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Tag: SEC

  • HYIP Spammer Hits Profitable Sunrise Facebook Site With Drive-By Offers For ‘AdHitProfits,’ A Ponzi-Board ‘Program’ Whose Thread-Opener Bragged, ‘Payza, STP & Liberty Reserve Accepted !!’

    ponziglareUPDATED 5:41 P.M. EDT (U.S.A.) A spammer hit a Profitable Sunrise Facebook site yesterday with five drive-by offers for “AdHitProfits.” All five of the machine-gunned theft bids claimed the same thing: “make money every half an hour…100% commission let your money grow for you at high speed.”

    The AHP “program” also is being pitched on the Ponzi boards, with the thread-starter at MoneyMakerGroup bragging that “Payza, []STP & Liberty Reserve Accepted !!”

    LibertyReserve was described last week by federal prosecutors in New York as a criminal enterprise that had laundered more than $6 billion for Ponzi schemers, credit-card fraudsters, identity thieves, investment fraudsters, computer hackers, child pornographers and narcotics traffickers.

    The names of Payza predecessor AlertPay and SolidTrustPay, meanwhile, appear in U.S. court files as payment processors for Ponzi schemes. In August 2012, the SEC accused Ponzi-board “program” Zeek Rewards of orchestrating a $600 million Ponzi- and pyramid fraud. Earier in 2012, Zeek Rewards was auctioning sums of U.S. cash and telling successful bidders they could receive their winnings through AlertPay and SolidTrustPay.

    Forums such as MoneyMakerGroup and TalkGold are referenced in U.S. court filings as places from which HYIP frauds/Ponzi schemes are promoted. AHP also has a presence on both forums. It also has a presence on DreamTeamMoney, yet another Ponzi forum.

    Like other recent Ponzi-board “programs,” AHP is triggering a security warning from McAfee Site Advisor. The warning declares the AHP site a “Dangerous Site.”

    “Whoa!” the warning begins. “Are you sure you want to go there?”

    In March, the SEC described Profitable Sunrise as a murky pyramid scheme that may have gathered tens of millions of dollars through offshore bank accounts. Court filings show that money tied to Profitable Sunrise and Liberty Reserve ended up in offshore bank accounts. Whether Profitable Sunrise had a Liberty Reserve account is unclear.

    Although HYIP schemes always are dangerous, they may be particularly dangerous now as operators scramble for new, Ponzi-sustaining cash after a series of seizures related to the Liberty Reserve investigation. The amount of HYIP-related cash seized in the Liberty Reserve probe is unknown. A well-known scam that has operated under at least three names — JSS Tripler, JustBeenPaid and ProfitClicking — claimed it accepted Liberty Reserve and now appears to have wiped out investors’ purported holdings and perhaps zeroed out the purported earnings of many of them.

    In an April 6 thread-starting post for AHP at MoneyMakerGroup, the claim is made that “You Purchase 1 Or More Revenue Share Ad Spot(s) For $45 !!” and that “You Earn $56.25.” The pitch also claims that a return of 125 percent is “More Stable For Long Term !!”

    Separately, the thread-starter’s forum signature tries to lure visitors to a “program” known as “AddWallet,” with a claim that it is “Better Than Zeek (( A Complete Passive Income With Best Advertising Revenue Income Ever )).”

    AHP shills have paraded to TalkGold to make “I Got Paid” posts for the purported “opportunity.” Shills did the same thing for Zeek and the other “programs.”

    An emerging Ponzi-forum darling like Zeek and Profitable Sunrise before it, AHP appears to have debuted in April, just weeks after the website of Profitable Sunrise went missing.

    A series of reload scams are been targeted at Profitable Sunrise victims via a Facebook site. Many of the “programs” claimed to accept LibertyReserve, PerfectMoney, Payza or SolidTrustPay.

    PerfectMoney, which purportedly operates from Panama, now claims it is banning new registrations from U.S. prospects.

  • ULTIMATE INSULT? ‘ProfitClicking,’ A ‘JSSTripler’/’JustBeenPaid’ Reload Scam That Surfaced After Collapse Of Zeek Rewards, Now Called ‘ProfitCrapping’ On Ponzi Boards

    Frederick Mann
    Frederick Mann

    A “program” the PP Blog reported may have ties to the so-called “sovereign citizens” movement appears to have wiped out investors and perhaps zeroed out the purported earnings of many of them, according to posts at the MoneyMakerGroup Ponzi-scheme forum.

    In fact, according to one post, the “ProfitClicking” program perhaps now can be best described as “Profitcrapping.”

    ProfitClicking listed Liberty Reserve as one of its payment processors. On Tuesday, federal prosecutors in New York described Liberty Reserve as a massive criminal enterprise involved in the laundering of more than $6 billion. The effect of the Liberty Reserve action on Profit Clicking was not immediately clear.

    What is clear is that ProfitClicking was a fraud from the start. The “program” traces its roots to JSSTripler/JustBeenPaid, which promised a daily payout of 2 percent and purportedly was operated by Frederick Mann, a one-time pitchman for the collapsed, 1-percent-a-day AdSurfDaily Ponzi scheme. ProfitClicking surfaced after Mann purportedly retired suddenly in the days after the SEC took down Zeek Rewards in August 2012, amid allegations it had operated a $600 million Ponzi- and pyramid fraud that had duped investors into believing it provided a legitimate payout averaging about 1.5 percent a day.

    Prior to the emergence of ProfitClicking, Mann speculated that his JSS/JBP “program” could come under attack by American cruise missiles. He also has described U.S. government employees as “part of a criminal gang of robbers, thieves, murderers, liars, imposters.”

    Taking the time to ensure JSS/JBP was operating legally was a concession to slavery, Mann contended. Fellow AdSurfDaily figure Kenneth Wayne Leaming, a purported sovereign convicted in a plot to file false liens for billions of dollars against U.S. government employees, later contended that he was being held as a slave against his will.

    But even as Mann was sliming the U.S. government and calling its employees slavemasters, one of his JSS/JBP pitchmen was operating a site known as Vatican Assassins that contended “Majority Savage Blacks were never taught to behave in civil White Protestant culture and thus have been released upon us Reformation Bible-believing Whites to further destroy our once White Protestant and Baptist American culture founded upon the Reformation’s AV1611 English Bible and a White Protestant Presbyterian Constitution with its attached White Baptist-Calvinist Bill of Rights.”

    Some analysts have speculated that the name “Frederick Mann” (emphasis by PP Blog) is longhand code for “free man.” Purported “sovereign citizens” sometimes calls themselves “free men of the land.”

    Among other things, both JSS/JBP and ProfitClicking made members affirm they were not with the “government.” Mann declined to say where his “program” was operating from, a development that drew comparisons to the infamous BCCI banking scheme of the 1990s. BCCI, shorthand for Bank of Credit and Commerce International, purportedly was designed to be “offshore everywhere,”

    Liberty Reserve also has drawn such comparisons. (Link is to May 28 article in Vanity Fair.)

    Mann fell out of the Ponzi spotlight for a brief time after his purported retirement from JSS/JBP as ProfitClicking was gaining a head of steam.

    He soon was back, however — this time as a pitchmen for a “program” known as ClickPaid.

    The ClickPaid Terms — like the Terms of JSS/JBP and ProfitClicking — made members affirm they are not with the “government.”

    On May 29, the PP Blog reported that the Securities and Exchange Commission of the Republic of the Philippines had issued a warning on the JSSTripler/JustBeenPaid and ProfitClicking scams. JSS/JBP also came under investigation in Italy.

    A Ponzi-board program known as “Profitable Sunrise” also experienced the same fate in Italy.

    The U.S. SEC has described Profitable Sunrise as a murky “program” that may have collected tens of millions of dollars through offshore bank accounts. Profitable Sunrise had five HYIP plans, including one bizarrely dubbed the “Long Haul,” which purported to pay 2.7 percent a day — more than Zeek, more than ASD, more than JSS/JBP, more than ProfitClicking, more than ClickPaid.

    A website linked to Mann once linked to videos featuring Francis Schaeffer Cox, a purported “sovereign” and “militia” man implicated in a murder plot against public officials in Alaska.

  • BULLETIN: ‘PerfectMoney,’ Fraud-Scheme Processor Purportedly Based In Panama, Says It Is Banning U.S. Customers

    breakingnews72BULLETIN: On the heels of the apparent shutdown of Costa Rica-based Liberty Reserve as part of an international money-laundering investigation, “PerfectMoney” says it is banning users from the United States. Perfect Money purportedly operates from Panama. (More below.)

    In an announcement dated today on its website, Perfect Money says that “due to changes in our policy we forbid new registrations from individuals or companies based in the United States of America. This includes US citizens residing overseas. If you fall under the above mentioned category, please do not register an account with us.”

    How PerfectMoney intends to treat existing U.S. users was not immediately clear, and the firm did not explain why it suddenly had changed its policy. The company is favored by criminals and HYIP scammers and has a history of advertising on behalf of purported Forex “opportunities” that have been the subjects of sweeping court actions in the United States.

    In January 2013, the Superintendency of the Securities Market of the Republic of Panama (SMV) warned that Perfect Money “has not been granted any kind of license by the SMV, nor has been authorized to carry on activities of intermediation, administration, or advisory in securities, financial instruments or forex, in or from the Republic of Panama, within the scope of the Securities Law.

    “PERFECT MONEY FINANCE CORP. does not have [its] own offices in Panama, the office and its P.O. Box claim in its website [deleted by PP Blog], belong to the companies Azuero Business Center, Inc. and Panama Net Buy, which provides online shopping services,” SMV said.

    In 2011, the PP Blog reported that an individual referenced as a Perfect Money contact person is referenced in federal court filings that tie money from the alleged EMG/Finanzas Forex fraud scheme to an international narcotics probe that led to the seizure of at least 59 bank accounts in the United States and the companion seizure of 294 bars of gold and at least seven luxury vehicles.

    PerfectMoney’s name also is referenced in case filings from the SEC’s 2010 fraud complaint against Imperia Invest IBC, a scam purportedly operating offshore. Deaf people lost millions of dollars to Imperia, the SEC said.

    A quick check today by the PPBlog showed dozens of HYIP sites that claim to accept PerfectMoney. Many of the same sites also claimed to accept LibertyReserve. How the “programs” — all of which advertise preposterous returns — will contend with the absence of LibertyReserve and the new restrictions imposed by PerfectMoney was not immediately clear.

    Liberty Reserve operator Arthur Budovsky Belanchuk is reported to be under arrest in Spain as part of a probe by authorities in Costa Rica and the United States.

    Based on U.S. court files and certain extrapolations, murky HYIPs may be raking in billions of dollars. In August 2012, the SEC alleged that the Zeek Rewards “program” gathered at least $600 million. Legisi, another HYIP scam, gathered at least $72 million before its 2008 collapse. Pathway To Prosperity appears to have churned at least $70 million prior to its 2010 collapse. The 2008 AdSurfDaily scheme gathered at least $119 million, according to federal prosecutors.

    Zeek and ASD — at least — did business with AlertPay and SolidTrustPay, processors based in Canada.

    In April 2013, the SEC alleged that a murky “program” known as Profitable Sunrise may have gathered tens of millions of dollars. Profitable Sunrise is the subject of regulatory actions or Investor Alerts in at least five countries: the United States, Canada, the United Kingdom, Italy and New Zealand.

    Profitable Sunrise pitchmen may not even have known for whom they were working to glean commissions, the SEC alleged.

    There may be hundreds or perhaps thousands of HYIP scams operating online at any given point in time. Some of them — like Profitable Sunrise — even advertise they accept bank wires. HYIP scams often have promoters in common, a situation that sets the stage for banks to come into possession of funds tainted by a revolving door of fraud schemes.

    In recent weeks, the PP Blog has reported on a number of reload scams aimed at victims of the Profitable Sunrise scheme. Virtually all of the schemes accepted PerfectMoney, LibertyReserve or both. Some also advertised they accepted SolidTrustPay and EgoPay.

    These schemes included BiwakoBank Limited, SuperWithdraw, Whos12, Fairy Funds, Roxili, OptiEarn, AVVGlobal, ProForexUnion, MajestiCrown and TelexFree.

  • URGENT >> BULLETIN >> MOVING: Liberty Reserve Payment Processor Offline Amid Reports Of Arrest Of Operator In Spain On Money-Laundering Charges

    breakingnews72URGENT >> BULLETIN >> MOVING: Costa Rica-based Liberty Reserve, a payment processor favored by HYIP scammers and other criminals, is offline — and there are reports that its operator is under arrest in Spain on money-laundering charges.

    “We lost Huge $$$,” a poster on the MoneyMakerGroup Ponzi forum complained. The poster’s forum signature was advertising AdHitProfits, with a pitch of “125% – Superfast Earning.” It also was promoting GoldAllianceFunds, with a pitch of “4.5% for 45 Business Days.”

    From The Tico Times, a newspaper published in Costa Rica (italics added):

    Arthur Budovsky Belanchuk, 39, on Friday was arrested in Spain as part of a money laundering investigation performed jointly by police agencies in the United States and Costa Rica.

    Costa Rican prosecutor José Pablo González said Budovsky, a Costa Rican citizen of Ukrainian origin, has been under investigation since 2011 for money laundering using a company he created in the country called Liberty Reserve.

    Local investigations began after a request from a prosecutor’s office in New York. On Friday, San José prosecutors conducted raids in Budovsky’s house and offices in Escazá, Santa Ana, southwest of San José, and in the province of Heredia, north of the capital.

    Budovsky’s businesses in Costa Rica apparently were financed by using money from child pornography websites and drug trafficking.

    Separately, BehindMLM.com is reporting that Liberty Reserve’s website is throwing a server error. The PP Blog confirmed the site will not load and that there appears to be no page-source information on the landing page.

    Recent scams that have used Liberty Reserve include JustBeenPaid/JSSTripler, “Expert Invest Group,” T2MoneyKlub (one of Ponzi schemer “Dave’s”) purported “programs,” Insectrio, Imperia Invest IBC and many more.

    Imperia scammed deaf people, the SEC said in 2010.

  • UPDATE: Pushed To Profitable Sunrise Victims, Biwako Bank Limited Appears To Be DOA

    biwakoadUPDATE: The PP Blog wrote about Biwako Bank Limited on April 29 after it was touted on a Profitable Sunrise Facebook site as a good “program” for individuals ripped off in the alleged Profitable Sunrise pyramid scheme.

    But now Biwako Bank’s website has disappeared, with the “program” apparently following Profitable Sunrise into the darkness.

    “**THIS IS NOT AN HYIP , THIS IS A BANK**” a pitchman bizarrely claimed about Biwako on the Profitable Sunrise Facebook site last month. The program curiously said it hoped to attract “costumers.”

    The non-HYIP claim was made despite the fact Biwako Bank listed four color-coded “plans” that purported to provide daily payouts of between 1.95 percent and 3.05 percent.  The highest-paying plan — the “Red Plan” at 3.05 percent a day — advertised a percentage even higher than the purported “Long Haul” plan of Profitable Sunrise.

    The “Long Haul” plan claimed to pay 2.7 percent a day.

    In April, the SEC alleged that Profitable Sunrise was a pyramid scheme that may have gathered tens of millions of dollars at least in part by using offshore companies and wire transfers.

    Regulators have repeatedly warned about reload scams targeted at victims of fraud schemes. Like Profitable Sunrise, Biwako had a presence on the TalkGold and MoneyMakerGroup forums. So did Zeek Rewards, which the SEC described in August 2012 as a $600 million Ponzi- and pyramid scheme.

    Biwako’s haul is unknown.

    Other reload programs promoted on the Facebook site by boat-sharks include (at least) “SuperWithdraw,” “Whos12,” “Maxi-Cash,” “FairyFunds,” “Roxilia,” “OptiEarn,” “AVVGlobal,” “ProForexUnion,” “MajestiCrown” and “TelexFree.”

  • UPDATE: Sentencing For Legisi Pitchman Matthew John Gagnon Now Set For June 18

    Matthew J. Gagnon
    Matthew J. Gagnon

    Sentencing for Legisi HYIP Ponzi scheme pitchman Matthew John Gagnon has been rescheduled for June 18. Gagnon initially was scheduled to be sentenced yesterday, federal prosecutors said earlier this month.

    Gagnon pleaded guilty to not disclosing he’d been paid more than $1 million by Legisi and operator Gregory N. McKnight to tout the “program” online. McKnight is scheduled to be sentenced Aug. 6, federal prosecutors said.

    Legisi, a Ponzi-forum darling, collapsed in 2008. It triggered a civil probe by the SEC and a criminal investigation by the U.S. Secret Service. Michigan securities regulators also were involved in the probe.

    Other recent Ponzi-board “programs” that became the subjects of major investigations include Pathway To Prosperity, Imperia Invest IBC, AdSurfDaily, Zeek Rewards and Profitable Sunrise. All of the “programs” claimed absurd rates of return.

    The name of MoneyMakerGroup, a forum listed in U.S. court filings as a place from which Ponzi schemes are promoted, appears in an evidence exhibit in the Legisi case. Also included in the exhibit is Legisi’s bizarre Terms of Service, which required investors to avow 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.

    Like McKnight, Gagnon also faces millions of dollars in civil judgments for hawking the Legisi scheme.

    In a plea agreement in the criminal case, Gagnon admitted he’d caused more than $7 million in losses to more than 50 Legisi investors.

    Delays in sentencing dates may be due in part to the difficulty the court-appointed receiver in the Legisi case has encountered in deposing a potential Legisi witness jailed in Alabama in a second scam.

  • Profitable Sunrise Facebook Site Changes Graphic To Promote ‘DollarsBluePrint,’ Which Triggers Security Warning

    "DollarsBluePrint" now is being promoted in a big way at a Profitable Sunrise Facebook site.
    “DollarsBluePrint” now is being promoted in a big way at a Profitable Sunrise Facebook site.

    A Facebook site set up to promote the Profitable Sunrise HYIP scheme has changed the lead graphic on the page to drive traffic to a site known as “DollarsBluePrint” — apparently through a web entity known as “Big Idea Mastermind.” The previous lead graphic was a leftover from the fraud reign of Profitable Sunrise.

    The Profitable Sunrise Facebook site has 5,045 likes as of this morning. The SEC has described Profitable Sunrise as an exceptionally murky enterprise that gathered money through multiple other enterprises and may have collected tens of millions of dollars. The website of ProfitableSunrise went offline March 14 or thereabouts.

    In 2010, FINRA issued a warning on HYIP fraud schemes, saying they often trade through social-media sites.

    When the PP Blog sought to view the website at the DollarsBluePrint URL, the Blog’s security software issued a “Dangerous Site” warning that said the Big Idea Mastermind site was exhibiting “one or more risky behaviors.”

    A series of reload scams have been promoted at the Profitable Sunrise Facebook site. In addition to DollarsBluePrint, today’s entries include “Hourly Chic Pay” (again).

    “Up to 260% ROI,” the Hourly Chic Pay promo reads in part. “Get paid by the hour!”

    The promo for DollarsBluePrint reads in part that recruits can “earn 6 figure[s.]”

    “YOU are a WINNER,” it screams.

    Other reload programs promoted on the Facebook site by boat-sharks include (at least) “SuperWithdraw,” “Whos12,” Maxi-Cash,” “FairyFunds,” “Roxilia,” “OptiEarn,” “AVVGlobal,” “ProForexUnion,” “MajestiCrown,” “Biwako Bank Limited” and “TelexFree.”

    The website of Biwako Bank Limited also has triggered browser security warnings.

    Promos for TelexFree have claimed a person can pay the purported opportunity $15,125 and receive at least $1,100 a week for a year. Lesser incomes can be bought for lesser sums, according to the TelexFree promos.

  • Zeek Rewards Claims Portal Is Open

    breakingnews72The claims portal for Zeek Rewards has opened on schedule. It is accessible through a “File a Claim” button on the website of the court-appointed receiver and also has a separate URL. Claims must be filed by 11:59 p.m. (prevailing Eastern time) on Sept. 5, 2013.

    A claims FAQ is accessible here.

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina approved the Zeek claims process on May 8.

    In a letter to Zeek participants last week, receiver Kenneth D. Bell said there potentially is more than 1 million claimants.

    In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid fraud operated by Paul R. Burks and Rex Venture Group LLC of Lexington, N.C. Zeek, the SEC said, was selling unregistered securities and duping investors into believing they were receiving a legitimate return of about 1.5 percent a day.

    Since that time, the SEC has filed an action against a murky HYIP known as Profitable Sunrise that promoted returns that exceeded even Zeek’s purported numbers and appears to have been using a series of offshore bank accounts. The Profitable Sunrise action was filed in April 2013, amid allegations pitchmen may not have known for whom they were working in a bid to glean commissions.

    Reload scams surfaced in the immediate aftermath of the SEC’s Zeek action. The same thing is happening in the aftermath of the Profitable Sunrise action. Various “opportunities” are being pitched as cure-alls for losses in the “programs.” Some of the reload scams appear to be bids to intercept information from Zeek and Profitable Sunrise victims.

    At least 36 U.S. states or provinces in Canada have issued cease-and-desist orders or Investor Alerts against Profitable Sunrise. Notices also have been published by the governments of the United Kingdom, Italy and New Zealand. The state of North Carolina has published at least two warnings about reload scams. Some of the actions by state regulators in the United States have identified alleged Profitable Sunrise pitchmen.

    Despite the warnings, pitchmen for other HYIP schemes have been spamming websites with offers for other “programs” that promise absurd rates of return.

    Bogus “refund” sites have surfaced after the fall of other major Ponzi schemes. Scammers also have been known to discourage participants in “programs” from filing claims, apparently as part of bids to minimize the victims’ count. Some participants in the AdSurfDaily Ponzi scheme, for example, planted the extortive seed that they might sue anybody who filed a claim.

  • BULLETIN: Kansas Issues Cease-And-Desist Order To Profitable Sunrise; Document Names 2 Alleged Promoters, Including Nanci Jo Frazer; State Urges Investors To Contact Securities Commissioner

    breakingnews72BULLETIN: The state of Kansas has issued a cease-and-desist order against the alleged Profitable Sunrise HYIP scheme, saying the “program” offered “gaudy” returns “of 1.6% to 2.7% on a daily basis.”

    In a statement, Kansas securities officials say the order names Florida resident David P. Cozzocrea as a Profitable Sunrise pitchman. Cozzocrea’s promo appeared on a website styled KTFAlways.com. (The site appears to be offering an Iraqi Dinars scheme at the time of this post.)

    “Two Kansas investors learned about Profitable Sunrise through KTFAlways.com and contacted Cozzocrea directly. Cozzocrea provided the investors with instructions for setting up an account with Profitable Sunrise and directly funded their accounts with Profitable Sunrise,” the office of Josh Ney, Kansas interim securities commissioner, said.

    Meanwhile, the Kansas order also identifies Ohio resident Nanci Jo Frazer of NJF Global Group as a Profitable Sunrise pitchwoman.

    “Two other Kansas residents invested in Profitable Sunrise through an organization known as the NJF Global Group Community,” Ney’s office said. “The NJF Global Group Community was operated by Focus Up Ministries, Inc. and its founder, Nanci Jo Frazer. The NJF Global Group Community promoted Profitable Sunrise as a fundraising opportunity for religious-based and charitable organizations.”

    Kansas now has become at least the third U.S. state to identify Frazer or NJF Global Group Community in a securities action. The others include Ohio and Minnesota. NJF Global Group also is referenced in an alert by the Financial Markets Authority of New Zealand.

    Kansas urged “any Kansas residents” who may have invested money with Profitable Sunrise or had contact with persons promoting Profitable Sunrise to contact Ney’s office immediately.

    “Considering the extent of this scheme, it is likely that several other Kansas residents have funds at risk with Profitable Sunrise,” Ney said.  “Our office needs information from such people in order to stop this type of activity.”

    A website tied to the NJF Global Group, however, appears to be encouraging investors not to contact state regulators.

    “If you file a claim in your State, be prepared to prove yourself and allow access to your bank accounts, personal info and emails as a part validating you,” NJFGlobalGroup.com says. “Some states are saying that all who participated are considered to have purchased an unregistered security.”

    In 2008 (and later), pitchmen for the AdSurfDaily Ponzi scheme also discouraged recruits from filing complaints with regulators.

    Read the statement by the Office of the Kansas Securities Commissioner.

    In April, the SEC described Profitable Sunrise as a pyramid scheme that may have gathered tens of millions of dollars through offshore entities.

    Kansas now has become one of at least 36 U.S. states or provinces in Canada to issue cease-and-desist orders or Investor Alerts against Profitable Sunrise. At least four Kansas residents invested a total of at least $22,000 in Profitable Sunrise, the state said.

    Whether purported Profitable Sunrise operator “Roman Novak” has any plans to help pitchmen address potential legal bills is unknown.

    The Kansas investigation is ongoing, the state said.

  • In Case Reminiscent Of Profitable Sunrise, Alberta Securities Commission Finds That Dale Joseph Edgar St. Jean And Gregory Dennis Tindall Made False Statements And Conducted Ponzi Scheme

    recommendedreading1Two men conducted an offering fraud tied to a purported “bridge lending” business and wiped out investors in a $52 million Ponzi scheme, the Alberta Securities Commission said yesterday.

    Some of the allegations against Dale Joseph Edgar St. Jean and Gregory Dennis Tindall were remarkably similar to allegations in the United States against the Profitable Sunrise “program,” which also had a purported bridge-loan business. While the Profitable Sunrise “Long Haul” plan promised 2.7 percent a day and purportedly was operated by “Roman Novak,” St. Jean and Tindall promised far less: between 15 percent and 22 percent a year.

    St. Jean and Tindall were at the helm of entities known as TransCap Corporation and Strata-Trade Corporation, the ASC said. The agency was among the first to issue a warning against Profitable Sunrise earlier this year.

    “The ASC panel found that payments to TransCap and Strata-Trade investors were funded from their own and their fellow investors’ money, ‘by definition, an unsustainable ‘Ponzi’ scheme,’” ASC said in a statement. “Investors (Albertans among them) having been lured by deceptive or false information into investing in a Ponzi scheme, their pecuniary interests were placed at serious risk.  Indeed, there appears to be no money remaining to pay them any interest owing or repay their principal investments.”

    Another similarity between the St. Jean and Tindall capers and Profitable Sunrise is that investors appear to have dealt mostly with pitchmen regurgitating the company line, not the operators.  (Garbage In, Garbage Out (GIGO) recited by commission-based pitchmen is an element in many Ponzi schemes, including AdSurfDaily in 2008. It’s often the case that the pitchmen aren’t financial professionals and are not licensed to offer securities.)

    It remains unclear whether “Roman Novak,” the purported operator of Profitable Sunrise, actually exists.

    With respect to the St. Jean/Tindall caper, Tindall’s “current whereabouts are unknown,” ASC said in its decision.

    Both men were charged by the SEC in a 2010 case that alleged they were managing members of a $34 million offering fraud based in Florida that led to the collapse of two hedge funds known as Arcanum Equity Fund LLC and Vestium Equity Fund LLC and subsequent bankruptcy filings.

    Bridge-loan scams are not rare — and may feature an offer that sounds plausible on the surface: a company solicits loans from one subset of customers at a lower interest rate to lend out to another subset at a higher interest rate, purportedly profiting from the spread. The “business” brings both securities laws and lending laws into play. (See the California Desist and Refrain Order against Profitable Sunrise.)

    In the HYIP sphere, the “model” quickly can become absurd on its face. Profitable Sunrise, for instance, was positioned as an enterprise that paid MLM-style affiliate commissions on three levels while also paying out preposterous sums of compound interest on a daily basis. (The infamous AdSurfDaily Ponzi scheme ($119 million) operated with a similar confluence of payout schemes between 2006 and 2008, although ASD did not purport to be a bridge lender.)

    One of the most infamous bridge-lending scams in U.S. history was the Nicholas Cosmo and Agape World Inc. scam, a Ponzi scheme that gathered more than $400 million and put Cosmo in federal prison for 25 years. Some of his pitchmen also were charged criminally.

    Some HYIP pitchmen may make boiler-room cold calls to fleece marks. Others may line up their so-called “warm market” as investors, perhaps by sponsoring seminars and webinars and encouraging family members, friends and business and social acquaintances to attend.

    Members of one Alberta family alone lost more than $1.6 million to the St. Jean/Tindall scam, ASC said in its decision.

    One investor (“TL”) and his wife plowed $1.22 million into the scam after being advised by a pitchman that TCC was “in the business of offering short-term loans at high interest, that St. Jean was its president, and that an investment in TCC was ‘without . . . risk’ – it was ‘supposed to be solid’, and ‘there was no threat of losing principal or interest.’”

    Profitable Sunrise, meanwhile, told investors that “investments in the program were insured by a leading investment bank,” the SEC said in bringing fraud charges in April 2013.

    Secrecy often is an element of HYIP scams.

    “In response to a Staff demand for documents evidencing contracts for securities purchases, ‘forward committing contracts’ and bridge financing contracts, St. Jean responded that TCC was ‘engaged in these business activities through other entities under private and confidential agreements’ and ‘[t]herefore [did] not have any specific documentation respecting any specific trade transaction,’” ASC said in its decision.

     

  • BULLETIN: SEC Moves To Block Virginia Man From Intervening In Profitable Sunrise Case; Appointment Of Receiver Will Depend On Success Of Efforts To Repatriate Assets To United States

    breakingnews72BULLETIN: The SEC has asked a federal judge not to permit a Virginia man to intervene in the Profitable Sunrise HYIP fraud case, saying that the man’s self-filed pleading “would open the floodgates for other investors to file similar motions.”

    In late April, James Paul Schilling of Mechanicsville effectively asked U.S. District Judge Thomas W. Thrash Jr. of the Northern District of Georgia to unfreeze $57,300 sent to Profitable Sunrise via wire in a series of transfers in January and February. In early April, the SEC described Profitable Sunrise as a pyramid scheme that may have collected tens of millions of dollars while operating through a “mail drop” in England and using other companies to gather the funds.

    Money from the scheme was directed at entities in several countries, the SEC said.

    Profitable Sunrise was targeted at U.S. residents, the SEC said in April. One of the claimed “plans” of Profitable Sunrise was bizarrely dubbed the “Long Haul” and purported to pay 2.7 percent a day.

    “In this case, permitting S[c]hilling to intervene and retrieve money commingled with funds deposited by thousands of other investors would open the floodgates for other investors to file similar motions, which would create an unnecessary strain on this Court’s resources thereby delaying the proceedings and, ultimately, any distribution of funds to investors,” the SEC argued.

    The agency said in its opposition to Schilling’s motion that it was contemplating asking the court to appoint a receiver, but any decision to ask for the appointment would depend on whether the SEC’s “efforts to repatriate funds are successful.

    “A Receiver could best administer a process to return funds to defrauded investors pursuant to a plan of distribution approved by the Court,” the SEC said.

    In April, the SEC said that “Hungarian law enforcement authorities” had frozen an account holding $11.3 million connected to the scheme as part of an “investigation of suspected money laundering.”

    Whether that money will be returned to the United States is unclear. Also unclear is whether Profitable Sunrise funds that may be held in other countries ever will be returned. Among other things, the Profitable Sunrise case demonstrates the dangers of doing business with murky enterprises, regardless of where an investor lives. Investors by the thousands could be left holding the bag.

    Profitable Sunrise was promoted on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. Although promoters claimed “Roman Novak” was running Profitable Sunrise, it remains unclear whether he actually exists. The scheme spread through an MLM-style network of promoters hoping to glean commissions.

    The SEC is asking Thrash to summarily deny Schilling’s motion or “in the alternative, order that Shilling support the motion with admissible evidence and provide citation to the legal authorities that he claims support his motion.”

    Despite the murkiness of Profitable Sunrise, former pitchman John Schepcoff is telling YouTube viewers that he’s identified another venture that is “1,000 percent better” than Profitable Sunrise and Zeek Rewards. In August, the SEC described Zeek as a $600 million Ponzi and pyramid scheme, saying it duped people into believing a return of about 1.5 percent a day was legitimate.

    The Profitable Sunrise “Long Haul” plan offered about double the purported returns of Zeek.

    NOTE: Our thanks to the ASD Updates Blog.