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Tag: Bernard Madoff

URGENT >> BULLETIN >> MOVING: Federal Judge Denies Alleged Zeek Winners’ Motion To Intervene In Case And Dissolve Receivership

URGENT >> BULLETIN >> MOVING: (3RD UPDATE 8:44 P.M. EDT U.S.A.) Senior U.S. District Judge Graham C. Mullen has denied a motion by alleged winners in Zeek Rewards to intervene in the SEC’s Ponzi-scheme case and to dissolve the receivership.

In December 2012, alleged Zeek “winners” Trudy Gilmond and Kellie King asked Mullen for permission to intervene in the case and to end the court-appointed receivership, arguing that Zeek did not sell securities as defined under federal law.

Mullen today denied the motion on both fronts.

Kenneth D. Bell is the receiver. He opposed the Gilmond/King motion. So did the SEC, which described Zeek in August 2012 as a $600 million Ponzi- and pyramid fraud selling unregistered securities through Rex Venture Group LLC in North Carolina.

Gilmond may have more than $1.364 million at risk in a clawback lawsuit. King potentially faces a claim from Bell for more than $205,180, according to court filings.

“Gilmond and King seek to improperly interfere with a settled SEC enforcement action against defendants Rex Venture Group and Paul Burks to deny the Receiver the ability, as directed by the Court, to marshal the estate’s assets for the benefit of all aggrieved ZeekRewards investors,” the SEC argued in January. “The Motion to Intervene is a transparent attempt to obtain prospective relief in an improper forum with respect to clawback litigation the Receiver has yet to initiate.”

For his part, Bell said Gilmond and King were engaging in “delaying tactics.”

Gilmond and King are represented by Ira Lee Sorkin, Bernard Madoff’s defense attorney.

“The issue Gilmond and King seek to litigate — whether the ZeekRewards program was an ‘investment contract’ or ‘security’ — has been resolved for the purposes of this settled SEC enforcement action,” the SEC argued in January. “As a result, Proposed Intervenors assert no ‘claim or defense that shares with the main action a common question of law or fact.’ Thus, there is no basis for intervention.

“Finally,” the SEC continued, “Proposed Intervenors provide no factual or legal support for their request to dissolve the receivership in this matter. Therefore, the Motion to Intervene should be denied in its entirety.”

Mullen did just that today.

Zeek operator Paul R. Burks consented to a judgment in the SEC case in August 2012.

NOTE: Thanks to the ASDUpdates Blog.

Jul 23, 2013
WTOL Introduces Middle America To The Profitable Sunrise HYIP Scheme; Graphic Shows 3-Tiered Affiliate Program On Top Of Absurd Payout

From the WTOL report.

During its 11 p.m. newscast yesterday, WTOL (CBS/Toledo) aired a report titled “Holy Rip-Off” about the alleged Profitable Sunrise HYIP scam. The report, which began with images of Ponzi schemer Bernard Madoff playing in the background, focused on alleged Profitable Sunrise pitchwoman Nanci Jo Frazer of Bryan, Ohio. Frazer and her NJF Global Group are referenced in Profitable Sunrise-related regulatory actions that brought the alleged scam to a halt, but have not been charged.

It’s easy to imagine that many people in WTOL’s audience will be surprised to learn that groups of individuals were pushing Profitable Sunrise and its absurd purported daily rates of return with a straight face. Among the Profitable Sunrise offerings was the bizarrely named “Long Haul” plan that promised interest of 2.7 percent a day that could be compounded. That Profitable Sunrise also traded on faith may bring a special blend of horror to the station’s Middle America viewers.

Still, it won’t be the maximum horror. Indeed, the SEC has alleged that Profitable Sunrise pitchmen may not even have known the identity of the person or persons running the “program” from a “mail drop” in England.

Indeed, a situation has evolved in which self-identified Christians apparently were targeting other Christians with promises of daily payouts that would make Madoff gag — and from all indications were doing so without even knowing for whom they were working as the offer spread virally over the Internet.

Whether purported Profitable Sunrise operator “Roman Novak” even exists still isn’t known.

Then, of course, there is the question about the final destination of purported tens of millions of dollars directed at the “program,” which was pitched in part from well-known forums referenced in U.S. court filings as places from which massive Ponzi and fraud schemes are promoted.

Within hours of an action brought by North Carolina against Profitable Sunrise weeks ago, a poster on the MoneyMakerGroup Ponzi forum said this:

“lol @ NC officials.” (See Comments thread in this PP Blog March 1 story.)

As the story has continued to unfold, an element or elements within NJF Global Group appears to be trying to blame critics for the demise of the “program,” as though the 2.7-percent-a-day “Long Haul” and four other absurd plans were entirely rational and didn’t warrant any scrutiny at all. This is occurring against the backdrop of major actions brought against other HYIP “programs” by the U.S. government in recent years, including Zeek Rewards last year. Zeek allegedly planted the seed it paid an average of 1.5 percent a day, about half of the purported return of the Profitable Sunrise “Long Haul” plan.

One of the issues posed by Profitable Sunrise is the issue of willful blindness among promoters. If Zeek was a scam at 1.5 percent a day, for instance, how could Profitable Sunrise not be one with “plans” that dwarfed the returns of Zeek?

It is known that Profitable Sunrise had promoters in common with Zeek. Some of the promotional ties among various HYIP programs date back at least to the AdSurfDaily 1-percent-a-day scheme in 2008. Like Profitable Sunrise, ASD also traded on religion.

As the screen shot (above) from the WTOL report shows, Profitable Sunrise offered a three-tiered, MLM-style referral “program” on top of the absurd interest rates. ASD President Andy Bowdoin is in federal prison for his 2008 scam, which offered a two-tiered referral program on top of an absurd 1-percent-a-day interest rate.

When the U.S. Secret Service exposed the ASD scam, Bowdoin compared the agency to “Satan” and the raid on ASD’s Florida headquarters to the 9/11 terrorist attacks. Earlier — prior to the August 2008 raid — he described himself as a Christian “money magnet” and encouraged prospects to send him tens of thousands of dollars at a time.

Watch WTOL introduce Profitable Sunrise and the early fallout to its audience . . .

ToledoNewsNow.com: News, Weather

Apr 26, 2013
LETTER TO READERS: Our Choice For The Most Important PP Blog Post Of 2012

Dear Readers,

The PP Blog’s choice for the “Most Important” story to appear on the Blog in 2012 is this one, dated July 28: “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

The story tells the bizarre tale of how purported Zeek “consultant” Robert Craddock, beginning on July 22, tried to gag K. Chang, a Zeek critic.

Our reasoning for selecting the Craddock tale appears below . . .

** __________________________________ **

UPDATED 1:30 P.M. ET (U.S.A.) This Blog is well aware that some MLMers would have you believe that nothing that appears here is important. The “case” against the Blog normally involves ad hominem attacks, along with bids to change the subject or cloud issues. Some of the campaigns against the PP Blog have been almost comical, falling along lines such as these: ASD can’t be a Ponzi scheme because it rained on Tuesday. Your [sic] an idiot and looser [sic] !!!!!

Other campaigns have been much more menacing.

One of the least-appreciated aspects of the Zeek Rewards story is that Zeek launched after Bernard Madoff made the word “Ponzi” a part of the national (and international) consciousness. Setting aside Zeek’s epic legal problems, Zeek and its “defenders” have a PR problem from which they’ll never recover. In short, it is fatal. The reason that it’s fatal is that it creates a dynamic that is virtually unique to the MLM HYIP sphere: While the rest of the world rails against Ponzi schemes and Ponzi schemers, the MLM HYIP sphere defends them.

But it gets stranger than that. Certain inhabitants of the HYIP sphere in effect are lobbying for the legalization of Ponzi schemes to make their lives more convenient. To this group, the answer to Ponzi schemes is even more Ponzi schemes. Their message is remarkably similar to the message of the gun lobby, which appears to be arguing that the answer to gun violence is even more guns — in strategic locations, of course, perhaps in educational institutions at the grade-school level through college. (And maybe at movie theaters and at the scene of rural house fires, in case first responders such as firefighters and EMTs encounter an ambush.)

You’ve heard by now that the rural town of Webster, N.Y., turned into Israel last week, we’re sure.

In fairness to the gun lobby, it must be pointed out that HYIP “defenders” who are lobbying for more Ponzi schemes even as the gun lobby lobbies for more guns have less legal standing than the gun lobby. Guns already are legal. Ponzi schemes are not.

But, getting back to Zeek’s PR problem . . .

Madoff was exposed in 2008 as a Ponzi schemer, a financial criminal of unprecedented hubris. Not only did Zeek debut after Madoff, it came after Scott Rothstein was exposed (in 2009) as a racketeer/Ponzi schemer — and after AdSurfDaily, a purported MLM “advertising” company, was exposed (in 2008 and 2009) as the largest online Ponzi scheme ever and was sued by its own members amid allegations of racketeering.

For some Zeek promoters, this well-known fact set makes them vulnerable to charges they are nothing less than members of an organized mob of habitual criminals who thrive by choosing to be willfully blind.

But, incredibly, it gets even stranger . . .

Zeek had members in common with AdSurfDaily and, like AdSurfDaily, told members that a purported “advertising” function was central to its business model. Meanwhile, Zeek became popular in North Carolina, after the infamous Black Diamond Ponzi caper was exposed in that very state. (Among other things, the Back Diamond fraud led to criminal charges being filed against a bank.)

Along those lines, Zeek (in May) began to show signs that it was experiencing banking problems after it had become popular in a region known to have served up another colossal mess, this one in nearby South Carolina. (The South Carolina mess was known as the “3 Hebrew Boys” scheme. It resulted in the longest Ponzi scheme sentences in the history of the South Carolina federal courts and, like AdSurfDaily and Zeek, served up a heaping helping of the bizarre, including claims by “sovereign citizens” that prosecutors had no authority over them.)

Moreover, the Zeek scheme for which some “defenders” continue to cheer featured recruitment commissions on two levels (like AdSurfDaily) and an “RPP” payout (like ASD’s 1-percent-a-day “rebates”). Finally, the Zeek scheme came to the fore after the U.S. Secret Service described ASD as a “criminal enterprise” and after the Attorney General of the United States made a special public appearance in Florida — fertile recruitment grounds for schemes such as Zeek and the stomping grounds of Madoff and Rothstein — to announce that the Justice Department was serious about putting people in jail for ravaging the U.S. economy with their Ponzi schemes.

“Palm Beach is, in many respects, ground zero for the $65 billion Ponzi scheme perpetrated by Bernard Madoff — the largest investor fraud case in our nation’s history,” Eric Holder said on Jan. 8, 2010, in southern Florida. “Before the house of cards Madoff built collapsed in 2008, before he was sentenced to 150 years in prison last June, before he became a notorious criminal on the cover of newspapers around the world, he was one of your neighbors.

“His former home sits just north of us,” Holder continued. “An 8,700-square-foot mansion that’s worth . . . well, we’ll know what its worth once the U.S. Marshals Service auctions it off and the proceeds are distributed to Madoff’s victims.”

Holder’s words are best viewed as a warning against willful blindness: Neither victim nor perpetrator be. There is unqualified pain and misery for both.

Despite Holder’s appearance in Florida — despite his reference to Madoff’s “house of cards” — AdSurfDaily promoters Todd Disner and Dwight Owen Schweitzer later sued the United States, claiming that its Ponzi case against ASD was a “house of cards.” Naturally they made this claim even as they were promoting Zeek.

And from what region were they promoting Zeek? Why, Southern Florida, of course, the same region Holder visited in 2010 to throw down the gauntlet against Ponzi schemers and their enablers.

Amid the historical circumstances cited above, Zeek Rewards began to encounter some heat from the media and from its own members. Some of the members did not understand why things at Zeek appeared to be so circuitous and why they were being asked to use payment processors such as AlertPay and SolidTrustPay that had been associated with fraud scheme after fraud scheme operating online, including ASD.

What to do if you’re Zeek?

Well, according to Florida resident Robert Craddock, a self-described Zeek consultant, you hire, well, Robert Craddock — and you use Robert Craddock to go after Zeek critics such as K. Chang.

The Most Important Story Of 2012

In the PP Blog’s view, the most important story to appear on the Blog in 2012 is this one, titled, “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

The story details efforts in July by Craddock to have K. Chang’s Zeek “Hub” at HubPages removed from the Internet just weeks before the SEC accused Zeek of being a $600 million Ponzi- and pyramid fraud. By early estimates, the alleged Zeek fraud was about five times larger than ASD in pure dollar volume ($600 million compared to $120 million) and perhaps 20 times larger in terms of the membership base (2 million compared to 100,000).

Incredibly, Craddock went after K. Chang after Deputy Attorney James Cole, speaking in Mexico, said that international fraud schemes have been known to “bring frivolous libel cases against individuals who expose their criminal activities.” And Cole also pointed out that fraudsters have a means of “exploit[ing] legitimate actors” and may rely on shell companies and offshore bank accounts to launder criminal proceeds.

If ever a company exploited legitimate actors, it was Zeek. Kenneth D. Bell, the court-appointed receiver, says there were approximately 840,000 Zeek losers who funded the ill-gotten gains of 77,000 winners. And Bell also says he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

There can be no doubt that some of those winners are longtime residents of the woeful valley of willful blindness. Not only do they “play” HYIP Ponzis for profit, they now publicly announce their intent to keep their winnings. Zeek has exposed the epicenter of willful blindness, the criminal underworld of the Internet. It is easy enough to view Craddock’s efforts as a means of institutionalizing willful blindness, first by seeking to chill speech and, second, by scrubbing the web of information that encourages readers to be discriminating so they won’t be duped by a Ponzi fraudster.

Bizarrely, it appears as though someone inside of Zeek believed it prudent to hire Craddock to go after K. Chang. If that weren’t enough, only days later Zeek used its Blog to plant the seed that unnamed “North Carolina Credit Unions” were committing slander against Zeek.

After the SEC brought the Zeek Ponzi complaint in August, Craddock quickly went in to fundraising mode. As incredible as it sounds, ASD’s Todd Disner — also of Zeek — was on the line with him.

What Craddock did was deplorable. It was as though he slept through the past four years of Ponzi history, all the cases that showcase the markers of fraud schemes and all the government warnings to be cautious. (Nongovernment/quasigovernment entities such as FINRA also publish such warnings, like this one on HYIP fraud schemes outlined by the PP Blog.)

The FINRA warning was published in 2010, prior to Zeek but after the Legisi, Pathway To Prosperity and ASD schemes were exposed. Legisi operator Gregory McKnight potentially faces 15 years in federal prison. He was charged both civilly (SEC) and criminally (U.S. Secret Service) — and Legisi pitchmen Matthew John Gagnon also was charged civilly and criminally by the same agencies. The SEC called Gagnon a “threat to the investing public.”

Any number of Zeek promoters pose a similar threat. They are at least equally willfully blind.

It is clear that some Zeek promoters also were promoting JSSTripler/JustBeenPaid, the debacle-in-waiting purportedly organized by Frederick Mann, a former ASD promoter. JSS/JBP has morphed into “ProfitClicking” amid reports of the “retirement” of Mann. Now, ProfitClicking “defenders” are threatening lawsuits against critics.

Naturally the stories advanced by ProfitClicking “defenders” are being improved by “defenders” of other obvious fraud schemes such as BannersBroker. A BannersBroker “defender” is over at RealScam.com — an antiscam site — suggesting that RealScam is a terrorist organization.

My God.

These claims are being made just days after Zeek figure Robert Craddock suggested he had contacts in law enforcement who were going to charge Blogger Troy Dooly with cyber harassment.

It wouldn’t sell as fiction.

Craddock’s bid to gag K. Chang easily was the most important story on the PP Blog in 2012. It’s the one that signaled that things are destined only to get crazier in MLM La-La Land and that the threat to U.S. national security only will grow.

Dec 27, 2012
URGENT >> BULLETIN >> MOVING: Ira Lee Sorkin, Bernard Madoff’s Attorney, Files Motion For Clients Who Are Potential Clawback Targets For More Than $1.56 Million In Zeek Case

URGENT >> BULLETIN >> MOVING: (3RD UPDATE 11:33 P.M. ET (U.S.A.) Famed defense attorney Ira Lee Sorkin is seeking pro hac vice admission to practice in U.S. District Court for the Western District of North Carolina on behalf of two prospective clawback targets in the Zeek Rewards Ponzi scheme case.

Sorkin is with Lowenstein Sandler PC in New York. He perhaps is best known as Ponzi schemer Bernard Madoff’s defense counsel. Sorkin also is the former head of the SEC’s New York regional office.

Sorkin’s clients are Zeek affiliates Trudy Gilmond and Kellie King, and Sorkin is arguing that Zeek did not sell securities and that the receivership should be dissolved.

Gilmond is the prospective target of a clawback action for more than $1.364 million, with receiver Kenneth D. Bell asserting she put in only $3,105, according to Sorkin’s motion. King potentially faces a claim from Bell for more than $205,180 after paying in only $1,492, Sorkin said in the filing.

Sorkin, according to a separate motion, also contests how the receiver issued subpoenas and is opposing a motion late last month by Dallas attorney Michael J. Quilling to be appointed “examiner.”

Quilling sought “to represent the collective interests of the Affiliates and all creditors of the receivership estate” and desired to “be compensated out of the receivership estate,” Sorkin argued.

But that should not be permitted to happen, Sorkin contended.

From Sorkin’s motion (italics added):

It is quite clear from the Receiver’s Preliminary Liquidation Plan and the defective subpoena issued to Ms. Gilmond that Qualified Affiliates have inherently conflicting positions as to one another, and thus cannot be jointly represented. To illustrate, it is in the interests of a Qualified Affiliate who is a “net-winner” to challenge the Receiver’s authority to clawback funds because the Receiver intends to use the “net-winner’s” money to pay net-losers. To the contrary, it is in the interests of a Qualified Affiliate who is a net-loser to support the Receiver’s efforts because the Receiver will take money from the “net-winner” and distribute it to the “net-loser” Qualified Affiliate. As such, an Examiner cannot be appointed to represent all of the Qualified Affiliates because the Examiner would have clients with inherently contradictory positions as to one another.

The motion by Sorkin potentially puts Gilmond and King at odds with positions taken by Quilling clients and potential Zeek clawback targets Dave Kettner, Mary Kettner and David Sorrells. The Kettners and Sorrells, for example, moved to have Quilling appointed examiner.

The Kettners and Sorrells potentially have a combined clawback exposure of nearly $2 million, according to court filings.

Zeek records, according to letters from Bell cited by the trio, suggest Sorrells received $945,539 from Zeek while paying in only $1,695. Dave Kettner received $537,577.95 while paying in only $1,378, and Mary Kettner received $465,866.67 while paying in only $1,495.

Dec 14, 2012
BULLETIN: SEC: Asset Manager Hid Madoff Losses, Boasted ‘Benchmark-Beating Returns,’ Recruited New Investors, Missed Redemptions — And Blamed MF Global Collapse

EDITOR’S NOTE: Scams undermine faith in legitimate markets. This is a case in which a purportedly legitimate asset manager allegedly is using the sort of explanations/excuses commonly used by Ponzi-forum hucksters.

** ________________________________________________ **

BULLETIN:The SEC has gone to federal court in the Northern District of Illinois, alleging that asset manager Nikolai Battoo duped investors by hiding losses in the Bernard Madoff Ponzi scheme, recruited new investors and boasted about “benchmark-beating returns.”

But Battoo, who claimed to have $1.5 billion under management, has not met redemption requests — and now claims his inability is due to the collapse of MF Global, the SEC said.

Also charged was Tracy Lee Sunderlage, “an unregistered broker-dealer who was banned from the industry in a previous SEC enforcement action,” the SEC said.

From the SEC complaint:

In 2008, Battoo and his company-defendants lost tens-of-millions of dollars investing in Madoff “feeder funds.” That same year they lost more than $100 million when an international bank terminated Battoo’s access to its credit and platform of funds. Yet Battoo-has not been forthcoming with his investors about the extent of — or in some cases even the fact of — these losses. His statements to clients omit his staggering losses. In the wake of such deception, existing clients have invested fresh investment proceeds. Battoo’s falsified track record of benchmark-beating returns has also won him new investors.

The jig appears to be up. Clients are now clamoring for redemptions, so Battoo has doubled-down on his deception. He’s blamed the MF Global calamity for his inability to repay investors. But when the SEC sought support for such claims, he declined to provide further information. At other times Battoo has blamed unnamed counterparties for freezing his assets because of unspecified government investigations. He told one investor that his attorneys were negotiating a “release” with the SEC. These statements are lies.

A federal judge, the SEC said, has granted an emergency freeze of assets belonging to Battoo and two of his companies: BC Capital Group S.A. of Panama Panama and BC Capital Group Ltd. of Hong Kong.

The SEC action is designed to protect U.S. investors, the agency said.

Battoo claims to manage $100 million for U.S. investors, the agency said.

“Battoo attracted quite a following of investors by proclaiming his investments withstood the test of the financial crisis, but reality seems to have finally caught up with him,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “Now, Battoo is offering investors one excuse after another for holding their money hostage.”

Read the remarkable complaint.

Sep 7, 2012
SENIOR FRAUD CAVALCADE CONTINUES: Ponzi Schemer, 86, Pleads Guilty; Stephen J. Klos Ripped Off Fellow Senior Citizens, Prosecutors Say

Stephen J. Klos, an 86-year-old church usher who sold elderly congregants in the Seattle area into a $3 million Ponzi scheme that began in 2004, has pleaded guilty to 10 counts of securities fraud, the office of King County Prosecuting Attorney Daniel T. Satterberg said.

Klos “met several of victims at his church and told them that he would invest their money but used most of it to repay prior investors and for his personal benefit,” Satterberg’s office said. He faces between 51 and 68 months in prison when sentenced Dec. 28 by Judge Bruce Heller.

Only four years short of his 90th birthday, Klos now joins a curiously long list of convicted or alleged Ponzi schemers and/or swindlers who were detected or charged after their 65th birthdays.

Others on the list include Bernard Madoff (New York/Florida); Andy Bowdoin (Florida); Arthur Nadel (Florida/now deceased); Martin B. Feibish (Rhode Island); Richard Piccoli (New York); Anthony Lupas (Pennsylvania); John William “Jack” Cranney (Massachusetts); Pat Kiley (Minnesota); Richard Elkinson (Massachusetts); Edward May (Michigan); John F. Langford (Texas); Hans P. Seibt (Nevada); Louis J. Borstelmann (California); Gerald J. “Jerry” Berke (California/Canada); Richard Horace Mayfield (Colorado); Richard M. Hersch (California); Richard Taft Johnson (Michigan); Julia Ann Schmidt (Texas); Ronald Keith Owens (Texas); James Blackman Roberts (Arkansas); Larry Atkins (North Dakota); Maxwell B. Smith (New Jersey); Judith Zabalaoui (Louisiana); Arthur Ferdig (California).

NOTE: The list above is incomplete.

Jul 31, 2012
URGENT >> BULLETIN >> MOVING: Peter Madoff Charged Criminally, Civilly; Bernard Madoff’s Brother ‘Enabled The Largest Fraud In Human History’ And Gained Millions Of Dollars, U.S. Attorney Preet Bharara Says

URGENT >> BULLETIN >> MOVING: Peter Madoff, the brother of Ponzi schemer Bernard Madoff, has pleaded guilty in New York to a two-count superseding information charging him with conspiracy to commit securities fraud, tax fraud, mail fraud, ERISA fraud and falsifying records of an investment adviser.

The government is seeking a staggering forfeiture order of $143.1 billion, “including all of [Peter Madoff’s] real and personal property.”

Peter Madoff began conspiring with his brother in 1996, and the sought-after forfeiture amount “represents all of the investor funds paid” into Bernard L. Madoff Investment Securities LLC from 1996 to the Ponzi collapse in December 2008, prosecutors said.

Peter Madoff has agreed to the forfeiture amount, prosecutors said.

Peter Madoff, 66, also was charged by the SEC today. He was the chief compliance officer and senior managing director of Bernard L. Madoff Investment Securities.

“Peter Madoff enabled the largest fraud in human history,” said Preet Bharara, U.S. Attorney for the Southern District of New York. “He will now be jailed well into old age, and he will forfeit virtually every penny he has. We are not yet finished calling to account everyone responsible for the epic fraud of Bernard Madoff and the epic pain of his many victims.”

“Peter Madoff helped Bernie Madoff create the image of a functioning compliance program purportedly overseen by sophisticated financial professionals,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “Tragically, the image was merely an illusion supported by Peter’s sham paperwork and false filings for which he was rewarded with tens of millions of dollars in stolen investor funds.”

Read the SEC’s statement.

Jun 29, 2012
UPDATE: Call In Which Frederick Mann Told JSS/JBP Members That ‘Opportunity’ Was Paying Them With Funds From ‘New Members’ Goes Missing From Website

Frederick Mann, onetime ASD pitchman and the purported operator of JSS Tripler/JustBeenPaid

UPDATED 7:44 A.M. EDT (U.S.A.). A potentially damning audio recording of a March 15 conference call in which Frederick Mann told JSS Tripler/JustBeenPaid members that the “opportunity” was paying them with money from “new members” has gone missing from the JSS/JBP website.

The precise date on which the recording was removed was not immediately clear. But the removal occurred after JSS/JBP also had removed recordings of conference calls featuring Carl Pearson, a pitchman for the “opportunity” and its purported COO.

Mann, whose name appeared in 2008 promos as a pitchman for AdSurfDaily, is the purported operator of JSS/JBP. The U.S. Secret Service seized tens of millions of dollars tied to ASD in 2008, amid allegations it was conducting an international Ponzi scheme over the Internet.

Andy Bowdoin now has been accused of serial scamming dating back at least two decades. He faces a May 8 bond-review hearing. Frederick Mann, the purported operator of JSS/JBP, was identified in 2008 promos as an ASD pitchman.

ASD President Andy Bowdoin was charged criminally in 2010. He now faces a May 8 bond-review hearing amid allegations that he continued to scam the public even after the August 2008 seizure of $65.8 million from his 10 personal bank accounts and even after his December 2010 arrest in Florida on ASD-related Ponzi charges of wire fraud, securities fraud and selling unregistered securities.

“I (Frederick Mann) have been with ASD since January 07,” remarks attributed to Mann on a site known as BigBooster read on May 14, 2008. “Past performance indicates a strong probablility (sic) that ASD will continue to perform as advertised. (By early May 2008, I had received 14 payments totalling over $6,000!”)

The U.S. Secret Service conducted a Ponzi raid of ASD less than three months later. Despite the Ponzi allegations against Bowdoin and ASD, Mann purportedly went on to launch JSS/JBP, which purports to pay members a return of 2 percent a day — double the purported return of ASD.

In January 2012, JSS/JBP-related claims came under the lens of CONSOB, the Italian securities regulator. The agency banned promos for the “opportunity” last month after earlier announcing a 90-day suspension.

Just days before CONSOB’s April 23 announcement of the ban — on April 17 — U.S. federal prosecutors sent a letter to Bowdoin’s defense attorney in the ASD Ponzi case. The letter informed the attorney — Charles A. Murray — that the government intended to introduce evidence that Bowdoin continued to commit crimes after the August 2008 ASD seizure and after Bowdoin’s subsequent indictment on charges that could put him behind bars for 125 years if he is convicted on all counts.

Prosecutors said they had tied Bowdoin to AdViewGlobal (AVG), an autosurf that collapsed in 2009. They also said Bowdoin had emerged as a pitchman for a “fraudulent scheme” known as OneX that — in ASD-like fashion — “simply re-distributes funds among participants.”

Online Ponzi schemes are infamous for morphing into new forms. Serial scammers who populate Ponzi boards such as TalkGold and MoneyMakerGroup drive business to the purported “opportunities,” which often advertise MLM-style, tiered recruitment “commissions” on top of preposterous rates of return.

ASD, AVG, OneX and JSS/JBP all have (or had) a presence on the Ponzi boards. Serial apologists for JSS/JBP have pooh-poohed the CONSOB developments.

In the now-missing March 15 recording, a caller purportedly from “San Francisco” asked Mann where “JustBeenPaid get[s] the money to pay that kind of interest.”

The reference was to the advertised return of 2 percent a day, which corresponds to a precompounding, annualized return of 730 percent — a figure that would make Bernard Madoff blush.

“Well, first of all, JBP or JSS Tripler is a revenue-sharing program, so that means some of the money comes from new members buying positions,” Mann responded to the caller. “Then, we are in the process of developing additional income streams, so that’s relevant. And eventually the additional income streams may be sufficient to pay the 2 percent — maybe not.”

May 1, 2012
Ponzi Schemer Arthur Nadel Dies; One Of The Original ‘Mini-Madoffs’ Succumbs At 80 At Same Prison Facility That Houses Madoff

Arthur Nadel

Arthur G. Nadel, the Florida fund manager and Ponzi schemer who briefly went on the lam in the weeks after Bernard Madoff’s even-greater caper imploded, has died. Nadel was 80, according to the Federal Bureau of Prisons.

Nadel, sentenced in 2010 to 14 years in an elaborate fraud that operated between 1999 and 2009, died at the Butner Federal Correctional Complex, the same North Carolina facility that houses Madoff.

With America still largely unacquainted with the word “Ponzi” and trying to come to grips in late 2008 and early 2009 with the staggering dollar volume of Madoff’s crime, Nadel went missing from Sarasota.

Like Madoff, he was in his senior years and secretly had been presiding over a long-running, monumental fraud. The ages of the lead figures in the individual schemes and the combined dollar amounts — Madoff’s was in the billions and Nadel’s was in the hundreds of millions — caused investors nationwide to wonder if their trusted brokers and financial advisers were running scams.

Nadel emerged as one of the earliest of the so-called “mini-Madoffs,” as did Tennessee’s Dennis Bolze, who also went missing after the Madoff scheme collapsed. Bolze, then 60, later was arrested in Pennsylvania.

In January 2009, Nadel surrendered to the FBI. Investigators said he caused investors to suffer losses of $162 million.

“Through his massive Ponzi scheme, Arthur Nadel greased his own pockets and financed his lavish lifestyle, using money his clients relied on him to invest,” said U.S. Attorney Preet Bharara of the Southern District of New York, after Nadel was formally sentenced in October 2010. “He cheated his elderly and unwitting victims out of their retirement savings and consigned others to poverty.”

In its story about Nadel’s death, the Sarasota Herald-Tribune quoted Nadel’s former lawyer.

“Dying behind prison walls is a very hard way for anyone to leave this world,” Mark Gombiner told the paper. “Arthur had a troubled life, but he took responsibility for his actions and he faced his punishment with dignity.”

Apr 18, 2012
SPECIAL REPORT: Hollow Claim: Caller Brings Up AdSurfDaily Ponzi Prosecution In JSS Tripler/JustBeenPaid Conference Call; Frederick Mann Tells Affiliates Operating In United States That ‘We Don’t Have An Office In The U.S.’

“[F]raudulent commercial schemes are not noted for their internal consistency.” — Professor James E. Byrne, consultant to FBI and Scotland Yard (among others) and HYIP expert hired by U.S. government to assess the alleged Pathway To Prosperity scheme in 2010

Frederick Mann

In a bizarre conference call for the JSS Tripler/JustBeenPaid “program,” a caller who identified himself as a former AdSurfDaily member raised the issue of the ASD Ponzi scheme case brought by the U.S. Secret Service in 2008, questioning whether JSS/JBP was safe from regulatory scrutiny or “getting too big and drawing certain attention.”

The implication of the remark was that the attention of the U.S. government would be unwanted.

With listeners identifying themselves as U.S.-based members of JSS/JBP on the line, Frederick Mann suggested that his purported program was outside the reach of U.S. law enforcement.

“Just Been Paid is not based in the U.S.,” Mann replied to the caller, after the female host of the call had paraphrased the caller’s query to Mann. The host paraphrased the question because Mann said he didn’t catch it the first time around.

” . . . [H]e was making reference to AdSurfDaily and that they were closed down, and he wants to know what we have in place to protect Just BeenPaid for it not to happen like AdSurfDaily,” the host said to Mann.

“Just Been Paid is not based in the U.S., and our servers are not in the U.S.,” Mann replied. “We don’t have an office in the U.S.”

But Mann’s answer did not speak to costly civil and criminal litigation that could ensue against JSS/JBP’s U.S.-based members, all of whom are using wires that run through the United States to participate in the purported program and some of whom are using U.S. wires to recruit downline members. Nor did the answer speak to actions the United States could take against JSS/JBP itself.

In 2008, marketing materials identified Mann as an ASD promoter. In January 2012, the Italian securities regulator CONSOB announced a JSS/JBP-related probe and issued a 90-day suspension order. JSS/JBP purports to pay out at a daily rate of 2 percent, double that of ASD. On an annualized basis, the payout rate of JSS/JBP corresponds to a return that is between 48 and 73 times the typical rates that put Bernard Madoff in prison for 150 years. ASD President Andy Bowdoin was indicted on Ponzi scheme charges in December 2010.

Bowdoin specifically was accused of wire fraud, securities fraud and selling unregistered securities. The U.S. Secret Service seized 10 of his personal bank accounts in August 2008, amid Ponzi allegations. Other court filings that became public in 2010 showed that the Secret Service also had seized bank accounts linked to some individual ASD promoters.

Mann previously has declined to identify JSS/JBP with a nation-state, meaning investors do not know where the “program” is operating from. JSS/JBP has no known securities registrations, and its U.S. affiliates very well could be selling unregistered securities to U.S. citizens via wire while at once implicating themselves and their recruits in a Ponzi scheme that is trying to disguise itself as a legitimate business.

Even if it is presumed to be true that the United States could not act against the company itself — and that’s a big “if” because U.S. law enforcement has a number of options should it choose to exercise them — U.S.-based affiliates of the “program” likely are running afoul of any number of civil and criminal statutes.

Internal Inconsistencies

In 2010, Professor James E. Byrne — who has consulted with the FBI and Scotland Yard and was hired by the United States to offer an expert opinion on the Pathway To Prosperity (P2P) HYIP scheme — observed that “fraudulent commercial schemes are not noted for their internal consistency” and that materials he examined in the P2P case displayed such inconsistencies.

After a probe by the U.S. Postal Inspection Service, P2P operator Nicholas Smirnow was charged criminally and accused of running an international financial scam. The purported return rate of JSS/JBP is somewhat on par with the rates of the alleged Smirnow/P2P HYIP scheme.

Internal inconsistencies were on full display during the March 8 JSS/JBP call featuring Mann.

As one example, a caller who identified himself as “John” and appeared to be speaking in U.S. English asked Mann for some specifics about the program, voicing that he was confused.

“All your marketing material — your website and now this conference call — has confused me more than anything I’ve ever heard in my life,” John said.

“You don’t have any answers for the [gentlemen] that have asked questions,” John said.

Mann suggested that John “submit a help request.”

Apparently growing agitated and increasingly confused, John shot back, “I submit that I just would like to have a straight answer.”

Mann again pointed John to the company’s web-based explanations and resources.

“The basic approach” to JSS/JBP, Mann explained, is to “find one thing that you understand and then find another thing that you understand, and that way you keep on finding things that you can understand.”

Unmoved by Mann’s response, John shot back, “I have two master’s degrees and I’m telling you that I do not understand it.”

John was the seventh caller to have asked Mann questions during the March 8 call. An eighth caller then came on the line. He identified himself as “Rick” (or by a name that sounded like Rick), saying he was from “California.” (Note: Garbling during the recorded call sometimes made it difficult to hear a name clearly.)

Rick questioned whether callers such as John should be asking Mann such “basic” questions, asserting that Rick, unlike John, had no master’s degree but nevertheless understood the program.

At that point, Mann observed that online money-making programs may have a “bigger learning curve.”

After Rick exited the line, a caller who identified himself as “Michael” from “San Francisco” stepped up to the plate for Mann and JSS/JBP.

Michael asserted that, like John, he has a “master’s degree,” adding that “I have lots of degrees” but noting that his academic pedigree was “really not applicable to online money-making.”

As guidance, Michael suggested that JSS/JBP promoters sign up for “all” of the payment processors used by the program — but Michael did not tell listeners that all of the processors with which JSS/JBP has associated itself are operating offshore (from a U.S. standpoint), are known to be friendly to fraud schemes and may deny customers U.S. consumer protections.

More Internal Inconsistencies

Other examples of internal inconsistencies presented themselves during the call, a recording of which was about 48 minutes in length.

One caller who identified himself as residing in “Florida” asked Mann about the importance of the “patent” claim on JBP’s website.

Mann initially replied that the “patent” claim is “not important at all.”

The response, however, gives rise to questions about why JSS/JBP even would mention a patent if it was “not important at all,” particularly since the “program” had altered the patent claim over time.

Prior to a website alteration that appears to have occurred last month, JSS/JBP made this specious claim: “JustBeenPaid! (JBP) and its related programs, including JSS-Tripler, are licensed under United States Patent 6,578,010.”

Those words were changed to read, “JustBeenPaid! (JBP) and its related programs operate in accordance with United States Patent 6,578,010 (now public domain).”

After reflecting on the caller’s patent question, Mann said this, “In any case, the patent is public domain. It doesn’t actually protect anything. But what is relevant about it is that a patent that covers some of what we do was issued and was approved by a government agency.”

In the United States, patents are issued by the U.S. Patent and Trademark Office, a government entity. The office is not the nation’s securities regulator.

It is common for scammers to try to associate a scheme with the government as a means of planting the seed that the government has full knowledge of the “program” and has endorsed it. The ASD scheme, for example, traded on the name of the President of the United States — something that caught the attention of the U.S. Secret Service, which has the twin duties of guarding the President’s life and protecting the U.S. financial system from criminals.

Callers also expressed confusion about “commission” payments from JSS/JBP and raised questions about an emerging JSS/JBP “Platinum” program that would accompany an existing “Premium” program through which some earlier members had paid higher fees believing they would “cycle” faster and make more money.

Based on comments made during the call, it appears as though the “Platinum” program is priced higher than the “Premium” program — and members are concerned that their earlier “Premium” purchases would be for naught if new “Platinum” purchasers effectively could pay more money to cut in line and “cycle” faster than them.

Mar 17, 2012
EDITORIAL: The Astonishing Virality Of JSS Tripler/JustBeenPaid, A ‘Program’ That Purports To Pay A Return Of 2 Percent A Day And Makes Members Affirm They Are Not With The ‘Government’ — Even As Purported Operator Spotlights ‘Sovereign Citizen’ Implicated In Alleged Murder Plot Against Public Officials
EDITOR’S NOTE: For the purposes of this column, the PP Blog is reporting on only a small number of references to JSS Tripler/JustBeenPaid in the past 24 hours, as compiled by Google’s “Past 24 hours” feature. Google also has a “Past hour” feature. At the time of this post, Google is reporting “About 3,970” indexed “results” for jss tripler during the 24-hour time period, yesterday to today. A good number of the returns are in languages other than English. (Editor’s note continues below screen shot.)

JSS Tripler/JustBeenPaid is an exceptionally murky “program” that purports to pay a return of 2 percent a day. That’s an absurd 60 percent a month — or, on an annualized basis, 730 percent, an ROI that would make Bernard Madoff gag. The “program,” which purports to be “indefinitely sustainable” and makes members affirm they are not government spies or media lackeys, has a strong presence on forums listed in U.S. federal court files as places from which Ponzi schemes are promoted.

On Feb. 27, the PP Blog reported that a website linked to Frederick Mann, the purported operator of the “program,” is publishing two videos and links to nine more that highlight Francis Schaeffer Cox, a purported “sovereign citizen” implicated in an alleged murder plot against public officials in Alaska.

“Sovereign citizens” have an irrational belief that laws do not apply to them. They have been implicated in numerous fraud schemes and may engage in what has become known as “paper terrorism” — i.e., the filing of false liens against members of law enforcement, false libel lawsuits against publishers and other bids to chill and nuisance the law-enforcement community or members of the media.

Mann declined to tell conference-call listeners on Feb. 23 even where the enterprise was operating from.

Despite these disturbing events, JSS Tripler/JustBeenPaid has achieved Internet virality and may be recruiting thousands of new affiliates daily. The bullet-point brief below condenses some of the affiliate claims in just the past 24 hours.

Despite repeated promotional references to the sum of $10, JSS Tripler/JustBeenPaid members do not have to limit their “purchase” to only one $10 position. The scheme could be raking in tremendous sums during an era of securities hucksterism that sometimes involves massive — if not epic — sums of money. It is not unusual for large sums to go missing, leaving defrauded investors holding the bag for tremendous losses. At a minimum, those losses contribute to the undermining of economies on a local level, perhaps particularly if groups of individuals from the same area become investors.
- Source: Blog titled “Easy Online Money” with a kicker of “Change a life today!” Among the claims: “You are guaranteed to earn a daily 2% on the positions you purchase, thereby making a decent amount of passive income online working from home.”
- Source: Blog at URL that is a subdomain of blogspot.com, a free Blogger platform hosted by Google. Among the claims: “You can fund your account with as little as $10, and earn 2% per day with no work.”
- Source: Blog at another blogspot subdomain. Among the claims: “JSS-Tripler now has 294,651 members — having grown by just over 6,000 new members during the past 24 hours. Thank you to our many promoters for doing such a great job!”
- Source: Text accompanying video on Google-owned YouTube. Among the text claims: “Once you are in JSS tripler . . . Click on ‘Financial’ tab . . . Scroll down you will have $10 in your jss tripler account . . . Click on ‘Buy Jss Tripler Position’ . . . Purchase 1 free position with the $10 you receive in your account . . . You will be getting 2% earnings on $10 [sic] i.e. $0.20 every day without doing anything . . . After the 75 days you make $15 dollars [sic] without any more investments or referrals. Then you invest back in $10 or whatever you like and you make more and more each day. Simple system really [sic] More position [sic] you purchase or get from referrals the more you make. Very simple process.”
- Source: Blog titled “Money Making Tips.” Among the claims: “The level of support is better than any other program i have seen, the Daily Web Conferences with Carl Pearson are terrific. You can usually get your questions acknowledged instantly, you are kept up to date with what’s going on with this company, they provide training including tutorials and videos. You can access the conference area 24/7 [sic] a moderator is there to answer all your questions. JBP had just hired a new marketing leader, Louis Paquette[,] to help educate members in any areas where they need help.” [Note by PP Blog: Louis Paquette is referenced in this Feb. 4 PP Blog story, which reported that a JSS Tripler-related domain hosted in Utah mysteriously began to redirect to the Netherlands after a JSS Tripler-related action by CONSOB, the Italian securities regulator.]
- Source: Blog at empowernetwork.com URL. Among the claims: “JSS Tripler Gives You the first $10 for FREE: My Total ‘2%’ Earnings Thus Far $4757.00.”
- Source: Blog with a kicker of “Social Media Marketing Consultant.” Blog has accompanying YouTube video: Among the Blog claims: “I would like to help JBP grow, in any way I can contribute . . . It is my goal to add 60 active referrals over the next 6 months or less.” Among the video claims: “Makes It So Easy to Make Money Online that a Baby can Almost do it!” The text accompanying the video engages in considerable keyword stuffing with the phrase of “Make Money At Home” and similar phrases.
- Source: Entry on apsense.com. Among the claims: “I just want to pay it forward and help others . . . get ‘$10 free money’ in your accounts . . . Buy a JSS-Tripler position and start earning 2% per day! . . . Inbite [sic] new members. There is an endless supply of people online looking for money making opportunities.”
- Source: Blog styled “Success Instantly.” Blog has accompanying YouTube video. Among the video claims: “Compound your Earnings To INCREASE Your Daily Payout.”
Mar 16, 2012