UPDATED 1:18 P.M. ET (U.S.A.) A company that denied any ties to the AdViewGlobal autosurf after AVG listed it as a facilitator of offshore wire transfers has been permanently banned by the National Futures Association (NFA) amid allegations that it failed to uphold high ethical standards and failed to supervise its operations.
KINGZ Capital Management Corp. (KCM), which operates in Barbados and has corporate officers in Canada, was banned as a result of permitting Trevor Cook to manage an investment pool, according to NFA.
Cook is one of the two central figures in the alleged Cook/Pat Kiley Ponzi scheme in Minnesota.
AdViewGlobal (AVG) is not mentioned in NFA’s Business Conduct Committee complaint against KCM and its vice president, David M.S. Krywenky.
Michael P. Krywenky, president and chief executive officer of KCM, issued a public denial in May that KCM had any ties to AVG. Michael Krywenky’s denial came after AVG identified KCM as a newly acquired facilitator of offshore wire transfers.
AVG made the announcement that KCM was facilitating wire transfers on the same date — May 4, 2009 — the Obama administration announced a crackdown on international financial schemes. Three days later, on May 7, 2009, Michael Krywenky told the PP Blog that KCM had no connection with AVG, suggesting that AVG had tried to route money to itself through an account in the name of a separate company, Living Legacy One LLC of Florida.
Link To Alleged Cook/Kiley Scheme
David Krywenky let Cook take control of an offshore investment pool that a KCM-related entity known as KCI was supposed to be operating, according to NFA’s complaint. Cook was neither an NFA member nor properly registered with the Commodity Futures Trading Commission (CFTC), NFA charged.
NFA is a self-regulatory body.
“In July 2009, NFA received information that indicated that KCM had links to an intertwined group of NFA Member and non-NFA Member entities and individuals that had come under some scrutiny because of difficulties that some investors had encountered in trying to retrieve their investments,” NFA said in a Sept. 30 charging document.
As its investigation proceeded, NFA learned that a Cook-controlled entity — Oxford Global Partners — “appeared to be the only investor in KCM’s KCI pool and that all of the pool’s money had purportedly been deposited with an entity named Crown Forex, SA, a non-NFA Member firm that is regulated by the Swiss Financial Market Supervisory Authority and that was put into bankruptcy by that body in May 2009,” NFA said.
Cook and Kiley later were implicated in an alleged Ponzi- and forex-fraud scheme involving at least $190 million, according to the SEC and the CFTC. A federal judge jailed Cook earlier this week until he turns over tens of millions of dollars linked to the alleged Cook/Kiley scheme.
NFA charged KCM with “cheating, defrauding or deceiving another person or attempting to do so.” The company consented to the permanent ban without admitting or denying the allegations.
David Krywenky also was charged with failing to uphold high ethical standards and failing to supervise. Like KCM, he neither admitted nor denied the allegations.
Should David Krywenky wish to become an NFA associate after his ban, he’ll be required to pay a fine of $25,000, NFA said.
AdViewGlobal Cited KCM Tie In May
In March 2009, AVG announced its bank account had been suspended because too many participants had wired transactions in excess of $9,500. The surf said it was working on a remedy.
Its purported remedy — routing wire transfers to itself with KCM as a facilitator — was announced with great fanfare on May 4, only hours after Obama appeared on national television to announce a crackdown on offshore fraud schemes.
AVG provided specific, detailed wiring instructions. Members were given the instructions under a headline titled, “BREAKING NEWS Fund your Advertising.†The instructions appeared on an AVG forum operated by some of the Mods and members of the Pro-AdSurfDaily Surf’s Up forum.
The instructions later were deleted, AVG members said. AVG never addressed KCM’s denial, choosing instead to explain that negotiations it had described as completed had broken down.
By June 25, AVG announced it was suspending members cash-outs and exercising its version of a “rebates aren’t guaranteed” clause, thus empowering itself to keep all money previously sent in by members who were expecting to receive not only 100 percent of their money back, but also a profit. AVG has close ties to AdSurfDaily, implicated in a $100 million Ponzi scheme.
Critics observe that the “rebates aren’t guaranteed” clause effectively is a license to steal. Autosurfs, which operate as virtually pure Ponzi schemes and position themselves as “advertising” companies, dangle the promise or suggestion of an investment return, sometimes gathering tens of millions of dollars.
Investigators say such clauses are designed to skirt securities laws.