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Tag: British Columbia Securities Commission

  • 3 PONZI/FRAUD CAPSULES: (1) Washington State Woman Jailed In Alleged $126 Million Ponzi Scheme; (2) Charity, Church, Investors In Metro Washington, D.C., Allegedly Scammed In $27M Ponzi; (3) South Florida Man Sentenced To More Than 12 Years In $29.5M ‘Gold’ Scam

    Screen shot: PDF from section of Page 1 of the indictment of Doris E. Nelson in an alleged $126 million Ponzi operating internationally through multiple companies.

    EDITOR’S NOTE: This information is presented in the form of briefs, with links to external sources.

    1.) Doris E. Nelson, arrested/jailed in Spokane, Wash., region, last week after federal raid in April 2010. SEC filed civil charges in September 2011.

    The allegations against Nelson and multiple companies in Nevada, Utah and Canada are alarming, but also somewhat standard fare if you’ve been observing how schemes form and then explain away problems when trouble develops.

    Among the core allegations are these:

    • Nelson, of Colbert, Wash.,  ran a payday-loan business called “The Little Loan Shoppe” in the area of Spokane. The firm was linked to multiple LLCs in the United States and multiple LTDs in Canada. The business started out in the Canadian province of British Columbia in roughly 1997, and moved to the United States “in or about 2001.” Investors were told they could earn enormous profits from the spread between the loan shop’s expenses and what it charged customers for a short-term loan.
    • The Ponzi scheme took in “at least” $126 million and caused losses of more than $40 million — losses that affected “at least” 800 investors.
    • Federal prosecutors say they have identified “victim investors” in multiple Canadian provinces and multiple U.S. states. The indictment also lists a victim from Spain.
    • The payday loan business was not profitable. Investors were getting paid through a complex shell game that lasted for years and involved the formation of new companies, including marketing and “leads” arms.
    • Nelson and some of the defendants engaged in wire fraud, mail fraud and money-laundering.
    • Nelson lied to the Manitoba Securities Commission and advised certain parties to lie to the British Columbia Securities Commission (BCSC).
    • Nelson used investor funds to purchase a motor home valued at nearly $127,000, a Chevrolet Corvette valued at more than $61,000, a Mercedes Benz valued at nearly $112,000. She purchased more than $220,000 in clothing at the St. Johns Knits store and $217,000 at other stores, including Nordstrom.
    • Nelson lost $400,000 of investors’ funds gambling at various Las Vegas casinos.
    • Nelson spent investors’ money on luxury sea cruises, including nearly $29,000 on a Royal Caribbean cruise in which she also spent $23,500 in investor funds to gamble.
    • The promissory-notes scheme showed classic signs of collapse in October 2008. (More details below.) Nelson slashed payouts to investors — from an anticipated rate of between 40 percent and 60 percent to 10 percent. The 10 percent payouts collapsed by March 2009.
    • Nelson claimed Little Loan Shoppe bought the building it used in Spokane, but that was a lie. In truth, the company was paying rent to a company owned by Nelson’s husband.
    • In February 2008, leading up to the beginning of the end in October 2008, Nelson forecast “an explosion of profit.” In May, she announced that “our industry is thriving.” She then opened a new window for investments, telling marks that she was “excepting” new money, as opposed to “accepting” it.  “[T]his window of opportunity will probably not be open again due to the expected surplus of income . . .” she wrote.
    • Between late June and late July of 2008, Nelson announced a “massive marketing campaign” that would turn the operation into “one of the largest loan companies.”
    • Millions of dollars flowed to the teetering scheme after Nelson’s various hype fests.
    • In October 2008, Nelson lied to BCSC about how she was making interest payments to investors, denying that the money came from “newer” investors and claiming the cash came from loan profits.
    • BCSC ordered Nelson to stop issuing promissory notes. Nelson then told investors that changes to U.S. lending laws had “dramatically reduced our profits . . .”
    • In February 2009, Nelson advised investors to quit contacting her about their investments because the inquiries were distracting her. She then announced a purported account review. In March 2009, Nelson told investors that the account review was behind schedule and perhaps would not be completed until the middle of April.
    • In March 2009, Nelson traveled to Florida to try to get more money from existing investors.
    • The scam then collapsed in its entirety and investors experienced ruin.

    Read/view coverage of alleged Nelson scam at KXLY.com.

    The Alleged Garfield M. Taylor Ponzi Scheme In Metro Washington, D.C.

    2.) Garfield M. Taylor, others sued by SEC last week amid spectacular allegations of Ponzi fraud targeted at charities and people of faith, among others.

    Outlined below are some of the core allegations in the alleged Garfield M. Taylor Ponzi scheme, which includes multiple defendants and multiple companies. The SEC brought the case last week, alleging a $27 million Ponzi scheme.

    First, a quote from Stephen L. Cohen, the SEC’s associate director in the Division of Enforcement.

    “Garfield Taylor and his partners in the scheme touted themselves as seasoned and trustworthy financial professionals offering a conservative but lucrative investment opportunity. In reality, they were gambling away investor assets in extremely risky trades and operating a classic Ponzi scheme.”

    Key allegations:

    • Garfield Taylor, of North Bethesda, Md., formerly worked for Fannie Mae and “frequently” used its name in his fraud pitch. His companies, Garfield Taylor Inc. and Gibraltar Asset Management Group LLC, were charged by the SEC, as were five alleged “collaborators”: Maurice G. Taylor of Bowie, Md., who is the brother of Garfield Taylor; Randolph M. Taylor of Washington, D.C., who is the nephew of Garfield Taylor; Benjamin C. Dalley of Washington, D.C., who is the childhood friend and business partner of Randolph Taylor; Jeffrey A. King of Upper Marlboro, Md., whose sister is married to Maurice Taylor; William B. Mitchell of Middle River, Md.
    • The scheme operated “at least” between 2005 and 2010, targeting “middle class” investors and charities.
    • The FDIC’s name was used to sanitize the scam.
    • Unregistered brokers were used to recruit investors.
    • The firms themselves were not registered.
    • Misleading PowerPoint presentations were used.
    • A Baptist church in Maryland, a children’s charity in Washington and an investment club in Philadelphia were shown the PowerPoint presentations.
    • Fancy language such as “proprietary strategy,” “covered call investment strategy” and “unparalleled downside protection” was used.
    • The Baptist church also was shown a “fake ‘letter of recommendation’ from Charles Schwab.”
    • “This letter was not prepared by anyone at Charles Schwab. Rather, it is a fabrication.”
    • A retiree from Lanham, Md.,  plowed more than $780,000 into the scam, an amount that represented “nearly his entire retirement savings.”
    • At least one investor in 2009 was worried about his/her nest egg in the post-Bernard Madoff environment, but Dalley reassured the investor that the opportunity had “taken the internal measures to strictly regulate our traders and accounting to ensure that our investor’s investments are safe.”
    • When Dalley provided the assurance, he already knew that the opportunity “had not followed a covered call trading strategy and had instead engaged in highly speculative naked options trading.”
    • Garfield Taylor actually was operating a “joint Ponzi scheme” through his companies.
    • Garfield Taylor “convinced at least three individuals to give him the username and password to their online brokerage accounts in order for Garfield Taylor to place trades in those accounts on a discretionary basis in exchange for a share of any profits generated.” A Maryland woman duped in this fashion lost “nearly her entire account” originally worth $450,000 “in a matter of two months.”
    • Garfield Taylor used investors’ money to send his children to private school at a cost of $73,000.
    • At one point, one of the Garfield Taylor firms had “less than” $1,000 in its account, but an investor “wired approximately $590,000.” Garfield Taylor used the incoming money to make Ponzi payments.

    Read the SEC complaint.

    Gold Scammer Gets More Than 12 Years In Slammer

    3.) Jamie Campany, 48, of Palm Beach County, Fla., sentenced to federal prison in $29.5 million fraud.

    Key allegations:

    • More than 1,400 investors defrauded.
    • Multiple companies operating in South Florida and elsewhere involved, including Global Bullion Exchange LLC of Lake Worth. Scam also used name of “Barclay.”
    • Fraud fueled by telemarketing.
    • FBI, U.S. Postal Inspection Service and Florida Office of Financial Regulation handled probe.

    Read Feds’ statement announcing the Campany sentencing.

    Watch Campany tell ABC News how he scammed the masses.

     

  • Man, 85, Accused Of Selling Unregistered Securities In ‘Shipwreck’ Venture; Recidivist Huckster Hawked Sunken-Treasure Offer While Banned Because Of Previous Misconduct, BCSC Says

    Ten years ago, when John Arthur Roche McLoughlin was about 75 years old, the British Columbia Securities Commission accused him of selling unregistered securities in a venture known as Grandby Development Corp., a purported fertilizer company.

    BCSC imposed a five-year ban that prohibited McLoughlin from acting as a director or officer of any issuer. Because McLoughlin did not meet the requirements to lift the ban, including paying a $25,000 assessment, the ban remained in effect, according to records.

    Now, at 85, McLoughlin has been accused of selling unregistered securities in a purported Irish venture in which investors were told they’d receive a share of treasure recovered from shipwrecks. The scheme, according to records, raised about $312,00 for the company, known as Blue Lighthouse Ltd.

    McLoughlin initially protested the $20,000 penalty BCSC sought to impose for his conduct in the treasure-salvaging venture, which he sold as an agent for Blue Lighthouse through a British Columbia firm known as MCL Ventures Inc., according to records.

    BCSC then increased the penalty by $30,000 and banned McLoughlin for 15 years. He next could seek to sell securities when he was approximately 100 years old, according to the ruling.

    “As McLoughlin engaged in the same misconduct for which he had previously been sanctioned and continued to breach the orders against him in spite of repeated warnings from BCSC staff, the panel increased the $20,000 fine sought by the commission to $50,000,” the agency said.

    BCSC also “cease-traded MCL Ventures Inc.,” the agency said.

  • KABOOM! SEC, Feds Target Alleged Money-Laundering Operation In Costa Rica; 6 People From Various Countries Charged Criminally; 7 Charged Civilly In Coordinated Probe Of ‘Pump And Dump’ Schemes

    BULLETIN: Two days after Southern Florida’s top federal prosecutor warned that offshore fraudsters who targeted Americans had no safe haven, six people from various parts of the world who allegedly ran or contributed to a pump-and-dump scheme that used the services of a  money-laundering operation in Costa Rica have been charged criminally, authorities said.

    The SEC, meanwhile, charged seven people civilly. An attorney has been charged both criminally and civilly, the SEC said. The cases were brought in the Southern District of Florida, which has been a hotbed of financial crime.

    Defendants in the cases hail from Costa Rica, Great Britain, Canada, Israel and the United States, according to the SEC. The criminal charges include conspiracy to commit securities, mail and wire fraud; wire fraud; mail fraud; violating the securities regulation laws and obstruction of justice.

    Jonathan R. Curshen, a convicted felon awaiting sentencing in an earlier securities and bribery scheme, has been charged both criminally and civilly in the new case. Curshen, 46, a dual U.S. and British citizen and the one-time “honorary counsel” of St. Kitts-Nevis to Costa Rica, presided over a Costa Rican company known as Red Sea Management Ltd.

    Red Sea “effected fraudulent pump-and-dump schemes on behalf of its clients and laundered millions of dollars in illegal trading proceeds out of the United States to its clients overseas,” the SEC charged.

    Also charged criminally and civilly were attorney Michael S. Krome, 49, of Lake Grove, N.Y; Ariav “Eric” Weinbaum, 37, of an unspecified city in Israel; Yitzchak Zigdon, 47, of Tel Aviv; Ronny Morales Salazar, 39, of San Jose, Costa Rica; and Robert L. Weidenbaum, 44, of Coral Gables, Fla.

    Krome and Weidenbaum (as distinct from Weinbaum) are Americans.

    Weinbaum, according to records, has dual U.S. and Israeli citizenship. He previously lived in Boca Raton, Fla., but now is living in Israel, the SEC said. The SEC alleged that Weinbaum has a “network of operatives he uses to perpetrate pump-and-dump stock manipulations.”

    Zigdon is an “Israeli accountant and the business partner of Weinbaum,” the SEC said.

    David C. Ricci of San Jose, Costa Rica, was charged civilly, and already has settled with the SEC. Ricci is a citizen of Canada who was living in Costa Rica, according to the SEC charging documents.

    “This group of illicit stock promoters sought to hide their scheme behind offshore entities, but their misconduct was exposed by the excellent cooperation of law enforcement agencies here and abroad,” said Cheryl Scarboro, associate director in the SEC’s Division of Enforcement.

    On Feb. 16, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida warned offshore scammers and criminals that the United States would not tolerate crime aimed from abroad at its citizens.

    “International law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas,” Ferrer said.

    “Curshen directed Red Sea to open numerous nominee brokerage accounts with U.S. and Canadian broker-dealers to enable the firm to engage in coordinated manipulative trading and conceal its illegal activity,” the SEC charged, alleging that Ricci and Salazar had trading authority over the nominee accounts.

    The scheme for which the charges were brought centered on a “sham” company known as CO2 Tech Ltd., which purported to be in the business of reversing global warming, the SEC said.

    Purportedly based in London, the company claimed to have a relationship with Boeing, the aircraft-maker, and traded on the Pink Sheets.

    “There were no communications, correspondence or understandings between CO2 Tech and Boeing,” the SEC said flatly, alleging that CO2 Tech was a “sham” that had no “significant assets or operations.”

    Krome, the lawyer, “issued a fraudulent opinion letter” to enable Weinbaum and Zigdon to advance the scheme, and “Weinbaum hired Weidenbaum” to distribute false information through websites, spam e-mails and fax blasts, the SEC charged.

    “Weidenbaum enlisted a group of stock promoters who then executed illegal ‘matched orders’ with Red Sea’s nominee brokerage accounts in order to ‘jump-start’ the market and increase the price of the stock,” the SEC charged. “As a result of the false media campaign and the illegal matched orders, the market price of CO2 Tech stock increased 81 percent increase in one day and trading volume increased 1,573 percent.”

    Ricci and Salazar sold the stock through Red Sea, and the “coordinated misconduct enabled stock sales at artificially inflated prices for profits of more than $7 million at the expense of unsuspecting investors,” the SEC charged.

    Cooperating in the case were the U.S. Department of Justice, the FBI, and the U.S. Postal Inspection Service, FINRA, the Costa Rican Police, the British Columbia Securities Commission, the Israel Securities Authority, the United Kingdom Financial Services Authority and The City of London Police Department, the SEC said.

    In recent days, federal prosecutors also have filed charges against more than 100 people associated with Armenian Power, an international organized-crime group with ties to Russia and Armenia.

  • GO FINRA! Regulator Tackles Online HYIPs; Issues Warning On ‘Social Media-Linked Ponzi Schemes’; References P2P, Genius Funds, ‘Con Artists’ And ‘Bizarre Substratum’ Of Internet

    EDITOR’S NOTE: It has become increasingly clear that regulators and the law-enforcement community are rallying around a common theme that web-based promoters are using discussion forums and social-networking sites in bids to sanitize HYIP Ponzi schemes by positioning them as attractive investment opportunities and even a thrilling form of gambling that pays commissions.

    Today the Financial Industry Regulatory Authority (FINRA) launched an awareness campaign aimed at taking the lipstick off financial pigs and exposing them for the economy-killing, filthy hogs they are. FINRA did not mince words, calling the HYIP universe a “bizarre substratum of the Internet.”

    Here, now, the story . . .

    The Financial Industry Regulatory Authority (FINRA) has launched a public-awareness campaign and issued an investor alert on HYIP schemes that use social-media sites such as YouTube, Twitter, Facebook and online forums and “rating” sites to spread Ponzi misery globally.

    “HYIPs are old-fashioned Ponzi schemes dressed up for a Web 2.0 world,” said John Gannon, FINRA’s senior vice president. “Some of these schemes encourage people to bring in new victims, while others entice investors to ‘ride the Ponzi’ by attempting to get in and get out before the scheme collapses.”

    FINRA is supplementing its educational campaign with an advertising campaign.

    “By using Google AdWords, we are hoping to reach anyone searching the Internet for HYIPs before they fall into the hands of con artists,” Gannon said.

    FINRA’s campaign occurs against the backdrop of remarkable law-enforcement actions against the alleged Legisi Ponzi scheme pushed by Matt Gagnon of Mazu.com, the alleged Pathway To Prosperity (P2P) Ponzi scheme pushed on forums such as ASA Monitor, MoneyMakerGroup, Talk Gold and MyCashForums, and the collapse of an HYIP known as Genius Funds.

    It also occurs against the backdrop of “prelaunch” buzz surrounding a mysterious program known as WebsiteTester.biz, which is spreading virally on the Internet through electronic news releases, references on promoters’ websites and daily updates on Twitter.

    Promoters’ advertising is heavy for WebsiteTesterBiz, despite the fact the company’s domain name is registered behind a proxy, its purported parent company’s domain name is registered behind a proxy and there is a paucity of any verifiable information about either firm.

    FINRA specifically referenced the alleged P2P Ponzi in its educational materials. It also provided a link to information published about the collapsed Genius Funds HYIP by the British Columbia Securities Commission. Alarmingly, FINRA said the Genius Funds’ fraud costs investors a staggering $400 million.

    Federal prosecutors who filed criminal charges against P2P operator Nicholas Smirnow declared in May that “[a] large percentage, if not all, HYIPs, are Ponzi schemes.”

    In its resource material, FINRA is building on that theme.

    “[V]irtually every HYIP we have seen bears hallmarks of fraud,” FINRA said. “We are issuing this alert to warn investors worldwide to stay away from HYIPs.”

    P2P gathered more than $70 million. Legisi also gathered more than $70 million, according to court records.

    Separately, the alleged AdSurfDaily autosurf Ponzi scheme gathered at least $80 million and perhaps $100 million or more, according to records. Autosurfing is a form of HYIP fraud. The U.S. Secret Service acted against ASD in August 2008.

    In February 2010, an autosurf known as INetGlobal also came under investigation by the Secret Service. The SEC has acted against autosurfs known as 12DailyPro, PhoenixSurf and CEP, which gathered tens of millions of dollars combined — fueled by online promotions.

    Citing FBI statistics, FINRA said “the number of new HYIP investigations during fiscal year 2009 increased more than 100 percent over fiscal year 2008.”

    The regulator specifically warned about websites that “Rank the latest programs and provide details of ‘payout options.’” At the same time, it warned about sites that “Allow web designers to buy ready-made HYIP templates and set up an ‘instant’ HYIP.” Meanwhile, it warned about sites that “Blog, chat and ‘teach’ about HYIPs.”

    “Some HYIP ‘investors’ proffer strategies for maximizing profits and avoiding losses — everything from videos showing how to ‘make massive profits’ in HYIPs and ‘build a winning HYIP portfolio’ to an eBook on how to ‘ride the Ponzi’ and get in and out before a scheme collapses,” FINRA said.

    “Other HYIP forums discuss how to enter ‘test spends,’ how to identify new HYIPs to maximize one’s chances of being an early stage payee and even how to check when a HYIP’s domain name expires so you can guess how long it might pay returns before shutting down,” FINRA noted.

    One of the tips offered by FINRA was to be on the look out for “typos and poor grammar” in sales pitches.

    “This is often a tip-off that scammers are at work,” FINRA said.

    FINRA said HYIP scammers often don’t share critical information with investors.

    “HYIP operators cloak themselves in secrecy regarding who manages investor money, where the company is located or where to go to get additional information,” FINRA said.

    Claims about being “offshore” also are made, FINRA said.

    “Be aware that generally persons or firms offering securities to U.S. residents must be licensed by FINRA and registered with the SEC,” FINRA said.

    The sky often is positioned as the limit in the HYIP universe, which often relies on “online payment systems” — some of which “have been tied in recent years to criminal activity, including money laundering, identity theft and other scams,” FINRA warned.

    “High-yield investment programs (HYIPs) are unregistered investments created and touted by unlicensed individuals,” FINRA said. “Typically offered through slick (and sometimes not-so-slick) websites, HYIPs dangle the contradictory promises of safety coupled with high, unsustainable rates of return — 20, 30, 100 or more percent per day—through vague or murky trading strategies.”

    Read FINRA’s warning on HYIPs. (Make sure you click on the links in the body of the warning.)

    Read a PP Blog story about an alleged penny-stock scheme that was operated on Facebook and Twitter. Read a PP Blog story on P2P, and also one on Genius Funds and others.

    Read more about P2P. Read more about Legisi.

  • Another HYIP Pushed By ASD Members Now DOA; Cypriot, Canadian Securities Regulators Issue Warnings About Genius Funds; Regulator Seeks Criminal Probe

    Regulators in Cyprus have referred Genius Funds for criminal investigation and released a warning that the company “[is] not permitted to provide investment and ancillary services in the Republic.”

    Genius Funds, a darling of the HYIP world,  was heavily promoted on the Ponzi boards. The program also is known as Genius Investments. The program was referred for criminal investigation by the Cyprus Securities and Exchange Commission, which also issued the warning. The announcement that the case was referred for criminal investigation was made Friday in Cyprus.

    One of the matters referred for criminal investigation pertained to a question about whether Genius Funds used a “falsified document that possibly stated that it possessed an operational license which was not authentic,” the Cypriot regulator said.

    Separately, Canadian securities regulators also have acted against Genius Funds, permanently banning the HYIP “for illegally selling securities,” the British Columbia Securities Commission (BCSC) said.

    Genius Funds’ website is throwing a server error.

    The program was pitched on the pro-AdSurfDaily Surf’s Up forum in December by a poster who dubbed himself “joe.” Genius Funds was one of four HYIP’s pitched by “joe” in an egg-themed promotion. The egg-themed domains redirected to HYIP programs.

    All of the programs appear to have failed or gone missing, but the egg-themed domain names now redirect to other HYIPs.

    “ALL MY EGGS ARE NOT IN ONE BASKET,” the Surf’s Up pitchman said in all-caps. “I MAKE 2000.00 A WEEK.”

    Some ASD members continued to promote autosurfs and HYIPs after the federal seizure of tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin in August 2008. The Surf’s Up forum went missing earlier this year.

    In recent weeks, the Golden Panda Ad Zone forum (also known as the Online Success Zone forum), another website from which ASD members pitched autosurf and HYIP programs, also went missing.

    BCSC opened its probe into Genius Funds after receiving a tip from “a financial institution,” the agency said.

    Read the Genius Funds’ announcement from Cyprus. Read the announcement from Canada.

  • HYIP/AUTOSURF SHOCKWAVES: Regulators Order Canadian Ponzi Schemers To Pay Penalties Totaling $26 Million And To Disgorge Illegal Profits Of $16 Million; Case Has Parallels To AdSurfDaily And AdViewGlobal

    The British Columbia Securities Commission (BCSC) has ordered four respondents in a civil action to pay penalties of $26 million for operating a Ponzi scheme and to surrender $16 million in illegal profits.

    In forceful findings that may echo throughout the HYIP and autosurfing universe, BCSC said the schemers tried to skirt securities laws by selling a fraudulent HYIP currency-trading program in Canada through an MLM-syle operation while hiding behind “non-disclosure” agreements and operating in an environment of secrecy.

    AdViewGlobal (AVG), an autosurf firm with close ties to the alleged AdSurfDaily (ASD) Ponzi scheme in the United States, created a similar structure in which participants were advised to keep news within “association” walls and not to disclose information to outsiders.

    BCSC also found that the companies named in the Canadian complaint disseminated false information and used intimidation tactics in a bid to prevent participants from cooperating with authorities.

    “Because of those [non-disclosure] agreements, and because of false but intimidating statements made to them by the respondents, many investors refused or were reluctant to cooperate with the Commission’s investigation,” BCSC said.

    In recent weeks, some ASD members have circulated emails that suggested participants should not cooperate with the U.S. Secret Service in the ASD probe. During the summer, AVG, which had suspended member cashouts, threatened to sue members for sharing information with outsiders and also threatened to contact the Internet Service Providers of participants who complained on a company forum.

    In yet another similarity to the ASD case, some of the purveyors of the Canadian scheme also pushed what Canadian authorities described as a “private common law spiritual trust.”

    Some of ASD’s and AVG’s most ardent supporters have used similar phrasing and referenced common law in defending the surfs.

    BCSC minced no words as it laid out the penalties against Hal (Mick) Allan McLeod, David John Vaughan, Kenneth Robert McMordie (also known as Byrun Fox) and Dianne Sharon Rosiek.

    BCSC pegged losses at $13 million, saying the respondents “fraudulently distributed securities and made misrepresentations” through Legacy Capital Inc., Legacy Trust Inc. and Manna Trading Corp Ltd.

    The Canadian respondents also cited a tie to an entity known as the Manna Humanitarian Foundation.

    AVG, in promotional material, cited a tie to the World Rain Forest Movement in what some observers saw as a bid to sanitize the AVG business by linking it to a worthwhile cause.

    “At AVGlobal Association we believe we should go beyond the basics of ethical business practices and embrace our responsibility to people and to the planet,” AVG said on its website. “We believe this brings sustained, collective value to our members, our employees, our customers and society.”

    AVG announced a suspension of payouts June 25. It is unclear if any worthwhile cause ever received money from the company.

    A BCSC panel fined McLeod $8 million. Vaughan, Rosiek and McMordie were dispensed penalties of $6 million each. The panel also ordered each respondent, including the companies, to disgorge the $16 million the scheme obtained from investors.

    The suggested payout percentages of the Canadian entities actually were significantly lower than the suggested payout percentages of both ASD and AVG.

    “Manna promised investors 7 [percent]  monthly returns (later reduced to 5 [percent]), sometimes compounded,” BCSC said.

    ASD and AVG both promoted compounding. Some ASD members promoted returns of 365 percent a year, claiming $100,000 in ASD returned $1,000 a day.

    Similar to ASD and AVG, investors who became “affiliates” or “consultants” of the Canadian companies could bring in new investors.

    “When they did so, they earned a commission on the amount invested and a continuing share of the return on the new investment,” BCSC said.

    The private, common-law spiritual trust “was a mechanism Fox concocted ostensibly to avoid the application of tax and securities laws to investments in the Manna scheme,” BCSC said.

    BCSC pegged losses in the Canadian scheme at $13 million, saying as many as 800 people lost money.

    “They created a multi-level marketing structure to maximize distribution of the Manna securities,” BCSC said.

    “The respondents knew exactly what they were doing when it came to dealing with securities laws,” a BCSC panel said. “They were well aware of the requirements of the Act, and of the role of the Commission in enforcing the Act. They took numerous actions calculated to escape detection. They attempted, unsuccessfully, to construct the Manna scheme in a form that would fit within a specific exemption in the Act.”

    Authorities said the scheme was inexcusable.

    “Nothing strikes more viciously at the integrity of our capital markets than fraud, and this case represents a particularly aggressive and flagrant assault on the public’s confidence in our markets,” BCSC said.

    BCSC’s announcement followed on the heels of announcements Oct. 15 by the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission that they were targeting a Florida company that allegedly tried to hide behind a corporate registration in Panama.

    The actions by the SEC and CFTC expose the vulnerability of autosurfs that register as corporations offshore and arrange web-hosting overseas, but do not comply with securities laws of the United States and foreign countries in which they have a paper footprint or are not regulated in the foreign countries.

    The moves also demonstrate that U.S. securities regulators — no matter where a company arranges webhosting — intend to treat American owners who flout laws as issuers of unregistered securities, unregistered investment advisers and operators of unregistered foreign investment companies from inside the United States

    Named defendants in emergency actions filed Oct. 15 in U.S. District Court for the Middle District of Florida were David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc.