PatrickPretty.com

Tag: FBI

  • OWOW Defender And Phil Piccolo Apologist Demands To Know If PP Blog Is ‘Israeli’; Says Blog Spreads ‘Islamophobia’ And That Terror Scares Are ‘FAKE’; Suggests Cover-Up Followed 9/11 Attacks

    Hours after the PP Blog published a story about the FBI foiling a bid to detonate a bomb targeted at American children and families at a Christmas tree lighting ceremony in Portland, Ore., a poster defending OWOW — the apparent successor company to Data Network Affiliates (DNA) — demanded to know if the Blog was “Israeli,” planted the seed that the Blog was racist and accused it of spreading “Islamophobia.”

    “On a sep[a]rate note, [I] was shocked to discover that you are also spreading Islamophobia, so not only are you a two-bit hack, some might say that you are a racist,” a poster identified as “John” wrote in a comments thread below a Nov. 21 story that referenced OWOW. “For your information, most educated people know that the terror scares are FAKE, and that the Sept 11th attacks were carried out by another group, Israel being prime suspects.”

    “John” also railed against the SEC, in response to a comment by the Blog that raised the question of whether OWOW, which is associated with Internet Marketer Phil Piccolo, was offering unregistered securities as investment contracts by advertising that it paid 24 percent annual interest to members who sent in money.

    Piccolo has gained a reputation online as a “one-man Internet crime wave.” During a radio program in August, Piccolo threatened to sue critics and planted the seed that he could cause them to experience physical pain.

    Rather than answering the question, John wrote, “The SEC? In between watching porn all day? The same SEC covering up the biggest financial crime i[n] history, IE the long term manipulation of the Gold and precious metals markets? That SEC?”

    Earlier this year, the inspector general for the SEC said he was investigating reports that some SEC officials had used government computers to view pornography.  Such an announcement, though embarrassing to the agency,  did not legalize securities fraud or create a new defense for securities violations or potential securities violations.

    DNA is a Nevada-registered company whose website is registered behind a proxy in the Cayman Islands. The company explained months ago that it registered the domain privately in the Caymans to prevent management from having to “put up with 100 stupid calls a day.”

    Dean Blechman, DNA’s former CEO, resigned suddenly in February after just weeks with the firm, saying later that the company was engaging in “bizarre” conduct and a campaign of “misinformation and lies.”

    Despite its Caymans’-registered domain, DNA asserted it was paying members of its multilevel-marketing (MLM) program to write down license-plate numbers at churches, “doctors’ offices” and retail outets such as Walmart. The plate numbers, according to DNA, would be entered into a database that was being developed to help law enforcement and the AMBER Alert program rescue abducted children.

    The license-plate program raised privacy concerns, and no guidance was given members in the areas of propriety, legality and safety. DNA later morphed into a purported cell-phone company, proclaiming it had destroyed all competition on earth overnight by offering a free cell phone with unlimited talk and text for $10 a month.

    Members flooded the Internet with ads. DNA later said that it had been hoodwinked by a vendor that had led it to believe it could deliver the $10 unlimited plan. In a bizarre email, the company acknowledged that it had not studied cell-phone pricing before declaring itself the world’s low-price leader. Just weeks before, the company sent an email to announce its cell-phone venture in which it made the all-caps claim of “GAME OVER — WE WIN.”

    By July 4 — and with no new cell-phone plan announced to replace the failed venture — DNA said it was entering the mortgage-reduction and resorts businesses. The purported mortgage-reduction program was positioned as the “MORAL OBLIGATION’ of churches to promote.

    Later in July the company announced it was selling a “protective spray” that would help buyers obscure the license-plate numbers of their cars to guard against getting traffic tickets. The spray purportedly would block cameras from snapping usable photos of the plates, and DNA said the spray protected against “wrongful ticketing by city cameras worldwide.”

    DNA did not explain the incongruity of saying it supported law enforcement in its efforts to locate abducted children while at once working against law enforcement in its efforts to enforce traffic laws. Nor did DNA say whether it believed criminals who abducted children and sped off in cars would find the “protective spray” useful when making a getaway.

    Even as DNA was announcing the availability of its purported “protective spray,” the company announced it soon would adopt a browser-based “DNA World Wide Alert Button” to let members know when a “child is reported missing in your immediate area.”

    It is unclear of DNA ever developed such a button.

    What is clear is that multiple domain names associated with the company now redirect to a website known as “One World, One Website” or OWOW.

    Members have been prompted to send prospects an email that advertises a cure for cancer.

    (Italics added):

    Invest 90 Seconds to earn $4,600 to $46,000 Monthly
    Send A Simple E-mail “The Secret Cure For Cancer”

    JUST FORWARD THIS E-MAIL TO EVERYONE YOU KNOW…
    YOUR PERSONAL WEBSITE IS EMBEDDED IN THIS E-MAIL…

    Invest 90 Seconds + Send out a Simple Cure for Cancer e-mail… Earn $4,600 to $46,000 a Month within 100 days or less…

    +++++++++++++++++++++++++
    The Simple & Short E-mail
    +++++++++++++++++++++++++

    Most likely someone you love will die of Cancer or
    some type of Flu type Disease and when it happens
    you will say I wish I could have done something…

    The SECRET CURE FOR CANCER…
    Are you ready for the Simple & Secret CURE…
    Here it is “DON’T GET IT”…

    THE BOTTOM LINE IS
    Take TurboMune & DON’T GET IT & If you GOT IT
    Take TurboMune To Help You Get Rid You Of IT…

    This product use to sell for $150 a capsule…
    It currently sells in ASIA for $300 a bottle…
    OWOW sells the product as low as $19.95 a bottle…

    ++++++++++++++++++
    Invest 90 Seconds

    The PP Blog first reported the existence of the email Saturday. The Blog also reported that Phil Piccolo had been a member of a company in California that had been expressly warned by the state not to make false and misleading claims in promotional materials and not to advertise that tax “write-offs” were available for joining an MLM company.

    DNA advertised that members who recorded license-plate numbers on its behalf could qualify for hefty mileage deductions despite the fact that no evidence has surfaced that the firm’s license-plate program is a legitimate business.

    “Did you know about your DNA Tax Benefits . . .” the DNA pitch began. “Imagine driving 10,000 miles for your DNA Business = up to a $5,000 Tax Deduction… “IRS Announces 2010 Standard Mileage Rates” IR-2009-111, Dec. 3, 2009… and this is just one of many…”

    Less than enthused about the PP Blog’s reporting, “John” apparently embarked on a strategy of trying to discredit the Blog by advancing a conspiracy theory about the 9/11 attacks, the “the long term manipulation of the Gold and precious metals markets” and tying the Blog to Israel.

    “John” even demanded that another poster answer a question about whether the Blog is “AN ISRAELI?” He also observed that “Millions consider the [Food and Drug Administration] to be a filthy cabal of criminals” and suggested there was nothing misleading about Piccolo’s cancer-cure email to OWOW members.

    The Blog specifically asked “John” why someone would plant the seed that the OWOW TurboMune product cures cancer.

    “THERE YOU GO AGAIN, wrong AGAIN, spreading lies AGAIN,” John claimed. “The email says ‘The Secret Cure For Cancer” IS ‘Dont get it.’”

    “John” offered no comment on the part of the email that read, “THE BOTTOM LINE IS
    Take TurboMune & DON’T GET IT & If you GOT IT Take TurboMune To Help You Get Rid You Of IT…”

  • BULLETIN: FBI Foils ‘Chilling’ Plot To Kill Children, Families En Masse; Mohamed Osman Mohamud, A U.S. Citizen, Tried To Detonate Explosives-Laden Van At Christmas Tree Lighting Ceremony In Portland, Ore.; Charged With Attempting To Use Weapon Of Mass Destruction

    BULLETIN: (UPDATED 6:41 A.M. ET U.S.A. Nov. 28) The FBI and police officers in Oregon have foiled a plot by a naturalized U.S. citizen to kill children and entire families by detonating a car bomb at a Christmas tree lighting ceremony in Portland yesterday.

    Mohamed Osman Mohamud, 19, of Corvallis, Ore., was charged with attempting to use a weapon of mass destruction. He was born in Somalia and faces life in prison if convicted.

    Crowd photos taken at the scene just prior to 6 p.m. yesterday, when the tree was scheduled to be lighted, appear to show that people by the hundreds attended the ceremony. The FBI said they were not in danger because the agency had intercepted the plot months ago, had kept Mohamud under surveillance as part of a long-term undercover probe and that the bomb be believed he was detonating was inert.

    “This defendant’s chilling determination is a stark reminder that there are people — even here in Oregon — who are determined to kill Americans,” said  U.S. Attorney Dwight C. Holton of the District of Oregon.

    ‘Absolutely Committed To Carrying Out An Attack On A Very Grand Scale’

    The day after Thanksgiving in the United States is known in the retail trade as “Black Friday.” Many Americans had a long holiday weekend and, as had become tradition, were crowding into holiday events and retail stores to pluck Black Friday bargains.

    “The [Portland] threat was very real,” said  said Arthur Balizan, special agent in charge of the FBI in Oregon. “Our investigation shows that Mohamud was absolutely committed to carrying out an attack on a very grand scale.”

    Given the chilling news that an American wanted to kill as many fellow Americans as possible by detonating explosives at a crowded holiday event, Balizan stressed that Portland’s public never was in danger.

    “I want to reassure the people of this community that, at every turn, we denied him the ability to actually carry out the attack,” Balizan said.

    Mohamud sought to contact a party “overseas” more than a year ago,  the FBI said.

    “[I]n August 2009, Mohamud was in e-mail contact with an unindicted associate (UA1) overseas who is believed to be involved in terrorist activities,” the FBI said. “In December 2009, while UA1 was located in the northwest frontier province of Pakistan, Mohamud and UA1 discussed the possibility of Mohamud traveling to Pakistan to engage in violent jihad. UAI allegedly referred Mohamud to a second unindicted associate (UA2) overseas and provided Mohamud with a name and email address to facilitate the process.”

    “In the months that followed, Mohamud allegedly made several unsuccessful attempts to contact UA2,” the FBI continued. “Ultimately, an FBI undercover operative contacted Mohamud via e-mail in June 2010 under the guise of being an associate of UA1. Mohamud and the FBI undercover operative then agreed to meet in Portland in July 2010. At this meeting, Mohamud allegedly told the FBI undercover operative that he had written articles that were published in Jihad Recollections, an online magazine that advocated violent jihad. Mohamud also indicated that he wanted to become’ operational.’ Asked what he meant by ‘operational,’ Mohamud stated that he wanted to put an ‘explosion’ together, but needed help.”

    Mohamud had been contemplating jihad for four years, the FBI said. Eventually he identified Portland’s tree-lighting ceremony as his target.

    Mohamud Knew Children, Parents Would Be In In The Crowd; Portland Deliberately Targeted Because Of Location

    That children and their parents would be attending the Portland ceremony mattered nothing to Mohamud, who moved forward with the plan, the FBI said. Chillingly, Mohamud speculated that his bid to kill Portland residents would be less apt to be detected.

    “. . . it’s in Oregon; and Oregon like you know, nobody ever thinks about it,” the FBI quoted Mohamud as telling an undercover operative.

    The steadfast plan was to look for a “huge mass that will . . . be attacked in their own element with their families celebrating the holidays,” the FBI said.

    As the attack plan moved forward, the FBI said, Mohamud focused on logistics, deciding on a location for the bomb to be detonated and mailing “bomb components to the undercover FBI operatives, who he believed were assembling the device.”

    He also plotted a way to flee the United States after the attack, the FBI said.

    Mohamud “mailed” passport photos to undercover operatives “as part of a plan to help him sneak out of the country after the attack,” the FBI said. “In addition, Mohamud provided the undercover FBI operatives with a thumb drive that contained detailed directions to the bomb location and operational instructions for the attack.”

    ‘Test’ Detonation Conducted In Rural Oregon Prior To Urban Tree-Lighting Event

    A test detonation occurred in a remote section of Oregon 22 days before the planned Black Friday attack, the FBI said.

    “[O]n November 4, 2010, Mohamud and the undercover FBI operatives traveled to a remote location in Lincoln County, Ore., where they detonated a bomb concealed in a backpack as a trial run for the upcoming attack,” the FBI said.  “Afterwards, on the drive back to Corvallis, undercover FBI operatives questioned Mohamud as to whether he was capable of looking at the bodies of those who would be killed in the upcoming attack in Portland. According to the affidavit, Mohamud responded, ‘I want whoever is attending that event to leave, to leave either dead or injured.’”

    Upon returning to Corvallis that same day, Mohamud recorded a video of himself with the undercover FBI operatives in which he read a written statement that offered a rationale for his bomb attack, the FBI said.

  • BULLETIN: Appeals Court Upholds Conviction Of James Bunchan, Pyramid Schemer Who Scammed Investors, Plotted Murder Of 12 Witnesses And Identified Federal Prosecutor As Possible Homicide Target

    BULLETIN: The U.S. Court of Appeals for the First Circuit has upheld the conviction of James Bunchan in a murder-for-hire plot that grew from a pyramid scheme that gathered $20 million and mostly targeted people of Cambodian descent.

    Federal prosecutors described the pyramid scheme as “devastating,” saying it relied on smoke and mirrors to fleece more than 500 victims, many of whom lacked command of English and had little formal education.

    While awaiting trial in the pyramid case, Bunchan discussed hiring a hitman to kill Assistant U.S. Attorney Jack Pirozzolo of the District of Massachusetts. Pirozzolo specializes in prosecuting economic crimes.

    Bunchan was the founder and owner of World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL), which were positioned as purveyors of cosmetics, health and dietary supplements.

    The pyramid scheme collapsed in early 2005. Federal prosecutors said the companies generated money almost exclusively through the recruitment of new investors or “members.”

    While jailed in Massachusetts awaiting trial in the pyramid case, Bunchan hatched a murder-for-hire plot that called for 12 people be believed would testify against him to be killed. The FBI became aware of the plot and staged a sting in which Bunchan believed an assassin named “Jamal” would carry out the murders for a fee.

    “Jamal” actually was an undercover police officer posing as a hitman.

    Bunchan first was convicted on the pyramid charges and sentenced to 35 years in federal prison. After the pyramid trial, he was tried on charges flowing from the murder-for-hire plot. A jury returned guilty verdicts in the murder-for-hire plot, and Bunchan was sentenced to 25 years.

    All in all, Bunchan’s pyramid scheme resulted in sentences totaling 60 years. His bids to overturn convictions in both cases now have failed.

    Pirozzolo, who joined the Justice Department in 2003 and encountered the Bunchan pyramid case two years later, was promoted to First Assistant U.S. Attorney for the District of Massachusetts last year.

    In 2007, Pirozzolo received the Justice Department’s Director’s Award for his role in the investigation and prosecution of illegal mutual fund market timing conduct occurring at Prudential Securities Inc.

    Pirozzolo also received the Chief Postal Inspector Award for his work on the Prudential market timing cases. In 2008, he received a Victim Rights Award for his work on the Bunchan case.

    Visit Leagle.com to read the murder-for-hire appeals decision against Bunchan.

  • BREAKING NEWS: Atlanta Securities Attorney Gregory Bartko Jailed Immediately After Guilty Verdicts In North Carolina Fraud Case; Judge Finds That Lawyer Committed Perjury While Testifying

    The Atlanta securities attorney who was defending clients in the alleged Billionaire Boys Club Ponzi case in Detroit and then was indicted in North Carolina on charges that he was running his own fraud scheme has been found guilty.

    Gregory Bartko was immediately jailed by U.S. District Judge James C. Dever III, who found that Bartko had committed perjury on the witness stand in the North Carolina case. Jurors had just returned guilty verdicts against Bartko for conspiracy, mail fraud and selling unregistered securities.

    How the Detroit case in which Bartko was representing accused Ponzi schemer John J. Bravata against civil charges filed by the SEC will proceed is unclear.

    Prosecutors said the North Carolina case against Bartko was one in which an attorney tried to hide behind criminals to insulate himself from prosecution.

    “We should not let criminals get away simply because they have carefully covered their tracks,” said U.S. Attorney George E.B. Holding of the Eastern District of North Carolina.

    “Complicated and difficult crimes by sophisticated and careful criminals may not be easy to investigate or prosecute, but they are some of the most important cases our office handles,” Holding said. “In this case, an experienced Atlanta securities attorney had used other criminal players to insulate himself from prosecution. He had evaded SEC audits, avoided examination by the bar association, and managed to fool nearly everyone, keeping both his license to practice law and his securities licenses.

    “The Defendant was involved in a scheme to defraud victims of millions of dollars but yet was still representing clients before the SEC,” Holding said. “Such a defendant deserves to be prosecuted to the full degree under the law.”

    Assisting in the Bartko case were the FBI, the U.S. Postal Inspection Service, the IRS and the North Carolina Secretary of State’s Office.

    See earlier story on the PP Blog.

    See Holding’s news release on the conviction and jailing of Bartko.

    The 2009 Michigan case became known as the “Billionaires Boys Club” prosecution because a Bravata company was named “BBC Equities,” and the SEC asserted in July 2009 that BBC was intended to stand for “Billionaire Boys Club.”

    A California Ponzi scheme in the 1980s also was known as “The Billionaire Boys Club.”

  • BREAKING NEWS: OLINT Boss David A. Smith Extradited To United States From Turks And Caicos Islands; Faces Charges In Spectacular Forex-Fraud Case In Orlando Region

    BULLETIN: Agents from U.S. Immigration and Customs Enforcement (ICE) traveled to the Turks And Caicos Islands to take accused Ponzi schemer David A. Smith into custody. Smith has been transported to the United States and is jailed in Florida.

    Smith, who was serving a prison term in the islands for fraud and conspiracy, became the subject of an official request by the United States to extradite him to face federal charges in Florida for bilking investors out of more than $220 million.

    The director of ICE said the Smith fraud posed a danger to the U.S. banking system, and the Department of Homeland Security is involved in the probe of Smith’s business activities.

    “One of ICE-Homeland Security Investigations’ critical missions is investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money,” said ICE Director John Morton. “Not only do these kinds of financial schemes damage the lives of the thousands of victims, but the international money laundering involved poses a direct threat to the security of the U.S. financial system.”

    Smith was at the head of a Jamaican company known as Overseas Locket International Corp. (OLINT), prosecutors said. In 2006, he started another firm known as OLINT TCI Corp. Ltd. in the Turks and Caicos Islands.

    Both firms were described as “private investment clubs,” prosecutors said.

    Smith also was the majority owner in a Lake Mary, Fla., firm known as I-Trade FX LLC, prosecutors said.

    The scheme was pulled off with the help of unindicted co-conspirators in the United States, prosecutors said.

    The conspiracy was carried out in Seminole County, Fla., and was designed to channel money from the scheme into U.S. banks, prosecutors said.

    Residents of Orange County were affected by the scheme, prosecutors said. They noted that the unindicted co-conspirators were affiliated with a Florida company known as JIJ Investments. Prosecutors did not name the unindicted co-conspirators, describing them as “Directors” of JIJ.

    Federal prosecutors in the Middle District of Florida are involved in several actions targeted at alleged purveyors of massive fraud schemes.

    Assisting in the Smith case are U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service (IRS), Federal Bureau of Investigation (FBI), Commodity Futures Trading Commission (CFTC), National Futures Association (NFA), U.S. Customs and Border Protection (CBP) and the Royal Turks and Caicos Islands Police Force.

    See earlier story.

  • A CHILL ACROSS THE PONZI LANDSCAPE: Two Women Arrested, Charged With Helping Bernard Madoff Pull Off Epic Ponzi Scheme; ‘House Of Cards Is Almost Never Built By One Lone Architect,’ U.S. Attorney Says

    Madoff

    BULLETIN: The FBI has arrested Joann Crupi of Westfield, N.J., and Annette Bongiorno of  Boca Raton, Fla.

    The women were charged with helping Bernard Madoff pull off his Ponzi scheme by both actively participating in and concealing the epic fraud, federal prosecutors in New York said. The women had worked for Madoff for a combined total of 65 years and routinely “executed” client trades “only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg.”

    “Those trades achieved annual rates of return that had been pre-determined by Madoff,” prosecutors charged.

    The scheme was so foundationally corrupt that Bongiorno “processed exceptional gains in the IA [investment-advisory] accounts that occurred months before the IA accounts even had been established,” prosecutors said.

    Meanwhile, she “also asked IA clients to return previously-issued BLMIS [Bernard L. Madoff Investment Securities] account statements so that she could alter them, and often include additional backdated trades. She received specific instructions from IA Clients about the amount of appreciations and gains they wanted to be reflected in their IA accounts,” prosecutors said.

    At the same time, Crupi “prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors,” prosecutors said. “Among other things, by keeping track of BLMIS’s daily cash balance, Crupi became aware that client redemption requests bore no relationship to [BLMIS’s] cash on hand, which by late 2008 was woefully insufficient to meet those requests.”

    Now, Bongiorno, 62, faces a maximum prison sentence of 75 years if convicted on all counts. Crupi, 49, potentially faces 65 years behind bars.

    “As everyone knows, Bernard Madoff perpetrated the largest financial fraud in history, but as we allege again today, others criminally assisted his epic crime,” said U.S. Attorney Preet Bharara of the Southern District of New York.

    In a comment that could send chills across the spines of Ponzi concealers and apologists across the United States, Bharara added that “A house of cards is almost never built by one lone architect.”

    Crupi and Bongiorno were charged with a series of felonies.

    Among the charges were conspiracy, securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and tax evasion.

    “Bongiorno and Crupi were both long-time Madoff employees who played vital roles in the scheme and its concealment,” said Janice K. Fedarcyk, FBI assistant-director-in-charge. “We knew early on that a fraud of this scale could not have been the work of one person alone.”

    Both defendants “personally benefited” from the fraud, prosecutors charged.

    Bongiorno stacked the deck in her own favor by creating “numerous backdated trades in her own IA accounts,” prosecutors said.

    “From 1975 to 2008, [she] deposited only approximately $920,000 into her own IA accounts; however, she withdrew more than $14 million during that same time period,” prosecutor said, adding that Bongiorno also received “more than $325,000 in off the books income” from the scheme — on top of her salary.

    Crupi “received payments of more than $2.7 million from Madoff directly out of the [BLMIS] bank account that held investor funds,” plus more than $270,000 in off-the-books income,” prosecutors charged.

  • Justice Department Using Undercover Agents To Battle White-Collar Criminals; Top Official Says Investigative Tactics Normally Used To Prosecute Organized Crime Figures Useful In Battling Fraud Epidemic

    EDITOR’S NOTE: The remarks below are excerpted from a speech last week in New York by Assistant U.S. Attorney General Lanny A. Breuer. As the PP Blog has previously reported, the Justice Department and agencies such as the FBI and U.S. Secret Service have been using undercover operatives to infiltrate criminal operations and networks used by the criminals.

    One of the FBI investigations Breuer referenced was the Trevor Cook Ponzi scheme in Minneapolis. The scheme consumed tens of millions of dollars, defrauding victims of at least $158 million. Many mysteries remain in the case.

    Meanwhile, undercover operatives also recently were used to expose penny-stock schemes operating in Florida.

    It also is known that the Secret Service used undercover operatives in the AdSurfDaily case, the INetGlobal case, the Regenesis 2×2 case, the Legisi case and a case involving alleged international fraudster Vladislav Horohorin, accused of using criminal forums to peddle stolen credit-card information.

    Here, now, some excerpts from Breuer’s speech . . .

    Part of Trevor Cook's stash.

    “Now, as I’m sure you know, financial criminals can be extraordinarily innovative, and they are often expert at covering their tracks. So we are always looking for creative ways to gather the evidence we need to bring financial criminals to justice. To that end, we have begun increasingly to rely, in white collar cases, on undercover investigative techniques that have perhaps been more commonly associated with the investigation of organized and violent crime.

    “As part of this effort, we have significantly strengthened the Criminal Division’s Office of Enforcement Operations (known as OEO), which is the office in the Justice Department that reviews and approves all applications for federal wiretaps from across the country. We have a dynamic new OEO Director, Paul O’Brien, and we’ve substantially increased the number of attorneys at OEO who review these wiretap applications, adding to their ranks experienced prosecutors and recent graduates who have completed federal clerkships. As a result, the number of wiretaps we authorize – in all types of cases – has gone up.

    “Let me give you just two examples of white collar cases in which we have used undercover techniques, both of which also highlight areas in which we have stepped up our white collar enforcement efforts more generally.

    “The first example is the case of Trevor Cook, which was prosecuted by the U.S. Attorney’s Office in Minneapolis. Mr. Cook is just one of dozens of individuals whom we’ve prosecuted in recent months for participating in investment fraud schemes. Over the course of several years, Mr. Cook schemed to defraud at least 1,000 people out of approximately $190 million by pretending to sell them investments in a foreign currency trading program.

    “In reality, he was pocketing the money or using it to pay off other investors. As was recently reported in the New York Times, we gathered evidence against Mr. Cook by using an undercover informant to record his transactions and conversations. [Cook] pleaded guilty earlier this year and was recently sentenced to 25 years in prison.

    “Trevor Cook is one of literally hundreds of financial criminals who have preyed upon vulnerable, individual investors and bilked them out of their savings using investment fraud schemes. And as with Mr. Cook, we have been prosecuting these people aggressively, all over the country – from New Jersey and Connecticut to Texas and California, and everywhere in between.

    “The second example comes from our enhanced efforts in the area of FCPA enforcement. Earlier this year, as I’m sure many of you know, we indicted 22 defendants in the military and law enforcement products industry for their participation in widespread schemes to bribe foreign government officials. These indictments resulted from the Department’s most extensive use ever of undercover law enforcement techniques in an FCPA investigation, and they represent the single largest prosecution of individuals in the history of our FCPA enforcement efforts. In September, one of the defendants in the case, Richard Bistrong, pleaded guilty . . .

    “Over the last 18 months, we’ve devoted significant additional resources to the Criminal Division’s Fraud Section. We’ve recruited talent not only from white shoe law firms, but also from a deep pool of prosecutors around the country who bring with them extensive experience in prosecuting everyone from violent mobsters to dangerous terrorists. We are now bringing that extraordinary talent and experience to bear on prosecuting financial fraudsters.”

    See related story on alleged Pathway To Prosperity Ponzi scheme.

    See related story on alleged Legisi Ponzi scheme.

    See related story on Matt Gagnon and Mazu.com.

  • Feds Charge Robert Stinson Criminally On Heels Of SEC Lawsuit; Prosecutors Say ‘Life’s Good’ Operator Stole More Than $17 Million In Ponzi Scheme, Wired Money Even As FBI Was Conducting Raid

    Even as the FBI was executing search warrants in the case of Life’s Good Inc. operator Robert Stinson Jr., Stinson was “wiring stolen funds out of Life’s Good bank accounts to other accounts,” federal prosecutors said.

    That act alone led to criminal charges of obstruction of justice. In a 26-count indictment in an alleged Ponzi scheme in which Stinson was accused of stealing more than $17 million from more than 260 investors, Stinson also was charged with wire fraud, mail fraud, money-laundering, bank fraud, filing false tax returns and making false statements to federal agents.

    At 12:06 p.m. on June 29 — the date of the raid and while federal agents were executing search warrants — Stinson began a series of wire transactions in which he moved at least $225,000 to prevent the cash from being seized, according to the indictment.

    Two of the transactions occurred during the same minute and involved two separate banks, according to the indictment.

    The scam involved promises of fixed returns of between 8 and 16 percent in four bogus real-estate hedge funds, prosecutors said. They added that Stinson was not a graduate of the Massachusetts Institute of Technology or Pennsylvania State University, as he had claimed.

    Although Stinson, 55, of Berwyn, Pa., told a tale of fabulous business success, he actually was a recidivist securities offender and had multiple fraud convictions. Part of his most recent fraud involved and online “webinar” and a PowerPoint presentation, according to the indictment.

    Stinson claimed to have “funded millions of dollars in real estate rehab and improvements as well as saved over 1,500 families from foreclosure free of charge,” according to the indictment.

    “Advisors” who drove business to the criminal firm were paid commissions of between 5 percent and 10 percent of the money they brought in.

    In 1986, he was convicted of wire fraud and larceny in U.S. Court in Delaware, according to records. In 1987, he was convicted of forgery and larceny in New Jersey state court. During the same year, he was convicted of mail fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Meanwhile, in 1996, he was convicted of criminal conspiracy in state court in Pennsylvania. In 2001, he was convicted of bank fraud in U.S. District Court for the Eastern District of Pennsylvania.

    Stinson filed two bankruptcy petitions in 1999, one in October and another in December, according to records.

    Nine years earlier, in 1990, he was charged with fraud by the SEC. He was ordered to pay a judgment of $7,680, but the judgment remains unpaid, according to court filings.

    The SEC sued Stinson in June. The criminal probe was conducted by the FBI, the IRS and the U.S. Postal Inspection Service.

    If convicted on all counts, Stinson faces a maximum sentence of 329 years in federal prison and a fine of $6.8 million.

  • BULLETIN: FBI Seeks Arrest Of Perry and Rachelle Griggs; Agency Alleges Husband-And-Wife Team Ran Ponzi Scheme While Husband Was Federal Prisoner In Nevada; Manhunt Under Way

    WANTED BY FBI: Perry and Rachelle Griggs

    BULLETIN: UPDATED WITH INFORMATION FROM THE CFTC AT 7:03 P.M. EDT (U.S.A.) Perry and Rachelle Griggs are on the lam after running a Ponzi scheme while Perry Griggs was a federal prisoner in Nevada, the FBI said.

    The alleged commodities scheme consumed about $3 million and was targeted principally at inmates and family members of inmates, the FBI said.

    Separately, the CFTC said Perry Griggs ran a previous Ponzi scheme that resulted in convictions for wire fraud and money-laundering, a restitution order for more than $3 million and a 96-month prison sentence. Perry Griggs began serving the sentence in 2003, but hatched the new scheme while incarcerated.

    Yet-another scheme grew out of the scheme Perry Griggs hatched from prison, according to the CFTC. If the allegations are true, it means that Perry Griggs has been at the center of at least three fraud schemes since 2003, and launched two of them while in federal custody.

    The scheme for which Perry Griggs began serving time in 2003 involved coffee futures, the CFTC said. Even as he was serving time, Perry Griggs executed trades for the new scheme from prison by using the Internet and a telephone, according to court filings.

    Perry Griggs and his wife lost investors’ money in the new scheme and made Ponzi-style payments to cover up the fraud, while also stealing about $1 million to pay “for personal expenses, including luxury car leases, renting a home in Hawaii, purchasing jewelry and chartering a private jet,” the CFTC said.

    The couple went missing from a halfway house after Perry Griggs’ release from prison. Perry Griggs was on parole for the earlier Ponzi scheme when he fled while the second scheme was unraveling, the CFTC said.

    Perry Griggs was housed “with a large number of inmates from Hawaii,” the FBI said. He was released from prison in late 2008, and went missing with his wife from Las Vegas in January 2010.

    Indictments against the husband and wife were returned by a federal grand jury in Hawaii yesterday.

    The FBI has launched what it described as a “national fugitive manhunt with a primary focus on the states of Nevada, Washington, and California.”

    PERRY JAY GRIGGS is 49 years old, 5’10” tall, 180 pounds, with grey hair and blue eyes. He is known to have expensive tastes in sports cars, high-end clothing, cigars, and golf, the FBI said.

    RACHELLE LOUISE GRIGGS, also known as RACHELLE RUTLEDGE, is 42 years old, 5’4” tall, 150 pounds with blonde hair and green eyes.

    Anyone recognizing PERRY and RACHELLE GRIGGS or having information as to their current location is asked to call the Honolulu FBI at 808-566-4300.

    Perry Griggs also spent time in federal prisons in California and Texas. The Ponzi that put the couple on the lam operated through a scam company known as Aloha Trading Co., which purported to be in the business of trading commodities, the FBI said.

    Meanwhile, the CFTC said investors in the second scheme were lured by the promise of high returns. Some investors refinanced their homes and liquidated retirement accounts to invest with Perry and Rachelle Griggs.

    A third scheme grew from the second scheme and involved a company known as Paradise Trading LLC, the CFTC said.

    Read the CFTC complaint.

  • BULLETIN: Woman Who Did Not Report Ponzi Schemer Richard Piccoli Sentenced To 18 Months In Federal Prison For ‘Misprision Of Felony’ And Tax Charge; Kathleen Fuoco Turned ‘Blind Eye’ To Fraud, Prosecutors Say

    BULLETIN: In a case that could send shockwaves across the culture of promoting scams and accepting payments from scams, a New York woman who turned a blind eye to Richard Piccoli’s long-running Ponzi scheme in New York state has been sentenced to 18 months in federal prison for misprision of a felony and willful failure to file tax returns.

    Kathleen Fuoco, 60, of West Seneca, N.Y., pleaded guilty to the charges in June. She was sentenced today in Buffalo. Piccoli, 83, was sentenced to 20 years in prison last year. He became infamous in the Buffalo region for targeting people of faith in the scheme.

    Fuoco knew Piccoli was operating a scam, but did not report him, prosecutors said in June. Her failure to report the scheme brought about the misprision charge and also resulted in an agreement with prosecutors in which a financial judgment of $25 million would be placed against Fuoco, the total amount of restitution due victims.

    Piccoli operated a firm known as Gen-See Capital Corp., and directly targeted Christians and senior citizens.

    “Our seniors and clergy are absolutely pleased with Gen-See’s Re-Investment Program,” Piccoli said, according to marketing materials gathered by investigators as evidence in the case.

    The Piccoli prosecution was brought after an undercover sting by the U.S. Postal Inspection Service and the IRS.

    After Fuoco’s guilty plea in June,  U.S. Attorney William J. Hochul said “the public should know that if you attempt to defraud any hard working citizen or turn a blind eye while someone else is committing fraud, you will be caught and prosecuted to the fullest extent of the law.”

    Hochul built on his earlier remarks after Fuoco’s sentencing today.

    “The best defense for investors is to conduct your own due diligence and research,” he said. “When unscrupulous defendants take advantage of others through fraud, however, my office stands ready to bring the full force of law to punish the crime.”

    Misprision of felony is a charge that serial promoters of online scams such as autosurfs, HYIPs and 2×2 matrix cyclers potentially could face. The schemes proliferate in no small measure because promoters who play dumb to the fraud create the conditions that make it possible for the “programs” to go “viral” on the Internet.

    Some promoters help fuel scheme after scheme after scheme, perhaps saying later that they were surprised the programs proved to be fraudulent.

    Such bids to create plausible deniability have been unmasked by the U.S. Secret Service in a number of investigations since 2008. In some cases, the agency has used undercover identities to join the schemes and later advised federal judges that the agents were instructed by members of the schemes to avoid using certain phrases in sales pitches to minimize the chance of getting caught.

    In certain undercover operations, the Secret Service revealed it had agents in rooms or venues from which scammers were delivering sales pitches to an audience. Some schemers have been kept under surveillance for weeks by agents.

    Court documents in the alleged AdSurfDaily (Florida) and INetGlobal (Minnesota) Ponzi schemes — and in the alleged Regenesis 2×2 (Washington state) Ponzi scheme — show that agents moved from location to location and even city to city to build evidence against Ponzi schemers.

    Meanwhile, court documents show that undercover Secret Service operatives and their state law-enforcement colleagues even have posed as interested investors and walked right through the front doors of offices operated by suspected fraudsters.

    Court filings in the alleged Legisi Ponzi scheme brought by the SEC show that the behavior of the alleged schemer changed after he came to understand he was under investigation — a development that allegedly led to even greater chicanery to hide the scheme.

  • KABOOM! More Bad News For Fraudsters: ‘FBI Undercover Operation’ Leads To Florida Fraud Busts; 20 Charged In Alleged Schemes, Including ‘CHiPs’ Actor

    An undercover sting conducted by the FBI has resulted in fraud charges being filed against 20 individuals or companies. The sting was centered in southern Florida. Among those charged was Larry Wilcox, one of the stars of the long-running television program “CHiPs” in which Wilcox played the role of a California police officer, the SEC said.

    Records suggest Wilcox agreed to become a government informant after becoming implicated in the probe.

    Wilcox, 63, of West Hills, Calif., was among a group charged both civilly and criminally. The case was brought after the FBI conducted an undercover probe into penny-stock schemes.

    “Securities fraud is an equal opportunity crime — it runs the gamut from very large to very small publicly traded companies,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    Ferrer noted that “even microcap companies are plagued by fraudsters who seek to manipulate the stock market to line their own pockets.”

    Separately, the SEC said the sting was conducted “in such a way that no investors suffered harm” — an announcement that could send shockwaves across the fraud universe because it demonstrates that investigators are infiltrating schemes and relying on informants to unmask the schemers.

    Wilcox, for example, believed he was doing business with a “corrupt trustee,” according to court filings. Records suggest that Wilcox entered a deal with the government in July in which he would cooperate in an ongoing probe.

    “These corrupt promoters meticulously planned their schemes down to the last detail, except for the possibility that they were walking into an undercover operation,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “This joint law enforcement effort is a stark warning to those who embark on securities fraud schemes that we may be listening and we may be watching.”

    Whether the SEC and FBI were performing similar stings in the corrupt worlds of HYIPs, autosurfs and 2×2 matrix cyclers as promoted on Ponzi forums was not immediately clear. The Justice Department, however, has made it clear in court filings that it is infiltrating criminal forums and is using undercover operatives.

    The U.S. Secret Service also has made it clear that it is using undercover operatives in its investigations of corrupt enterprises such as HYIPs, autosurfs and 2×2 matrix cyclers.

    Read the SEC’s statement:

    Read the statement of U.S. Attorney Ferrer and remarks from the FBI:

    Read a story about a Secret Service probe in which undercover operatives were used to infiltrate criminal forums: