PatrickPretty.com

Tag: FINRA

  • EDITORIAL: Case Against Alleged New York Scammer With Eye-Pleasing Website Could Help Educate ‘Achieve Community’ Members And Newcomers Who Encounter The Ponzi Boards — If They Choose To See

    From the "Wolf Hedge" website.
    From the “Wolf Hedge” website.

    EDITOR’S NOTE: This is one to think about if you’re an “Achieve Community” fan who’s moved over to the “Rockfeller” Ponzi-board scam while asserting its professional-looking website puts you at ease — even though you don’t know who’s running the purported company and apparently have formed the irrational belief that engaging a “chat” attendant through the website somehow means you’ve conducted due diligence.

    You’re about to read a tale about a man, his attractive websites and the artifices he allegedly employed to make sure he had a ready supply of cash at his disposal during his long con. The take home: Eye-pleasing websites and stories of fantastic success routinely are used to conduct and fuel securities fraud.

    **______________________**

    UPDATED 6:51 P.M. ET U.S.A. Moazzam Ifzal Malik, also known as Mark Malik, has been indicted, arrested and jailed in New York “on $1 million bond over $1 million cash bail,” state Attorney General Eric T. Schneiderman announced yesterday.

    Separately, the SEC announced civil charges against Malik, whom Schneiderman described as a Pakistani who’d defrauded investors in New York, Florida, Texas, Canada and Switzerland after setting up a constantly evolving flim-flam operation.

    Malik, the SEC charged, solicited investors with promises of consistently high returns. In the end, though, investors were left holding the bag.

    “By pretending to be a successful hedge fund manager, Malik conned investors into bankrolling his lavish lifestyle,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.

    For a while, according to investigators, Malik was able to outsmart his investors, in part by creating “opportunity” after “opportunity” to keep the scam going. He even outsmarted financial journalists. But it eventually all came crashing down as redemptions stalled or disappeared and investors grew more skeptical.

    The five-year wave of fraud ended yesterday, authorities said, alleging that Malik still was trying to pick pockets as recently as January of this year.

    Precisely when Malik, 33, came to America and began his alleged long con is unclear. The SEC said he attended high school in Pakistan and later “became registered with FINRA as a stock broker trainee at a New York-based investment advisory firm from where he was terminated in November 2009.”

    Since 2009, the attorney general said, Malik was associated with entities identified as Wall Street Creative Partners L.P., Seven Sages Capital, L.P., American Bridge Investments L.P., and, most recently, Wolf Hedge LLC.

    His business? “Purported” hedge funds that “promised his victims a partnership interest,” Schneiderman said.

    It’s pretty clear that both the attorney general and the SEC want to use the cases against Malik to create a teachable moment. Schneiderman pointedly published a link to one of Malik’s webpages. The SEC published links to two Malik sites. (See one. See two.)

    It is from these attractive sites and corresponding links to social media such as Twitter that Malik created a myth around himself and engineered his alleged scheme to defraud.

    The SEC’s complaint is a real keeper for persons able to experience a teachable moment. It relates a tale of the impossible fictions Malik used to fleece his marks. If more money were involved — indeed, as this point we’re talking “only” about an $840,774 swindle — Hollywood perhaps would come calling.

    There are so many interesting allegations it’s hard to know where to begin. Let’s start with the allegation Malik used the web to deceive, something many scams (including the Ponzi-board program “Rockfeller” and “Achieve Community”) have in common.

    “In addition to communicating with investors using his own name, Malik created a fictitious identity named ‘Amanda Ebert’ to communicate with several investors. Malik sent emails from Amanda Ebert to several investors, with each email including a photograph of Ms. Ebert,” the SEC charged.

    “The emails identified Ms. Ebert as ‘Investor Relations, Wolf Hedge LLC’ and attached customer account statements, which contained inflated valuations,” the agency said. “However, there was never any such person named Amanda Ebert associated with [American Bridge Investment Group], Wolf Hedge, or Malik.”

    Malik simply plucked a photo of a woman off the web and worked it into his scam, the SEC alleged.

    And what of redemption delays? Although Malik was not running a Ponzi-board swindle, his purported hedge fund sure acted like one. The SEC identified one of his victims as “Investor A.” After this investor repeatedly asked Malik for a redemption, the delay in granting one initially was blamed on a busy travel and work schedule.

    “Okay working literally 24.7 just came back from Vermont (client meetings),” Malik allegedly advised the investor in an email. “I will call you on Monday and solve the issue. I promise.”

    That call allegedly never came. Another month passed. Here’s what happened next, according to the complaint (italics added):

    “Investor A did not hear from Malik again until September 2013 when a purported Malik employee named ‘Courtney,’ another fictitious identity used by Malik, emailed the investor as follows: ‘Mr. Malik has been [sic] passed away with the heart attack after accident. We will dissolve the fund shortly.’”

    How about name-dropping of the sort that regularly occurs among hucksters pushing HYIP “programs?”

    Well, Malik allegedly did that, too — perhaps with particularly notable success. You see, the SEC alleged that Malik duped Bloomberg and BarclayHedge into giving him positive press, and then used the inaccurate coverage he created to dupe his marks.

    “In 2012, Barclay Hedge awarded American Bridge Investments L.P. the ‘yearly performance award’ and ranked the fund as the year’s top performing equity long-short fund with over $100 million in assets,” Schneiderman’s office alleged.

    In its complaint, the SEC alleged that American Bridge’s trading account “never held more than $90,177 in assets.”

    It gets worse. During the same year American Bridge and its Seven Sages spinoff were winning awards as purported rising stars, “Seven Sages’ brokerage account held only $269.52,” the SEC said.

    How did Malik pull it off? By creating false financials and presenting them to reporters, the SEC charged.

    From the SEC complaint (italics added/light editing performed):

    Malik submitted to BarclayHedge a purported financial statement and auditor’s report of Seven Sages, dated December 31, 2012, which listed Berkowitz & Associates, a purported accounting firm with an Iselin, New Jersey address. The report claimed that Berkowitz & Associates had audited the Seven Sages’ financial statement.

    This information was false. There is no accounting firm named Berkowitz & Associates in Iselin, New Jersey, and no auditor ever served as ABIG’s or Seven Sages’ auditor.

    In the purported financial statement sent to Barclay Hedge, as of December 31, 2012, Seven Sages reported funds under management of$100.26 million. In fact, at that time Seven Sages’ brokerage account held only $269.52.

    Malik eventually used another trick from the scammer’s playbook: The SEC alleged he married his namedropping to a purported IPO. Among the names dropped in the never-to-materialize IPO were the New York Stock Exchange, KPMG, Credit Suisse, JP Morgan, Barclays, Guggenheim and Merrill Lynch.

    What to do when skeptical investors start turning up the heat? Here, Malik again engaged in the sort of conduct seen in HYIP scheme after HYIP scheme on the Ponzi boards.

    This, friends, is stuff made for Hollywood:

    “[O]n February 22, 2014, after Investor C had repeatedly asked Malik to redeem his investment (and Malik refused), Malik sent the investor a threatening email,” the SEC alleged. “The email contained a video of a werewolf movie with Malik’s comment ‘that’s what I think I am.’ Malik sent this email as a threat, indicating that Malik was as dangerous and threatening as a werewolf, and the email was intended to deter Investor C from efforts to redeem or to contact the authorities.”

    As is the case in many Ponzi-board scams, the threats allegedly didn’t end there.

    “Malik sent Investor D, who had repeatedly requested a redemption (which Malik refused), irate and profane emails apparently because Malik believed that the investor had contacted the [SEC] staff,” the agency alleged.

    As Malik allegedly dialed up his egregious conduct, he did something else commonly seen in the HYIP sphere: tried to rip off one or more of his victims for a second time.

    After his menacing conduct to Investor C, the SEC said, “Malik solicited Investor C to invest an additional $100,000.”

    This solicitation came in January 2015, about 11 months after Malik threatened Investor C with the werewolf imagery, according to the complaint.

    Along the way, the SEC charged, Malik sent emails that repeatedly used exclamation marks.

    It’s something that happens every hour in HYIP Ponzi Land.

    This, the SEC said, was one of the Malik emails: “Increase everyone! We are going to go in the biggest trade with full hedge and stop loss. You may redeem next month if you wish. INCREASE!!!”

    A false screen shot that showed a a fund value of $56 million was part of the scam, the SEC alleged.

    So was the use of  “uncompensated individuals to conduct marketing and perform other work for him,” the SEC said.

    And when things started caving in, Malik “sent emails to investors accusing them of trying to ruin him by communicating with the Commission staff, while simultaneously soliciting them to invest additional funds.”

    At one point, though, he finally remained silent, according to the complaint.

    “Malik asserted his Fifth Amendment privilege against self-incrimination in response to the Commission’s staffs subpoenas compelling him to testify and produce documents,” the SEC said.

    Read the SEC’s statement and access the complaint.

     

  • North American Securities Administrators Association Publishes Warning On HYIP Frauds: ‘Ponzi Schemes Sold By Unlicensed Individuals,’ International Group Says

    Don’t get fleeced by HYIP scammers and commission-based promoters who push such fraud schemes on the Internet, the North American Securities Administrators Association (NASAA) says in a new warning.

    From the warning (italics added):

    Have you ever seen an ad on the Internet or a posting on a social media site promising too-good-to-be-true rates of return in short periods of time? Then you may have encountered an advertisement for a high-yield investment program, sometimes referred to as an HYIP.

    HYIPs are Ponzi schemes sold by unlicensed individuals. In the past, con artists relied on word of mouth to lure investors into these investments. Now they rely on the Internet and social media buzz to quickly popularize their schemes before the fraud is discovered.

    recommendedreading1NASAA’s membership consists of “67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico,” the group says.

    The association’s member-agencies were instrumental last year in making sure the word got out about the “Profitable Sunrise” scheme that traded on social media and used Bible verse as a lure. Some individual NASAA member-agencies filed actions against Profitable Sunrise, as did the U.S. Securities and Exchange Commission.

    Both the Financial Industry Regulatory Authority and the U.S. Securities and Exchange Commission have published warnings on HYIP scams similar to this month’s warning by NASAA.

    On Nov. 12, 2014, the SEC charged an HYIP known as “Profits Paradise” that allegedly was operating from India while duping people into believing it was operating from the United States.

    The first Profits Paradise “plan purportedly yielded daily interest of 1.5 percent on investments of $10 to $749,” the SEC said. “The second plan purportedly yielded 1.75 percent on investments of $750 to $3,499. And the third plan purportedly yielded 2 percent on investments of $3,500 and above. Postings on Profit Paradise’s Facebook page promised investors they could ‘Enjoy Hassle Free Income’ and advertised a ‘5% Referral Commission.’”

    NASAA’s HYIP warning notes that some HYIP scammers are switching to cryptocurrencies. With many HYIPs already operating in an environment of secrecy, ones that use payment vessels such as Bitcoin may intensify risk to investors.

    From an April 2014 NASAA warning on risks associated with virtual currencies (italics added):

    Some common concerns and issues you should consider before investing in any product containing virtual currency include:

    • Virtual currency is subject to minimal regulation,susceptible to cyber-attacks and there may be no recourse should the virtual currency disappear.
    • Virtual currency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to $250,000.
    • Investments tied to virtual currency may be unsuitable for most investors due to their volatility.
    • Investors in virtual currency will be highly reliant upon unregulated companies that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
    • Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect their e-Wallets from theft.

  • SEC Halts Trading Of Cynk Technology Corp. Stock, A Mysterious And Sudden Darling With Belize Address

    From an SEC halt order today.
    From an SEC halt order today.

    It’s one of those things almost too bizarre to contemplate: The stock price of Cynk Technology Corp. increased tens of thousands of percent over a period of days — except the Belize company supposedly in the social-networking business reportedly has no revenue and no assets.

    The SEC halted trading in Cynk stock this morning, citing “concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK’s common stock.”

    How a penny stock rose “to a market cap of well over $6 billion at one point” remains a mystery.

    A variety of headlines:

    “Tech stock soars 25,000%. Trading halted” (CNN Money)

    “Penny stock soars to $6B, and even the auditor is perplexed.” (CNBC)

    “Cynk Is a Joke, Not Proof of a Bubble” (Business Week)

    From Twitter:

     

  • Why California’s WCM777 Action May Spell Trouble For HYIP Promoters On You Tube

    As a reporter interviews a Peruvian official at the scene of a police raid against a WCM777 outlet, an image of American pitchman Harold Zapata flashes on the screen. Source: YouTube.
    As a reporter interviews a Peruvian official at the scene of a police raid against a WCM777 outlet in Lima, an image of American pitchman Harold Zapata (left) flashes on the screen. Source: YouTube.

    Still using social-media sites to promote massive fraud schemes — even after the AdSurfDaily, Zeek Rewards and Profitable Sunrise debacles?

    Thanks to his presence on social media, Harold Zapata, a WCM777 YouTube pitchman named a respondent in a Desist and Refrain order announced last month by California’s Department of Business Oversight, may be trapped between a rock and a hard place.

    Zapata is a California resident. Not only does the state know about his YouTube presence — indeed, his promos are referenced in the D&R — so do authorities in Peru. Whether Zapata ever has ventured to Peru is unclear. What is clear is that Peruvian media have used snippets of his U.S.-based promo as a backdrop to video reports about a police raid against a local WCM777 outlet in Lima.

    Whether he likes it or not, Zapata has become one of the American faces for WCM777.  In one video, Zapata identified himself as a WCM777 “director . . . working directly with our founder, CEO, chairmans [sic], leaders in our WCM777 organization.”

    WCM777 executives include Ming Xu and Zhi Liu, California said. Both men are named in the D&R. Zapata also is named.

    California’s action against WCM777, its executives and Zapata may signal trouble for other YouTube pitchmen for highly questionable MLM “programs” or outright scams. For starters, YouTube commercials for HYIPs sometimes are copied and used by promoters of the same purported “opportunity,” thus saving fellow pitchmen the time and trouble of making their own videos. This can happen with or without permission, perhaps with an eager recruit using the video of another sponsor but inserting a URL to the recruit’s page in a companion text pitch below the actual video.

    Beyond that, some fraud-scheme pitchmen openly share their YouTube promos with downline recruits as a means of driving more business to a scam. Such approaches typically are portrayed as the acts of a helpful sponsor who wants to see his or her recruits thrive by providing them the “tools” they need to succeed.

    At least one YouTube pitchman for WCM777 appears to be using Zapata’s video to drive traffic to WCM777 and possibly other “opportunities.”

    Zapata appears to have noticed this at least two months ago and placed warnings in Spanish and English on the YouTube site of the fellow WCM777 pitchman.

    Here’s how the warnings read (italics added):

    Por favor quite este video inmediatamente o me veo obligado a reportarte por infracción de copyright, de este video.

    Please remove this video immediately or I will be forced to report this video for copyright infringement.

    The video nevertheless remains. It shows Zapata pitching WCM777 in English, even after the California action and the raid in Peru. The title of the video on the fellow WCM777 pitchman’s site is “WCM777. FULL PRESENTATION IN ENGLISH.”

    It is unclear from Zapata’s warnings whether he was upset that the video was being used without his permission or whether he was concerned that the fellow WCM777 pitchman was using the video to cherry-pick Zapata’s earnings.

    Regardless of Zapata’s specific concerns, however, the continued appearance of the video shows the vulnerability of MLM pitchmen who promote “programs” on YouTube. Such promoters not only may lose control over their own content, they literally may lose control over their own faces.

    Even if Zapata has stopped promoting WCM777, the video published by the fellow WCM777 pitchman makes it appear as though Zapata still is promoting the purported opportunity, which California publicly declared a scam last month. Last week, the state asked residents who invested in WCM777 to contact the DBO immediately.

    At least 5,500 Californians plowed money into the WCM777 scam, the state said.

    “The California Department of Business Oversight has seen a surge of high-yield investment schemes that take advantage of social networks to market illegal investments,” said Jan Lynn Owen, commissioner of the Department of Business Oversight. (Bolding added by PP Blog.)

    In 2010, FINRA called the HYIP sphere a “bizarre substratum of the Internet” and issued a warning that such schemes were spreading on social-media sites such as YouTube, Facebook and Twitter. Zapata’s experience demonstrates that some HYIP pitchmen either missed the warning or chose to ignore it.

    BehindMLM.com is reporting that WCM777 — now operating as Kingdom777 — appears now to be engaging in ham-handed wordplay to continue its duping of the masses. The “program,” BehindMLM reports, now is using the word “members” and trying to steer clear of the word  “investors.”

    Such wordplay bids foreshadowed doom at both AdSurfDaily, a $120 million Ponzi scheme, and Zeek Rewards, which allegedly gathered at least $850 million.

    As the PP Blog reported in June 2012, here is part of what the U.S. Secret Service said in a filing in the ASD Ponzi-scheme case in February 2009 (italics’bolding added):

    [ASD operator Andy] Bowdoin and his sponsor knew that it was illegal to sell investment opportunities to thousands of individuals; thus, they were careful not to call participants “investors” but rather referred to them as “members.” Moreover, there were careful not to call payments to “members” “return on investments”; rather, they referred to the income program as a “rebate” program . . .

    The document cited above is available at the top this PPBlog story about the then-active Zeek Rewards Ponzi scheme: EDITORIAL: A Friday Evening In MLM Radio La-La Land. (Document courtesy of the ASD Updates Blog.)

    For whatever reason, HYIPs and their pitchmen apparently continue to believe they can duck or circumvent securities regulations and laws against the sale of unregistered securities by calling an investment something else.

    Prosecutors made short work of the Zeek and ASD wordplay, saying both “programs” engaged in linguistic games to describe an investment as something else.

    WCM777 even may dialing up the HYIP wordplay madness. From BehindMLM.com (italics added):

    A “dividend” [at WCM777/Kingdom777] is now a “bonus”… cuz well, a bonus could be anything… including an investment “return”, which is now also just a “bonus”.

  • BULLETIN: California Asks Residents Who Bought Into WCM777 To Contact Department Of Business Oversight ‘Immediately’; State Says Thousands Of Locals Bought Into Scam

    breakingnews72BULLETIN: (UPDATED 6:38 P.M. ET U.S.A.) The state of California, which last month issued a Desist and Refrain order against the WCM777 MLM “program” and called it an “investment scam,” now is asking residents who invested in WCM777 to contact the Department of Business Oversight “immediately.”

    At least 5,500 Californians plowed money into the scheme, the DBO said.

    The state has ordered WCM777 to halt is operations in California.

    “The California Department of Business Oversight has seen a surge of high-yield investment schemes that take advantage of social networks to market illegal investments,” said Jan Lynn Owen, commissioner of the DBO. “We encourage anyone who dealt with WCM777 to immediately contact the Department.”

    Affinity fraud is part of the WCM777 mix, the state said.

    “Relying on Biblical themes to lure investors, the WCM777 scheme offers securities in the form of memberships that allegedly provide purchasers with up to a 60 percent profit in 100 days,” the state said.

    WCM777 now is operating as Kingdom777.

    From a DBO statement (italics added):

    All California investors in WCM777 are strongly encouraged to contact the Department of Business Oversight to file a formal complaint at (866) 275-2677 or online at: www.dbo.ca.gov/Consumers/consumer_services.asp. The January 8 order is available on the Department’s website at http://www.dbo.ca.gov/ENF/pdf/2014/WorldCapitalMarketInc_dr.pdf.

    Named in California’s order are executives Ming Xu and Zhi Liu, and YouTube pitchman Harold Zapata, all with addresses in California  Also named are World Capital Market Inc., WCM777 Inc. and WCM777 Limited.

    Police raided a WCM777 outlet in Peru last month. At least one Peruvian TV station showed snippets of Zapata’s YouTube pitch as part of its coverage of the raid. The development signals that HYIP pitchmen operating from the United States or other countries and using YouTube to help a fraud scheme go viral now may find their faces plastered on TV both locally and in faraway lands.

    FINRA issued a warning on HYIP schemes that use social-media sites in 2010.

  • BULLETIN: California Calls WCM777 A ‘Scam,’ Issues Desist And Refrain Order That Names Executives And YouTube Pitchman

    From the California order announced last week on the state's website.
    From the California order announced last week on the state’s website.
    From a Consumer Alert issued by the California Department of Business Oversight. (Red highlight by PP Blog.)
    From a Consumer Alert issued by the California Department of Business Oversight. (Red highlight by PP Blog.)

    BULLETIN: (Updated 10:36 a.m. ET U.S.A.) The state of California has called the WCM777 MLM “program” a “scam” and issued a Desist and Refrain Order that bans the enterprise in the state. The Department of Business Oversight (DBO) has issued a companion Consumer Alert and is “strongly” encouraging California investors to file a formal complaint.

    Named in the Jan. 8 order announced late last week on the state’s website are WCM777 executives Ming Xu and Zhi Liu. Harold Zapata, an alleged WCM777 YouTube pitchman with an address in Hanford, Calif., also is named in the order. Corporate entities named in the order include World Capital Market Inc., WCM777 Inc. and WCM777 Limited, all of Pasadena.

    Zapata, California alleged, identified himself as “CEO at WCM777 Global Stars,” something that suggests he was the leader of an upline group. On July 15, 2010, the PP Blog reported that FINRA warned the investing public about scams that spread on social-media sites such as YouTube,  Facebook and Twitter.

    WCM777 was targeted at people of faith and members of minority communities. California investors can file a complaint by dialing 866-275-2677, the state said.

    In November, the state of Massachusetts accused WCM777 of selling unregistered securities.

    California now has done the same thing.

    “The WCM777 membership units offered and sold by Respondents constitute securities,” the state charged.

    And, it alleged, “Respondents offered and sold securities by means of written and oral communications which included untrue statements of material fact and which omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.”

    WCM777 now is operating as Kingdom777, and has been associated with a series of bizarre events. On Jan. 17 via Twitter, the “program” issued a declaration of love to the people of Peru after a police raid on a WCM777 outlet there. The announcement was attributed to “Dr. Phil Ming Xu” and claimed the enterprise now “has a promotion plan with a payout ratio of 130%.”

    In issuing the announcement, WCM777 appeared to be ignoring the securities issues altogether. California publicly announced the order six days later, on Jan. 23. The California order is dated Jan. 8. A day earlier, on Jan. 7, WCM777 published an announcement of the name change to Kingdom777, claiming “Kingdom777 has acquired the assets of WCM777.”

    As is typical in HYIP scams, the announcement blamed affiliates for WCM777’s woes.

    “Some members failed to represent WCM777 correctly and distorted our vision and mission to be a social capital company whose goal is to build a global community of trust and love,” the new company said.

    But California’s order, which in part echoes suggestions in Massachusetts that WCM777 was steering recruits to avoid lower levels of buy-in in favor of the highest level of $1,999, makes it clear that the state viewed WCM777 itself as a fraud.

    From the California order (italics/bolding added):

    9. The most expensive and, by far, the most popular WCM777 membership unit costs $1,999. The $1,999 membership unit provides the purchaser five years of access to WCM777’s alleged online cloud services. In addition, WCM777 claims that a purchaser of the $1,999 membership unit will receive up to $32 per day over a 100-day period in the form of profit-sharing payments, bonuses and commissions. Thus, over a 100-day period, a purchaser of the $1,999 membership unit would allegedly earn $1,200 more than the original cost of the unit—an alleged 60% return in only 100 days.

    10. The vast majority of purchasers buy the five year unit, rather than the less expensive units that generate lesser returns. In fact, over 95% of purchasers in the United States bought the $1,999 membership unit.

    11. There is no limit to how manyWCM777 membership units an individual may purchase at one time. In fact, a significant number of purchasers buy multiple WCM777 membership units at the same time.

    12. After the purchaser’s 100-day daily returns cycle expires, the purchaser may “re-up” by purchasing another membership unit at a 50% discount, which then restarts the 100-day cycle. A purchaser can “re-up” indefinitely. Therefore, over a 300-day span, a purchaser of a single $1,999 WCM777 membership unit who “re-ups” at the end of each 100-day cycle would allegedly earn up to $5,600 more than the cost of buying the membership units—an alleged 140% return in about 10 months.

    Precisely how California learned that 95 percent of U.S. purchasers allegedly bought in at the maximum level of $1,999 is unclear. What is clear is that the state has accused WCM777 of engaging in a rank deception and gathering at least $20 million between March 2013 and September 2013.

    Among WCM777’s fraudulent claims was that the “Respondents’ activities were not subject to the jurisdiction of the United States Securities & Exchange Commission or the United States Federal Trade Commission,” California alleged.

    Moreover, the state claimed that the respondents failed “to disclose that WCM777 had no other significant sources of income but for its sale of membership units.” Meanwhile, they failed to disclose “that WCM777 did not have an enforceable contract with Siemens under which Siemens would provide the alleged online cloud services that WCM777 advertised.” (See Oct. 30, 2013, PP Blog story, which reports on the issue with Siemens and notes that WCM777 was being targeted at a Latino church in Rialto, Calif.)

    Siemens, the state said in its order, “has publicly disavowed any relationship or contract with WCM777. In a press release, Siemens stated that it disavowed a relationship with WCM777 “[i]n order to help . . . investors avoid making any investments based on false assumptions[.]”

    And despite claims by the respondents that “WCM777’s alleged daily returns are backed by the global banking business of its parent company, WCM,” the state charged, “WCM777 and WCM had no significant income outside of sales of WCM777 membership units.

    “From March 2013 to the end of September 2013, WCM777 and WCM generated over $20 million in sales of WCM777 membership units,” the state alleged. “During the same period, over 99% of the income of WCM777 and WCM came from sales of WCM777 membership units, while less than 1% of their income came from WCM’s alleged global ‘merchant banking’ or any other business.”

    Some WCM777 promoters have claimed that the WCM enterprise had handed out more than $1 billion in loans. In a bizarre example of MLM hucksterism, the promoters identified several companies that allegedly had borrowed great sums from WCM — and even how much the firms purportedly had borrowed.

    News of the California order first was reported today by BehindMLM.com.

    Visit California’s website. Read the Desist and Refrain Order.

  • SPECIAL REPORT: Like AdSurfDaily And OneX Before It, Alleged TelexFree Pyramid Scheme May Be Engaging In Game Of Payment-Processor Roulette

    “While reviewing the ASD website in the District of Columbia, [an undercover agent] found a posting within ASD’s News section, apparently posted by ASD on July 2, 2008. The title of the posting was, “Alert Pay & Direct Deposit are being phased out July 31, 2008.” According to ASD’s posting, “We have notified BOA not to accept cash or personal checks for deposit account – English or Spanish.” ASD further stated, “Please remember that the preferred method of purchasing Ad Packages is by mailing a Check or by Solid Trust Pay . . . Solid Trust Pay is a Canada based money transmitting and payment company that, like the e-Gold system, operates over the Internet. It appears that beginning August 1, 2008, Solid Trust Pay will be ASD’s preferred method for receiving funds from members, and for paying rebates and commissions to members . . . Within the past two weeks, ASD has wired several million dollars to Solid Trust Pay from its BOA Accounts. A TFA also learned that earlier in July 2008, a bank other than BOA closed the last account that was controlled by Bowdoin or family members after that bank determined, and explained to them, that an investigation by the bank determined that Bowdoin appeared to be operating a Ponzi scheme.” — AdSurfDaily Ponzi scheme forfeiture complaint, August 2008

    TelexFree affiliate promos encouraging participants to register for International Payout Systems (I-Payout) began to appear online in recent hours. Just last month, TelexFree affiliates were encouraged to register for Global Payout Gateway, another e-Wallet vendor that supposedly would solve TelexFree's payment problems. There now are reports online that GPG has dumped TelexFree, leading to questions about whether TelexFree is trying to port its alleged fraud scheme to yet another vendor -- I-Payout.
    TelexFree affiliate promos encouraging participants to register for International Payout Systems (I-Payout) began to appear online in recent hours. Just last month, TelexFree affiliates were encouraged to register for Global Payroll Gateway, another e-Wallet vendor that supposedly would solve TelexFree’s payment problems as a pyramid-scheme probe moved forward in Brazil. There now are reports online that GPG has dumped TelexFree, leading to questions about whether TelexFree is trying to port its alleged fraud scheme to yet another vendor — I-Payout. Source: Google search results.

    In 2008, the U.S. Secret Service effectively accused the AdSurfDaily MLM “program” of playing a game of payment-processor roulette as U.S. law enforcement put the squeeze on certain money-movers, the willfully blind enablers of online fraud schemes.

    ASD, a $119 million HYIP Ponzi scheme that led to a 78-month prison sentence for operator Andy Bowdoin, started out by accepting “e-Gold and Virtual Money,” according to a Ponzi-scheme forfeiture complaint filed in federal court in August 2008.

    But ASD, according to the complaint, realized e-Gold had come under investigation for enabling the laundering of money, something that could put the heat on ASD.

    “Shortly after publicity surrounding the government’s investigation into e-Gold appeared, ASD discontinued using the e-Gold system as a means for receiving member funds,” the complaint alleged.

    And even as these events were occurring, according to court filings in the ASD case and in other cases, Robert Hodgins, a supplier of debit cards and the operator of Virtual Money Inc. — now listed by INTERPOL as an international fugitive — came under investigation in Connecticut amid allegations he was assisting in the laundering of narcotics proceeds in Medellin, Colombia, and prepping himself to assist in the laundering of funds in the Dominican Republic.

    Virtual Money, whom some ASD members said was supplying debit cards to ASD, also was linked to the PhoenixSurf Ponzi scheme, according to court filings.

    In December 2010, federal prosecutors alleged that ASD also had accepted money from e-Bullion, a California firm that processed payments for Ponzi schemes, including the $72 million Legisi HYIP scheme in Michigan that led to prison sentences for operator Gregory McKnight and pitchman Matthew John Gagnon. E-Bullion operator James Fayed has been sentenced to death for ordering the brutal contract slaying of his wife, a potential witness against him. Pamela Fayed’s throat was slashed repeatedly in the shadows of a Greater Los Angeles parking garage, her husband seated on a nearby park bench “like he doesn’t have a care in the world.”

    ASD, according to court filings, also used AlertPay and SolidTrustPay, money-movers based in Canada that have been linked to multiple Ponzi schemes, including the alleged $600 million Zeek Rewards Ponzi scheme broken up by the SEC last year.

    Not even Bowdoin’s arrest in 2010 stopped him from pitching fraud schemes, according to court filings. Facing serious criminal charges for his actions in ASD, Bowdoin (in 2011) became a pitchmen for the OneX “program,” which federal prosecutors later alleged to be a pyramid scheme recycling money in ASD-like fashion. Among Bowdoin’s fellow OneX pitchmen was T. LeMont Silver, later of Zeek and later of  JubiMax and GoFunPlaces, two MLM “programs” that are suing each other amid allegations of financial fraud.

    At one time, OneX claimed to have a relationship with SolidTrustPay. It then claimed to have ended that relationship and to have started a relationship with I-Payout. Earlier, I-Payout had listed the uber-bizarre TextCashNetwork MLM “program” with ties to the Phil Piccolo organization as a “selected client.” TextCashNetwork now appears to have disappeared, but still is operating with the acronym “TCN” — this time as TrueCashNetwork. How the “new” TCN is processing payments is unknown. What is known is that someone associated with the “new” TCN has sent emails to “winners” in the Zeek scheme in an apparent bid to get them to flog for the new iteration, an apparent investment arm of which is being promoted as an opportunity to earn an interest rate of 50 percent.

    Now — as incredible as it seems — promoters of the alleged TelexFree pyramid scheme operating in Brazil and the United States now are claiming that TelexFree is using I-Payout, known formally as International Payout Systems Inc. Equally incredibly, this is happening less than a month after TelexFree promoters advised TelexFree participants to register with Global Payroll Gateway (GPG), another eWallet company and supplier of debit cards, as a means of getting paid after payouts to Brazilian members of TelexFree were blocked in Brazil.

    Just last month, TelexFree affiliates were encouraging prospects to register with Global Payroll Gateway (GPG). In recent hours --0 and amid reports GPG has given TelexFree the boot -- TelexFree affiliates have been urged to register with I-Payout.
    Just last month, TelexFree affiliates were encouraging prospects to register with Global Payroll Gateway (GPG). In recent hours — and amid reports GPG has given TelexFree the boot — TelexFree affiliates have been urged to register with I-Payout. Source: Google search results.

    There are reports online, including on Facebook from self-identified members of TelexFree, that GPG gave TelexFree the boot in recent days. No sooner did those reports surface than videos went up on YouTube encouraging TelexFree members to register for I-Payout.

    One of the reports that TelexFree suddenly had shifted from GPG to I-Payout is published on the MoneyMakerGroup forum. MoneyMakerGroup’s name appears in U.S. court files as a place from which Ponzi and fraud schemes are promoted. Both FINRA and the SEC have warned that HYIP schemes spread in part through social-media sites such as forums, YouTube and Facebook.

    Because international MLM HYIP fraud schemes often have promoters in common — and because the schemes are promoted on Ponzi cesspits such as MoneyMakerGroup and TalkGold —  proceeds from the schemes can flow into banks at the local level, putting them in the position of becoming warehouses for the ill-gotten gains of participants, including winners and insiders. The use of stored-value debit cards such as those in play in HYIP schemes can lead to the quick dissipation of assets, meaning that victims of an HYIP scheme may have limited hope (or even no hope) that a recovery can be made for their benefit.

    The most recent incongruous events involving TelexFree are occurring even as at least one judge and one prosecutor involved in the TelexFree pyramid probe in Brazil reportedly have been threatened with death. And, as was the case with ASD, some promoters of TelexFree have claimed an ability to expedite the flow of money to the scheme — perhaps through back-office transactions within the TelexFree system.

    Also see report on BehindMLM.com.

     

     

  • Notes/Analysis On TelexFree: A Little Like AdSurfDaily/AdViewGlobal, TextCashNetwork, Zeek Rewards, Profitable Sunrise And World Marketing Direct Selling

    TelexFree affiliates have shared a photo of James M. Merrill posing in front of an office building in Massachusetts. The photo, however, is not proof of TelexFree's legitimacy and raises questions about whether the company was trying to plant the seed it had a massive physical presence in the United States.
    TelexFree affiliates have shared a photo of President James M. Merrill posing in front of an office building in Massachusetts. The photo, however, is not proof of TelexFree’s legitimacy and raises questions about whether the company was trying to plant the seed it had a massive physical presence in the United States.

    UPDATED 10:22 P.M. EDT (U.S.A.) The purported TelexFree “opportunity” is under investigation by multiple agencies in Brazil, its purported base of operations despite competing claims the company is headquartered in the United States.  The notes below concern TelexFree’s U.S. presence and positioning. They are presented in no particular order of importance. TelexFree says it is in the communications business.

    TelexFree has a footprint in Massachusetts at 225 Cedar Hill Street, Suite 200, Marlborough. It is a shared office facility. Ads for the building suggest a conference room with video capabilities can be rented by the hour. One suggested use of the room is for attorneys to rent it to conduct depositions. Some attorneys practicing in the state and federal courts use the building as a business address.

    Other lessees include the Massachusetts Library System (MLS), which describes itself as “state-supported collaborative” to foster “cooperation, communication, innovation, and sharing among member libraries of all types.” MLS uses Suite 229, according to its website.

    TelexFree operates as an MLM. One of the problems in the MLM sphere is that purported “opportunities” and their promoters have been known to dupe participants by leasing virtual office space to create the illusion of scale or of a massive physical presence.  Such was the case with a Florida entity associated with AdViewGlobal, an AdSurfDaily knockoff scam that purported to pay 1 percent a day. As the PP Blog reported on May 31, 2009 (italics added):

    Research suggests a company with which AVG has a close association is headquartered in a modern office building in the United States. The building was constructed in 2003. Office functions and conferencing can be rented by the hour. Two large airports are nearby, and a major Interstate highway is situated one mile from the building.

    It is a virtual certainty that AVG, which purported to operate from Uruguay, actually was operating from the U.S. states of Florida and Arizona and using a series of business entities to launder the proceeds of its fraud scheme. AVG disappeared mysteriously in June 2009.

    On Dec. 14, 2011, the PP Blog reported that Text Cash Network (TCN) — another purported MLM “opportunity” — was using a virtual office in Boca Raton, Fla., in a bid to create the illusion of scale. TCN promoters published photos of a glistening building with TCN’s name affixed near the crown of the building. The Boca Raton Police Department, however, said the firm’s name did not appear on the building.

    Although the PP Blog is unaware of any bids to Photoshop TelexFree’s name on a large office building, affiliates have shared photos of TelexFree President James M. Merrill posing in front of the large Massachusetts building. So there can be no confusion, TelexFree does not own the building. TelexFree affiliates/prospects should not rely on the photo of the building as proof of the legitimacy of the company. The photo itself raises questions about whether Merrill and TelexFree were trying to create the illusion of scale. Even though the answer could be no, the negative inferences that can be drawn from the photo contribute to MLM’s reputation for serial disingenuousness.

    TelexFree also has a presence in the state of Nevada. Records show that an entity known as TelexFree LLC is listed as “Domestic Limited-Liability Company” situated in Las Vegas. Listed managers include Carlos N. Wanzeler, Carlos Costa and James M. Merrill. TelexFree operates in Massachusetts with an “Inc.” version of the name — i.e., TelexFree Inc., having undergone a name change in February 2012 from Common Cents Communications Inc. In Massachusetts, James Merrill is listed as the registered agent, president, secretary and director of the firm, with Carlos Wanzeler listed as treasuer and director. Unlike the Nevada “LLC” version of TelexFree, Carlos Costa appears not to hold a title in the Massachusetts “Inc.” entity.

    The footprints in the United States are important in the sense that they establish a business presence in the country should TelexFree become the subject of U.S. investigations akin to what is happening now in Brazil, where pyramid-scheme and securities concerns have been raised. Along those lines, records of the Financial Industry Regulatory Authority (FINRA) appear not to list TelexFree — despite the fact affiliates in the United States have claimed members acquire “stock” from TelexFree that can be sold through TelexFree and that affiliates purchase “contracts” from TelexFree.

    One YouTube video viewed by the PP Blog shows a TelexFree affiliate purportedly cashing out his stock through his TelexFree back office. The affiliate appears to be speaking in U.S. English, citing the date as March 19, 2013. In the video, the affiliate describes his pitch as a “quick withdrawal video” — i.e., proof that TelexFree is legitimate because it pays.

    “OK,” the narrator intones. “I’m going to sell all my stock.” The video shows a tab labeled “Stock” and a subtab styled “Repurchase” in the back office.

    The narrator then clicks on a series of graphics styled “REPURCHASE” and tells the audience that he wants to show it all the “stock that I have that converts to actual money.” He then proceeds to a “Withdraw” subtab under a “Statement” tab. These actions eventually expose a screen that shows an “AVAILABLE BALANCE” of $927.61 for withdrawal.

    For a brief moment, the acronym “BT&T” flashes on the screen, suggesting the TelexFree affiliate is seeking to have his earnings from stock sales relayed through North Carolina-based Branch Banking & Trust. The interesting thing about that is that the alleged $600 million Zeek Rewards Ponzi- and pyramid scheme claimed it had a banking relationship with BB&T.

    In May 2012 — on Memorial Day — Zeek mysteriously announced it was ending its relationship with BB&T. It was unclear from the TelexFree affiliate’s video whether he was a BB&T customer or whether TelexFree was. What is clear is that the SEC moved against Zeek in August 2012, accusing the company of securities fraud and selling unregistered securities as investment contracts. The U.S. Secret Service said it also was investigating Zeek.

    In this TelexFree promo running on YouTube, the acronym BB&T flashes on the screen in a TelexFree affiliate's back office.
    In this TelexFree promo running on YouTube, the acronym BB&T flashes on the screen in a TelexFree affiliate’s back office.

    Among the problems with HYIP schemes is that banks can become conduits through which illicit proceeds are routed or stockpiled. Zeek used at least 15 domestic and foreign financial institutions to pull off its fraud, according to court filings.

    Because HYIPs offer commissions to members who recruit other members along with “investment returns,” legitimate financial institutions can come into possession of money tainted by fraud.

    Like Zeek (and AdViewGlobal and AdSurfDaily), TelexFree has a presence on well-known forums listed in U.S. court records as places from which Ponzi schemes are promoted.

    TelexFree shares some of the characteristics of fraud schemes such as Zeek, AdViewGlobal, AdSurfDaily, Profitable Sunrise and others. ASD, AVG and Zeek, for instance, had a purported “advertising” element. So does TelexFree.

    TelexFree affiliates claim they get paid for posting ads online for the purported “opportunity.” Zeek affiliates made the same claim.

    It is highly likely that Zeek and TelexFree have promoters in common, a situation that potentially is problematic, given that some affiliates may have used money from Zeek to join TelexFree — and the court-appointed receiver in the Zeek case is pursuing clawbacks against “winners.” In short, some of the winnings could have been spent in TelexFree.

    An online promo for Zeek in July 2012 claimed North Carolina-based Zeek had 100,000 affiliates in Brazil alone. TelexFree affiliates are claiming that their “opportunity” now has hundreds of thousands of affiliates, which suggests TelexFree has achieved Zeek-like scale. Whether it enjoys Zeek-like, money-pulling power on the order of $600 million is unclear.

    What is clear is that TelexFree, like Zeek before it, is spreading in part through the posting of promos on classified-ad or similar sites across the United States. Profitable Sunrise, another HYIP, spread in similar fashion. Dozens of U.S. states issued Investor Alerts or cease-and-desist orders against Profitable Sunrise, which the SEC accused of fraud in April 2013.

    To gain an early sense of the scale TelexFree may be achieving in the United States, the PP Blog typed into Google the term “TelexFree” and the names of several U.S. states known to have taken actions against Profitable Sunrise. This revealed URLs such as “TelexFreeOhio” and “telexfreetexas.blogspot.com,” for two examples. It also showcased classified-ad (or similar) sites on which TelexFree promos are running or have run.

    Finally, the state of Massachussets was the venue from which the prosecutions of the infamous World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL) pyramid-schemes were brought in federal court. Those fraud schemes were targeted at Cambodian-Americans. The state does not take kindly to affinity fraud. In March, Massachusetts securities regulators charged a man in an alleged fraud bid against the Kenyan community.

    Among the claims of the MLM hucksters pitching WMDS and 1UOL was that members could purchase an income. Some TelexFree affiliates are making similar claims.

    The WMDS and 1UOL frauds became infamous as the source of death threats, including one against a federal prosecutor.

    Media outlets in Brazil have reported that death threats have surfaced over the TelexFree scheme.

    For the reasons cited above and more, it would be surprising if things end well in the United States for TelexFree, which has Zeek and ASD-like signatures of MLM disasters waiting to happen.

     

     

  • ‘Earn Profit Click,’ Scheme Targeted At Profitable Sunrise Victims On Facebook, Says It Will Build Its Program With Targeted Spam On Facebook And Twitter

    An emerging scheme that butchers the English language and contends it opposes spam also bizarrely says it intends to build its business by requiring members to post ads on Facebook and Twitter.

    Equally bizarrely, the scheme says it accepts Liberty Reserve, the now-shuttered payment processor implicated by the United States last month in an alleged $6 billion money-laundering conspiracy.

    The scheme is known as Earn Profit Click — or EPC for short. The PP Blog observed ads for the “program” over the weekend on a Profitable Sunrise Facebook site. The ads now appear to have been removed. Profitable Sunrise was a murky international pyramid scheme that may have gathered tens of millions of dollars by using offshore bank accounts, the SEC said in April.

    Since that time, pitches for reload scam after reload scam have appeared on the still-active Profitable Sunrise Facebook site. Both the SEC and FINRA have warned that scams are spreading via social media such as Facebook, Twitter, YouTube and others. EPC’s full name is similar to “ProfitClicking,” a scam that rose from JSSTripler/JustBeenPaid, an earlier scam that also used social media to spread.

    EPC is similar to Zeek Rewards in the sense that “members” are required to place ads for the “program.” In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid fraud. Unlike Zeek, EPC appears to be trying to force members to post ads on specific social-media sites that may have heavy viewership. (Many Zeek ads were placed on classified-ad sites with low traffic; such also appeared to be the case with Profitable Sunrise.)

    Here is a verbatim snippet from the purported Terms of EPC (italics added):

    19. You have to post face book ads in a group which have at least 500 members. If you want to post the ad on any of your friends’ wall, then the condition is that your particular friend must have at least 300 friends in his friends list.

    20. If you post the ad on LinkedIn or twitter in a group then there should be at least 200 members in this group. If you post the ad on a friend’s wall then there should be 100 friends in his friends list.

    21. In a group, you can post maximum 2 ads in 24 hours.

    22. On a friend’s wall, you can post only one ad during 24 hours.

    23. By accepting terms and conditions, you will be bound to keep the marketing material confidential provided on website.

    Part of the "Earn Profit Click" pitch.
    Part of the “Earn Profit Click” pitch.

    Elsewhere on its site, EPC claims to be a “Rapidly spread advertising company” through which members can “earn thousands of free entry [sic] that are changing lives [sic] of thousands people [sic] . . .”

    Meanwhile, EPC makes this text declaration: “We are a win-win game players [sic], as we provide our members a suitable era [sic] to win high financial benefits and helps [sic] to make their financial future [sic] splendid. We have the best minds from the field of IT to assist you and to handle the operations of EPC. Our mature, dedicated and wonderful team has twenty years [sic] experience in the field of online home-based business.”

    A graphic on the site declares, “We are growing fastly [sic].”

    The site reproduces famous logos and appears to trying to plant the seed that well-known companies such as GoDaddy, HostGator and the Ernst & Young accounting firm somehow have endorsed EPC’s operations. (The PP Blog’s research suggest GoDaddy is the EPC domain registrar and that HostGator servers are being used.) Promos for various HYIP scams appear on the same page as the logos of the famous companies. The HYIP scams include FastCashMega (“Turn $10 Into $20,010 Without Recruiting”); “NonStopPayments” (“6% Daily For 180 Business Days”); and “WorldConsumerAlliance,” a “program” once known as “WealthCreationAlliance” that launched as a Zeek Rewards reload scam in 2012 and published ad after ad for HYIP scams.

  • YouTube Video Pitchmen For Profitable Sunrise Hit By Subpoenas From SEC

    John Schepcoff says he potentially lost more than $193,000 in Profitable Sunrise but that a new “program” is “1,000 percent” better.
    John Schepcoff says on YouTube that he potentially lost more than $193,000 in Profitable Sunrise but that a new “program” operating from Hong Kong is “1,000 percent” better.

    EDITOR’S NOTE: Much remains murky about Profitable Sunrise, the alleged purveyor of five HYIP “plans,” including one bizarrely dubbed the “Long Haul” that purported to pay a preposterous 2.7 percent a day. The “Long Haul” payoff was dubbed the “Easter Gift.” Investors were told it would arrive April 1 — but it never materialized.

    One thing that is abundantly clear is that Profitable Sunrise potentially has created legal exposure and inconvenience for individual pitchmen, even though purported operator “Roman Novak” appears to be gone like a thief in the night.

    Still pushing HYIP schemes?

    _____________________________

    At least three Profitable Sunrise pitchmen — including at least two who pushed the “program” on YouTube — have been subpoenaed by the SEC to appear at depositions this month. The agency’s move is occurring in the aftermath of the depositions of at least two other Profitable Sunrise figures in Florida and Utah in April.

    In July 2010, the PP Blog reported that the Financial Industry Regulatory Authority (FINRA) warned investors worldwide “to stay away from HYIPs,” saying that they use social-media sites such as YouTube, Twitter, Facebook and online forums and “rating” sites to spread Ponzi misery globally.

    At least two of the men named in the new round of subpoenas went on to push other purported “opportunities” after the SEC described Profitable Sunrise in April as a murky HYIP that had used a “mail drop” in England and a series of offshore bank accounts in multiple countries to scam investors potentially of tens of millions of dollars.

    A subpoena was docketed yesterday in federal court in Atlanta for John Schepcoff of Carmichael, Calif. Schepcoff also is known as James Schepcoff, according to the SEC. His deposition has been scheduled for June 12 at 10 a.m. in San Francisco.

    After pitching Profitable Sunrise on YouTube prior to its March collapse amid especially murky circumstances, Schepcoff returned to YouTube in late April and began pitching yet another murky “program” purportedly operating from Hong Kong. Although the identity of the Hong Kong “program” was unclear, records suggest it was a Zeek Rewards-like “opportunity” known as “Better-Living Global Marketing.”

    In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid scheme that had pushed unregistered securities on hundreds of thousands of people and duped them into believing they were receiving a legitimate return of about 1.5 percent a day. The U.S. Secret Service also said it was investigating Zeek.

    A subpoena also was docketed in Atlanta yesterday for video pitchman Melton McClanahan of Fairfield, Calif. McClanahan was identified in a March order by the Alabama Securities Commission (ASC) as a Profitable Sunrise agent. McClanahan then posted a YouTube video denying he was an agent and yet claiming the information he passed along to lure prospects “was given to me.”

    McClanahan’s deposition is scheduled for June 11 at 10 a.m. in San Francisco.

    An SEC subpoena also was docketed yesterday in Atlanta for Don Gillette of Miami. Gillette reportedly told members of his Profitable Sunrise downline that he was turning to a new “program” that “must have a realistic earning potential of at least $500 a day or more,” according to a post at the RealScam.com antiscam forum.

    Details about the scheduling of Gillette’s deposition are unclear.

    As part of its ongoing Profitable Sunrise probe, the SEC also has subpoenaed records at PayPal and at Societe Generale in New York, according to the docket of U.S. District Judge Thomas W. Thrash Jr. in Atlanta. Whether Profitable Sunrise or its members were using the companies to move money is unclear.

    One of the problems with HYIP schemes is that they may cause laundered funds or proceeds of criminal enterprises to pass through or be placed on deposit at legitimate financial institutions.

    News of the new round of Profitable Sunrise subpoenas follows on the heels of the takedown last month of Liberty Reserve, amid allegations it had orchestrated a $6 billion money-laundering conspiracy. Liberty Reserve was popular with HYIP scammers and other criminals.

    NOTE: Thanks to the ASD Updates Blog.

     

  • Profitable Sunrise Facebook Site Changes Graphic To Promote ‘DollarsBluePrint,’ Which Triggers Security Warning

    "DollarsBluePrint" now is being promoted in a big way at a Profitable Sunrise Facebook site.
    “DollarsBluePrint” now is being promoted in a big way at a Profitable Sunrise Facebook site.

    A Facebook site set up to promote the Profitable Sunrise HYIP scheme has changed the lead graphic on the page to drive traffic to a site known as “DollarsBluePrint” — apparently through a web entity known as “Big Idea Mastermind.” The previous lead graphic was a leftover from the fraud reign of Profitable Sunrise.

    The Profitable Sunrise Facebook site has 5,045 likes as of this morning. The SEC has described Profitable Sunrise as an exceptionally murky enterprise that gathered money through multiple other enterprises and may have collected tens of millions of dollars. The website of ProfitableSunrise went offline March 14 or thereabouts.

    In 2010, FINRA issued a warning on HYIP fraud schemes, saying they often trade through social-media sites.

    When the PP Blog sought to view the website at the DollarsBluePrint URL, the Blog’s security software issued a “Dangerous Site” warning that said the Big Idea Mastermind site was exhibiting “one or more risky behaviors.”

    A series of reload scams have been promoted at the Profitable Sunrise Facebook site. In addition to DollarsBluePrint, today’s entries include “Hourly Chic Pay” (again).

    “Up to 260% ROI,” the Hourly Chic Pay promo reads in part. “Get paid by the hour!”

    The promo for DollarsBluePrint reads in part that recruits can “earn 6 figure[s.]”

    “YOU are a WINNER,” it screams.

    Other reload programs promoted on the Facebook site by boat-sharks include (at least) “SuperWithdraw,” “Whos12,” Maxi-Cash,” “FairyFunds,” “Roxilia,” “OptiEarn,” “AVVGlobal,” “ProForexUnion,” “MajestiCrown,” “Biwako Bank Limited” and “TelexFree.”

    The website of Biwako Bank Limited also has triggered browser security warnings.

    Promos for TelexFree have claimed a person can pay the purported opportunity $15,125 and receive at least $1,100 a week for a year. Lesser incomes can be bought for lesser sums, according to the TelexFree promos.