PatrickPretty.com

Tag: Panama

  • NEWS/UPDATES: Feds Charge Donald Young In Massive Ponzi In Pennsylvania; Matthew Pizzolato Pleads Guilty In Louisiana; Jeffrey Mowen Loses Cars In Utah; ‘Today’ Show Interviews Daughter Who Turned In Mom For Ponzi

    A grand jury has returned an indictment against a suburban Philadelphia man, accusing him of operating a Ponzi scheme that gathered at least $95 million and fleeced investors of more than $25 million.

    Charged criminally with mail fraud and money-laundering was Donald Anthony Young, who also has been sued by the SEC.

    Meanwhile, Matthew Pizzolato has pleaded guilty in a separate Ponzi case targeting senior citizens in Louisiana, prosecutors said.

    Pizzolato, 26, of Tickfaw, pleaded guilty to 21 counts of mail fraud, three counts of money-laundering, and single counts of wire fraud, securities fraud and witness tampering. In all, Pizzolato pleaded guilty to 27 felonies. He also was sued by the CFTC.

    At the same time, accused Ponzi schemer Jeffrey Lane Mowen has lost his monstrous collection of vehicles in Utah. The U.S. Marshals Service began selling the 210-vehicle collection at auction yesterday — April Fool’s Day.

    Marshals were authorized to sell the cars because the bill to store them cost $21,000 a month. Mowen, 47, was arrested in Panama in 2009, extradited to the United States and jailed in Utah on Ponzi charges. He later was charged in an alleged murder-for-hire plot in which he was accused of trying to recruit a fellow prisoner to kill witnesses in the Ponzi case.

    The auction had been delayed twice, but proceeded yesterday. It was billed by Erkelens & Olson Auctioneers as the “Largest collection of Muscle, Collector & Exotic vehicles ever [offered] in Utah!”

    Elsewhere, NBC’s “Today” show this morning featured a daughter who turned in her mother in a Ponzi scheme. The mother ultimately was not charged because authorities came to view her as a victim who had been recruited to sell the scheme.

    Authorities busted the California scheme, operated by Pastor Robert Jennings and Henry Uliomereyon Jones, a magnetic figure. The affinity-fraud scheme involved investments in coal and a bogus international gold deal.

    Jones was arrested in Hong Kong and extradited to the United States. He and Jennings were convicted last year.

    Kim Flanigan told Today that she reached her limit when she observed her mother, a widow, trying to recruit a widow with nine children into the Ponzi scheme. Both widows attended the same church.

    “That was my breaking point,” Flanigan told Today. (See link to story below. NBC’s “Dateline” program will feature Flanigan tonight 9 EDT.)

    In the Donald Anthony Young case in Pennsylvania, prosecutors said Young stole from investors so he could live in the lap of luxury.

    “Ponzi schemes are usually a vehicle for an unscrupulous person to live high off of someone else’s wealth,” said U.S. Attorney Michael L. Levy. “According to the indictment, this defendant helped himself to others’ fortunes, living a life of luxury, with little or no regard for the damage to our financial markets, our economy, and the reputation of the investment advisors who follow the rules.”

    A veteran FBI agent said the agency was committed to destroying Ponzi fraud.

    “The FBI views these types of financial investment Ponzi fraud schemes as significant criminal problems, because of the devastating effect they have not only on the individual victims who are preyed upon but also the effect they have on financial markets and on the overall economy,” said Janice K. Fedarcyk, special agent-in-charge of the Philadelphia Division of the FBI.

    Prosecutors and agents involved in the Pizzolato case, meanwhile, also said Ponzi fraud will not stand in the United States.

    “[Pizzolato’s]  plea demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those economic predators who seek to take advantage and prey upon the most vulnerable among us, including our senior citizens who most desperately need our protection,” said U.S. Attorney Jim Letten.

    Letten thanked the Office of the Louisiana Commissioner of Securities for its assistance in the Pizzolato case.

    An FBI agent said the case sends a signal.

    “This guilty plea represents once again, the FBI’s resolve to aggressively investigate financial crimes which victimize our most vulnerable citizens,” said David Welker, special agent in-charge. “It is reprehensible that Mr. Pizzalotto would target senior citizens and defraud them of their life’s savings. The FBI, along with our law enforcement partners, will continue to identify and investigate frauds such as this.”

    An IRS investigator said authorities would leave no stone unturned to expose financial fraudsters.

    “This investigation shows that the appearance of success can be a mask for a tangled financial web of lies,” said Michael J. DePalma, special agent in-charge of the IRS New Orleans’ office.

    “No matter what we call this type of crime, the bottom line is that Mr. Pizzolato robbed over a hundred investors of more than $19 million and spent just about all of it,” DePalma said. “Special Agents of IRS Criminal Investigation will continue to work with our federal and state law enforcement partners and the United States Attorney’s Office to pursue evidence of criminal activity wherever it leads, leaving no financial stone unturned.”

    Visit the Today show site to read about Flanigan’s experience.

  • A PONZI MYSTERY: Trevor Cook’s Faberge Eggs, Iraqi Dinars Missing; Appraiser Braves Elements, Accesses Cook’s Frozen Island Retreat In Canada By Snowmobile

    It’s starting to read like Ian Fleming fare, something straight out of James Bond and “Octopussy.”

    R.J. Zayed, the receiver in the alleged Trevor Cook/Pat Kiley Ponzi scheme in Minnesota, says he did not find Cook’s collection of Faberge eggs when, armed with a court order, he searched Cook’s home in Apple Valley. The precise size of the collection is unclear, but it has been described in court filings as featuring “numerous” eggs.

    The fabulous jeweled eggs also didn’t turn up at the Van Dusen mansion in Minneapolis, which Cook and Kiley used as an office. Potentially “millions” of Iraqi dinars once stored on the third floor of the mansion also are missing, according to court filings.

    Zayed was able to get cursory information on Cook’s island getaway in Canada, though — thanks to a real-estate appraiser who was willing to venture to the Rainy Lake Island property near Fort Francis, Ont., on a snowmobile.

    “Given the difficulty traveling to the island during the winter, however, no other licensed appraisers have been able to make an on-site inspection as of [yesterday],” Zayed said.

    Additional appraisals will be obtained with the spring thaw, presumably in April, “when the weather allows easier access to the island,” Zayed said.

    The Rainy Lake Island property consists of 2.3 acres of land. There are “several structures on the property, including an 1130 square foot log cabin, a guest cabin, docks and sheds,” Zayed said.

    “The dwelling structures are newly constructed and weather tight, but unfinished on the inside. The property is serviced with electrical power supplied by under water cable originating from the Minnesota side of the lake,” Zayed said.

    He estimated that the property was worth about $400,000 to $500,000.

    Cook, who is jailed for contempt of court for not turning over receivership assets, purportedly purchased a submarine to access the island, but discovered the waters were too dark for the submersible craft.

    Because of the unfriendly waters, Cook talked about moving the craft to Panama, whose waters he believed more suited for use of his submarine, according to court filings. The submarine purportedly was purchased on eBay.

    Zayed was able to locate 31 watches in a collection described in court filings as “vast,” including a “diamond studded Rolex watch that Cook gave to his wife and that she maintained in a safe deposit box.” He also recovered a ROM exercise machine that retailed for $14,165.

    Investors in the alleged $190 million scheme may get “pennies on the dollar,” Zayed said.

    Prior to being jailed in January, Cook asked Chief U.S. District Judge Michael Davis for a monthly allowance of $6,679, including a monthly outlay of $105 to cover the expenses of his three housecats and $100 for a gym membership.

    While searching Cook’s home, Zayed seized three automobiles: a 2005 Lexus 33 series; a 2004 Lexus L43; and a 1997 BMW 328ic. He is seeking to auction them off.

    Zayed already has sold a 1989 Rolls Royce; a 2004 Audi RS6; a 1985 Pontiac Fiero “Lamborghini Kit Car”; a 1998 BMW Z3; a 1989 Mercedes 420 SEL; and a 2000 Lexus. The cars, some of which had high mileage, fetched $73,100, according to court filings.

    All buyers were required to “sign a statement certifying that they were not serving as a proxy” for Cook or any other person or entity that is part of the probe, Zayed said.

    Meanwhile, Zayed sold Cook’s large-screen, high-definition TVs and other items such as computers and gambling equipment for “at least” $24,000 — higher than the expected amount, according to court filings. A final accounting of the auction was not yet finalized.

    An inventory of items suggested that the collection featured 10 TV sets with 50-inch screens and two sets with 42-inch screens. Like the car-buyers, the TV-buyers had to certify they were not acting as a proxy.

    The Cook/Kiley entities perpetrated “a massive scheme to defraud and that they never operated as legitimate investment vehicles,” Zayed said, noting that he believes the entities “have no value as ongoing businesses” and that “the value of any ‘investments’ in these entities has a present value of zero dollars.”

    Zayed said the Van Dusen mansion has a “still-confidential buyer” willing to pay $1.6 million in cash for the historic structure. A deal could close next month, if no buyer willing to pay more emerges.

    The property was marketed for $1.995 million, and racked up some big bills for security, repair of furnaces, repair of the alarm system, snow removal, cleaning and other maintenance.

    Cook, Kiley and several companies were implicated in an alleged $190 million Ponzi and forex fraud in November by the SEC and the CFTC. Kiley formerly hosted a show on Christian radio.

  • CHILLING: Terrorism Link, A Ponzi, An HYIP, Gold, Mysterious ‘Offshore’ Businesses, ‘Rebates’ — And A Brutal Murder In California

    EDITOR’S NOTE: HYIP or autosurf promoter? Can’t say no to the commissions from recruiting people into scheme after scheme? Position yourself as an “expert” on Internet forums — even though you don’t have a clue about the motivations of the program owners and may not even know their names? Find yourself promoting programs that reference “gold” and “funds” and relying on marketing assertions that cannot be verified? Tell your recruits that the programs are money “games” or nontraditional investments? Been involved in one program after another that has failed in this seedy and dangerous world? Think that you’ll have a lifetime of plausible deniability and that professional investigators will believe you when you explain you didn’t really know what was going on — despite the fact you’ve been involved in one failed “program” after another, perhaps for months and even years?

    Here’s a story about what can happen in the sea of HYIP, “Gold,” Ponzi and autosurf corruption . . .

    UPDATED 12:42 P.M. ET (U.S.A.) Yesterday a reader provided us a document that can only be described as chilling. The document, from the Ontario Securities Commission (OSC), includes exhibits from a 2003 Canadian civil-securities case against convicted Ponzi swindler Brian David Anderson, a former Christian clergyman from Vancouver, British Columbia.

    Last week, Anderson was sentenced to 90 months in federal prison in the United States for operating a $4 million Ponzi scheme known as Frontier Assets. Anderson also was linked to a mysterious scheme known as the “Alpha Project.”

    U.S. and Canadian investigators, meanwhile, also identified Anderson as a pitchman for an international HYIP known as Flat Electronic Data Interchange (FEDI). FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.

    Why is the document chilling? For starters, its references a bank account held by Goldfinger Coin & Bullion Inc. in Camarillo, Calif. If that name does not ring a bell, think “E-bullion,” the now-shuttered money-exchange business purportedly backed by gold.

    James Fayed, the operator of Goldfinger and E-Bullion, was charged in 2008 with operating an unlicensed money-transmitting business. Investigators said E-Bullion had been used to transact at least $20 million in Ponzi scheme payments.

    During the same general time period in 2008, the SEC was conducting a Ponzi scheme investigation into a separate company known as Gold Quest International (GQI), which used E-Bullion and claimed to be registered in Panama.

    GQI operated from Las Vegas. It initially tried to claim that it was immune to U.S. law because of links to a “sovereign” Indian tribe. GQI was charged in May 2008 by the SEC with operating a Ponzi scheme. The purported “attorney general” of the purported “sovereign” tribe reacted by trying to file a lawsuit against the SEC for the preposterous sum of $1.7 trillion. A federal judge was not amused, and struck the bizarre filings.

    Woman Stabbed To Death

    On July 28, 2008, Pamela Fayed — James Fayed’s estranged wife — was brutally murdered in a parking garage in California. She was stabbed in the chest, neck and face — and left to die, according to court filings. Prosecutors said there was no evidence of robbery or carjacking. The murder, according to court filings, occurred just minutes after a meeting Pamela attended with her criminal attorney and her husband’s criminal attorney.

    James Fayed was present at the meeting, according to court filings. A meeting with separate attorneys — this one involving a divorce hearing — had been scheduled for the next day, July 29, 2008. Prosecutors said that James Fayed was at risk of being ordered to turn over nearly $1 million to Pamela at the divorce proceeding.

    Pamela had advised the government in June 2008 that she wished to cooperate in its criminal investigation of E-Bullion, according to prosecutors.

    “Pamela’s murderer left the crime scene in a red SUV that was captured on surveillance video, along with its license,” prosecutors said. “The license was traced to Avis car rentals in Camarillo, not far from [the] defendant’s business. The vehicle had been rented from Avis on July 3, 2008 using an American Express card issued to defendant and GCB.

    “An American Express credit card with the same account number was found in defendant’s wallet during a search of his residence in the days following Pamela’s murder. During the search of defendant’s residence, officers also found approximately $60,000 in cash wrapped in plastic material; approximately $3,000,000 in gold; and approximately 31 firearms, including one with a long-range night vision scope, along with thousands of rounds of matching ammunition,” prosecutors alleged.

    Prosecutors also alleged James Fayed arranged for the July 28 meeting to create an alibi.

    Read a court filing in the federal case against James Fayed in which prosecutors alleged he operated an unlicensed money-transmitting business. The filing references the alleged murder plot.

    Murder Charges Filed

    James Fayed and an employee — Jose Luis Moya — were charged by the Los Angeles District Attorney’s office with murder and a conspiracy plot in September 2008. Fayed paid Moya “approximately $25,000 to arrange the murder of Pamela Fayed,” investigators said.

    On July 3, 2008, investigators said, “Fayed and his company — Goldfinger, Inc. — rented a Suzuki sport utility vehicle that was used by the killers at the Watt Tower parking garage where Pamela Fayed was killed.

    “The Suzuki SUV was driven to Fayed’s Ventura County ranch on Happy Camp Road after the killing,” according to investigators. Moya returned the vehicle to Avis the next day.

    OSC Document Outlined Purported Anderson/E-Bullion Meeting In 2003

    The OSC document filed in Canada is important — and we suggest you read every word of it from the link below — because exhibits in the document show the murkiness and just plain creepiness of the HYIP and Ponzi worlds. One exhibit suggests Anderson planned to meet with Fayed and his wife in 2003 to discuss business.

    The document also references Alishtari and FEDI, claiming an investment program was backed by $125 billion in gold. Among other things, the document lists the name of Goldfinger Coin & Bullion and an account number, along with directions on how to open an E-Bullion account.

    Screen shot: From exhibit in 2003 OSC filing.

    Also included in the document is a purported joint-venture agreement marked “STRICTLY CONFIDENTIAL” that purportedly was used by Anderson to recruit investors into an international fraud scheme.

    Parallels To AdSurfDaily Case

    Parts of the document include claims very similar to claims made by promoters of the alleged AdSurfDaily (ASD) Ponzi scheme in the United States. Anderson, for example, was positioned as a “very successful business executive” who attended a function to observe Alishtari receive an award “for Republican Business Man of the Year for the State of New York.” Similar claims were made about ASD President Andy Bowdoin.

    Investor payouts, according to an exhibit in the OSC document, were called “rebates.” ASD, whose assets were seized by the U.S. Secret Service in August 2008 amid Ponzi allegations, also called its payouts “rebates.” Exhibits in the OSC document were thick with references to God and family — another similarity to the ASD case.  Anderson’s efforts to promote the program were deemed “heroic,” and business was conducted in part from Boca Raton, Fla. ASD was thick with Florida members.

    In a purported email from Anderson dated April 17, 2003, according to an exhibit within the OSC document, Anderson laid out the case for the new venture.

    “Dear Family,” the email began. Chillingly, the email appears to reference Pamela Fayed, allegedly murdered by her husband and conspirators five years later. The email suggests there once were happy days between the Fayeds.

    “I am very pleased that my recommendations and leg work have paid off and the Alpha Project will be merging its gold value/currency transfer through E-Bullion,” the email purportedly sent by Anderson claimed.

    “E-Bullion is owned by a wonderful couple who have their roots in Egypt and, therefore, are Arab in descent. I will be spending personal time with them on Monday in California.”

    Screen shot: Exhibit of purported Anderson email in 2003 OSC filing.

    The email, which discusses a trip to Panama, promised investors an “offshore” company and outlined a plan to sell “debit cards” through vending machines that would be positioned in posts offices, hotels and college buildings.

    Put “$20 into a vending machine and the machine spits out a loaded Debit card for you,” the email said. “Now you can begin to see why the Alpha Project in will in time be another Microsoft in size.”

    Claims in HYIP and Ponzi schemes that a company is destined to become the “next” Microsoft or Google are common. Beyond that, the use of debit cards in the murky HYIP and autosurf words is becoming increasingly popular — as are appeals for investors to entrust funds to “offshore” businesses, amid claims that such businesses are outside the reach of U.S. law enforcement.

    Read the OSC document from 2003.

  • PARTIAL LIST: Gold Nugget Invest (GNI) Just Latest Failed Scheme Promoted By AdSurfDaily Members; One Program After Another Pushed By Promoters Has Collapsed

    EDITOR’S NOTE: This list summarizes several programs pushed by members of AdSurfDaily, a Florida company implicated in an alleged $100 million Ponzi scheme. In some cases, the programs were pushed prior to the seizure by the U.S. Secret Service in August 2008 of 15 bank accounts linked to ASD or Golden Panda Ad Builder, one of the companies implicated in the ASD scheme. Each of the programs listed below came to a dubious end or continue to exist in an unclear, shadowy form. This list is presented in no particular order and does not include every HYIP/autosurf pitched by ASD members.

    UPDATED 3:16 P.M. ET (U.S.A.)

    Gold Nugget Invest (GNI): Collapsed Friday. HYIP. Government of Belize issued warning in November. Ownership hidden behind proxy. Business model unclear. Presented as betting arbitrage, but perhaps was involved in forex. Advertised payout of 7.5 percent per week. Possibly linked to European banking investigation. Changed rules on the fly. Still collecting money after “Re-organization.” Purportedly launched in October 2006, the same month ASD was preparing for launch.

    Genius Funds/Cash Tanker/Saza Investments: Pushed by ASD member “joe” in a post on the ProASD Surf’s Up forum just prior to collapse of GNI. CashTanker, which used a graphic depicting Jesus, now has tanked after advertising payouts of 2 percent a day. “joe” pitched GNI, Genius Funds, Cash Tanker and Saza Investments in an egg-themed promotion in which the word “egg” was used in domain names that redirected to the HYIPs. “joe’s” egg-themed domain that redirected to Cash Tanker now redirects to a program called PTV Partner, an HYIP that bills itself “The Ultimate High Yield Asset for your Financial Portfolio!” “joe’s” egg-themed pitch was based on the screaming notion that “ALL MY EGGS ARE NOT IN ONE BASKET. I MAKE $2000.00 A WEEK.” A street address for the egg-themed domains corresponds to an address in a federal lawsuit involving cell-phone trafficking.

    Regenesis 2×2: Matrix in Seattle area. Records seized by U.S. Secret Service in July 2009. Operators kept under surveillance for five weeks. Multiple search warrants issued. Discarded records found in Dumpster. Sold “commission centers” for $325. Touted itself the “THE ECONOMIC STIMULUS PLAN FOR YOU.” Site appears to have been registered behind a proxy in Europe. Jeffrey William Snyder, one of the individuals kept under surveillance, was a convicted felon on probation for a previous securities scheme.

    GoldenPandaAdBuilder: So-called “Chinese” version of ASD. Assets seized in two forfeiture complaints in ASD case. Operated by Clarence Busby of Georgia. Records in now-dismissed RICO lawsuit against Busby identified him as “Rev.” at least 120 times. Busby was implicated by SEC in 1990s in three prime-bank schemes that promised enormous payouts. Purportedly became Golden Panda president after going fishing with ASD President Andy Bowdoin in April 2008. Federal judge ordered forfeiture of more than $14 million from Golden Panda in July 2009. Busby now purported “chief consultant” of BizAdSplash (BAS). Ceased payouts in July 2009, after declaring “crisis” and claiming members were overpaid. Went offline. Returned online. Went offline again for about two weeks during 2009 Holiday season. Now back online.

    BizAdSplash (BAS): (Also see GoldenPanda entry above.) BAS launched in aftermath of seizure of assets in ASD/GoldenPanda case. Assets seized in civil complaints in ASD/GoldenPanda case total about $80.52 million. Clarence Busby purported to be chief consultant of BAS. BAS touted purported offshore registration in Panama. Georgia corporation records show version of surf’s name used address of UPS Store No. 2644 in Kennesaw, Ga.

    Noobing: Pitched as alternative to ASD after seizure. Noobing targeted deaf people. Deaf member says she reported Noobing to FBI and sheriff’s department in California. There are recent suggestions that deaf members also reported Noobing to SEC. FTC and attorneys general of Minnesota, Kansas and North Carolina joined in suing Affiliate Strategies Inc. (ASI), Noobing’s parent company, in alleged scheme offering guaranteed government grants from economic stimulus funds. Illinois now has joined the FTC action. Original lawsuit filed in July 2009. Like ASD, ASI owned a jet ski. Court-appointed receiver sold it at auction. Receiver performed a preliminary exam of Noobing’s records and determined surf was upside down by approximately $550,000. Noobing gathered money in aftermath of seizure of ASD’s bank accounts. Surf slashed payouts in early 2009, citing unclear ruling in ASD case. Site offline since FTC lawsuit, which did not name Noobing.

    DailyProSurf (DPS): DPS is a largely unknown and mysterious surf site registered by ASD President Andy Bowdoin in August 2006, about two months prior to the formal birth of ASD. Records suggest DPS operated prior to registration, although its ownership was unclear. (NOTE: The story in the DPS link in this paragraph also contains information on 12DailyPro and PhoenixSurf, two surfs sued successfully by the SEC.)

    AdVentures4U (ADV4U): Surf tanked in August 2009. Reportedly had more than 60,000 members. Members identified Steve R. Smith as owner. Smith also purported owner of venture called TradingGold4Cash. In confusing note to ADV4U members, Smith purportedly said his family received threats. Used ASD-like “rebates aren’t guaranteed” excuse upon payout suspension. Urged members not to contact payment processors. Site reportedly conducted business with hotmail address.

    CEP: Judicially declared Ponzi scheme. Smashed by SEC. ASD once advertised it accepted funds through CEP Trust, the payment processor associated with the CEP Ponzi scheme.

    MegaLido: Pushed by ASD members in aftermath of seizure of ASD’s assets and positioned as a safe, “offshore” alternative, MegaLido tanked late in 2008, during the Christmas season, a few months after the ASD seizure. MegaLido purportedly had 27,000 members. MegaLido might have had a tie to Instant2U, another surf that tanked during the 2008 Holiday season. “MegaLido Rocks!” one ASD promoter blared, noting excitedly that it paid 12 percent a day and “It’s Offshore!” Instant2U advertised 14 percent a day.

    Frogress: Pitched by ASD members in aftermath of seizure. Frogress tanked in January 2009, just after the Christmas holiday in 2008.

    DailyProfitPond: Another surf pitched by ASD members in aftermath of seizure. DailyProfitPond tanked in December 2008, in the days leading up to Christmas. One DailyProfitPond promoter said it was possible to start with $12 and turn it into $12,000. The “return” was listed as 150 percent over 30 days.

    AdViewGlobal (AVG or AVGA): Surf with ASD/Bowdoin ties. Formally debuted in February 2009, with a push from the now-defunct Pro-ASD Surf’s Up forum and ASD members. Tanked in June 2009 after collecting untold millions of dollars.

    Perhaps one of the most bizarre autosurfs ever to enter the “industry.” Switched to “private association” structure after reportedly meeting with felon convicted in a 1990s securities scheme. Cited U.S. Constitutional protection despite purported headquarters in Uruguay.

    AVG disclaimed any ties to ASD, despite fact its CEO was a former ASD executive who submitted a sworn affidavit in the ASD case. Issued news release disclaiming ASD ties; release was signed by an ASD employee who had testified in federal court for ASD in 2008. Said the fact AVG’s graphics appeared on ASD-controlled website was “operational coincidence.”

    Announced bank account “suspension” in March 2009, blaming it on members who wired too many transactions in excess of $9,500. Announced CEO resignation, saying CEO would remain in “accounting” department. Announced new wire facility as done deal in May 2009. Company it identified as wire facilitator issued public denial, suggesting AVG was trying to funnel money to itself through a shell company.

    Shell company operated by man with two large bankruptcy filings, including one in which an address listed as an apartment was the address of a mail drop. Purported AVG “compliance” department head was sued twice in 2008 for noncompliance with federal law. AVG claimed to own eWalletPlus payment processor. Actual eWalletPlus ownership far from clear. At least two people close to AVG money had spectacular bankruptcy filings. Andy Bowdoin, whom members later said was AVG’s silent head, was arrested for felony securities violations in the 1990s and entered guilty pleas.

    AdGateWorld (AGW): Now-defunct surf launched after ASD seizure. Later purportedly sold to interests in the “Middle East.” Claims cannot be verified. AGW linked to ASD member Jack Schrold, a Florida attorney once suspended from the Florida bar for misconduct. Schrold was sued successfully by the FTC for the actions of his credit-repair firm, and also was convicted separately of knowledge of the commission of conspiracy and wire-fraud. AGW announced its death as “End of Dream.” Blamed members in announcement: “This honest and legitimate approach using the advertising rebate model apparently did not meet the expectations of the herd mentality.”

    PaperlessAccess: Mysterious upstart surf. ASD President Andy Bowdoin appeared in a video for Paperless Access in 2009, after the ASD seizure. Video appeared online in March 2009 — during time frame in which AVG was announcing bank-account suspension and the departure of its CEO. PaperlessAccess positioned as way for ASD members to regain money seized by the government. Bowdoin did not identify the owners of Paperless Access, describing them only as a small group of people. Nor did Bowdoin mention that the government was establishing an ASD refund program.

    PremiumAdsClub (PAC): Tanked in February 2009. Members said it collected money right up to the end.

    AggeroInvestment: Had PAC ties. Advertised 60 percent a month, plus bonuses. Collected money to the bitter end.

    QBusinessSolution: Surf with purported ties to former ASD executive Juan Fernandez, who took the 5th Amendment in the ASD forfeiture case. # # #

  • BLOCKBUSTER ARREST: MLM Pyramid Scheme Operator Charged With Laundering Drug Money; David Murcia Extradited From Colombia To Stand Trial In New York

    EDITOR’S NOTE: Finding the United States an unfriendly environment, the so called autosurf and HYIP “industries” increasingly are relying on offshore money-exchange businesses and debit cards to entice participants, advising them that the offshore locations are “safe” havens that “shelter” U.S. residents from regulators and law-enforcement agencies.

    In August 2009, we reported that a Dallas-based company, Virtual Money Inc., which  provided debit cards to Florida-based AdSurfDaily Inc., was indicted on charges of helping a Colombian cocaine operation launder money by providing cards that were used to convert drug proceeds to cash at ATMs in Medellin. ASD is implicated in an alleged $100 million Ponzi scheme.

    In a follow-up story, we asked if autosurf and HYIP enthusiasts who describe the enterprises as harmless despite the fact they steal wealth from a large group to give it to a smaller one had yet felt a “lump” in their throats because law enforcement also had tied the offshore debit-card business to international narco-trafficking.

    That lump only should be getting bigger.

    The story below is about D.M.G. Group (DMG) and its operator, David Eduardo Helmut Murcia Guzman (David Murcia). DMG used debit cards as the principal part of a pyramid scheme that largely targeted the poor in Colombia. The scheme is believed to have collected hundreds of millions of dollars from as many as 400,000 people before collapsing in 2008.

    Murcia, who owned two airplanes, three yachts and at least 12 luxury vehicles, was arrested in Panama in 2008, just as he was attempting to flee to Costa Rica to avoid extradition to Colombia. He was convicted of money-laundering in Colombia in December 2009, sentenced to 30 years in prison and fined $12.5 million. Viewed as a Robin Hood figure by some people, Murcia portrayed himself as a man simply interested in creating wealth for others. His arrest initially led to rioting in Colombia.

    Police used tear gas to disperse protesters, and the government launched a nationwide crackdown on Ponzi and pyramid schemes and declared a state of emergency. Dozens of schemes using various corrupt business models were operating simultaneously, sucking wealth from the economy and placing it in the hands of a small number of people. At least 12 people reportedly were killed in Colombia during Ponzi/pyramid-related rioting. Only the people who got into the schemes first made money. By some estimates, 90 percent or more of the participants lost money.

    One of the fraudulent companies operating at the same time as DMG was known as DRFE (Dinero Rapido Facil en Efectio), which means “Rapid Money, Easy Cash.” It, too, collapsed.

    DMG, for its part, had 59 offices in Colombia; the government shuttered them all in a single day, after linking DMG money to international drug traffickers.

    Here, now, the story about the dramatic extradition of Murcia to the United States yesterday . . .

    David Murcia

    His jailers at La Picota prison in Bogota placed him in handcuffs. They wrapped him in a heavy, bullet-proof jacket. From there they took him to the Catam military airport under heavy guard. He was led to a plane owned by the U.S. Drug Enforcement Administration (DEA). Officials made sure that the moments were captured on film and videotape. They were sending a simple message: We will come after you, no matter where you are, even if you pretend you are Robin Hood.

    And with that David Eduardo Helmut Murcia Guzman (David Murcia), known as the “Bernie Madoff of Colombia” for his collapsed financial scheme, was whisked to Miami. He’ll be tried in New York on charges of conspiring to launder millions of dollars in narcotics proceeds through his company, D.M.G. Group (DMG), a house of cards propped up by a pyramid-scheme involving debit cards and promises that participants would get back 100 percent of what they paid in and perhaps more.

    “Extradition signals Colombia’s continuing commitment with the U.S. in fighting drug dealers,” said New York City Police Commissioner Raymond Kelly. “It is also important in attacking the money laundering that accompanies drug trafficking. The black market peso exchange is just one of many schemes to launder drug money and corrupt once legitimate business in the process. Left to their own devices, narcotics traffickers would undermine entire economies through drug trafficking, money laundering, extortion and corruption. This was an auspicious victory in a continuing fight.”

    U.S. prosecutors yesterday pointedly called DMG “a vehicle for a multi-level marketing scheme.” Participants were told to buy prepaid debit cards that operated on a points system and would permit them to buy electronics and other merchandise at DMG retail stores and enable them to get back 100 percent of what they paid in and perhaps more.

    Points accumulated when purchases were made and participants introduced others to the scheme, which was sold as an opportunity to buy anything they wanted — from groceries to flat-screen TVs and motorcycles — while getting the products and at least 100 percent of the purchase price back in six months.

    Murcia, 28, founded DMG in Colombia’s coca-growing region. The complex scheme ultimately led to questions about how Murcia, a high-school graduate, had figured out a way to give back at least 100 percent of the purchase price of products without operating a shell game in which money was taken from new participants to pay returns to the original participants. Murcia never could explain clearly how the program worked, and sometimes used accounting terms such as “cash flow” to deflect questions. He had assembled a massive following of devotees, many of whom zealously defended the program, saying Murcia was helping people rise out of poverty.

    At first it was speculated that DMG bought merchandise in bulk and sold it to debit-card customers at grossly inflated prices to create a hugely profitable spread. That all changed, however, when investigators found $3.2 million in cash stuffed in cardboard boxes in the coca-growing region — and linked the cash to Murcia — and later linked Murcia to a reputed drug smuggler.

    U.S. prosecutors now say Murcia had acquired so much money that it created a problem for him — the classic dilemma faced by corrupt operations. In the fall of 2007, Murcia and Margarita Leonor Pabon Castro, a 35-year-old co-defendant in the U.S. case, “approached another individual in Colombia and said that they had cash — apparently in U.S. dollars — that they could not deposit into the Colombian banking system.”

    Murcia and Castro asked the unidentified person to set up an account in the United States. A U.S. account was opened at Merrill Lynch in the name of Blackstone International Development. Neither Murcia nor Casto was listed as owners of the account.

    In March 2008, Murcia and Castro told the person who had opened the account that they had “provided $2.2 million worth of Colombian Pesos to German Enrique Serrano-Reyes, 45, in Colombia, and, in exchange, Serrano-Reyes had caused nearly $2.2 million to be wired into the Blackstone Account through 18 separate wire transfers.”

    Prosecutors seized the Blackstone Account in May 2008.

    When Murcia was informed of the seizure of the Blackstone Account, he “told the individual who set up the account that he should not attempt to retrieve the contents of the account, and should not under any circumstances inform the authorities of [Murcia] or [Castro’s] interest in the Blackstone Account, prosecutors said.

    Also indicted in the United States was William Suarez-Suarez, 41, whom prosecutors said was the head of DMG’s Colombian operations and attempted to bribe officials in Colombia.

    Suarez-Suarez, according to prosecutors, helped Murcia and “others” establish “hundreds of subsidiary and affiliated companies linked to DMG in countries including Colombia, Panama, and the United States.”

    DMG also had links to the drug trade in Mexico, prosecutors said. Murcia, Santiago Baranchuk-Rueda, 34, Daniel Angel Rueda 36, and Luis Fernando Cediel Rozo, 34, “coordinated the pick-up and transportation of millions of dollars in narcotics proceeds in Mexico,” prosecutors said.

    “The defendants concealed narcotics proceeds by investing them in legitimate real estate
    and limited liability companies in the United States,” prosecutors said.

    U.S. Attorney Preet Bharara said prosecutors and their law-enforcement colleagues would leave no stone unturned in fighting international money-laundering and drug-trafficking.

    “David Murcia Guzman is charged with using his namesake company as cover for the laundering of illicit drug proceeds,” Bharara said. “[He] allegedly played a shell game with dirty money, masking millions for narco-traffickers as legitimate transfers. This extradition affirms that we will not tolerate the abuse of the U.S. banking system to stimulate the black market economy.”

    John P. Gilbride, DEA Special-Agent-in-Charge, said investigators have the experience and the patience to peel back layers of the onion to expose the corruption.

    “Hiding behind a corporation name did not make this business legitimate,” Gilbride said. “In fact, it was facilitating millions of narco drug dollars into pesos for drug traffickers worldwide. This extradition highlights law enforcement’s international efforts to identify and arrest those who profit from the sale of illegal narcotics.”

    Bharara thanked the government of Colombia for its cooperation.

    Murcia faces a prison term of 20 years in the United States, if convicted. He’ll serve any sentence that emerges in the United States, and then will be sent back to Colombia to serve his 30-year sentence there.

  • Trevor Cook Allegedly ‘Refused’ To Cooperate With Ponzi Receiver; Security Guards Posted At Van Dusen Mansion In Minneapolis

    A Minnesota man accused of operating a Ponzi scheme with Christian radio host Pat Kiley is not cooperating with the court-appointed receiver in the case and might have spent $30,000 on “gift cards” after the SEC and CFTC brought twin actions last month, according to the receiver.

    The receiver, R. J. Zayed, described efforts to locate and claim assets tied to the alleged $190 million fraud as an international paper chase.  On Dec. 21, Zayed said, the Ontario Superior Court of Justice recognized his appointment by a U.S. federal judge and granted him power over receivership assets in Canada.

    Zayed said he was able to take control over a Cook property in Rainy River. Some investors said Cook had purchased a two-person submarine on eBay for $40,000 to access the island property, but Zayed did not mention the submarine in his initial receivership report to U.S. District Court Chief Judge Michael J. Davis.

    “Based on the Receiver’s Canadian authority, the Receiver obtained a Certificate of Pending Litigation that has been filed against the property in Canada to prevent its transfer without the authority of the Receiver. In addition, the Receiver is in the process of obtaining the three necessary appraisals to sell the property.”

    The situation involving land in Panama upon which a casino was planned is less clear because of litigation filed against receivership assets in the Central American country by Oxford FX Growth, one of the relief defendants named in U.S. litigation.

    “Prior to the appointment of the Receiver, Relief Defendant Oxford FX Growth, L.P. secured Panamanian counsel and filed a lawsuit in Panama in an effort to prevent the sale of the real estate in Panama that was acquired with funds of the Receiver Estates,” Zayed said. “The Receiver has taken control of the Panamanian lawsuit, including the costs of litigation.”

    Zayed said he had been in contact with legal counsel for Oxford FX Growth, and learned that four of five pieces of property had been “successfully attached” and secured by a bond in the amount of $200,000.

    He also learned that Oxford FX Growth had filed a local claim in Panama against Cook, Gary Saunders and Holger Bauchinger for $12 million and that lawyers in Panama are attempting to perfect service.

    The Cook/Kiley investigation is among a number of Ponzi probes in Minnesota. Like other Ponzi cases, it has included spectacular allegations that investor funds were diverted to acquire expensive automobiles and real-estate. Among the assets frozen in the case is the landmark Van Dusen Mansion at 1900 LaSalle Ave. in Minneapolis.

    Zayed said he took control of the mansion and secured its furnishings and equipment on Nov. 24, with the assistance of the U.S. Marshal’s Service and the Minneapolis Police Department.

    “Trevor Cook, Patrick Kiley, Graham Cook and Marc Trimble were found on and escorted from the premises without being allowed to remove any property (except for Patrick Kiley who was allowed to take his personal clothing and toiletries with him),” Zayed said.  “All exterior locks were changed and security guards were posted to safeguard the property.”

    He added that he found 41 computer hard drives and other media at the mansion and that they were “forensically copied.” Meanwhile, 21 computer hard drives and other media were found at a separate property at 12644 Tiffany Court in Burnsville, Minn. The data was copied, the premises and furnishing were secured, locks were changed and guards were posted.

    To date, Zayed said he has seized six cars — a 1989 Rolls Royce; a 1985 Pontiac Fiero;  a 1989 Mercedes 420 SEL; a 1998 BMW Z3; a 2000 Lexus; and a 2004 Audi RS6 — and “has identified additional vehicles that may be subject to the Receivership.”

    Cook, he said, “has asserted the Fifth Amendment privilege and refused to cooperate with the Receiver.” Zayed also asserted that Cook might have depleted receivership assets after the SEC and CFTC brought their respective cases.

    “In December, the Receiver received information that Mr. Cook had been purchasing gift cards in large denominations,” Zayed said. “As a result of this information, Mr. Cook turned over approximately $30,000 in gift cards and now faces Motions brought by the SEC and CFTC for a Rule to Show Cause as to why he should not be held in contempt of the Court’s asset freeze orders.”

    A hearing on the motions is set for Jan. 8.

    Zayed said he has been receiving “30 to 60” calls from investors each day. He established a website for information.

    See Cook/Kiley Receivership website.

    U.S. District Court for the District of Minnesota also has established a Cook/Kiley website.

  • Alleged Jeffrey Mowen Ponzi Creates Storage Problem For U.S. Marshals Service; Huge Auction Scheduled In Utah

    This 1986 Panther Kallista and at least 239 other vehicles are on the auction block in Utah.A Utah man arrested in Panama on Ponzi charges, brought back to the United States to stand trial and later implicated in a murder-for-hire plot owned so many cars and motorcycles that the U.S. Marshal’s Service has been given permission to sell them prior to the trial.

    Jeffrey Lane Mowen had acquired more than 200 vehicles through his Ponzi, real-estate and forex scheme, federal prosecutors said. The Salt Lake Tribune reported that the U.S. Marshal’s Service had been paying $20,000 a month just to store the seized assets and that a judge agreed that the storage costs were depleting the amount of money victims would receive.

    Mowen was indicted under seal in February 2009. When the indictment was unsealed April 21, authorities said Mowen was “living outside of the United States.”

    That changed quickly. He was arrested just three days later in Panama “by Panamanian authorities in conjunction with the FBI Legal Attache office,” the FBI said.

    Mowen was jailed in Davis County, Utah. In November, a new indictment was issued, charging him

    Jeffrey Lane Mowen

    with wire fraud, solicitation to commit a crime of violence, witness tampering and retaliating against a witness.

    Prosecutors said Mowen, 47, of Lindon, Utah, hatched a plot while jailed to hire a fellow prisoner to kill four witnesses in the Ponzi scheme case upon the inmate’s release from prison.

    The Utah vehicle auction is billed by Erkelens & Olson Auctioneers as the “Largest collection of Muscle, Collector & Exotic vehicles ever [offered] in Utah! Over 240 Units to be sold in 2 auctions.”

    See a Nov. 19 story on Mowen.

    Visit the auctioneers’ website.

    Visit the Salt Lake Tribune.

  • EDITORIAL: Think ‘Offshore’ Means ‘Shelter’ From The SEC Or The FBI Or The IRS? Don’t Tell That To John And Marian Morgan — Or Jeffrey Lane Mowen

    You’ve seen the ads or heard the pitches trying to persuade you to put money in “offshore” ventures such as the AdViewGlobal, AdGateWorld and MegaLido autosurfs. You’ve been told they were safe. You’ve been told the people who run them are out of the reach of U.S. securities regulators and law-enforcement agencies.

    And you’ve been told your investment, which the surf purveyors call an “advertising” purchase, provides shelter from the FTC, the SEC and state attorneys general.

    Don’t tell John and Marian Morgan of Florida that “offshore” means “safe” and that “offshore” provides a blanket of protection from law enforcement.

    And don’t tell it to Jeffrey Lane Mowen, either.

    John and Marian Morgan were charged by the SEC in June with running a prime-bank scheme. They skipped the country rather than appear for a hearing in July, first going to Europe and later to Sri Lanka.

    Guess where they are now?

    John and Marian Morgan are in separate cells in a U.S. jail. In addition to the SEC’s civil charges, they now face criminal charges after being indicted by a federal grand jury. They did not outmaneuver the SEC. They did not outmaneuver the U.S. Marshals Service. They did not outmaneuver the FBI. They did not outmaneuver the IRS. They did not outmaneuver Interpol.

    Nor did John and Marian Morgan outmaneuver the government of Sri Lanka. They were arrested and jailed on the island, which is situated about 20 miles off the southern coast of India, in August. Sri Lanka deported them, and the United States brought them home earlier this month.

    morgansrilankaIt’s big news in Sarasota — and it should be big news among the autosurf or forex/HYIP schemers who are telling you the United States is powerless to act against “offshore” enterprises or people inclined to start a get-rich-quick program and then scurry offshore one step ahead of what surf promoters derisively describe as the “sheriff” or “Big Brother.”

    Do yourself a favor and read this story in the Sarasota Herald Tribune. Longtime opponents of the autosurf “industry” — in this upside-down world, the opponents are called “naysayers” and the Ponzi advocates are called “leaders” — will recognize the utter absurdity.

    Sadly, though, most of the “leaders” likely will be too busy “leading ” the troops to even bigger and better catastrophes to take the time to read it.

    Or they simply won’t care because leading people into catastrophes pays too well.

    If you missed it earlier, take the time to read this story on how the FBI brought home Jeffrey Lane Mowen from Panama to face charges in a Utah Ponzi case that now has morphed into murder-for-hire investigation.

  • A PONZI WORLD FIRST? Regulators Have Evidence Accused Minnesota Schemer Trevor Cook Bought A ‘Submarine’ To Shuttle To Private Island

    You’ve heard about the Ponzi mansions. You’ve heard about the luxury automobiles — Scott Rothstein’s $1.6 million Bugatti and the $350,000 Rolls-Royces he and suspects in other Ponzi schemes enjoyed.

    Now comes word that Trevor Cook, implicated in Minnesota with radio talk-show host Pat Kiley in an alleged Ponzi scheme involving at least $194 million, owned a submarine.

    Not a submarine sandwich, but an actual, two-person, submersible submarine used for underwater transit. It allegedly was purchased on eBay for $40,000 and was used to tool around the waters that surrounded his private island in Canada.

    Yep, he allegedly bought himself his own island, too.

    An old-fashioned speedboat to access the island, perhaps, was too practical. And perhaps building a bridge to the island upon which Cook could pilot his Rolls was too expensive, even for an alleged Ponzi-schemer forcing himself to draw the line somewhere. (Yes, regulators say that Cook, like Rothstein and others, also owned a Rolls.)

    At least two people who’ve been deposed in the Cook case have referenced the submarine. And Cook referenced it himself in an email sent to an associate in Europe last spring, according to the Star Tribune of Minneapolis-St. Paul.

    He appeared to be disappointed after the purchase, the newspaper reported, because the waters surrounding the island were muddy. Not to worry, though: Cook ventured the sub would serve its intended purpose much farther south — in Panama, where he believed the water to be more sub-friendly than those dark waters in Canada.

    We obtained a copy of the Sept. 14 transcript in which SEC attorney Steven L. Klawans was conducting the deposition of witness Gerald Durand. The deposition turned to the matter of Cook’s affinity for expensive things.

    “Does Cook own any boats, planes or anything?” Klawans asked Durand.

    “I heard be bought a sub,” Durand replied.

    The transcript does not capture the emotional feel of the setting, but it’s easy to imagine that people observing the deposition were stunned.

    “A what?” Klawans intoned.

    “Submarine,” Durand reaffirmed.

    A moment later, in response to another question by Klawans, Durand told a story that may become the stuff of legend in the Ponzi world.

    “[Cook] told me . . . he bought the sub because he bought the island, so he needed a submarine to sail around the water up there. It’s a two-man deal. Paid $40,000 for it off of [eBay].”

    Visit the Star Tribune, whose coverage of both the alleged Tom Petters’ Ponzi scheme and the alleged Cook/Kiley Ponzi scheme has been riveting.

    Screen shot: Deposition in Cook/Kiley Ponzi case.
    Screen shot: Deposition in Cook/Kiley Ponzi case.

  • BREAKING NEWS: Two-Time Convicted Felon With $3 Million Judgment Against Him Emerged From Prison And Targeted Ponzi Scheme At Chinese-Americans In Oklahoma City, CFTC Says

    ponzinewsA man imprisoned between 1996 and 2001 after being convicted in Texas of two financial felonies emerged from the penitentiary and targeted Greater Oklahoma City’s ethnic Chinese in a Ponzi scheme, the U.S. Commodity Futures Trading Commission (CFTC) said.

    Kenneth W. Lee also had a $3 million civil judgment placed against him in the 1990s in a fraud case, CFTC said.

    Despite the felony convictions and the huge judgment against him, Lee and business partner Simon Yang hatched a new scheme in 2003. Yang pitched the scheme to members of his church in Edmond, Okla., CFTC said.

    Information shown prospects to get them to join the scheme claimed Lee was an exceptional trader. But when investigators reverse-engineered literature about Lee’s alleged prowess, they discovered that Lee was in prison during a time in which Lee and Yang claimed Lee was “achieving great returns,” CFTC said.

    CFTC’s announcment of the filing in Oklamoma City came only hours after it had joined with the SEC yesterday in announcing a Ponzi complaint against radio talk-show host Pat Kiley and his colleague Trevor G. Cook in Minnesota.

    The Oklahoma Ponzi scheme operated at least in part from South Carolina and Texas. Two companies named co-defendants along with Lee and Yang claimed to be registered corporations in Panama, CFTC said.

    Charged with Lee and Yang were Prestige Ventures Corp.  and Federated Management Group Inc. (FMG). The Oklahoma Securities Commission joined in the prosecution.

    Regulators said the 13-year-old judgment for $3 million against Lee in Texas also included a company named Federated.

    Lee was convicted of felonies in both 1995 and 1996, CFTC said.

    Yang, the agency said, also used the aliases Simon Chen and Xiao Yang.

    “[T]he defendants fraudulently operated a commodity futures pool that had at least $8.7 million in assets and 140 participants,” CFTC said.

    Lies, Losses, Yacht Fees

    Lee and Yang lied to participants, never telling them about Lee’s felony convictions or the judgment. At the same time, CFTC said, they issued bogus account statements that “consistently showed monthly profits generated by Lee’s purportedly successful trading of commodity futures, foreign currency (forex) and other instruments.

    “However, Lee sustained net losses of approximately $4.3 million trading primarily commodity futures and forex,” CFTC said. “Lee, Prestige and FMG also allegedly misused pool participant funds to pay off other pool participants and for personal use, such as paying for cars and yacht fees and funneling money to family members.”

    Yang was charged with submitting a false declaration to CFTC in response to a subpoena requiring the production of documents and information relating to Yang, Lee, FMG and others.

    “In his declaration, Yang falsely claimed that he solicited only through email based on information on the FMG website, that the persons he solicited did not open accounts and that he no longer solicited for FMG,” CFTC said.

    Both Yang and Lee also failed to tell prospective pool participants that Yang and Lee were under investigation by federal authorities.

    In 2003, just two years after Lee’s release from prison, Yang and Lee reported to prospects that Prestige had $1 billion in assets under management and FMG had up to $379 million, CFTC said.

    They also falsely told participants that Lee “never suffered losses,” that FMG’s marketers or solicitors were members of the National Futures Association and that the accounts of participants were insured by FMG’s credit union.

    U.S. District Judge David L. Russell froze the defendants’ assets and appointed a receiver.

  • BREAKING NEWS: Prosecutors Allege Ponzi Murder Plot; Jeffrey Lane Mowen Accused Of Soliciting Prisoner To Kill Witnesses In Multimillion-Dollar Case Against Him

    EDITOR’S NOTE: In August, a poster here who defended autosurf Ponzi schemes demanded readers to “show me one time where the [U.S. government] has even started a lawsuit or ‘gone after’ a company off shore.” The post concerned the AdVentures4U (ADV4U) autosurf, which, like a number of autosurfs, claimed legal ties to Panama. Promoters said the purported ties insulated the surf from prosecution. Readers responded by providing several examples of prosecutors extending their reach beyond U.S. domestic soil to pierce the illusion of corporate veils and bring schemers to justice.

    The story below is about an alleged Utah Ponzi, real-estate leveraging and forex-trading scheme in which the operator was arrested in Panama, brought back to the United States and jailed.

    While Jeffrey Lane Mowen was in jail awaiting trial, the FBI said yesterday, he solicited a fellow inmate scheduled to be released in October to murder four witnesses “with the intent of preventing their attendance and testimony at his federal fraud trial” in the Ponzi scheme case.

    UPDATED 4:14 P.M. ET (U.S.A.) In a case that puts more than just the financial dangers of Ponzi schemes on full display, jailed Ponzi suspect Jeffrey Lane Mowen has been indicted in Utah on charges of hatching a plot to hire a fellow prisoner to kill four witnesses in the Ponzi scheme case upon the inmate’s release from prison.

    Mowen was indicted yesterday on charges of wire fraud, solicitation to commit a crime of
    violence, witness tampering and retaliating against a witness. Mowen, jailed in Davis County, Utah, earlier this year after being arrested by Panamanian authorities working proactively with U.S. officials, was extradited to the United States to face the original charges in the case.

    Jeffrey Lane Mowen
    Jeffrey Lane Mowen

    Prosecutors indicted Mowen in February under seal for the alleged Ponzi, announcing when the indictment was unsealed April 21 that he was “living outside of the United States.” He was arrested just three days later in Panama “by Panamanian authorities in conjunction with the FBI Legal Attache office,” the FBI said.

    U.S. authorities said Mowen used investor funds “to purchase more than 200 high-end antique, classic, and modern vehicles, including cars, trucks, trailers, motorcycles, three-wheelers, and other vehicles.”

    Mowen, 47, of Lindon, Utah, used his material possessions “as symbols of his success to investors,” the FBI said. The agency added that Mowen also used investor funds to “pay for personal expenses, including payments to himself and his [former] wife, dining expenses, vehicle storage fees, travel, utilities, and credit card expenses.”

    For its part in a separate civil case, the Securities and Exchange Commission alleged that Mowen had three prior convictions in Utah for securities fraud and two for theft. Despite Mowen’s criminal record and history as a fraudster, promoters still did business with him. Their faith drained millions of dollars from investors, the SEC said.

    Using language apt to cause unease in the autosurf Ponzi world, the SEC said one promoter “either knew or was reckless in not knowing that Mowen had multiple recent felony convictions involving crimes of dishonesty.”

    Indeed, the SEC said, the promoter learned in approximately late June 2007 that Mowen had been convicted of securities fraud . . . [but] continued to solicit new investor funds for several months while failing to disclose Mowen’s criminal history to any of the Promoters or their investors.”

    Downstream promoters who entrusted the promoter “conducted virtually no due diligence in connection with [his] purported investment opportunities, but transferred investor money to [him] without any documentation or limitation on his use of the funds,” the SEC said.

    “[T]he Promoters were reckless in failing to discover [his] association with Mowen and that their funds were being placed into a Ponzi scheme or used for other undisclosed purposes,” the SEC said.

    Among the SEC’s civil allegations against Mowen were that he siphoned off $8 million in investor funds for his personal use and transferred $650,000 to his former wife, who is named a relief defendant in the case.

    Authorities painted a picture yesterday of a scheme that had morphed from financial crimes that crossed international borders to murder-for-hire — all in the name of Ponzi profits.