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Tag: Financial Fraud Enforcement Task Force

  • BULLETIN: 3 New Defendants In ‘Red Sea Management’ Case Have Been Arrested; New Charges Filed Against Original Defendants In Alleged Stock-Manipulation Scheme Over Which Purported One-Time ‘Consulate’ To Nonexistent Nation Of ‘New Utopia’ Allegedly Presided

    BULLETIN: Federal agents have arrested three new defendants in the alleged Red Sea Management stock-manipulation scheme. The arrests occurred in three U.S. states last week, and one of the new defendants already was in custody for a separate scam, federal prosecutors said.

    Arrested were Timothy Barham Jr., 43, of Henderson, Tenn.; Nathan Montgomery, 30, of Henderson, Nev.; and Ryan Reynolds, 39, of Dallas. Reynolds already was in custody. The SEC charged him in 2008 in a separate scam, according to records. He is a defendant in at least two separate SEC actions.

    Red Sea allegedly was operated by Jonathan Curshen, a convicted felon and the one-time purported “honorary counsel” of St. Kitts-Nevis to Costa Rica. Curshen, 46, of Sarasota, Fla., also has been referenced as a purported “consulate” to the bizarre, nonexistent nation of “New Utopia.”

    New Utopia has purported to be an underwater nation that will rise out of the Caribbean on concrete stilts.

    On March 10, the PP Blog received a bizarre communication from a person who purported to be “Mr. Protector” and complained about the Blog’s coverage of the New Utopia fantasy, which the SEC said was dreamed up by American Lazarus R. Long more than a decade ago.

    Long has described himself as a “Prince.” New Utopia, which purportedly is located undersea “approximately 115 miles west of the Cayman Islands,” has offered driver’s licenses for $140.

    The communication both invited and uninvited the Blog to witness the debut of the New Utopia “Palace” on a date uncertain.

    “How about we print your words out about New Utopia in size 12 font and then, when New Utopia Construction begins, we can invite you there in front of the Palace and watch you eat the words and the paper they are written on?” the person wrote.

    In the very next paragraph, however, the Blog was uninvited.

    “[H]ow will we know to not allow you to visit The Principality of New Utopia?” the person inquired. “We will find a way of that be assured.”

    Read the Justice Department statement on the new defendants and a superseding indictment against the original defendants. The original defendants included Curshen; attorney Michael Simon Krome, 49, of Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, both of Israel.

    The case was brought by elements of the interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009.

  • URGENT >> BULLETIN >> MOVING: Keith Simmons’ Forex Ponzi Caper Leads To Criminal Charges And Deferred Prosecution Against North Carolina Bank; CommunityONE Bank Charged With Not Maintaining Effective Anti-Money Laundering Program

    BULLETIN: Federal prosecutors say the collapsed Forex Ponzi scheme operated by Keith Franklin Simmons put an undercapitalized  North Carolina bank with 45 offices in 38 communities in harm’s way.

    In a dramatic announcement, Justice Department officials said CommunityONE Bank N.A of Asheboro, N.C., turned a blind eye to Simmons and did not file a single Suspicious Activity Report despite the fact the scheme sent out red flags for more than two and a half years.

    CommunityONE lost 16 percent of its value because of the scheme, the Justice Department said. Had the bank collapsed, it would have cost the FDIC insurance fund $500 million, prosecutors added.

    In a deferred prosecution agreement, the bank has been charged criminally with failing to maintain an effective anti-money laundering program. The agreement, officials said, would enable the bank to recapitalize and execute a merger plan while providing $400,000 to help the Ponzi victims recover.

    “Banks asleep at the switch need to wake up,” said U.S. Attorney Anne Tompkins of the Western District of North Carolina.  “Federal law requires banks to implement a robust and proactive anti-money laundering program to detect fraud and protect the public from harm.  This bank’s failure to detect and report a Ponzi scheme cost it 16 percent of its value.  Other financial institutions should heed this warning:  the Bank Secrecy Act applies to more than just drug and terrorist financing.”

    Simmons, prosecutors said, operated his massive scam “almost entirely through an account at the bank.”

    Between April 2007 and September 2009, prosecutors said, Simmons used CommunityONE to deposit more than $35 million in investor funds and withdraw at least the same amount.

    Even though “hundreds” of suspicious transactions occurred, the bank chose to be willfully blind, the Justice Department said.

    “CommunityONE Bank turned a blind eye to criminal conduct occurring under its nose,” said Assistant Attorney General Lanny Breuer.

    The Justice Department made the announcement from Washington, and Breuer said the bank was implementing a new program and beginning the process of “righting its wrongs.” The charges will be dismissed in two years if the bank complies with its agreement.

    Records at CommunityONE, prosecutors said, showed that Simmons diverted more than $2 million to other accounts at the bank “to operate his other businesses.”

    Meanwhile, he “diverted nearly $800,000 in cash withdrawals, gift cards and transfers to his personal account with the bank” and “diverted numerous payments to support his luxurious lifestyle, including payments for private jets, vehicles and gifts,” prosecutors said.

    Simmons, who was convicted of securities fraud, wire fraud and money laundering last year, operated a company known as Black Diamond Capital Solutions LLC. He faces a maximum sentence of 80 years in federal prison. Read more about Black Diamond here.

    The action against CommunityONE was brought by elements of the interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009.

  • BULLETIN: Judge Orders Lee Bentley Farkas Detained After Conviction In $2.9 Billion Fraud Caper That Rocked Banking System; Former Taylor, Bean & Whitaker Chairman Once Bragged He Could Could ‘Rob A Bank With A Pencil,’ Prosecutors Say

    BULLETIN: A federal jury in Virginia has returned guilty verdicts on more than a dozen counts filed against Lee Bentley Farkas, the former chairman of Taylor, Bean & Whitaker (TBW). A federal judge ordered Farkas, 58, taken into custody immediately.

    Farkas, accused of contributing to the U.S. mortgage meltdown and the failures of both TBW and Colonial Bank by engaging with co-conspirators in a long-running, $2.9 billion fraud scheme, once bragged he could “rob a bank with a pencil,” prosecutors said.

    “[H]e did just that,” said U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.

    The Farkas case is perhaps the signature case brought by elements of the interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009. Colonial Bank, one of the 25 largest banks in the United States, collapsed in 2009. TBW was one of America’s largest, privately held mortgage companies.

    Six others pleaded guilty for their roles in the fraud. Assistant Attorney General Lanny Breuer, head of the Justice Department’s Criminal Division, said Farkas “masterminded” the scheme, which was one of the largest in U.S. history.

    “Mr. Farkas may have thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset,” Breuer said. “But now a jury has told him otherwise, and he must face the severe consequences.”

    Formal sentencing for Farkas is scheduled July 1. He potentially faces what would amount to a life sentence, given his age. He was convicted of one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud.

    See earlier story.

    Read Justice Department statement.

  • BULLETIN: Feds, CFTC File Stunning Allegations Of Multimillion-Dollar Fraud Against Purported Forex Trader Who Filed Bizarre Documents In NFA Disciplinary Case; Lyndon Lydell Parrilla Arrested In California

    A California man who allegedly once defended himself in a disciplinary case by advising the National Futures Association that he was “a living breathing free Man upon the free soil” and an “American citizen of the American Republic” has been arrested by federal agents on charges of defrauding investors of $5 million in a Forex scheme.

    Lyndon Lydell Parrilla, 31, of Los Angeles, was arrested yesterday. He also was sued by the CFTC, and the allegations surrounding his business practices are stunning.

    NFA booted Parrilla in 2009 after bringing a disciplinary action against him and receiving nonresponsive answers to its complaint, according to records. Parrilla once was associated with a firm known as Parman Financial.

    In response to the NFA  inquiry, Parrilla allegedly submitted documents styled “Public Notice, Declarations, and Lawful Protest and Private Pure Trust Act of State,” NFA said.

    These, according to NFA records, were among his alleged assertions:

    • “Lyndon Lydell Parrilla is a living breathing free Man upon the free soil, an American citizen of the American Republic, beneficiary of the Original jurisdiction.”
    • “Lyndon Lydell Parrilla is not a United States Citizen, subject, vessel or ‘person’ as defined in Title 26 of the United States Code.”
    • “As beneficiary to the Original Jurisdiction, He is not subject to nor does HE volunteer to submit to or contract with any ens legis artificial or corporate jurisdiction to which a United States person may be subject.”

    Federal prosecutors in Boston now say Parrilla was running a $5 million Forex scam in which he withdrew $2.1 million in cash from customers accounts, spent $950,000 at casinos and bought a car for $130,000. He was specifically charged with wire fraud. Elements of the case were assembled by the Interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009.

    The scam allegedly operated through a company known as Green Tree Capital, which used a website and addresses in California, Las Vegas, Boston and Canada, including the cities of Montreal London and Piedmont, according to court records.

    For its part, the CFTC said Green Tree created bogus records of its trading prowess, including “a false 33-page track record from an account that claims Green Tree achieved gains of 1000% from January 19, 2009, through February 26, 2010.”

    The company also used at least one dummy address in California, the CFTC charged.

    “Green Tree misrepresents its location on its website,” the CFTC charged.  “The website claims that Green Tree’s main office in the United States is located at 9701 Wilshire Boulevard, 10th Floor, Beverly Hills, California, and lists a phone number for that office.

    “However,” the CFTC continued, “the purported office address is fictitious, and Green Tree uses an answering service named Ruby Receptionists located in Portland, Oregon, to answer the phone number for its purported office in Beverly Hills.”

    There even is doubt that Green Tree had an office in Boston, according to the CFTC.

    A company known as FX High Summit (FXHS) is listed in the CFTC complaint as a “related entity,” but is not named a defendant.

    FXHS “holds itself out as a forex trading firm and purportedly is located in Quebec, Canada and/or Ireland,” the CFTC said.

    Discussions in online forums include complaints that FXHS also disappeared with money.

    Law enforcement and regulators have been squaring off against bizarre pleadings in securities and commodities cases. Some individuals charged in cases have made bizarre claims they are “sovereign” beings answerable only to God.

    There also have been bizarre claims that U.S. criminal and regulatory laws do not apply to accused criminals and fraudsters, even if the crimes or offenses occurred in the United States.

  • Sea Of Incongruity Surrounds Club Asteria: As ‘Ken Russo’ Pushes ‘Opportunity’ On TalkGold Ponzi Board, World Bank Qualifies ‘Director’ Claims Made By Promoters

    The World Bank confirmed to the PP Blog this morning that a person named Andrea Lucas left its employment in December 1986, nearly 25 years ago. But Lucas was never a member of the World Bank’s board of directors, as many members of business “opportunity” known as Club Asteria have implied in online, MLM-style promotions for the firm.

    Rather, the World Bank described Lucas as a former department head among “many” department heads who held the internal title of director of an individual department. Lucas, the World Bank said, was director of the management systems and account department. She worked in Washington, D.C., according to the World Bank’s records.

    The PP Blog initially sought comment from the World Bank on March 3 about Lucas and various claims about Club Asteria made by members of the purported opportunity. Some of the claims have been made on the TalkGold Ponzi scheme and criminals’ forum. The World Bank’s name is being used in Club Asteria promos on TalkGold and other websites.

    A blurb for Andrea Lucas on the slow-loading Club Asteria website describes her in the first sentence as “former Director of the World Bank,” using an uppercase “D” in “Director” with no other qualifiers. The reference to the World Bank begins seven words into the profile. The profile also lists Andrea Lucas as  “founder and Managing Director of Club Asteria.” No other entities are referenced in the Andrea Lucas blurb.

    The blurb makes no mention that Andrea Lucas left her staff job at the World Bank more than two decades ago, when Ronald Reagan was President of the United States and Mikhail Gorbachev was General Secretary of the Communist Party of the now-dissolved Soviet Union.

    When Andrea Lucas last worked at the World Bank, George Herbert Walker Bush was Vice President of the United States and still more than two years away from his term as President. The “Black Monday” market crash of October 1987 had not yet occurred, and Iraq’s August 1990 invasion of Kuwait that led to the Gulf War was still nearly four years away. Modern-day accused shoplifter and actress Lindsay Lohan was five months old, and few people outside of Arkansas recognized the names of Bill Clinton and Hillary Clinton. Barack Obama, a community organizer in Chicago, had yet to enter Harvard Law School or meet Michelle Robinson, who’d become his wife and, later, First Lady of the United States.

    Regardless, Lucas and the World Bank are referenced repeatedly in online promos by Club Asteria members. Why the company and promoters had seized on the World Bank’s name when Andrea Lucas last was employed there nearly a quarter of a century ago as a young woman was not immediately clear.

    “Real Profit Sharing Program ! No Ponzi !” one affiliate promo preemptively screams. “Club Asteria from the Former Director of World Bank – Andrea Lucas.” The affiliate site includes a photo of a letter dated Dec. 14, 2010, and the letter appears to feature the World Bank’s letterhead and verify the former employment of Andrea Lucas at the World Bank.  It is positioned by the affiliate as a reason to trust Club Asteria.

    Why the affiliate would preemptively argue that Club Asteria was “No Ponzi” was unclear.

    Another promo describes Club Asteria as “a perfect home based business that specializes in the remittance business of sending funds back home.

    “We provide training, opportunities, consultation and one of the most sensational pay plans of our time,” the promo continues. Club asteria (sic) is run by a former Director of the World Bank and it (sic) set to take the net by storm.”

    “Ken Russo,” who posts at TalkGold as “DRdave” and promotes one highly questionable scheme after another, announced yesterday that Club Asteria’s membership ranks had soared to 187,481.

    The announcement occurred against the backdrop of a December warning by the Financial Fraud Enforcement Task Force led by U.S. Attorney General Eric Holder that visitors to websites and forums should be skeptical of claims.

    “Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims,” the Task Force warned.

    Except for its confirmation this morning that a person named Andrea Lucas once worked for the World Bank and its release of certain details about her employment nearly a quarter of a century ago, the World Bank declined to comment immediately about the linkage of its name to Club Asteria and the promos at TalkGold and other websites.

    The bank, however, confirmed it is aware of the claims. Meanwhile, some Club Asteria members are grumbling in forums about the firm’s slow-loading website and spotty customer support. Among the concerns is that the company recruited members under one set of rules, but may be trying to implement a new set that may force higher costs on participants who expect to get paid.

    Some Club Asteria members appear to be confused about whether Club Asteria conducts business from the United States or Hong Kong.

    How the company makes money beyond membership fees is unclear. Also unclear is whether the firm has significant revenue streams beyond membership fees. Club Asteria appears to publish no verifiable financial data.

    The World Bank is the most recent prominent international entity to have its name appear on TalkGold and other Ponzi forums that push highly questionable business pursuits. Last year, members of the purported MPB Today “grocery” program, which operates as an MLM, flooded websites and social-media sites such as YouTube with references to Walmart.

    It is common in the MLM sphere for affiliates to trade on the names of prominent business entities even if no ties exist. Walmart’s name also appeared in promos on the Ponzi boards.

    TalkGold, MoneyMakerGroup and ASAMonitor are referenced in federal court filings as places from which international Ponzi schemes are promoted. Even if Club Asteria is a legitimate enterprise, the mere fact it is being promoted on the Ponzi boards raises troubling questions about whether its revenue stream is polluted by proceeds from any number of fraud schemes operating globally.

    In recent weeks, federal agencies such as the SEC and CFTC have taken actions against schemes promoted on the Ponzi boards. Meanwhile, the FTC announced an action this week against an online enterprise that allegedly was not policing its affiliate sales force properly.

    The FTC charged Lester Gabriel Smith and Legacy Learning of Nashville, Tenn., with disseminating “deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or ‘independent’ reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.”

    In bringing the case, the agency held Smith and Legacy accountable for claims made by affiliates.

    “Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising.”

    See the FTC news release on Legacy Learning, which was assessed a $250,000 penalty.

  • SEC Chief Makes Veiled Reference To Imperia Invest Case In Congressional Testimony: Will Ongoing Law-Enforcement Initiatives Spell More Trouble For Serial Online Scammers And Their Enablers?

    SEC Chairman Mary Schapiro

    SEC Chairman Mary Schapiro alluded to the agency’s investigation of the alleged Imperia Invest IBC scam in testimony before Congress this morning, a development that may signal more bad news is in the offing for serial scammers online.

    Without mentioning Imperia by name, Schapiro told members of the House Subcommittee on Financial Services and General Government that the agency, which is a member of the Financial Fraud Enforcement Task Force, participated in “Operation Broken Trust.”

    In December, the U.S. Department of Justice noted that the Imperia case brought by the SEC in October was part of the operation. Imperia was promoted on Ponzi and criminals’ forums such as TalkGold and MoneyMakerGroup, both of which have been identified in federal court filings as places from which family-destroying international Ponzi and HYIP fraud schemes are promoted.

    Schapiro said today that the SEC has been aggressively pursuing “Ponzi scheme operators and perpetrators of offering frauds.” The Imperia case, which the SEC brought in Utah, is an example of an Internet-based offering fraud, as are many of the “programs” pitched on the Ponzi boards.

    In December, members of the Financial Fraud Enforcement Task Force identified Ponzi Scheme "hot spots" in the United States. Pictured here are FBI Executive Assistant Director Shawn Henry (foreground), with Attorney General Eric Holder (right) and Chief Postal Inspector Guy Cottrell. The Task Force specifically warned investors to be wary of social-networking sites and chat forums. And officials noted that "we continue to use sophisticated investigative techniques—like undercover operations and court-authorized electronic surveillance—to collect evidence in ongoing cases and to identify and stop criminals before they prey on others."

    Salt Lake City was identified in December by the Task Force as one of the “top five Ponzi scheme hot spots in the country.” Other Ponzi hot spots include Los Angeles, New York, Dallas and San Francisco, the Task Force said, cautioning Americans that the fraud hardly was limited to those cities.

    “Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims,” the Task Force urged.

    In June 2010, the Justice Department used its Justice Blog to create awareness about the emerging threat of mass-marketing fraud, specifically referencing the alleged Pathway To Prosperity Ponzi scheme. Pathway To Prosperity, which the U.S. Postal Inspection Service said created tens of thousands of victims from virtually all corners of the world, also was promoted on TalkGold and MoneyMakerGroup.

    In October, before the public knew Operation Broken Trust was under way, the SEC said Imperia had stolen millions of dollars from thousands of Americans with hearing impairments. The firm used a payment processor known as Perfect Money, a favorite among international scammers who populate the Ponzi boards. Imperia also purported to have a relationship with Visa, but was using the name “without authorization” to disarm skeptical investors, the agency said.

    Not a “single penny” was paid to Imperia investors, the SEC said.

    Money from the Imperia scheme is believed to have been funneled into accounts in Cyprus and New Zealand. Imperia purported to have operated from the Bahamas and Vanuatu, but the business addresses were “fake,” the SEC said.

    The Justice Department said Imperia used “a series of offshore PayPal style bank accounts to raise “in excess of $7 million from at least 14,000 investors worldwide, including 6,000 investors in the U.S. who have invested in excess of $4 million.”

    Earlier this year, the CFTC turned its attention to purported Forex programs that were promoted on TalkGold and MoneyMakerGroup. Some of those programs also used PerfectMoney. Like the SEC, the CFTC is part of the Financial Fraud Enforcement Task Force.

    Tips From The Task Force

    • Be careful of any investment opportunity that makes exaggerated earnings claims, especially during a short period of time.
    • Ask for written information about the investment, such as a prospectus, recent quarterly or annual reports, or an offering memorandum.
    • Consult an unbiased third party, like an unconnected broker or licensed financial adviser, before investing.
    • Don’t be fooled into believing an investment is safe just because someone you know is recommending it. So-called “affinity scams” are one of the favorite methods used to lure people in.
    • If you feel you are being pressured into investing, don’t do it.
    • Be wary of people you meet on social networking sites and in chat rooms, where investment fraud criminals have been known to troll for victims.

  • SPECIAL REPORT: U.S. Counter-Terrorism Unit Intercepted Communication From Person With AdSurfDaily Ties In 2009; Intended Recipient Was Imprisoned Felon Associated With Scheme In Which Prospects Were Told They Could Rip Off Government’s Medicaid Program

    EDITOR’S NOTE: Lower in this story, the names of AdSurfDaily President Andy Bowdoin and other individuals appear. They are NOT the individuals referenced in the government communiqué described below.

    UPDATED 12:50 P.M. ET (U.S.A.) The name of a person known to have used at least two names and to have AdSurfDaily ties appears in a law-enforcement communiqué issued in 2009 by the counter-terrorism arm of a U.S. government agency that employs a method of monitoring both domestic extremists and individuals with known links to international terror groups, the PP Blog has learned.

    At least one communication from the person was intercepted by the government and used as part of a raw intelligence report that includes summaries on the actions of dozens of individuals with alleged ties to al-Qaida, Hezbollah or homegrown extremist groups in the United States. The communication does not reference ASD, but includes a reference to a second person known to have an ASD tie.

    The sender of the communication was described as a provider of fraudulent documents typically associated with tax schemes operated by antigovernment extremists. Meanwhile, the intended recipient was an individual known to have promoted various forms of financial fraud, including a scheme in which prospects were told they could qualify for Medicaid by hiding assets and making themselves artificially poor.

    Medicaid is a federal health-services program for low-income Americans. It is administered by the states.

    The PP Blog established the identities of both individuals with ASD ties by examining a variety of public records and other documents.

    ASD's Andy Bowdoin

    Neither person is in state or federal custody, but it is clear that both the federal and state governments are aware of their activities and have worked to disrupt them. The intended recipient of the communication is in federal custody for a crime unrelated to ASD.

    Both individuals with ASD ties have a tie to a third person with ASD links, according to the Blog’s analysis of records.

    Owing to the sensitive nature of the communiqué, the Blog is declining to identify the individuals with ASD links and the agency. It also is declining to publish specific details such as quoted material, dates, times, telephone numbers and addresses. The communiqué demonstrates that the United States has identified particular areas in which it believes terrorism could fester and is monitoring oral, electronic and printed communications in a specific context.

    The communiqué devotes more than a full page to the topic of the communication intercepted from the individual with ASD ties.

    Based on its research, the Blog is reporting today that the person with ASD ties whose communication was intercepted is an American believed to have ties to a network of domestic extremists immersed in a sea of organized corruption. The person has an arrest record for a nonviolent crime, but also has been associated with bids to intimidate people and cause them financial harm. Records show that the person has used at least two names.

    News of the disturbing developments comes even as some ASD members are blindly asserting that ASD was a wholesome enterprise and making broad claims that any ties to terrorism have been ruled out. ASD has been implicated in an alleged international Ponzi scheme that gathered at least $110 million.

    Despite an alleged concession by ASD President Andy Bowdoin that the company was operating illegally and a new assertion by the government that Bowdoin and unnamed “others” ventured to Costa Rica in the spring to 2008 to get the lay of the land for an upstart “autosurf” enterprise, some members are soliciting funds to challenge a U.S. Secret Service affidavit that led to the seizure of tens of millions of dollars from Bowdoin’s personal bank accounts in August 2008.

    Bowdoin’s own bid to challenge the affidavit failed in November 2008, more than two years ago.

    In December 2010, federal prosecutors asserted that ASD had the ability to accept money from e-Bullion, a shuttered California payment processor whose operator — James Fayed — has been charged with arranging the contract murder of his wife.

    Pamela Fayed, who was stabbed to death in a parking garage, was a potential witness against her husband. James Fayed is believed to have used e-Bullion to facilitate multiple Ponzi schemes, including a scheme hatched by a New York man — Abdul Tawala Ibn Ali Alishtari — who later pleaded guilty to financing terrorism.

    Like ASD’s Bowdoin, Ali Alishtari claimed to have received an important award for his business acumen. And Ali Alishtari’s scheme, known as FEDI, was pushed by an individual convicted in a separate Ponzi scheme and sentenced to federal prison. Payments from the scheme were called “rebates,” the same terminology adopted by ASD to describe payments to members.

    “In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others,” U.S. Attorney Preet Bharara of the Southern District of New York said in September 2009.

    e-Bullion’s name also is referenced in court filings in the Gold Quest International (GQI) Ponzi scheme, which gathered up to $29 million, according to U.S. and Canadian regulators. GQI, which operated from Las Vegas, falsely claimed to be immune to U.S. law and to enjoy purported “sovereignty” extended by a North Dakota  “Indian” tribe.

    One of the unusual elements of the GQI case was a claim that the purported sovereignty was portable, shielding the purveyors from prosecution anywhere.

    A New Plan To Do Battle With The Government

    ASD member Todd Disner, one of dozens of unsuccessful pro se litigants in the civil portion of the ASD case in U.S. District Court for the District of Columbia, now wants ASD members to come up with money to fund a lawsuit in Florida that would challenge the U.S. Secret Service affidavit in the District of Columbia that led to the seizure of $80 million in the ASD case, according to a recording of a Feb. 22 conference call.

    “We were dragged down the river by our government agents, and the rest is history,” Disner told listeners.

    “There might be an opportunity for us to throw a few punches of our own,” Disner said. “We’ve been on the ropes for three years now, and we’d like to start swinging back if we could.”

    The opportunity to battle back after a fatiguing and demoralizing three years on the ropes would cost ASD members a combined total of about $10,000, according to people who listened to the call.

    After the call, some ASD members received an email that purported that an ASD “terrorism connection has been ruled out.” The email, sent by an ASD member who did not use a full name, did not describe who within the government had ruled out a terrorism link.

    Disner, who claimed he was “excited” about the prospect of suing the government to overturn the ASD forfeiture, also claimed he’d been advised on the complex legal issues by Dwight Schwetizer, whom he described as a fellow ASD member, friend and “very accomplished attorney” who is “not practicing law now.”

    “They’re just going to try and try to keep that money,” Disner asserted. “They seized the money improperly, and if they release it then everybody’s included.”

    The government, however, already has put in place a restitution program that would compensate crime victims from seized funds. An apparent linchpin of the new strategy outlined by Disner is a theory that the government restitution program somehow opens the door for ASD members not only to reverse the judicially declared forfeiture, but also to receive damages for an unwarranted government intrusion. Schweitzer also provided commentary on the call.

    For its part, the government says ASD was engaging in felonious wire fraud and securities fraud by disguising itself as an “advertising” business while operating a $110 million Ponzi scheme from Florida that had affected tens of thousands of people globally. Just last week prosecutors advised a federal judge that Bowdoin, who was arrested in December, had ventured to Costa Rica in the spring of 2008 to look for a way to start an offshore Ponzi scheme.

    Disner’s conference call was held just a few days after the latest damaging claims against ASD became public. The government filed the new claims against ASD on Feb. 18, the same day it announced a major prosecution against an alleged Costa Rican money-laundering operation that was accused of engaging in international securities fraud and siphoning millions of dollars in penny-stock schemes.

    The U.S. government, using its individual agencies and the Financial Fraud Enforcement Task Force created by President Obama in 2009, has been targeting various forms of fraud, including HYIPs, penny-stock capers, Forex schemes, tax schemes and domestic and offshore crime targeted at U.S. citizens.

    In some cases, victims have been counted by the tens of thousands — enough to fill the nation’s largest sports stadiums. ASD was purported to have 120,000 members.

    Some ASD members have called for a “militia” to storm Washington, D.C. Others have called for a federal prosecutor to be placed in a medieval torture rack. Still others have called for prosecutors and investigators to be charged criminally and sued civilly for their efforts to disrupt what the government has described as a classic Ponzi scheme operated by Bowdoin, a recidivist felon.

  • MIND-BOGGLER: Forex Scammer Who Never Traded Forex Charged In $35 Million Ponzi Scheme; CFTC’s Real-Life Complaint Against Keith F. Simmons And Co-Defendants Reads Like Bizarre Fiction

    And people actually are questioning President Obama’s November 2009 decision to create the interagency Financial Fraud Enforcement Task Force when things such as this are going on?

    An unregistered North Carolina company that churned tens of millions of dollars in a long-running shell game and described itself as a Forex dealer was operated by a now-convicted felon who worked with another now-convicted felon and told the FBI he never actually traded Forex, the Commodity Futures Trading Commission has alleged in court filings that only can be described as alarming.

    Black Diamond Capital Solutions LLC, operated by convicted felon Keith F. Simmons of West Jefferson, N.C., became a cancer on the legitimate Forex landscape, the CFTC charged. The firm and associated companies combined to create a sales force consisting of scammers who ultimately stole from investors and each other, pocketing huge sums to fund businesses not disclosed to investors and to pay for things such as luxury cars, real estate, maid service and sky-diving vacations.

    One of the alleged scammers — Deanna Salazar, a purported alternative-investments specialist and the owner of Life Plus Group LLC of Yucca Valley, Calif. — herself is a now-convicted felon. She has been linked to multiple fraud schemes, including a local one in California in which investors allegedly were told they were financing B-movies, and now has been linked by the CFTC to Simmons’ spectacular Forex Ponzi scheme.

    Salazar, according to the CFTC, never conducted “any due diligence” on Simmons or his Black Diamond companies. Instead, she simply passed along his bogus claims, including a claim that Simmons used an “exclusive” computerized trading system that had led to an “actual result” of $5,000 turning into $194,340 in three years.

    In 2008 alone, according to the bogus “actual” trading results, an account-holder purportedly enjoyed monthly Forex returns that ranged between 4.765 percent and 13.357 percent, according to the CFTC.

    Two other alleged Simmons’ associates — Bryan Coats of Clayton, N.C., and Jonathan Davey, a CPA from Newark, Ohio — also blindly followed Simmons and helped him orchestrate the massive Ponzi scheme, the CFTC alleged.

    Davey, according to records, organized a Belize company known as Divine Circulation Services Ltd. that assisted Simmons in pulling off the scam, which the CFTC alleged traded on religion. Davey also was at the helm of a Belize firm known as Sovereign Grace Inc., a firm that benefited from the scam, the CFTC said.

    Coats, meanwhile, was at the head of companies known as Genesis Wealth Management LLC and Genesis Wealth Partners LP, both of Delaware.

    Multiple companies with high-sounding names were created by the defendants and either assisted in pulling off the scam or benefited from the scam, the CFTC said. Among the names of the companies were Safe Harbor Ventures Inc., owned by Shari Davey, Davey’s wife, and Safe Harbor Wealth Inc.

    Salazar’s husband — Lawrence Salazar — also benefited from the scheme, the CFTC alleged.

    All in all, the CFTC charged, the scheme netted at least $35 million from at least 240 investors. It is believed that most if not “all” of the customers were not even eligible to become investors in the purportedly private program because they lacked assets totaling at least $5 million and thus were not “eligible contract participants.”

    Adding yet-another layer of the bizarre, Simmons allegedly told the FBI and the CFTC that Black Diamond did not engage in Forex — despite the fact it had gathered tens of millions of dollars by holding itself out as a Forex company and customers received statements showing their purported gains, the CFTC charged.

    When the Ponzi began to collapse in early 2009 — and with Black Diamond never having done any actual Forex trading — Salazar, Coats and Davey continued either to work for the firm or to steer business to it, the CFTC alleged.

    On March 19, 2009 Simmons sent an email to Salazar and Coats, instructing them that the company “would be shutting down for restructuring” and that all accounts would be liquidated with investors profits paid out, the CFTC alleged.

    Incredibly, the CFTC alleged, Simmons claimed a month later — in April 2009 — that Black Diamond’s trading was only hypothetical, despite the fact customers had sent in tens of millions of dollars to conduct real trading and received statements showing their gains.

    A months-long round of excuse-making about why customers weren’t getting paid then began, starting with Simmons’ assertion that a restructuring was under way. Coinciding with the restructuring claim were bank statements showing  that Black Diamond had “less than $200,000” in its accounts, the CFTC alleged.

    The CFTC, alleging that Simmons had purported to be an active Forex dealer who’d turned $5,000 from one investor into more than $194,000 and then insisted he had not executed a single trade despite issuing account statements showing gains of more than 13 percent a month, then defaulted to a strategy of claiming multiple “accounting reviews” were under way.

    He then claimed “excessive withdrawal requests by customers were causing delays in the return of funds.”

    Simmons also claimed a “non-existent German liquidity provider by the name of Klaus was attempting to provide $120 million to Black Diamond to payout customers and replace Black Diamond on the purported platform, but his alleged transfer of funds was frozen by bank or regulatory procedures,” the CFTC charged.

    At the same time, Simmons said “interventions” by the Federal Reserve, the U.S. Department of the Treasury and the CFTC had led to a situation that made it impossible for Black Diamond to pay customers, the CFTC alleged.

    Simmons made excuses from March 2009 through Dec. 17, 2009, the date he was arrested on criminal charges to which he already has pleaded guilty.

    Salazar, Coats and Davey strung customers along while Simmons was piling on excuses that were becoming increasingly “complex and outrageous,” the CFTC alleged.

    By passing on the excuses after earlier having performed no due diligence — and by continuing to forward the excuses to investors — Salazar, Coats and Davey “recklessly failed to ascertain the cause of the funding problem at Black Diamond” and helped perpetuate lies, the CFTC alleged.

    Salazar even helped Simmons shape the lies, according to the CFTC.

    In July 2009, Salazar worked with Simmons “to draft the excuse” about why Black Diamond wasn’t making payments, the CFTC charged.

    Coats, meanwhile, also worked with Simmons on creating an excuse that payments were not immediately forthcoming because of “stricter capital requirements imposed on our banking system,” the CFTC charged.

    Davey informed customers that payouts could not be made because the Federal Reserve had forced Simmons to fill out “anti-money laundering” forms and had frozen $16 million until he completed the task.

    In an approach often employed on Ponzi scheme and criminals’ forums such as TalkGold and MoneyMakerGroup, Simmons and Coats warned investors not to contact regulators or attempt to interfere with payment facilitators.

    “Simmons threatened certain customers that if they contacted the alleged paymaster, Black Diamond would lose access to the paymaster services and the payout to customers would be jeopardized,” the CFTC alleged.

    The agency did not identify the alleged paymasters in the complaint.

    And in an act reminiscent of some of developments in the AdSurfDaily Ponzi scheme case, Coats allegedly warned investors that the CFTC was “randomly calling all Forex . . . clients across the America to try and identify possible Madoff scams,” the CFTC alleged.

    It was Coats’ “suggestion,” the CFTC alleged, that “members not have any discussions with the Commission.” The suggestion occurred while Black Diamond was refusing to return clients’ money.

    In the ASD case, members were urged not to cooperate with the U.S. Secret Service and not to fill out forms that would identify them as victims of a scam.

    Salazar, Coats and Davey continued to solicit funds for Black Diamond even though the company was not paying out and was engaged in chronic excuse-making, the CFTC alleged.

    Despite assertions that Black Diamond had a miraculous trading platform and expert software developers, “the so-called system developers and the Black Diamond trading platform never existed, the CFTC charged.

    Although Salazar’s customers plowed more than $7 million into the scheme — including more than $2 million paid directly to Salazar that was supposed to go to Black Diamond — she “failed to send Black Diamond approximately $1.5 million,” the CFTC charged.

    Black Diamond transmitted more than $1.9 million to Salazar, but she returned only $600,000 of that sum to customers and kept $1.3 million for herself, the CFTC alleged.

    Of the $2.8 million Salazar cherry-picked in the scam, the CFTC alleged, she used more than $400,000 to purchase cars and took “expensive personal trips.”

    Coats’ customers plowed more than $27 million into the scam, and Coats took purported management fees or owner gains of more than $400,000, including about $200,000 after Black Diamond quit paying customers, the CFTC alleged.

    Customer funds were used by Coats to acquire an “expensive car,” maid service, home improvements and “a sky diving trip,” the CFTC said.

    Davey used customer funds to make $1.3 million in “loans” to his “Sovereign Grace” firm and other companies he controlled. He also bought 47 acres of land and built a “lavish home,” the CFTC charged.

  • BULLETIN: Florida — Again: Multiagency Probe Leads To Federal Criminal Charges Against 9 People In Interconnected Ponzi And Fraud Schemes

    BULLETIN: An investigation by the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and the Miami Police Department has led to criminal charges against nine defendants in three Florida fraud schemes that allegedly were interconnected.

    Seven of the defendants were indicted. Two others were charged via criminal information, and the investigation is ongoing. The probe demonstrates that, in an era of seemingly ceaseless white-collar crime, investigators are using leads uncovered in one case and following them to discover fraud schemes that perhaps would have gone undetected were it not for the discovery of an initial scheme.

    Charged with conspiracy to commit bank fraud connected to a Ponzi scheme were Maria Baksh, 50, of Hollywood; Juan Cardenas, 48, of Miami; Gabriel Cifuentes, 63, of Hialeah; Maureen Cifuentes, 35; of Hialeah, Lucia Garcia, 58, of Pembroke Pines; Roberto Hernandez, 66, of Miami; Maribel Roman, 47, of Hialeah; Reinaldo Roman Jr., 39, of Hialeah; and Roberto Rodriguez, 43, of Miami.

    The case is tied to the purported “jewelry” Ponzi scheme of Luis Felipe Perez, 38, of Fort Lauderdale. Lopez was charged both civilly (SEC) and criminally last year (Secret Service/ICE). He was sentenced to 10 years in federal prison after pleading guilty to securities fraud.

    Investigators said he pocketed $6 million from his Ponzi scheme, which gathered $40 million. Investors were told they were financing his purported jewelry business and pawn shops in New York, authorities said.

    Perez, investigators now say, recruited “many” of the new defendants and referred them to Berta Sanders, 61, of Miami Lakes. Sanders, a CPA, helped them secure $12 million in commercial lines of credit by preparing false tax returns and false income statements submitted to Wachovia Bank. Proceeds from the loans were diverted to the Perez Ponzi scheme.

    “When Perez’s Ponzi scheme ultimately collapsed in May 2009, most of the fraudulent loans obtained from Wachovia defaulted,” prosecutors said, noting that the scheme cost Wachovia $10 million.

    Sanders, who has pleaded guilty to conspiracy to commit bank fraud, is scheduled to be sentenced Feb. 22 by U.S. District Judge Paul C. Huck.

    Viewed as a whole, the case featured the Perez Ponzi scheme and a related bank-fraud scheme over which Sanders allegedly presided for a 10 percent cut of the bogus loans she engineered, prosecutors said.

    It also featured a conspiracy by which other defendants fleeced the bank by allowing Sanders to prepare fraudulent documents so they could get the money to plow into the Ponzi scheme, prosecutors said.

    The investigation was undertaken by elements of the Financial Fraud Enforcement Task Force.

    While investors were imagining “guaranteed annual returns of 18 percent to 120 percent through monthly interest payments,” the SEC said last year, Perez spent $3.2 million of their money on a home, $1 million on jewelry for himself and his wife, $400,000 to lease luxury cars, $300,000 on clothing for his wife, $300,000 for travel by private jet and $100,000 on artwork.

  • Father, 3 Sons Plead Guilty In Massive Texas Fraud And Ponzi Swindle; Members Of The Tony Rand Family Potentially Face Decades In Prison

    Five people — including a father, three sons and a pitchman who doubled as an executive — have pleaded guilty to their roles in orchestrating a $68 million securities-fraud and Ponzi scheme involving fraudulent Texas oil-and-gas investments, federal prosecutors said.

    The father — William Anthony “Tony” Rand, 69, of Plano — is a recidivist felon who previously had spent nearly seven years in prison for money-laundering, bank fraud and other crimes, prosecutors said.

    Tony Rand was the financial manager and bookkeeper for Aspen Exploration Inc., which prosecutors described as corrupt from top to bottom. Sons Gregory Keith “Greg” Rand, William Nicholas “Bill” Rand and Mark Albert “Mark” Rand were Aspen’s owners and principals.

    Greg Rand, 46, pleaded guilty last week to conspiracy to commit mail fraud and securities fraud and three counts of securities fraud. Under a plea agreement, he faces up to 216 months in prison.

    Bill Rand, 41, pleaded guilty to three counts of securities fraud. His plea agreement exposes him to up to 168 months in prison.

    Mark Rand, 45, pleaded guilty in October 2010. Details about his plea were not available immediately.

    Tony Rand, meanwhile, faces up to 78 months in prison after pleading guilty last week to conspiracy to commit mail fraud and securities fraud and one count of securities fraud.

    A fifth Aspen employee — Joel William Petersen, 54, of Frisco — also faces up to 78 months in prison after pleading guilty last week to conspiracy to commit mail fraud and securities fraud and one count of securities fraud. Peterson was an Aspen vice president and pitchman.

    The Rands “will be required to forfeit substantial money judgments and property to the government, including real estate, boats and other personal water craft, luxury vehicles, artwork, including an original Picasso, furniture, antiques, musical instruments, jade, expensive jewelry and wine,” prosecutors said.

    Despite the fact Aspen was insolvent, investors were told “they could receive profits equal to the return of their cash investment within three years with potential production revenues lasting up to 20 years and multi-fold returns on their investment funds,” prosecutors said.

    The case was brought by elements of the Financial Fraud Enforcement Task Force.

  • Patrick H. Rakotonanahary Sentenced To Prison For Forex Scheme That Defrauded Investors In Hawaii And On The U.S. Mainland; Case Was One Of The First Brought By Financial Fraud Enforcement Task Force

    A Florida resident charged with defrauding investors in Hawaii and the U.S. mainland has been sentenced to 90 months in federal prison, ordered to begin serving his sentence immediately and make restitution — and advised he faces deportation to Madagascar upon his release from a U.S. prison.

    The case against Patrick H. Rakotonanahary, 34, of Punta Gorda, was one of the first assembled by President Obama’s Financial Fraud Enforcement Task Force. He was sued civilly by the CFTC and charged criminally by the FBI in March 2010 with 21 counts of wire fraud, amid allegations he operated a forex Ponzi scheme and pocketed $1 million for himself.

    The scheme affected about 100 investors, most of them residents of Hawaii, state and federal investigators said.  The state of Hawaii also sued Rakotonanahary.

    Rakotonanahary operated a company known as Cyber Market Group LLC, which marketed a Forex scheme that purported to pay investors up to 10 percent interest per week. The scheme netted more than $10.2 million.

    Only minimal Forex trading occurred — and the trading that did occur resulted in losses, authorities said. The scheme sustained itself in typical Ponzi fashion.

    See earlier story.