Attorney General Lawrence Wasden at an Idaho event last year. Source: website of the attorney general.
The successful felony prosecutions under federal law of two Connecticut women in a cash-gifting scam apparently hasn’t registered in Idaho.
Now, the state’s attorney general, citing the Connecticut prosecutions that led to lengthy prison sentences, is taking action. And he’s not mincing words.
“Taking part in an unlawful pyramid scheme violates the Idaho Consumer Protection Act and is a felony under the state’s criminal code,” Attorney General Lawrence Wasden said. “Make no mistake – taking part in these schemes is illegal. Anyone who has received money from participating must pay it back. Failure to do so may result in civil or criminal enforcement action.”
Idaho investigators have received two recent reports of illegal gifting pyramids operating in the state, Wasden’s office said. Sums of $5,000 are being solicited. Reports identified the schemes as a “Women’s Wisdom Circle.”
One has “a formal dinner theme, the other a gardening theme,” Idaho prosecutors said.
In one Women’s Wisdom Circle reportedly operating in Ammon, participants are being asked to pay a $5,000 entry fee. By recruiting others, participants can then advance up the pyramid through levels named after the courses of a formal dinner: appetizer, soup/salad, entrée and dessert. Reports investigated by the Consumer Protection Division indicate those at the top of the pyramid have received payments of up to $40,000.
The gardening theme gifting circle operating near Preston makes “soil” the entry position, while “harvester” rests at the top of the pyramid.
The schemes are promoted as gifting programs intended to empower women and claim to adhere to IRS gifting rules. Women are encouraged to keep their involvement secret and are required to sign a statement that the money they pay is a gift, with nothing expected in return.
The statements are false and do not make participation legal, regardless of what potential recruits are told, Wasden said.
“Participants should stop immediately,” Wasden warned. “Unlawful pyramid schemes collapse, hurt people financially and are a crime in Idaho.”
In May 2012, three American women and alleged “leaders” of a cash-gifting pyramid scheme were arrested in Connecticut for their roles in the purported “opportunity,” a pyramid that featured so-called “Women’s Gifting Tables” and had a food theme. Two of the woman later were sentenced to prison. The third woman was placed on three years’ probation and put under court supervision.
It now has emerged that 11 women in Britain implicated in a highly similar scheme have been prosecuted. Six have been convicted. The British scheme was known variously as “Give and Take” and “Key to a Fortune” and had a bridal theme.
The apparent message? Get a great start in wedded life by handing over your cash to a gifting scheme and waiting for your £3,000 to magically turn into more than £20,000.
Like the Connecticut cash-gifting scheme, the British scheme allegedly was led by older women, including some in their fifties or sixties. Both schemes featured false claims the “program” was legal.
The British scheme reportedly gathered on the order of £21 million, with about 90 percent of participants losing their money. Some of the participants appear to have purchased multiple positions, hoping to score more than one payout.
Western Morning News, quoting a prosecutor, reported the scheme was ruled with a “rod of iron.” In May 2012, federal prosecutors in the United States said the Connecticut scheme included an element of “intimidation” aimed at silencing people who questioned the scheme.
The scheme in Britain allegedly operated between May 2008 and April 2009. The Connecticut scheme operated roughly between 2008 and 2011.
From the BBC, quoting Judge Mark Horton (italics added):
“These cases and the actions and attitudes of these defendants demonstrate the way in which pyramid promotional schemes and chain gifting schemes can be secretly created and quickly spread amongst a vast number of people and over several counties,” he said.
In February 2014, a prosecutor in Hawaii warned about a “Women’s Circle” gifting scheme operating in that state. The PP Blog reported at the same time that members of a cash-gifting scam known as BlessingGoldClub were trying to offload “units” in the Better-Living Global Marketing HYIP scam for $500. The units purportedly were being discounted from $1,295.
In the U.K. case, Judge Horton said, “The public need to be aware that schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities as friends and family are lured into such a scheme,” according to Western Morning News.
“Women’s Gifting Circles” or “Women Empowering Women Circles” pyramid schemes are operating in Hawaii, said Kauai Prosecuting Attorney Justin F. Kollar.
“These schemes are marketed as a way to entice women through a tiered investment model, often using language that speaks in terms of ‘empowering’ women spiritually or financially,” Kollar said. “The people at the top of the pyramid collect money from those at the bottom of the pyramid, plain and simple. The people at the bottom are promised future rewards that are based on recruiting additional followers to start new circles. These schemes are illegal and are designed by predators to extract money from people who trust them.”
In many cases, women who are being recruited are told not to talk about the circle for various reasons, or are told that the practices are legal as long as the dollar amounts are under a certain threshold. However, violators can be subject to criminal and civil penalties under State securities laws.
In other cash-gifting fraud news, a source told the PP Blog today that members of a cash-gifting scam known as BlessingGoldClub are trying to offload “units” in the Better-Living Global Marketing HYIP scam for $500. The units purportedly are being discounted from $1,295.
BLGM members have been fretting about not getting paid. The “program” is similar to the Zeek Rewards’ Ponzi scheme.
TelexFree figure Scott Miller also has been a proponent of cash-gifting. Miller’s Facebook site for TelexFree, alleged in Brazil to be a massive pyramid scheme, appears not to have been updated since Jan. 10.
Paul Darby with “President Obama,” apparently on Inauguration Day in 2009 after the U.S. Secret Service infomed the MLM world through the filing of the AdSurfDaily Ponzi case that trading on the name and image of the President of the United States might not be a good idea.
UPDATED 8:37 A.M. EDT (OCT. 21, U.S.A.) Former AdSurfDaily President Andy Bowdoin is continuing to serve 78 months in federal prison at the age of 78 — in part because he borrowed liberally from the MLM scammer’s playbook and planted the seed that the President of the United States (then George W. Bush) backed his “program.” Some MLM prospects joined the ASD fraud scheme — a $119 million Ponzi popularized in part on the Ponzi boards and broken up by the U.S. Secret Service in 2008 — based on pitches highlighting Bowdoin’s purported ties to the White House.
Bush left office on Jan. 20, 2009. Barack Obama then became President.
Records now strongly suggest that Obama was President for only minutes when he became an unwitting salesman for an MLM or affiliate scheme. Indeed, an online pitch featuring “Obama” is dated Jan. 20, 2009, Inauguration Day in the United States and the date upon which Obama took over from Bush.
A Blog on Google’s free Blogspot platform made this headline claim on Jan. 20, 2009: “Barack Obama visits Unimax Services.”
The Blog, which remains online well into Obama’s second term that began on Jan. 20 of this year, features a knockoff of the Seal of the President of the United States. “Presidents Club,” it screams. Recruits for a “program” known as Net Millionaires Club apparently were accorded the title of Presidents — not of the United States, but of the “Unimax States.”
This is straight out of MLM or affiliate scheme La-La Land.
Paul Darby, who describes himself as “President of the Unimax Services Corporation” on the Blogspot site with the “Barack Obama visits Unimax Services” headline, is featured alongside a cardboard cutout of Obama in a video playing on the site. In the bizarre video, Darby bizarrely describes the cutout of Obama as the “featured guest” and suggests the Net Millionaries Club he’s promoting with the knockoff of the U.S. Presidential Seal is an “economic stimulus package.”
If you don’t go any farther than the headline — if you don’t take the time to view the video showing the Obama cutout — you could reasonably conclude that Obama actually visited Unimax Services and endorsed the “program.” Put another way, it’s a contemptible, backdoor way to use the Internet to turn the White House and the Commander-in-Chief into a spokesman for a highly dubious MLM or affiliate scheme.
If all of this seems altogether too much, altogether too bizarre, consider that the Secret Service, through the filing of the ASD Ponzi case in 2008, informed the MLM world that it wasn’t a good idea to go around trying to tie the President of the United States to your scheme. Next consider that the ASD scheme had its own form of a Darby-like Net Millionaries Club; the ASD version was multipronged and was called the “President’s Circle,” the “President’s Advisory Board” and “President’s Advisory Counsel.” Then consider that the Darby Blog — in January 2009, months after the ASD case had been filed — led with the “Barack Obama visits Unimax Services” headline on the date the President was inaugurated.
Did the President of the United States really visit Unimax Services, purveyors of the Net Millionaires Club? And did the White House somehow give Darby permission to alter the Seal of the President of the United States as a means of driving traffic to the “program? Did Paul Darby learn nothing from the ASD case?
But it gets worse . . .
Flash forward to 2013 (while considering that MLM schemes such as BidsThatGive and Lyoness also have tried to tie themselves to the U.S. Presidency or the Presidency of other countries), and you’ll find Darby as the braintrust behind yet another “program.” This one is called “YouGetPaidFast.”
Like ASD before it, YouGetPaidFast has a presence on the Ponzi boards. The new “program” appears to be a cash-gifting scheme. Ponzi-forum pitchman “Ken Russo,” previously of the ASD Ponzi scheme, the GNI and NewGNI Ponzi schemes, the Zeek Rewards Ponzi scheme, the MPB Today pyramid scheme, the Club Asteria fraud scheme and the Profitable Sunrise fraud scheme, is helping lead the YouGetPaidFast charge.
“Ken Russo” appears even to have coined a new acronym to deflect attention away from the critical issues surrounding online fraud schemes. Critics, according to a post attributed to “Ken Russo” at the MoneyMakerGroup Ponzi forum, are “NAG[s].” NAG stands for “Naysayers Anonymous Group.”
According to “Ken Russo,” in apparent defense of YouGetPaidFast (italics added):
“The NAG (Naysayers Anonymous Group) are doing their best to deter you from joining an excellent program which offers one of the best opportunities I have ever seen for average folks to develop a substantial additional income stream. The NAG is relentless in their efforts to denigrate this fine program . . .”
This is occurring after the United States charged three women criminally in Connecticut for pushing a cash-gifting pyramid scheme. Two of the three women were sentenced earlier this year to lengthy terms in federal prison.
It also is occurring against the backdrop of bids earlier this year by enthusiasts of other Ponzi-board “programs” to trade on images of Obama and the prestige of the U.S. Presidency. Those “programs” included Empower Network and “Ultimate Power Profits.”
Unlike his Net Millionaires Club scheme, however, Darby’s YouGetPaidFast scheme appears no longer to be interested in trading on the name of the President of the United States and the seal of the President of the United States.
No, this time Darby is planting the seed that the FBI backs his “program.”
Darby is trotting out some of the same sort of MLM La-La Land talking points advanced by self-styled Zeek Rewards consultant Robert Craddock — that is, if you speak out against a “program,” you’re going to get sued and perhaps even paid a visit by its backers in law enforcement.
As BehindMLM.com is reporting today, Darby now claims to have FBI agents on “speed dial.” And at least one of those agents purportedly has vetted YouGetPaidFast and given it the all-clear.
Beyond that, according to the BehindMLM.com report, one or more Christian pastors is encouraging Darby to sue his detractors.
If that seems altogether too odd, consider that purported Christian pastors also are backing Empower Network and its purported “Badass” content, including the reported death by suicide of a top Herbalife MLM distributor.
David Wood, one of the top dogs at Empower Network, once advised critics to “Back the fuck down.”
“Be warned: BIG, SCARY WARNING,” Wood wrote. “I’m in the process of having lawyers research into whether or not we can sue the shit out of you.”
Whether Wood lost any pastors after the remark is unclear. At least one purported pastor encouraged Empower Network affiliates to overlook the nasty language and simply concentrate on making money. Pastors also backed the ASD Ponzi scheme and the Profitable Sunrise scheme — to cite just two of the MLM fraud schemes that recently have fleeced people of faith. ASD’s Bowdoin, before becoming a pitchman for a scheme known as OneX, once described himself as a Christian “money magnet.”
There is plenty of God talk in YouGetPaidFast, too.
URGENT >> BULLETIN >> MOVING: UPDATED 10:18 P.M. EDT (U.S.A.) Two Connecticut women convicted of wire fraud and filing false tax returns in a multimillion-dollar cash gifting scam have been sentenced to a combined 10.5 years in federal prison, federal prosecutors announced tonight.
Donna Bello, 57, was sentenced to six years. Jill Platt, 65, was sentenced to four and a half years years. Both women reside in Guilford and were ringleaders in the Women’s Gifting Tables scam, prosecutors said.
Bello and Platt both were ordered to serve three years’ supervised probation after their release. Bello also was fined $15,000. Both women were ordered to pay a combined total of $32,000 in restitution to several victims
“These significant sentences are appropriate for two individuals who profited from an illegal pyramid scheme and conspired to conceal their income from the IRS,” said Acting U.S. Attorney Deirdre M. Daly. “The investigation into this and other Gifting Tables schemes in Connecticut is ongoing. Hopefully, this successful prosecution and the prison terms imposed today will serve as a strong deterrent and end this criminal activity.”
Chief U.S. District Judge Alvin W. Thompson imposed the sentences.
From a statement tonight by prosecutors (italics added):
From approximately 2008 to 2011, BELLO, 57, and PLATT, 65, oversaw and profited from this Gifting Tables pyramid scheme. The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and affirmatively misrepresented to recruits and participants that Gifting Tables was not a pyramid scheme. Also, in May 2010, the defendants attempted to intimidate a participant who had questioned the legality of the Gifting Table scheme.
BELLO and PLATT also conspired to defraud the Internal Revenue Service by telling recruits and participants that monies given and received during the scheme were tax-free “gifts” under the IRS Code and that lawyers and accountants had approved Gifting Tables as legal ventures that generated tax-free proceeds. In addition, BELLO and PLATT filed false tax returns that failed to report income generated from the scheme.
EDITOR’S NOTE: In May 2012, the PP Blog reported that three women had been arrested on federal charges in Connecticut that flowed from an alleged cash-gifting pyramid scheme. One of the women has pleaded guilty. Two others now are on trial.
Cash-gifting often is associated with affinity fraud. The alleged Connecticut scheme centered around women with common interests, for example. Cash-gifting schemes also may be targeted at members of a common faith or belief system, members of a specific racial or ethnic group, members of specific occupations or members of virtually any group with common interests or common problems.
No individual or member of an organization may be truly safe in the context of affinity fraud, considering that schemes even have been targeted at members of the military and their loved ones. Now, it seems, not even members of Alcoholics Anonymous — an American treasure with international reach that has helped countless participants in their daily struggle against the clutches of alcoholism — were off limits to a person or persons desiring to recruit members into the cash-gifting scheme.
** _________________________________ **
The New Haven Register is reporting that “Julie,” a witness in the “Women’s Gifting Table” trial in federal court in Connecticut, testified that members of Alcoholics Anonymous were recruited for the scheme, which caused dissension among people battling to stay sober.
“Julie” was introduced to cash-gifting by her AA sponsor, Julie testified, according to the Register.
Eventually, there were eight AA members involved in tables and Julie attempted to recruit more. What followed was “the largest conflict I’ve ever seen in Alcoholics Anonymous,” she said. “It’s a violation of a trusted relationship. I trusted people to save my life, and people trusted me to save their lives, and to take advantage of that situation was a problem.”
“Julie” testified that she quit the scheme after news broke that former Connecticut Attorney General Richard Blumenthal had launched an investigation.
Gifting is the business of parasites, Blumenthal said in November 2009.
OregonLive (The Oregonian) is reporting that the state has taken action against participants in an alleged cash-gifting pyramid scheme.
Like recent cases in Connecticut and Michigan, the Oregon case involves women. The paper is reporting that four naturopathic physicians were involved in the scheme. One of them was ordered to pay a fine of $15,000 and make restitution.
From The Oregonian (italics added):
A letter from the attorney general’s office warned Abundance members that their involvement could run afoul of the Board of Naturopathic Medicine. “A doctor’s solicitation of patients to join a pyramid club can result in discipline by the state board,” the letter said.
Read the story in The Oregonian. (The reader comments below the story also are well worth reading.)
Many Oregonians are being defrauded by unlawful pyramid schemes operating under the guise of so-called “gifting clubs” such as the Dinner Club or Women’s Empowerment Network. These “clubs” are elaborate scams designed to make money for a few at the expense of many.
The promoters of the scheme claim that IRS regulations allow people to “gift” one another up to $10,000 per year tax free. For example, persons are asked to pay $5,000 to enter at the bottom of the pyramid or “tree” along with others. As these people encourage others to join the club, they rise on the tree to the top position, where the total amount collected from “gifts” is $40,000, a $35,000 profit. Often, people at the top re-invest another $5,000 and start the process anew.
Each of the eight persons just entering the tree delivers his/her $5,000 “gift” directly to the person at the top of the pyramid. This also helps convince new players that they will eventually receive a $35,000 return on their “gift.”
These schemes are doomed to failure. Each “tree” involves 8 persons who “gift” $5,000 each. The person at the top of the tree gets $40,000 and the other 7 people hope that enough players come on board to push them to the top. For each person at the top, there are 8 people who are likely to lose their investment and the chance of a big “payoff.” Eventually, these schemes collapse because they run out of prospective participants.
No matter what the promoters may tell you, gifting clubs are illegal. They are unlawful pyramid schemes. Gifting clubs and pyramids have not been approved by the Oregon Attorney General, local district attorneys, or the Division of Finance and Corporate Securities. Operating or participating in a pyramid scheme violates Oregon’s Unlawful Trade Practices Act, which imposes civil penalties of up to $25,000 per violation.
So, you think your cash-gifting “sponsor” has your best interest at heart?
Three women who were “leaders” of a cash-gifting scheme in Connecticut were arrested earlier today on charges of conducting a pyramid scheme and engaging in a conspiracy, wire fraud and tax fraud, federal prosecutors said.
The scam operated between 2008 and 2011, reached beyond Connecticut’s borders and allegedly featured an element of “intimidation” aimed at a prospect who questioned the purported opportunity.
Prosecutors today published snippets of emails sent over multiple months and linked to the alleged scheme, which gathered purported “gifts” $5,000 at a time using a food theme.
“[K]eep bringing in new blood,” one of the emails allegedly read in part. “It is a fact when women get excited about making money, they tend to over extend . . .”
Another email allegedly advised in part that potential recruits needed “to Shit or get off the pot . . .”
It has been known for months that a grand-jury probe into so-called “gifting tables” has been under way in Connecticut. That probe now has resulted in the arrests of Donna Bello, 55, of Guilford; Jill Platt, 64, of Guilford; and Bettejane Hopkins, 66, of Essex.
An indictment filed yesterday that names Bello, Platt and Hopkins also includes the word “co-conspirators,” suggesting others may be charged.
“The indictment alleges that the three defendants ran a pyramid scheme designed to enrich themselves at the expense of other participants,” said U.S. Attorney David B. Fein. “In addition, the indictment alleges that the defendants tried to use the pretext of ‘gifting tables’ as a way to avoid paying taxes on the substantial illegal proceeds of their scheme.”
Fein noted that the probe, which is being led by the IRS, is ongoing.
Bello, Platt and Hopkins “conspired to defraud the IRS by misrepresenting to recruits and participants that monies given and received during the scheme were legally considered tax-free ‘gifts’ under the IRS code and that lawyers and accountants had approved gifting tables as legal ventures that generated tax-free proceeds,” prosecutors said. “The indictment further alleges that Bello, Platt and Hopkins filed false tax returns that failed to report income generated from the scheme.”
Prosecutors today also released snippets of emails linked to the alleged cash-gifting scammers.
“[W]e need to keep silent and under the radar,” one of the emails read in part, prosecutors said.
Another allegedly read in part, “[A]s women we like our own stash. Keep it in a safe. Keep it quiet because rather not have red flags raised. Hiring accountants and atterneys [sic] is costly.”
A third allegedly read in part, “I am not a . . . saint . . . . I’m teaching you all how to make an extra 80 grand a year . . . . Isn’t that enough?”
Meanwhile, a fourth allegedly read, “It’s sort of a joke that I refer to our freezer as the ATM.” A fifth allegedly read, “They have had enough parties. Its [sic] costing us a small fortune in their food and wine delights. No more parties until they commit with the cash.”
From prosecutors (italics added):
. . . a gifting table is configured as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row. The top row participant is referred to as the “dessert,” the two participants on the second row as “entrees,” the four participants on the third row as “soup and salads,” and the eight participants on the bottom row as “appetizers.” To join a gifting table, new participants were required to pay $5,000, typically in cash, to the dessert, that is, the participant occupying the top position on the pyramid. The $5,000 payment, which was fraudulently characterized as a gift, secured the new participant a position as an appetizer on the bottom row. Participants moved from the bottom row of the pyramid and progressed through a gifting table by recruiting additional people to join. When eight new participants joined a gifting table, each having made a $5,000 “gift” to the person occupying the dessert position at the top of the pyramid, the dessert left the gifting table and kept the $40,000 paid by the eight new participants. That particular gifting table was then split, with the two participants occupying the Entree position on the second row moving to the top position (dessert) of two new pyramids. The other incumbent members of the gifting table moved up a row on one of the two newly-formed pyramids, and the search for 16 new participants began. The success of the gifting tables depended on new participants joining and making the $5,000 “gift.”
The indictment alleges that from approximately 2008 to 2011, Bello, Platt and Hopkins oversaw and profited from this gifting tables pyramid scheme. The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and misrepresented to recruits and participants that gifting tables was not a pyramid scheme. The indictment further alleges that in May 2010, the defendants attempted to intimidate a participant who had questioned the legality of the gifting table scheme.
Read the indictment, which includes information investigators allegedly gleaned from emails.
In this June 2008 video, Hank Needham — later to emerge as a Club Asteria principal — counts out a stack of £20 British notes delivered in a cash-gifting scheme. Using the pronoun "we" without defining who "we" was, Needham told viewers that "we" intended to open a cash-gifting "school." About three years later, Club Asteria positioned itself as an online "education" leader. In a March 2008 cash-gifting video, Needham was featured counting out a small stack of U.S. $100 bills. What was needed, Needham coached, was "training" on how to post cash-gifting videos on the Internet. Prosecutors say cash-gifting is illegal. The BBB calls it a pyramid scheme. In May 2011, CONSOB, the Italian securities regulator, blocked promos for Club Asteria in Italy. Needham has called himself a Club Asteria owner, and Club Asteria had described him as the director of sales and marketing “responsible for establishing Country, Regional and Network Team Leaders."
In this post, we included a March 2008 Dailymotion video of Hank Needham — later to emerge as one of Club Asteria’s purported owners — hawking a cash gifting scheme in which five $100 bills (U.S.) spilled out of an envelope tucked inside an envelope delivered by overnight courier DHL. (Please note that March 2008 video also appears on a separate site. The date notation on that site is May 2008.)
Another cash-gifting video from Needham — this one dated June 2008 — has surfaced. In the June 2008 video, Needham is holding an envelope from FedEx, another overnight courier. “Now, we have another [envelope] — I won’t really go through the courier — I don’t think we’re supposed to use this courier anymore,” Needham tells viewers, after making sure they notice what he describes as a “little pile of cash that’s accumulating” to his left.
As the June 2008 video proceeds, Needham removes cash that has been packed snugly in the FedEx envelope. It’s British pounds as opposed to U.S. currency this time — and this time the money has come from “Robin” (or Robyn?) in the “British Isles.” Unlike the March (and May) 2008 video in which “George,” presumably an American, is reported by Needham to have sent five large U.S. bills, “Robin,” presumably a Brit, has chosen to send 25 twenty-pound notes. Needham counts out all 25 bills, creating five rows with five bills in each row. Why Needham was reluctant the mention the name of FedEx was not made clear in the video. What was clear was the Needham wanted viewers to know that “we’re opening up a website called CashGiftingSchool.com.”
He did not define “we.” The “school” website, which appears to have been registered in April 2008 while Needham was pushing the AdSurfDaily scheme in addition to cash-gifting, now resolves to a page that beams ads. (It’s worth noting that Needham, in 2008, was wearing casual attire while hawking the cash-gifting “school,” apparently from his home. Flash forward three years to 2011: Club Asteria is positioning itself as an “education” leader and featuring Needham on video. He is wearing a crisp, black suit in the 2011 video — and the backdrop is a board room. A button promoting the 2011 Club Asteria video in which Needham is showcased in the black suit is labeled “ABOUT COURAGE.” The button appears in Club Asteria’s October 2011 recruitment house organ.)
Various Club Asteria-related entities have been trading on the names of various charities, including the American Red Cross. The Red Cross sent the purported Asteria Philanthropic Foundation a cease-and-desist letter 11 days ago, and the relief agency said yesterday that the foundation agreed to stop using the Red Cross logo and other materials. How long it will take the Asteria-themed enterprises to comply is unclear.
Needham’s image also appeared in 2008 promos for AdSurfDaily, an autosurf the U.S. Secret Service called an international Ponzi scheme.
The Attorney General
Before you take a look at the June 2008 Needham video — which appears to have been placed on Dailymotion just two months before the spectacular seizure by the U.S. Secret Service of tens of millions of dollars in the ASD Ponzi case — we’d like you to take a look at what the attorney general of Michigan says about cash gifting. Bill Schuette notes that purveyors can be charged with felonies. Mike Cox, Schuette’s predecessor as attorney general, said the same thing.
Needham does not mention the law in either of his videos; he’s too busy counting bills. He appears to be less than pleased that “Robin,” unlike “George” in the other video, packed the bills tightly. It is unclear in either video whether DHL or FedEx left the envelopes in a secure place before Needham retrieved them. In other words, had the envelopes been left on Needham’s doorstep, they could have been stolen, an outcome sure to have created an unpleasant situation for both the senders and Needham.
UPDATED 9:36 P.M. EDT (U.S.A.) The American Red Cross is a national treasure whose powerful and noble name never should be diluted or trifled with. But it is now apparent that various Club Asteria-related entities have done exactly that by not revealing certain critical information to the Red Cross while at once shamelessly seeking to build the Asteria brand across multiple platforms by tying it to the Red Cross — beginning in the spring during a period in which the agency was responding to a crisis in Japan.
To describe what the Asteria entities have done as spectacularly parasitic with equally disgusting measures of greed and ham-handedness thrown in would be a gross understatement. In any event, the Asteria entities have created a deplorable situation that sparked the Red Cross to issue a statement today. (You’ll see the full statement beginning four paragraphs below.) The statement was issued this afternoon from Washington, D.C., and emailed by the Red Cross to the PP Blog. The statement concerns the purported Asteria Philanthropic Foundation, which is linked to the purported Club Asteria business “opportunity” and other Asteria-themed enterprises. The Asteria enterprises are using the Red Cross name and logo in promos across multiple websites — while calling the Red Cross a partner. No partnership exists, the Red Cross made clear today.
Members of Club Asteria — participants in any of the Asteria-themed enterprises — need to know that at least one of Club Asteria’s purported owners, Hank Needham, has been linked to promotions for online Ponzi schemes and pyramid schemes. (You’ll see a cash-gifting video starring Needham below.) The stench lives on three years after the taping, and it cannot be dissipated by leeching off the name of the Red Cross.
This is a story that only is getting uglier. Ten days ago — after becoming concerned that its name and logo were being misused — the Red Cross sent the purported Asteria Foundation a cease-and-desist letter. It later developed that Needham had appeared in a May 2008 video that advertised a cash-gifting scheme. Needham, whose face also appeared in a 2008 promo for the alleged $110 million AdSurfDaily Ponzi scheme, is seen in the video opening an envelope from a courier service. A smaller envelope was packaged in the courier envelope — and five $100 bills spilled out of the smaller envelope. Needham fanned them for the camera. Cash-gifting schemes are prosecutable under pyramid-scheme statutes, despite what prospects are led to believe. U.S. Sen. Richard Blumenthal, D-Conn., called cash-gifters “parasites” when he was attorney general of Connecticut.
The PP Blog has added the italics to today’s statement by the Red Cross:
The Asteria Foundation contacted the American Red Cross in April and said it wanted to make a donation to aid relief efforts in Japan after the earthquake and tsunami. At the time, the organization requested information on how the donation might be put to use and we directed their representative to published information on Red Cross recovery efforts. The organization also requested the ability to mention its donation to us in its own press materials, which we felt was appropriate.
However, we have no record of receiving a donation from this organization and have not partnered with them on that or any other projects. We have requested that the organization remove our logo and other materials from its web site, and they have agreed to do so.
In September, Club Asteria removed an image and purported “interview” with famed actor Will Smith from its recruitment emagazine amid questions about whether the purported “opportunity” was trying to plant the seed that Smith had endorsed the company.
Scores of promos for Club Asteria, which trades on the name of the World Bank, have appeared online this year. The promos described Club Asteria as a “passive” investment opportunity that generated a weekly return of up to 10 percent. Club Asteria suspended member cashouts in June, after acknowledging its PayPal account had been suspended — and after claims about Club Asteria came under investigation in Italy.
Club Asteria was widely promoted on Ponzi scheme forums such as TalkGold and MoneyMakerGroup. Members said payouts were routed through a Hong Kong entity known as Asteria Holdings Limited. When things turned sour at Club Asteria, the Ponzi-forum promoters turned their attentions to other HYIP “programs” that offered absurd returns that translated into purported yearly gains in the hundreds of percent.
The Asteria Foundation also has used a Hong Kong address — tying it to a fax number in Virginia. Asteria Corp., Club Asteria’s apparent parent company and also the apparent driving force behind the purported Asteria Foundation, is based in Virginia.
State authorities said last month that neither Club Asteria nor Asteria Corp. was registered to sell securities. Club Asteria has blamed its members for promotional blunders and for PayPal’s decision to suspend its account. That explanation, however, strains credulity — given Needham’s history of pushing multiple fraud schemes. It is inconceivable that Club Asteria did not know that its growth was being fueled by serial hucksters on Ponzi forums and by thousands of promos on the independent websites of Club Asteria affiliates, many of whom preemptively denied Club Asteria was conducting a Ponzi scheme. They could not possibly know whether Club Asteria was on the up-and-up without seeing the books and records from banks and as many as four separate payment processors.
How much money Club Asteria gained as a result of promos that positioned the company as a cash cow is unclear. Scores of members claimed that paying Club Asteria $19.95 a month would produce a yearly income of more than $20,000. Club Asteria is believed to have gained considerable traction in the Third World. Club Asteria pitchman “Ken Russo,” who also is known as “DRdave” and is believed to operate from the United States, claimed on Ponzi boards to have received thousands of dollars in recruitment commissions via wire from Hong Kong.
Club Asteria, which has described itself as a revenue-sharing program, does not publish verifiable financial information. The firm now appears to be branching out into social networking, positioning itself as an education leader and “cause” marketing company.
Ponzi forum promoters, whom some critics describe derisively as “pimps” and “referral whores,” shilled for Club Asteria for months before the company suspended cashouts.
2008 Hank Needham Video On Cash-Gifting
Please note that the URL advertised in the Dailymotion video below — ptigift.com — no longer resolves to a server.
Just prior to Christmas last year, seven Michigan women were charged with felonies in an alleged cash-gifting pyramid scheme that targeted women.
Now, just prior to Memorial Day, eight more women have been charged, bringing the total number of women charged to date to 15. The Michigan State Police said last year that gifting schemes were sweeping across the state.
The Muskegon Chronicle was among the first newspapers to report on the new defendants.
Separately, the BBB has added a video on cash-gifting scams and added to its previous warning about “thousands” of such schemes using YouTube and the Internet to proliferate.
In August 2008, after the U.S. Secret Service seized tens of millions of dollars in the AdSurfDaily autosurf probe, some ASD members immediately turned to cash-gifting, positioning it as a way for ASD members to make up their losses. Gifting scams typically pluck heartstrings, targeting people of faith, people down on their luck and people who can ill afford to lose a single dollar, let alone hundreds or thousands at a time.
“Cash gifting is a pyramid scheme — pure and simple,” the BBB says. “There are thousands of YouTube videos and websites out there touting cash gifting as an empowerment program or a way to make easy money from the security of your home.”
