The EmGoldEx “program” describes gold as “money” and an ancient investment vehicle available in a “new splendor.”
If TelexFree, WCM777 and Wings Network were not enough, the office of Massachusetts Commonwealth Secretary William Galvin now is investigating the “EmGoldEx” program.
Secretary of State William F. Galvin’s office is investigating the Andover operation of Emgoldex Team USA Inc., a company that recruits investors to buy gold online and pays bonuses for referring friends and acquaintances.
The degree to which EmGoldEx has penetrated Massachusetts is unclear. “Gold” and other shiny-object schemes typically ride on the coattails of MLM HYIP recruiting scams. Narratives surrounding such schemes often are incongruous, if not downright wild, sometimes focusing on tales of spectacular profit opportunities in Europe and the Middle East and a chance to deal with purported royal families or upstream investors interested in elevating people out of poverty.
EmGoldEx purportedly operates from Dubai. Here is a verbatim snippet of the EmGoldEx narrative as it appears in challenged English: “To become a client of the Internet – shop, it is necessary to be registered and make an Order. In the Internet shop an account will be opened for you and the purchase price will be fixed for 24 hours.”
Hidden text on the page appears to be in Russian.
As part of the TelexFree probe in April, Galvin’s office alleged a Massachusetts entity had asserted that it bought “TelexFree packages, and all sorts of real estate within the U.S.A. or foreign countries.” Investigators further alleged that the enterprise asserted it was backed by “Dubai investors.”
Regulators in Quebec issued a warning on a “program” known as Karatbars International earlier this year. Other recent (or relatively recent) gold-themed “programs” that have been targeted by regulators include Gold Nugget Invest (HYIP/shiny-object scheme that collapsed in 2010 amid bizarre, companion claims INTERPOL was investigating the SEC); and Gold Quest International (HYIP with possible links to the “sovereign citizens movement” and operated in part by a purported “Lord”).
In October 2013, the office of North Carolina Secretary of State Elaine F. Marshall announced criminal charges against Rondell Scott Hedrick, 48, of Lexington, N.C.
Investigators linked Hedrick to an alleged “precious metals scam” that involved trawling for investor cash on Craigslist.
One investor, according to the state, wired Hedrick $5,000 after Hedrick had provided instructions and claimed he’d be leaving for Dubai soon and providing the investor a return of 200 percent.
Shiny-object scams are close cousins to prime-bank swindles, which produce equally wild narratives. (See Sept. 30, 2011, PP Blog story on the experience of U.S. Ponzi schemer Marian Morgan, who was arrested in Sri Lanka.)
HourlyRevShare, another in a long list of incongruous HYIP Ponzi-board “programs” pushed by serial huckster “Ken Russo” (also known as “DRdave”), reportedly has collapsed after taking a second bite of the Ponzi apple (purportedly as HRS II) after the original iteration collapsed. Other recent “programs” pushed by “Ken Russo” include Zeek Rewards and Profitable Sunrise, both of which cratered after regulatory actions in the United States.
“Ken Russo” also pushed Felmina Alliance, which became the subject of an Investor Alert in Canada; AdSurfDaily, a $119 million Ponzi scheme that put operator Andy Bowdoin in federal prison in Florida; MPB Today, a scheme that led to racketeering charges being filed in Florida against operator Gary Calhoun; Club Asteria, a scheme that falsely planted the seeds it was endorsed by actor Will Smith and the American Red Cross while also trading on the name of slain human-rights champion Mahatma Gandhi; a scheme known as Gold Nugget Invest that cratered in at least two forms; JSS Tripler/JustBeenPaid, a multiple-name scheme purportedly operated by Frederick Mann that promised a return of 730 percent a year and has encountered regulatory actions in Italy and the Philippines; knockoff scams known variously as JSSTripler 2 and Compound 150 purportedly operated by “Dave” between purported bouts with Dengue Fever; and Wealth4AllTeam, a “program” that experienced business halts and relaunches with new names, at one time claiming it was impervious to U.S. regulators at the state and federal level while incongruously claiming disputes would be settled under California law.
Among other things, the lead pitchman for HourlyRevShare on the MoneyMakerGroup Ponzi forum claimed that the “program” offered “Daily guaranteed Payouts.” The promoter also claimed (italics added):
“Earn 4.5% to 6.5% daily for 20 days.”
“Earn 135% to 195% on your shares.”
“Earn 0.18 to 0.29 every hour.”
On April 9, 2013, less than a month after the Profitable Sunrise HYIP scheme collapsed amid SEC allegations a ghost might have been at the wheel, Ken Russo (as “DRdave”) claimed on TalkGold that he’d just received a payment of $4,850 from HourlyRevShare, which was using a Gmail email address. Critics of HourlyRevShare claim the “program” is linked to individuals known as Analie or Anelie Steinway and Dr. Leiven Van Neste.
Whether these individuals actually exist remains an open question.
“Ken Russo” also has been leading cheers for a “program” known as NEOMutual, yet-another Ponzi-board darling. NEOMutual is being pushed alongside a “program” bizarrely known as “CashCropCycler.”
Felmina Alliance, another in a long line of HYIP “programs” pushed on the Ponzi boards by serial huckster “Ken Russo,” appears to be DOA. “Ken Russo” also is known as “DRdave.” His record in promoting scams, pooh-poohing or ignoring regulatory actions and engaging in willful blindness may be unparalleled.
Regulators in the United States and Canada issued an Investor Alert against Felmina Alliance earlier this year.
The server for Felmina Alliance now has been throwing an error message for days. Other recent “Russo” disasters include NewGNI, an apparent knockoff scam of an earlier scam known simply as GNI (Gold Nugget Invest), Zeek Rewards and Profitable Sunrise. On the TalkGold Ponzi forum as “DRdave,” “Ken Russo” was promoting Zeek and NewGNI simultaneously.
NewGNI appears to have collapsed in February.
Previous “Ken Russo” scams include AdSurfDaily, a $119 million Ponzi scheme; Club Asteria, a venture that traded on the name of the World Bank and listed a serial-cash gifter and former ASD Ponzi promoter as one of its managers; and MPB Today, a “program” that claimed a one-time purchase of $200 in groceries could lead to free food and gasoline for life.
MPB Today operator Gary Calhoun is awaiting sentencing in Florida on a racketeering charge. ASD operator Andy Bowdoin is serving a federal prison sentence for wire fraud after being sued for racketeering by some of his own members. Club Asteria, which falsely planted the seeds it was endorsed by actor Will Smith and the American Red Cross, suspended interest payments long ago. Club Asteria also traded on the name of slain human-rights champion Mahatma Gandhi.
Club Asteria misspelled Gandhi’s name in promos.
“Ken Russo” dubbed Zeek an “AMAZING PROGRAM” in May 2012. Three months later the SEC dubbed it a $600 million Ponzi- and pyramid fraud. The original GNI collapsed in 2010 into a sea of incongruity, amid reports the operators were seeking a “crystal clear vision of our financial vortex.”
In April 2013, the SEC said ProfitableSunrise was conducting an international fraud scheme and may have gathered tens of millions of dollars through a mail drop and a series of offshore accounts.
Records strongly suggest that Felmina Alliance was using an address of 50 Street, Global Plaza Tower, 19th Floor, Suite H, Panama City, Panama. That address also shows up in court filings by the SEC in the Profitable Sunrise action.
The website of “NewGNI” has not resolved to a server for days. The “program” is believed to have been a knockoff of a predecessor scam known as “GNI” or GoldNuggetInvest, which collapsed in early 2010 after being promoted by members of the AdSurfDaily Ponzi scheme.
The collapse of the original GNI was about as bizarre as they come in HYIP land. Critics were told to concentrate on earthquake relief in Haiti, rather than questioning the HYIP scheme. GNI’s collapse purportedly occurred after its operators sought “a crystal clear vision of our financial vortex.“
Among the pitchmen for both GNI and NewGNI was Ponzi-board legend “Ken Russo,” also known as “DRdave.” Earlier, “Ken Russo” had promoted the $119 million ASD scheme. He later turned to ClubAsteria, which was trading on the name of the World Bank to reel in suckers. ClubAsteria promos came under the lens of CONSOB, the Italian securities regulator. “Ken Russo” also emerged as a pitchman for Zeek Rewards, which the SEC described in August 2012 as a $600 million Ponzi- and pyramid scheme operating from North Carolina.
Among “Ken Russo’s” latest ventures is “Profitable Sunrise,” now the subject of a cease-and-desist order from North Carolina regulators.
Profitable Sunrise purportedly is operated by Roman Novak. The “program” is being targeted at people of faith, some of whom appear to be defending it by weaving impossible tales. Any number of Ponzi-board taunts have been aimed at the Securities Division of North Carolina Secretary of State Elaine Marshall, even as ProfitableSunrise advertises a risk-free, preposterous return of 2.7 percent a day in its bizarrely named “Long Haul” program with a purported Easter holiday payoff.
“lol @ NC officials,” says one post at MoneyMakerGroup. Another compares Marshall’s office to “Deputy Barney Fife,” an iconic TV character played by Don Knotts in the Andy Griffith Show.
Even after the government of Belize issued a warning against GNI in 2009, scammers continued to promote it — virtually to the very day it collapsed and took an unspecified sum with it. The collapse triggered a bizarre series of conspiracy theories.
GNI was operating concurrently with a now-collapsed scam bizarrely known as “Cash Tanker,” an “opportunity” aimed at Christians. Cash Tanker used an image of Jesus Christ in its promos and purported to pay 2 percent a day.
MoneyWeb has the story of Relative Value Arbitrage Fund (RVAF), an alleged massive Ponzi scheme in South Africa in which Herman Pretorius shot and killed a business partner in July and then shot and killed himself.
The scheme appears to have gathered R2.2bn, the equivalent of more than $250 million (U.S.).
From Julius Cobbett at MoneyWeb (italics/bolding added):
RVAF curators estimate that the scheme received R2.2bn from about 3000 investors. At the time of Pretorius’s death, the RVAF owed an estimated R3.1bn to investors.
The difference between the amount received and owing is most likely explained by the fund’s performance, which is believed to be fictitious.
Investigations following Pretorius’s death show that he alone was in control of a tangled web of companies, close corporations, trusts and offshore bank accounts.
NOTE BY PP BLOG: Some scammers on Ponzi-scheme forums also purport to engage in “arbitrage.” The collapse of purported arbitrage “program” Gold Nugget Invest (GNI) in 2010 brought out the “conspiracy theorists,” the PP Blog reported at the time.
Among the bizarre assertions was that the SEC was under investigation by INTERPOL.
It is common for Ponzi-board scammers to use terms that sound impressive — arbitrage, for instance — in their scams.
“Ken Russo,” a former Ponzi-board pitchman for the alleged Zeek Rewards Ponzi scheme, was promoting something called “NewGNI” even as he was promoting Zeek, according to his posts at the TalkGold Ponzi forum (as “DRdave”).
NewGNI may be a follow-up scam to the GNI scam.
Read a January 2010 PP Blog story on some of the bizarre claims surrounding the collapse of GNI, a scheme also pushed by some members of the AdSurfDaily Ponzi scheme.
“It’s gonna blow up; it’s gonna be an ugly blow-up. It’ll probably happen sooner, not later. And it will leave a trail of devastation behind it. And I urge you to not even consider them.” — Comment on Zeek Rewards by Randy Schroeder, president of North America and Europe for Mona Vie, July 16, 2012
Randy Schroeder
UPDATED 7:10 P.M. EDT (U.S.A.) Randy Schroeder, the president of Mona Vie for North America and Europe, has done what few major figures in multilevel marketing have been willing to do: comment about the menace posed by the Zeek Rewards MLM program.
It was a most unexpected and welcome development, something that speaks well of both Schroeder and Mona Vie. But some Zeek apologists immediately (and predictably) accused Schroeder of meddling in North Carolina-based Zeek’s affairs and defaming the company, which suddenly announced on Memorial Day evening (May 28) that it was closing accounts at two U.S. banks and mysteriously claimed that affiliates had to cash or deposit checks drawn on the banks before June 1 or they would bounce.
Just 22 days earlier — on May 6 — Ponzi-forum huckster “DRdave,” also known as “Ken Russo,” claimed on the TalkGold Ponzi forum that he’d received $34,735 from Zeek since Nov. 14, 2011. The Zeek money, according to the post, was delivered largely if not wholly by AlertPay and SolidTrustPay. Both companies are offshore payment-processing firms linked to fraud scheme after fraud scheme promoted online.
Hucksters such as “Ken Russo” and myriad others use “I Got Paid” posts on the Ponzi forums as a means of creating the appearance a scheme is legitimate. Included in “Ken Russo’s” signature at TalkGold today is a link to a “program” known as “NewGNI,” which purports to pay “up to 6% weekly.”
"Ken Russo," as "DRdave," brags on the TalkGold Ponzi forum about a purported Zeek payout of $2,164.80 from Rex Venture Group LLC while pitching an emerging HYIP known as "NewGNI."
GNI may be a knockoff scam to the collapsed Gold Nugget Invest HYIP Ponzi, which also used the acronym GNI while purporting to pay a Zeek-like 7.5 percent a week. The government of Belize issued a warning about GNI in November 2009. In December 2009 — after the GNI warning by Belize — the “program” nevertheless was pitched (with three others HYIPs) by a member of the “Surf’s Up” forum, which existed to shill for accused AdSurfDaily Ponzi schemer Andy Bowdoin.
Any number of Zeek affiliates, including individuals Zeek has described as “empoyees,” hail from the ranks of ASD’s $110 million Ponzi scheme and various other interconnected fraud schemes. Some Zeek affiliates, for example, also are promoting JSSTripler/JustBeenPaid, which purports to pay 2 percent a day and may have ties to the “sovereign citizens” movement.
Zeek promoters also have been associated with a “program” known as OneX, which U.S. federal prosecutors described in April as a “fraudulent scheme” and pyramid cycling money in ASD-like fashion.
In addition to pushing Zeek, ASD, the NewGNI knockoff and a JSS/JBP knockoff known as JSS Tripler 2 that hatched a companion fraud scheme known as Compound150, “Ken Russo” pushed Club Asteria, which purported to provide a Zeek-like payout of between 3 percent and 8 percent a week before promoters came under the lens of CONSOB, the Italian securities regulator.
Amid these ruinous circumstances that are creating monumentally bizarre PR and legal disasters for the MLM trade, what did certain purported MLM experts do?
Why, boo Mona Vie’s Schroeder, of course — for the apparent high crime of trying to protect his own company and affiliates from these interconnected, international cancers.
Here is hoping that other influential MLM executives and trade groups follow Schroeder’s lead, including the Association of Network Marketing Professionals. Its name is being used to sanitize the Zeek scheme — and if it continues to permit that to happen, it risks a future in the dust bin of irrelevance.
While we’re speaking of hope, here’s hoping that Mona Vie will not shy away from Schroeder’s Zeek comments and actually will join him in the remarks, which he says were made as a concerned individual, not as a Mona Vie executive. Mona Vie should back Schroeder to the hilt.
A ‘Messy Fact’
It’s a “messy fact that periodically a company comes along and sweeps people along into a trail that turns into a trail of devastation,” Schroeder said about Zeek Rewards during a July 16 conference call with Mona Vie distributors.
Schroeder, of course, was alluding to Zeek’s AdSurfDaily-like business model that solicits participants to shell out sums up to $10,000, offers a dubious “product” (or a “product” that is just lipstick on a pig), plants the seed that spectacular returns on the order of 500 percent a year are possible and insists participants who buy into the scheme are neither making an investment nor purchasing a security.
“My own opinion is that that company will come to grief, that it will come to grief in the relatively near future, not farther future,” Schroeder said of Zeek.
If history is any guide — and Schroeder, with considerable justification, suggests that it is — Zeek will encounter a regulatory action that will cause it to crater.
But those words and others — including the use by Schroeder of “pyramid” and “Ponzi” in the context of Zeek — did not sit well with MLM Blogger Troy Dooly. (See PP Blog June 10 editorial.)
Dooly Takes Schroeder To The Woodshed
Dooly wrote Thursday that he “started getting the links and downloads of Randy Schroeder’s call” on July 18, took some time to digest the call and to shoot off a text message to MonaVie founder Dallin Larsen about Dooly’s “concerns” about Schroeder’s remarks.
And then Dooly ventured that Rex Venture Group LLC, the purported parent company of Zeek, just might sue Schroeder and perhaps MonaVie itself. Dooly wrote (italics added):
As the leader of a billion dollar multi-national health and nutrition company in the network marketing community, Schroeder should be very careful what he has to say about any other company. Although he made it clear he was not speaking on behalf of MonaVie, as an officer of the company, he places the company and their distributors in jeopardy if Rex Venture Group LLC were to file some form of civil action.
Good grief. The world is facing the greatest white-collar fraud epidemic in history, much of the money is routed through murky businesses and shell companies with accounts at offshore payment processors such as AlertPay and SolidTrustPay and banks that are asleep at the switch because staying awake is bad for fee revenues, many of the corrupt “programs” use MLM or an MLM-like component — and Troy Dooly, apparently with a straight face, is telling Randy Schroeder that he’d better tread lightly on Paul Burks because Zeek just might sue.
In the same column in which he bizarrely took Schroeder to the woodshed for holding a view about Zeek that is wholly responsible and serves the best interest of the MLM community moving forward, Dooly equally bizarrely extended an olive branch to the subject of his fresh scorn. Indeed, Dooly suggested a bunch of legal messiness could be avoided if Schroeder and Dallin Larsen saddled up Mona Vie’s corporate jet and deposited themselves in North Carolina at Zeek’s next Red Carpet event.
While ensconced in North Carolina as Dooly’s guest, they could hear Zeek boss Paul Burks deliver the good word about the company and could get some extra education from the Zeek “team.”
Dooly wrote (italics added):
I challenge Randy and Dallin to take the corporate jet and travel to N.C. next week as my guests to the Red Carpet Day event. I will introduce you to Paul Burks, and his team and let you better understand their drive and mission for the company.
Dooly did not say whether Burks and Zeek would make their Ponzi-board team available to educate the Mona Vie executives on Zeek’s drive and mission. Nor did he say whether Zeek would make “Ken Russo” available to explain the differences between Zeek and, say, NewGNI or Club Asteria or JSS Tripler 2.
We sincerely hope Schroeder and Larsen decline Dooly’s offer to parachute into North Carolina to break bread with the Zeek pope and the “team.”
Dooly is engaging in pandering of the worst sort. It’s also caustically amateur PR because it raises the specter that an aggrieved Zeek might use legal muscle to silence Schroeder, who, like Larsen, is a prominent figure in MLM circles. Zeek’s Stepfordian cheerleaders will love it, of course, because it gives them a new supply of red meat and raises the prospect that, if Schroeder speaks his mind against Zeek and gets sued, the Bloggers and critics may be next.
History An Appropriate Guide
Intimidation campaigns did not work for AdSurfDaily; they will not work for Zeek, either directly or through proxies. Beyond that, Schroeder has the weight of history on his side: the notoriousness of the ASD Ponzi case, Andy Bowdoin’s guilty plea in that case and the guilty plea of Gregory McKnight in the Legisi HYIP Ponzi case. Of course, Schroeder also could point that accused Pathway To Prosperity HYIP operator Nicholas Smirnow is listed as an international fugitive wanted by INTERPOL. And Schroeder also could point out that Robert Hodgins, an accused international money-launderer for narcotics-traffickers, also has been linked to the HYIP “industry” and also is wanted by INTERPOL.
Just days ago, a federal grand jury returned a 49-count indictment against alleged HYIP purveyor Terrance Osberger, 48, of Genoa, Ohio. In March, a top U.S. Department of Justice official speaking in Mexico City commented on some of the challenges law enforcement is facing in the Internet Age, including bogus libel lawsuits filed to silence critics and protect ventures that engage in organized crime. In May, a top INTERPOL official speaking in Israel said the cost of cybercrime was approaching $1 trillion a year in Europe and that U.S. banks lost $12 billion to cybercrime last year.
Regardless, we have to concede that Zeek/Rex Venture might be stupid enough to try to score points by suing Schroeder and MonaVie. Back in 2008, then-closeted Ponzi schemer Andy Bowdoin of ASD planted the seed that he might just sue “MLM Watchdog” Rod Cook for $40 million. Bowdoin even announced that he’d filled a pot with $750,000 and was going to use it to start suing critics of his 1-percent-a-day “program” back to the Stone Age.
Cook, who is a board member of ANMP and holds the title of chairman emeritus, didn’t blink.
When the Feds noticed the lawsuit threats, they thought them important enough to bring to the attention of a federal judge. They simply called it “GOVERNMENT EXHIBIT 5.”
On Aug. 5, 2008, the U.S. Secret Service raided ASD. What occurred after that from the ASD side left an indelible stain on MLM. Bowdoin compared federal prosecutors and the Secret Service, the agency that guards the life of the President of the United States and has the companion duty of protecting the U.S. financial system from attack, to “Satan.” He further compared the raid to the 9/11 terrorist attacks.
Over time, the ASD case turned into a symphony of the bizarre. “Sovereign citizens” entered the fray. One of them accused a federal judge of “TREASON.” Another allegedly filed bogus liens against five public officials involved in the ASD case, including a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service who led the Ponzi investigation.
These episodes were to the utter humiliation of MLMers who value the reputation of the trade. The ruinous PR fallout continues even to this day.
What did Zeek do? Why, it wrapped what effectively is ASD’s 1-percent-a-day compensation model into its payout plan, thus raising the stench of ASD all over again and adding to the stench by effectively paying out an affiliate-reported average of about 1.4 percent a day. Zeek promptly found favor on the Ponzi boards and benefited from promoters of fraud schemes such as ASD and JSS Tripler/JustBeenPaid (730 percent a year). It also picked up some hucksters from OneX, a “program” in part responsible for the fact ASD’s Bowdoin is now jailed in the District of Columbia.
There can be no doubt that Zeek also attracted promoters of AdViewGlobal (AVG) into its fold. The Feds now have linked Bowdoin to AVG, a 1-percent-a-day “program” that collapsed in 2009 under circumstances both mysterious and bizarre. Before AVG went missing, its braintrust tried to plant the extortive seed that lawyers were going after the critics and that “program” members themselves were at risk of getting sued for sharing negative information. For good measure, AdViewGlobal tried to plant the extortive seed that it would report its own members to their Internet Service Providers if they continued to question the “program” in public.
‘MoneyMakingBrain’ Reemerges In Bid To Chill Critics
Today on the RealScam.com antiscam forum, a notorious cyberstalker and JSSTripler/JustBeenPaid apologist known as “MoneyMakingBrain” is planting the seed that JSS/JBP is going to use its lawyers to come after critics. “MoneyMakingBrain” previously claimed he’d defend Frederick Mann, JSS/JBP’s purported operator, “so help me God.” And then “MoneyMakingBrain” started attacking Lynn Edgington, the chairman of Eagle Research Associates, a California nonprofit entity that works proactively with U.S. law enforcement to educate the public about online financial fraud. Edgington is a longtime contributor to the PP Blog and, like the PP Blog, is a member of RealScam.com, a site that concerns itself with international mass-marketing fraud.
(IMPORTANT NOTE: The PP Blog is providing a link to the RealScam.com thread in which “MoneyMakingBrain” has (for months) been engaging in efforts to intimidate JSS/JBP critics. MoneyMakingBrain has a history of emailing threatening communications to the PP Blog. Among other things, he purports to have an ability to track IP addresses and to be keeping a “dossier” on critics. If these things are true, it could mean that “MoneyMakingBrain” will seek to target you in harassment and intimidation campaigns. [** Caution duly advised. RealScam link. Caution duly advised **])
The PP Blog commends Randy Schroeder for his remarks about Zeek. It encourages Mona Vie to back him. Zeek is awash in the stench of ASD, AVG, JSS/JBP, OneX and the serial scammers who populate the Ponzi boards.
Such “programs” put economic security at risk and thus national security.
Period.
Stories Wouldn’t Sell As Fiction
Thank your lucky stars that Zeek’s apologists and Stepfordians are not the fire department. If they were, they wouldn’t be fighting fires. Instead, they’d be standing in the parking lot, deducing the red glow under the roof of the building to which they’d been dispatched was an optical illusion and that the man on the roof with the gas can wasn’t really there. All the acrid, billowing smoke would be ignored in favor of a theory that smoke doesn’t always mean flame.
“No need to bring out the hoses,” they’d say. “This is nothing.”
And when the cops showed up and observed firefighters standing around watching a blaze and ignoring their duty to put it out, they’d be told to mind their own damned business or get busy hiring a lawyer to defend against a defamation lawsuit.
It wouldn’t sell as fiction — and yet somehow passes the plausibility test with thousands or even hundreds of thousands of individuals who call themselves MLMers.
Bravo to Randy Schroeder for advising the members of his trade to open their eyes and choose to see.
Four egg-themed domain names used to drive business to HYIPs that ended in spectacular flameouts and foreshadowed a warning from the Financial Industry Regulatory Authority (FINRA) have gone missing.
The domains — including one that redirected to an HYIP site known bizarrely as Cash Tanker, which used an image of Jesus Christ to promote a purported payout of 2 percent a day — first were promoted on the pro-AdSurfDaily Surf’s Up forum by a poster who used the handle “joe” in December 2009.
The egg-themed promo featured a pitch that HYIP participants were wise to spread risk by not keeping all of their eggs in “ONE BASKET.” It also hawked Gold Nugget Invest (7.5 percent a week); Saza Investments (9 percent a week); and Genius Funds (6.5 percent a week).
Despite an active criminal investigation into the business practices of ASD President Andy Bowdoin and alleged co-conspirators — and despite a RICO lawsuit filed by members against Bowdoin and repeated warnings from various regulators about the dangers of HYIPs and autosurfs — the egg-themed promo claimed in all-caps that “I MAKE 2000.00 A WEEK” and directly solicited ASD members to part with their money.
One Surf’s Up member dissed critics of the promo, calling them “dead wrong.”
“I also make a lot of money from those four and your remarks tell me you don’t know anything about them,” the member claimed. “[T]hey are very reputable [companies] who have been around for years….and the money is NOT made from ‘new’ people’s money….google them and look at various forums and see what others have to say about them….I don’t even know Joe, but I can vouch for the programs!”
A series of spectacular collapses that consumed each of the HYIPs then followed over a period of just weeks, demonstrating that spreading risk across multiple HYIPs by putting eggs in multiple HYIP baskets was spectacularly poor advice that had produced a recipe for financial disaster.
In July, FINRA said that Genius Funds cost investors about $400 million. The regulator launched a public-awareness campaign, one component of which was an ad campaign on Google designed to educate and inform the public about HYIP fraud.
“Open the cyber door to HYIPs, and you will find hundreds of HYIP websites vying for investor attention,” FINRA said. “It is a bizarre substratum of the Internet.”
Records show that the government of Belize had issued a warning about Gold Nugget Invest nearly a month before the egg-themed promo had appeared on Surf’s Up and at least two members had vouched for the program.
FINRA also pointed to criminal charges filed by the U.S. Postal Inspection Service in May against Nicholas Smirnow, the alleged operator of an HYIP Ponzi scheme known as Pathway To Prosperity that fleeced more than 40,000 people across the globe out of an estimated $70 million.
Using baffling prose, a purported GNI manager claimed the program ended after it had attempted to gain “a crystal clear vision of our financial vortex” during the fourth quarter of 2009.
After the collapse of the programs in the original egg-themed pitch on Surf’s Up, the domains then were set to redirect to other HYIPs.
Some ASD members later turned their attention to promoting MLM programs such as Narc That Car/Crowd Sourcing International (CSI), Data Network Affiliates (DNA) and MPB Today. CSI and DNA purport to be in the business of paying people to write down the license-plate numbers of cars for entry in a database. MPB Today purports to be in the grocery business.
DNA, which once instructed people of faith that it was their “MORAL OBLIGATION” to hawk a purported mortgage-reduction program offered alongside the purported license-plate program, now appears to have morphed into a program known as One World One Website or “O-WOW.”
An email received by members of the O-WOW program this weekend purported that a man suffering from terminal thyroid cancer had derived benefit from an O-WOW product known as “TurboMune” and that members somehow can earn “24% Annual Interest on their money” by giving it to O-WOW.
If members don’t pay O-WOW before Nov. 30, they’ll earn a lower rate of interest (18 percent), according to an email received by members.
Like DNA, O-WOW is associated with Phil Piccolo. During a radio program in August, Piccolo threatened critics with lawsuits and planted the seed that he could cause critics to experience physical pain. DNA has an “F” rating from the Better Business Bureau. So does CSI. So does United Pro Media, a company formerly operated by MPB Today’s Gary Calhoun.
A man has been indicted in Las Vegas for stealing nearly $1 million from investors by telling them they were participating in a “sports arbitrage” betting program and could not lose, federal prosecutors said.
An arrest warrant has been issued for Yul Na. He was charged in a criminal indictment with 30 counts of wire fraud and 29 counts of money laundering. Na faces up to 890 years in prison if convicted on all counts.
Prosecutors said Na used investors’ funds to do his own personal gambling in Las Vegas.
Some of the claims Na allegedly made were similar to claims made by the now-defunct Gold Nugget Invest (GNI) HYIP, which also purported to offer sports arbitrage. GNI tanked earlier this year.
“Na allegedly began marketing an investment opportunity to individuals involving the technique of ‘sports arbitrage’ for placing and accepting sports wagers,” prosecutors said. “Na claimed that investors would not lose money if they invested in this technique.
“Na defined the sports arbitrage program to the investors as ‘middling,’ because it involved the combination of betting both sides of the same event, as well as the use of specific timing for the placement of the sports wagers,” prosecutors continued. “[He] represented that opposing bets were placed at different times to capitalize on the movement in wagering lines by the sports books. Na represented that this placing of bets at different lines or payout ratios created an opportunity for profit.”
Part of the scheme featured a claim from Na that he had “an exclusive and binding agreement with Mandalay Bay Resort and Casino to accept large lay-off wagers” at a reduced rate of 18 percent, prosecutors said.
A layoff wager is a wager one bookmaker makes with another to balance bets and reduce risk.
Na told investors that, in order to minimize their risk, he had “contracted with an off-shore sports book to bet the other side of the same events for which he had accepted wagers from Mandalay Bay,” prosecutors said.
Because the offshore bookmaker purportedly charged a 10 percent premium on all wagers, Na “claimed that regardless of the outcome of an event, his sports arbitrage program would always achieve an overall net gain of 8 percent on all lay-off wagers accepted from the Mandalay Bay sports book,” prosecutors said.
Na’s claims were false, prosecutors said.
“[He]Â knew that he did not have in place any system to place bets for the purpose of ‘middling’ sports events and did not have any exclusive agreement with Mandalay Bay to accept lay-off wagers at a discount rate of 18 percent,” prosecutors said.
In furtherance of the scheme, Na advised investors to transfer their money electronically to Mandalay Bay’s bank account, instructing them to add “notations for the funds to be applied to[his]Â personal casino account,” prosecutors said.
“Na told investors that the funds had to be wired to his personal account because the casino could not accept wagers from any entity other than an individual,” prosecutors said.
Investors wired $962,350 to Na through this process, and he “withdrew the funds and used them to gamble at Mandalay Bay instead of using them for the sports betting investment program,” prosecutors said.
Gold Nugget Invest collapsed in January. It told members on its website that sports arbitrage was a “market phenomenon based on pure mathematics.”
The government of Belize issued a warning on GNI in November.
GNI’s critics were accused of suffering from “mental illness.” Detractors also were told they did not understand that the program, which advertised a return of 7.5 percent a week and later reduced the purported payout to 20 percent a month with a “No Risk Wager,” was “real.â€
After the collapse, GNI explained that its problems were caused in part by “catastrophic script failure(s)” and “potentially catastrophic hackers.”
A year ago, members of AdViewGlobal and AdSurfDaily asked Sen. Patrick Leahy, chairmain of the Senate Judiciary Committee, to endorse Ponzi schemes and investigate the prosecutors in the ASD case. This year, members of the failed Gold Nugget Invest (GNI) HYIP are doing most of the early season cheerleading for reprehensible "programs," while sabotaging debate in the ranks and continuing to argue there is something noble about fraud schemes. Fifteen U.S. banks failed while GNI members were singing the praises of the HYIP in the opening days of 2010. GNI tanked earlier this month. Thirteen U.S. banks failed while AVG/ASD members were conducting a letter-writing campaign to Leahy in the opening days of 2009.
The new year is starting out like the year that just passed. Banks are failing, unemployment is high, money is not trickling down to small businesses that need capital to expand and create new jobs — and the Ponzi pimps are still putting lipstick on pigs, pushing autosurfs and HYIPs and cheerleading for them even when they fail.
Gold Nugget Invest (GNI) quickly has become this year’s equivalent of last year’s early season favorite, AdSurfDaily (ASD), among the apologists. As was the case a year ago with ASD, the GNI faithful and delusional members of the failed HYIP have emerged to lead the cheers, make the excuses, confuse the issues, sabotage legitimate discussions and set the stage for even more people to lose tremendous sums of money to practiced online schemers.
Web records suggest that at least 57 percent of funds directed at GNI originated in the United States, and there are claims that GNI had 11,000 members. GNI tanked earlier this month, directly on the heels of an HYIP known as “Cash Tanker,” which used images of Jesus Christ in its marketing materials.
Yes, even an HYIP that called itself Cash Tanker and used a revered figure as though he were just another hamburger salesman on TV was able to collect untold sums from investors by relying on HYIP cheerleaders to spread the gospel of robbing Peter to pay Paul.
First, a brief look at the banking environment.
Five U.S. banks failed Friday, bringing the year-to-date total to 15. That’s ahead of last year’s pace. Through Feb. 14, 2009, 13 U.S. banks had failed. Twenty-five failed in all of 2008, and only three failed in 2007.
By the time the banking bloodletting had ended in 2009, a total of 140 banks had failed. With 15 failures already this year, the United States is on pace to record 180 in 2010. The FDIC insurance fund fell into the red last year under the weight of the failures, and the agency is replenishing the fund by requiring banks to prepay fees for insurance.
A Year Ago
Most notable among the Ponzi pimps a year ago at this time were the promoters of ASD and its offshoot, the AdViewGlobal (AVG) autosurf. They hailed AVG as a cure for what ailed the U.S. economy, even though ASD had been implicated in a wire-fraud, money-laundering, securities fraud and Ponzi scheme that resulted in the federal seizure of tens of millions of dollars.
AdViewGlobal, which tanked in June 2009, formally launched a year ago this week. It was pushed by ASD members who positioned AVG as an “offshore” alternative.
Almost a year ago, the Pro-ASD Surf’s Up forum led a campaign to Sen. Patrick Leahy that sought the Senate’s endorsement of Ponzi schemes — it seems incredible, but it’s true — and also sought to have the Senate investigate the prosecutors and agents who were investigating the alleged ASD Ponzi scheme.
Incredibly, last year’s Surf’s Up campaign, which piggybacked off a campaign by ASD mainstay “Professor” Patrick Moriarty, came to the fore during a time in which 13 U.S. banks were failing in the opening days of the year; the Bernard Madoff Ponzi scheme ($65 billion) was still a fresh news item; the Tom Petters’ Ponzi scheme ($3.65 billion) was in the news; the alleged Allen Stanford Ponzi scheme ($8 billion) was in the news; the alleged Arthur Nadel Ponzi scheme ($350 million/$400 million) was in the news; the alleged Paul Greenwood/Stephen Walsh financial scheme ($553 million) was in the news; and the alleged Nicholas Cosmo Ponzi scheme ($370 million) was in the news. There were others, of course.
At the same time the events cited in the paragraph above were making fresh news, autosurfs and HYIPs also were falling like dominos and taking investors’ money with them. Notable among them were MegaLido, Noobing, Frogress, Daily Profit Pond, Premium Ads Club and Aggero Investment. All of them were pushed by promoters who also were pushing AVG (and had pushed ASD).
Some of the promoters simultaneously tried to sanitize the “industry” through the letter-writing campaign to Leahy, asserting, for example, that the schemes actually were legitimate opportunities and that the government did not understand the technology or the math behind the schemes.
Despite the headlines of spectacular Ponzi fraud in the mainstream press, despite the fact that it was impossible to miss news about Ponzi schemes unless you lived a life of blissful ignorance or had chosen to be willfully blind, despite the fact that sites such as Scam.com and WorldLawDirect and the PP Blog had published tons of information on autosurf and HYIP Ponzi schemes, despite the fact that the U.S. and other governments had published warnings about the frauds and had filed both civil and criminal cases against the fraudsters, despite the fact that no autosurf or HYIP ever has stood the test of time and survived, the schemers closed ranks and continued to shill and shill and shill and shill.
They’re still shilling a year later.
GNI Becomes The New ASD In Opening Days Of 2010
This year’s early season ASD is GNI. Instead of writing letters to Leahy, though, some of the apologists are saying that the HYIP critics and doubters in the GNI ranks should quit complaining and starting donating money to Haiti earthquake relief. As was the case with ASD, all of the cheerleading is occurring blindly. Not a shred of evidence has emerged that anything about GNI was real.
And instead of Madoff, Nadel, Cosmo, Stanford and the other Ponzi notables cited above being the preeminent contextual backdrop a year after the Surf’s Up campaign, figures such these have replaced them: alleged Ponzi schemers Trevor Cook and Christian radio host Pat Kiley ($190 million); proven Ponzi schemer Scott Rothstein ($1.2 billion); proven Ponzi schemer Milton Retana ($62 million/$3.2 million in cash found in back of religious bookstore); proven Ponzi schemer Gold Quest International (about $29 million; ruled a Ponzi and a pyramid scheme by Canadian authorities); proven Ponzi schemer and former Christian clergyman Brian David Anderson ($4 million, link to Flat Electronic Data Interchange (FEDI), whose operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,†was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme); alleged Ponzi schemer Arthur Leroy Heffelfinger ($2.02 million, including alleged theft from woman in 90s with dementia): alleged Ponzi schemer Mariana Montes (at least $682,000 in combo Ponzi and fraud case, including alleged theft from 90-year-old widow); proven schemer John Anthony Miller ($15 million, tried to flee United States by using identity of deceased Catholic school classmate); proven schemer Bradley L. Ruderman ($25 million, mostly from family and friends); alleged schemer Edmundo Rubi (operated $24 million “Knights Express†Ponzi scheme earlier in decade, sentenced to prison, emerged from jail with new scheme targeting original customers); proven Ponzi schemer Marcia Sladich ($15 million, scheme targeted churchgoers); alleged Ponzi schemer Steve Salutric (at least $1.8 million, including more than $400,000 from 96-year-old widow with dementia).
There are others, of course, and the names constantly change. What hasn’t changed is that the autosurf and HYIP shills continue to shill and shill and shill, even as one bank after another is failing and one Ponzi schemer after another is making one headline after another.
We can’t think of anything that matches the level of disconnect or demonstrates the same level of greed and wanton criminality — not even Rothstein’s Bugatti and collection of other fine automobiles purchased with Ponzi proceeds.
EDITOR’S NOTE: This list summarizes several programs pushed by members of AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme. In some cases, the programs were pushed prior to the seizure by the U.S. Secret Service in August 2008 of 15 bank accounts linked to ASD or Golden Panda Ad Builder, one of the companies implicated in the ASD scheme. Each of the programs listed below came to a dubious end or continue to exist in an unclear, shadowy form. This list is presented in no particular order and does not include every HYIP/autosurf pitched by ASD members.
UPDATED 3:16 P.M. ET (U.S.A.)
Gold Nugget Invest (GNI): Collapsed Friday. HYIP. Government of Belize issued warning in November. Ownership hidden behind proxy. Business model unclear. Presented as betting arbitrage, but perhaps was involved in forex. Advertised payout of 7.5 percent per week. Possibly linked to European banking investigation. Changed rules on the fly. Still collecting money after “Re-organization.” Purportedly launched in October 2006, the same month ASD was preparing for launch.
Genius Funds/Cash Tanker/Saza Investments: Pushed by ASD member “joe” in a post on the ProASD Surf’s Up forum just prior to collapse of GNI. CashTanker, which used a graphic depicting Jesus, now has tanked after advertising payouts of 2 percent a day. “joe” pitched GNI, Genius Funds, Cash Tanker and Saza Investments in an egg-themed promotion in which the word “egg” was used in domain names that redirected to the HYIPs. “joe’s” egg-themed domain that redirected to Cash Tanker now redirects to a program called PTV Partner, an HYIP that bills itself “The Ultimate High Yield Asset for your Financial Portfolio!” “joe’s” egg-themed pitch was based on the screaming notion that “ALL MY EGGS ARE NOT IN ONE BASKET. I MAKE $2000.00 A WEEK.†A street address for the egg-themed domains corresponds to an address in a federal lawsuit involving cell-phone trafficking.
Regenesis 2×2: Matrix in Seattle area. Records seized by U.S. Secret Service in July 2009. Operators kept under surveillance for five weeks. Multiple search warrants issued. Discarded records found in Dumpster. Sold “commission centers†for $325. Touted itself the “THE ECONOMIC STIMULUS PLAN FOR YOU.†Site appears to have been registered behind a proxy in Europe. Jeffrey William Snyder, one of the individuals kept under surveillance, was a convicted felon on probation for a previous securities scheme.
GoldenPandaAdBuilder: So-called “Chinese” version of ASD. Assets seized in two forfeiture complaints in ASD case. Operated by Clarence Busby of Georgia. Records in now-dismissed RICO lawsuit against Busby identified him as “Rev.” at least 120 times. Busby was implicated by SEC in 1990s in three prime-bank schemes that promised enormous payouts. Purportedly became Golden Panda president after going fishing with ASD President Andy Bowdoin in April 2008. Federal judge ordered forfeiture of more than $14 million from Golden Panda in July 2009. Busby now purported “chief consultant” of BizAdSplash (BAS). Ceased payouts in July 2009, after declaring “crisis” and claiming members were overpaid. Went offline. Returned online. Went offline again for about two weeks during 2009 Holiday season. Now back online.
BizAdSplash (BAS): (Also see GoldenPanda entry above.) BAS launched in aftermath of seizure of assets in ASD/GoldenPanda case. Assets seized in civil complaints in ASD/GoldenPanda case total about $80.52 million. Clarence Busby purported to be chief consultant of BAS. BAS touted purported offshore registration in Panama. Georgia corporation records show version of surf’s name used address of UPS Store No. 2644 in Kennesaw, Ga.
Noobing: Pitched as alternative to ASD after seizure. Noobing targeted deaf people. Deaf member says she reported Noobing to FBI and sheriff’s department in California. There are recent suggestions that deaf members also reported Noobing to SEC. FTC and attorneys general of Minnesota, Kansas and North Carolina joined in suing Affiliate Strategies Inc. (ASI), Noobing’s parent company, in alleged scheme offering guaranteed government grants from economic stimulus funds. Illinois now has joined the FTC action. Original lawsuit filed in July 2009. Like ASD, ASI owned a jet ski. Court-appointed receiver sold it at auction. Receiver performed a preliminary exam of Noobing’s records and determined surf was upside down by approximately $550,000. Noobing gathered money in aftermath of seizure of ASD’s bank accounts. Surf slashed payouts in early 2009, citing unclear ruling in ASD case. Site offline since FTC lawsuit, which did not name Noobing.
DailyProSurf (DPS): DPS is a largely unknown and mysterious surf site registered by ASD President Andy Bowdoin in August 2006, about two months prior to the formal birth of ASD. Records suggest DPS operated prior to registration, although its ownership was unclear. (NOTE: The story in the DPS link in this paragraph also contains information on 12DailyPro and PhoenixSurf, two surfs sued successfully by the SEC.)
AdVentures4U (ADV4U): Surf tanked in August 2009. Reportedly had more than 60,000 members. Members identified Steve R. Smith as owner. Smith also purported owner of venture called TradingGold4Cash. In confusing note to ADV4U members, Smith purportedly said his family received threats. Used ASD-like “rebates aren’t guaranteed” excuse upon payout suspension. Urged members not to contact payment processors. Site reportedly conducted business with hotmail address.
CEP: Judicially declared Ponzi scheme. Smashed by SEC. ASD once advertised it accepted funds through CEP Trust, the payment processor associated with the CEP Ponzi scheme.
MegaLido: Pushed by ASD members in aftermath of seizure of ASD’s assets and positioned as a safe, “offshore” alternative, MegaLido tanked late in 2008, during the Christmas season, a few months after the ASD seizure. MegaLido purportedly had 27,000 members. MegaLido might have had a tie to Instant2U, another surf that tanked during the 2008 Holiday season. “MegaLido Rocks!†one ASD promoter blared, noting excitedly that it paid 12 percent a day and “It’s Offshore!†Instant2U advertised 14 percent a day.
Frogress: Pitched by ASD members in aftermath of seizure. Frogress tanked in January 2009, just after the Christmas holiday in 2008.
DailyProfitPond: Another surf pitched by ASD members in aftermath of seizure. DailyProfitPond tanked in December 2008, in the days leading up to Christmas. One DailyProfitPond promoter said it was possible to start with $12 and turn it into $12,000. The “return†was listed as 150 percent over 30 days.
AdViewGlobal (AVG or AVGA): Surf with ASD/Bowdoin ties. Formally debuted in February 2009, with a push from the now-defunct Pro-ASD Surf’s Up forum and ASD members. Tanked in June 2009 after collecting untold millions of dollars.
Perhaps one of the most bizarre autosurfs ever to enter the “industry.” Switched to “private association” structure after reportedly meeting with felon convicted in a 1990s securities scheme. Cited U.S. Constitutional protection despite purported headquarters in Uruguay.
AVG disclaimed any ties to ASD, despite fact its CEO was a former ASD executive who submitted a sworn affidavit in the ASD case. Issued news release disclaiming ASD ties; release was signed by an ASD employee who had testified in federal court for ASD in 2008. Said the fact AVG’s graphics appeared on ASD-controlled website was “operational coincidence.”
Announced bank account “suspension” in March 2009, blaming it on members who wired too many transactions in excess of $9,500. Announced CEO resignation, saying CEO would remain in “accounting” department. Announced new wire facility as done deal in May 2009. Company it identified as wire facilitator issued public denial, suggesting AVG was trying to funnel money to itself through a shell company.
Shell company operated by man with two large bankruptcy filings, including one in which an address listed as an apartment was the address of a mail drop. Purported AVG “compliance” department head was sued twice in 2008 for noncompliance with federal law. AVG claimed to own eWalletPlus payment processor. Actual eWalletPlus ownership far from clear. At least two people close to AVG money had spectacular bankruptcy filings. Andy Bowdoin, whom members later said was AVG’s silent head, was arrested for felony securities violations in the 1990s and entered guilty pleas.
AdGateWorld (AGW): Now-defunct surf launched after ASD seizure. Later purportedly sold to interests in the “Middle East.” Claims cannot be verified. AGW linked to ASD member Jack Schrold, a Florida attorney once suspended from the Florida bar for misconduct. Schrold was sued successfully by the FTC for the actions of his credit-repair firm, and also was convicted separately of knowledge of the commission of conspiracy and wire-fraud. AGW announced its death as “End of Dream.” Blamed members in announcement: “This honest and legitimate approach using the advertising rebate model apparently did not meet the expectations of the herd mentality.â€
PaperlessAccess: Mysterious upstart surf. ASD President Andy Bowdoin appeared in a video for Paperless Access in 2009, after the ASD seizure. Video appeared online in March 2009 — during time frame in which AVG was announcing bank-account suspension and the departure of its CEO. PaperlessAccess positioned as way for ASD members to regain money seized by the government. Bowdoin did not identify the owners of Paperless Access, describing them only as a small group of people. Nor did Bowdoin mention that the government was establishing an ASD refund program.
PremiumAdsClub (PAC): Tanked in February 2009. Members said it collected money right up to the end.
AggeroInvestment: Had PAC ties. Advertised 60 percent a month, plus bonuses. Collected money to the bitter end.
QBusinessSolution: Surf with purported ties to former ASD executive Juan Fernandez, who took the 5th Amendment in the ASD forfeiture case. # # #
EDITOR’S NOTE: Claims often are made that it’s “safe” for U.S. residents to invest in “offshore” opportunities and that offshore enterprises are outside the reach of U.S. regulators and law-enforcement agencies. This column refutes those assertions — and also includes information on Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon.” Alishtari operated an investment scheme known as FEDI and was convicted in September of stealing millions of dollars from participants and of financing terrorism.
UPDATED 3:58 P.M. ET (U.S.A.) Lots of people say that HYIPs are harmless. They continue to promote the programs even though they’d never encourage their children to hop into a car driven by a stranger or tell their parents or friends it was OK to hire a roofing contractor who was not registered at City Hall.
Why purported operators of online High Yield Investment Programs (HYIPs) get a pass when strangers driving cars and fly-by-night home-improvement contractors do not is a matter for great introspection. It’s a pretty safe bet, though, that it comes down to reckless — and even criminal — greed.
The Gold Nugget Invest (GNI) HYIP tanked Friday, after collecting untold sums. GNI’s website disappeared for a while after an announcement by the company that it was embarking on a “Re-organization.” The site now is back online. The “Re-organization” appears to be just another way to collect money by changing the distribution scheme.
“Earn up to . . . 20% monthly,” the site says. “No Risk Wager.” There is no corresponding announcement on the site’s landing page that it changed the rules, withheld payouts to members under a previous scheme and, apparently, lost access to a hefty sum of its cash when assets linked to Yesilada Bank through a purported “Correspondent Bank” purportedly were frozen by “German Authorities” on an unspecified date.
GNI’s announcement about the purported actions by “German Authorities” was vague and ambiguous.
“This particular frozen account contains all of Yesilada’s client’s foreign exchange funds,” GNI said Friday. “There are dozens of legitimate clients, along with GNI, whose lives have been put on hold pending the resolution of an investigation which has NOTHING to do with GNI. It’s a matter of being at the wrong place at the wrong [] time.”
GNI’s claims could not be independently verified. The company does not publish financial information that could help investors make an informed decision. Its announcement was so overwrought with florid language that members still don’t know what it means.
Even if the claims are true, however, the only thing they demonstrate is that the company is responding to a purported crisis caused by unspecified third parties by advertising a “No Risk Wager” that implies a payout of 20 percent a week.
Good grief. (Look in the Comments section below for GNI’s entire announcement about its problem and its “Re-organization” plan. It is one for the ages.)
As we reported yesterday, the conspiracy theorists already have surfaced in an apparent bid to help GNI deflect attention from the fact it collected money under one set of rules, changed the rules — and now intends to continue to collect money (while holding onto earlier money it collected), thus further distancing its original investors from their money and not informing new investors in plain sight about the previous problems.
Incredibly, some existing members of GNI are applauding GNI’s actions, saying they are consistent with a company that is “honest.” Some of the same cheerleaders are saying the United States does not have jurisdiction in matters pertaining to GNI or its purveyors. Why the apologists would tout the company’s “honesty” while also saying the SEC can’t touch it is just another one of the many incongruities of the HYIP world.
If you are on the fence about GNI — if you find yourself desperately wanting to believe the cheerleaders and apologists — perhaps you’ll find this story at Canada.com informative. It’s a brief on Brian David Anderson, a Canadian citizen who was just sentenced to federal prison in the United States for targeting U.S. citizens in a financial-fraud scheme.
Anderson, by the way, originally was arrested by Spanish authorities in Madrid. He was jailed in the United States and pleaded guilty in August 2008 . It is not even remotely unusual for governments to cooperate when investigating fraud and Ponzi schemes. The British Columbia Securities Commission noted Anderson was in a U.S. jail when it issued this news release on his penalty for targeting Canadians in a securities scheme.
“Anderson told the panel in a letter that he was ‘unable to appear in response’ to the findings because he is incarcerated in a New York prison,” BCSC said. “He also said he is not in a position to pay the [$250,000] fine.”
He was not in position to pay the restitution, either. Many HYIP promoters know that, if the operator goes to jail, no one gets paid. Investors are told not to raise a ruckus, the suggestion being that raising a ruckus might capture the attention of authorities — and if the authorities swoop in, well, game over.
Under this reasoning, it is best to stay quiet, even if it means a schemer has to steal from others to make payments to his or her original investors. Many of the promoters suspect a theft has occurred. They ignore it or talk around it because no gun was used. They’d call the police if a roofing contractor ever scammed their widowed mother. They’d join a posse if — heaven forbid — their missing child last was seen getting into the car of a stranger. The HYIP schemer get a pass because personal investment cash or commission cash is on the line.
Know Who Your HYIP Neighbors Are?
Anderson helped pitch a scheme known as Flat Electronic Data Interchange (FEDI). The FBI identitied Abdul Tawala Ibn Ali Alishtari as the operator of FEDI. Alishtari pleaded guilty in September 2009 to fleecing investors in the scheme — and also to charges of financing terrorism and conspiracy to commit wire fraud.
Alishtari, who used the name “Michael Mixon,” facilitated the “transfer of $152,000, with the understanding that the money would be used to fund training for terrorists,” the FBI said. “In the latter half of 2006, Alishtari agreed to discreetly transfer these funds for an undercover officer, believing that the money was going to be used to purchase night vision goggles and other equipment for a terrorist training camp in Afghanistan. During his guilty plea, Alishtari admitted that he sent the money from the United States knowing that the funds were to be used to help finance alleged terrorist activity in Pakistan and Afghanistan.”
Anderson was not linked to terrorism, but his ties to FEDI are documented in one filing after another in Canada. Here is a mention of FEDI from the Alberta Securities Commission.
International law enforcement regularly shares information and works cooperatively. Here are some more examples:
Colombia recently handed over to the United States Colombian citizen David Murcia, whose pyramid scheme caused rioting in South America and later was linked to international narcotics trafficking. Authorities in Panama recently arrested U.S. citizen Jeffrey Lane Mowen, who is now in a U.S. jail awaiting trial on Ponzi charges and charges he plotted to have four witnesses against him murdered.
John and Marian Morgan were arrested in Sri Lanka and brought to the United States. Their alleged financial scheme purportedly operated out of Europe, although the Morgans are U.S. citizens who allegedly targeted U.S. customers.
Web records suggest that GNI’s servers are in the United Kingdom and that almost 57 percent of GNI’s website traffic originates in the United States. Other countries driving measurable traffic are Canada, Australia, the U.K., Italy and Japan. The records, however, strongly suggest that traffic from the United States dwarfs traffic from other countries.
This almost certainly means that GNI was reliant on U.S. dollars to sustain itself. Much of the cheerleading for the company appears to come from U.S.-based investors. The most probable reason for their continued support of the company is the fear that they’ll lose their current stakes and perhaps even get sued by people they enrolled in the program if they don’t spin the recent GNI events as a positive.
The Gag Reflex
The behavior of cheerleaders in murky HYIP circles is enough to make a person want to hurl. The most offensive cheerleaders are the ones who position themselves as “experts.” They are experts only in the same sense that Charles Ponzi and Bernard Madoff were experts. They are people who prey on ignorance to line their pockets with commissions. The arguments are an embarrassment to any person with a functioning brain, so utterly pretentious — and often so utterly passive-aggressive — that they trigger the gag reflex.
A common tactic is to position people concerned about their funds as troublemakers or whiners. The worried parties are told that they are immature, that responsible adults don’t whine — and that responsible adults never put in more money than they can afford to lose. Such insults, which often are encased in smiles and expressed with great confidence, often include the claim that the SEC has no jurisdiction or that the “opportunity” is a “game” and therefore cannot be regulated by government.
Professional HYIP pushers are at risk of being charged under U.S. law with selling unregistered securities as investment contracts — at a minimum. The Ponzi board “experts” argue that no contract exists and that it therefore follows that no charges can be brought. The argument does not pass the giggle test. Among the reasons it’s made is because the purveyors don’t want investors to call the SEC — or the FBI or state attorneys general or state securities regulators or provincial securities regulators or international law-enforcement agencies.
The purveyors also are at risk of being criminally charged under U.S. law with wire fraud. GNI operated over the Internet — just like AdSurfDaily, an alleged autosurf Ponzi scheme based in Florida. It is known that some ASD members also promoted GNI. They announced their participation even after the U.S. Secret Service seized tens of millions of dollars from ASD in August 2008 amid allegations of selling unregistered securities and operating a wire-fraud and money-laundering scheme.
A racketeering statute also is cited in two forfeiture complaints against ASD-connected assets. When the Secret Service filed the ASD allegations, federal prosecutors included copies of successful complaints filed against 12DailyPro and PhoenixSurf, two autosurf firms prosecuted under securities statutes.
GNI’s apologists would rather you not know about these things.
Bottom line: The cheerleaders don’t want to give up their commissions or profits. At the same time, they don’t want to be sued or named a defendant in a civil-enforcement action or a criminal complaint. They know the programs are illegal and that they have vast exposure, so they make excuses for the company and just plain lie — or pass along deceptions such as the SEC has no jurisdiction over the enterprises.
Let us say it plainly: You do not have an idea of who your HYIP neighbors are. You do not have a clue about what happens to the money after it leaves your bank account or your payment processor. If you claim otherwise, you are deluding yourself. If you race to announce to forums to exclaim you “got paid,” you are setting the stage for others to get fleeced.
This applies to virtually all the online HYIPs.
If you are a U.S.-based GNI investor, you likely bought an unregistered security from a person who was not licensed to sell securities or are the victim of some sort of commodities or forex fraud. As noted above, web records suggest that nearly 57 percent of GNI’s traffic originated in the United States. It is likely that more than 57 percent of GNI’s money pool was comprised of U.S. dollars because of the ready supply of U.S.-based promoters, sometimes called referral “whores.”
It’s an offensive description, to be sure. The “industry” itself is offensive. It leads to one ugly result after another. Eventually it’s going to lead to a result that is so unquestionably ugly that it cannot be pooh-poohed or explained away by greedsters and scammers posing as “experts” on Internet forums.
Did we mention that Brian David Anderson, who pushed FEDI and whose name now is linked with the name of a man convicted of financing terrorism, was a Christian minister — and that he is in his 60s, and that he pitched FEDI in a hotel room and that he claimed repeatedly that it was “backed by gold?”
Make sure you get a copy of our PDF compilation of President Obama’s Executive Order establishing the Interagency Financial Fraud Enforcement Task Force and remarks on the Task Force by U.S. Attorney General Eric Holder. Read this story, and get the PDF near the bottom.
