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Tag: Bernard Madoff

  • ANNIVERSARY EVE: Message That Altered Lives Appeared On AdSurfDaily Website One Year Ago Tomorrow

    Ponzi back in vogue in big way.
    Ponzi back in vogue in big way.

    It was before Bernard Madoff and before Sir Allen Stanford. President Obama was candidate Obama. Sarah Palin, the little-known governor of Alaska, would not become part of the public consciousness for nearly another month. Few people had heard of the so-called “Arby’s Indians.” Fewer yet could instantly place Uruguay or Panama on a map or understand the acronym “RICO” without a quick trip to Wikipedia. No one had heard of AdViewGlobal, BizAdSplash or AdGateWorld. The 31st Annual Pilgrimage to Graceland  to commemorate the life and passing of Elvis Presley would not begin officially until Aug. 9, another eight days.

    Regardless, the term Ponzi scheme — which goes missing from the public consciousness for years at a time, despite the nonstop play it recently has received — started making a big comeback late in the afternoon of Aug. 1, 2008. For good measure and to sear the memory, nature treated part of the world to a total eclipse of the sun on Aug. 1. The small town of Quincy, Fla., was too far south to witness the spectacle — but Quincy soon would witness a spectacle of its very own.

    Friday, August 1st 2008 afternoon update

    Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.

    ASD Management.

    Yes, ASD signed this life-altering message “ASD Management.” A company that claimed to be a professional advertising and communications firm — one whose promoters claimed had Fortune 500 clients and signed contracts from major advertisers for millions of dollars — lost the PR war with a single, vague posting.

    It was only the first of many incongruities. Reporters who called later were told there was nothing to fear because God was on ASD’s side.

    Quincy’s spectacle began on Aug. 5, the date agents showed up with search warrants for ASD’s headquarters and the home of ASD President Andy Bowdoin. WCTV was the first media outlet to report the news. Here is how we put it:

    WCTV is reporting that agents are executing a search warrant at ASD Cash Generator headquarters in Quincy, Florida.

    Details are sketchy. WCTV serves Tallahassee, Thomasville and Valdosta., and is a CBS affiliate.

    Our first update came at 3:09 P.M. EDT (U.S.A.):

    WCTV is reporting that the U.S. Secret Service and the Gadsden County Sheriff’s Department are conducting the raid at ASD Cash Generator. Agents reportedly are searching for documents and computers.

    We obtained a copy of the forfeiture complaint later in the day. Here are the initial quotations and background we published from the complaint.

    ” . . . there is reasonable cause to believe that ASD, Thomas A. Bowdoin, Jr. and others, devised and intended to devise a scheme or artifice to defraud, or a scheme for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and that he and they transmitted or cause to be transmitted by means of wire, communications in interstate or foreign commerce (including writings, signs, signals, pictures, or sounds), for the purpose of executing such scheme or artifice, to wit: an Internet-based Ponzi scheme, in violation of Title 18, United States Code, Section 1343 (Wire Fraud); and in violation of Title 18, United States Code, Section 371 (Conspiracy to Commit Wire Fraud),” the complaint read in part.

    “Further, based on the information provided herein, there is reasonable cause to believe that the defendant properties constitute proceeds of the above-specified offenses or property involved in financial transactions, with wire fraud proceeds, that are prohibited by the federal anti-money laundering statutes.”

    ASD sales materials positioned Bowdoin as an accomplished business person who once received a medal for business achievement from President Bush. Federal prosecutors, however, say Bowdoin received no such medal from Bush and that “successes are remarkably absent from his true work history.”

    Bowdoin “was arrested in Alabama for one or more felony violations related to Fraud in Connection with the Offer and Sale of Securities by an Unregistered Agent,” prior to his involvement in ASD, prosecutors said.

    In the Alabama case, prosecutors said, Bowdoin and co-defendants in a company known as Mobile International Inc. were charged with selling “unregistered securities to investors and with failing to state material facts to the investors that would have impacted the victims’ decisions to invest.

    Alabama officials asserted Bowdoin “instigated a scheme by which he took money from some victims to pay off prior investors,” prosecutors said.

    Charges were dismissed after Bowdoin agreed to enter Pre-Trial Diversion with three years’ supervised probation. He was ordered to pay $15,000 in restitution to victims. The case was settled in 1997.

    Then, in 1999, Bowdoin plead guilty in Wilcox County to one count of selling unregistered securities. He was sentenced to a year in prison and three years’ supervised probation. The prison sentence was suspended, and Bowdoin was ordered to make restitution in the amount of $75,000.

    U.S. Attorney Jeffrey A Taylor of the District of Columbia, the U.S. Secret Service, the Internal Revenue Service and other agencies are involved in the ASD probe, which also involves Golden Panda Ad Builder, another autosurf.

    An IRS-Secret Service Task Force agent opened an A[SD] account as part of the investigation, according to the complaint. Agents also interviewed a number of ASD members as part of the investigation.

    Here is how we followed up on Aug. 6:

    Yesterday U.S. Attorney for the District of Columbia Jeffrey A Taylor filed a forfeiture complaint in a case involving Ad Surf Daily Inc., ASD Cash Generator, Thomas “Andy” Bowdoin, Golden Panda Ad Builder, Clarence Busby Jr. and Dawn Stowers.

    Meanwhile, some ASD members appear to be acting in organized fashion to criticize the government. This has led some ASD critics to dismiss Bowdoin’s advocates as “Kool-Aid” drinkers. References to Bowdoin, Christianity and religion are common parts of the discussion across the Web.

    Federal prosecutors and the U.S. Secret Service, which raided ASD’s Quincy, Florida, headquarters, are seeking $53 million held in various Bank of America accounts, a condominium in Myrtle Beach, S.C., and Bowdoin’s home in Quincy.

    The Justice Department called ASD a “massive Internet-based wire fraud scheme,” alleging that ADSurfDaily Inc. was nothing more than a common Ponzi that used incoming money from new ASD members to sustain payouts to earlier members of the program.

    Some ASD members appear to be going on the offense, attacking the government and flooding news sites, Blogs and forums with defenses for ASD and Bowdoin. Some of the messages have a fire-and-brimstone quality. The message in many cases is that ASD members have a Christian duty to back ASD and Bowdoin, who has a criminal record in Alabama for selling unregistered securities and bilking investors.

    WCTV-TV, a CBS affiliate in Tallahassee, has been flooded by comments from ASD members. Many of the posts are defenses for Bowdoin. Some posters mentioned a medal Bowdoin allegedly received from the Bush administration for business achievement. Prosecutors said Bowdoin received no such award, even though the alleged award was cited in ASD advertising materials.

    Other posters compared the government’s actions yesterday to the actions of Nazi Germany. Others suggested the government was involved in a conspiracy to defame Bowdoin and that overzealous prosecutors were trying to destroy private enterprise.

    ASD members have contacted this Blog, saying it has a duty to investigate the Social Security program if it is going to report on ASD Cash Generator. The argument — directed at this Blog and at others — is that Social Security is a government-sanctioned Ponzi. It therefore follows that ASD should be let off the hook.

    Elsewhere online there are reports of people who’d directed life savings and large sums of cash at ASD. One Blog poster and ASD member asked if anybody could point him in the direction of a bridge from which he could jump. The post appeared to be in jest, but it’s easy to believe that people who have thousands of dollars tied up in ASD are unnerved.

    The Government Makes Its Case Against Bowdoin And Busby

    Bowdoin once was sentenced to prison for his role in a securities scheme. The sentence was suspended after he agreed to three years’ supervised probation and to make restitution in the amount of $75,000, according to the Feds’ complaint.

    Like Bowdoin, Golden Panda’s Busby also had a previous run-in with the law over securities issues.

    In 1997, according to prosecutors, the “SEC successfully charged that Busby had violated anti-fraud provisions of the Securities laws by offering and selling investment contracts in connection with three different ‘prime bank’ schemes. Busby was accused of raising money for purported trading programs in ‘prime bank’ notes by fraudulently representing that investments were risk-free and the ventures would result in returns ranging from 750% to 10,000%. In total, Busby raised nearly $1 million from more than 70 investors.

    “None of the investors earned the exorbitant returns promised by Busby,” prosecutors said in the forfeiture complaint. “Busby was ordered to pay $15,000 in disgorgement to victims; however, after Busby filed a financial statement to support a professed inability to pay, the court dismissed the order of payment. Busby filed for bankruptcy in 1997. This information was not disclosed on Golden Panda’s webpage or mentioned by Busby during his recent conference call.”

    Although Bowdoin positioned ASD Cash Generator as an advertising program, the government said it was a smokescreen.

    In July 2008, according to the forfeiture complaint, the Ad Cash Generator website stated that ([emphasis] added):

    All payments made to ASD are considered advertising purchases, not investments or deposits of any kind. All sales are final. ASD does not guarantee any earnings or profits. Any commissions paid to Members are for the service of viewing other Member web sites and for referring Members to AdSurfDaily. All advertising purchases are non-refundable.

    Prosecutors dismissed the disclaimer language, calling it “ASD’s effort to avoid being recognized as an unregistered issuer of securities and to avoid liability to participants, for breaking promises it makes elsewhere, when the Ponzi is revealed.”

    Government Describes Role Of ASD Attorney Robert Garner

    It was widely known online that ASD explained to new members that its program was legal — and used an attorney to help make it’s non-Ponzi case.

    The attorney, Robert Garner, appeared in a video alongside Bowdoin and is mentioned prominently in the forfeiture complaint.

    Here’s what the government had to say about Garner’s video appearance with Bowdoin:

    “Mr. Garner proceeds to explain that Bowdoin hired [Garner] to insure that ASD’s operations are legal in all aspects. Garner assures the viewer that he and ‘other attorneys in our offices . . . are dedicated to this work with Andy and his company.’ He continued by saying his attorneys ‘are available at any time to deal with the issues as they arise.’

    “Garner address[ed] the concerns that new ASD members sometimes have in the area of the legality of the Ad Cash Generator opportunity, by saying: ([Emphasis] added):

    Andy has directed us to ensure that his company is structurally sound today and tomorrow and far into the future. My staff and I are dedicated to Andy’s vision that his company will continue to rapidly grow bigger and stronger, and will continue to be an industry leader in Internet advertising in the years to come.

    “According to Garner,” the forfeiture complaint continued, “ASD . . . complies with all laws and regulations that apply to it. In explaining that ASD is not a Ponzi scheme, Garner notes that a Ponzi scheme is ‘illegal, because [it] use[s] money from new investors to pay the first investors in the scheme their promised returns.’”

    “On behalf of ASD, on its website,” prosecutors said in the forfeiture complaint, “Garner advises prospective members that ASD is not a Ponzi scheme because, among other things, ASD is developing other revenue sources and ‘[t]here is no continuing obligation to pay returns to infinity.’ Contrary to Garner’s claim that this is not a Ponzi scheme, however, an infinite payment obligation is irrelevant and the lack of a non-member revenue source is a tell-tale sign of a Ponzi.”

    In what prosecutors described as a “further attempt to make Bowdoin’s business model sound more legitimate, Garner describes ASD rebates as ‘function[ing] something like ‘loss leaders’ in that advertisers are presented [with] a way[ ] to earn their money back, plus a little more, in addition to having their ads viewed on the internet.’”

    But an IRS-Secret Secret Service Task Force has “not found any other product or service that ASD sells, aside from new memberships, to cover the ‘losses’ it incurs by allowing its so-called ‘advertisers’ to ‘earn their money back, plus a little more,’” the government said in the forfeiture complaint.

    Agents discovered that ASD’s “Nevada incorporation documents list Garner as a director. [Garner], however, does not disclose the fact that he is an insider of ASD in his interview, in his typewritten opinion letter that appears on ASD’s webpage, or anywhere else on ASD’s webpage,” the complaint said.

    “Furthermore, although Garner is admitted to the North Carolina Bar, it appears that [Garner] works out of his home and that he does not employ the team of lawyers that, he claims, have worked diligently to confirm ASD’s legality,” prosecutors said.

    All in all, the government’s forfeiture complaint takes up 101 pages (including exhibits).

    A year has passed. The documentation is much thicker now. Andy Bowdoin has fewer people willing to support him publicly. AdViewGlobal is in a state of decay; like AVG, BizAdSplash recently announced the suspension of member cash-outs. AdGateWorld announced it was selling itself to an unnamed party in the Middle East.

    The autosurf world continues to alter lives, continues to turn friend against friend and family member against family member. Every day is a total eclipse of the sun.

  • Read The National Futures Association Report On Paul Greenwood And Stephen Walsh; Association Asserts Hundreds Of Millions Of Dollars Unaccounted For Amid Suspensions

    We’ve previously pointed out that, in recent times, some of the actions filed against financiers and fund managers — and the findings of investigators — have read like works of fiction. On Friday, for example, Irving Picard, the trustee in the Bernard Madoff case, asserted that Madoff appears not to have purchased securities for customers in at least 13 years.

    It’s an incredible assertion that suggests Madoff was running a virtually pure Ponzi: money in, money out, with no attempt even to try to make it work in a legitimate way.

    Now comes incredible assertions by the National Futures Association against Paul Greenwood and Stephen Walsh, who’ve been suspended from NFA for stonewalling on an audit.

    On Friday, Carnegie Mellon University and the University of Pittsburgh sued Greenwood, Walsh, Westridge Capital Management (WCM) and related entities for the return of $114 million feared lost in an investment swindle.

    At least 16 public entities invested with WCM, including universities and retirement funds for educators, police officers and firefighters. It is possible than $2 billion or more is at risk.

    CMU and Pitt sued in the aftermath of the NFA audit. NFA’s documentation of its attempts to audit Greenwood and Walsh — its recounting of the stonewalling and its partial findings based on what it what it was able to uncover despite the stonewalling — is yet another example of nonfiction that reads like fiction.

    Big money is involved here, and the facts are not all known. But NFA’s document can only be described as jaw-dropping. It really makes one wonder how many other shoes will drop and how many more times the public will be asked to suspend its disbelief before these almost unbelievable financial tales come to an end.

    Read NFA’s report on Greenwood and Walsh, including the sworn declaration of an NFA compliance director, Jennifer Sunu, who supervised the audit.

    See our earlier post.

  • DISCUSSION THREAD: CEP Judgments, Ponzis And The Deaf, Noobing, Andy Bowdoin, Surf’s Up, BizAdSplash Surf, More

    miseryindexUPDATE 2:49 P.M. EST (U.S.A.) At a gathering of creditors today, Irving Picard, the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities, said he could find no evidence that Madoff even purchased securities for customers in the past 13 years. Cash came in — and immediately went out — to sustain the Ponzi, Picard said. We’ve added a Madoff Discussion Topic at the bottom of this post.

    Here, below, our earlier post . . .

    This is a discussion thread for readers to share their views on developments in the autosurf world. Offer your opinions on any of the discussion topics below — or even all of them.

    First, however, some news:

    The bankruptcy judge in the CEP Ponzi scheme case has ordered some large judgments against “winners” who were sued in adversarial proceedings by William Perkins, the CEP receiver.

    Judge James E. Massey even ordered interest be paid on the judgment amounts. “Winners” who are now losers include:

    • Chris Barany: $225,702.90
    • Earl Reed: $146,677.50
    • Ginger Phillips Reed: $103,339.70
    • Jessica Phillips: $44,821.85

    As a side note, our research suggests that AdSurfDaily President Andy Bowdoin was a participant in the CEP Ponzi scheme. ASD once advertised it accepted payments from CEP Trust, the failed payment processor owned by the operators of the CEP Ponzi scheme.

    DISCUSSION TOPIC: If you’ve been following the ASD case, you’ve read that ASD was an exciting, new business model and Andy Bowdoin a genius. But how could that be true if ASD was a member of other autosurf Ponzi schemes?

    Ponzis And The Deaf

    As reported on PonziNews, the SEC has taken action against a Hawaii-based firm that allegedly ran a Ponzi scheme targeting the hearing-impaired communities of the United States and Japan.

    Investigators say Billion Coupons Inc., run by Marvin Cooper, made affinity fraud part of a $4.4 million Ponzi scheme.

    “A Ponzi scheme targeting members of the Deaf community is particularly reprehensible,” said Rosalind R. Tyson, director of the SEC’s Los Angeles Regional Office.

    This week, a surf came under fire in forums for slashing payouts to customers. The surf, known as Noobing, targeted the deaf at Deaf Expo events in 2008 and in YouTube videos.

    DISCUSSION TOPIC: Given customers’ claims of “bait and switch,” the fact Noobing launched after the government seized ASD’s assets, Noobing’s statement that people should be angry at the government — not Noobing — for its decision to slash payouts, and the targeting of deaf people, is an investigation warranted?

    Andy Bowdoin

    Two months have passed since prosecutors filed a second forfeiture complaint against assets tied to ASD. The complaint alleged that ASD funds were used to fuel big spending by Bowdoin family members. It further alleged that $1 million purportedly was stolen from ASD by “Russian” hackers and that Bowdoin didn’t file a police report. Meanwhile, it also alleged that money in addition to what “Russian” hackers took also was stolen — and that Bowdoin didn’t file a police report about those thefts, either.

    ASD said it had more than $1 million on deposit in Antigua, which this week became the center of an international financial scandal involving billionaire Allen Stanford, the biggest banker on the Caribbean island. Customers flooded banks in the tiny nation to withdraw money, and the government of Antigua appealed for calm.

    Last summer, Bowdoin told a federal judge that ASD needed money to operate and asked her to free up seized funds. But Bowdoin didn’t tell the judge about the money in Antigua until after prosecutors pointed it out. After prosecutors revealed the presence of the Antigua money, Bowdoin explained in a conference call that the cash — at least $500,000 of it — was a deposit so ASD could process credit-card orders.

    But the account was in a name other than ASD.

    DISCUSSION TOPIC: Did Andy Bowdoin get the money out of Antigua before the onset of the banking crisis? Why was the money in a name other than ASD’s if it was used to process credit cards for ASD? Why didn’t Bowdoin repatriate the money and use it to pay ASD employees and restart the company?

    Surf’s Up

    On Nov. 27, ASD offered the Surf’s Up forum its official endorsement. This was several days after ASD lost the evidentiary hearing and several days before major prelaunch buzz for AdViewGlobal (AVG) began.

    With ASD’s endorsement in hand, some of the Surf’s Up Mods and members started a new site on ning.com to promote AVG. For its part, AVG says it has no ties to ASD, even though the two companies share a common executive, a common customer-service representative, and AVG’s graphics once appeared on a webroom operated by ASD — and AVG listed its street address as ASD’s street address in Quincy.

    DISCUSSION TOPIC: Should Surf’s Up have accepted the endorsement? Does it make sense to promote yet-another surf, especially when the surf has clear ties to ASD?

    BizAdSplash

    Despite all the upheaval in the financial world — and despite the fact the Feds are working harder than ever to expose Ponzi schemes — BizAdSplash says things are going just fine. Yesterday it announced a new promotion: 100 percent matching bonuses for customers and sponsors.

    Here is the announcement:

    Over the past week we have had a number of you contact us about your initial deposit and that you only purchased a small amount of Ad Packages just to test the system. Now you are ready to make a larger purchase. Your question is can we get the 100% match or discount on the cost of a larger Ad Package. Biz Ad Splash has agreed to open a small window for this 100% additional match. Any new purchases made from outside the system will be given the same benefit as your initial purchase and will be given the 100% match along with the sponsor match. This is only on purchases made on February 23 through February 28. This is a tremendous opportunity for all our Biz Ad Splash advertisers.

    Thank you for your patience while we are in our beta launch. We value your participation in Biz Ad Splash and we look forward to exceeding your expectations.

    The Biz Ad Splash Team

    DISCUSSION TOPIC: Is BizAdSplash, which launched only a short time ago, already hurting? Is it desperately trying to collect cash to survive? How can it possibly fund payouts for customers and sponsors when the 100 percent matching bonuses create so much extra liability?

    Will the surf hide behind “rebates aren’t guaranteed” if things go South? If that happens, will surf participants still think “offshore” surfing is the ticket to prosperity?

    And how can any of the new surfs — BizAdSplash, AdviewGlobal, AdGateWorld — expect to thrive when they are fundamentally competing for the same business in a world in which many governments are going after Ponzi schemes with exceptional vigor?

    Bernard Madoff

    Trustee Irving Piccard now says that Bernard Madoff didn’t even purchase securities for customers in the past 13 years, instead taking incoming money to pay off older investors in a virtually pure Ponzi scheme.

    DISCUSSION TOPIC: Given that Madoff escaped detection for years — and given that Allen Stanford appears to have escaped detection for years — are you worried that other Ponzi shoes may drop?

  • EDITORIAL: Cancel Their Ponzi Ticket, Sen. Leahy

    Sen. Leahy, in oline chat with eighth-graders.
    Sen. Leahy, in online chat with eighth-graders.

    Four more U.S. banks failed yesterday. Three failed on the previous Friday. Thirteen have failed year-to-date. To say this is unsettling is to grossly understate the severity of the banking problem and the drag on the U.S. and world economies.

    Stories about Ponzi schemes and mortgage fraud are in the news daily. The obvious fear among regulators is that more Bernard Madoffs and Arthur Nadels will emerge. The situation is ripe for Ponzi schemes to be exposed because people need cash and actually fear Ponzi fraud now, meaning they’re predisposed to request redemptions just in case. Ponzi operators won’t be able to fund the redemptions, and the fraud will be exposed at the revulsion of the world.

    And yet some members of the Surf’s Up forum, which is associated with the AdSurfDaily Ponzi operation, are writing incredibly brazen letters to Sen. Patrick Leahy. These letters are a bid to get the Senate Judiciary Committee to investigate the prosecutors who prevented the ASD Ponzi from mushrooming. Sen. Leahy is committee chairman.

    Make no mistake about it, Sen. Leahy: ASD is a $100 million Ponzi scheme and every bit as dangerous as the Madoff and Nadel schemes. ASD thrived for months and collected tens of millions of dollars — now subject to forfeiture because of quick action by the U.S. Secret Service, the IRS and the Justice Department — and tried to cover its tracks by drafting investors into a contract that provided no consumer protections at all. The contract was nothing more than an inartful, cynical bid to legalize Ponzi schemes and skirt securities laws by calling an investment program an “advertising” program.

    Members of the Judiciary Committee should pay close attention to the ASD contract, which appears starting on P. 68 of this document, an Aug. 5 forfeiture complaint against assets tied to ASD. The Justice Department filed a second forfeiture complaint on Dec. 19, outlining even more ASD abuses and highlighted by a claim that “Russian” hackers stole $1 million from ASD.

    ASD President Andy Bowdoin did not even file a police report, which raises even more questions — questions such as “Why not?” and “Did a theft actually even occur?”

    Members of the Judiciary Committee also should know that Bowdoin already has surrendered claims to money and property seized in the August forfeiture complaint.

    At the same time, members of the committee should seek to determine if the Robert Garner mentioned beginning on P. 160 of this Senate document pertaining to a 2001 money-laundering investigation is the same Robert Garner mentioned in the ASD forfeiture complaint.

    The Surf’s Up members’ bid to misinform the Judiciary Committee and sanitize Ponzi schemes is reprehensible, an insult to hard-working and underfunded law-enforcement agencies, the highly capable men and women who staff the agencies, and dedicated prosecutors at all levels of government.

    And it is a slap in the face to hard-working Americans who are living through lean times, struggling to make ends meet and are stunned beyond words at the devastation wrought by the Ponzi economy.

    We call on Sen. Leahy, a former prosecutor, and the Judiciary Committee to fully investigate so-called “autosurf” Ponzi fraud and propose legislation that will help federal and state prosecutors combat it. A law that specifically codifies the crime and spells out penalties would be a good first step.

    We suggest that Sen. Leahy and members of the Judiciary Committee work closely with Attorney General Holder and SEC Chairman Schapiro in crafting legislation that specifically addresses autosurf and HYIP Ponzi fraud.

    This insidious business is sucking wealth out of the economy and creating an environment in which criminals and even terrorists can thrive. Mini-Madoffs exist far and wide across the autosurf landscape. They are engaging in the sale of unregistered securities, wire fraud, money-laundering, mail fraud and racketeering, and they are being aided by people who are doing everything in their power to change the subject and sanitize what amounts to organized theft on a global scale.

    Cancel their Ponzi ticket, Sen. Leahy.

  • Reports: U.S. Regulators Probing Bank In Antigua

    Multiple media outlets — including Bloomberg News, the Associated Press and Business Week — are reporting that the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the Florida Office of Financial Regulation are investigating Stanford Financial Group.

    At issue is the extraordinary rate of return advertised by Stanford International Bank Ltd. (SIB), an Antigua-based arm of Stanford Financial Group. Stanford Financial Group is an investment firm headquartered in Houston. It is run by billionaire R. Allen Stanford, whose fortune was estimated at $2.2 billion by Forbes magazine.

    SIB’s certificates of deposit, for instance, have been advertised to return double or even triple the rates of U.S.-based CDs. The FBI now has joined the probe, the Wall Street Journal reports.

    The question on the lips of reporters is whether Allen Stanford in the next Bernard Madoff. Fueling concern have been the reports of financial analyst Alex Dalmady. Take a minute to read Dalmady’s report if you’ve been following the AdSurfDaily case. Antigua is a Caribbean nation and favored spot for U.S. residents to move money offshore.

    AdSurfDaily Inc., an alleged $100 million Ponzi purveyor, had more than $1 million on deposit in an Antigua bank, according to Aug. 25 court filings.

    “[Andy Bowdoin] told the Secret Service that an Antigua account (in another name), holds over one million ASD dollars,” federal prosecutors said.

    Perhaps ASD members would be wise to ask Bowdoin the name of the Antigua bank in which the funds are deposited.

    But, getting back to SIB . . .

    SIB has a strong presence in Florida. Dalmady, the financial analyst, has been asking some troubling questions and relating some troubling observations. One of the things that bothered him about SIB was the “unsophisticated” appearance of its website

    It’s an observation mindful of reactions to the ASD website.

    Reports now are circulating that SIB reserved the right to refuse early CD redemption requests, which has a whiff of some of the language ASD used to protect what federal prosecutors said was a Ponzi scheme. It’s not quite “rebates aren’t guaranteed,” but why restrict access to customers’ money, especially when you’re operating offshore? It only raises red flags.

    Stanford Financial is blaming the probe on disgruntled employees; ASD blamed bad press it was getting on disgruntled MLMers.

    It’s early. No charges have been filed against Stanford Financial Group.

  • Bowdoin/Madoff Comparison: Is It Fair?

    andybowdoinartLast night we received a note from a reader who had a bone to pick: He advised us, seemingly politely, that ASD was not an “autosurf.”  Rather, he said, it was a “manual surf.”

    There was a whiff of passive-aggressiveness in the note: He informed us that he did not desire to “address your blog” with the exception of informing us of the differences between a manual surf and an autosurf.

    Because we received this note shortly after publishing a graphic showing Andy Bowdoin, Bernard Madoff and Arthur Nadel in the same image, we wondered if the reader actually had a bigger bone to pick but didn’t want to acknowledge it. He didn’t want to “address your blog,” after all. (View the graphic.)

    We have received many such notes since August. Lots of them have been passive-aggressive in nature — poison arrows and bitter sarcasm delivered with a smile — and some were just plain aggressive. Virtually all of them tried to change the subject in some way and deflect from the core issues. We’ve been told that our “little blog” was universally reviled, told that we had “no right” to write about ASD because we weren’t members and, in the next breath, told that people who really understand how the world works recognize the ASD case for what it is: an attempt by the government to trample on people’s rights.

    ‘Win-At-All-Costs’ Strategy Backfired: ASD Members Destroyed Firm’s Already-Fleeting Credibility

    If you were the owner of an Internet program in almost unimaginable trouble with the government — so much trouble that prosecutors wanted to seize your property and sell it at auction — would you want members trying to “help” your case by insulting or trying to intimidate prosecutors, federal judges and other people who had the power to make a difference?

    Would you want Kool-Aid campaigns to Bill O’Reilly or petition drives aimed at getting politicians to endorse Ponzi schemes during an election year that coincided with an economic crisis? (Talk about a mixed message.) Would you want members trying to influence public opinion by sending chain letters to reporters? Would you want people repeating claims that a deal with a penny-stock company was going to pump $200 million into ASD? Would you want people filing complaints and trying to have a TV station charged with “deceptive business practices” for broadcasting news unflattering to ASD?

    And how about certified-mail campaigns right out of a sham Utah “Indian” tribe’s playbook — a tribe purportedy founded inside an Arby’s restaurant? Finally, would you want people filing complaints with the Office of Inspector General at the Justice Department before there had been a single finding of fact in the case?

    If you want to be taken seriously, you wouldn’t want any of these things. So why encourage them?

    What’s more, why invite even more scrutiny of ASD? The firm and its own out-of-control members destroyed the only chance ASD had to be viewed as a progressive, professional advertising company with a sharp, well-honed message and a well-oiled PR operation.

    Nothing that ASD or its members did was consistent with professionalism. The messages couldn’t possibly have been more at odds with themselves.

    Here is how a professional communications company would have addressed a monumental crisis:

    We emphatically deny the government’s assertions and look forward to explaining our business model to the Court. We are confident these issues will be resolved to our satisfaction and that we’ll continue to provide an extraordinary value and opportunity to our worldwide customer base.

    Compare that simple message to the ultimate messages.

    Back to last night’s note . . .

    The AdSurfDaily case does not hinge on whether ASD was a manual surf or an autosurf. We acknowledge that ASD participants had to click on an object to see the next ad. We have written about this, pointing out that a young girl videotaped clicking on ASD ads said it was so simple a six-year-old could do it. In the same video, the supervising adult implied that Facebook was a paid ASD advertiser. Lots of ASD members were capable of doing or saying anything to get the sale.

    The term “autosurf” generally has come to mean a surf site that loads ads in a rotator and pays people “rebates” to view them. The term is used in virtually all litigation involving similar businesses, so we’re comfortable with it. Readers seem to know what “autosurf” litigation is about, and ASD would be in the same trouble if it offered “rebates” but operated as what commonly is known as a manual traffic exchange.

    As we noted above, the note was polite. But we can’t help but wonder why the reader had the need to define ASD as a manual surf at this late date. It impressed us as yet another bid to change the subject. Andy Bowdoin already has surrendered claims to the lion’s share of the seized assets, and the court has acknowledged his motion to withdraw the claims.

    For all intents and purposes, the forfeiture element of the case is over, and the government has won.

    The Bowdoin/Madoff/Nadel Graphic

    Let us know if you think it was fair or unfair by leaving a comment.

    We believe it is fair for the following reasons:

    • All three men are implicated in big-dollar Ponzi schemes.
    • All three men have close ties to Florida.
    • All three men are in their 70s.
    • Ponzi schemes are very much in the news.
    • A $100 million Ponzi scheme should not be viewed as a minor event simply because there are larger Ponzi schemes.
    • Incredible sums of wealth were destroyed.
    • Although it is true the government intervened in the Bowdoin case before the Ponzi collapsed, it is equally true that it didn’t intervene in the Madoff/Nadel cases — much to the dismay of investors who lost fortunes.
    • Madoff, despite the fact he is Public Enemy No. 1, is said to be cooperating with investigators. If true, it does not minimize the crime or make it any less repulsive — but it is something Bowdoin didn’t do. To say Bowdoin’s approach was cynical is to understate his method. He encouraged members to send in testimonials while shielding them from important facts. He then relied on members to testify at the evidentiary hearing, while notifying the court that he intended to take the 5th.
    • Prosecuors allege in all three cases that company funds were diverted to fuel personal spending, including luxury spending for things such as automobiles. Prosecutors also allege that company funds were directed to family members and that extravagant purchases were made.

    So, make your case: Fair or unfair? We are always pleased to publish dissenting opinions.

  • Seniors In Gallery Of Ponzi Rogues; Grandpa Breaks Bad

    bowdoinmadoffnadel

    We noted Sunday that a startling number of senior citizens have been implicated in Ponzi schemes or accused of monumental financial misdeeds. Featured in this graphic are (left to right): Andy Bowdoin, president of fundamentally defunct AdSurfDaily Inc. of Quincy, Fla.; Bernard Madoff, head man at fundamentally defunct Bernard L. Madoff Investment Securities of New York; and Arthur Nadel, principal in several fundamentally defunct hedge funds in Sarasota, Fla.

    Bowdoin is 74. Prosecutors said he fleeced investors in a $100 million Ponzi scheme by selling unregistered securities and calling them “advertisements.”

    Madoff, who might have presided over the biggest Ponzi scheme in world history, is 70. Losses could reach $50 billion.

    Nadel, 76, was arrested yesterday in Tampa, after being on the lam for two weeks. An estimated $300 million is missing from hedge funds he managed in Sarasota.

    Authorities said all three men lived well while investors were being taken to the cleaners. Just prior to a federal seizure of his assets in August, Bowdoin put a gleaming new Lincoln in the driveway — after setting up a sham entity, diverting ASD money to it in a bid to hide assets, and using ASD cash to fuel personal spending in the hundreds of thousands of dollars by family members and preferred investors, prosecutors said.

    Bowdoin has surrendered claims to approximately $100 million in cash and other assets seized by the Feds. In a second forfeiture complaint that is unresolved, prosecutors seek to take control over other assets tied to the firm, including cars, a 20-foot Triton Cabana boat, jet skis and other property purchased with the proceeds of an illegal enterprise.

    Irving Picard, the trustee in the Madoff case, has filed papers to reject expensive automobile leases. While Madoff was engaging in a Ponzi scheme, Picard said, investors were footing the bill for three Mercedes, a Range Rover, a Lexus and a Cadillac.

    madoffleases

    Lease costs for the Mercedes units alone exceeded $4,200 a month, while the lease for the Range Rover cost $1,153 monthly. The Lexus ($888/month) and the Cadillac ($884/month) were relative bargains compared to the other vehicles.

    Prosecutors now say Nadel also took money from company funds and used it for family businesses. The receiver in the Nadel case, Burton Wiand, said in court filings that one of the family business owns as many as five airplanes.

    Other seniors in Ponzi trouble include Richard Picolli, 82, operator of the alleged Gen-See Ponzi in western New York. Prosecutors said he mostly targeted Catholics.

    Meanwhile, Ronald Keith Owens, 73, was just sentenced in Texas to 60 years in prison for running a “prime bank” Ponzi scheme promising huge returns out of the Bahamas and elsewhere.

    Elsewhere, James Blackman Roberts, 71, of Heber Springs, Ark., was just sentenced to 15 years in prison for running a $43.5 million Ponzi scheme.

  • ASD: Spending Spree Coincided With 2-for-1 Las Vegas Rally

    Less than two weeks after a May 31 AdSurfDaily rally concluded in Las Vegas, ASD funds were used to retire a $157,000 mortgage. Another $62,000 was used to purchase two cars — a 2008 Honda CRV and a 2009 Acura, federal prosecutors said.

    The beneficiaries of the mortgage retirement and the Honda were George and Judy Harris. George Harris is the son of Edna Faye Bowdoin, the wife of ASD President Andy Bowdoin.

    On June 10, Edna Faye Bowdoin worked with her son to establish an account at Capital City Bank. More than $177,000 in ASD funds were transferred from Bank of America and deposited into the Capital City account, prosecutors said.

    On June 23, George Harris used $157,216 of the money to pay off the mortgage. Earlier, on June 11, an ASD check for $28,607 was used to purchase the Honda. The vehicle was registered in the names of George and Judy Harris, prosecutors said.

    On June 10 and June 11 alone, prosecutors said, almost $240,000 in ASD funds were used for personal purchases by Bowdoin family members or friends, the home and two cars included.

    The timing of this is important. In December 2007, only six months prior to the Las Vegas rally, ASD was struggling. Within days of the conclusion of the Las Vegas rally, however, company funds were used to go on a buying spree and the company was scurrying to find ways to hide assets, prosecutors said.

    ASD used matching bonuses to lure prospects to Las Vegas. Some prospects excidedly talked about spending $35,000 at the rally and emerging with 70,000 “ad packs.”

    Two-for-one deals, of course, put even more strain on Ponzis because $35,000 now has the compounding power of $70,000, and $50,000 has the compounding power of $100,000.

    Give ASD $50,000. Receive a matching bonus, effectively doubling the power of your spend. Emerge with the purported capacity to earn $1,000 a day (1 percent of $100,000) by clicking on ads.

    People saw a way to turn their $50,000 spend into a $365,000-a-year job — a job that required only minutes a day and computes to $7,260 an hour in paper “profit.”

    That’s what Bernard Madoff allegedly did — showed people “profits” on paper to keep them coming back for more. Bowdoin showed the “profits” electronically, in members’ back offices.

    It was always absurd. It was absurd from Day One. It can be dressed up to seem plausible, even smart, but it is always and forever absurd.

    “Rebates aren’t guaranteed” sanitizes none of this; it’s just a way for an autosurf operator to live very well while money is flowing in and to license himself to keep all the cash when when the enterprise begins to collapse.

    Coupled with hundreds of thousands of dollars that were exiting ASD for personal purchases by family members — and profits taken by other insiders — ASD was adding new layers of impossibility to its already-impossible mathematical structure.

    And rank-and-file members were shouldering the burden — first for additional deficits created by two-for-one deals, and later for personal purchases and rewards given insiders.

    A review is in order (emphasis added):

    “Mr. Bowdoin and associates issued ad packages to friends and family (who  paid nothing for the ad packages) as free investment, and compensation programs,” prosecutors said.

    “Mr. Bowdoin, and others working with or associated with ASD, also gave ad packages to employees/workers as compensation for services performed for ASD,” prosecutors said.

    “These individuals also were able to pull out considerable funds from the so-called rebate program even though in many cases they put little, if any, of their own money into the scheme,” prosecutors said.

    “For example, a former employee took over $30,000 out of ASD after putting in nothing. Another former employee pulled out over $300,000 after putting in about $10,000,” prosecutors said. “One ASD promoter pulled out almost $100,000 after putting in less than $1,000.”

    In their December forfeiture complaint, prosecutors told the stories of some ASD insiders. One of the claims was about a claim Andy Bowdoin made about Russian hackers stealing $1 million from ASD. He didn’t report the theft to police, even though a tremendous sum allegedly had been stolen from the company.

    But Andy Bowdoin did sponsor rallies, after seeing how well they worked in Iowa. And after the rally concluded in Las Vegas, hundreds of thousands of dollars left ASD and was used for personal purchases by family members, prosecutors said.

    And when rallies in Chicago, Miami and Tampa concluded, they added, a $50,000 Lincoln was purchased with ASD funds. Bowdoin had found a way to make up an alleged $1 million theft and buy lots of new things — a boat and jet skis included.

  • Madoff Bail Restrictions Tightened, But He’ll Stay Home

    It must have been a worrisome weekend for Bernard Madoff.

    Madoff, accused of masterminding a $50 billion Ponzi scheme that has affected investors worldwide, found out Friday that a federal judge planned to rule today whether to revoke his bail and jail him in response to prosecutors’ court pleadings.

    The judge now has ruled — and Madoff will be permitted to stay at home.

    Prosecutors had not proven Madoff was a security or flight risk, Judge Ronald Ellis said.

    But Ellis did tighten Madoff’s bail conditions.

    Bernard Madoff
    Bernard Madoff

    Prosecutors had feared Madoff could transfer assets to family members, friends and employees, thus denyting victims of a means to recover losses.

    Madoff  now been ordered to compile an inventory of possessions and banned from transfering property.

    Federal prosecutors said last week that agents found $173 million in checks in Madoff’s office. The checks were to have been distributed to a list of people Madoff deemed worthy of receiving bonuses and gifts.

    All $173 million could have been dissipated had the checks been distributed — and people who deposited or cashed them could have been sued by victims and forced to return the proceeds.

    Prosecutors also said Madoff sent expensive jewelry and gifts to family and friends. Those gifts must be returned.

    Madoff is under house arrest in his New York City apartment. Under bail terms, he must wear an electronic monitoring advice.

    Baltimore officials now say the city’s police and fire pension funds reportedly lost $3.5 million through an indirect tie to Madoff.

  • Prosecutors Turn Up The Heat On Madoff

    Ponzi schemes almost always have insiders, and sometimes the insiders may not even know they’re insiders.

    In an extraordinary revelation, federal prosecutors said this afternoon that Bernard Madoff took overt steps to distribute bonuses to preferred family,  friends and employees after he realized the Ponzi he created was crashing down around him

    “[When] the defendant’s office desk was searched, investigators found approximately 100 signed checks totaling more than approximately $173 million, ready to be sent out,” said prosecutors Marc Litt and Lisa A. Baroni.

    The assertions were made in a letter to Judge Ronald L. Ellis.

    “The only thing that prevented the defendant from executing his plan to dissipate these assets was his arrest by the FBI on December 11,” Litt and Baroni said. The letter was signed by Litt, under the authority of  Acting U.S. Attorney Lev. L. Dassin of the Southern District of New York.

    Today’s letter by prosecutors marked the first public disclosure that Madoff already had drafted and signed checks, a situation that could have led to an even greater calamity had the checks been mailed and cashed.

    Prosecutors earlier had said only that Madoff had discussed distributing up to $300 million to preferred individuals.

    Here is the  letter from prosecutors.

    Had the preferred parties received and deposited the checks, Madoff’s assets would have been depleted by $173 million, putting family members, friends and employees in the position of getting sued to disgorge illegal profits.

    Prosecutors said earlier this week that Madoff and his wife, Ruth, sent more than $1 million in jewelry and other items to friends and family after his arrest. The government viewed it as a bail violation, saying Madoff should be jailed.

    Madoff’s attorney, Ira Sorkin, explained Madoff’s behavior as an innocent mistake.

    Today’s filing by prosecutors makes it clear that the government believes home-detention with electronic monitoring weren’t enough to keep Madoff in line while awaiting trial. The gloves are off, and prosecutors now are playing hardball.

    “The nature and circumstances of the offense charged are unprecedented,” prosecutors told the judge. “The defendant has admitted to perpetrating one of the largest, if not the largest, Ponzi schemes in history — a scheme that required the defendant to lie routinely to thousands of people and a scheme which has caused extraordinary damage to individuals, families and institutions all over the world.”

  • RateMyVanity.com, Inspired By Madoff Attire, Coming Soon; Readers Will Rate Newsmakers’ Vanity

    blank-logoRateMyVanity.com covers news from the worlds of entertainment, media, politics, business and sports, asking readers to rate how they perceive the vanity of newsmakers. Select stories will include a vanity poll.

    Read the News Release.

    The site was inspired by the Bernard Madoff case, particulary the garb he selected on the date of one of his bail hearings.  Content, however, won’t be limited to business news.

    Say, for example, the quarterback for your favorite team throws an ill-advised pass that gets intercepted late in the game, costing your team a win. If we write about the interception, we might ask readers if vanity played a role in the quarterback’s decision to throw into heavy coverage with the game on the line, instead of simply throwing the ball out of bounds and lining up again to give the team another shot at victory.

    Now, take the Bernard Madoff Ponzi case, for instance. When we write about it, we’ll encapsulate the news for readers, and ask them to rate the amount of vanity in play in a given situation.

    In the world of media, we might ask readers to assess the vanity of an anchor or reporter or host or opinion-maker in a given situation. Did Bill O’Reilly call out a federal judge because his heart was there and it was the right thing to do — or did he scold the judge because it was good for ratings?

    Did Keith Olbermann call out the President of the United States out of principle — or because he was trying to curry favor with his left-leaning viewers?

    The site message is simple: RateMyVanity.com: Vanity in the News. Rated.

    The site still is undergoing some tweaking and testing. The polling system is working, and there is a test poll on the Madoff case. As it stands, the poll is a “dummy” poll, meaning the system will record responses. The vanity choices in the poll, however, were designed for testing purposes only and don’t include the degree of “sizzle” we’ll use in day-to-day polls.

    Visit RateMyVanity.com.

    Here’s hoping you’ll make RateMyVanity.com one of your daily stops. The site will mix serious news and fun, giving readers a chance to rate vanity in the news. Perhaps little vanity will be present in a given story — but perhaps it will be present to a stifling, maddening degree.

    We’ll tailor the site to reflect current events, things that will having meaning to readers. The site will have some “attitude” — but it won’t be over-the-top. Over the weekend we’ll continue to tweak and test, with the site going operational from an editorial perspective Jan. 7.

    In time, prospective advertisers will be given a chance to sponsor an individual RateMyVanity “Vanity Poll” and also purchase a display ad. The site is aimed at consumers, news junkies, folks who like dish, readers who enjoy a diversion from the ordinary, people who believe the news is an endlessly fascinating display of things that aren’t always noble.

    Visit RateMyVanity.com.