With federal prosecutors in the District of Columbia now saying AdSurfDaily President Andy Bowdoin was involved in multiple fraud schemes after the U.S. Secret Service seized $65.8 million from his personal bank accounts in August 2008 in a Ponzi probe, the ASD patriarch now faces a bond-review hearing in Washington.
U.S. District Judge Rosemary Collyer has scheduled the hearing for May 8.
Prosecutors pointedly asserted on April 17 that Bowdoin, 77, was promoting a “fraudulent scheme” known as “OneX,” informing Collyer that Bowdoin’s OneX pitches began in 2011 –after Bowdoin was indicted in 2010 on charges of wire fraud, securities fraud and selling unregistered securities in his operation of ASD.
Collyer now has ordered prosecutors to present “all evidence (written and testimonial) regarding Defendant’s alleged involvement in OneX or any other alleged Internet scheme since the Indictment in this case.”
Bowdoin’s OneX pitches, which mixed in commentary about his criminal case, began in October 2011. The ASD-related indictment against him was unsealed in November 2010 and announced publicly on Dec. 1, 2010.
Prosecutors also say Bowdoin was involved in AdViewGlobal, an autosurf that came to life in late 2008 and early 2009 — after the August 2008 Secret Service seizure. At the same time, prosecutors say Bowdoin, Clarence Busby and “others” were involved in the operation of the Golden Panda Ad Builder autosurf, the so-called “Chinese” version of ASD.
Money from at least five Golden Panda bank accounts was seized as part of the ASD probe in 2008. All in all, the combined sums seized from ASD and Golden Panda totaled about $80 million.
BULLETIN:Philip Lochmiller Sr., the Colorado recidivist securities huckster and Ponzi schemer whose case drew comparisons to the AdSurfDaily Ponzi case for a lack of key disclosures to investors, has been sentenced to 405 months in federal prison and ordered to pay restitution of $18.6 million.
The term amounts to nearly 34 years. Lochmiller is 64. He was taken into custody immediately by the U.S. Marshals Service upon his sentencing, federal prosecutors said.
U.S. District Judge Philip A. Brimmer presided over the case.
“Make no mistake,” said U.S. Attorney John Walsh of the District of Colorado. “Today’s sentence, which amounts to a life sentence, demonstrates that those who rob with the pen and the computer cannot evade the painful consequences of their crimes. Although this sentence can’t by itself undo the damage suffered by the many victims of this fraudulent scheme, justice was done.”
All in all, the scheme attracted more than $30 million and affected more than 400 investors, prosecutors said.
“Today’s sentencing provides 403 citizens victimized by Philip Lochmiller Sr some justice for the devastating financial losses he caused with deceit and misrepresentations,” said James Yacone, FBI special agent in charge.
Added Sean Sowards, special agent in charge of the IRS Criminal Investigation Unit in Denver: “IRS Criminal Investigation will work with our law enforcement partners to vigorously pursue and hold accountable those who perpetrate these schemes to get rich quick at the expense of honest Americans.”
Lochmiller’s stepson — Philip Lochmiller Jr. — also was implicated in the scheme. So was Shawnee Carver, an employee of Valley Investments, a company linked to Lochmiller’s Valley Mortgage Inc. entity.
Lochmiller Jr. earlier was sentenced to eight years and ordered to pay $18.6 million in restitution. Carver was sentenced to two years and ordered to pay $2.5 million in restitution.
Lochmiller and two members of his family were sentenced to prison for their roles in a California securities swindle in the 1980s, according to records. The 1980s scheme operated in the Greater San Diego area and resulted in 1,600 investors being bilked out of a total of $5 million.
Investors in Lochmiller’s most recent scheme were not told about his previous felony conviction, prosecutors said. Nor were they told about a bankruptcy filing.
Like Lochmiller, ASD’s Andy Bowdoin shielded investors from knowing he had been implicated in an Alabama securities swindle in the 1990s and had pleaded guilty to a felony, according to court filings.
At the same time, ASD investors were denied information that Clarence Busby, a key Bowdoin business associate, had declared bankruptcy and had been implicated by the SEC in three prime-bank swindles in the 1990s, according to records.
BULLETIN: A Florida jury found that TD Bank assisted now-disbarred and imprisoned attorney Scott Rothstein in his epic Ponzi scheme and has found the bank liable for $67 million in damages.
The victorious attorney in the civil case is David S. Mandel, who represented the plaintiffs against the bank.
If Mandel’s name seems familiar to PP Blog readers, it’s because he also is the court-appointed receiver in the Commodities Online LLC fraud case brought by the SEC last year.
Separately, a company known as SSH2 Acquisitions Inc. had sued Commodities Online figure James C. Howard III on Sept. 15, 2010, alleging that Howard and others were running a massive Ponzi scheme into which SSH2 had plowed $39 million.
Records in Nevada show that former AdSurfDaily member and “Surf’s Up” forum moderator Terralynn Hoy was a “director” of SSH2.
Hoy has not been accused of wrongdoing.
The private lawsuit against Howard and the others became notable because of the clashing images: Although SSH2 was complaining about the alleged Ponzi scheme directed at it by Howard and others, it was doing so in the months after Hoy had helped lead cheers on Surf’s Up for accused ASD Ponzi schemer Andy Bowdoin, who was implicated by the U.S. Secret Service in an alleged Ponzi scheme even larger than Howard’s alleged scheme. Hoy also was a moderator on a forum that supported AdViewGlobal, an autosurf that vanished mysteriously in June 2009.
Now defunct, Surf’s Up was known for unapologetic, unabashed cheerleading for Bowdoin, whom federal prosecutors said had swindled investors in Alabama in a previous securities caper during the 1990s and took in at least $110 million through ASD. Clarence Busby, an alleged business partner of Bowdoin and the operator of the Golden Panda Ad Builder autosurf, swindled investors in three prime-bank schemes in the 1990s, according to the SEC.
More than $14 million linked to Golden Panda was seized as part of the ASD case — and yet the cheerleading for autosurf schemes continued on Surf’s Up. The forum labeled ASD pro-se litigant Curtis Richmond a “hero” after he accused the judge and prosecutors of crimes in 2009.
UPDATED 1:46 P.M. EDT (U.S.A.) AdSurfDaily “paid out millions of dollars to operators and insiders,” according to a U.S. Secret Service affidavit originally filed under seal in February 2009.
But ASD President Andy Bowdoin changed the subject when people told him that what Florida-based ASD was doing not only was illegal, but also was “not mathematically possible,” according to the affidavit.
What he was trying to do, according to court filings, was establish at least three autosurfs that would generate Ponzi-extending cash while Bowdoin positioned them as legitimate “advertising” businesses.
And Bowdoin also wanted to persuade members that he had discovered a formula that purportedly made it possible for ASD to set aside 50 percent of its daily revenue and pay participants 125 percent of what they paid in — all while planting the seed that members could expect a return of 8 percent a day on some days.
Investigators saw things a different way, saying ASD was creating a minimum liability of $1.25 for every dollar it took in.
“Try it — it works,” Bowdoin simply told the doubters, changing the subject instead of addressing the mathematical realities, according to the Secret Service.
There was too little profit in operating legitimately, Bowdoin told a consultant, according to the Secret Service.
As ASD was facing a Ponzi abyss, a consultant told Bowdoin there was a way for ASD to clean up its act, according to the Secret Service.
“Bowdoin, however, was dissatisfied with the consultant’s revenue sharing proposal and with the limited revenue a legitimate business would produce,” the Secret Service alleged in the February 2009 affidavit. “Bowdoin rejected the consultant’s plan and terminated his relationship with the consultant.”
Bowdoin had arrived at his 50-in/125-out formula after an earlier formula in which ASD purportedly had set aside 60 percent of its revenue to pay participants 150 percent of what they paid in had brought on a Ponzi collapse that caused the company to cease operations and leave investors in limbo for weeks in 2007, according to the Secret Service.
ASD’s original formula was concocted by Bowdoin and his “silent partner,” a man who recruited Bowdoin into the 12DailyPro autosurf Ponzi scheme, according to the Secret Service.
Both of ASD’s formulas were just a means of hiding ASD’s true nature as a financial beast with a fatal disease, according to court filings.
Despite the spectacular collapse of 12DailyPro amid Ponzi allegations filed by the SEC in early 2006, Bowdoin and his silent partner ruminated that 12DailyPro simply had promised to pay out too much money on a daily basis, according to the Secret Service.
Upstart ASD, Bowdoin and his silent partner speculated, could take regulators out of play and avoid the Ponzi fate of 12DailyPro by telling investors that the firm would pay out less money and by introducing verbal sleight-of-hand to disguise the true nature of the business, according to the Secret Service.
ASD also speculated that it could circumvent the Ponzi problem and law-enforcement scrutiny by suggesting that ASD’s payouts, which the firm called “rebates,” were not “guaranteed,” according to the Secret Service.
Despite telling members to “Try it — it works,” Bowdoin had no confidence in his business model and knew it was still a Ponzi despite the post-12DailyPro tweaking. In the end, according to court documents and other records, ASD still was telling investors they’d get back more than they paid in and, on a yearly basis, would receive a return of 365 percent at a “rebate” rate of 1 percent a day.
Even as ASD was playing in the post-12DailyPro fields and grew eventually to suck in tens of millions of dollars a week, less than 2 percent of its revenue came from external sources. More than 98 percent came from members and was simply being recycled to other members to keep the Ponzi afloat, according federal prosecutors.
At a certain point in time, Bowdoin did away with unlimited purchases and limited the amount investors could pay ASD to $12,000 “because he did not want members to lo[]se too much money should ASD collapse,” according to the February 2009 Secret Service affidavit.
The import of the claim is that prosecutors can argue to a jury that Bowdoin himself was worried about the imminent demise of ASD — a demise Bowdoin brought on through the use of various mathematical concoctions, linguistic fantasies and fabrications designed to separate people from their money to keep the Ponzi afloat.
Meanwhile, the claim sets the stage for prosecutors to tell a jury that Bowdoin anticipated a catastrophe and sought to insulate himself from prosecution by suggesting that ASD did not guarantee rebates and that customers were purchasing “advertising,” as opposed to entering into an investment contract with ASD.
“[T]o ensure that no individual investor monopolized the rebate pool, and to reduce the
likelihood that any individual investor would suffer a catastrophic loss, Bowdoin placed a limit on the amount of ‘advertising’ members could purchase,” the Secret Service said. “Of course, it would have made no sense to impose such limitations if ASD was actually selling, and members actually were purchasing, Internet advertising.”
Bowdoin’s various stories were at odds with themselves, the Secret service alleged. Even as Bowdoin was telling members ASD was not in the investment business and instead was a provider of advertising “rebates,” ASD’s computer systems described member payouts as “ROI” — for Return on Investment.
And even as he positioned himself as a Christian “money magnet” and merchant who’d been recognized by the President of the United States — and even as he purportedly was enforcing a $12,000 purchase ceiling to minimize the chance an individual investor would become engulfed in a calamity — Bowdoin told attendees of company “rallies” in U.S. cities that ASD would match the money they plowed into the firm 50 cents on the dollar.
“At the rallies, to raise more money, Bowdoin concocted the idea of running ‘rally-only promotions,’” the Secret Service alleged. “New members were told they would receive a 50% bonus for joining at the rally. For example, if a new member purchased $500 in ‘ad packages’ as a bonus she would be credited $750 to her account. Representatives of ASD stated this was a ‘World Wide Wealth’ program that was available to anyone with Internet access.”
In early 2008, Bowdoin became a participant in a scheme with a “North Carolina” attorney to assure prospects that ASD had been vetted and was operating lawfully. ASD’s 26-minute legality video and the rallies caused tens of millions of dollars suddenly to flow into the firm, according to the Secret Service.
Just a year earlier, the company suspended operations because it was starved for cash flow and faced a collapsed Ponzi, according to the Secret Service. ASD’s response to the collapse was to launch a new autosurf Ponzi under a new name — and to port the accounts of its original set of victims into the new scheme, where the payouts early loyalists had expected would be funded by incoming participants who did not know their money was being distributed to Bowdoin’s orginal victims.
Later in 2008, as spring and summer warmth returned to northern climes, ASD found people throwing money at it. Some of the people who threw money at ASD did so at rallies in Iowa, according to the Secret Service.
Affidavit For Seizure Targeted At At Least 7 Iowa Bank Accounts
The PP Blog reported in December 2010 that funds traced to Bowdoin and two other ASD members had been targeted in yet-another forfeiture action in the District of Columbia. The action was filed less than three weeks after Bowdoin’s Dec. 1 arrest by federal agents in Florida on Ponzi-related charges of wire fraud, securities fraud and selling unregistered securities.
Prosecutors’ December civil-forfeiture action was at least the third targeted at assets owned by Bowdoin. Assets of two other ASD members — Erma “Web Room Lady” Seabaugh and Robyn Lynn Stevenson (also: Robyn Lynn) of Florida — also were targeted.
The civil case against Bowdoin’s assets is on hold because of the criminal allegations against him. But the cases against the assets of Seabaugh and Lynn remain active. Neither Seabaugh nor Lynn had filed a claim for the money as of Friday.
In the case against Seabaugh’s assets, the government was authorized to seize $213,693 from a bank account, but found only $153,097 in the account. The Secret Service seized $96,525 from two bank accounts linked to Lynn.
Some of the money Seabaugh plowed into ASD originated at E-Bullion, a shuttered California money-services business operated by convicted murderer James Fayed, who ordered the execution of his estranged wife in 2008.
Pamela Fayed, a potential witness against her husband on matters pertaining to E-Bullion and an associated business known as Goldfinger Coin & Bullion, was slashed to death in a Los Angeles-area parking garage on July 28, 2008.
On Aug. 1, 2008, the Secret Service seized tens of millions of dollars from Bowdoin’s bank accounts. The December 2010 claim by federal prosecutors that Seabaugh had used E-Bullion to fund one of her ASD accounts was the first public tie between ASD and E-Bullion, which has been linked to multiple Ponzi schemes.
Seabaugh had multiple ASD accounts with multiple email addresses — and appeared to be “selling her own investment ‘ad packs’ to clients and representing herself as ASD,” the Secret Service alleged.
The PP Blog learned on June 10 that the Secret Service, in February 2009, also targeted proceeds in seven bank accounts belonging to ASD members in Iowa for forfeiture. In an affidavit, the agency said the accounts contained at least $413,018.
How the cases are evolving was not immediately clear. The Secret Service, according to the affidavit, identified the assets as proceeds of an ASD-related wire-fraud scheme.
Acting as pro se pleaders and using a litigation template associated with ASD participant Curtis Richmond, one of the so-called Arby’s Indians, two of the individuals associated with the Iowa accounts cited by the Secret Service in the February 2009 affidavit later attempted unsuccessfully to intervene in the main civil-forfeiture case against Bowdoin’s assets.
The February 2009 Secret Service affidavit identifies the individuals as Joyce and Michael Haws.
“Joyce Haws was an active participant in and large promoter of the ASD wire fraud
scheme,” the Secret Service alleged in the affidavit. “Ms. Haws was one of several people who requested and facilitated one of the first rallies within ASD, in Ankeny, Iowa, on about March 15th, 2008.”
Haws recruited her mother and others into the scheme, according to the affidavit.
Walter Clarence Busby Jr., a Georgia minister and Bowdoin’s alleged business partner in Golden Panda Ad Builder, identified Joyce Haws and her “spouse” in 2008 as “founders” of Golden Panda.
In the same Busby affidavit, filed on Aug. 29, 2008, Busby identified Robyn Lynn as the person who introduced him to ASD.
Curtis Richmond was an early mainstay in the ASD story. He has a contempt-of-court conviction for threatening federal judges, has been banned from the practice of law in Colorado even though he is not an attorney and has been sued successfully under the federal racketeering statute for harassing public officials and participating in schemes to place bogus financial judgments against them.
Richmond, who proclaimed himself a sovereign being answerable only to God, was a member of a Utah “Indian” tribe a federal judge ruled a “sham.” The “tribe” got its derisive name — the Arby’s Indians — because it once held a meeting in an Arby’s restaurant.
The “tribe” also used the address of a Utah doughnut shop as the address of its “Supreme Court,” while threatening public officials with arrest and detention for carrying out their official duties.
We’ve previously noted that the Financial Industry Regulatory Authority (FINRA) has described the HYIP sphere as a “bizarre substratum of the Internet.”
That substratum now is getting crazier yet.
Three weeks ago, Club Asteria was a great darling of the Ponzi boards. But weekly payout rates that purportedly have been slashed — coupled with a purported freeze of Club Asteria’s PayPal account — appear to have put the “program” in a death spiral.
Club Asteria stopped short of announcing it had placed a call to the coroner, but did announce a “downward spiral,” according to a post on the MoneyMakerGroup Ponzi scheme and criminals’ forum.
Not to worry, though: Some Club Asteria promoters on the Ponzi forums have turned their attentions to JSS Tripler, whose site appears to be accessible through multiple domains, including a site known as JustBeenPaid (JBP).
JBP appears to be tied to something called Synergy Surf, which appears to be another darling of the Ponzi boards.
“I buyed (sic) new 8 positions for that,” a MoneyMakerGroup poster announced.
JPB encouraged enrollees to “[s]et up your AlertPay account and fund it, or link your credit card to it,” according to web records.
These instructions also were provided.
Upgrade in JBP by making your $10 or $20 payments.
Enter your AlertPay email address in the JBP Member Area.
Buy and/or sponsor downline members.
Study and apply ‘Upgrade Your Brain’ and the ‘Big Success Breakthrough’ — see ‘Access Our Products’ in your JBP member area.
Make JBP’s Synergy Surf (JSS) your primary moneymaker.
In the spring of 2009 — as the AdViewGlobal (AVG) autosurf was in its death throes before a fatal gurgle — the AVG braintrust pointed the finger of blame at the membership.
Other surfs that launched in the aftermath of the seizure of tens of millions of dollars from Florida-based AdSurfDaily did the same thing. These included AdGateWorld, which once referenced ASD in what appeared to be a copy-and-paste lift from ASD’s Terms of Service, and BizAdSplash, whose purported “chief consultant” was ASD/Golden Panda Ad Builder figure Clarence Busby.
Fast forward two years, and Club Asteria, which lists Andrea Lucas as managing director, appears to be doing the same thing — along with serving up some Busby-like syrup for the soul:
“Greed is a very powerful motivation, but the kindness, generosity and goodness in all of us all are even more powerful,” Club Asteria is reported on MoneyMakerGroup to have intoned.
“The challenges that we are facing recently have been caused by a small percentage of our members misusing their membership privileges,” Club Asteria is reported to have told members. “As any good company would have done to protect their members and future members, we had to reinforce our Code of Ethics and Conduct, to ensure that our message of a better life for all of us is presented honestly and accurately.
“We are working very hard to make sure that any benefit from Club Asteria and all of our products and services are accurately represented. Any company, no matter how good their products and services are, can be destroyed with misleading information, bad publicity, false rumors and inactivity of their members/customers.”
Two years ago, AVG’s death spiral began as the ASD grand jury was meeting in the District of Columbia. The surf first slashed payouts — something Club Asteria reportedly is doing right now — and then eliminated them altogether, while at once announcing an 80/20 program would become mandatory after AVG completed an audit of itself.
One of the issues complicating matters for AVG was the purported misuse of a member-to-member cash button. Club Asteria members also purportedly misused a money-transfer facility.
“Bizarre substratum of the Internet” just about covers it — except for the heartache and myriad nightmares created by the various HYIP darlings, of course.
Thinking Outside The Box
Our friends at RealScam.com report another nightmare in the making. It’s bizarrely called Insectrio — and it bizarrely has an “Egg” plan purported to pay 103 percent after one day, a “Larva” plan purported to pay 120 percent after five days and other plans advertised to pay even more.
The sales pitch for Insectrio, apparently an emerging HYIP, touts MoneyMakerGroup, TalkGold and DreamTeamMoney.
Given JBP’s prompt for enrollees to “upgrade” their brains — which we view as a prompt to think outside the box — the PP Blog concludes this post by providing readers an outside-the-box way to look at the Insectrio offer:
InSECtrio.
Indeed, the three letters centering the HYIP’s name are real attention-getters.
James Clark Howard: Source: Boca Raton Police Department
UPDATED 2:25 P.M. EDT (U.S.A.) In a complex case unfolding in Florida, the SEC has filed fraud charges against two companies that allegedly sold unregistered securities and conducted a $27.5 million “investment scheme” involving “purported commodities contracts.” A receiver has been appointed to marshal the assets of the murky businesses, which are known as Commodities Online LLC and Commodities Online Management LLC.
Millions of dollars generated in the scheme were moved to Mexico and the Netherlands even as the SEC was issuing subpoenas in the case last month, according to court filings. The agency described the transactions as “extremely suspicious.”
Although the SEC successfully halted the alleged Commodities Online scheme on April 1, the only defendants named to date are the companies themselves. The agency described the individuals presiding over the scheme — a former managing member and a vice president — as convicted criminals.
One of the individuals, according to the SEC, was a “convicted felon who was, in March 2010, charged with grand theft and organized scheme to defraud in conjunction with an unrelated Ponzi investment scheme.”
The other, according to the SEC, was an individual who “pled guilty to bank fraud and narcotics charges in 2005 and to transmitting a threat to injure charge in 2007.”
The PP Blog confirmed that, on March 5, 2010, the Boca Raton Police Department arrested James Clark Howard, who is listed as a “managing member” of Commodities Online LLC in documents filed with the Florida Department of State on Jan. 26, 2010.
Howard was charged with grand theft and organized scheme to defraud in a Ponzi case that may involve as many as five companies and their associates acting in concert to scam investors. Boca Raton authorities said the Florida Office of Financial Regulation also was conducting an investigation.
On Feb. 11, 2011, Louis Gallo was identified as a manager of Commodities Online Management LLC in records filed with the Florida Department of State. The Sun Sentinel newspaper reported that Gallo is “on probation for bank fraud and a cocaine charge out of New Jersey federal court.”
AdSurfDaily Member And Surf’s Up Mod Emerges As Figure In New Florida Flap
Other records show that, on Sept. 15, 2010, a Nevada-based company that listed former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy as a “director” sued Howard and others in federal court in Fort Lauderdale. The Nevada company — SSH2 Acquisitions Inc. — alleged that Howard and the others were running a Ponzi scheme into which SSH2 had plowed $39 million.
Hoy, who has not been accused of wrongdoing, was a member of Florida-based AdSurfDaily, which the U.S. Secret Service said in August 2008 was conducting an international Ponzi scheme involving tens of millions of dollars. After the ASD seizure, Hoy became a moderator at the pro-ASD “Surf’s Up” forum, which mysteriously vanished in January 2010 after cheerleading nonstop for ASD President Andy Bowdoin for more than a year.
Bowdoin was the target of a federal criminal probe the entire time Surf’s Up operated, according to court filings. In November 2008, just days after a key court ruling went against ASD, the firm endorsed Surf’s Up as its mouthpiece.
By February 2009, Hoy became a conference-call host and moderator of a now-defunct forum that promoted the now-defunct AdViewGlobal (AVG) autosurf. AVG, which had close ties to ASD, launched in the aftermath of the federal seizure of more than $80 million in ASD-related assets, the filing of two forfeiture complaints against ASD-related assets and the filing of a civil racketeering lawsuit against Bowdoin.
On June 30, 2009 — one day after Bernard Madoff was sentenced to 150 years in federal prison for his colossal Ponzi scheme — lawyers suing Bowdoin for racketeering alleged that AVG was an extension of ASD. In September 2009, federal prosecutors made a veiled reference to AVG in court filings in the ASD case.
AVG disappeared in June 2009, about a month after the grand jury that ultimately indicted Bowdoin for wire fraud, securities fraud and selling unregistered securities as investment contracts began to meet. The indictment against Bowdoin was unsealed in November 2010, and Bowdoin was arrested in Florida on Dec. 1, 2010.
Surf’s Up was known for unapologetic, unabashed cheerleading for Bowdoin, whom prosecutors said had swindled investors in Alabama in a previous securities caper during the 1990s. Clarence Busby, an alleged business partner of Bowdoin and the operator of the Golden Panda Ad Builder autosurf, swindled investors in three prime-bank schemes in the 1990s, according to the SEC.
More than $14 million linked to Golden Panda was seized as part of the ASD case — and yet the cheerleading for Bowdoin continued on Surf’s Up. The forum labeled ASD pro-se litigant Curtis Richmond a “hero” after he accused the judge and prosecutors of crimes in 2009.
Richmond was associated with a Utah “Indian” tribe a federal judge in a separate case ruled a “complete sham” after it filed enormous judgments against public officials in performance of their duties. Regardless, the cheerleading on Surf’s Up continued — even after it was revealed that Richmond had a contempt-of-court conviction for threatening federal judges and had been sued successfully under the federal racketeering statute by the Utah public officials and was ordered to pay nearly $110,000 in penalties and damages.
Federal prosecutors now say they have linked ASD to E-Bullion, a shuttered California payment processor whose operator — James Fayed — is accused of arranging the contract murder of his wife, a potential witness against him in a fraud case. E-Bullion has been linked by investigators in the United States and Canada to multiple Ponzi schemes.
SSH2, the company that listed Hoy as a director, alleged in September 2010 that Howard was part of a Ponzi scheme that also involved Patricia Saa, Sutton Capital LLC and Rapallo Investment Group LLC.
Howard had been arrested by the Boca Raton Police Department in March 2010, about six months before SSH2 accused him in the September 2010 lawsuit of operating a Ponzi scheme. In the lawsuit, SSH2 said it had conducted business with the defendants from “early 2009 through March 2010,” and ultimately turned over $39 million.
Howard and the defendants, according to the lawsuit, told SSH2 it was trading in commodities and “would produce profits of 40% per month or more, while not risking any of the invested funds.”
SSH2 did not say in the complaint how it had come to believe that a return of 40 percent a month with no risk was possible. Nor did the company describe its efforts to conduct due diligence on Howard and the other defendants.
Of the $39 million directed at Howard and the other defendants, SSH2 received back approximately $19 million in “fake and fraudulent ‘profits,’” according to the lawsuit.
If SSH2’s assertions that it conducted business with Howard and the others beginning in “early 2009” and expected a return of 40 percent a month are true, it means that the business was being conducted in a period after which both the Bernard Madoff Ponzi scheme and the alleged AdSurfDaily Ponzi schemes were exposed.
Both Madoff and ASD bragged about returns that were far less than the monthly returns allegedly offered by Howard and the other lawsuit defendants.
Madoff’s fraud was exposed in December 2008, about four months after ASD’s alleged fraud was exposed.
And if SSH2’s assertions against Howard and the others are true, it also means the transactions occurred during a period in which Hoy, later to emerge as an SSH2 director, also was moderating forums for ASD and AVG and also was serving as a conference-call host for AVG, which purported to operate from Uruguay and enjoy protection from U.S. regulators because of its purported “private association” structure.
ASD’s Bowdoin initially ceded the money seized by the Secret Service in January 2009, dropping his claims to the cash “with prejudice.” By the end of February 2009, however, Bowdoin sought to reenter the case as a pro se litigant and renew his claim to the money, which totaled about $65.8 million.
Bowdoin’s sudden reappearance in a case he had abandoned coincided with a meeting AVG reportedly conducted with Karl Dahlstrom, a convicted felon. In March 2009 — in a letter posted on Surf’s Up — Bowdoin claimed he had decided to reenter the case after consulting with a “group” of ASD members. Bowdoin did not name the members, but chided federal prosecutors in his letter, writing that his pro se pleadings should “really get their attention.”
For the balance of 2009, Surf’s Up continued to cheerlead for Bowdoin, despite the fact he never told the membership at large about a second forfeiture complaint that had been filed against ASD-connected assets in December 2008. Bowdoin also did not inform ASD members that he had been sued for racketeering and had signed a proffer letter in late 2008 or early 2009 and acknowledged that prosecutors’ material allegations against ASD were all true.
Surf’s Up continued to operate even after prosecutors revealed the existence of the proffer letter. In Bowdoin’s own court pleadings, he had acknowledged he had given information against his interests to prosecutors. Bowdoin said he hoped to work out a deal by which he could avoid prison time, despite the fact prosecutors had alleged he was at the helm of a massive Ponzi scheme.
In October 2008 — at the conclusion of an evidentiary hearing ASD had requested — Surf’s Up conducted an online party for ASD members, complete with images of champagne and fireworks. Members were fed one-sided accounts of what had happened at the hearing, and a federal prosecutor was described derisively as “Gomer Pyle.” ASD’s lawyers were described as the “Perry Mason” team.
A month later — in November 2008 — U.S. District Judge Rosemary Collyer ruled at ASD had not demonstrated at the hearing that it was a lawful business and not a Ponzi scheme. The AVG forum led by some of the Surf’s Up mods, including Hoy, launched shortly thereafter, and the Surf’s Up forum soldiered on.
AVG was positioned as a way for members to make up their losses in the alleged ASD Ponzi scheme.
Surf’s Up became infamous for deleting comments and information unflattering to Bowdoin. The forum also was used to hatch a rumor that the prosecution secretly had admitted ASD was not a Ponzi scheme but was clinging to the case in a bid to save face.
As time progressed, dozens of pro se litigants attempted to intervene in the ASD case, claiming the government had no “EVIDENCE.” These filings occurred despite the fact that some of the evidence had been a matter of public record since August 2008.
Critics referred to Surf’s Up, whose formal name was the ASD Member Advocates Forum, as the AS[Delusional] forum. Various tortured explanations for Bowdoin’s conduct appeared on the forum, and there were calls for a “militia” to storm Washington, D.C., and for a prosecutor to be placed in a medieval torture rack. Prosecutors and federal agents were derided as “goons” and “Nazis,” and critics were derided as “maggots.”
The SEC’s Case Against Commodities Online
On April 1, the SEC filed an action against Commodities Online that alleged it was selling unregistered securities and operating a commodities fraud that had absorbed at least $27.5 million. Florida attorney David S. Mandel was appointed receiver.
“In connection with the unregistered securities offerings, the Defendants made numerous material misrepresentations and omissions regarding the nature of Commodities Online’s business model and operations, the risks and earnings associated with investing in its securities, and the background of its co-founder and vice-president,” the SEC charged.
“On December 15, 2010, Commodities Online announced on its website that ‘[t]o date, we have 32 contract offerings that have been completed for which our steadfast subscribers have been paid. The dollar total of these contracts is approximately $7.5 million and the payout was in excess of $8.5 million, producing an average earning of over 14.5%.’
“That statement was untrue,” the SEC charged. “There is no evidence to support this amount of investor return. In fact, Commodities Online’s bank records show a net loss for the companies associated with these promised contracts. Further, the company’s records show a net outflow of cash for each of these associated companies.”
By March 14, 2011, the SEC charged, Commodities Online had upped its number of purported successful contracts to 48. That claim also was untrue, the agency charged.
Referring to Howard but not naming him, the SEC said that the company “failed to disclose that in 1997, he was convicted of federal narcotics and firearms felonies and sentenced to 57 months in prison. The Defendants never disclosed his past criminal background to investors either through the Commodities Online website or any other company communication to investors.”
Referring to Gallo but not naming him, the SEC said that, in 2005, he “pled guilty in the United States District Court for the District of New Jersey to bank fraud and narcotics charges.
“In 2007, in the same court, he pled guilty to transmitting a threat to injure,” the SEC continued. “He is currently serving a three-year term of supervised release, which expires in July 2011.”
In a separate filing accompanying the complaint filed on April 1, the SEC said that Commodities Online “recently sent approximately $3.8 million to entities and individuals in Mexico and the Netherlands.”
Investigators deemed the transactions “extremely suspicious,” given that the transactions allegedly occurred between March 15, 2001, and March 25, 2011. The SEC said it issued subpoenas to the defendants on March 15, the same day the international transactions began to occur.
Bartow County Bank, which once held deposits tied to Golden Panda Ad Builder and the alleged AdSurfDaily Ponzi scheme, has failed in Georgia.
The Georgia Department of Banking and Finance closed the small bank today and appointed the FDIC receiver. Bartow once held $644,266 linked to Golden Panda, federal prosecutors said in a December 2008 forfeiture complaint.
Bartow’s failure is expected to cost the Deposit Insurance Fund nearly $70 million, the FDIC said. Georgia leads the United States in bank failures.
Golden Panda President Clarence Busby and his daughter, Dawn Stowers, voluntarily ceded the money in the Bartow account to the government more than two years ago, according to court filings. U.S. District Judge Rosemary Collyer formerly ordered the money forfeited on March 31, 2010.
Golden Panda was the purported “Chinese” arm of the Florida-based ASD “autosurfing” enterprise, which prosecutors said was a $110 million Ponzi scheme. Most of the money from the scheme was routed through Bank of America, according to court filings.
Busby, who was implicated by the SEC in three prime-bank schemes during the 1990s, advised Collyer in 2008 that Golden Panda was formed after a “relaxing” day of fishing with Bowdoin and a minister on a Georgia Lake.
Along with the more than $644,000 in Golden Panda cash seized in the December 2008 forfeiture case, prosecutors also seized an $800,000 building in Florida for which Bowdoin had paid cash, according to court filings.
Prosecutors also seized a boat, cars and other equipment in the December 2008 complaint. In a forfeiture complaint filed in August 2008, prosecutors seized nearly $80 million held in Bank of America accounts, including $65.8 million in 10 accounts in Bowdoin’s name, and $14 million in Golden Panda-related accounts.
Collyer ordered Bowdoin’s money forfeited in January 2010. Golden Panda’s money was ordered forfeited in July 2009.
As was the case with many things associated with ASD, the December 2008 forfeiture case turned into Theatre of the Absurd. Although Bowdoin family members were named beneficiaries of much of the fraud outlined in the December complaint, neither Bowdoin nor a family member entered claims for the seized property.
Regardless, Bowdoin filed an appeal after Collyer ordered the money and property forfeited.
The FDIC said today that Bartow County Bank will repoen tomorrow as a branch of Hamilton State Bank. Bartow’s failure will cost the Deposit Insurance Fund an estimated $69.5 million.
“The FDIC and Hamilton State Bank entered into a loss-share transaction on $247.5 million of Bartow County Bank’s assets,” the FDIC said. “Hamilton State Bank will share in the losses on the asset pools covered under the loss-share agreement.”
Four other U.S. banks failed today, bringing the year-to-date total to 34. In 2007, only three banks failed in the United States.
Eight banks have failed in Georgia so far this year. Two have failed in Florida.
After the assets of ASD and Golden Panda were seized, some members immediately turned their attention to promoting other autosurfs. They also pushed HYIPs and cash-gifting schemes, saying the miserable businesses were a good way to make up for ASD/Golden Panda losses.
When an MLM program known as MPB Today launched in Florida last year, promoters urged foreclosure subjects and Food Stamp recipients to part with their money to join the business. Records show that one of the banks MPB Today used was operating under a consent agreement with the FDIC.
MPB Today said last year that it had recruited more than 30,000 members.
Florida has one of the highest foreclosure rates and bank-failure rates in the United States.
“[I]f this company doesn’t have sales, it’s not a viable company. Every company has to have sales that’s what makes this company work because the great business model, not because it has a lot of outside resources, but with that said we have a lot of things planned in the next weeks and months ahead. This will create lots more wealth for you.”— Federal prosecutors, quoting Golden Panda Ad Builder President Clarence Busby in August 2008 forfeiture complaint that seized $80 million in the ASD/Golden Panda Ponzi case.
“Our electronic wallet offered by our financial partners can make a great difference to you and your family. If you don’t utilize these programs and services and take advantage of everything that Club Asteria offers, you are not helping yourself. Our services are priceless — but only if you take advantage of them.
“We are privileged to work for you and we hope that you feel privileged to be part of our Club that is striving to make a real difference for you and the rest of the world. When the revenue sharing is announced each week, remember that we are doing our part to bring about the best services and products — you need to do your part as well to maintain the highest revenue sharing.”— Club Asteria announcement to members, April 2, 2011.
Members of Club Asteria, an online “opportunity” that trades on the name of the World Bank, purportedly issues member payments from Hong Kong and is promoted on Ponzi scheme and criminals’ forums as a “revenue sharing” business, now say that the club’s worldwide membership roster has swelled to more than 230,000.
A new wave of “I got paid” posts appeared on TalkGold and MoneyMakerGroup over the weekend, and promoter “manolo” announced that a “matching bonus” program had been extended through April. Separately, other Club Asteria members are seeking to drive business to the firm, which touts its relationship with offshore payment processors, by issuing press releases in multiple languages.
Google News has picked up a number of the releases in recent days, including one dated March 28 that touts a Miami-based promoter and claims “Club Asteria is exploding in every corner of the world.”
When clicked, a URL in the press release takes visitors to a text and audio pitch for Club Asteria. “Some members are making in excess of $20,000 US Dollars per month,” the promo claims in bold. Prospects who pay Club Asteria a fee of $20 to join as a “GOLD Member” are offered a coaching program that promises the “best tips and tricks that you WILL need to succeed with Club-Asteria!” according to the promo.
Google rejected an application by the PP Blog in June 2010 to become part of its Google News service. The PP Blog covers online fraud schemes and is written by a journalist with more than 20 years’ experience.
“[W]e’re unable to include it in Google News at this time,” Google advised the Blog. “We don’t include sites that are written and maintained by one individual.”
Some Club Asteria members say the company is based in the United States. Why payments purportedly are issued from Hong Kong is unclear.
Forum posts that declare “I got paid” have been associated with Ponzi schemes that spread virally on the Internet. Such schemes have used press releases to sanitize the business “opportunities,” and also have made use of “matching bonus” programs and offshore processors.
A March 30 sales pitch from a Club Asteria promoter claims the program “ia (sic) a basically (sic) Human Development Program.”
The pitch continues with an all-caps paragraph that purportedly defines what the program is not and includes 15 exclamation points.
“A CHANCE TO CREATE INCOME FOR LIFE…!!! YES…!!! INCOME FOR LIFE FINANCIAL FREEDOM…!!! CLUB ASTERIA EARN AND SHARE, NO SCAM, NO HYIP, NO PONZI, NO GET RICH QUICK SCHEME. EARN $ 400 EVERY WEEK FOR LIFE LONG. JUST A TRUE INVESTMENT AND A GREAT WAY TO EARN AND SHARE THE WEALTH WITH ALL THE PEOPLE OF THE WORLD. RUN BY FORMER DIRECTOR OF THE WORLD BANK ANDREA LUCAS. NOW CLUB-ASTERIA IS PRELAUNCH PHASE. GET ON NOW TO GRAB PRELAUNCH OFFERS…!!! JOIN NOW…!!!”
Preemptive claims that emphasize what a program is not also have been associated with Ponzi schemes.
The World Bank said last month that it once employed a person named Andrea Lucas, but that she left her job as a department head in Washington, D.C., in December 1986, nearly 25 years ago. Lucas was not a member of the World Bank’s board of directors, as hundreds — and perhaps thousands — of promotions for Club Asteria have implied.
Some Club Asteria members have identified Lucas as a former World Bank “Vice president” and “Chairman.”
Although Club Asteria has been promoted as a “passive” investment opportunity in which customers would simply register, pay a fee and earn money from the efforts of others, Club Asteria now appears to be trying to distance itself from those claims — while keeping the “matching bonus” program intact.
Claims that members can make money passively by simply paying a fee and relying on Club Asteria to generate profits leads to questions about whether the company and its army of affiliates are selling unregistered securities as investment contracts. On March 17, the company said that members who registered for its program and paid a fee were in position to “help the people of Japan” after last month’s devastating earthquake.
About two weeks later, Club Asteria suggested that members were overselling the earnings program and making false claims.
“The revenue will go up or down depending on how many members actively take advantage of utilizing and/or selling any one of our programs or services,” Club Asteria said in an April 2 note on its website. “If anybody has told you something different, they are mistaken and incorrect. We share our revenue that is earned by our membership. There is no guarantee. It would be impossible to guarantee this.”
Club Asteria members earned a payout of 4.01 percent last week, according to “akledba,” who was posting on the MoneyMakerGroup Ponzi forum in 36-point type.
“Wow, that is great,” replied MoneyMakerGroup member “strosdegoz.”
“I didn’t realize it was higher than last week,” strosdegoz noted. Below the post was a link for a program called “Exotic FX,” which bills itself a “PRIVATE ASSET HAVEN.”
MoneyMakerGroup is referenced in U.S. federal court filings as a place from which the alleged Pathway to Prosperity and Legisi Ponzi schemes were promoted. The schemes gathered more than $140 million, according to court filings.
Club Asteria did not say how much money it had collected as a result of purported misrepresentations by members or how members could be assured that the firm’s money stream was free of Ponzi and scam proceeds. The company does not publish verifiable financial data. Because the “opportunity” is being promoted on well-known Ponzi forums, it is possible that serial fraudsters have polluted Club Asteria’s revenue stream with proceeds from autosurf fraud schemes, HYIP fraud schemes, MLM fraud schemes, Forex fraud schemes, “arbitrage” fraud schemes and other forms of online fraud.
“Matching bonus” programs have been one of the hallmarks of online Ponzi schemes, some of which swelled to victimize tens of thousands of participants. AdSurfDaily, an “autosurf” firm that also was promoted on the Ponzi boards, routinely used matching bonuses to attract prospects. ASD’s membership ranks swelled to 120,000, according to promos for the firm, which now is accused of operating an international Ponzi scheme that gathered at least $110 million.
In 2009, a firm known as AdViewGlobal (AVG), which is said to have recruited 20,000 members in only weeks after the seizure of ASD-related assets, also used matching bonuses. One promoter claimed that $5,000 sent to AVG turned into $15,000 “instantly.” AVG also was promoted on the Ponzi boards.
AVG collapsed in June 2009. Private attorneys suing ASD President Andy Bowdoin in a racketeering case have referenced AVG in court filings. Federal prosecutors who brought both civil and criminal charges against ASD have made veiled references to AVG in court filings.
Recent promos for Club Asteria have made claims such as these (below): (NOTE: These are verbatim and are from multipe websites, all of which could be driving money to Club Asteria.)
“Earn a realistic $400 a week… PASSIVELY!”
“Discover How You Can Earn $400 Per Week Passively With No Sponsoring Requirement And How To Make Money Starting Now!”
“We help you become financially secure, YOU help others become financially free. We are restoring balance of financial equality.”
“Join Our TEAM and Earn $400 weekly for $20”
“Club Asteria” A site of “World Bank’s former Vice president Andrea Lucas”
“We all can be millionaires in 2 years if we can afford to invest N15,300 ($100). Thanks to ANDREA LUCAS, a former World Bank Director who established the investment outfit, CLUB ASTERIA.” (Continued below graphic.)
This Club Asteria promo, which trades on the names of Google, Yahoo, MSN and America Online, claims Club Asteria members earn $400 a week "passively." Such claims lead to questions about whether Club Asteria members are selling unregistered securities as investment contracts.
“Be 100% passive and still earn $400 weekly from Real/Legal/Safe Co.”
“Hi, club Asteria is founded by former world bank Chairman. running in 141 countries worldwide,21 years experience,its main aim is to eradicate poverty by giving micro-loans.If u pays $20 monthly for life-long by taking gold membership,you earn weakly $400 for lifelong from 19 th Month.No-referrals.But,If u refer one member, U get $9 monthly for lifelong.”
BULLETIN: Federal prosecutors now say that a Florida company whose operator is accused of running an international Ponzi scheme may have defrauded 40,000 or more victims and may not have entered all the names of people who gave it money into the firm’s database.
Andy Bowdoin, the president of AdSurfDaily, was indicted last month on charges of wire fraud, securities fraud and selling unregistered securities. Prosecutors now have revealed in court filings that the U.S. Secret Service seized ASD’s database during the probe, which began in July 2008.
ASD’s database contains 97,000 names, including the names of members who joined for free, prosecutors said in a motion that asks U.S. District Judge Rosemary Collyer to approve a plan by which websites would be used to help locate additional victims and keep victims in general informed about developments in the case.
“The government is not certain that this list is a complete list of all people who provided money to ASD and who potentially lost their money,” prosecutors said. “It appears from the investigation that there may be members who provided funds to ASD but whose information ASD did not enter into its database.”
Some ASD members claimed the company had as many as 120,000 members.
To date, prosecutors said they had identified “approximately 40,000 known potential victims.” The victims’ list includes “individuals who contacted the U.S. Attorney’s Office directly and identified themselves as losing money in their ASD investment, members who agents identified as potentially losing money with ASD and Golden Panda Ad Builder members.”
Golden Panda was the purported “Chinese” option for ASD members. It was operated by Clarence Busby of Georgia, according to court filings.
Bowdoin, prosecutors said in their motion, was operating ASD “essentially as his own piggy-bank.”
Beyond that, prosecutors said, “as far as the Government is aware, there is no available accurate compilation” of all individuals or entities that lost money in the scheme.
All victims have the right to be “reasonably heard” and to be kept up to date on proceedings, but the sheer number of ASD victims and a lack of records makes it “impracticable to give individualized notice to each potential victim.
A web-based system of notification through email and a government site and the remissions site set up by Rust Consulting Inc. of Minnesota will help victims stay informed of their rights, prosecutors said in their motion to Collyer.
“In light of the fact that Bowdoin operated an Internet based scheme, it is reasonable to assume that victims will have access to the internet and will be able to easily access information on the government’s website,” prosecutors said. “Moreover, the government will include on the remission website a link to the U.S. Attorney’s Office’s website for victims seeking information about public proceedings in the criminal case.
“The Government respectfully submits that the proposed notice procedure is reasonable to give effect to the rights of the potential victims in this case, and requests that the Court enter the proposed order,” prosecutors said.
Similar accommodations have been made in other securities-fraud cases, including the Bernard Madoff case, prosecutors said.
BULLETIN:UPDATED 6:27 A.M. ET (U.S.A., DEC. 18) The U.S. Secret Service and federal prosecutors have seized nearly $250,000 from two alleged ASD promoters and filed a new forfeiture complaint dated today.
More than $153,000 has been seized from a bank account controlled by ASD promoter Erma Seabaugh, known as the “Web Room Lady.” Seabaugh was a purported ASD “trainer,” prosecutors said.
She was accused in the complaint of accepting checks made out to ASD, depositing them into her bank account and transferring “ad packs” to her downline by using ASD’s internal system.
Meanwhile, more than $96,000 has been seized from bank accounts controlled by ASD member Robyn Lynn Stevenson, who operated a company known as Robyn Lynn LLC and worked briefly for ASD itself, prosecutors said.
At the same time, investigators seized nearly $500,000 from a bank account once controlled by ASD President Andy Bowdoin and nearly $50,000 from an account controlled by Golden Panda Ad Builder President Clarence Busby.
Busby, prosecutors said, already has ceded the money to the government. The money was ceded in September 2008, about two months after an undercover agent had been invited by an ASD member to listen to Busby talk in July 2008, as Golden Panda was ramping up for its formal launch.
The additional sum of nearly $500,000 ($496,505) seized from Bowdoin was a balance left in an account that once contained more than $31.6 million, prosecutors said. The lion’s share of the money in the account already has been declared forfeited, but agents worked out an agreement with Bank of America to permit about $500,000 to remain in the account on the date of the Aug. 1, 2008, seizure of Bowdoin’s assets.
The buffer was necessary to permit checks already drawn on the account prior to the effective date of the seizure warrant to clear, prosecutors said.
All in all, the forfeiture complaint filed today targeted $794,718 in illegal ASD proceeds, prosecutors said.
The seizure of cash tied to Seabaugh and Stevenson traced its roots to the opening days of 2009, months after the seizure of the lion’s share of money from Bowdoin’s bank accounts, according to the complaint.
On Feb. 26, 2009, U.S. District Judge Rosemary Collyer authorized the seizure of “up to” $213,693 in the name of “Carpe Diem or Erma Seabaugh,” prosecutors said. The seizure occurred one day after Bowdoin had signed a document in which he sought to reverse an earlier decision he made to submit to the forfeiture of tens of millions of dollars in his bank accounts, records show.
When the Secret Service executed the warrant to seize the money from Seabaugh, only $153,097 was found in the account, according to the complaint.
Between July 15 and July 30, 2008 — effectively the two week period leading up to the ASD seizure — Seabaugh received nine ASD checks totaling $203,993, prosecutors said.
On July 25, 2008, just days before the seizure of Bowdoin’s bank accounts, Seabaugh deposited into her bank account seven checks made out to ASD totaling $9,700 prosecutors said.
The checks came from “third parties,” and Seabaugh transferred a corresponding number of “ad packs” to the buyers by using ASD’s internal system, prosecutors said.
“Based on these facts, it appears Ms. Seabaugh was selling her own investment ‘ad packs’ to clients and representing herself as ASD,” prosecutors said.
Seabaugh had at least three ASD accounts and appeared to be using ASD’s “advertising” rotator to sell other pyramid schemes, prosecutors said. All three of the accounts used a form of the “Carpe Diem” name, according to the complaint.
One of Seabaugh’s ASD accounts was opened with a transfer of “ad packs” from La Fuente Dinero, yet-another autosurf scheme tied to ASD, prosecutors said.
Noting that Seabaugh deposited no “new money” into the account, prosecutors said she withdrew $83,994 from the account via checks from ASD.
Seabaugh recruited 48 ASD members, according to the complaint. She withdrew an additional $107,997 from another ASD account.
Stevenson, meanwhile, made only one deposit with ASD — for $500 — and yet received $96,525, prosecutors said. The withdrawals came in the form of 17 checks issued by ASD between July 10 and July 25, 2008, just days before the seizure of ASD’s assets, according to records.
The checks were deposited into two bank accounts that Stevenson opened July 31, 2008, one day before the seizure of Bowdoin’s bank accounts, according to records.
Separately, Bowdoin pleaded not guilty today to criminal charges filed against him in U.S. District Court for the District of Columbia. Prosecutors said he was at the helm of a massive Ponzi scheme that gathered at least $110 million.
In a bizarre and unsettling development, some members of AdSurfDaily who may be planning to file for restitution through the official claims administrator have received a confusing and threatening email from a “group” of ASD members.
The email, which appears to be a compendium that cobbles together communications from the group and asks ASD members to pass along the information, implies that ASD members who file for restitution through the government-approved process may face legal action from the group, which has or will file claims against the “illicit UNITED STATED (sic) OF AMERICA INC. et al” for its prosecution of the ASD Ponzi scheme case brought by the U.S. Secret Service in August 2008.
The lawsuit threat appears to be targeted at ASD members who are planning to file a restitution claim through Rust Consulting Inc. of Minneapolis. Rust Consulting is under contract with the government to administer the restitution program through a process known as remission in which ASD members must certify they are crime victims.
Pasted into the email is a purported “legal opinion” by a person described as “Keny” of “AMERICAN-International Business Law inc. (sic).”
“Keny” does not appear to be the source of the lawsuit threat. Rather, the email quotes a purported “legal opinion” by “Keny” — and then implies members who file through Rust Consulting may be sued by members of the group. The email asks members not to file for a refund through the official process.
“Please send me your response(s) and I will manage the feedback timely,” says an email signed “MYHUB.” “Again, we are asking that our Claimants do not engage in the DOJ’s Remission Process, as long you want to maintain being part of our Group Claims whatsoever. If you are indeed wanting to eat on the other side of the fence, you must let us know before you submit anything to the DOJ, without causing us potential harm and further damages. In case you were to fail to notify us, we would have a possible claim against you, and that’s not what you want us to do in the first place.
“We very much appreciate your understanding in this rather sensitive time of legal dealings,” the email continues. “No worries, we are just getting started to fight for and along with you. If you feel that this email could help some of your friends in ASD that are not part of our Group Claims, we are allowing you to share and forward this email as long it doesn’t end up in Blogs et al., but then again, people need to be informed since they can’t read and or understand the legal language or the meaning of words any longer.”
Google search results include multiple references to “AMERICAN-INTERNATIONAL BUSINESS LAW INC” and a person referenced as “Keny.”
One of the references appears on a website operated by Cornell University Law School under a heading of “Legal Services & Lawyers.” The Cornell reference identifies a person named Kenneth Wayne Leaming of AMERICAN-INTERNATIONAL BUSINESS LAW INC. of Spanaway, Wash. The Cornell site notes that correspondence should be sent to the attention of “Keny” and that Kenneth Wayne Leaming practices “Admiralty/Maritime, Business Law, Estate Planning and Native American Law.”
Records at the Practice of Law Board at the Washington State Bar Association (WSBA) say that Kenneth Wayne Leaming, also known as Kenneth Wayne, was accused of the unauthorized practice of law by clients in 2005.
One client accused Leaming of “actively market[ing] legal services via seminars and the internet” and of providing “legal advice” and preparing “pleadings for many clients,” according to WSBA.
Another client accused Leaming of contracting with him “to assist him in avoiding an IRS lien on his home” and failing to provide the services.
On Dec. 20, 2005, WSBA said in a letter to Leaming that his “conduct constitutes the unauthorized practice of law.” The final disposition of the matter was not immediately clear. Also unclear is whether Leaming ever was a licensed attorney or authorized to practice law in any state.
Separately, the Anti-Defamation League (ADL) lists Leaming as a member of an “extremist group” known as “Little Shell Pembina Band of North America.”
Leaming, according to ADL, is a “self-described ‘recognized international lawyer’ who once served as a deputy sheriff and member of the Civil Rights Task Force, a “sovereign citizen group that has used badges and raid jackets to resemble law enforcement officers.”
“His CRTF partner, David Carroll Stephenson, was ordered by a federal court in March 2004 to stop promoting an alleged tax scam that allowed people to avoid an estimated $43 million in federal income taxes,” according to ADL.
The identity of “MYHUB” was unclear in the email received by ASD members. Portions of the email were pieced together by a sender known as “Sara.” A person named Sara Mattoon once served as ASD’s official spokeswoman and is referenced in a court filing by the Secret Service in 2009.
In the email, “Sara” referenced remarks attributed to “Keny” as a “legal opinion about why it may be unwise for you to fill out the [Rust Consulting] form, aside from it working against ASD.”
The “Sara” email then reproduces the “MYHUB” email and the purported “legal opinion” by “Keny.”
The purported legal opinion describes the Rust Consulting website, which is listed in court documents as the official site for ASD victims, as “almost exclusively a propaganda site to get the viewer to ‘believe’ the gov’t LIE that advertising via network marketing on the internet is somehow bad business and fraudulent, and solicit false testimony from the viewer based on the false information!”
In yet-another email received by ASD members, a fellow member referenced as “Robert” also referred to the claims program administered by Rust Consulting. The email from “Robert” includes an unattributed opinion, meaning the identity of the person who offered the opinion is unclear.
“If members feel it absolutely necessary to complete the remission form now instead of waiting a little longer for the legal process to be completed then they may want to write on a separate piece of paper and have it notarized saying that they were not an investor,” according to the opinion contained within the email from “Robert.”
Members also should swear that “they purchased advertising for their website and that they were happy with their purchase,” according to the unattributed opinion circulated by “Robert.”
“The govt is trying to trick people into saying it was an investment,” the opinion claimed.
Separately, an apparent ASD member known as MMG7 who posts on the MoneyMakerGroup Ponzi forum left a scathing missive yesterday in an ASD thread at the forum.
“The same people who abused their power, under the color of law, back in August of 2008 and basically *shut down* the company without due process are up to yet additional tactics to *CREATE VICTIMS* out of thin air,” the post read in part.
“The general consensus is that once they can *create victims* they can then turn around and use it against ASD or even YOU.
“It is VERY HEALTHY to question their motives. Remember, these are the same people that ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.
“Could it be they thought ASD would roll over and play dead so they could put a feather in their cap and claim victory? Not to mention being able to keep a hefty sum of members monetary property.”
The MoneyMakerGroup forum is referenced in a May filing by the U.S. Postal Inspection Service as a place from which Ponzi schemes are promoted. The filing accused an entity known as Pathway To Prosperity of conducting an international Ponzi scheme that defrauded more than 40,000 investors across the globe.
MMG7 did not explain in his post how he arrived at the conclusion that ASD was denied due process in a court case that has featured more than 175 filings and a hearing called at ASD’s request to free seized money.
ASD’s request was denied in November 2008 because it did not demonstrate at the hearing it requested to prove its legitimacy that it was operating lawfully and was not a Ponzi scheme, according to court records.
ASD President Andy Bowdoin later met with federal prosecutors over a period of at least four days. Bowdoin, according to court filings, signed a proffer letter and acknowledged the government’s material allegations in the case were all true.
Although Bowdoin initially contested the forfeiture of tens of millions of dollars seized in the case, he submitted to it in January 2009. By the end of February 2009, however, Bowdoin reentered the case, acting as his own attorney and seeking to reassert his claims to the money. Months of legal wrangling followed, and Bowdoin was forced to hire new attorneys. A federal judge ruled last fall that Bowdoin would not be permitted to reenter the case, and an order of forfeiture was signed in January 2010.
Nor did MMG7 explain how he had arrived at his conclusion that the government “ruined the lives of 100,000+ people in the blink of an eye without so much as having to provide an explanation for their actions.”
Court records plainly show that that the government explained in considerable detail to at least two federal judges why it sought the authority to seize tens of millions of dollars contained in the personal bank accounts of Bowdoin, who was accused of swindling investors in an Alabama securities caper in the 1990s. Moroever, the government has said all along that it intended to establish a restitution pool from the assets seized in the case.
The implementation of both the pool and the restitution/remission process were delayed by appeals filed by Bowdoin.
Bowdoin was sentenced to prison in the Alabama case, but avoided jail time by agreeing to make restitution, according to records.
Clarence Busby, his business partner in the AdSurfDaily/Golden Panda Ad Builder venture, also swindled investors in a separate securities scheme in the 1990s, according to the SEC.
At the same time, MMG7 did not explain how he arrived at his conclusion that the government “shut down” ASD. Records show that ASD was permitted to continue to display advertising after the seizure, but that Bowdoin chose not to do so.
Prosecutors say that, despite ASD’s claims to a federal judge that it had no money to operate, the company had $1 million in an account under a “different name” on the island nation of Antigua.
Records show that Bowdoin did not reveal the existence of the Antigua money to members until after ASD had asked the court for emergency cash to pay its rent and webhosting bill.
U.S. District Judge Rosemary Collyer, whom Bowdoin and another member later tried to have removed from hearing the case, refused to release funds to ASD.
