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Tag: Phil Ming Xu

  • DEVELOPING STORY: Phil Ming Xu Of WCM777 May Be Under Arrest In China

    wcm777UPDATED 3:11 P.M. EDT U.S.A. A report dated today at ShanghaiDaily.com says an individual “surnamed Xu” and associated with “World Capital Market Inc.” is “now in custody” after a police action against a “pyramid scheme” in China.

    The PP Blog has contacted the U.S. Securities and Exchange Commission to determine if the person reportedly under arrest in China is “Phil” Ming Xu of the World Capital Market/WCM777 scheme from 2014.

    If the individual proves to be the Xu in the SEC case, it would mean that Xu left the United States sometime after being charged civilly by the SEC in March 2014 with a fraud alleged to have gathered tens of millions of dollars. It also potentially means the scheme, which allegedly operated under different names and resulted in the appointment of a receiver by a U.S. federal court, continued offshore after the U.S. action.

    Phil Ming Xu resided in Temple City, Calif., the SEC said in 2014.

    From Shanghai Daily (italics added):

    Last June and August, police received alerts from the People’s Bank of China and the Guangdong branch of China Securities Regulatory Commission that the company and its owners were not qualified to conduct public financing, and a criminal investigation began.

    A U.S. criminal probe into World Capital Market and related companies or figures also is believed to be under way.

    The WCM777 story in the United States has been consistently bizarre. MLM hucksters, for example, pitched the “program” in churches and claimed the company had given loans for spectacular sums to some top American businesses.

    There also was a claim a former CIA operative was involved, that the appearance of “blood moons” in the sky would provide investors guidance, that Ming Xu had acquired a company that produced “Innocence of Muslims,” a film that has been described as anti-Islamic and denigrating to the prophet Muhammad, that Ming Xu was an educator at a purported university known as the Joseph Global Institute.

    UPDATE 2:03 P.M. EDT MAY 17 U.S.A. The SEC said today that it didn’t have anything on whether the Xu reportedly under arrest in China is the Xu from the agency’s March 2014 case.


  • WCM777/’Joseph Global Institute’: More Strange Turns Potentially Involving More Colleges And A Push Toward Offshore ‘Cryptocurrency’

    SWIU.edu claims it is showing its main gate, but it's actually a gate at XXX.
    SWIU.edu call itself Southwestern University and claims it is showing its front gate for its “main campus,” but it’s actually a gate at Eastern Connecticut State University.

    UPDATED 4:06 P.M. ET U.S.A. Campus police departments at Southwestern University, Eastern Connecticut State University, the University of Wisconsin-Madison and Texas Tech University had no immediate comment today on a developing story that may be flowing from the bizarre WCM777 Ponzi scheme allegedly operated by SEC defendant Phil Ming Xu, also known as Dr. Phil Ming Xu.

    In addition to pushing WCM777, Xu pushed something called the “Joseph Global Institute” alongside a former reputed member of the Mafia named “Dr. Bruno Caporrimo.” Joseph Global purportedly was a California University in Pasadena that offered a “College of Engineering,” a “College of Health, ” a “College of Media Arts” and a “College of Business.”

    Everything about Joseph Global appears to have been bogus

    On Saturday, the PP Blog reported that an entity that is calling itself “Southwestern University” and purports to have a campus in Georgetown, Texas, claimed it had taken over Joseph Global. This entity, which appears to have no affiliation with the actual Southwestern University in Georgetown, is using SWIU.edu as a URL. The actual Southwestern University uses Southwestern.edu.

    Not only does SWIU appear fraudulently to be trading on the name of Southwestern University, it appears also to have ripped off images from the websites of Eastern Connecticut State University, the University of Wisconsin-Madison and Texas Tech to create a veneer of legitimacy.

    At the SWIU site, for example, what is described as a photo of the “USA Main Campus Front Gate” appears actually be be a photo from the website of Eastern Connecticut showing its entryway.

    Another photo at SWIU purports to be that of the “Main Library,” but it appears to be a photo from Wisconsin-Madison. Still-another SWIU photo depicts a statue of a man with a horse. This appears to be a photo of the statue of Will Rogers and “Soapsuds” at Texas Tech. There may be other misappropriated photos at the SWIU site.

    Though SWIU calls itself “Southwestern University,” it developed today that an entity perhaps based in Singapore that calls itself the “WOW School of Excellence” is pointing visitors toward an entity dubbed SWIU — for “Southwestern International University.”

    The reference at the WOW School site appears to be a reference to the SWIU domain, despite the fact the SWIU domain calls itself “Southwestern University” as opposed to “Southwestern International University.”

    The WOW school website purports to train students in “cryptocurrency.” At the same time, it suggests it operates a “School of Business (School of Excellence in Digital Currencies for Asian Students.”)

    “Our courses are currently affiliated with Southwestern International University (SWIU) and WOW Digital Academy,” the site claims.

    WCM777 was a scam targeted in part at Asian communities. At the moment, any number of purported cryptocurrency schemes are targeting Asians and other population groups.

    The SWIU website purports to be that of a Christian university led by individuals who hold doctorates in various academic disciplines. Videos for the Joseph Global Institute positioned Xu as the “dean” and Caporrimo as the “chancellor.”

  • SPECIAL REPORT: Accused WCM777 Ponzi Schemer Ming Xu Expressed Concern About Being Harmed, Says He Was Cooperating With Government; Purported Texas University Claims It Has Absorbed The Bizarre ‘Joseph Global Institute,’ Raising New Questions; WCM777 Claims Deadline Extended To Dec. 24

    EDITOR’S NOTE: The story about Phil Ming Xu’s asserted cooperation with the government appears below the subhead. We’ll lead with the news of extension of the claims deadline for WCM777 victims.

    If you’re a victim of the World Capital Market/WCM777 Ponzi- and pyramid scam shut down by the SEC last year, you now have until Dec. 24 — Christmas Eve — to file your claim.

    The original claims deadline had been Nov. 9. On Oct. 26, court-appointed receiver Krista L. Freitag asked for an extension. U.S. District Judge John F. Walter of the Central District of California granted the request on the same day, extending the deadline until Dec. 24 and empowering the receiver to take other actions “to increase the number of investor claims submitted,” according to the court docket.

    This is the URL of the receiver’s site: http://www.worldcapitalmarketreceivership.com/

    This is the URL of the site to file claims: https://www.wcm777claimsprocessing.com/en/Home/Filing

    Among other things, the WCM777 case demonstrates the logistical challenges posed by cross-border fraud schemes operating over the Internet and involving cash transactions and potentially thousands of domestic and international bank accounts, including at least 100 linked to accused WCM777 Ponzi schemer Phil Ming Xu alone. Victims from multiple countries piled up potentially by the tens of thousands. Not all of them spoke the same language and, as in similar scams, not all of them paid WCM777 directly. Rather, they paid their “upline” sponsor, making the task of following the money and filing a claim more difficult. (See March 15, 2015, PP Blog story: “WCM777: More Theft And Money Laundering MLM-Style.”

    Phil Ming Xu Says He Cooperated With Government

    The opening of a Phil Ming Xu declaration originally filed under seal in April 2014. The seal was lifted at the request of an investor and after federal prosecutors did not object.
    The opening of a Phil Ming Xu declaration originally filed under seal in April 2014. The seal was lifted at the request of an investor and after federal prosecutors did not object.

    The PP Blog is reporting today that Ming Xu claimed in an application to file certain information under seal in April 2014 that he was cooperating with the government on matters pertaining to alleged misdeeds by attorney Vincent J. Messina, a figure in the WCM777 story. The SEC previously had described Messina, believed to be in his eighties, as an “inactive” Florida lawyer. (Also see March 13, 2015, PP Blog story: “BULLETIN: CLAIM: Former CIA Operative Was Paid More Than $400,000 By Companies Linked To WCM Ponzi Scheme.”

    Messina is alleged to have come into possession of $5 million in proceeds from the WCM777 fraud, some of which allegedly was directed to International Market Ventures, a company operated by Gary Messina, his nephew. Gary Messina formerly worked as the chief information officer for the Bureau of Citizenship and Immigration Services, an arm of the U.S. Department of Homeland Security.

    Messina has been ordered to return the $5 million, and IMV — the recipient of a transfer from Messina — is on the hook for $941,505 of it.

    The effort to lift the seal on Ming Xu’s April 2014 filings began more than a year later, on Aug. 21, 2015, with a filing by an alleged victim of Xu from Daly City, Calif. This individual asserted he’d wired $2,000 to HSBC Bank in Hong Kong as his initial investment in WCM, a company that “represented itself as a leader in China based business and finance.”

    Walter lifted the seal in an order dated Sept. 14, after the office of U.S. Attorney Eileen M. Decker of the Central District of California did not object. Precisely what Decker’s office is investigating remains unclear, although tens of millions of dollars are alleged to have flowed through WCM and related entities.

    Ming Xu once claimed campaign ties to Los Angeles Mayor Eric Garcetti, and Freitag has alleged a California lobbying firm received $750,000 from the fraud for the purposes of “locating and securing legislators, obtaining access to such legislative leaders in California and Washington, D.C., and communicating and recommending advocacy strategies and effective public relations programs with the government.” 

    It is not unusual for Ponzi schemers to rub elbows with famous politicians as a means of trying to sanitize their scams, Scott Rothstein being an infamous example.   

    How dangerous is the world of HYIP Ponzis? Well, the Press Democrat of Santa Rosa, Calif., reported in January 2015 that investigators believe a murder might be tied to WCM777 and a companion scam known as Kingdom777.

    Ming Xu also was concerned about being harmed, according to his now-unsealed motion from April 2014 to file under seal. He did not list a source of harm, but with so much money and so many tentacles involved, it could be anybody — from a person down the street to a person overseas.

    From the motion (italics added):

    “Xu is making this request because public disclosure of his cooperation with the government, including the U.S. Attorney’s Office for the Central District of California and the Securities and Exchange Commission, could jeopardize potential criminal investigations and the use of proactive covert operations. If Xu’s cooperation was disclosed, potential subjects of the ongoing investigations may take certain steps to hide evidence and proceeds of criminal activity, flee the jurisdiction or potentially harm Xu or his family.”

    As for what Ming Xu said in his actual declaration docketed in May 2014 and now public . . .

    If you were pushing WCM777 during hotel pitchfests and in your church and continue to have doubt WCM777 was a Ponzi scheme, put those doubts to rest. The huckster conceded the Ponzi in his declaration, while alleging Messina also knew it was a Ponzi.

    From the declaration (italics added):

    “Mr. Messina knew the $5 million transferred to him was proceeds of an illegal Ponzi scheme and is being investigated by SEC and knew I was sending him the money to avoid detection and seizure of the funds by the federal government. I transferred the $5 million to Mr. Messina’s IOLTA account because he warned me the government would seize the money as illegal proceeds of the Ponzi scheme. Mr. Messina told me on several occasions that WCM had serious criminal and civil liability issues, and that he expected federal agents to show up at our office in Pasadena, execute a search warrant, seize all the computers, and other business records of WCM’s business operations.”

    Ming Xu continued (italics added):

    On or about February 27, 2014, Mr. Messina sent me a document to sign stating that the transfer of the $5 million was a non-recourse loan payable in full in five years. I executed the loan document after being advised to do so by Mr. Messina. The money I transferred to Mr. Messina was not truly a loan and the two-line document purporting to be a loan agreement is false.

    On or about March 20, 2014, I wrote and sent a letter to Mr. Messina, wherein I demanded return of the $5 million transferred from the ToPacific bank account into Mr. Messina’s IOLTA account for SEC settlement. Mr. Messina refused to return the monies.

    I have subsequently learned that Mr. Messina has disbursed some of these funds to an entity, International Marketing Ventures, a company that is controlled and operated by Gary Messina, his nephew. 

    I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

    It is unclear if Ming Xu currently is cooperating with the government and how much his asserted cooperation in April 2014 helped in pursuit of the WCM777 case or other cases.

    What is clear is that the WCM777 story has included a series of bizarre developments — everything from a pledge of love for the people of Peru written on the letterhead of a suspended California company and a recitation of the importance of “blood moons” to the appearance of a “Jesus sword” and the apparent involvement of a former CIA operative.

    Strangest of all, though, may be the Ming Xu claim he was taking over a company linked to the film “Innocence of Muslims” as part of a bid to “transform nations” and “train a group of Josephs to bless the world.”

    Who constituted the “Josephs” and how they would “bless the world” always has been unclear, as has the nature of the purported “training” they required. This particular segment of the WCM777 narrative is deeply strange in other ways. For example, a former reputed member of the Mafia named “Dr. Bruno Caporrimo” is part of the narrative and a purported Ming Xu associate.

    So is a purported California university known as the “Joseph Global Institute” of which Ming Xu purportedly was “dean” and Caporrimo reportedly was “chancellor.” As the PP Blog reported last year, one promo for the institute appeared to rip off video footage from Liberty University, a well-known Christian college in Virginia.

    ‘Joseph Global Institute’ Narrative Evolves

    Something that curiously calls itself “Southwestern University” even though it uses the four-letter acronym SWIU (at www.swiu.edu) now claims online that it has absorbed the Joseph Global Institute. Best we can tell, SWIU stands for “Spirituality Wisdom Inspiration Understanding” and appears not to be affiliated with Southwestern University of Georgetown, Texas, which uses www.southwestern.edu. SWIU purports to have a campus at 4040 Saltburn Drive in Georgetown, but the city does not have such a street, the Georgetown Police Department told the PP Blog today. (The city of Plano, nearly three hours from Georgetown, has a Saltburn Drive.)

    The Joseph Global Institute previously planted the seed it was affiliated with Harvard.

    Some people have blamed the “Innocence of Muslims” film for the Sept. 11, 2012, attack on U.S. outposts in Bengazi, Libya, that killed Ambassador Chris Stevens and three other Americans. The issue has dogged former Secretary of State Hillary Clinton, now a Democratic candidate for President of the United States.

    The WCM777 Ponzi-scheme story has proceeded through all sorts of tortured twists and turns, creating nonfiction that reads like fiction. Although it not unusual for bizarre narratives to accompany Ponzi schemes, the narratives surrounding WCM777 are particulary bizarre — and Americans should be concerned and follow developments closely.

    NOTE: Our thanks to the ASD Updates Blog.

  • UPDATE: Another Bizarre Turn In WCM777 Ponzi Probe

    With a storyrecommendedreading1line that has included claims that $14,000 would turn into $500,000 in a year, a declaration of love to the Peruvians it had fleeced and additional claims that all would become clear when “4 blood moons” appeared in the sky in April, the WCM777 “cloud computing” MLM scam has served up a symphony of the bizarre. For now, at least, the storyline only is getting stranger.

    Here’s the latest  . . .

    Very early on in her investigation of the WCM777 MLM “program” and the financial activities of accused Ponzi schemer Ming Xu, court-appointed receiver Krista. L. Freitag discovered that a Xu/WCM777-linked entity known as ToPacific had transferred $1 million to an entity known as MaNa Fashion.

    This transfer, according to court filings, occurred “on or around” Feb. 28. On March 28, the SEC announced pyramid- and Ponzi charges against Xu. Freitag was appointed receiver.

    Shortly thereafter, according to court filings, Freitag tried unsuccessfully to contact and to serve a subpoena on MaNa operator Sue Wang, according to court files.

    Freitag, however, was able to identify Wang’s accountant, who provided an email address for Wang.

    The receiver’s counsel then “e-mailed Ms. Wang a copy of the subpoena and a demand for information,” according to court filings. On May 23, nearly two months after the SEC action and Freitag’s appointment as receiver, “Ms. Wang finally acknowledged the Receiver’s attempts to contact her.”

    Wang “thereafter engaged counsel to respond to the subpoenas,” according to the receiver. “After further delays and demands for additional time, Ms. Wang produced limited documents on July 18, 2014.”

    In court filings, Freitag now says MaNa’s Wang is Ming Xu’s sister and that Ming Xu did not disclose this during an interview with the receivership. In fact, according to Freitag, the receivership did not learn this until September 2014.

    That’s not the only surprise.

    Freitag now finds herself seeking court approval to liquidate apparel in bulk as a means of recovering funds for WCM777 participants affected by the scheme. That’s because Freitag, on Oct. 13, met with Wang and her counsel and visited “two 10′ x 20′ storage sheds” that included an estimated 100,000 garments.

    Wang has acknowledged the apparel belongs to the receivership, Freitag says.

    These garments mostly were “stored in disorganized fashion, with much of the articles of apparel stuffed in large plastic bags and boxes with limited recognizable form of organization either by style, size or other methods generally acceptable in the [fashion] industry.”

    The items, Freitag says, are “non-branded” and will not fetch the $1 million Xu supplied his sister to acquire them. The best that can be hoped for is between $100,000 and $250,000, but their value will decrease over time because the merchandise is aging. “Most” of it was acquired for “previous seasons.”

    It might be helpful to sell them in bulk ASAP with the holiday season quickly approaching, Freitag says.

    So, she has asked the judge for permission to do exactly that. And, Freitag notes that she “has direct experience running a design and wholesale footwear and accessories company, and will utilize that expertise and experience to market the Garments and negotiate with potential buyers for the highest per unit price.”

    It also turns out that Wang was associated with two other entities that received another $1 million combined from Xu. These were identified as JJ Sparkles Inc. and Yuanhao Inc.

    “These entities are interrelated as their public registrations with the California Secretary of State show that Ms. Wang (who is also named as a salesperson for MaNa Fashion) is the named agent for service of process for both MaNa Fashion and JJ Sparkles, and Yuanhao’s registered business address is that of JJ Sparkles.”

    “The Receiver is continuing her investigation into the remaining funds disbursed to the other entities and will pursue these matters as appropriate,” Freitag says in an Ex Parte Application for Order to Sell Additional Personal Property.

    Because Ming Xu also bought golf courses, the receivership also has found itself in the golf business. And because Xu, the purported cloud-computing chieftain, used WCM777-linked funds to acquire real estate, the receivership also has found itself in the property-management business.

    The receivership even became a part of the fish-management business when Freitag discovered “live Koi” at a WCM777-linked property in California.

    Visit the receivership website.

  • BULLETIN: Receiver For WCM777 MLM ‘Program’ Says California Lobbying Firm Received $750,000

    Ming Xu is called "DPMX" in this purported contact with a lobbying firm. Source: Federal court files.
    Ming Xu is called “DPMX” in this purported contract with a lobbying firm. Source: Federal court files. Red highlight by PP Blog.

    BULLETIN: (7th update 6:59 p.m. EDT U.S.A.) The court-appointed receiver in the SEC’s WCM777 pyramid- and Ponzi-scheme case says she is seeking court approval to pursue claims against a California lobbying firm that allegedly received $750,000 from accused scammer Ming Xu and performed no work.

    Some WCM777 MLM affiliates claimed $14,000 sent to the “program” returned $500,000 in 52 weeks.

    Ming Xu also is known as Phil Ming Xu and Dr. Phil Ming Xu. The receiver, Krista Freitag, has shown a federal judge a document that purports to be a contract between Governmental Impact Inc. (GII) and Xu, who is described in apparent shorthand as “DPMX” in the contract.

    James Dantona is listed on the contract as the president of GII. Under the contract terms, either party could terminate the agreement with 30 days’ notice and no refunds would be given Xu by GII.

    “DPMX shall not be entitled to any refund for any reason,” the document allegedly specified. Given the nature of the allegations against Xu and WCM777, such an agreement could have deepened the Ponzi.

    It is unclear whether Xu holds a doctorate, and there are claims Xu and enablers tried to plant the seed he was affiliated with Harvard, the famous Ivy League school. The receiver’s claim that Xu negotiated an advocacy contract dated Jan. 30 with GII just weeks after the WCM777 “program” got kicked out of Massachusetts and just days after it was issued a Desist and Refrain order in California adds another bizarre layer to an already-bizarre case.

    Xu was photographed in 2013 with celebrities such as former Vice President Al Gore and Apple co-founder Steve Wozniak. He also purportedly was listed as a member of the Inauguration Committee of Los Angeles Mayor Eric Garcetti, son of the famed prosecutor Gil Garcetti.

    Filings by Freitag suggest Xu, through the 2014 GII contract, was seeking to buy access to American politicians. It is not unusual for Ponzi schemers to seek to surround themselves with politicians and to use politicians and famous companies to create a veneer of legitimacy. WCM777 and its purported parent — World Capital Market Inc. — also claimed ties to scores of famous companies.

    One of them — Siemens — specifically refuted WCM777’s claims in October 2013, during a period in which WCM was being pitched in California churches.

    Some of the money Xu directed toward GII ended up at a company called ZHB International Corp. and was used to pay for the personal mortgage of ZHB’s Zayda Aberin, Freitag contends.

    Through GII, Freitag contends, Xu sought help in “locating and securing legislators, obtaining access to such legislative leaders in California and Washington, D.C., and communicating and recommending advocacy strategies and effective public relations programs with the government.”

    Xu’s plan appears to have backfired. After actions by Massachusetts and California, the SEC sued Xu, alleging he was at the helm of a massive international fraud.

    Visit the receiver’s website. Read the receiver’s declaration.

  • ** CAUTION: Report Of Bogus TelexFree Site **

    cautionflagThere is a report on social media this morning of a bogus TelexFree site that mirrors an old TelexFree site that existed when the company was actively soliciting business. The site creates the impression TelexFree has reopened.

    TelexFree has not reopened.

    It is Sunday. Federal prosecutors handing the TelexFree criminal case involving alleged fraudsters James Merrill and Carlos Wanzeler did not immediately respond to a request for comment.

    The actual TelexFree site says the firm has suspended all business activity. The trustee in the TelexFree bankruptcy case has begun his investigation and announced in court filings that he is seeking court authority to issue subpoenas. (See documents 261-265 here. Link current as of today’s date.)

    Because the report about the bogus site was made on social media and the intent of the poster is not known, extreme caution is warranted. Clicking on the link to the asserted hacking site through the social-media site potentially could have bad consequences. So could entering any information on forms at the site.

    The social-media poster positioned the report as a warning hackers seeking to profit from the troubles at TelexFree could be at work.  The site used the word “telexfree” as part of its URL.

    Even if the social-media poster was being sincere in his warning and it proves true the site is bogus and designed for hacking, clicking on the link potentially could expose you to harm.

    And if the site is not a hacking or phishing site, it leads to questions about why such a site that mirrors TelexFree’s “old” site exists to begin with. Could it be an old TelexFree affiliate’s site created with swiped code and designed to dupe prospects into believing they were dealing directly with the TelexFree corporate entity? Could it be an orphaned site of TelexFree itself?

    The asserted hacking site uses the name of a male individual with an address in Chicago, according to a database search. The Registant Organization is listed as “telexfree.”

    Some TelexFree affiliates are alleged to have accepted TelexFree payments directly, a circumstance the Massachusetts Securities Division said in April resulted in a condition in which “participants received uncontrolled cash deposits outside of the TelexFree system.”

    The social-media poster who issued the warning appears to be pushing a “program” known as ViziNova that may be linked to the alleged $80 million WCM777 scam allegedly operated by Phil Ming Xu.

    It is common for HYIP hucksters to be in multiple “programs” simultaneously. After “working” a “program” for months and cleaning up with it, the most disingenuous promoters then may turn on the “opportunity,” perhaps particularly if a regulatory action occurs or there is a sense one is imminent.

    Such promoters then may try to port entire “teams” to a new scam.

    Read a report on ViziNova at BehindMLM.com.

  • UPDATE: Federal Judge Orders Properties Linked To Alleged WCM777 MLM Scam Listed For Sale

    wcm777UPDATE: A federal judge has ordered the receiver in the WCM777 case to list for sale three properties linked to the alleged MLM pyramid scheme.

    U.S. District Judge Christina A. Snyder is presiding over the SEC’s civil case filed in March. Receiver Krista L. Freitag asked for the authority to sell the properties last month. Snyder granted the authority June 9. The properties are single-family residential homes in Lake Elsinore, Monrovia and Walnut, Calif.

    Snyder also authorized Freitag to “close frozen bank accounts of the Receivership Entities and have the balances wired to receivership bank accounts.”

    Since the filing of the original SEC pyramid action, the agency has upped the dollar volume of the alleged scam from about $65 million to about $80 million. In April, Freitag said she’d put an end to a nascent MLM scheme with ties to WCM777.

    WCM777 purportedly was part of an entity known as World Capital Market.

    In an amended complaint last month, the agency accused Vincent Messina, an attorney linked to alleged WCM operator Phil Ming Xu, of self-dealing and distributing millions of dollars in funds linked to WCM777 to other entities.

    Certain money disbursed by Messina ended up with “persons in Canada, Abu Dhabi, and to an entity in Hong Kong,” the SEC alleged.

    Snyder imposed an asset freeze on Messina last month.

    Some promoters of TelexFree, an MLM “program” and alleged Ponzi- and pyramid fraud that gathered more than $1.2 billion, also promoted WCM777.

    Like TelexFree, WCM777 was the subject of a state-level securities investigation in Massachusetts. Regulators said both programs targeted individuals who speak Spanish or Portuguese. WCM777 also targeted the Asian community.

    Like other HYIP scams, WCM777 traded on the names of famous companies.

    The WCM777 and TelexFree “programs” have led to questions about whether MLMers were getting sucked into companies that have cult-like qualities.

    Ming Xu reportedly sent a love note to the people of Peru when police there acted against the “program.”

    He further reportedly explained that the “program” aims would become clear when “4 blood moons” appeared in the sky in April.

  • Judge Sets Hearing Date On WCM777 Receiver’s Claim That Attorney Linked To Phil Ming Xu Is Refusing To Return Millions And That ‘Xu Uses Nominees To Hold The Proceeds Of Fraud’

    Screen shot of federal court file. Red redaction by PP Blog.
    Screen shot of federal court file. Red redaction by PP Blog.

    EDITOR’S NOTE: See related story from earlier today that outlines where about $2.133 million of the $5 million cited in the story below is being held for safe-keeping. The whereabouts of the balance is creating a mystery, according to court files.

    U.S. District Judge Christina A. Snyder has scheduled a hearing April 24 in Los Angeles to address a court-appointed receiver’s claim that a $5 million transfer by accused WCM777 Ponzi scheme operator Phil Ming Xu to a lawyer a month before an asset freeze was a “sham” designed to stash cash.

    The lawyer, Vincent Messina, now has retained a lawyer and is refusing to return most of the cash and explain what happened to more than $2.66 million that hasn’t been accounted for, insisting that the transaction was a “loan” for investment purposes and that he also was helping Xu set up a “political action committee,” according to receiver Krista L. Freitag.

    Messina has retained Maranda Fritz, an attorney in New York, according to court filings.

    Freitag, who wants the money returned and an accounting of how it was used, has asked Snyder to freeze Messina’s bank accounts.

    “There is not only a strong likelihood that monies transferred to Mr. Messina will be dissipated, but evidence they already have been,” Freitag argued.

    And, she continued, “[t]his poses a serious risk of irreparable injury to the receivership estate and investors. Once monies are disbursed by Mr. Messina, it will be difficult, if not impossible, to recover them for the benefit of investors.”

    The SEC has described WCM777 as a $65 million Ponzi- and pyramid scheme. Freitag says her early analysis suggests that WCM777 may have more than 479,000 “member accounts.”

    Moreover, Freitag argued, Messina refused to return the money even when asked by Xu in a March 20 letter.

    Xu, according to the letter, described Messina as his attorney, not as a business partner, and wrote he wanted the $5 million returned so he could use it “to settle any outstanding SEC issues that I may have.” (See screen shot above.)

    Other records show that the SEC had been investigating Xu since October 2013. Snyder granted an asset freeze on March 27, after the SEC appeared in federal court and alleged that WCM777 and related entities were conducting an ongoing fraud.

    Xu allegedly transferred the $5 million to Messina a month prior to the March 27 freeze.

    From the receiver’s motion to freeze Messina’s bank accounts (italics/carriage returns added):

    Considering the large sum of money at issue, the compelling evidence of fraud and that Defendant Xu uses nominees to hold the proceeds of fraud, as well as the proximity of the transfer to the filing of the case, and the fact that Mr. Messina refuses to provide any information about the whereabouts of the remaining $2.668 million, it is critical that Mr. Messina’s bank accounts be immediately frozen to protect the Receivership Entities’ investors from further dissipation of the funds.

    The temporary freeze should remain in place pending further investigation and a determination by the Court of the true nature of the $5 million transfer. To aid in this investigation and determination, Mr. Messina should be directed to provide an accounting of the funds, a relatively simple task considering he received them only about 40 days ago.

    The accounting will also assist in determining the appropriate scope of the freeze, which should cover accounts containing funds received from Mr. Xu or the Receivership Entities.

    Thanks to the ASD Updates Blog. View WCM777 case docs 29 through 29-2 here.

  • BULLETIN: WCM777 Receiver Puts End To ‘New Multi-Level Marketing Scheme Which Was Being Developed’ In California Warehouse And ‘Involved Numerous Of The Same Defendants And Personnel’; Receiver Also Seeks Freeze Of Attorney’s Bank Accounts — Plus, A Ponzi Fish Story

    breakingnews72BULLETIN: (UPDATED 11:38 P.M. EDT U.S.A.) The court-appointed receiver in the WCM777 Ponzi- and pyramid case says in court filings that she has stopped a “new multi-level marketing scheme” that had been under development by WCM777 in a warehouse in El Monte, Calif.

    WCM777, alleged by the SEC to have gathered about $65 million, purportedly was in the “cloud” computing business and may have more than 479,000 “member accounts.”

    Receiver Krista L. Freitag says in a report that she has identified more than “100 domain names” associated with the alleged WCM777 fraudsters.

    Meanwhile, Freitag says she is seeking an order to freeze the bank accounts of an attorney linked to accused WCM777 Ponzi schemer Phil Ming Xu.

    The lawyer, according to the receiver, purportedly is “the beneficiary of a $5 million non-recourse loan, to be repaid in 2019 in a single balloon payment” and allegedly claimed he’d lost a cashier’s check for $200,000. The purported loan allegedly came from a Xu-owned entity.

    At the same time, Freitag says her preliminary analysis suggests that Xu, who allegedly squired the purchase of two golf courses and at least six other properties for millions of dollars in cash, may have an association with at least 28 business entities. One is known as “12 Zodiacs Inc.” Another uses the words “Medical Group” when forming its name. Yet-another is described as “US Immigration Investment Assoc.” Still-another is called “WCM Art Inc.”

    Perhaps like the Zeek Rewards MLM HYIP scheme before it, WCM777 could lead to an incredible paper chase that serves up intriguing but worrisome sidebars of black comedy. Another of the entities listed in the WCM777 receiver’s report, for example,  potentially has an all-subsuming name: “Frequency Holdings Inc.”

    The El Monte MLM scheme was being developed by “numerous of the same defendants and personnel” involved in WCM777, Freitag advised a federal judge.

    U.S. District Judge Christina A. Snyder is presiding over the case. It was not immediately clear whether the alleged emerging scheme was “Global-Unity,” which once used a photograph of a golden pyramid on its website.

    What is clear is that Freitag has been plenty busy since the SEC fraud case was filed March 27. In one instance, she advised the judge, the receivership observed a “third party” removing  “furniture and art work” from a property linked to WCM777.

    “The Receiver promptly contacted the Monrovia [Calif.] police department and made a report,” Freitag advised the judge. “The Receiver has investigated the removal of art and furniture and has identified the people who removed the personal property. The Receiver has demanded the return of the art and furniture.”

    In another instance, Freitag said in the report to the judge, the receivership observed “live Koi” at a WCM777-linked property, this one in Walnut, Calif.

    “Koi” are color-splotched, trainable, domesticated carp originally bred in Japan and reportedly known to recognize the persons feeding them and to eat out of the hands of their owners, according to the Wikipedia entry for the species.

    Some websites sell Koi for thousands of dollars apiece.

    “The Receiver has taken steps to maintain these fish in the event they have value to the receivership estate,” Freitag advised the judge.

    On the money front, the receiver advised the judge that the receivership now has in its possession “$11.28 million” of WCM777-connected money that once had been in the trust account of a law firm, $1.5 million that had been in a bank account and designated to be part of a WCM777-connected real-estate acquisition and an “aggregate of approximately $2.54 million held in other accounts of the Receivership Entities or recovered from other entities.”

    Freitag also has met with Xu and his lawyers, according to the receiver’s report to the judge.

    “This interview lasted several hours, during which the Receiver primarily focused on identifying assets of the Receivership Entities that needed to be secured, as well as gaining understanding of any past or present operations that were being conducted by Receivership Entities,” Freitag advised the judge.”Among other things, these interviews yielded significant information concerning funds transferred to Vincent Messina as well as a myriad of investments, loans, and transfers that need to be addressed by the Receiver.”

    Messina is a lawyer WCM777 billed as its “In-house Legal Counsel,” according to affiliate promos.

    From the receiver’s report (italics/carriage returns added):

    During her initial investigation, the Receiver learned that, approximately one month before this case was filed, $5 million was transferred from ToPacific, Inc., an entity owned by Defendant Phil Ming Xu and whose accounts are now frozen, to the IOLTA trust account of attorney Vincent Messina.

    Mr. Messina has refused to turn over the funds and his counsel has stated that some of funds have already been disbursed, but the details of those disbursements have not been provided. The Receiver initially sought to recover the funds from Mr. Messina, which Mr. Messina refused. The Receiver then asked Mr. Messina to agree to escrow the undisbursed funds pending further order of the Court and provide an accounting of the funds he received. On April 4, 2014, Mr. Messina, the Receiver, and the Commission agreed that $2.332 million wired by Mr. Messina from various accounts he controls to the client trust account of Thompson Hine LLP, Mr. Messina’s attorneys, would be held in escrow by Thompson Hine pending further order of the Court. Mr. Messina still refuses, however, to provide any information about the remaining $2.668 million, stating only that it was disbursed for “business purposes.”

    On April 8, 2014, Maranda Fritz of Thompson Hine confirmed that $2,133,214.62 has been received by Thompson Hine and is being held pursuant to the escrow agreement. The remaining $200,000 to be held pursuant to the escrow agreement has not yet been received.

    The Receiver also learned Mr. Messina obtained a $200,000 cashier’s check from Bank of America, which he claims he lost. Mr. Messina is apparently putting in a claim with Bank of America that the funds be credited back to his account. Bank of America advises it may take as long as 91 days for such claim to be approved and the funds credited back to Mr. Messina’s account.

    Mr. Messina’s position is that the $5 million transfer is a loan pursuant to a two-line loan agreement dated February 27, 2014, in which Mr. Messina is the beneficiary of a $5 million non-recourse loan, to be repaid in 2019 in a single balloon payment. The funds were wired to Mr. Messina’s IOLTA trust account . The purported loan agreement is virtually identical to purported non-recourse, unsecured loan agreements signed by Receivership Entity Manna Holding Group, Inc., an entity owned by Mr. Xu’s wife, in connection with large transfers from World Capital Market, Inc. and Kingdom Capital Market, LLC for the purchase of real property. Declaration of [lead SEC investigator] Peter Del Greco, Dkt. No. 6, Exhibits 32 and 33. No payments are due under the purported loan agreement until January 2019.

    Moreover, Defendant Ming Xu subsequently asked for return of the “retainer” from Mr. Messina, which undermines a claim that this was a bona fide loan transaction for some legitimate purpose.

    The Receiver is filing an ex parte application concurrently with this report requesting that Mr. Messina’s bank accounts be frozen and he be directed to provide an accounting of all funds received from the Receivership Entities, including ToPacific, Inc. Such immediate relief is necessary to protect investors from further dissipation of the funds pending further investigation and a determination by the Court of the true nature of the $5 million transfer.

    Read the receiver’s report.

  • TelexFree’s Name Appears In Federal Court Filings In The SEC’s Pyramid And Ponzi Case Against WCM777

    TelexFree's name is referenced on Page 14 of Exhibit 3 in an SEC affidavit filed as part of the WCM777 pyramid- and Ponzi prosecution. Information in the exhibit was gleaned from the California Department of Business Oversight's investigation into WCM777.
    TelexFree’s name is referenced on Page 14 of Exhibit 3 in an SEC affidavit filed as part of the WCM777 pyramid- and Ponzi prosecution. Information in the exhibit was gleaned from the California Department of Business Oversight’s investigation into WCM777. Red highlights by PP Blog.

    UPDATED 8:51 P.M. EDT (U.S.A.) Already under investigation in Massachusetts, is TelexFree destined to encounter trouble from state regulators in California and perhaps the U.S. Securities and Exchange Commission (SEC)?

    At least by Nov. 14, 2013, the California Department of Business Oversight (DBO) was asking questions about the TelexFree MLM scheme, according to filings in federal court. The filings, which appeared in affidavit form and included exhibits, were docketed March 27 after being submitted by the lead investigator in the SEC’s case against WCM777, an alleged $65 million Ponzi- and pyramid fraud.

    Some pitchmen in HYIP schemes promote multiple purported opportunities simultaneously and use money from one scheme to join another, a situation that may put banks and payment processors in possession of tainted proceeds from interconnected and ongoing frauds. A federal judge has frozen at least 54 bank or vendor accounts linked to WCM777 or accused operator Phil Ming Xu.

    California investigators asked Stanley Stephan Huntsman, who identified himself as a “spokesman-ambassador” for WCM777 with Xu as his “employer,” whether he had any “relationship” with “TelexFree,” according to the SEC filings.

    It may be the first reference to TelexFree in a federal court filing, albeit one that is not a charging document. At a minimum, however, it demonstrates that both the California DBO and the SEC are aware of TelexFree and believe that the Massachusetts-based “program” has promoters in common with WCM777.

    “I have no relationship with TelexFree,” Huntsman responded.

    The SEC announced the WCM777 prosecution on March 28, one day after its lead WCM777 investigator submitted the documents and exhibits from California’s WCM777 probe. Huntsman was not named a defendant in the SEC’s WCM777 action.

    WCM777 was targeted at Asians and Latinos, the SEC alleged.

    In addition to identifying himself as a “spokesman-ambassador” for WCM777, Huntsman told California investigators that he “was required to read power points prepared by WCM, which was also displayed on the WCM website,” according to an SEC affidavit.

    TelexFree is creating tensions in Massachusetts which, like California, banned WCM777.

    NOTE: Thanks to the ASD Updates Blog.

     

  • URGENT >> BULLETIN >> MOVING: SEC Takes Down WCM777; Says Purported Opportunity Is ‘Worldwide Pyramid Scheme,’ Ponzi And Offering Fraud; Federal Judge Signs Asset Freeze

    breakingnews72URGENT >> BULLETIN >> MOVING: (16th update 5:42 p.m. EDT U.S.A.) The SEC has gone to federal court in Los Angeles, alleging that the WCM777 “program” is a “worldwide” pyramid scheme, a Ponzi scheme and an offering fraud that targeted Asian and Latino communities and gathered more than $65 million.

    A federal judge has granted an asset freeze, the SEC said. The agency brought the case in an emergency complaint.

    “[Phil Ming] Xu and his entities claimed they were using investor funds to build a strong cloud services company that would then ignite other high-tech companies and ultimately make their investors very wealthy,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “In reality, they were operating a pyramid scheme that preyed on investors in particular ethnic communities, leaving them with nothing left to show for their investment.”

    Some MLM promoters have pitched WCM777 alongside the TelexFree “program.” TelexFree is not referenced in the SEC complaint. But the complaint does reference a Massachusetts probe into WCM777 last fall. TelexFree  has been under investigation by the Massachusetts Securities Division since at least February 2014.

    Charged in the SEC’s WCM777 case are WCM777 Inc. of Nevada, World Capital Market Inc. of Delaware, WCM777 Ltd.( dba as WCM777 Enterprises Inc.) of Hong Kong and Ming Xu, also known as Phil Ming Xu, of Temple City, Calif.

    Several firms are listed as relief defendants, amid allegations they received ill-gotten gains. These include Kingdom Capital Market LLC of Delaware, Manna Holding Group LLC of California, Manna Source International Inc. of California, WCM Resources Inc. of Texas, Aeon Operating Inc. of Texas and PMX Jewels Ltd. of Hong Kong.

    Even as WCM777 was under investigation by state regulators in the United States, the SEC said, the “program” raised “more than $37 million from investors which has been deposited into [the defendants’] Hong Kong bank account.”

    During the state-level probes in Massachusetts and elsewhere, “Defendants stopped depositing investor funds into their United States bank accounts, although the WCM777 offering continued,” the SEC alleged.

    Xu, the SEC charged, is “involved in all aspects of the fraud.”

    From the SEC complaint (italics/bolding/carriage returns added):

    The bulk of the investor funds have been used to pay cash for real property purchased in the United States, purchased in many cases with funds transferred through Defendant World Capital Market Inc. (“WCM”), and held in the names of Relief Defendants Manna Holding Group LLC and Kingdom Capital Market LLC, which are affiliated with Defendant Xu.

    The properties include two golf courses, a warehouse, vacant land, and several single family homes. Defendants have also used investor funds to play the stock market and to make investments, through intermediary companies, in an oil and gas offering of Relief Defendant Aeon Operating, Inc.

    Defendants have also sent investor funds to Relief Defendant PMX Jewels, Limited, which is a rough diamond jewel merchant in Hong Kong, and to Relief Defendant Manna Source International, Inc., which is affiliated with Defendant Xu.

    The golf courses were identified as Glen Ivy Golf Club in Corona, Calif., and the Links at Summerly in Lake Elsinore, Calif. To acquire Glen Ivy, WCM777 plunked down $6.5 million in cash, with the money coming from “WCM777 accounts that held investor proceeds,” the SEC charged.

    Meanwhile, the Links at Summerly was acquired for $1.65 million in cash. Again, the SEC charged, the money to acquire the course “originated from WCM777 accounts that held investor proceeds.”

    Along the pyramid and Ponzi path, the SEC charged, WCM777 bought a single-family home in Walnut, Calif., for “$2.4 million in cash,” a single-family home in Monrovia, Calif. for “$980,000 in cash,” a single-family home in Lake Elsinore, Calif., for “$500,000 in cash,” vacant land in New Cuyama, Calif., for “$700,000 in cash,” a warehouse in El Monte, Calif, for “$1,051,750 in cash” and used “$1,456,041.56” to close on the purchase of a single-family home in Monrovia, Calif.

    This Monrovia sale never closed, the SEC said.

    And “Ming Xu opened an account at a major brokerage firm in June 2013 in the name of WCM,” the SEC charged. “Between June 2013 and January 2014, Defendants deposited a total of $2.155 million into this brokerage account. The cash originated from WCM777 accounts that held investor proceeds.”

    Moreover, the SEC charged, WCM777 disbursed $200,000 in investors proceeds to ToPacific Inc., $210,000  to Agape Technology and $230,000 to Media for Christ.

    All of these entities, the SEC charged, were “associated or otherwise affiliated” with Xu.

    Media for Christ — apparently before Xu’s alleged involvement — found itself at the center of an international firestorm in 2012 over a film production known as “Innocence of Muslims.” (See PP Blog report dated Nov. 21, 2013.)

    Among the alarming allegations is that WCM777 falsely planted the seed that it had partnerships “with more than 700 major companies such as Siemens, Denny’s, and Goldman Sachs,” the SEC said.

    WCM777 also asserted a false association with Stouffer Hotels and Resorts, a company that “has not been in business since 1996 when it sold its real estate portfolio to another company, and that was then purchased by Marriott in 1997,” the SEC said. “Marriott does not have any relationship with Defendants.”

    As the PP Blog reported in October 2013, affiliates of WCM777 helped spread the claims about ties with famous businesses across the web.

    Commingling

    The WCM777 enterprises “opened and used numerous accounts located at three different banks in the United States, to move and commingle most of the investor proceeds before they were disbursed to third parties,” the SEC said.

    It is common for HYIP scams to use banks and payment processors to warehouse proceeds from fraud schemes, a practice that brings national-security concerns into play.

    HYIP schemes often also purport to offer interest-earning “packages” while using a “points” system and touting future public offerings, things allegedly in play at WCM777.

    From the SEC complaint (italics added):

    Through publicly available websites and promotional materials, Defendants offer packages or membership units in “WCM777.” Defendants portray WCM777 as a profitable multi-level marketing venture that sells packages of “cloud media” or cloud services. In the WCM777 offering, Defendants promise investors that they will earn 100% or more returns in 100 days. Defendants represent that the “points” investors receive for their investments will be convertible into equity in initial public offerings (“IPOs”) of “high tech” companies Defendants are purportedly incubating. Defendants have facilitated a “secondary market” in the points they award to investors, and Defendants estimate that $890 million of the points have traded on this market.

    But in reality, the SEC said, the WCM777 enterprises “do not realize any appreciable revenue other than from the sale of ‘packages’ of cloud services to investors. WCM777 is not profitable, and is a pyramid scheme. Defendants use some of the investor funds to make Ponzi payments of returns to investors.”

    The SEC, which says WCM777 was selling unregistered securities as investment contracts,  is seeking the appointment of a receiver, a request the judge has approved.

    Like other HYIP schemes, WCM777 preemptively denied it was a “Ponzi scheme.”

    “Is WCM777 a Ponzi Game?” WCM777 wrote on its website, before answering its own question, the SEC said.  “In summary, we are not a Ponzi game company. We are creating a new business model.”

    In reality, the SEC said, “The cash paid to investors were Ponzi payments made with funds received from other investors, and were not paid from net income or profits of the WCM777 enterprise.”

    At a 2013 business event in California, Xu was photographed alongside luminaries such as former U.S. Vice President Al Gore and Apple co-founder Steve Wozniak. It is somewhat common for Ponzi schemers to trade on the names and reputations of prominent individuals.

    Zhi Liu, another WCM777 executive identified in state-level filings, is not directly referenced in the SEC complaint. There may be an oblique reference, however.

    “On January 27, 2014, WCM777 Ltd. filed a lawsuit against a former employee in the Superior Court for the State of California, County of Los Angeles,” the SEC said.

    Liu is known as “Tiger.”

    A Twitter site under the name of “Dr. Phil Ming Xu” has a March 14 entry that claims, “Tiger created the system and took $30M worth of unauthorized ecash from WCM777. WCM777 sued him.”

    As noted above, however, the SEC has alleged that Xu was involved in all aspects of the fraud. And also as noted above, the SEC further alleged that “more than $37 million from investors” had been deposited in a Hong Kong bank account.

    Whether Liu had a role in the Hong Kong deposits is unclear. Also unclear is whether Liu remains in the United States or has relocated elsewhere.

    In its emergency filing, the SEC said the WCM777 enterprise constituted an “ongoing” fraud.

    Read the SEC’s statement and complaint.