As one of its operators sits in a Michigan federal prison and the other is listed “at large” by U.S. authorities, Payza today announced a purported “restructuring” as a “European service” that has ceased serving U.S. customers.
“This means that no transactions are allowed for US members at this time and Payza will no longer be servicing businesses registered in the US, neither providing US payout services or US based withdrawals,” Payza said in a Blog post accessible via Twitter.
Precisely who is running things at the company is unclear. The Blog post had a byline of “Payza Writer.”
Ferhan Patel, 37, is listed as an inmate at the federal correctional institute in Milan, Mich. He was arrested Sunday in Detroit. Firoz Patel, his brother and co-defendant in a major money-laundering case announced Tuesday by U.S. prosecutors, appears neither to have surrendered or been arrested. Firoz Patel is 43. The brothers are citizens of Canada and reportedly lived in the Montreal area.
The office of U.S. Attorney Jessie K. Liu of the District of Columbia confirmed Wednesday that Payza’s dotcom domain had been seized.
Prosecutors said Payza had helped fuel Ponzi schemes, pyramid schemes, a child-porn site and other criminal activities. Homeland Security Investigations is leading the probe.
Payza and a predecessor company known as AlertPay have been referenced in Ponzi-scheme litigation dating back at least to 2008’s AdSurfDaily Ponzi scheme, a $119 million fraud. More recent “programs” with ties to Payza include Traffic Monsoon and Zeek Rewards.
News came early this morning that the SEC had moved against Traffic Monsoon, calling it a Ponzi scheme. Both the “program” and alleged operator Charles Scoville were charged civilly yesterday in Utah federal court with securities fraud and selling unregistered securities to unaccredited investors.
Scoville also was the braintrust behind AdHitProfits, a Ponzi-board “program” in part targeted at people who also were targeted in the egregious 2013 Profitable Sunrise cross-border scam in which millions of dollars appear to have vanished overseas.
As the PP Blog reported on June 2, 2013 (italics added):
A spammer hit a Profitable Sunrise Facebook site yesterday with five drive-by offers for “AdHitProfits.” All five of the machine-gunned theft bids claimed the same thing: “make money every half an hour…100% commission let your money grow for you at high speed.”
The AHP “program” also is being pitched on the Ponzi boards, with the thread-starter at MoneyMakerGroup bragging that “Payza, []STP & Liberty Reserve Accepted !!”
LibertyReserve was described last week by federal prosecutors in New York as a criminal enterprise that had laundered more than $6 billion for Ponzi schemers, credit-card fraudsters, identity thieves, investment fraudsters, computer hackers, child pornographers and narcotics traffickers.
In its complaint against Traffic Monsoon and Scoville, the SEC says PayPal restricted Traffic Monsoon during the winter, in January 2016.
Our research shows that Scoville then turned to Payza for the heavy lifting and that Payza attended a Traffic Monsoon event in May 2016, during the spring and while funds in PayPal had been frozen by PayPal.
From the SEC complaint (italics added):
After the PayPal freeze, Scoville began using other payment processors more extensively: Solid Trust Pay, headquartered in Ontario, and Payza, headquartered in London with offices in New York. He has also used an account at JPMorgan Chase to receive investor funds.
Zeek used both SolidTrustPay and Payza, as did the AdSurfDaily Ponzi scheme before it.
Traffic Monsoon’s haul appears to have exceeded $200 million, potentially making it one of the largest advertising “revshare” schemes of all time. As things stand, it is larger than other well-known revshare frauds such as AdSurfDaily ($119 million) and Banners Broker ($156 million). Some of the Banners Broker cash reportedly ended up in KulClub, yet another Ponzi-board MLM scheme.
Ponzi-board schemes are eviscerating wealth globally. It is not unusual for such schemes to use multiple payment processors and to target vulnerable population groups. Agencies from the U.S. Department of Homeland Security have been involved in a number of major investigations of Ponzi-board “programs.”
It is unclear if DHS or other U.S. agencies with the power of arrest are involved in a Traffic Monsoon probe. History has shown, however, that when the SEC brings a civil case, other agencies sometimes carry out criminal investigations on a parallel track.
Payza, an HYIP-friendly payment processor that recently bragged on Twitter about its attendance at an event for the teetering TrafficMonsoon scheme, has advised a federal judge that it is not responsible for millions of dollars that allegedly went missing in the Zeek Rewards’ scheme taken down by the SEC in 2012.
Zeek receiver Kenneth D. Bell alleged in February that Payza and an outfit known as Payment World “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme. The PP Blog reported on Feb. 21 that the money at issue — about $13.1 million — may have ended up in one or more collapsed Russian banks after being transferred out of VictoriaBank in Moldova.
Payza acknowledged it was a business partner with Payment World, but maintained the account in Moldova was Payment World’s alone and that it has sued Payment World for more than $20 million because it, too, had been ripped off.
In response to Bell, who is seeking a contempt sanction and to hold Payza jointly liable with Payment World and VictoriaBank for return of the cash, Payza says it never had “dominion and control” over the money and thus should not be held liable.
Payza, which operates out of Canada as part of a company known as MH Pillars of the United Kingdom, further contends with worked cooperatively and proactively with Bell and U.S. authorities tracking the money. The defense filing by Payza was docketed yesterday in the Western District of North Carolina and also claims Payza performed due diligence on Rex Venture Group, the operator of Zeek. The filing contained a declaration by MH Pillars Executive Vice President Firoz Patel.
In a May 15 Twitter post, Payza said Patel was a speaker at a May 15 event in New York for the Traffic Monsoon program.
The Tweet made no due-dilignce claims about Traffic Monsoon, which reportedly is under investigation by PayPal and has been blocked from a sum totaling on the order of $60 million.
This message was on the Payza website on April 25, 2016.
Payza, an HYIP-friendly payment processor currently under fire from the receiver in the Zeek Rewards Ponzi- and pyramid-scheme case, is reporting on Twitter that it is experiencing a web outage.
At the time of this PP Blog post, the outage appears to be more than four hours old. A post with no timestamp at the Payza Blog says the processor expects “everything to be back to normal within 18 hours. You may experience some interruptions and connection errors until that time on our website, member’s area, and Customer Support Pages.”
Members of the Traffic Monsoon “program” are complaining on Facebook about the outage. Traffic Monsoon is a purported “advertising” venture reportedly served by Payza and shut off by PayPal.
“Hello, what is going on with PAYZA?” one Monsooner asked. “I can’t get to the site and therefore I cannot buy more adpacks with the money I have on the account.”
Another Monsooner ventured. “I saw other people have the same problem than me. Paya acknowledged they have problems but don’t say what kind of problems. Isn’t this worrying? First Paypal, now Payza, and still no news of the bank in Dubai.”
The PP Blog observed a message from Incapsula when it tried to load Payza’s website.
“You’ve requested a page that currently is on the Incapsula network,” the message read. “Incapsula was unable to connect to the server.”
Incapsula provides DDoS protection. Whether a DDoS attack was responsible for the Payza outage was unclear.
Funds from Zeek, which once auctioned sums of U.S. currency, may have ended up in a collapsed Russian bank. Graphic from the PP Blog archives: April 2012.
(Updated 11:14 a.m. ET U.S.A.) Money due victims of Zeek Rewards from transactions involving Payza and Payment World may have been transferred from VictoriaBank in Moldova to JSC TusarBank in Russia in violation of an asset freeze imposed in 2012 by a U.S. court, according to court filings by Zeek receiver Kenneth D. Bell.
Meanwhile, OboPay’s name now has surfaced in filings by Bell. This is in the form of an October 2012 email from a Payment World official to a Payza official questioning Payza’s relationship with OboPay. The U.S. Justice Department last year announced a criminal investigation involving Payza and OboPay. The specific reason behind the probe and the targets are unknown.
Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina last week lifted the seal on Bell’s 258-page filing in which Bell alleged Payza, Payment World and VictoriaBank enabled Zeek’s Ponzi scheme shut down by the SEC in 2012. The filing consisted of a 26-page motion and 232 pages of exhibits, including emails between Payza and Payment World. As noted above, one of the exhibits raises the name of OboPay.
Mullen imposed the asset freeze in August 2012.
Whether the possible transfer of Zeek-related funds from Moldova to Russia is part of the Russian probe is unclear.
Adding to the international intrigue is that a second Russian bank that somehow might have been involved in the Payment World-related money flow reportedly collapsed in 2013. This institution is known as Master Bank and is described in Bell’s exhibits as a “sponsoring bank” of a Payment World entity in Hong Kong.
A sponsoring bank provides processors access to Visa or MasterCard networks
On Sept. 13, 2015, just prior to the collapse of TusarBank, the Moscow Times listed Master Bank as one of “Russia’s Biggest Banking Crashes of the Last 2 Years.” This crash occurred in 2013 and was notable for something beyond the 31.3-billion-ruble bailout.
Even having Igor Putin, a cousin of President Vladimir Putin, on the board of directors could not save Master Bank. The lender’s license was revoked in November 2013 with the Central Bank alleging the bank had violated money laundering legislation and processed large suspicious transactions.
In 2012, just prior to the collapse of Zeek, Zeek figure Keith Laggos claimed he had helped Zeek move payment operations offshore, including to Hong Kong. Specific details of that asserted move are unknown. Zeek had about 15 financial vendors, according to court filings.
Payza, under the leadership of Firoz Patel, has claimed it conducted due diligence on Zeek, according to Bell’s filings. Even if true, it somehow appears to have missed that Zeek was offering an outrageous and unusually consistent return averaging about 1.5 percent a day and also claimed “compounding” was possible.
The SEC has described Zeek as a cross-border Ponzi scheme that gathered nearly $900 million while operating from North Carolina.
From Bell’s filing (italics added):
On August 29, 2010, Paul Burks [of Zeek] onboarded an account with Payza (then, known as AlertPay) in the name of Rex Venture Group LLC that was associated with two websites: www.zeekrewards.com and www.zeekler.com. Prior to the boarding of the account, Payza purportedly conducted due diligence, collecting and reviewing information about Paul Burks and the business. According to Payza, during the course of the relationship, it monitored and mitigated risk. Despite these procedures, Payza did not identify or address the red flags indicating that ZeekRewards was a Ponzi scheme and, instead, together with PaymentWorld and VictoriaBank [of Moldova], facilitated access and payment to and from ZeekRewards by numerous affiliates worldwide.
Bell’s 258-page filing is available on the landing page of the receivership website. It is styled, “Memorandum in Support of the Receiver’s Motion for an Order Directing Payza, Payment World, and VictoriaBank to Turn Over Receivership Assets and/or Find Them in Contempt of the Court’s Order Freezing and Preserving Receivership Assets.”
Zeek Rewards’ receiver Kenneth D. Bell has gone to federal court in the Western District of North Carolina, alleging that the Payza and Payment World payment processors “facilitated” the epic cross-border Zeek Ponzi- and pyramid scheme.
More than $13.1 million in funds from North Carolina-based Zeek that could be used to compensate victims ended up in VictoriaBank in Moldova, owing to a processing relationship among Payza, Payment World and the bank, Bell alleged.
Now, Bell contends, “based on recent developments in the Receiver’s investigation, there is an open question as to whether the Receivership Assets held on Reserve at VictoriaBank remain or were transferred from the account.”
Prosecutors haven’t revealed the target of the criminal probe. It is unclear whether there is any nexus with the Zeek case, alleged overall to involve $897 million. Zeek, a Ponzi forum “program,” allegedly created tens and tens of thousands of victims worldwide.
Payza is a Ponzi-forum darling. Its predecessor, AlertPay, is referenced in court filings in the 2008 AdSurfDaily Ponzi case. Scores of Ponzi-board “programs” claim to accept Payza, including an emerging scheme known as Traffic Monsoon.
Bell accused Payza, Payment World and VictoriaBank of violating an asset-freeze order issued in 2012 by Senior U.S. District Judge Graham C. Mullen.
In a novel legal maneuver, Bell has persuaded Mullen to freeze a correspondent account VictoriaBank holds on U.S. soil at Bank of New York Mellon. Mullen authorized the freezing of more than $13.1 million in the account.
If the account proves not to hold that sum, VictoriaBank must deposit with the receivership the difference between the frozen sum and the $13.1 million Bell claims as receivership assets, according to the order.
Bell signaled on Feb. 1 that the receivership would pursue Payza, Payment World and VictoriaBank.
Moldova is situated in Eastern Europe. It shares a border with Ukraine, a world hot spot.
The office of U.S. Attorney Channing D. Phillips of the District of Columbia originally anticipated making an announcement about a criminal investigation involving the Payza and OboPay payment processors “shortly” after Jan. 22.
On Feb. 10, however, prosecutors updated their Victim/Witness site to say they now do not expect to make an announcement until “shortly” after April 29.
Payza, alleging fraud, sued OboPay last year. As the PP Blog reported in October, prosecutors intervened in the civil case and requested a stay while the criminal probe continued.
U.S. District Judge Phyllis J. Hamilton of the Northern District of California initially paused the civil case until Jan. 22. The stay now has been extended until April 29 at the request of prosecutors with agreement by the parties, according to court filings.
The target of the criminal probe has not been revealed.
UPDATE MAY 23, 2016, 4:03 P.M. The stay in the civil case has been extended until June 29, 2016. The Victim/Witness site has been updated to reflect this.
BULLETIN: New court filings in the Zeek Rewards’ Ponzi- and pyramid-scheme case brought by the SEC in 2012 say Zeek receiver Kenneth D. Bell may ask a federal judge for a finding of contempt against Payza, a payment processor.
The news comes as federal prosecutors continue a criminal investigation involving Payza and Obopay, another payment processor. Prosecutors are expected to make an announcement on the Payza/Obopay matter soon.
Payza is Ponzi-forum darling.
Some of the Zeek money ended up in Moldova, according to previous filings by Bell. Precisely how that happened remains unclear, but Bell says he is working with authorities in both Moldova and the United States “to locate and recover the funds.”
The Receiver Team continues its efforts to investigate and pursue outstanding funds from the processing relationship and flow of funds between Payza, Payment World, and Victoria Bank . The Team is working with government officials in both the United States and Moldova and with members of McGuireWoods Consulting to locate and recover the funds. The Receiver Team has also begun efforts to file a motion against these entities seeking the return of receivership assets and for a finding of contempt. The Receiver Team continues to investigate and pursue outstanding funds from Solid Trust Pay and Cyberprofit and is working with various government agencies in pursuit of these assets.
On Oct. 19, the PP Blog received traffic from 76 countries. This graphic reflects the Top 10 on that date and suggests high global interest in a criminal probe involving Payza and Obopay.
On the past four Mondays — Oct. 26, Nov. 2, Nov. 9 and Nov. 16 — the PP Blog averaged viewership from 32 countries, according to a compilation of data from Jetpack summarized by the Blog. These numbers are typical. On any given day, viewers from between 25 and 40 countries arrive here.
But on Oct. 19 — also a Monday and the day the Blog reported that a criminal investigation involving the Payza and Obopay payment processors was under way — the Blog’s viewership shot up to 76 countries. That’s nearly 40 percent of the nations in the world. Viewers from other countries followed Payza- and Obopay-related content in subsequent days, suggesting that people in an even higher percentage of the world’s nations are concerned about the probe.
The Blog is reporting today that Payza’s name again has appeared in a filing by the court-appointed receiver in the 2012 Zeek Rewards’ Ponzi- and pyramid scheme case. The filing was dated yesterday and includes these lines (italics added):
The Receiver Team continues to investigate and pursue outstanding funds from Payza, Payment World, Solid Trust Pay, and Cyberprofit and is working with various government agencies and McGuireWoods Consulting in pursuit of these assets.
Millions of dollars tied to U.S.-based Zeek may be in Moldova, according to receiver Kenneth D. Bell. Moldova is a neighbor to Ukraine, a world hot spot described by the Financial Times as “war torn.”
Payza, its predecessor AlertPay and SolidTrustPay are Ponzi-forum darlings operating in an era of almost unimaginable cross-border fraud that frequently has an MLM or direct-sales component. The numbers are truly staggering — so high that agencies such as the U.S. Department of Homeland Security and the FBI have become involved in investigations.
Money moves across borders in a flash these days, including the borders of nations under terrorist threat. Perhaps especially in the HYIP sphere, the aims of the “program” operators and the identities of the recipients of the cash may be particularly murky.
Though uncharged, AlertPay and SolidTrustPay both are referenced in the P2P case, as well as the AdSurfDaily case from 2008. Ponzi forums such as TalkGold and MoneyMakerGroup also are referenced in U.S. filings.
As the PP Blog reported Oct. 19, federal prosecutors have opened a criminal probe involving Obopay and Payza and successfully asked a federal judge to pause civil litigation involving both payment-processing companies.
The Blog is reporting today that federal prosecutors in the Northern District of California and the District of Columbia specifically intervened in a lawsuit filed by Payza against Obopay and others on March 25, 2015. Payza’s lawsuit alleged Obopay had engaged in a multimillion-dollar fraud during business dealings. Prosecutors asked a judge to halt the case on June 23, advising her that a criminal investigation was under way.
The targets of the probe are unclear. It could be one or more parties involved in the litigation between Payza and Obopay.
One part of prosecutors’ filings — and it’s a part that appears before the actual motion to intervene is presented — reads: “The basis for this motion is that the United States Attorney’s Office for the District of Columbia in connection with Homeland Security Investigations and the Washington, D.C. Financial Crimes Taskforce, is actively conducting a criminal investigation into the illegal activities of [REDACTED.]”
On July 20, U.S. District Judge Phyllis J. Hamilton, presiding in Oakland, granted the intervention and ordered the case stayed until Jan. 22, 2016, according to docket entries.
The public portion of prosecutors’ filing is heavily redacted, leaving the targets of the criminal probe unclear.
This is a screen shot of one such redaction in the 16-page filing:
Among other things, prosecutors contended “there are a number of issues in the instant action that may be resolved by the criminal case.” After another redaction, prosecutors continued: “Given the high degree of overlap and interrelatedness of the cases, dual litigation does not serve the interests of efficiency or judicial economy.”
Here is another redaction:
In her July 20 ruling, Hamilton found that “proceeding with the present action would likely force one or more parties into the position of having to choose between waiving their Fifth Amendment rights or invoking the privilege (but with knowledge that adverse inferences could be drawn in the civil action).”
In the United States, the Fifth Amendment is a Constitutional protection against self-incrimination.
The judge also found that the government had an “interest in the stay because discovery in the civil action could affect its ability to pursue a parallel criminal investigation or could compromise existing confidential informants.”
Back then, a site styled obopayusa.com claimed “[t]he US Department of Homeland Security has seized all MH Pillars dba Payza money on deposit with UltraLight FS.”
Payza, meanwhile, contended that “we are unable to complete any requests to withdraw or transfer funds for a part of our U.S. members at this time, since they are being withheld by Ultralight Financial Services (formerly known as Obopay Inc.) a licensed U.S. money transmitter of which Payza was an agent.”
Federal prosecutors in the District of Columbia confirmed earlier this month that Homeland Security Investigations is conducting the criminal probe.
URGENT >> BULLETIN >>MOVING: (Updated 3:03 p.m. EDT U.S.A.) The United States has opened a criminal investigation involving Obopay and Payza, a Ponzi-forum darling.
Details of the probe are unclear. But the office of U.S. Attorney Channing D. Phillips of the District of Columbia confirms on its website that the U.S. Department of Homeland Security through Homeland Security Investigations (HSI) is involved in the investigation. So is the Washington, D.C. Financial Crimes Task Force.
The PP Blog first reported in December 2013 that matters pertaining to Obopay and Payza were under investigation. At the time, however, authorities did not say it was a criminal probe.
In an Oct. 15 update, the U.S. Attorney’s office says a criminal probe is under way and that prosecutors successfully asked a judge to stay civil litigation until early next year.
“The United States government, including Homeland Security Investigations and the Washington, D.C. F[i]nancial Crimes Task Force, is currently conducting a criminal investigation. As part of that investigation, the United States Attorney’s Office for the District of Columbia has requested a United States District Judge to pause curr[en]t civil litigation relating to Payza and Obopay. The Judge has paused the litigation until January 22, 2016. Shortly after that date, additional information will be made available on this website about the status of this investigation.”
Prosecutors’ update includes an email link and phone number.
As one of its operators sits in a Michigan federal prison and the other is listed “at large” by U.S. authorities, Payza today announced a purported “restructuring” as a “European service” that has ceased serving U.S. customers.
News came 
Payza, an HYIP-friendly payment processor that recently bragged on Twitter about its attendance at an event for the teetering TrafficMonsoon scheme, has advised a federal judge that it is not responsible for millions of dollars that allegedly went missing in the Zeek Rewards’ scheme taken down by the SEC in 2012.
BULLETIN: New court filings in the Zeek Rewards’ Ponzi- and pyramid-scheme case brought by the SEC in 2012 say Zeek receiver Kenneth D. Bell may ask a federal judge for a finding of contempt against Payza, a payment processor.
