Two Canadians have been charged by the SEC in an alleged pump-and-dump scheme that included a reverse merger between a “shell public company” and a startup, “blast emails” and a concerted hype campaign, the U.S. agency said.
Named defendants are Bruce D. Strebinger, 38, of Vancouver, and Brent Howard Chapman, 38, who “is or has been residing in Antigua,” the SEC said. The complaint is filed in U.S. District Court for the Northern District of Georgia.
“Strebinger and Chapman rigged a penny stock in their favor while staging a massive promotional campaign,” said William P. Hicks, associate director for enforcement in the SEC’s Atlanta Regional Office. “They disguised their scheme by dumping their shares in relatively small amounts over extended periods of time, and they attempted to hide their proceeds from U.S. regulators by routing them through offshore accounts.”
The shell was known as Americas Energy Company-AECo. Its stock was suspended, with the company being liquidated in bankruptcy, the SEC said. The other company was a startup coal mining and oil and gas exploration business based in Nashville, Tennessee” that became known as Americas Energy Company Inc.
From the complaint (italics added):
The promotion began in September 2009 and continued through April 2010. While the promotion continued and the Stock price soared, Strebinger and Chapman sold their Stock for $17 million through offshore accounts, including accounts with Swiss financial institutions in the names of three entities: (1) Muskateer Investments, Inc. (“Muskateer”), beneficially owned by Strebinger; (2) Furla Blue SpA (“Furla”), beneficially owned by Strebinger’s wife, Anne Strebinger (“Strebinger’s Wife” ); and (3) Lance Investments S.A. (“Lance), beneficially owned by Chapman.”
The promotion increased investor demand for the Stock and enabled Strebinger and Chapman to reap huge profits through sales of the Stock while simultaneously concealing from investors not only that Strebinger and Chapman owned a significant portion of Americas Stock, but also that it was Strebinger and Chapman who were together marketing and funding a multi-million dollar promotional campaign related to the Stock.”
All in all, the SEC charged, the duo sold their shares “through an intricate web of offshore corporations, foreign accounts, and financial institutions located in Canada, Nevis, Panama, Switzerland, and the Turks and Caicos Islands.”
Assisting in the probe were the British Columbia Securities Commission, the Swiss Financial Market Supervisory Authority and the Financial Industry Regulatory Authority, the SEC said.
BULLETIN: Songkram Roy Shachaisere, a sidebar figure in the AdSurfDaily Ponzi scheme story, has been indicted with several others in what federal prosecutors in the Eastern District of New York are calling “one of the largest international penny stock frauds in history.”
The probe “used wiretaps in the United States and undercover agents in foreign countries,” prosecutors said.
Chillingly, prosecutors said some of the scammers impersonated IRS employees. Others joined forces to scam victims a second time by creating a “fake law firm.” Some of the money allegedly ended up in “an account maintained in Beirut, Lebanon.”
Indeed, prosecutors said, some of the scammers branched off from the penny-story scheme to orchestrate a scheme “in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses,” the office of U.S. Attorney Loretta E. Lynch said. “In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.”
“The criminals behind this scheme were shameless in heartlessly defrauding hundreds of victims out of their savings and retirement accounts for their own enrichment,” said James C. Spero, special agent in charge of Immigration and Customs Enforcement Homeland Security Investigations (HSI) in Buffalo.
All in all, the scams netted at least $140 million and defrauded victims in 35 countries, prosecutors said.
Fake news releases, bogus announcements about nonexistent ventures, bribes and fake posts on social-media sites were used to dupe the masses, prosecutors said.
Shachaisere allegedly was involved in a massive pump-and-dump scheme. In 2010, according to the SEC, Sahachaisere fraudulently touted the stock of Praebius Communications. That’s the company ASD once conveniently announced was providing it a $200 million revenue infusion. ASD made the claim while awaiting a key ruling by the federal judge presiding over the ASD Ponzi case brought by the U.S. Secret Service in 2008.
Even as critics were voicing concerns that ASD was advancing yet-another story that was too good to be true, members of the now-defunct Pro-ASD Surf’s Up forum were cheerleading ASD’s purported revenue infusion from Praebius.
Some ASD members sprinted to forums to announce the news, but the information could not be verified. ASD later removed the announcement from its website.
ASD’s name was not referenced in the SEC’s 2010 complaint against Shachaisere, and Praebius was not listed as a defendant in the case. Praebius was referenced in the case as a client that paid Sahachaisere and his company in stock “to provide investor relations services.”
All in all, seven defendants were arrested today, with nine indicted. Before the bust, one of the defendants bragged, “We know enough to be subtle,” prosecutors said.
Gary Kershner
Citizenship: United States
Age: 72
Tucson, Arizona
Joseph Manfredonia
Citizenship: United States
Age: 45
Tom’s River, New Jersey
Cort Poyner
Citizenship: United States
Age: 44
Boca Raton, Florida
Songkram Roy Shachaiser
Citizenship: United States
Age: 43
Huntington Beach, California
William Seals
Citizenship: United States
Age: 51
Fallbrook, California
Here’s how prosecutors described the pump-and-dump scheme (italics added):
As alleged in the indictment, defendants Sandy Winick, Gary Kershner, Joseph Manfredonia, Cort Poyner, Songkram Roy Shachaisere and William Seals orchestrated one of the largest international penny stock frauds in history. First, the defendants gained controlling interests of huge quantities of worthless stock in 11 public companies known in the industry as ‘file cabinet businesses’ – thinly traded companies with minimal assets and non-existent business operations, which in many cases were mere shell companies. They then ‘pumped up’ the share prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which included distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on social media sites and bribing stock promoters and brokers.
And here’s how prosecutors described the advance-fee component of the scam (italics/bolding added):
As the indictment alleges, defendants Winick, Gregory Curry, Kolt Curry and Gregory Ellis perpetrated a second scheme in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses. In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.
To facilitate the scheme, the defendants established boiler rooms or call centers from which members of the conspiracy would solicit advance fees from the unsuspecting penny stock victims. The call centers were located in various locales around the world, including Canada, Thailand and the United Kingdom. Recently, the defendants began planning to open a new call center in Brooklyn, New York. Some of the victims were told that they either needed to pay the advance fee to remove restrictions that were placed upon their penny stock, which prevented the victims from selling their stock in the market, or to join investors in a pending or anticipated lawsuit to recover losses that they incurred while owning the penny stock. Victims were then told that the advance fees were needed to convert the warrants of their stocks to a saleable security. In several instances, the advance fee defendants even pretended to be IRS employees collecting a bogus advance tax from victim investors before they could unload their penny stocks. The victims were directed to send payment of the advance fees to banks around the world, including bank accounts in New York City. The fraud proceeds were then transferred through a funds transfer network, located in Getzville, New York, to an account maintained in Beirut, Lebanon. Ultimately, these defendants generated more than $20 million in fraudulently obtained advance fees.
Defendant Kolt Curry described the Advance Fee Scheme in the following way over an intercepted wire communication: “I would say that 100 percent of these stocks are like uh pink uh… just dumps . . . . so … ya know they’re totally, they’re like, so a lot of these guys are dying . . . . to get rid of this crap. . . . The money is good, it’s easy. It’s easy money. Definitely easy money, and it’s good money.” In fact, while bragging about his prowess as a fraudster, defendant Kolt Curry further stated, “I had a guy send me a million dollars over one phone call . . . . He actually sent me almost two million dollars over the period of the hit . . . . I guess in the industry they coin it as a smash and grab.” As for the group’s recent plans to open a call center in Brooklyn, New York, defendant Kolt Curry said, “I tell you what man . . . hitting the Americans would be like taking money from a baby.”
Lynch’s office thanked various U.S. agencies for their worked on the probe. She also thanked the Royal Canadian Mounted Police, Financial Crime Intelligence Unit in Vancouver and the Integrated Market Enforcement Team in Toronto, and the Serious Organized Crime Agency in the United Kingdom. Meanwhile, prosecutors said that significant assistance was also provided by the United States Embassies in Ottawa, Toronto, London, Bangkok and Beijing.
BULLETIN: In an unprecedented move, the SEC today announced that it had suspended trading in 379 penny stocks, saying the companies were delinquent in filings and ripe for hijacking and scams involving reverse mergers and pump-and-dump schemes.
“The trading suspension marks the most companies ever suspended in a single day by the agency as it ramps up its crackdown against fraud involving microcap shell companies that are dormant and delinquent in their public disclosures,” the agency said.
The previous one-day record for trading suspensions was 35. That mark was set in 2005, but the SEC now says “enhanced intelligence technology” has enabled it to spot dormant companies more effectively and head off trouble at the pass.
“Empty shell companies are to stock manipulators and pump-and-dump schemers what guns are to bank robbers — the tools by which they ply their illegal trade,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “This massive trading suspension unmasks these empty shell companies and deprives unscrupulous scam artists of the opportunity to profit at the expense of unsuspecting retail investors.”
Regulators such as the SEC and FTC and agencies such as the FBI long have fretted about the use of shell companies to pull off fraud schemes, dupe investors, customers and vendors and conceal crimes and civil offenses.
“It’s critical to assess risks to investors in the capital markets and, through strategic planning, develop ways to neutralize them,” said Thomas Sporkin, director of the SEC’s Office of Market Intelligence. “We were able to conduct a detailed review of the microcap issuers quoted in the over-the-counter market and cull out these high-risk shell companies.”
As part of an initiative dubbed “Operation Shell-Expel” undertaken by the SEC’s Microcap Fraud Working Group, the trading suspensions announced today affect “clearly dormant shell companies in 32 states and six foreign countries that were ripe for potential fraud,” the agency said.
“The existence of empty shell companies can be a financial boon to stock manipulators who will pay as much as $750,000 to assume control of the company in order to pump and dump the stock for illegal proceeds to the detriment of investors,” the SEC said. “But with this trading suspension’s obligation to provide updated financial information, these shell companies have been rendered essentially worthless and useless to scam artists.”
URGENT >> BULLETIN >> MOVING: Thirteen individuals, including lawyers, corporate officers and a stock promoter, have been charged criminally in an FBI sting aimed at microcap fraud. The SEC has suspended trading in seven companies: 1st Global Financial Inc. (FGFB), based in Las Vegas; Augrid Global Holdings Corp. (AGHD), based in Houston; ComCam International Inc. (CMCJ), based in West Chester, Pa.; MicroHoldings US Inc. (MCHU), based in Vancouver, Wash; Outfront Companies (OTFT), based in Florida; Symbollon Corp./Symbollon Pharmaceuticals Inc. (SYMBA), based in Medfield, Mass; and ZipGlobal Holdings Inc. (ZIPG), based in Hingham, Mass.
Investigators alleged the fraud involved illegal kickbacks and sham consulting agreements in schemes to hype penny stocks. The criminal activity occurred “in the midst of an undercover FBI operation,” the SEC said.
Charged criminally, according to the SEC, were:
Kelly Black-White, 51, of Mesa, Ariz. Black-White operates Premier Funding Inc. and Premiere Services Inc.. He is charged with wire fraud.
James Prange, 60, of Greenbush, Wisc. He is affiliated with Northern Equity Inc., and is charged with wire fraud.
Michael Lee, 51, of Hingham, Mass. Lee is ZipGlobal’s CEO. He is charged with mail fraud and conspiracy to commit securities fraud.
Edward Henderson, 69, of Lincoln, R.I. He is charged with wire fraud.
Paul DesJourdy, 50, of Medfield, Mass. DesJourdy is the CEO of Symbollon Pharmaceuticals. He is charged with mail fraud and conspiracy to commit securities fraud.
James Wheeler, 51, of Camas, Wash. Wheeler is CEO of MicroHoldings Inc. He is charged with mail fraud and conspiracy to commit securities fraud.
Steve Berman, 49, of Hillsboro, Ohio. He is CEO of China Wi-Max Communications, and is charged with mail and wire fraud.
Richard Kranitz, 68, of Grafton, Wisc. He is a board member of China Wi-Max Communications, and is charged with mail and wire fraud.
JC Jordan, 60, of Cameron Park, Calif. Jordan is CEO of Vida Life International LTD. He is charged with mail and wire fraud.
Karen Person, 61, of Naperville, Ill. She is president of Small Business Company Inc., and is charged with mail and wire fraud.
Albert Reda, 65, of Tustin, Calif. He is treasurer of 1st Global Financial, and is charged with mail and wire fraud.
Steve Stuart, 48, of Monrovia, Md. Stuart is a major shareholder in ComCam International Inc., and is charged with mail and wire fraud.
Muhammad “MJ” Shaheed, 44, of Houston. He is CEO of Augrid Global Holdings Corp., and is charged with mail and wire fraud.
The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts is handing the criminal cases, the SEC said.
“Kickbacks and phony consulting agreements have no place in the financial strategies of any public company, and executives who engage in this kind of fraud are just selling out their own investors,” said David Bergers, director of the SEC’s Boston Regional Office.
The undercover operation, according to the SEC, was under way for a year, and Desjourdy, Henderson, Lee and Wheeler also were charged civilly.
Combined with corporation records and documents such as news releases, this post on the MoneyMakerGroup Ponzi forum raises questions about whether AdViewGlobal, an autosurf with close ties to AdSurfDaily, was part of an elaborate penny-stock scheme and money-laundering conduit that consumed the EWalletPlus payment processor and left AVG members holding the bag.
EDITOR’S NOTE: Longtime readers of the PP Blog will recall that the purported AdSurfDaily (ASD) spinoff known as AdViewGlobal (AVG) and some of its members engaged in particularly bizarre behavior in May 2009. The absurdities included announcing (and then unannouncing) a puported deal with a new offshore wire facilitator, announcing (and then unannouncing) a new website with purported new services and claiming the upstart company was healthy enough not only to pay out 250 percent matching bonuses to members and 200 percent matching bonuses to recruiters, but also to pay out multilevel downline commissions and purported surfing income of up to 8 percent a day.
Just two months earlier — in March 2009 — AVG suddenly announced its account at an unspecified bank had been suspended and that its chief executive officer had resigned. The firm bizarrely added that CEO Gary Talbert would not leave the company altogether. Rather, Talbert would remain in the accounting department.
Just a month earlier, Talbert, also a former ASD executive, had been introduced in an AVG conference call by Terralynn Hoy, an ASD member and moderator of the pro-ASD Surf’s Up forum and an emerging forum for the AVG autosurf. The introduction occurred in February 2009 after weeks of assertions by AVG that there were no ties between itself and ASD. The introduction was preceded by a bizarre announcement in late January of 2009 by AVG that the appearance of its graphics on an ASD-controlled webroom was an “operational coincidence.” The person making that announcement on AVG’s behalf was Chuck Osmin, a former ASD employee.
AVG’s websites ultimately disappeared. Members claimed AVG was owned by George and Judy Harris, and at least one of the AVG websites identified George Harris as an AVG trustee. George Harris, described in court filings as the head of ASD’s purported real-estate division, is the stepson of Andy Bowdoin and the son of Bowdoin’s wife, Edna Faye Bowdoin.
It later proved to be the case that May 2009 — the same month in which AVG was reimagining itself as one of the world’s leading advertising and communications firms while at once announcing and unannouncing key bits of purported news — was the same month the grand jury that indicted ASD President Andy Bowdoin had convened.
The PP Blog is reporting today that records strongly suggest AVG was a cog in a larger fraud — one that somehow married the AVG autosurf to a penny-stock scheme with a purported arm in the “oil” businesses and a branch that owned an Arizona payment processor known as EWalletPlus that later collapsed.
Here, now, our Special Report . . .
Is stock manipulation in multiple venues part of the bigger picture of the AdSurfDaily Ponzi scheme? Out of the clear blue sky in the fall of 2008 — as ASD awaited a critical court ruling in the Ponzi forfeiture case against the assets of President Andy Bowdoin — ASD claimed it expected a $200 million revenue infusion from Praebius Communications, a penny-stock firm that did not disclose audited sales figures.
But the Praebius announcement, which ASD later withdrew without explaining why, may not be the firm’s only tie to a penny-stock company.
A May 2009 post on the MoneyMakerGroup Ponzi forum is adding to lingering questions about whether AdViewGlobal — an autosurf with close ties to ASD — was part of an elaborate penny-stock scheme and money-laundering conduit involving multiple companies, domestic and offshore venues and individuals with ties to ASD.
On May 5, 2009, a MoneyMakerGroup poster who used the handle of “IMCanadian” claimed he (or she) had received autosurfing payouts totaling $1,300 from AdViewGlobal (AVG) on unspecified dates. The payments, according to the post, were routed through SolidTrustPay (STP), a Canadian payment processor.
The MoneyMakerGroup post potentially provides a glimpse into how fraudulent securities businesses may layer themselves to confuse both investors and authorities. The post cites two different email addresses as the sources of STP payments from the AVG scheme. Although the email addresses purportedly were used by AVG to cause STP to issue AVG autosurf payouts, neither of the addresses used a domain name owned by AVG. Instead, they used Yahoo and Gmail addresses.
AVG, according to records, could have chosen to use email addresses that corresponded to its own domain names. The firm owned at least two namesake domains before it suspended member cashouts in June 2009: ADVGlobal.com and AdViewGlobal.com.
But relying on free email providers such as Yahoo and Google was not the sole oddity associated with AVG, a firm an early promoter predicted would become a “1 Billion Dollar Company [before the] end of 2009.”
“Most if not all of your leaders are joining,” the promoter flatly counseled on a forum known as FreeLunchRoom on Dec. 23, 2008, two days before Christmas.
The MoneyMakerGroup posts that followed cited not only the Yahoo and Gmail payout addresses, but also two different STP usernames from which AVG payouts to “IMCanadian” purportedly originated. Absent in both usernames was any reference to AVG itself.
Like AVG, ASD also used STP, according to records. In August 2008, the U.S. Secret Service alleged that ASD had wired “several million dollars” to STP just prior to the seizure of tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin.
A payment of $200 for AdViewGlobal earnings was received through STP from an STP user who used the acronym “avg” as part of a yahoo.com email address, but did not use an AVG domain, according to the MoneyMakerGroup post. The STP username linked to the AVG payout was “karveck,” not AdViewGlobal or AVG, according to the post.
An AVG payment for $1,100, meanwhile, had come from an STP member who used the words “tmscorp” and “usa” — along with the abbreviation “llc” as part of a Gmail address, according to the post. The STP username for the payout was “tmscorp,” not AdViewGlobal or AVG, according to the post.
Ten days after the claims appeared on MoneyMakerGroup, the grand jury that indicted ASD President Andy Bowdoin in the District of Columbia was sworn in, according to records. The swearing in occurred just 11 days after the Obama administration announced a crackdown on offshore fraud schemes. On the same day Obama himself spoke about the crackdown — May 4, 2009 — AVG announced it had secured a new offshore wire facilitator in the aftermath of the purported suspension of AVG’s bank account in March 2009. Research by the PP Blog suggests that AVG sought to route money to itself by using a Florida shell company that had sought the services of an offshore firm later banned by the National Futures Association.
The seal on the Bowdoin indictment was lifted on Nov. 23, 2010, during a period in which some ASD members were discouraging others from filing remissions claims in the ASD forfeiture case brought by federal prosecutors and the U.S. Secret Service in August 2008.
Bowdoin was arrested in Florida on Dec. 1, 2010. He faces an upcoming trial on allegations of wire fraud, securities fraud and selling unregistered securities for his operation of ASD. AVG’s name does not appear in the indictment.
The Operative Word: ‘Murky’
Much remains murky about the degree of connectivity among ASD, AVG, STP, Karveck, TMS Corp and EWalletPlus. It is known that ASD and AVG had members and promoters in common. Both firms used STP to process payments, but it remains far from clear how many STP accounts the companies and their executives or insiders controlled and how much money generated in the ASD scheme remained in offshore accounts that later could be tapped to channel money to AVG.
ASD and AVG are known to have turned to members and moderators of the now-defunct Surf’s Up forum to sanitize the respective schemes. The surf firms, according to AVG, also shared at least two of the same employees: Chuck Osmin and Gary Talbert.
Some ASD members have claimed Bowdoin was a silent partner in AVG and fronted the money to acquire EWalletPlus, AVG’s purported in-house payment processor. If the assertion that Bowdoin provided money to buy EWalletPlus is true, it may mean that the deal was heavily layered to shield Bowdoin from being identified as the funding source and that AVG had more than one silent partner.
Karveck and TMS Corp used multiple versions of their names, a potential indicator of money-laundering — i.e., a bid to dupe banks into warehousing fraud-scheme proceeds. Karveck, for example, has been referred to as just plain Karveck, but also Karveck International. Records show that at least three versions of the TMS Corp. name exist: TMS Corp., TMS Association and TMS Corp. USA LLC.
TMS Corp. USA LLC is listed in Nevada and Arizona records as using ASD’s address in Quincy, Fla. Its manager is listed as Talbert, the former executive at both ASD and AVG.
Each of the TMS firms appears to have a tie to EWalletPlus, which once shared the same server in Panama with AVG. Despite serving pages from Panama, AVG purported to be based in Uruguay and to enjoy U.S. Constitutional protections even though it was operating offshore. Making the situation even murkier is that a penny-stock company known as Vana Blue Inc. claimed in 2008 to own TMS Corp., the parent company of the EWalletPlus web portal, and to have have acquired Karveck International in February 2009.
The claims came in the form of news releases — and news releases are common tools in penny-stock frauds.
AVG formally launched in February 2009, a year after VanaBlue claimed ownership in a news release of TMS Corp. and EWalletPlus and months after the seizure of Bowdoin’s assets in August 2008. Prior to the seizure, Bowdoin ventured to Costa Rica and Panama, according to court filings by the Secret Service.
The purpose of the Bowdoin trip, according to the Secret Service, was to to incorporate ASD Cash Generator — a replacement autosurf for a Bowdoin surf that had collapsed in 2007 — and an entity known known as La Sorta Trading outside of U.S. jurisdiction. The agency made the claim on Feb. 26, 2009, less than a month after the formal launch of AVG and during the same period in which AVG reportedly had met with a convicted securities felon and announced the formation of a purported offshore “private association.”
Also in February 2009, Vana Blue declared Karveck International a “newly acquired asset” that had produced $1.8 million in revenue in January 2009. Karveck was described as a company that “specializes in internet advertising and promotion in a search engine and ad clicking type environment.”
Mysteriously, however, VanaBlue disowned Karveck International just six months later — in August 2009. What Vana Blue initially had described in February as a completed acquisition of Karveck International was redescribed in August as deal that had fallen through as a result of “further due diligence.”
“Vana Blue was unable to complete this transaction but is in the final stages of negotiation with an oil company to continue its plans of acquisitions,” Vana Blue claimed on Aug. 17, 2009.
During the month of August 2009, ASD’s Bowdoin announced in court filings that he was “negotiating” with federal prosecutors. The August 2009 negotiations, which collapsed by mid-September of the same year, marked at least the second time that Bowdoin or his legal team claimed that the ASD patriarch was seeking to find a way to settle the ASD forfeiture case.
Bowdoin’s negotiations pleading appeared on the docket of U.S. District Judge Rosemary Collyer on Aug. 4, 2009. Thirteen days later — on Aug. 17, 2009 — Vana Blue announced on Business Wire that its acquisition of Karveck International — a deal it described in February 2009 as completed — had fallen through.
Vana Blue claimed in the same announcement it was proceeding on a deal for an oil company despite its sudden loss of Karveck International.
Earlier this year, a source told the PP Blog that she provided $5,000 to her sponsor — and that the sponsor converted her money to cashier’s checks made payable to TMS Association, one of the “TMS” companies records suggest was tied to both AVG and EWalletPlus. The woman told the Blog that she believed she was a victim of the ASD scheme.
On Dec. 21 2010, just 20 days after Bowdoin was indicted, an email that appeared to have originated with an AVG member began to circulate among ASD members.
The email accused members of ASD who were participating in the remissions program established by the Justice Department and the Secret Service of signing their “morals and soul away” and supporting “innocent peoples lives being destroyed.”
In a possible bid to intimidate ASD members, the email further claimed that an unspecified “back lash” would occur against any ASD member who participated in the claims program.
Last month ASD members who filed approved claims forms received back 100 percent of the money they had directed at ASD. The remissions payments were funded by money seized by the Secret Service in the ASD Ponzi case.
Although its is believed the government also has opened a probe into the affairs of AVG, prosecutors have made only veiled references to AVG in court filings in the ASD case.
EDITOR’S NOTE: The remarks below are excerpted from a speech last week in New York by Assistant U.S. Attorney General Lanny A. Breuer. As the PP Blog has previously reported, the Justice Department and agencies such as the FBI and U.S. Secret Service have been using undercover operatives to infiltrate criminal operations and networks used by the criminals.
One of the FBI investigations Breuer referenced was the Trevor Cook Ponzi scheme in Minneapolis. The scheme consumed tens of millions of dollars, defrauding victims of at least $158 million. Many mysteries remain in the case.
Meanwhile, undercover operatives also recently were used to expose penny-stock schemes operating in Florida.
It also is known that the Secret Service used undercover operatives in the AdSurfDaily case, the INetGlobal case, the Regenesis 2×2 case, the Legisi case and a case involving alleged international fraudster Vladislav Horohorin, accused of using criminal forums to peddle stolen credit-card information.
Here, now, some excerpts from Breuer’s speech . . .
Part of Trevor Cook's stash.
“Now, as I’m sure you know, financial criminals can be extraordinarily innovative, and they are often expert at covering their tracks. So we are always looking for creative ways to gather the evidence we need to bring financial criminals to justice. To that end, we have begun increasingly to rely, in white collar cases, on undercover investigative techniques that have perhaps been more commonly associated with the investigation of organized and violent crime.
“As part of this effort, we have significantly strengthened the Criminal Division’s Office of Enforcement Operations (known as OEO), which is the office in the Justice Department that reviews and approves all applications for federal wiretaps from across the country. We have a dynamic new OEO Director, Paul O’Brien, and we’ve substantially increased the number of attorneys at OEO who review these wiretap applications, adding to their ranks experienced prosecutors and recent graduates who have completed federal clerkships. As a result, the number of wiretaps we authorize – in all types of cases – has gone up.
“Let me give you just two examples of white collar cases in which we have used undercover techniques, both of which also highlight areas in which we have stepped up our white collar enforcement efforts more generally.
“The first example is the case of Trevor Cook, which was prosecuted by the U.S. Attorney’s Office in Minneapolis. Mr. Cook is just one of dozens of individuals whom we’ve prosecuted in recent months for participating in investment fraud schemes. Over the course of several years, Mr. Cook schemed to defraud at least 1,000 people out of approximately $190 million by pretending to sell them investments in a foreign currency trading program.
“In reality, he was pocketing the money or using it to pay off other investors. As was recently reported in the New York Times, we gathered evidence against Mr. Cook by using an undercover informant to record his transactions and conversations. [Cook] pleaded guilty earlier this year and was recently sentenced to 25 years in prison.
“Trevor Cook is one of literally hundreds of financial criminals who have preyed upon vulnerable, individual investors and bilked them out of their savings using investment fraud schemes. And as with Mr. Cook, we have been prosecuting these people aggressively, all over the country – from New Jersey and Connecticut to Texas and California, and everywhere in between.
“The second example comes from our enhanced efforts in the area of FCPA enforcement. Earlier this year, as I’m sure many of you know, we indicted 22 defendants in the military and law enforcement products industry for their participation in widespread schemes to bribe foreign government officials. These indictments resulted from the Department’s most extensive use ever of undercover law enforcement techniques in an FCPA investigation, and they represent the single largest prosecution of individuals in the history of our FCPA enforcement efforts. In September, one of the defendants in the case, Richard Bistrong, pleaded guilty . . .
“Over the last 18 months, we’ve devoted significant additional resources to the Criminal Division’s Fraud Section. We’ve recruited talent not only from white shoe law firms, but also from a deep pool of prosecutors around the country who bring with them extensive experience in prosecuting everyone from violent mobsters to dangerous terrorists. We are now bringing that extraordinary talent and experience to bear on prosecuting financial fraudsters.”
Two Canadians have been charged by the SEC in an alleged pump-and-dump scheme that included a reverse merger between a “shell public company” and a startup, “blast emails” and a concerted hype campaign, the U.S. agency said.
