The litigation against INetGlobal amid Ponzi scheme allegations is turning into a legal slugfest in multiple venues. On one side, federal prosecutors are seeking to disqualify INetGlobal attorney Mark Kallenbach, claiming that he is attempting to be both a lawyer and a witness in the same case.
Now, employees of INetGlobal are seeking a protective order that effectively would block the U.S. Secret Service and other law-enforcement agencies “from contacting these represented individuals and requesting interviews.”
Attorney Paul Engh filed the motion in federal court on behalf of INetGlobal’s 70 employees, arguing that he is the gatekeeper for the employees’ legal interests and that the government has approached an unspecified number of employees without going through him.
“These approaches have been made on a cold-call basis, at [employees’] homes, at night or in the early morning hours, and all without notice to counsel,” Engh said in a brief.
His request that the practice stop was “refused,” Engh argued, asserting that the government claims “that since the employees are on laid off status. . . they are no longer employees.”
“Having been an employee is a status that doesn’t disappear because the Government wants it to,” Engh asserted. “None were fired.”
At least one employee — Donald Allen, a former vice president of a company related to INetGlobal and its operator Steve Renner — said earlier this week that he had his own attorney and was cooperating with the Secret Service and federal prosecutors.
Allen said he was approached by the Secret Service, which appeared at his home unannounced a week ago today, and was asked by the agency if he wanted an attorney. Allen said that he answered yes, and described his first meeting with the agency as “excellent.”
Allen said he was advised he had “exposure” in the case. He denied he had done anything wrong, saying he was not privy to INetGlobal’s internal financial workings.
On Tuesday, Allen said he had a second meeting with the Secret Service April 26, adding that he is cooperating in the investigation “100 percent.”
Also on Tuesday, Steve Renner went to Hennepin County Court in Minneapolis and obtained a restraining order against Allen, claiming that Allen was harassing and threatening him and trying to extort $100,000 from the company.
Allen said that what Renner claimed to be extortion was actually an attempt to work out a severance package.
The extortion claim was the second against a former INetGlobal employee. Former CEO Steven Keough was accused in court filings by Renner last month of trying to extort $500,000 from the company. Keough may be the government’s star witness in the case. The Secret Service said Keough had come to believe that Renner had hired him to be a “good face” for the company and that Renner had fired him for asking too many questions.
Engh argued in his brief yesterday that the government appeared to be ignoring his duty as counsel to INetGlobal employees “on some federalist notion of superiority or entitled sense of un-accountability.”
Separately, some members of INetGlobal have asserted the government is not playing fair. Similar claims were made in the prosecution of the assets of the AdSurfDaily autosurf. The government ultimately won three separate orders of forfeiture totaling more than $80 million in the ASD case.
ASD President Andy Bowdoin, whose company has been linked to international fugitive Robert Hodgins, who allegedly laundered money for a Colombian drug cartel, has filed an appeal. The ASD case has been in litigation since the Secret Service raided the company’s Florida headquarters in August 2008. The ASD case is referenced in filings by the prosecution in the INetGlobal case that allege an undercover agent was introduced to INetGlobal by an ASD member who promoted the program despite describing it as a wink-nod enterprise.
Renner, who was convicted in December of four felony counts of income-tax evasion and is awaiting sentencing, has not been charged in the INetGlobal case. The government seized about $26 million in its investigation into Renner’s business practices, and prosecutors have argued that Renner is attempting to get the government to expose its case before a formal action is brought.
Renner has denied wrongdoing, and the companies have said they are legitimate enterprises.
Former INetGlobal CEO Steven Keough now has some company on the list of people alleged to have tried to extort money from the Steve Renner family of companies.
Renner went to court yesterday in Minnesota to seek a restraining order prohibiting Donald Allen from harassing him. The order was granted after Renner asserted Allen tried to extort $100,000 and had engaged in a pattern of abusive behavior, including raising “havoc” with employees, threatening “to destroy him and his family,” posting libelous and defamatory material on the Internet and engaging in verbal harassment.
Allen also was accused to taking pictures of Renner’s offices and employees without their consent.
“[Allen] has attempted to extort $100,000 from Petitioner’s businesses [and] if not paid will go to the FBI and Secret Service,” Renner asserted.
A judge ordered Allen not to harass Renner, not to have any contact with Renner and to stay away from Renner’s home. The judge also ordered Allen to stay one “city block” away “in all directions” from Renner’s businesses in Minneapolis.
Should Allen violate the order, he could be arrested, jailed for up to 90 days and fined up to $1,000, according to the order. Subsequent violations of the order could result in stiffer measures, including the filing of felony charges that could land Allen in jail for for up to 10 years and force him to pay a fine of up to $20,000.
Allen is referred to in court papers as a previous employee of a Renner company.
In a story published yesterday on the PP Blog, Allen said he was cooperating with the U.S. Secret Service “100 percent” in a probe of Renner’s business practices. The Secret Service said in February that it believed Renner was operating a Ponzi scheme and engaging in wire fraud and money laundering.
Renner has not been charged with a crime and denies wrongdoing. Allen was vice president at V-Newswire, one of the “V” entities in the Renner family of companies. The Secret Service said in February that Allen had given confusing information to a customer of INetGlobal, another Renner entity.
Allen denies wrongdoing, and now says he has met with the Secret Service twice and is cooperating fully in the Ponzi probe. The first meeting with the Secret Service occurred Friday, after agents showed up unannounced at his home, Allen said yesterday.
In March, Renner accused Steven Keough, the former CEO of INetGlobal, of trying to extort $500,000 from the company. Keough may be the government’s star witness if charges are filed.
“This is the same move they tried on Steve Keough,” Allen said this morning. “I never tried to extort anything.”
EDITOR’S NOTE: The story below includes an assertion by Donald Allen that his IBNN.org website was knocked offline Sunday by a company with ties to INetGlobal. Moments before the story was set for publication, the IBNN website returned. The story does not reflect this later event, and it is possible that the site is not viewable in all parts of the world owing to an apparent change in nameservers. Events surrounding the apparent change in nameservers are unclear.
Acknowledging he had been advised that he potentially has “exposure” in the INetGlobal Ponzi scheme investigation, Donald Allen II said this morning that he had nothing to hide and would cooperate with the U.S. Secret Service and federal prosecutors “100 percent.”
That cooperation already has begun, Allen said. He added that his thinking about INetGlobal has evolved since the Feb. 23 raid of company headquarters in Minneapolis, and he insisted he was out of the loop on INetGlobal’s financial affairs and that his efforts to promote the firm were legitimate.
“Let me make it perfectly clear,” Allen said this morning. “I did the Global News Distribution and was never let in to the ‘workings’ of iNetGlobal. I met with the US Secret Service and [its] position is that I ‘shielded’ [Steve Renner] to operate a Ponzi, which is untrue.”
Allen, a vice president with V-Newswire, an entity in the INetGlobal family controlled by Renner, claimed this morning that the company had blocked his access and the access of readers to a public-affairs Blog he operates. The Blog is known as the Independent Business News Network (IBNN).
The company, Allen asserted, was penalizing him “for coming forward to answer ANY questions the Government has regarding iNetGlobal.”
Renner has not been charged with a crime and has denied wrongdoing. The Secret Service said in court documents filed in February that “there is probable cause to believe that Renner is operating a large, Internet-based, Ponzi scheme through his umbrella corporation, InterMark, and some of its subsidiaries, particularly Virtual Payment Systems [LLC of Wisconsin/Brackets Denoting the LLC Designation added Jan. 20, 2011], V-Media, Cash Cards International, and V-Local.”
NOTE IN BOLD ADDED JAN. 20, 2011: An Indianapolis-based company known as Virtual Payment Systems Inc. has contacted the PP Blog to let it know it is not affiliated with the Renner company Virtual Payment Systems LLC of Wisconsin, which is referenced in the paragraph above.
The Secret Service alleged INetGlobal was the “primary vehicle for the perpetration of this fraud.”
INetGlobal, which features an advertising rotator, is the so-called “autosurfing” platform of the Renner companies. The government has prosecuted several autosurf companies in recent years, saying they were selling investment programs disguised as advertising programs and engaging in wire fraud and money-laundering.
Renner’s company has a high concentration of Chinese members who may have limited or no facility in English, the agency said. At least one INetGlobal member has said Americans flocked away from Renner’s autosurfing enterprise after the Secret Service, in August 2008, raided a similar company in Florida known as AdSurfDaily (ASD).
The ASD litigation is referenced in court papers in the INetGlobal case.
Allen said this morning that he also had performed work for V-Media and V-Local — both of which the Secret Service said had ties to the alleged INetGlobal fraud — but he insisted that he had done nothing wrong.
“I wasn’t privileged to know anything about the compensation program” of InetGlobal, Allen said. “I could not explain it to this day.”
An error message that reads “This Account Has Been Suspended: Please contact the V-Webs.com billing/support department as soon as possible” now appears on the IBNN site. In the early hours after Allen lost control of the Blog, the site would not return a ping and produced a “bad destination” error message, according to records.
Even though Allen moved the content of the site from a hosting company controlled by Renner weeks ago, Renner controlled the domain registration and thus has the ability to block access, Allen asserted this morning.
Allen’s access to the site was blocked sometime after “noon on Sunday,” two days after he met with the Secret Service, Allen said.
Agents appeared at his home Friday unannounced, Allen said.
He described his initial meeting with agents as “excellent.” Allen added that he is consulting with an attorney.
“[The Secret Service] asked me if I would like legal representation,” Allen said. “I said yes.”
A second meeting with the Secret Service occurred yesterday. Allen said he was consulting with his attorney again today, saying a characterization that described him as cooperating with the agency was “totally accurate.”
The move to block IBNN also followed on the heels of a letter Allen gave to Renner April 22, Allen said. The letter claimed that Allen had “clear and documented” evidence of violations of the Federal Equal Employment Opportunity laws in a hiring decision it made.
In the letter, Allen suggested he was not given an opportunity to interview for a job that went to an INetGlobal member with a large downline. The letter also questioned the operations of the company’s board of directors and claimed an INetGlobal “receptionist” was performing “confidential” work that should have been handled by the firm’s Human Resources department.
Moreover, Allen said this morning that nothing in his employment contract with the Renner entity permitted the company to block access to the IBNN site. He claimed that the company now wants him to sign an agreement not to write about INetGlobal and also to inspect his computer.
Allen Questions INetGlobal’s Operations
Allen said this morning that he questioned how the company was paying its bills in the aftermath of the federal seizure of its assets. He claimed a member of INetGlobal with a Chinese name had received a promotion to a position that purportedly paid $120,000 a year after the seizure. This member, Allen said, also may have a seat on the board of directors and also purportedly had a downline organization in the company that purportedly paid $10,000 a day.
His first question for Renner, Allen said, is “how is that possible with the current funds frozen by the US Government?”
Allen said his position with the company was supposed to pay $75,000, but that he had not seen “a penny.”
“I’m a little upset, a little traumatized by this attempt to shut me down, because I had one hell of a story,” Allen said. “I’m kind of devastated; I have a civil-rights Blog. A lot of people read it.”
No Stranger To Controversy
Allen and his IBNN Blog have been the subjects of controversy. He used an offshoot of the Blog to claim in March that “federal officials” were leaking information about the INetGlobal case to the PP Blog. After the PP Blog began to report on INetGlobal, Allen began to post comments on the PP Blog without initially identifying himself as a Renner employee, claiming that the PP Blog was “minor league” and engaging in a “witch hunt.”
Separately, Allen used the IBNN Blog to attack the Star Tribune newspaper of Minneapolis St. Paul for its coverage of the INetGlobal raid. Meanwhile, Allen’s name is listed in the Secret Service affidavit filed in February to obtain search warrants at the firm’s headquarters. In the affidavit, the agency painted Allen as a person who provided confusing information to an INetGlobal prospect at a January event in Flushing, N.Y.
Undercover agents attended the Flushing event, and one agent’s observations of Allen are noted in the affidavit.
An INetGlobal prospect “stated she was struggling to understand how the business worked and explained that the person who brought her to the conference was not able to explain it either,” the agency said in the affidavit. “She asked what would happen if she sold iNetGlobal products to someone who had a website and they did not see an increase in their profits.
“Donald Allen asked her what type of products the person was selling and the woman gave the example of beauty products,” the agency continued in the affidavit. “Donald Allen replied that if she was advertising beauty products and not selling any, then maybe she should be in a different business. The woman further challenged Donald Allen on people not truly viewing the websites, just simply opening them. Patricio Diez, iNetGlobal’s marketing director for Spanish-speaking countries, then stated that ‘that doesn’t matter for you.’
“When the woman pressed further, stating that it does matter to whomever she sold the package to, Donald Allen simply stated ‘we have solutions for that’ but failed to expand upon those solutions,” the agency said.
After the raid at INetGlobal’s offices in Minneapolis, Allen used the IBNN Blog to criticize both the media and the government for what he described as unfair treatment of the company — without disclosing his tie to the firm. Allen later told the PP Blog he should have disclosed the tie.
Allen said this morning that his thinking about INetGlobal has evolved. He added that he also had revisited certain events at INetGlobal and had come to believe that things were not quite right.
At an event in Las Vegas last year, for example, Allen was not given time to talk to attendees about V-Local, he said. In recent days he has publicly questioned why few if any members were interested in purchasing the company’s editorial products.
“I can’t recall ever selling a press release to a Chinese member of iNetGlobal,” Allen said in a comment on the PP Blog April 23. “My yearly budget was in-part based on iNetGlobal members buying a press release from V-Newswire — hasn’t happened yet.”
Meanwhile, Allen said this morning that he was sympathetic to Steven Keough, INetGlobal’s former chief executive officer and potentially the government’s star witness in the case. The company has claimed Keough tried to hatch an extortion plot after he was dismissed for incompetence.
“Keough understood that INetGlobal members needed to buy the products,” Allen said this morning. “Steven Keough was the best thing that ever happened to that company,” adding that he believed Keough saw “noncompliance” with laws and was dismissed for pointing them out.
UPDATED 2:25 P.M. ET (March 2, U.S.A.) The vice president and director of public relations for V-Newswire — a company in Steve Renner’s INetGlobal family — authored an opinion piece lambasting a Minnesota newspaper’s coverage of a Secret Service raid at INetGlobal’s Minneapolis offices last week on his personal Blog, but did not disclose his tie to the firm.
Donald W.R. Allen II operates a Blog known as The Independent Business News Network (IBNN). Allen did not disclose his INetGlobal tie when authoring an editorial titled, “Minneapolis’ Star Tribune newspaper’s bias reporting causes defamatory speculation at Internet marketing firm.”
The piece began, “If the Star Tribune newspaper can use its ‘power’ to taint a company’s image prior to investigation by authorities, whose (sic) to say the news you get is true and accurate?â€
The Star-Tribune was among the first media outlets to report that federal agents believed INetGlobal was operating a Ponzi scheme.
Information gleaned during the federal probe led to allegations that INetGlobal also was engaging in wire fraud and money-laundering.
Allen, whose name is referenced in a search-warrant application in the INetGlobal case, now says he should have disclosed the tie in the IBNN editorial.
“I will give full disclosure on the iNetGlobal piece today because I have 3 more follow up stories,” he said this morning. He asserted that the IBNN domain, which is registered in Renner’s name under the organization of V-Webs LLC, “has nothing to do with iNetGlobal other than being registered by the company as part of my employment agreement.”
Allen defined the IBNN Blog as a “Civil Rights, Politics and News Blog for mostly the Twin Cities area.” IBBN’s site content includes an endorsement of the Tea Party Movement in the United States and a “Declaration of Tea Party Independence.”
Allen emailed the PP Blog Sunday after appearing at the Blog, posting comments and using the IBNN URL, not a URL associated with the Renner companies. He dismissed the Blog as “minor league,” writing it was engaging in a “witch hunt.” The Blog responded to Allen’s email by asking him to comment on a number of issues concerning INetGlobal and inquiring why he was using the IBNN URL if he was a spokesman for a Renner entity.
Later in the day, Allen responded to the Blog’s questions by saying he would answer questions about his role at V-Newswire, but he did not address the questions the Blog asked previously.
The Blog then resubmitted the questions, adding several more questions to a list of four it previously had asked. Allen responded to the email, but chose not to answer a number of questions.
Among the questions Allen declined to answer was whether INetGlobal, in the aftermath of the Ponzi scheme allegations, believed it should inform members about Steve Renner’s December conviction on four felony counts of income-tax evasion. Allen also declined to answer a question on whether INetGlobal had a duty to inform members that Cash Cards International (CCI) — a payment processing firm once operated by Renner — could not return money to Ponzi scheme victims in a case brought by the SEC against a California company known as Learn Waterhouse because Renner had spent the customers’ money.
Allen did say he saw “nothing illegal with V-Newswire or the V-News Network.”
The Blog asked Allen whether he was the “Donny Allen” referred to in an INetGlobal news release and the “Donald Allen” referred to in a Secret Service affidavit that alleged “Donald Allen” provided confusing information to a person who attended an INetGlobal function in New York.
Allen did not answer the question, which the Blog posed twice.
Undercover Secret Service agents also attended the New York function, according to the affidavit.
The PP Blog also asked Allen whether he believed he should disclose his tie to INetGlobal when responding to Blog and forum posts. He declined to answer the question, which was posed twice.
He also declined to answer a question about how it served INetGlobal’s PR ends to dismiss as “minor league” Blogs that report the serious allegations against the company.
AdSurfDaily, a Florida company implicated in a $100 million Ponzi scheme, employed a similar PR approach. The ASD case is referenced in the Secret Service affidavit, amid allegations that an ASD member described INetGlobal as a wink-nod enterprise and attempted to have an undercover Secret Service agent participate in a three-way call with the ASD members’ sponsor for the purpose of recruiting the agent into INetGlobal.
Allen also declined to answer a question on whether he was the author of an INetGlobal news release after the raid that said federal agents had arrived at Renner’s offices “looking for something to substantiate their claim that illegal activity was occurring in the business.”
The news release used Allen’s email address, which he described as temporary in an email to the PP Blog, but did not mention Renner’s income-tax conviction and the allegations that Renner had spent money belonging to CCI customers.
The litigation against INetGlobal amid Ponzi scheme allegations is turning into a legal slugfest in multiple venues. On one side, federal prosecutors are seeking to disqualify INetGlobal attorney Mark Kallenbach, claiming that he is attempting to be both a lawyer and a witness in the same case.
