Source: FBI graphic from Jan. 4, 2016, retrospective on the E-Bullion case from 2008.
Still pushing Ponzi-board schemes in the age of cross-border fraud and terrorism?
In a retrospective on the 2008 E-Bullion case, a retired FBI special agent says convicted murderer James Fayed was scamming HYIP scammers.
“He just pocketed the money from all these high-yield investment programs after they ran,” said Maura Kelley. “And the money continued to come in because the word didn’t get out right away that they weren’t paying. And people were still investing.”
In 2011, Fayed, then 48, was sentenced to death for the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Indeed, the effective bagman for a host of Ponzi-board swindles ultimately turned to homicide in a bid to cover his tracks.
Pamela was stabbed 13 times and left to die outside a Los Angeles-area parking garage.
E-Bullion has been linked to multiple Ponzi schemes, including Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.
So, a man with murder in his heart also was supplying financial services to Ali Alishtari, an HYIP swindler who believed he was funding the purchase of night-vision goggles for a terrorist training camp in Afghanistan.
Upon the conviction of Alishtari, U.S. Attorney Peeet Bharaha of the Southern District of New York offered remarks. As the PP Blog noted, here is part of what Bharaha and the FBI said:
“Alishtari . . . admitted that he stole millions from investors and knowingly financed what he believed to be tools of terror. In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others.”
Investigators said Alishtari “facilitated the transfer of $152,000, with the understanding that the money would be used to fund training for terrorists.
“In the latter half of 2006,” according to investigators, “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.”
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.)
BULLETIN: The SEC has asked a federal judge to permit the receiver in the Legisi HYIP Ponzi-scheme case to pursue funds tied up after the arrest of James Fayed, the operator of the e-Bullion payment processor. Fayed was convicted in 2011 of ordering the murder of his wife, a potential witness against him. Pamela Fayed was slashed to death in a Greater Los Angeles parking garage in July 2008. The SEC brought the Legisi fraud prosecution in May 2008, just two months before Pamela was killed.
E-bullion has been linked to several Ponzi schemes. In court filings on June 6, receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through the defunct processor. Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for an order “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.
The SEC now says Steeh should issue the order because Gordon’s efforts could “lead to the recovery of millions of dollars for the Receivership Estate, funds which ultimately could be distributed to victims pursuant to a Court-approved formula.”
Under Gordon’s plan, the SEC said, Legisi’s “winning investors” would be provided a process to dispute claims for the e-Bullion money.
“As a result,” the SEC said, “any investors who assert that they are entitled to money claimed by the Receiver would have an opportunity to have their arguments heard and decided by the Court. No moneys would be disbursed until after the Court hears and decides such disputed claims.”
The agency also said that Gordon earlier had successfully claimed $1.7 million from e-Gold, an e-Bullion rival charged in a 2007 money-laundering case. In May 2013, federal prosecutors in New York charged Liberty Reserve — yet another payment processor linked to online fraud schemes and other crime — in an alleged $6 billion money-laundering conspiracy.
With a take of $72 million, Legisi was a “program” pitched on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — forums from which “programs” such as AdSurfDaily ($119 million), Zeek Rewards ($600 million), Pathway To Prosperity ($70 million) and Profitable Sunrise also were pitched. The combined scams gathered at least $861 million, according to federal court records. The number could be significantly higher because the final take of Profitable Sunrise — estimated in the tens of millions of dollars — is unknown. If Profitable Sunrise gathered $140 million, it would mean that the take of the five scams combined exceeded $1 billion.
Similar scams continue to be promoted on the Ponzi boards by commission-based hucksters. The condition is comparable to “whack-a-mole” in the sense that one scam rises to replace another. The “offers” frequently are targeted at victims of previous schemes and positioned as a means investors can “earn” back funds lost in the earlier scams.
Federal court records show that prosecutors asserted an AdSurfDaily pitchwoman funded her ASD account through e-Bullion, which also has been tied to mysterious scams such as Gold Quest International, the “Alpha Project” and Flat Electronic Data Interchange, known as FEDI. FEDI’s 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.
Cash associated with the ASD Ponzi scheme was seized on Aug. 1, 2008, about four days after Pamela Fayed was murdered in Los Angeles. Erma Seabaugh, the ASD promoter who funded her account with e-Bullion, also pitched a scam known as StreamlineGold, according to federal records.
In November 2007, a MoneyMakerGroup poster claimed this about StreamLineGold (italics added):
StreamLine Gold is literally what it says. [I]t can provide you with an unlimited income through the combination of Precious Metals and Cash with a business model whose time has come PLUS the most advanced and lucrative pay plan ever devised.
Seabaugh, according to records, was promoting ASD through an entity known as Carpe Diem, a purported “religious” nonprofit firm in Oregon.
Separately, the receiver in the Zeek Rewards Ponzi case has said that he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”
An evidence exhibit in the Legisi case shows that investors had to affirm they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.
This Legisi “Quick Start Manual” showed investors how to open payment accounts at e-Bullion and e-Gold, both of which provided services to HYIP scams and both of which were implicated in international fraud schemes. e-Bullion operator James Fayed was convicted in 2011 of arranging the grisly murder of his wife, a potential witness against him. (Source: federal court files.)
UPDATED 5:08 P.M. EDT (U.S.A.) How dangerous and bereft is HYIP Ponzi Land? More than 85 percent of the $72.6 million directed at the Legisi HYIP Ponzi scheme before its May 2008 collapse flowed through the now-shuttered e-Bullion payment processor operated by convicted murderer James Michael Fayed, according to the court-appointed receiver in the Legisi case.
Receiver Robert D. Gordon — noting he has consulted with federal prosecutors — now is asking a federal judge in Michigan for an order that would authorize him “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.
Fayed is sitting on California’s Death Row after his May 2011 conviction for ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Pamela Fayed was stabbed 13 times in a Greater Los Angeles parking garage on July 28, 2008. The Los Angeles Times reported her husband was seated on a nearby park bench “texting” on his cell phone while his alleged accomplices carried out the slaying.
Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for the order on June 6. About two weeks earlier, federal prosecutors in New York brought criminal charges against the Liberty Reserve payment processor, alleging that it had orchestrated a $6 billion money-laundering conspiracy. Both Liberty Reserve and E-Bullion were popular with HYIP scammers and other criminals.
Legisi was a “program” promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. The “program” resulted in both criminal and civil charges being filed against operator Gregory N. McKnight and online pitchman Matthew John Gagnon of Mazu.com. In 2010, the SEC described Gagnon as a serial pithman for fraud schemes and a “danger to the investing public.”
Sentencing for Gagnon had been scheduled for yesterday. It now has been moved to July 9. McKnight, whom prosecutors said engaged in “semantic obfuscation” to raise millions of dollars in his HYIP fraud scheme, is scheduled to be sentenced Aug. 6.
In his June 6 filing, Gordon alleged that McKnight “used e-Bullion as the vehicle to hold, receive and distribute funds from and to Legisi investors” and that McKnight used investor funds to invest in “various High-Yield Investment Programs.” He further alleged that Gagnon was a “prolific” user of e-Bullion and that “Mazu and Gagnon published on the mazu.com website how-to instructions for prospective Legisi investors to fund their accounts by opening an e-Bullion account.”
From the receiver’s June 6 filing (italics added):
The Department of Justice has established a remission process in the Central District of California to administer claims of former accountholders of e-Bullion a/k/a “Goldfinger Coin & Bullion.” McKnight, Legisi, and the majority of Legisi investors held accounts with e-Bullion. Mr. Gordon has made claims against the seized funds for the benefit of the Estates. In addition to direct claims on behalf of the Legisi-related entities, Mr. Gordon seeks to recover funds relative to Legisi investor accounts. To authorize such claims, officials at the Department of Justice have suggested an order from the Receivership Court stating: “Receiver is authorized to receive and collect any remission or restoration of forfeited funds recoverable by or payable to [Legisi Investors] pursuant to any civil or criminal forfeiture action brought by the United States in any federal jurisdiction.” Such an order would assist Mr. Gordon in recovering funds owed bynet winner investors and in compensating victims of the Legisi scheme.
E-bullion has been linked to multiple Ponzi schemes, including AdSurfDaily, Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.
When a jury sentenced Fayed to death in 2011, Los Angeles Superior Court Judge Kathleen Kennedy described him as “one cold, calculating human being.”
Here is how the U.S. Department of Justice is describing e-Bullion. (Note: this is reproduced verbatim from Gordon’s June 6 filing — with italics/bolding added):
e-Bullion was a web-based money transmitting business operated by James Michael Fayed. e-Bullion allowed individuals to depositmoney and purchase virtual “e-currency” that was purportedly backed by precious metal reserves maintained by Fayed’scompanies in the United States and Australia. Accountholders could use e-currency to trade in goods and services with other accountholders. Federal investigators determined that many operators of fraudulent investment schemes used e-Bullion to collect millions of dollars from victims, much of which was wired to overseas accounts.
In May 2011, Fayed was convicted of murdering his wife and is currently awaiting execution on California’s death row. On July 30, 2012, the United States Attorney’s Office for the Central District of California obtained a judgment in federal district court that resulted in the forfeiture of approximately $3.6 million in bank funds and $5.4 million worth of gold, silver, and platinum seizedfrom two entities formerly controlled by Fayed – Goldfinger Coin and Bullion (GCB) and Goldfinger Bullion Reserve Corp (GBRC).In a related matter, the Australian Federal Police obtained a judgment resulting in the forfeiture of approximately $13 millionin precious metals that were purchased and stored by Fayed in the Perth Mint in Australia. The funds forfeited in the Australia matterare also expected to be distributed to qualified e-Bullion accountholders through this remission process.
“I don’t want to see a lawyer. If you do, I’m going to lien him down fast.” — Gregory Allen Davis addressing U.S. Magistrate Judge Alice R. Senechal of North Dakota in a false-liens case that evolved from events in 2010 and earlier
UPDATED 5:14 P.M. ET (U.S.A.)
The word “lien” is a noun. But it seems quickly to have become a verb in the mind of Gregory Allen Davis, a reputed “sovereign citizen” accused in 2010 of filing false liens against U.S. District Judge Daniel Hovland of North Dakota and Lynn Jordheim, a federal prosecutor who once served as the acting U.S. Attorney for the state.
Appearing before U.S. Magistrate Judge Alice R. Senechal to be arraigned on charges of filing false liens in the form of UCC Financing Statements against Hovland and Jordheim, Davis informed Senechal that he’d reject the appointment of defense counsel by the court, according to transcripts cited by the U.S. Court of Appeals for the Eighth Circuit. (PP Blog emphasis):
“I don’t want to see a lawyer,” Davis barked to the judge. “If you do, I’m going to lien him down fast.”
A Tortured History
With the belligerent morphing of “lien” from noun to verb even as Davis claimed the judge had no jurisdiction over him and demanded she present her “oath of office,” thus began a new chapter in the already-bizarre sagas of Davis and fellow purported “sovereign citizen” Michael Howard Reed.
Reed emerged as a figure in the May 2008 SEC Ponzi-scheme case against Gold-Quest International (GQI) after asserting he was the “attorney general” for an “Indian” tribe in North Dakota and trying to sue the agency for the staggering sum of $1.7 trillion.
GQI operated from Las Vegas and touted a footprint in Panama. Reed’s apparent theory was that the enterprise, which was accused of hatching a Ponzi that had gathered nearly $30 million, was untouchable under U.S. law and that it enjoyed sovereignty that somehow was portable across multiple state lines in the United States. A federal judge in Nevada quickly put an end to that nonsensical argument — even as regulators in Canada also were preparing or pressing claims against GQI, which purportedly was operated by a “Lord.”
Reed’s unsuccessful bid to intervene in the GQI case was hardly his only encounter with the federal judiciary and law-enforcement agencies.
In rejecting various claims by Davis and Reed in the false-liens case and upholding the rulings of U.S. District Judge Charles B. Kornmann of South Dakota — who was sitting in special designation because the North Dakota federal judiciary had recused itself — the Eighth Circuit appeals panel started out by reciting some of the tortured litigation history surrounding the false-liens case. (Italics added):
“Gregory Allen Davis and Michael Howard Reed irrationally believe that their membership in the Little Shell Nation, an unrecognized Indian tribe, means they are not United States citizens subject to the jurisdiction of the federal courts. This belief led them into serious trouble. First, Reed threatened North Dakota District Judge Ralph Erickson because he refused to dismiss federal drug charges against two other Little Shell members. Months later, when District Judge Daniel Hovland denied a motion to dismiss a firearm charge pending against Reed, Davis filed a Uniform Commercial Code (UCC) financing statement listing Judge Hovland and acting United States Attorney Lynn Jordheim as $3.4 million debtors and Davis as the secured party. After a three-day trial, a jury convicted Davis and Reed of conspiring to file and filing false liens against Judge Hovland and Jordheim in violation of 18 U.S.C. § 1521. The jury also convicted Reed of corruptly obstructing justice in violation of 18 U.S.C. § 1503(a), based on his earlier threats. On appeal, Davis argues that the evidence was insufficient to prove a violation of § 1521. Both Davis and Reed argue, for somewhat different reasons, that the district court violated their constitutional rights by allowing them to represent themselves at trial. We affirm.”
Notwithstanding the fact Davis initially had claimed he’d “lien . . . down” even appointed defense counsel and personally defend the charge that he’d filed false liens against public officials, Davis subsequently permitted a lawyer appointed by the court as “standby counsel” to carry out duties such as arguing evidentiary issues, according to court records. Both Davis and Reed reserved their rights to argue the case-in-chief.
“[T]hey provided opening statements, cross-examined the government’s witnesses, testified in their own defense, and offered a mountain of irrelevant documents relating to their claims of personal sovereignty,” according to Eighth Circuit.
But after both men were convicted of filing false liens and conspiring to file them, they then claimed they should not have been permitted to act as their own counsel, a claim in stark contrast to the earlier insistence by Davis that he be permitted to exercise his Constitutional right to represent himself and that he’d file a lien against a defense attorney if one were appointed for him.
Among other things, the Eighth Circuit upheld Kornmann’s conclusion that Davis “knowingly and voluntarily waived his right to counsel.” It made the same determination in rejecting Reed’s argument that the judge should not have permitted him to argue his own case.
Reed claimed, among other things, that “he should not have been allowed to defend himself foolishly,” according to the Eighth Circuit.
The Story Within The Story
Also of note is that the federal law under which Davis and Reed were charged and convicted in North Dakota is the same law under which AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was charged in November 2011 by an FBI terrorism task force in Washington state: Retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title.
In court filings, the FBI said Leaming filed bogus liens against a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service — among other officials. In addition, he is charged with being a felon in possession of firearms, harboring two fugitives and uttering a bogus “Bonded Promissory Note” for $1 million. He is jailed near Seattle.
But to Davis, the law against filing false liens against public officials is “ass wipe,” according to a citation in the Eighth Circuit decision upholding his conviction.
“At trial, an FBI agent testified that, during a January 20 interview, Davis admitted to filing this lien, threatened to file more liens, and referred to the statute prohibiting false liens as “ass wipe,” the appeals panel recounted.
Leaming, according to court filings in the false-liens cases against him, filed the liens in Washington state.
Davis, though, chose to file liens in the District of Columbia — and he did so electronically, according to the Eighth Circuit.
“Reed and Davis conducted a recorded telephone conversation on January 5, 2010, the day Judge Hovland issued an order denying Reed’s motion to dismiss the pending firearms charge,” the appeals panel recounted. “The two discussed placing UCC liens for $2.4 million in cash and $1 million in silver against federal entities. The next day, Davis electronically filed a Form UCC-1 financing statement with the Recorder of Deeds in Washington, D.C., listing as debtors, ‘1. U.S. District Court of North Dakota/Daniel Hovland,’ and ‘2. Acting United States Attorney, Lynn C. Jordheim.”
The histories of both the Davis/Reed case and the emerging Leaming case lead to troubling questions about whether the Internet and the current state of U.S. and state procedures with respect to how liens are accepted and recorded in the public record have opened the doors for “sovereign citizens” to wage far-reaching revenge campaigns against public officials.
This comes at potential expense to both taxpayers and the targeted public officials who at least briefly have to take time away from their public duties and put on the hat of a witness/crime victim.
The Eighth Circuit ruling, for instance, points out that lien targets and federal officials “Hovland and Jordheim testified that they are not indebted to Davis” despite his assertion they owed him millions of dollars.
“Davis chose a filing office whose public records would likely be searched by a party looking for adverse claims against the properties of Judge Hovland and Jordheim, such as prospective lenders, credit card issuers, and credit rating agencies,” the appeals panel found. “He also filed the facially suspect statement electronically and it became a public record without review.”
And, as the appeals panel highlighted in a potentially ominous footnote, different results are possible in different jurisdictions. (PP Blog emphasis added):
“Some States have amended UCC Article 9 to give filing officers discretion to refuse apparently fraudulent or unauthorized filings and to streamline procedures for the removal of fraudulent filings. See White & Summers, Uniform Commercial Code § 31-16 (6th ed. 2010). Absent such an amendment, the UCC grants little authority to refuse to accept fraudulent filings. See § 9-520(a) & cmt. 2.”
Although accused Ponzi schemer and AdSurfDaily President Andy Bowdoin appears not to be among the promoters of JSS Tripler (T2), T2 appears to be relying on a Bowdoin-like playbook in announcing a restart after having earlier suspended payouts.
The bizarre international spectacle created by JSS Tripler 2 (T2) is continuing — and gets stranger and more insidious by the day. The purported “opportunity,” which is trading on the name of a murky entity known as JSS Tripler and apparently cloning its Ponzi business model, has announced a restart after weeks of existing in a state of suspended animation purportedly caused by the freezing of a one-time T2 business partner’s AlertPay account.
T2 now claims it has regained access to the frozen AlertPay funds.
A week or so prior to T2’s purported restart, promoters of JSS Tripler, the purported “opportunity” upon which T2 based its name, became the subject of a securities investigation in Europe. Ponzi-forum hucksters — some of whom are promoting both T2 and JSS Tripler — scoffed at the CONSOB probe and flooded the MoneyMakerGroup Ponzi forum with “I got paid” posts.
It is axiomatic that all successful Ponzi schemes pay. That an “opportunity” pays is not evidence that no underlying criminality exists. The timing of T2’s restart — indeed, the restart occurred after the Italian regulator CONSOB announced that JSS Tripler promoters were being scrutinized — demonstrates that the serial hucksters driving T2 are turning a blind eye to the serious issues being raised in Europe.
The development is hardly unprecedented, given that core groups of scammers who populate the Ponzi boards and simultaneously maintain their own fraud sites thumbed their noses after law-enforcement moved against “opportunities” such as Pathway To Prosperity, Legisi, Gold Quest International, Imperia Invest IBC and others, including AdSurfDaily.
Like its namesake JSS Tripler, T2 advertises a return rate of 2 percent a day, twice that of ASD. In 2008, the U.S. Secret Service called ASD an international Ponzi scheme. Tens of millions of dollars were seized from bank accounts, and ASD operator Andy Bowdoin later was arrested on charges of wire fraud, securities fraud and selling unregistered securities.
At least $110 million found its way into ASD or related coffers, prosecutors said. Several million dollars were moved into Canada just prior to the seizure of ASD-related assets in August 2008, according to court filings.
In early 2007, according to prosecutors, ASD suffered a Ponzi collapse that in part was blamed on “Russian” hackers. Bowdoin claimed the hackers stole $1 million, but he never filed a police report.
Like T2 did between at least December 2011 and February of this year, ASD existed in a state of suspended animation for months in 2007. Bowdoin eventually restarted the “opportunity” under a different name and different website — ASDCashGenerator, as opposed to AdSurfDaily — and began the process of picking pockets anew, federal prosecutors said.
Unlike ASD, T2 did not claim its payout problems were caused by Russian hackers. Instead, the “opportunity” claimed a onetime business partner known as “Chris,” purportedly living in England, was to blame.
Like ASD, however, T2 claimed it was changing names, morphing from JSS Tripler 2 to T2MoneyKlub. The name change was explained to be part of an overall restart plan in which T2 would create revenue streams by building prefabricated websites and offering them for sale at a tremendous profit. The plan, which appeared to be exceptionally forward-looking while making preposterous assumptions, presented fallacies of logic such as these:
That T2, operating with an in-house skeleton crew and volunteer members, no declared base of operations and no compliance arm despite reaching into dozens of countries each with a unique set of laws, could at once be a web-service provider while managing a “program” that promised a return rate of 2 percent a day or 730 percent a year on top of recruitment-commission payments.
That web-service customers would pay a premium for sites built by a murky entity whose operators simultaneously were offering investors returns that would make Bernard Madoff blush.
That the fees generated by the sale of websites at a future point uncertain somehow could sustain a scheme that promised to pay out twice as much as ASD, whose operator already was under indictment on Ponzi-related charges and had advertised the same sort of payment schemes.
That there would be any reason at all for T2 to continue to offer an investment program that advertised a ludicrous return if its purported sale of websites could result in handsome, self-sustaining profits for the web-service venture. (Longtime PP Blog readers will recall that the AdViewGlobal (AVG) autosurf claimed at one time that it, too, was morphing into a company that would offer web services as a means of propping up an initial investment scheme. AVG, like ASD, promised to pay out half of what T2 claims. AVG disappeared in June 2009, only weeks after its morphing announcement.)
Also like ASD, T2 preemptively denied it was a Ponzi scheme, despite an absurd confluence of payment schemes in which T2 claimed an ability to pay an annualized return of 730 percent on top of recruitment commissions.
As previously noted, T2’s advertised return rate was double that of ASD, which prosecutors said had no meaningful revenue streams beyond payments by members. Those payments simply were recycled and returned to other ASD members in the form of classic Ponzi payouts.
Even though T2 — like ASD — purported to be changing its name, the name change appears to have hit a snag. T2 initially announced it would emerge as T2MoneyKlub on Feb. 1. That didn’t happen, according to Ponzi-forum chatter, because T2 did not have an AlertPay account in its new name.
T2, according to chatter, then defaulted back to its original name, a circumstance that apparently means the purported “opportunity” can both receive and send money, shelve its new name for the time being and reposition itself under its “old” name to reach into the pockets of new investors.
“Dave,” the purported operator of T2, according to Ponzi-forum chatter, once was a member of JSS Tripler, one of the entities referenced in the CONSOB action. It appears as though “Dave” was unmoved by the CONSOB action, so much so that he restarted JSS Tripler 2 even though claims about namesake JSS Tripler are under scrutiny and the already-radioactive name easily could become even more radioactive in the weeks ahead.
T2 payouts will come from “AlertPay, SolidTrustPay and LibertyReserve,” Dave announced on the MoneyMakerGroup Ponzi forum, posting as “Peakr8.” All three of the named processors have reputation for being friendly to fraud schemes. Both AlertPay and SolidTrustPay are referenced in court files in the ASD Ponzi case.
MoneyMakerGroup member “jieroz” quickly fired up an “I got paid” post for T2 today, saying the $25 payment had come from AlertPay.
“Congrats, that was fast … As usual . . .” strosdegoz blathered.
A poster purportedly from India and using the handle “hemsagar” also joined in the cheers.
“WTG! WTG!” he exclaimed in approval.
A link under the approving post of “hemsagar” led to a “benefactor” promotion in which he claims he’ll pay people to join T2 by sending them money through AlertPay.
Amid the cheerleading in the MoneyMakerGroup T2 thread, “Dave,” posting as “Peakr8,” announced he was taking a trip to “Cambodia.” This trip apparently follows on the heels of a trip “Dave” purportedly had taken earlier from England to Thailand during a period in which T2 was not paying members.
“Dave” conceded that T2’s restart had resulted in problems at T2’s in-house cheerleading forum.
“I know there are bugs, but we will stamp on em one by one when I get back from Cambodia,” Dave posted on MoneyMakerGroup as “Peakr8.”
Below that post, another post from “hemsagar” appears. Although his brief MoneyMakerGroup bio at the left of the post claims he is from India, his post about the bugs in the T2 forum makes this claim:
“Its back up here in the Ukraine.”
Whether “hemsagar” is a citizen of India now living in Ukraine is unclear.
Serial huckster “strosdegoz” later proclaimed “we need to pump up” the T2 forum and “also . . . every place else.
“I have to do my dozens of forums too,” strosdegoz acknowledged.
Regulators have warned the public repeatedly that scams involving hundreds of millions of dollars are spreading virally on the Internet through forums and social-media sites. Pathway to Prosperity, which was pushed on the Ponzi forums, eventually made its way to 120 countries, according to court filings.
The scheme had a take of more than $70 million and created at least 40,000 victims, according to court filings.
ASD may have created a similar number of victims, according to court filings. Legisi and Imperia Invest IBC also created victims by the thousands, investigators said.
Included in the Imperia victims’ count were thousands of people with hearing impairments, investigators said.
BULLETIN: The Los Angeles Times is reporting (link below) that James Fayed has been formally sentenced to the death penalty for arranging the brutal slashing death of Pamela Fayed, his estranged wife and a potential witness against him.
James Fayed, 48, is an emerging figure in the AdSurfDaily Ponzi case. Federal prosecutors in the District of Columbia said in December 2010 that E-Bullion was used to forward money to ASD, which the U.S. Secret Service described as a massive international Ponzi scheme that used multiple payment venues to amass at least $110 million.
Erma Seabaugh, an ASD member who used E-Bullion, was an ASD trainer, according to the government. Records in Oregon show that Seabaugh, whose assets were seized in the ASD case, was operating a purported “religious” nonprofit firm from Missouri. The purported religious entity was known as Carpe Diem.
Seabaugh’s assets were seized in February 2009, during a period of time in which the AdViewGlobal (AVG) autosurf was launching and ASD President Andy Bowdoin was morphing into a pro-se litigant and trying to undo his January 2009 decision to submit to the forfeiture of $65.8 million seized by the Secret Service from 10 Bowdoin bank accounts in August 2008. AVG had close ASD ties, according to members.
E-Bullion has been linked to multiple Ponzi schemes, including Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.
FEDI participants could expect to receive payouts deemed “rebates,” according to documents obtained by the Ontario Securities Commission from a FEDI promoter who simultaneously was promoting a mysterious business known as the “Alpha Project.” ASD also used the word “rebates” to describe its payouts, according to court filings.
Ali Alishtari, like ASD’s Bowdoin, contributed money to Republican causes and heralded a purported GOP award for his business acumen, according to documents.
Seabaugh used ASD’s advertising “rotator” to promote an apparent “pyramid scheme” known as StreamlineGold.net, according to federal court filings. Like ASD, Legisi and GoldQuest International, StreamlineGold.net was promoted on Ponzi boards such as TalkGold and MoneyMakerGroup.
Pamela Fayed was stabbed 13 times in a Greater Los Angeles parking garage on July 28, 2008. The Times reported today that James Fayed was seated on a nearby park bench “texting” on his cell phone while his alleged accomplices carried out the slaying.
Los Angeles Superior Court Judge Kathleen Kennedy described James Fayed as “one cold, calculating human being,” according to the Times. Kennedy formally imposed the death sentence yesterday. The jury that convicted James Fayed in May recommended the sentence.
From the Times (italics added):
The only person within earshot who didn’t react was the victim’s estranged husband who was sitting on a nearby bench “texting on his cellphone, like he doesn’t have a care in the world,” Los Angeles County Superior Court Judge Kathleen Kennedy said Thursday, moments before sentencing James Fayed to death for the contract killing.
UPDATED 11:54 A.M. ET (U.S.A.) Curtis Richmond claimed the federal judge overseeing the AdSurfDaily civil-forfeiture case in the District of Columbia was among a group of “Co-Conspirators” that included two federal prosecutors and a court clerk.
The judge, Richmond claimed, was violating her oath and conspiring with another judge to deny ASD members justice. Prosecutors, meanwhile, were helping the judge interfere with commerce, according to Richmond. The judge rejected Richmond’s arguments — but it didn’t stop other ASD pro se litigants from advancing similar arguments.
For his bid to intervene in the ASD Ponzi case, Richmond was labeled a “hero” on both the pro-AdSurfDaily “Surf’s Up” forum (now defunct) and on a forum that championed the AdViewGlobal autosurf (now defunct). Among Richmond’s boosters was “Professor” Patrick Moriarty, a Missouri man who once started a purported nonprofit in the name of a man accused of murdering a woman in cold blood and shooting a police officer.
Moriarty later was indicted for tax fraud. He pleaded guilty after prosecutors said they had “casino” records and intended to use them in the case against Moriarty, who advertised that he sold fake academic degrees on e-Bay as “gag gifts.”
Prior to Moriarty’s indictment, members of the Surf’s Up forum joined with him in forming a purported Missouri nonprofit known as ASD Members International (ASDMI). ASDMI’s stated mission was to litigate against the government for its role in the ASD Ponzi case.
Utah resident and ASD figure Christian Oesch — later to join with Washington state resident and ASD figure Kenneth Wayne Leaming in a failed 2010 bid to sue the United States for more than twice the U.S. Gross Domestic Product in 2009 — filed pro se pleadings in the ASD case that championed Richmond’s take on the law.
But Curtis Richmond’s court forays now have been cited by various judges in various jurisdictions as reasons to reject tortured legal constructions. A federal judge in North Dakota, for example, cited this Utah case involving Richmond as a reason to reject tortured arguments advanced by Michael Howard Reed, a so-called “sovereign citizen” now serving two prison sentences for federal crimes.
Richmond, a Californian who advanced the notion in the 2006 Utah case that he enjoyed diplomatic immunity that extended to him from an “Indian” tribe, became a figure in the ASD case in 2008. The “tribe,” which a federal judge ruled a “sham,” came to be known derisively as the “Arby’s Indians” because it once conducted a meeting at an Arby’s restaurant.
Reed, whose name surfaced in the 2008 SEC Ponzi case against Gold Quest International after he claimed to be the “attorney general” of an unrecognized tribe and asserted a claim against the agency for $1.7 trillion, asserted in a separate case that the government could not prosecute him because he was immune to U.S. law and had trademarked his name.
Here is a verbatim section from one of Reed’s nonsensical pleadings in federal court in North Dakota. (Italics/identation added):
Richmond’s Utah case was cited in the North Dakota case as a reason to reject Reed’s bizarre arguments.
It also was cited in this Colorado case in which a U.S. Magistrate Judge rejected the tortured legal constructions of Christopher Douglas Wise. Among other things, Wise, a prisoner in the Colorado state system, asserted that he was a “secured party creditor” who’d never lived in the “District of Columbia” — and that somehow this alleged fact set destroyed the jurisdiction of the Adams County District Court in which he was convicted of a crime.
In a separate case in Florida, a federal magistrate judge pointed to Richmond’s Utah “Indian” pleadings as a reason to reject arguments advanced by Timothy Black, who was serving two life sentences for sex crimes involving children and tried to overturn his conviction in part by claiming he had copyrighted his name and by arguing he was not subject to Florida law.
“Petitioner was found guilty by a jury and convicted of two counts of sexual battery on a person less than twelve years of age, and one count of lewd or lascivious molestation on a person less than twelve years of age, and sentenced to two terms of life and one term of thirty years, to be served concurrently,” the judge noted.
Here is a verbatim section from Black’s court claims. (Italics added):
In July 2010, FINRA memorably described the HYIP sphere as a “bizarre substratum of the Internet.” The regulator warned about “online payment systems” that are used for criminal activity, noting that some fraud purveyors discuss subjects such as how to “build a winning HYIP portfolio” and how “to ‘ride the Ponzi’ and get in and out before a scheme collapses.”
A case brought by federal prosecutors in Colorado against a Utah man could be an eye-opener for fraudsters and their apologists and shills who engage in bizarre and reckless behavior such as that outlined by FINRA and help fraud schemes proliferate to consume millions of dollars.
Indeed, the Durango (Colorado) Herald is reporting that Frederick H.K. Baker will be going to federal prison for 41 months (see link at bottom of post). Although FINRA’s 2010 Public Awareness Campaign is not referenced in the story, Baker’s case speaks to a number of the issues FINRA raised more than a year ago.
Compellingly, even Baker’s attorney conceded that his client thought he could “scam the scammers” by knowingly becoming a Ponzi player and adopting a strategy by which he’d get in early, collect his profits — and then get out, according to the Herald.
“Baker thought he could make money if he got in early,” the Herald reported. “In effect, he was running a Ponzi scheme to invest in other Ponzi schemes . . .”
The Herald’s story quotes a federal prosecutor who told a federal judge that Baker’s scheme destroyed families and caused financial and emotional heartache for the victims.
And it also notes that E-Bullion, the shuttered California payment processor whose operator, James Fayed, was convicted in May of arranging the July 2008 gruesome murder of his wife, was used in the Baker scheme.
E-Bullion also has been referenced in the AdSurfDaily Ponzi case, the Legisi Ponzi case, the Gold Quest International Ponzi case, the FEDI case and other cases. The most recent reference to E-Bullion in the Legisi case, according to research by the PP Blog, occurred on Sept. 22, 2011 — less than three weeks ago.
An attorney for two individuals claimed in court filings that his clients had used E-Bullion when investing with Legisi and were out $92,094.11. The attorney noted that their claims to a share of proceeds from the receivership estate have been rejected. Other filings list the reason for the rejection as inadequate documentation of the investment. The operators of fraud schemes such as Legisi are infamous for keeping poor records and not entering information in books, a sad reality that can lead to a result of victims of fraud schemes not receiving compensation from restitution pools.
Read the Baker story in the Durango Herald. The story is compelling because it points out that Ponzi players have more to lose than just money. Baker, according to the story, is now facing some harsh realities and coming to grips with what his descent into the Ponzi darkness truly has cost him and his family.
Matthew J. Gagnon, an alleged web-based pitchman of Ponzi schemes and Forex frauds, has been hit with judgments totaling more than $2.5 million by the receiver in the Legisi Ponzi and fraud case. Gagnon also was charged separately by the SEC.
A web-based pitchman for the alleged Legisi Ponzi scheme has been hit with separate court judgments of $1.69 million and $810,000. Meanwhile, the court-appointed receiver in the Legisi case has hired local counsel in Oregon to pursue the judgments against Matthew J. Gagnon and Mazu Publishing Inc.
Legisi was alleged by the SEC in 2008 to have operated an international Ponzi and fraud scheme that gathered about $72 million from more than 3,000 investors. The scam was promoted on TalkGold, MoneyMakerGroup and other websites, including Gagnon’s Mazu.com.
MoneyMakerGroup’s name is referenced in federal court filings in the Legisi case — and records show that shills on TalkGold and MoneyMakerGroup sought to sanitize the scheme even as the U.S. Secret Service and the Michigan Office of Financial and Insurance Regulation were using undercover agents to gather evidence about the fraud.
The judgments against Gagnon and Mazu illustrate the legal and financial nightmares to which forums such as TalkGold and MoneyMakerGroup contribute. Meanwhile, the fact that Legisi was promoted at the forums even as it was under investigation exposes a myth advanced on such forums that investors would know in advance that a government probe of an “opportunity” was under way.
In this evidence exhibit given to a federal judge prior to the Legisi asset freeze, a Legisi prospect writes the name "Money Maker Group.com" in longhand. The prospect also wrote the name "Matt Gagnon" in longhand and a telephone number for Gagnon.
At the same time, the judgments against Gagnon destroy the myths that online promoters of securities schemes have no legal exposure and that offers positioned as “private” insulate promoters from prosecution.
Indeed, the judgments against Gagnon resulted from litigation brought by Robert D. Gordon, the court-appointed receiver in the Legisi case, in October 2009. The SEC sued Gagnon in May 2010, seven months after Gordon brought his actions.
Among the SEC’s allegations against Gagnon was that he continued to promote fraud schemes online — even after the Legisi scheme was exposed.
“Gagnon has been unrelenting in his efforts to raise money from the public through fraudulent, unregistered offerings,” the SEC said in May 2010. “He remains a danger to the investing public.”
Despite his sales pitches, “Gagnon has never been associated with a registered broker-dealer and has never been registered with the Commission as a broker or dealer or in any other capacity,” the SEC said.
After the Legisi HYIP fraud, Gagnon transitioned to pushing Forex frauds, the SEC said.
Gagnon was hit with an asset freeze after the SEC brought its action.
Records show that Legisi was among a number of “opportunities” that used E-Bullion, which was operated by James Fayed.
A jury in Los Angeles last week recommended the death penalty for Fayed for arranging the slaying of his estranged wife, Pamela Fayed.
Federal prosecutors said in December that AdSurfDaily, yet another alleged Ponzi scheme, had an E-Bullion tie. Records show that Gold Quest International, still another Ponzi scheme, also used E-Bullion.
BULLETIN: The jury that returned the guilty verdict against James Fayed for the murder of his estranged wife in July 2008 has recommended the death penalty.
James Fayed, 48, was found guilty May 19 in the murder-for-hire slaying of Pamela Fayed. On May 20, the penalty phase of the case began — and the jury returned the death recommendation today.
Pamela Fayed, 44, was slashed to death in a California parking garage on July 28, 2008.
James Fayed, the operator of E-Bullion and an emerging figure in the AdSurfDaily Ponzi case, paid $25,000 to have his wife killed and then plotted to kill the hit men, prosecutors said.
Pamela Fayed was a potential witness against her husband over financial matters. Court records show that E-Bullion had been linked to multiple Ponzi schemes.
Sentencing for James Fayed is scheduled for Sept. 22.
Three other men have been charged with Pamela Fayed’s killing.
Steven Vicente Simmons, 22, stabbed her, prosecutors said.
Jose Luis Moya, 50, a Fayed employee, was paid $25,000 to arrange the murder, and Gabriel Jay Marquez, 46, acted as lookout, prosecutors said.
E-Bullion is referenced in court or regulatory documents in the ASD Ponzi case, the Legisi Ponzi case, the Gold Quest International Ponzi case and the FEDI fraud scheme. A mysterious enterprise known as the “Alpha Project”also is referenced along with FEDI in filings in Canada.
This chilling document from the Ontario Securities Commission references both FEDI and the Alpha Project — and appears to make a veiled reference to Pamela Fayed.
From a 2003 filing by the Ontario Securities Commission. Click on link above to read entire document.
