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Tag: Matthew John Gagnon

  • UPDATE: Sentencing For Legisi Pitchman Matthew John Gagnon Now Set For June 18

    Matthew J. Gagnon
    Matthew J. Gagnon

    Sentencing for Legisi HYIP Ponzi scheme pitchman Matthew John Gagnon has been rescheduled for June 18. Gagnon initially was scheduled to be sentenced yesterday, federal prosecutors said earlier this month.

    Gagnon pleaded guilty to not disclosing he’d been paid more than $1 million by Legisi and operator Gregory N. McKnight to tout the “program” online. McKnight is scheduled to be sentenced Aug. 6, federal prosecutors said.

    Legisi, a Ponzi-forum darling, collapsed in 2008. It triggered a civil probe by the SEC and a criminal investigation by the U.S. Secret Service. Michigan securities regulators also were involved in the probe.

    Other recent Ponzi-board “programs” that became the subjects of major investigations include Pathway To Prosperity, Imperia Invest IBC, AdSurfDaily, Zeek Rewards and Profitable Sunrise. All of the “programs” claimed absurd rates of return.

    The name of MoneyMakerGroup, a forum listed in U.S. court filings as a place from which Ponzi schemes are promoted, appears in an evidence exhibit in the Legisi case. Also included in the exhibit is Legisi’s bizarre Terms of Service, which required investors to avow they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.

    Like McKnight, Gagnon also faces millions of dollars in civil judgments for hawking the Legisi scheme.

    In a plea agreement in the criminal case, Gagnon admitted he’d caused more than $7 million in losses to more than 50 Legisi investors.

    Delays in sentencing dates may be due in part to the difficulty the court-appointed receiver in the Legisi case has encountered in deposing a potential Legisi witness jailed in Alabama in a second scam.

  • UPDATE: Sentencing For Legisi HYIP’s Gregory McKnight Delayed Again; Sentencing For Pitchman Matthew J. Gagnon Also Moved

    Gregory N. McKnight
    Gregory N. McKnight

    Sentencing for Legisi HYIP Ponzi scheme purveyor Gregory N. McKnight has been delayed again — this time until Aug. 6 at 1:30 p.m. McKnight had been scheduled to be sentenced today in the Eastern District of Michigan. The postponement marks at least the fifth in the case.

    Legisi, which had a presence on infamous Ponzi forums such as TalkGold and MoneyMakerGroup and became the subject of both civil (SEC) and criminal (U.S. Secret Service) probes prior to its 2008 collapse, was a fraud that gathered about $72 million. McKnight pleaded guilty to wire fraud in February 2012. Prosecutors have asked for a sentence of 15 years, describing McKnight’s wordplay when trying to sanitize his HYIP scheme as “semantic obfuscation.”

    Meanwhile, sentencing for Legisi pitchman Matthew John Gagnon has been moved from today until May 21 at 1:30 p.m. Gagnon pleaded guilty to not disclosing he’d been paid more than $1 million by Legisi and McKnight to tout the “program” online. Gagnon pushed the “program” on Mazu.com.

    The name of MoneyMakerGroup appears in an evidence exhibit in the Legisi case. Also included in the exhibit is Legisi’s bizarre Terms of Service, which required investors to avow they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.

    Other recent Ponzi-board “programs” that became the subjects of major investigations include Pathway To Prosperity, Imperia Invest IBC, AdSurfDaily, Zeek Rewards and Profitable Sunrise. All of the “programs” claimed absurd rates of return.

    The SEC said last month that Profitable Sunrise was operating from a “mail drop” in England and that pitchmen may not even have known for whom they were working when touting the “opportunity,” which may have gathered tens of millions of dollars.

    ASD was a $119 million Ponzi scheme. Zeek, according to the SEC, was a $600 million Ponzi- and pyramid fraud. Imperia targeted thousands of deaf investors and consumed more than $7 million. Pathway to Prosperity gathered about $70 million, according to court filings.

    ASD’s Andy Bowdoin — now serving a prison term of 78 months — also engaged in semantic obfuscation, prosecutors said. ASD, a massive Ponzi scheme,  purported to pay 1 percent a day. That’s about a third of the purported payout of the Profitable Sunrise “Long Haul” plan, which promoters said paid 2.7 percent a day.

    Like Legisi, Profitable Sunrise claimed to be in the “loan” business.

     

  • Legisi HYIP Pitchman Matthew John Gagnon Pleads Guilty, Admits He Didn’t Disclose ‘Touting’ Compensation Of More Than $1 Million And Caused More Than $7 Million In Losses

    Matthew John Gagnon
    Matthew John Gagnon

    Legisi HYIP Ponzi-scheme pitchman Matthew John Gagnon has pleaded guilty in the Eastern District of Michigan to a criminal charge of not disclosing he’d been paid more than $1 million by Legisi and its operator Gregory N. McKnight to tout the “program” online.

    In a plea agreement now public after being fashioned in October and November, Gagnon admitted he’d caused more than $7 million in losses to more than 50 Legisi investors. Legisi gathered about $72 million and collapsed in 2008, according to court filings.

    Legisi was promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. Gagnon, who was accused of willful blindness and potentially faces up to five years in federal prison when sentenced in May, pitched the “program” through Mazu.com. The MoneyMakerGroup forum is specifically referenced in an evidence exhibit in the Legisi case.

    In the agreement, Gagnon admitted he touted Legisi as a “winner” and “not a scam.” On any given day, any number of hucksters make the same claims about any number of “programs” on the Ponzi boards. Willful blindness — in no small measure — drives the scams.

    Legisi’s Terms of Service sought to make members affirm they were not an “informant, nor associated with any informant” of the IRS, FBI, CIA and the SEC, among other agencies, according to documents filed in federal court. McKnight, like Gagnon, faces sentencing in May. Prosecutors have sought a 15-year term for McKnight.

    Both McKnight and Gagnon also face millions of dollars in civil judgments that flowed from a case brought by the SEC in 2008. The U.S. Secret Service and state authorities in Michigan also investigated Legisi.

    Prosecutors recommended a three-level sentencing reduction for Gagnon, noting he has accepted responsibility for his role in the scam and has assisted authorities.

    U.S. District District Judge Mark A. Goldsmith is scheduled to sentence Gagnon on May 7.

    Zeek Rewards, an alleged $600 million Ponzi- and pyramid fraud, also was touted on the MoneyMakerGroup and TalkGold forums. The SEC brought the Zeek case in August 2012.

  • LETTER TO READERS: Our Choice For The Most Important PP Blog Post Of 2012

    Dear Readers,

    The PP Blog’s choice for the “Most Important” story to appear on the Blog in 2012 is this one, dated July 28: “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

    The story tells the bizarre tale of how purported Zeek “consultant” Robert Craddock, beginning on July 22, tried to gag K. Chang, a Zeek critic.

    Our reasoning for selecting the Craddock tale appears below . . .

    ** __________________________________ **

    recommendedreading1UPDATED 1:30 P.M. ET (U.S.A.) This Blog is well aware that some MLMers would have you believe that nothing that appears here is important. The “case” against the Blog normally involves ad hominem attacks, along with bids to change the subject or cloud issues. Some of the campaigns against the PP Blog have been almost comical, falling along lines such as these: ASD can’t be a Ponzi scheme because it rained on Tuesday. Your [sic] an idiot and looser [sic] !!!!!

    Other campaigns have been much more menacing.

    One of the least-appreciated aspects of the Zeek Rewards story is that Zeek launched after Bernard Madoff made the word “Ponzi” a part of the national (and international) consciousness. Setting aside Zeek’s epic legal problems, Zeek and its “defenders” have a PR problem from which they’ll never recover. In short, it is fatal. The reason that it’s fatal is that it creates a dynamic that is virtually unique to the MLM HYIP sphere: While the rest of the world rails against Ponzi schemes and Ponzi schemers, the MLM HYIP sphere defends them.

    But it gets stranger than that. Certain inhabitants of the HYIP sphere in effect are lobbying for the legalization of Ponzi schemes to make their lives more convenient. To this group, the answer to Ponzi schemes is even more Ponzi schemes. Their message is remarkably similar to the message of the gun lobby, which appears to be arguing that the answer to gun violence is even more guns — in strategic locations, of course, perhaps in educational institutions at the grade-school level through college. (And maybe at movie theaters and at the scene of rural house fires, in case first responders such as firefighters and EMTs encounter an ambush.)

    You’ve heard by now that the rural town of Webster, N.Y., turned into Israel last week, we’re sure.

    In fairness to the gun lobby, it must be pointed out that HYIP “defenders” who are lobbying for more Ponzi schemes even as the gun lobby lobbies for more guns have less legal standing than the gun lobby. Guns already are legal. Ponzi schemes are not.

    But, getting back to Zeek’s PR problem . . .

    Madoff was exposed in 2008 as a Ponzi schemer, a financial criminal of unprecedented hubris. Not only did Zeek debut after Madoff, it came after Scott Rothstein was exposed (in 2009) as a racketeer/Ponzi schemer — and after AdSurfDaily, a purported MLM “advertising” company, was exposed (in 2008 and 2009) as the largest online Ponzi scheme ever and was sued by its own members amid allegations of racketeering.

    For some Zeek promoters, this well-known fact set makes them vulnerable to charges they are nothing less than members of an organized mob of habitual criminals who thrive by choosing to be willfully blind.

    But, incredibly, it gets even stranger . . .

    Zeek had members in common with AdSurfDaily and, like AdSurfDaily, told members that a purported “advertising” function was central to its business model.  Meanwhile, Zeek became popular in North Carolina, after the infamous Black Diamond Ponzi caper was exposed in that very state. (Among other things, the Back Diamond fraud led to criminal charges being filed against a bank.)

    Along those lines, Zeek (in May) began to show signs that it was experiencing banking problems after it had become popular in a region known to have served up another colossal mess, this one in nearby South Carolina. (The South Carolina mess was known as the “3 Hebrew Boys” scheme. It resulted in the longest Ponzi scheme sentences in the history of the South Carolina federal courts and, like AdSurfDaily and Zeek, served up a heaping helping of the bizarre, including claims by “sovereign citizens” that prosecutors had no authority over them.)

    Moreover, the Zeek scheme for which some “defenders” continue to cheer featured recruitment commissions on two levels (like AdSurfDaily) and an “RPP” payout (like ASD’s 1-percent-a-day “rebates”). Finally, the Zeek scheme came to the fore after the U.S. Secret Service described ASD as a “criminal enterprise” and after the Attorney General of the United States made a special public appearance in Florida — fertile recruitment grounds for schemes such as Zeek and the stomping grounds of Madoff and Rothstein — to announce that the Justice Department was serious about putting people in jail for ravaging the U.S. economy with their Ponzi schemes.

    “Palm Beach is, in many respects, ground zero for the $65 billion Ponzi scheme perpetrated by Bernard Madoff — the largest investor fraud case in our nation’s history,” Eric Holder said on Jan. 8, 2010, in southern Florida. “Before the house of cards Madoff built collapsed in 2008, before he was sentenced to 150 years in prison last June, before he became a notorious criminal on the cover of newspapers around the world, he was one of your neighbors.

    “His former home sits just north of us,” Holder continued. “An 8,700-square-foot mansion that’s worth . . . well, we’ll know what its worth once the U.S. Marshals Service auctions it off and the proceeds are distributed to Madoff’s victims.”

    Holder’s words are best viewed as a warning against willful blindness: Neither victim nor perpetrator be. There is unqualified pain and misery for both.

    Despite Holder’s appearance in Florida — despite his reference to Madoff’s “house of cards” — AdSurfDaily promoters Todd Disner and Dwight Owen Schweitzer later sued the United States, claiming that its Ponzi case against ASD was a “house of cards.” Naturally they made this claim even as they were promoting Zeek.

    And from what region were they promoting Zeek? Why, Southern Florida, of course, the same region Holder visited in 2010 to throw down the gauntlet against Ponzi schemers and their enablers.

    Amid the historical circumstances cited above, Zeek Rewards began to encounter some heat from the media and from its own members. Some of the members did not understand why things at Zeek appeared to be so circuitous and why they were being asked to use payment processors such as AlertPay and SolidTrustPay that had been associated with fraud scheme after fraud scheme operating online, including ASD.

    What to do if you’re Zeek?

    Well, according to Florida resident Robert Craddock, a self-described Zeek consultant, you hire, well, Robert Craddock — and you use Robert Craddock to go after Zeek critics such as K. Chang.

    The Most Important Story Of 2012

    In the PP Blog’s view, the most important story to appear on the Blog in 2012 is this one, titled, “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

    The story details efforts in July by Craddock to have K. Chang’s Zeek “Hub” at HubPages removed from the Internet just weeks before the SEC accused Zeek of being a $600 million Ponzi- and pyramid fraud. By early estimates, the alleged Zeek fraud was about five times larger than ASD in pure dollar volume ($600 million compared to $120 million) and perhaps 20 times larger in terms of the membership base (2 million compared to 100,000).

    Incredibly, Craddock went after K. Chang after Deputy Attorney James Cole, speaking in Mexico, said that international fraud schemes have been known to “bring frivolous libel cases against individuals who expose their criminal activities.” And Cole also pointed out that fraudsters have a means of “exploit[ing] legitimate actors” and may rely on shell companies and offshore bank accounts to launder criminal proceeds.

    If ever a company exploited legitimate actors, it was Zeek. Kenneth D. Bell, the court-appointed receiver, says there were approximately 840,000 Zeek losers who funded the ill-gotten gains of 77,000 winners. And Bell also says he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    There can be no doubt that some of those winners are longtime residents of the woeful valley of willful blindness. Not only do they “play” HYIP Ponzis for profit, they now publicly announce their intent to keep their winnings. Zeek has exposed the epicenter of willful blindness, the criminal underworld of the Internet. It is easy enough to view Craddock’s efforts as a means of institutionalizing willful blindness, first by seeking to chill speech and, second, by scrubbing the web of information that encourages readers to be discriminating so they won’t be duped by a Ponzi fraudster.

    Bizarrely, it appears as though someone inside of Zeek believed it prudent to hire Craddock to go after K. Chang. If that weren’t enough, only days later Zeek used its Blog to plant the seed that unnamed “North Carolina Credit Unions” were committing slander against Zeek.

    After the SEC brought the Zeek Ponzi complaint in August, Craddock quickly went in to fundraising mode. As incredible as it sounds, ASD’s Todd Disner — also of Zeek — was on the line with him.

    What Craddock did was deplorable. It was as though he slept through the past four years of Ponzi history, all the cases that showcase the markers of fraud schemes and all the government warnings to be cautious. (Nongovernment/quasigovernment entities such as FINRA also publish such warnings, like this one on HYIP fraud schemes outlined by the PP Blog.)

    The FINRA warning was published in 2010, prior to Zeek but after the Legisi, Pathway To Prosperity and ASD schemes were exposed. Legisi operator Gregory McKnight potentially faces 15 years in federal prison. He was charged both civilly (SEC) and criminally (U.S. Secret Service) — and Legisi pitchmen Matthew John Gagnon also was charged civilly and criminally by the same agencies. The SEC called Gagnon a “threat to the investing public.”

    Any number of Zeek promoters pose a similar threat. They are at least equally willfully blind.

    It is clear that some Zeek promoters also were promoting JSSTripler/JustBeenPaid, the debacle-in-waiting purportedly organized by Frederick Mann, a former ASD promoter. JSS/JBP has morphed into “ProfitClicking” amid reports of the “retirement” of Mann. Now, ProfitClicking “defenders” are threatening lawsuits against critics.

    Naturally the stories advanced by ProfitClicking “defenders” are being improved by “defenders” of other obvious fraud schemes such as BannersBroker. A BannersBroker “defender” is over at RealScam.com — an antiscam site — suggesting that RealScam is a terrorist organization.

    My God.

    These claims are being made just days after Zeek figure Robert Craddock suggested he had contacts in law enforcement who were going to charge Blogger Troy Dooly with cyber harassment.

    It wouldn’t sell as fiction.

    Craddock’s bid to gag K. Chang easily was the most important story on the PP Blog in 2012. It’s the one that signaled that things are destined only to get crazier in MLM La-La Land and that the threat to U.S. national security only will grow.

     

     

  • BULLETIN: Citing Gregory McKnight’s ‘Semantic Obfuscation,’ Prosecutors Ask Judge To Sentence Convicted Legisi HYIP Swindler To 15 Years — ‘The Top Of The Sentencing Guidelines’; Like Zeek, ‘Program’ Was Pushed On The Ponzi Boards And Instructed Members Not To Use The Word ‘Investment’

    This grainy likeness of Legisi HYIP operator Gregory N. McKnight appears in U.S. court files.

    BULLETIN: Yesterday’s scheduled sentencing of convicted Legisi HYIP swindler Gregory N. McKnight has been delayed until Nov. 19, but federal prosecutors in the Eastern District of Michigan have asked U.S. District Judge Mark A. Goldsmith to sentence McKnight to 15 years in prison.

    McKnight and Legisi relied on “semantic obfuscation” in which investors were told they were joining a “loan program,” not making an “investment,” prosecutors said.

    A 15-year sentence is at “the top of the sentencing guidelines of 151-188 months” and “may serve to discourage others who are inclined to involve themselves in similar criminal conduct,” prosecutors argued to the judge.

    In February, McKnight, 52, pleaded guilty to wire fraud in the Legisi Ponzi caper. The scam, which planted the seed a return of between .25 percent a day and 12 percent a month was possible, was popularized in part on Ponzi boards such as MoneyMakerGroup and Talk Gold.

    Court filings show that Legisi used some of the same payment processors used by the AdSurfDaily Ponzi scheme, including e-Gold and e-Bullion. ASD operator Andy Bowdoin was sentenced in August to 78 months in federal prison.

    “The principle mechanism by which investor funds would be funneled to defendant was through the utilization of the internet via digital currency, particularly e-gold and e-bullion,” prosecutors said in the McKnight sentencing memo. “The use of these non-traditional funding methods provided McKnight with the opportunity (at least for a while) to conduct the scheme below the radar of regulators.”

    And, prosecutors pointed out, “[i]n 2007, the United States government seized the property in approximately 58 e-gold accounts due to various criminal violations, including McKnight’s account . . . Moreover, in 2008, e-gold and its operators were convicted of money laundering and conspiracy to defraud the United States . . . And in 2006, the United States government commenced a forfeiture suit against e-bullion for operating an unlicensed money transmitting business, wire fraud, and money laundering . . . James Fayed, the owner and operator of e-bullion, was later convicted in the State of California of having his wife murdered and sentenced to death row.”

    Legisi gathered about $72 million. The SEC and the U.S. Secret Service led the probe, which resulted in civil charges against McKnight by the SEC and a criminal charge of wire fraud against him by the Secret Service.

    Legisi pitchman Matthew John Gagnon also was charged civilly and criminally in the Legisi case.

    From the prosecution’s sentencing memo on McKnight (italics added/bolding in original):

    As if the exorbitantly high interest rates were not enough to induce investors into defendant’s scam, Legisi also offered a referral program whereby investors could earn a 5% to 7% commission on the amount of new funds that a referred investor placed in the program. As McKnight explained, “[a]s an Active Member of Legisi.com, you are encouraged to refer friends, colleagues, and your own website visitors to us and benefit from an additional source of income — a 5% – 7% incentive bonus for each new account opened by your referrals and on any and all future deposits from them!”

    Legisi was an acronymn that stood for “Lucrative Electronic Gold Income Services International,” prosecutors said. HYIP schemes spread in part because unlicensed/unregistered brokers (such as Gagnon) push them online to earn “commissions.”

    The MoneyMakerGroup Ponzi forum — one of the outlets from which Legisi was pushed — is specifically referenced in court filings in the Legisi case.

    Zeek Rewards, which the SEC described last month as a $600 million Ponzi- and pyramid scheme selling unregistered securities, also was heavily pushed on the Ponzi forums. Zeek used both domestic and offshore financial vendors, including AlertPay and SolidTrustPay in Canada.

    Zeek planted the seed it could provide a return of between 1 percent and 2 percent a day, far higher than Legisi’s maximum suggested payout of 12 percent a month. Like Zeek, ASD suggested a payout on the order of 1 percent a day. The ASD scheme gathered at least $119 million, federal prosecutors in the District of Columbia said.

    ASD relied on wordplay to dupe investors. So did Legisi, prosecutors said in the McKnight sentencing memo (italics added):

    In addition to operating a Ponzi scheme, McKnight committed various securities violations. While McKnight himself referred to Legisi as a “loan” program, and demanded that “members” not refer to their “loan” and an “investment,” Legisi was, in reality, an investment contract, which is considered a security and therefore regulated by the Securities and Exchange Commission. This semantic obfuscation was quite obviously an attempt to sidestep the securities laws.

    From a footnote in the prosecution’s McKnight sentencing memo (italics added):

    [Legisi] Investors originated from all 50 states and approximately 33 foreign countries (Australia, Bahamas, Belgium, Canada, Cyprus, Demark, England, France, Finland, Germany, Greece, Iceland, India, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Malaysia, Mexico, Nigeria, Philippines, Saudi Arabia, Singapore, Slovenia,
    South Africa, South Korea, Sweden, Spain, Thailand, Trinidad West Indies).

    Read the prosecution’s sentencing memo on McKnight and recommendation of 15 years’ imprisonment.

  • The Bizarre Wordplay Of ‘ProfitClicking’

    “25. Individual PC members are not responsible for the performace [sic] of PC or any other programs, products, and services provided by PC. Individual PC members, including those who introduce, sponsor, or refer other members, incur no liabilities or obligations in respect of PC’s financial decisions and directions and any other programs, products, and services launched.” — From the ProfitClicking Terms of Service, Sept. 3, 2012

    ProfitClicking, the nascent follow-up scam to JSS Tripler/JustBeenPaid that surfaced last month amid claims of the sudden retirement of purported JSS/JBP operator Frederick Mann, appears to be trying to tell affiliates that they’ll incur no liability for promoting the “program.”

    And even as it does this, ProfitClicking is disclaiming any liability on the part of the “opportunity”:

    “Participants agree to hold the ProfitClicking! owners, managers, and operators harmless in respect of any losses incurred as a result of participation in any activity related to ProfitClicking!” the “opportunity” claims in its Terms.

    The development occurs on the heels of the collapse of Zeek Rewards, which the SEC described as a $600 million Ponzi- and pyramid scheme that recruited investors by making them believe they’d joined a sort of online nirvana that provided a return of 1.5 percent a day. Zeek’s Aug. 17 collapse already has triggered at least two class-action lawsuits, the appointment of a receiver who has signaled he’ll pursue winners for ill-gotten gains and the seizure of Zeek-related money by the U.S. Secret Service.

    Like JSS/JBP before it, highly secretive ProfitClicking plants the seed that it will pay even more than Zeek.

    One of the Zeek-related, class-action lawsuits is targeted at Zeek operator Paul R. Burks and 10 “John Does,” meaning the plaintiffs are targeting individuals believed to have profited from the alleged Zeek Ponzi scheme or perhaps helped Burks pull off the scam.

    Given that disclaimer language never has succeeded in warding off a fraud prosecution or private lawsuit in HYIP Ponzi land, ProfitClicking’s words aimed at insulating itself are virtually meaningless. Whether ProfitClicking actually believes it can provide legal cover for its pitchmen is unclear. What is clear is that the ProfitClicking Terms — like the JSS/JBP Terms before it — read like an invitation to join an international financial conspiracy.

    If you’re a ProfitClicking promoter, good luck at your deposition in the post-AdSurfDaily*, post-Legisi**, post-Pathway To Prosperity*** and post-Zeek era when a private attorney or lawyer for the government asks you why you were promoting a “program” that advertised a return in the hundreds of percent per year and made you affirm you were not with the “government.”

    Some highlights from the ProfitClicking Terms (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.

    7. I affirm that I am not an employee, by contract or otherwise, of any media or research company, and I am not reading any of the PC pages in order to collect information for someone else.

    22. It is your responsibility to check your payment system accounts to be sure you actually received all payments that you should have received. Because certain payments are made member to member in PC, the PC system cannot confirm that any payments between members were actually made.

    24. In the event of a disagreement between two members regarding payments, it is the responsibility of the members involved to resolve the disagreement. The PC managers hold no responsibility at all in such scenarios.

    Here’s one way to read the Terms: Either ProfitClicking or its affiliates can rip you off — and there’s not a damned thing you can do about it.

    With Zeek’s Paul Burks confronting litigation on at least three fronts and with “John Does” being part of the mix, ProfitClicking’s words are just more HYIP drivel.

    * ASD operator Andy Bowdoin was sentenced to 78 months in federal prison for his Ponzi scheme.

    ** Legisi operator Gregory McKnight faces sentencing Sept. 11 for his Ponzi scheme. Legisi pitchman Matt Gagnon, meanwhile, faces civil judgments in the millions of dollars, along with a criminal charge.

    *** Pathway To Prosperity’s alleged operator Nicholas Smirnow is listed by INTERPOL as an international fugitive.

  • UPDATE: JSS Tripler 2 And Associated Scams Get More Bizarre By The Day: After Purported Bout With Dengue Fever, ‘Dave’ Purportedly Gets Married; Cashouts Now Reportedly Delayed Due To Wedding And Script Glitch — As Members Encouraged To Carry Out Blog-Posting ‘Tasks’

    This will be a familiar refrain to many readers of the PP Blog: In July 2010, the Blog reported that the Financial Industry Regulatory Authority (FINRA) had launched a public-awareness campaign about HYIP fraud. FINRA called the HYIP sphere a “bizarre substratum of the Internet.”

    Just a month earlier — in June 2010 — the U.S. Department of Justice pointed to a threat assessment by the International Mass-Marketing Fraud Working Group (IMMFWG) that declared “[t]here are strong indications that the order of magnitude of global mass-marketing fraud losses is in the tens of billions of dollars per year.” (Emphasis added).

    In publicizing the IMMFWG document, which noted that international scammers use threats and coercive tactics to sustain schemes and chill “uncooperative victims,” the Justice Department alleged that the Pathway to Prosperity (P2P) HYIP scheme had reached into at least 120 countries and gathered $70 million.

    P2P was only one of hundreds or even thousands of HYIP scams operating on the Internet.

    Flash forward to late 2011 and the birth of “Dave’s” JSS Triper 2, which apparently based its name on JSS Tripler, the “opportunity” purportedly operated by Frederick Mann. JSS Tripler 2 reportedly stopped making payments within weeks of launch, blaming an AlertPay account freeze. After that, “Dave” suggested that an unidentified law-enforcement agency that had failed to act in his interests was at least partly responsible for JSS Tripler 2’s problems.

    Among other things, “Dave” has asserted he was conducting a “scan” of critics. Naturally, a “program” relaunch purportedly occurred, Ponzi-forum cheerleaders helped “Dave” advance the scheme (as they drove traffic to their other schemes) and JSS Tripler 2 changed its name to T2MoneyKlub and hatched a companion scheme known as Compound150.com — all while “Dave” reportedly was battling back from a bout with Dengue fever.

    “Dave,” who preemptively denied JSS Tripler 2 was a Ponzi scheme, now appears to have duped members into performing “tasks” such as making comments on Blogs/websites to dupe prospective purchasers of the sites into believing they’re buying established sites with built-in readership. The theory — apparently — is that “Dave” can monetize the sites, sell them at a handsome profit and use the cash to fund his various investment programs, thus muting the Ponzi critics and taking concerns of illegality off the table.

    Some of “Dave’s” members claim they’ve carried out the “tasks” — in effect, to “do what’s best for the ‘program.’” Whether they’re concerned that they’re helping “Dave” scam a new crop of suckers who’d end up with junk websites is unclear.

    What is clear is that they want to get paid — and perhaps are willing to say anything while carrying out the “task” of posting comments on Blogs in purported bids to make them more attractive to purchasers.

    One bizarre and homophobic “comment” on a purported “Dave” Blog (CarryMyBaby.com) reads as such:

    “[W]ell obviuosly [sic] the more sex you have the greater the chances of becoming pregnant unles [sic] you r [sic] one of those queer couples. then no matter what you two do together neither party wll [sic] get pregnant,,,capisce [sic]?”

    Meanwhile, a bizarre comment on a purported “Dave” Blog (IBeatForeclosure.com) reads as such:

    “its [sic] got be [sic] tough to have to decide if you have to foreclose on your house but the this [sic] mortagage [sic] crisis happened [sic] people had not [sic] choice not [sic] and [sic] easy thing to go through.”

    The Blogs appear to be hosted in Utah. Ownership is unclear.

    But even with the “tasks,” JSS Tripler 2 payments reportedly have been suspended again, owing to “Dave’s” wedding, the need to accommodate international travelers and a purported script glitch that caused some members to get paid twice.

    Some members — including members who previously sold JSS Tripler as a “passive” investment opportunity — now claim that members unwilling to assist Dave in posting fake comments are “lazy.”

    On the MoneyMakerGroup Ponzi forum, a “Dave” cheerleader posted a list of 26 websites for JSS Tripler 2 members to visit to post comments.

    So, the JSS Tripler 2 “program” includes these elements:

    • An HYIP scheme that purportedly provided an annualized return of 730 percent and started out by naming itself after an existing scheme that also purported to pay 730 percent a year. (Think FINRA and its memorable “bizarre substratum of the Internet” line in July 2010.)
    • A preemptive denial that a Ponzi scheme was under way — even as well-known Ponzi forum cheerleaders helped the scheme gain a head of steam. (As part of FINRA’s July 2010 educational campaign on the dangers of HYIP fraud,  it issued a public warning about social-networking fraud.)
    • A purported payment-processor freeze that left members in the lurch for weeks.
    • Incongruous suggestions that “law enforcement” had failed to act in the best interests of the “program.”
    • Attempts to chill/ostracize members. (The sort of coercive tactics referenced in the June 2010 IMMFWG document publicized by the U.S. Department of Justice.)
    • Cheerleading by willfully blind participants. (Think Matt Gagnon and the Legisi HYIP Ponzi scheme.)
    • A name change. (Also an element in the AdSurfDaily Ponzi case.)
    • The launch of companion “programs.” (Another element in the ASD Ponzi case.)
    • A purported bout with Dengue fever. (Purported illnesses and violent windstorms are longtime HYIP clichés.)
    • Payment delays blamed on a wedding. (Imagine a legitimate broker/financial adviser telling you that you’d have to wait for the branch manager to return from her honeymoon in Southeast Asia  before you could withdraw the sum you need to buy groceries or cough medicine for your children or pay a tuition bill.)
    • Payment delays blamed on script problems and/or double payments to members. (See this story from our ASD files.)
    • A purported duty to post comments on Blogs to drive up their sale value, so the money can be used to fund investment “opportunities.”

     

  • Day After SEC Announces Judgments Totaling $4.2 Million Against Serial HYIP Pitchman, Another Serial Pitchman — ‘Ken Russo’ — Makes ‘I Got Paid’ Post On TalkGold For JSS Tripler/JustBeenPaid; Separately, McAfee’s ‘Site Advisor’ Declares JBP Pages ‘Dangerous’

    In a 29-page court order announced yesterday by the SEC, U.S. District Judge George Caram Steeh of the Eastern District of Michigan laid out the case of willful blindness against serial HYIP pitchman Matthew John Gagnon.

    That case now has resulted in court-ordered judgments of more than $4.2 million against Gagnon, who also was named in a criminal complaint by the U.S. Secret Service in November 2011.

    But in the HYIP sphere, which FINRA described in 2010 as a “bizarre substratum of the Internet,” not even the huge judgment against Gagnon announced yesterday appeared to unnerve the serial scammers on the TalkGold and MoneyMakerGroup Ponzi forums.

    Posting as “DRdave” on TalkGold, huckster “Ken Russo” announced he’d received a new payment of $482.08 from JSS Tripler/JustBeenPaid, a “program” whose purported daily payout rate of 2 percent dwarfs the purported payout rate of Legisi, one of the “programs” that led to Gagnon’s demise.

    In a March 15 conference call, Frederick Mann, the purported operator of JSS/JBP, told members that the company was making the payouts from money sent in by “new members.” Paying “old” members with money from “new” members is the central element of a Ponzi scheme.

    Even as “Ken Russo” was making the announcement, the online security company McAfee was publishing a “Warning: Dangerous Site” message about the JustBeenPaid website.

    “We tested this site and found it’s risky to visit,” McAfee’s Site Advisor reported.

    In 2010, the SEC declared Gagnon a “danger to the investing public” for his serial promotion of scams. (See paragraph 11 of May 2010 SEC complaint.)

    Assessing Gagnon more than $4.2 million in disgorgement, prejudgment interest and penalties, Steeh found that:

    • Gagnon promoted the Legisi HYIP online, through emails and through a forum.
    • Even though Gagnon promoted the program, he was not associated with a registered broker-dealer and had never been registered with the SEC in any capacity.
    • Gagnon understood HYIP frauds and Ponzi schemes, and yet gleaned about $3.6 million from Legisi operator Gregory McKnight and did not disclose details of his agreement with McKnight to solicit investors for Legisi.
    • Gagnon helped orchestrate the “massive” Legisi Ponzi scheme and initially had come into contact with McKnight after Gagnon had recruited McKnight into an MLM business that sold dietary supplements.
    • Legisi was selling unregistered securities.
    • Gagnon was selling unregistered securities.
    • Gagnon did not qualify investors in any way. (In essence, the only necessary qualification was to have money to send to Legisi.)
    • Gagnon performed no “due diligence” on the profitability of the Legisi program. He did not retain or review trading records, bank or brokerage accounts statements or e-currency account records.
    • Gagnon knew or “recklessly disregarded” warnings that Legisi was a scam, did not know where McKnight was keeping the money or how McKnight was calculating profits and losses.
    • Eventually Gagnon distanced himself from McKnight (after learning about an SEC probe, according to the agency), but proceeded to pitch other scams touting the illegal sale of securities. A twice-convicted felon was Gagnon’s alleged partner in one of the scams, but Gagnon performed no legwork up front.
    • Gagnon eventually learned that a man with the same name as his partner had been convicted of fraud, but “accepted” his partner’s “representation that it was not him.” Gagnon did not investigate his partner’s denials, which were false.
    • Gagnon then proceeded to another opportunity touting unregistered securities, effectively using the same blueprint he’d used when touting Legisi and the other scam in which his partner was a convicted felon. As in the other scams, Gagnon did no legwork and “recklessly ignored several warning signs.”
    • Even as he touted the third program, Gagnon had received “several” bad checks from the purported “successful” trader. Gagnon continued to tout the program.
    • Gagnon then touted a fourth program, apparently one operated by a Ugandan national Gagnon had met on the Internet. (Gagnon stopped promoting this program, according to the SEC, only after the agency subpoenaed his bank records.)
    • Gagnon has shown “no remorse” for his conduct “and has tried to downplay his culpability.”

    Whether “Ken Russo” has conducted any “due diligence” on JSS/JBP is unknown. Whether “Ken Russo” has any qualifications to sell securities is unknown. Whether “Ken Russo” qualified investors in any way is unknown. Whether “Ken Russo” retained or reviewed JSS/JBP records, bank or brokerage accounts statements or e-currency account records is unknown.

    What is known is that “Ken Russo” proceeds from scheme to scheme to scheme.

    “I would caution everyone not to listen to anyone who is posting negative comments about this program,” “Ken Russo,” posting as “DRdave” on TalkGold, urged today. “JBP/JSSTripler has changed many lives during the past 13 months and it is one of the best programs I have seen since I first entered the industry back in 1996!”

    Here, according to the SEC, is how Gagnon, who’d been pitching programs online “since at least 1997,” described Legisi:

    “IN ALL OUR EXPERIENCE IF (sic) HIGH YIELD PROGRAMS THIS IS THE ONLY GENUINE PROGRAM THAT WE HAVE EVER FOUND!”

    McKnight, like Gagnon, is facing millions of dollars in civil judgments. And McKnight pleaded guilty last month to a criminal charge of wire fraud.

    It turned out that Legisi was not “GENUINE” at all.

  • URGENT >> BULLETIN >> MOVING: Legisi Ponzi-Scheme Pitchman Matthew J. Gagnon Ordered To Pay More Than $4.2 Million In Disgorgement, Penalties

    Matthew John Gagnon

    UPDATED 10:35 P.M. EDT (U.S.A.)  Matthew John Gagnon, an HYIP huckster and promoter of the Legisi Ponzi scheme, has been hit with orders of disgorgement and penalties totaling more than $4.2 million, the SEC said.

    Gagnon, of Portland, Ore., and Weslaco, Texas, was described by the SEC as a serial promoter of fraud schemes through his Mazu.com website.

    “The Court found that Gagnon ‘purposefully built up an image of trustworthiness in the on-line investing community and exploited this trust,’” the SEC said. “The Court also found that Gagnon ‘repeatedly committed egregious violations of the federal securities laws’ and ‘has shown no remorse for his conduct.’”

    U.S. District Judge George Caram Steeh of the Eastern District of Michigan presided over the Gagnon case, which the SEC brought in May 2010. The SEC case against Gagnon was not limited to his involvement in Legisi. It also addressed his involvement in a “resorts” securities-fraud scheme from which money was diverted to a recidivist felon, and his involvement in multiple Forex schemes.

    Legisi, an HYIP fraud, had a considerable presence on the TalkGold and MoneyMakerGroup Ponzi forums. Legisi operator Gregory McKnight pleaded guilty to wire fraud last month.

    Here is the breakdown of the financial penalties ordered by Steeh in the May 2010 case against Gagnon: $3,613,259 in disgorgement; $488,570.47 in prejudgment interest; and a $100,000 civil penalty.

    The court-appointed receiver in the Legisi case also holds millions of dollars in judgments against Gagnon.

    Here is a snippet from Steeh’s order of permanent injunction against Gagnon (italics added):

    “[Gagnon] explained that ‘I have a trader I represent in Europe that can trade your funds in a managed account.’ Gagnon promised that investors in the European Trade Offer would experience ‘consistent monthly profits’ and ‘very few losing trades.’ Apparently, the European trader is ‘Juju,’ who is Jjunju Kateregga, a Ugandan national residing in Finland. Gagnon promoted Juju’s trading prowess after meeting him on the internet, exchanging emails and talking to him on the phone ‘a few times.’”

    NOTE: The quoted passage above pertains to a purported “managed Forex trading” offer pitched by Gagnon after he moved on from Legisi. (Read the full order at Justia.com.)

    In November 2011, the U.S. Secret Service filed a criminal complaint against Gagnon for his alleged wrongdoing in Legisi.