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Tag: Eric Holder

  • BULLETIN: Traders Operated ‘The Cartel’; Banks Charged Criminally

    breakingnews72Forex traders at four multinational banks — Citicorp, JPMorgan Chase & Co., Barclays PLC and Royal Bank of Scotland plc — formed “The Cartel” and conspired to manipulate the prices of the U.S. dollar and the euro, the U.S. Department of Justice said today.

    All four banks have been charged criminally in an investigation that began when Eric Holder was Attorney General, said Loretta Lynch, Holder’s successor.

    UBS AG, a fifth multinational, has been charged criminally with manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates, the Justice Department said. The UBS prosecution came about after the agency ripped up an earlier nonprosecution agreement (NPA) with bank, alleging that UBS had violated the terms of a pact reached in December 2012 to resolve the LIBOR matter.

    Barclays also breached an NPA struck in June 2012 over the LIBOR matter and has agreed to pay an additional $60 million, the Justice Department said.

    The charges, all felonies, include conspiring to fix prices and rig bids. They are filed against Citicorp, Barclays, JPMorgan and RBS.

    A felony charge of wire fraud was filed against UBS, the Justice Department said.

    “In other words,” Lynch said, according to her prepared remarks released by the Justice Department, “UBS promised, in other resolutions, not to commit additional crimes — but it did.”

    As for Citicorp, Barclays, JPMorgan and RBS, Lynch said, “Starting as early as December 2007, currency traders at several multinational banks formed a group dubbed ‘The Cartel.’ It is perhaps fitting that those traders chose that name, as it aptly describes the brazenly illegal behavior they were engaged in on a near-daily basis. For more than five years, traders in ‘The Cartel’ used a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion.”

    All five of the banks have agreed to plead guilty to the criminal charges at the “parent level,” the Justice Department said.

    Here, according to the Justice Department, are the market-manipulation timelines and the agreed-to criminal fines:

    • Citicorp, involved from as early as December 2007 until at least January 2013, $925 million.
    • Barclays, involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, $650 million.
    • JPMorgan, involved from at least as early as July 2010 until January 2013, $550 million.
    • RBS, involved from at least as early as December 2007 until at least April 2010, $395 million.
    • UBS (for NPA breach that occurred after December 2012), $203 million.

    A statement by the Justice Department includes the type of language the agency normally directs at street criminals when it is trying to send a message. In this instance, however, the language is directed at the banks. From the statement (italics added):

    Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

    Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

    Holder, Lynch said, “oversaw this investigation from its inception.

    “His relentless work made this resolution possible, and I want to thank him for his commitment to this important effort,” she said.

    Lynch replaced Holder last month.

  • Loretta Lynch Confirmed As Attorney General

    BULLETIN: The U.S. Senate — after a period of considerable partisan rancor and delay — has approved Loretta Lynch to be the next Attorney General of the United States. She will replace Eric Holder.

    A statement by Barack Obama, the President of the United States (italics added):

    Today, the Senate finally confirmed Loretta Lynch to be America’s next Attorney General – and America will be better off for it.  Loretta has spent her life fighting for the fair and equal justice that is the foundation of our democracy.  As head of the Justice Department, she will oversee a vast portfolio of cases, including counterterrorism and voting rights; public corruption and white-collar crime; judicial recommendations and policy reviews – all of which matter to the lives of every American, and shape the story of our country.  She will bring to bear her experience as a tough, independent, and well-respected prosecutor on key, bipartisan priorities like criminal justice reform.  And she will build on our progress in combatting newer threats like cybercrime.  Loretta’s confirmation ensures that we are better positioned to keep our communities safe, keep our nation secure, and ensure that every American experiences justice under the law.

    The New York Times put the vote at 56-43, reporting that 10 Republicans voted to confirm Lynch. She will become the first African American woman to hold the job.

    Obama nominated Lynch in November. Although her qualifications never were in much doubt, some Republicans saw her as too friendly to Obama’s immigration policies, especially those instituted by executive action.

     

  • President Obama To Nominate Loretta Lynch To Replace Eric Holder As Attorney General

    Loretta Lynch. Source: U.S. Attorney's website.
    Loretta Lynch. Source: U.S. Attorney’s website.

    UPDATED 8:42 A.M. ET NOV. 9 U.S.A. Many Americans will have only a vague recollection of her name. Others will not be able to place her at all. But they’ll remember cases with which she has been involved.

    One of those involved the prosecution of New York City police officers, including Justin Volpe, implicated in the brutal and unthinkable attack against Haitian immigrant Abner Louima in 1997. Americans of all races and creeds were infuriated at the news cops had assaulted Louima  — and then hatched a coverup. The assault and the efforts to hide it embarrassed police agencies and prosecutors in New York and across the land because law enforcement is supposed to safeguard and champion civil rights, not violate and dispose of them.

    The White House announced yesterday that President Obama today will nominate Loretta Lynch, a member of the team that brought justice to one of America’s most famous crime victims, to replace Eric Holder as Attorney General of the United States. Holder, in September, announced that he is stepping down. Lynch currently is the U.S. Attorney for the Eastern District of New York. Local residents think of her as the U.S. Attorney for Brooklyn, Queens, Staten Island and Nassau and Suffolk Counties on Long Island.

    If confirmed by the Senate, Lynch will become the first African American female Attorney General in U.S. history. She was born in North Carolina 55 years ago.

    Here are two statements from Lynch that have appeared on the PP Blog:

    “As alleged in the complaint, the defendant came to this country intent on conducting a terrorist attack on U.S. soil and worked with single-minded determination to carry out his plan. The defendant thought he was striking a blow to the American economy. He thought he was directing confederates and fellow believers.” — U.S. Attorney Loretta E. Lynch, Eastern District of New York, Oct. 17, 2012

    Read the PP Blog story here.

    In 2011, Lynch’s office became involved in the prosecution of Vincent P. McCrudden. He was accused of threatening to to kill 47 current or former market regulators from the SEC, FINRA and others, and of publishing an “Execution List” on his website. McCrudden, later convicted, allegedly also encouraged others to kill regulators.

    Here is what Lynch said when the charges were brought:

    “In this day and age, there is no such thing as an idle threat. Those who threaten injury or worse to the lives of others will be promptly investigated and vigorously prosecuted.” — U.S. Attorney Loretta E. Lynch, Eastern District of New York, Jan. 14, 2011

    McCrudden’s arrest occurred just five days after a gunman in an unrelated incident had opened fire at an Arizona constituent event hosted by U.S. Rep. Gabrielle Giffords. Giffords was critically wounded in the attack. U.S. District Judge John Roll and five others were shot and killed.

    The PP Blog stories below also reference Lynch:

    BULLETIN: FBI Issues Wanted Posters, INTERPOL Issues Red Notices For Alleged International Cybercriminals Who Targeted Americans In Scam That Duped Big-Ticket Shoppers

    BULLETIN: Songkram Roy Shachaisere, Figure In AdSurfDaily Ponzi Story, Indicted With 8 Others In ‘One Of The Largest International Penny Stock Frauds In History’

    BULLETIN: Missing Investment Adviser Named In SEC Civil Complaint Yesterday In Atlanta Has Been Charged Criminally In New York

    BULLETIN: Vincent McCrudden Pleads Guilty To Threatening Regulators, Government Officials

    Accused Scammer And Convicted Felon Eric Aronson, 2 Others Indicted In Alleged Permapave Ponzi Scheme; ‘House Of Cards,’ Top Federal Prosecutor Says

    BULLETIN(S): (1) Missouri Con Man, 72, Charged In Alleged $3.18 Million Ponzi Caper While Jailed In Previous Fraud Scheme; (2) New York Woman Was Running Multiple Ponzi And Fraud Schemes That Gathered More Than $9 Million, Feds Say

    BULLETIN: Feds Say New York Man Was Running $50 Million Real-Estate Ponzi Swindle; Gershon Barkany Arrested By FBI

     

  • Top Official Who Warned About Cross-Border ‘Criminal Enterprises’ And ‘Frivolous Libel Cases’ To Mask Them Is Leaving Justice Department

    Deputy Attorney General James M. Cole, the No. 2 official at the U.S. Justice Department, is leaving after four years, Attorney General Eric Holder confirmed in a statement. (Holder also is leaving, a topic for another day.)

    Cole said something in Mexico City at the High-Level Hemispheric Meeting Against Transnational Organized Crime in March 2012 that is as important today as it was on the day the words were spoken.

    Indeed, Cole said on March 1, 2012, “Because of the sophistication of the world economy, organized crime groups have developed an ability to exploit legitimate actors and their skills in order to further the criminal enterprises. For example, transnational organized criminal groups often rely on lawyers to facilitate illicit transactions. These lawyers create shell companies, open offshore bank accounts in the names of those shell companies, and launder criminal proceeds through trust accounts. Other lawyers working for organized crime figures bring frivolous libel cases against individuals who expose their criminal activities.”

    And Cole also said this: “The advance of globalization and the internet, while hugely beneficial to people everywhere, has also created unparalleled opportunities for criminals to expand their operations and use the facilities of global communication and commerce to carry out their criminal activities across national borders.”

    We wish Deputy Attorney General Cole the best and thank him for his dedicated service to his country.

     

  • Attorney General References ISIS Recruiting Efforts; ‘We Have Established Processes For Detecting American Extremists Who Attempt To Join Terror Groups Abroad,’ Holder Says

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.” — Eric Holder, U.S. Attorney General, Sept. 15, 2014.

    EDITOR’S NOTE: This is the full statement of the U.S. Department of Justice on an initiative to combat violent extremism in an era in which terrorists effectively are operating global mass-marketing campaigns.  The terrorist group ISIS, which has taken over lands in Iraq and Syria, recently has engaged in beheadings of two American journalists and a British aid worker. A link to a video of remarks by U.S. Attorney General Eric Holder appears at the bottom of this post. ISIS also is known as ISIL.

    ** ________________________________ **

    Eric Holder. From Sept. 15, 2014, Justice Department video.
    Eric Holder. From Sept. 15, 2014, Justice Department video.

    Attorney General Eric Holder announced Monday that the Justice Department will launch a new series of pilot programs in cities across the country to bring together community representatives, public safety officials and religious leaders to counter violent extremism. The new programs will be run in partnership with the White House, the Department of Homeland Security, and the National Counterterrorism Center.

    “Today, few threats are more urgent than the threat posed by violent extremism,” [the] Attorney General said in a video message posted on the Justice Department’s website. “And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.”

    The complete text of the Attorney General’s video message is below:

    “Last week, millions of Americans paused to mark the 13th anniversary of the attacks of September 11, 2001 – the deadliest acts of terror ever carried out on American soil. For my colleagues at every level of our nation’s Department of Justice, and for me, this anniversary was also a solemn reminder of our most important obligation: to ensure America’s national security and protect the American people from a range of evolving threats.

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.

    “Through law enforcement agencies like the FBI, American authorities are working with our international partners and Interpol to disseminate information on foreign fighters in Syria and Iraq, including individuals who have traveled from the United States. We have established processes for detecting American extremists who attempt to join terror groups abroad. And we have engaged in extensive outreach to communities here in the U.S. – so we can work with them to identify threats before they emerge, to disrupt homegrown terrorists, and to apprehend would-be violent extremists. But we can – and we must – do even more.

    “Today, I am announcing that the Department of Justice is partnering with the White House, the Department of Homeland Security, and the National Counterterrorism Center to launch a new series of pilot programs in cities across the nation. These programs will bring together community representatives, public safety officials, religious leaders, and United States Attorneys to improve local engagement; to counter violent extremism; and – ultimately – to build a broad network of community partnerships to keep our nation safe. Under President Obama’s leadership, along with our interagency affiliates, we will work closely with community representatives to develop comprehensive local strategies, to raise awareness about important issues, to share information on best practices, and to expand and improve training in every area of the country.

    “Already, since 2012, our U.S. Attorneys have held or attended more than 1,700 engagement-related events or meetings to enhance trust and facilitate communication in their neighborhoods and districts. This innovative new pilot initiative will build on that important work. And the White House will be hosting a Countering Violent Extremism summit in October to highlight these and other domestic and international efforts. Ultimately, the pilot programs will enable us to develop more effective – and more inclusive – ways to help build the more just, secure, and free society that all Americans deserve.

    “As we move forward together, our work must continue to be guided by the core democratic values – and the ideals of freedom, openness, and inclusion – that have always set this nation apart on the world stage. We must be both innovative and aggressive in countering violent extremism and combating those who would sow intolerance, division, and hate – not just within our borders, but with our international partners on a global scale. And we must never lose sight of what violent extremists fear the most: the strength of our communities; our unwavering respect for equality, civil rights, and civil liberties; and our enduring commitment to justice, democracy, and the rule of law.”

    The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.

  • BULLETIN: U.S. Trustee Says ‘Compelling Evidence Of Fraud’ And ‘Reasonable Grounds’ To Believe ‘Criminal Conduct’ Occurred On Road To TelexFree Bankruptcy Filing

    breakingnews72BULLETIN:  (11th Update 2:35 p.m. EDT U.S.A.) The United States’ trustee who serves the region (Nevada) in which TelexFree’s bankruptcy case was filed on April 13 has alleged there are “reasonable grounds” to believe that “criminal conduct” occurred at TelexFree.

    Trustee Tracy Hope Davis, who works for a division of the U.S. Department of Justice, says in Bankruptcy Court filings that the court should appoint a Chapter 11 trustee because “[t]here is compelling evidence of fraud, dishonesty and gross mismanagement of the affairs of the TelexFree debtor entities, TelexFree, LLC, TelexFree, Inc. and TelexFree Financial, Inc.

    Davis was appointed trustee of the region by U.S. Attorney General Eric Holder in November 2013.

    The motion by Davis cites separate fraud actions against TelexFree filed April 15 by the Massachusetts Securities Division (MSD) and the U.S. Securities and Exchange Commission (SEC). MSD is the state-level securities regulator in Massachusetts. The SEC is the top securities regulator in the United States.

    “In response to subpoenas issued by the MSD in January and February, 2014, TelexFree changed its compensation plan so that promoters would now be required to sell its VoIP product in order to qualify for the payments that TelexFree had previously promised to pay them,” Davis alleged. “The rule change has generated a storm of protests from promoters who cannot recover their money. The change has also caused a precipitous decline in investor revenue which has pushed TelexFree into bankruptcy.”

    Meanwhile, the Davis motion cites an SEC complaint and emergency motion in Massachusetts federal court on April 15 that successfully sought an asset freeze against alleged TelexFree co-owners James Merrill and Carlos Wanzeler and TelexFree CFO Joseph Craft (and others), along with a Temporary Restraining Order.

    “Millions of additional investor funds received by TelexFree are presently unaccounted for,” Davis alleged. “Fortunately, the TRO was granted by the District Court for the District of Massachusetts and all of the Debtors’ accounts have been frozen pending a preliminary injunction.”

    As a result of TelexFree, Davis alleged, “[t]wo companies controlled by Craft received more than $2,010,000.00 between November 19, 2013 and March 14, 2014.” Millions more allegedly went to Merrill and Wanzeler.

    Among the assertions by Davis:

    • The Debtors did not disclose that several banks and at least one payment processor stopped doing business with them, apparently due to concerns about the legality of its multi-level marketing program.
    • It appears that part of the reason for the Debtors’ cash flow problems was the diversion of funds to insiders.
    • Craft was caught “holding the bag” when the U.S. Department of Homeland Security was executing a search warrant at TelexFree headquarters in Massachusetts on April 15.

    “When Craft was caught ‘holding the bag’ during the execution of the HSI search warrant on April 15, 2014, nine of the ten cashier’s checks that were confiscated were dated April 11, 2014 and were remitted to Merrill,” Davis asserted. “Of these checks, five were made out to TelexFree, LLC totaling $25,548,809.00, and one was made out to Katia B. Wanzeler (Wanzeler’s wife) in the amount of $2,000,635.00. The tenth check, dated April 3, 2014, was remitted to Wanzeler and was made out to TelexFree Dominicana SRL in the amount of $10,398,000.00.”

    Davis also expressed concern about a TelexFree board meeting that occurred in the hours leading up to the bankruptcy filing. (See April 21 PP Blog story that references the same meeting.)

    From the Davis motion to appoint a trustee (italics added):

    The minutes of the special meeting of the Board of Managers of TelexFree, LLC held on April 13, 2014, indicate that Merrill and Wanzeler comprise the entire Board of Managers (the “Board”). . . At this meeting, Merrill and Wanzeler selected Craft and [Stuart] MacMillian as the Debtors’ “Authorized Persons,” empowered to execute and file pleadings on behalf of the Debtors, to employ counsel and other professionals (including Craft’s accounting firm), and to exercise signature authority over the Debtors’ accounts. Although the minutes include language revoking any prior signature authority of other individuals, there is no language stating that Merrill and Wanzeler are stepping down from the Board or that anyone else is stepping up to serve as their replacements. On information and belief, the new interim CFO and CEO still report to and take direction from the Board which is still comprised of 2 individuals – Merrill and Wanzeler.

    And, Davis alleged, “Merrill, Wanzeler, Craft, and possibly others have engaged in securities fraud, withheld material information from investors, and improperly diverted millions of dollars of estate property to themselves or their entities, as set forth in the SEC Complaint and Memorandum.”

    In the trustee’s view, according to the allegations, “[t]he modus operandi of Merrill and Wanzeler and their cohorts suggests that it is more likely than not that anyone handpicked by them to manage their wholly owned companies will be another cohort.”

    Davis asserted “on information and belief” that there have been “no allegations to date regarding the involvement of MacMillan (the new CEO) or [William] Runge (the new CRA) in the Debtors’ Ponzi scheme, neither is there any indication that these interim officers are truly independent of the fraud of ‘former’ management.”

    And, Davis continued, “[t]he only way to ensure honest and independent management of these Debtors going forward is for the Court to direct the United States Trustee to appoint a Chapter 11 trustee.”

  • U.S. Attorney General Eric Holder Hospitalized [UPDATE: Now Released From Hospital]

    U.S. Attorney General Eric Holder was hospitalized in Washington this morning after “experiencing symptoms including faintness and shortness of breath,” the Justice Department said.

    Holder is 63.

    “He is currently resting comfortably and in good condition,” the Justice Department said. “He is alert and conversing with his doctors. Additional information will be provided as it becomes available.”

    UPDATE 6:08 p.m. ET (USA): The Attorney General has been released from the hospital, the Justice Department said in a statement this afternoon. Here is the full statement (italics added):

    Director of Public Affairs Brian Fallon released the following statement this afternoon:

    The Attorney General has been discharged from MedStar Washington Hospital Center. He was taken there earlier today as a precaution, after experiencing lightheadedness and shortness of breath during a senior staff meeting at the Justice Department in Washington.
     
    The Attorney General arrived at the hospital at approximately 10:30 am, and was treated for an elevated heart rate. He received medication that quickly restored his heart rate to a normal level, and after successfully completing a full range of tests, doctors were satisfied that the Attorney General could be discharged.
     
    He departed the hospital at 1:15 pm. He walked out without any assistance, and has returned home, where he is resting comfortably.
     
    Several years ago, the Attorney General experienced similar symptoms, but in milder form that did not require serious medical attention.
     
    Throughout today, the Attorney General has remained alert and in good spirits. He appreciates the well wishes from so many friends and colleagues, and is grateful for the excellent care he received from the professionals at MedStar Washington Hospital Center.

  • **[UNCONFIRMED]** Report In Brazil Says Prosecutors Have Asked U.S. Court To Block TelexFree Accounts, New Signups **[UNCONFIRMED]**

    telexfreelogo**[UNCONFIRMED]** A report in Brazilian media translated by Google Translate from Portuguese to English says that prosecutors in Brazil have asked a U.S. court to prevent new members from joining TelexFree and to block the accounts of TelexFree figures Carlos Wanzeler, James Merrill, Carlos Costa and Lyvia Wanzeler.

    The PP Blog could not immediately confirm the report. If it is true, it could mean that law-enforcement agencies in Brazil have contacted their U.S. counterparts and asked them to begin the process of investigating a potential seizure of TelexFree-related funds that may be in the United States and perhaps to disable or otherwise block the functionality of the TelexFree web domains. The United States has said on various occasions that it is interested in fostering partnerships with law-enforcement agencies across the globe to combat commercial fraud online.

    As of 1:03 p.m. EDT today in the United States, the TelexFree websites remained online and appeared still to be capable of enrolling recruits.

    TelexFree has said it has U.S. arms in the states of Massachusetts and Nevada. Some U.S. afffiliates of TelexFree also appear to have formed business entities in California and Florida. Some TelexFree affiliates have claimed the “opportunity” did business through Bank of America, TD Bank and ProPay. (See July 8, 2013, PP Blog report on some of the claims.)

    Despite allegations in Brazil that TelexFree was conducting a massive pyramid scheme and that a Brazilian judge and prosecutor had been threatened with death, TelexFree nevertheless held a rah-rah session in California late last month in which an MLM pitchman appears to have tried to sustain the scheme by telling a joke about “Carlos Danger,” an online identity purportedly used by U.S. Democratic politician Anthony Weiner. A companion TelexFree promo playing in the United States on YouTube claims that people who send $15,125 to TelexFree can expect to profit to the tune of more than $42,000 in a year.

    TelexFree has a presence on well-known Ponzi-scheme forums such as TalkGold, MoneyMakerGroup and DreamTeamMoney. The forums previously were used as staging grounds for the Legisi Ponzi scheme, the AdSurfDaily Ponzi scheme, the PathwayToProsperity scheme, the Zeek Rewards scheme and the Profitable Sunrise scheme, among others. The SEC has described Zeek as a $600 million Ponzi- and pyramid fraud. The agency has described Profitable Sunrise as a fraud that may have gathered tens of millions of dollars through a series of accounts. Federal prosecutors in Illinois have described PathwayToProsperity as a fraud that made its way into at least 120 countries.

    In May, the United States indicted the Liberty Reserve payment processor and forced it offline, amid allegations that Liberty Reserve and some of its operators had engaged in a $6 billion money-laundering conspiracy. In June 2011, U.S. Attorney General Eric Holder described the amount of money being stolen online as “staggering.”

    “In recent years, we’ve seen clear, and alarming, advances in the sophistication and commercialization of crimes involving electronic networks,” Holder said.  “And the staggering volume of money being stolen online today has the potential to threaten not only the security of our nation — but the integrity of our government, the stability of our economy, and the safety of our people.”

    Nearly a year later — in May 2012 — INTERPOL said that “[Eighty] per cent of crime committed online is now connected to organized gangs operating across borders.”

    In October 2012, Lisa Monaco, then-Assistant Attorney General for National Security, said that cyber intrusions may have resulted in “the greatest transfer of wealth in history.”

    Monaco is now President Obama’s chief counterterrorism adviser.

    Some TelexFree members have claimed that the purported “opportunity” has gathered in excess of $300 million. Among other things, TelexFree has purported to be in the hotel-development business in the run-up to the 2014 World Cup and the 2016 Summer Olympics in Brazil. TelexFree, an MLM business, also purports to be in the VOIP telephone business.

    Many HYIP “opportunities” that use an MLM sales model have members and promoters in common and promise absurd rates of return. The practice has led to questions about whether groups of MLMers — however loosely associated — may be engaging in willful blindness and causing banks and payment processors to become warehouses for fraud proceeds.

    The ASD, Zeek, Legisi, PathwayToProsperity and Profitable Sunrise HYIP schemes may have gathered on the order of $1 billion, court filings suggest. Alleged PathwayToProsperity operator Nicholas Smirnow is listed as wanted by INTERPOL. So is Robert Hodgins, who reportedly once provided payment services to ASD and is listed as an INTERPOL fugitive in a money-laundering case allegedly involving the offloading of narcotics profits in Colombia.

    See Aug. 12 TelexFree report on BehindMLM.com.

  • 2 Days After Judge Cites Specific Web Domain And Declares Kenneth Wayne Leaming Filing ‘Undecipherable,’ PP Blog Receives Would-Be Comment With Link To Page That References Same Domain And Case Against Different Purported ‘Sovereign’

    ponziblotterOn Feb. 13, the PP Blog reported that a federal judge who was quoting from a pleading by AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming had referenced a domain styled peoplestrust1776.org.

    U.S. District Judge Ronald B. Leighton declared Leaming’s filing, which apparently cited the Uniform Commercial Code (UCC), “undecipherable.” The judge exempted prosecutors from responding to a series of recent bizarre pleadings from Leaming, who is jailed near Seattle on charges of filing false liens against public officials in the AdSurfDaily Ponzi case. Leaming, 57, also is accused of other crimes.

    Like other purported “sovereigns,” the judge observed, Leaming is “fascinated” by capital letters.

    Some “sovereign citizens” appear to believe that pleadings that include capital letters or make UCC claims provide defenses or remedies for everything from murder charges to charges of targeting public officials in harassment campaigns.

    Less than two days after the PP Blog published its most recent story about Leaming’s strange defense efforts in the Western District of Washington, the Blog received a would-be comment it is treating as spam because it purported to be in response to a reader who left a comment on the PP Blog nearly two years ago on a different subject. Received at 2:55 a.m. ET today, the unpublished, would-be comment included a link to a post on a Blog whose URL was formed in part with the words “the-full-details-of-kidnapping-of.”

    One had to visit the site to determine who allegedly was kidnapped.

    The PP Blog visited the link and found a post about Patrick Cody Morgan, a purported Texas “sovereign” who was convicted last year of conspiracy and nine counts of bank fraud in a real-estate swindle involving repeated bids to scam residential mortgage lenders and FDIC-insured banks between 2004 and 2007. The scam involved “trust accounts” and “straw buyers,” prosecutors said. The PP Blog wrote about the Morgan convictions on Nov. 2, 2012. No readers left comments in the thread below the story.

    In any event, the would-be commentator apparently wants to generate discussion about the Morgan case and to enlist support for Morgan. Notably, the spammed link received by the PP Blog includes references to the same peoplestrust1776.org domain Leaming cited in an apparent defense bid in his criminal case.

    Content on the site whose post link was spammed to the PP Blog overnight appears to be designed to paint government officials or agencies involved in the Morgan case as “the Accused.” Apparently among the purported “Accused” are U.S. Attorney General Eric Holder, FBI Director Robert Mueller, U.S. District Judge Lynn N. Hughes of the Southern District of Texas and others. The site also published florid legalese attributed to Morgan that, like Leaming’s prose, made liberal use of capital letters.

    Legalese attributed to Morgan asserts he is “Patrick-Cody: Family of Morgan”; Leaming’s legalese asserts he is “Kenneth Wayne, born free to the family Leaming.”

    Some “sovereigns” appear to believe that using exceptionally formal prose, capital letters and/or specific forms of punctuation in court filings somehow provide for a winning defense.

    Leighton characterized Leaming’s prose as “gobbledygook.”

    Morgan — in his apparent defense — appears to claim he was the victim of criminals working for the government. Leaming has made similar arguments in Washington state.

    Precisely what role, if any, peoplestrust1776.org is playing in the Morgan and Leaming cases is unclear.

     

  • UPDATE: Leaming — Again: After Earlier Claiming He’d Been Targeted For ‘DEATH,’ AdSurfDaily Figure And Purported ‘Sovereign Citizen’ Now Claims’ He’s Been Subjected To ‘POISON’ And ‘TORTURE’

    AdSurfDaily figure Kenneth Wayne Leaming now claims he's been subjected to "POISON" and "TORTURE."
    AdSurfDaily figure Kenneth Wayne Leaming now claims he’s been subjected to “POISON” and “TORTURE.”

    In 2009, AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming claimed a city in Washington state targeted him for “DEATH” and threatened to kill him by “HUNTING” him down “in screaming packs and mobs” and using “several armed street gangs” that served as police, according to records.

    Leaming, now 57, further claimed the Pierce County city of Puyallup engaged in terrorism by controlling “multiple electronic broadcast media” and employing police who used “chemical and biological weapons,” “machine guns” and “explosives.”

    In November 2011, prosecutors said Leaming was found in Spanaway, Wash., with two federal fugitives from Arkansas. Those fugitives now have been convicted of mail fraud for a multimillion-dollar, home-based business caper. Court filings by Timothy Shawn Donavan, 64, and Sharon Jeannette Henningsen, 68, suggest they also were sovereign citizens.

    After Leaming’s arrest with Donavan and Henningsen, federal prosecutors in the Western District of Washington said an FBI terrorism Task Force found evidence that Leaming had filed false liens against at least five public officials involved in the AdSurfDaily Ponzi case filed by the U.S. Secret Service in 2008.

    Leaming allegedly also filed bogus liens or assisted in filing liens against a former cabinet official in the administration of President George W. Bush, the head of a credit union and at least two U.S. prison officials. In 2012, while detained, Leaming sued President Obama and Attorney General Eric Holder, advancing a Birther conspiracy theory.

    A federal judge tossed that lawsuit. Court filings by Leaming now suggest he intends to sue Holder anew, this time in the District of Columbia as opposed to the Western District of Washington.

    But Leaming also has another active lawsuit against Holder and others in the Western District of Washington. A complaint by Leaming dated yesterday asserts he has been subjected to “POISON” and “TORTURE” during his ongoing detention at the SeaTac federal detention center near Seattle.

    In October 2012, federal prosecutors alleged that Leaming “was instrumental in founding the ‘County Rangers,’ the sovereign group’s armed enforcement wing. Members of the County Rangers were issued realistic-looking badges and credentials were required to possess firearms as part of their duties, and held themselves out as law enforcement agents.”

    Leaming already is a convicted felon from a case that alleged he had no license and yet piloted an aircraft. When he was arrested in November 2011 in the company of Donavan and Henningsen, several firearms were found in Leaming’s residence, including an “AK-47 style assault rifle with a bayonet,” prosecutors said.

    He later was charged with unlawful possession of firearms as a convicted felon.

    When agents executed a search warrant, they found “numerous boxes of correspondence and legal paperwork documenting other apparent fraud schemes,” prosecutors said.

  • BULLETIN: AdSurfDaily Figure And Purported ‘Sovereign Citizen’ Kenneth Wayne Leaming Now Seeks To File Another Lawsuit

    Kenneth Wayne Leaming
    Kenneth Wayne Leaming

    BULLETIN: (UPDATED 12:35 P.M. ET U.S.A.) AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming has reached out from jail again in a bid to sue the government and officeholders.

    Leaming, 57, is detained in the SeaTac federal-detention facility near Seattle on charges of filing false liens against at least five public officials involved in the ASD Ponzi case and other crimes. He was arrested by an FBI terrorism Task Force in November 2011. Since his arrest, Leaming has filed lawsuits against President Obama, Attorney General Eric Holder, the U.S. Attorney for the Western District of Washington and a county sheriff in Arkansas.

    Filings in U.S. District Court for the District of Columbia — the venue from which the ASD Ponzi prosecution was brought — now show that Leaming is seeking to sue Holder anew, along with a federal prison official in Washington state. Leaming originally sued Holder and Obama in a different venue.

    His new claims make Holder a prospective defendant in the D.C. District Court and make new claims against the Attorney General.

    The case is docketed as “unassigned” to a specific judge, but U.S. District Judge Rosemary Collyer — an alleged target of one of Leaming’s false liens and the presiding judge in the ASD case — has issued an order that requires Leaming to submit certain paperwork to the court before the case can proceed. The January docket for the D.C. district suggests that Collyer’s duties this month have included the initial responses to complaints brought by individuals desiring to sue members of government.

    Leaming does not appear to be making an ASD-related claim in his most recent case. Even so, it is possible that Collyer would remove herself from any Leaming-related process moving forward because of the FBI allegations he filed a false lien against her in Washington state.

    In the new filing in the D.C. District, Leaming appears to be trying to make a damages claim against a SeaTac prison official while simultaneously making a claim against Holder. The earlier case against Holder and Obama was tossed in the Western District of Washington months ago. Following a Birther conspiracy theory, it alleged that Obama was not born in the United States and thus was inelegible to be President — and that Holder was a bogus Attorney General because he’d been appointed by a bogus President.

    Leaming now is demanding damages paid in “United States Silver Eagle Dollars,” amid allegations he was denied access to a law library. In his earlier case against Holder and Obama, he demanded payment in gold in silver.