. McDuffie of Denver. McDuffie formerly was known as Stanley Roberson and Stanley Battle, the SEC said.
“McDuffie and HMCU held out HMCU as a secure, legitimate, regulated credit union, promised to pay above-market interest rates, and assured investors that their deposits were insured by Lloyd’s of London or the U.S. Virgin Islands’ government,” the SEC said. “In reality, HMCU was an unregulated, illegitimate credit union that never held share insurance covering investor deposits, and McDuffie and HMCU misappropriated investors’ funds.”
The Better Business Bureau record for HMCU notes a 2010 action by the Colorado Division of Securities against “Stanley B. Roberson.”
Roberson “was sentenced to one year in jail after being found in contempt of a court order,” the BBB reported, citing Colorado authorities. “Mr. Roberson is the chief executive officer of Her Majesty’s Credit Union, a U.S. Virgin Island company with a servicing office in Denver.”
Mr. Roberson failed to produce documents pursuant to a lawful subpoena issued to him as part of our investigation of Her Majesty’s Credit Union. The Division of Securities then filed contempt proceedings in Denver District Court to compel production. Since its accounts are not federally insured, we are attempting to determine if Her Majesty’s Credit Union is offering only uninsured deposits or is engaging in the offer and sale of unregistered securities.
The SEC today charged McDuffie with selling unregistered securities, saying in its complaint that McDuffie “misappropriated the funds for personal and business expenses, causing investors to lose most of their principal, and rendering it impossible for HMCU to make required interest payments.”
McDuffie also allegedly clammed up to the SEC, the agency said. From the SEC complaint (italics added):
After a subpoena enforcement action resulted in McDuffie being ordered by the Court to comply with the SEC’s subpoenas, McDuffie refused to testify in the SEC’s investigation, citing his Fifth Amendment privilege against self-incrimination in response to all substantive questions.
Named a defendant in the SEC’s action against McDuffie was Jilapuhn Inc., the apparent operator through McDuffie of “Her Majesty’s Credit Union.”
The defunct Georgia credit union was known as the “Jilapuhn Employees Federal Credit Union,” the SEC said.
“In August 2005, after JEFCU had operated for only eight months, the [National Credit Union Administration] determined that JEFCU was insolvent, and therefore it issued a Notice of Involuntary Liquidation and Revocation of Charter,” the SEC said.
Where/When: Stamford, Conn. (today from 9 a.m. to 1 p.m. EDT at the University of Connecticut – Stamford Campus); Nashville, Tenn. (Oct. 4 from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South) ; San Francisco (Oct. 9, in Walnut Creek, Calif., from 9 a.m. to 1 p.m. PDT at the Rossmoor Retirement Community – Gateway Complex located at 1001 Rain Road); Denver (Oct. 10 from 8 a.m. to 12 p.m. MDT at the Tivoli Building – Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150); Cleveland (Oct. 11 in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway); and Miami (Oct. 12 from 9 a.m. to 1 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210).
Why: Investment fraud losses have been “staggering,” the Justice Department says.
Since the beginning of 2011, “the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion.”
Summit Sponsors: Department of Justice, U.S. Attorneys’ offices, the FBI, the SEC, the FTC, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the CFTC, the Bankruptcy Trustees, FINRA, AARP and the Better Business Bureau.
UPDATED 10:58 A.M. EDT (U.S.A.) Two new details have emerged in the mysterious shutdown yesterday of the office and websites of Zeekler/Zeek Rewards: The office of North Carolina Attorney General Roy Cooper told the PP Blog this morning that it has taken no action to shut down Zeek, the operator of an MLM and a penny-auction site.
“We have not taken action to shut the company down and are currently working to get more information so we can pass that along to consumers who may be impacted by this,” said Noelle Talley, a spokeswoman for Cooper.
But Cooper’s office did say that it had issued a Civil Investigative Demand (CID) to Zeek on July 6. That’s weeks earlier than initially believed and leads to questions about whether Zeek had known for five weeks that it had been under investigation and did not inform participants.
Without providing details, Zeek announced on its Blog yesterday that it had canceled its Aug. 22 “Red Carpet” event. By early evening, the Zeek Rewards and Zeekler sites began to publish this message: “Zeek Rewards is currently unavailable. More information will be available shortly on this website.”
Earlier in the week, Zeek announced that “there won’t be any training, recruitment or leadership calls for the next few days while planning is going on.”
With Zeek leaving affiliates in an information vacuum, many of them took to the Web. At least two petition drives appear to be under way demanding the government to reopen Zeek. As of the time of this post, the PP Blog has been unable to confirm that an action by any government agency — state or federal — was responsible for Zeek’s sudden absence.
The Blog still is in the process of trying to piece together events in what has emerged as a bizarre and fluid situation. Sensing Zeek affiliates were vulnerable, some MLM opportunists raced to various sites such as The Dispatch newspaper in North Carolina and YouTube with offers to join their “programs.”
Zeek fans on the MoneyMakerGroup Ponzi forum almost immediately blamed critics for Zeek’s problems, with one poster declaring he’d already mined his profits from Zeek and was confident they could not be attached by prosecutors in the United States.
The Better Business Bureau said this morning that it was aware of reports that the doors at Zeek’s office in Lexington, N.C., were closed. The BBB added that it would publish more information as it became available.
Zeek is a purported arm of Rex Venture Group LLC, led by Paul R. Burks.
Screen shot of page from November 2011 lawsuit that named ZeekRewards.com a defendant. (Red highlight by PP Blog.)
ZeekRewards.com was accused of cyberpiracy, unfair competition and benefiting from copyright infringement in a trademark-dilution and defamation lawsuit filed in U.S. District Court for the Northern District of California on Nov. 7, 2011. The action demands an accounting, disgorgement of alleged ill-gotten gains and treble damages.
The PP Blog was unable to reach Zeek immediately by phone this morning for comment on the lawsuit, which may involve the actions of a Zeek affiliate. The Blog followed up with an email and is awaiting a response.
The docket of the case shows a summons was issued to ZeekRewards.com and several co-defendants on Nov. 7, the same date the lawsuit was filed.
A process server served the complaint on ZeekRewards.com at 136-20 38th Street, Suite 9H3, Flushing, N.Y., 11354, on Nov. 21, 2011, at 7:28 p.m., according to court filings.
An individual who accepted process for ZeekRewards.com at the Flushing address stated “they are authorized” to do so, according to court filings.
But Zeek says it is an arm of Rex Venture Group LLC, an entity registered in both Nevada and North Carolina. In North Carolina records, Paul Ray Burks is listed at the registered agent of Rex Venture at an address in Lexington, N.C. In Nevada records, meanwhile, Nevada Corporate Planners Inc. of Las Vegas is listed as the registered agent of Rex Venture.
The docket of the case strongly suggests that neither ZeekRewards.com nor any of the other defendants has entered a defense to the claims and that an attorney for the plaintiff has moved the court for a default judgment to be entered. No attorney appears to have filed an appearance notice for ZeekRewards.com or any of the other defendants. On Jan. 26, 2012, the clerk of courts recorded an “ENTRY OF DEFAULT” against all of the defendants.
Here are the named defendants: Lewis Liu, also known as Wei Liu; www.eadgear.ca; www.zeekrewards.com; Xinzheng Wire Mesh Co. Ltd.; Xinzheng Companies (America) Inc.; and “DOES 1-10, inclusive.”
The plaintiff is eAdGear Inc., which does business as www.eadgear.com.
eAdGear contends that Liu, a former eAdGear affiliate, copied eAdGear’s .com website to a top-level domain in Canada and used the site to promote ZeekRewards.com and to defame eAdGear.
“In early October 2011, [Liu] published written defamatory statements on ‘www.eadgear.ca,’” the plaintiff alleged. “As shown in Ex. 3, [Liu] stated that plaintiff was not an accredited business by [the Better Business Bureau] and that BBB would soon publish an extremely low rating on Plaintiff. [Liu] further asserted that Plaintiff’s holding company in Hong Kong had never existed. All [Liu’s] statements are false. [Liu] started to use ‘www.eadgear.ca’ to promote his own online advertising business ‘www.zeekrewards.com.’ He asked all his customers under his Plaintiff account (eAdGear ID #127264) to transfer business to ‘www.zeekrewards.com.’ He promised with a low monthly service fee and other incentives to customers who were willing to transfer to ‘www.zeekrewards.com.’”
The PP Blog also sought comment from Zeek today on why auctions for sums of U.S. cash appear to have been removed from Zeekler.com, the penny-auction arm of Zeek. Zeek Rewards is the MLM arm.
Zeek Rewards plants the seed that a return of between 1 percent and 2 percent a day is possible, although it claims it is not offering an investment program and has preemptively denied it is a pyramid scheme.
BULLETIN: A federal judge has frozen the assets of three Florida companies and their operator, after the Federal Trade Commission alleged a “precious metals” telemarketing scam aimed at senior citizens was under way and had collected nearly $9 million.
Named defendants in the case were Anthony J. Columbo, Premier Precious Metals Inc., Rushmore Consulting Group Inc. and PPM Credit Inc., all of Deerfield Beach.
Customers got trapped in a boondoggle in which they were lured into buying precious metals on credit while their capital was eaten away by undisclosed or misrepresented fees. In some cases, the only way out of the thicket was to pay more money “or lose their investment,” the FTC charged.
“High-pressure” pitchmen picked the pockets of customers, the FTC charged.
“The majority of consumers who purchase precious metals from Defendants lose money,” the FTC charged. “Consumers’ equity in their precious metals investments is drained by the fees and commissions that are assessed at the inception of their transactions and by the constant accumulation of service fees and interest charges on the leverage portion of their accounts.
“These fees, commissions, and interest charges negatively affect consumers’ ability to break even or profit on the precious metals investments,” the FTC continued. “When a consumer’s equity decreases sufficiently, an equity call is issued and the consumer must either invest additional money or allow the precious metals to be liquidated at a loss, making the investments risky. In some instances, consumers’ accounts are liquidated without notice to consumers.”
Assisting in the FTC probe were the Better Business Bureau of Southeast Florida and the Caribbean, the Commodity Futures Trading Commission (CFTC), the Florida Department of Agriculture and Consumer Affairs, the State of Florida Office of the Attorney General, the Florida Office of Financial Regulation and the Broward County Sheriff’s Office, the FTC said.
2ND UPDATE 4:16 P.M. EDT U.S.A. Former Herbalife President’s Team member Anthony Powell is referenced in a report by the court-appointed receiver in the Vemma pyramid-scheme case filed by the FTC last month.
