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Tag: FBI

  • WCM777: More Theft And Money Laundering MLM-Style

    “Many investors gave cash to the company and to their leaders (or upline sponsors) who then deposited the cash along with other investor funds.” — Krista L. Freitag, court-appointed receiver in the WCM777 pyramid- and Ponzi case, Feb. 27, 2015

    wcm777forensicsEDITOR’S NOTE: Tens of millions of dollars allegedly flowed through WCM777 and related entities. At the bottom of this column, you’re going to read that an apparent apologist for accused Ponzi schemer Ming Xu is claiming the U.S. Securities and Exchange Commission is violating his human rights. Fair warning: You might want to have your vomit bucket at the ready . . .

    UPDATED 10:31 A.M. ET U.S.A. Here’s how you rob the Christians in an offering fraud that involves the sale of tens of millions of dollars in unregistered securities across state and national borders: You start an MLM “program,” get it in the churches and on YouTube, permit “leaders” to gather money from their enraptured audiences and put out the word that $1,999 returns $3,200 in 100 days.

    It might help if you have a storefront in, say, Peru. It also might help if you have, say, promoters willing to tout the “program” in webinars and from a “function room in a hotel in Massachusetts.” At the same time,  it might help if you have promoters willing to steal the intellectual property of the “Rocky” movie franchise to drive dollars into any of the “77 domestic and 23 foreign bank accounts” you’re using. (The bank-account information is sourced from a forensic accounting by Krista L. Freitag, the court-appointed receiver in the WCM777 case. It was filed Feb. 27 in U.S. District Court for the Central District of California and is the basis for part of this PP Blog column. Links to exhibits are provided near the bottom of the column.)

    Along the way, it might help if you follow the standard blueprint from one MLM scam after another that calls for you to disarm skeptics by dropping the names of plenty of famous businesses, perhaps with the aim of hoping your “leaders” will follow your lead and do the same thing. Damn! Wouldn’t you know it! They did exactly that! (See link in first paragraph of this story.)

    Might you follow the blueprint of earlier scams such as Zeek Rewards that calls for you to get some of the money you’re gathering offshore, perhaps to Hong Kong?  You betcha!

    It might be particularly helpful if you make a calculation that a bank such as HSBC in Hong Kong might frown upon a subpoena issued in the United States and clam up when it comes to assisting the receiver appointed to your case after the SEC moves in.

    “To date, HSBC-Hong Kong has not responded to the Receiver’s requests/subpoena,” Freitag advised U.S. District Judge John F. Walter in her forensic accounting.

    Why would HSBC shun the receiver? Well, perhaps it had something to do with this July 2012 hearing by the U.S. Senate Permanent Subcommittee on Investigations that examined “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History.”

    Or maybe HSBC doesn’t want to open a new can of worms after it settled with the Justice Department in December 2012 by forfeiting $1.256 billion and entering into a deferred-prosecution agreement after it was accused of “willfully failing to maintain an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent affiliates, violating [the  International Emergency Economic Powers Act]  and violating [the Trading with the Enemy Act].”

    In May 2014, the SEC said it had an email from accused WCM777 Ponzi schemer Ming Xu to Vincent Messina, the asserted “general counsel” to a Xu business entity known as “World Capital Market.”

    “Vincent,” the alleged Ming Xu email to Messina began. “We have lots of members for our social capital company, WCM777 in Brazil. They paid us in Brazil. How to move the money legally from Brazil to USA or Hong Kong?”

    Whether Messina provided guidance on how to get money out of Brazil and move it to the United States and Hong Kong is unclear. Ming Xu’s email, however, suggests that WCM affiliates in Brazil, like their U.S. counterparts, also were collecting money directly from MLM recruits and that Ming Xu needed to find a way to get the cash under his control.

    This situation is eerily reminiscent of how the massive TelexFree scheme conducted business and almost certainly explains why the U.S. Department of Homeland Security got involved in the 2013/2014 TelexFree probe alongside the FBI and the SEC.

    It’s also highly reminiscent of a scam known as Imperia Invest IBC that stole millions of dollars from people with hearing impairments in 2010.

    Freitag says she has traced $5 million in Ming Xu proceeds to Messina, and Walter ordered Messina to return it. Only $2.133 million has been returned, Freitag says.

    Messina wasn’t just a lawyer; he was a WCM777 “insider,” the receiver alleges.

    Because Freitag has access to certain WCM777 banking records, she has been able to determine that “$29,404,996” went to HSBC in Hong Kong  “for 7 Receivership Entities and 1 individual.”

    Ming Xu used numerous companies as part of his overall money-moving scheme, the receiver contends.

    Here’s how she describes one transaction that occurred after WCM777 got in trouble with the Massachusetts Securities Division in late 2013 and agreed to return money to the fleeced investors in that state (italics added):

    “ . . . rescission payments were made to WCM777 investors in accordance with the Consent Order issued by the Massachusetts Securities Division. Bank records show that funds from ToPacific bank accounts were used to make payments to the Massachusetts WCM777 investors.”

    “ToPacific” was a company in the WCM777 fold.

    How circuitous were things within WCM777 (italics added):

    “the payment methods with which investors payments were made varied from third-party electronic disbursement (primarily Global Payout) to physical checks written directly on Receivership Entity bank accounts. There does not appear to be any consistency in the bank accounts from which investor checks were written. Rather, bank records indicate payments were made to investors from whichever accounts happen[ed] to have funds available at the time the payments were made.”

    The FBI has been warning about shell companies involved in crime and how banks and payment processors can get caught up in it since at least 2010. Even so, the WCM777 entities somehow managed to open at least 100 bank accounts while also gaining access to bank wires and at least one payment processor.

    Here’s how Freitag describes the overall scheme (italics added/light editing performed):

    “The Receivership Entities’ primary source of income was investor deposits, which was also the primary source of virtually all funds distributed to the investors; [t]he vast majority of the Receivership Entities’ business activities revolved around raising and distributing investor funds; [i]nvestor funds were so materially commingled between and among the Receivership Entities that the entities operated as a unitary enterprise, rather than as separate entities.”

    And while WCM777 recruits thought they were joining an MLM “program,” their money financed the purchases of two golf courses in California, several pieces of real estate, including one with live koi, and a series of purported investments elsewhere. These allegedly included jewelry or gold, oil and gas — and even piles of “jeans, shorts, pants and leggings” stored by Ming Xu’s sister.

    Ming Xu’s Mom allegedly got a new house, but not until after the cash to purchase the home had passed through bank accounts linked to Ming Xu and his sister.

    Earlier, Ming Xu used Twitter to send a declaration of love to the Peruvian people — on the letterhead of a company suspended in California.

    The Ming Xu Twitter account, which once claimed all would become known when “blood moons” appeared in the sky and published a picture of Apple co-founder Steve Wozniak, whom Ming Xu had corralled at a networking event in California, now includes a link to a website that claims (italics added):

    U.S. Securities and Exchange Commission was wrong to close down the company and confiscate about $43M cash asset and oil reserve asset of $50M. It has violated the company’s legal interests and human rights of Ming Xu.

    Read the exhibits from Freitag’s forensic accounting. (Here’s one; here’s the other.)

    As noted above, you might want to have a vomit bucket handy if you’re contemplating how certain MLM “programs” are operating these days in the era of epic white-collar fraud and while terrorism, beheadings and attacks on police are occurring.

  • BULLETIN: Zeek Receiver Sues Alleged ‘Winners’ In New Zealand And British Virgin Islands

    breakingnews72BULLETIN: (9th update 9:57 p.m. ET U.S.A.) Zeek Rewards receiver Kenneth D. Bell has sued alleged “winners” with residencies in New Zealand and the British Virgin Islands.

    One BVI winner is alleged to have gained more than $2 million from Zeek’s combined Ponzi- and pyramid scheme. Bell identified her as Agnita Solomon of Road Town, Tortola.

    Susan Forbes, of Tortola, the largest island, is alleged by Bell to have won more than $603,000. No specific town is listed for her.

    Hamish Brownie appears to be Zeek’s largest alleged winner in New Zealand. Bell listed a sum of more than $507,000 for Brownie, who resides in Christchurch.

    Road Town, the capital of the BVI, possibly was a Zeek stronghold. Of the five BVI residents sued, three listed Road Town addresses, according to Bell’s lawsuit. Besides Solomon, the other two were identified by Bell as Marcus Drigo and Patrice Harewood.

    Drigo allegedly won more than $70,000; Harewood allegedly received nearly $60,000.

    Marguerite D. Hodge, another BVI resident, was alleged to have won more than $115,000. No specific city or island was listed for her.

    The other alleged New Zealand winners sued by Bell were identified as Praveen Kumar of Auckland and David Ian MacGregor Fraser, also of Auckland.  Kumar is alleged to have won more than $115,000; MacGregor Fraser received more than $89,000, Bell alleged.

    The lawsuits against the BVI and New Zealand defendants are filed in U.S. District Court for the Western District of North Carolina. The actions mark at least the third time Bell has sued international alleged winners.

    Bell previously sued winners with addresses in Canada and Australia. He has sued about 9,400 individuals or entities with U.S. addresses, most of them via a class action.

    The actions against U.S. domestic alleged winners and their international Zeek colleagues likely represent the largest undertaking by a receiver in an HYIP case in U.S. history.

    Cross-border MLM HYIP schemes operating over the Internet have emerged as a considerable problem. Zeek may have involved on the order of 800,000 participants, the vast majority of them alleged losers of a combined sum in the hundreds of millions of dollars.

    Court filings in the TelexFree bankruptcy case alleged that $1.8 billion was driven to that cross-border scheme, which potentially involved more than 1 million participants globally.

    The SEC shut down Zeek in August 2012, with three key figures later charged criminally. TelexFree declared bankruptcy on a Sunday night in April 2014, just as regulators were preparing to file actions.

    Two TelexFree figures later were charged criminally. There also are TelexFree-related civil and criminal investigations in Brazil, perhaps TelexFree’s main stronghold. The U.S. Department of Homeland Security and the FBI are involved in the TelexFree probe.

    In the actions against the BVI and New Zealand alleged Zeek winners, Bell said this: “Because Zeek’s net winners ‘won’ (the victims’) money in an unlawful combined Ponzi and pyramid scheme, the net winners are not permitted to keep their winnings and must return the fraudulently transferred winnings back to the Receiver for distribution to Zeek’s victims.”

    NOTE: Our thanks to the ASD Updates Blog.

     

  • URGENT >> BULLETIN >> MOVING: ‘North Korean Government’ Responsible For Sony Pictures Hack, FBI Says

    URGENT >> BULLETIN >> MOVING: The “North Korean government” is responsible for the catastrophic hack at Sony Pictures Entertainment last month, the FBI says.

    As pressure mounts for the United States to retaliate, President Obama is expected to take questions on the matter at 1:30 p.m. today.

    The FBI said it was “deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there. Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States.

    “Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart. North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves. Such acts of intimidation fall outside the bounds of acceptable state behavior. The FBI takes seriously any attempt—whether through cyber-enabled means, threats of violence, or otherwise—to undermine the economic and social prosperity of our citizens.”

    Threats of 9/11-style terrorist attacks against movie patrons and theaters that screened a comedic film that mocks North Korea leader Kim Jong Un and depicts him as an assassination target first caused theaters to bail on “The Interview,” a Sony film scheduled to open Christmas Day. Sony itself later withdrew the film, triggering an avalanche of criticism that it had caved into the demands of terrorists.

    As the situation evolved, it became clear that the United States viewed the attack on Sony as an attack against the country itself.

    The actual hacking of Sony appears to have occurred in November, with “Guardians of Peace” taking credit. Troves of private emails and records were stolen, Sony and its employees were threatened and Sony’s computers effectively were rendered inoperable. Sony has been in PR damage-control mode for weeks, even as the firm’s intellectual property such as films not yet released fell into the hands of the hackers.

    Sony quickly reported the incident to the FBI, and the swiftness aided in the probe, the agency said.

    Here’s more from the FBI’s statement (italics added):

    As a result of our investigation, and in close collaboration with other U.S. government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions. While the need to protect sensitive sources and methods precludes us from sharing all of this information, our conclusion is based, in part, on the following:

    • Technical analysis of the data deletion malware used in this attack revealed links to other malware that the FBI knows North Korean actors previously developed. For example, there were similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks.
    • The FBI also observed significant overlap between the infrastructure used in this attack and other malicious cyber activity the U.S. government has previously linked directly to North Korea. For example, the FBI discovered that several Internet protocol (IP) addresses associated with known North Korean infrastructure communicated with IP addresses that were hardcoded into the data deletion malware used in this attack.
    • Separately, the tools used in the SPE attack have similarities to a cyber attack in March of last year against South Korean banks and media outlets, which was carried out by North Korea.

  • URGENT >> BULLETIN >> MOVING: eAdGear Figures Indicted In California On Conspiracy Charge Of Structuring Transactions To Evade Bank-Reporting Requirements

    breakingnews724TH UPDATE 3:44 P.M. ET U.S.A. Before the SEC announced its civil pyramid- and Ponzi-scheme case on Sept. 26 against eAdGear figures Charles Wang and Francis Yuen, the pair had been indicted on a criminal charge in U.S. District Court for the Northern District of California, the PP Blog has learned.

    Docket records show the indictment was filed under seal Sept. 18. On Sept. 23, prosecutors in the office of U.S. Attorney Melinda Haag requested the seal be lifted. The SEC announced its civil case three days later.

    The specific criminal charge is conspiracy to structure transactions to evade bank-reporting requirements. A grand jury alleged that the eAdGear duo directed two employees to open bank accounts in the employees’ names “for the purpose of using those accounts as nominee accounts in which to conduct structured cash transactions.”

    The FBI is leading the criminal investigation, according to papers filed in the case.

    News of an eAdGear criminal investigation first was reported yesterday by the Wall Street Journal under a headline of “SEC on Lookout for Web-Based Pyramid Schemes.” The PP Blog learned that an indictment had been returned by locating a criminal case number in a Nov. 12 order issued by U.S. District Judge Yvonne Gonzalez Rogers that also referenced the SEC’s civil case. The ASD Updates Blog then located the indictment, which lays out a structuring plot dating back to 2011 involving accounts at multiple banks.

    Separately, the PP Blog learned that police in Taiwan carried out eAdGear-related raids in October. News of the raids first was reported in Taiwanese media, including reports in Chinese.

    Accounts at JPMorgan Chase, Bank of America and Bank of the West allegedly were used in the Wang/Yuen structuring conspiracy, with Wang further accused of using accounts in his name and in the name of a relative to advance the plot.

    Transaction sums were kept below $10,000 “such that they would not cause the relevant financial institutions to generate a currency transaction report,” according to the indictment.

    “It was also a part of the conspiracy that, after these accounts were opened, [Wang], using funds for eAdGear memberships, made numerous structured cash deposits into these accounts and other accounts,” according to the indictment.

    Yuen, according to the indictment, “caused to be transferred tens of thousands of dollars of the structured cash deposits into a separate consumer loan account at [Bank of the West],” according to the indictment.

    Wang and Yuen both posted bond of $100,000, according to court records. Wang, 52, of  Warren, N.J., may need a Mandarin interpreter, according to the docket of the case.

    Yuen, 53, resides in Dublin, Calif., according to the SEC.

    The Wall Street Journal article includes a statement from HYIP huckster T. LeMont Silver.

  • U.S. Postal Service Targeted In Cyber Attack; Customer, Employee Data Breached

    Benjamin Franklin, first Postmaster General. Source: screen shot from USPS illustrated booklet, "The United States Postal Service: An American History, 1775-2006."
    Benjamin Franklin, first Postmaster General. Source: screen shot from USPS illustrated booklet, “The United States Postal Service: An American History, 1775-2006.”

    There have been cyber attacks on banks, retail outlets, U.S. government sites and sites operated by U.S. government contractors.

    And now the FBI is investigating an attack on the U.S. Postal Service.

    In some ways, the attack might be viewed by Americans as the most personally violative to date. Virtually the whole of America — from the largest of cities to the smallest of towns — has contact with USPS six days a week. In 1775, U.S. founding father Benjamin Franklin was appointed by the Continental Congress as the first postmaster general of the fledgling Democracy. The famous “Pony Express” would not begin for another 85 years.

    Early reports have described the attack as massive, one that has affected 2.9 million USPS customers and hundreds of thousands of USPS employees.

    From a statement by USPS (italics added):

    The Postal Service has recently learned of a cyber security intrusion into some of our information systems. We began investigating this incident as soon as we learned of it, and we are cooperating with the investigation, which is ongoing. The investigation is being led by the Federal Bureau of Investigation and joined by other federal and postal investigatory agencies. The intrusion is limited in scope and all operations of the Postal Service are functioning normally.

    Information potentially compromised in the incident may include personally identifiable information about employees, including names, dates of birth, Social Security numbers, addresses, beginning and end dates of employment, emergency contact information and other information.

    Postal Service transactional revenue systems in Post Offices as well as on usps.com where customers pay for services with credit and debit cards have not been affected by this incident. There is no evidence that any customer credit card information from retail or online purchases such as Click-N-Ship, the Postal Store, PostalOne!, change of address or other services was compromised.

    The intrusion also compromised call center data for customers who contacted the Postal Service Customer Care Center with an inquiry via telephone or e-mail between Jan. 1, 2014, and Aug. 16, 2014. This compromised data consists of names, addresses, telephone numbers, email addresses and other information for those customers who may have provided this information. At this time, we do not believe that potentially affected customers need to take any action as a result of this incident.

    The privacy and security of data entrusted to us is of the utmost importance. We have recently implemented additional security measures designed to improve the security of our information systems, including certain actions this past weekend that caused certain systems to be off-line. We know this caused inconvenience to some of our customers and partners, and we apologize for any disruption.

    We began communicating this morning with our employees about this incident, apologized to them for it, and have let them know that we will be providing them with credit monitoring services for one year at no charge to them. Employees also have the personalized assistance available to them provided by the Human Resources Shared Services Center. We are committed to helping our employees deal with this situation.

     

  • URGENT >> BULLETIN >> MOVING: First U.S. Criminal Prosecution Of Bitcoin-Themed Scheme; Trendon Shavers Arrested

    breakingnews72In the first U.S. criminal prosecution involving a Bitcoin-themed scheme, Trendon Shavers has been arrested and charged with securities fraud and wire fraud.

    Shavers, 32, of McKinney, Texas, was charged civilly by the SEC in July 2013. He is known as “pirateat40,”  and allegedly pushed his Bitcoin Savings and Trust Ponzi scheme from a forum.

    FBI agents arrested him today at his Texas residence.

    “As alleged, Trendon Shavers managed to combine financial and cyber fraud into a Bitcoin Ponzi scheme that offered absurdly high interest payments, and ultimately cheated his investors out of their Bitcoin investments,” said U.S. Attorney Preet Bharara of the Southern District of New York.  “This case, the first of its kind, should serve as a warning to those looking to make a quick buck with unsecured currency.”

    A top FBI official threw down the gauntlet.

    “Shavers used a new currency, but the same old reprehensible tricks,” said FBI Assistant Director-in-Charge George Venizelos. “He claimed to offer a Bitcoin market-arbitrage strategy. In reality, it was nothing more than an insidious scheme motivated by greed. Today, Shavers’ jig is up. He finds himself under arrest and charged in Manhattan federal court.”

    Some HYIP schemes appear now to have moved away from payment processors such as the now-shuttered Liberty Reserve and are moving toward Bitcoin.

    From a statement by Bharara’s office, which previously prosecuted Liberty Reserve, calling it a $6 billion money-laundering operation that enabled HYIPs and others forms of fraud (italics added):

    From at least September 2011 up through and including September 2012, SHAVERS operated a Ponzi scheme. Specifically, SHAVERS solicited investments in BCS&T on the “Bitcoin Forum” – a public, Internet-based forum where, among other things, Bitcoin investment opportunities were posted. SHAVERS’s offer to investors was straightforward: investors who lent Bitcoin to BCS&T would be paid up to seven percent interest weekly – an annualized interest rate of 3,641% per year – and investors could withdraw their investments in BCS&T at any time. SHAVERS claimed that the Bitcoin invested by BCS&T investors would be used to support a Bitcoin market-arbitrage strategy, which included (i) lending Bitcoin to others for a fixed period of time; (ii) trading Bitcoin via online exchanges; and (iii) selling Bitcoin locally via private, off-markets transactions – i.e., “over-the-counter transactions.” SHAVERS also personally guaranteed to cover any losses in the event of a market change. In truth, SHAVERS largely failed to execute the claimed market arbitrage strategy, failed to honor all of his investors’ redemption requests as well as his personal guarantee, and failed to deliver the agreed upon rates of interest.

    In the end, BCS&T was a Ponzi scheme in which SHAVERS used Bitcoin from new investors to make purported interest payments to existing investors and to cover investors’ requests to withdraw Bitcoin from existing BCS&T accounts. In addition, SHAVERS diverted investors’ Bitcoin for day trading in his own account on a Bitcoin currency exchange, and exchanged investors’ Bitcoin for U.S. dollars to pay certain of his personal expenses. At the peak of the scheme, SHAVERS raised, and had in his possession, about seven percent of all the Bitcoin that were then in public circulation. In the end, at least 48 of approximately 100 investors lost all or part of their investment in BCS&T.

    Some Bitcoin enthusiasts have fretted that dark forces and criminal organizations are seeking to use Bitcoin in the same way they used Liberty Reserve. Criminal activities could undermine confidence in Bitcoin and affect its perception in the marketplace.

    In late August, some affiliates of the collapsed $850 million Zeek Rewards Ponzi scheme began pushing a Bitcoin-themed “program” known as BitClub Network, a purported “mining venture” with an investment arm attached that purportedly supplies a payout for 1,000 days.

    Prospects were encouraged to buy in with sums ranging from $500 to $3,500.

    Zeek used traditional forms of payment.

     

  • URGENT >> BULLETIN >> MOVING: Accused Cop-Killer Eric Frein Captured After 48-Day Manhunt In Pennsylvania Mountains

    Eric Frein
    Eric Frein

    URGENT >> BULLETIN >> MOVING: (Updated 6:37 a.m. EDT Oct. 31 U.S.A.) Eric Frein, the man accused of ambushing two state troopers under cover of darkness outside their barracks in rural northeastern Pennsylvania, has been captured after a 48-day manhunt, Gov. Tom Corbett announced on Twitter.

    Frein, 31, became one of the FBI’s 10 Most Wanted Fugitives after allegedly shooting one trooper to death and wounding a second one on Sept. 12.

    KDKA, the CBS affiliate in Pittsburgh, is reporting that troopers put the handcuffs of slain colleague Cpl. Bryon T. Dickson on Frein when bringing him in.

    Multiple media outlets are reporting that Frein was captured by the U.S. Marshals Service near or in an abandoned airport hangar in northeast Pennsylvania. Frein, a purported survivalist, apparently hid in the Pocono Mountains after the attack.

  • No Immediate Comment From Federal Reserve On Claims Related To Emerging BitClub Network ‘Program’

    cautionflagUPDATED 12:27 A.M. EDT SEPT. 22 U.S.A. The PP Blog today contacted the Board of Governors of the Federal Reserve System, owing to claims concerning the emerging BitClub Network “program” that is being pitched by certain members of the $850 million Zeek Rewards Ponzi- and pyramid scheme.

    Known in shorthand as the Fed, the Federal Reserve is the central bank of the United States.

    Someone is posting on the RealScam.com antiscam forum as “Fedman” and purporting to be “Steve,” a “Vice President” of a federal reserve bank. Fedman purports to have been employed by the Fed “for over 30 years,” to “manage large operations” and to “work with monetary policy.”

    Fedman appears to be defending pitches for BitClub Network by Brian Spatola, a New Jersey-based  alleged “winner” in the massive Zeek scheme that may have affected hundreds of thousands of people. The court-appointed receiver in the Zeek case is suing more than 9,000 alleged Zeek winners in the United States and has said he’ll also sue international winners in the “program.”

    The Fed did not immediately comment on the claims being made by Fedman.

    It is sometimes the case in HYIP schemes that promoters and defenders of “programs” drop the names of individuals and entities that have no ties whatsoever to a “program” as a means of sanitizing scams. The name-dropping associated with BitClub Network has been furious and now appears even to include the name of the U.S. central bank.

    bitclub350smallAfter missing a series of advertised launch dates — including one on Sept. 1, the 75th anniversary of the beginning of World War II and another on Sept. 10, the eve of the 13th anniversary of the 9/11 terrorist attacks — BitClub Network now appears to have launched.

    Promoters claim the scheme pays out between 0.3 and 0.8 percent a day for 1,000 days on invested sums of between $500 and $3,500. In addition, promoters claim there are recruitment commissions on top of the daily payout, a claim that accompanies many HYIP Ponzi- and pyramid swindles.

    Among the BitClub Network promoters are Spatola and T. LeMont Silver, late of Zeek. Silver also promoted the OneX pyramid scheme, an exceptionally murky program that used an image of a bomb in its logo.

    AdSurfDaily figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was a Federal Reserve conspiracy theorist and an overall banking conspiracy theorist. Leaming was arrested by an FBI terrorism task force in 2011, after filing bogus liens against federal officials who had a role in the ASD Ponzi prosecution that began in 2008.

    Leaming now is serving a lengthy prison sentence.

     

     

     

  • Warrant Issued For Arrest Of Eric Matthew Frein, Pennsylvania Man Suspected Of Ambushing 2 State Troopers At Rural Barracks In Cowardly Nighttime Attack

    Eric Matthew Frein. Source: Pennsylvania State Police.
    Eric Matthew Frein. Source: Pennsylvania State Police.

    2nd Update 11:35 p.m. to note that Frein has been added to the FBI’s 10 Most Wanted Fugitive List.

    Normalcy has not returned to Monroe County in the Pocono Mountains region of Northeastern Pennsylvania. Two troopers allegedly were ambushed outside their barracks in a nighttime, shift-change attack at the Blooming Grove station in nearby Pike County on Friday.

    Cpl. Bryon T. Dickson, 38, was shot and killed. Tpr. Alex T. Douglass was seriously wounded.

    Pennsylvania State Police now say Eric Matthew Frein, 31, of Canadensis, Pa., is wanted in connection with the shootings. Canadensis is in Monroe County.

    Frein, described in media accounts as having “survivalist” skills, reportedly belongs to a group that reenacts European military campaigns.

    Here’s the lede in a Sept. 17 story from the Times Leader (italics added):

    Friends described homicide suspect Eric Matthew Frein as intelligent, an Eagle Scout and a military re-enactor, while the state police call him a “coward” who dressed up as a Serbian soldier.

    The manhunt for the 31-year-old Canadensis man continued Wednesday throughout the rural and dense areas of the Poconos in Monroe, Pike and Wayne counties, prompting the closure of several schools in the region.

    From a Sept 18 story at TheDailyReview.com (italics added):

    [State Police] Lt. Col. [George] Bivens declined to say which group Frein belonged to because they are hoping for cooperation from its members. But Frein is pictured repeatedly on the MySpace page of Istocni Vuk, a group that dresses up as Serbian Army soldiers. Roughly translated, the name Istocni Vuk means “Eastern Wolf.” On the page, Frein is referred to in one photo as Vuchko, which was the wolf mascot in the Sarajevo Winter Olympic games in 1984. On some sites online, Vuchko is referred to as “the tough and courageous wolf.”

    UPDATE 11:35 P.M. EDT U.S.A. Frein has been added to the FBI 10 Most Wanted Fugitive List.

  • BULLETIN: MLM Attorney Jeffrey Babener Told TelexFree It Was Operating Pyramid Scheme Months Before Collapse, But MLM ‘Program’ Continued To Collect Money, Bankruptcy Trustee Says

    newtelexfreelogoBULLETIN: (2nd Update 5:26 p.m. EDT Sept. 16 U.S.A.) The court-appointed trustee in the TelexFree bankruptcy case says in court filings that MLM attorney Jeffrey Babener advised TelexFree in August 2013 that it was operating a pyramid scheme.

    TelexFree nevertheless continued to collect money, Trustee Stephen B. Darr said.

    Just two months earlier — in June 2013 — TelexFree’s Brazilian arm (Ympactus) “was seized by the Brazilian authorities and its operations shut down based upon the allegations that its operations constituted a pyramid scheme,” Darr said.

    Between early February 2014 and mid-March 2014 alone, Darr said, TelexFree “took approximately $50,000,000 from new and existing Promoters.”

    This occurred while both the SEC and the Massachusetts Securities Division were investigating TelexFree, Darr said.

    And, he noted, it also occurred after TelexFree — in the late summer or early fall of 2013 — had retained Robert Weaver, “an attorney with extensive white collar crime expertise, and the firm of Garvey, Schubert, Barer based in Seattle to, upon information and belief, provide legal advice respecting potential and/or ongoing violations of federal and state law.”

    “Despite the shutdown of Ympactus on the basis that its business was a pyramid scheme, and being advised in August of 2013 that the Debtors’ business plan was a pyramid scheme, the Principals continued to operate their business in accordance with that scheme throughout 2013 and into March 2014,” Darr said.

    Babener not only told TelexFree it was operating a pyramid scheme, he also told the law firm Greenberg Traurig that TelexFree was a pyramid scheme, Darr said.

    Greenberg Traurig, Darr said, initially had been retained by TelexFree in early February 2014 to represent the company “in connection with the MSD investigation.”

    The law firm then represented TelexFree in its Chapter 11 bankruptcy case. That case was filed in Nevada on April 13, two days before the SEC and MSD brought actions and the FBI and the U.S. Department of Homeland Security raided TelexFree’s office in Massachusetts.

    With TelexFree members complaining about high billings from TelexFree’s bankruptcy lawyers and other professionals involved in the bankruptcy case, Darr said that he “has reached an agreement in principle with Greenberg [Traurig] that should resolve the objections of the Trustee and the SEC to the Greenberg fee application.”

    (See BehindMLM.com for story on clashes with the Gordon Silver law firm over fees.)

    Overall, Darr said, TelexFree had racked up more than $5 billion in liabilities.

    If it proves true Babener advised TelexFree it was operating a pyramid scheme, his concerns would appear to be in stark contrast to words MLM attorney Gerald Nehra delivered at a TelexFree convention in California in July 2013.

    In May 2014, some TelexFree members accused Nehra of racketeering and turning a blind eye to fraud at TelexFree, alleging he misrepresented TelexFree as a legitimate business and encouraged TelexFree members “unknowingly” to “participate in the evasion of federal and state securities laws.”

    Moreover, the plaintiffs alleged, Nehra’s “opinions were packaged and promoted as part of TelexFree’s total ‘post Brazilian shut down package’ to the members of the putative class,” according to the complaint.

    Nehra was not merely providing zealous representation to TelexFree, the plaintiffs alleged. Rather, he counseled “TelexFree on methods to evade United States securities laws that were intended to offer, in part, protection from pyramid Ponzi schemes; all to enrich himself financially and serve his own selfish interests.”

    Nehra was billed as a “special guest” at a TelexFree rah-rah session in Spain in early March of this year, but appears not to have shown.

  • Attorney General References ISIS Recruiting Efforts; ‘We Have Established Processes For Detecting American Extremists Who Attempt To Join Terror Groups Abroad,’ Holder Says

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.” — Eric Holder, U.S. Attorney General, Sept. 15, 2014.

    EDITOR’S NOTE: This is the full statement of the U.S. Department of Justice on an initiative to combat violent extremism in an era in which terrorists effectively are operating global mass-marketing campaigns.  The terrorist group ISIS, which has taken over lands in Iraq and Syria, recently has engaged in beheadings of two American journalists and a British aid worker. A link to a video of remarks by U.S. Attorney General Eric Holder appears at the bottom of this post. ISIS also is known as ISIL.

    ** ________________________________ **

    Eric Holder. From Sept. 15, 2014, Justice Department video.
    Eric Holder. From Sept. 15, 2014, Justice Department video.

    Attorney General Eric Holder announced Monday that the Justice Department will launch a new series of pilot programs in cities across the country to bring together community representatives, public safety officials and religious leaders to counter violent extremism. The new programs will be run in partnership with the White House, the Department of Homeland Security, and the National Counterterrorism Center.

    “Today, few threats are more urgent than the threat posed by violent extremism,” [the] Attorney General said in a video message posted on the Justice Department’s website. “And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.”

    The complete text of the Attorney General’s video message is below:

    “Last week, millions of Americans paused to mark the 13th anniversary of the attacks of September 11, 2001 – the deadliest acts of terror ever carried out on American soil. For my colleagues at every level of our nation’s Department of Justice, and for me, this anniversary was also a solemn reminder of our most important obligation: to ensure America’s national security and protect the American people from a range of evolving threats.

    “Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.

    “Through law enforcement agencies like the FBI, American authorities are working with our international partners and Interpol to disseminate information on foreign fighters in Syria and Iraq, including individuals who have traveled from the United States. We have established processes for detecting American extremists who attempt to join terror groups abroad. And we have engaged in extensive outreach to communities here in the U.S. – so we can work with them to identify threats before they emerge, to disrupt homegrown terrorists, and to apprehend would-be violent extremists. But we can – and we must – do even more.

    “Today, I am announcing that the Department of Justice is partnering with the White House, the Department of Homeland Security, and the National Counterterrorism Center to launch a new series of pilot programs in cities across the nation. These programs will bring together community representatives, public safety officials, religious leaders, and United States Attorneys to improve local engagement; to counter violent extremism; and – ultimately – to build a broad network of community partnerships to keep our nation safe. Under President Obama’s leadership, along with our interagency affiliates, we will work closely with community representatives to develop comprehensive local strategies, to raise awareness about important issues, to share information on best practices, and to expand and improve training in every area of the country.

    “Already, since 2012, our U.S. Attorneys have held or attended more than 1,700 engagement-related events or meetings to enhance trust and facilitate communication in their neighborhoods and districts. This innovative new pilot initiative will build on that important work. And the White House will be hosting a Countering Violent Extremism summit in October to highlight these and other domestic and international efforts. Ultimately, the pilot programs will enable us to develop more effective – and more inclusive – ways to help build the more just, secure, and free society that all Americans deserve.

    “As we move forward together, our work must continue to be guided by the core democratic values – and the ideals of freedom, openness, and inclusion – that have always set this nation apart on the world stage. We must be both innovative and aggressive in countering violent extremism and combating those who would sow intolerance, division, and hate – not just within our borders, but with our international partners on a global scale. And we must never lose sight of what violent extremists fear the most: the strength of our communities; our unwavering respect for equality, civil rights, and civil liberties; and our enduring commitment to justice, democracy, and the rule of law.”

    The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.