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Tag: SEC

  • On National Drink Beer Day, SEC Announces Action Against Anheuser-Busch InBev

    Anheuser-Busch InBev will pay $6 million to settle SEC charges “it violated the Foreign Corrupt Practices Act (FCPA) and chilled a whistleblower who reported the misconduct,” the SEC said.

    The SEC’s announcement came on National Drink Beer Day. Whether the timing of the announcement was a coincidence was not immediately clear.

    At issue, according to the SEC order dated Sept. 28 was improper payments made government officials in India to expand the market share of Crown beer.

    “Anheuser-Busch InBev recorded improper payments by its sales promoters in India as legitimate expenses in its financial accounting, and then exacerbated the problem by including language in a separation agreement that chilled an employee from communicating with the SEC,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit.

    “Threat of financial punishment for whistleblowing is unacceptable,” said Jane Norberg, acting chief of the SEC’s Office of the Whistleblower.  “We will continue to take a hard look at these types of provisions and fact patterns.”

    The whistleblower stopped talking to the agency after entering into the separation agreement, which could have imposed a $250,000 penalty for continuing to talk, according to the SEC.

    “After signing the Separation Agreement, the Crown Employee, who was previously voluntarily communicating directly with the Commission staff, stopped doing so,” the SEC said. “The Crown Employee stopped doing so because he believed that he was prohibited by the recently executed Separation Agreement and any violation of the Separation Agreement would risk triggering the Separation Agreement’s liquidated damages provision. Only after the Commission issued an administrative subpoena for testimony and documents did the Crown Employee resume communicating directly with the Commission staff.”

    At the time of this PP Blog post, #NationalDrinkBeerDay was a trending Twitter hashtag.

    Anheuser-Busch InBev of Belgium owns Budweiser and other major brands. The company acknowledged no wrongdoing, but is making compliance changes, according to the SEC.




  • Dawn Wright-Olivares Of Zeek Rewards Sentenced To 7.5 Years In Federal Prison

    Dawn Wright-Olivares.
    Dawn Wright-Olivares.

    BULLETIN: Dawn Wright-Olivares, the former COO of Zeek Rewards, has been sentenced to seven and one-half years in federal prison. The sentence was imposed by U.S. District Judge Max O. Cogburn Jr. of the Western District of North Carolina. The office of U.S. Attorney Jill Westmoreland Rose prosecuted Wright-Olivares for investment- and tax-fraud conspiracy.

    Daniel Olivares, the stepson of Wright-Olivares and Zeek’s key programmer, also was sentenced today. Cogburn imposed a two-year prison term against Olivares, who was charged with investment-fraud conspiracy.

    Both defendants had agreements with prosecutors and pleaded guilty in February 2014, more than two years in advance of the trial of Zeek operator Paul Burks. Burks, 69, was convicted by a jury in July 2016 on charges of mail fraud, wire fraud, conspiracy to commit both and tax-fraud conspiracy. No sentence date has been set.

    Prosecutors said Zeek was a cross-border fraud that had gathered hundreds of millions of dollars operating over the Internet. Hundreds of thousands of victims were defrauded. Only TelexFree, another cross-border MLM “program,” may be larger when measured by the number of persons fleeced.

    In addition to the criminal charges, Wright-Olivares, 48, and Olivares, 34, both of Clarksville, Ark., faced serious civil litigation from the SEC and from the court-appointed receiver in the Zeek case. The SEC accused them of keeping Zeek participants in the dark about a federal investigation and Zeek’s “imminent collapse” while accepting “substantial sums of money from the scheme.”

    In the end, Wright-Olivares and Olivares ended up with nothing.

    Before its August 2012 collapse in a pile of Ponzi rubble, Zeek tried to dupe people into believing they were not making an investment. Any number of current schemes are doing the same thing.

    Among other things, the Zeek case shows that key executives aren’t the only people who risk prosecution for pushing online fraud schemes. In December 2015, the SEC charged alleged Zeek promoter Trudy Gilmond with fraud.

    Separately, Kenneth D. Bell, the Zeek receiver, has been pursuing hundreds of millions of dollars in clawback claims against alleged net winners globally. Bell said he’d be in court today to present the sentencing judge letters from Zeek victims.

    Jaymes Meyer, a Zeek payment vendor, last month was sentenced to 15 months in prison for obstruction of justice.

  • Zeek Receiver Has $104K Judgment Against TrafficMonsoon Pitchman Now Pushing TrafficPowerline

    Screen shot from federal court files. Masking by PP Blog.
    Screen shot from federal court files. Masking by PP Blog.

    On Oct. 14, 2015, the federal court clerk for the Western District of North Carolina signed a judgment of $104,743.55 against Adrian John Hibbert of Sully, United Kingdom. The judgment was in favor of Zeek Rewards’ receiver Kenneth D. Bell, records show.

    Bell had sued Hibbert and other U.K. residents in March 2015 for return of their alleged Ponzi scheme winnings, plus interest. The SEC shut down Zeek in August 2012, alleging a massive cross-border fraud that had gathered hundreds of millions of dollars.

    Hibbert appears not to have entered a defense to Bell’s claims that he had received more than $82,000 from Zeek and that those winnings constituted Ponzi proceeds that must be returned to victims.

    Instead, he pushed other cross-border, online schemes such as Traffic Monsoon, shut down by the SEC in July after allegedly gathering more than $207 million. With Traffic Monsoon facing a Sept. 23 hearing in Utah, Hibbert has turned his attention to Traffic Powerline, according to promos on YouTube.

    The development shows that money tainted by fraud may be flowing between and among schemes.

    Bell has raised the issue of MLMers moving from one fraud scheme to another.

    BehindMLM.com has reported TrafficPowerline is related to a recently collapsed Ponzi scheme known as MoBrabus.

    Pearse Donnelly of both TrafficPowerline and MoBrabus has been threatening BehindMLM.

    NOTE: Thanks to the ASD Updates Blog.




  • DEVELOPING STORY: Possible Traffic Monsoon Data Breach

    trafficmonsoonlogoDEVELOPING STORY: During its routine reporting today, the PP Blog observed information that strongly suggests a data breach occurred at Traffic Monsoon or within a sponsor’s organization — possibly in the summer of 2015.

    The SEC, which charged Traffic Monsoon and alleged operator Charles David Scoville of Utah last month with running a massive, cross-border Ponzi scheme, did not immediately respond to a request for comment. Traffic Monsoon allegedly gathered at least $207 million.

    If a breach can be substantiated, it would mean that certain personally sensitive information of at least hundreds of Traffic Monsoon participants has been compromised. The information appears initially to have been published on a website with an Arabic audience. The site also includes certain information in English, including what we’d describe as purported PayPal payment “proofs” for various amounts.

    What’s clear at the moment is that the website uses the term Traffic Monsoon as two of the words that form its name. Information on the site suggests certain Traffic Monsoon participants in the United States, the Netherlands, Latvia, South Africa, India, Sweden, Malaysia, Germany, Canada, Serbia, Romania, Israel, Indonesia, the United Kingdom, Australia, the Philippines, Belgium, Argentina and other nations may have been affected.

    This would not be the first time a “program’s” database has leaked onto the web. It previously has happened with cash-gifting schemes, perhaps particularly if sponsors were maintaining their own databases of recruits and did not secure them properly.




  • SEC Declines Comment On Whether It Contacted Traffic Monsoon Pitchman Sunil Patel About Saturday Rally In England

    Sunil Patel: From Facebook video.
    Sunil Patel: From Facebook video.

    Traffic Monsoon pitchman Sunil Patel has promised “security” at a “Revolution Day” rally Saturday in the area of Brighton Beach/Brighton Pier in England to advocate for the alleged Ponzi scheme.

    In a video post today on Facebook, Patel claimed the SEC has contacted him about the event.

    The SEC this afternoon declined to comment on Patel’s claims and his public efforts to get Traffic Monsoon participants to sign a sworn “affidavit” that declares the agency a “third-party interloper.” The Sussex Police did not immediately respond to a PP Blog inquiry about the event. There may be scores of Traffic Monsoon victims in England, potentially setting the stage for trouble between supporters of the SEC’s action and supporters of the “program.”

    Last month the SEC alleged that “more than 99% of Traffic Monsoon’s revenue is derived from new investor funds, making claims that it is a successful advertising business merely an illusion.” A federal judge imposed an asset freeze.

    The SEC’s action against Traffic Monsoon and alleged operator Charles Scoville of Utah is the most recent of several major cases the agency has brought against “programs” that operate across borders. Others include TelexFree, Zeek Rewards and WCM777.

    Combined, the schemes are alleged to have resulted in billions of dollars of illicit business. Some of the funds were fraudulently moved to the far corners of the world.

    On Tuesday from Washington, the Justice Department announced that a money-mover in the Zeek case had been sentenced to 15 months in federal prison for obstruction of justice for fraudulently moving a pile of cash offshore. Jaymes Meyer, the operator of Preferred Merchant Solutions, was convicted on charges of trying to hide millions of Zeek dollars from the SEC, the court-appointed receiver and government investigators.

    The SEC charged Zeek in August 2012.

    Patel says that Traffic Monsoon participants from all over the world will attend Saturday’s Brighton event. How many of them will consult legal counsel before signing affidavits is unknown.

    Some Traffic Monsoon participants say they’ve already moved to a “program” known as Traffic Hurricane. The SEC previously has voiced concerns about “whack-a-mole.”

    NOTE: Our thanks to the ASD Updates Blog.




  • Private Attorneys Now Investigating Traffic Monsoon

    Charles Scoville: From YouTube.
    Charles Scoville: From YouTube.

    UPDATED 1:15 P.M. EDT U.S.A. It has happened in previous cases involving alleged violations of federal securities laws, and now it’s happening with Traffic Monsoon.

    “The Peiffer Rosca Wolf law firm is investigating Traffic Monsoon, LLC and Charles Scoville’s alleged Ponzi scheme on behalf of investors – whom Traffic Monsoon called ‘members,’” the firm said in a PR release today.

    How the firm would proceed is unclear. The announcement, however, potentially means Traffic Monsoon and Scoville will be facing litigation on a front separate from the Ponzi case filed by the SEC on July 26.

    After the 2008 AdSurfDaily Ponzi case was filed by the U.S. Secret Service, private attorneys filed a racketeering complaint against ASD operator Andy Bowdoin (and others) that helped out a second Ponzi scheme known as AdViewGlobal.

    Class-action attorneys also filed complaints in the TelexFree and Zeek Ponzi- and pyramid cases. Certain TelexFree-related actions alleged racketeering and referenced a “program” similar to Traffic Monsoon: My AdvertisingPays. There also were counts of fraud against TelexFree principals and some individual promoters.

    Even if they don’t result in a recovery, the actions filed by private individuals — as opposed to government plaintiffs — force defendants to confront litigation on multiple fronts. Defense costs may soar.

    “The Peiffer Rosca Wolf lawyers are preparing to take action and seek compensation on behalf of those who invested in the alleged Ponzi scheme orchestrated by Traffic Monsoon and Scoville,” the firm said.

    Traffic Monsoon gathered at least $207 million, according to the SEC.




  • BULLETIN: Utah Division of Securities Rejects Claims In Traffic Monsoon Promo That Scheme Had Been Given Clean Bill Of Health

    Charles Scoville of Traffic Monsoon.
    Charles Scoville of Traffic Monsoon.

    BULLETIN: The Utah Division of Securities — the state-level regulator — has rejected online claims that the agency had investigated Traffic Monsoon and had given it a clean bill of health.

    Federal regulators sued Traffic Monsoon and alleged operator Charles Scoville last week, alleging Ponzi fraud, securities fraud and the sale of unregistered securities to unaccredited investors.

    The PP Blog contacted the state Division on Aug. 1, after reading a Traffic Monsoon affiliate promo that in part read, “The State of Utah’s security division & Consumer Protection went to the offices of Traffic Monsoon to investigate their business model. The result of the investigation was that Traffic Monsoon wasn’t committing any kind of investment scheme or security fraud.”

    That simply didn’t happen, the Division said through Director Keith Woodwell early this afternoon in response to the PP Blog’s inquiry.

    “[T]he Division has not investigated Traffic Monsoon,” the agency said flatly.

    It added that it “never made any determinations as to whether Traffic Monsoon was ‘committing any type of investment scheme or security fraud’ and that it had “made no determination as to whether there was a pyramid scheme.”

    It is not unusual for promoters of MLM-type or direct-sales fraud schemes to claim that a scheme had passed muster with regulators.

    The Division said it had received one complaint about AdHitProfits, another Scoville scheme, in December 2013. No action was taken there, the Division said, because the Division determined there was no offer of securities under state law.

    Regardless, the Division said, it does not offer clean bills of health to schemes or issue statements of “nothing wrong.”




  • Some Traffic Monsoon Promoters Are Zeek Clawback Defendants

    trafficmonsoonlogoUPDATED 11:51 A.M. EDT U.S.A. Zeek Rewards’ receiver Kenneth D. Bell had no comment this morning on reports that some Zeek clawback defendants also were participants in Traffic Monsoon, alleged last week by the SEC to have been a Ponzi scheme that had gathered at least $207 million.

    The reports appeared on RealScam.com.

    In March 2015, Bell sued Adrian Hibbert of the United Kingdom, alleging he had received more than $82,000 in Ponzi proceeds from Zeek. Zeek was charged with fraud by the SEC in August 2012.

    Another Zeek promoter listed by Bell as a winner in that scheme — Frank Calabro Jr. of the United States — also promoted Traffic Monsoon. Bell has expressed concern about online pitchmen moving from one fraud scheme to another.

    “Winnings” from MLM or direct-sales fraud schemes may be subject to return through clawback litigation.

    Both Zeek and Traffic Monsoon were purported “revenue sharing” programs. Paul Burks, the operator of Zeek Rewards, potentially faces a long prison term after his conviction earlier this month on multiple fraud counts.

    On July 26, the SEC civilly charged alleged Traffic Monsoon operator Charles Scoville of Utah with fraud. He has not been charged criminally and is believed to be residing overseas.

    Peggy Hunt of the Salt Lake City office of the Dorsey & Whitney law firm has been appointed receiver over Traffic Monsoon. Neither she nor the firm responded immediately this morning to a request for comment on the issue of common promoters between Traffic Monsoon and Zeek.

    The law firm confirmed to the PP Blog last week that there would be a receivership website for Traffic Monsoon, but the site was not yet live. The URL has not been released.

    Some Zeek clawback defendants also were participants in the AdSurfDaily Ponzi scheme. ASD was a “program” similar to Traffic Monsoon broken up by the U.S. Secret Service in 2008 in a highly publicized action.

    In U.S. domestic clawback litigation and in cases filed against non-U.S. residents, Bell has sued thousands of alleged Zeek winners for return of their gains and interest.

    Hunt’s plans with Traffic Monsoon are unclear.

    Hibbert appears also to have a page promoting the “My Advertising Pays” scheme.  MAPS, as it is known, has caught the attention of class-action attorneys involved in litigation against the TelexFree scheme broken up by the SEC and the U.S. Department of Homeland Security in 2014. The litigation also includes Zeek figures.

    TelexFree and Zeek may be the two largest combined Ponzi- and pyramid schemes in history, generating on the order of $4 billion in illicit, cross-border business and affecting hundreds and hundreds of thousands of people.

    The MAPS’ page attributed to Hibbert claims that MAPs operator Mike Deese “has been in the trenches with Zeek, ASD, Banners Broker, Ad Hit Profits, and many other advertising revenue sharing companies some of which continue to thrive and some that are not.”

    AdHitProfits also was a Scoville scheme. BannersBroker was a cross-border fraud that led to arrests in Canada.

    Separately, the Zeek page attributed to Hibbert claims, “If you want to make money and get paid everyday, you have to look at Zeek Rewards and understand how it works.”

    The SEC and federal prosecutors in the Western District of North Carolina said Zeek worked as a Ponzi scheme.

    Visit the TrafficMonsoon thread at RealScam.com.




  • SEC: Claims That Traffic Monsoon Was A Successful Advertising Business ‘Merely An Illusion’

    “The complaint alleges that more than 99% of Traffic Monsoon’s revenue is derived from new investor funds, making claims that it is a successful advertising business merely an illusion.” — U.S. Securities and Exchange Commission, July 28, 2016

    Charles Scoville.
    Charles Scoville.

    EDITOR’S NOTE: This (below) is the full litigation statement of the SEC on its Ponzi case against Traffic Monsoon and Charles Scoville. The statement was issued today. It asserts Traffic Monsoon “raised more than $207 million from investors worldwide, primarily in the U.S., India and Russia.” The case was brought July 26 in Utah federal court. The photo (left) of Charles Scoville is a screen shot by the PP Blog of a video on YouTube featuring Scoville. The SEC’s Salt Lake City office, referenced in the statement below, has experience uncovering online schemes, including the infamous Imperia IBC caper targeted at Americans and others with hearing impairments. Like  Traffic Monsoon, Imperia was a Ponzi-board “program” with a presence on sites such as MoneyMakerGroup and TalkGold. 

    **_______________________________**

    U.S. SECURITIES AND EXCHANGE COMMISSION

    Litigation Release No. 23604 / July 28, 2016

    Securities and Exchange Commission v. Traffic Monsoon et al., No. 2:16-cv-00832-JNP (D. Utah filed July 26, 2016)

    SEC Halts $207 Million Internet-Based Ponzi Scheme

    The Securities and Exchange Commission today announced that it has obtained an asset freeze against the operator of a Utah-based international Ponzi scheme that raised more than $207 million from investors worldwide, primarily in the U.S., India and Russia.

    In a complaint filed in federal court in Salt Lake City on July 26, the SEC alleges that Traffic Monsoon LLC and Charles Scoville, the company’s only member operated an Internet-based Ponzi scheme that they falsely represented to investors was an advertising company. According to the SEC complaint, Scoville began operating Traffic Monsoon in October 2014 as a combination Internet traffic exchange and pay-per-click program and recruited more than 162,000 investors around the world. According to the complaint, although Traffic Monsoon markets itself as a highly successful company, nearly all of its revenue is generated by other investors, not its products or services. The complaint alleges that more than 99% of Traffic Monsoon’s revenue is derived from new investor funds, making claims that it is a successful advertising business merely an illusion.

    The SEC’s complaint alleges that Traffic Monsoon and Scoville violated Sections 5(a), 5(c) and 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Among other things, the SEC’s complaint seeks permanent injunctions, prohibiting further violations of the laws charged, disgorgement of ill-gotten gains plus prejudgment interest and civil penalties from Traffic Monsoon and Scoville.

    The SEC’s investigation was conducted by Alison Okinaka, Scott Frost and Cheryl Mori of the SEC’s Salt Lake Regional Office. Daniel Wadley is leading the SEC’s litigation.

    SEC Complaint

    [SOURCE] http://www.sec.gov/litigation/litreleases/2016/lr23604.htm

    **_______________________________**




  • REPORT: SEC Moves Against ‘TrafficMonsoon,’ Calls It A Ponzi

    trafficmonsoonlogoThe SEC has filed a lawsuit against the Traffic Monsoon “program” and called it a Ponzi scheme that had gathered $207 million, the Salt Lake Tribune is reporting.

    The assets of Traffic Monsoon and alleged operator Charles Scoville have been frozen, the newspaper reports.

    On June 1, the PP Blog reported that Payza — a payment processor under fire from the court-appointed receiver in the Zeek Rewards Ponzi- and pyramid case brought by the SEC in 2012 — bragged about its attendance at a Traffic Monsoon event in May.

    Zeek’s Paul Burks was found guilty last week of multiple felonies for his operation of Zeek, a purported auction “program.”

    Traffic Monsoon, which may be a whack-a-mole scheme, is a purported “advertising “program” similar to the AdSurfDaily Ponzi scheme and other scams, including Banners Broker.

    The SEC warned about whack-a-mole schemes in March.

    More as the situation develops . . .




  • DEVELOPING STORY: U.S. Attorney Carmen Ortiz ‘Has Been Recused’ From Prosecution Of TelexFree Figures James Merrill and Carlos Wanzeler

    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.
    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.

    2ND UPDATE 6:27 P.M. EDT U.S.A. A government filing dated July 1 — a Friday before the long Independence Day weekend — says U.S. Attorney Carmen Ortiz of the District of Massachusetts “has been recused” from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler.

    The document does not say why Ortiz no longer will oversee the cases against the alleged pyramid- and Ponzi-schemers. The recusal comes more than two years after Merrill and Wanzeler were charged criminally by prosecutors in Ortiz’s office and nearly 24 months after they were indicted.

    Ortiz, in May 2014, described the alleged fraud as “breathtaking.”

    At the time of this story, no media announcement about the recusal appears on the U.S. Attorney’s website.

    On Saturday (today), Ortiz’s office did not respond immediately to a request for comment.

    U.S. District Judge Timothy S. Hillman is presiding over the cases.

    Here is the text of the “NOTICE OF RECUSAL BY THE UNITED STATES ATTORNEY” dated yesterday (italics added):

    The United States respectfully notifies the Court that United States Attorney Carmen M. Ortiz has been recused from this matter. Pursuant to 28 U.S.C. § 515 and related delegations, an Associate Deputy Attorney General has directed and authorized First Assistant United States Attorney John T. McNeil to have the status, and perform all of the authorized functions, of a United States Attorney with respect to this case.

    Ortiz announced the appointment of McNeil as her first assistant on April 28, 2014. TelexFree declared bankruptcy just 15 days earlier, on April 13. The SEC moved against TelexFree on April 17, 2014.

    Section 3-2.170 of the U.S. Attorneys’ Manual says recusals are required “only where a conflict of interest exists or there is an appearance of a conflict of interest or loss of impartiality.”

    From the manual (italics added):

    A United States Attorney who becomes aware of circumstances that might necessitate a recusal of himself/herself or of the entire office, should promptly notify [the General Counsel’s Office of the Executive Office For United States Attorneys] at . . . to discuss whether a recusal is required. If recusal is appropriate, the USAO will submit a written recusal request memorandum to GCO. GCO will then coordinate the recusal action, obtain necessary approvals for the recusal, and assist the office in arranging for a transfer of responsibility to another office, including any designations of attorneys as a Special Attorney or Special Assistant to the Attorney General . . .

    Whatever TelexFree-related conflict exists, it appears only to affect Ortiz, given that her first assistant has been put in charge and the entire U.S. Attorney’s Office in Massachusetts has not been excluded from the prosecution.

    NOTE: Our thanks to the ASD Updates Blog.