A Florida resident charged with defrauding investors in Hawaii and the U.S. mainland has been sentenced to 90 months in federal prison, ordered to begin serving his sentence immediately and make restitution — and advised he faces deportation to Madagascar upon his release from a U.S. prison.
The case against Patrick H. Rakotonanahary, 34, of Punta Gorda, was one of the first assembled by President Obama’s Financial Fraud Enforcement Task Force. He was sued civilly by the CFTC and charged criminally by the FBI in March 2010 with 21 counts of wire fraud, amid allegations he operated a forex Ponzi scheme and pocketed $1 million for himself.
The scheme affected about 100 investors, most of them residents of Hawaii, state and federal investigators said. The state of Hawaii also sued Rakotonanahary.
Rakotonanahary operated a company known as Cyber Market Group LLC, which marketed a Forex scheme that purported to pay investors up to 10 percent interest per week. The scheme netted more than $10.2 million.
Only minimal Forex trading occurred — and the trading that did occur resulted in losses, authorities said. The scheme sustained itself in typical Ponzi fashion.
This backpack, which contained an explosive device, was found along the route of the Martin Luther King Jr. parade in Spokane on Monday. Articles of clothing (pictured below) helped conceal the bomb, the FBI said.
On Monday, America celebrated the national holiday commemorating the life and legacy of community service of slain civil-rights leader Martin Luther King Jr. with events in city after city. King, a recipient of the Nobel Peace Prize, was assassinated in Memphis in 1968.
He had become an international figure in 1963, the year hundreds of thousands of Americans streamed to Washington in late August and heard what became known as the “I Have a Dream” speech. The speech was delivered from the steps of the Lincoln Memorial.
“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character,” King intoned. “I have a dream that one day on the red hills of Georgia the sons of former slaves and the sons of former slave owners will be able to sit down together at a table of brotherhood.”
In Washington on Monday, President Obama encouraged Americans to give back to their communities to honor King’s legacy.
“Martin Luther King Jr. lived his life for others, dedicating his work to ensuring equal opportunity, freedom, and justice for all,” Obama said. “I encourage every American to observe this holiday in honor of Dr. King’s selfless legacy by volunteering in their own communities and by dedicating time each day to bettering the lives of those around us.”
U.S. Attorney General Eric Holder, speaking at the King Center in Atlanta on Monday, recalled King’s “Mountantop” speech delivered on the eve of his death. King’s speech proved to be prophetic.
“And then I got to Memphis,” King intoned more than 40 years ago. “And some began to say the threats, or talk about the threats that were out. What would happen to me from some of our sick white brothers?
“Well, I don’t know what will happen now,” King continued. “We’ve got some difficult days ahead. But it doesn’t matter with me now. Because I’ve been to the mountaintop. And I don’t mind. Like anybody, I would like to live — a long life; longevity has its place. But I’m not concerned about that now. I just want to do God’s will. And He’s allowed me to go up to the mountain. And I’ve looked over. And I’ve seen the Promised Land. I may not get there with you. But I want you to know tonight, that we, as a people, will get to the Promised Land. So I’m happy, tonight. I’m not worried about anything. I’m not fearing any man. Mine eyes have seen the glory of the coming of the Lord.”
King was shot and killed the next day.
Holder told the Atlanta gathering that “our long struggle to end suffering and to eradicate violence goes on.”
And the attorney general referenced the Jan. 8 shootings in Arizona that killed U.S. District Judge John Roll and five others, including a nine-year-old girl. Rep. Gabrielle Giffords was critically wounded in the attack. She was shot in the head at close range. Eighteen others also were shot.
“As we continue to mourn those recently lost, and to pray for those now in need of healing and comfort, let us also recommit ourselves to carrying on Dr. King’s work and to honoring the values that were at the center of his life: tolerance; nonviolence; compassion; love; and – above all – justice,” Holder remarked in Atlanta.
The attorney general delivered his remarks on Monday morning in the Eastern time zone of the United States.
On the same day — in the Pacific Northwest, the FBI now says — someone planted a bomb in a backpack along the Martin Luther King Jr. parade route in Spokane, Wash.
These articles of clothing were found inside the backpack, which contained a bomb, the FBI said.
“At approximately 9:25 a.m. PST on Monday, 1/17/2011, a suspicious backpack was discovered on a bench at the southeast corner of N. Washington Street and W. Main Avenue in downtown Spokane,” the FBI said. “The Spokane Explosives Disposal Unit was notified and safely neutralized the device. Subsequent preliminary analysis revealed the backpack contained a potentially deadly destructive device, likely capable of inflicting multiple casualties.”
The agency is treating the incident as a case of domestic terrorism. It noted that the suspect should be considered armed and dangerous.
“As a part of this ongoing investigation, the FBI is seeking any information regarding the identity of the person or persons that may have been seen with this backpack from approximately 8:00 a.m. to 9:25 a.m. on Monday, 1/17/2011,” the FBI said. “If anyone has any information regarding this incident, they are requested to immediately contact the FBI. In addition, if anyone took photographs or video in the area of N. Washington Street and W. Main Avenue from approximately 8:00 a.m. to 11:00 a.m., they are also requested to contact the FBI as soon as possible.”
Here is the phone number: 206-622-0460.
A bomb was found outside a federal courthouse in Spokane in March 2010.
Earlier this month — on Jan. 12, six days prior to the Tucson shootings — federal prosecutors charged a California man with threatening to kill Rep. Jim McDermott of Washington state.
Charles Turner Habermann, 32, of Palm Springs, was charged with making “two expletive-laden, threatening phone calls” to McDermott’s Seattle office on Dec. 9, 2010.
“In the first call recorded on the office answering system, Habermann threatens to kill Congressman McDermott, his friends and family,” the FBI said. “In the second call Habermann says he will hire someone to put Congressman McDermott ‘in the trash.’”
Last week, the FBI arrested a New Jersey man amid allegations he threatened to kill 47 federal regulators. Vincent P. McCrudden, 49, was accused of creating an “execution list.”
Yesterday in suburban Los Angeles, two students were shot when a gun concealed in a backpack discharged inside Gardena High School.
A New York man sued by the CFTC last month for registration violations has been arrested on criminal charges of threatening to kill 47 current or former market regulators, federal prosecutors said.
Vincent P. McCrudden, 49, who recently had been living in Singapore, was arrested yesterday by the FBI at Newark Liberty International Airport after returning to the United States.
The arrest occurred just five days after a gunman opened fire at an Arizona constituent event hosted by U.S. Rep. Gabrielle Giffords. Giffords was critically wounded in the attack. U.S. District Judge John Roll and five others were shot and killed.
McCrudden was denied bail this afternoon in the alleged threats against regulators, some details of which U.S. Attorney Loretta E. Lynch of the Eastern District of New York released today.
“In this day and age, there is no such thing as an idle threat,” said Lynch. “Those who threaten injury or worse to the lives of others will be promptly investigated and vigorously prosecuted.”
On Sept. 30, prosecutors said, McCrudden sent an email to an employee of the National Futures Association (NFA) that made a death threat.
“[I]t wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when,” the email read, prosecutors said. “And now, that question has been answered. You are going to die a painful death.”
McCrudden also published an “Execution List” on his website. The list included the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC. Included on the list were the names of the “the Chairperson of the SEC, the Chairman of the CFTC, a former Acting Chairman and Commissioner of the CFTC, the Chairman and CEO of FINRA, the former chief of Enforcement at FINRA, and other employees of the NFA and CFTC,” prosecutors said.
“[T]hese people have got to go,” McCrudden wrote, prosecutors said. “And I need your help, there are just too many for me alone.”
And McCrudden “posted a $100,000 reward on his website for personal information of several government officials and proof that those officials were punished,” prosecutors charged.
On Dec. 16, according to the complaint, McCrudden sent a CFTC official an email with a subject line of, “You corrupt mother[*!&$$%]!”
The email went on to inform the official that he was “first on my list.”
McCrudden used the website to encourage others to “[g]o buy a gun” and take back the country. On the website, McCrudden wrote that he would lead by example, prosecutors said.
A top FBI official said the threats were “especially troubling.”
“Overt threats of the sort made by this defendant must be dealt with to the fullest extent of the law,” said Janice K. Fedarcyk, assistant director-in-charge of the FBI’s New York field office.
“The threats were direct, extreme, and specific, vowing to kill securities regulators and encouraging others to do the same,” Fedarcyk said. “The allegations, coming as they do during a period of national mourning in the wake of horrific violence done to public officials and others, are especially troubling.”
A federal judge was shot and killed in Arizona yesterday in an attack apparently aimed at a member of Congress who was holding a constituent event outside a supermarket in Tucson, an official said.
Rep. Gabrielle Giffords was shot in the head at close range. President Obama said she was battling for her life after undergoing emergency surgery. The president announced the death of U.S. District Judge John Roll in a special statement at the White House.
Roll had just attended Mass and had stopped by the supermarket on his way home. The Wall Street Journal reported that he stopped at the event to thank Giffords for signing a letter to the Ninth Circuit Court of Appeals that a judicial emergency existed in Arizona because of a high number of immigration cases and a lack of judges to hear them.
Also killed in the attack were a nine-year-old girl, three senior citizens in their seventies and a 30-year-old Congressional aide engaged to be married.
In 2009, Roll was under the 24-hour protection of the U.S. Marshals Service for about a month because of threats made against him, the Washington Post reported.
The alleged shooter used a semiautomatic handgun, authorities said. He was identified as Jared Loughner, 22, of the Tucson region. This is believed to be his YouTube site.
Obama dispatched FBI Director Robert Mueller to Arizona to coordinate the investigation.
“We are going to get to the bottom of this,” the President pledged.
Judge Roll was appointed to the federal bench by President George H.W. Bush in 1991.
Giffords, a Democrat, was serving as the host of the constituent event, which was dubbed “Congress On Your Corner.”
She is the wife of Capt. Mark Kelly, a naval officer, U.S. astronaut and Space Shuttle commander. Kelly’s brother, Scott Kelly, also is an astronaut. He is currently aboard the International Space Station in a mission that began in October.
A disturbing portrait of Loughner was emerging in the early hours. The YouTube site and remarks attributed to him elsewhere suggest he was a burgeoning conspiracy theorist who authored or uttered incoherent ramblings on subjects such as the gold standard, government trickery and how one properly defines terrorism.
“If I define terrorist then a terrorist is a person who employs terror or terrorism, especially as a political weapon. I define terrorist,” Loughner appears to have written. “If you call me a terrorist then the argument to call me a terrorist is ad hominem. You call me a terrorist.”
Loughner also appears to have pondered the fractured thoughts that college was “illegal” under the U.S. Constitution and that people should be provided “accurate information of a new currency.”
An AdSurfDaily promoter whose cash was seized in February 2009 and now has been targeted for forfeiture funded one of her three ASD accounts in part with a transfer from E-Bullion, a shuttered payment processor whose founder was charged in 2008 with operating an unlicensed money-transmitting business and hiring a hit man to kill his estranged wife, according to records.
The E-Bullion allegation raises troubling new questions about the sinister worlds of autosurfs and HYIPs, how ASD and its members were exchanging money and whether ASD and top promoters were employing secret conduits. In 2008, prosecutors asserted ASD had a relationship with E-Gold, a payment processor accused in 2007 of money-laundering. Yesterday’s assertion that ASD also had a relationship with E-Bullion marked the first time that prosecutors have raised E-Bullion’s name in the ASD case.
Erma Seabaugh, known among ASD members as the “Web Room Lady,” used E-Bullion in November 2007 to transfer $10,510 to ASD, according to a forfeiture complaint filed yesterday.
SCREEN SHOT: Federal prosecutors asserted yesterday that ASD member Erma Seabaugh funded one of her ASD accounts by transferring $10,510 from E-Bullion.
E-Bullion founder James Fayed was jailed in California in August 2008, the same month as the seizure of tens of millions of dollars from ASD and nine months after the firm was used to transfer money to ASD, according to records. He initially was charged in an indictment unsealed in August 2008 by federal prosecutors with operating an unlicensed money-transmitting business that had processed more than $20 million in Ponzi scheme payments. The scope of E-Bullion’s alleged Ponzi business is unclear, but the company now has been linked to at least three alleged Ponzi schemes.
In September 2008, Fayed was charged by the Los Angeles District Attorney’s office with the July 2008 murder of his wife, Pamela Fayed.
In June 2008, a month before she was killed in a California parking garage by a man who allegedly had accepted $25,000 from James Fayed to carry out the plot, Pamela Fayed had informed federal prosecutors in California that she wished to cooperate in the investigation of E-Bullion, according to records. E-Bullion is referenced in court files as a payment processor used by Gold Quest International (GQI), an alleged Ponzi scheme operating in Las Vegas that was charged by the SEC in May 2008 and also was charged by Canadian regulators.
A total of four people, including James Fayed, now have been charged in the murder plot. As with many things in the miserable worlds of HYIPs and autosurfs, the prosecution of GQI by the SEC turned into Theatre of the Absurd.
GQI, accused in May 2008 by the SEC in a $29 million Ponzi case, sought to derail the case by filing a lawsuit for $1.7 trillion against the agency. Company officials absurdly asserted that GQI was immune to U.S. law because its Las Vegas operations enjoyed purported sovereignty that was portable from an “Indian” tribe in North Dakota and that GQI also was off-limits to prosecution in the United States because it was registered in Panama.
Chillingly, E-Bullion also is referenced in documents filed by the Ontario Securities Commission in a case against Ponzi swindler Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia. Anderson was sentenced to prison in the United States earlier this year for his role in a Ponzi scheme known as Frontier Assets.
Anderson also was linked to a mysterious scheme known as the “Alpha Project.” U.S. and Canadian investigators also identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon, was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.
In addition to the ASD account funded by the E-Bullion transfer, Seabaugh had at least two other ASD accounts, prosecutors charged in the forfeiture complaint. She used one of her accounts to advertise a mysterious business known as StreamlineGold, which was described by investigators as a probable “pyramid scheme dealing with the sale of memberships that are sold to customers.”
The account through which Seabaugh promoted StreamlineGold was funded by a transfer from La Fuente Dinero, yet-another Ponzi scheme associated with ASD, prosecutors said.
StreamlineGold’s website now throws an error message, but web records show it was promoted on the MoneyMakerGroup and TalkGold forums, two websites that are associated with Ponzi schemes and referenced in federal court records as a place from which the alleged Pathway To Prosperity Ponzi scheme was promoted.
“StreamLine Gold is literally what it says,” a poster crowed on the MoneyMakerGroup Ponzi site in November 2007, the same month Seabaugh allegedly was promoting the same scheme through ASD. “[I]t can provide you with an unlimited income through the combination of Precious Metals and Cash with a business model whose time has come PLUS the most advanced and lucrative pay plan ever devised.”
Records suggest StreamlineGold had failed in an earlier iteration — and then failed again after rebirthing itself.
The FBI has captured Perry and Rachelle Griggs, the fugitive Ponzi couple accused of running a scam while Perry Griggs was a federal prisoner in Nevada. The arrest was made in Kingman, Ariz., yesterday.
Perry and Rachelle Griggs were indicted in October for wire fraud and mail fraud. They had been missing since January 2010. Perry Griggs had been released from prison in 2008. An investigation later revealed that the scam had begun while he was in custody and was directed largely at Hawaii residents.
They operated a company known as Aloha Trading. The couple also has been charged by the CFTC. Rachelle Griggs was accused of soliciting money from families of her husband’s fellow prisoners.
The FBI said the manhunt for the fugitive couple was “intense,” and used websites, national news coverage and “electronic highway billboards” to dial up the heat on the alleged Ponzi schemers.
This is actually Post No. 1,007 since the PP Blog switched to the WordPress platform two years ago this month. We’d hoped to commemorate our 1,000th WordPress post in the actual 1,000th post, but missed the chance because of Breaking News concerning the Financial Fraud Enforcement Task Force’s Operation Broken Trust.
The PP Blog's Breaking News graphic was stolen and used in a promotion for Data Network Affiliates (DNA) earlier this year. DNA, which purports to be in the business of helping the AMBER Alert prohram rescue abducted children, now apparently has morphed into a company known as OWOW, which has instructed members to advertise a secret cure for cancer.
Several hours after we reported that the Task Force now was counting investment-fraud victims by the tens of thousands and noting that even deaf people had been targeted in massive scams, we reported that Walmart had joined the “If you see something, say something” terrorism-awareness campaign operated by the Department of Homeland Security (DHS).
Walmart was instantly and savagely pilloried on YouTube, apparently for holding the view that DHS deserved private-sector help in its work to keep America safe. On. Dec. 6, when the PP Blog first observed the DHS video on YouTube announcing the Walmart partnership, the video had received only 310 views. That number now has shot up to 289,657. YouTube posters called DHS Secretary Janet Napolitano names that could peel paint. We’ll leave it at that, except to say that scores of Americans appear to have emerged as kneejerk critics and appear unwilling to view America’s economic well-being within the lens of national security.
Indeed, how safe is America — and the world at large — if fraud victims are being counted in numbers that would fill stadiums and vast sums of wealth are being consumed and disappearing down ratholes? In the Task Force announcement, Attorney General Eric Holder said that, since Aug. 16 alone, cases investigated by the Task Force have uncovered losses of more than $10.4 billion. The schemes affected at least 120,000 victims.
The victims’ count in just this relatively small cluster of cases is more than enough to fill the Rose Bowl in Pasadena or Michigan Stadium in Ann Arbor, America’s largest college-football stadium.
Just prior to our Operation Broken Trust post — in Post No. 999 — we reported that the AdPayDaily autosurf, which has promoters and members in common with both AdSurfDaily and AdViewGlobal, was showing signs of collapse. Flash forward to Post No. 1,002: In this post, we reported that a New York Internet Marketer had been arrested by the U.S. Postal Inspection Service for cyberstalking.
Vitaly Borker apparently believed it prudent to use the Internet to threaten to rape women who had received what investigators described as bogus and inferior-quality goods from him. A fair reading of the complaint against Borker shows that he used the same type of gutter language directed at Napolitano on YouTube — you know, for her apparent High Crime of asking Walmart shoppers to be aware of their surroundings in the Age of Terrorism.
We next reported on a 54-year prison sentence handed down to a former Indiana pastor who duped Christian investors in a Ponzi scheme. After that, we reported that a company that once did business with Steve Renner’s Cash Cards International had been implicated in a massive Forex scheme that affected at least 800 investors.
Renner was the operator of the INetGlobal autosurf, which the U.S. Secret Service said in February was operating a Ponzi scheme affecting thousands of people, including victims of Chinese descent who may have limited ability to understand English. The Secret Service said an undercover agent had been introduced to INetGlobal by an AdSurfDaily member.
On Dec. 8, we reported that a Maryland man had been arrested after the FBI intercepted his plot to detonate a car bomb at a military-recruitment center. A similar plot had been unmasked by the FBI in Portand, Ore., on the day after Thanksgiving. It was aimed at a Christmas tree lighting ceremony, meaning it was aimed at children and families.
Here is one way to look at the alleged Thanksgiving plot: The arrest was announced on Nov. 26. By Dec. 6, crackpots were flooding YouTube with paint-peeling comments about Napolitano and the terrorism-awareness campaign. Two days after that, on Dec. 8, a man was arrested in the Maryland plot. He allegedly also talked about blowing up Andrews Air Force Base, which happens to be the home base of Air Force One, which happens to be the aircraft used by the President of the United States.
We haven’t even written about Wikileaks and the arrest in Britian of Julian Assange. Wikileaks’ sympathizers reacted by bringing DDoS attacks, apparently based on the belief that the best way to show support for Assange was to send out an army of bots to disrupt the websites of businesses that did not support Assange.
By week’s end, Prince Charles and Camilla, the Duchess of Cornwall, were surrounded by a mob unhappy about the skyrocketing costs of getting a college education in the United Kingdom. Civility, it seems, can be cast out the door in a country minute and replaced by the taunts of a mob.
Yesterday, as we again sought to commemorate our 1,000 post, word arrived about the apparent suicide of Bernard Madoff’s son on the second anniversary of his father’s arrest.
There is no doubt — none whatsoever — that Ponzi = Pain. There also is no doubt that the Internet has ushered in an era of unprecedented, mass-produced, viral crime. Criminals have been aided in their nefarious pursuits by crackpots who employ no editorial filters and simply create or repeat lies that institutionalize crime as an occupation and even celebrate it.
At the precise moment in time in which Americans and other citizens of the world could benefit most from serious words and serious research backing those words, some of the world’s great publishing companies are struggling to make ends meet. Print circulation is down. Journalists are losing jobs. Designers and salespeople are losing jobs.
The switch to electronic publishing platforms has been accompanied by piracy, wanton theft and trademark infringement that further erodes the value of words and intellectual property, undermines the economy and adds to concerns about national and international security. People, including well-intentioned people, simply copy-and-paste entire editorial wells from one site to another. The public becomes confused about the original source of material, which often is shoe-horned to fit a specific agenda.
Earlier this year, the PP Blog’s Breaking News graphic was stolen by a member of Data Network Affiliates (DNA), an MLM company that routinely targets promos at Christians and, among other things, has claimed it is helping the AMBER Alert program rescue abducted children. DNA now apparently has morphed into a company known as OWOW, which is asking members to suggest that a product known as TurboMune cures cancer.
This is not “freedom,” as the scammers would have you believe; it is theft and piracy on the high electronic seas, plain and simple. It also often is the case that this specific brand of theft also gets mixed with appeals to faith, meaning the scammers are seeking to pluck heartstrings and separate Believers from their money.
There simply is no way that any government or branch of government can be at all places at all times. Although it is fashionable to describe efforts to battle crime in the Age of the Internet and the Age of Terrorism as an effort by Big Brother to assign each individual citizen his or her own bureaucrat to bring commerce and freedom to a screeching halt, such opinions often are simple rants that lack any real-world context.
Within hours of the PP Blog’s publication of a story about the alleged Portland plot, the Blog was bizarrely assailed by an MLM aficionado for DNA/OWOW as a tool for Israel. Michael Chertoff, a former federal judge, federal prosecutor and DHS secretary, was described as a “suspect” in the 9/11 attacks, which the poster blamed on Israel while calling Chertoff an Israeli scum bag.
As noted above, when Janet Napolitano announced a simple partnership with Walmart to encourage citizens to be aware of their surroundings, she encountered vicious name-calling — and it all happened during the same week yet-another bombing plot was unmasked, the Task Force was noting that America’s largest stadiums were not large enough to accommodate recent victims of financial fraud, DDoS attacks were aimed at companies deemed by third parties to be unfriendly to Wikileaks and the future king of England and his wife were surrounded by an angry mob.
Even if one is willing to assume that Wikileaks seeks to serve a higher, noble purpose, directing DDoS attacks at businesses and government sites hardly helps Assange elicit sympathy or understanding. He lost an important round in the PR war last week, as did the unthinking crowd that assailed Napolitano and the mob that heckled Prince Charles and the Duchess.
The lionization of crackpots of all stripes is rapidly emerging as a dangerous, unintended consequence of the Internet — as are all the tortured claims that MLM products treat or cure cancer, create vast sums of wealth for ordinary participants and the tortured claim that appropriating the names of Walmart and Winfrey and Trump and Buffet and Clinton is just another word for freedom.
Far from promoting freedom, the crackpots and criminals are promoting anarchy. They do not seek to compete in either a free marketplace of commerce or a free marketplace of ideas. Rather, they seek to commit crimes on a global scale and to fill entire stadiums with victims — even as would-be terrorists speculate about throwing cocktail bombs into military-recruitment centers and shooting soldiers and staff as they flee the flames through the doors.
In Portland, meanwhile, the idea was to kill wide-eyed children contemplating the miracles of Christmas and Santa Claus with a fireball that also would consume their parents.
We conclude this 1,000 post commemoration with a simple thought: Death and taxes are not the only two certainties of life. It is equally certain that law enforcement needs the proactive participation of the public more than ever. It is one thing to direct reasonable criticism at agencies and public officials; it is quite another to cheer against the people who are responding to unprecedented security challenges while trying to make sure the stadiums fill up with football fans, not victims.
A Mexican company listed as a customer of Steve Renner’s Cash Cards International (CCI) in a 2005 scam known as MegaFund now has been charged by the CFTC with running a massive Forex fraud scheme that gathered at least $28 million from more than 800 U.S. customers.
Named defendants by the CFTC were MXBK Group S.A. de CV, a private Mexican financial services holding company, and its Forex trading division, MBFX S.A. Court records show that MXBK Group S.A. de CV formerly was known as MexBank Group SA de CV or MexBank.
Separately, the SEC has charged three men with fraud for blindly pitching the MexGroup program and raising “tens of millions” of dollars in the process. Charged in Utah federal court were Clifton K. Oram, Don C. Winkler and William R. Michael.
“Beyond the fact that none of the defendants understood how the Forex market or Forex trading functioned, neither Oram, Winker or Michael took any significant steps to investigate MexGroup, its principals, or the viability of the investment,” the SEC charged. “Instead, they blindly accepted MexGroup’s representations about its background, veracity, and track record.
“Further, Michael and his company used MexGroup’s purported performance numbers on his company’s website and made misleading representations and omissions regarding their own Forex trading experience,” the SEC continued. “Even more egregious, Winkler and Oram continued to offer and sell the MBFX offering even after the November 2008 collapse.”
Renner, the operator of both CCI and the INetGlobal autosurf, currently is serving an 18-month prison sentence for tax evasion. In February 2010, the U.S. Secret Service alleged that Renner was operating a Ponzi scheme through INetGlobal.
Renner has denied the Ponzi allegations.
The CFTC case against the Mexican companies and the SEC case against the promoters were brought as a result of a joint cooperative investigation among the regulators, the FBI and the IRS, officials said.
Read the CFTC complaint, which alleges the MXBK Group Forex scam began in 2005.
Here is a snippet:
“U.S. customers sign up to participate in the Defendants’ forex trading enterprise by completing forms electronically on the Defendants’ internet website. However, when completing their customer applications, U.S. customers are required to designate certain U.S. individuals or entities, sometimes called ‘resellers’ or ‘introducers,’ who in turn act as liaisons for U.S. customers with Defendants’ operations in Mexico. The resellers or introducers receive rebates described as ‘PIPs,’ which are purportedly based upon the volume of trading.”
(NOTE: The full complaint is highly recommended reading if you follow HYIP and Forex fraud schemes.)
It has become kneejerk sport to deride Department of Homeland Security (DHS) Secretary Janet Napolitano as “Big Sis.”
Today the attacks on Napolitano turned even more caustic, with the announcement by both DHS and Walmart that Walmart had joined the DHS-operated “If You See Something, Say Something” campaign.
Walmart issued a news release today saying it was proud to become part of the campaign, linking its announcement to a 44-second DHS video that will begin playing in 588 Walmart stores across the United States in the coming weeks .
“Homeland security starts with hometown security, and each of us plays a critical role in keeping our country and communities safe,” said Napolitano. “I applaud Walmart for joining the ‘If You See Something, Say Something’ campaign. This partnership will help millions of shoppers across the nation identify and report indicators of terrorism, crime and other threats to law enforcement authorities.”
Snarky, vile comments were posted on the DHS YouTube site in response to the video — some of the sort that made the “Big Sis” slam seem almost like a compliment.
Walmart, though, is not alone in backing the campaign.
Other DHS partners in the campaign include Mall of America, the American Hotel & Lodging Association, Amtrak, the Washington Metropolitan Area Transit Authority, sports and general aviation industries and state and local fusion centers across the country.
Walmart’s announcement that it had joined the campaign occurs against the backdrop of a recent terrorist plot targeted at a community Christmas tree lighting ceremony in Portland, Ore. The plot, which was detected by the FBI, was scheduled to be carried out on “Black Friday.”
“Black Friday” is the day after Thanksgiving in the United States, and has become a day filled with heavy retail shopping and community events. The suspect in the foiled Portland attack allegedly told the FBI that the plot would be less apt to be detected because the city was not front-and-center on law enforcement’s antiterrorism radar screens.
“. . . it’s in Oregon; and Oregon, like, you know, nobody ever thinks about it,” the FBI quoted the Portland suspect as saying.
There also have been bizarre events this year in which Walmart’s name was appropriated by members of murky multilevel-marketing businesses. Members of MLM programs known as Narc That Car/Crowd Sourcing International and Data Network Affiliates/OWOW instructed prospects to take photos of the license plates of cars parked at Walmart and other large retail stores.
The plate numbers purportedly were to be entered into databases controlled by the MLM firms as a means of helping law enforcement and the AMBER Alert program rescue abducted children. No evidence has surfaced that either of the MLM firms has any tie to the AMBER Alert program, which is administered by the U.S. Department of Justice and the National Center for Missing and Exploited Children.
Meanwhile, bizarre promos for an MLM program known as MPB Today routinely used Walmart or its branding materials as backdrops for a purported program that suggested a one-time, $200 purchase from MPB Today could lead to free groceries for life.
In its news release announcing it had joined the “If You See Something, Say Something” campaign, Walmart urged customers to support the program, but did not say precisely why it had made the decison to become to first national retailer to partner with DHS.
U.S. Attorney General Eric Holder and members of President Obama’s Financial Fraud Enforcement Task Force said this morning that a nationwide sweep known as “Operation Broken Trust” has netted 343 criminal defendants and 189 civil defendants.
Among the targets of the sweep were purveyors of Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business-opportunity fraud and other similar schemes, investigators said.
Some of the defendants “filed for bankruptcy in an attempt to avoid claims by victim-investors,” investigators said.
The combined losses in the schemes, which affected 120,000 investors, were estimated at $10.4 billion, Holder said. He was joined in the announcement by FBI Executive Assistant Director Shawn Henry; U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami; U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell; Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI); Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC); and other members of the Financial Fraud Enforcement Task Force.
“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Holder. “To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan — we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”
The calling card of the schemes was greed, Henry said, adding that undercover probes are part of the Task Force’s arsenal.
“This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said Henry. “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”
Khuzami, meanwhile, said the law-enforcement community was pursuing multiple forms of fraud.
“Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Khuzami. “Victims want justice and don’t much care who the fraudster is or how unique the fraud. Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”
President Obama authorized the Financial Fraud Enforcement Task Force in November 2009. In January 2010, Holder ventured to Florida to speak about the aims of the Task Force and to warn scammers that the government was serious about putting them in jail.
The FBI has arrested Jenifer Devine, saying the Fair Lawn, N.J., woman was operating a promissory notes Ponzi scheme through a purported wholesale business that claimed to sell clothing and electronics.
Similar charges were brought earlier this year in New Jersey against Nevin Shapiro. Prosecutors said Shapiro, who has pleaded guilty, was running an $880 Ponzi scheme in Florida that purported to sell groceries wholesale.
Like the case against Shapiro, the case against Devine, 39, was brought by President Obama’s interagency Financial Fraud Enforcement Task Force.
“As alleged in the complaint, Devine’s wholesale business was wholesale fraud,” said U.S. Attorney Paul Fishman, whose office also prosecuted Shapiro. “Victims who were promised huge returns paid the tab for [Devine’s] vacation and designer goods. This case reminds investors: always be wary of a sure thing.”
More than 15 investors plowed more than $8 million into Devine’s scheme, operated through a company known as Devine Wholesale of Carlstadt, N.J. Investors were told they were helping Devine finance the business and would receive a speedy return of 25 percent. Some investors were shown bogus lists of inventory Devine said she sold, prosecutors said.
“In reality,” prosecutors said, “Devine Wholesale had no active wholesale clothing or electronics business during the relevant time period, and had virtually no business sales.”
In classic Ponzi fashion, “Devine instead used new investor funds to make principal and interest payments to existing investors, as well as to fund her own lifestyle. Devine stole tens of thousands of dollars to pay for personal expenses, including a Royal Caribbean cruise and purchases at luxury retailers such as Burberry, Gucci and Coach. Devine also transferred over $26,000 to her mother, who had no role with Devine Wholesale,” prosecutors said.
Investors losses were estimated at $2 million, but may be higher, prosecutors said. If convicted, Devine faces up to 20 years in federal prison and a fine of up to $1 million.
“It is a difficult thing to convince people to be prudent and cautious with their financial
investments when people like Ms. Devine make grandiose promises,” said David Velazquez, assistant special agent in charge of the FBI’s office in Newark.
“Criminals know how easily greed can override good judgment and they use that basic human flaw to victimize other people,” Velazquez said about the promissory-notes scheme that promised 25 percent interest. “We hope this matter will serve the public as an educational tool in preventing investment fraud as the disruption and dismantling of these schemes remains an important part of our work at the FBI and with our partners.”
Separately, Paul J. LoPapa, 64, of Livingston, N.J., pleaded guilty today in federal court in New Jersey to duping investors investors in a scheme involving fictitious overseas investments sold though a company known as Skyline Equities Inc.
LoPapa also pleaded guilty of defrauding the Social Security Administration of $145,000 in disability payments beginning in 2001, claiming he had not worked since 1990.
Skyline Equities’ referred to its investment program as the “Bank Guarantee Program,” which was billed as a “sophisticated international financial instrument facilitated through well-known financial institutions,” prosecutors said.
Investors dumped about $815,000 into the scam, prosecutors said.
The money was used to pay for “five high-end Mercedes-Benz automobiles” and other personal purchases, prosecutors said.
A Florida resident charged with defrauding investors in Hawaii and the U.S. mainland has been sentenced to 90 months in federal prison, ordered to begin serving his sentence immediately and make restitution — and advised he faces deportation to Madagascar upon his release from a U.S. prison.
