There is no question that President Trump had the power to ask Bharara and dozens of other U.S. Attorneys who were holdovers from the Obama administration to go. But Bharara expected to stay, especially since Trump asked him to do so.
Bharara’s name has appeared on the PP Blog many times. In fact, something he once said became a source of great (and ongoing) editorial inspiration for peeling back layers of the HYIP onion.
You see, back in 2009, Bharara tied an HYIP scheme to a case of terrorism financing. This was the case against Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. He was accused of operating an investment fraud known as FEDI and moving money with the belief he was purchasing night-vision goggles and other equipment for a terrorist camp in Afghanistan.
It turned out that online marketers interested in commissions pushed FEDI to Americans, Canadians and others, not knowing its operator was interested in helping dark forces kill people en masse.
How many other schemes could be sponsoring terrorism or fueling organized crime remains an open question. There are thousands of dark possibilities to mull, some of them (like FEDI and Profitable Sunrise) cloaked in light. HYIP schemes are ground zero for fake news.
Knowing Preet Bharara was on the job always was a comforting thought. He brought FEDI to justice and, for example, made sure Liberty Reserve could not continue to launder billions of dollars for HYIP fraudsters and other criminals. (Did you know that one of the Liberty Reserve figures prosecuted by Bharara was a shill on the TalkGold Ponzi forum?)
Bharara’s work, of course, was hardly limited to unmasking financial fraudsters.
It is disheartening to think that the Trump administration is bemoaning “fake news” in one breath and firing the exposer of FEDI’s fake news in the next.
Lots of purveyors of FEDI-like “programs” are online right now. They are delivering fake news through millions of column-inches and through terabytes of video.
Billing records in the TelexFree bankruptcy case show that advisers to court-appointed Trustee Stephen B. Darr held an hour-long teleconference with McGuireWoods, counsel to Zeek Rewards’ receiver Kenneth D. Bell.
This appears to mark the first time that Zeek’s name has surfaced in TelexFree-related court matters. The two cross-border MLM/network-marketing fraud schemes allegedly gathered a combined sum approaching $3 billion. Each scheme operated for only about two years.
The conference took place on Nov. 6, 2014. Precisely what was discussed was not disclosed, although the records suggest Darr’s advisers were studying the claims form used in the Zeek Ponzi- and pyramid case. Participants included Mesirow Financial Consulting LLC and McGuireWoods.
Mesirow, which provides accounting and financial services, has assisted Darr in the mammoth job of reverse-engineering the alleged $1.8 billion TelexFree cross-border fraud scheme. McGuireWoods has provided litigation counsel to Bell, who has sued Zeek vendors and thousands of individual participants who allegedly profited from the $897 million cross-border scheme shut down by the SEC in August 2012.
McGuireWoods is not providing legal counsel to Darr. That duty has been undertaken by Murphy & King (M&K.) Still, there may be lessons to be learned from the Zeek litigation. On Nov. 7, 2014, a day after the conference, two of Darr’s advisers at Mesirow noted “research regarding MLM payment schemes and Zeek rewards” in billing records.
Such schemes raise the prospect of a black market and back-alley deals infecting the legitimate commerce stream. It has been a concern in the TelexFree, Zeek and ASD cases. The screen shot below is taken from Mesirow’s first interim application for payment for assisting Darr in his TelexFree probe.
Mesirow’s billings notes make several mentions of M&K, Darr’s legal counsel. One of them, dated Jan. 15, 2015, noted a discussion “regarding promoter to promoter payments.”
Billing notes by Mesirow say the firm analyzed “reports related to Colombian investigation” and that Mesirow is aware of a “Colombian creditor claiming $3MM.” In September 2014, the PP Blog reported that TelexFree President James Merrill claimed at a 2013 TelexFree event in California that Colombia “feared” network marketing.
The California TelexFree event may create a tie with Zeek, the Blog reported in April 2014.
In 2010, the U.S. government established ties between a Colombian MLM “program” known as D.M.G. Group to money-laundering in the United States to conceal narcotics profits.
As the PP Blog reported on Nov. 24, 2010 (italics added):
DMG’s membership ranks swelled to more than 400,000, with the scheme capturing hundreds of millions of dollars. The pyramid collapsed in 2008 — but not before [David] Murcia and others had set up an international money-laundering operation that routed narcotics proceeds through Mexico and concealed the criminality in real estate and other holdings in the United States, prosecutors said.
“The so-called ‘Bernie Madoff of Colombia’ now stands convicted of money-laundering in Manhattan federal court,” said U.S. Attorney Preet Bharara” [of the Southern District of New York].
TelexFree In Brazil
Mesirow’s billing notes also reference an ongoing investigation in Brazil into TelexFree activities through an affiliate known as Ympactus.
The shutdown by Brazilian authorities of Ympactus in the summer of 2013 “was the first of many indication that the Debtors were operating an unsustainable pyramid scheme,” Mesirow said.
It noted in the fee application that it has been in “regular contact” with U.S. government officials and “representatives of the Brazilian government.”
In its first billing, Mesirow said it has assisted Darr in recovering more than $17 million since the firm was formally appointed to assist the trustee on July 14, 2014. Mesirow is seeking about $1.6 million in fees for more than 2,962 hours of work, plus reimbursement of expenses of $20,942.
Read the Mesirow application and billing notes, which reference TelexFree figures such as Merrill, Carlos Wanzeler, Carlos Costa, accountant Joe Craft and MLM Attorney Gerald Nehra.
M&K, legal counsel to Darr, also has submitted a billing application with notes that reference Zeek Rewards. M&K, like Mesirow, joined with the trustee in July 2014. M&K is seeking more than $1.3 million, saying it has expended more than 2,784 hours. It also is seeking reimbursement of expenses of $36,116.
One M&K reference to Zeek mentions a “Review [of] Zeek Rewards settlement pleadings with net winners and insiders.” Another references a conference “regarding Zeek Rewards application to TelexFree case and practical implications.” Yet another references a “Review [of] Zeek Rewards docket re: how to treat inter-promoter activity.”
Still another note says this: “Research potential claims against Nehra.”
There are other Zeek references, plus references to other Ponzi cases.
Before Liberty Reserve and its alleged co-conspirators were indicted in May, the company was involved in several horror-filled propositions. These included laundering $6 billion as part of schemes involving “credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking,” federal prosecutors said.
Now, Liberty Reserve figure Vladimir Kats, also known as “Ragnar,” has pleaded guilty to multiple crimes. The plea occurred yesterday: Halloween Day.
Liberty Reserve, prosecutors said, set the stage for criminals to thrive and functioned as “as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals to conduct anonymous and untraceable financial transactions.”
“Vladimir Kats, by his own admission, helped to create and operate an anonymous digital currency system that provided cybercriminals and others with the means to launder criminal proceeds on an unprecedented scale,” said Acting Assistant Attorney General Mythili Raman. “His conviction reinforces what we said when Liberty Reserve was first brought down: banking systems that allow criminals to conduct illegal transactions anonymously will not be allowed to stand, and professional money launderers will be brought to justice.”
It all added up to danger and created “an international den of cybercrime,” added U.S. Attorney Preet Bharara of the Southern District of New York.
“As a co-founder and operator of Liberty Reserve, Vladimir Kats served as a global banker for criminals, giving them an anonymous, online forum to hide the proceeds of their illegal and dangerous activities,” Bharara said.
Kats, 41, of Brooklyn, N.Y., potentially faces decades in federal prison. No sentencing date has been sent.
From a statement by prosecutors (italics added):
Kats was arrested in Brooklyn in May 2013 and pleaded guilty today to one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison; one count of conspiring to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of receiving child pornography, which carries a maximum sentence of 40 years in prison and a mandatory minimum sentence of 15 years in prison; and one count of marriage fraud, which carries a maximum sentence of five years in prison.
Charges remain pending against Liberty Reserve founder Arthur Budovsky and alleged co-conspirators Ahmed Yassine Abdelghani, Allan Esteban Hildago Jimenez, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev, prosecutors said.
Arthur G. Nadel, the Florida fund manager and Ponzi schemer who briefly went on the lam in the weeks after Bernard Madoff’s even-greater caper imploded, has died. Nadel was 80, according to the Federal Bureau of Prisons.
Nadel, sentenced in 2010 to 14 years in an elaborate fraud that operated between 1999 and 2009, died at the Butner Federal Correctional Complex, the same North Carolina facility that houses Madoff.
With America still largely unacquainted with the word “Ponzi” and trying to come to grips in late 2008 and early 2009 with the staggering dollar volume of Madoff’s crime, Nadel went missing from Sarasota.
Like Madoff, he was in his senior years and secretly had been presiding over a long-running, monumental fraud. The ages of the lead figures in the individual schemes and the combined dollar amounts — Madoff’s was in the billions and Nadel’s was in the hundreds of millions — caused investors nationwide to wonder if their trusted brokers and financial advisers were running scams.
Nadel emerged as one of the earliest of the so-called “mini-Madoffs,” as did Tennessee’s Dennis Bolze, who also went missing after the Madoff scheme collapsed. Bolze, then 60, later was arrested in Pennsylvania.
In January 2009, Nadel surrendered to the FBI. Investigators said he caused investors to suffer losses of $162 million.
“Through his massive Ponzi scheme, Arthur Nadel greased his own pockets and financed his lavish lifestyle, using money his clients relied on him to invest,” said U.S. Attorney Preet Bharara of the Southern District of New York, after Nadel was formally sentenced in October 2010. “He cheated his elderly and unwitting victims out of their retirement savings and consigned others to poverty.”
In its story about Nadel’s death, the Sarasota Herald-Tribune quoted Nadel’s former lawyer.
“Dying behind prison walls is a very hard way for anyone to leave this world,” Mark Gombiner told the paper. “Arthur had a troubled life, but he took responsibility for his actions and he faced his punishment with dignity.”
In Manhattan yesterday, U.S. Attorney Preet Bharara accused the online company Full Tilt Poker of operating a massive Ponzi scheme on a global scale. The prosecution of Full Tilt began in April. The case includes multiple online poker companies as defendants. As the investigation evolved, the Full Tilt Ponzi scheme was detected, prosecutors said. It is the only poker firm accused of a Ponzi offense.
Lost in the Full Tilt Ponzi headlines yesterday was an intriguing series of allegations that raises serious questions about what is real online and what is not. The import of the allegations is that, if true, it shows that certain tentacles of the Internet have evolved in incredibly deceptive and dangerous ways. Could all the king’s horses and all the king’s men working 24/7/365 realistically hope to contain the menace of web-based money-laundering?
The allegations also beg another question: Can the form-shifting Internet even be policed — or do the virtuoso maestros of virtual criminality have a permanent advantage that aids them in the full-scale fleecing of tens of thousands of people of tens of millions of dollars at a time?
There are no easy answers. But it is almost certain that the criminals have the upper hand right now, which makes it even more important for businesses and consumers to stay informed and work proactively with law enforcement. Can there be any doubt that both economic security and national security are at risk in an era in which the largest sports stadiums cannot accommodate all of the victims of online fraud flowing from a single case and fraud proceeds disappear down ratholes in the blink of an eye?
Although the general allegations of fraud beyond the Ponzi variety drew little media attention yesterday, those allegations may be the most important in the evolving poker cases. In one way or another, they touch on each of the defendants — and the story is the stuff of nightmares because it suggests that the nightmares could become permanently entrenched if this extremely murky corner of the Internet continues to expand.
Among the prosecution’s claims (bolding added by PP Blog) is that certain “[C]oconspirators . . . created dozens of phony e-commerce websites purporting to sell everything from clothing to jewelry to golf clubs to bicycles” in bids to route money to the poker companies.
Not one or two, but dozens. Virtual companies and phony corporations/websites, it seems, are doing the work of the fabled brick-and-mortar car washes of yesteryear in disguising fraud proceeds.
And why not project political awareness and a social conscience when funneling cash and laundering money?
There is a specific claim that a phony firm known as “Green2YourGreen” was used to disguise payments to poker firms. A bogus website for Green2YourGreen allegedly was set up, and the purported business was described as a “direct sales” firm.
Its offerings allegedly consisted of purported “environmentally friendly household products” pitched by affiliates on a commissions basis.
In reality, prosecutors charged, the phony “green” operation was created “to disguise the gambling transactions” and “listed numerous products that were purportedly for sale and contained ‘testimonials’ about the benefits of green living.”
All of the phony firms and websites were designed to trick banks into processing payments for illegal gambling, according to the complaint.
There were so many of them that PokerStars, a non-Ponzi defendant, was experiencing “increasing” chargebacks because its customers could not figure out why charges for “BICYCLEBIGSHOP.COM, GOLFSHOPCENTER.COM [and] VENTURESHOPPING.COM” were appearing on their bank statements, according to the complaint.
In any event, the lies and laundering of truth and money worked so well that billions of dollars flowed to the schemes, according to the complaint.
It was hard to read the complaint yesterday without coming away with these questions: How many more bogus websites and bogus companies are doing the same thing — for beneficiaries who have no ties to poker?How many more criminal operations outside of the poker sphere — narcotics traffickers and terrorists, for instance — have cloaked themselves in this fashion and parked themselves at the end of the money-laundering conduit?
The PP Blog has covered various “programs” that seem to make no sense at all — and we’re not just referring to the obvious fraud schemes such as the ones that exist on the Ponzi and criminals’ forums.
No, for the purposes of this post, we’re talking about the less-obvious ones — purported MLM or direct-sales “programs” that do not appear even to have a product and yet have a virtual presence on the Internet, for instance
And we’re wondering how many of the purported “programs” are just fronts for the Steroidal Puppeteers at the end of the criminally gushing money spigot and how many of the hucksters who become the public faces of the schemes are really just people who carry out the orders of the hidden master criminals.
URGENT >> BULLETIN >> MOVING: Federal prosecutors in New York say that Full Tilt Poker was a “global Ponzi scheme” that raked in “hundreds of millions of dollars” — while defrauding players and lining the pockets of insiders who used offshore bank accounts.
Snippet from an amended complaint filed in the Southern District of New York today:
“Full Tilt Poker . . . not only engaged in the operation of an unlawful gambling business, bank fraud, wire fraud, and money laundering as alleged in the Complaint, but also defrauded its poker players by misrepresenting to players that funds deposited into their online player accounts were secure and segregated from operating funds, while at the same time using player funds to pay out hundreds of millions of dollars to Full Tilt Poker owners. Full Tilt Poker was able to accomplish this massive fraud, in part, because it illegally conducted business in the United
States but maintained its personnel, operations, assets, and accounts principally overseas.”
Full Tilt’s lawlessness affected the U.S. financial infrastructure and poker players alike, U.S. Attorney Preet Bharara of the Southern District of New York said.
“Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars,” Bharara said. “As described, Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company.”
This snippet from the complaint alleges that Full Tilt owed $390 million to players globally, but had only $60 million on deposit in bank accounts — and that the operators enriched themselves for years prior to law-enforcement intervention earlier this year.
“As of March 31, 2011, Full Tilt Poker owed approximately $390 million to players around the world, including approximately $150 million owed to players in the United States. At that time Full Tilt Poker had only approximately $60 million on deposit in its bank accounts. As of the filing of this
Amended Complaint, Full Tilt Poker still owes players over $300 million.”
Between April 2007 and April 2011, Full Tilt Poker and directors Raymond Bitar, Howard Lederer, Christopher “Jesus” Ferguson and Rafael Furst “distributed approximately $443,860,529.89 to themselves and other owners of the company. Payments to the Full Tilt Poker owners stopped only after April 15, 2011,” according to the complaint.
Bitar received approximately $41 million, prosecutors said. Lederer, meanwhile, received about $42 million, and Furst about $11.7 million.
“Ferguson was allocated approximately $87,486,182.87 in distributions, and received at least $25 million, with the remaining balance characterized as ‘owed’ to him,” prosecutors said. “Much of the money that was distributed was transferred by the Board members and owners to accounts in Switzerland and other overseas locations.”
David Eduardo Helmut Murcia Guzman (David Murcia), the MLM huckster whose pyramid scheme targeted the poor in Latin America and laundered money for a Colombian narcotics operation, has been sentenced to nine years in a U.S. federal prison.
Murcia, 30, also faces a 30-year prison sentence in Colombia after his release from a U.S. jail.
“Murcia Guzman wove an intricate web of deception across continents to disguise his dirty drug money and support his lavish lifestyle,” said U.S. Attorney Preet Bharara of the Southern District of New York. “But his web has been untangled and his lifestyle dramatically curtailed by this sentence.”
Murcia was at the helm of a Colombian MLM scheme known as D.M.G. Group, which collapsed in 2008 after luring customers by offering prepaid debit cards that purportedly would elevate their standard of living. Along with five co-conspirators, Murcia laundered drug money through the MLM company and other entities, prosecutors said.
In January 2010, the U.S. Drug Enforcement Administration (DEA) brought Murcia from Colombia to the United States to face trial. Murcia, wearing a bulletproof jacket, was whisked under heavy guard from his prison cell in Bogota to a waiting DEA aircraft.
Although it is common for online criminals to promote fraud schemes by saying the operations are outside the reach of U.S. regulators and law enforcement, such claims are a myth.
Finding the United States an unfriendly environment, the so called autosurf and HYIP “industries” increasingly are relying on offshore money-exchange businesses and debit cards to entice participants, sometimes advising them that the offshore locations are “safe” havens that “shelter” U.S. residents from regulators and law-enforcement agencies.
BULLETIN: Raj Rajaratnam has been found guilty of all 14 counts of conspiracy and securities fraud filed against him in the Galleon Group insider-trading case.
The verdict came on the 12th day of jury deliberations. It deals a devastating blow to Rajaratnam, but is a major win for prosecutors. The case was brought by the office of U.S. Attorney Preet Bharara of the Southern District of New York.
Rajaratnam, 53, once was listed by Forbes magazine as one of the wealthiest men in the United States. Prosecutors said that crime ultimately became his business model. Wiretaps and recordings were used to convict him.
The Justice Department has said it recent months that tools traditionally used in organized-crime investigation have been helpful in exposing white-collar fraud.
“Raj Rajaratnam, once a high-flying billionaire and hedge fund manager, is now a convicted felon, 14 times over,” Bharara said. “Rajaratnam was among the best and the brightest — one of the most educated, successful and privileged professionals in the country. Yet, like so many others recently, he let greed and corruption cause his undoing. The message today is clear — there are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have.”
Insider trading “cheats the ordinary investor, victimizes the companies whose information is stolen, and is an affront not only to the fairness of the market, but the rule of law,” Bharara said.
Rajaratnam traded illegally in the stock of Goldman Sachs, Clearwire, Akamai, AMD, Intel, Polycom and PeopleSupport, prosecutors said, describing the case as the “largest hedge fund insider trading scheme in history.”
He potentially faces up to 205 years in federal prison. Sentencing is scheduled for July 29. Prosecutors said he gained nearly $64 million by trading on material, nonpublic information culled from fellow cheaters.
Rajaratnam remains free pending sentencing. He has been placed on electronic monitoring.
The SEC provided “extraordinary assistance,” Bharara said. The FBI led the criminal probe and also received praise from Bharara.
BULLETIN: UPDATED 8:48 A.M. EDT (U.S.A.) Steven Byers, the president and chief executive officer of WexTrust Capital LLC, has been sentenced to 160 months in federal prison for his role in an alleged $255 million Ponzi and fraud scheme that cost investors millions of dollars.
Byers, 48, of Oakbrook, Ill., was sentenced by Judge Denny Chin of the U.S. Court of Appeals for the Second Circuit. Chin, formerly a U.S. district judge, was nominated to the appeals court by President Obama and received unanimous approval (98-0) in the U.S. Senate in the months after he sentenced Bernard Madoff in June 2009 to 150 years in federal prison for his $65 billion Ponzi scheme.
Chin also ordered Byers to make $7.7 million in restitution to victims and ordered the forfeiture of $9.2 million. Byers also will be on supervised probation for three years after he serves his prison sentence. The scheme largely was targeted at Orthodox Jews, according to court filings.
U.S. Attorney Preet Bharara described the sentence imposed by Chin against Byers as properly severe.
“Steven Byers used smoke and mirrors to defraud his investors out of millions of dollars,” Bharara said. “But his scheme was ultimately exposed for the sham that it was, and now he will be punished severely for his crimes.”
Prosecutors specifically charged Byers with fleecing investors in a $9.2 million, private-placement offering that claimed the money would be used to “purchase and operate seven commercial properties that were leased to the United States General Services Administration (GSA).”
“The seven GSA properties, however, were never purchased,” prosecutors said. “Instead, funds raised from investors were diverted for other purposes.”
Chin is scheduled to sentence Joseph Shereshevsky, Byers’ co-defendant, on May 13. The SEC said in August 2008 that Shereshevsky was a convicted felon who had been arrested for bank fraud in the 1990s.
It is common in the Ponzi universe for securities swindlers to start new schemes. Some fraudsters have hatched new schemes while on probation for previous swindles. Others have hatched new schemes from their jail cells.
EDITOR’S NOTE: Lower in this story, the names of AdSurfDaily President Andy Bowdoin and other individuals appear. They are NOT the individuals referenced in the government communiqué described below.
UPDATED 12:50 P.M. ET (U.S.A.) The name of a person known to have used at least two names and to have AdSurfDaily ties appears in a law-enforcement communiqué issued in 2009 by the counter-terrorism arm of a U.S. government agency that employs a method of monitoring both domestic extremists and individuals with known links to international terror groups, the PP Blog has learned.
At least one communication from the person was intercepted by the government and used as part of a raw intelligence report that includes summaries on the actions of dozens of individuals with alleged ties to al-Qaida, Hezbollah or homegrown extremist groups in the United States. The communication does not reference ASD, but includes a reference to a second person known to have an ASD tie.
The sender of the communication was described as a provider of fraudulent documents typically associated with tax schemes operated by antigovernment extremists. Meanwhile, the intended recipient was an individual known to have promoted various forms of financial fraud, including a scheme in which prospects were told they could qualify for Medicaid by hiding assets and making themselves artificially poor.
Medicaid is a federal health-services program for low-income Americans. It is administered by the states.
The PP Blog established the identities of both individuals with ASD ties by examining a variety of public records and other documents.
ASD's Andy Bowdoin
Neither person is in state or federal custody, but it is clear that both the federal and state governments are aware of their activities and have worked to disrupt them. The intended recipient of the communication is in federal custody for a crime unrelated to ASD.
Both individuals with ASD ties have a tie to a third person with ASD links, according to the Blog’s analysis of records.
Owing to the sensitive nature of the communiqué, the Blog is declining to identify the individuals with ASD links and the agency. It also is declining to publish specific details such as quoted material, dates, times, telephone numbers and addresses. The communiqué demonstrates that the United States has identified particular areas in which it believes terrorism could fester and is monitoring oral, electronic and printed communications in a specific context.
The communiqué devotes more than a full page to the topic of the communication intercepted from the individual with ASD ties.
Based on its research, the Blog is reporting today that the person with ASD ties whose communication was intercepted is an American believed to have ties to a network of domestic extremists immersed in a sea of organized corruption. The person has an arrest record for a nonviolent crime, but also has been associated with bids to intimidate people and cause them financial harm. Records show that the person has used at least two names.
News of the disturbing developments comes even as some ASD members are blindly asserting that ASD was a wholesome enterprise and making broad claims that any ties to terrorism have been ruled out. ASD has been implicated in an alleged international Ponzi scheme that gathered at least $110 million.
Despite an alleged concession by ASD President Andy Bowdoin that the company was operating illegally and a new assertion by the government that Bowdoin and unnamed “others” ventured to Costa Rica in the spring to 2008 to get the lay of the land for an upstart “autosurf” enterprise, some members are soliciting funds to challenge a U.S. Secret Service affidavit that led to the seizure of tens of millions of dollars from Bowdoin’s personal bank accounts in August 2008.
Bowdoin’s own bid to challenge the affidavit failed in November 2008, more than two years ago.
In December 2010, federal prosecutors asserted that ASD had the ability to accept money from e-Bullion, a shuttered California payment processor whose operator — James Fayed — has been charged with arranging the contract murder of his wife.
Pamela Fayed, who was stabbed to death in a parking garage, was a potential witness against her husband. James Fayed is believed to have used e-Bullion to facilitate multiple Ponzi schemes, including a scheme hatched by a New York man — Abdul Tawala Ibn Ali Alishtari — who later pleaded guilty to financing terrorism.
Like ASD’s Bowdoin, Ali Alishtari claimed to have received an important award for his business acumen. And Ali Alishtari’s scheme, known as FEDI, was pushed by an individual convicted in a separate Ponzi scheme and sentenced to federal prison. Payments from the scheme were called “rebates,” the same terminology adopted by ASD to describe payments to members.
“In enriching himself, Alishtari displayed a deliberate disregard for the financial and personal security of others,” U.S. Attorney Preet Bharara of the Southern District of New York said in September 2009.
e-Bullion’s name also is referenced in court filings in the Gold Quest International (GQI) Ponzi scheme, which gathered up to $29 million, according to U.S. and Canadian regulators. GQI, which operated from Las Vegas, falsely claimed to be immune to U.S. law and to enjoy purported “sovereignty” extended by a North Dakota “Indian” tribe.
One of the unusual elements of the GQI case was a claim that the purported sovereignty was portable, shielding the purveyors from prosecution anywhere.
A New Plan To Do Battle With The Government
ASD member Todd Disner, one of dozens of unsuccessful pro se litigants in the civil portion of the ASD case in U.S. District Court for the District of Columbia, now wants ASD members to come up with money to fund a lawsuit in Florida that would challenge the U.S. Secret Service affidavit in the District of Columbia that led to the seizure of $80 million in the ASD case, according to a recording of a Feb. 22 conference call.
“We were dragged down the river by our government agents, and the rest is history,” Disner told listeners.
“There might be an opportunity for us to throw a few punches of our own,” Disner said. “We’ve been on the ropes for three years now, and we’d like to start swinging back if we could.”
The opportunity to battle back after a fatiguing and demoralizing three years on the ropes would cost ASD members a combined total of about $10,000, according to people who listened to the call.
After the call, some ASD members received an email that purported that an ASD “terrorism connection has been ruled out.” The email, sent by an ASD member who did not use a full name, did not describe who within the government had ruled out a terrorism link.
Disner, who claimed he was “excited” about the prospect of suing the government to overturn the ASD forfeiture, also claimed he’d been advised on the complex legal issues by Dwight Schwetizer, whom he described as a fellow ASD member, friend and “very accomplished attorney” who is “not practicing law now.”
“They’re just going to try and try to keep that money,” Disner asserted. “They seized the money improperly, and if they release it then everybody’s included.”
The government, however, already has put in place a restitution program that would compensate crime victims from seized funds. An apparent linchpin of the new strategy outlined by Disner is a theory that the government restitution program somehow opens the door for ASD members not only to reverse the judicially declared forfeiture, but also to receive damages for an unwarranted government intrusion. Schweitzer also provided commentary on the call.
For its part, the government says ASD was engaging in felonious wire fraud and securities fraud by disguising itself as an “advertising” business while operating a $110 million Ponzi scheme from Florida that had affected tens of thousands of people globally. Just last week prosecutors advised a federal judge that Bowdoin, who was arrested in December, had ventured to Costa Rica in the spring of 2008 to look for a way to start an offshore Ponzi scheme.
Disner’s conference call was held just a few days after the latest damaging claims against ASD became public. The government filed the new claims against ASD on Feb. 18, the same day it announced a major prosecution against an alleged Costa Rican money-laundering operation that was accused of engaging in international securities fraud and siphoning millions of dollars in penny-stock schemes.
The U.S. government, using its individual agencies and the Financial Fraud Enforcement Task Force created by President Obama in 2009, has been targeting various forms of fraud, including HYIPs, penny-stock capers, Forex schemes, tax schemes and domestic and offshore crime targeted at U.S. citizens.
In some cases, victims have been counted by the tens of thousands — enough to fill the nation’s largest sports stadiums. ASD was purported to have 120,000 members.
Some ASD members have called for a “militia” to storm Washington, D.C. Others have called for a federal prosecutor to be placed in a medieval torture rack. Still others have called for prosecutors and investigators to be charged criminally and sued civilly for their efforts to disrupt what the government has described as a classic Ponzi scheme operated by Bowdoin, a recidivist felon.
BULLETIN: Attorney Jonathan Star Bristol has been arrested by federal agents and is scheduled to make an appearance in Manhattan federal court this afternoon to face criminal charges of money-laundering amid allegations he helped convicted fraudster Kenneth Ira Starr siphon money from clients though an escrow fund.
“Today’s indictment should serve as a reminder to attorneys and others that you should always know the source, nature, and ownership of funds transferred through our financial systems,” said Charles R. Pine, IRS special agent in charge. “IRS Criminal Investigation is at the forefront of this type of investigation and will continue to hold professionals accountable in any field where they are entrusted with other people’s money and engage in money laundering transactions.”
Bristol was sued only hours ago by the SEC. Now comes word that there also was a sealed criminal indictment in the case.
“Jonathan Bristol, a lawyer and an officer of the court, allegedly helped his client Kenneth Starr hide the proceeds of his massive Ponzi scheme,” said U.S. Attorney Preet Bharara. “Along with our law enforcement partners, we will continue to pursue corrupt professionals in both the public and private sectors who betray their duties of trust.”
Pine said attorneys who turn a blind eye to sources of funds risk prosecution.
“A professional, such as an attorney, cannot knowingly use an escrow account funded with illegally obtained monies, or look the other way without questioning where the monies came from,” Pine said.
Among the specific criminal allegations against Bristol was that his former law firm was concerned that Starr had not paid $750,000 in legal fees he had racked up.
“In March 2010, Bristol reported to senior management that STARR would be paying $100,000 of the at least$750,000 that Starr owed,” prosecutors said. “Bristol’s law firm did receive a $100,000 payment that month, but it did not come from Starr — it came from Starr’s clients, laundered by Bristol through Bristol’s escrow accounts.”
Bristol also was accused of using the escrow accounts to help Starr steal $7 million to acquire a luxury New York condo with five bedrooms and 6.5 bathrooms, prosecutors said.
He also was accused of hoodwinking Starrs’ clients about how their money was being used.
“In 2009 and 2010, Bristol regularly used his escrow accounts to receive funds belonging to Starr clients and then transferred the monies directly to Starr & Co. to pay the company’s operating expenses,” prosecutors charged.
