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Tag: Kingdom777

  • SPECIAL REPORT: Accused WCM777 Ponzi Schemer Ming Xu Expressed Concern About Being Harmed, Says He Was Cooperating With Government; Purported Texas University Claims It Has Absorbed The Bizarre ‘Joseph Global Institute,’ Raising New Questions; WCM777 Claims Deadline Extended To Dec. 24

    EDITOR’S NOTE: The story about Phil Ming Xu’s asserted cooperation with the government appears below the subhead. We’ll lead with the news of extension of the claims deadline for WCM777 victims.

    If you’re a victim of the World Capital Market/WCM777 Ponzi- and pyramid scam shut down by the SEC last year, you now have until Dec. 24 — Christmas Eve — to file your claim.

    The original claims deadline had been Nov. 9. On Oct. 26, court-appointed receiver Krista L. Freitag asked for an extension. U.S. District Judge John F. Walter of the Central District of California granted the request on the same day, extending the deadline until Dec. 24 and empowering the receiver to take other actions “to increase the number of investor claims submitted,” according to the court docket.

    This is the URL of the receiver’s site: http://www.worldcapitalmarketreceivership.com/

    This is the URL of the site to file claims: https://www.wcm777claimsprocessing.com/en/Home/Filing

    Among other things, the WCM777 case demonstrates the logistical challenges posed by cross-border fraud schemes operating over the Internet and involving cash transactions and potentially thousands of domestic and international bank accounts, including at least 100 linked to accused WCM777 Ponzi schemer Phil Ming Xu alone. Victims from multiple countries piled up potentially by the tens of thousands. Not all of them spoke the same language and, as in similar scams, not all of them paid WCM777 directly. Rather, they paid their “upline” sponsor, making the task of following the money and filing a claim more difficult. (See March 15, 2015, PP Blog story: “WCM777: More Theft And Money Laundering MLM-Style.”

    Phil Ming Xu Says He Cooperated With Government

    The opening of a Phil Ming Xu declaration originally filed under seal in April 2014. The seal was lifted at the request of an investor and after federal prosecutors did not object.
    The opening of a Phil Ming Xu declaration originally filed under seal in April 2014. The seal was lifted at the request of an investor and after federal prosecutors did not object.

    The PP Blog is reporting today that Ming Xu claimed in an application to file certain information under seal in April 2014 that he was cooperating with the government on matters pertaining to alleged misdeeds by attorney Vincent J. Messina, a figure in the WCM777 story. The SEC previously had described Messina, believed to be in his eighties, as an “inactive” Florida lawyer. (Also see March 13, 2015, PP Blog story: “BULLETIN: CLAIM: Former CIA Operative Was Paid More Than $400,000 By Companies Linked To WCM Ponzi Scheme.”

    Messina is alleged to have come into possession of $5 million in proceeds from the WCM777 fraud, some of which allegedly was directed to International Market Ventures, a company operated by Gary Messina, his nephew. Gary Messina formerly worked as the chief information officer for the Bureau of Citizenship and Immigration Services, an arm of the U.S. Department of Homeland Security.

    Messina has been ordered to return the $5 million, and IMV — the recipient of a transfer from Messina — is on the hook for $941,505 of it.

    The effort to lift the seal on Ming Xu’s April 2014 filings began more than a year later, on Aug. 21, 2015, with a filing by an alleged victim of Xu from Daly City, Calif. This individual asserted he’d wired $2,000 to HSBC Bank in Hong Kong as his initial investment in WCM, a company that “represented itself as a leader in China based business and finance.”

    Walter lifted the seal in an order dated Sept. 14, after the office of U.S. Attorney Eileen M. Decker of the Central District of California did not object. Precisely what Decker’s office is investigating remains unclear, although tens of millions of dollars are alleged to have flowed through WCM and related entities.

    Ming Xu once claimed campaign ties to Los Angeles Mayor Eric Garcetti, and Freitag has alleged a California lobbying firm received $750,000 from the fraud for the purposes of “locating and securing legislators, obtaining access to such legislative leaders in California and Washington, D.C., and communicating and recommending advocacy strategies and effective public relations programs with the government.” 

    It is not unusual for Ponzi schemers to rub elbows with famous politicians as a means of trying to sanitize their scams, Scott Rothstein being an infamous example.   

    How dangerous is the world of HYIP Ponzis? Well, the Press Democrat of Santa Rosa, Calif., reported in January 2015 that investigators believe a murder might be tied to WCM777 and a companion scam known as Kingdom777.

    Ming Xu also was concerned about being harmed, according to his now-unsealed motion from April 2014 to file under seal. He did not list a source of harm, but with so much money and so many tentacles involved, it could be anybody — from a person down the street to a person overseas.

    From the motion (italics added):

    “Xu is making this request because public disclosure of his cooperation with the government, including the U.S. Attorney’s Office for the Central District of California and the Securities and Exchange Commission, could jeopardize potential criminal investigations and the use of proactive covert operations. If Xu’s cooperation was disclosed, potential subjects of the ongoing investigations may take certain steps to hide evidence and proceeds of criminal activity, flee the jurisdiction or potentially harm Xu or his family.”

    As for what Ming Xu said in his actual declaration docketed in May 2014 and now public . . .

    If you were pushing WCM777 during hotel pitchfests and in your church and continue to have doubt WCM777 was a Ponzi scheme, put those doubts to rest. The huckster conceded the Ponzi in his declaration, while alleging Messina also knew it was a Ponzi.

    From the declaration (italics added):

    “Mr. Messina knew the $5 million transferred to him was proceeds of an illegal Ponzi scheme and is being investigated by SEC and knew I was sending him the money to avoid detection and seizure of the funds by the federal government. I transferred the $5 million to Mr. Messina’s IOLTA account because he warned me the government would seize the money as illegal proceeds of the Ponzi scheme. Mr. Messina told me on several occasions that WCM had serious criminal and civil liability issues, and that he expected federal agents to show up at our office in Pasadena, execute a search warrant, seize all the computers, and other business records of WCM’s business operations.”

    Ming Xu continued (italics added):

    On or about February 27, 2014, Mr. Messina sent me a document to sign stating that the transfer of the $5 million was a non-recourse loan payable in full in five years. I executed the loan document after being advised to do so by Mr. Messina. The money I transferred to Mr. Messina was not truly a loan and the two-line document purporting to be a loan agreement is false.

    On or about March 20, 2014, I wrote and sent a letter to Mr. Messina, wherein I demanded return of the $5 million transferred from the ToPacific bank account into Mr. Messina’s IOLTA account for SEC settlement. Mr. Messina refused to return the monies.

    I have subsequently learned that Mr. Messina has disbursed some of these funds to an entity, International Marketing Ventures, a company that is controlled and operated by Gary Messina, his nephew. 

    I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

    It is unclear if Ming Xu currently is cooperating with the government and how much his asserted cooperation in April 2014 helped in pursuit of the WCM777 case or other cases.

    What is clear is that the WCM777 story has included a series of bizarre developments — everything from a pledge of love for the people of Peru written on the letterhead of a suspended California company and a recitation of the importance of “blood moons” to the appearance of a “Jesus sword” and the apparent involvement of a former CIA operative.

    Strangest of all, though, may be the Ming Xu claim he was taking over a company linked to the film “Innocence of Muslims” as part of a bid to “transform nations” and “train a group of Josephs to bless the world.”

    Who constituted the “Josephs” and how they would “bless the world” always has been unclear, as has the nature of the purported “training” they required. This particular segment of the WCM777 narrative is deeply strange in other ways. For example, a former reputed member of the Mafia named “Dr. Bruno Caporrimo” is part of the narrative and a purported Ming Xu associate.

    So is a purported California university known as the “Joseph Global Institute” of which Ming Xu purportedly was “dean” and Caporrimo reportedly was “chancellor.” As the PP Blog reported last year, one promo for the institute appeared to rip off video footage from Liberty University, a well-known Christian college in Virginia.

    ‘Joseph Global Institute’ Narrative Evolves

    Something that curiously calls itself “Southwestern University” even though it uses the four-letter acronym SWIU (at www.swiu.edu) now claims online that it has absorbed the Joseph Global Institute. Best we can tell, SWIU stands for “Spirituality Wisdom Inspiration Understanding” and appears not to be affiliated with Southwestern University of Georgetown, Texas, which uses www.southwestern.edu. SWIU purports to have a campus at 4040 Saltburn Drive in Georgetown, but the city does not have such a street, the Georgetown Police Department told the PP Blog today. (The city of Plano, nearly three hours from Georgetown, has a Saltburn Drive.)

    The Joseph Global Institute previously planted the seed it was affiliated with Harvard.

    Some people have blamed the “Innocence of Muslims” film for the Sept. 11, 2012, attack on U.S. outposts in Bengazi, Libya, that killed Ambassador Chris Stevens and three other Americans. The issue has dogged former Secretary of State Hillary Clinton, now a Democratic candidate for President of the United States.

    The WCM777 Ponzi-scheme story has proceeded through all sorts of tortured twists and turns, creating nonfiction that reads like fiction. Although it not unusual for bizarre narratives to accompany Ponzi schemes, the narratives surrounding WCM777 are particulary bizarre — and Americans should be concerned and follow developments closely.

    NOTE: Our thanks to the ASD Updates Blog.

  • DEVELOPING STORY: Kidnapping, Murder Linked To WCM777/Kingdom777 Scam, Newspaper Reports

    wcm777DEVELOPING STORY: (Updated 8:43 p.m. ET U.S.A.) The Press Democrat of Santa Rosa, Calif., is reporting that detectives in Napa County have linked the kidnapping and murder of 44-year-old Reynaldo Pacheco to the WCM777/Kingdom777 MLM scam and as many as four suspects.

    From the Press Democrat in a story dated Jan. 15 about the arrest of Angela Martinez Arias, 41, of Petaluma (italics added):

    According to investigators, Pacheco had been involved in a business scam known as WCM777, or Kingdom 777. Early last year, the U.S. Securities and Exchange Commission announced it to be an illegal pyramid scheme targeting Asian and Latino communities worldwide. Assets were frozen.

    Pacheco apparently had gotten Arias to invest an undisclosed amount of money in Kingdom 777, according to detectives. Pacheco “owed her money from a failed business relationship,” [Napa County Sheriff’s Capt. Doug] Pike said.

    The other suspects, according to the newspaper, are Mauricio Tovar-Telles, 24, and Norberto Guerrero Gonzalez, 29. Both are in custody.

    A fourth suspect, Miguel Angel Garcia, reportedly shot and killed himself last year after a standoff with SWAT officers.

  • URGENT >> BULLETIN >> MOVING: SEC Takes Down WCM777; Says Purported Opportunity Is ‘Worldwide Pyramid Scheme,’ Ponzi And Offering Fraud; Federal Judge Signs Asset Freeze

    breakingnews72URGENT >> BULLETIN >> MOVING: (16th update 5:42 p.m. EDT U.S.A.) The SEC has gone to federal court in Los Angeles, alleging that the WCM777 “program” is a “worldwide” pyramid scheme, a Ponzi scheme and an offering fraud that targeted Asian and Latino communities and gathered more than $65 million.

    A federal judge has granted an asset freeze, the SEC said. The agency brought the case in an emergency complaint.

    “[Phil Ming] Xu and his entities claimed they were using investor funds to build a strong cloud services company that would then ignite other high-tech companies and ultimately make their investors very wealthy,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “In reality, they were operating a pyramid scheme that preyed on investors in particular ethnic communities, leaving them with nothing left to show for their investment.”

    Some MLM promoters have pitched WCM777 alongside the TelexFree “program.” TelexFree is not referenced in the SEC complaint. But the complaint does reference a Massachusetts probe into WCM777 last fall. TelexFree  has been under investigation by the Massachusetts Securities Division since at least February 2014.

    Charged in the SEC’s WCM777 case are WCM777 Inc. of Nevada, World Capital Market Inc. of Delaware, WCM777 Ltd.( dba as WCM777 Enterprises Inc.) of Hong Kong and Ming Xu, also known as Phil Ming Xu, of Temple City, Calif.

    Several firms are listed as relief defendants, amid allegations they received ill-gotten gains. These include Kingdom Capital Market LLC of Delaware, Manna Holding Group LLC of California, Manna Source International Inc. of California, WCM Resources Inc. of Texas, Aeon Operating Inc. of Texas and PMX Jewels Ltd. of Hong Kong.

    Even as WCM777 was under investigation by state regulators in the United States, the SEC said, the “program” raised “more than $37 million from investors which has been deposited into [the defendants’] Hong Kong bank account.”

    During the state-level probes in Massachusetts and elsewhere, “Defendants stopped depositing investor funds into their United States bank accounts, although the WCM777 offering continued,” the SEC alleged.

    Xu, the SEC charged, is “involved in all aspects of the fraud.”

    From the SEC complaint (italics/bolding/carriage returns added):

    The bulk of the investor funds have been used to pay cash for real property purchased in the United States, purchased in many cases with funds transferred through Defendant World Capital Market Inc. (“WCM”), and held in the names of Relief Defendants Manna Holding Group LLC and Kingdom Capital Market LLC, which are affiliated with Defendant Xu.

    The properties include two golf courses, a warehouse, vacant land, and several single family homes. Defendants have also used investor funds to play the stock market and to make investments, through intermediary companies, in an oil and gas offering of Relief Defendant Aeon Operating, Inc.

    Defendants have also sent investor funds to Relief Defendant PMX Jewels, Limited, which is a rough diamond jewel merchant in Hong Kong, and to Relief Defendant Manna Source International, Inc., which is affiliated with Defendant Xu.

    The golf courses were identified as Glen Ivy Golf Club in Corona, Calif., and the Links at Summerly in Lake Elsinore, Calif. To acquire Glen Ivy, WCM777 plunked down $6.5 million in cash, with the money coming from “WCM777 accounts that held investor proceeds,” the SEC charged.

    Meanwhile, the Links at Summerly was acquired for $1.65 million in cash. Again, the SEC charged, the money to acquire the course “originated from WCM777 accounts that held investor proceeds.”

    Along the pyramid and Ponzi path, the SEC charged, WCM777 bought a single-family home in Walnut, Calif., for “$2.4 million in cash,” a single-family home in Monrovia, Calif. for “$980,000 in cash,” a single-family home in Lake Elsinore, Calif., for “$500,000 in cash,” vacant land in New Cuyama, Calif., for “$700,000 in cash,” a warehouse in El Monte, Calif, for “$1,051,750 in cash” and used “$1,456,041.56” to close on the purchase of a single-family home in Monrovia, Calif.

    This Monrovia sale never closed, the SEC said.

    And “Ming Xu opened an account at a major brokerage firm in June 2013 in the name of WCM,” the SEC charged. “Between June 2013 and January 2014, Defendants deposited a total of $2.155 million into this brokerage account. The cash originated from WCM777 accounts that held investor proceeds.”

    Moreover, the SEC charged, WCM777 disbursed $200,000 in investors proceeds to ToPacific Inc., $210,000  to Agape Technology and $230,000 to Media for Christ.

    All of these entities, the SEC charged, were “associated or otherwise affiliated” with Xu.

    Media for Christ — apparently before Xu’s alleged involvement — found itself at the center of an international firestorm in 2012 over a film production known as “Innocence of Muslims.” (See PP Blog report dated Nov. 21, 2013.)

    Among the alarming allegations is that WCM777 falsely planted the seed that it had partnerships “with more than 700 major companies such as Siemens, Denny’s, and Goldman Sachs,” the SEC said.

    WCM777 also asserted a false association with Stouffer Hotels and Resorts, a company that “has not been in business since 1996 when it sold its real estate portfolio to another company, and that was then purchased by Marriott in 1997,” the SEC said. “Marriott does not have any relationship with Defendants.”

    As the PP Blog reported in October 2013, affiliates of WCM777 helped spread the claims about ties with famous businesses across the web.

    Commingling

    The WCM777 enterprises “opened and used numerous accounts located at three different banks in the United States, to move and commingle most of the investor proceeds before they were disbursed to third parties,” the SEC said.

    It is common for HYIP scams to use banks and payment processors to warehouse proceeds from fraud schemes, a practice that brings national-security concerns into play.

    HYIP schemes often also purport to offer interest-earning “packages” while using a “points” system and touting future public offerings, things allegedly in play at WCM777.

    From the SEC complaint (italics added):

    Through publicly available websites and promotional materials, Defendants offer packages or membership units in “WCM777.” Defendants portray WCM777 as a profitable multi-level marketing venture that sells packages of “cloud media” or cloud services. In the WCM777 offering, Defendants promise investors that they will earn 100% or more returns in 100 days. Defendants represent that the “points” investors receive for their investments will be convertible into equity in initial public offerings (“IPOs”) of “high tech” companies Defendants are purportedly incubating. Defendants have facilitated a “secondary market” in the points they award to investors, and Defendants estimate that $890 million of the points have traded on this market.

    But in reality, the SEC said, the WCM777 enterprises “do not realize any appreciable revenue other than from the sale of ‘packages’ of cloud services to investors. WCM777 is not profitable, and is a pyramid scheme. Defendants use some of the investor funds to make Ponzi payments of returns to investors.”

    The SEC, which says WCM777 was selling unregistered securities as investment contracts,  is seeking the appointment of a receiver, a request the judge has approved.

    Like other HYIP schemes, WCM777 preemptively denied it was a “Ponzi scheme.”

    “Is WCM777 a Ponzi Game?” WCM777 wrote on its website, before answering its own question, the SEC said.  “In summary, we are not a Ponzi game company. We are creating a new business model.”

    In reality, the SEC said, “The cash paid to investors were Ponzi payments made with funds received from other investors, and were not paid from net income or profits of the WCM777 enterprise.”

    At a 2013 business event in California, Xu was photographed alongside luminaries such as former U.S. Vice President Al Gore and Apple co-founder Steve Wozniak. It is somewhat common for Ponzi schemers to trade on the names and reputations of prominent individuals.

    Zhi Liu, another WCM777 executive identified in state-level filings, is not directly referenced in the SEC complaint. There may be an oblique reference, however.

    “On January 27, 2014, WCM777 Ltd. filed a lawsuit against a former employee in the Superior Court for the State of California, County of Los Angeles,” the SEC said.

    Liu is known as “Tiger.”

    A Twitter site under the name of “Dr. Phil Ming Xu” has a March 14 entry that claims, “Tiger created the system and took $30M worth of unauthorized ecash from WCM777. WCM777 sued him.”

    As noted above, however, the SEC has alleged that Xu was involved in all aspects of the fraud. And also as noted above, the SEC further alleged that “more than $37 million from investors” had been deposited in a Hong Kong bank account.

    Whether Liu had a role in the Hong Kong deposits is unclear. Also unclear is whether Liu remains in the United States or has relocated elsewhere.

    In its emergency filing, the SEC said the WCM777 enterprise constituted an “ongoing” fraud.

    Read the SEC’s statement and complaint.

     

  • Quebec Issues Investor Alert On WCM777

    This image of a golden pyramid appeared on the Global-Unity website last month.
    This image of a golden pyramid appeared on the Global-Unity website last month.

    UPDATED 6:42 P.M. EDT (U.S.A.) The Autorité des marchés financiers (AMF) has issued an Investor Alert on the WCM777 MLM “program.”

    Quebec’s securities regulator now joins at least nine other jurisdictions issuing Investor Alerts or filing actions against WCM777, also known as World Capital Market, Kingdom777 and Global-Unity. Global-Unity recently used a photo of a golden pyramid on its website, a possible taunt at regulators.

    Some WCM777 pitchmen claimed that $14,000 sent to the “program” returned $500,000 in a year.

    “World Capital Market, Inc., WCM777, Inc. and WCM777 Limited and their officers and representatives, Ming Xu, Zhi Liu and Harold Zapata, are not registered with the AMF and did not obtain a receipt for a prospectus from the AMF,” AMF said. “Consequently, any solicitation of Québec investors by these firms and individuals could violate the Québec Securities Act.”

    AMF said the “scheme originated in California and is offered mainly as part of hotel presentations and through Internet ads and webinars.”

    Quebec’s move brings the unofficial total of jurisdictions or regulatory agencies filing actions or issuing Investor Alerts against WCM777 to 10. The others are the country of Peru, the country of Colombia, the state of Massachusetts, the state of California, the state of Colorado, the state of Louisiana, the state of New Hampshire, the state of Alaska, the province of New Brunswick.

    There are many mysterious things about WCM777.

    From AMF (italics added):

    If you have responded to solicitations related to WCM777 or any similar scheme, please contact an officer at our Information Centre.

    Read the Quebec Investor Alert.

  • Alaska Issues Alert On WCM777; State Asks Local Investors To Contact Division Of Banking And Securities

    The WCM777 “program,” also known as Kingdom777 and Global-Unity, is now the subject of an Investor Alert in Alaska.

    Alaska’s move brings the unofficial total of jurisdictions or regulatory agencies filing actions or issuing Investor Alerts against WCM777 to eight: The country of Peru, the state of Massachusetts, the state of California, the state of Colorado, the state of Louisiana, the state of New Hampshire, the state of Alaska, the province of New Brunswick.

    “Investors have been promised returns of up to 140% in a period of less than one year,” said Kevin Anselm,  director of Alaska’s Division of Banking and Securities. “This type of promise should raise serious red flags for investors, especially when traditional investments such as bank certificates of deposit are generally providing notably less return in the same period of time.”

    Alaskans with information regarding World Capital Market may contact the Division at 907-269-8140 or through email.

    Read Alaska’s Investor Alert on WCM777.

  • MORE FROM MLM LA-LA LAND: Is It A Taunt? Purported Successor Firm To WCM777/Kingdom777 Uses Image Of Golden Pyramid

    A Giant human hand puts the top piece on a golden pyramid. Source: Global-Unity website.
    A giant human hand puts the top piece on a golden pyramid. Source: Global-Unity website.

    Updated 6:24 p.m ET (U.S.A.) Members of the WCM777 scam, which morphed into Kingdom777 after regulatory actions were filed, have been informed by a “program” upline that the venture now is operating as Global-Unity, a source told the PP Blog today.

    Parts of the Global-Unity website appear to be under construction. The “News” tab, for instance, includes no releases.

    Strangely, though, it does include a photo of a giant human hand placing what appears to be the top piece on a giant golden pyramid. Whether the photo was designed as a taunt to regulators was not immediately clear.

    Promoters of the alleged TelexFree pyramid scheme also recently have used images of a pyramid in promos.

    WCM777 is the subject of regulatory actions or Investor Alerts in the United States, Canada and Peru. TelexFree is the subject of a pyramid probe in Brazil.

    HYIP scammers have been known to taunt regulators. Frederick Mann, the purported operator of the JSSTripler/JustBeenPaid HYIP scam, once claimed that government workers were “part of a criminal gang of robbers, thieves, murderers, liars, imposters.”

    JSSTripler/JustBeenPaid purported to pay 2 percent a day (precompounding). The original scam changed names at least twice after the Zeek Rewards’ Ponzi action by the United States in 2012. Zeek was a scam designed to make investors believe they’d received an average payout of 1.5 percent a day, the SEC said.

    JSS/JBP’s Mann was a former AdSurfDaily Ponzi-scheme pitchman and appears to have had sympathies for “sovereign citizen” political extremists in the United States, including convicted “militia” man Francis Schaeffer Cox.

    A scam known as “Profitable Sunrise” that became the subject of state and federal regulatory actions in the United States last year once promoted a 2.7-percent-a-day investment “plan” known as the “Long Haul.” The Long Haul payout purportedly was due April 1, 2013 — April Fool’s Day and the day after Easter.

    At least one Profitable Sunrise supporter taunted North Carolina regulators after the state filed a Cease and Desist order against the “program.” (See Comments thread below this story.)

    Profitable Sunrise, like both WCM777 and TelexFree, was targeted at Christians. Both the “Long Haul” name and the purported payout dates could have been taunts.

    In promos, TelexFree, WCM777 and Profitable Sunrise each used an image of the Christ the Redeemer statue in Brazil.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    WCM777 now is operating as Kingdom777.

    From a DBO statement (italics added):

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

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

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

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

  • Websites For WCM777 And Kingdom777 ‘Unavailable’

    UPDATED 12:08 P.M. ET (U.S.A.) The WCM777 and Kingdom777 websites appear to be back online. Our earlier story is below . . .

    _______________________________

    Websites linked to WCM777 and Kingdom777 are showing a “Service Unavailable” message this morning. The precise reason why is unclear.

    WCM777 now operates as Kingdom777. California securities regulators have called WCM777 an “investment scam” that gathered at least $20 million. California, Colorado and Massachusetts have banned the “program.” Louisiana and New Hampshire have issued Investor Alerts.

    The province of New Brunswick in Canada also has issued an Investor Alert.

    Ming Xu has been identified in securities actions as the operator of WCM777. Some promoters have called him Dr. Phil Ming Xu and Dr. Philip Ming — or just plain Dr. Phil. At a business event in California last year, Ming Xu was photographed alongside former U.S. Vice President Al Gore and Apple co-founder Steve Wozniak.

    Some MLM scams try to gain a head of steam by associating themselves with famous politicians, famous people and famous businesses. Promos for WCM777 have sought to tie to firm to several famous companies.

    A Twitter account in the name of Dr. Phil Ming Xu says this this morning: “You have not shut me up into the hand of the enemy. You have set my feet in a large place.”

    A Jan. 27 Tweet said this: “Though an army should encamp against me, my heart shall not fear. Though war should rise against me, even then I will be confident.”

    Meanwhile, a Jan. 25 Tweet said this: “Confidence in someone unfaithful in time of trouble is like a bad tooth, or a lame foot.”

    Based on promos that have appeared online, it is possible that individual WCM777 sponsors were accepting wire transfers from their recruits and then somehow forwarding the money to WCM777, which reportedly has a presence in Hong Kong and the British Virgin Islands.

    Circuitous flow of cash is a key marker of scams and may signal money-laundering or other crimes are occurring.

    Please use the PP Blog’s search function near the upper-right corner to find more information on WCM777.

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

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

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

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

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

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

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

    California now has done the same thing.

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

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

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

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

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

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

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

    From the California order (italics/bolding added):

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

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

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

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

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

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

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

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

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

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

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

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

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

  • UPDATE: Dallas Group May Be Trying To Port WCM777 Members To Lucrazon

    recommendedreading1The PP Blog has received information that suggests a WCM777 group in Greater Dallas may be trying to port members to Lucrazon, a purported revenue-sharing “program.”

    WCM777 now is known as Kingdom777.

    “Same team leaders want to encourage us to invest $8000.00 and we can get 15 units and they said that it will be similar to kingdom777,” a source told the Blog. “In other words they see us as uneducated people who have excavated money from underground or group of dumb people who will trust them again. Believe me that amount of people who invested are already falling for it.”

    It is common for “revenue-sharing” promoters in the MLM sphere to try to switch downline members from one scheme to another. Zeek Rewards and AdSurfDaily — both massive Ponzi schemes — are examples of MLM “programs” pitched as revenue-sharing “opportunities.”

    Read Lucrazon review at BehindMLM.com.

    From BehindMLM (italics added):

    The issue with Lucrazon’s MLM business model is the basic mechanic of new affiliate money flowing in at $1000 a pop and being paid out to those who have already paid $1000 a pop for “positions”.

    WCM777 is targeting people of faith. Promoters appear to be targeting Brazilians, Brazilian-Americans, members of the U.S. Latino community and Latinos at large, Asian-Americans and Asians in general.

    Separately, the PP Blog received information today that suggests WCM777 also has a presence in Canada. A person who emailed the PP Blog said a loved one had plowed $8,000 into the WCM777 scheme.

    The “payout stopped, she was never able to withdraw,” the sender said.

    The sender was contemplating reporting WCM777 to the Royal Canadian Mounted Police, according to the email.

    In November, securities regulators in Massachusetts accused the “program” of selling unregistered securities. The WCM777 scheme also is under investigation in Peru and Colombia.

    Meanwhile, a source told the PP Blog today that something called KingdomTrade.org is being discussed in WCM777/Kingdom777 circles.

    “They claim they will also be trading Oil, [G]ems, Gold and Art as well as Stock/Options in Kingdom777,” the source said.