UPDATED 10:04 A.M. ET (DEC. 8, U.S.A.) Frank L. Pavlico III — convicted in 2007 of felony conspiracy to conduct financial transactions involving the proceeds of drug trafficking and released in 2008 after serving his 10-month prison term — has been arrested for wire fraud by the FBI in an alleged prime-bank swindle that occurred while Pavlico was on probation, the SEC said.
Charged civilly with securities fraud is Brynee K. Baylor, an attorney in the District of Columbia, Maryland and New Jersey. The SEC said Baylor helped Pavlico pull off the swindle, which allegedly gathered about $2.1 million and affected at least 13 investors.
U.S. District Judge Rosemary Collyer of the District of Columbia approved an emergency asset freeze, the SEC said.
“Pavlico and Baylor produced paperwork dotted with legal-sounding gibberish designed to deceive investors into believing this is a highly-sophisticated investment opportunity,” said Stephen L. Cohen, associate director of the SEC’s Division of Enforcement. “This case is particularly egregious because attorneys hold a special position of trust, and Baylor and her law firm cloaked the Milan investment in the guise of licensed legal services to deceive investors and steal their money.”
Baylor, 37, of Silver Spring, Md., is co-founder and managing partner of Baylor & Jackson PLLC in the District of Columbia, according to the SEC. The agency said she and the law firm “acted as ‘counsel’ for Pavlico’s company The Milan Group, vouching for Pavlico and acting as an escrow agent that in reality was merely receiving and diverting the majority of investor funds.”
The Milan Group, which also was known as The Milan Trading Group Inc., operated from Pavlico’s home in Clarks Summit, Pa., the SEC said. Pavlico is 41, the SEC said.
The scheme operated in a shroud of mystery, with inexperienced investors being told about a purported “private trading platform” and that “confidentiality and secrecy requirements prevented the defendants from providing details of the investments,” the SEC charged.
Baylor “deceive[ed] investors into believing that the Milan investment was legitimate and that investors’ funds would be safe,” the SEC charged, adding that she provided notarized “Attorney Attestation” letters to some investors.
Moreover, the SEC charged, Baylor “told investors that she had personally witnessed millions of dollars paid to investors through B&J’s trust account, consistent with Pavlico’s representations.”
Pavlico “deceived investors by using the name ‘Frank Lorenzo’ and by failing to disclose that he pled guilty to a felony, served 10 months in prison, and was on supervised release at the time he was soliciting their investments,” the SEC charged.
Investors were duped by high-sounding terms such as “standby letters of credit” and “bank guarantees,” the SEC said. Meanwhile, “Pavlico and Baylor also provided investors with bogus excuses attempting to explain the delay in providing the promised returns including, among other things, feigned illnesses, false representations that the European bankers supposedly involved in the transaction were on extended vacation, or that there were unspecified problems with processing the transactions through ‘Euroclear,’ a supposed necessary step in the transaction,” the SEC charged.
The scheme began in August 2010 or earlier, the SEC charged. Prison records show Pavlico was released in November 2008. His probation ran through Nov. 5, 2011, according to records.
“Pavlico offered returns of up to twenty times the original investment within forty-five days,” the SEC charged. “Investors were told that the investment involved no risk and that their principal would be returned if a successful bank instrument transaction was not completed.”
Fake “screen shots” also were used to dupe investors, the SEC charged.
Collyer also is presiding over the AdSurfDaily Ponzi case in the District of Columbia. The FBI alleged last month that Collyer was targeted with false liens by Kenneth Wayne Leaming, 55, of Spanaway, Wash.
UPDATE:Andrew Isaac Chance, the Maryland man accused last year of filing a false lien against a federal prosecutor, has been convicted. Sentencing by U.S. District Judge Alexander Williams Jr. is set for Feb. 15, the Justice Department announced in a news release last month.
Chance, a recidivist who filed the lien while on probation for his 2007 conviction for making a false claim for in income-tax refund in 2005, targeted the prosecutor “[s]hortly after” Chance was released from prison in the tax case.
Federal prison records say Chance is 65.
The lien came in the firm of a UCC financing statement that claimed the prosecutor owed him $1.313 billion, the Justice Department said.
Chance was charged in December 2010 with violating 18 U.S.C. § 1521: Retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title.
AdSurfDaily figure Kenneth Wayne Leaming was charged by the FBI last month with violating the same statute, amid allegations he filed false liens against at least five public officials involved in the ASD Ponzi case. Leaming, 55, of Spanaway, Wash., is jailed at a federal detention center near Seattle.
In December 2010, Chance also was charged with filing three false claims that sought $900,000 in income-tax refunds. He was convicted last month on those counts, as well, prosecutors said.
“This verdict is a clear message that filing false retaliatory liens against federal officials, including federal prosecutors who are simply doing their jobs, is illegal and will be punished,” said Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division.
Prosecutors said Chance faces a maximum term of 25 years in federal prison and a fine of up to $ 1 million. He admitted filing the bogus lien against the federal prosecutor, explaining that the prosecutor had “done him wrong,” the Justice Department said.
Chance, though, did not limit his lien escapades to the federal prosecutor, the Justice Department said.
“The evidence showed that Chance filed a similar lien against a Maryland state prosecutor for her role in prosecuting him for crimes relating to his attempts to cash the fraudulently obtained U.S. Treasury check for the 2005 tax return,” the Justice Department said.
EDITOR’S NOTE: If Kirkland’s name sounds familiar to you — but you can’t quite place it — think about two of America’s great national pastimes: baseball and building things. Indeed, the city produced the 1982 Little League World Series champs, carding a thrilling win over a team from Taiwan, a youth-baseball powerhouse. Kirkland’s team became a source of tremendous U.S. pride, motivating the nation’s middle-schoolers to pursue excellence.
The Kirkland team further was immortalized by legendary sportscaster Jim McKay in the “thrill of victory” clip on ABC’s “Wide World of Sports.” (The joyous “thrill of victory” clip featuring the Kirkland team was juxtaposed against the program’s signature “agony of defeat” clip showing ski-jumper Vinko Bogataj’s jarring ramp crash at a competition in West Germany in 1970.)
Kirkland also is the home of Kenworth Truck Co., a renown nameplate whose parent firm, PACCAR, is a Fortune 500 company with 17,700 employees. (Source: 2010 annual report.) PACCAR and its subsidiaries, including Kenworth, create tens of thousands of ancillary jobs in the United States. In short, Kirkland is about excellence — and employment across America.
That Kirkland, a city that motivated young people to pursue excellence and has contributed so much to U.S. commerce and the building/rebuilding of the vital infrastructure of the United States, was subjected to a series of ugly, life-altering incidents by the “sovereign citizen movement” should be a subject of great introspection for all Americans . . .
“For too long Kirkland Mayor Joan McBride and other city officials have had to live with the specter of Mr. Myrland’s armed associates invading their homes. I applaud the courage of the mayor and her officers who appeared at the sentencing hearing today and described how this defendant’s selfish campaign of threats and quasi legal filings has altered their lives.” — U.S. Attorney Jenny A. Durkan, Western District of Washington, Dec. 2, 2011
Mayor Joan McBride
UPDATED 2:03 P.M. ET (U.S.A.) David Russell Myrland, a Washington state “sovereign citizen” whose name is referenced in the criminal complaint filed Nov. 21 against AdSurfDaily figure Kenneth Wayne Leaming, has been sentenced to 40 months in federal prison for threatening the mayor of the Seattle suburb of Kirkland.
But Mayor Joan McBride, according to federal prosecutors, was not the only target of Myrland’s sustained intimidation campaign, which began in April 2010 with a garden-variety traffic stop by police and evolved into a stupefying drama that will live in infamy.
Myrland, 53, was pulled over for driving without a license plate. A police officer at the scene discovered he also had no driver’s license — though Myrland insisted it didn’t matter because “he was not subject to Washington State laws regarding driving,” federal prosecutors said.
If Myrland were arrested, prosecutors said he insisted, Myrland would become “constitutionally authorized to come to the officer’s residence and ‘arrest’ the officer” — and would be permitted to use “deadly force.”
McBride received a letter from Myrland telling her that 50 “armed men and women” would appear at her home to arrest her, the Seattle Post-Intelligencer reported. The mayor, according to the Post-Intelligencer, was advised to facilitate her arrest by not locking her doors.
“DO NOT RESIST as these Citizens will be heavily armed,” the letter read in part, according to the Post-Intelligencer.
U.S. Attorney Jenny A. Durkan applauded Kirkland Mayor Joan McBride and city officials for their courage in the face of threats from purported "sovereign citizens."
“Our cherished right to free speech does not extend to the freedom to make threats against our public officials and law enforcement officers,” said U.S. Attorney Jenny A. Durkan of the Western District of Washington.
Other Kirkland officials also were threatened by Myrland, Durkan’s office said yesterday in a statement.
In September 2010, Myrland “sent emails and placed calls” to Kirkland officials urging them to “keep their doors unlocked,” because they were going to be arrested and “should not resist,” prosecutors said.
Myrland initially was arrested on state charges, but not even his arrest stopped the intimidation campaign. Federal prosecutors filed charges “after his associates continued to send letters to local officials referencing the use of ‘deadly force’ to apprehend a ‘fleeing felon’ such as Kirkland city leaders,” Durkan’s office said.
During the probe, investigators linked Myrland to an “Assembly” of sovereign citizens with an “armed wing” known as the “County Rangers,” prosecutors said yesterday.
Leaming has been linked to the same groups, the FBI said last month. Leaming, 55, of the Pierce County, Wash., community of Spanaway, is accused of filing bogus liens in Washington state against at least five public officials involved in the ASD Ponzi case in the District of Columbia — nearly 3,000 miles away.
Among the allegations against Leaming is that he discussed a plan by which he’d serve U.S. Chief Justice John Roberts with a writ through the school his preteen children attend.
U.S. District Judge Ricardo S. Martinez told Myrland at his sentencing yesterday that the law “applies to everyone,” as do “the consequences of breaking the law,” prosecutors said.
Whether Myrland, who also was ordered to pay Kirkland $1,961 for “police overtime costs” because of his threats and will be placed on supervised probation for three years after his prison release, got the message is an open question.
“He continues to this day to apparently believe that he was in the right, and everyone else is in the wrong,” prosecutors wrote in a sentencing memo. “Despite his guilty plea, he continues to argue that he had a legal right to make the threats he made; that they were not legally threats; and that he was in the right in virtually every respect.”
Leaming repeatedly violated his probation after an earlier arrest for piloting an airplane without a license, the FBI said last month.
URGENT >> BULLETIN >> MOVING: Thirteen individuals, including lawyers, corporate officers and a stock promoter, have been charged criminally in an FBI sting aimed at microcap fraud. The SEC has suspended trading in seven companies: 1st Global Financial Inc. (FGFB), based in Las Vegas; Augrid Global Holdings Corp. (AGHD), based in Houston; ComCam International Inc. (CMCJ), based in West Chester, Pa.; MicroHoldings US Inc. (MCHU), based in Vancouver, Wash; Outfront Companies (OTFT), based in Florida; Symbollon Corp./Symbollon Pharmaceuticals Inc. (SYMBA), based in Medfield, Mass; and ZipGlobal Holdings Inc. (ZIPG), based in Hingham, Mass.
Investigators alleged the fraud involved illegal kickbacks and sham consulting agreements in schemes to hype penny stocks. The criminal activity occurred “in the midst of an undercover FBI operation,” the SEC said.
Charged criminally, according to the SEC, were:
Kelly Black-White, 51, of Mesa, Ariz. Black-White operates Premier Funding Inc. and Premiere Services Inc.. He is charged with wire fraud.
James Prange, 60, of Greenbush, Wisc. He is affiliated with Northern Equity Inc., and is charged with wire fraud.
Michael Lee, 51, of Hingham, Mass. Lee is ZipGlobal’s CEO. He is charged with mail fraud and conspiracy to commit securities fraud.
Edward Henderson, 69, of Lincoln, R.I. He is charged with wire fraud.
Paul DesJourdy, 50, of Medfield, Mass. DesJourdy is the CEO of Symbollon Pharmaceuticals. He is charged with mail fraud and conspiracy to commit securities fraud.
James Wheeler, 51, of Camas, Wash. Wheeler is CEO of MicroHoldings Inc. He is charged with mail fraud and conspiracy to commit securities fraud.
Steve Berman, 49, of Hillsboro, Ohio. He is CEO of China Wi-Max Communications, and is charged with mail and wire fraud.
Richard Kranitz, 68, of Grafton, Wisc. He is a board member of China Wi-Max Communications, and is charged with mail and wire fraud.
JC Jordan, 60, of Cameron Park, Calif. Jordan is CEO of Vida Life International LTD. He is charged with mail and wire fraud.
Karen Person, 61, of Naperville, Ill. She is president of Small Business Company Inc., and is charged with mail and wire fraud.
Albert Reda, 65, of Tustin, Calif. He is treasurer of 1st Global Financial, and is charged with mail and wire fraud.
Steve Stuart, 48, of Monrovia, Md. Stuart is a major shareholder in ComCam International Inc., and is charged with mail and wire fraud.
Muhammad “MJ” Shaheed, 44, of Houston. He is CEO of Augrid Global Holdings Corp., and is charged with mail and wire fraud.
The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts is handing the criminal cases, the SEC said.
“Kickbacks and phony consulting agreements have no place in the financial strategies of any public company, and executives who engage in this kind of fraud are just selling out their own investors,” said David Bergers, director of the SEC’s Boston Regional Office.
The undercover operation, according to the SEC, was under way for a year, and Desjourdy, Henderson, Lee and Wheeler also were charged civilly.
Seven firearms were found last week at the scene of the arrest of Kenneth Wayne Leaming in Spanaway, Wash., the office of U.S. Attorney Jenny A. Durkan of the Western District of Washington said last night.
Durkan’s office said it could not discuss whether the government was contemplating taking the firearms matter before a grand jury. Leaming, a purported “sovereign citizen,” was arrested by the FBI last week on charges that he filed bogus liens against five public officials involved in the AdSurfDaily Ponzi case.
The FBI filed the false-liens charges via a 17-page criminal complaint. Information about the alleged presence of firearms came out during testimony at a detention hearing for Leaming last week, Durkan’s office said.
Prosecutors argued in court filings last week that Leaming was a “serious” flight risk who posed a risk to public safety, and a judge found after hearing testimony from two government witnesses that Leaming lacked an “appropriate residence.”
U.S. Magistrate Judge J. Richard Creatura ordered Leaming detained, finding that “no condition or combination of conditions which defendant can meet will reasonably assure the appearance of the defendant as required and/or the safety of any other person and the community.”
Creatura specifically found that Leaming’s history included a “failure to comply with Court orders and terms of supervision” that evolved from a previous case and that Leaming lacked an “appropriate residence.”
Leaming, 55, pleaded guilty in March 2005 to a federal felony of piloting an aircraft without a valid airman’s certificate, according to records. He spent 31 days in jail, and was formally sentenced in August 2005 to time served. Leaming also was placed on probation for a year. On at least two occasions after his guilty plea and sentencing, Leaming was brought up on charges of violating the conditions of his probation, according to federal records.
On one of the occasions in which he violated his probation, Leaming claimed he had “diplomatic status or immunity.” On another occasion, he filed a “vexatious lawsuit lien or retaliatory complaint,” according to the FBI
Leaming has been detained at the Sea Tac Federal Detention Center near Seattle since his arrest eight days ago.
Nearly three years after Leaming pleaded guilty to having no pilot’s license while flying a Cessna aircraft repeatedly between 2002 and 2004, he filed a document styled in part as “NOTARY PRESENTMENT OF: BONDED REPORT OF FRAUDULENT SECURITIES” in a bid to overturn his conviction in the aircraft-piloting case, according to court filings.
The document, dated June 3, 2008, and placed in the court record six days later, named the judge who sentenced Leaming in the case a “3rd Party Respondent.” Five other individuals also were named “3rd Party Respondent[s].”
“COMES NOW the man, Kenneth Wayne, of the family LEAMING, to provide the above titled ‘court’ (BANK) and its named officers a BONDED REPORT OF FRAUDULENT SECURITIES, and to provide said officers an opportunity to SUA SPONTE vacate the entire record of ‘prosecution,’ ‘conviction’ and ‘sentence’ upon which the fraudulent securities were issued,” the document began.
It went on to accuse the judge and others of “BARRATRY” and to argue that the court in the Western District of Washington through which his conviction was recorded was “actually a bank” and a “commercial” enterprise.
A plea bargain that had led to Leaming’s guilty plea three years earlier was forced on him under “THREAT OF DEATH,” Leaming argued unsuccessfully.
The June 2008 document was notarized by Tina M. Hall, according to the stamp. In January 2010 and February 2010 — approaching two years after Hall’s name appeared in Leaming’s pleadings in U.S. District Court for the Western District of Washington — her name appeared on the court docket of U.S. District Judge Rosemary Collyer in the civil portion of the ASD Ponzi case in the District of Columbia. Those filings, which were rejected, were styled “Claim by Notary Presentment.”
Collyer is presiding over both the criminal and the civil aspects of the ASD Ponzi case. ASD President Andy Bowdoin, 77, was arrested by the U.S. Secret Service in December 2010. Bowdoin is scheduled to go on trial on charges of mail fraud, securities fraud and selling unregistered securities in September 2012.
Leaming now is accused of filing a bogus lien against Collyer in Pierce County, Wash., nearly 3,000 miles from the District of Columbia. The state of Washington revoked Hall’s notary license last year, according to records.
Leaming also is accused of filing bogus liens against the federal prosecutors and the Secret Service agent involved in the ASD case.
Among the allegations against Leaming is that he sent an email in May 2011 to David Carroll Stephenson, a former business partner and a federal prisoner. That email referenced the “kids” of U.S. Chief Justice John Roberts and their “school,” according to the complaint against Leaming.
“In this email,” the FBI agent who sought Leaming’s arrest in the false-liens case 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.”
Richard Elkinson, the 78-year-old Ponzi swindler whose promissory notes scheme gathered $29 million over 20 years, has been sentenced to 102 months in federal prison.
Elkinson resided in Framingham, Mass., and told investors he was in the business of providing uniforms to the government and other entities.
But it was all a scam that lured investors with promises of outsize returns of between 9 percent and 15 percent in less than a year, federal prosecutors, the FBI and the SEC said.
The scheme began to collapse in late 2008 after investors — motivated by the publicity the Bernard Madoff Ponzi began to receive — “started seeking more information and documents about the uniform business,” the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said yesterday.
Madoff, himself a senior swindler at the helm of a long-running Ponzi caper, was arrested on Dec. 11, 2008.
Although Elkinson initially lulled investors in early 2009 with a variety of excuses about why he wasn’t making payments, he later fled Massachusetts. Elkinson was arrested at a Mississippi casino in January 2010. Investigators said they discovered evidence that the con man had an affinity for gambling and had conducted “a total of more than $3.7 million in currency transactions over $10,000” at Las Vegas casinos dating back to 1998.
Purported “sovereign citizen” Kenneth Wayne Leaming remains jailed near Seattle a week after his arrest on charges of filing bogus liens against five public officials involved in the AdSurfDaily Ponzi case in the District of Columbia, according to prison records.
Leaming, 55, was arrested in Spanaway, Wash., on Nov. 22. He was charged with retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title, amid allegations he filed false liens against a federal judge, a former U.S. Attorney, a former assistant U.S. Attorney, a current assistant U.S. Attorney and an active-duty special agent of the U.S. Secret Service.
The office of U.S. Attorney Ronald C. Machen Jr. in the District of Columbia — the venue from which the ASD case was brought in August 2008 — declined to comment yesterday on Leaming’s arrest on the other side of the country.
“Because our office is not handling this particular case, we have no comment on this particular matter,” Machen’s office said.
The office of U.S. Attorney Jenny A. Durkan of the Western District of Washington is supervising the Leaming prosecution. An FBI affidavit filed in the case last week references the name of American-International Business Law Inc., a Spanaway company associated with Leaming.
The company’s name also is referenced in the April 8, 2011, Congressional Record as the presenter of a “petition . . . relative to a claim against the United States of America.” (Story here.)
Whether the firm filed a claim against the United States through the U.S. Congress for a dollar sum is not known.
Meanwhile, American-International’s name appeared in a November 2010 email received by some members of ASD. (Story here.)
Pasted into the November 2010 email was a purported “legal opinion” by a person described as “Keny” of “AMERICAN-International Business Law inc. (sic).”
“Keny” is a Leaming nickname. Advertisements describing Leaming as an attorney appeared online last year, but Leaming appears to have no law degree. Some ASD members, however, appear to have turned to him for legal advice.
When Leaming was arrested last week, he was found in the company of two federal fugitives from Arkansas, Durkan’s office said last week. The fugitives, who were indicted in February 2011 amid allegations they hatched a home-business scheme involving stuffing envelopes, were identified as Timothy Shawn Donavan and Sharon Jeannette Henningsen.
Donavan, 63, and Henningsen, 67, made an appearance before U.S. Magistrate Judge J. Richard Creatura in Tacoma yesterday, according to records. They remain in custody at the Sea Tac Federal Detention Center near Seattle, according to records.
Leaming is being held at the same facility.
A grand jury in the Western District of Arkansas returned mail-fraud indictments against Donavan and Henningsen on Feb. 24. The envelope-stuffing scheme, according to the indictment, was “created solely to defraud persons seeking home-based employment” and operated through entities known as Trial Head Options Inc. and Premier Solutions in Van Buren, Ark.
When the U.S. Court of Federal Claims dismissed the lawsuit brought by Leaming and Oesch last year, Judge Christine Odell Cook Miller noted that their “challenge took the form of presenting claims issued by Tina M. Hall, a notary public in the State of Washington . . .”
Hall’s name appears on the court docket in the ASD case on Jan. 27, 2010, and Feb. 12, 2010 — with entries of “Leave to file denied” by U.S. District Judge Rosemary Collyer, whom the FBI now says was one of the targets of Leaming’s bogus liens. Hall’s license later was revoked by the state of Washington.
EDITOR’S NOTE: A passage from a May 2011 email allegedly written by Kenneth Wayne Leaming appears in the story below. The passage, which appears to contain electronic clutter — specifically the string “#39;” — is reproduced verbatim, meaning the string also appears in the court document from which the passage was taken.
An FBI agent assigned to the Tacoma Resident Agency Joint Terrorism Task Force advised a judge last week that Kenneth Wayne Leaming — now jailed at a federal detention facility near Seattle on charges he filed bogus liens against public officials involved in the AdSurfDaily Ponzi case — referenced the young children of U.S. Chief Justice John Roberts and their “school.”
The reference appeared in a email that Leaming allegedly sent to David Carroll Stephenson on May 14, 2011. Stephenson, whom the agent described as Leaming’s former business partner in Washington state, is a convicted felon serving a 96-month sentence in federal prison for tax crimes.
“This week I will ‘flood’ the USSC with the habeas, one to each justice and resend the one to the Chief Justice, and maybe one to his kid#39;s school to be given to the parents,” Leaming allegedly wrote. “One way or another he is going to get it in his hands and I#39;ll start working on off duty locations for the remaining justices as well.”
Roberts and his wife have two preteen children.
The email clearly became a source of concern for the FBI.
“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.”
But the alleged email to Stephenson was hardly the FBI’s only concern about Leaming, who appears to have no law degree but has been depicted in online ads as a practicing attorney. (The ads were removed last year.)
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.
At least some of the bogus papers linked to Leaming were found in July 2011 — during the execution of a search warrant at the Yelm, Wash., home of purported “sovereign citizen” Raymond Leo Jarlik-Bell, according to the FBI.
Whether Jarlik-Bell was a member of ASD is unclear.
The U.S. Secret Service has described ASD as a “criminal enterprise” led by Andy Bowdoin, a 77-year-old recidivist felon and securities huckster. Bowdoin, who was arrested in the Gulf Coast area of Englewood, Fla., in December 2010, operated ASD from the small town of Quincy in northern Florida, near Tallahassee. He has described himself as a “money magnet” and man of God.
The FBI said “one of the specific documents” recovered in the search of Jarlik-Bell’s home sought the staggering sum of $225.4 billion and listed “Kenneth Wayne, sovereign man” as “grantee,” and the public officials as “grantors.”
“Kenneth Wayne” is a name used by Leaming.
Navy Federal, which serves members of the military, is the largest credit union in the world.
So-called “sovereign citizens” have been known to file vexatious liens against public officials and courtroom opponents, including financial institutions. The practice has been described as “paper terrorism” and “mailbox arbitration.” Among other things, it can cause both the lien targets and the government to expend money and resources to defend against the nuisance claims, which can affect the credit histories of the individual targets and the efficiency of the court system.
Named in the liens in in addition to Peters and Dawson were U.S. District Judge Rosemary Collyer; former U.S. Attorney Jeffrey A. Taylor; former assistant U.S. Attorney William Cowden; current assistant U.S. Attorney Vasu B. Muthyala; and Roy Dotson, a special agent of the U.S. Secret Service.
Collyer, Taylor, Cowden, Muthyala and Dotson have had roles in the ASD Ponzi case. Why Peters and Dawson were targeted with liens is unclear.
Jarlik-Bell, who has been linked with Leaming to “sovereign citizen” groups known as the “County Rangers” and the “Assemblies on the County,” was arrested in July on tax charges. He was jailed pending trial, according to the FBI complaint against Leaming.
More Alleged Leaming Correspondence
In June 2011, according to the FBI, Leaming sent an email to Stephenson that referenced a letter that had or would be sent to Roberts, America’s top judicial officer. The letter strangely described the chief justice as “FIDUCIARY.” The email followed on the heels of other Leaming emails that suggested Leaming had spent part of the month of May conducting financial research on Roberts and his wife and trying to find a street address through which he could cause Stephenson-related writs to be delivered to the couple’s home — instead of the Supreme Court.
Other Leaming email correspondence in May suggests he sent a “certified,” Stephenson-related letter to the residence of Associate Justice Ruth Bader Ginsburg and was trying to find a home address for Associate Justice Stephen G. Breyer — instead of sending Stephenson-related correspondence to the Supreme Court address.
The letter that had or would be sent to Roberts asserted that Stephenson was being “restrained” and “concealed” in a federal prison under a under a “fictitious name.” It further asserted that the government had assigned Stephenson an “inventory control number,” according to the complaint against Leaming.
As the letter proceeded, it painted a picture that Roberts had been part of a conspiracy with the Federal Bureau of Prisons to “evade the habeas corpus process.”
Because Stephenson was in federal custody, his communications were being monitored, according to the complaint against Leaming. In a phone call between Stephenson and Leaming, Leaming spoke about “$10m” allegedly owed to Stephenson by a public official employed by the Bureau of Prisons and suggested that “$20 million” would be sought from a prison warden.
Leaming told Stephenson that the city of Puyallup, Wash., was in receivership because of Leaming’s paperwork maneuverings, according to the complaint against Leaming. (Records show that Leaming filed liens against affecting at least two communities in Washington state, including Puyallup. Records also show that he filed a lien for more than $9 billion against a Franciscan hospital in Lakewood, Wash., and tried to put the facility in involuntary bankruptcy. At the same time, records show that Leaming also sought to put the Washington State Bar Association in involuntary bankruptcy. See this story. See this story.)
During phone conversations with Stephenson, Leaming talked about escalating his paperwork maneuverings against the courts if “they don’t straighten up soon” and the potential need to “have a little liability correspondence with Eric Holder himself.”
Eric Holder is the Attorney General of the United States.
Leaming also told Stephenson that “someone has suggested we go after body odor in the White House,” an apparent veiled reference to President Obama.
Returning to the subject of the courts, Leaming told Stephenson that he would start “working” on the chief judge of U.S. federal courts in the Western District of Washington, according to the complaint against Leaming.
Leaming, according to the complaint, also ventured that “the Rothschilds” were hiding in a “bunker in India” while controlling the central bank of Iraq, according to the complaint against Leaming.
Banking conditions in Iraq are causing the Rothschilds to lose money, and the “inner circle” is “jumping ship,” Leaming allegedly told Stephenson, “just like body odor’s inner circle in the White House.”
Leaming has been under federal surveillance by both the Tacoma Resident Agency Joint Terrorism Task Force and the Seattle Division’s Mobile Surveillance unit since August 2011, according to the complaint. Agents have observed him driving a blue Ford Crown Victoria and visiting mailing spots in Spanaway, Wash., where he lives in an apartment, according to the complaint.
In October 2011, some ASD members received an email attributed to “Keny” — a Leaming nickname — that suggested they file “county recorder” papers against federal officials involved in the ASD case that would identify the officials as “DOJ thieves.”
The email encouraged the members to send a “notary certified copy” of the filings to the home address of Chief Justice Roberts.
At least two notaries public with ties to Leaming have lost their licenses in Washington state, according to records. One of the notaries — Kathryn E. Aschlea — was associated with an enterprise known as FAN NW LTD INC.
The name of FAN NW LTD INC. appears in the criminal complaint against Leaming, and the FBI says a telephone associated with the firm was used on calls between Leaming and Stephenson.
Federal court records in the ASD case in the District of Columbia reference a “Claim by Notary Presentment/Acceptance by Kathryn E. Aschlea.” Collyer denied Aschlea leave to file on June 11, 2010.
Kathryn Aschlea and “Kenneth Wayne” are listed in Washington state as officers of FAN NW LTD INC.
President Bush observes the 2006 swearing-in ceremony of incoming Transportation Secretary Mary Peters. Peters held the cabinet post between October 2006 and January 2009. Source: Wikipedia: White House photo by Paul Morse.
UPDATED 5:42 P.M. ET (U.S.A.) Public officials involved in the AdSurfDaily Ponzi case were not the only targets of bogus liens filed by Kenneth Wayne Leaming, according to federal prosecutors in Seattle.
Leaming, 55, also filed a lien against Mary Peters, the U.S. Secretary of Transportation under President George W. Bush during his second White House term, prosecutors said.
In addition, prosecutors said Leaming filed liens against U.S. District Judge Rosemary Collyer; former U.S. Attorney Jeffrey A. Taylor; former assistant U.S. Attorney William Cowden; current assistant U.S. Attorney Vasu B. Muthyala; and Roy Dotson, a special agent of the U.S. Secret Service.
Collyer is presiding over both the civil and criminal prosecutions connected to the ASD Ponzi case in the District of Columbia. The civil case, which led to the successful forfeiture of tens of millions of dollars in the personal bank accounts of ASD President Andy Bowdoin, was brought by Taylor’s office in August 2008.
Cowden and Muthyala assisted in the prosecution against ASD-related assets, including more than $65.8 million in Bowdoin’s 10 bank accounts and more than $14 million in other bank accounts linked to Golden Panda Ad Builder, a companion autosurf.
Dotson was a key investigator in the case, which was brought in part through the efforts of a Florida-based Task Force. Bowdoin was arrested in December 2010. He is free awaiting trial in the District of Columbia.
Taylor was succeeded as U.S. Attorney by Ronald C. Machen Jr. Machen’s office was sued pro se earlier this month by ASD members Todd Disner and Dwight Owen Schweitzer of Miami. Disner, a cofounder of the Quiznos sandwich franchise, and Schweitzer, a former attorney whose license was suspended in Connecticut, asserted that prosecutors engaged in “character assassination” against Bowdoin and that the forfeiture case consisted of a “tissue of lies.” They also claimed Dotson’s affidavit that led to the seizure of Bowdoin’s assets was flawed and that 4th Amendment violations had occurred.
Disner and Schweitzer also named Rust Consulting Inc., the government-approved claims administrator in the Ponzi case, a pro se lawsuit defendant. In September, Machen joined Assistant Attorney General Lanny Breuer in announcing that the government had returned $55 million to victims of the ASD Ponzi.
Collyer ordered the forfeiture of Bowdoin’s assets in January 2010. Her rulings were upheld by the U.S. Court of Appeals. Bowdoin, 77, is using Facebook and a website known as “Andy’s Fundraising Army” to raise money for his criminal defense on charges of wire fraud, securities fraud and selling unregistered securities.
Why Peters allegedly was targeted by Leaming was not immediately clear. But court records suggest the FBI is investigating Leaming ties to a Washington state group of “sovereign citizens” known as the “County Rangers.”
Leaming was arrested on Tuesday. On Wednesday, he appeared before U.S. Magistrate Judge J. Richard Creatura in Tacoma. Creatura ordered Leaming’s detention to continue. The date of Leaming’s next court appearance was not immediately clear.
Leaming, according to prosecutors, was found Tuesday with two federal fugitives from Arkansas who were indicted in February on federal charges related to an alleged envelope-stuffing scheme. Prosecutors identified the fugitives as Timothy Shawn Donavan and Sharon Jeannette Henningsen.
Donavan and Henningsen have court histories that include declaring themselves “living breathing free” people to whom laws do not apply, according to records. Like Leaming, they are being held at the Sea Tac Federal Detention Center near Seattle.
Leaming has been charged with retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title, an obstruction of justice statute.
Among the government’s allegations against Bowdoin is that he falsely claimed to have received an important award for business acumen from President Bush in 2008. ASD members used Bush’s name in online promos, according to records.
In July 2008 — as the Secret Service and the Task Force were investigating ASD — Bowdoin threatened to sue critics, according to court filings. After the seizure of his assets, he claimed the government’s action was the work of “Satan” and compared the seizure to the 9/11 terrorist attacks, which killed nearly 3,000 people in New York, Washington and Pennsylvania.
Cowden, whose name was repeatedly misspelled as “Crowden” by pro se litigants in the forfeiture case, was derided as “Gomer Pyle” on the now-defunct, pro-ASD “Surf’s Up” forum. One ASD member opined that Cowden should be placed in a torture rack. Another said a “militia” should storm Washington. Still another issued a “prayer” that called for prosecutors to be struck dead.
ASD critics were derided as “rats,” “maggots” and “cockroaches.”
In December 2010, prosecutors linked ASD to E-Bullion, a defunct California payment processor operated by James Fayed. E-Bullion has been linked to several Ponzi schemes.
Earlier this month, Fayed was formally sentenced to death for arranging the contract slaying of his estranged wife, Pamela Fayed.
Pamela Fayed was slashed 13 times in a Greater Los Angeles parking garage in July 2008 while James Fayed sat on a bench within earshot of Pamela’s screams, according to records.
At least one ASD member used E-Bullion to send money to ASD, according to federal court records. That member — former ASD “trainer” Erma Seabaugh of Missouri — was operating a purported “religious” nonprofit in Oregon and using ASD to promote a pyramid scheme, according to records.
Screen shot: PDF from section of Page 1 of the indictment of Doris E. Nelson in an alleged $126 million Ponzi operating internationally through multiple companies.
EDITOR’S NOTE: This information is presented in the form of briefs, with links to external sources.
1.)Doris E. Nelson, arrested/jailed in Spokane, Wash., region, last week after federal raid in April 2010. SEC filed civil charges in September 2011.
The allegations against Nelson and multiple companies in Nevada, Utah and Canada are alarming, but also somewhat standard fare if you’ve been observing how schemes form and then explain away problems when trouble develops.
Among the core allegations are these:
Nelson, of Colbert, Wash., ran a payday-loan business called “The Little Loan Shoppe” in the area of Spokane. The firm was linked to multiple LLCs in the United States and multiple LTDs in Canada. The business started out in the Canadian province of British Columbia in roughly 1997, and moved to the United States “in or about 2001.” Investors were told they could earn enormous profits from the spread between the loan shop’s expenses and what it charged customers for a short-term loan.
The Ponzi scheme took in “at least” $126 million and caused losses of more than $40 million — losses that affected “at least” 800 investors.
Federal prosecutors say they have identified “victim investors” in multiple Canadian provinces and multiple U.S. states. The indictment also lists a victim from Spain.
The payday loan business was not profitable. Investors were getting paid through a complex shell game that lasted for years and involved the formation of new companies, including marketing and “leads” arms.
Nelson and some of the defendants engaged in wire fraud, mail fraud and money-laundering.
Nelson lied to the Manitoba Securities Commission and advised certain parties to lie to the British Columbia Securities Commission (BCSC).
Nelson used investor funds to purchase a motor home valued at nearly $127,000, a Chevrolet Corvette valued at more than $61,000, a Mercedes Benz valued at nearly $112,000. She purchased more than $220,000 in clothing at the St. Johns Knits store and $217,000 at other stores, including Nordstrom.
Nelson lost $400,000 of investors’ funds gambling at various Las Vegas casinos.
Nelson spent investors’ money on luxury sea cruises, including nearly $29,000 on a Royal Caribbean cruise in which she also spent $23,500 in investor funds to gamble.
The promissory-notes scheme showed classic signs of collapse in October 2008. (More details below.) Nelson slashed payouts to investors — from an anticipated rate of between 40 percent and 60 percent to 10 percent. The 10 percent payouts collapsed by March 2009.
Nelson claimed Little Loan Shoppe bought the building it used in Spokane, but that was a lie. In truth, the company was paying rent to a company owned by Nelson’s husband.
In February 2008, leading up to the beginning of the end in October 2008, Nelson forecast “an explosion of profit.” In May, she announced that “our industry is thriving.” She then opened a new window for investments, telling marks that she was “excepting” new money, as opposed to “accepting” it. “[T]his window of opportunity will probably not be open again due to the expected surplus of income . . .” she wrote.
Between late June and late July of 2008, Nelson announced a “massive marketing campaign” that would turn the operation into “one of the largest loan companies.”
Millions of dollars flowed to the teetering scheme after Nelson’s various hype fests.
In October 2008, Nelson lied to BCSC about how she was making interest payments to investors, denying that the money came from “newer” investors and claiming the cash came from loan profits.
BCSC ordered Nelson to stop issuing promissory notes. Nelson then told investors that changes to U.S. lending laws had “dramatically reduced our profits . . .”
In February 2009, Nelson advised investors to quit contacting her about their investments because the inquiries were distracting her. She then announced a purported account review. In March 2009, Nelson told investors that the account review was behind schedule and perhaps would not be completed until the middle of April.
In March 2009, Nelson traveled to Florida to try to get more money from existing investors.
The scam then collapsed in its entirety and investors experienced ruin.
Read/view coverage of alleged Nelson scam at KXLY.com.
The Alleged Garfield M. Taylor Ponzi Scheme In Metro Washington, D.C.
2.)Garfield M. Taylor, others sued by SEC last week amid spectacular allegations of Ponzi fraud targeted at charities and people of faith, among others.
Outlined below are some of the core allegations in the alleged Garfield M. Taylor Ponzi scheme, which includes multiple defendants and multiple companies. The SEC brought the case last week, alleging a $27 million Ponzi scheme.
First, a quote from Stephen L. Cohen, the SEC’s associate director in the Division of Enforcement.
“Garfield Taylor and his partners in the scheme touted themselves as seasoned and trustworthy financial professionals offering a conservative but lucrative investment opportunity. In reality, they were gambling away investor assets in extremely risky trades and operating a classic Ponzi scheme.”
Key allegations:
Garfield Taylor, of North Bethesda, Md., formerly worked for Fannie Mae and “frequently” used its name in his fraud pitch. His companies, Garfield Taylor Inc. and Gibraltar Asset Management Group LLC, were charged by the SEC, as were five alleged “collaborators”: Maurice G. Taylor of Bowie, Md., who is the brother of Garfield Taylor; Randolph M. Taylor of Washington, D.C., who is the nephew of Garfield Taylor; Benjamin C. Dalley of Washington, D.C., who is the childhood friend and business partner of Randolph Taylor; Jeffrey A. King of Upper Marlboro, Md., whose sister is married to Maurice Taylor; William B. Mitchell of Middle River, Md.
The scheme operated “at least” between 2005 and 2010, targeting “middle class” investors and charities.
The FDIC’s name was used to sanitize the scam.
Unregistered brokers were used to recruit investors.
The firms themselves were not registered.
Misleading PowerPoint presentations were used.
A Baptist church in Maryland, a children’s charity in Washington and an investment club in Philadelphia were shown the PowerPoint presentations.
Fancy language such as “proprietary strategy,” “covered call investment strategy” and “unparalleled downside protection” was used.
The Baptist church also was shown a “fake ‘letter of recommendation’ from Charles Schwab.”
“This letter was not prepared by anyone at Charles Schwab. Rather, it is a fabrication.”
A retiree from Lanham, Md., plowed more than $780,000 into the scam, an amount that represented “nearly his entire retirement savings.”
At least one investor in 2009 was worried about his/her nest egg in the post-Bernard Madoff environment, but Dalley reassured the investor that the opportunity had “taken the internal measures to strictly regulate our traders and accounting to ensure that our investor’s investments are safe.”
When Dalley provided the assurance, he already knew that the opportunity “had not followed a covered call trading strategy and had instead engaged in highly speculative naked options trading.”
Garfield Taylor actually was operating a “joint Ponzi scheme” through his companies.
Garfield Taylor “convinced at least three individuals to give him the username and password to their online brokerage accounts in order for Garfield Taylor to place trades in those accounts on a discretionary basis in exchange for a share of any profits generated.” A Maryland woman duped in this fashion lost “nearly her entire account” originally worth $450,000 “in a matter of two months.”
Garfield Taylor used investors’ money to send his children to private school at a cost of $73,000.
At one point, one of the Garfield Taylor firms had “less than” $1,000 in its account, but an investor “wired approximately $590,000.” Garfield Taylor used the incoming money to make Ponzi payments.
3.) Jamie Campany, 48, of Palm Beach County, Fla., sentenced to federal prison in $29.5 million fraud.
Key allegations:
More than 1,400 investors defrauded.
Multiple companies operating in South Florida and elsewhere involved, including Global Bullion Exchange LLC of Lake Worth. Scam also used name of “Barclay.”
Fraud fueled by telemarketing.
FBI, U.S. Postal Inspection Service and Florida Office of Financial Regulation handled probe.
Oscar Ramiro Ortega-Hernandez: Source: U.S. Park Police.
Oscar Ramiro Ortega-Hernandez has been charged by the FBI with attempting to assassinate President Obama by firing repeated rounds from a car at the White House after dark and then fleeing the Veterans Day shooting scene in Washington.
Ortega-Hernandez, 21, of Idaho Falls, Idaho, also is known as Oscar Ramiro Ortega. He was arrested in western Pennsylvania on Wednesday and made a preliminary court appearance in Pittsburgh yesterday. The case against him was filed in Washington, and he’ll be returned there to face the charges. (Demonstrating that it’s a small world and that judges have overlapping duties and encounter cases of all types, the arrest warrant for Ortega-Hernandez was issued by the same U.S. Magistrate Judge in the District of Columbia who issued the seizure warrants in the August 2008 AdSurfDaily Ponzi case. Meanwhile, the U.S. Secret Service is involved in the Ortega-Hernandez prosecution, as is the office of U.S. Attorney Ronald C. Machen Jr. The Secret Service and Machen’s office also are prosecuting the ASD case. )
An FBI agent who prepared the affidavit noted that investigators had found witnesses at the shooting scene — and also had interviewed Idaho witnesses who know Ortega-Hernandez. One witness, according to the affidavit, told investigators that the suspect had come to believe that the government was conspiring against him.
The same Idaho witness told investigators that Ortega-Hernandez wanted to “hurt” Obama and referred to him as “the anti-Christ.” Another witness, relating a conversation about Ortega-Hernandez, said that Ortega-Hernandez had been heard expressing that he “needed to kill” the President.
Yet another witness told investigators that Ortega-Hernandez claimed Obama was “the devil” and that that Ortega-Hernandez was “preparing for something” and would not stop “until it’s done.”
Ortega-Hernandez, according to the affidavit, told the witness that Obama “needed to be taken care of.”
Investigators said a witness told them that Ortega-Hernandez owned a black gun with a “huge butt” — and that the gun was missing from the bedroom of Ortega-Hernandez when he left Idaho last month driving a black Honda Accord. The gun was described by another witness as a black “AK-47-like gun” with a “scope-like thing” on top.
A witness in Washington observed shots being fired toward the White House “through the passenger-side window” of a dark car that had stopped in front of her. The car then sped away, according to the account of the witness in the affidavit. Another witness described hearing approximately eight sounds of a “popping noise” coming from the car and observing “puffs of air” coming from the passenger side.
Ironically, police found the car abandoned on the lawn of the U.S. Institute of Peace. A witness in that area said the operator of the car fled on foot after trying to restart it. Inside the car, a black Honda Accord in which Ortega-Hernandez was one of two registered owners, investigators found a Romanian Cugir SA semiautomatic assault rifle with a large scope, three magazines loaded with cartridges and “several additional boxes” of ammunition.
They also found a hooded jacket emblazoned with the letters “LA, ” a baseball bat, brass knuckles, and a sales receipt from a Walmart in Fairfax, Va. The receipt was dated Nov. 11 — the day of the shooting — at “approximately” 5 p.m. Investigators went to Walmart and retrieved the surveillance video, which revealed Ortega-Hernandez had been inside the store wearing the “LA” jacket at roughly 5 p.m., according to the affidavit.
Authorities did not describe what Ortega-Hernandez had purchased at Walmart.
Investigators discovered that police in Arlington County, Va., had encountered Ortega-Hernandez and his car about six hours earlier — at 11 a.m. — after receiving a report about a suspicious person. Arlington police recorded the plate number of the Honda Accord and took photos of Ortega-Hernandez.
Although Arlington officers sought permission to search the car, Ortega-Hernandez refused, the FBI said in the affidavit.
Six hours later, Ortega-Hernandez was at the Walmart — and four-plus hours after that, he was opening fire at the White House after dark and speeding away, according to the affidavit. Sunset in Washington on Nov. 11 occurred at approximately 4:57 p.m. ET. The shots rang out at approximately 9:04 p.m., according to the affidavit.
Investigators found nine spent shell casings in the car, according to the affidavit. Because Ortega-Hernandez apparently was wearing the “LA” attire prior to his alleged 5 p.m. Walmart visit, it seems possible that one part of the ongoing probe will focus on what he purchased at the store and what he did for the next four-plus hours before opening fire.
Investigators found “several confirmed bullet impact points” at or above the second story of the White House, according to the affidavit. The First Family’s living quarters are on the second and third stories.
Although the President was not home at the time of the shooting, the White House is occupied around the clock. Whether other members of the First Family were home is unclear. What is clear is that investigators believe Ortega-Hernandez had contempt for the government in general and Obama in specific — and opened fire on the White House from an automobile and made sure he had plenty of ammunition and a means of getting away
Two assistant U.S. Attorneys from Machen’s office supervised the preparation of the documents that led to the issuance of the arrest warrant for Ortega-Hernandez. The FBI agent who prepared the affidavit has more than 15 years’ experience in law enforcement and was assisted in the early hours of the probe by the U.S. Secret Service, the U.S. Park Police and other agencies, according to the affidavit.
UPDATED 10:04 A.M. ET (DEC. 8, U.S.A.) Frank L. Pavlico III — convicted in 2007 of felony conspiracy to conduct financial transactions involving the proceeds of drug trafficking and released in 2008 after serving his 10-month prison term — has been arrested for wire fraud by the FBI in an alleged prime-bank swindle that occurred while Pavlico was on probation, the SEC said.
