BULLETIN: Utah Ponzi schemer Jeffrey Lane Mowen has been ordered by a federal judge to pay more than $18 million in a civil case that sparked a criminal probe and resulted in allegations that Mowen had hatched a murder-for-hire plot from a U.S. jail after he was extradited from Panama in 2009.
The FBI worked with officials in Panama to return Mowen, 50, to the United States.
The Mowen case destroyed Ponzi-forum myths that scammers are untouchable if they remain “offshore.” It also destroyed the myth that individuals who drive business to a Ponzi scheme cannot be charged. Indeed, the SEC sued at least six individuals who drove money to Mowen and also filed administrative actions against them.
Mowen ultimately pleaded guilty to wire fraud and is serving 10 years in federal prison. The case is fabled in Ponzi lore because Mowen had accumulated more than 200 vehicles with investors’ funds — so many that it created a storage problem for the U.S. Marshals Service.
Part of Jeffrey Lane Mowen's Ponzi haul.
Here is the breakdown of the civil judgment against Mowen: disgorgement of $8,041,779 in ill-gotten gains, a matching civil penalty of $8,041,779 and $1,964,203.67 in interest.
Mowen is scheduled to be released from prison in January 2018.
For starters, Zeek affiliates being approached by upline sponsors and email/website appeals to send in money “to defend Zeek Rewards and all of our independent businesses as per our legal rights of due process” might want to read this July 25 PP Blog post.
It’s about how wordplay was used to sanitize HYIP scams.
For additional background, Zeek affiliates might want to read this July 28 PP Blog post.
It’s about how purported Zeek “consultant” Robert Craddock sought to disable the Hub of Zeek critic “K. Chang.” Craddock now is part of the effort to raise funds to “defend” Zeek affiliates.
Zeek and untold thousands of its minions are known to have a tin ear for PR. That tin ear is on full display again today, with a “warning” from the leaders of the effort to “defend” Zeek from the SEC’s Aug. 17 allegations that it was a $600 million Ponzi and pyramid scheme not to contact the SNR Denton law firm.
“We have asked the firm to provide us the names of the individuals that are calling; we will refund your donation and will remove you from the group to be represented if you call. The law firm is only going to discuss the case with the 12 leaders and we will put out the information to the entire group on this site.”
“This site,” as it were, is this site, which calls itself ZTeamBiz.
ZTeamBiz, which calls itself a “professional organization,” says its has hired SNR Denton. The precise reason why is unclear, although ZTeamBiz says the “SEC has tried to make us all believe that Zeek Rewards was an ‘investment’ and a Ponzi scheme. All the pages that were submitted by the SEC indictment has all been one sided and what we believe to be a misrepresentation of the truth and facts of what Zeek Rewards was as a viable and legal business.”
And ZTeamBiz also accused the SEC of misleading a federal judge.
One of the persons on the ZTeamBiz squad — although it’s unclear if his presence is formal or informal — is Todd Disner. Disner is a former pitchman for the AdSurfDaily Ponzi scheme and, along with former attorney Dwight Owen Schweitzer, sued the government in November 2011. Disner and Schweitzer alleged that prosecutors and a U.S. Secret Service agent presented a “tissue of lies” to a federal judge when bringing the civil portion of the ASD Ponzi case in August 2008.
Disner and Schweitzer made that claim after ASD had lost the case in U.S. District Court and the U.S. Court of Appeals. Among other things, Disner and Schweitzer claimed the government had gone shopping for a friendly judge when it brought the forfeiture proceedings.
That judge allegedly was targeted with a false lien by Kenneth Wayne Leaming, who also targeted three federal prosecutors and a Secret Service agent with false liens, according to the FBI. Leaming was arrested by an FBI Terrorism Task Force in November 2011. He is a purported “sovereign citizen.” All five of the federal officials targeted in the alleged lien campaign have ties to the ASD case.
ASD President Andy Bowdoin pleaded guilty seven months later to a Ponzi-related charge of wire fraud. He is scheduled to be sentenced Wednesday.
Zeek is known to have members in common with ASD, which federal prosecutors have described as a $119 million Ponzi scheme that created at least 9,000 victims before its 2008 collapse amid allegations by the U.S. Secret Service of Ponzi fraud.
Like Zeek, ASD claimed it was not offering an investment program. And like Zeek, ASD planted the seed it offered a daily payout rate of 1 percent a day or more.
Like Zeek, ASD came under investigation by the U.S. Secret Service. The agency has referred to ASD as a “criminal enterprise,” with the U.S. Department of Justice calling ASD “insidious.”
Those descriptions apparently were not enough to dissuade investors from throwing money at Zeek, which has listed ASD members as “employees.”
On Aug, 4, Zeek itself blasted unspecified “North Carolina Credit Unions” for raising concerns about Zeek. Zeek warned members to toe the company line.
The SEC was in federal court 13 days later.
Zeek also is known to have members in common with JSS Tripler/JustBeenPaid, which appears now to have morphed into something called “ProfitClicking.” Both JSS/JBP and ProfitClicking may have ties to the sovereign-citizens movement.
A domain registered in the name of purported JSS/JBP operator Frederick Mann once linked to videos featuring Francis Schaeffer Cox, a purported sovereign citizen implicated in a murder plot against public officials in Alaska.
Because HYIP scams typically are promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — and because Zeek, JSS/JBP, ProfitClicking and ASD all had a presence on those forums — questions have been raised about whether cash was circulating between and among various fraud schemes and placing U.S. banks in the position of possessing fraudulent proceeds.
A receiver has been appointed to marshal the assets of the alleged Zeek fraud.
Despite the appeal by ZTeamBiz for Zeek affiliates to send in money to “defend” themselves and the company, the interests of all Zeek affiliates almost certainly are not equivalent. Net “winners” almost certainly are at risk of clawback lawsuits from the receiver. Such court actions are used to enlarge the pool through which victims of a Ponzi fraud receive a disbursement designed to make them as whole as possible.
It’s often the case that victims never are made whole and receive disbursements of dimes or even pennies on the dollar. Such is the case to date for victims of the 2009 Trevor Cook Ponzi caper in Minnesota. That scheme was a form of affinity fraud targeted largely at people of faith, including senior citizens.
Post-Ponzi receiverships sometimes turn into an international paper chase because scammers hide money offshore. Reverse-engineering a Ponzi caper can take years. Even as Zeek receiver Kenneth D. Bell begins his duties, scammers on the Ponzi boards are planting the seed that the receivership cannot be trusted.
In the 2009 Mantria/Speed of Wealth Ponzi scheme case, which in part was pushed MLM-style, a federal judge issued a specific order not to interfere with the receiver.
“Well we have been dealt a setback today…the judge here agreed with the government to transfer us to the District Court in Washington DC… The same judge who railroaded Andy. I will make a motion for her to recuse herself and if she will not (and she will not) I will take an appeal.” — Remark attributed to Dwight Owen Schweitzer that is contained within email by former AdSurfDaily spokeswoman Sara Mattoon that discusses plan to “flood” a federal judge with letters of support for jailed ASD Ponzi schemer Andy Bowdoin, Aug. 13, 2012
Thomas A. "Andy" Bowdoin
Former AdSurfDaily member Dwight Owen Schweitzer — later to join former ASD colleague Todd Disner as a pitchman for the Zeek Rewards 1-percent-a-day-plus MLM scheme — is quoted in an email circulating among ASD members that ASD President Andy Bowdoin was “railroaded” by a federal judge.
The quotation attributed to Schweitzer was contained within an Aug. 13 email forwarded by Disner after being assembled by former ASD spokeswoman Sara Mattoon. Mattoon has a history of packaging communications friendly to ASD, adding her purported insights to the communications and emailing them to members. The Aug. 13 email calls for ASD members to “flood” a federal judge with letters of support for Bowdoin. The ASD patriarch and veteran securities swindler is scheduled to be sentenced Aug. 29 in the District of Columbia by U.S. District Judge Rosemary Collyer.
Previous Mattoon emails have quoted Kenneth Wayne Leaming, a purported “sovereign citizen” now jailed near Seattle after a 2011 investigation by an FBI Terrorism Task Force. Leaming was accused of filing false liens against at least five public officials involved in the ASD Ponzi case, harboring two fugitives wanted in a separate home-business scheme, being a felon in possession of firearms and uttering a bogus “Bonded Promissory Note” for $1 million.
Leaming, who is not an attorney, was said to be performing legal work on behalf of some ASD members.
In May 2012, Bowdoin pleaded guilty to wire fraud in the ASD Ponzi case and acknowledged that ASD was a Ponzi scheme and that his company never operated lawfully from the inception of its 1-percent-a-day (or more) “program” in 2006. Bowdoin, 77, originally remained free on bond after his guilty plea, pending formal sentencing.
But Bowdoin was jailed in June 2012, after prosecutors presented evidence that Bowdoin continued to promote scams after the U.S. Secret Service seized more than $80 million in ASD-related proceeds in 2008 and after Bowdoin was arrested on ASD-related Ponzi charges in 2010. Prosecutors identified those scams as “OneX,” and AdViewGlobal (AVG).
Like ASD, AVG was a 1-percent-a-day “program.” AVG, which launched in February 2009 after the seizure of ASD-related bank accounts in 2008, vanished mysteriously in the summer of 2009 after issuing threats to members and journalists. AVG was referenced in a lawsuit filed by ASD members who accused Bowdoin of racketeering.
Contained within the forwarded email dated Aug. 13 are at least two ads for the Zeek Rewards’ MLM which, like ASD, plants the seed that a return that corresponds to an annualized return in the hundreds of percent is possible. Precisely why the Zeek ads appeared in the email is unclear. They are attributed to a Zeek affiliate known as “Compassion Ministries” and display Zeek videos produced by USHBB Inc., a company that once produced ads for the Narc That Car pyramid scheme that collapsed in 2010 after the Better Business Bureau raised concerns about Narc and investigative reporters began to write about Narc and produce television reports about the “program.”
Even as the Mattoon email solicited support for Bowdoin as his Aug. 29 sentencing date approaches, it cautions ASD members to “be careful” if they write to Bowdoin in jail because “they read his mail.”
Disner and Schweitzer sued the U.S. government in November 2011, claiming the seizure of ASD’s database was unconstitutional. The lawsuit originally was filed in the Southern District of Florida, but a judge there granted a request by the government to transfer the case to the District of Columbia. The case now appears on the docket in U.S. District Court for the District of Columbia and has been assigned to Collyer.
The Aug. 13 email from Mattoon quotes Schweitzer as saying, “Well we have been dealt a setback today…the judge here agreed with the government to transfer us to the District Court in Washington DC… The same judge who railroaded Andy. I will make a motion for her to recuse herself and if she will not (and she will not) I will take an appeal.”
When suing the United States in November 2011, Disner and Schweitzer relied in part on a purported expert opinion from Keith Laggos that ASD was not a Ponzi scheme. Like Disner and Schweitzer, Laggos also has been linked to the Zeek Rewards’ scheme.
Laggos reportedly was fired as a Zeek “consultant” last month. Details surrounding the reported firing remain unclear.
Zeek is now the subject of an “examination” by North Carolina Attorney General Roy Cooper.
Zeek’s news Blog published this baffling message yesterday (italics added):
Hello Fine People:
The team wanted to let you know there won’t be any training, recruitment or leadership calls for the next few days while planning is going on. Standby for some important announcements. Thank you for your patience!
A purported “sovereign citizen” apparently unhappy that a bank wouldn’t fall for his “UCC” scamming bid to wipe out a $179,000 home-equity loan has been arrested by the FBI on charges he threatened to kill two bank employees: a loss-prevention specialist and an attorney.
Michael Chung, 52, of the New York Borough of Queens, somehow came to believe that a “Form UCC-3” sent to a Sovereign Bank office “automatically extinguished” the bank’s interest in a $179,000 home-equity loan “without the need for Chung to repay the loan,” the FBI said in an affidavit.
When the bank rejected Chung’s UCC argument, Chung sent a fax to the bank that claimed he had a right to kill the bank employees under the 2nd Amendment of the U.S. Constitution, according to FBI court filings.
” . . . the Second Amendment to the National Constitution authorizes the use of deadly force to protect my interests as a national citizen,” the Chung fax read in part, the FBI said. “I believe I have a basis to act in that manner.”
The 2nd Amendment applies to the right to keep and bear arms. “UCC,” meanwhile, is an acronym that stands for “Uniform Commercial Code,” an effort that began in the 1940s to make the laws of commerce uniform in the 50 U.S. states. So-called “sovereign citizens” advance any number of fanciful theories on how the UCC can be used to eliminate debts.
Chung is being held without bail in New York. He was arrested yesterday.
Michael Lee Crane, a purported sovereign citizen accused of murder in Arizona, told the judge presiding over his February arraignment that “I would like to reserve my right to Uniform Commercial Code . . .”
EDITOR’S NOTE: Just when you thought AdSurfDaily-related events could not get any stranger . . .
** _____________________________ **
Kenneth Wayne Leaming
Jailed near Seattle and awaiting trial in September on charges he filed false liens against at least five public officials involved in the AdSurfDaily Ponzi case, purported “sovereign citizen” Kenneth Wayne Leaming has sued “Barrack Hussein Obama” and U.S. Attorney General Eric Holder in federal court in the Western District of Washington.
The complaint was written in longhand and names Leaming business associate and fellow federal prisoner David Carroll Stephenson a co-plaintiff. In addition to Obama and Holder, the complaint names as defendants “J. Doe #1 (U.S. Atty)” and “John Does 2-10.”
It is believed that “J. Doe” refers to U.S. Attorney Jenny A. Durkan of the Western District of Washington. Durkan’s office has been involved in the prosecution of a number of purported “sovereign citizens,” including David Russell Myrland. Myrland was convicted last year on charges of threatening the mayor and officials of the Seattle suburb of Kirkland.
Obama, according to the Leaming/Stephenson complaint, is not a U.S. citizen and therefore is ineligible to be President. And because an ineligible President appointed Holder, it follows that Holder is “Personating [sic] the Attorney General of the United States” and therefore “cannot lawfully appoint or delegate authority to “Any United States Attorney.”
It further follows, according to the complaint, that the charges against Leaming and Stephenson brought by the U.S. Attorney for the Western District of Washington should be declared “VOID For FRAUD” because the U.S. Attorney also is “personating” [sic] a federal officer.
In court filings after Leaming’s arrest, the FBI cited a passage from an alleged Leaming email that referenced the children of U.S. Chief Justice John Roberts and their “school.”
“In this email,” the FBI agent who sought Leaming’s arrest wrote, “I believe that LEAMING is offering to file documents on Stephenson’s behalf, including sending them to the Chief Justice, via his minor children.”
Investigators discovered a paperwork trail that linked Leaming and Stephenson to a purported $10 million lien against Harley Lappin, the former director of the Federal Bureau of Prisons, and a purported lien for $20 million against Dennis R. Smith, the warden of the Federal Correctional Institution in Phoenix.
As the probe that led to Leaming’s arrest proceeded, agents found bogus liens filed in Pierce County, Wash., against other public officials, including at least five officials involved in the ASD Ponzi case. Liens against Mary Peters, the former U.S. Secretary of Transportation, and Cutler Dawson, president and CEO of Navy Federal Credit Union, also were discovered.
Leaming and Stephenson are demanding 100 “ounces of .999 fine silver” from each defendant as “compensatory damages ” for each day the government allegedly holds them unlawfully. In addition, they are demanding 1,000 “ounces of .9999 fine gold” from “each defendant” for “Punitive and Exemplary damages.”
Screen shot: From the Stephenson/Leaming complaint.
With two defendants formally named and 10 “Does,” it appears as if Leaming and Stephenson are demanding 12,000 ounces of gold. Gold is trading at roughly $1,600 an ounce, meaning the duo is asking for about $19.2 million at today’s approximate rate.
Leaming was arrested in November 2011, after an investigation by an FBI Terrorism Task Force. Stephenson — already a federal prisoner at the time of Leaming’s arrest — later was indicted with Leaming on a charge of retaliating against a federal judge or federal law enforcement officer.
In addition to the charges of filing false liens, Leaming also faces charges of harboring two federal fugitives, being a felon in possession of firearms and uttering a bogus “Bonded Promissory Note” with a purported face value of $1 million.
The U.S. Secret Service has described AdSurfDaily as a $110 million Ponzi scheme and a “criminal enterprise.” ASD President Andy Bowdoin is jailed in the District of Columbia, pending formal sentencing Aug. 29 in the ASD Ponzi case.
One of the individuals against whom Leaming allegedly filed false liens is the Secret Service agent who led the ASD investigation. False liens also allegedly were filed against three federal prosecutors who worked on the ASD case and the federal judge who presided over it.
Leaming has a prior federal felony conviction for piloting an aircraft without a license.
BULLETIN:Aubrey Lee Price, the missing Georgia man sued by the SEC in an alleged $40 million investment-fraud caper that depleted “substantially all” of the reserves of a bank in Southern Georgia, has been charged criminally in New York with embezzling $17 million from the bank.
The office of U.S. Attorney Loretta E. Lynch of the Eastern District of New York said Price “disappeared after telling acquaintances that he had lost a large amount of money through trading activities and that he planned to kill himself.”
He has been missing since at least June 16, prosecutors said.
Price last was seen boarding a ferry boat in Key West, Fla. The ferry was bound for Fort Myers, prosecutors said.
“Price has told acquaintances that he owns real estate in Venezuela and Guatemala,” prosecutors said. “Price recently traveled to Venezuela and returned to the United States from that trip on June 2, 2012.”
After a Price company bought a controlling portion of the bank’s stock in December 2010, he “took on the responsibility of investing the bank’s capital” in early 2011, prosecutors said.
Although the bank was told Price was investing the bank’s capital in U.S. Treasury securities, “Price fraudulently wired the bank’s funds to accounts that he personally controlled at other financial institutions and provided bank management with altered documents to make it appear as if he had invested the bank’s money in Treasury securities,” prosecutors said.
The FBI is leading the criminal probe.
Anyone with information regarding Price’s whereabouts or the alleged crime is urged to contact the FBI’s office in New York at 212-384-1000. Prosecutors said this email address also may be used: ny1@ic.fbi.gov.
Persons with information on his whereabouts also may contact the Atlanta office of the FBI at 404-679-9000 or the Lowndes County Sheriff’s Office at 229-671-2985, the SEC said yesterday.
Three vulnerable U.S. banks that processed illegal gambling payments for Full Tilt Poker in exchange for investments in the institutions later failed, federal prosecutors in the Southern District of New York said yesterday. The failures of Sunfirst Bank in St. George, Utah, and All American Bank and New City Bank — both of which were “single-branch” banks in Illinois — allegedly cost the FDIC more than $70 million.
Now, Full Tilt Poker Chief Executive Officer Raymond Bitar has been arrested in New York. The arrest occurred yesterday upon his return from Ireland, and Bitar, 40, was charged in an 11-count, superseding indictment with lying to players about the security of their funds and other crimes. He’d earlier been charged with gambling, bank fraud, and money laundering offenses.
News of Bitar’s arrest occurred on the same day the SEC alleged that a Georgia man effectively had gutted a bank in the state as part of a $40 million investment scheme. That man, Aubrey Lee Price, now is listed as missing. Fraud schemes have contributed to multiple bank failures in the United States.
In one of three counts that allege Full Tilt’s Bitar committed wire fraud against Full Tilt players, he is accused of lying to participants on an “internet forum” about players’ money being kept separate from corporate funds. Prosecutors said that Full Tilt was using players’ money as its own to sustain the scheme.
At one point, according to prosecutors, Full Tilt owed players $344 million but had only $145 million “in all of its bank accounts.” At another point, Full Tilt owed players $390 million but had only $60 million on-hand.
Among the astonishing allegations by federal prosecutors yesterday in the aftermath of an FBI investigation was that Vitar did not halt the Full Tilt Ponzi scheme after the government brought the initial set of charges in 2011. Instead, he continued to operate it offshore and “lured players to continue gambling with Full Tilt Poker by continuing to promise them that their funds were safe. In actuality, [Bitar] was using new customer deposits to pay off some of the backlog of player requests to withdraw funds and to cover the company’s operating expenses, including salary for [Nelson] Burtnick and himself. In effect, Full Tilt Poker operated what was, by then, nothing more than a Ponzi scheme. When the scheme finally collapsed, Full Tilt Poker was unable to pay players the approximately $350 million it owed them.”
Nelson Burtnick was the head of Full-Tilt’s payment-processing department. He also was charged yesterday in the superseding indictment.
Prosecutors said Bitar and Burtnick “hired agents to create dozens of phony companies, complete with fake websites, and to open bank accounts using the names of these phony companies as a cover to process payments for Full Tilt Poker.”
The codes of credit-card transactions were altered to circumvent Visa and MasterCard processing regulations and to dupe banks into processing illegal gambling transactions, according to the superseding indictment.
To keep cash flowing to Full Tilt, Bitar and Burtnick also found a way to disguise e-checks that relied on “ACH” transactions routed through an electronic network administered by the Federal Reserve. Dummy companies were used to exploit the network, federal prosecutors charged.
“Bitar and Full Tilt Poker persisted in soliciting U.S. gamblers long after such conduct was outlawed,” said Janice K. Fedarcyk, FBI assistant director-in-charge. “As alleged, Bitar has already been charged with defrauding banks to conceal the illegal gambling. Now he stands accused of defrauding Full Tilt’s customers by concealing its cash-poor condition and paying off early creditors with deposits from later customers. The on-line casino become an Internet Ponzi scheme.”
Losses to customers involved “hundreds of millions of dollars” while Bitar and Full Tilt owners were paid “over $430 million,” said U.S. Attorney Preet Bharara.
With yesterday’s arrest “and the new charges brought against him, Raymond Bitar will now be held criminally responsible for the alleged fraud he perpetrated on his U.S. customers that cost them hundreds of millions of dollars,” said Bharara. “The indictment alleges how Bitar bluffed his player-customers and fixed the game against them as part of an international Ponzi scheme that left players empty-handed.”
BULLETIN: The SEC has gone to federal court in Atlanta, alleging that Aubrey Lee Price masterminded a $40 million investment fraud and that Price might have misappropriated millions of dollars from a “failing” bank in southern Georgia after a company he controlled bought a stake in the bank in 2010.
The alleged misappropriation involved “substantially all” of the bank’s reserves, which were lost in trading, the SEC said.
In June, some investors received a 22-page letter attributed to Price in which Price allegedly “admits that he ‘falsified statements with false returns’ in order to conceal between $20-23 million dollars in investor losses,” the SEC said.
Price, 46, was believed to be living in Lowndes County, Ga., after moving there from Manatee County, Fla. But Price has gone missing, the SEC said.
“Price raised nearly $40 million from investors and made woeful financial transactions that he hid from them,” said William P. Hicks, associate director of the SEC’s Atlanta Regional Office. “Now both the money and Price are missing.”
Price managed an unregistered investment fund that went by the name of PFG LLC of McDonough, Ga., the SEC said.
U.S. District Judge Timothy C. Batten Sr. has issued an asset freeze and temporary restraining order, the SEC said.
The scheme began in 2008 and affected at least 100 investors in Georgia and Florida, the SEC said.
“Price purported to invest fund assets in traditional marketable securities, but he also made illiquid investments in South America real estate and a troubled South Georgia bank,” the SEC said. “In order to conceal mounting losses of investor funds, Price created bogus account statements with false account balances and returns that were provided to investors and bank regulators.”
Price also was associated with an entity known as PFGBI through which the banking investment was made, the SEC said.
But the “investment in the bank is substantially worthless, as the bank’s cash assets have been substantially depleted and substantially all of the bank’s reserves (including U.S. treasuries and other liquid assets) were misappropriated by Price and lost in trading,” the SEC charged.
“Goldman Sach’s records document at least $10 million in unexplained funds being transferred by Price from the bank to a trading account at Goldman Sachs,” the SEC said.
Persons with information on his whereabouts should contact the Atlanta office of the FBI at 404-679-9000 or the Lowndes County Sheriff’s Office at 229-671-2985, the SEC said.
UPDATED OCT. 19, 2013. George Sepero has been sentenced to 100 months in federal prison. Our earlier story is below and has been edited to correct spelling.
The word “proprietary” has been used again to mask a large financial swindle, federal prosecutors said.
George Sepero, 39, of Glen Rock, N.J., has been indicted on charges he was running a hedge-fund scam and a separate scam designed to steal the life savings of an elderly New Jersey woman with serious medical problems.
Sepero now has been charged in a 17-count indictment with 16 counts of wire fraud and one count of conspiring to commit wire fraud.
The caper involved Pelt Capital, Caxton Capital Management, SP Investors Inc. and CCP Pro Consulting Inc., prosecutors said.
As part of the hedge-fund scam, Sepero and co-conspirators “claimed they owned and controlled a proprietary computer algorithm for trading foreign currencies, that they had used the algorithm to achieve returns of more than 170 percent in the prior two years, and that any investment funds would be highly liquid and could be withdrawn on days’ notice,” the office of U.S. Attorney Paul J. Fishman of the District of New Jersey said.
In reality, “Sepero and others invested little money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures,” Fishman’s office said.
Any number of scammers have used the word “proprietary” as a part of explanations designed to cover up an underlying fraud, discourage investors from asking questions or to make an opportunity appear to be unique. Such explanations often also include the words “secret” or “algorithm.”
The Sepero scam gleaned more than $4 million, and Sepero and others spent investor money on credit card bills averaging about $25,000 per month, prosecutors said.
Here is how other money was spent, prosecutors said.
Bar tabs of approximately $18,241, including a $4,000 tip at Drai’s Hollywood nightclub in Los Angeles.
Luxury hotel rooms for tens of thousands of dollars, including suites costing more than $4,000 at W Hotels in New York.
Flights to Paris, Los Angeles, Chicago and elsewhere.
A customized Ford F-350 “Harley-Davidson Edition” pickup truck costing more than $80,000.
A Mini Cooper automobile.
A leased a BMW.
“Sepero also spent victims’ money on other personal expenditures, including mortgage payments, home improvements, meals at high-end restaurants, jewelry and limousines,” prosecutors said.
The hedge-fund scam also included the mailing of false statement to customers and emails sent by “Mel Tannenbaum,” whom prosecutors described as “a fictional character of the conspirators’ invention.”
And bogus “screen shots” also were used to dupe investors, prosecutors said.
“Sepero and others also emailed to several investors ‘screen shots’ of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets,” prosecutors said. “In reality, the shots reflected trading in fictional accounts set up by the co-conspirators to dupe investors.”
In the scam targeting the senior citizen in poor health, Sepero took charge of her annuity account” and drained it down to less than $17 while making the woman’s family believe the account contained more than $750,000.
The woman was a widow, and Sepero “convinced her to write checks to entities that Sepero controlled,” prosecutors said. “Sepero promised to add the money to the annuity account, but instead spent hundreds of thousands of dollars for his personal use.”
UPDATED 9:05 P.M. EDT (U.S.A.) The white-collar fraud epidemic has become a political football — one that actually uses a football analogy. This is a statement from Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission:
“The result of the House bill is to effectively put the interests of Wall Street ahead of those of the American public by significantly underfunding the agency Congress tasked to oversee derivatives – the same complex financial instruments that helped contribute to the most significant economic downturn since the Great Depression.
“The CFTC’s hardworking staff is just 10 percent more in numbers than at our peak in the 1990s, yet Congress has now directed the agency to oversee the swaps market that is eight times larger than the futures market. Picture the NFL expanding eightfold to play more than 100 football games in a weekend, leaving just one referee per game, and, in some cases, no referee. Imagine the mayhem on the field, the resulting injuries to players, and the loss of confidence fans would have in the integrity of the game.
“We would not want similar mayhem and loss of confidence in markets so critical to farmers, ranchers and end users that may result from this bill’s significant underfunding of the CFTC.”
The statement comes on the heels of vote by the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies to cut the CFTC budget, the agency said on its website.
It also occurred on the same day the CFTC announced that it had filed and simultaneously settled charges against Luis Salazar-Correa of Las Vegas.
Salazar-Correa and his Nevada-based company, Prosperity Team LLC, were accused of fraudulently soliciting at least 183 individuals and drafting them into a Forex Ponzi scheme that gathered at least $2.482 million.
Demonstrating that the fraud epidemic is a global plague and that the world’s antifraud agencies are cooperating in a bid to tame the beast, CFTC thanked the Cyprus Securities and Exchange Commission, the International Financial Services Commission of Belize, the Swiss Financial Market Supervisory Authority and the U.K. Financial Services Authority for assisting in the Salazar-Correa/Prosperity Team probe.
CFTC also thanked the FBI, the SEC and the U.S. Attorney’s Office in Nevada.
In March Congressional testimony, Gensler said the agency needed both more employees and more money to carry out its tasks.
The CFTC, Gensler said in March, needed to add about 305 employees to its current staff of 710 to keep up with its expanded responsibilities. It also needed an additional outlay of tens of millions of dollars, the chairman said.
But Rep. Jack Kingston, a Georgia Republican, apparently has joined other politicians in advancing a bill that would slash $25 million from CFTC’s current budget of about $205 million.
In the era of white-collar fraud, the proposed bill would provide the CFTC only $25,000 “for the expenses for consultations and meetings hosted by the Commission with foreign governmental and other regulatory officials.”
Back in 2008 — when the U.S. Secret Service raided Florida-based AdSurfDaily in a Ponzi probe and people who called ASD’s office were told God was on the company’s side — federal prosecutors alleged that ASD President Andy Bowdoin had “followers.”
The meaning of “followers” largely was left to the imagination. Much of the mystery was taken away, however, when a now-defunct cheerleading forum for Bowdoin known as “Surf’s Up” served up impossibly tortured defenses for the ASD patriarch around the clock for more than a year.
Although it’s hard to distill the peculiar essence of Surf’s Up in a single thought, this one at least approximates it: ASD = good; government = evil.
One Surf’s Up member advanced the notion that Bowdoin’s problems could be solved by a “militia” storming Washington. Another opined that the interests of justice best would be served if the then-lead federal prosecutor were placed in a torture rack and ASD members drew straws to determine who got the honor of turning the wheel. Another ASD member — on the seventh anniversary of the 9/11 attacks — issued a “prayer” for the prosecutors to be struck dead.
“Root them out of the land of the living!” the “prayer” petitioned. “Let evil slay them, and desolation be their lot!”
For good measure, the “prayer” called for God to order “divine angelic prophetic assaults . . .” against the prosecution and evidence in the case, including the ASD database.
Bowdoin himself removed some of the “followers” mystery when he compared a government raid designed to protect the financial interests of thousands of victims ensnared in an alleged $110 million Ponzi scheme to the 9/11 terrorist attacks that killed nearly 3,000 people. He further demonized the Secret Service and federal prosecutors by comparing them to “Satan.”
Another part of the mystery perhaps was decloaked when Bowdoin’s son — in 2010 — asserted his father “is a man with no conscience” who’d used religion for years to fleece the masses.
The government has filed at least three civil forfeiture actions related to ASD. Two of the cases have proceeded to final judgment, with ASD on the losing side. (A third civil forfeiture case remains pending. Elements of the third case are directed at certain specific ASD members who allegedly benefited from the fraudulent scheme, meaning that the members themselves may have significant legal exposure.)
In both cases that have proceeded to final judgment, Bowdoin unsuccessfully appealed the losses to a higher court. He filed one of the appeals, despite the fact he’d never entered a defense in that specific case. The case he did not defend is one in which certain members of Bowdoin’s family may have significant legal exposure.
Separately, Bowdoin was named a defendant in a lawsuit by disaffected ASD members who accused him of racketeering. By December 2010, Bowdoin had been arrested on ASD-related charges of wire fraud, securities fraud and selling unregistered securities. Although his trial date is set for September, he faces a bond-review hearing on Friday. Prosecutors now say they’ve linked Bowdoin to at least two post-ASD frauds, including one known as “OneX.”
Bowdoin began pitching OneX in October 2011, about 10 months after he was indicted in the ASD case.
“I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin said last year.
Both Bowdoin and supporters habitually use pronouns such as “us” and “we”when discussing ASD or matters pertaining to Bowdoin. The precise reason why remains unclear. So far, Bowdoin is the only ASD figure known to have been charged publicly for alleged misconduct directly tied to ASD, which the Secret Service described as a “criminal enterprise.”
Bowdoin’s reference in his OneX sales pitch to “this case” was in the context of the ASD-related criminal case against him. He earlier blamed the loss of the ASD civil cases on a “single, lone judge,” prosecutors/agents who’d allegedly “crucified” him and earlier defense attorneys who’d allegedly railroaded him.
Did we mention that some ASD members have accused a federal judge of “treason” and that purported “sovereign citizen” Kenneth Wayne Leaming — an ASD story mainstay — is jailed near Seattle on federal charges that he filed false liens against at least five public officials involved in the ASD case?
Meanwhile, Christian Oesch, a Leaming colleague in a failed lawsuit against the government for alleged misdeeds in the ASD case, strangely has taken to calling himself a “transmitting utility” in response to a nonASD lawsuit in which he is named a defendant.
Records in Washington state show that at least two companies that use the phrase “transmitting utility” in their names have a business tie to Leaming through an entity known as American-International Business Law Inc. Other records show that the phrase itself has been linked to the so-called sovereign-citizen movement. “Sovereign citizens” have an irrational belief that laws do not apply to them.
When Leaming was arrested by an FBI terrorism task force in November 2011, he was found with two federal fugitives from Arkansas, according to court filings. Leaming also allegedly discussed a plan by which he’d serve John Roberts with a writ through the school his young children attended. That writ apparently was part of a scheme to file false liens against two U.S. prison officials for alleged misdeeds against a former Leaming business colleague serving time in a federal penitentiary.
John Roberts is the Chief Justice of the United States.
And yet Bowdoin — despite everything that has happened to date in the ASD case and its surrounding circus of the bizarre — still has followers.
The PP Blog received information through a source last night that some of Bowdoin’s followers will continue on with OneX, despite the government’s recent assertion it is a “fraudulent scheme” and “pyramid” that is recycling money to members in ASD like fashion.
An email circulating last night from Bowdoin’s OneX “team” strangely referenced Bowdoin without naming him. The email used the pronouns “our” and “we.”
“As many have noticed our Mentor has had to take a break due to legal reasons,” the email read in part. “We had hoped for a breakthrough on the 8th, however it was postponed to later this month.”
Bowdoin’s bond-review hearing originally had been scheduled for May 8. A federal judge later rescheduled it for May 18 — Friday.
That Bowdoin — an accused felon with a felonious history — gets accorded the description of “Mentor” (with an uppercase “M”) hardly can be a source of comfort to the good men and women at the Department of Justice and the U.S. Secret Service. Agents and prosecutors alike must be scratching their heads today and wondering where it all will end.
Here is the OneX email in its entirety (italics added):
Ninja Success Team Updates
Dear Team,
As most know we have been going through some changes with the Ninja Success Team. As many have noticed our Mentor has had to take a break due to legal reasons. We had hoped for a breakthrough on the 8th, however it was postponed to later this month.
I have gotten a lot of emails in the last week and I hope that my honesty has made you feel at ease and I hope that you will find patience until the challenge has been met.
Another challenge that we are facing is the financing of the servers that everybody’s Lead Capture Page Systems, the 1xTraining Site, and the Ninja Back Office sit [sic]. Our Mentor has been paying this out of his own pocket for all time. Because of the legal challenges, we are left to finance ourselves.
The management team has been tossing around a bunch of ideas, from donations to selling the lead packages. We have decided to ask for donations as well as to continue to sell the new ninja tools (which are getting awesome results).
As we all know we are at a very big momentum right now and are at the downhill roll to making all of our business worth quite a bit of money and this is due to the working of our Ninja Success Team. In order to continue as one of the biggest, most successful teams of the OneX opportunity, I implore everybody to at least make a donation or purchase of the New Ninja Turbo tools available on the training site or the Ninja Back Office.
Below is the link to make a donation or you can find on the menu part of the Training Site. A donation of $10 or $20/mon. would be extremely welcome.
[Link deleted by PP Blog]
I want to personally thank everybody as well for the patience they have shown during this challenge.
Alan
The Ninja Success Team
If the government is right, it means that Bowdoin is pushing a pyramid scheme even as he awaits trial in a major Ponzi scheme case.
And if purported email author and OneX pitchman “Alan” is right, then the Bowdoin “team” is getting “awesome results” from selling “tools” to drive traffic to a program the government says is a pyramid scheme.
“Alan” apparently does not feel compelled to pull the plug on the Bowdoin “team” OneX promos even though the “Mentor” possibly faces severe bond restrictions or potentially even loss of his freedom owing to the pitches.
What’s important to “Alan,” apparently, is that the “breakthrough” now is expected to come through on May 18 after a 10-day delay.
Whether the judge conducting the bond-review hearing might have a differing notion on the meaning of the word “breakthrough” is a question that may be answered in the coming days.
In any event, “followers” — a word used by the ASD prosecutors long ago — proved to be pretty much spot on. What no one knew at the time was that not even three forfeiture cases, a racketeering lawsuit, an arrest on serious criminal charges and Bowdoin’s own felonious history could deter some of those followers from seeing him as anything other than a mentor.
For starters, Zeek affiliates being approached by upline sponsors and email/website appeals to send in money “to defend Zeek Rewards and all of our independent businesses as per our legal rights of due process” might want to read this 
