On Feb. 13, the PP Blog reported that a federal judge who was quoting from a pleading by AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming had referenced a domain styled peoplestrust1776.org.
U.S. District Judge Ronald B. Leighton declared Leaming’s filing, which apparently cited the Uniform Commercial Code (UCC), “undecipherable.” The judge exempted prosecutors from responding to a series of recent bizarre pleadings from Leaming, who is jailed near Seattle on charges of filing false liens against public officials in the AdSurfDaily Ponzi case. Leaming, 57, also is accused of other crimes.
Like other purported “sovereigns,” the judge observed, Leaming is “fascinated” by capital letters.
Some “sovereign citizens” appear to believe that pleadings that include capital letters or make UCC claims provide defenses or remedies for everything from murder charges to charges of targeting public officials in harassment campaigns.
Less than two days after the PP Blog published its most recent story about Leaming’s strange defense efforts in the Western District of Washington, the Blog received a would-be comment it is treating as spam because it purported to be in response to a reader who left a comment on the PP Blog nearly two years ago on a different subject. Received at 2:55 a.m. ET today, the unpublished, would-be comment included a link to a post on a Blog whose URL was formed in part with the words “the-full-details-of-kidnapping-of.”
One had to visit the site to determine who allegedly was kidnapped.
The PP Blog visited the link and found a post about Patrick Cody Morgan, a purported Texas “sovereign” who was convicted last year of conspiracy and nine counts of bank fraud in a real-estate swindle involving repeated bids to scam residential mortgage lenders and FDIC-insured banks between 2004 and 2007. The scam involved “trust accounts” and “straw buyers,” prosecutors said. The PP Blog wrote about the Morgan convictions on Nov. 2, 2012. No readers left comments in the thread below the story.
In any event, the would-be commentator apparently wants to generate discussion about the Morgan case and to enlist support for Morgan. Notably, the spammed link received by the PP Blog includes references to the same peoplestrust1776.org domain Leaming cited in an apparent defense bid in his criminal case.
Content on the site whose post link was spammed to the PP Blog overnight appears to be designed to paint government officials or agencies involved in the Morgan case as “the Accused.” Apparently among the purported “Accused” are U.S. Attorney General Eric Holder, FBI Director Robert Mueller, U.S. District Judge Lynn N. Hughes of the Southern District of Texas and others. The site also published florid legalese attributed to Morgan that, like Leaming’s prose, made liberal use of capital letters.
Legalese attributed to Morgan asserts he is “Patrick-Cody: Family of Morgan”; Leaming’s legalese asserts he is “Kenneth Wayne, born free to the family Leaming.”
Some “sovereigns” appear to believe that using exceptionally formal prose, capital letters and/or specific forms of punctuation in court filings somehow provide for a winning defense.
Leighton characterized Leaming’s prose as “gobbledygook.”
Morgan — in his apparent defense — appears to claim he was the victim of criminals working for the government. Leaming has made similar arguments in Washington state.
Precisely what role, if any, peoplestrust1776.org is playing in the Morgan and Leaming cases is unclear.
A federal judge was shot and killed in Arizona yesterday in an attack apparently aimed at a member of Congress who was holding a constituent event outside a supermarket in Tucson, an official said.
Rep. Gabrielle Giffords was shot in the head at close range. President Obama said she was battling for her life after undergoing emergency surgery. The president announced the death of U.S. District Judge John Roll in a special statement at the White House.
Roll had just attended Mass and had stopped by the supermarket on his way home. The Wall Street Journal reported that he stopped at the event to thank Giffords for signing a letter to the Ninth Circuit Court of Appeals that a judicial emergency existed in Arizona because of a high number of immigration cases and a lack of judges to hear them.
Also killed in the attack were a nine-year-old girl, three senior citizens in their seventies and a 30-year-old Congressional aide engaged to be married.
In 2009, Roll was under the 24-hour protection of the U.S. Marshals Service for about a month because of threats made against him, the Washington Post reported.
The alleged shooter used a semiautomatic handgun, authorities said. He was identified as Jared Loughner, 22, of the Tucson region. This is believed to be his YouTube site.
Obama dispatched FBI Director Robert Mueller to Arizona to coordinate the investigation.
“We are going to get to the bottom of this,” the President pledged.
Judge Roll was appointed to the federal bench by President George H.W. Bush in 1991.
Giffords, a Democrat, was serving as the host of the constituent event, which was dubbed “Congress On Your Corner.”
She is the wife of Capt. Mark Kelly, a naval officer, U.S. astronaut and Space Shuttle commander. Kelly’s brother, Scott Kelly, also is an astronaut. He is currently aboard the International Space Station in a mission that began in October.
A disturbing portrait of Loughner was emerging in the early hours. The YouTube site and remarks attributed to him elsewhere suggest he was a burgeoning conspiracy theorist who authored or uttered incoherent ramblings on subjects such as the gold standard, government trickery and how one properly defines terrorism.
“If I define terrorist then a terrorist is a person who employs terror or terrorism, especially as a political weapon. I define terrorist,” Loughner appears to have written. “If you call me a terrorist then the argument to call me a terrorist is ad hominem. You call me a terrorist.”
Loughner also appears to have pondered the fractured thoughts that college was “illegal” under the U.S. Constitution and that people should be provided “accurate information of a new currency.”
“They helped form a series of sham business entities and then promoted fraudulent debt elimination tactics intended for the sole purpose of concealing income from the IRS.” — Victor S. O. Song, chief, IRS Criminal Investigation
As the U.S. Department of Agriculture was conducting a “review” of claims made by affiliates of a purported “grocery” business in Pensacola, Fla., that dispenses “gift cards” to winners in a 2×2 matrix cycler, a federal judge in Pensacola was handing out prison sentences to defendants convicted in a tax-fraud and debt-elimination scheme.
All in all, nine promoters were implicated in the Pinnacle Quest International (PQI) case. Four were sentenced to prison in July. Two others will be sentenced in October, and three were sentenced yesterday for their roles in an elaborate fraud in which PQI served as an “umbrella organization for numerous vendors of tax and credit card debt elimination scams,” federal prosecutors said.
Eugene Casternovia received 7 years in prison. Arthur Merino, meanwhile, was sentenced to 40 months. Mark Lyon, the third defendant sentenced yesterday, cooperated with prosecutors and received a sentence of 18 months.
Among the PQI vendors was the Southern Oregon Resource Center for Education (SORCE), which “sold bogus theories and strategies for tax evasion,” prosecutors said.
“For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama,” prosecutors said. “Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a ‘reliance defense’ that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.”
Financial Solutions, another PQI vendor, sold “fraudulent schemes for eliminating credit card debt,” prosecutors said.
“Financial Solutions charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt,” prosecutors said. “The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.”
At the same time, yet-another PQI vendor known as MYICIS “operated as a sophisticated, computerized ‘warehouse bank,’” prosecutors said.
“MYICIS was a single bank account in which customers pooled their money,” prosecutors said. “MYICIS was promoted to PQI’s clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three year period.”
A veteran IRS agent declared the business entities tied to the PQI case a “sham.”
“These defendants are now being held accountable for their criminal behavior,†said Victor S. O. Song, chief, IRS Criminal Investigation. “They helped form a series of sham business entities and then promoted fraudulent debt elimination tactics intended for the sole purpose of concealing income from the IRS. Their tactics were fraudulent. There is no secret formula that can eliminate an individual’s tax obligation.â€
In July, Arnold Ray Manansala was sentenced to 12 years in prison; Dover Eugene Perry, meanwhile, was sentenced to 10 years. Michael Guy Leonard was sentenced to nine years and one month, and Mark Daniel Leitner was sentenced to five years.
The trial in Pensacola took up a full month. Wayne Hicks, the operator of My Icis Inc., already was serving a five-year prison sentence.
FBI Director Robert Mueller has warned Congress at least twice this year about a “shadow” banking system that is a threat to U.S. national security.
In November, President Obama formed the Financial Fraud Enforcement Task Force to attack the problem with white-collar and other forms of fraud. It is billed the “broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.”
MYICIS was a topic of discussion on known Ponzi scheme and fraud forums such as TalkGold. In May, the U.S. Postal Inspection Service referenced the forums in filings in a criminal case against an alleged Ponzi scheme known as Pathway To Prosperity.
In recent months, a Pensacola business known as MPB Today (My Premier Business Today) has been operating an MLM program that purports to sell “groceries.” The program has been advertised on TalkGold, and other known Ponzi forums.
One MPB Today affiliate attempted to sell the program by creating a video animation and depicting President Obama and Secretary of State Hillary Clinton as Nazis. Clinton was called “Hitlary” in the promo.
Others have attempted to sell the MPB Today business “opportunity” by linking it to the federal Food Stamp program administered by the Department of Agriculture. The USDA announced earlier this month that it was conducting a “review” of affiliate claims.
This video promo for Pensacola-based MPB Today is targeted at Food Stamp recipients.
Still other MPB Today affiliates have focused on recruiting prospects by telling them they’d receive “gift cards” from Walmart. At least one promo on YouTube shows an envelope inside an envelope that had been mailed through the U.S. Postal Service.
Such an approach is consistent with the practices of “cash-gifters” — people who use the mails to promote chain-letter pyramid and tax schemes. The inside envelope in the YouTube video showed that at least one MPB Today affiliate had been paid with a prepaid Visa card purchased at Walmart. The envelope also contained a Walmart gift card.
In the YouTube video, the MPB Today affiliate appeared to be surprised about what he’d just received in the mail.
One promo after another for MPB Today has emphasized the gift cards. Still other affiliates have produced videos that show checks drawn on an FDIC-insured bank in Pensacola that has been operating since January under a consent agreement with the FDIC.
Florida has been plagued by mortgage foreclosures. MPB Today is targeting foreclosure subjects in a video pitch, as are many affiliates. Affiliates also have targeted the unemployed, senior citizens, people of faith and members of the alleged AdSurfDaily (ASD) Ponzi scheme.
ASD also was based in Florida. The company is known to have attracted affiliates who participated in tax, debt-elimination and cash-gifting schemes. At least one ASD affiliate has been linked to a group that sought to imprison federal judges and litigation opponents in debt cases. Another affiliate filed papers in federal court that purported to show that a bank could be defeated in a foreclosure case by filing a bond consisting of $21 in “silver coinage.”
At least one MPB Today promoter positioned the grocery company as an opportunity for religious members of ASD to make up losses in the failed autosurf. The U.S. Secret Service has seized tens of millions of dollars from bank accounts linked to ASD.
Florida records show that MPB and its associated grocery company — Southeastern Delivery — have operated by at least five names since 2006. MPB Today operator Gary Calhoun was ordered by the U.S. Food and Drug Administration to stop violating federal law in promotions for a product marketed as a treatment for Lou Gehrig’s disease, among others.
ASD President Andy Bowdoin also operated numerous companies in Florida. according to records.
BULLETIN: Ponzi schemer Trevor Cook has been sentenced to 25 years in federal prison for his role in an international Forex Ponzi scheme that gathered more than $190 million and fleeced victims out of more than $158 million.
In ordering the prison term, U.S. District Judge James Rosenbaum sided with the prosecution’s recommendation of a quarter of a century. It is believed to be the longest prison term ever imposed in a Minnesota financial-fraud case in which the defendant pleaded guilty.
“Such a sentence fairly, adequately, and justly punishes the defendant for his offense, reflecting the seriousness of the offense, his willingness to plead guilty and provide information to law enforcement, and the need to protect the public,” prosecutors said last week in a sentencing recommendation to Rosenbaum.
“Over the course of a few years, the defendant executed an investment fraud, victimizing approximately 923 victims and defrauding them of over $158 million,” prosecutors said. “As is all too common, the defendant often used victims’ religious beliefs as a means of enticing them to give him their money.”
Cook, 38, is not out of legal harm’s way — even with the sentence of 25 years. Prosecutors disclosed last week that he has signed a waiver that would subject him to further punishment if the ongoing investigation shows he has “somehow secreted undisclosed assets.”
Victims have expressed concerns that Cook could have stashed money from the scheme anywhere on earth. Cook failed a lie-detector last month about the whereabouts of assets.
FBI and IRS agents later found more than $400,000 in undisclosed assets under the control of Graham Cook, Trevor Cook’s brother.
Despite Cook’s lack of disclosure, prosecutors contended that it made no sense to delay Cook’s sentencing any longer as the asset search by the government and R.J. Zayed, the court-appointed receiver in a civil case filed against Cook and former Christian radio host Pat Kiley last year by the SEC and the CFTC, continued.
Cook had been scheduled to be sentenced last month. Kiley, who called his radio listeners “truth seekers,” has not been charged criminally in the case.
“The government has worked closely with the court-appointed receiver to assist its efforts in finding and identifying assets,” prosecutors said of Cook. “The government and the receiver now agree that any additional time prior to sentencing will not result in any additional information or assistance to the receiver’s efforts.”
It is possible that Cook could prove to be a valuable source of information for the government — in the same sense that disbarred attorney, convicted racketeer and Ponzi schemer Scott Rothstein has become an information source.
Rothstein, who presided over a $1.2 billion Ponzi scheme in Florida, was sentenced to 50 years in federal prison earlier this year. It is known that Rothstein has provided information helpful to the government.
Cook “has been repeatedly debriefed by law enforcement in an effort to identify assets and to provide information regarding other individuals,” prosecutors said. “He has done so. The information has been of assistance to law enforcement in its ongoing investigation.”
Ponzi schemes are toxic — and frequently are incredibly elaborate. Court documents in case after case show that the schemes frequently feature schemes within schemes and elaborate money-laundering networks. Criminals often go to fantastic lengths to disguise the conduits of the schemes, using shell companies and multiple bank accounts to funnel money and make the schemes difficult to reverse-engineer.
FBI Director Robert Mueller has warned Congress at least twice this year about a “shadow” banking system criminals employ and an increasing reliance on “shell corporations†to commit crimes and hide from investigators.
Cook’s scheme featured companies with confusingly similar names.
Records show that Cook had a tie to a company the AdViewGlobal (AVG) autosurf claimed to be its facilitator of offshore wires.
KINGZ Capital Management, AVG’s purported facilitator, denied any affiliation with AVG, which has close ties to the AdSurfDaily autosurf. ASD is implicated in a Ponzi scheme alleged to involve tens of millions of dollars.
AVG collapsed in June 2009, after running a virtually nonstop promotion that advertised matching bonuses of 200 percent for both recruits and their sponsors.
The National Futures Association said last year that Cook was managing money for KINGZ. AVG made the claim KINGZ was its wire facilitator on May 4, 2008 — the same day the Obama administration announced a crackdown on offshore fraud.
One of the Trevor Cook homes. From court filings in the SEC/CFTC case.
Some of the investors in the Trevor Cook/Pat Kiley Ponzi scheme are none too pleased with Cook’s plea deal, which may place a ceiling of 25 years on any prison sentence he receives while tens of millions of dollars remain missing.
One investor has told the PP Blog that a group of investors is seeking a meeting with prosecutors either to overturn the plea deal or delay Cook’s sentencing until more information becomes known. Cook, 38, is scheduled to be sentenced in Minneapolis July 26, one month from today.
Cook pleaded guilty in April to mail fraud and tax evasion. Under the terms of the agreement, he is required to cooperate with authorities and R.J. Zayed, the court-appointed receiver, to unravel the scheme. Although Cook has met with both the government and Zayed, investors are concerned that he is incapable of telling the entire truth. Their concerns are based on his history of telling spectacular lies and thumbing his nose at both investors and the court by spending investors’ funds even after his assets were frozen in November 2009.
Records from the National Futures Association (NFA) show that Cook has a history of scamming. In 2006, NFA fined Cook $25,000, saying he had committed a “very serious violation†in the manner in which he treated funds entrusted to him by an 80-year-old woman who was the guardian over her elderly sister. The case featured assertions of side-dealing and fabricated signatures on account documents. Read more about Cook’s NFA encounter here. Read more on yet-another case in which Cook’s name was referenced by NFA here.
Before we get into the details of some of recent events in the Cook case, we’d like to provide a short capsule based on court filings. It has become clear that the Cook Ponzi scheme has caused financial pain for hundreds of people, including loved ones, and also has resulted in frustration — some of it of the needless and senseless variety.
Such frustration surfaces in virtually all Ponzi cases, in part because the crimes can be extraordinarily elaborate even though the basic concept of a Ponzi is simple: tricking people into believing everything is on the up-and-up by using cash from new investors to pay earlier investors or duping people into rolling over their investments instead of taking distributions to keep the cash from drying up — all while the Ponzi schemer siphons funds and glad-hands and back-slaps with investors, politicians, bankers and others to create the illusion of success.
At the end of the day, however, Ponzis are about people. They cause pain and frustration for every person and institution they touch.
Cook’s in-laws, Clifford and Ellen Berg of Apple Valley, Minn., received $948,848.36 from the scheme. Zayed recovered $726,650.38 of that sum, and then effectively sued the Bergs by seeking a court order for the balance of $222,197.98. The SEC, which had named the Bergs relief defendants in the case for receiving ill-gotten gains, backed Zayed in his efforts to recover the balance. Records show that the Bergs raised $194,000 to pay the receivership estate through the sale of two cars, the tapping of an IRA account and by taking out a mortgage on their cabin. They were given credit by the receivership for $13,500 from the sale of another vehicle, but still came up nearly $15,000 short of the sum needed to retire the receivership balance. If the shortage is not paid by Sept. 15, a judgment will be entered against the Bergs, who have retained the right to be treated as victims of their son-in-law and to file a claim for the principal they invested with Cook.
Zayed effectively had to sue Wells Fargo by seeking a court order to force it to turn over the relatively small sum of $9,275.22 from Cook’s bank accounts. This document is worth reading because it paints a picture of a receiver — Zayed — encountering frustrating resistance in his bid to round up assets for victims. Although the Cook/Kiley Ponzi is extremely serious business that has altered the lives of more than 1,000 people, the document linked to above is almost dolefully comedic. Zayed eventually had to file a 12-page legal document to force the return of the sum. Just 13 days after Zayed asked a federal judge to order Wells Fargo to return the money, he filed a three-page document advising the judge that the bank finally had turned over the sum — something he’d been trying to get it to do for months.
If you’re a victim of a Ponzi scheme or a loved one of a Ponzi schemer — such as Gina Cook, Trevor Cook’s wife — this document shows that your life may start to revolve around attorneys. No matter how you slice it, the result is conflict — legal, emotional or otherwise.
Can Cook Be Trusted In Any Context?
As noted above, some investors fear that Cook is incapable of telling the full truth. There is fear that he has stashed money and covered his tracks so well that he could emerge from prison and benefit from his crime — or perhaps permit insiders or unknown criminal colleagues to benefit from the fraud while he is jailed.
International litigation can be an extremely complex thing. The Cook case, according to Zayed, has required the notarization of documents “under the Hague Convention standards.”
On Feb. 13, the PP Blog reported that a federal judge who was quoting from a pleading by AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming had referenced a domain styled peoplestrust1776.org.
