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Tag: Monica J. Lindeen

  • URGENT >> BULLETIN >> MOVING: Montana Fines ‘Funky Shark,’ Purported Upstart ‘Penny Auction’ Program; Operator Agrees to Pay $834,000 After Issuance Of Order

    breakingnews72URGENT >> BULLETIN >> MOVING: (UPDATED AT 12:49 P.M. ET U.S.A. TO DELETE EARLIER REFERENCE TO ‘CEASE AND DESIST’ ORDER AND TO PROVIDE LINK TO CONSENT AGREEMENT AND FINAL ORDER.)

    An upstart “penny auction” company known as “Funky Shark” effectively has been shut down after the state of Montana named it in an order and its alleged operator agreed to pay a $40,000 fine and to repay $834,000 to investors, the office of the Montana Commissioner of Securities and Insurance Monica J. Lindeen said this morning.

    Montana authorities identified Scott Wacker of Bozeman as Funky Shark’s operator, alleging that he and Funky Shark sold investment opportunities illegally.

    In September — after the shutdown by the SEC of the purported Zeek “penny auction” program — “Wacker began recruiting investors for his penny-auction website, FunkyShark.com,” Lindeen’s office said. “By the end of October, Wacker had raised over $1 million from investors across the world.”

    In a claim apt to cause unease among HYIP operators, Lindeen’s office said Wacker’s bank filed a “suspicious activity report.” Such reports typically are filed when a bank begins to suspect something untoward is occurring in a customer’s account.

    “The flurry of transactions in Wacker’s personal and business accounts led his bank to file a suspicious activity report, which was referred to Lindeen’s office,” Montana authorities said. “After reviewing the report, investigators suspected Funky Shark was a pyramid scheme and requested a restraining order to prevent additional investors from getting involved.”

    Wacker cooperated with Montana authorities and “posted a notice on Funky Shark’s website explaining that its investment program ‘may violate certain securities laws in the United States,’” Lindeen’s office said.

    Authorities described Funky Shark as a program teetering on collapse shortly after its launch.

    “In the two months it operated, Funky Shark paid nearly $378,000 in commissions to participants who recruited new members,” Lindeen’s office said. “Those commission payments left Funky Shark unable to repay all of its participants in full, so Wacker agreed to pay $270,000 out-of-pocket to make investors whole.”

    Lindeen said Funky Shark investors were lucky.

    “Mr. Wacker stepped up to the plate and repaid his investors,” she said. “Often when we handle these types of cases, there’s simply no money left to repay participants. But for a number of reasons, this case is unique. Mr. Wacker didn’t understand what he was getting into, and he has expressed his commitment to setting things right.”

    Some HYIPs are selling “founder’s memberships” to fill the coffers with cash prior to the “launch” of a “program.” That was the case with Funky Shark, Lindeen’s office said.

    “According to the Funky Shark website, members who pay a $24.95 fee can join a ‘rewards program’ and earn ‘passive income’ from new members they recruit,” Lindeen’s office said on Nov. 2. “For a non-refundable, $1,000 investment, members become ‘founders’ and get a share of each day’s auction profits and a bonus for every new founder they recruit.”

    Authorities noted that “[n]either Wacker nor Funky Shark were licensed to offer securities in Montana.”

    Here is the consent order.

  • REPORTS: Accused Montana Ponzi Schemer Richard F. Reynolds Has Been Arrested In Kansas

    Richard F. Reynolds, the accused Montana Ponzi schemer, has been arrested in Kansas, ABCMontana is reporting via the Associated Press.

    The AP report cites a report that first appeared in the Bozeman Daily Chronicle.

    Reynolds also is known as Richard F. Adkins. In March, the office of Montana Commissioner of Securities Monica J. Lindeen said Reynolds presided over an “elaborate” caper that swindled “at least 140 victims from 21 states and 6 countries.”

    Millions of dollars were involved, Lindeen’s office said at the time.

    Between 2008 and 2011, the scam “shuffled investor’s money across more than 30 bank accounts to be spent on new cars, international vacations, and a new home for Reynolds and his wife,” Lindeen’s office said in March.

    As many as eight corporations Reynolds created over the three-year period may be part of the swindle, Lindeen’s office said.

    See ABCMontana report.

     

  • BULLETIN: Felony Warrants Issued For Accused Montana Ponzi Schemer And Affinity Fraudster Richard F. Reynolds; ‘Phony Gold And Foreign Currency Trading Schemes’ Alleged — With ‘Pastors’ Used As Pitchmen

    BULLETIN: Richard F. Reynolds, of the region of Bozeman, Mont., is wanted on 20 felony warrants, Montana officials said. Reynolds also is known as Richard F. Adkins.

    Reynolds, the office of Montana Commissioner of Securities Monica J. Lindeen said, presided over an “elaborate” caper that swindled “at least 140 victims from 21 states and 6 countries.”

    Between 2008 and 2011, the scam “shuffled investor’s money across more than 30 bank accounts to be spent on new cars, international vacations, and a new home for Reynolds and his wife,” Lindeen’s office said.

    As many as eight corporations Reynolds created over the three-year period may be part of the swindle, Lindeen’s office said.

    An investigation has been under way for 19 months, Lindeen’s office said.

    Reynolds faces up to 200 years in prison. The investigation is being conducted by Lindeen’s office and the Gallatin County Attorney’s Office, authorities said.

    A former employee of Reynolds told investigators that Reynolds was a devoted scammer “not concerned about who he hurts — seniors, and even single parents with kids,” Lindeen’s office said.

    “Reynolds allegedly used his connections with various ministers, pastors, and other religious leaders to recruit victims into his scheme,” Lindeen’s office said. “Pastors told investigators Reynolds paid approximately 10 percent of new funds they brought into the scheme, and tax records indicate that the pastors were considered employees of Reynolds’ companies. The pastors said they believed all of the money was being invested in foreign currency trading or gold opportunities until Reynolds abruptly cut off contact in the fall of 2011.”

    Some of the investors hailed from Russia, Mexico, Germany and South Korea, Lindeen’s office said. Court documents also reference Canada.

    Reynolds has not been arrested and is considered “wanted,” officials said.

    When arrested, Reynolds faces bond of $10 million, officials said.

    He was associated with an “umbrella” entity known as “United Consultant Investment Corporation” and nested “pyramid schemes” and embezzlement within his elaborate fraud mix, officials said.

    “Marketing materials given to potential victims promised 100 percent quarterly returns on investments in Reynolds’ phony gold and foreign currency trading schemes through two of his companies, Buffalo Exchange and Buffalo Extension LLP,” officials said.

    Losses preliminarily are estimated at more than $5 million.

    Link to affidavit of probable cause.

    Link to criminal information.

     

  • BULLETIN: Montana Declares ACN Inc. A ‘Pyramid Scheme’; Cease-And-Desist Order Issued Amid Allegations Deck Is Stacked Against MLM Participants

    BULLETIN: ACN Inc., a North Carolina-based multilevel-marketing company that bills itself “The World’s Largest Direct Seller of Telecommunication Services,” has been accused by the state of Montana of operating a pyramid scheme.

    Monica J. Lindeen, Montana’s Commissioner of Securities and Insurance, has issued a cease-and-desist order against ACN and a Notice of Proposed Agency Action.

    “Pyramid schemes are immensely profitable to a few individuals at the top and a complete loss for almost everyone else,” Lindeen said. “The actions against ACN and its officers seek to shut down the company’s alleged unlawful operation before more people lose their hard-earned money.”

    Also named in the actions were Gregory Provenzano, Robert Stevanovski, Anthony Cupisz and Michael Cupisz, all officers and founders of ACN, according to Lindeen’s office.

    “[A]n overwhelming portion of revenues earned by ACN representatives was derived from participants who must personally buy a telephone service that does not work in many parts of Montana to become managers or recruit new participants into the program,” Lindeen’s office said.

    Investigators said the odds of making any money in ACN were overwhelmingly against participants.

    “In 2008, ACN recruited 91 Montana participants who paid approximately $61,741.69 to be a part of the program,” Lindeen’s office said. “Only two of the participants made any money, with one participant making $696 and the other making $700.”

    In the whole of 2009, according to investigators, Montana-based reps paid ACN nearly $239,000 to be a part of the program. The money came from more than 300 participants.

    “ACN’s records indicate a mere $896.86 was paid out in compensation to these participants,” Lindeen’s office said.