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Tag: Jerry Brown

  • Now, A ‘B-Movie’ Ponzi Scheme: Producer Mahmoud Karkehabadi Charged With 89 Felonies, Faces $11 Million Bail, California AG Says

    EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme — as opposed to shrimp — here’s one for your list.

    UPDATED AT 12:33 P.M. June 6, 2013. See Comments thread below. Mahmoud Karkehabadi has been sentenced to 27 years in state prison . . .

    A producer of “B-movies” such as “Confessions of a Pit Fighter” scammed investors in a $9 million Ponzi scheme by accepting “movie production loans” and promising returns of up to 35 percent no matter how the films performed, California Attorney General Jerry Brown said.

    Mahmoud Karkehabadi, also known as Mike Karkeh, was charged with 89 felonies, including grand theft and securities fraud. Two alleged accomplices who helped bring money to Karkehabadi’s film company by selling unregistered securities also were charged.

    Karkehabadi, 53, listed an address in the Orange County, Calif., community of Laguna Niguel.

    Before producing a series of four movie flops, Karkehabadi was charged with ripping off customers in a credit-card venture known as First National Credit, according to records. In the 2001 credit-card scheme, customers were told they’d receive a “gold card” with a $15,000 limit and encouraged to pay up to $43 for “rush processing and delivery.”

    The card proved to be a card that could be used only with a “catalog” business. Authorities secured a $5 million judgment in the case, and Karkehabadi declared bankruptcy, according to records.

    By 2005, he was making B-movies, and never told investors about the huge judgment from the credit-card case or the bankruptcy, Brown’s office said.

    “This con artist sold securities under the guise of a loan to fool investors and try to avoid following the rules,” Brown said. “He ran a cold and calculated scam, making promises he never intended to keep and using the funds of new victims to pay off the earlier ones.”

    Karkehabadi’s bail was set at $11 million.

    His alleged accomplices in the movie scheme were identified as Timothy Cho, also known as Hin-Kong Cho, 54, of Newport Beach, Calif., and Deanna Salazar, 53, of Yucca Valley, Calif. Salazar has agreed to surrender, but Cho “remains at large,” Brown’s office said.

    At least 150 investors were affected by the scheme. Records show that Karkehabadi’s movie company — Alliance Group Entertainment — gathered more than $11 million. The movies generated only $535,000 in revenue, Brown’s office said.

    “Karkehabadi and his agents told investors they would get their money back within a year, regardless of a project’s success, with returns of 18 to 35 percent ,” Brown’s office said. “When the year was up, Karkehabadi convinced investors to roll their ‘loans’ over into the latest movie project or agree to extensions on the date for repayment.”

    Among the movie flops was a film titled “Hotel California,” Brown’s office said.

  • Two-Thirds Of Poll Respondents Rate Data Network Affiliates’ Pitch A ‘Complete Failure’; Nearly 90 Percent Rate It ‘Poor’ Or Worse

    UPDATED 11:53 A.M. EDT (U.S.A.) The sales pitch of a multilevel-marketing (MLM) company that plucks the heartstrings of members by suggesting it can help law-enforcement and the AMBER Alert program locate abducted children has been rated  a “Complete Failure” by 66 percent of respondents in a PP Blog Poll.

    Meanwhile, 88 percent of respondents rated Data Network Affiliates’ message “Poor” or worse.  Only 12 percent rated the sales pitch either “Good,” “Very good” or “Exceptionally professional.”

    Separately, some DNA members said the firm, which had been barraging them with sales pitches, has been less communicative in recent days. The company has been mysterious from the start, registering its domain name behind a proxy in the Cayman Islands while incongruously suggesting its services could be beneficial to the U.S. government.

    DNA initially explained that its domain was registered privately in the Caymans to prevent management from having to “put up with 100 stupid calls a day.”

    Customer service has been conducted via a free Gmail address for months, although the firm in recent weeks has published a street address in Boca Raton, Fla.

    Fifty votes were cast in the PP Blog Poll, which was unscientific. Despite the low turnout, the poll results suggest that respondents were deeply turned off by the DNA sales pitch — to the point of revulsion. Regardless, 8 percent of respondents rated the pitch an “A,” meaning they viewed at as “Exceptionally professional.”

    Some PP Blog posters have speculated that voters might have rated the pitch “Exceptionally professional” because it deliberately was crafted by MLM hucksters to recruit members into an insidious lead-capture system through which they’d be pitched relentlessly on products other than DNA’s purported database product.

    Under this theory, the pitch was deemed “Exceptionally professional”  because it achieved the dubious purpose of lining up people by the tens of thousands to be fleeced.

    DNA, whose members have claimed Donald Trump and Oprah Winfrey endorse the company even though there is not a shed of evidence that the claim is true, purportedly has attracted more than 130,000 members. It is possible that some or all of the 8 percent of respondents who rated the sales pitch “Exceptionally professional” believe the pitch has merit beyond its ability to suck people into an insidious system.

    The database product purportedly is being built by members who appear in the parking lots of doctors’ offices, churches and giant retailers such as Walmart and Target to write down license-plate numbers or take photos with cell phones or video cameras of license plates for entry in the database.

    One of DNA’s leading pitchmen on conference calls has described the parking lots of medical facilities, places of worship and retail stores as wonderful places to gather data. He further suggested that members should behave in an inconspicuous fashion when gathering the data.

    DNA delayed its launch date twice in February. After its “free” data-collection program purportedly got under way in March, the company quickly began pitching other products to members, including a $127 upgrade that purportedly would improve the ability of “free” members to enter license-plate data into the system.

    The company said its “Pro” data-entry module was better than its “free” module. Prior to the introduction of the “Pro” module, “free” members did not know they would be receiving a data-entry tool the company itself described as a clunker.

    News about the “Pro” module began to spread March 10, only days after DNA told members who listened to an “Oscar” night conference call that the company’s “free” affiliates would “receive the same kind of commitment and respect from our DNA management team” as paid members received.

    DNA said its “Pro” module was part of a Business Benefits Package (BBP).

    “Upon close inspection of the B.B.P. you will find a minimum of 10 times the cost of such package to the end user in value savings and benefits,” DNA said in an email to members. “The two that stand out the most is (sic) the FREE 1000 REWARD DOLLARS with FREE REFILLS and the $402 Travel Agent Value Package for only $49.”

    In recent weeks, DNA mysteriously referred to its BBP package as the “BBB” package. Precisely why DNA would change the acronym of its package to the acronym associated with the Better Business Bureau was unclear.

    “6 OF THE 10 WILL BUY THE B.B.B. AND GET 1 OTHER TO BUY THE B.B.B. WITHIN 24 HOURS,” DNA declared earlier his month.

    Earlier, in April, the company announced that it was in the cell-phone business. The announcement came out of nowhere, and DNA boldly declared, “GAME OVER — WE WIN.”

    Without doing any checking, members raced to YouTube and Craigslist to announce that DNA was offering an unlimited cell-phone talk and text plan for $10 a month and, for $19.95 a month, was offering unlimited talk, unlimited text and 20 MB of data.

    DNA, which had no experience in the cell-phone business and yet declared it had slayed all competitors, later announced it had not researched pricing prior to announcing the plan.

    “[W]e found that there are no such service plans to be found by any carrier, anywhere on the planet, by any company in the industry,” DNA said in an email to members that un-announced the announcement weeks earlier of the $10 unlimited plan.

    DNA insisted it would have a new plan by May, but May passed without such a plan. The company then said it would have a plan in June. No such plan has emerged.

    A video on YouTube implied that DNA had a branding deal with Apple’s iPhone and that the phone would be called the “DNA iPhone.” The video asserted that DNA is the “ONLY Network Marketing Company With Branded iPhones.”

    Meanwhile, a separate YouTube video implied that DNA not only had an iPhone, but that the iPhone came with a “No Term Contract” for $10 a month.

    “You are Not in Kansas Anymore!” the second video screamed. “This is Global Baby!”

    Apple, which is known to defend its brand and intellectual property vigorously, did not respond to the PP Blog’s request for comment on the claims.

    DNA also has bragged about something called “RETIRE BY CHRISTMAS 2010 with DNA
    in “3″ to “6″ steps . . .” and various guarantees, including a purported “$100,000 DNA Minimum Income Guarantee” and a purported “$1,000,000 DNA Minimum Income Guarantee.”

    It is possible that the purported “income guarantee” exceeds the revenue DNA has posted to date. Like Narc That Car (Crowd Sourcing International), DNA’s purported Dallas-based competitor, the company publishes neither revenue figures nor the names of purported clients of the database product.

    The BBB has raised pyramid concerns about Narc/CSI.

    DNA also has urged members to imagine themselves driving 10,000 miles a year in pursuit of their DNA businesses to qualify for an IRS tax write-off of $5,000.

    In 2009, an MLM company known as YourTravelBiz (YTB) was enjoined in California from making tax claims under the terms of settlement of a pyramid-scheme lawsuit by Attorney General Jerry Brown that ordered the firm to pay $1 million.

    DNA has acknowledged that Phil Piccolo is part of its organization, and web records suggest Piccolo was actively involved in YTB. Separately, Narc That Car President Jacques Johnson was a director in YTB, according to court filings.

  • FOX 5 ATLANTA: Narc That Car President, Director Involved In Previous Pyramid Schemes; Separately, Math Expert Says License-Plate Location System ‘Like Finding A Needle In A Haystack’

    A Georgia State University mathematics professor consulted by Fox News 5 in Atlanta said Narc's purported data-driven location system was like finding a needle in a haystack.

    The Fox 5 News “I-Team” in Atlanta has returned to the subjects of pyramid schemes and Narc That Car, also known as Crowd Sourcing International. (See video and link below.)

    During tonight’s principal newscast, veteran investigative reporter Dana Fowle reported that Narc President Jacques Johnson was a manager in YourTravelBiz (YTB), which was sued in 2008 by California Attorney General Jerry Brown for operating a pyramid scheme.

    Meanwhile, Fox 5  reported that Narc Director Norman Pearah, who owns the building in which the firm’s offices are located, was charged in Louisiana in the 1980s with running an “endless chain” pyramid scheme.

    Records reviewed by the PP Blog show that the California case against YTB was settled with a stipulated judgment that ordered the company to pay $1 million. Records also show that YTB sought an injunction in federal court against Johnson amid allegations he violated a “director’s agreement,” solicited members to move from YTB while still a director and violated a “non-compete” agreement after leaving YTB.

    Johnson “hung up” on Fowle when she contacted him for comment, the station reported.

    Separately, the station reported that it consulted with Yichuan Zhao, a mathematics professor at Georgia State University, about Narc’s license-plate data claims.

    The professor, who appeared on camera with a chart and graphs, observed that the math of Narc was “like finding a needle in a haystack.”

    Narc has said its system could help recover abducted children. Although promoters claimed the firm was affiliated with the AMBER Alert program, the U.S. Department of Justice denied in February that the program had any affiliation with Narc. So did the National Center for Missing & Exploited Children, which administers the secondary AMBER Alert program for the Justice Department.

    Fox 5 also aired a Narc report during last night’s newscast. Last night’s report revisited the station’s previous reports on Narc, which featured the use of a hidden camera.

    See tonight’s Fox 5 report below:

    Visit the Fox 5 website.

  • Fox 11 In Los Angeles Says California Attorney General Seeking Information On Narc That Car; Will Data Network Affiliates Get Drawn Into Inquiry?

    Fox News 11 in Los Angeles visited YouTube to collect information for an investigative report on NarcThatCar, also known as Crowd Sourcing International.

    A company that recruits members to record the license-plate numbers of cars for entry in a database now has drawn the attention of the attorney general of California, Fox News 11 in Los Angeles is reporting.

    Although it previously was known that Texas Attorney General Greg Abbott was working with the district attorney of Henderson County, Texas, in a Narc inquiry, Fox News 11 became the first outlet to report that California Attorney General Jerry Brown also is seeking information on the firm.

    Narc That Car, which recently changed its name to Crowd Sourcing International, was the subject of an investigative report by Fox 5 in Atlanta last week. The Atlanta station interviewed Georgia Attorney General Thurbert E. Baker, who raised questions about the manner in which Narc purportedly was verifying license-plate data through the state’s Department of Driver Services. The station shared video with the Fox station in Los Angeles, which has video from its own investigation into Dallas-based Narc.

    As part of its Narc report, Fox News 11 (Los Angeles) aired video from a YouTube sales promo by former Narc promoter Jeff Long, who jumped ship earlier this year and threw in his lot with Data Network Affiliates (DNA).

    It is possible that DNA could become part of any government probe that evolves in California, Texas or Georgia because the firms are known to have promoters in common and because of claims made by promoters.

    DNA, which uses a Cayman Islands address in its domain registration and a free gmail address from Google to conduct customer service, purportedly is a competitor of Narc. Long started out by pitching Narc, instructing prospects in a YouTube video to record plate numbers on their cell-phone cameras as they strolled through Walmart parking lots, according to his YouTube video.

    But Long then switched to promoting DNA, according to the YouTube site.

    “This video talks about NARC That Car… IF YOU ARE PLANNING ON MARKETING THIS BUSINESS ON THE INTERNET DO NOT JOIN!!!!! NarcThatCar CANCELED AND DISABLED My distributorship because I put this video on YouTube…I’m now the #1 leader and sponsor in their BIGGEST COMPETITOR’S BUSINESS…DataNetworkAffiliates. Again…don’t join NarcThatCar if you plan on marketing on the internet!!!!!! JOIN DNA WITH ME FOR 100% FREE!” a screaming message on the website says.

    Long, who reportedly went on to become DNA’s largest affiliate, participated in a DNA conference call to tout Narc’s supposed competitor. DNA, which gained a reputation for authoring bizarre communications, suddenly then announced it had gotten into the cell-phone business and was offering an unlimited talk and text package for $10 a month.

    Even Dean Blechman, DNA’s former CEO, described some of the communications authored by the company as “bizarre.” Blechman quit in February after only a few weeks on the job. DNA waited nearly a week to announce his departure, then butchered the announcement, Blechman said in an interview with the PP Blog.

    DNA claimed on April 26 that it had been snookered into believing that it could offer an unlimited cell-phone usage plan for $10 a month and withdrew the offer. The withdrawal — and the ceaseless hype that has emerged from DNA — has led to questions about what, exactly, the company is offering and whether it was engaging in bait-and-switch tactics.

    Questions also have been raised about the worth of both the Narc and DNA databases. Long, for example, said he gathered extra license-plate numbers and offered them for free to prospects so they could qualify for their initial multilevel marketing (MLM) payouts by entering data he supplied.

    Other Narc promoters have used the same approach, which could lead to a polluted data stream. If a promoter in Florida supplied plate numbers to a prospect in Alaska, for example, it could lead to a result in which a car sighted in Florida was listed in Narc’s database as having been sighted in Alaska — or any state the prospect chose.

    Such an approach could undermine Narc’s claim that it exists in part to assist law enforcement and the AMBER Alert program for missing children. Experts say corrupt or untimely data actually could hinder efforts to locate abducted children, and the Justice Department, which manages the AMBER Alert program, has denied it has any affiliation with Narc — despite promoters’ claims to the contrary.

    Even if a Florida sponsor, for example, provided an accurate address at which a car was sighted, the mere fact an Alaska prospect was asked to input the data as though he or she actually had seen the car in Florida leads to troubling questions about whether Narc members were simply gaming the system to earn commissions.

    And there may be other questions in any probes that emerge: Are police officers — off-duty and on-duty — helping Narc and DNA collect data? If the officers are collecting data on-duty, is it an appropriate use of their time? If they are collecting data off-duty, are they participating in a pyramid or Ponzi scheme?

    Not a single Narc promoter interviewed by Fox 5 in Atlanta could identify a single data client of Narc. Narc itself says its clients identities are proprietary, but the Better Business Bureau, which gave Narc an “F” rating, has received thousands of inquiries on the company. The BBB also said it is concerned about Narc advertising claims.

    Some promoters have claimed the firm was endorsed by the FBI and the Department of Homeland Security. Others have claimed it was endorsed by AMBER Alert. Narc removed a reference to AMBER Alert from a sales video after the Justice Department denied it had any affiliation with the firm.

    Still other promoters have used craigslist to pitch Narc as though the company were a jobs-provider, rather than an MLM opportunity in which members are independent contractors reliant on their ability to recruit new members to make money. Some members even have started .org websites, as though joining Narc was the same as donating to a charity.

    Reckless advertising claims have led to questions about whether both Narc and DNA had come into possession of money as a result lies told by promoters. The claims also have caused some MLM observers to wonder if the industry had reached a new low. Despite the uncertainty about both Narc and DNA, promoters are in the field recruiting members. DNA now says its has more than 125,000 members.

    View the video on Fox 11 in Los Angeles:

    Visit the Fox 11 site.