Pitching your HYIP fraud scheme on YouTube and deceiving your audience en masse? You might need a good attorney: Two of the three wire-fraud counts against alleged DFRF Enterprises operator Daniel Fernandes Rojo Filho pertain to YouTube pitches.
One, allegedly uploaded on Oct. 20, 2014, is titled “Primeiro Evento DFRF.” The other, allegedly uploaded on May 9, 2015, is titled “DFRF Entrevista Stock Market Registration and Card With CEO Daniel Filho.” The third wire-fraud count involves “a wire transfer of $1.8 million from an Eastern Bank account ending in 7206, in the name of DFRF Enterprises, LLC, to a Citibank account ending in 4458, in the name of DFRF Enterprises, LLC,” according to an indictment returned Aug. 5.
The video below has the same title of second one referenced in the indictment, but may be a copy:
Some HYIP promoters may not know that making false claims on YouTube can result in criminal charges of wire fraud and potentially decades in prison. Filho is alleged to have been at the helm of a $23 million Ponzi- and pyramid scheme.
From the Filho indictment.
Other records show criminal investigators have been busy executing search warrants — no fewer than six of them, including ones that suggest there could be criminal actions coming against one or more others.
These warrants, according to docket entries, involve at least three mobile phones with numbers in the regions of Orlando and Tallahassee, Fla., and San Francisco. The Feds also have sought “GPS Location information” for a “Rolls Royce Ghost,” plus information on AOL and .com (dotcom) email addresses with DFRF links.
The SEC, among other agencies, has been warning for years about scams spreading on YouTube and other social media. Here is one such warning.
From an SEC exhibit in the Profits Paradise complaint.
URGENT >> BULLETIN >> MOVING: (Updated 9:33 p.m. ET U.S.A.) The SEC has charged two Indian nationals with running an HYIP scheme known as “Profits Paradise” that reached into the United States and offered “extraordinary” returns of up to 480 percent in 240 days, plus “compounding.”
As is typical in HYIP schemes, the “program” gained a head of steam on social media, the SEC charged. (A quick Google search shows that ProfitsParadise also had a presence on well-known Ponzi forums such as TalkGold and MoneyMakerGroup.)
ProfitsParadise operated between April 2013 and early February of 2014 and offered “guaranteed” payouts, the SEC alleged.
The scam “invited investors to deposit funds that supposedly would be pooled with money from other investors and traded on foreign exchanges as well as in stocks and commodities,” the SEC alleged.
Pitches on Facebook, YouTube and Twitter were “pervasive” and resulted in investors being exploited, the SEC charged.
The named respondents are Pankaj Srivastava of Mumbai and Nataraj Kavuri of Hyderabad. They also are accused of promoting the scam through Google Plus.
Srivastava “used the pseudonym “Paul Allen,” the SEC charged. Kavuri called himself “Nathan Jones.”
It was not immediately clear from the complaint whether the HYIP scammers intended to trade on the name of Microsoft co-founder Paul Allen. HYIP schemes, however, are infamous for trading on the names of prominent individuals.
“Srivastava and Kavuri used excessive secrecy in their effort to swindle investors through social media outreach and a website that attracted as many as 4,000 visitors per day,” said Stephen Cohen, associate director of the SEC’s Division of Enforcement. “Our investigation stopped the constant solicitations once the website disappeared, and successfully tracked down the identities of the perpetrators behind those fraudulent solicitations.”
Bogus names also were used to register websites, the SEC charged.
Srivastava caused the Profits Paradise website to be registered through GoDaddy in the name of “Jane Roe” of Seattle, the SEC charged.
“Jane Roe is a fictitious name, and there is no connection between Profits Paradise and the dwelling at 300 Boylston Ave E., in Seattle, Washington, or its residents,” the SEC charged. “The telephone number provided to GoDaddy is a toll-free number for a conference call center that is unrelated to Profits Paradise,” the SEC charged.
Meanwhile, a Gmail email address linked to the supposed Seattle street address was associated with IPs “located in India, not Seattle,” the SEC charged.
At the same time, the agency charged, “Kavuri disguised Profits Paradise’s physical location by providing the false ‘whois’ data, indicating that Profit Paradise’s operations were within the United States when they were not.”
From the SEC’s civil administrative complaint (italics added):
“The phony name and address served a dual purpose. In addition to concealing the fact that Srivastava and Kavuri were behind the Website, the domain name registration to Jane Roe at a Seattle address was meant to attract American investors. Additionally, to create the illusion that mainly American investors were visiting the Profits Paradise Website, Srivastava instructed the web designer to ensure that the ‘Alexa detail’ showed the Website’s ‘rank in the United States’ rather than its ‘rank in India.’ “Alexa” refers to a website (www.alexa.com) that ranks other websites, by country, based on the amount of Internet traffic directed to the website.”
Also typical of HYIP scams, payment processors such as Liberty Reserve, PerfectMoney and EgoPay were used. Dates cited in the SEC complaint suggest Profits Paradise opened its Liberty Reserve account just prior to federal prosecutors bringing criminal charges against Liberty Reserve in May 2013.
Srivastava, in 2005, worked for Quixtar.com in Minneapolis, but returned to India in 2007, the SEC said.
Read the SEC complaint, which alleges the Profits Paradise scheme also was “structured so that under certain conditions investors could never recover their principal investments.”
A man asserted to be a promoter of at least three fraud schemes, including TelexFree, has been hauled in front of TV cameras in Uganda. The report below is from NTV Uganda.
The embarrassing appearance of the suspect may raise the stakes for promoters of online fraud schemes and create even more disastrous PR for cross-border MLM schemes. TelexFree has been accused in the United States of operating a $1.2 billion pyramid- and Ponzi scheme. In court filings, the SEC repeatedly has pointed to TelexFree promos that appeared on YouTube.
Whether TelexFree, which now is batting civil and criminal fraud charges in the United States, would provide counsel for the alleged Ugandan affiliate was not immediately clear. Accused HYIP purveyors typically find themselves on their own, perhaps facing prosecution and the need to hire attorneys at their own expense.
Some HYIP promoters proceed from scheme to scheme to scheme. At least eight alleged TelexFree managers/executives and promoters face civil charges in the United States. Two of those — James Merrill and Carlos Wanzeler — face criminal charges. The various probes are ongoing.
The United States had labeled Wanzeler a fugitive.
Will it be the shot heard ’round the HYIP world — or will serial Ponzi-board and social-media fraudsters continue to pretend it is meaningless?
Matthew John Gagnon, a 45-year-old pitchmen for the $72 million Legisi HYIP Ponzi scheme and other online fraud schemes, is listed as an inmate at Federal Correctional Institution (FCI) in Sheridan, Ore.
In July, Gagnon was sentenced to 60 months in prison, ordered to pay $4.4 million in restitution and further ordered to serve three years’ supervised probation after his prison release. He was permitted to self-report to prison. That appears to have occurred yesterday.
Gagnon colleague and Legisi operator Gregory N. McKnight was sentenced to a prison term of more than 15 years. McKnight’s age is listed as 53. He was sentenced last month and was ordered taken into custody immediately. He is listed as an inmate at the FCI in Milan, Mich. McKnight was ordered to pay more than $48.9 million in restitution and further ordered to serve three years’ supervised probation after his prison release.
Legisi was promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. In 2007, Legisi became the subject of an undercover investigation by state regulators in Michigan and the U.S. Secret Service. Both criminal and civil charges followed.
In court filings on June 6, Legisi receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through e-Bullion.
e-Bullion is a now-defunct processor. One-time e-Bullion operator James Fayed is on California’s death row after being convicted of ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him.
AdSurfDaily, a $119 million Ponzi scheme also promoted on the Ponzi forums, also accepted money from e-Bullion, according to court filings.
Legisi’s Terms of Service read like an invitation to join an international financial conspiracy. Members had to affirm they were not associated with the SEC, the IRS, the FBI and the CIA — along with “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office.
EDITOR’S NOTE: As the PP Blog reported on Aug. 6, Legisi HYIP Ponzi-scheme operator Gregory N. McKnight was sentenced to 188 months in federal prison. McKnight is 53. He was ordered taken into custody immediately after sentencing last week and is listed as “in transit” to an unspecified detention facility. Legisi was promoted in part on Ponzi forums such as TalkGold and MoneyMakerGroup.
The SEC today released the statement reproduced below . . .
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22776 / August 13, 2013
Securities and Exchange Commission v. Gregory N. McKnight, et al., Civil Action No. 08-cv-11887 (E.D. Mich.)
15 Year Prison Term for Gregory Mc[K]night, Orchestrator of $72 Million Ponzi Scheme
The Securities and Exchange Commission announced that on August 6, 2013, the Honorable Mark A. Goldsmith of the United States District Court for the Eastern District of Michigan sentenced Gregory N. McKnight to 188 months (15 years and 8 months) in prison, followed by supervised release of 3 years, and ordered McKnight to pay $48,969,560 in restitution to his victims. McKnight, 53, of Swartz Creek, Michigan, had previously pled guilty to one count of wire fraud for his role in orchestrating a $72 million Ponzi scheme involving at least 3,000 investors. The U.S. Attorney’s Office for the Eastern District of Michigan filed criminal charges against McKnight on February 14, 2012. McKnight was taken into custody immediately after the sentencing hearing.
The criminal charges arose out of the same facts that were the subject of an emergency action that the Commission filed against McKnight and others on May 5, 2008. On that same day, the Court issued orders freezing McKnight’s assets and those of several companies he controlled, and appointed a Receiver. The Commission’s complaint alleged that, from December 2005 through November 2007, McKnight, through his company Legisi Holdings, conducted a fraudulent, unregistered offering of securities in which he raised approximately $72 million from more than 3,000 investors in all 50 states and several foreign countries. According to the Commission’s complaint, McKnight represented that he would invest the offering proceeds in various investment vehicles and pay interest of as much as 15 percent per month from the resulting profits. The complaint charged that McKnight invested less than half of the offering proceeds and that these investments resulted in millions of dollars in losses. The Commission’s complaint further charged that McKnight used investor funds to make Ponzi payments to investors and for his own use. The Commission’s complaint charged McKnight with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.
On July 6, 2011, the Court entered a final judgment against McKnight in the Commission’s action, and ordered McKnight to pay disgorgement of ill-gotten gains, prejudgment interest, and civil penalties totaling approximately $6.5 million. The court also issued orders permanently enjoining McKnight from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. On July 9, 2013, McKnight’s associate Matthew J. Gagnon was sentenced to five years in prison for his role in promoting Legisi.
For additional information, see Litigation Release No. 20563 (May 8, 2008), No. 20588 (May 20, 2008), No. 22269 (Feb. 24, 2012) and No. 22749 (July 11, 2013).
Depictions of Jesus Christ were used in the Profitable Sunrise and the equally bizarre “Cash Tanker” HYIP schemes — and now are being used in promos for TelexFree, an MLM “opportunity” under investigation in Brazil amid pyramid-scheme and securities concerns.
It looks as though the statue of Christ the Redeemer in Rio de Janeiro has been used in promos for both TelexFree and Profitable Sunrise, which the U.S. Securities and Exchange Commission said in April 2013 was a fraud scheme operating in part through a “mail drop” in England.
1.
From a promo for TelexFree playing on YouTube. Another part of the video shows money being tossed by one TelexFree pitchman and raining down on another.
TelexFree affiliates have shared a photo of President James M. Merrill posing in front of an office building in Massachusetts. The photo, however, is not proof of TelexFree’s legitimacy and raises questions about whether the company was trying to plant the seed it had a massive physical presence in the United States.
UPDATED 10:22 P.M. EDT (U.S.A.) The purported TelexFree “opportunity” is under investigation by multiple agencies in Brazil, its purported base of operations despite competing claims the company is headquartered in the United States. The notes below concern TelexFree’s U.S. presence and positioning. They are presented in no particular order of importance. TelexFree says it is in the communications business.
TelexFree has a footprint in Massachusetts at 225 Cedar Hill Street, Suite 200, Marlborough. It is a shared office facility. Ads for the building suggest a conference room with video capabilities can be rented by the hour. One suggested use of the room is for attorneys to rent it to conduct depositions. Some attorneys practicing in the state and federal courts use the building as a business address.
Other lessees include the Massachusetts Library System (MLS), which describes itself as “state-supported collaborative” to foster “cooperation, communication, innovation, and sharing among member libraries of all types.” MLS uses Suite 229, according to its website.
TelexFree operates as an MLM. One of the problems in the MLM sphere is that purported “opportunities” and their promoters have been known to dupe participants by leasing virtual office space to create the illusion of scale or of a massive physical presence. Such was the case with a Florida entity associated with AdViewGlobal, an AdSurfDaily knockoff scam that purported to pay 1 percent a day. As the PP Blog reported on May 31, 2009 (italics added):
Research suggests a company with which AVG has a close association is headquartered in a modern office building in the United States. The building was constructed in 2003. Office functions and conferencing can be rented by the hour. Two large airports are nearby, and a major Interstate highway is situated one mile from the building.
It is a virtual certainty that AVG, which purported to operate from Uruguay, actually was operating from the U.S. states of Florida and Arizona and using a series of business entities to launder the proceeds of its fraud scheme. AVG disappeared mysteriously in June 2009.
On Dec. 14, 2011, the PP Blog reported that Text Cash Network (TCN) — another purported MLM “opportunity” — was using a virtual office in Boca Raton, Fla., in a bid to create the illusion of scale. TCN promoters published photos of a glistening building with TCN’s name affixed near the crown of the building. The Boca Raton Police Department, however, said the firm’s name did not appear on the building.
Although the PP Blog is unaware of any bids to Photoshop TelexFree’s name on a large office building, affiliates have shared photos of TelexFree President James M. Merrill posing in front of the large Massachusetts building. So there can be no confusion, TelexFree does not own the building. TelexFree affiliates/prospects should not rely on the photo of the building as proof of the legitimacy of the company. The photo itself raises questions about whether Merrill and TelexFree were trying to create the illusion of scale. Even though the answer could be no, the negative inferences that can be drawn from the photo contribute to MLM’s reputation for serial disingenuousness.
TelexFree also has a presence in the state of Nevada. Records show that an entity known as TelexFree LLC is listed as “Domestic Limited-Liability Company” situated in Las Vegas. Listed managers include Carlos N. Wanzeler, Carlos Costa and James M. Merrill. TelexFree operates in Massachusetts with an “Inc.” version of the name — i.e., TelexFree Inc., having undergone a name change in February 2012 from Common Cents Communications Inc. In Massachusetts, James Merrill is listed as the registered agent, president, secretary and director of the firm, with Carlos Wanzeler listed as treasuer and director. Unlike the Nevada “LLC” version of TelexFree, Carlos Costa appears not to hold a title in the Massachusetts “Inc.” entity.
The footprints in the United States are important in the sense that they establish a business presence in the country should TelexFree become the subject of U.S. investigations akin to what is happening now in Brazil, where pyramid-scheme and securities concerns have been raised. Along those lines, records of the Financial Industry Regulatory Authority (FINRA) appear not to list TelexFree — despite the fact affiliates in the United States have claimed members acquire “stock” from TelexFree that can be sold through TelexFree and that affiliates purchase “contracts” from TelexFree.
One YouTube video viewed by the PP Blog shows a TelexFree affiliate purportedly cashing out his stock through his TelexFree back office. The affiliate appears to be speaking in U.S. English, citing the date as March 19, 2013. In the video, the affiliate describes his pitch as a “quick withdrawal video” — i.e., proof that TelexFree is legitimate because it pays.
“OK,” the narrator intones. “I’m going to sell all my stock.” The video shows a tab labeled “Stock” and a subtab styled “Repurchase” in the back office.
The narrator then clicks on a series of graphics styled “REPURCHASE” and tells the audience that he wants to show it all the “stock that I have that converts to actual money.” He then proceeds to a “Withdraw” subtab under a “Statement” tab. These actions eventually expose a screen that shows an “AVAILABLE BALANCE” of $927.61 for withdrawal.
For a brief moment, the acronym “BT&T” flashes on the screen, suggesting the TelexFree affiliate is seeking to have his earnings from stock sales relayed through North Carolina-based Branch Banking & Trust. The interesting thing about that is that the alleged $600 million Zeek Rewards Ponzi- and pyramid scheme claimed it had a banking relationship with BB&T.
In May 2012 — on Memorial Day — Zeek mysteriously announced it was ending its relationship with BB&T. It was unclear from the TelexFree affiliate’s video whether he was a BB&T customer or whether TelexFree was. What is clear is that the SEC moved against Zeek in August 2012, accusing the company of securities fraud and selling unregistered securities as investment contracts. The U.S. Secret Service said it also was investigating Zeek.
In this TelexFree promo running on YouTube, the acronym BB&T flashes on the screen in a TelexFree affiliate’s back office.
Among the problems with HYIP schemes is that banks can become conduits through which illicit proceeds are routed or stockpiled. Zeek used at least 15 domestic and foreign financial institutions to pull off its fraud, according to court filings.
Because HYIPs offer commissions to members who recruit other members along with “investment returns,” legitimate financial institutions can come into possession of money tainted by fraud.
Like Zeek (and AdViewGlobal and AdSurfDaily), TelexFree has a presence on well-known forums listed in U.S. court records as places from which Ponzi schemes are promoted.
TelexFree shares some of the characteristics of fraud schemes such as Zeek, AdViewGlobal, AdSurfDaily, Profitable Sunrise and others. ASD, AVG and Zeek, for instance, had a purported “advertising” element. So does TelexFree.
TelexFree affiliates claim they get paid for posting ads online for the purported “opportunity.” Zeek affiliates made the same claim.
It is highly likely that Zeek and TelexFree have promoters in common, a situation that potentially is problematic, given that some affiliates may have used money from Zeek to join TelexFree — and the court-appointed receiver in the Zeek case is pursuing clawbacks against “winners.” In short, some of the winnings could have been spent in TelexFree.
An online promo for Zeek in July 2012 claimed North Carolina-based Zeek had 100,000 affiliates in Brazil alone. TelexFree affiliates are claiming that their “opportunity” now has hundreds of thousands of affiliates, which suggests TelexFree has achieved Zeek-like scale. Whether it enjoys Zeek-like, money-pulling power on the order of $600 million is unclear.
What is clear is that TelexFree, like Zeek before it, is spreading in part through the posting of promos on classified-ad or similar sites across the United States. Profitable Sunrise, another HYIP, spread in similar fashion. Dozens of U.S. states issued Investor Alerts or cease-and-desist orders against Profitable Sunrise, which the SEC accused of fraud in April 2013.
To gain an early sense of the scale TelexFree may be achieving in the United States, the PP Blog typed into Google the term “TelexFree” and the names of several U.S. states known to have taken actions against Profitable Sunrise. This revealed URLs such as “TelexFreeOhio” and “telexfreetexas.blogspot.com,” for two examples. It also showcased classified-ad (or similar) sites on which TelexFree promos are running or have run.
Finally, the state of Massachussets was the venue from which the prosecutions of the infamous World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL) pyramid-schemes were brought in federal court. Those fraud schemes were targeted at Cambodian-Americans. The state does not take kindly to affinity fraud. In March, Massachusetts securities regulators charged a man in an alleged fraud bid against the Kenyan community.
Among the claims of the MLM hucksters pitching WMDS and 1UOL was that members could purchase an income. Some TelexFree affiliates are making similar claims.
The WMDS and 1UOL frauds became infamous as the source of death threats, including one against a federal prosecutor.
Media outlets in Brazil have reported that death threats have surfaced over the TelexFree scheme.
For the reasons cited above and more, it would be surprising if things end well in the United States for TelexFree, which has Zeek and ASD-like signatures of MLM disasters waiting to happen.
UPDATED 11:28 P.M. EDT (U.S.A.) Scammers have used the names of government agencies and famous businesses in bids to dupe the public. Now, the name of a well-known MLM law firm appears to have been used for the same purpose.
Attorney Kevin Thompson published a Blog post today that warns of a bogus Banners Broker/Profit Clicking “Claim Form” on the Web. Thompson is with Thompson Burton PLLC in Tennessee.
“DO NOT FILL OUT THIS FORM,” Thompson warned in the post. “It’s fraudulent. We did not create this form, or anything like it. We are not representing Banners Brokers or Profit Clicking participants.”
And, Thompson noted, “The form is requiring highly sensitive information, such as your usernames and passwords for Payza and Solid Trust Pay accounts. It’s also asking for credit card information. If you filled out the form, we strongly suggest you change your passwords and cancel your credit cards immediately.”
Such events have been associated with phishing schemes and identity-theft schemes.
Banners Broker is a bizarre “program” that, like many HYIPs, purports to be in the “advertising” business. Promoters have claimed that sending money to Banners Broker results in a doubling of the cash.
ProfitClicking is a scam that rose up to replace the JSSTripler/JustBeenPaid scam purportedly operated by Frederick Mann. Mann, a former pitchman for the AdSurfDaily Ponzi scheme, may have links to the “sovereign citizens movement.” “Sovereign citizens” may express an irrational belief that laws do not apply to them.
Among other things, ProfitClicking became known — like JSS/JBP before it — for publishing Terms that read like an invitation to join an international financial conspiracy. Here is Item 6 from the ProfitClicking Terms, as published on Sept. 3, 2012 (italics added):
6. I affirm that I am not an employee or official of any government agency, nor am I acting on behalf of or collecting information for or on behalf of any government agency.
Regulators in Italy and the Philippines have issued warnings about JSS/JBP or ProfitClicking, both of which featured Terms similar to those of Legisi, a $72 million HYIP fraud scheme broken up by the SEC and the U.S. Secret Service in May 2008, about three months before the AdSurfDaily Ponzi scheme ($119 million) was exposed.
The PP Blog has been subjected to various bids to chill its reporting on the JSS/JPB/ProfitClicking scams, including one from an individual who claimed he’d defend Mann “so help me God.”
Meanwhile, the PP Blog has received bizarre and menacing spam apparently in support of Banners Broker. (Like JSS/JBP/ProfitClicking, AdSurfDaily, Legisi and Zeek Rewards, Banners Broker has a presence on well-known Ponzi-scheme forums such as TalkGold and MoneyMakerGroup.)
WARNING: The next paragraph includes quoted material from one of the Jan. 18, 2013, spams, and the PP Blog is reproducing it to illustrate the bizarre and often menacing nature of the HYIP sphere. Indeed, the apparent Banner’s Broker supporter wrote (italics added):
” . . . I am Big Bob’s cock meat sandwich. Your mom ate me and made me do press ups until I threw up . . . I am gonna report you. When you make false accusations, you can get done. Maybe you will be seen in court soon . . .”
In August 2012, the SEC described Zeek Rewards as a $600 million Ponzi- and pyramid scheme. A number of reload scams have surfaced in its wake. At least one appears to have been a bid to dupe people into sending money to an entity that was posing as a U.S. government agency while claiming to be a recovery vessel for Zeek members who lost money.
Thompson is encouraging people who may have information about the purported Banners Broker/Profit Clicking “Claim Form” to contact him here.
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.
Andrew Neil yesterday made the universal “[batspit] crazy” gesture after trying to interview Alex Jones of InfoWars.HYIP apologists dating back (at least) to the AdSurfDaily Ponzi scheme in 2008 ($119 million) have bizarrely sought to defend their favorite scams by steering discussions off the track. Why talk about the recidivist securities felon who presided over ASD (Andy Bowdoin), for instance, when the “real menace” is the Bilderberg Group?
And, hey, since the United States is a participatory Democracy, why not further cloud the issues by launching petition drives designed to derail the prosecutions of major Ponzi schemes (such as AdSurfDaily and Zeek Rewards) and even filing bogus liens for billions of dollars against judges, prosecutors and investigators?
If you encounter an HYIP Ponzi scheme these days that perhaps purports to pay interest of 2 percent a day or more, it’s a safe bet you’ll encounter one conspiracy theorist after another on well-known fraud-scheme forums such as TalkGold and MoneyMakerGroup — especially if the evilGUBment brings a criminal or civil action against the purported “opportunity.”
It was against this delusional backdrop that conspiracy theorist Alex Jones appeared on the BBC’s “Sunday Politics” program hosted by Andrew Neil. The subject was the annual meeting of the Bilderberg Group, sometimes known simply as the Bilderbergers.
One of the best moments of the program occurred near the end of the Jones segment, when Neil made the universal “[batspit] crazy” gesture after Jones shared a FEMA concentration-camp conspiracy theory and screamed that “you will not stop freedom! You will not stop the republic! Humanity is awakening!”
Neil declared, “We have an idiot on the program today.”
Among the bizarre claims of the AdSurfDaily apologists was that all commerce is lawful as long as the parties to a “contract” agree that it is lawful, a position that would legalize Ponzi schemes — and slavery and human trafficking and narcotics trafficking, for that matter. The U.S. Secret Service took down ASD, and promptly was called “Satan” by ASD operator Andy Bowdoin, now serving a 78-month prison sentence for wire fraud for his 1-percent-a-day scheme.
The SEC took down Zeek Rewards in August 2012, amid allegations it was conducting a $600 million, international Ponzi- and pyramid scheme by duping people into believing they were receiving a legitimate return that averaged about 1.5 percent a day. A federal judge appointed a receiver, who quickly was described as a felon by a Zeek litigant. (The Zeek receiver is a former federal prosecutor who once successfully prosecuted a Hezbollah terrorist cell operating in the United States.)
Back in 2008 and 2009, some of the ASD apologists accused a federal judge appointed by President George W. Bush of committing dozens of felonies and conspiring with a chief judge to deny ASD members justice.
Why HYIP scammers seem to embrace the conspiracy theories of Jones long has been left to the imagination. One thing that is clear is that ASD and Zeek combined allegedly gathered $719 million. Some recent HYIP scams such as Legisi ($72 million) and JSSTripler/JustBeenPaid (unknown take) have required participants to avow they were not with the “government.” Legisi specifically named the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.
Late last month, the United States — working with other countries — took down a major payment processor for fraud schemes. Its name was “Liberty Reserve.”
BULLETIN: On the heels of the apparent shutdown of Costa Rica-based Liberty Reserve as part of an international money-laundering investigation, “PerfectMoney” says it is banning users from the United States. Perfect Money purportedly operates from Panama. (More below.)
In an announcement dated today on its website, Perfect Money says that “due to changes in our policy we forbid new registrations from individuals or companies based in the United States of America. This includes US citizens residing overseas. If you fall under the above mentioned category, please do not register an account with us.”
How PerfectMoney intends to treat existing U.S. users was not immediately clear, and the firm did not explain why it suddenly had changed its policy. The company is favored by criminals and HYIP scammers and has a history of advertising on behalf of purported Forex “opportunities” that have been the subjects of sweeping court actions in the United States.
In January 2013, the Superintendency of the Securities Market of the Republic of Panama (SMV) warned that Perfect Money “has not been granted any kind of license by the SMV, nor has been authorized to carry on activities of intermediation, administration, or advisory in securities, financial instruments or forex, in or from the Republic of Panama, within the scope of the Securities Law.
“PERFECT MONEY FINANCE CORP. does not have [its] own offices in Panama, the office and its P.O. Box claim in its website [deleted by PP Blog], belong to the companies Azuero Business Center, Inc. and Panama Net Buy, which provides online shopping services,” SMV said.
In 2011, the PP Blog reported that an individual referenced as a Perfect Money contact person is referenced in federal court filings that tie money from the alleged EMG/Finanzas Forex fraud scheme to an international narcotics probe that led to the seizure of at least 59 bank accounts in the United States and the companion seizure of 294 bars of gold and at least seven luxury vehicles.
PerfectMoney’s name also is referenced in case filings from the SEC’s 2010 fraud complaint against Imperia Invest IBC, a scam purportedly operating offshore. Deaf people lost millions of dollars to Imperia, the SEC said.
A quick check today by the PPBlog showed dozens of HYIP sites that claim to accept PerfectMoney. Many of the same sites also claimed to accept LibertyReserve. How the “programs” — all of which advertise preposterous returns — will contend with the absence of LibertyReserve and the new restrictions imposed by PerfectMoney was not immediately clear.
Liberty Reserve operator Arthur Budovsky Belanchuk is reported to be under arrest in Spain as part of a probe by authorities in Costa Rica and the United States.
Based on U.S. court files and certain extrapolations, murky HYIPs may be raking in billions of dollars. In August 2012, the SEC alleged that the Zeek Rewards “program” gathered at least $600 million. Legisi, another HYIP scam, gathered at least $72 million before its 2008 collapse. Pathway To Prosperity appears to have churned at least $70 million prior to its 2010 collapse. The 2008 AdSurfDaily scheme gathered at least $119 million, according to federal prosecutors.
Zeek and ASD — at least — did business with AlertPay and SolidTrustPay, processors based in Canada.
In April 2013, the SEC alleged that a murky “program” known as Profitable Sunrise may have gathered tens of millions of dollars. Profitable Sunrise is the subject of regulatory actions or Investor Alerts in at least five countries: the United States, Canada, the United Kingdom, Italy and New Zealand.
Profitable Sunrise pitchmen may not even have known for whom they were working to glean commissions, the SEC alleged.
There may be hundreds or perhaps thousands of HYIP scams operating online at any given point in time. Some of them — like Profitable Sunrise — even advertise they accept bank wires. HYIP scams often have promoters in common, a situation that sets the stage for banks to come into possession of funds tainted by a revolving door of fraud schemes.
In recent weeks, the PP Blog has reported on a number of reload scams aimed at victims of the Profitable Sunrise scheme. Virtually all of the schemes accepted PerfectMoney, LibertyReserve or both. Some also advertised they accepted SolidTrustPay and EgoPay.
These schemes included BiwakoBank Limited, SuperWithdraw, Whos12, Fairy Funds, Roxili, OptiEarn, AVVGlobal, ProForexUnion, MajestiCrown and TelexFree.
![Andrew Neil yesterday made the universal "[batspit] crazy" gesture after trying to interview Alex Jones of InfoWars.](https://patrickpretty.com/wp-content/uploads/2013/06/andrewneilbbc.jpg)
