A website that promotes the MPB Today “grocery” program is targeted at Spanish-speaking prospects and uses Walmart’s name in its domain name.
Like at least three other websites linked to Florida-based MPB Today’s 2×2 matrix cycler, it is unclear if the site’s operator has Walmart’s permission to use its name in a domain name. The site, which implies Walmart distributes cash, is not registered in the retail giant’s name.
An English headline on the site urges viewers to “Eliminate Your Grocery Bills . . . Forever” by joining the MLM. The site then presents Spanish content, while linking to a video that uses images of business titans Warren Buffet and Donald Trump. A check drawn on the account of Southeastern Delivery is reproduced on the site, as are images of a Walmart gift card, a Walmart store and a Sam’s Club store.
MPB Today removed images of Buffet, Trump and Walmart from the homepage of its website last month. Regardless, multiple MPB Today affiliates continue to use the images. Southeastern Delivery is MPB Today’s purported parent company.
It is common for MLM participants to imply a “program” is endorsed by celebrities and famous companies.
The check reproduced on the website is drawn on a bank that has been operating under a consent agreement with the FDIC since January. Walmart and the FDIC have not responded to a request for comment from the PP Blog on the MPB Today program. Neither has the bank upon which the check is shown to be drawn.
Multiple MPB Today affiliates have produced check- and card-waving videos and websites to recruit prospects. Some of them have been online for months.
MPB Today has been advertised on forums that promote Ponzi schemes, including the now-defunct ASA Monitor forum. Some MPB Today affiliates have claimed publicly that there are liars, thieves and scammers in the organization.
Another website that pitches the MPB Today MLM program and uses Walmart’s name in a registered domain name has surfaced. This one was registered Sept. 11, and uses an address in Fort Lauderdale, Fla. Walmart is not the registered owner of the domain, and it is unclear if the registrant has the retail giant’s permission to use its name in a domain name.
Separately, check-waving videos and Blog posts using the name of a distressed Florida bank continue to appear online in promos for MPB Today. The promos show checks and the name of Gulf Coast Community Bank of Pensacola.
Promos for MPB Today that show Walmart gift cards and prepaid Visa cards also continue to appear online.
Gulf Coast has been operating under an FDIC consent agreement since January. The bank did not respond to requests for comment from the PP Blog last week. Neither did the FDIC.
The most recent website to use Walmart’s name in its domain name positions the opportunity as a free shopping club.
“Almost Everyone within the USA is saying ‘YES!” the pitch page proclaims.
“Please Help Me!” it urges. “I need FREE Food AND a way to Create some Serious Cash NOW!”
MPB Today operates an “Amazing ‘Recycling Matrix,’” according to the pitch page.
“Warning!” the page says. “Once you watch this Video, you won’t be able to sleep tonight!”
A Blog post by a separate MPB Today promoter displays both a check drawn on Gulf Coast Community Bank and a Walmart gift card.
Some MPB Today affiliates have urged Food Stamp recipients, the unemployed, senior citizens, victims of the AdSurfDaily Ponzi scheme, people of faith and opponents of President Obama and Secretary of State Hillary Clinton to join the MPB today program.
The U.S. Department of Agriculture (USDA) said Friday that its Food and Nutrition Service unit was investigating specific claims about the MPB Today program, which is being promoted widely online.
Among the places from which the program is being promoted are forums known for pitching criminal enterprises and Ponzi schemes.
In yet-another pitch for MPB Today, a promoter is shown opening an envelope mailed through the U.S. Postal Service. Inside the envelope was another envelope, which appeared to include U.S. postage.
The inner envelope contained a prepaid Walmart Visa card and a Walmart gift card.
Walmart has not responded to a request for comment about the MPB Today program. MPB promoters have claimed the company is “affiliated” with Walmart — and also affiliated and endorsed by the USDA’s Food Stamp program for low-income Americans.
Some MPB Today affiliates have claimed in public promotions for the program that liars and thieves exist in the organization.
Eight U.S. banks have failed since Sept. 10, including two in Florida. Only three bank failures occurred in the entire United States in 2007.
As giddy members of Florida-based MPB Today flock to YouTube to post check-waving videos as “proof” of the MLM’s legitimacy, the bank used by the purported grocery company is operating under an FDIC consent order issued in January, records show.
The FDIC had no immediate comment when asked this morning by the PP Blog about the videos, which clearly show the names of MPB Today and its purported grocery arm, Southeastern Delivery of Pensacola, along with the name of Gulf Coast Community Bank of Pensacola.
A call to Gulf Coast for comment was not immediately returned. The Blog left a detailed voicemail message with a bank official, and also left a message with an employee who answered the phone.
MPB Today appears to have paid members by issuing checks drawn on both its name and the name of Southeastern Delivery. The checks are drawn on Gulf Coast accounts, according to the videos on YouTube and other sites. Affiliates say the business opportunity has attracted more than 16,000 members since April.
Affiliates reportedly receive checks for $300 drawn on Gulf Coast when they “cycle” by recruiting new affiliates and causing $1,200 of business within an MPB Today downline group. Affiliates also receive $200 Walmart gift cards or “In Store Credit” cards.
The Walmart cards also are prominently featured in the videos that display Gulf Coast’s name.
Gulf Coast is rated “zero”stars by Bauer Financial, the tracking firm’s lowest rating on a scale of zero to five stars. The Blog confirmed the rating with Bauer this morning.
Gulf Coast is listed on the FDIC website as a party to a January consent order that raised the issue of unsound banking practices. The bank was given time to comply with the order and implement new business procedures to address the FDIC’s concerns.
Some Florida banks are being battered by the recession and a surge in nonperforming loans and mortgage foreclosures. It was not immediately clear if Gulf Coast now is operating to the satisfaction of the FDIC.
Also unclear is whether the bank knows that its name is being used on YouTube in promotions for MPB Today, and under whose authority MPB Today affiliates are acting when displaying the checks drawn on Gulf Coast. At the same time, the volume of the business MPB Today and Southeastern conduct with the bank is unclear.
MPB Today uses a 2×2 cycler matrix, a business model the U.S. Secret Service referenced in court filings in a Ponzi scheme probe last year in Seattle that involved a company known as Regenesis2x2.
Regenesis2X2 was promoted on known Ponzi forums such as ASAMonitor, TalkGold and MoneyMakerGroup. MPB Today’s 2×2 matrix is being promoted on the same forums. At least one of the promoters of the alleged Regenesis2x2 Ponzi scheme also is promoting MPB Today, and some of the MLM’s affiliates are targeting churches in sales pitches. Others are targeting Food Stamp recipients, foreclosure subjects and victims of the alleged AdSurfDaily (ASD) Ponzi scheme.
In August 2008, the Secret Service alleged that ASD, which also operated in Florida, was conducting a Ponzi scheme that gathered nearly $100 million from investors. The agency seized Bank of America deposits totaling at least $79 million in the ASD case.
Meanwhile, the ASAMonitor, TalkGold and MoneyMakerGroup forums are specifically referenced in a criminal case filed by the U.S. Postal Inspection Service in May. The case, which was filed in the Southern District of Illinois, alleges that a firm known as Pathway To Prosperity was operating an international Ponzi scheme that attracted more than 40,000 investors and gathered more than $70 million.
In July, the Financial Industry Regulatory Authority (FINRA) issued an alert about online fraud schemes that use forums and social-media sites to spread virally.
MPB Today is a subject of a “review” by the U.S. Department of Agriculture (USDA) amid affiliate claims the company is an attractive option for Food Stamp recipients and is endorsed by the government. Some affiliates also have claimed that Walmart, the retail giant, endorses the program.
Walmart has not responded to a request for comment from the PP Blog. MPB Today removed the images of a Walmart store from its website last week. Also removed from the site were images of business titans Donald Trump and Warren Buffet. It is unclear if Walmart, Trump and Buffet forced the removal.
MPB Today is operated by Gary Calhoun. Calhoun was the subject of a 2006 inquiry by the U.S. Food and Drug Administration about the marketing of a product that claimed to treat Lou Gehrig’s disease, Parkinson’s disease and Alzheimer’s, among other serious medical conditions.
Calhoun was ordered by the FDA to stop violating provisions of the Federal Food, Drug, and Cosmetic Act. His company, Trim International, later failed. Southeastern Delivery began to operate in Florida in January 2010, according to state records. The firm previously was known as William Lindsay Properties LLC.
A number of MPB Today affiliates have posted check-waving videos that clearly show Gulf Coast’s name and other identifying information. The videos potentially expose MPB and the bank, which has a high ratio of troubled assets, to security breaches. The video posters potentially are exposing themselves to identity theft.
In January, Gulf Coast agreed to a consent order that required its board of directors to meet at least monthly to review reports of “income and expenses; new, overdue, renewal, insider, charged-off, and recovered loans; investment activity; operating policies; and individual committee actions,” according to the FDIC.
Florida has one of the highest rates of bank failures in the United States and one of the highest foreclosure rates.
“Within 90 days from the effective date of this ORDER, the Bank shall have and retain qualified management,” the FDIC ordered on Jan. 28. “Each member of management shall have qualifications and experience commensurate with his or her duties and responsibilities at the Bank.”
Gulf Coast consented to the order “without admitting or denying any charges of unsafe or unsound banking practices, or violations of law or regulation relating to weaknesses in asset quality, capital adequacy, earnings, management effectiveness, liquidity, and sensitivity to market risk,” according to a stipulation.
A promotional website for the MPB Today multilevel-marketing (MLM) program specifically references the U.S. Food Stamp program administered by the U.S. Department of Agriculture and includes links to at least 100 “paid to surf” programs, including programs that use domains registered offshore and programs that appear already to have failed.
Separately, an MPB Today affiliate is using a YouTube video to inform prospects that they are better off not buying groceries from a Florida-based company linked to the MLM program. Instead, the affiliate suggested, incoming members should follow the herd and not purchase groceries from Southeastern Delivery in a bid to earn a higher payout later from MPB’s 2×2 cycler matrix.
“When you join MPB Today, you buy or purchase a $200 food voucher — food voucher,” stressed the affiliate in a video pitch. “That puts you into the business.
“You can purchase food with that voucher,” he continued. “Or you can wait and do the business and exchange that voucher for a Walmart gift card . . . which I did and everybody else is doing.”
During the portion of the video in which the affiliate was stressing the importance of following the herd — a snippet of about 60 words — the word “voucher” was used four times. The use of the word — coupled with a published statement by MPB Today that it charges up to 50 percent of the cost of the order to ship groceries and ships only “dry-goods” — gives rise to questions about whether MPB Today actually has a product behind the business “opportunity.”
“We ship ONLY non-perishable dry-goods only,” MPB Today stresses on its website, using the word “only” twice in a seven-word sentence. Because the firm’s purportedly high shipping costs, dry-goods “only” policy and lack of dollar-stretching generic products, questions have been raised about whether the firm and its affiliates are deliberately steering members to the matrix program and seeking to minimize or eliminate grocery orders from outside its base of operations in Pensacola.
The video first was referenced by “Ken Russo” on the Ponzi-pushing ASAMonitor forum as a “very concise . . . presentation” that outlines the advantages of the MPB Today program.
“Ken Russo,” who also pushed the Regenesis 2×2 cycler program that became the subject of a U.S. Secret Service probe last year that featured undercover operatives and the surveillance of a Dumpster into which business records were tossed, opined on the ASAMonitor Ponzi forum that he has “concluded that MPBToday is one of the best and most practical programs I have ever seen in the network marketing industry.”
In April 2009, while pitching Regenesis on ASAMonitor, “Ken Russo” observed that “ReGenesis is an excellent program which lends itself to a team effort approach which will greatly enhance the Automated Recruiting System that they provide to ensure that each and every member is credited with 2 personal referrals.”
By August 2009, the Secret Service had applied for and executed search warrants in the Seattle area as part of its probe into Regenesis, according to court documents. The agency informed a federal judge that it had kept certain subjects under surveillance for five weeks and that it had linked the scheme to a securities fraudster who had been released from federal prison in January 2009.
The agency laid out allegations of an elaborate fraud involving multiple individuals, multiple bank accounts, multiple addresses and multiple company names. Agents said they observed complaint letters directed at the firm being discarded into a Dumpster that was kept under constant surveillance.
Also found in the Dumpster were copies of checks sent in by customers, other documents that included customers’ names and information to identify them personally, complaint faxes sent by customers and a letter from a law firm complaining about false, misleading and deceptive advertising, according to court filings.
In the promo that specifically referenced the Food Stamp program, meanwhile, the affiliate claimed that MPB Today sells “prepaid” groceries.
“This grocer is so legitimate that they are legally authorized to accept payment via EBT,” the affiliate claimed. “EBT is an abbreviation for Electronic Benefits Transfer which is the method now used for distributing the federal Supplemental Nutrition Assistance Program (SNAP). As of Oct. 1, 2008, SNAP is the new name for the federal Food Stamp Program. One word —> LEGITIMATE !â€
The clear implication of the claim is that, because the government approved Southeastern Delivery to accept Food Stamps, the MLM program also passes muster. The word “voucher†also is used on the Food Stamp pitch page, and the page includes links to multiple autosurfing sites and other highly questionable business opportunities.
One of the programs pitched on the page is Data Network Affiliates (DNA), which purports to collect license-plate data that can aid law enforcement and the AMBER Alert program rescue abducted children. Like MPB Today, some affiliates of DNA used an image of Donald Trump to pitch the purported license-plate data program. Trump’s image appeared for 10 continuous minutes in a pitch for DNA, while a narrator said the company had “incredible” people on speed dial. DNA, which lists an address in Boca Raton, Fla., uses a domain registered behind a proxy in the Cayman Islands and says it can help members avoid traffic tickets by providing them a protective spray that purportedly shields intersection cameras from taking pictures of license plates, has an “F” rating from the Better Business Bureau for not responding to customer complaints.
DNA once claimed that churches have the “MORAL OBLIGATION” to help it pitch a purported mortgage-reduction program. Florida is plagued by mortgage fraud — and scammers who are targeting foreclosure subjects.
MPB Today is targeting foreclosure subjects in a video sales pitch. Trump’s image was removed from the MPB Today website Tuesday.
In a video accessible from the page in which the MPB Today Food Stamp claim is made, another affiliate is shown cashing his check from Southeastern Delivery at an FDIC insured bank. The video captures the voice of the bank teller.
In this YouTube video, an MPB Today affiliate cashes his check from Southeastern Delivery at an FDIC-insured bank. The page from which the video is accessible shows August prices for Southeastern Delivery, which appears to have no money-stretching generic products. Among the name-brand products listed was Starbucks coffee — $14.28 for 20 ounces of House Blend.
The affiliate then was videotaped inside a Walmart store making a purchase with a Walmart gift card sent to him by the MLM program. This section of the video captured the face of a Walmart employee.
Later, the affiliate was taped inside a taco store. In an apparent gag, the affiliate attempted to pay for his purchase with a Walmart gift card. This section of the video showed the faces of at least three taco-store employees. The employees, whose faces now are on YouTube along with the face of the Walmart employee and the voice of the bank employee, appear to be confused about what is happening.
It is unclear if any of the workers knew they were being videotaped or audiotaped for an affiliate’s commercial for MPB Today.
MPB removed an image of a Walmart store from its website Tuesday. Walmart has not responded to questions posed by the PP Blog. The U.S. Department of Agriculture (USDA) is conducting a review of claims made about the MPB Today program.
A Georgia banker accused of lending a now-accused Florida real-estate fraudster money to buy a “private island” in the Caribbean has pleaded guilty to conspiracy to commit bank fraud and to receive bribes, and to a single count of tax evasion, federal prosecutors said.
Douglas Ballard, 40, of Atlanta, formerly was the executive vice president in charge of lending at Integrity Bank, a $1 billion institution that collapsed in August 2008 and was taken over by the Federal Deposit Insurance Corp. (FDIC).
“Among the roots of our nation’s financial crisis were criminal acts by bank insiders and major borrowers that contributed to the failures or bailouts of financial institutions previously believed to be secure,†said U.S. Attorney Sally Quillian Yates of the Nortern District of Georgia.
Ballard, Mitchell and Joseph Todd Foster, another Integrity vice president, were indicted under seal in April. Mitchell, 50, of Coral Gables, Fla., is a developer. Foster, 42, of Atlanta, was in charge of risk management at the bank.
Prosecutors now say Ballard has admitted that he conspired with Mitchell “to receive bribes from Mitchell and to assist Mitchell in receiving millions in loan draws under false pretenses.”
Ballard, prosecutors said, “admitted in court to receiving over $200,000 in cash and other corrupt payments from Mitchell in exchange for Ballard’s assistance in distributing millions of loan draws.
“During this same time, Ballard caused Integrity Bank to distribute nearly $20 million in loan proceeds to Mitchell’s personal account, much of which was allegedly used for Mitchell’s personal consumption (including the purchase of a private island in the Bahamas),” prosecutors said.
About $7 million of the sum was related to draws on a “construction loan relating specifically to supposed construction and renovation at the ‘Casa Madrona,’ a luxury hotel owned by Mitchell in Sausalito, Calif.
“The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred,” prosecutors said.
“While Mitchell was spending much of the loan proceeds on himself, the indictment alleges that [he] paid little, if any, of his money back to Integrity to satisfy interest payments,” prosecutors said in May.
Instead, prosecutors alleged, “Mitchell paid interest on existing loans by taking draws or disbursements from other loans, and continually borrowed more and more money to keep paying the ever-increasing interest payments.”
For his part, Foster pleaded guilty to securities fraud amid allegations of insider trading.
Prosecutors said Foster “dumped his shares of Integrity stock based on his knowledge that the bank was facing an increasingly substantial but undisclosed risk that its major customer, Mitchell, would default on over $80 million in outstanding loans.”
“These officers of Integrity Bank sure weren’t living up to the bank’s name,” Yates said in May, after the April indictments were unsealed. “While the developer was living the good life, even buying a private island with Integrity’s money, and the bank’s senior loan officer was making huge commissions and taking payoffs from the developer, the bank was dying a slow death. The defendants were going to leave the bank’s shareholders and the FDIC holding the bag, but now they are being held accountable.â€
The case was brought as part of the undertakings of President Obama’s Financial Fraud Enforcement Task Force.
Mitchell paid about $1.5 million for the private island in the Bahamas, prosecutors said.
“Those who line their pockets with profits of bank fraud schemes should know they will not go undetected and they will be held accountable,†said Reginael McDaniel, special agent in charge of the IRS Criminal Investigations unit.
No sentencing dates have been set for Ballard and Foster. Ballard faces up to 10 years in prison and a fine of up to $500,000. Foster faces up to 20 years in prison and a fine of up to $5 million.
Acting Assistant Director in Charge of the FBI’s New York Office George Venizelos announces the arrest.
EDITOR’S NOTE: At the moment, I don’t have the time to do this story justice. The allegations, however, are astonishing. And law-enforcement officials at both the state and federal level are calling it another case that has been solved by the Interagency Financial Fraud Enforcement Task Force.
A New York man has been arrested on charges he tried to prop up a failing bank while fleecing two Florida church pastors and attempting to defraud the Troubled Asset Relief Program (TARP) operated by the government — all while stealing from the bank itself.
The charges against Charles J. Antonucci Sr. read like a work of fiction, painting him as a man who engaged in one deception after another, received first-class transportation on a private plane by approving millions of dollars in overdrafts by a co-conspirator, pocketed money that did not belong to him and hatched a complex scheme to fleece taxpayers.
Investigators said all of these things occurred:
The Park Avenue Bank in New York was failing.
It was seized by the FDIC and New York banking regulators Friday.
Prior to the seizure, Antonucci, who served as the bank’s president and chief executive officer from June 2004 to October 2009 and also was a member of the board of directors, engaged in “self-dealing, bank bribery and embezzlement.”
Antonucci and a co-conspirator participated in an investment scheme that fleeced the pastors of Calvary Springs Chapel in Coral Springs, Fla. out of $103,940 by making them believe they could earn back the principal and a profit of about $500,000 in weeks by investing in a bond. The pastors, who were investing the funds to build a new church, deposited the money into an account in the name of “Park Avenue Insurance.” The account proved to be owned by Antonucci, who split the proceeds with his co-conspirator and did not pay the interest promised the church.
Antonucci was at the center of a fraud in which he caused the bank to lend a company he owned $400,000 by installing a puppet president to hide his ownership of the firm, which was called “Easy Wealth Group Ltd.” The puppet president applied to the bank for a $300,000 line of credit, and Antonucci personally approved it, later increasing it to $400,000. The puppet president drew down the entire line, causing the bank a loss of the entire sum.
Antonucci approved overdrafts totaling more than $8 million tied to an entity of a co-conspirator. (The FBI cryptically referred to this co-conspirator as “CC-1,” an associate of Antonucci’s and part of the “Oxygen-related entities.”) In 2008 and 2009, Antonucci flew on the co-conspirator’s private plane more than 10 times, including trips to Florida, Panama, Arizona (to attend the Super Bowl), and Augusta, Ga. (to attend the Masters golf tournament). When a check from one of the “Oxygen” entities bounced in 2009 — apparently because Antonucci did not intervene — Antonucci was told he no longer could fly on the private plane.
Antonucci caused Park Avenue Bank to lease and pay expenses and upkeep on three properties he personally owned. Each of the properties was in Fishkill, N.Y. The bank had no legitimate need for two of the properties.
Antonucci tried to calm depositors’ concerns about the bank by saying he personally had pumped in $6.5 million. The money he invested, however, came from a series of loans the bank had made to businesses that had relationships with Antonucci. Those businesses then routed the money to Antonucci, who re-deposited the money back into the bank.
Antonucci lied to the FDIC about the source of the $6.5 million.
Antonucci tried to get $11 million in TARP funds, based on his purported, personal capital infusion of $6.5 million. He issued a false press release about the purported infusion, saying the bank was “well-positioned.”
The FDIC declined the bank’s TARP application. Antonucci then lied, saying he had withdrawn the application because of “issues” with TARP and because he did not want to create the “market impression” the bank was weak because it had accepted TARP funds.
To conceal the $6.5 million fraud, Antonucci created a bogus certificate of deposit in the amount of $2.3 million and engaged in an elaborate deception involving at least two companies to conceal the fraud.
J.V. Huffman Jr. Source: Catawba Country Sheriff's Office
It’s not as though alleged fraudster J.V. Huffman Jr. did not have the expensive cars and real estate often associated with Ponzi schemes or financial frauds.
Huffman, jailed awaiting trial in North Carolina on Ponzi and weapons charges, had plenty of those, according to William Walt Pettit, the court-appointed receiver. He had an Aston Martin ($100,000+), three Mercedes (nearly $180,000 combined), and a Prevost motor home (insured against loss for $825,000) , for example. And Huffman had at least 14 parcels or properties, including a $765,000 property in North Carolina and multiple interests in time-shares at Walt Disney World in Orlando.
But Huffman also had jet skis, which oddly seem to have become a signature purchase among operators of alleged Ponzi schemes or financial frauds. Disbarred Florida attorney Scott Rothstein, implicated in an alleged $1.2 billion Ponzi scheme, had jet skis.
Affiliate Strategies Inc., a Kansas company under whose umbrella the shuttered Noobing autosurf fell, had a jet ski. ASI is among a number of companies sued by the Federal Trade Commission and the attorneys general of four states for operating a grant-writing scheme.
Florida-based AdSurfDaily, whose president is implicated by the U.S. Secret Service in a $100 million Ponzi scheme, also had jet skis — two of them. Andy Bowdoin told his members that the jet skis (and a lakefront home) were for their benefit, but the statement was met with anger, the jet skis and Bowdoin’s other marine equipment dismissed derisively as “water toys.”
Huffman’s next court appearance in North Carolina has been delayed until Jan. 25. He also faces a civil prosecution by the SEC, which said his Ponzi scheme began in 1991 and operated for 17 years before collapsing.
The weapons charge was added when guards found a razor blade hidden in Huffman’s Bible in his jail cell. Prosecutors said the alleged financial scheme largely was targeted at Lutherans.
SEC investigators said Huffman and his company — Biltmore Financial Group — gathered as much as $25 million from 500 investors. At first, Huffman told investors he operated a mutual fund.
After the 9/11 terrorist attacks and the ensuing volatility in financial markets, Huffman changed his story, telling investors that he pooled funds to purchase and sell safe mortgages that had strong equity positions and were insured, the SEC said.
“Contrary to his representations, Huffman and Biltmore did not invest the funds as represented,” the SEC said. “Instead, Huffman spent investor funds to subsidize his lavish lifestyle. Returns to investors were paid from money invested by new investors. The purported insurance protecting the investments did not exist and much of the principal has been dissipated or used to purchase real estate for Huffman and/or his wife, expensive automobiles or other luxuries.”
In another claim reminiscent of the AdSurfDaily case, the SEC said Huffman dropped famous acronyms such as “FDIC” to get people to invest with him.
North Carolina Secretary of State Elaine F. Marshall is spearheading the criminal prosecution.
“People who are knowledgeable in the investment industry came to us saying that the
promises being made sounded ‘too good to be true,’†she said, after agents arrested Huffman in November 2008. “In most cases, when an investment sounds too good to be true, it usually is.â€
UPDATED 1:33 P.M. EDT (U.S.A.) The failure yesterday of San Joaquin Bank in Bakersfield, Calif., brought the total of bank failures in the United States this year to 99.
With weeks remaining in the year, it is a virtual certainty that failures will top the 100 mark. Banks have been failing at an average rate of slightly less than 10 per month in 2009. Last year, 25 banks failed in the United States. In 2007, only three banks failed.
As many as 416 names of other troubled banks appear on a confidential list maintained by the Federal Deposit Insurance Corp. (FDIC). The hemorrhage of bank failures — in large measure caused by a severe recession, consumer and business defaults, a collapse of real-estate prices in many parts of the country, brazen fraud in the mortgage sector and a contraction of development — is not over.
Although banks and the government are working together to find ways to curb an explosion in the mortgage-foreclosure rate, foreclosures continue to suck wealth from the economy.
“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,†said James J. Saccacio, chief executive officer of RealtyTrac.
RealtyTrac tracks foreclosure activity in the United States. On Oct. 14, the company said foreclosures in the third quarter set a record and were up 23 percent from the total reported in the third quarter of 2008.
Foreclosure filings, default notices, scheduled auctions and bank repossessions totaled 937,840 in this year’s third quarter, RealtyTrac reported.
Although foreclosure filings in September totaled 343,638 — a 4 percent decrease from August’s total — the number still represented a 29 percent increase from September 2008.
September’s monthly total was among the highest figures reported since January 2005, trailing only July and August of this year.
“REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties,†Saccacio said.
Florida, California Battered By Foreclosures
Six states — California, Florida, Arizona, Nevada, Illinois and Michigan — accounted for 62 percent of the foreclosure total in the third quarter, RealtyTrac reported. Foreclosures in the six states totaled 579,541.
Foreclosures in California totaled 250,054 in the third quarter; Florida posted 156,924 foreclosures, a 23 percent increase from the total reported in the third quarter of 2008.
Because Florida is an attractive state for retirees — and because those retirees have friends and loved ones in all corners of the United States — the state is an attractive target for scammers.
Florida also has a large population of immigrants, another attractive target of scammers.
Agencies Battle Florida Ponzi Fraud
In the past 72 hours alone, the SEC, the CFTC, the FBI, the U.S. Postal Inspection Service, and federal prosecutors have announced three Florida Ponzi scheme prosecutions, a conviction in a separate Ponzi case — and a conviction in a fraud case in which a Florida man created more than 260 identities on eBay and fleeced customers out of $717,000.
On the Florida Ponzi front:
David F. Merrick, Traders International Return Network (TIRN), MS Inc., GTT Services Inc., MDD Consulting Inc. and Go ! Tourism Inc. were named defendants in emergency actions in U.S. District Court for the Middle District of Florida. Merrick, 61, of Apopka, is accused of operating a $22 million Ponzi scheme with ties to Panama, Mexico, Malaysia, Switzerland and the Netherlands.
HomePals Investment Club LLC, HomePals LLC (Home Pals), Ronnie Eugene Bass Jr., Abner Alabre and Brian J. Taglieri were charged in South Florida with securities fraud, conspiracy to commit securities fraud, wire fraud and money laundering. The defendants were accused of targeting Haitian-Americans in a $14.3 million Ponzi scheme that promised investment returns of 100 percent every 90 days. The scheme gathered money from as many as 64 “investment clubs,†the SEC said.
Sean Healy, 38, of Weston, Fla., was charged in a 55-count indictment unsealed in Pennsylvania with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice. The Florida-based scheme led to at least $14.6 million in losses in Pennsylvania alone, prosecutors said, adding that Healy purchased “numerous exotic vehicles and sport cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth over $2.3 million.†Healy also bought a $2.4 million waterfront mansion furnished with more than $2 million of home improvements, plus $1.5 million in men’s and women’s jewelry, prosecutors said.
Michael Riolo, 38, of Boca Raton, was sentenced to more than 24 years in prison for bilking investors in a $44 million Ponzi scheme. Prosecutors accused Riolo of cooking the books and sending false statements to investors that reported “consistent trading profits and increasing account balances.” In reality, Riolo “misdirected money he received from some investors to make distributions to other investors who sought to withdraw money from their investment accounts,” prosecutors said.
Andy Bowdoin, 74, of Quincy, Fla., continued his efforts to get back into a Ponzi case in which he had already submitted to the forfeiture of tens of millions of dollars seized last year by the U.S. Secret Service in an international wire-fraud and money-laundering probe. Bowdoin, who submitted to the forfeiture in January, fired his attorneys and began to file as his own attorney in February. In April, federal prosecutors announced that Bowdoin had signed a proffer letter in the case prior to acting as his own attorney and acknowledged his company, AdSurfDaily Inc., had been operating illegally. “Mr. Bowdoin also confirmed that the revenue figures of the enterprise were managed to make it appear to prospective members that the enterprise called Ad Surf Daily was a consistently profitable, and brilliant, passive income opportunity,” prosecutors said. Despite his own acknowledgments of illegal conduct, despite the proffer — and despite the fact Bowdoin had asked the court to grant his request to submit to the forfeiture and that the court granted Bowdoin’s request — Bowdoin climbed back on the litigation saddle. “Mr. Bowdoin says that after discussing this case with his supporters, and concluding that they were smarter than his attorneys, he has changed his mind,” prosecutors said.
Total funds gathered in the alleged Bowdoin, Merrick, Bass, Alabre, Taglieri and Healy Ponzi schemes in Florida are estimated at $156.3 million, during a period in which U.S. banks are failing, the U.S. economy is confronting the worst business conditions since the Great Depression and mortgage foreclosures are piling up across the country, including hard-hit Florida.
With the Riolo conviction added to the estimate, the number totals $200.3 million. The estimate does not reflect the massive, $65 billion Ponzi fraud of Bernad Madoff, who wiped out clients in Florida and elsewhere. Nor does it take into account allegations that Arthur Nadel, another man implicated in a large-scale fraud in Florida, may be responsible for tens — if not hundreds — of millions of dollars of Ponzi pain.
“During these tough economic times, it is more important than ever that those who lie to and steal from the investing public be held accountable for their misconduct,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida, commenting on the 24-year prison sentence Riolo received.
“The United States Attorney’s Office will continue to investigate and prosecute those who perpetrate these large-scale fraud schemes,†Sloman said.
When the AdViewGlobal (AVG) autosurf — now failed — was in prelaunch phase in December 2008, it positioned itself as an offshore cure for what ails the U.S. and world economies.
Less than two years earlier, promoters of the AdSurfDaily autosurf — which has close ties to AVG — implied that the individual surf accounts of ASD members were insured by the FDIC and that ASD provided “shelter” from the FTC and the SEC.
ASD’s assets were seized by the U.S. Secret Service in August 2008, amid allegations of wire-fraud, money-laundering and selling unregistered securities via a Ponzi scheme. Only months later AVG began its ignoble task of encouraging members to move cash offshore and permit it to be managed by unknowns, thus separating participants from even more wealth.
The result was a colossal failure AVG announced in June, before it disabled its forum to prevent members from asking uncomfortable questions. AVG even threatened members who shared the news with copyright-infringement lawsuits. Indeed, AVG went from a much ballyhooed cure to a thuggish disease that attacked its own participants in only weeks.
Neither ASD nor AVG created any new wealth or cured anything. About the only thing the surfs managed to do was siphon wealth from one group and transfer it to another, all during a time a global recession was rearing its ugly head and putting jobs and lifetimes of hard work in harm’s way.
The U.S. economy shed 263,000 jobs in September, and the unemployment rate edged up to 9.8 percent, the Labor Department said yesterday.
Unemployment virtually has doubled since December 2007. The number of persons looking for work now totals 15.1 million, and the unemployment rate is the highest since June 1983.
When discouraged workers and workers who’ve accepted part-time jobs in the absence of full-time employment are factored into the numbers, the so-called “real” unemployment rate is 17 percent. The number could be distorted — meaning the true employment numbers could be masked to a degree — because older workers separated from their jobs have been applying for Social Security, rather than continuing their struggle to find work when the odds are against them.
The Social Security Administration told Bloomberg News that it had expected an increase of 315,000 applications for the one-year period ending Sept 30, but instead received 465,000, an increase of 150,000 applications.
Meanwhile, regulators seized three more U.S. banks yesterday, bringing the year-to-date total to 98. Because the FDICÂ is close to operating in the red, the agency is in the process of recapitalizing and has proposed a plan that would force banks to pay insurance premiums early to protect customer deposits, rather than pass along the cost of the recapitalization to taxpayers.
“First and foremost, bank customers should know that their insured deposits have and always will be 100 percent safe, no matter what,” said FDIC Chairman Sheila Bair. “This commitment to depositors is absolute. The decision today (Sept. 29) is really about how and when the industry fulfills its obligation to the insurance fund. It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem. In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”
At risk, however, are banking profits when the industry already is struggling, but the FDIC insists that “banks overall have enough liquid assets to make the proposed prepayment.”
U.S. regulators have not confronted a challenge of this magnitude since the late 1980s and early 1990s, when the savings and loan industry recorded 745 failures, in no small part due to fraud, mismanagement and regulatory laxity.
An AdSurfDaily downline group known as “oneteam” used the names of U.S. government agencies, a Congressionally chartered insurance entity for depositors and Bank of America in what appears to have been a brazen bid to disarm doubting prospects continuously in advertisements for at least 18 months.
The ads appeared online beginning in February 2007.
Among other things, the ads advised prospects that ASD provided “shelter” from the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC). The FTC, among its many duties, polices false advertising; the SEC regulates the securities industry, prosecuting illegal activities such as securities fraud, the sale of unregistered securities and Ponzi schemes in a securities environment — all of which are activities associated with the so-called autosurf “industry.”
Autosurfs typically call themselves “advertising” companies in a bid to avoid regulatory scrutiny and short-circuit prosecutions. “oneteam’s” ads began to appear one year to the month after the SEC filed fraud charges against 12DailyPro in February 2006, in a widely publicized case that effectively smashed a $50 million Ponzi scheme. ASD was struggling to recruit members when the “oneteam” ads debuted.
“oneteam’s” ads also repeatedly mentioned the Federal Deposit Insurance Corp. (FDIC), an independent agency created by Congress during the height of the Great Depression in 1933 to maintain stability and public confidence in the U.S. financial system. One version referenced the FDIC in prominent type in a headline box and included another FDIC reference below, placing Bank of America’s name right next to the FDIC claim.
The web library archive.org archived the ads at a specific “oneteam” URL between February 2007 and October 2007, a period of eight months. The ads, however, appear to have continued for at least 10 months beyond that, according to a screen shot taken Aug. 26, 2008, as part of this Blog’s research into ASD.
‘Damned Determined To Be Rich’
Meanwhile, a second URL associated with “oneteam” styled the group as “Teamed For Integrity,” noting that members were known as the “Damned Determined To Be Rich Bunch.”
The URL “oneteam” created for its ASD ads was active for a minimum of 25 days after the government began the process of seizing tens of millions of dollars from ASD on Aug. 1, 2008, amid allegations of wire fraud, money-laundering and securities fraud in a Ponzi environment. The “oneteam” ad appeared at the URL at least through Aug. 26, 2008. It went missing on a date uncertain after Aug. 26.
The URL — http://oneteam.homestead.com/asdall.html — now resolves to the main page at homestead.com, a hosting service. Previously it behaved as a subdomain, with the URL resolving to the ASD ads.
An archive.org archive from Feb. 9, 2007 (see note below about an earlier archive from a different URL), strongly suggests that “oneteam” was trying to plant the seed that ASD was like no other surf program because member deposits were “insured” by the FDIC. Bank of America’s name appeared directly next to the FDIC claim, the third claim on a numbered list.
Here is a screen shot of “oneteam’s” Bank of America claim, with our notes included in red outlines:
Screen shot of 'oneteam' making claim that ASD deposits were insured by the FDIC, that the company provided 'shelter' from the FTC and the SEC — and highlighting a tie to Bank of America next to one of the FDIC insurance claims.
To see the archive.org archives of “oneteam” ads, visit archive.org and type in this URL:
http://oneteam.homestead.com/asdall.html
To see the archive.org archive of the “Teamed For Integrity” page, visit archive.org and type in this URL:
http://oneteam.homestead.com/index.html
NOTE ABOUT EARLIER ARCHIVE: To see the archive.org archive for yet another URL “oneteam” used to promote ASD, visit archive.org and type in this URL:
http://oneteam.homestead.com/asd.html
The URL that ends with “asd.html” first was recorded by archive.org on Feb. 3, 2007, and lists several captures beyond that. In these versions of the ad, “oneteam” touted ASD “longevity.” The Feb. 3, 2007, version of the ad said ASD was “predicted to go mainstream by 2/23/07!” — making an additional claim that ASD had a “NEW Un-Breakable Business Model.” The “oneteam” group later changed the predicted date ASD would go “mainstream” from Feb. 23, 2007, to May 1, 2007. The earliest archived version of this URL (Feb. 3, 2007) also featured the FDIC claim in a prominent headline box, and placed Bank of America’s name next to the FDIC claim lower in the ad.
FDIC Claim Removed From Headline
The Feb. 9, 2007, ad at “asdall.html” appears to have been pulled quickly — perhaps appearing online for a minimum of one day and a maximum of eight before being edited and restructured. By Feb. 17, Bank of America’s name had been deleted from the numbered list — although the FTC, SEC and FDIC claims remained — and Bank of America’s name continued to appear elsewhere in the ad.
“oneteam” also restructured the ad in other places. The Feb. 9 version, for instance, made the brazen FDIC insurance claim in 14-point Arial type in a headline box near the top of the page. The FDIC claim in the headline box did not appear on Feb. 17, 2007, the date archive.org recorded its next visit to the site.
Later versions of the ad also dropped the FDIC claim from the headline, while maintaining the claim lower in the ad and not mentioning Bank of America in the context of FDIC insurance. The final archive entry is dated Oct. 5, 2007.
“oneteam’s” pitch was supplemented in forum posts that also used Bank of America’s name. Here is a claim from Feb. 25, 2007, that cites the “oneteam” URL, Bank of America’s name and a sign-up link for ASD.
At one time, the first external link on the “oneteam” page at “asdall.html” resolved to this URL: http://www.adsurfdailytraining.com
ASD President Andy Bowdoin is listed as the adsurfdailytraining.com domain owner. The domain was registered on Oct. 12, 2006. It listed an address — 13. S. Calhoun Street, Quincy, Fla. — federal prosecutors later said was fraudulent. Heardy Myers of Marietta, Ga., is listed as the technical contact for the domain. The URL now resolves to a parked GoDaddy.com page.
Virtually every claim made in the “oneteam” ad is dubious or demonstrably false, including the apparently toned-down version that deleted Bank of America’s name from the numbered slot next to the FDIC claim. Some of the claims — the references to the SEC, FTC and FDIC, for instance — can be described aptly as utterly preposterous.
Although the Bank of America reference in the numbered list next to the FDIC claim was deleted, subsequent versions of the ad continued to reference the bank lower in the copy, using these words:
“*USA – Direct Deposits can be made through Bank of America*.”
The asterisks led to a prompt to “*Please get back to the person who invited you to this page for their Web Site Link*.” A confusing claim also was made that Dallas Cowboys’ owner Jerry Jones had provided a testimonial, apparently for a non-Bank of America debit card somehow connected to ASD.
Even as Bowdoin — whom prosecutors described as a “convicted fraudster” — was suspending pay-outs and blaming problems on a script that purportedly overpaid members and drained ASD’s resources in early 2007, “oneteam” positioned ASD as “well-capitalized” with “top management.”
“oneteam” also repeatedly heralded (for months) an imminent ASD name change and, at one point, asserted that ASD had been marketing itself “all wrong.”
Some of the claims border on the bizarre, because they are so obviously untrue. The references to “shelter” can be construed as a bid to make ASD appear to be legal or a safe option — unlike 12DailyPro, which was smashed by the SEC in February 2006, one year prior to the appearance of “oneteam’s” ASD ads.
Meanwhile, the FDIC claims can be construed as a bid to fool customers into believing that money they invested in ASD was insured against investor losses, meaning there was no way to lose money with ASD.
Here is a screen shot taken by this Blog Aug. 26, 2008, of a “oneteam” ASD ad that appeared live at the “asdall.html” URL:
Screen shot of a second version of 'oneteam' claim. This ad eliminated the FDIC insurance claim in the headline (while preserving it lower in the copy) and dropped Bank of America's name from the slot next to the FDIC claim. Bank of America's name, however, appeared elsewhere in the ad (not pictured).
A website that promotes the MPB Today “grocery” program is targeted at Spanish-speaking prospects and uses Walmart’s name in its domain name.
