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  • Proposed Class Action Alleges Traffic Monsoon’s Scoville Told PayPal He Was In ‘Investments’ Business

    From a proposed class-action lawsuit against PayPal sparked by the alleged Traffic Monsoon/Charles Scoville Ponzi scheme. Red highlights by PP Blog.

    In the aftermath of the SEC’s securities-fraud action against him last year and a judicial ruling this year that he was opertaing a Ponzi scheme, Traffic Monsoon’s Charles Scoville has blanketed social media with claims he was not offering investments.

    But Scoville told PayPal that “Traffic Monsoon’s business was “Investments – general” when he opened an account for the “program” in 2014, according to a proposed class-action lawsuit against the payment processor for aiding and abetting Scoville’s alleged fraud.

    This happened after PayPal had “previously banned Scoville from using its services following allegations that his prior pay-to-click businesses, which also purportedly sold advertising businesses with revenue sharing, were Ponzi/pyramid schemes,” according to the lawsuit.

    Whether the SEC would seize on the claim as the agency’s case against Scoville and Traffic Monsoon works its way through the courts was not immediately clear. Investigators potentially could argue that Scoville was telling investors one thing while telling PayPal another.

    Likely because of a court-imposed stay of litigation against Scoville and Traffic Monsoon while Scoville appeals judicial findings against him in the SEC case, neither Scoville nor Traffic Monsoon is named a defendant in the proposed class action.

    Named defendants are PayPal Inc. and PayPal Holdings Inc. Plaintiffs are Chukwuka Obi and Kingsley Ezeude. The case was filed May 4 in U.S. District Court for the Northern District of California.

    From the complaint (italics added/light editing performed):

    The [Traffic Monsoon] scheme lasted from September 2014 through July 2016. During this time, Traffic Monsoon duped investors into believing it was “a specialized advertising and revenue sharing company” that operated a pay-to-click and Internet traffic exchange program. On its website, Traffic Monsoon falsely told investors that it was not selling investments or operating a Ponzi/pyramid scheme that would pay returns to existing investors with money from new investors . . .

    Traffic Monsoon also concealed from its investors that Scoville, its sole member and operator, had a prior history of defrauding investors through similar pay-to-click investment “businesses.” Unbeknownst to investors – but known to PayPal – Traffic Monsoon was not Scoville’s first fraudulent investment scheme disguised as a “pay-to-click” program. In fact, just as he did with Traffic Monsoon, Scoville ran his prior pay-to-click schemes with PayPal’s support and through PayPal’s infrastructure. Indeed, in 2011 PayPal had banned Scoville from using its services following allegations that Scoville was operating a substantially similar – and similarly fraudulent – “pay-to-click” investment scheme. Yet, despite its knowledge of Scoville’s past pay-to-click schemes and its knowledge that pay-to-click websites have Ponzi/pyramid scheme features, PayPal failed to enforce its own ban and allowed Scoville to open an account for Traffic Monsoon in September 2014, using PayPal’s infrastructure to perpetrate and profit from his new – but similar in its material respects – “pay-to-click” investment fraud.

    The 52-page complaint argues that the left hand at PayPal didn’t know what the right had was doing with respect to doing business with and applying policies to Scoville.

    From the complaint (italics added/light editing performed):

    PayPal was aware that Scoville had previously operated similar pay-to-click businesses that PayPal banned from using its services following allegations that the businesses were Ponzi/pyramid schemes. PayPal is also aware that pay-to-click businesses raise concerns regarding fraud and that some have Ponzi/pyramid scheme features. Indeed, PayPal has placed holds or bans on other pay-to-click businesses. Yet PayPal did not enforce its own ban on Scoville’s use of its services.

    By knowingly allowing Scoville’s new pay-to-click scheme, Traffic Monsoon, to use its services, PayPal departed from its own policy that prohibits the use of its services for “transactions that . . . support pyramid or ponzi schemes.” (PayPal Acceptable Use Policy.) . . .

    PayPal was aware that Traffic Monsoon was falsely representing to investors that it sold advertising services, not investments. Scoville told PayPal (but not investors) that Traffic Monsoon offered investments, which PayPal noted in PayPal Account 7752. When PayPal reviewed Traffic Monsoon’s website to verify the information provided by Scoville, PayPal learned that Traffic Monsoon was a pay-to-click scheme; represented to investors that Traffic Monsoon sold advertising services, not investments; and promised to make payments to investors in pyramid scheme fashion . . .

    PayPal also knew that Traffic Monsoon was a Ponzi/pyramid scheme. PayPal actively monitored Traffic Monsoon’s PayPal account. It was aware of each investment and each withdrawal from the account. PayPal was aware that Traffic Monsoon was making Ponzi/pyramid scheme payments to investors and that Traffic Monsoon’s Ponzi/pyramid scheme was growing exponentially in classic Ponzi/pyramid scheme fashion.

    PayPal told Bloomberg that it looked forward to refuting the claims.

    The complaint is posted on Dropbox.




  • In Atmosphere Of Murkiness, Are Violations Of The Traffic Monsoon Asset Freeze Taking Place?

    EDITOR’S NOTE: Traffic Monsoon is a Utah company. The firm also has purported business operations in the United Kingdom and Dubai. Details about the offshore operations are murky.

    A claim from an apparent Traffic Monsoon affiliate appeared Monday (April 3) on Facebook that “Allied Wallet is making refunds of [Traffic Monsoon]  purchases made by credit cards or debit cards. Many people are getting this [sic] refunds.”

    In the same thread on the TrafficMonsoonupdates Facebook site, a poster claimed, “I received this in my bank today . . . 10.04% of my initial deposit to TM.” The apparent partial refund was marked “AW*TRAFFICM.”

    In July, U.S. District Judge Jill N. Parrish ordered all assets of Traffic Monsoon and operator Charles Scoville frozen. An October report by court-appointed receiver Peggy Hunt said that Allied Wallet had claimed it had approximately $7 million in Traffic Monsoon funds on deposit when the SEC filed its Ponzi action against the “program.”

    The asset freeze imposed by Parrish was further reinforced last week when she issued a preliminary injunction at the request of the SEC.

    From the preliminary injunction, which names Allied Wallet and other Traffic Monsoon vendors, including PayPal, Payza, Solid Trust Pay and JPMorgan Chase Bank (italics added):

    Each of the financial or brokerage institutions, debtors, and bailees, or any other person or entity holding Defendants’ Assets shall hold or retain within their control and prohibit the withdrawal, removal, transfer, or other disposal of any such assets, funds, or other properties.

    Why, then, are Traffic Monsoon members claiming Allied Wallet is issuing at least partial refunds? And if the refunds are taking place, are they in violation of the asset freeze?

    Allied Wallet did not respond to a request for comment Monday. Neither did the SEC or Hunt.

    But the docket of the SEC’s case against Traffic Monsoon now shows that Hunt filed a notice of a subpoena naming Allied Wallet on Tuesday. How things would proceed was not immediately clear.

    Hunt previously informed the court about a statement Scoville allegedly made about how Traffic Monsoon hooked up with Allied Wallet prior to the SEC action via a company that purportedly was given to him.

    From the statement, as contained in a transcript filed by Hunt last year (italics added):

    Well, the thing is is Traffic Monsoon in the UK was kind of formed in a way because, when we were in Dubai, that’s when we got set up with someone who knew people inside of Allied Wallet to help us get an Allied Wallet account set up. And when we were setting up Allied Wallet, Allied Wallet required us to have a registration in the UK.

    Scoville went on to say, “We had somebody who was there with us who said, I’ve got a UK company. We can change it to the Traffic Monsoon, and then we could use that registration so you can use Allied Wallet. So that’s Taheer and Amir, both of them are on that business registration, but technically they don’t own any of the company.”

    And, according to the transcript, Scoville said, “they were just giving me a company that they had already registered as a speedy process of just making sure that we have a business registration in the UK. But they put me on as the owner.”

    Scoville, according to the transcript, grew to have doubts about the U.K. operation because he could not confirm that staff or security personnel for which he was paying 6,000 pounds per month actually were working at the U.K. office of his own company.

    From the transcript (italics added):

    I went over there, and apparently, the person at the front desk didn’t know who I was, who asked to see the people that were working for Traffic Monsoon, and they said that there’s nobody there. So I don’t know all of the ins and outs of what’s going on there. I may have been scammed. I don’t know.

    Parrish has found that Traffic Monsoon operated as a Ponzi scheme, according to court documents. Scoville has said he will file an appeal.




  • SEC Charges Zeek Figure Keith Laggos With Publishing Fake News To Sanitize Ponzi/Pyramid Scheme

    In December 2013, these plaques of Network Marketing Business Journal Zeek puff pieces were put up for auction by the court-appointed receiver for Zeek. On March 22, 2017, the SEC charged former NMBJ publisher Keith Laggos with securities fraud.

    Keith Laggos, an AdSurfDaily Ponzi scheme figure and the onetime publisher of Network Marketing Business Journal, has been charged by the SEC with securities fraud for illegally touting the Zeek Rewards scheme and using NMBJ to sanitize the egregious fraud that gathered hundreds of millions of dollars.

    Among the agency’s allegations is that “Laggos’s favorable editorials of the scheme contained material misstatements and omissions. Laggos published theses misstatements despite being made aware of their inaccuracy and otherwise being in a position as a paid consultant for ZeekRewards to know of their falsity.”

    The former .com site for NMBJ now is showing a “For Sale” sign.

    Plaques commemorating NMBJ’s Zeek puff pieces on Zeek were listed as auction items by the court-appointed receiver for Zeek in December 2013.

    From an SEC statement on March 23, 2017 (italics added):

    The SEC alleges that, from at least June 2011 through July 2012, Laggos, through NMBJ and while acting a paid consultant for ZeekRewards, was paid at least $64,000 for publishing several editorials providing crucial publicity to the ZeekRewards scheme. These publications promoted ZeekRewards as the “company of the month” and touted, among other things, the scheme’s supposed record earnings and opportunity to generate income for participants. Laggos failed to disclose the fact that he was paid for the favorable editorial coverage, the amount that he was paid, and that he was a paid consultant for ZeekRewards.

    Laggos, a prior defendant in an SEC touting case, agreed to pay $79,190.68 to settle the Zeek matter, the SEC said. In addition, he agreed to a permanent injunction from future violations of Sections 17(a) and 17(b) of the Securities Act, from participating in future securities offerings and from providing paid publicity to securities.

    The SEC moved against Zeek on Aug. 17, 2012. (See Aug. 12, 2012, PP Blog editorial that references Laggos: “Karl Wallenda Wouldn’t Do Zeek.”)

    See BehindMLM’s March 25, 2017, story on the charges against Laggos.

    See the SEC’s litigation statement.

    Whether other outlets that publish fake news to sanitize fraudulent MLM schemes would learn from the case against Laggos was not immediately clear.




  • SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans

    A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.

    VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.

    A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.

    Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.

    “Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.

    The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.

    From the SEC’s ViziNova  complaint (italics added/light editing performed):

    Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.

    In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .

    Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.

    ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.

    Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.

    “There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”

    The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.

    Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.

    In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.

    Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.

    Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.




  • BRIEF: Feds Tweet Photo Of $20 Million Allegedly Found In Box Spring And Tied To TelexFree

    Federal prosecutors have Tweeted a photo of $20 million allegedly found stuffed in a box spring and linked to the massive TelexFree Ponzi- and pyramid caper.

    The cash was found Jan. 4 by the Homeland Security Investigations branch of U.S. Immigration and Customs Enforcement, an arm of the U.S. Department of Homeland Security.

    Agents seized the cash and arrested Cleber Rene Rizerio Rocha, 28, of Brazil. He remains jailed.

    In other HYIP news, apparent supporters of the Traffic Monsoon “program” have been using Twitter in the past 24 hours to ask President Trump to intervene in the SEC’s fraud case brought in July 2016.

    Traffic Monsoon was pitched as an “advertising” program. The SEC alleged the program operated as a Ponzi scheme.




  • Zeek Receiver Solicits Victim Letters For Feb. 13 Sentencing Of Paul Burks

    Paul Burks will be sentenced Feb. 13 for his criminal role in Zeek Rewards, and the court-appointed receiver is soliciting letters from victims of the combined Ponzi- and pyramid scheme that affected hundreds of thousands of people.

    Zeek gathered hundreds of millions of dollars in a massive fraud scheme broken up by the SEC and the U.S. Secret Service in 2012.

    From receiver Kenneth D. Bell in an announcement dated Jan 19, 2017  (italics added):

    Victims of these offenses are entitled to be heard at sentencing. If a victim would like to have a letter describing the impact that ZeekRewards had on them submitted to the Court please send an email to HearingLetter@zeekrewardsreceivership.com. In particular, the Court would like to hear about any of the below circumstances:

    • Becoming insolvent;
    • Filing for bankruptcy under the Bankruptcy Code;
    • Suffering substantial loss of a retirement, education, or other savings or investment fund;
    • Making substantial changes to his or her employment, such as postponing his or her retirement plans;
    • Making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and
    • Suffering substantial harm to his or her ability to obtain credit.

    I will be attending the hearings on behalf of all ZeekRewards victims and will present your letters to the Court.

    Bell also is special master of the criminal case against Burks.

    Burks, then 67, was indicted in 2014 on charges of wire and mail fraud, wire- and mail-fraud conspiracy and tax-fraud conspiracy. He was convicted by a jury in July 2016 at age 69 on all charges and potentially faces decades in federal prison.

    Two of Burks’ former Zeek colleagues — Dawn Wright-Olivares and her stepson Daniel Olivares — previously pleaded guilty and now are listed as federal prisoners.




  • In Immigration Fraud Case, TelexFree Figure Sann Rodrigues Sentenced To Time Served And 2 Years’ Supervised Release

    sannrodrigues1UPDATED 1:56 P.M. ET U.S.A. TelexFree figure Sann Rodrigues could have been sentenced to 10 years for immigration fraud. Instead, he was sentenced yesterday to time served. The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts said early this afternoon that Rodrigues ended up spending 57 days behind bars after his May 2015 arrest on the immigration charge.

    A citizen of Brazil, according to court filings, Rodrigues presented his U.S. “green card to Customs and Border Protection Officers on May 3, 2015, at Logan Airport [in Boston], knowing that he obtained that document based upon false statements to immigration officials,” prosecutors said.

    Rodrigues was not charged criminally for his involvement in TelexFree, perhaps the largest combined Ponzi- and pyramid scheme in history. SEC civil charges brought against him in April 2104 remain intact, as does other TelexFree-related civil litigation.

    A veteran huckster who once claimed “God” invented MLM and “binary,” Rodrigues potentially faces large financial judgments for his TelexFree behavior, which followed earlier behavior in a scheme known as Universo Fone Club prosecuted by the SEC in 2006.

    Rodrigues also promoted a collapsed “program” known as IFreeX.

    U.S. criminal prosecutors said Rodrigues was freed after sentencing in Massachusetts yesterday and will be on supervised release for two years.

    During his period of supervised release, he is “required to comply with any immigration-related orders, the U.S. Attorney’s Office said.

    Because Rodrigues, a Brazilian national, now has been convicted of a felony, he is subject to “administrative immigration proceedings” by the U.S. Department of Homeland Security, the U.S. Attorney’s Office said.

    Such actions potentially could lead to deportation.

    NOTE: Our thanks to the ASD Updates Blog.




  • 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 bow charged with fraud by the CFTC,
    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.




  • EDITORIAL: Traffic Monsoon Apologist Goes All-Trump, Calls Receiver ‘Piggy’ And ‘Lying Cow’

    trafficmonsoonlogoUPDATED 3:51 P.M. EDT U.S.A. Peggy Hunt, a partner at Dorsey & Whitney in Salt Lake City, is the court-appointed receiver in the SEC’s Ponzi- and securities-fraud case against Traffic Monsoon and Charles David Scoville. Her impressive Dorsey bio says she has worked in the areas of bankruptcy and receivership law for more than 25 years and has served as “lead counsel to trustees and equity receivers appointed in some of the largest Ponzi and securities fraud cases in Utah.”

    In a section on some of her professional and civil involvement, the firm notes “Peggy is passionate about advancing the status of women and girls in Utah. She co-founded and currently chairs the Utah Women’s Giving Circle of the Community Foundation of Utah, is President of the Utah Women’s Forum, and is a former President of Women Lawyers of Utah.”

    But to Traffic Monsoon apologist Jose Nunes, Hunt, an officer of the court for close to three decades, is “Piggy,” a “[b . . . h” and a “Lying cow.”

    These descriptors naturally reminded us of some of the things Donald Trump has said about women. Remarkably, Nunes took to Facebook to disparage Hunt just this past weekend, the same weekend Trump again was battling assertions that he is a misogynist.

    Like Trump, Nunes may have a defective filter of some sort. The Traffic Monsoon huckster earlier came up with a “Revenue Shares Matter” campaign with a slogan of “RIOT.”

    Such cluelessness is hardly unprecedented in the so-called revshare sphere. AdSurfDaily was a purported “advertising” program similar to Traffic Monsoon.

    When the U.S. Secret Service raided ASD in 2008, operator Andy Bowdoin responded by comparing the agency to “Satan” and the 9/11 terrorists.

    Some ASDers circulated a “prayer” calling for prosecutors to be struck dead.

    When a receiver was appointed in the Zeek Ponzi case, Zeek apologists immediately launched verbal attacks against the receiver. One Zeeker suggested almost immediately that the receiver was guilty of a felony.

    It is all a steaming pile.




  • TELEXFREE: Prosecutors Docket Prospective Witness List And Exhibits Against James Merrill: Understanding The Background

    EDITOR’S NOTE: This story, which easily could be titled “What NOT To Do In MLM,” summarizes a few of the witnesses and exhibits the U.S. government may use against TelexFree’s James Merrill when his trial gets under way Oct. 24 in Massachusetts. The background provided below is based on research by the PP Blog. Prosecutors filed their witness/exhibit lists on Sept. 26 in U.S. District Court. For our Brazilian readers, we’ll note here that the United States is expected to call at least one member of the Brazilian Federal Police to testify. U.S. District Judge Timothy S. Hillman is presiding. In total, dozens of witnesses may testify, including some who have been sued by the SEC, TelexFree Trustee Stephen B. Darr or private attorneys. There are hundreds of government exhibits, some collected by the Massachusetts Securities Division and the U.S. Department of Homeland Security.

    **______________________**

    EXHIBIT: The government may introduce a document filed by TelexFree with the Alabama Public Service Commission in March 2014.

    BACKGROUND: This document potentially could be used to demonstrate Merrill lied to regulators and business consultants. It was filed on March 20, 2014, and asserts TelexFree was “financially qualified” to operate in the state as a telecom company and that its “current financials Show considerable net worth.”

    Less than a month later, however, TelexFree filed for bankruptcy, raising questions about the truthfulness of its telecom applications in various states. The document, which the PP Blog published before TelexFree’s bankruptcy filing, also ties Merrill to Indiana MLM accountant Joe Craft, a former interim TelexFree executive listed Sept. 26 by the government as a witness. Craft was sued alongside Merrill and others by the SEC in April 2014. He later filed a pleading in which he said he had concluded TelexFree was a Ponzi scheme selling unregistered securities and that he had been misled by TelexFree insiders.

    Joseph Isaacs, a Florida-based consultant for TelexFree, helped prepare TelexFree’s telecom filing in Alabama and other states. Isaacs also now is listed as a government witness. Filings in Missouri say Isaacs told regulators there that Merrill had not been truthful when submitting an affidavit.

    tfwcmmerrillsuv-1EXHIBIT: The government may introduce a photo of Merrill posing with a Hummer vehicle in TelexFree promos.

    BACKGROUND: Ponzi/pyramid schemes and flashy rides are virtually inseparable.

    In 2014, a federal judge ordered TelexFree pitchman Santiago De La Rosa — an SEC defendant — to sell two BMWs and a Land Rover Range Rover. De La Rosa now is listed as a government witness.

    EXHIBIT: The government may introduce a September 2013 email that shows Merrill was aware of a criminal indictment and prison term imposed against AdSurfDaily President Andy Bowdoin in a Ponzi case with remarkable similarities to TelexFree.

    BACKGROUND: The email described above allegedly was sent to Merrill by MLM attorney Jeffrey Babener. Babener now is listed as a government witness. Darr, the bankruptcy trustee, has said Babener informed TelexFree in August 2013 that it was operating a pyramid scheme, but TelexFree nevertheless continued to gather money.

    The ASD case, which also came up in the prosecution of Zeek Rewards’ operator Paul Burks, potentially could be used to demonstrate Merrill was engaging in willful blindness in his operation of TelexFree.

    One of Merrill’s MLM attorneys — Gerald Nehra — has been sued by Darr, private attorneys and the court-appointed receiver in the SEC’s case against Zeek. Nehra also was a figure in the ASD case. He now is listed as a government witness against Merrill.

    EXHIBIT: A video by Thomas More of Newport Beach, Calif.

    BACKGROUND: The SEC has warned for years that scams spread on social media. More, now listed as a government witness, was a TelexFree pitchman who was listed as a “winner” in the Zeek Rewards Ponzi- and pyramid scheme. Nehra once was a speaker at a TelexFree event in Newport Beach.

    EXHIBIT: Records from various banks and financial vendors for Merrill or TelexFree.

    BACKGROUND: Follow the money.

    NOTE: Our thanks to the ASD Updates Blog.




  • BULLETIN: Sann Rodrigues, TelexFree Figure, Agrees To Plead Guilty To Immigration Fraud

    Sann Rodrigues
    Sann Rodrigues

    BULLETIN: (4th Update 7:23 p.m. EDT U.S.A.) Sann Rodrigues, a figure in the TelexFree Ponzi- and pyramid-scheme case, has agreed to plead guilty to a charge of immigration fraud, court documents say.

    The agreement potentially puts the native Brazilian at risk of deportation and a U.S. prison term of up to 10 years. He last was reported living in Davenport, Fla.

    Rodrigues, whose full name is Sanderley Rodrigues De Vasconcelos, initially was charged criminally with visa fraud in May 2015. The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts said he was involved in “several pyramid schemes” and that he had obtained his green card fraudulently.

    The SEC charged Rodrigues civilly with securities fraud over TelexFree-related activity in April 2014.

    NOTE: Our thanks to the ASD Updates Blog.




    More . . .