On May 17, 2011, Matthew “Matt” O’Neill, 52, entered a post office in Kremmling, Colo., and “filled out documents for certified or registered mail,” federal prosecutors said.
O’Neill, though, did not immediately put his envelope in the mail. Instead, he left the post office and “reentered several times before finally mailing” it, prosecutors said.
By May 25, a mail-room employee of the Colorado Department of Revenue had begun the typical process of opening the envelope, stapling the documents inside and routing it to the intended recipient, prosecutors said.
After placing the envelope on her desk, the recipient observed “white powder” falling out onto her work space. She then took the contents to another office, informed a colleague about the suspicious substance — and the two employees placed the contents on the desk, left the office and locked the door.
They next informed the Revenue Department floor manager, who immediately dialed 9/11 and contacted the Colorado State Patrol. Fearing they’d been exposed to a biological or chemical substance, the two employees tried to decontaminate themselves by washing their hands, prosecutors said.
More moments of high anxiety followed as the employees waited for the Denver Fire Department and the HAZMAT team to arrive. Practically every adult in America understands the horror caused when powdered substances spill out of envelopes. In September 2011 — about a week after the 9/11 terrorist attacks — the anthrax attacks began through the mail.
Five people died. Seventeen became infected. One of the largest investigations in U.S. history began.
When the fire department and HAZMAT team arrived at the Revenue Department, first responders — necessarily expecting the worst — took precautions with clothing and equipment and entered the building. An evacuation of people ensued.
It was not the first time the Revenue Department had heard from Matthew O’Neill.
As the probe continued, investigators learned that O’Neill had “sent several documents that express his views as a sovereign citizen, and that he believes that he does not have to pay state or federal taxes.”
O’Neill pleaded guilty this week to providing false information related to a terrorism offense for his mailing of the white powder, which proved to be baking soda but nevertheless caused fear to spread and left employees wondering if they’d lose their limbs or perhaps even their lives.
“Those who mail a threat, especially one containing material simulating a biological or chemical agent, will face felony criminal consequences,” said U.S. Attorney John Walsh.
“All threatening communications are taken seriously, the recipient of these types of threats cannot determine the true nature of the implied, or stated danger,” said James Yacone, special agent in charge of the FBI’s Denver office. “The FBI wants to remind everyone that mailing a threatening communication that contains a hoax of any kind in a parcel will be aggressively investigated. We will continue to respond to such threats, along with our federal, state, and local law enforcement partners, through the combined resources of the Joint Terrorism Task Force.”
Whether the power was harmful was not the issue, said the region’s top postal inspector.
Threatening mailings “not only constitute a federal crime, but cause alarm to victims and victim institutions,” said Tommy Coke, acting postal inspector in charge of the Denver Division of the U.S. Postal Inspection Service.
Sentencing for O’Neill before U.S. District Judge Marcia S. Krieger is set for June 4. He potentially faces up to five years in federal prison and a fine of up to $250,000.
Some “sovereign citizens” have attempted to use the mail to instill fear among judges, prosecutors, investigators, litigation opponents, community officials and taxing authorities.
BULLETIN: The FBI and federal prosecutors in Virginia have confirmed the arrest of Amine El Khalifi, describing him as a Moroccan national living in the United States illegally and saying he planned a suicide bombing with a vest strapped to his body today at the U.S. Capitol building in Washington.
El Khalifi, 29, resided in Alexandria, Va., and represents “the continuing threat we face from homegrown violent extremists,” said Lisa Monaco, assistant attorney general for national security.
“[He] allegedly believed he was working with al Qaeda and devised the plot, the targets, and the methods on his own,” said U.S. Attorney Neil MacBride of the Eastern District of Virginia.
A “confidential human source” told the FBI more than a year ago — in January 2011 — that El Khalifi had met with other individuals at a residence in Arlington.
During the meeting, U.S. officials said, “one individual produced what appeared to be an AK-47, two revolvers and ammunition. El Khalifi allegedly expressed agreement with a statement by this individual that the ‘war on terrorism’ was a ‘war on Muslims’ and said that the group needed to be ready for war.”
By Dec. 1, 2011 — with El Khalifi under surveillance — “he was introduced by a man he knew as ‘Hussien’ to an individual named ‘Yusuf,’ who was, in reality, an undercover law enforcement officer,” prosecutors said. “Throughout December 2011 and January 2012, El Khalifi allegedly proposed to carry out a bombing attack. His proposed targets included a building that contained U.S. military offices, as well as a synagogue, U.S. Army generals and a restaurant frequented by military officials.”
After witnessing a staged explosion purportedly triggered through a cell phone at a West Virgina quarry last month, “El Khalifi expressed a desire for a larger explosion in his attack. He also selected Feb. 17, 2012, as the day of the operation,” prosecutors said.
“El Khalifi dialed a cell phone number that he believed would detonate a bomb placed in the quarry,” prosecutors said.
Over the next month, El Khalifi repeatedly traveled to the Capitol building to conduct surveillance, prosecutors said.
He also asked for a gun that “he could use during the attack to shoot any officers who might attempt to stop him,” prosecutors said.
El Khalifi was arrested today a short distance from the Capitol after traveling there to conduct the suicide bombing. But it was a sting in which equipment given to him had been rendered inert, prosecutors said.
“This individual allegedly followed a twisted, radical ideology that is not representative of the Muslim community in the United States,” said James W. McJunkin, assistant director in charge of the FBI Washington Field Office.
BULLETIN: The St. Kitts Nevis Observer is reporting that U.S. Associate Justice Stephen Breyer was robbed last week by a masked intruder wielding a machete. (See report.)
Breyer, 73, is one of nine members of the U.S. Supreme Court and has served the nation in that capacity since being appointed by President Clinton in 1994.
The robbery occurred while the justice was vacationing in Nevis with his wife and several friends, and the FBI has dispatched an agent, the newspaper reported.
Nevis is an island of the West Indies chain in the Caribbean.
The Supreme Court has confirmed the incident to the Washington Post, and CNN is reporting that it was unclear whether the intruder knew Breyer’s professional identity.
Also unclear is the level of security provided the justice during his family vacation.
“The greed in this case is stunning. [Frederick Darren Berg] stole and squandered the dreams of hundreds: dreams of retirement, dreams of homeownership, dreams of a college education for their children and grandchildren. While we could not restore those dreams, today he was held accountable for his acts.” — U.S. Attorney Jenny A. Durkan, Western District of Washington, Feb. 9, 2012
Frederick Darren Berg gestures during his sales pitch for his Ponzi scheme in 2009. Source: YouTube.
It was the largest fraud scheme ever prosecuted in the Western District of Washington. Before his Meridian Group of funds collapsed into a pile of Ponzi rubble, Frederick Darren Berg ensconced himself in the lap of luxury.
Among other things, prosecutors said, Berg had acquired:
A $1.95 million condominium at Second and Union in Seattle.
A $1.25 million house in La Quinta, Calif.
A $1.4 million condominium in San Francisco.
A $5.475 million waterfront home on Mercer Island in Washington state.
Two Lear jets for $5.5 million, including operational costs.
“Several” yachts that consumed $3.6 million through “purchase, operation and frequent modification.”
Even after he was caught, the lies and profligate spending continued, prosecutors said.
Berg concealed about $400,000 from bankruptcy trustees while claiming to be cooperating. He sold a home he did not disclose in his bankruptcy filing, pocketing the proceeds and depositing the undisclosed windfall “into a series of bank accounts he concealed from the trustee.”
While his investors were left holding the bag, Berg used the cash to make lease payments on a Porsche Cayenne and Porsche 911 Turbo Cabriolet. In addition, prosecutors said, he paid a year’s rent up front on a Los Angeles apartment, bought an Audi S5 convertible, purchased insurance for “jet skis” and a yacht — and plunked down a retainer for a criminal defense attorney.
Berg was charged criminally in November 2010 with wire fraud, money laundering and bankruptcy fraud. He pleaded guilty in August 2011.
“Those who peddle false investments and prey on investors for their own personal financial benefit need to understand that law enforcement will not sit by and let it happen,” said Kenneth J. Hines, IRS special agent in charge of the Pacific Northwest.
It was a case of “unadulterated greed,” a top FBI agent in Seattle said.
“Mr. Berg took advantage of hopeful investors — many of them senior citizens who depended on their carefully built savings to afford assisted living, medical care, and higher educational opportunities for future generations,” said Steven M. Dean, assistant special agent in charge of the Seattle office.
The day of reckoning for Berg, 49, came yesterday.
Prior to sentencing Berg to 18 years in federal prison, U.S. District Judge Richard A. Jones told Berg “he had ‘reckless disregard for his victims . . . and had no moral compass,” prosecutors said, quoting the judge.
Restitution is still being compiled. Prosecutors said it is expected to top $100 million, noting that Berg’s real-estate and financial swindle took in $245 million between 2001 and 2009 and consisted of schemes within schemes.
Without investors’ knowledge, about $45 million was peeled off to acquire buses and to operate a transportation company known as MTR Western and subsidiaries.
The long-running Berg swindle defrauded more than 800 investors, prosecutors said.
Here is an outtake from the government’s sentencing memo. (Italics added):
“Indeed, many of Mr. Berg’s victims will be forced to make significant changes to their lifestyle and that of their families such as foregoing retirement, taking additional jobs to support their children’s’ education and selling their homes. Others are likely to be forced into bankruptcy and may also lose their homes because of the financial devastation Mr.Berg’s fraud has caused.”
Read a Seattle Times story on Berg’s sentencing and courtroom comments. Visit the YouTube site of the Times to see a Berg Ponzi sales pitch. (He references Bernard Madoff while addressing the audience.)
Charles G. Martin has been sentenced to 17 years in federal prison — and fellow Forex Ponzi schemer John E. Walsh has been sentenced to more than 12 years — in a case in which investors’ money went to pay for strippers, fine meals, fine hotels, a piano, high-end electronics, artwork, jewelry, flashy cars and private jets, prosecutors said.
Martin, 46, formerly resided in Glencoe, Ill., and Malibu, Calif. Walsh, 63, lived in Lake Forest, Ill.
More than 1,000 investors “worldwide” got sucked into the scheme, which gathered more than $17 million. The fraud gained a head of steam even though Martin previously had been in trouble with the National Futures Association and had been barred from being a principal in a commodities firm, prosecutors said.
Martin and Walsh were principals of an entity known as One World Capital Group LLC.
“One World’s trading platform operated as a front to placate customers whose margin funds were being systematically misappropriated by them,” the office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said.
After investigators peeled back layers of the One World onion, they found that tax evasion had occurred, in addition to wire fraud and securities fraud, prosecutors said.
U.S. District Judge Virginia Kendall ordered restitution of more than $16.9 million.
Customers who provided money did not realize they were getting scammed out of the gate, prosecutors said. New money went to cover existing shortfalls in One World’s trading account, and tremendous sums were diverted to fuel extravagant lifestyles.
“Credit card and bank records show that Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting flight time on private jets,” prosecutors said. “He purchased a fleet of luxury vehicles, donated hundreds of thousands of dollars to celebrity charity events, and hired personal security guards to accompany him in public.”
Walsh also frittered away investors’ funds to live the high life, using his One World “credit card to charge personal expenses, including more than $140,000 of jewelry,” prosecutors said. “He also used $70,000 in One World funds for country club expenses and $1,425,000 to purchase a second home in Lake Forest.”
About $500,000 from investors was diverted to finance a movie “that had listed Martin as a contributing producer,” prosecutors said.
The FBI and the IRS handled the criminal probe, and the CFTC and NFA assisted, prosecutors said.
In December 2007, the CFTC obtained a trading halt and asset freeze. At the time of the freeze, One World had only $677,932 in assets and unpaid customer liabilities of more than $17.6 million, prosecutors said.
U.S. law enforcement has been counting victims of some individual fraud schemes in the thousands — or even the tens of thousands. The cases present unique logistical challenges because of their size and international reach.
In some scams, criminals have used dozens of shell companies and bank accounts to funnel money, hide it or spirit it away. Reverse-engineering a single scheme can take years.
Rick Devan Hendrix and Sarah Candace Deswert-Hendrix. Source: FBI.
Rick Devan Hendrix and Sarah Candace Deswert-Hendrix disappeared while on pretrial release after their 2005 arrests for mail fraud and wire fraud in an alleged Internet auction scam in which victims were bilked out of more than $300,000, the FBI said.
Hendrix, 56, and Deswert-Hendrix, 30, now are the subjects of a billboard campaign in Oregon, and the FBI is offering a reward of up to $5,000 for information leading to their arrest and conviction.
The couple is accused of taking photos of merchandise, posting the items for sale online, gathering the money — and leaving customers from Oregon, Washington state and California holding the bag.
Assisting the FBI in the probe are the U.S. Postal Inspection Service and the U.S. Marshals Service.
Hendrix is described as a white male, 6’2” in height and weighing 220 pounds. He has blue eyes, and brown, graying hair.
Deswert-Hendrix is described as a white female, 5’10” in height and weighing 180 pounds. She has hazel eyes and brown hair.
“Investigators believe Rick Hendrix, at least, may now be living in the Beaverton area,” the FBI said.
Beaverton is situated in Washington County, Ore., about seven miles west of Portland.
Persons with information are asked to call the FBI at 503-224-4181.
UPDATED 1:33 P.M. ET WITH LINK TO INDICTMENT: AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming is facing new federal-felony charges.
Leaming, 56, originally was arrested in November 2011 by an FBI terrorism task force on charges of filing false liens against at least five public officials involved in the ASD Ponzi scheme case.
Prosecutors now say he faces charges in addition to the ones originally filed and will be arraigned on the charges tomorrow in Tacoma, Wash.
Among the new charges are concealing a person from arrest, being a felon in possession of a firearm and using a false and fictitious instrument, the office of U.S. Attorney Jenny A. Durkan of the Western District of Washington said.
Leaming is among at least six purported “sovereign citizens” recently charged or convicted of crimes in the western section of the state.
Timothy Garrison, 60, of Mount Vernon, Wash., was sentenced yesterday to 42 months in federal prison for a tax scam that cost the U.S. government more than $2.5 million.
Like Leaming, Garrison’s activities included filing false liens. He also made “threats to ‘arrest’ law enforcement officers,” prosecutors said.
“No one is above the law,” Durkan said. “[Garrison’s] scheme now creates a hardship for those who put their trust in Mr. Garrison – they have big tax bills to pay. His further abuse of the legal system with fraudulent liens and so-called ‘arrest warrants,’ is a dangerous mix for our law enforcement officers who are trying to keep our communities safe.”
A convicted felon prior to the charges for which he was sentenced yesterday, Garrison assisted in the filing of more than 50 returns with false or fraudulent information, prosecutors said.
When Leaming was arrested in November, he was found with two federal fugitives from Arkansas, along with firearms, prosecutors said.
UPDATE AT 1:33 P.M. ET. Here is a link to the indictment, which also names alleged Leaming associate David Carroll Stephenson in a count of retaliating against a federal judge or federal law-enforcement officer. Stephenson currently is serving time in an Arizona federal prison in an earlier case, and prosecutors said he’ll be brought to Washington state on the new retaliation charge against him. He is referenced in this November 2010 PP Blog story on a Leaming email sent to ASD members. Stephenson also is referenced in this November 2011 Leaming story about certain communications allegedly directed at U.S. Chief Justice John Roberts at the behest of Stephenson.
The indictment describes the weapons allegedly found with Leaming and describes the fugitives by their initials. The PP Blog previously confirmed that the fugitives were Timothy Shawn Donavan and Sharon Jeannette Henningsen, who were wanted in an alleged mail-fraud caper involving envelope stuffing in Arkansas.
“I dont care what the CONSOB or whatever says because I am not an Italian.” — TalkGold poster known as “WallStreetIsAPonzi,” Jan. 28, 2012
Even as CONSOB, the Italian securities regulator, is publishing an announcement on its website that promoters of a bizarre HYIP known as JSS Tripler are under investigation amid preposterous claims that investors receive an annualized return of 730 percent, promoters on Ponzi forums such as MoneyMakerGroup and TalkGold are thumbing their noses at the news.
JSS Tripler is an arm of “program” known as “JustBeenPaid” (JBP). Whether JBP plans to assist any of the companies or individuals identified in the CONSOB announcement in navigating the regulatory waters and preparing a defense in the weeks ahead is unclear.
What is clear is that some JBP promoters are reacting to the news by posting fresh “I got paid” posts on the Ponzi boards, even as JBP continues to use its website to advertise returns of “2%+ per Day” and “60% per Month!”
Visitors are advised they can “Increase Earnings with Daily Compounding” and glean affiliate “bonuses” totaling 15 percent over two tiers — on top of the annualized returns of 730 percent.
In the AdSurfDaily Ponzi case in 2008, U.S. District Judge Rosemary Collyer described “a confluence [of ASD] payment schemes” very similar to the payment schemes purportedly in place at JBP. JBP, though, is advertising a return rate double that of ASD, whose operator, Andy Bowdoin, later was arrested on charges of wire fraud, securities fraud and selling unregistered securities.
Bowdoin faces up to 125 years in federal prison and fines in the millions of dollars, if convicted on all counts.
In her 2008 ruling in the ASD case in which she refused to release money seized by the U.S. Secret Service as part of an international Ponzi probe, Collyer noted that ASD called its payouts to members “rebates.”
Separately, documents from Canadian investigators show that the word “rebates” was used in international scams, including Flat Electronic Data Interchange (FEDI) and the mysterious “Alpha Project.” At least one FEDI promoter is jailed in the United States, as is FEDI operator Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” who was convicted on charges of operating an investment-fraud scheme and financing terror.
At MoneyMakerGroup yesterday — on the heels of the CONSOB news — a poster published seven purportedly recent payment proofs from JSS Tripler. Each of them used the word “rebate,” demonstrating that the purported opportunity also is using the same language as ASD and FEDI to describe payouts to members.
The MoneyMakerGroup member said he planned to buy a “motor home” and “start traveling the US” with his JSS Tripler money.
In the AdSurfDaily Ponzi case, several automobiles were seized as the alleged proceeds of a criminal scheme. A boat and marine equipment also were seized, along with computers and real estate valued at more than $1 million. All in all, the cash seizures to date in the ASD case total more than $80 million, including cash seized from individual promoters in at least four U.S. states.
U.S. federal prosecutors say that ASD in part tried to mask its $110 million Ponzi scheme by calling its payments to members "rebates." JSS Tripler, an arm of a "program" known as "JustBeenPaid," also refers to its payouts to members as a "rebate," according to this post yesterday at the MoneyMakerGroup Ponzi forum.
Although Frederick Mann, the purported operator of JBP/JSS Tripler, is described by supporters as a business genius and creator of a “masterpiece,” the program is using the same sort of language and bizarre presentations that drew the attention of law enforcement in the ASD and FEDI cases.
Elsewhere on MoneyMakerGroup, a member described the CONSOB development as “NONSENSE!”
Another member observed yesterday that JBP payouts came from an email address on a domain styled BigBooster.com. Why the payouts are associated with the BigBooster domain is unclear, but the BigBooster domain previously has been linked to the alleged ASD Ponzi scheme and Frederick Mann, the purported operator of JBP/JSS Tripler.
Separately, the TalkGold forum deleted a link to a PP Blog report on the CONSOB action. In the ASD case, a forum known as “Surf’s Up” routinely deleted links to the PP Blog. ASD members who relied on the Blog for information were described on the forum as troublemakers, and posters willing to consider the government’s point of view were described as “rats,” “maggots” and “cockroaches.”
ASD figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by the FBI in November 2011 on charges of filing bogus liens against at least five public officials involved in the ASD case, including a federal judge, three federal prosecutors and an active-duty agent of the U.S. Secret Service who did some of the early legwork in the case.
The Secret Service employed undercover operatives in bringing the ASD prosecution.
One MoneyMakerGroup poster yesterday suggested that the CONSOB action was “crap” and claimed outright that JSS Tripler had “paid out over 10 million bucks.”
Whether the poster ever had seen the verified, audited books of JBP/JSS Tripler and other financial records such as bank and payment-processor statements to substantiate his claim is unclear. But even if the $10 million claim is true, the claimed sum was not broken down by recipient — and online scams are infamous for siphoning cash and concentrating it in the pockets of program sponsors and insiders.
Promoters of fraud schemes often pass along company lies and deceptions to recruits and prospects, a situation that U.S. government agencies, including the Secret Service, the SEC and the CFTC, have noted in prosecutions involving individual, commission-based promoters.
The same MoneyMakerGroup promoter also ventured the CONSOB action came because “governments are not getting a cut of this revenue,” further asserting that “the only reason they are starting to do probes and crap (sic) not because they care about protecting you from loosing (sic) your money.”
ASD members made similar claims. Like JBP/JSS Tripler, ASD also was promoted on the Ponzi boards — as were at least three purported ASD clones, all of which have ceased to operate. The cost to investors is unknown.
Like ASD, JSS Tripler also appears to have a clone — one that actually uses JSS Tripler’s name to form its own name. That “program,” known as JSS Triper 2 or T2, appears now to be changing its name to T2MoneyKlub. Regardless of the name, T2 also was hawked on the Ponzi boards and appears even to have given birth to itself on a Ponzi board as a result of a dispute with JBP/JSS Tripler.
Federal prosecutors said ASD also changed its name, morphing from just plain AdSurfDaily into ASD Cash Generator. Court records suggest that changing names was part of ASD’s criminal plan and that the change occurred after the initial ASD Ponzi collapsed and after certain payment conduits began to come under government scrutiny.
Among the MoneyMakerGroup posters who published “I got paid” posts for JBP/JSS Tripler yesterday was “10BucksUp” — his second such post since the CONSOB action became public.
“10BuckUp” previously pushed Club Asteria, anotherPonzi-forum darling that came under CONSOB scrutiny. In addition to displaying no apparent respect for CONSOB, “10BucksUp” let it be known in September 2011 that he also was a pitchman for Cherry Shares, a collapsed program referenced in June by Canadian regulators.
Cherry Shares also was a Ponzi-forum darling.
Whether “10BucksUp” and other JBP/JSS Tripler promoters planned to tell their existing recruits and prospects about the fact CONSOB is targeting individual promoters in a 90-day suspension order related to the purported JBP/JSS Tripler program is unclear.
Also unclear is whether JBP/JSS Tripler will inform existing participants and prospects about the CONSOB action.
Members of any “opportunity” that purports to pay an absurd return always are at great risk. The risk becomes even greater if they are denied information about investigations. Promoters who do not disclose the presence of an investigation or simply rely on the company line (or lack thereof) potentially are at greater risk of prosecution as individual promoters.
In the ASD case, for instance, federal prosecutors said the company was collecting money from new members and funneling it to original members affected by ASD’s first collapsed Ponzi — without informing new enlistees and prospects that their money was being used to prop up losers from the initial scheme and to help the second Ponzi gain a head of steam.
The personal assets of a number of individual ASD promoters were targeted in forfeiture actions or affidavits, with the government seizing sums in several bank accounts in multiple U.S. states. These sums totaled in the hundreds of thousands of dollars, according to court records.
“Investors who suspect that their email account has been hacked should immediately notify their brokerage firm and other financial institutions, and anyone who suspects they have been defrauded should file a complaint with FINRA.” — Gerri Walsh, vice president for Investor Education, Financial Industry Regulatory Authority, Jan. 26, 2012
The Financial Industry Regulatory Authority (FINRA) yesterday issued an alert and regulatory notice, saying that it “has received an increasing number of reports involving investor funds being stolen by fraudsters who first gain access to the investor’s email account and then email instructions to the firm to transfer money out of the brokerage account.”
FINRA’s announcement occurred on the same day the SEC charged that a 34-year-old Latvian trader “broke into” customers’ brokerage accounts between June 2009 and August 2010 and made trades to manipulate the prices of stock he owned to create a personal windfall while causing losses to customers and broker-dealers.
In just one 32-minute period on Oct. 26, 2009, Igors Nagaicevs “generated more $14,000 in illegal profits” by twice taking a position a NYSE-listed security, driving up the stock price by purchasing shares through a hacked account and then “liquidating his position at a profit.”
All in all, Nagaicevs repeated his fraudulent scheme 159 times over 14 months, manipulating the prices of “104 different NYSE and Nasdaq securities” and pocketing more than $850,000 in illegal profits, the SEC charged.
Nagaicevs, in effect, caused his hacking targets to lose at least $2 million while passing the bill for the losses to broker-dealer firms, which reimbursed the affected customers, according to the SEC complaint in federal court.
FINRA did not reference Nagaicevs in its alert yesterday, but warned that email intrusions were on the rise.
“In some instances, the perpetrators appear to have obtained customers’ brokerage information by accessing customers’ email accounts and searching contact lists or emails sent from the account,” FINRA cautioned in its regulatory notice.
After breaching the email accounts, FINRA said, the scammers typically “email brokerage firms from customers’ personal email accounts with instructions to wire funds to an account, often overseas, controlled by the perpetrator.”
Document forgeries may follow the initial email chicanery, FINRA said.
“The instructions may be accompanied or followed by fraudulent letters of authorization also emailed from compromised email accounts. In some instances, firms have released funds after unsuccessfully attempting to verify emailed instructions by phone. In at least one case, the fraudulent email stressed the urgency of the requested transfer, pressuring the firm to release the funds before verifying the authenticity of the emailed instructions.”
Read a new alert from the FBI, the Financial Services Information Sharing and Analysis Center (FS-ISAC) and the Internet Crime Complaint Center (IC3) that warns that scammers are using devious email plots to siphon cash from “banks, broker/dealers, credit unions and other institutions.”
NOTE: If you follow the criminal madness on the various Ponzi-scheme boards, you’ll notice that the new alert from the FBI, FS-ISAC and IC3 cites the type of scam-talk frequently seen on the huckster forums.
An outtake from the alert (emphasis added):
“The excuse is typically based on an illness or death in the family which prevents the account holder from conducting business as usual.”
BULLETIN: A new superseding indictment has been returned in federal court in Alaska against purported “sovereign citizens” and “militia” members Francis Schaeffer Cox, Coleman L. Barney and Lonnie G. Vernon.
In addition to the original charges outlined in an the first superseding indictment, the trio now is accused of conspiracy to kill federal officers and officials, according to the FBI.
Cox further is charged with soliciting Barney and Vernon to murder federal officers, the FBI said.
And Cox, 27, Barney, 36, and Vernon, 57, “are all charged with additional counts involving the carrying of firearms during a crime of violence,” the FBI said. “In addition to these charges, the indictment includes criminal forfeiture allegations relating to several seized firearms, silencers, and destructive devices.”
Cox allegedly has asserted courts have no authority over him. The superseding indictment alleges that Cox and his militia colleagues, despite their sovereign posturing and beliefs the government has no legitimate authority over them, apparently divined themselves the right to assert authority over private citizens.
Among other things, the indictment alleges that Cox had an armed security force and somehow persuaded himself that a federal “hit team” had been sent to Fairbanks to assassinate him, according to the indictment.
With Cox scheduled to make a television appearance in November 2010, Cox, Barney, Vernon and others “developed a tactical plan to provide security for COX,” according to the new indictment. “Part of the tactical plan included the wearing of body armor, the possession of hand grenades, arming with semi-automatic weapons, the possession of 37mm launchers loaded with Hornets Nest anti-personnel rounds along with the creation and implementation of a deadly force policy in the event the federal agents arrived to arrest or attempt to kill COX.”
On Nov. 23, 2010, according to the indictment, Barney, Vernon and others “established a tactical and armed perimeter security force of militia members around COX while COX was doing the television interview,” according to the indictment. “This perimeter security force, among other things, trespassed on the private property of local citizenry while ‘patrolling’ on COX’s behalf, constructed a vehicular funneling point in order to stop and inspect the vehicles and identities of private citizens, and did, in fact, stop private citizens without lawful authority and under the force of arms.”
The armed security detail asked citizens “for names and identification and prevented citizens from traveling either to their place of employment or their own private residences,” according to the indictment.
While stopping citizens, Barney had “a semi-automatic assault rifle, an AR-15 .223 rifle,” according to the indictment..
Attached to the “rail mount” of the semi-automatic rifle “was a 37mm launcher,” according to the indictment. “Loaded inside the 37 mm launcher was a ‘Hornets Nest’ anti-personnel round.”
For his part, Vernon had “a semi-automatic assault rifle, a Sig Arms AR-15 .223 rifle,” according to the indictment.
Also in November 2010 — apparently after divining himself the right to use armed guards to interrupt the free travel of private citizens — Cox paid for 16,000 newspaper ads, according to the indictment.
Here is how the ads read:
“The laws of The Judiciary appear to have been fraudulently displaced by a privately owned for profit corporation deceptively named the ‘Alaska Court System.’ This corporation and the Alaska Bar Association are under criminal investigation. If you have had a case decided without full disclosure of the true nature of the ‘Alaska Court System’ the damages can be corrected. Judgments can be overturned and you may be entitled to restitution! A public meeting to explain the process in simple laymen’s terms will be held at the CARLSON CENTER ON DECEMBER 1, AT 6:30 PM . . .”
On Nov. 22, 2011, AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by the FBI in Washington state on charges he filed bogus liens against at least five public officials involved in the ASD Ponzi case.
Some ASD members apparently have relied on Leaming for legal advice, even though he is not an attorney.
Leaming was found with two federal fugitives implicated in an Arkansas-based, home-business scheme involving envelope-stuffing, federal prosecutors said. Those fugitives — Timothy Shawn Donavan and Sharon Jeannette Henningsen — were indicted on mail-fraud charges in February 2011, according to federal records.
Whether Donavan and Henningsen were ASD members is unclear. Also unclear is whether they relied on Leaming for legal advice at any point in time. Their filings, however, appear to be consistent with filings in cases involving purported “sovereign citizens.”
Although Leaming remains jailed, Donavan, 63, and Henningsen, 67, were released on bond in Washington state several days after their arrests and kept a court date in Arkansas on Dec. 8. During their initial Arkansas appearance, both defendants suggested they’d defend themselves — while also ambiguously suggesting they might hire a lawyer, according to court filings.
They again were released on bond, with the judge ordering them as a bond condition “to report to the court within 10 days o[n] whether they had hired an attorney or intended to pursue representing themselves.”
They did not do so, according to federal court records. The judge then set a hearing date for Dec. 27 and required Donavan and Henningsen to formally explain whether they’d rely on attorneys or themselves to defend the case.
On Dec. 27 — the date of the hearing and nine days after the initial deadline to inform the court on how they intended to defend the case — Donavan and Henningsen filed a bizarre pleading styled, “Notice: Forgive Me Request; Constructive Notice of Conditional Acceptance and Request to Continue Public Proceedings.”
In the pleading, Donavan and Henningsen apparently argued that they needed “80” more days to make up their minds. Their trail date, however, already had been scheduled for Jan. 19, 2012. Both defendants were aware of the trial date, according to court records.
It got stranger yet.
“At the hearing and in their Notice the Defendants stated that they were appearing as ‘Authorized Representatives for the Secured Party Creditor having a security interest in the collateral belonging to the Debtor-Defendant, SHARON JEANNETTE HENNINGSEN AND TIMOTHY SHAWN DONAVAN, and also accommodation parties, hereinafter, ‘Offerees.’” according to an order issued by the judge.
“The Offerees,” the strange pleading continued, “are in receipt of INDICTMENT a copy attached hereto and incorporated herein as if full reproduced herein as ‘Exhibit 1’ dated February 24, 2011 in Case #2:11-CR-20008, hereinafter ‘offer’, (sic) from UNITED STATES OF AMERICA via M.W. FLEMING, Assistant United States Attorney, U.S. Attorney’s Office . . ., hereinafter `Offerer’”. (sic)
Donavan and Henningsen then apparently ventured that they’d accept appointed counsel if the appointed counsel would “hold them harmless” for anything they suffered.
The judge denied the motion for an 80-day continuance and appointed provisional counsel.
How the case will proceed was not immediately clear.
On May 17, 2011, Matthew “Matt” O’Neill, 52, entered a post office in Kremmling, Colo., and “filled out documents for certified or registered mail,” federal prosecutors said.
