UPDATED 1:15 P.M. EDT U.S.A. It has happened in previous cases involving alleged violations of federal securities laws, and now it’s happening with Traffic Monsoon.
“The Peiffer Rosca Wolf law firm is investigating Traffic Monsoon, LLC and Charles Scoville’s alleged Ponzi scheme on behalf of investors – whom Traffic Monsoon called ‘members,’” the firm said in a PR release today.
How the firm would proceed is unclear. The announcement, however, potentially means Traffic Monsoon and Scoville will be facing litigation on a front separate from the Ponzi case filed by the SEC on July 26.
Class-action attorneys also filed complaints in the TelexFree and Zeek Ponzi- and pyramid cases. Certain TelexFree-related actions alleged racketeering and referenced a “program” similar to Traffic Monsoon: My AdvertisingPays. There also were counts of fraud against TelexFree principals and some individual promoters.
Even if they don’t result in a recovery, the actions filed by private individuals — as opposed to government plaintiffs — force defendants to confront litigation on multiple fronts. Defense costs may soar.
“The Peiffer Rosca Wolf lawyers are preparing to take action and seek compensation on behalf of those who invested in the alleged Ponzi scheme orchestrated by Traffic Monsoon and Scoville,” the firm said.
Traffic Monsoon gathered at least $207 million, according to the SEC.
As the PP Blog reported more than six years ago, Pay It Forward (PIF) “programs” have a noxious history in HYIP and cash-gifting Scamland.
A new case in Michigan, however, may be off-the-charts in terms of noxiousness. That’s because investigators looking into a PIF scheme there found child pornography on the alleged PIF operator’s computer, the office of Michigan Attorney General Bill Schuette said in February.
Michael Skupin, 54, of Oakland County, was charged with six counts of possession of child sexually abusive materials five counts of larceny by conversion,and one count of Racketeering- Conducting a Criminal Enterprise.
The PIF “program” was a Ponzi scheme that gobbled up $10,000 at a time from participants, Schuette’s office said.
Records show that it’s not unusual for Ponzi schemers in Michigan to be charged with racketeering, a 20-year felony.
“Victims allegedly made $10,000 cash investments in the [Skupin] scheme,” Schuette’s office said. “Their money would then cycle through a chart in which participants were eventually paid out of other new investors’ money. The scheme was discovered when eventually there were no new investors signing and most people in the scheme lost all of their money.”
The Oakland Press reported yesterday that Skupin was a former contestant on the “Survivor” television show.
And, the publication reported, Skupin was accused of violating his release conditions while waiting trial on the charges against him.
Following his arraignment, the former reality TV contestant posted bond and was under house arrest with conditions that barred him from using the Internet except for work.
But during a probable cause hearing Friday, April 8, in Clarkston’s 52-2 District Court, Judge Kelley Kostin ordered Skupin jailed because he violated the Internet bond conditions by posting on Facebook.
Skupin now has made bail for a second time.
PIF schemes have many price points — from low-dollar sums to high. In some PIF schemes, a recruiter may offer you the money to join a “program” — with the understanding you’ll do the same for your recruits. Some participants will purchase multiple “positions” for friends and family members, only to lose it all.
Other such schemes may encourage you to purchase second and subsequent “positions” if you get paid — in effect, paying it forward to yourself, so you can get paid again.
From PP Blog archives: On April 2, a video depicting President Obama as a fan of the MyAdvertisingPays “program” appeared on YouTube. An “Obama voice” was dubbed into the video, which also shows the Presidential Seal. Text below the video reads, “Mr. President speaks about the new advertising revolution.”
“My AdvertisingPays pays its members every 20 minutes,” a mimicked voice of Obama said in the promo. “I highly recommend you to join MyAdvertisingPays.”
Like many things in network marketing, this was reckless beyond measure. MAPS, as it is known, is reminiscent of the AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. ASD, sued by some of its own members amid allegations of racketeering and described by the Secret Service as a “criminal enterprise,” thought it prudent to trade on the name of President George W. Bush to drive dollars to its $119 million scam.
It proved to be very imprudent for ASD to suggest a White House vetting and endorsement. The indictment against ASD operator Andy Bowdoin even referenced the bid to dupe members and prospects in this fashion . (Also see: “THE DAY ‘WINK-NOD’ DIED,” from the PP Blog on Dec. 2, 2010.)
MAPS Suddenly Says It Is Withdrawing From United States
After one or more MAPS’ promoters lifted footage of a Presidential address and used technology to put words in Obama’s mouth to help an MLM scheme spread its tentacles, it now has come to pass that MAPS — purportedly led by American Mike Deese of Mississippi via Anguilla, a British overseas territory — says it is pulling out of the United States.
In an announcement dated yesterday and titled “THE MOST IMPORTANT UPDATE EVER RELEASED,” MAPS more than hinted it is not wanted in America: “We are going to focus on the place where we are wanted and are making huge strides,” MAPS said.
That place is Europe, according to MAPS.
“The decision comes on the heels of a declining marketplace in the US for our company.,” MAPS said. “It simply isn’t profitable for us to remain engaged there. Over 90% of our business already comes from Europe, while we are catering to the US members by operating in US currency. It doesn’t make good business sense to continue operating in a place and expending valuable resources in a market that’s steadily declining.”
If MAPS is right — if it’s not wanted in America and if the U.S. market is steadily declining — we take this as good news that suggests MAPS perceives a serious threat from American law enforcement and class-action lawyers interested in suing under the federal RICO (racketeering) statute. Even so, it’s troubling that MAPS apparently sees a welcome mat for itself in Europe.
About 50,000 Spaniards reportedly got sucked into the TelexFree scheme. TelexFree pain, in fact, lingers across Europe and the world. It is possible that it affected 1 million people or more. MAPS currently brags that it has “209805+ Users.”
Like the other “programs,” MAPS now is planting the seed it is lining up people to sue.
From the MAPS Oct. 15 announcement (italics added):
On a different note, it has come to our attention that there exist multiple internet-based avenues being used for defamatory and libelous speech against MAP. Through our research, we have found many, if not all, of these claims to be without merit and simply an attempt by certain individuals to exploit the MAP name in order to heighten the popularity of their own product. MAP has served demand letters upon those individuals who engage in defamatory and slanderous rhetoric, and in anticipation of litigation, has prepared complaints against all such individuals. MAP would like to emphasize and reassure you that their decision to cease operations in the United States is in no way connected to the aforementioned defamation and libel claims.
MLM attorney Gerald Nehra at a TelexFree rah-rah event in California last year. Source: YouTube.
In case you missed the big news yesterday, TelexFree figures James Merrill and Carlos Wanzeler were charged criminally.
Unofficially this brings the number of charged MLM HYIP “programs” (or clients) with links to MLM attorney Gerald Nehra to three in recent years. Nehra was an “expert witness” for AdSurfDaily in 2008. He testified that ASD, a 1-percent-a-day “program,” was a legitimate business and not a Ponzi scheme.
ASD operator Andy Bowdoin, who compared the men and women who guard the President of the United States to “Satan” and the 9/11 terrorists and clucked that “God” * was on his side, later was charged criminally and sentenced to a lengthy term in federal prison.
Nehra was brought in for marquee value and as an adviser to Zeek Rewards, Zeek operator Paul Burks said in late 2011 or early 2012. Zeek executives Dawn Wright-Olivares and Daniel Olivares later were charged criminally. Zeek was a 1.5-percent-a-day “program.”
At some point in 2012 or 2013, Nehra began to advise TelexFree. TelexFree executive Steve Labriola, like Zeek’s Burks before him, also saw marquee value in Nehra, according to Labriola’s comments in a TelexFree promo on YouTube. Now, Merrill and Wanzeler face the prospect of jail. Because the investigation is ongoing, others may, too.
TelexFree’s bogus returns were not tied to sales of its VOIP product and computed to more than 200 percent a year, making the “program” a classic Ponzi- and pyramid swindle, according to court filings. Some promoters claimed $15,125 returned $57,200. One promoter allegedly told an undercover federal agent that he’d scored $1.6 million in TelexFree “without selling a TelexFree product.”
This is a column about willful blindness and feigned obtuseness. (Think Faith Sloan.) It’s also a column about missed signals, whether they’re missed purposely or otherwise. (Think: Why would TelexFree hire Nehra after ASD and Zeek — and why would Nehra ever accept the work, which was bound to lead to racketeering allegations? Put another way, if you’re at the scene of too many highly suspicious fires, you shouldn’t be surprised if serious people start to believe you’re the arsonist or the arsonist’s helper. Even assuming Nehra is no MLM arsonist or racketeer, accepting the TelexFree work potentially put him in the position of being extorted or otherwise abused by the trade’s arsonists and racketeers.)
Spot any common themes or information roadmaps in the quoted material below?
AdSurfDaily “is not” a Ponzi scheme. “It is a legally structured, direct selling business model with multilevel compensation.” — Gerald Nehra, MLM attorney, Aug. 18, 2008. (Context: Nehra’s submitted testimony as defense witness in civil forfeiture action in the $119 million AdSurfDaily MLM HYIP Ponzi case. **)
“[AdViewGlobal] is the next iteration of the Ponzi scheme auto-surf programs, which [are] staffed with former [AdSurfDaily] executives and Bowdoin disciples.” — Class-action attorneys suing AdSurfDaily operator Andy Bowdoin and AdSurfDaily attorney Robert Garner of North Carolina, June 30, 2009. (Context: Motion in member-filed lawsuit against Bowdoin and Garner that alleged RICO (racketeering) violations.)
“With all of our efforts to punish and deter this criminal enterprise, the rights of innocent parties are protected and will subsequently be returned.” — A.T. Smith, assistant director, U.S. Secret Service Office of Investigations, Sept. 26, 2011. (Context: Successful forfeiture actions and remission (restitution) in AdSurfDaily MLM HYIP Ponzi case.)
“We will continue to use every tool at our disposal to bring justice to the citizens defrauded by these insidious schemes.” — Assistant Attorney General Lanny A. Breuer, U.S. Department of Justice, Criminal Division, Sept. 26, 2011. (Context: Successful forfeiture actions and remission (restitution) in AdSurfDaily MLM HYIP Ponzi case.)
“Just having him on retainer and having him on our team, it goes a long way from keeping anybody from launching an attack. Because generally when Gerry Nehra is involved, the Feds know that he’s cleaned up the act really well.” — Paul Burks, Zeek Rewards operator, c. December 2011. (Context: Burks’ remarks to early Zeek members that MLM attorney Nehra was on board.)
“I am pleading guilty because I am in fact guilty of the offense(s) identified in this Plea Agreement.” — Andy Bowdoin, AdSurfDaily operator, May 2012. (Context: Plea agreement to wire fraud in which Bowdoin disagreed with MLM attorney Nehra and acknowledged AdSurfDaily was a Ponzi scheme.)
“Capitalizing on the strength of our financial task force partnerships, we aggressively pursue criminals using computer experts, forensic specialists, investigative experts and intelligence analysts.” — Dennis Ramos Martinez, special agent in charge, U.S. Secret Service Orlando Office, Aug. 29, 2012. (Context: Prison sentence imposed on AdSurfDaily operator Andy Bowdoin.)
“While [Gregory] McKnight himself referred to Legisi as a “loan” program, and demanded that “members” not refer to their “loan” and an “investment,” Legisi was, in reality, an investment contract, which is considered a security and therefore regulated by the Securities and Exchange Commission. This semantic obfuscation was quite obviously an attempt to sidestep the securities laws.” — Office of U.S. Attorney Barbara L. McQuade, Eastern District of Michigan, September 2012. (Context: Sentencing memo against Gregory McKnight in Legisi $72 million HYIP swindle.)
“I’m not sure how many of you have heard the name ‘Gerry Nehra.’ But it is a very big name in this industry.” — Steve Labriola, TelexFree executive, Newport Beach, Calif., July 2013. (Context: Labriola introducing Nehra to TelexFree members at “Super Weekend” MLM rah-rah fest.)
“ZeekRewards used the enormous power of the Internet to rip off $850 million from hundreds of thousands of victims in less than two years. We will continue to work with our law enforcement partners to take down greedy scam artists who think nothing of stealing the savings of hard working people.” — U.S. Attorney Anne M. Tompkins, Western District of North Carolina, Dec. 20, 2013. (Context: The filing of criminal charges in the Zeek Rewards MLM/HYIP case.)
“The Massachusetts Securities Division charged TelexFREE Inc., with running a Ponzi scheme targeting Brazilian-Americans that has raised over $90 million from Massachusetts residents and around $1 billion globally.” — U.S. Department of Homeland Security,April 17, 2014. (Context: U.S. financial infrastructure protection. Sourced from DHS Daily Open Source Infrastructure Report.)
“At this [TelexFree] ‘super weekend’ event, Attorney Nehra spoke at length to attending investors, assuring them of the legality of TelexFree’s operation stating: ‘It is legally designed . . . you are on very solid legal ground.'” — Class-action attorneys, May 3, 2014. (Context: The filing of a prospective class-action against TelexFree and Nehra that alleged RICO (racketeering) violations.)
“Attorney Nehra’s extensive experience in multi-level marketing, and particularly his involvement with the Ponzi schemes involving AdSurfDaily and Zeek Rewards, armed him with the knowledge of what constitutes violations of United States securities law. Indeed, Attorney Nehra was well aware that the use of semantics and obscured phraseology to obfuscate securities laws fails to legitimize TelexFree’s illegal Pyramid Ponzi Scheme.” — Class-action attorneys, May 3, 2014. (Context: The filing of a prospective class-action against TelexFree and Nehra that alleged RICO (racketeering) violations.)
“Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities.” — Bruce Foucart, special agent in charge, Homeland Security Investigations, May 9, 2014. (Context: Comment on the filing of criminal charges in the TelexFree Ponzi- and pyramid case.)
“As alleged, these defendants devised a scheme which reaped hundreds of millions of dollars from hard working people around the globe.” — U.S. Attorney Carmen Ortiz, District of Massachusetts,May 9, 2014. (Context: Comment on the filing of criminal charges in the TelexFree Ponzi- and pyramid case.)
* Like jailed AdSurfDaily operator Andy Bowdoin, TelexFree figure Carlos Costa contends God is on his side. While Bowdoin talked of “Satan,” one TelexFree promoter has called a prosecutor in Brazil a “blonde she-devil.”
** Two members of AdSurfDaily who went on to become members of Zeek Rewards liked Nehra’s opinion so much they used it in a failed lawsuit (2011) against the U.S. government. The members, Todd Disner and Dwight Owen Schweitzer, both are listed as “winners” in the $850 million Zeek Rewards’ scheme. Disner’s Zeek haul was alleged to be more than $1.875 million.
URGENT >> BULLETIN >> MOVING: (18th update 3:49 P.M. EDT U.S.A.) TelexFree, MLM attorney Gerald Nehra, “Doe” insiders and several banks have been sued in a prospective class-action that alleges fraud and violations of the federal RICO (racketeering) statute.
“Certain Defendants share joint and severable liability, including the Doe Inside Promoters, the licensed professionals such as the RLP Defendants, including certified public accountants and lawyers that specialized in sheltering so-called Multi-Level Marketing schemes having aided and abetted TelexFree’s Pyramid Ponzi Scheme by providing TelexFree with legal and financial advice and assistance during the course of the fraud, despite knowledge of the fraudulent nature of TelexFree’s operation,” the complaint alleges.
Among other things, Nehra was accused in the complaint of turning a blind eye to securities issues at TelexFree, encouraging others to conceal those issues and engaging in other misconduct.
Nehra, according to the complaint, was not merely providing zealous representation to TelexFree, he counseled “TelexFree on methods to evade United States securities laws that were intended to offer, in part, protection from pyramid Ponzi schemes; all to enrich himself financially and serve his own selfish interests.”
With Nehra understanding that “his legal opinions and representations would be used by TelexFree as a marketing tool to further and advance their business model,” his “opinions were packaged and promoted as part of TelexFree’s total ‘post Brazilian shut down package’ to the members of the putative class,” according to the complaint.
The complaint further alleges that Nehra’s actions in misrepresenting TelexFree as a legitimate business encouraged TelexFree members “unknowingly” to “participate in the evasion of federal and state securities laws.”
Named defendants included TelexFree LLC, TelexFree Inc., “Paralegal Doe [who] served as TelexFree, LLC’s agent, servant or employee,” TelexFree Financial Inc., TelexElectric LLLP, Telex Mobile Holdings Inc., James M. Merrill, Carlos N. Wanzeler, Steven M. Labriola, Joseph H. Craft, Craft Financial Solutions LLC, Carlos Costa, Gerald P. Nehra, Gerald P. Nehra, Attorney at Law PLLC, Richard W. Waak (Nehra law partner), Law Offices of Nehra and Waak, Richard W. Waak Attorney at Law PLLC, TD Bank NA, Citizens Financial Group Inc., Citizens Bank of Massachusetts, Fidelity Co-Operative Bank, Middlesex Savings Bank, Global Payroll Gateway Inc., International Payout Systems Inc. (I-Payout), ProPay Inc., “Banks Doe,” “Doe Inside Promoters” and “Credit Processors Doe.”
Merrill, Wanzeler, Labriola and Craft are former TelexFree managers or executives. The Massachusetts Securities Division has described TelexFree as a combined Ponzi- and pyramid scheme that gathered more than $1.2 billion and crossed national borders. The SEC also has charged TelexFree, Merrill, Wanzeler, Labriola and Craft with fraud, alleging that the firm conducted business in at least 20 U.S. states and mainly targeted Brazilian and Dominican immigrants.
Plaintiffs are identified as Waldemara Martins and Leandro Valentim.
The complaint alleges that Craft incorporated TelexFree Financial and that the entity “was fraudulently set up for the purpose of sheltering funds rightfully belonging to the putative class.”
Among the contentions in the complaint (italics added):
On March 9, 2014, TelexFree changed its compensation plan, thereby requiring Promoters to sell its VoIP product to qualify for the payments that TelexFree had previously promised to pay them.
TelexFree’s former officers or employees stated to the TelexFree transition team that under the Pre March 2014 standard form contract TelexFree owes its promoters over $5 billion dollars.
The rule change generated a storm of protests from Promoters who were unable to recover their money. On April 1, 2014, dozens of Promoters descended upon TelexFree’s Marlborough, Massachusetts office to protest this change and attempt to regain access to their money.
Reporting on TelexFree-related matters by BehindMLM.com, a publication that reports on evolving MLM frauds, is referenced in the complaint.
In addition, according to the complaint, “TelexFree mailed fraudulent and inaccurate 1099 (Miscellaneous Income) forms to investors, possibly to create the illusion that they had made payments to investors.”
HYIP schemes in recent years have advised participants to avoid calling the “program” an “investment program.” Here is what the complaint alleges on this subject:
“TelexFree’s Contract at Section 2.6.5 (m) mandates that Promoters are not to use the term investment with respect to the registration costs . . . Co-Defendant and Company Counsel Attorney Gerald P. Nehra, through his affiliated companies (Law Offices of Nehra and Waak , Gerald P. Nehra, Attorney at Law, PLLC, and Richard W. Waak, Attorney at Law, PLLC), and under the direct supervision of Co-Defendants Richard W. Waak and Richard W. Waak Attorney at Law, PLLC provided this deceitful advice for the purpose of furthering perpetuating Defendants unlawful Pyramid Ponzi Scheme.”
In the complaint, the plaintiffs further asserted that “Attorney Nehra’s extensive experience in multi-level marketing, and particularly his involvement with the Ponzi schemes involving Ad SurfDaily and Zeek Rewards, armed him with the knowledge of what constitutes violations of United States securities law. Indeed, Attorney Nehra was well aware that the use of semantics and obscured phraseology to obfuscate securities laws fails to legitimize TelexFree’s illegal Pyramid Ponzi Scheme.”
Craft was accused in the complaint of “Overseeing TelexFree’s creation of falsified accounting records,” “Fraudulently certifying TelexFree’s business operations and accounting practices as good and lawful, despite actual knowledge of their unlawful and illegitimate nature” and “Concealing the fact that the AdCentral Packages purveyed by TelexFree were actually securities.”
At the same time, Craft was accused of “Concealing and absconding with investor assets.”
Costa, a TelexFree figure in Brazil, was accused of publicly supporting “TelexFree’s illegal and corrupt activities.”
The banks and processors were accused of aiding and abetting a fraud scheme.
“[Former State Rep. Brian] Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.” — Office of Michigan Attorney General Bill Schuette, Dec. 20, 2013
A onetime Michigan statehouse member who’d earlier lost $400,000 in an offering fraud and responded by becoming a cheerleader for the thief who swindled him has pleaded no contest to a criminal charge of Neglect of Duty by a Public Official.
Strange as it sounds, it is not unusual in the fraud sphere for crime victims to turn into supporters of those who ripped them off or even to follow them to another scam in the hope of making up losses. The case against former Michigan Rep. Brian Palmer demonstrates that a victim’s behavior after a scam could have criminal consequences if he or she doesn’t break ties with a scammer.
Palmer, 64, of Romeo, reasoned that he could make up his losses in the offering fraud by assisting Jeffrey Ripley, who ran API Worldwide Inc. But API Worldwide proved to be a $9 million Ponzi scheme overseen by Ripley and fellow scammer Danny Lee VanLiere, the office of Michigan Attorney General Bill Schuette said.
“Ripley lost Palmer’s $400,000 on the investment and assured Palmer that he would get his money back if Palmer helped him with API,” prosecutors said. “Ripley gave Palmer credit for the $400,000 in API investments and Palmer cooperated with API because he believed he would receive a return on his lost funds.”
Palmer cooperated with investigators in the state probe conducted by Department of Attorney General’s Corporate Oversight Division and Public Integrity Unit and the Department of Insurance and Financial Services, Schuette’s office said.
In the API Worldwide scam, investigators said, senior citizens were lured into cashing out CDs and other investments and plowing the money into the purported “high-return” opportunity operated by Ripley, 61, of Sparta, and Danny Lee VanLiere, 62, of Grand Rapids.
From a statement by prosecutors (italics added):
Palmer met with potential investors on behalf of Ripley and API. With the knowledge that Ripley was attempting to circumvent the Securities Act, Palmer did not report the conduct to proper authorities.
Palmer carried a cell phone provided by API and answered calls from potential investors even while on the House floor. To circumvent state security laws, Palmer assisted Ripley by providing documents to make the scheme appear legitimate and signed investment guarantees. And, with Palmer’s knowledge, Ripley used Palmer’s name and position as a public official to vouch for and sell the API scheme to potential victims.
“Public officials are sworn to uphold the law,” said Schuette. “Those who break the public trust should face the consequences.”
The charge of Neglect of Duty by a Public Official to which Palmer pleaded no contest is a misdemeanor. Ingham County Judge Patrick Cherry sentenced the former legislator to “320 hours of community service that shall be served in a capacity helping seniors and the homeless,” Schuette’s office said.
A fine and costs totaling $405 also were assessed against Palmer, who conceivably could have been fined up to $1,000 and ordered to spend a year in jail.
Ripley and VanLiere pleaded no contest earlier this year to racketeering and selling unregistered securities.
Ottawa County Circuit Court Chief Judge Edward R. Post sentenced both men to serve six to 20 years in prison. Ripley was ordered to pay more than $5.3 million in restitution. VanLiere was ordered to pay more than $3 million.
The API Worldwide scam has resulted in at least two other convictions, bringing the total conviction count to five.
On Dec. 13, Schuette said Douglas Kacos, 58, of Grand Rapids, and Thomas Doctor, 53, of Grand Rapids, pleaded no contest to misdemeanor Money Laundering, which is punishable by up to two years in prison and/or a $10,000 fine or twice the value of the proceeds, whichever amount is greater.
Kent County Circuit Court Judge James R. Redford is scheduled to sentence Kacos and Doctor on Jan. 27.
Bizarre levels of detachment and reservoirs of denial may accompany fraud schemes. In the $82 “Three Hebrew Boys” scam in South Carolina in which victims’ funds were used to acquire a party bus, a jet aircraft and expensive sports tickets, for example, some victims asserted that the scammers should not be prosecuted. Meanwhile, in the $21.5 million Dennis Bolze Ponzi scheme in Tennessee, Bolze told a federal judge that he could make up the losses if permitted access to the Internet and a computerized program — and a little time.
In the $119 million AdSurfDaily Ponzi case in Florida in 2008, thousands of victims initially expressed support for now-convicted Ponzi schemer Andy Bowdoin — even after prosecutors pointed out that he’d previously been convicted of crimes tied to securities swindles with a Ponzi element in Alabama and had a business partner implicated by the SEC in three prime-bank swindles. At least one purported “opportunity” (PaperlessAccess) appears to have hired Bowdoin in 2009 to be a commercial pitchman during an active criminal investigation into ASD and while the ASD Ponzi indictment against him was pending. While awaiting his ASD-related criminal trial in 2011, Bowdoin became a pitchman for OneX, a “program” federal prosecutors later called a scam.
In June 2013, a company known as iWowWe brought in Zeek Rewards figure Dawn Wright-Olivares as its chief marketing officer after the SEC alleged in August 2012 that Zeek was a Ponzi- and pyramid scheme that had gathered hundreds of millions of dollars and after the U.S. Secret Service announced it also was investigating Zeek. Wright-Olivares was charged criminally last week for her role in Zeek, creating a PR problem for iWowWe.
Felmina Alliance, another in a long line of HYIP “programs” pushed on the Ponzi boards by serial huckster “Ken Russo,” appears to be DOA. “Ken Russo” also is known as “DRdave.” His record in promoting scams, pooh-poohing or ignoring regulatory actions and engaging in willful blindness may be unparalleled.
Regulators in the United States and Canada issued an Investor Alert against Felmina Alliance earlier this year.
The server for Felmina Alliance now has been throwing an error message for days. Other recent “Russo” disasters include NewGNI, an apparent knockoff scam of an earlier scam known simply as GNI (Gold Nugget Invest), Zeek Rewards and Profitable Sunrise. On the TalkGold Ponzi forum as “DRdave,” “Ken Russo” was promoting Zeek and NewGNI simultaneously.
NewGNI appears to have collapsed in February.
Previous “Ken Russo” scams include AdSurfDaily, a $119 million Ponzi scheme; Club Asteria, a venture that traded on the name of the World Bank and listed a serial-cash gifter and former ASD Ponzi promoter as one of its managers; and MPB Today, a “program” that claimed a one-time purchase of $200 in groceries could lead to free food and gasoline for life.
MPB Today operator Gary Calhoun is awaiting sentencing in Florida on a racketeering charge. ASD operator Andy Bowdoin is serving a federal prison sentence for wire fraud after being sued for racketeering by some of his own members. Club Asteria, which falsely planted the seeds it was endorsed by actor Will Smith and the American Red Cross, suspended interest payments long ago. Club Asteria also traded on the name of slain human-rights champion Mahatma Gandhi.
Club Asteria misspelled Gandhi’s name in promos.
“Ken Russo” dubbed Zeek an “AMAZING PROGRAM” in May 2012. Three months later the SEC dubbed it a $600 million Ponzi- and pyramid fraud. The original GNI collapsed in 2010 into a sea of incongruity, amid reports the operators were seeking a “crystal clear vision of our financial vortex.”
In April 2013, the SEC said ProfitableSunrise was conducting an international fraud scheme and may have gathered tens of millions of dollars through a mail drop and a series of offshore accounts.
Records strongly suggest that Felmina Alliance was using an address of 50 Street, Global Plaza Tower, 19th Floor, Suite H, Panama City, Panama. That address also shows up in court filings by the SEC in the Profitable Sunrise action.
WFMY interviewed Zeek Rewards receiver Ken Bell as part of its report on an apparent reload scam.
WFMY (CBS/Greensboro, N.C.) is reporting that it exposed an apparent Zeek Rewards reload scam operating on Google’s Blogspot platform — and that Google has removed the offending Blog.
The scam was operating at a URL of ZeekRewardsIsComingBack.blogspot.com, the station reported. WFMY contacted Zeek Rewards’ receiver Kenneth D. Bell as part of its report. Bell told the station that the Blogspot site looked like “another attempt to revictimize” Zeek investors.
Whoever controlled the Blogspot site was telling Zeekers there was a “simple process” to “get your money back,” WFMY reported.
Separately, the PP Blog located content online that suggests the Blogspot site was soliciting Zeek victims to send funds to at least three offshore payment processors: Payza, Liberty Reserve and Perfect Money. All three processors are known to do business with international scoundrels.
On April 1, the PP Blog observed an online pitch for an entity that appeared to be using the name and address of a U.S. government agency while promising “to recover” funds lost through Profitable Sunrise. The fake agency claimed it could recover losses for a sum of less than $50 and encouraged Profitable Sunrise members to send money to purported accounts at the Liberty Reserve and Solid Trust Pay payment processors.
The Blog reported information about the fake site to a U.S. government agency.
North Carolina regulators have repeatedly warned about so-called “reload scams,” including scams that surfaced after the SEC alleged in August 2012 that Zeek was a $600 million Ponzi- and pyramid scheme and scams that surfaced after North Carolina brought a cease-and-desist order against the Profitable Sunrise HYIP in February. The SEC has alleged that Profitable Sunrise was a massive online pyramid scheme.
In 2010, the state of Delaware charged a Detroit man with racketeering for his alleged role in swindling a woman who’d earlier been ripped off in a securities swindle. The state deemed the follow-up swindle an “investment recovery scam.” Delaware is among many U.S. states investigating Profitable Sunrise.
Zeek itself is known to have used offshore payment processors. Prior to the SEC bringing spectacular allegations of fraud against Zeek last year, Zeek was auctioning sums of U.S. currency and telling members they’d be sent their winnings through offshore processors.
Here’s the WFMY report on the apparent Zeek Rewards reload scam . . .
M. Viktoria Wilson: Source: Michigan Attorney General’s Office.
BULLETIN: A Michigan woman who allegedly hindered an investigation into her on-the-lam husband’s Ponzi scheme has been charged with lying to a police officer during the investigation of a crime, a felony under state law.
M. Viktoria Wilson, 24, of Saginaw, was arrested yesterday by Saginaw Valley State University Police, the office of Michigan Attorney General Bill Schuette said.
Wilson’s husband — Joel Wilson, 30, of Saginaw — fled the United States after his Ponzi scheme was exposed in January.
“Scam artists who defraud Michigan citizens, particularly senior citizens, think they can run but they cannot hide from the law,” said Schuette. “We are working to secure justice for the Michigan victims and families affected by this scam.”
When authorities interviewed M. Viktoria Wilson in January, she lied to them, Schuett’s office said.
From a statement by investigators (italics added):
Beginning in 2009, it is alleged that Mr. Wilson scammed investors through his operation of The Diversified Group Advisory Fund LLC, an investment company. Mr. Wilson allegedly told investors that he would use their funds to purchase distressed properties in the Saginaw area and Bay City areas. The properties would later be refurbished and sold for profit, which would go to investors.
When funds Mr. Wilson collected from the sales of the unregistered securities failed to turn a profit, he allegedly used new investor funds to pay returns to previous investors – the trademark of a Ponzi scheme. In addition, Mr. Wilson allegedly pocketed approximately $47,000 of the investment funds to pay his personal expenses and acquire personal assets.
The following nine charges were filed against Mr. Wilson in Bay City District Court on January 8, 2013:
One count of Continuing Criminal Enterprise (Racketeering), a felony punishable by up to twenty years in prison;
Three counts of Sale of Unregistered Securities, a felony punishable by up to ten years in prison;
One count of Larceny by Conversion ($20,000 or more), a felony punishable by up to ten years in prison;
One count of Larceny by Conversion ($1,000-$20,000), a felony punishable by up to five years in prison; and,
Three counts of Fraudulent Sale of Securities, a felony punishable by up to ten years in prison.
Joel Wilson is expected to surrender, Schuett’s office said.
UPDATED 11:08 A.M. ET (U.S.A.) On a day Americans cherish as a great symbol of the continuation of Democracy, images of their President are being used to create the impression he has endorsed a “program” HYIP hucksters sought to popularize in the aftermath of the August 2012 collapse of the Zeek Rewards “program” amid SEC allegations that Zeek was just another massive Internet scam.
“Just join their team and you will receive all the help you need to grow your own business,” an animated Obama tells prospects in a video promoting Ultimate Power Profits. “By doing so, your earnings will increase. There is no hidden agenda. They showed me how their system worked and I was impressed. It is a fully legal and U.S.-patented system they use to make money.”
Obama’s image previously was used in affiliate promos for MPBToday, a purported MLM “grocery” program whose operator was arrested on a racketeering charge in Florida last month. A building that housed MPB Today’s operations is the subject of a federal forfeiture action in U.S. District Court for the Northern District of Florida. The forfeiture case was filed July 31, 2012.
Less than three weeks later — on Aug. 17, 2012 — the SEC alleged Zeek was a $600 million Ponzi and pyramid scheme. Zeek and MPBToday are known to have promoters in common, including serial Ponzi scheme pitchman “Ken Russo,” also known as “DRdave.”
On Aug. 18, only a day after the SEC’s Zeek action late on Friday afternoon, the PPBlog began to receive spam about the UltimatePowerProfits “program.” (See Comments thread below this story. The Blog established a Ponzi-forum tie between Zeek and Ultimate Power Profits.)
On Aug. 20, the office of North Carolina Attorney General Roy Cooper — which also had been investigating Zeek — issued a warning on “reload scams” in the wake of the SEC’s Zeek action.
Ultimate Power Profits is not the first “program” to make a claim about a “U.S. patent.” The JSS/JBP scam, which purported to pay an annualized return of 730 percent and purportedly was operated by former AdSurfDaily Ponzi-scheme pitchman Frederick Mann, also made a claim about a U.S. patent.
It is not uncommon for HYIP scams and MLM frauds to plant the seed that a “program” is endorsed by an agency of the U.S. government or a U.S. politician. ASD’s Andy Bowdoin was accused in 2008 of trading on the name of George W. Bush, then the President of the United States and Obama’s predecessor.
Images of former President Bill Clinton and Secretary of State Hillary Clinton were used in the massive Mantria “green” Ponzi scheme in 2009.
In 2012, JSS/JBP came under the lens of CONSOB, the Italian securities regulator. Some promoters, however, didn’t miss a beat. (Compare the images in the screen shots below. The first is from a promo for an emerging “program” known as RicanAdFunds; the second is from a promo for Zeek; the third is from a promo for JSS/JBP.)
URGENT >> BULLETIN >> MOVING: Gary A. Calhoun is the subject of a criminal probe linked to a civil-forfeiture action in federal court in the Northern District of Florida, according to court filings by his attorney.
Calhoun, 56, is the operator of the MPB Today MLM, which is tied to a grocery-delivery business in Pensacola known as Southeastern Delivery. In July, federal prosecutors filed a forfeiture action against a property at 8812 Grow Drive, also known as Grow Road, in Pensacola. The property is the business address of Southeastern Delivery and also the address of a Calhoun-controlled entity known as WL Property Holdings LLC.
The affidavit in the forfeiture case was filed under seal. But the forfeiture case, according to prosecution filings, was brought to enforce 18 USC § 1028 and 18 USC § 1029, statutes dealing with access-device fraud and fraud in connection with identification documents.
Calhoun was arrested last month in Florida on a state-level charge of racketeering. The existence of the federal documents may mean that Calhoun also has exposure under federal criminal law. The forfeiture complaint also cites the federal wire-fraud and conspiracy statutes.
Some promos for MPB Today in 2010 were targeted at federal Food Stamp recipients. The U.S. Department of Agriculture told the PP Blog in 2010 that it had opened a “review” into claims about the MPB Today “program.” The agency later described the matter as an investigation.
A news release apparently authored by an MPB Today affiliate in 2010 encouraged impoverished prospects to sell $200 worth of Food Stamps to a “friend, family member or whoever” to raise cash to join the the MPB Today program.
In September, Calhoun asked for the forfeiture case to be stayed because of a parallel criminal probe. A federal judge granted the request.
When prosecutors filed the July forfeiture action, they noted that “[t]he facts and circumstances supporting the seizure and forfeiture of the defendant property are contained in a sealed affidavit, so as not to publish the facts of an ongoing criminal investigation.”
On Sept. 24, Calhoun’s lawyer noted in a court filing that he “has confirmed that Mr. Calhoun is, at a minimum, a subject in the related criminal investigation.”
As the PP Blog reported 
