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Tag: offshore fraud

  • SEC: Federal Judge Orders Asset Freeze Amid Allegations That ‘Locust Offshore Fund Ltd.’ Was A Fraud Pulled Off By Man Who Falsely Claimed 2 Harvard Degrees; Andrey C. Hicks Accused Of Faking Academic And Employment Pedigrees And Sanitizing Fraud Through Website

    In yet another bizarre and disturbing development on the fraud front, the SEC went to federal court in Massachusetts yesterday, leveling spectacular allegations of financial deceit against Locust Offshore Management LLC of Delaware and Cambridge, Mass., and its principal, Andrey C. Hicks of Boston.

    Named a relief defendant was Locust Offshore Fund Ltd., a purported hedge fund in the British Virgin Islands that is alleged to have been the bogus recipient of ill-gotten gains.

    Neither of the Locust entities was registered with the SEC, and claims that Locust was properly registered and in good standing in the British Virgin Islands were false, the agency alleged.

    Although Hicks, 27, planted the seed he had both undergraduate and graduate degrees from Harvard, the claims were false, the SEC said.

    Nor was Hicks ever employed by Barclays Capital as he claimed, the agency charged.

    Meanwhile, Ernst & Young — contrary to the claims of Hicks — was not the auditor of the Locust Fund, the SEC charged. At the same time, Credit Suisse was not the fund’s prime broker and custodian, and the fund was not incorporated in the British Virgin Isles as Hicks had claimed, the agency added.

    The scheme operated in part through a website designed to trick investors, the SEC said. Despite high-sounding claims on the site that the “firm’s quantitative strategies are based on mathematical models developed by the fund’s manager, Andrey C. Hicks, during his tenure at Harvard University and are executed by computer software,” Hicks attended Harvard for only three semesters as an undergraduate — and flunked out twice, the SEC alleged.

    He was not permitted to re-enroll after his second dismissal, the SEC charged. During his brief time at Harvard, Hicks took only one math course, carding a D-minus, the agency said, quoting records from the prestigious university.

    None of these things, however, kept Hicks from creating a website and using it to mask the fraud and sanitize the scheme, establishing Locust Offshore Management LLC  as a Delaware corporation, opening business and personal checking accounts, creating offering materials for his unregistered firm purportedly operating offshore — and hawking his fraud scheme, the SEC charged.

    Hicks met one of his customers on an “airplane,” telling his fellow voyager that Locust had $1.5 billion under management , that he had a PhD in “applied mathematics” from Harvard and had developed his trading skills at Barclays before setting out on his own at Locust, the SEC charged.

    Among other things, Hicks told his airplane mark that Barclays was a “large investor” in the Locust fund and touted the Locust website. The pair exchanged business cards, the SEC said.

    After meeting Hicks on the plane, the investor visited the Locust website last month, viewing purported data about the firm, including a claim that the fund had more than $1.2 billion under management and had generated  “an incredible year-to-date return of 78.59 percent,” the SEC alleged.

    “All of the financial data appeared on web-pages that described the data as ‘powered by Credit Suisse,’ creating the false and deceptive impression that the data came from Credit Suisse,” the SEC charged.

    In reality, the SEC charged, bank records showed that the enterprise had only about about $1.7 million under management.

    Based on the false information provided by Hicks, the investor plowed $100,000 into the scheme, the SEC said, alleging that, within days of the September investment, Hicks moved the money into his personal checking account.

    Between June 2, 2011 and Oct. 11, 2011, other investors from Massachusetts, Minnesota and Iowa appear to have plowed more than $1.6 million into the scheme — with $83,000 being the low-end investment and $500,000 being the high end, the SEC alleged.

    “Substantially all” of the money was transferred to to “checking and savings deposit accounts in the sole, personal name of Hicks,” the SEC charged.

    U.S. District Judge Richard Stearns ordered an asset freeze, the SEC said.

     

  • 9News.com (KUSA/Denver) Reports That Marlyn Hinders, Fugitive In $80 Million Genesis Fund Ponzi Scheme, Has Been Arrested

    Marlyn D. “Milt” Hinders, a Colorado fugitive charged six years ago in the $80 million Genesis Fund Forex Ponzi scheme, has been arrested in Houston, 9News.com (KUSA) is reporting.

    Hinders is 72. He was indicted in May 2005. A federal grand jury that had been impaneled in the Central District of California in 2003 accused him of being “one of the leading promoters and a manager of the Genesis Fund.”

    The Genesis Fund scheme traces its roots at least to 1994 and presaged highly complex international Forex, HYIP and autosurf fraud investigations to come. The Genesis Fund fraud caper started in the United States, but then whisked itself offshore to Costa Rica and other countries when U.S. law enforcement began to close in, first by issuing subpoenas and later by convening a grand jury when evidence disappeared.

    One of the figures in the case was a “co-conspirator lawyer from Costa Rica,” according to the indictment. Another was California attorney Victor Preston, who pleaded guilty in 2009 to defrauding the United States.

    INTERPOL and authorities in Costa Rica assisted in rounding up at least three Genesis Fund defendants who’d ducked out of the United States. Five others were arrested in the United States, prosecutors said.

    Hinders, who allegedly moved to Mexico in 2004 after subpoenas were issued and the grand jury was impaneled, was caught in Houston after a “tip” last month, KUSA reported. It is believed Hinders is the last of the nine defendants in the case to be rounded up.

    Like the now-defunct AdViewGlobal autosurf, the now-defunct Genesis Fund purported to be an offshore “association” outside the reach of U.S. law enforcement, according to records.

    Investigators followed the Genesis Fund paper trail “from the Caribbean to Hong Kong to Costa Rica and numerous other offshore locations,” according to a statement last year.

    When the Genesis Fund Ponzi scheme collapsed, its operators “and their co-conspirators lulled the investors into believing that their investments would be recovered through a new investment plan,” the grand jury charged in an 83-count indictment.

    It is common for investment fraud schemes to suspend payouts and then claim a new program will emerge to replace a failed one.

    “Upon learning of the grand jury investigation, the defendants and their co-conspirators conspired to and did endeavor to obstruct the investigation by restructuring the Genesis Fund as a group of nominee offshore corporations,” the grand jury charged.

    “This signals the new era of solving global financial fraud — the veil of offshore secrecy has been lifted and the IRS will do what is necessary to expand international cooperation to obtain financial evidence,” Victor S O. Song, chief of the IRS Criminal Investigation Unit, said last year.

    Read earlier story on the Genesis Fund.

    Read the Genesis Fund indictment.

  • EDITORIAL: Animated Attack On Obama Goes Missing From MPB Today Affiliate’s Sales Arsenal; PP Blog Declines Request From Affiliate’s MLM Sponsor To Remove Story That Describes Bizarre Sales Pitch Painting President As Nazi

    Regular readers of the PP Blog know that it supports the efforts of President Obama’s Financial Fraud Enforcement Task Force to weed out the purveyors of schemes who brought the U.S. and much of the world economy to its knees. Obama is a Democrat.

    What readers may not know is that the Blog is written by a Republican who celebrates America’s entrepreneurial spirit, its market economy, its job-creators, its Great Defenders of Freedom, its Great Guardians of Liberty.

    The PP Blog concerns itself with matters of interest to readers who embrace online commerce and see the Internet as an outlet that is pivotal to future economic expansion. How wonderful would it be, say, if Americans and the other peoples of the world who are living in poverty could harness their entrepreneurial spirits and the power of the Internet to engage in legitimate commerce and elevate the standard of living worldwide?

    And how wonderful would it be if companies and individuals who already are benefiting from financial success could use the Internet to create a legitimate turbine that generates sustainable jobs that pay a pride-producing wage and freelance sales and vendor positions that create bright financial futures?

    Although the PP Blog focuses on business and generally avoids politics, today it makes an exception: When the President of the United States — regardless of party — is attacked to drive business to an online multilevel-marketing (MLM) firm, it must be noted for posterity that the MLM sphere has reached a new and deeply disturbing low.

    To call the anti-Obama, animated screed by an affiliate of MPB Today “tasteless” would be a gross understatement. It harms MPB Today, which is the subject of a “review” by the U.S. Department of Agriculture amid affiliate claims the company has been endorsed by the government. Various government agencies — regardless of what political party controls the White House and the Congress — have warned repeatedly for years that one of the scammer’s most important tools is the shovel that plants the seed that the government endorses a “program” or “business opportunity.”

    MLM “opportunities” are infamous for planting this cancer-spreading seed. Members of AdSurfDaily, for instance, planted the seed that President George W. Bush had given ASD President Andy Bowdoin an award for a lifetime of business achievement. Bowdoin fanned the pollination of the seed by taking his “award” on the road with him and even posing with it.

    The clear aim of the claim was to make prospects believe that ASD could not possibly be a scam because the President of the United States would not give an important business award to a scammer.

    It turned out that the “award” actually was a memento for making campaign donations to the National Republican Congressional Committee. In effect, Bowdoin had made the donations to the NRCC in return for banquet tickets. Records show that Bowdoin made the donations during a period of time in which federal prosectors say he was operating an international Ponzi scheme that perhaps ensnared more than 100,000 people.

    It is a virtual certainty that Bowdoin, who’d been charged with felonies in Alabama in a previous securities swindle and was given a suspended jail sentence, used Ponzi proceeds to make the donations.

    Harm spreads virally when such bogus seeds are planted and take root on the Internet.

    But getting back to the matter of the MPB Today affiliate’s Obama-bashing sales pitch . . .

    Walmart and Walmart’s Sam’s Club name now have been harmed because the MPB Today affiliate used the name of Sam’s Club in the animated attack, which painted Obama and Secretary of State Hillary Clinton as Nazis — with Obama as a cowering Nazi and Clinton as a drunken one wearing “puke colored” clothes purchased from Big Lots, a discount retailer.

    This occurred while other MPB Today affiliates were claiming that MPB, which dispenses Walmart gift cards to winners in the MPB 2×2 matrix cycler, was under “contract” with Walmart, that MPB members were “partners” with Walmart, that MPB sells food “vouchers” that can be exchanged for Walmart gift cards and that the MLM program was “Govt. certified with Food Stamps!”

    As incredible as it seems, Michelle Obama — the First Lady of the United States — was depicted in the affiliate’s animation as experiencing an embarrassing gas attack in the Oval Office after sampling “beans” at a Sam’s Club store. A dog depicted in the pitch more or less said that the First Lady was stinking up the joint.

    Good grief!

    The pitch also harms the image of U.S. business in general because it sends the message that “anything goes” in American Capitalism as long as it returns a profit, the precise message U.S. companies now under indictment or investigation were sending when they brought the financial sector to its knees.

    Meanwhile, it specifically harms online business. Much of the world already believes the Internet is one giant cesspit, in no small measure because of the business practices of certain MLM programs and affiliates of MLM programs.

    At the same time, it harms the Republican party, which is trying to make gains in the upcoming midterm elections. It would be easy, for example, for the Democrats to seize on the message that the sales pitch for MPB Today is just another example of wretched GOP excess and hatred embedded in code. The most bizarre thing about the pitch is that it seems to presume that it is a perfectly acceptable business practice to alienate MPB members and prospects who might be Democrats and Obama supporters — as well as Republicans who actually respect and admire the President even if they disagree with his policies and do not share his political philosophy.

    Even though the MPB Today affiliate’s precise party or political affiliation is not known, it seems clear that the affiliate sees nothing wrong with mixing business with inflammatory, divisive politics,  and is not enthusiastic about the current Democratic leadership. In this sense, it also harms the Democratic party. Political pranksters and Obama opponents could paint the MPB pitchman as a Democratic saboteur or a Tea Party activist seeking to create dissension in the ranks, something that could inure to the benefit of Republicans.

    Most of all, though, the pitch hurts America. Much of the world looks to America for both financial and moral leadership. What the world got in the context of the promotion for MPB Today is yet-another impossibly ham-handed attempt to sell an MLM product at any price — even at the price of American prestige.

    Segments of the MLM trade already are infamous for their inability to sell products without lying, for resorting to gutter tactics, for using sales pitches to reimagine products as something they are not and for setting the stage for tens of thousands of people to get fleeced in one spectacular scam after another that goes “viral” on the Internet.

    Today the PP Blog received a request from a person who described herself as the sponsor of the MPB Today affiliate who produced the anti-Obama screed to “delete” the Blog’s stories on the reprehensible sales pitch.

    “The animated short video on MPB with Hilary and Obama was created by a member I sponsored into MPB and the film has since been taken down,” the sponsor noted. “The member agrees it may have been in poor taste and chose to delete it. Please do the same.”

    Welcome to the often-bizarre world of MLM — a world in which the affiliate who authored a political attack on the President of the United States to gain payments from a 2×2 cycler matrix pushed on known Ponzi forums such as ASAMonitor  “agrees” only that the pitch “may have been in poor taste” and the dutiful sponsor seeks to make sure the the record gets deleted.

    Although the PP Blog verified that the sales pitch had been deleted from the animation site, the Blog is declining to delete its coverage of the matter. All people engaged in MLM need to see it. If they are interested in being taken seriously, they need to condemn it.

    MPB Today should issue a statement that condemns it.

    In May 2009 — just days after the Obama administration announced a crackdown on international financial fraud — the PP Blog received a request from KINGZ Capital Management to delete a story about the AdViewGlobal (AVG) autosurf’s claim that it had secured KINGZ as an offshore wire facilitator to make it easier for Americans (and other peoples of the world) to send money to an obvious Ponzi scheme that had risen from the ashes of ASD, yet another Ponzi scheme

    The PP Blog declined the request. KINGZ later was banned by the National Futures Association for turning a blind eye to the actions of Trevor Cook, a now-convicted felon who operated an international Ponzi scheme that caused investor losses of at least $158 million. The scheme traded on religion. A federal judge called it “wretched, tawdry and cheap.”

    History will record that AVG made the claim about  its new relationship with KINGZ on the very same day in May 2009 that Obama himself announced the fraud crackdown. By June 25, 2009, AVG suspended autosurf cashouts, taking an unknown sum of money sent in by members with it. It is known that many AVG members also were members of ASD, the subject of a racketeering lawsuit and two federal complaints that sought the forfeiture of more than $80 million. The government won both forfeiture cases. The decisions by U.S. District Judge Rosemary Collyer now are under appeal by Bowdoin.

    It also is known the ASD victims have been targeted in promotions for MPB Today. If that’s not enough, it also is known that at least one MPB Today affiliate’s pitch page includes links to at least 100 “surfing” programs, as well as a link to Data Network Affiliates (DNA).

    DNA, yet another MLM program, purports to collect license-plate data that can aid law enforcement and the AMBER Alert program rescue abducted children. Even as DNA and affiliates are claiming to be interested in helping law enforcement, the company says it is selling a spray product that prevents cameras from snapping photographs of license plates at intersections that use electronic systems to enforce traffic laws.

    As DNA is doing this, it also is telling churches that they have the “MORAL OBLIGATION” to recruit affiliates for a purported mortgage-reduction program targeted at people who are facing foreclosure. Meanwhile, MPB Today also is targeting foreclosure subjects in sales pitches, and some MPB affiliates are using religion in sales pitches to attract MLM members.

    Both MPB Today and DNA are operating in Florida, which has one of the highest concentrations of foreclosures in the United States and is near the top of the list in U.S. bank failures.

    So, no. The PP Blog will not delete its coverage of the MPB Today affiliate’s attack on Obama.

    All of America — all of the world and all of the MLM universe — needs to see that the President of the United States was right in May 2009 when he announced the fraud crackdown and was right in November 2009 when he announced the formation of the Financial Fraud Enforcement Task Force.

    The PP Blog has no doubt — none whatsoever — that corrupt elements within the MLM universe are doing everything in their power to use the Internet to bleed wealth from hard-working Americans and other hard-working peoples of the world, and that the corrupt transfer of wealth is leading to losses of billions of dollars globally. Simply put, these reprehensible — if not downright criminal business practices — are a money grab on a colossal scale.

    Proceeds from fraud schemes are difficult to trace. Money moves at the speed of an electronic impulse. Any number of nefarious enterprises, including narcotics traffickers, organized crime and terrorist groups, could be tapping into the fraud stream. There is no doubt that some of the criminal enterprises are dressed up as legitimate MLMs or employ a direct-sales business model that pays commissions to attract new money.

    Stand strong, Mr. President. Your efforts to turn off this criminally gushing Ponzi and fraud spigot not only are commendable, but also are in the interest of U.S. national security, the safeguarding of which is your highest duty to the American people.

    The photos below are for posterity. We are publishing them even as we wonder if nothing is off limits if it helps an MLM offer convert — and even as we wonder why the MLM trade seems so willing to repeatedly attribute its image problem to only a “few bad apples” while simultaneously calling the industry’s critics “haters.”

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  • Pyramid Scheme Operated From Building Known As ‘One Pyramid Center’; Pennsylvania AG Says; Universities, Nonprofits Swindled In Alleged Caper With Offshore Tentacles

    Brian J. Murray

    Four Pennsylvania residents have been charged in an alleged pyramid-scheme caper that gathered more than $7.5 million and bilked universities, nonprofits, local governments and other clients, investigators said.

    Charged in the case were Brian James Murray, 67, of Scranton; Murray’s wife, Diane D. Murray, 66; Christine M. Oliver-Shean, 51, of Scranton; and Oliver-Shean’s husband, Timothy G. Shean, 53.

    Brian Murray was the chief executive officer of  the Murray Insurance Agency in Scranton. Christine Oliver-Shean was the president of the company, which is now bankrupt, authorities said.

    The former executives are charged with criminal conspiracy, money laundering, theft, insurance fraud, forgery, participating in a corrupt organization, tampering with evidence, obstructing law enforcement and various tax crimes. Among the allegations was that the executives used a business registered in the British Virgin Islands to conceal more than $10 million in income and avoid paying taxes.

    Diane Murray, meanwhile, was accused of theft and conspiracy in an alleged scheme to divert money from another business to the Murray Insurance Agency. She also is charged with filing false tax returns.

    Timothy Shean was accused of conspiracy, tampering with physical evidence and obstructing law enforcement in an alleged bid to conceal evidence.

    In what may go down in the law-enforcement community as a moment of almost impossible symmetry, Pennsylvania Attorney General Tom Corbett got to deliver the type of line that only can be delivered when the fraud-fighting universe aligns itself perfectly.

    Indeed, Corbett said, “It is interesting to note that the building in Scranton where Murray’s insurance business was headquartered is known as ‘One Pyramid Center,’ because this was a massive illegal pyramid.”

    The pyramid absorbed “millions of dollars from new clients to conceal past thefts and keep the scheme in operation,” Corbett said.

    Also charged criminally in the case were three companies: Murray Insurance Agency and Mallow Holding Co. of Scranton, and Gaffer Insurance Co. Ltd. of Tortola, British Virgin Islands.

    The case demonstrates that underlings and relatives who participate in a fraud scheme and/or help to conceal evidence can be charged with serious crimes. Corbett said the probe sprouted from an earlier investigation in which Brian Murray was accused of stealing more than $1.3 million in customers’ payments for insurance premiums.

    “The losses from large-scale fraud cases such as this one impact everyone who purchases an insurance policy in Pennsylvania, who will face higher premiums and increased costs in the future,” Corbett said.

    In essence, Brain Murray was accused of collecting money for insurance premiums — but not forwarding the money to insurers. If a client made a claim, the claim was paid from money sent in by other clients. The scheme collapsed in September 2009.

    Listed among the victims were the University of Scranton, Marywood University, Loyola College of Maryland, St. Joseph’s University, Moses-Taylor Hospital, the Borough of Phoenixville, and the Lackawanna County Multi-Purpose Stadium.

    Other nonprofits and unsuspecting businesses also were fleeced in the scam, investigators said.

  • FLASHBACK: Year Ago Today, AdViewGlobal Announced Offshore Wire Facilitator — On Same Day Obama Announced Crackdown On International Fraud

    One year ago today, President Obama announced a crackdown on international fraudsters. On the same day, the AdViewGlobal autosurf announced a new, offshore wire facilitator. By November, the president had created the interagency Financial Fraud Enforcement Task Force.

    Longtime readers of the PP Blog may scarcely believe a year has passed since the AdViewGlobal (AVG) autosurf announced a new, offshore wire facilitator — on the same day President Obama announced a crackdown on international fraud.

    Obama delivered his remarks at 11:37 a.m. By 5:54 p.m., a member of an AVG forum operated by some of the Mods and members of the Pro-AdSurfDaily Surf’s Up forum announced that AVG members could wire money offshore from the United States after the company’s bank account had been mysteriously suspended earlier in the year.

    AVG highlighted its purported “offshore” location in sales promos.

    The date of the wire announcement — May 4, 2009 — was an important one in the history of the PP Blog. In the following weeks, the Blog came under attack by advocates for autosurf Ponzi schemes. In the months that followed, however, one autosurf scheme after another came crashing down — including AVG.

    Not even the collapse of one autosurf Ponzi scheme and HYIP scheme after another, however, has caused serial promoters to renounce these sordid pursuits. Too much money is involved. Why fret over the national-security implications if a downline commission is on the line in this shadowy and unseemly pocket of reprehensible commerce populated by greedsters, MLM hucksters and just plain criminals and racketeers?

    In this seedy world of constantly expanding rationalizations for criminal conduct and personal profit, the bomb or missile probably will land on a neighborhood that deserves to be destroyed. Right? Longtime readers of the PP Blog know the Ponzi advocates reshape their stories whenever the need arises. Any fanciful, made-up reality will do.

    Some of the Blog’s readers — and the Blog itself — came under near-ceaseless attacks last spring and summer from people who desire to legalize Ponzi schemes. Although the proposition itself is absurd, it was championed by the Blog’s Kool-Aid-drinking critics. Indeed, some of them believe, for example, that all commerce should be legal.

    Some of them are so out-of-touch that they appear not to recognize they are advancing the argument not only for economic misery and the steady supply of drugs for the schoolchildren of America, but also for slavery and human bondage. Their argument is one that would set Bernard Madoff free if society placed any credence in it at all. Madoff victims would be out billions of dollars, 80-year-old people fleeced of their pensions and savings would be forced to reenter the workforce because “that’s the breaks” of capitalism — and yet Madoff would be set loose to run a brand-new scheme of his choosing.

    No part of that vision for America computes. It is a desperate argument of convenience advanced by people who are willing to embrace crime as long as some people make money. In short, it’s the delusional argument for Enron-style capitalism applied to Ponzi schemes. The scalding irony is that some of the very same people who championed Andy Bowdoin of AdSurfDaily did not do the same for Madoff. The hypocrisy — the disconnect — is stunning. If the basis of a pro-Ponzi argument is that all commerce should be legal and that the government wields too big a stick, then both Madoff and Bowdoin should be equally championed — victims be damned.

    So what if Grandma, 92, is greeting customers at Walmart because Madoff needed another big house? And so what if Enron employees and stockholders lost jobs and what they believed to be their financial security? That’s the breaks. Right? It’s much better to follow the lead of some AdSurfDaily members in calling for the prosecutors to be jailed and the judges to be brought up on charges for violating their oaths? Right?

    Today the PP Blog invites readers to visit its archives.

    You’ll see a story about the announcement of AVG’s purported new, offshore wire facility here. You’ll find a related story here.

    In this story, you’ll find a tie between KINGZ Capital Management — AVG’s purported offshore facilitator — and the Trevor Cook Ponzi scheme in Minnesota.

    Here you’ll find a comment from a purported attorney who advised the PP Blog that it might be stepping on too many toes by publishing stories about AVG. Our response is here.

    You’ll find a story about the collapse of AVG here. The collapse occurred about 23 days after we received the note from the purported attorney. As a side note, the story about the collapse also points out that AVG threatened its own members.

    Here you’ll find a story about AVG’s name being mentioned in a racketeering lawsuit against AdSurfDaily, which has close ties to AVG. (Take time to read the comments from readers below the story.)

    In this earlier story, we provided plenty of reasons for people not to join AVG.

    We also recommend you read this story and the accompanying comments. Weighed by a number of factors beyond page views, it is the “most popular” story in the history of the PP Blog.

    Finally, we encourage you to read this story. It’s one of a number of stories we’ve done on  what the President of the United States is doing to combat the insidious amount of financial fraud.