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Tag: Robert D. Gordon

  • Legisi HYIP Ponzi Pitchman Matthew John Gagnon Is In Federal Custody

    Matthew John Gagnon
    Matthew John Gagnon

    Will it be the shot heard ’round the HYIP world — or will serial Ponzi-board and social-media fraudsters continue to pretend it is meaningless?

    Matthew John Gagnon, a 45-year-old pitchmen for the $72 million Legisi HYIP Ponzi scheme and other online fraud schemes, is listed as an inmate at Federal Correctional Institution (FCI) in Sheridan, Ore.

    In July, Gagnon was sentenced to 60 months in prison, ordered to pay $4.4 million in restitution and further ordered to serve three years’ supervised probation after his prison release. He was permitted to self-report to prison. That appears to have occurred yesterday.

    Gagnon colleague and Legisi operator Gregory N. McKnight was sentenced to a prison term of more than 15 years. McKnight’s age is listed as 53. He was sentenced last month and was ordered taken into custody immediately. He is listed as an inmate at the FCI in Milan, Mich. McKnight was ordered to pay more than $48.9 million in restitution and further ordered to serve three years’ supervised probation after his prison release.

    Legisi was promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. In 2007, Legisi became the subject of an undercover investigation by state regulators in Michigan and the U.S. Secret Service. Both criminal and civil charges followed.

    In court filings on June 6, Legisi receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through e-Bullion.

    e-Bullion is a now-defunct processor. One-time e-Bullion operator James Fayed is on California’s death row after being convicted of ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him.

    AdSurfDaily, a $119 million Ponzi scheme also promoted on the Ponzi forums, also accepted money from e-Bullion, according to court filings.

    Legisi’s Terms of Service read like an invitation to join an international financial conspiracy. Members had to affirm they were not associated with the SEC, the IRS, the FBI and the CIA — along with “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office.

     

  • URGENT >> BULLETIN >> MOVING: Legisi HYIP Operator Gregory McKnight Sentenced To More Than 15 Years In Federal Prison

    McKnight. From U.S. court files.
    McKnight. From U.S. court files.

    URGENT >> BULLETIN >> MOVING: Gregory N. McKnight, the operator of the $72 million Legisi HYIP Ponzi scheme popularized in part on the TalkGold and MoneyMakerGroup forums, has been sentenced to 188 months in federal prison for wire fraud and ordered to pay more than $48.9 million in restitution.

    McKnight also was ordered to serve three years’ probation following his prison release. Legisi collapsed in 2008.

    Legisi pitchman Matthew John Gagnon was sentenced last month to serve five years in federal prison and to pay $4.4 million in restitution.

    The criminal cases against Gagnon and McKnight were prosecuted by the office of U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. The civil cases were prosecuted by the SEC.

    Legisi bizarrely made members affirm they were not associated with the SEC, the IRS, the FBI and the CIA — along with “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office.

    Prosecutors said McKnight engaged in “semantic obfuscation” in which investors were told they were joining a “loan program,” not making an “investment.”

    Among Legisi’s payment processors was e-Bullion. The Legisi receiver is pursuing claims tied up after the 2008 arrest of James Fayed, the operator of e-Bullion.

    Fayed was convicted in 2011 of ordering the murder of his wife, a potential witness against him. Pamela Fayed was slashed to death in a Greater Los Angeles parking garage in July 2008. The SEC brought the Legisi fraud prosecution in May 2008, just two months before Pamela was killed.

    E-bullion has been linked to several Ponzi schemes. In court filings on June 6, receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through the defunct processor.

    The Legisi investigations were led by the SEC, the U.S. Secret Service and state regulators in Michigan.

  • BULLETIN: SEC Backs Legisi Receiver’s Bid To Pursue E-Bullion Cash

    breakingnews72BULLETIN: The SEC has asked a federal judge to permit the receiver in the Legisi HYIP Ponzi-scheme case  to pursue funds tied up after the arrest of James Fayed, the operator of the e-Bullion payment processor. Fayed was convicted in 2011 of ordering the murder of his wife, a potential witness against him. Pamela Fayed was slashed to death in a Greater Los Angeles parking garage in July 2008. The SEC brought the Legisi fraud prosecution in May 2008, just two months before Pamela was killed.

    E-bullion has been linked to several Ponzi schemes. In court filings on June 6, receiver Robert D. Gordon said more than 85 percent of the $72.6 million directed at Legisi had flowed through the defunct processor. Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for an order “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.

    The SEC now says Steeh should issue the order because Gordon’s efforts could “lead to the recovery of millions of dollars for the Receivership Estate, funds which ultimately could be distributed to victims pursuant to a Court-approved formula.”

    Under Gordon’s plan, the SEC said, Legisi’s “winning investors” would be provided a process to dispute claims for the e-Bullion money.

    “As a result,” the SEC said, “any investors who assert that they are entitled to money claimed by the Receiver would have an opportunity to have their arguments heard and decided by the Court. No moneys would be disbursed until after the Court hears and decides such disputed claims.”

    The agency also said that Gordon earlier had successfully claimed $1.7 million from e-Gold, an e-Bullion rival charged in a 2007 money-laundering case. In May 2013, federal prosecutors in New York charged Liberty Reserve — yet another payment processor linked to online fraud schemes and other crime — in an alleged $6 billion money-laundering conspiracy.

    With a take of $72 million, Legisi was a “program” pitched on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — forums from which “programs” such as AdSurfDaily ($119 million), Zeek Rewards ($600 million), Pathway To Prosperity ($70 million) and Profitable Sunrise also were pitched. The combined scams gathered at least $861 million, according to federal court records. The number could be significantly higher because the final take of Profitable Sunrise — estimated in the tens of millions of dollars — is unknown. If Profitable Sunrise gathered $140 million, it would mean that the take of the five scams combined exceeded $1 billion.

    Similar scams continue to be promoted on the Ponzi boards by commission-based hucksters. The condition is comparable to “whack-a-mole” in the sense that one scam rises to replace another. The “offers” frequently are targeted at victims of previous schemes and positioned as a means investors can “earn” back funds lost in the earlier scams.

    Federal court records show that prosecutors asserted an AdSurfDaily pitchwoman funded her ASD account through e-Bullion, which also has been tied to mysterious scams such as Gold Quest International, the “Alpha Project” and Flat Electronic Data Interchange, known as FEDI. FEDI’s operator, Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” was convicted in September 2009 of financing terror and fleecing investors in the FEDI scheme.

    Cash associated with the ASD Ponzi scheme was seized on Aug. 1, 2008, about four days after Pamela Fayed was murdered in Los Angeles. Erma Seabaugh, the ASD promoter who funded her account with e-Bullion, also pitched a scam known as StreamlineGold, according to federal records.

    In November 2007, a MoneyMakerGroup poster claimed this about StreamLineGold (italics added):

    StreamLine Gold is literally what it says. [I]t can provide you with an unlimited income through the combination of Precious Metals and Cash with a business model whose time has come PLUS the most advanced and lucrative pay plan ever devised.

    Seabaugh, according to records, was promoting ASD through an entity known as Carpe Diem, a purported “religious” nonprofit firm in Oregon.

    Separately, the receiver in the Zeek Rewards Ponzi case has said that he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    An evidence exhibit in the Legisi case shows that investors had to affirm they were not an “informant” for government agencies such as the CIA, FBI, SEC, “Her Majesty’s Police,” the Intelligence Services of Great Britain and the Serious Fraud Office, among others.

     

  • BULLETIN: Legisi Receiver Goes After E-Bullion Assets Tied Up After Grisly California Murder; Robert D. Gordon Says More Than 85 Percent Of Funds Directed At HYIP Flowed Through Shuttered Processor

    This Legisi "Quick Start Manual" showed investors how to open payment accounts at E-bullion and e-Gold, both of which provided services to HYIP scams and both of which were implicated in money-laundering schemes. e-Bullion operator James Fayed was convicted in 2011 of arranging the grisly murder of his wife.
    This Legisi “Quick Start Manual” showed investors how to open payment accounts at e-Bullion and e-Gold, both of which provided services to HYIP scams and both of which were implicated in international fraud schemes. e-Bullion operator James Fayed was convicted in 2011 of arranging the grisly murder of his wife, a potential witness against him. (Source: federal court files.)

    UPDATED 5:08 P.M. EDT (U.S.A.) How dangerous and bereft is HYIP Ponzi Land? More than 85 percent of the $72.6 million directed at the Legisi HYIP Ponzi scheme before its May 2008 collapse flowed through the now-shuttered e-Bullion payment processor operated by convicted murderer James Michael Fayed, according to the court-appointed receiver in the Legisi case.

    Receiver Robert D. Gordon — noting he has consulted with federal prosecutors — now is asking a federal judge in Michigan for an order that would authorize him “to receive and collect any remission or restoration of funds recoverable or payable to Legisi investors pursuant to forfeiture actions brought by the United States” in federal court in Los Angeles.

    Fayed is sitting on California’s Death Row after his May 2011 conviction for ordering the brutal contract slaying of Pamela Fayed, his wife and a potential witness against him. Pamela Fayed was stabbed 13 times in a Greater Los Angeles parking garage on July 28, 2008. The Los Angeles Times reported her husband was seated on a nearby park bench “texting” on his cell phone while his alleged accomplices carried out the slaying.

    Gordon asked Judge George Caram Steeh of the Eastern District of Michigan for the order on June 6. About two weeks earlier, federal prosecutors in New York brought criminal charges against the Liberty Reserve payment processor, alleging that it had orchestrated a $6 billion money-laundering conspiracy. Both Liberty Reserve and E-Bullion were popular with HYIP scammers and other criminals.

    Legisi was a “program” promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup. The “program” resulted in both criminal and civil charges being filed against operator Gregory N. McKnight and online pitchman Matthew John Gagnon of Mazu.com. In 2010, the SEC described Gagnon as a serial pithman for fraud schemes and a “danger to the investing public.”

    Sentencing for Gagnon had been scheduled for yesterday. It now has been moved to July 9. McKnight, whom prosecutors said engaged in “semantic obfuscation” to raise millions of dollars in his HYIP fraud scheme, is scheduled to be sentenced Aug. 6.

    In his June 6 filing, Gordon alleged that McKnight “used e-Bullion as the vehicle to hold, receive and distribute funds from and to Legisi investors” and that McKnight used investor funds to invest in “various High-Yield Investment Programs.” He further alleged that Gagnon was a “prolific” user of e-Bullion and that “Mazu and Gagnon published on the mazu.com website how-to instructions for prospective Legisi investors to fund their accounts by opening an e-Bullion account.”

    From the receiver’s June 6 filing (italics added):

    The Department of Justice has established a remission process in the Central District of California to administer claims of former accountholders of e-Bullion a/k/a “Goldfinger Coin & Bullion.” McKnight, Legisi, and the majority of Legisi investors held accounts with e-Bullion. Mr. Gordon has made claims against the seized funds for the benefit of the Estates. In addition to direct claims on behalf of the Legisi-related entities, Mr. Gordon seeks to recover funds relative to Legisi investor accounts. To authorize such claims, officials at the Department of Justice have suggested an order from the Receivership Court stating: “Receiver is authorized to receive and collect any remission or restoration of forfeited funds recoverable by or payable to [Legisi Investors] pursuant to any civil or criminal forfeiture action brought by the United States in any federal jurisdiction.” Such an order would assist Mr. Gordon in recovering funds owed by net winner investors and in compensating victims of the Legisi scheme.

    E-bullion has been linked to multiple Ponzi schemes, including AdSurfDaily, Legisi, Gold Quest International and FEDI. The FEDI scheme has been linked to Abdul Tawala Ibn Ali Alishtari, also known as Michael Mixon. Ali Alishtari pleaded guilty in 2009 to financing terrorism and fleecing investors in the FEDI scheme.

    When a jury sentenced Fayed to death in 2011, Los Angeles Superior Court Judge Kathleen Kennedy described him as “one cold, calculating human being.”

    Here is how the U.S. Department of Justice is describing e-Bullion. (Note: this is reproduced verbatim from Gordon’s June 6 filing — with italics/bolding added):

    e-Bullion was a web-based money transmitting business operated by James Michael Fayed. e-Bullion allowed individuals to deposit money and purchase virtual “e-currency” that was purportedly backed by precious metal reserves maintained by Fayed’s companies in the United States and Australia. Accountholders could use e-currency to trade in goods and services with other accountholders. Federal investigators determined that many operators of fraudulent investment schemes used e-Bullion to collect millions of dollars from victims, much of which was wired to overseas accounts.

    In May 2011, Fayed was convicted of murdering his wife and is currently awaiting execution on California’s death row. On July 30, 2012, the United States Attorney’s Office for the Central District of California obtained a judgment in federal district court that resulted in the forfeiture of approximately $3.6 million in bank funds and $5.4 million worth of gold, silver, and platinum seized from two entities formerly controlled by Fayed – Goldfinger Coin and Bullion (GCB) and Goldfinger Bullion Reserve Corp (GBRC). In a related matter, the Australian Federal Police obtained a judgment resulting in the forfeiture of approximately $13 million in precious metals that were purchased and stored by Fayed in the Perth Mint in Australia. The funds forfeited in the Australia matter are also expected to be distributed to qualified e-Bullion accountholders through this remission process.

     

  • UPDATE: Sentencing For Legisi HYIP Ponzi Swindler Gregory McKnight Rescheduled For Feb. 5

    This grainy likeness of Legisi HYIP operator Gregory N. McKnight appears in U.S. court files.

    Sentencing for a Michigan man federal prosecutors accused of “semantic obfuscation” for the manner in which his “program” was promoted has been rescheduled for Feb. 5, according to the docket of U.S. District Judge Mark A. Goldsmith of the Eastern District of Michigan.

    The sentencing delay for Gregory N. McKnight, who conducted the Legisi HYIP Ponzi swindle, is at least the third. McKnight originally was scheduled to be sentenced Sept. 11. That date was delayed until Nov. 19 — and now has been delayed until Feb. 5.

    Prosecutors did not return a call seeking comment on the Legisi case, McKnight and the reason for the sentencing delay.

    But it is known that the court-appointed receiver in the Legisi case has moved for a contempt of court order against Paul Harary. Harary, 48, is a purported one-time FBI informant now in federal prison in Alabama for his role in a Boca Raton, Fla., investment fraud that occurred in 2004 and 2005.

    Receiver Robert B. D. Gordon (Corrected Aug. 22, 2013) alleges that Harary informed individuals who were researching McKnight for the purposes of selling him investments prior to the filing of the SEC’s Ponzi case in May 2008 that McKnight likely was operating a Ponzi scheme and offering impossible returns.

    Harary also allegedly consulted with at least one of the individuals about Legisi’s bizarre Terms of Service, including a provision that required investors to affirm they were not with the government, namely the IRS, the FBI, the CIA and the SEC. Harary, the receiver alleged, told the individual “that if Legisi was not doing anything wrong why would Legisi want these representations from their customers[?]”

    Despite Harary’s alleged misgivings about McKnight and Legisi and an acknowledgment by at least one of the individuals that McKnight likely was running a scam, the individuals allegedly decided to solicit money from McKnight for the purpose of investing in penny stocks and a real-estate limited partnership.

    McKnight allegedly turned over more than $20 million, beginning about a year prior to the collapse of his Ponzi, according to the receiver.

    But now Harary is ducking a deposition aimed at getting to the heart of the alleged fraudulent transfer, according to the receiver.

    HYIPs are infamous for using wordplay to try to duck securities regulators. An evidence exhibit in the Legisi case includes a transcript of McKnight interacting with undercover agents who’d infiltrated the purported “opportunity.”

    McKnight, according to the transcript, informed the agents that he was presiding over a “loan” program, not an investment program.

    The MoneyMakerGroup Ponzi forum also is referenced in court documents in the Legisi case.

    Zeek Rewards, another alleged Ponzi scheme, also was pushed on MoneyMakerGroup. Zeek, too, insisted it was not offering investments.

    McKnight pleaded guilty in February to wire fraud. Prosecutors have asked for a prison sentence of 15 years.

     

  • KABOOM! Web-Based Ponzi Pitchman For Legisi Hit With Judgments Totaling More Than $2.5 Million; Receiver Hires Law Firm To Collect Against Matthew J. Gagnon; Scheme Was Promoted On TalkGold, MoneyMakerGroup, Among Others

    Matthew J. Gagnon, an alleged web-based pitchman of Ponzi schemes and Forex frauds, has been hit with judgments totaling more than $2.5 million by the receiver in the Legisi Ponzi and fraud case. Gagnon also was charged separately by the SEC.

    A web-based pitchman for the alleged Legisi Ponzi scheme has been hit with separate court judgments of $1.69 million and $810,000. Meanwhile, the court-appointed receiver in the Legisi case has hired local counsel in Oregon to pursue the judgments against Matthew J. Gagnon and Mazu Publishing Inc.

    Legisi was alleged by the SEC in 2008 to have operated an international Ponzi and fraud scheme that gathered about $72 million from more than 3,000 investors. The scam was promoted on TalkGold, MoneyMakerGroup and other websites, including Gagnon’s Mazu.com.

    MoneyMakerGroup’s name is referenced in federal court filings in the Legisi case — and records show that shills on TalkGold and MoneyMakerGroup sought to sanitize the scheme even as the U.S. Secret Service and the Michigan Office of Financial and Insurance Regulation were using undercover agents to gather evidence about the fraud.

    The judgments against Gagnon and Mazu illustrate the legal and financial nightmares to which forums such as TalkGold and MoneyMakerGroup contribute. Meanwhile, the fact that Legisi was promoted at the forums even as it was under investigation exposes a myth advanced on such forums that investors would know in advance that a government probe of an “opportunity” was under way.

    In this evidence exhibit given to a federal judge prior to the Legisi asset freeze, a Legisi prospect writes the name "Money Maker Group.com" in longhand. The prospect also wrote the name "Matt Gagnon" in longhand and a telephone number for Gagnon.

    At the same time, the judgments against Gagnon destroy the myths that online promoters of securities schemes have no legal exposure and that offers positioned as “private”  insulate promoters from prosecution.

    Indeed, the judgments against Gagnon resulted from litigation brought by Robert D. Gordon, the court-appointed receiver in the Legisi case, in October 2009. The SEC sued Gagnon in May 2010, seven months after Gordon brought his actions.

    Among the SEC’s allegations against Gagnon was that he continued to promote fraud schemes online — even after the Legisi scheme was exposed.

    “Gagnon has been unrelenting in his efforts to raise money from the public through fraudulent, unregistered offerings,” the SEC said in May 2010. “He remains a danger to the investing public.”

    Despite his sales pitches, “Gagnon has never been associated with a registered broker-dealer and has never been registered with the Commission as a broker or dealer or in any other capacity,” the SEC said.

    After the Legisi HYIP fraud, Gagnon transitioned to pushing Forex frauds, the SEC said.

    Gagnon was hit with an asset freeze after the SEC brought its action.

    Records show that Legisi was among a number of “opportunities” that used E-Bullion, which was operated by James Fayed.

    A jury in Los Angeles last week recommended the death penalty for Fayed for arranging the slaying of his estranged wife, Pamela Fayed.

    Federal prosecutors said in December that AdSurfDaily, yet another alleged Ponzi scheme, had an E-Bullion tie. Records show that Gold Quest International, still another Ponzi scheme, also used E-Bullion.