BULLETIN: (4th Update 9:13 p.m. EDT U.S.A.) Accused Ponzi schemer Paul Burks ran a “pyramid scheme” known as FollowMe1X2 that was a precursor to ZeekRewards, federal prosecutors say.
A quote about FollowMe1X2 that appears in a prosecution filing today also appears verbatim in a post on the MoneyMakerGroup Ponzi forum dated Sept. 4, 2010, by “charlieone.”
From the quote: FollowMe1X2 is “a fast-paced network advertising program that was designed to maximize your ad budget, increase your businesses exposure and your bank account exponentially!”
FollowMe1X2 collapsed and participants were ported into ZeekRewards, prosecutors said.
Zeek also had a presence on MoneyMakerGroup and other boards referenced in federal court filings as places from which Ponzi schemes are promoted.
Today’s prosecution filings against Burks, who faces trial next month on charges of wire fraud, mail fraud. conspiracy to commit both and conspiracy to commit tax fraud, come in the form of a “Notice of Intent to Introduce Evidence and Memorandum of Law in Support of its Admissibility.”
The document is similar to filings against now-convicted Ponzi schemer Andy Bowdoin of AdSurfDaily, another Ponzi board “program.” In the ASD cases, prosecutors tied Bowdoin to scams both before ASD (DailyProSurf) and after (AdViewGlobal and OneX).
ASD, another Ponzi-board “program,” collapsed in 2008. Like Zeek, ASD used vendors such as SolidTrustPay and AlertPay and purported to have an “advertising” function.
Like Burks, Bowdoin was accused of porting participants from one scam to another.
BehindMLM.com reported today that Burks is seeking to have the tax-fraud conspiracy charge against him dismissed prior to trial, scheduled to begin July 5. Prosecutors have not yet responded to his argument.
But in their notice today, prosecutors argued that the jury should be able to hear evidence that Zeek parent Rex Venture Group LLC had not filed corporate tax returns between 2003 and 2011.
It also should be able to hear evidence about the FollowMe1X2 scheme, prosecutors contended.
EDITOR’S NOTE: Certain reports by the PP Blog that are available to any person with an Internet connection are referenced in a consolidated, amended prospective class-action complaint that makes claims against various defendants with an alleged association with TelexFree. Information from other publicly available sites, including BehindMLM.com, RealScam.com and others, also is referenced.
The purpose of the PP Blog is to make information available to a wide audience interested in Ponzi schemes, pyramid schemes, securities-fraud schemes and concerns about the interconnectivity of such schemes. The Blog was not consulted about the inclusion of its links or quoted material from the Blog. Nor was the Blog compensated. The PP Blog has no association with the class-action attorneys, who obviously are readers of the Blog and the other online publications.
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Still promoting MLM HYIP schemes in the face of evidence they cause intractable financial, legal and emotional pain that sometimes mushrooms to involve hundreds of thousands of people?
On March 9, 2015, the PP Blog reported that the name of “MyAdvertisingPays” was referenced in a TelexFree-related proposed class-action lawsuit filed in U.S. District Court for the Southern District of New York in December 2014.
The filing appeared to mark the first time MyAdvertisingPays, known in shorthand as MAPS, was referenced in a federal-court filing.
History shows that such references are closely watched by law enforcement. Indeed, they sometimes serve as unofficial triggering actions and presage federal regulatory action by civil authorities such as the SEC and even actions by agencies empowered to enforce criminal laws.
When the California Department of Business Oversight was investigating the WCM777 scam in 2013, for instance, TelexFree’s name popped up in the context of the cross-promotion of MLM HYIP schemes.
This was months before it became known that the SEC and the U.S. Department of Homeland Security were investigating TelexFree, alleged to have gathered at least $1.6 billion in a combined pyramid- and Ponzi scheme.
Instead, the complaint alleged that TelexFree huckster Daniil Shoyfer was “the largest single Promoter” of TelexFree “in the greater New York area.” Web records showed that Shoyfer also was promoting MAPS alongside MAPS colleagues such as U.K. hucksters Simon Stepsys and Shaun Smith.
Willfully blind and supremely disingenuous MLM HYIP promoters moving from one cross-border fraud scheme to another has been a longtime problem. Such promoters may have little of their own money invested, but contribute to a condition under which banks and payment processors become warehouses for fraudulent proceeds cycling between and among scams.
New York is the financial center of the United States. The filing of the proposed TelexFree class action there contributed to questions about whether MAPS soon would be on the U.S. regulatory and enforcement radar.
The answer to that question remains unclear. What is clear is that the New York complaint was transferred to Massachusetts, the U.S. home base of TelexFree. And it’s also clear that Shoyfer has been named a defendant in an amended TelexFree class-action complaint filed April 30 in Massachusetts federal court.
Among the allegations against Shoyfer (italics added/light editing performed/formatting not precise):
TelexFree changed its compensation plan on or about March 9, 2014, much to the fury of affiliates, noted below. Shoyfer, however, continued to promote it unremittingly, sending group text messages to his network with such as the following:
Hey..my team Telexfree! ! And here we go again..Come to check out and learn about new compensation plan TF 2.0.. and how to grow it even faster and MUCH more aggressively and efficiently than the one we had before.…Here is this week’s schedule. . Monday 03/24 at Salon Delacqua (2027 86 str) at 8.00 pm (in English) ..Wednesday 03/26 at SOHO launch(2213 65th street) at 7.45 pm ( in Russian) and Thursday 03/27 at 7.30 pm at 63-112 Woodhaven Blvd in a real estate office. In my case, since I have started from absulute zero during this passed week Mon 03/17- Sun 03/23/14 I booked 11,500 from new one and 21,600 still coming from old plan..A total of 31,100 in 7 short days… Go Telex!!!
After the institution of the new TelexFree compensation plan in March 2014, Shoyfer took part in a closed meeting with TelexFree’s directors and owners in Marlborough, Massachusetts, at which Shoyfer was instructed not to discuss the new TelexFree compensation plan with others and non-insiders, as the new compensation plan was detrimental to Promoters and was adopted to forestall [TelexFree] filing bankruptcy.
So, a man who allegedly promoted TelexFree and had inside information detrimental to ordinary TelexFree affiliates allegedly kept it to himself, continued to promote the scheme — and then moved on to MAPS. This naturally leads to questions about whether Shoyfer has kept information from ordinary MAPS members.
Purpose Of The Amended TelexFree Class Action
The complaint is an effort to consolidate for the sake of efficiency various TelexFree-related class actions filed in various courts. Such actions were filed in multiple U.S. states.
But that’s not the only news: The amended complaint also names TelexFree pitchman Scott Miller a defendant alongside Shoyfer and HYIP huckster Faith Sloan. In documents prepared by Zeek receiver Kenneth D. Bell, Miller’s name appears as an alleged winner in the $897 million Zeek scheme.
In 2013, Miller promoted TelexFree through a publication known as Home Business Advertiser. Another advertiser promoted a cash-gifting scheme. A columnist described Jesus Christ as the person who inspired modern network marketers through his recruitment of 12 disciples.
A Semacon cash-counting machine appeared as a stage prop in a cash-gifting video advertised in Home Business Advertiser. The promos appeared after two women in Connecticut were sentenced to federal prison for their roles in a cash-gifting scheme and tax fraud.
Also named promoter-defendants in the amended TelexFree class action are Sanderley Rodrigues de Vasconcelos (Sann Rodrigues), a two-time SEC defendant in pyramid-scheme cases who allegedly also claimed his actions were inspired by a deity; Santiago de la Rosa; and Randy N. Crosby.
How the promoter-defendants will pay for their defenses in the amended class action is an open question. One of the risks of promoting such schemes is to be left totally on your own if the government or class-action attorneys file lawsuits.
Another open question is whether other shoes will drop in the government actions. The government probes are ongoing. Some of the class-action defendants conceivably could become defendants in amended or new actions filed by the SEC or agencies that have criminal enforcement power.
The amended TelexFree class action asserts fraud claims under Massachusetts law against a slew of defendants, including financial vendors and MLM attorney Gerald Nehra, also a figure in the the Zeek scheme and the AdSurfDaily Ponzi-scheme story. ASD was a $119 million Ponzi scheme broken up by the U.S. Secret Service in 2008. ASD operator Andy Bowdoin was sentenced to federal prison in 2012, after authorities tied him to at least two other cross-border fraud schemes: OneX and AdViewGlobal.
ASD’s name is referenced repeatedly in the amended TelexFree complaint, as is the name of Zeek. When the complaint will be heard is anyone’s guess. That’s because there are unresolved criminal matters against alleged TelexFree principals James Merrill and Carlos Wanzeler, both of whom are named defendants in the amended complaint and also are among the subjects of the SEC complaint.
Katia Wanzeler, Wanzeler’s wife, also is named a defendant in the amended complaint. So is TelexFree figure Joe Craft, another defendant in the SEC action. Brazilian TelexFree figure Carlos Costa also is named a defendant in the amended class action.
Also named a defendant in the amended class action is Jason “Jay” Borromei of Laguna Niguel, Calif. Along with a company known as Opt3, he is accused of “intentionally, knowingly, unfairly and deceptively set[ting] up TelexFree’s United States-based servers in Brazil with the intent of directly furthering, aiding or abetting their unlawful and fraudulent operation, including facilitating the placement of evidence of the Pyramid Scheme beyond the jurisdiction of the United States’ courts.”
With TelexFree itself in bankruptcy court, the class-action plaintiffs contend that “Opt3 and Borromei have a history of providing technical services within the multilevel marketing industry and hold themselves out as having related specialized knowledge. For example, Borromei previously served as chief information officer of Joystar, Inc., later renamed Travelstar, a multilevel marketing company that collapsed in approximately late 2008, and subsequently entered involuntary chapter 7 bankruptcy.”
Though not named a defendant in the amended class action, TelexFree and Zeek figure Tom More also is referenced in the 200-page complaint.
‘Private Jet’ Gets A Mention
On March 9, 2014, the PP Blog reported that a person who took the stage at a TelexFree rah-rah fest in Massachusetts asserted that TelexFree had access to a “private jet” that recently had ventured to the Dominican Republic and Haiti.
The “private jet” also was referenced in the class-action complaint. Details about it remain unclear.
At the moment, the April 30, 2015, amended and consolidated complaint is posted here at the website of class-action attorney Robert Bonsignore.
“BRING THE BACON HOME” purportedly is operated by an “admin” who is a “young trustworthy girl from Singapore,” according to a Ponzi-board post. If this graphic is to believed, the “program” will produce a happy marriage and bring you children — along with a palm-tree-lined oceanfront mansion near a convenient airport, a big car, lots of U.S. cash and delicious, oversized fruit.
UPDATED 6:20 A.M. ET U.S.A. “BRING THE BACON HOME,” a bizarre Ponzi-board “program” purportedly operated by “Sherilyn” from “Singapore” and pushed on YouTube by Achieve Community hucksters Rodney Blackburn and Mike Chitty, reportedly collapsed during a so-called Beta launch this week and has been put on hold.
The “program” purportedly turns $40 into $1,800. Achieve Community purportedly turns $50 into $400, although it has been dogged by problems for more than two months and now is the subject of an investigation by the Colorado Division of Securities.
“BRING THE BACON HOME” appears to have enabled subscription purchases, but the early haul before the failed Beta is unclear. “Sherilyn” is quoted on the MoneyMakerGroup Ponzi forum in a post dated Jan. 26 as saying, “Just buy the subs and let us do the ‘magic’ for now.”
“My Beta Bacon got Burnt,” one Ponzi-board wag ventured.
Separately, a “program” known as Cycles 24/7 that was advertised on the Achieve Community private forum last month may be dead. Cycles 24/7 initially collapsed at launch, but rebirthed itself — at least long enough to grab some cash.
Cycles 24/7 purportedly is operated by “Rick Fleming.” Like Achieve, Cycles 24/7 purported to turn $50 into $400.
On Jan. 24, a poster on MoneyMakerGroup claimed this about Cycles 24/7: “I have 45$ in payza balance, but admin say that his payza money Frozen, how i can withraw [sic] to egopay?”
Cycles 24/7 and “BRING THE BACON HOME” both listed EgoPay and Payza among their processors. Like Achieve Community, Cycles 24/7 is serving ads for other HYIPs.
One ad for “BRING THE BACON HOME” observed today by the PP Blog on the Cycles 24/7 site referenced “Unison Wealth,” yet another Ponzi-board “program” pushed by Achieve Community members.
The ad was titled “Bring Home The Bacon.” A text line read, “Did you miss Unison Wealth on the 1st day?” When clicked, the ad led to the “BRING THE BACON HOME” site.
Unison Wealth also is beaming ads for other HYIP schemes.
It is not unusual for one HYIP venture to try to prop up another through advertising or even to invest in other scams. Beginning in 2005, for instance, the CEP scam allegedly plowed money into at least 26 other schemes.
In 2012, after the collapse of the $897 million Zeek Rewards “program,” a venture known as Wealth Creation Alliance published ads for one HYIP scheme after another. The schemes typically are Ponzi schemes or pyramid schemes — or sometimes both. They engage in securities fraud and the sale of unregistered securities across national borders.
People who openly profess Christian beliefs or faith in God often are at once the marks and the purveyors of such schemes. AdSurfDaily Ponzi schemer Andy Bowdoin, an apparent advocate of The Prosperity Gospel who encouraged his MLM flock to envision money “flowing” to them, once declared himself a Christian “money magnet.”
Federal prosecutors tied Bowdoin to at least four fraud schemes, including at least two that surfaced after the collapse of ASD in 2008. He is now in federal prison.
One of Bowdoin’s schemes was called “One X.” “I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin claimed in 2011.
The “this case” to which he referred was the ASD Ponzi prosecution. Bowdoin lost on all fronts, eventually pleading guilty to wire fraud.
Bowdoin also was associated with a scam known as AdViewGlobal that once threatened to litigate against its own members for asking questions. AVG, as it was known, also created a private forum after its public scam outreach started to create problems.
Achieve Community recently has added a private forum.
Another current Ponzi-board HYIP scheme pushed by one or more Achieve Community promoters is called “Trinity Lines.” Among other things, Trinity Lines claims to be the purveyor of “high quality scriptural vignettes.” It also claims:
“Although this opportunity is geared for those who appreciate the Scriptures, we welcome anybody to join our community.”
“We at Trinity Lines do believe in God and believe in the power of ‘His Word’.
The column is titled, “Why the Prosperity Gospel Is the Worst Pyramid Scheme Ever.”
From the column by Nicholas McDonald at The Gospel Coalition (italics added):
Step One: A snazzy entrepreneur wants to make a lot of money. Said snazzy entrepreneur tells two little old ladies that if they sell his “Wow-What-A-Sham 3000,” they can make some dough to pay off their cat-sitting bills. That will cost them a startup investment of $401.76. And yes, Wow-What-A-Sham 3000 is a gimmick. But that’s okay, it’s not really about selling the product anyway; it’s about recruiting more salespeople.
McDonald is associate pastor at Carlisle Congregational Church, according to his bio line in the column.
1.) Reports began to surface late Thursday on Twitter and Facebook that TelexFree has been cleared by a judge of U.S. pyramid-scheme charges. These reports are false. Period.
Perhaps to add credibility to the claim, a photo that appeared to depict a female TV reporter sitting in a studio was posted on Facebook. A computer to which a TelexFree logo was affixed sat to the reporter’s right. Below these images was a text message in Portuguese.
The headline was “FORTE VITÓRIA TELEXFREE NOS ESTADOS UNIDOS.” Google’s translate tool (to English) translated it to this: “STRONG Telexfree VICTORY IN THE UNITED STATES.”
Another Portuguese section read as such: “Corte americana declarou que a empresa não pratica “Pirâmide Financeira” e nomeou um interventor, Stephen B. Darr, que deve dar início ao processo de recuperação judicial, que tem autonomia de liquidar ou manter o funcionamento da empresa.”
The Google translation tool translated this section to: “American Court stated that the company does not practice “financial pyramid” and appointed a receiver, Stephen B. Darr, who shall initiate the process of bankruptcy, it has autonomy to liquidate or keep running the business.”
No American court has said that TelexFree was not a pyramid scheme or not a “financial pyramid.” Darr is the court-appointed trustee in the TelexFree bankruptcy case in Massachusetts. He has said he has no intention of reorganizing or reopening the company.
Twitter and Facebook were used today to drive TelexFree visitors to images of Helena Soares. She is wearing an old TelexFree logo on her racing outfit.
Whether TelexFree had or has sponsored her was not immediately clear. What is clear is that there are a number of references to Soares in the context of TelexFree online. One of them is a YouTube video titled “Deaf Deaf TelexFree.” Promo text appears to be in Russian.
This may spark questions about whether TelexFree was targeted at members of the international hearing-impaired community. HYIP scams such as Noobing and Imperia Invest have been targeted at investors who cannot hear.
Today’s Twitter/Facebook references to Soares depict her as a “Campeã” (champion) of TelexFree.
It is not unusual for Ponzi schemes to seek to associate themselves with celebrities, politicians, business stars and sports stars. This particular form of brand-leeching surfaces in scheme after scheme after scheme. A recent major example of this is the WCM777 scam, which tried to associate itself with the sport of golf, Jesus Christ, Harvard College, the Denny’s Restaurant chain, Apple co-founder Steve Wozniak and former U.S. Vice President Al Gore — and many others.
3.) As the PP Blog reported on Sept. 30, 2014, Massachusetts Commonwealth Secretary William Galvin issued a warning on a an emerging “program” known as IFreeX that is being targeted at TelexFree members. iFreeX may be a reload scheme designed to fleece TelexFree members for a second time. On Oct. 1, the Blog reported that IFreeX appears to have lifted branding material of T-Mobile, including images of Carly Foulkes, “the T-Mobile Girl” famous for wearing pink summer dresses in TV spots.
T-Mobile said it was looking into the situation.
A large image of Foulkes appeared today on Twitter in an iFreeX promo targeted at TelexFree members.
The use of the letter “X” in HYIP scams has led to questions about whether purveyors are speaking in a sort of secret code. The OneX scheme used an “X” and an image of a bomb as part of its logo, and HYIP scams have been known to have ties to “sovereign citizens” and antigovernment extremists.
From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.
2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”
The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.
Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”
“Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”
Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.
MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.
The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.
The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.
“Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.
In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”
One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.
Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.
Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.
If someone pitches you on an MLM “Plan B,” run like the wind.
UPDATED 12:27 A.M. EDT SEPT. 22 U.S.A. The PP Blog today contacted the Board of Governors of the Federal Reserve System, owing to claims concerning the emerging BitClub Network “program” that is being pitched by certain members of the $850 million Zeek Rewards Ponzi- and pyramid scheme.
Known in shorthand as the Fed, the Federal Reserve is the central bank of the United States.
Someone is posting on the RealScam.com antiscam forum as “Fedman” and purporting to be “Steve,” a “Vice President” of a federal reserve bank. Fedman purports to have been employed by the Fed “for over 30 years,” to “manage large operations” and to “work with monetary policy.”
Fedman appears to be defending pitches for BitClub Network by Brian Spatola, a New Jersey-based alleged “winner” in the massive Zeek scheme that may have affected hundreds of thousands of people. The court-appointed receiver in the Zeek case is suing more than 9,000 alleged Zeek winners in the United States and has said he’ll also sue international winners in the “program.”
The Fed did not immediately comment on the claims being made by Fedman.
It is sometimes the case in HYIP schemes that promoters and defenders of “programs” drop the names of individuals and entities that have no ties whatsoever to a “program” as a means of sanitizing scams. The name-dropping associated with BitClub Network has been furious and now appears even to include the name of the U.S. central bank.
After missing a series of advertised launch dates — including one on Sept. 1, the 75th anniversary of the beginning of World War II and another on Sept. 10, the eve of the 13th anniversary of the 9/11 terrorist attacks — BitClub Network now appears to have launched.
Promoters claim the scheme pays out between 0.3 and 0.8 percent a day for 1,000 days on invested sums of between $500 and $3,500. In addition, promoters claim there are recruitment commissions on top of the daily payout, a claim that accompanies many HYIP Ponzi- and pyramid swindles.
Among the BitClub Network promoters are Spatola and T. LeMont Silver, late of Zeek. Silver also promoted the OneX pyramid scheme, an exceptionally murky program that used an image of a bomb in its logo.
AdSurfDaily figure Kenneth Wayne Leaming, a purported “sovereign citizen,” was a Federal Reserve conspiracy theorist and an overall banking conspiracy theorist. Leaming was arrested by an FBI terrorism task force in 2011, after filing bogus liens against federal officials who had a role in the ASD Ponzi prosecution that began in 2008.
The BitClub Network “program” — originally set to launch Sept 1, the 75th anniversary of the beginning of World War II — reportedly now will launch on Sept. 10.
That’s the eve of the 13th anniversary of the 9/11 terrorist attacks.
The Sept. 10 launch time is pegged for “2pm EST,” which possibly means the “program” is using Panama time. Panama, part of the Americas, does not use Eastern Daylight Time (EDT).
Some of the money from the Profitable Sunrise HYIP swindle last year went to an entity in Panama City, the SEC said last year. Other Profitable Sunrise money ended up in Australia and the Czech Republic, according to court filings.
Profitable Sunrise operated through a “mail drop” in England and had a “director” in Seychelles, according to court filings.
Zeek Rewards Ponzi- and pyramid-scheme figure T. LeMont Silver, an early adopter of BitClub Network who is promising a $600 sign-up bonus and “training” for the “program,” now is using a Seychelles address, according to an email pitch he sent last week.
Seychelles is a known money-laundering haven. Silver may be operating from the Dominican Republic after parachuting into the nation after the collapse of Zeek in 2012 and the later collapse of two other purported “revenue-sharing programs” he was pitching.
Those “programs,” which ended up suing each other amid allegations of fraud, were GoFunPlaces/GoFun Rewards and JubiMax/JubiRev. Silver described disaffected prospects as “low-hanging fruit.”
BitClub Network, which purportedly offers “shares” of “mining pools,” has a Bitcoin theme. The reported buy-in levels are $500, $1,000 and $2,000, with “Founders’” positions going for $3,599.
Whether Silver even knows precisely who is operating the BitClub Network “program” is unclear. Also unclear is why the “program” chose start dates that corresponded with the starting dates of World War II in Europe and the 9/11 terrorist attacks against the United States.
Are the dates merely coincidences?
Hitler’s Nazi Third Reich was hoped to last 1,000 years. BitClub Network, early bird MLM HYIPers say, will pay a daily dividend for 1,000 days.
HYIP schemes in general are exceptionally murky propositions, with narratives, descriptions and actions that may be designed as taunts against both prospects and regulators. Profitable Sunrise, for example, used images of Jesus Christ in promos and offered a purported “Long Haul” plan with a purported Easter gift to be paid out on April 1, 2013 — April Fool’s Day.
March 31 of that year was Easter Sunday.
WCM777 also used images of Jesus Christ. A follow-up scam used images of a golden pyramid.
John Neil Hirst was charged by the U.K. Serious Fraud Office in 2011 with running a Ponzi scheme that targeted British, French and Americans through a company registered in Panama and Seychelles.
A 2010 scam known as “Alpha Trade Group” that was promoted on well-known Ponzi-scheme forums purported to be registered in Panama and was using “various corporations and fictitious names registered in Florida” to pull off the scheme, according to court filings.
David F. Merrick of Traders International Return Network (TIRN) was charged in a 2009 Ponzi scheme that was operating in the United States while funneling money to Panama, Mexico, Malaysia, Switzerland and the Netherlands.
It was promoted alongside the bizarrely named “Cash Crop Cycler.” Among the provocative claims on the CashCropCycler website was that the “program” was interested in building “a network that ticks.”
A 2011 scam known as OneX used an image of a bomb in its logo.
Silver was a OneX pitchman, alongside Andy Bowdoin, the operator of the $119 million AdSurfDaily Ponzi scheme that he positioned as a “revenue-sharing” program.
At least one promo for Bitclub Network claims “All Countries” and prospects are accepted for “Legal Passive Income.”
Zeek receiver Kenneth D. Bell had “no comment” this morning on an Aug. 30, PP Blog story that reported Zeek figure T. LeMont Silver now was pushing a murky “program” called “BitClub Network.”
Zeek figure Dawn Wright-Olivares pleaded guilty to criminal charges of investment-fraud conspiracy and tax-fraud conspiracy in February 2014. Her stepson, former Zeek programmer Daniel Olivares, pleaded guilty to a charge of investment-fraud conspiracy.
The Consumer Financial Protection Bureau (CFPB) issued a warning on Bitcoin-themed scams on Aug. 11, 2014. Silver’s promotions for BitClub Network began to appear on the Internet about three weeks later.
CFPB did not immediately respond to a request for comment on BitClub Network, which Silver has described as a “mining” venture.
BitClub Network purportedly pays out a daily dividend for 1,000 days and has three “mining pools” with tiered buy-in rates: $500, $1,000 and $2,000. Early birds — described as “Leaders” — are being encouraged to send in $3,599 to qualify for a “Founder’s” position.
Much is murky about BitClub Network.
Also see Sept. 1 report on “Gold Crowdfunding” by BehindMLM.com.
Florida “Expat” and Zeek Rewards Ponzi-scheme figure T. LeMont Silver yuks it up earlier this year in the Dominican Republic. Source: YouTube.
MLM, witness your latest PR train wreck — as voiced by alleged Zeek “winner” and purported “revenue sharing” consultant/trainer and Florida “Expat” T. LeMont Silver. (Video below.)
In a consolidated motion in response to motions by various alleged Zeek “winners” to dismiss the clawback lawsuits against them, the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case has asked the court to take “judicial notice” of two YouTube videos featuring Silver, a veteran HYIP huckster.
In typical HYIP fashion that marries the merely imponderable to the truly bizarre, one of them painfully is titled, “(T. Le Mont Silver, Sr.), (7 Figure Producer) shares about Plan B part #2.” (Bold emphasis added by PP Blog.)
The HYIP sphere, the staging waters for boat sharks who throw purported rescue jackets to victims bloodied in the water from earlier scams and desperately struggling to stay afloat, is infamous for Plans B.
Although the “program” isn’t identified in the video, Silver’s Plan B appears to be the ill-fated JubiRev/JubiMax. (See June 18, 2013, BehindMLM.com story.)
MLM may have a problem with “serial participants” in Zeek-like schemes to defraud, Zeek receiver Kenneth D. Bell suggests in the motion asking the court to take judicial notice of the Silver videos.
The language chosen by the receiver is similar to language the SEC used in 2013 to describe MLM HYIP huckster Matthew John Gagnon. Gagnon, the SEC said at the time, was a “serial fraudster.”
The context of the SEC’s Gagnon prosecution may be important. Indeed, one of the “programs” he was accused of promoting was the infamous Legisi scheme, a semi-offshore debacle the SEC took down in 2008. Like Zeek, the Legisi case started with asset freezes and the appointment of a receiver.
Time slowly marched on. But in 2009, the receiver sued Gagnon. In 2010, the SEC filed civil charges against him. He was charged criminally in 2011.
Legisi, the SEC said, operated a “classic pooled investment vehicle.” In one of the Silver videos cited by the receiver, Silver describes his “Plan B” program as the operator of a “pot.”
Women between the ages of 30 and 55 were the financial targets of the “opportunity,” according to one of the videos referenced by Bell.
The video tends to suggest that Silver understood how Zeek got caught by using highly questionable “bids” as its “product” and that the MLM’s trade’s serial fraud wing immediately sought more clever disguises — hiding an HYIP scam behind the purported sale of ostensibly legitimate products such as cosmetics and diet shakes, for instance.
Silver has appeared in “many” online videos and has promoted “several ‘revenue sharing’ schemes in addition to Zeek,” receiver Kenneth D. Bell advised Senior U.S. District Judge Graham C. Mullen.
Bell supplied the court links to the videos.
In the HYIP sphere, the term “revenue sharing” is used to make schemes appear to be innocuous.
As noted above, the HYIP sphere is infamous for purported Plans B, which typically are cosmetically tweaked reload schemes designed to fleece an initial group of marks for a second time.
Here, it’s appropriate to revisit HYIP history for a second time. If you believe AdSurfDaily Ponzi schemer Andy Bowdoin caused an almost inconceivable amount of PR damage to the MLM trade by comparing the U.S. Secret Service to “Satan” and the 9/11 terrorists, wait until you get a load of what T. LeMont Silver does in one of his videos cited by the receiver. (Video appears at bottom of this column.)
By way of background, the HYIP sphere is infamous for dropping the names of famous entities and people, even if they have no ties whatsoever to the “opportunity” being presented.
Although Silver apparently isn’t selling Avon or Amway or Mary Kay or Herbalife or ViSalus in the video, he drops the names of all of them (and more). Along the way he drops in a veiled reference to Zeek, describing it as a penny auction “program” in which affiliates would “make large purchases of . . . let’s say ‘bids’,” with Zeek’s product creating a “big issue” with regulators.
Silver notes that he’ll provide “training” for the upstart “program,” positioning it as a way for average MLMers to make money without having to recruit or to orchestrate “dog and pony” presentations. Regardless, Silver assures the audience that he’s a master of the MLM dog and pony. He further suggests that, because Zeek’s “bids” had caught the attention of regulators, the trade’s braintrust now is turning toward “more traditional MLM-type products and services.”
Putting lipstick on brand-new HYIP pigs or evolving ones is part and parcel to the HYIP sphere. Silver’s video suggests that the HYIP trade has learned that sketchy products such as Zeek’s bids might not fly and now was concentrating on attracting women between the ages of 30 and 55 by wrapping cosmetics, weight-loss shakes, home products and travel into a purported “revenue sharing” model in which participants who bought in would receive “pro rata” shares from a giant revenue pot.
After suggesting he has inside information about the new HYIP regime, Silver curiously observes that he is “very, very key on genealogical integrity.” We interpret this to mean that he’d be exceptionally pleased if people with existing MLM organizations within traditional companies would port them into his next scam.
Even though he’s apparently not selling Amway in the video, he bizarrely also prompts viewers not to dare “call Amway Scamway.” Equally bizarrely, Silver congratulates the company for “legitimizing this industry” back in the 1970s by purportedly “kick[ing] the backside” of the U.S. government and the government’s “[p]atootie.”
“My goodness,” he says. “Thank you, Amway.”
Yes. T. LeMont Silver has now publicly thanked Amway for kicking the government’s ass 35 years ago and, under his interpretation of In the Matter of Amway Corporation, Inc., et al., paving the way for people to send tremendous sums of money to companies with presumptively better disguises than Zeek.
Amway is a lot of things — good and bad — to a lot of people. Unlike Zeek, however, it is not an HYIP that offered “passive” investors who sent in $10,000 or smaller sums a laugh-out-loud, average daily return of 1.5 percent, basically in perpetuity.
Gawd!
Our take on Silver’s take of the 1979 non-HYIP Amway decision is that it somehow made preposterous “revenue sharing programs” as seen in the HYIP sphere lawful or that all HYIP schemes are lawful if they have product such as those offered by Avon, Amway, Herbalife and the others. But the pyramid analysis, of course, does not exclusively hinge on whether a company has a “product.” If it did, Zeek (“bids”) and BurnLounge (“music”) would still be in business. Moreover, there would be no Bill Ackman/Herbalife dichotomy, no question about whether Herbalife was Jurassic Park or Disneyland. In short, MLM heaven on earth would not be a rumor, it would be a reality.
“Plan B,” meanwhile, is a virtual calling card of HYIP swindles, with prospects typically given instructions to join at least two “programs” in case one of them fails or to quickly join another “program” when a favored one collapses or encounters regulatory scrutiny.
Silver is a longtime pusher of “Plan B” MLM HYIPs, which, as noted above, typically call themselves “revenue sharing programs.” He’s hardly alone. Zeek figure and purported MLM expert Keith Laggos pushed the Lyoness “program” to Zeekers as a “Plan B” just prior to the Aug. 17, 2012, collapse of Zeek. (See Aug. 12, 2012, PP Blog editorial: “Karl Wallenda Wouldn’t Do Zeek.”)
Lyoness, among other things, dropped the name of Nelson Mandela in sales promos.
Among the tips Laggos provided to listeners of a Lyoness conference call was this: “Don’t put no more than 70 percent back in [Zeek]. Take out 20 or 30 percent [on] a daily basis. [Unintelligible.] This would be a good place. But, by the same token, if you put $10,000 in Zeekler, if nothing happens over the next year, you’ll probably make $30,000 or $40,000, if that’s all you do without building the front end, the matrix . . . The same amount of money in Lyoness, you’re looking . . . and not doing anything else, without single sponsoring . . . you can probably make a quarter-million dollars.”
One of the problems with HYIP schemes is that they cause polluted money to flow between and among scams, in part because the scams have serial promoters in common. The inevitable result is that payment vendors become warehouses for fraud proceeds, prompting the government to apply for asset freezes and account seizures to stop the flow of tainted cash.
Receiver Cites Second Silver Video
The second video featuring Silver — an alleged winner of more than $1.71 million in Zeek — is titled “Internet Entreprenuer Family Chooses Cabrera [Dominican Republic] For Their New Expat Lifestyle.” It shows Silver and his wife — another alleged Zeek winner — lounging in the Dominican Republic after the collapse of the Zeek scheme.
Prior to relocating to the Dominican Republic, Silver told his downline in a failed MLM “program” known as GoFunPlaces to take advantage of “low-hanging fruit” (other disaffected GoFunPlaces members) and become recruiters for a “program” known as Jubimax. The “programs” ultimately accused each other of fraud.
Silver also promoted “OneX,” which federal prosecutors in the District of Columbia described as an AdSurfDaily-like, money-circulating scheme. ASD operator Andy Bowdoin, now jailed after the collapse of the ASD fraud in 2008, also promoted OneX, explaining to prospects that they’d earn $99,000 very quickly and that he’d use the money he’d earned to pay for his criminal defense in the ASD case.
Bowdoin asserted OneX was great for college students. Silver asserted that positions being given away were worth $5,000.
Prosecutors also linked Bowdoin to AdViewGlobal, an ASD reload scam that operated as a “Plan B.” AdViewGlobal, which purported to operate offshore but actually was operating from Florida and Arizona, mysteriously vanished in the summer of 2009.
Zeek receiver Bell, who connected alleged Zeek winner Todd Disner to the ASD Ponzi scheme in court filings this week, now says in court filings that certain Zeek clawback defendants “may well be serial participants in these types of schemes.”
One of the things that makes Zeek-related litigation unique in the history of actions flowing from HYIP schemes is that Bell is not limiting his lawsuits to a relatively small universe of alleged major winners such as Silver. In a proposed class action, he’s also pursuing more than 9,000 alleged winners of smaller sums (more than $1,000 but less than $900,000), something that could have a long-needed chilling effect on serial promoters who may enter an HYIP Ponzi knowingly but less publicly.
Some early HYIP Ponzi entrants may recruit heavily at first and be satisfied with smaller sums, because the larger plan is to get out quickly on the theory smaller winners won’t be pursued.
Regulators have warned for years about the online phenomenon of “riding the Ponzi.”
Florida “Expat” and Zeek Rewards Ponzi-scheme figure T. LeMont Silver yuks it up in the Dominican Republic. Source: YouTube.
(UPDATED 9:33 A.M. EDT, APRIL 27 U.S.A.) T. LeMont Silver, a pitchman for the $850 million Zeek Rewards Ponzi scheme and the OneX pyramid scheme, is now a spokesman for the “Florida Expat” lifestyle in the Dominican Republic, which recently has been rocked by what the U.S. Securities and Exchange Commission describes as the collapse of the TelexFree pyramid scheme.
The Massachusetts Securities Division has described TelexFree as a “financial pariah” that gathered more than $1.2 billion.
Whether Silver ever had a position in TelexFree is unclear, and he is not referenced in any TelexFree-related court files. What is clear is that the court-appointed receiver in the Zeek case sued Silver in March 2014, alleging that Silver was a Zeek “net winner” of more than $1.71 million.
Karen Silver, Silver’s wife, also is an alleged Zeek winner. In her case, the receiver says she received “more than $600,000.”
Kenneth D. Bell, the Zeek receiver, wants the money returned, saying it came from Zeek victims.
Like her husband, Karen Silver has emerged as a fan of the “Florida Expat” lifestyle in the Dominican Republic.
A video dated Jan. 16, 2014, and posted on YouTube features the Silvers being interviewed on the subject of their decision to move to the Dominican Republic. The logo of an enterprise known as DRESCAPES rolls on the screen.
The website of DRESCAPES says its clients will “Survive the Collapse of Fiat Currencies, Including the Dollar & Euro.”
“In our opinion, it’s time to take proactive steps to protect your assets and provide a safe fallback position for your family,” the site ventures.
Prior to relocating to the Dominican Republic, Silver told his downline in a failed MLM “program” known as GoFunPlaces to take advantage of “low-hanging fruit” (other disaffected GoFunPlaces members) and become recruiters for a “program” known as Jubimax. The “programs” ultimately accused each other of fraud.
In the “Expat” video, Silver says he pays his housekeeper in the Dominican Republic $175 a month and that she does an “excellent” job. How many hours she worked to earn her wages was unclear.
Many MLM “programs” sell dreams of riches to low-wage workers. Tens of thousands of Dominicans are believed to be members of TelexFree, which filed for bankruptcy in Nevada April 13.
In March, prior to the April bankruptcy filing, a TelexFree pitchman explained at a convention in Boston that he’d recently been a passenger with other TelexFree pitchmen on a “private jet” that had flown from the Dominican Republic to Haiti. The jet purportedly was met at the airport by “the Prime Minister of Haiti’s motorcade,” which triggered “high-fiving.”
“I felt like a rockstar,” the man said.
Disaffected TelexFree members are now “low-hanging fruit” for other MLM “programs.” Many pitches have been targeted at them.
The SEC said last week that TelexFree mainly targeted Dominican and Brazilian immigrants in the United States.
“[Former State Rep. Brian] Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.” — Office of Michigan Attorney General Bill Schuette, Dec. 20, 2013
A onetime Michigan statehouse member who’d earlier lost $400,000 in an offering fraud and responded by becoming a cheerleader for the thief who swindled him has pleaded no contest to a criminal charge of Neglect of Duty by a Public Official.
Strange as it sounds, it is not unusual in the fraud sphere for crime victims to turn into supporters of those who ripped them off or even to follow them to another scam in the hope of making up losses. The case against former Michigan Rep. Brian Palmer demonstrates that a victim’s behavior after a scam could have criminal consequences if he or she doesn’t break ties with a scammer.
Palmer, 64, of Romeo, reasoned that he could make up his losses in the offering fraud by assisting Jeffrey Ripley, who ran API Worldwide Inc. But API Worldwide proved to be a $9 million Ponzi scheme overseen by Ripley and fellow scammer Danny Lee VanLiere, the office of Michigan Attorney General Bill Schuette said.
“Ripley lost Palmer’s $400,000 on the investment and assured Palmer that he would get his money back if Palmer helped him with API,” prosecutors said. “Ripley gave Palmer credit for the $400,000 in API investments and Palmer cooperated with API because he believed he would receive a return on his lost funds.”
Palmer cooperated with investigators in the state probe conducted by Department of Attorney General’s Corporate Oversight Division and Public Integrity Unit and the Department of Insurance and Financial Services, Schuette’s office said.
In the API Worldwide scam, investigators said, senior citizens were lured into cashing out CDs and other investments and plowing the money into the purported “high-return” opportunity operated by Ripley, 61, of Sparta, and Danny Lee VanLiere, 62, of Grand Rapids.
From a statement by prosecutors (italics added):
Palmer met with potential investors on behalf of Ripley and API. With the knowledge that Ripley was attempting to circumvent the Securities Act, Palmer did not report the conduct to proper authorities.
Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.
“Public officials are sworn to uphold the law,” said Schuette. “Those who break the public trust should face the consequences.”
The charge of Neglect of Duty by a Public Official to which Palmer pleaded no contest is a misdemeanor. Ingham County Judge Patrick Cherry sentenced the former legislator to “320 hours of community service that shall be served in a capacity helping seniors and the homeless,” Schuette’s office said.
A fine and costs totaling $405 also were assessed against Palmer, who conceivably could have been fined up to $1,000 and ordered to spend a year in jail.
Ripley and VanLiere pleaded no contest earlier this year to racketeering and selling unregistered securities.
Ottawa County Circuit Court Chief Judge Edward R. Post sentenced both men to serve six to 20 years in prison. Ripley was ordered to pay more than $5.3 million in restitution. VanLiere was ordered to pay more than $3 million.
The API Worldwide scam has resulted in at least two other convictions, bringing the total conviction count to five.
On Dec. 13, Schuette said Douglas Kacos, 58, of Grand Rapids, and Thomas Doctor, 53, of Grand Rapids, pleaded no contest to misdemeanor Money Laundering, which is punishable by up to two years in prison and/or a $10,000 fine or twice the value of the proceeds, whichever amount is greater.
Kent County Circuit Court Judge James R. Redford is scheduled to sentence Kacos and Doctor on Jan. 27.
Bizarre levels of detachment and reservoirs of denial may accompany fraud schemes. In the $82 “Three Hebrew Boys” scam in South Carolina in which victims’ funds were used to acquire a party bus, a jet aircraft and expensive sports tickets, for example, some victims asserted that the scammers should not be prosecuted. Meanwhile, in the $21.5 million Dennis Bolze Ponzi scheme in Tennessee, Bolze told a federal judge that he could make up the losses if permitted access to the Internet and a computerized program — and a little time.
In the $119 million AdSurfDaily Ponzi case in Florida in 2008, thousands of victims initially expressed support for now-convicted Ponzi schemer Andy Bowdoin — even after prosecutors pointed out that he’d previously been convicted of crimes tied to securities swindles with a Ponzi element in Alabama and had a business partner implicated by the SEC in three prime-bank swindles. At least one purported “opportunity” (PaperlessAccess) appears to have hired Bowdoin in 2009 to be a commercial pitchman during an active criminal investigation into ASD and while the ASD Ponzi indictment against him was pending. While awaiting his ASD-related criminal trial in 2011, Bowdoin became a pitchman for OneX, a “program” federal prosecutors later called a scam.
In June 2013, a company known as iWowWe brought in Zeek Rewards figure Dawn Wright-Olivares as its chief marketing officer after the SEC alleged in August 2012 that Zeek was a Ponzi- and pyramid scheme that had gathered hundreds of millions of dollars and after the U.S. Secret Service announced it also was investigating Zeek. Wright-Olivares was charged criminally last week for her role in Zeek, creating a PR problem for iWowWe.
BULLETIN: (4th Update 9:13 p.m. EDT U.S.A.) Accused Ponzi schemer Paul Burks ran a “pyramid scheme” known as FollowMe1X2 that was a precursor to ZeekRewards, federal prosecutors say.
