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Tag: Robert Craddock

Firm In Which TelexFree Figure Faith Sloan Allegedly Hid Money Charged With Fraud In Separate Case

After the SEC’s TelexFree case in 2014, Faith Sloan allegedly sent money to Changes Worldwide, a firm now charged with fraud by the CFTC. From: federal court files.

UPDATED 12:14 P.M. EDT U.S.A. Back in April 2014, the SEC charged online huckster Faith Sloan with fraud for pushing the TelexFree scheme. Two month later, in June 2014, the SEC accused Sloan of violating the TelexFree asset freeze by sending nearly $15,000 to an online scheme known as Changes Worldwide LLC for the purchase of “business promo packs.”

She also was accused of violating the freeze by sending $3,990 to an entity known as Changes Trading. There has been concern for years about serial MLM HYIP participants proceeding from fraud scheme to fraud scheme to fraud scheme. This sometimes is described as “whack-a-mole.”

Now, the U.S. Commodity Futures Trading Commission has charged both Changes Trading and Changes Worldwide with fraud. Also charged were Changes operator Timothy Baggett of Lakeland, Fla., and Kimball Parker of Lehi, Utah, along with Parker’s Utah company, MakeYourFuture LLC.

The CFTC prosecution appears not to be related to the SEC’s TelexFree case, except in the sense that it demonstrates a continuing need for discernment and that discernment may be in short supply. Sloan is not a CFTC defendant.

From the CFTC (italics added):

The CFTC Complaint alleges that the Defendants engaged in a fraudulent scheme to misrepresent the profitability and success of a futures trading system that they sold to customers, including making fraudulent representations in marketing materials, on their websites, and in one-on-one communications with customers and prospective customers regarding the profitability of their trading system. According to the Complaint, from at least March 2014 through the present, the Defendants induced at least 289 customers to pay them more than $853,294.98 for the trading system.

Specifically, as alleged, the Defendants made material, false representations in his solicitations of customers and prospective customers, including that their trading system had “never had a losing month,” and generated “300% annual returns.” According to the Complaint, to support these claims, Defendants posted so-called “documented and verifiable results” on their websites showing returns of between 11% and 68% each month from January through December 2014.

However, as the Complaint further alleges, Defendants’ “documented and verifiable results” were false and did not reflect any actual trading of real money in any futures account. Meanwhile, according to the Complaint, Parker and Baggett consistently lost money trading futures in their personal accounts, and customers also consistently lost money attempting to trade according to the system, a fact that Defendants were made aware of by customer complaints.

A bogus “live training room” and “robot” also were part of the scheme, the CFTC alleged.

Kenneth D. Bell, the receiver in the Zeek Rewards Ponzi- and pyramid case, has raised the issue of promoters/participants jumping to new schemes. Robert Craddock, a figure in the Zeek scheme later charged with ripping off the Deepwater Horizon oil-spill fund, once had an association with Changes Worldwide.

BehindMLM.com has some history on the Changes-related companies and notes Baggett also allegedly was involved in the BidsThatGive scheme.

Read the CFTC complaint, which explains how Baggett’s MLM business purportedly selling vitamins and vacations allegedly ended up getting involved in the futures business.

Oct 13, 2016
‘BidsThatGive’ Operator Listed As Oregon’s Biggest Tax Scofflaw

Randall Jeffers in a pitch for BidsThatGive. From the PP Blog archives, July 2012.

UPDATED 12:41 P.M. ET U.S.A. Remember “BidsThatGive,” the bizarre auction “program” linked to MLM huckster Randall Jeffers that surfaced just prior to the spectacular collapse of Zeek Rewards in 2012 amid Ponzi-scheme allegations?

Among other things, BidsThatGive was notable for reckless name-dropping and claiming it existed to feed children and prevent them from becoming sex slaves. The then-upstart commandeered the names of Chelsea Clinton, presidential adviser Doug Wead and NBC News anchor Lester Holt — all while soliciting $25,000 in “certified funds” from purported “founders” and promising “Presidential Ambassadors” they could qualify for an”Exotic Car, Yacht, RV or Home.”

One promo for BTG, as it was known, promised that that the “opportunity’s” most successful distributors would receive an “orphanage in your name.”

From the 2012 BTG promo, as reported by the PP Blog (italics added):

“ . . . what we do is we take a quarter-million dollars out of the company’s profit, right? It’s not coming out of your pocket; it comes out of the company profit, and we’re going to establish an orphanage in your name. So, that’s your little slice of heaven. You don’t have to manage it or run it. We’ll put some cameras up and you can see the kids that you actually pretty much saved their life, and that’s just an emotional reward for you, as well as all the monetary things that you’ve already earned.”

Nevada has revoked the business registrations of BidsThat Give and a related company known as BTG180.

And now, according to a Feb. 25 story in the Oregonian that cites state records, Randall Jeffers is Oregon’s biggest individual tax scofflaw, owing more than $3.8 million in personal income tax.

BTG, meanwhile, has carded an “F” from the Better Business Bureau.

In 2014, Jeffers was a plaintiff in a trademark-infringement case that named Zeek figure Robert Craddock a defendant and accused him of engaging in a “shake down” bid against BTG affiliates.

In an unrelated matter, Craddock later was charged and convicted of scamming the Deepwater Horizon oil-spill fund of more than $100,000.

Feb 26, 2016
In Separate Case, Zeek Figure Robert Craddock Sentenced To 6 Months In Federal Prison — Plus 15 Days At ‘Work Farm’ After Release

Uncharged in the Zeek Rewards’ case, Robert Craddock nevertheless has received prison time after pleading guilty to swindling more than $117,000 from the Deepwater Horizon oil-spill fund.

U.S. District Judge Gregory A. Presnell of the Middle District of Florida yesterday sentenced Craddock to two six-month terms in federal prison to be served concurrently, followed by three years’ supervised release. During his period of probation, Craddock additionally must serve 15 days at the “Brevard County Work Farm,” according to the docket of the case. (See 2013 News13 story on one of the purposes of the work farm.)

Presnell also ordered Craddock to make restitution of $117,700.

Craddock had asked for no jail time, BehindMLM.com reported Oct. 21.

Craddock had a storied history in Zeek, including a bid to silence Zeek critic K. Chang just weeks before the SEC and U.S. Secret Service moved against Zeek in 2012. After that, the SEC accused Craddock of trying to stifle the court-appointed receiver in the Zeek case.

At one point, Craddock participated in Zeek-related fundraising calls with Todd Disner, a figure in the AdSurfDaily Ponzi-scheme story. (Also see PP Blog guest column by Gregg Evans, from Aug. 29, 2012.)

The Secret Service led the investigation of the Deepwater Horizon matter involving Craddock.

NOTE: Our thanks to the ASD Updates Blog.

Oct 27, 2015
Defense Attorney With Ties To Zeek Case Now Representing Kristi Johnson Of Achieve Community In Criminal Case

UPDATED 9:08 A.M. EDT JULY 21 U.S.A. Matthew G. Pruden, an attorney with the Tin Fulton Walker & Owen law firm, is a defense lawyer in the June 2015 criminal case against “Achieve Community” figure Kristine Louise Johnson (Kristi Johnson), according to the docket of the case.

North Carolina-based Tin Fulton Walker & Owen also is representing alleged Zeek Rewards’ operator Paul R. Burks in the criminal case against him brought by federal prosecutors in the Western District of North Carolina last year and in the civil case brought by the SEC in 2012. Pruden’s name appears on a Plainsite.org version the docket in the SEC’s civil case against Rex Venture Group LLC, the company through which Burks allegedly operated Zeek.

Achieve, like Zeek, is alleged to have been a pyramid- and Ponzi scheme. Pruden was appointed by the court to represent Johnson, who has pleaded guilty to a charge of wire-fraud conspiracy.

Though bizarrely dismissed by some Zeek cheerleaders as country bumpkins in the early days after the SEC brought its civil case, Tin Fulton Walker & Owen is a distinguished law firm. (Read GlimDropper of the RealScam.com antiscam forum, posting at Quatloos, covering a 2012 Robert Craddock barb against the firm.)

Among the firm’s most famous clients is Gen. David Petraeus, the former director of the Central Intelligence Agency who received probation and a fine after admitting “to the unauthorized removal and retention of classified information and lying to the FBI and CIA about his possession and handling of classified information.” (Jake Sussman, the Petraeus lawyer quoted in this April 23, 2015, AP story on the Petraeus sentence, also is a lawyer for Zeek’s Burks.)

Achieve’s Johnson pleaded guilty to wire-fraud conspiracy on June 30. She is free on bail. Though listed as a Colorado resident, she was charged criminally in the Western District of North Carolina — the same venue in which the criminal charges against Burks were filed.

It is known that Zeek and Achieve had members in common.

Whether the cases against Burks and Johnson raise any potential conflicts for Tin Fulton Walker & Owen was not immediately clear.

Certain documents that appear to be related to Johnson’s passport have been sealed in the criminal action against her. Certain documents in the Zeek case also are sealed.

Pruden assisted Johnson when she appeared in court last month and pleaded guilty, according to documents in the case.

NOTE: Our thanks to the ASD Updates Blog.

Jul 20, 2015
Zeek Figure Craddock Expected To Plead Guilty In Separate Case

Zeek Rewards’ figure Robert Craddock is expected to plead guilty to wire fraud this afternoon in federal court in Orlando, Fla., in a case that alleged he defrauded a compensation fund set up to assist businesses affected by the Deepwater Horizon oil spill in 2010.

Craddock, 54, of Port Orange, Fla., has not been charged with wrongdoing in the Zeek Ponzi- and pyramid-scheme case. But he was charged in March 2015 with fleecing the Deepwater Horizon fund of more than $100,000 by crafting fictitious invoices.

In a June 12 agreement with the office of U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Craddock admitted to the crime and accepted responsibility. Prosecutors, in turn, recommended a two-level downward departure for the purposes of sentencing. If Craddock completes a financial affidavit and keeps his end of the deal, prosecutors said they’d recommended a downward departure of an additional level.

Under the terms of the agreement, Craddock will forfeit $117,700, cooperate in the identification of assets and submit to a polygraph exam if requested by prosecutors.

“The defendant agrees to take all steps necessary to identify and locate all substitute assets and to transfer custody of such assets to the United States before the defendant’s sentencing,” the agreement reads in part. “The defendant agrees to be interviewed by the government, prior to and after sentencing, regarding such assets. The defendant further agrees to be polygraphed on the issue of assets, if it is deemed necessary by the United States.”

In addition, the agreement covers only Craddock’s Deepwater Horizon-related conduct. Whether he is under government scrutiny for Zeek-related conduct or other MLM activities is unclear.

“It is further understood that this agreement is limited to the Office of the United States Attorney for the Middle District of Florida and cannot bind other federal, state, or local prosecuting authorities, although this office will bring defendant’s cooperation, if any, to the attention of other prosecuting officers or others, if requested,” the agreement reads in part.

Though uncharged in the Zeek case, Craddock has been described by the SEC as an obstructionist who encouraged victims of the $897 million Zeek scheme not to cooperate with Kenneth D. Bell, the court-appointed receiver.

NOTE: Our thanks to the ASD Updates Blog.

Jun 22, 2015
BULLETIN: Zeek Figure Robert Craddock Indicted In Separate Scheme

BULLETIN: Florida resident Robert Craddock, a figure in the Zeek Rewards Ponzi-scheme story, has been indicted in a separate scheme involving the alleged theft of more than $135,000 from a compensation fund set up to assist businesses affected by the Deepwater Horizon oil spill in 2010.

The office of U.S. Attorney A. Lee Bentley III of the Middle District of Florida announced Friday that Craddock, 54, of Port Orange, had been charged with wire fraud. The U.S. Secret Service conducted the probe.

BehindMLM.com reported the news in a story dated March 16.

Prosecutors said in a statement that Craddock “crafted fictitious invoices to support the amount of lost earnings that he claimed.”

From the statement by prosecutors (italics added):

According to the indictment, following the April 2010 explosion of the Deepwater Horizon oil rig (which was being leased by BP, formerly known as British Petroleum), Craddock submitted a claim to BP and the Gulf Coast Claims Facility (“GCCF”), an independent facility established by BP to compensate qualified claimants, for lost earnings purportedly related to the impact of the oil spill on his businesses.

Though uncharged in the Zeek case, Craddock has been described by the SEC as an obstructionist who encouraged victims of the $897 million Zeek scheme not to cooperate with Kenneth D. Bell, the court-appointed receiver.

Separately, the Daytona Beach News-Journal is reporting that local property records showed that Craddock, a pilot, recently “bought a home complete with aircraft hangar that backs up to a runway in Spruce Creek Fly-In.”

In 2012, Craddock was involved in a fundraising venture purportedly to assist Zeek participants to mount a challenge against the SEC for bringing the Zeek Ponzi case. This occurred through a Craddock venture known as Fun Club USA, later described by litigants suing Craddock for alleged trademark infringement as a shell company engaged in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

Precisely how much Craddock collected in the Zeek-related fundraising effort is unclear. Also unclear is precisely how the money was used.

Zeek figures Todd Disner and T. LeMont Silver — alleged winners of millions of dollars from Zeek — helped champion the fundraising venture. Disner also was a figure in the AdSurfDaily Ponzi-scheme story, something Zeek receiver Kenneth D. Bell pointed out to a federal judge.

Bell has raised concerns that MLMers or network marketers are moving from fraud scheme to fraud scheme to fraud scheme.

Craddock has been a lightning rod for MLM controversy. In November 2012, for example, he bizarrely planted the seed that MLM attorney Kevin Thompson was practicing law without a license. Thompson described Craddock as a liar.

But if there is a signature Craddock moment, it occurred in July 2012, when Craddock sought to disable a HubPage critical of Zeek by alleging author K. Chang had engaged in libel, trademark infringement and copyright infringement. It was all a fantastic crock, and K. Chang eventually prevailed.

Less than a month after Craddock moved against K. Chang, the SEC and the U.S. Secret Service moved against Zeek.

Court records from the ASD Ponzi case show that ASD also tried to chill reporters with threats about lawsuits in the weeks prior to a government raid on ASD headquarters in August 2008.

In 2014, Craddock was listed as a copyright enforcer on the website of an entity known as Changes Worldwide LLC. The SEC has accused TelexFree figure Faith Sloan of violating the asset freeze in the TelexFree case by sending thousands of dollars to Changes Worldwide. Sloan also was a Zeek affiliate.

Craddock later reportedly authored a book whose sales copy included a claim that the U.S. government should have modeled a “stimulus program” after Zeek, which prosecutors have described as a Ponzi- and pyramid scheme that had gathered $897 million and affected hundreds of thousands of people globally.

The SEC declined to comment on the book, which was offered on Amazon.com.

Mar 16, 2015
Zeek Figure Robert Craddock’s Fun Club USA Severely Sanctioned In Trademark-Infringement Case; Judge Orders Default For Failure To Follow Court Order

OfferHubb.net Inc. sued Zeek Rewards figure Robert Craddock in February 2014, alleging Craddock “immediately” embarked on a web-based disparagement campaign after OfferHubb chose in July 2013 not to renew a contract with Craddock and Craddock’s Fun Club USA Inc.

Co-defendants included Craddock’s wife, Sylvia Salgado Craddock, and Fun Club.

Craddock was accused in the complaint of cybersquatting, trademark infringement, wrongful use of a computer, misappropriation of trade secrets, wrongful interference with economic relations, breach of contract, unjust enrichment, defamation and hiding behind a shell company.

Now, a federal district judge in Nevada — following the October recommendation of a magistrate judge — has ordered sanctions. This includes the striking of the answer Fun Club filed in February. It also includes a default order against the enterprise.

Why? Fun Club’s “failure to comply with this Court’s Order to obtain counsel,” Judge Richard F. Boulware II said in the order.

Boulware also ordered the clerk to enter judgment and close the case. The financial fallout was not immediately clear.

As the PP Blog reported in October (italics added):

Fun Club and Craddock are referenced in a blistering memo filed in the Zeek Ponzi- and pyramid-scheme case by the SEC on Dec. 17, 2012. In the memo, the SEC accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver. The SEC further alleged that Craddock was spreading misinformation about how the agency viewed its own case against Zeek and that Fun Club appeared to have been formed 11 days after the SEC emergency action against Zeek on Aug. 17, 2012.

Craddock has not been charged by the SEC with wrongdoing . . .

The trademark-infringement claim may be particularly concerning to the MLM trade, given that Craddock has asserted he works as a copyright and trademark agent on behalf of MLM “programs.”

On July 22, 2012, while purportedly working as a “consultant” for Zeek, Craddock filed a copyright- and trademark-infringement complaint against a HubPages website operated by Zeek critic K. Chang. K. Chang, who also posts on publications such as the PP Blog and BehindMLM.com, ultimately prevailed in the action brought by Craddock.

Less than a month later, the SEC brought the Ponzi- and pyramid action against Zeek.

Earlier this year, a website known as Changes Worldwide identified Craddock as its copyright agent. Filings by the SEC in June 2014 alleged that Faith Sloan, accused in April 2014 of securities fraud by the agency in its Ponzi- and pyramid complaint against the TelexFree “program,” sent more than $15,000 to an entity known as Changes Worldwide LLC after an asset freeze was imposed against Sloan in the TelexFree case.

Sloan also was a Zeek affiliate. Whether proceeds that originated in Zeek and/or TelexFree made their way into Changes Worldwide is unclear.

Craddock also was sued for trademark infringement and other alleged offenses by a firm known as BTG180, which accused Craddock of using the alleged Fun Club “shell corporation” to engage in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

NOTE: Our thanks to the ASD Updates Blog.

Feb 4, 2015
EDITORIAL: Uber Isn’t MLM, But It Sure Acts Like It

From a letter by Sen. Al Franken to Uber. Franken, a Democrat, is a member of the powerful Senate Committee on the Judiciary. He also is chairman of the Subcommittee on Privacy, Technology and the Law.

We’ll begin by pointing out that Uber, the popular ride-sharing company and darling of venture capitalists, is not an MLM firm. But it sure is acting like one, even briefly vomiting one of MLM’s most familiar and reflexive responses to critics: HatersGonnaHate.

Can MLM enterprises and MLMers in general learn from Uber’s bizarre missteps?

You see, both Uber and MLM have a common problem: a certain internal recklessness coupled with a tin ear for PR, one that serves up one spectacular gaffe after another. Uber’s latest self-inflicted wound now has the attention of Sen. Al Franken, the Minnesota Democrat. Franken wants to know why “Uber’s Senior Vice-President of Business Emil Michael recently made statements suggesting that Uber might mine private information to target a journalist who had criticized the company.”

As BuzzFeedNews reported on Nov. 17 (italics/bolding added):

A senior executive at Uber suggested that the company should consider hiring a team of opposition researchers to dig up dirt on its critics in the media — and specifically to spread details of the personal life of a female journalist who has criticized the company.

Put another way: make the lady sweat that some skeleton might surface and lead to her demise should she dare continue to write pieces Uber found unflattering.

One Uber executive, BuzzFeed reported, planted the seed that Uber could prove “a particular and very specific claim about her personal life.”

The journalist is Sarah Lacy, the editor-in-chief at PandoDaily and a Mom. Here we’ll mention that, in addition to the Uber thuggishness, she’s also had to deal with the sidebar contention that Pando just might be funded by the CIA.

As a journalist who has been accused by MLMers of being on the CIA payroll and told by MLMers that my supposed secrets dealing with my supposed homosexuality and supposed porn addiction will be outed even as “sovereign citizens” threaten me with $500,000 fines for alleged trademark infringement, it will come as no surprise to PP Blog readers that I’m more than a little sympathetic to reporters who encounter thugs.

This sympathy extends whether the thugs are in the Ivory Tower or operating from the sewers.

The BuzzFeed Uber revelation set off a media firestorm now in its fourth day, putting Uber’s name in the papers for all the wrong reasons. Now, at least one reporter has come forward to claim that Uber tracked her without her permission as she rode in a Uber car. The device Uber uses to perform this tracking is known as “God View.”

In September, venture capitalist Peter Sims wrote that he’d been tracked by Uber without his permission. Sims says he was in a Uber car in New York City and that Uberites in Chicago were monitoring his movements. What this means, in essence, is that Uber was using him as a stage prop without his knowledge and consent from halfway across the country while also invading his privacy.

This reminds me of two crackpot MLM schemes making the rounds in 2010. These “programs” were known as NarcThatCar and Data Network Affiliates. Both schemes bizarrely reimagined mass invasions of privacy as exciting new products — and then wrapped pyramid schemes around their creations for good measure.

The schemes worked approximately like this: Armies of MLMers would hit neighborhoods across the land and write down the license-plate numbers of cars parked on streets and the addresses at which they were parked. They’d also hit the parking lots of grocery stores, big-box retailers, restaurant chains, pharmacies, doctors’ offices, bookstores, libraries, theaters, video-rental companies and universities.

All of this information would be entered in a database, purportedly to assist the AMBER Alert system of locating abducted children. AMBER Alert purportedly would get the data for free, but clientele purportedly including banks and companies in the business of repossessing cars during the height of the recession would pay for it.

MLM recruits were told to try not to attract too much attention while writing down all these plate numbers. They also were falsely told they were helping the U.S. Department of Homeland Security track terrorists.

Yes. MLM went in the spy business, using the pretext that it was one’s patriotic duty to monitor license plates and that enormous profits would flow from neighbors keeping track of automobiles in their neighborhoods. As the story was told, the database could tell the police what cars were parked at a fixed address at the time a child was snatched. This information then could be compared to the next sighting of the tag as entered in the database from a different fixed address, thus purportedly providing clues as to where the kidnapped child was being held.

If anyone had the temerity to raise a stink or even make a polite inquiry about why a stranger was recording their plate number in a parking lot, the recorders were trained to respond that no one had anything to fear if they hadn’t done anything wrong.

Both Narc and DNA were filled with such Orwellian outrageousness (and were such obvious pyramid schemes) that reporters began to hound both “programs.” The Better Business Bureau was subjected to bizarre attacks from the MLM sphere for raising questions about the “programs,” and some MLMers got the idea that the reporters, rather than the companies pulling off obvious scams, should be investigated.

Nazi propagandist Joseph Goebbels couldn’t have imagined greater allies than the MLM Stepfordians.

By 2012, MLMer and Zeek Rewards Ponzi-scheme figure Robert Craddock got the bright idea of putting himself in the opposition-research business — the opposition being reporters who wrote anything bad about Zeek. One of his targets was Zeek critic K. Chang, who briefly lost control over his HubPages site because Craddock had filed a complaint alleging copyright infringement, trademark infringement and libel.

K. Chang eventually prevailed, but not without experiencing downtime while the Zeek scheme was still gathering cash. The SEC eventually shut down Zeek, alleging that it was operating a fraud that had gathered $850 million.

Still sensing there was money to be made in the MLM cottage business of harassing reporters or soliciting dirt on them, Craddock eventually established a website known as “InternetClowns” that purportedly would serve all MLM firms. The supposed “clowns” included the PP Blog and BehindMLM.com, two sites that report on MLM frauds.

At the beginning of this column I noted that perhaps MLM could learn something from the experience of Uber in the subject area of tracking reporters and soliciting dirt on them. It strikes me now that maybe it should be the other way around: that Uber could learn from MLM.

One of the things Uber could learn is not to do anything MLMish if it wants to maintain its standing as a venture-capital darling.

By MLMish, we mean something crazy and outlandish such as tracking reporters, bringing in opposition-research teams to menace them and telling a group of people in the Second City that you’re using your “God Machine” to spy on a venture capitalist in the Big Apple.

And perhaps Uber also might want to avoid the most recent practice associated with “defenders” of outrageous MLM “programs” and HYIP schemes.

This would be the practice of trying to smear critics by using online forums to plant false stories about critics’ ties to Islamic terrorist groups and otherwise attacking human beings based on their Muslim faith.

Uber can read all about that one on RealScam.com, a site that concerns itself with international mass-marketing fraud. RealScam.com currently is being hectored by a person known as “Happy Customer” who is making outrageous claims against critics, filing bogus reports at RipoffReport and trying to keyword stuff the forum with words such as “Islamic Forum” and “haven for Islamic Terrorists !”

Happy Customer’s mind appears to be telling him (used presumptively) that, if only he can use the words “Islamic” and “Muslim” enough times — while mixing in words such as “terrorist” and “terrorism” — the eavesdropping and text-reading National Security Agency might just buzz by and turn off RealScam’s server.

Study the strange MLM circus, Uber. What you’ll learn should be more than enough to help make most unwanted headlines go away.

Nov 20, 2014
DEVELOPING STORY: Zeek Figure Robert Craddock Accused Of Trademark Infringement And Engaging In ‘Shake-Down’ Bid Against MLM Affiliates

EDITOR’S NOTE: The story below focuses mostly on a lawsuit filed against Zeek Rewards figure Robert Craddock by a Nevada company known as BTG180. A lawsuit filed against Craddock by a Wyoming company known as OfferHubb.net Inc. makes similar claims against Craddock.

** ___________________________________**

DEVELOPING STORY: (4th Update 10:12 a.m. EDT Oct. 14 U.S.A.) Zeek Rewards figure Robert Craddock has been accused in a private lawsuit filed in Nevada federal court of trademark infringement and using a “shell corporation” to engage in a “shake-down” bid against affiliates of at least three MLM networks: Zeek, OfferHubb and BTG180.

The alleged shell corporation is known as Fun Club USA Inc., according to a complaint filed Feb. 5, 2014. It has “no employees,” was “never capitalized” and created a condition under which Craddock was able to use funds directed to the corporation by MLMers as his personal funds, the plaintiffs contend.

The plaintiffs in the case are listed as BTG180 LLC and Randall Jeffers. A second complaint against Craddock was filed on the same day, also in Nevada. Plaintiffs in that case are OfferHubb.net Inc. and David Flynn, who allege that Craddock “immediately” embarked on a web-based disparagement campaign against them after OfferHubb chose in July 2013 not to renew a contract with Craddock and FunClub USA.

OfferHubb.net Inc. further accused Craddock of misrepresenting the company, breaching the OfferHubb Terms of Service by inducing affiliates to make side deals and accept kickbacks from affiliates and cross-selling other MLM opportunities in contravention of his agreement with OfferHubb.

BTG180 is associated with a “program” known as BidsThatGive, which positioned itself as an opportunity to fight child poverty and the exploitation trades. An apparent prelaunch for BidsThatGive was conducted in July 2012, the month before the SEC moved against Zeek.

Fun Club and Craddock are referenced in a blistering memo filed in the Zeek Ponzi- and pyramid-scheme case by the SEC on Dec. 17, 2012. In the memo, the SEC accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver. The SEC further alleged that Craddock was spreading misinformation about how the agency viewed its own case against Zeek and that Fun Club appeared to have been formed 11 days after the SEC emergency action against Zeek on Aug. 17, 2012.

Craddock has not been charged by the SEC with wrongdoing.

Despite the SEC’s December 2012 assertions against Craddock and Fun Club, however, BTG180 appears to have entered into a contract with Craddock and Fun Club on Aug. 12, 2013, just five days shy of the one-year anniversary of the SEC’s complaint against Zeek. In the August 2012 action, the agency accused Zeek of engaging in securities fraud, selling unregistered securities and operating a combined Ponzi and pyramid scheme that had gathered hundreds of millions of dollars in just shy of 20 months.

BTG180, according to its own lawsuit against Craddock and Fun Club filed in February 2014, paid Craddock and the shell company $50,000 in advance of work Craddock had agreed to perform for BTG180.

BTG180 says it wants back the $50,000 because Craddock failed to deliver. It also contends other actions by Craddock caused it to suffer damages.

Part of Craddock’s duties, according to the complaint, was to “market the BTG180 network marketing opportunity to former affiliates of the Zeek Rewards network, which had provided products similar to those provided by BTG180.”

Craddock did not perform the agreed-to work, according to the lawsuit. Instead, he attempted to “induce BTG180 to promote and incorporate into its product line a so-called checking account draft processing system known as BTM. Craddock is the founder of a corporation known as BTM Check Draft Inc.”

Without authorization from BTG180’s Jeffers, according to the complaint, Craddock pitched his BTM check system to the members of BTG180, amid false claims that it “had been approved by BTG180” and was in the company’s product stable.

Other “confrontations” between Craddock and “BTG180 executives” ensued, and Craddock tried to “induce” BTG180 to “market other products for him,” according to the complaint.

When Craddock “continued to defy Plaintiffs requests to stop these actions,” according to the complaint, “BTG stopped paying Craddock and Fun Club.”

Under the terms of the contract, according to an exhibit in the case, Craddock and Fun Club were to receive $20,000 a month through BTG180, plus approved expenses, from Sept. 1, 2013 through Sept. 1, 2014.

Craddock also was required not to reveal BTG180’s trade secrets and proprietary information, according to the exhibit.

But at some point during contractually required Craddock visits to BTG180’s operations in Nevada, according to the complaint, BTG180 came to believe that “Craddock used a computer or several computers at BTG180’s offices to access and download and/or retain contact information of BTG180’s affiliates.”

Craddock, according to the complaint, then sought to harm BTG180 by “disrupting and ruining its relationships with its affiliates.”

As part of his plan to ruin BTG180, according to the complaint, Craddock established a website styled BTGlegal.com and engaged in trademark infringement while doing so. As a further part of this scheme, according to the complaint, Craddock used the website to paint Jeffers as dishonest and unethical, saying Jeffers and “other principals” of BTG180 had criminal records and a history of defrauding people.

At the same time, according to the complaint, Craddock claimed that BTG180 had been “classified” a Ponzi scheme, that the company was to be “investigated,” that “reports” about BTG180 had been filed with the North Carolina Attorney General, that a Zeek-like action against BTG180 was planned by investigators and that “BTG180 affiliates could face criminal or other legal charges for signing up new affiliates.”

Craddock, according to the complaint, issued an “edict” that “all BTG180 affiliates were under a cease and desist order to stop doing business with BTG180.”

By December 2013, according to the complaint, Craddock was soliciting monthly donations of $25 each from BTG180 affiliates, saying the money would help them get back sums they had paid to BTG180. At the same time, according to the complaint, Craddock was encouraging members to contact a reporter at ABC News by email and to use a subject line that read, “They Took My Money and Used Kids to Lure me In.”

In 2012, according to the BTG180 complaint, Craddock had solicted donations from Zeek members amid assertions he was protecting their legal interests. He eventually did the same thing to BTG180 and OfferHub participants, a “shake-down” bid targeted at MLMers, according to the complaint filed by BTG180.

Craddock is accused in the complaint of cybersquatting, trademark infringement, wrongful use of a computer, misappropriation of trade secrets, wrongful interference with economic relations, breach of contract, unjust enrichment, defamation and hiding behind a shell company.

The trademark-infringement claim may be particularly concerning to the MLM trade, given that Craddock has asserted he works as a copyright and trademark agent on behalf of MLM “programs.”

On July 22, 2012, while purportedly working as a “consultant” for Zeek, Craddock filed a copyright- and trademark-infringement complaint against a HubPages website operated by Zeek critic K. Chang. K. Chang, who also posts on publications such as the PP Blog and BehindMLM.com, ultimately prevailed in the action brought by Craddock.

Less than a month later, the SEC brought the Ponzi- and pyramid action against Zeek.

Earlier this year, a website known as Changes Worldwide identified Craddock as its copyright agent. Filings by the SEC in June 2014 alleged that Faith Sloan, accused in April 2014 of securities fraud by the agency in its Ponzi- and pyramid complaint against the TelexFree “program,” sent more than $15,000 to an entity known as Changes Worldwide LLC after an asset freeze was opposed against Sloan in the TelexFree case.

Sloan also was a Zeek affiliate. Whether proceeds that originated in Zeek and/or TelexFree made their way into Changes Worldwide is unclear.

BehindMLM.com, recently the subject of a DMCA takedown notice by Sloan but now back online, reported yesterday that Changes Worldwide and a companion entity known as Changes Trading are having payment problems. As the PP Blog reported on Oct. 2, the email address Sloan used to file the complaint against BehindMLM.com was associated with a 2×2 matrix “program” known as “Diamond Holiday Feeder” that was making the HYIP rounds in 2010.

Despite the fact Sloan accused BehindMLM.com of using on its website copyrighted material she owned, one of her 2010 promos for Diamond Holiday feeder used nearly three minutes of a soundtrack recorded in 2009 by The Black Eyed Peas to celebrate the 24th season of the Oprah Winfrey Show.

MPB Today, a collapsed matrix cycler that led to racketeering charges in Florida against the “program” operator, is an example of a 2×2. Another example is Regenesis 2×2, which led to a U.S. Secret Service probe in Washington state in 2009. Some Zeekers are known to have promoted Regenesis 2×2.

News broke last week that Craddock is listed on Amazon.com as the author of a book on Zeek Rewards. Marketing copy for the book asserts that the U.S. government should have modeled a “stimulus program” after Zeek, rather than shutting it down.

In the current infringement actions against Craddock, the dockets of the case suggest Craddock no longer has paid counsel and is seeking to litigate pro se against the plaintiffs, contending that the cases should have been handled through binding arbitration, not actions in federal court.

Craddock’s wife is a co-defendant, amid claims she and her husband used Fun Club USA to dupe MLMers who provided money to protect their legal interests.

NOTE: Our thanks to the ASD Updates Blog.

Oct 13, 2014
UPDATE: Ad For Book By Zeek Figure Robert Craddock Appears On Drudge Report

This ad for Zeek figure Robert Craddock’s new book appeared on the Drudge Report today. Source: Screen shot.

DISCLOSURE: The PP Blog carries ads from AdChoices that are delivered by Google.

UPDATED 7:22 A.M. EDT OCT. 12 U.S.A. The PP Blog observed yesterday that a new book by Zeek Rewards figure Robert Craddock now is available on Amazon.com after earlier having been listed as “Out of Print” and with “Limited Availability.” The price of the 276-page paperback, as advertised on Amazon.com yesterday and today, is $22.45.

This afternoon the PP Blog observed an ad for the Craddock book at the top of the Drudge Report, one of the most highly trafficked political websites in the world. A symbol in the ad suggested it originated through AdChoices. Ads on the Drudge Report are arranged through Intermarkets Inc.

Marketing copy for the book, which the PP Blog accessed directly through Amazon.com, does not mention that Zeek Rewards was alleged to be a massive international Ponzi- and pyramid scheme that gathered hundreds of millions of dollars and affected hundreds of thousands of people.

The copy argues that the U.S. government should have modeled a “stimulus program” after Zeek, instead of shutting it down.

Oct 11, 2014
SEC Declines To Comment On New Claims Attributed To Zeek Figure Robert Craddock

UPDATED 8:30 P.M. EDT U.S.A. The SEC this afternoon declined to comment on a confounding claim attributed to Zeek Rewards figure Robert Craddock that Zeek took in $1 billion in 12 months and that the U.S. government should have modeled a “stimulus program” after Zeek instead of shutting it down in 2012.

News that Craddock apparently had authored a book on Zeek and was making new claims first appeared on BehindMLM.com early today. In 2012, the SEC described Zeek as a massive Ponzi- and pyramid scheme and described Craddock as an obstructionist who was encouraging victims not to cooperate with Kenneth D. Bell, the court-appointed receiver in the agency’s civil case. Craddock has not been been charged with wrongdoing.

Titled “The Zeek Phenomenon: Zero to $1 Billion in 12 Months,” the book in which Craddock is listed as the author is advertised on Amazon.com as a paperback “Out of Print” and with “Limited Availability.” Sept. 29 of this year is the asserted publication date.

The office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina did not respond immediately to a request for comment on the claims. Tompkins’ office brought successful criminal prosecutions against Zeek figures Dawn Wright-Olivares (investment-fraud conspiracy and tax-fraud conspiracy) and Daniel Olivares (investment-fraud conspiracy) in late 2013.

Wright-Olivares, 45, and Olivares, 31, her stepson, pleaded guilty to the respective criminal charges against them in February 2014. Earlier, in December 2013, they settled SEC civil charges against them by agreeing to pay millions of dollars each, “the entirety of their ill-gotten gains plus prejudgment interest,” the SEC said at the time.

In July 2014, Bell said in court filings that Wright-Olivares, Olivares and alleged Zeek operator Paul Burks had agreed to a consent judgment of $600 million “to be satisfied with substantially all of their assets.”

Other court filings by Bell say a criminal investigation into Burks remains open. Bell also is special master in the criminal case.

The Confounding Claims

Craddock’s apparent claim that Zeek took in $1 billion in a year appears to be at odds with court filings by federal prosecutors in December 2013 that claim Zeek gathered a maximum sum of $897 million before collapsing in August 2012. If, as the claim suggests, Zeek took in $1 billion, there may exist a discrepancy of at least $103 million between the claim attributed to Craddock and the government’s account.

How Craddock apparently arrived at the $1 billion figure was not immediately clear. Such a discrepancy, though, potentially could cause both the SEC and federal prosecutors to revisit the Zeek numbers. The assertions attributed to Craddock suggest that Zeek’s haul could have been much larger and occurred in the narrower time frame of 12 months, not the nearly 20 months cited by the SEC.

In short, could an undisclosed, unrecovered pile of Zeek cash exist elsewhere?

According to marketing copy on Amazon.com for the book attributed to Craddock, the government messed up big time by taking down Zeek.

Here’s a snippet (italics added):

In 2012, if the present Administration wanted to build a successful stimulus program, it should have used Zeek Rewards as a guide. This pioneering venture went from zero to one billion dollars in just 12 months, paid over 400 million dollars to more than 20,000 people earning an average of $20,000, created 10 people who made over one million dollars, and caused several thousand people to earn incomes in excess of one hundred thousand dollars. This unparalleled example would have been a phenomenal feat for our US Government during a period when our very financial existence was threatened.

The words “Ponzi” and “pyramid” appear nowhere in the marketing copy on Amazon.com. Whether Zeek “paid” is immaterial in the context of Ponzi schemes. So is the issue of how much it paid. Bernard Madoff “paid.” All successful Ponzi schemes “pay.” Zeek launched after the collapse of Madoff’s epic fraud, leading to questions about whether Zeek, its insiders and key promoters simply divorced themselves from reality.

Moreover, Zeek launched after the collapse of AdSurfDaily, a Zeek-like scam that promoted a return of 1 percent a day. Zeek’s purported daily payout averaged 1.5 percent, a percentage grossly superior to Madoff and significantly better than ASD.

In 2012, less than a month prior to the SEC’s Zeek action, Craddock temporarily succeeded in taking down a HubPages site operated by Zeek critic “K. Chang” by accusing him of copyright and trademark infringement.

K. Chang ultimately prevailed, but the site experienced downtime.

As the PP Blog reported at the time, Zeek appeared not to own the trademarks Craddock complained about, purportedly with the authority of North Carolina-based Zeek operator Rex Venture Group. Rather, the trademarks were listed in the name of Ebon Research Systems LLC, a Florida business.

A business known as Ebon Research Systems Publishing LLC is listed as Craddock’s publisher for the new book on Zeek, according to the Amazon.com listing.

Florida records suggest that Ebon Research Systems Publishing is managed by Dr. Florence Alexander, the same person behind Ebon Research Systems LLC when the HubPages flap played out more than two years ago.

The PP Blog spoke with Alexander in 2012. She said she “certainly” knew of Zeek, but said she had “no knowledge” of any trademark or copyright complaint filed at HubPages against K. Chang.

Although Craddock claimed to be a Zeek “consultant” while filing the claim against K. Chang prior to the SEC action in 2012, Zeek itself did not list him as one after the action, according to court records maintained by the ASD Updates Blog. (See Zeek filing from September 2012 here.)

Oct 7, 2014