A Virginia-based company that trades on the name of the World Bank and claims to help lift some of the poorest people on earth out of poverty by involving them in an income and MLM-like recruitment scheme has suspended member cashouts, according to posts on Ponzi scheme and criminals’ forums.
If the news about Club Asteria is true — and the company is not confirming it on its news webpage — then the firm may be following the AdViewGlobal (AVG) autosurf into the darkness virtually two years to the day after AVG suspended cashouts after collecting an unknown sum of money and declaring member payouts never were guaranteed.
Club Asteria, according to chatter on infamous Ponzi forums such as MoneyMakerGroup, did not call its decision not to pay members a suspension. Rather, the firm described it as a “decision to accumulate revenue share disbursements for the next 30 to 60 days.”
Members have claimed in promos for months that Club Asteria provided a “passive” investment opportunity and that earnings were guaranteed. The company itself has implied as much, according to promotional materials. Club Asteria is under investigation by Italian authorities, and confirmed in May that its PayPal account had been frozen.
After the PayPal freeze, which involved an unspecified sum of money, Club Asteria slashed its weekly payout rate to less than 1 percent and urged members to use offshore payment processors.
Like AVG, Club Asteria blamed negative developments on its own members. The firm does not publish verifiable financial data, and members say payments come via wire from an entity known as Asteria Holdings Limited in Hong Kong.
Why a Virginia-based company would route money through an apparent Hong Kong-based subsidiary to both U.S.-based members and international members never has been clear. Some members have published spreadsheets and ads that state plainly or imply that Club Asteria members can count on earning $400 a week for a payment of $19.95 a month, with earnings projected at a rate of 10 percent a week.
Other members have claimed Club Asteria pays 3 percent to 4 percent a week, numbers that project to a return of between 156 percent and 208 percent per year. References to a “passive” earnings opportunity with guaranteed payouts gave rise to questions about whether Club Asteria and its members were selling unregistered securities as investment contracts.
Meanwhile, the presence of promotions and “I got paid” posts on infamous Ponzi forums led to questions about whether Club Asteria had come into possession of funds tainted by one or more Ponzi or fraud schemes.
When AVG collapsed two years ago this week, the firm said it was retooling and would make an 80/20 program mandatory upon relaunch. Club Asteria, whose domain name appears to have been registered on June 25, 2009, reportedly incorporated an 80/20 program into its business model upon its launch in 2010.
Club Asteria’s domain, according to web records, was registered on the very same day news about the collapse of AVG surfaced. On June 30, 2009 — five days after its collapse — AVG’s name was referenced as an iteration of Florida-based AdSurfDaily in a racketeering lawsuit filed against ASD President Andy Bowdoin.
Bowdoin was arrested by the U.S. Secret Service for wire fraud, securities fraud and selling unregistered securities in December 2010. In August 2008, prior to the launches of both AVG and Club Asteria, tens of millions of dollars were seized from Bowdoin’s 10 personal bank accounts by the Secret Service.
It is believed that ASD, AVG and Club Asteria had promoters and members in common.
In the online Ponzi world, 80/20 programs are used to minimize cash outflow and disguise the nature of the programs. Club Asteria members preemptively have claimed the firm was not operating a Ponzi, a highly dubious claim given that the company does not publish audited financial information and that members — perhaps particularly members from Third World countries, countries ravaged by war or countries governed by dictators or strongmen — likely lacked the means or ability to visit Club Asteria’s U.S. headquarters to examine the books in person.
James Clark Howard: Source: Boca Raton Police Department
UPDATED 2:25 P.M. EDT (U.S.A.) In a complex case unfolding in Florida, the SEC has filed fraud charges against two companies that allegedly sold unregistered securities and conducted a $27.5 million “investment scheme” involving “purported commodities contracts.” A receiver has been appointed to marshal the assets of the murky businesses, which are known as Commodities Online LLC and Commodities Online Management LLC.
Millions of dollars generated in the scheme were moved to Mexico and the Netherlands even as the SEC was issuing subpoenas in the case last month, according to court filings. The agency described the transactions as “extremely suspicious.”
Although the SEC successfully halted the alleged Commodities Online scheme on April 1, the only defendants named to date are the companies themselves. The agency described the individuals presiding over the scheme — a former managing member and a vice president — as convicted criminals.
One of the individuals, according to the SEC, was a “convicted felon who was, in March 2010, charged with grand theft and organized scheme to defraud in conjunction with an unrelated Ponzi investment scheme.”
The other, according to the SEC, was an individual who “pled guilty to bank fraud and narcotics charges in 2005 and to transmitting a threat to injure charge in 2007.”
The PP Blog confirmed that, on March 5, 2010, the Boca Raton Police Department arrested James Clark Howard, who is listed as a “managing member” of Commodities Online LLC in documents filed with the Florida Department of State on Jan. 26, 2010.
Howard was charged with grand theft and organized scheme to defraud in a Ponzi case that may involve as many as five companies and their associates acting in concert to scam investors. Boca Raton authorities said the Florida Office of Financial Regulation also was conducting an investigation.
On Feb. 11, 2011, Louis Gallo was identified as a manager of Commodities Online Management LLC in records filed with the Florida Department of State. The Sun Sentinel newspaper reported that Gallo is “on probation for bank fraud and a cocaine charge out of New Jersey federal court.”
AdSurfDaily Member And Surf’s Up Mod Emerges As Figure In New Florida Flap
Other records show that, on Sept. 15, 2010, a Nevada-based company that listed former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy as a “director” sued Howard and others in federal court in Fort Lauderdale. The Nevada company — SSH2 Acquisitions Inc. — alleged that Howard and the others were running a Ponzi scheme into which SSH2 had plowed $39 million.
Hoy, who has not been accused of wrongdoing, was a member of Florida-based AdSurfDaily, which the U.S. Secret Service said in August 2008 was conducting an international Ponzi scheme involving tens of millions of dollars. After the ASD seizure, Hoy became a moderator at the pro-ASD “Surf’s Up” forum, which mysteriously vanished in January 2010 after cheerleading nonstop for ASD President Andy Bowdoin for more than a year.
Bowdoin was the target of a federal criminal probe the entire time Surf’s Up operated, according to court filings. In November 2008, just days after a key court ruling went against ASD, the firm endorsed Surf’s Up as its mouthpiece.
By February 2009, Hoy became a conference-call host and moderator of a now-defunct forum that promoted the now-defunct AdViewGlobal (AVG) autosurf. AVG, which had close ties to ASD, launched in the aftermath of the federal seizure of more than $80 million in ASD-related assets, the filing of two forfeiture complaints against ASD-related assets and the filing of a civil racketeering lawsuit against Bowdoin.
On June 30, 2009 — one day after Bernard Madoff was sentenced to 150 years in federal prison for his colossal Ponzi scheme — lawyers suing Bowdoin for racketeering alleged that AVG was an extension of ASD. In September 2009, federal prosecutors made a veiled reference to AVG in court filings in the ASD case.
AVG disappeared in June 2009, about a month after the grand jury that ultimately indicted Bowdoin for wire fraud, securities fraud and selling unregistered securities as investment contracts began to meet. The indictment against Bowdoin was unsealed in November 2010, and Bowdoin was arrested in Florida on Dec. 1, 2010.
Surf’s Up was known for unapologetic, unabashed cheerleading for Bowdoin, whom prosecutors said had swindled investors in Alabama in a previous securities caper during the 1990s. Clarence Busby, an alleged business partner of Bowdoin and the operator of the Golden Panda Ad Builder autosurf, swindled investors in three prime-bank schemes in the 1990s, according to the SEC.
More than $14 million linked to Golden Panda was seized as part of the ASD case — and yet the cheerleading for Bowdoin continued on Surf’s Up. The forum labeled ASD pro-se litigant Curtis Richmond a “hero” after he accused the judge and prosecutors of crimes in 2009.
Richmond was associated with a Utah “Indian” tribe a federal judge in a separate case ruled a “complete sham” after it filed enormous judgments against public officials in performance of their duties. Regardless, the cheerleading on Surf’s Up continued — even after it was revealed that Richmond had a contempt-of-court conviction for threatening federal judges and had been sued successfully under the federal racketeering statute by the Utah public officials and was ordered to pay nearly $110,000 in penalties and damages.
Federal prosecutors now say they have linked ASD to E-Bullion, a shuttered California payment processor whose operator — James Fayed — is accused of arranging the contract murder of his wife, a potential witness against him in a fraud case. E-Bullion has been linked by investigators in the United States and Canada to multiple Ponzi schemes.
SSH2, the company that listed Hoy as a director, alleged in September 2010 that Howard was part of a Ponzi scheme that also involved Patricia Saa, Sutton Capital LLC and Rapallo Investment Group LLC.
Howard had been arrested by the Boca Raton Police Department in March 2010, about six months before SSH2 accused him in the September 2010 lawsuit of operating a Ponzi scheme. In the lawsuit, SSH2 said it had conducted business with the defendants from “early 2009 through March 2010,” and ultimately turned over $39 million.
Howard and the defendants, according to the lawsuit, told SSH2 it was trading in commodities and “would produce profits of 40% per month or more, while not risking any of the invested funds.”
SSH2 did not say in the complaint how it had come to believe that a return of 40 percent a month with no risk was possible. Nor did the company describe its efforts to conduct due diligence on Howard and the other defendants.
Of the $39 million directed at Howard and the other defendants, SSH2 received back approximately $19 million in “fake and fraudulent ‘profits,’” according to the lawsuit.
If SSH2’s assertions that it conducted business with Howard and the others beginning in “early 2009” and expected a return of 40 percent a month are true, it means that the business was being conducted in a period after which both the Bernard Madoff Ponzi scheme and the alleged AdSurfDaily Ponzi schemes were exposed.
Both Madoff and ASD bragged about returns that were far less than the monthly returns allegedly offered by Howard and the other lawsuit defendants.
Madoff’s fraud was exposed in December 2008, about four months after ASD’s alleged fraud was exposed.
And if SSH2’s assertions against Howard and the others are true, it also means the transactions occurred during a period in which Hoy, later to emerge as an SSH2 director, also was moderating forums for ASD and AVG and also was serving as a conference-call host for AVG, which purported to operate from Uruguay and enjoy protection from U.S. regulators because of its purported “private association” structure.
ASD’s Bowdoin initially ceded the money seized by the Secret Service in January 2009, dropping his claims to the cash “with prejudice.” By the end of February 2009, however, Bowdoin sought to reenter the case as a pro se litigant and renew his claim to the money, which totaled about $65.8 million.
Bowdoin’s sudden reappearance in a case he had abandoned coincided with a meeting AVG reportedly conducted with Karl Dahlstrom, a convicted felon. In March 2009 — in a letter posted on Surf’s Up — Bowdoin claimed he had decided to reenter the case after consulting with a “group” of ASD members. Bowdoin did not name the members, but chided federal prosecutors in his letter, writing that his pro se pleadings should “really get their attention.”
For the balance of 2009, Surf’s Up continued to cheerlead for Bowdoin, despite the fact he never told the membership at large about a second forfeiture complaint that had been filed against ASD-connected assets in December 2008. Bowdoin also did not inform ASD members that he had been sued for racketeering and had signed a proffer letter in late 2008 or early 2009 and acknowledged that prosecutors’ material allegations against ASD were all true.
Surf’s Up continued to operate even after prosecutors revealed the existence of the proffer letter. In Bowdoin’s own court pleadings, he had acknowledged he had given information against his interests to prosecutors. Bowdoin said he hoped to work out a deal by which he could avoid prison time, despite the fact prosecutors had alleged he was at the helm of a massive Ponzi scheme.
In October 2008 — at the conclusion of an evidentiary hearing ASD had requested — Surf’s Up conducted an online party for ASD members, complete with images of champagne and fireworks. Members were fed one-sided accounts of what had happened at the hearing, and a federal prosecutor was described derisively as “Gomer Pyle.” ASD’s lawyers were described as the “Perry Mason” team.
A month later — in November 2008 — U.S. District Judge Rosemary Collyer ruled at ASD had not demonstrated at the hearing that it was a lawful business and not a Ponzi scheme. The AVG forum led by some of the Surf’s Up mods, including Hoy, launched shortly thereafter, and the Surf’s Up forum soldiered on.
AVG was positioned as a way for members to make up their losses in the alleged ASD Ponzi scheme.
Surf’s Up became infamous for deleting comments and information unflattering to Bowdoin. The forum also was used to hatch a rumor that the prosecution secretly had admitted ASD was not a Ponzi scheme but was clinging to the case in a bid to save face.
As time progressed, dozens of pro se litigants attempted to intervene in the ASD case, claiming the government had no “EVIDENCE.” These filings occurred despite the fact that some of the evidence had been a matter of public record since August 2008.
Critics referred to Surf’s Up, whose formal name was the ASD Member Advocates Forum, as the AS[Delusional] forum. Various tortured explanations for Bowdoin’s conduct appeared on the forum, and there were calls for a “militia” to storm Washington, D.C., and for a prosecutor to be placed in a medieval torture rack. Prosecutors and federal agents were derided as “goons” and “Nazis,” and critics were derided as “maggots.”
The SEC’s Case Against Commodities Online
On April 1, the SEC filed an action against Commodities Online that alleged it was selling unregistered securities and operating a commodities fraud that had absorbed at least $27.5 million. Florida attorney David S. Mandel was appointed receiver.
“In connection with the unregistered securities offerings, the Defendants made numerous material misrepresentations and omissions regarding the nature of Commodities Online’s business model and operations, the risks and earnings associated with investing in its securities, and the background of its co-founder and vice-president,” the SEC charged.
“On December 15, 2010, Commodities Online announced on its website that ‘[t]o date, we have 32 contract offerings that have been completed for which our steadfast subscribers have been paid. The dollar total of these contracts is approximately $7.5 million and the payout was in excess of $8.5 million, producing an average earning of over 14.5%.’
“That statement was untrue,” the SEC charged. “There is no evidence to support this amount of investor return. In fact, Commodities Online’s bank records show a net loss for the companies associated with these promised contracts. Further, the company’s records show a net outflow of cash for each of these associated companies.”
By March 14, 2011, the SEC charged, Commodities Online had upped its number of purported successful contracts to 48. That claim also was untrue, the agency charged.
Referring to Howard but not naming him, the SEC said that the company “failed to disclose that in 1997, he was convicted of federal narcotics and firearms felonies and sentenced to 57 months in prison. The Defendants never disclosed his past criminal background to investors either through the Commodities Online website or any other company communication to investors.”
Referring to Gallo but not naming him, the SEC said that, in 2005, he “pled guilty in the United States District Court for the District of New Jersey to bank fraud and narcotics charges.
“In 2007, in the same court, he pled guilty to transmitting a threat to injure,” the SEC continued. “He is currently serving a three-year term of supervised release, which expires in July 2011.”
In a separate filing accompanying the complaint filed on April 1, the SEC said that Commodities Online “recently sent approximately $3.8 million to entities and individuals in Mexico and the Netherlands.”
Investigators deemed the transactions “extremely suspicious,” given that the transactions allegedly occurred between March 15, 2001, and March 25, 2011. The SEC said it issued subpoenas to the defendants on March 15, the same day the international transactions began to occur.
ASD President Andy Bowdoin wowed a "rally" crowd by showing a photo of this building in Quincy, Fla. The U.S. Secret Service later seized the building, saying it was purchased from the proceeds of a massive Ponzi scheme. Federal prosecutors said the scheme traded on religion and that Bowdoin emerged with "followers."
EDITOR’S NOTE: Two videos of sales pitches by AdSurfDaily President Andy Bowdoin are linked below. Both are available at publicly accessible websites.
The first video shows Bowdoin, in the summer of 2008, wowing a crowd by showing ASD rally attendees a photo of ASD’s new headquarters building in Quincy, Fla. The building later was seized by the U.S. Secret Service as the proceeds of a criminal enterprise. Also of note in the video is a claim by Bowdoin that George Harris is the head of ASD’s purported real-estate division. The video also references Judy Harris.
George Harris is the son of Andy Bowdoin’s wife, Edna Faye Bowdoin. The Harris home in Tallahassee was seized in December 2008. Federal prosecutors said the mortgage on the home was retired with Ponzi proceeds. Neither George nor Judy Harris ever filed a claim to the home.
The AdViewGlobal (AVG) autosurf, which launched after the seizure of Bowdoin’s assets, the Harris home and the filing of a racketeering lawsuit against Bowdoin, later identified George and Judy Harris as its operators. AVG purported to be a “private association” headquartered in Uruguay. The surf made the claim it was a private association in February 2009. The claim coincided with a decision by Bowdoin to reenter the ASD forfeiture case as a pro-se litigant.
Weeks earlier, in January 2009, Bowdoin had submitted to the forfeiture of tens of millions of dollars seized from his bank accounts. Despite the fact that Bowdoin had advised a federal judge that he was withdrawing his claims to the seized money “with prejudice” — meaning he intended never again to reinstitute his claims — he nevertheless sought to reenter the case, acting as his own attorney.
By April 2009, federal prosecutors said that, not only had Bowdoin submitted to the forfeiture and formally advised a federal judge of his decision to do so, but that Bowdoin also had signed a proffer letter and acknowledged the government’s material allegations in the case were all true.
Bowdoin met with federal prosecutors in Florida in late 2008 and early 2009 for a period of at least four days, according to court filings.
Of particular note in the second video is the timing: It was shot (presumably by a rally attendee) in Las Vegas on May 31, 2008. Bowdoin is shown in the video defining himself as a “money magnet” and encouraging ASD members to become the same. The federal grand jury that indicted Bowdoin began to meet in May 2009. Its indictment of Bowdoin was unsealed earlier this month and makes repeated references to the “money-magnet” line.
The video shows Bowdoin making references to God in his Las Vegas sales pitch. It begins with a Gordon Gekko-like suggestion by Bowdoin that greed is a net positive. Gekko, of course, is the fictional character played by Michael Douglas in the 1987 movie “Wall Street.” Douglas won an Oscar for the role.
“The point is, ladies and gentleman, that greed, for lack of a better word, is good,” the Gekko character memorably advised the movie audience. “Greed is right, greed works.”
Here is what Bowdoin said from the stage 21 years later in Las Vegas:
“Just like, you know, [the belief that] rich people are greedy. Turn that into a positive: Rich people are generous. All right. And you turn it into a positive like that, you repeat that — at least seven times, every time you think about it: Rich people are generous. Because you’ve got to reprogram that subconscious mind.”
Bowdoin went on to inform Las Vegas rally attendees that he had a plan to create 100,000 millionaires in three years and that it was important for ASD members “to have an attitude of gratitude with God.”
“And I always say, ‘Thank you, God, for developing me into a money magnet.’ And I see myself as a money magnet in attracting money and, I say, attracting large sums of money,” Bowdoin said.
He exhorted ASD members to internalize his message and imagine riches “flowing” in from ASD, the PP Blog reported on May 7, 2009.
About three weeks after the Las Vegas rally — a rally at which Bowdoin encouraged attendees to spend unlimited sums on ASD “ad packs” because a $50,000 ceiling on purchases would be enforced two days later — the $157,000 mortgage was retired on the Harris home.
ASD’s spending binge actually began about 11 days after Bowdoin exited the Las Vegas stage and ultimately consumed more than $1 million, federal prosecutors said. Other post-rally purchases included jet skis, marine equipment, a Cabana boat, haul trailers, real estate and at least three automobiles, including a Lincoln. One of the automobiles was purchased for George and Judy Harris, according to prosecutors.
The retired Harris mortgage and the car — a Honda — cost ASD members nearly $186,000, prosecutors said.
UPDATED 9:28 A.M. ET (U.S.A.) On Dec. 1, a federal magistrate judge set bail of $350,000 for AdSurfDaily President Andy Bowdoin and ordered him not to commit a federal, state or local crime after his arrest by the U.S. Secret Service on charges of wire fraud, securities fraud and selling unregistered securities.
Bowdoin, 76, was specifically warned that he could be held in contempt of court for violating conditions of his bail. The conditions included an order not to obstruct the investigation or tamper with witnesses.
Now an email attributed to former ASD and AdViewGlobal executive Gary Talbert has surfaced that is raising questions about whether Bowdoin is trying to suppress the victims’ count and manipulate ASD members who seek to file restitution claims with Rust Consulting Inc., the official claims administrator in the $110 million Ponzi case.
The email specifically references Bowdoin’s arrest, but makes no reference to the bail conditions set by U.S. Magistrate Judge Thomas G. Wilson in advance of a scheduled appearance by Bowdoin in U.S. District Court for the District of Columbia Dec. 17.
Bowdoin made his initial court appearance before Wilson in Florida.
“Got a email from Andy and he told me to go ahead and send this email out to everyone,” noted the email attributed to Talbert, who filed a sworn affidavit on ASD’s behalf in U.S. District Court for the District of Columbia in 2008. “He does have a hearing on Dec. 17th in Washington D.C. He and his lawyers are still positive on the out come.”
“Here is just a idea and I think this will work for everyone,” the email continued. “This should keep everyone legal. Because I think everyone understood it was not a investment. I believe it is time to fill out the info. from Rust inc. with the following addendum.
“Where it asks for your signature write in there ‘See addendum’.
“Now put this in your own words on the addendum. Here is a out line.
“On the addendum write that you knew this was not a investment and you where purchasing advertising. Now since the gov. stopped my advertising company and I did not get my advertising I would like to get my advertising money back from whom ever is holding it now. Sign it and send it in with the forms from Rust.”
News about the email attributed to Talbert was spreading among ASD members last night. Separately, ASD figures Kenneth Wayne Leaming and Christian Oesch have filed an ASD-related lawsuit in the U.S. Court of Federal Claims that apparently seeks the spectacular sum of $29 TRILLION from a federal judge, three federal prosecutors and a Secret Service agent involved in the ASD Ponzi case.
On June 30, 2009, AdViewGlobal was cited as an extension of ASD in a racketeering lawsuit filed against Bowdoin by ASD members. The reference was dated June 29, 2009, the same day Bernard Madoff was sentenced to 150 years in federal prison for his Ponzi scheme.
Federal prosecutors now say Bowdoin faces up to 120 years in prison if convicted of all counts against him.
“AVG is the next iteration of the Ponzi scheme auto-surf programs, which [are] staffed with former ASD executives and Bowdoin disciples, including George Harris, the stepson of Bowdoin, who is listed as an AVG trustee, Gary Talbert, former ASD executive served as CEO of AVG and now serves as an accountant, Nate Boyd, a former compliance officer at ASD, serves as ‘Protector’ of the AVG association, and Chuck Osmin, a former ASD employee who testified on ASD’s behalf at the evidentiary hearing before this Court last fall is a customer service representative of AVG,” the RICO plaintiffs claimed.
The grand jury that indicted Bowdoin began to meet in May 2009. During that same month, AVG was scurrying to reconfigure itself after gathering money from members and offering 200 percent “bonuses” for months. AVG launched in the aftermath of the seizure of tens of millions of dollars from Bowdoin in August 2008, the filing by the government of a second forfeiture complaint against ASD-connected assets in December 2008 and the filing of the racketeering lawsuit against Bowdoin.
In January 2009, just days prior to its official launch in early February, AVG bizarrely both confirmed and denied it had ties to ASD.
The appearance of AVG graphics in an ASD-controlled webroom after the federal seizure was an “operational coincidence,” AVG memorably explained. The announcement was attributed to Chuck Osmin, himself a former ASD employee.
Even though AVG previously had denied ASD ties, the upstart surf then announced that Talbert was its CEO.
“Since Mr. Talbert was and is the C.E.O. for both companies and had worked with the same web room company while at ASD, it would be very natural for him to choose and use many of the same venders (sic) that he had used before. So, the fact that ASD and AdView Global are using the same web room hosting company is no accident, in fact it is an operational coincidence,” AdViewGlobal said.
Why the surf identified Talbert as ASD’s CEO was unclear. He was listed in his own sworn court documents in the ASD case as ASD’s “Human Resource Manager, Assistant CFO and Website Editor.”
By March 2009, AVG announced that Talbert had resigned as AVG’s chief. It also announced that its bank account had been suspended, blaming the development on members.
In May 2009, AVG announced that it had secured a new, offshore wire facilitator to help it gather money from members. The announcement was made on the same day the Obama administration announced a crackdown on offshore financial fraud. (See this story and included links for updates on AVG’s purported facilitator, KINGZ Capital Management. There is a tie between KINGZ and Minnesota Ponzi schemer Trevor Cook.)
By June 25, 2009, AVG announced it was suspending cashouts, again blaming the development on members while threatening members and journalists with copyright-infringement lawsuits for reporting the news.
Just four days later, on June 29, 2009, the RICO plaintiffs in the ASD lawsuit referenced AVG in a court filing docketed the following day, June 30. By September 2009, federal prosecutors made a veiled reference to AVG in filings in the ASD case.
By Sept. 29, 2009, an email attributed to ASD spokeswoman Sara Mattoon was circulating among ASD members. The email specifically instructed members not to fill out a government form that would be used as part of the restitution process.
“Soon after the ASD shutdown, the DOJ (Dept of Justice) set up a website for people to file a claim for the money they had in ASD,” Mattoon was quoted as saying in the email. “As soon as I heard about it, I told everyone not to do it because I could see what the Government was trying to do, but some people didn’t realize what it was and afterwards they regretted doing so.”
The Matton email referenced an earlier email attributed to ASD member and purported trainer Robert Fava. Like the Mattoon email, the Fava email discouraged members from filling out the government form, describing it as “ammunition” that could be used against ASD.
In December 2009, Rita Gosselin was indicted for racketeering in Michigan. Michigan Attorney General Mike Cox said she was at the helm of a real-estate Ponzi scheme involving promissory notes.
In April 2010, Gosselin, 58, was alleged to have cut a monitoring device and fled the the state with her husband, Richard Gosselin, 62.
The couple was captured yesterday in Tennessee by the U.S. Marshals Service and the Humboldt Police Department.
Meanwhile, a Nevada couple charged earlier this week in a Ponzi case remains on the lam. Perry and Rachelle Griggs disappeared in January 2010.
Perry Griggs operated the scheme while he was incarcerated in federal prison for another Ponzi scheme, authorities said.
BULLETIN: UPDATED 10:51 A.M. EDT (U.S.A., Oct. 1.) About six months after the chief executive officer of Atlantis Technology Group (Atlantis) was quoted in a Marketwire news release that threatened online commentators for “making slanderous postings” about the company, the SEC has gone to federal court in Florida to accuse Atlantis CEO Christopher Dubeau and the firm of running a penny-stock swindle.
The SEC’s lawsuit concerns the operations of an Atlantis subsidiary known as Global Online Television (GOTV), which allegedly used a commission-based sales force to promote the purported TV company.
Dubeau and Atlantis actually were operating a “pump-and dump” stock fraud, the SEC charged in U.S. District Court for the Southern District of Florida.
“From at least August 7, 2009 through April 5, 2010 . . . Atlantis and Dubeau issued numerous false and misleading press releases that artificially inflated the trading volume and price of Atlantis’s stock,” the SEC charged. “Dubeau benefited financially from Atlantis’s artificially increased trading volume and stock price. In December 2009, he sold more than 60 million shares of Atlantis stock for proceeds of about $240,000, and in August 2009 he received $77,000 of the proceeds from an associate’s sale of more than 16 million shares.”
A Marketwire news released dated March 26, 2010, and issued under the names of Atlantis and Dubeau accuses “bashers” of making “slanderous” remarks about the company online.
“I can assure you I will not play the bashers’ games,” Dubeau was quoted as saying. “Atlantis has Launched an Investigation into these Individuals that are attacking the Company and its Associates. Atlantis has Identified at least 3 of these Participants in what we deem to be manipulation of the Company’s Stock price by making slanderous postings. We will seek every avenue available to bring these persons of interest to the forefront of the Judicial System.”
Now, six months later, the SEC has accused Dubeau of operating a large-scale fraud by fabricating news about the company’s ability to offer online TV and video-phone services.
“Atlantis’s press releases were false because Atlantis’s subsidiary has never offered
Internet protocol television service or video phone services,” the SEC charged. “At the time the company and Dubeau issued these press releases, the subsidiary did not offer (and was not able to offer) either service, and it did not have relationships with television networks to offer content to Atlantis’s subscribers. In fact, until March 1, 2010, neither the subsidiary nor Atlantis had any product or service to offer to consumers.”
Threats against critics who voice concerns about business opportunities online are common, as is the issuance of news releases to spread false information. In the alleged AdSurfDaily Ponzi scheme, for example, ASD President Andy Bowdoin threatened critics with lawsuits. ASD operated from Florida.
An operation known as AdViewGlobal (AVG) that has close ASD ties and also operated at least in part from Florida also threatened critics. AVG even threatened its own members with lawsuits.
Critics of Data Network Affiliates (DNA), a Florida company that purports to offer an MLM program that collects license-plate data to aid law enforcement and the AMBER Alert program rescue abducted children, also were threatened.
DNA figure Phil Piccolo used an online radio program last month to threaten critics.
Convicted Florida Ponzi schemer Scott Rothstein, who ran one of the largest scams in U.S. history, also threatened critics. Rothstein pleaded guility to racketeering.
A Hawaii man and his company were hit with sanctions totaling $6.2 million in a case that alleged they targeted people with hearing impairments in a Forex Ponzi scheme.
Both the SEC and the CFTC filed actions against Marvin Cooper and his Honolulu-based firm, Billion Coupons Inc. (BCI). The CFTC announced the judgment against Cooper and the company.
Investigators said Cooper and BCI “solicited funds from deaf American and Japanese individuals for the sole purported purpose of trading forex,” luring them with payout promises of up to 25 percent per month.
For his part, Cooper took “more than $1.4 million of customer funds for personal use, including for flying lessons and to purchase a $1 million home,” investigators said.
He was ordered to pay $3.9 million in restitution to customers and more than $2.3 million in penalties. The company is liable for the same amounts.
The “Billion Coupons” case drew comparisons to the now-defunct Noobing autosurf, which also targeted the deaf. Noobing became popular in the aftermath of the August 2008 federal seizure of tens of millions of dollars in the AdSurfDaily Ponzi scheme case.
Despite the federal seizure, some ASD members promoted Noobing. Noobing effectively went bust in July 2009, when the FTC charged its parent company — Affiliate Strategies Inc. — with pushing a scheme that promised “guaranteed” government grants of $25,000 from economic stimulus funds.
Noobing later was named a receivership defendant in the case. Receiver Larry Cook sold the company’s assets lock, stock and barrel — right down to a lavatory wastebasket. Like ASD, Noobing’s parent firm also owned a jet ski. Cook sold that, too.
Despite dramatic asset seizures and the federal actions against ASD and Noobing’s parent — and despite previous actions against autosurfs, including 12DailyPro, PhoenixSurf and CEP — some ASD members have continued to promote autosurfs.
This has occurred against the backdrop of a racketeering lawsuit against ASD President Andy Bowdoin and public filings in which prosecutors claimed Bowdoin had signed a “proffer” letter in the case and met with members of law enforcement over a period of four days in December 2008 and January 2009.
It also is known that Interpol is seeking the arrest of Robert Hodgins, whose Dallas-based debit-card company, Virtual Money Inc., is alleged to have agreed to launder drug money in the Dominican Republic and assist a Colombian drug operation launder money at ATMs in Medellin.
ASD members said Hodgins’ company supplied debit cards to AdSurfDaily, and web records suggest that Hodgins or a Virtual Money designate attended an ASD function in the Orlando area in late 2006.
Even though Bowdoin acknowledged in court filings that he had given information against his interests to the government, some ASD members continue to promote autosurfs and HYIPs. After signing the proffer letter and surrendering his claims to more than $65.8 million seized from his personal bank accounts, Bowdoin later reentered the case as his own attorney.
One of Bowdoin’s 10 personal bank accounts contained more than $31 million, according to court filings. Another contained more than $23 million. Three other bank accounts contained the exact same amount — a little over $1 million.
After submitting to the forfeiture in January 2009, Bowdoin fired his attorneys without notice and attempted to reenter the case weeks later as his own attorney. This set in motion a series of bizarre pleadings from Bowdoin, including one in which he claimed he had not been provided “fair notice” of his illegal conduct by the government. ASD members by the dozens then filed their own bizarre, pro se pleadings. U.S. District Judge Rosemary Collyer ruled against each of the filers, saying they had no standing in the case.
Collyer since has ruled against Bowdoin, awarding title to more than $80 million seized in the case to the government, which said it intends to implement a restitution program. Bowdoin is appealing Collyer’s forfeiture decisions.
Court filings show that Bowdoin told Collyer the seized money belonged to him. In September 2009, the U.S. Secret Service presented Collyer a transcript of a conference-call recording in which Bowdoin told members the money belonged to them. Although Bowdoin insisted he had big plans for ASD, records show that he let the firm’s registration lapse in the state of Florida — even as he was telling members they should be excited about the company’s future.
In the recording, Bowdoin claimed his fight against the government was inspired by the compelling personal story of a former Miss America.
EDITOR’S NOTE: The indictment in Delaware against Patrick A. Wiley of Detroit illustrates the dangers of entrusting money to a person who claims he can help you recover money lost in a securities swindle. It also illustrates that a person who claims he can help you recover money lost to a securities swindle — and then strings you along — can be charged with serious crimes.
A Detroit man has been indicted for racketeering in Delaware amid allegations he swindled at least $276,000 from a woman in an “investment recovery scam,” prosecutors said.
Patrick A. Wiley, 42, also was charged with securities fraud, selling unregistered securities and theft, Delaware Attorney General Beau Biden said. The prosecution was brought by Biden’s Securities Unit.
All in all, the victim in the case lost more than $300,000, including $45,000 in the original swindle.
Wiley’s investment-recovery scam grew out of an earlier fraud scheme in which the victim was persuaded by another man to invest in a “joint trading venture†that purportedly involved “several wealthy persons in London, England” and would fetch a return of $10 million on an outlay of $50,000 in only months, Biden’s office said.
“With deep sympathies for her loss, we remind all Delawareans that any deal that sounds too good to be true, probably is,” Biden said.
The victim was recruited into the investment scheme in early 2005 by Darren Dobson, 45, of Charlotte, N.C., Biden’s office said. After a state probe, Dobson was indicted in Delaware earlier this year on charges of securities fraud, selling unregistered securities and transacting business as an unregistered agent.
Investigators said the victim sent $45,000 to a Tampa company known as VFG Management
LLC based on Dobson’s claim “that a $50,000 investment would yield a return of $10 million by June 2005.”
VFG Management was “the entity through which the London partners were supposedly operating the joint trading venture,” Biden’s office said.
When no returns materialized, the victim contacted Wiley based on her belief he had been an investor in the same scam, authorities said.
“Wiley claimed he had information regarding the principals involved and that he would pursue them to obtain the victim’s promised investment return,” Biden’s office said. “On numerous occasions between October 2005 and November 2007, Wiley solicited funds from the victim to defray the cost of his efforts, including trips that he was supposedly taking abroad for meetings with the London trading partners and their attorney. During that time period, the victim wired more than $276,000 to Wiley on sixty-one separate occasions. The victim never received the promised investment return or the investment principal.”
Biden described the alleged scam as a “con game.”
“We are particularly disturbed by crimes that use trust and confidence as a means to an
illegitimate end,” Biden said. “The victim in this case has lost over $300,000 in a con game.”
The alleged Credit USA Inc. multilevel-marketing (MLM) pyramid scheme cost two Delaware residents more than $100,000, Attorney General Beau Biden said.
Biden has asked other potential victims to contact his Investor Protection Unit at 302-577-8424.
A state indictment announced two days ago charged Terrel Alexander, 41, Nicole Alexander, 41, and William Love III, 39, with Racketeering, Conspiracy to Commit Racketeering, Securities Fraud, Theft, Sale of Unregistered Securities and Acting as an Unregistered Broker/Agent.
Terrel Alexander lists an address in Wilmington, Del. Nicole Alexander, his ex-wife, lists an address in Mount Lauel, N.J., as does Love III. Although Credit USA was registered in Delaware, the scheme was conducted from headquarters in New Jersey and Pennsylvania, prosecutors said.
“With [the] indictment we’re holding these defendants accountable for cheating Delawareans out of their money,†Biden said.
Even as a grand jury in Kent County was handing up the criminal indictments, prosecutors in New Jersey were filing civil allegations against Credit USA for selling unregistered stock and transacting in securities without being registered.
Delaware prosecutors described each of the defendants as a “principal” of Credit USA. In 2008, the company was named in franchising allegations in Wisconsin amid assertions it offered an investor rights to the entire state for $250,000, including a “non-refundable deposit” of $125,000.
Credit USA was not authorized to sell franchises in Wisconsin, according to the state Department of Financial Institutions, Division of Securities.
The Delaware indictment charges that Credit USA purported to offer “credit repair products,” but that the company operated as a “pyramid scheme designed to personally enrich the three defendants.”
A Georgia man potentially faces decades in prison after being convicted yesterday of racketeering-related charges.
Frank Constantino, 65, of Marietta, was a recidivist securities offender previously disciplined in Missouri for a Bahamas-based scheme and also linked to a scheme in Belize, officials said. He now faces up to 95 years in prison after his conviction on charges of fleecing an elderly woman in a $2.7 million scheme.
Constantino was convicted of violating the Georgia Securities Act, theft and exploitation of an elderly person. Records show he first clashed with Georgia securities regulators in 1997, in a case that featured allegations that he claimed investments in a candy company were guaranteed against loss.
Prosecutors said Constantino had a history of creating shell companies such as Atrium Secure Annuity, Atrium Global Partners and Atrium Investment Partners to fleece investors.
Now facing up to 95 years in prison, Constantino already has been in the Cobb County jail for 349 days. He lost a Georgia Supreme Court battle in October in which he sought release pending trial, arguing he was in poor health and not a threat to flee.
Prosecutors argued he posed a “significant” flight risk because “he did not own any assets in this country, he owned assets in Belize and Nicaragua, and he traveled to Belize on a regular basis.”
In rejecting Constantino’s bid to be released pending trial, the Georgia Supreme Court affirmed a lower-court ruling that Constantino “posed a significant risk to flee” in part because of an alleged history of funneling “significant amounts of money to investments in Belize.”
A California man who tried to adopt the identity of a deceased classmate from his school days to flee the United States while his Ponzi scheme was unraveling has been sentenced to 159 months in federal prison.
The FBI and the State Department already were aware that John Anthony Miller’s scheme was falling apart when they targeted him in a sting in November 2008.
Miller, who was convicted in 1998 of racketeering “predicated on mail fraud, wire fraud, and securities fraud offenses” was operating a Ponzi scheme a decade later through a company known as JAM Jr. Enterprises of Newport Beach, Calif., according to the criminal complaint in the case. Miller, 52, lived in San Clemente.
Working with an informant, an FBI agent who also was an attorney and a former clerk for a judge on the U.S. Court of Appeals for the Third Circuit, set up a sting operation. Miller’s telephone calls with the informant were recorded as the scheme was collapsing.
Miller sought the informant’s help in obtaining a passport to a country that did not have an extradition treaty with the United States, according to the complaint. Using a story that a family friend knew a corrupt passport official, the informant set up a meeting between Miller and the purportedly corrupt official, who was actually an undercover officer from the U.S. Department of State.
<!–adsensestart–>Miller agreed to pay $20,000 for the passport, with $5,000 paid up front and the balance of $15,000 upon delivery of the passport. Miller paid the undercover officer $5,000 in cash that had been stuffed in an envelope. He then filled out a passport application that used the identity of his deceased classmate, according to the complaint.
Worried about his ability to honor redemption requests in the Ponzi scheme, Miller told the informant that he had been “meditating” since 2007 over whether it was best to “hide out in the United States or abroad” and had contacted at least one other individual about obtaining a “fake identity,” according to the complaint.
By October 2008, according to the complaint, Miller needed between $4 million and $5 million to meet redemption requests and did not have the money. He was worried about “tense” people who could bring him unwanted attention “quick” and wondered how long it would take for the FBI and the SEC to respond to complaints about him if “someone pull[s] the trigger.”
Miller ultimately concluded it was best to flee the country. After using Ponzi proceeds to pay the undercover agent the $5,000 deposit required for the bogus passport in November 2008, Miller was told it would take seven to 10 days for the documents to be prepared. He provided two photographs of himself, and used the name, Social Security number and date of birth of his deceased Catholic school classmate in the application.
FBI agents who had been keeping Miller under surveillance arrested him while he was preparing to flee. He was charged with mail fraud (for bogus statements he sent to investors), bribery, passport fraud and identity fraud. He pleaded guilty last year.
Investors lost more than $15 million in the scheme, which also involved a Miller company known as Forte Financial Partners.
“Miller promised investors ‘guaranteed’ annual returns of between 10 percent and 18 percent per year, telling investors that their money would be invested in foreign currency trading, oil wells, real estate and other vehicles,” prosecutors said.
Some investors raided their IRAs to invest with Miller, who promised better returns, prosecutors said.
A Virginia-based company that trades on the name of the World Bank and claims to help lift some of the poorest people on earth out of poverty by involving them in an income and MLM-like recruitment scheme has suspended member cashouts, according to posts on Ponzi scheme and criminals’ forums.
