PatrickPretty.com

Tag: SEC

  • UPDATE: PP Blog Now Starting To Get Bizarre Spam Related To BannersBroker ‘Program’

    americaatrisk4UPDATED 7:06 P.M. ET (U.S.A.) The PP Blog today began to receive bizarre spam related to the purported BannersBroker “program,” a Ponzi-forum darling.

    Senders from separate IPs who deemed themselves “Banners Broker” transmitted spam at 5:27 p.m. (ET) and 5:29 p.m. today. (UPDATE: 7:06 P.M. Actually, the 5:27 spammer deemed himself/herself “Banners Broker” and the 5:29 spammer deemed himself/herself  “Banners Brokers.”)

    One of the spams appeared to make the assertion that the PP Blog was created specifically in response to the Banners Broker “program” and that the Blog is in cahoots with at least two other sites to make Banners Broker look bad. The same would-be spam, which appeared to originate in the United Kingdom, also appeared to advance an argument that individuals should not question the Banners Broker “program.”

    An earlier spam — one that appeared to originate in Poland with a different email address but largely the same user name and same URL to a website that appears to sell purported Banners Broker sales aids — took a potshot at a Blogger named Finch. (The later spam described in the paragraph above also took a potshot at Rod Cook, the “MLM Watchdog.“)

    The PP Blog’s first reference to Banners Broker was published on June 17, 2012, when the Blog reported that a site that claimed it sold “customers” to Zeek Rewards members also was pushing traffic to Banners Broker and JSS Tripler/JustBeenPaid, the bizarre, 730-percent-a-year “program” purportedly operated by Frederick Mann.

    Mann also was a pitchman for the AdSurfDaily Ponzi scheme. JSS/JBP, which later morphed into a “program” known as ProfitClicking, may have ties to the sovereign-citizens movement.

    In August 2012, the SEC called Zeek Rewards a $600 million Ponzi- and pyramid fraud. Zeek, JSS/JBP, ProfitClicking and Banners Broker all were promoted from the Ponzi boards and had members in common, which leads to questions about whether the schemes and their financial vendors came into possession of funds tainted by multiple fraud schemes.

    The commonality of the “programs” also leads to questions about whether satellite companies are developing “leads” programs and purported sales aids to benefit from securities-fraud schemes before they are detected.

    The spammer at 5:27 p.m. today asserted that he (or she) was sure companies such as Banners Broker “will fight back through the legal system and get [Blogs critical of such programs] shut down.”

    In July, less than a month before the collapse of Zeek, Zeek figure Robert Craddock sought to shut down the website of Zeek critic K. Chang. It became the “Most Important” story of the year on the PP Blog.

    Banners Broker uses at least two of the payment processors used by Zeek: Payza and SolidTrustPay.

     

     

     

  • UPDATE: ASD’s Andy Bowdoin Incarcerated At Oklahoma City Federal Transfer Center

    Thomas Anderson "Andy" Bowdoin
    Thomas Anderson “Andy” Bowdoin

    Convicted 1-percent-a-day Ponzi schemer Andy Bowdoin is listed as an inmate at the Federal Transfer Center in Oklahoma City, a development that likely means the 78-year-old  AdSurfDaily patriarch is on his way to a federal prison. Bowdoin, a Floridian, last year requested to be incarcerated in Florida. The PP Blog was unable to determine immediately if that request was granted.

    Bowdoin pleaded guilty to wire fraud in the ASD Ponzi case in May 2012. He admitted ASD was a Ponzi scheme that had gathered about $119 million and had never operated lawfully from its inception in 2006 through its collapse in 2008. Bowdoin initially was imprisoned in June 2012, after federal prosecutors proffered evidence that he continued to promote scams even after the seizure of more than $80 million in the ASD Ponzi case and even after he was charged criminally in December 2010.

    In August, Bowdoin was sentenced to 78 months in federal prison for his role in the ASD Ponzi.

    Federal prosecutors identified AdViewGlobal and “OneX” as two other scams in which Bowdoin participated after the collapse of ASD amid Ponzi allegations by the U.S. Secret Service in 2008. Like ASD, AdViewGlobal was a purported “program” that planted the seed its paid a daily return of 1 percent. OneX was a “program” Bowdoin said could fetch participants a quick return of $99,000, apparently after an initial outlay of $5.

    Bowdoin targeted former ASD members and “college students” in his OneX promos.

    In August, the SEC accused Zeek Rewards of operating a massive online Ponzi scheme that had gathered about $600 million. Similar to ASD, Zeek Rewards was a “program” that planted the seed it paid a return of 1.5 percent a day.

    The SEC has described its Zeek probe as ongoing. The Secret Service said in August that it also was investigating Zeek.

    Despite the fact Bowdoin was sued civilly, accused of racketeering and charged criminally with wire fraud, securities fraud and selling unregistered securities for the ASD scam, any number of ASD members turned to promoting Zeek, which planted the seed it paid out even more than ASD.

    In August, the SEC accused Zeek of selling unregistered securities. Zeek operator Paul R. Burks, who is in his mid-60s, consented to a judgment in the civil case without admitting or denying the SEC allegations. Two prospective class-action lawsuits also were filed against Burks.

    Despite the legal entanglements of both Burks and Bowdoin and Bowdoin’s prison sentence, some MLMers immediately began promoting similar “programs.”

  • Former Zeek Pitchman Who Also Pushed JSS/JBP Scam Reportedly Doubts He’ll Be Paid By ProfitClicking, A Follow-Up ‘Program’

    alanchapmanpcmmgFormer Zeek Rewards and JSSTripler/JustBeenPaid pitchman “Alan Chapman” reportedly now claims he hasn’t been paid by “ProfitClicking” for “at least 3 months,” according to a post quoting “Chapman” on the MoneyMakerGroup Ponzi forum.

    ProfitClicking is the absurd follow-up “program” to the bizarre JSS/JBP scam, a 730-percent-a-year “opportunity” purportedly operated by Frederick Mann. JSS/JBP may have had ties to the “sovereign citizens” movement. Like ProfitClicking, the JSS/JBP “program” made members affirm they were not with the “government.”

    On Aug. 17,  the SEC described Zeek as a $600 million Ponzi and pyramid scheme that was selling unregistered securities to sustain a massive fraud that duped members into believing it provided a legitimate return averaging 1.5 percent a day. Just a day earlier, JSS/JBP took a page from the Zeek playbook, asserting that it was not selling securities and members were not making an investment.

    After the SEC’s Zeek action, JSS/JBP morphed into ProfitClicking, amid reports of the sudden retirement of Mann, a former pitchman for the AdSurfDaily Ponzi scheme. On Sept. 5, the PP Blog received a menacing communication threatening a lawsuit over its coverage of JSS/JBP/ProfitClicking. The lawsuit threat was made after the Blog reported that ProfitClicking was disclaiming any responsibility on the part of itself or its affiliates for offering the “program.”

    Like Zeek, JSS/JBP/ProfitClicking was promoted on forums listed in U.S. federal court files as places from which Ponzi schemes are promoted. In the hours after the SEC action, the PP Blog began to receive spam for a “program” known as “Ultimate Power Profits.” A check of the MoneyMakerGroup Ponzi forum showed that Zeek peddler “mmgcjm” was the key pitchmen for Ultimate Power Profits.

    The connectivity of the various scams shows how banks and financial vendors can come into possession of funds tainted by fraud schemes. Meanwhile, the court-appointed receiver in the Zeek case said last month that he had “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    “Chapman” was an apparent Diamond affiliate of Zeek. In June 2012 — apparently even as the SEC’s Zeek probe already was under way — a “Chapman” Blog known as “ZeekRewardsPays” asserted this (italics added):

    ZeekRewards Daily Profit Last 7 Days!
    June 11 2012 1.89 %
    JUNE 10 2012 0.88 %
    JUNE 09 2012 0.96 %
    JUNE 08 2012 0.92 %
    JUNE 07 2012 1.91 %
    JUNE 06 2012 2.00 %
    JUNE 05 2012 1.93 %

    Court filings by the SEC last week suggest its Zeek probe began in April 2012 and perhaps earlier. What’s not known is when Zeek learned it was under investigation. It is not unusual for law enforcement to maintain secrecy when a “program” hits its radar screens. Court filings from 2008 show that the U.S. Secret Service had infiltrated AdSurfDaily with undercover agents who corresponded with ASD promoters prior to any public announcement of a probe.

    At least one ASD member instructed an undercover agent not to call the “program” an investment, apparently based on the errant belief that wordplay designed to disguise ASD as an “advertising” program and not a program offering unregistered securities and unusually consistent returns at a preposterous rate of 1 percent a day somehow could insulate ASD from prosecution.

    On Aug. 1, 2008, the Secret Service began the process of seizing more than $80 million from ASD-related bank accounts, alleging that the “opportunity” was a massive online Ponzi scheme. ASD, Zeek, JSS/JBP and Profit Clicking planted the seed they provided returns that made Bernard Madoff look like a piker. Viewed on an annualized basis, the “programs” effectively were asserting they could outperform Madoff by a factor on the order of between 30 and 70 to one.

    The assertion by “Chapman” (as noted above) computed to an average daily return of 1.498 percent. On Aug. 17, the SEC said that Zeek operator Paul R. Burks “unilaterally and arbitrarily determines the daily dividend rate so that it averages approximately 1.5% per day, giving investors the false impression that the business is profitable.”

    Burks consented to a judgment on the same day the SEC brought the Zeek Ponzi action. The U.S. Secret Service — also on Aug. 17 — announced it was investigating Zeek. In 2008, the Secret Service brought Ponzi allegations against ASD’s 1-percent-a-day “program.” ASD operator Andy Bowdoin later admitted he was running a Ponzi scheme. Bowdoin was sentenced to 78 months in federal prison. He is 78 years old.

    Mann’s age is unknown. There have been reports he is in his eighties.

  • URGENT >> BULLETIN >> MOVING: New Filings By SEC Suggest Zeek Probe Began In April 2012 Or Earlier; Agency, Receiver Oppose Motions To Intervene By Possible Clawback Targets

    breakingnews72UPDATED 9:46 A.M. ET (JAN. 13, U.S.A.) New court filings by the SEC in the Zeek Ponzi scheme case in the Western District of North Carolina strongly suggest that the Zeek probe was under way at least by April 17, 2012. On that date, according to the filings, an IT specialist for the SEC was tasked by the agency’s Division of Enforcement to “conduct Website/video capture” of ZeekRewards.com.

    Four months to the day later — on Aug. 17, 2012 — the SEC alleged in federal court that Zeek was a $600 million Ponzi- and pyramid fraud operating from Lexington, N.C.  Left unanswered in today’s filing is the question about precisely when Zeek operator Paul R. Burks first was contacted by the agency and when he began to cooperate by providing records.

    Burks consented to judgment in the case, without admitting or denying wrongdoing.

    Separately, the SEC and court-appointed receiver Kenneth D. Bell both argued today that petitions to intervene and to dissolve the receivership by alleged Zeek “winners” Trudy Gilmond and Kellie King should be denied by Senior U.S. District Judge Graham C. Mullen.

    Court filings suggest that Gilmond has clawback exposure of more than $1.364 million. King’s potential exposure may exceed $205,000.

    “Gilmond and King seek to improperly interfere with a settled SEC enforcement action against defendants Rex Venture Group and Paul Burks to deny the Receiver the ability, as directed by the Court, to marshal the estate’s assets for the benefit of all aggrieved ZeekRewards investors,” the SEC argued. “The Motion to Intervene is a transparent attempt to obtain prospective relief in an improper forum with respect to clawback litigation the Receiver has yet to initiate.”

    For his part, Bell said Gilmond and King were engaging in “delaying tactics.”

     

  • Rumors Swirl About Banners Broker ‘Program’

    This affiliate page for the purported Banners Broker "advertising" program claims members can get double their money.
    This affiliate page for the purported Banners Broker “advertising” program claims members can double their money.

    UPDATED 8:54 P.M. ET (U.S.A.) Rumors abound online that authorities in India have carried out some sort of action against the Banners Broker “advertising” program. As of the time of this post, the PP Blog has been unable to confirm the rumored action with a law-enforcement source.

    “Advertising” scams long have been associated with the HYIP sphere. The $119 million AdSurfDaily Ponzi scheme, for instance, was such a “program.” Such scams are associated with the unlawful sale of unregistered securities and claims by law enforcement of members’ money being siphoned by operators. “Winners” in such schemes can be sued for their ill-gotten gains. There also have been instances in which key pitchmen have been sued by regulatory agencies and even charged with crimes.

    Several things the PP Blog has noticed:

    A “welcome page” Banners Broker URL exists for the United States but is throwing this error message: “Unable to locate template file welcome_us.tpl.”

    The nonworking US URL is  http://www.bannersbroker.com/main/welcome_us. It is listed on an apparent Banners Broker affiliate’s website with a headline of “BANNERS BROKER INDIA.” The site also lists a U.S. address for the company in Ocala, Fla. Other addresses and welcome URLs for other countries appear on the same page. Welcome URLs for India, Canada, Ireland and the United Kingdom appear to be working. Only the URL for the United States appears not to work.

    Whether Banners Broker removed the U.S. “welcome” URL in a bid to distance itself from U.S. regulatory scrutiny is unclear.

    Regardless, the Banners Brokers site is viewable in the United States from the URLs for other countries and by connecting directly to the Banners Broker dotcom address. Although Banners Broker lists the flags of several countries on its homepage, the American flag is not listed. (Or at least wasn’t viewable by the PP Blog from the United States.)

    The Better Business Bureau has given Banners Broker an “F,” the BBB’s lowest grade.

    At least one Banner’s Broker affiliate site is calling itself “Banners Broker Brief” and using the BBB acronym long associated with the Better Business Bureau. (A 2010 Phil Piccolo scam known as Data Network Affiliates arranged for one of its products to be called BBB. Such approaches sometimes are used to leech off of the Better Business Bureau’s famous acronym and to distort search-engine results and make “negative” information harder to find. It also is common in certain MLM schemes for affiliates to use the word “scam” when presenting the “opportunity” — and they then explain why it’s purportedly not a scam. This approach also may make it difficult to find “negative” information about a “program” because information can become buried in page after page of claims that the “program” is not a scam.)

    Any number of affiliate YouTube videos exist for Banners Broker. Some are of the check-waving variety. Instead of featuring checks, however, they appear to feature screen shots of payments that purportedly originated at SolidTrustPay. SolidTrustPay has a reputation for doing business with scam after scam. Zeek Rewards, which the SEC described in August as a $600 million Ponzi- and pyramid scheme, used SolidTrustPay.

    Banners Broker appears to have been popular among Zeek promoters. One video exists in which a Banners Broker affiliate tells the audience about the SEC’s Zeek case, but the affiliate claims he believes Banners Broker is not a fraud scheme. Even so, he allows that it could be.

    Banners Broker has a major presence on the Ponzi boards — again like Zeek. Some promoters race from scam to scam to scam.

    There are claims about Banners Broker “doubling” money.

     

     

  • WHACK-A-MOLE: In Aftermath Of Zeek Collapse, ‘ProfitableSunrise’ Emerges

    EDITOR’S NOTE: For the definition of “whack-a-mole,” see the Online Slang Dictionary . . .

    cautionflagUPDATED 6:12 A.M. ET (U.S.A.) ProfitableSunrise will take you and provide an extraordinary interest payment daily in the form of numbers on a screen — but only if you “fully accept the fact that all communication between you and Profitable Sunrise is absolutely confidential and cannot be disclosed to any third parties,” according to the “opportunity’s” website.

    Given that the many governments of the world could be considered third parties, you agree to be gagged if regulators or agencies with the power of criminal arrest ever contact you, according to the PP Blog’s reading of the ProfitableSunrise Terms of Service.

    ProfitableSunrise also advises incoming members they must “confirm” they “are not involved in any business related to alcohol, firearms, tobacco, gambling and abortion.” There is no mention of drugs/narcotics or prostitution.

    After apparently qualifying members via the Terms based on their beliefs about booze, guns, cigarettes, dice and abortion without disclosing why such information was needed by a purported investment firm , ProfitableSunrise says you can open various “Investment Accounts.” “Starter” accounts touted to pay 1.6 percent daily can be opened for as little as $10. But you also may plunk down greater sums of between $500 and $2,500, apparently through the “Regular” (1.8 percent daily) “Advanced” (2 percent daily) and “Long Haul” (2.7 percent daily) plans.

    Here is part of what ProfitableSunrise says about the Long Haul (italics added/no editing performed):

    The interest rate paid under the Long Haul is 2.7% per business day.
    – The Long Haul can only be started from November 1, 2012 till March 1, 2013.
    – The minimum deposit in the Long Haul is $500.00
    – The deposit options available in the Long Haul are bank wires and deposits from existing account principals in other plans – for group members, bank wire transfers only – for regular members.
    – E-currency deposits are not accepted in the Long Haul.
    – The Easter Gift Balance will be paid to all customers during the Easter week. You will not be able to leave it in your account principal.
    – After the Easter, the daily interest rate will be reduced to 2.35% in the Long Haul.
    – The compounding can be disabled or limited in any account at our sole discretion.
    – After March 1, 2013, you will not be able to make an additional deposits into the Long Haul.

    ProfitableSunrise appears to have become a refuge for certain members of the collapsed ZeekRewards “program,” which the SEC described in August as a $600 million Ponzi- and pyramid scheme that duped members into believing they got a legitimate return that averaged about 1.5 percent a day.

    Meanwhile, over at RealScam.com, an antifraud forum, an apparent ProfitableSunrise “defender” known as “Myriad Force” is advancing an argument that antiscam posters are  members of a “Cult of Uncertainty.”

    “Think of all the antichrists that are watching this program in terror,” Myriad Force ventures. “They won’t become involved because the owner is a Christian that loves Jesus Christ, and does not back down to the antichrists.”

  • LETTER TO READERS: Our Choice For The Most Important PP Blog Post Of 2012

    Dear Readers,

    The PP Blog’s choice for the “Most Important” story to appear on the Blog in 2012 is this one, dated July 28: “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

    The story tells the bizarre tale of how purported Zeek “consultant” Robert Craddock, beginning on July 22, tried to gag K. Chang, a Zeek critic.

    Our reasoning for selecting the Craddock tale appears below . . .

    ** __________________________________ **

    recommendedreading1UPDATED 1:30 P.M. ET (U.S.A.) This Blog is well aware that some MLMers would have you believe that nothing that appears here is important. The “case” against the Blog normally involves ad hominem attacks, along with bids to change the subject or cloud issues. Some of the campaigns against the PP Blog have been almost comical, falling along lines such as these: ASD can’t be a Ponzi scheme because it rained on Tuesday. Your [sic] an idiot and looser [sic] !!!!!

    Other campaigns have been much more menacing.

    One of the least-appreciated aspects of the Zeek Rewards story is that Zeek launched after Bernard Madoff made the word “Ponzi” a part of the national (and international) consciousness. Setting aside Zeek’s epic legal problems, Zeek and its “defenders” have a PR problem from which they’ll never recover. In short, it is fatal. The reason that it’s fatal is that it creates a dynamic that is virtually unique to the MLM HYIP sphere: While the rest of the world rails against Ponzi schemes and Ponzi schemers, the MLM HYIP sphere defends them.

    But it gets stranger than that. Certain inhabitants of the HYIP sphere in effect are lobbying for the legalization of Ponzi schemes to make their lives more convenient. To this group, the answer to Ponzi schemes is even more Ponzi schemes. Their message is remarkably similar to the message of the gun lobby, which appears to be arguing that the answer to gun violence is even more guns — in strategic locations, of course, perhaps in educational institutions at the grade-school level through college. (And maybe at movie theaters and at the scene of rural house fires, in case first responders such as firefighters and EMTs encounter an ambush.)

    You’ve heard by now that the rural town of Webster, N.Y., turned into Israel last week, we’re sure.

    In fairness to the gun lobby, it must be pointed out that HYIP “defenders” who are lobbying for more Ponzi schemes even as the gun lobby lobbies for more guns have less legal standing than the gun lobby. Guns already are legal. Ponzi schemes are not.

    But, getting back to Zeek’s PR problem . . .

    Madoff was exposed in 2008 as a Ponzi schemer, a financial criminal of unprecedented hubris. Not only did Zeek debut after Madoff, it came after Scott Rothstein was exposed (in 2009) as a racketeer/Ponzi schemer — and after AdSurfDaily, a purported MLM “advertising” company, was exposed (in 2008 and 2009) as the largest online Ponzi scheme ever and was sued by its own members amid allegations of racketeering.

    For some Zeek promoters, this well-known fact set makes them vulnerable to charges they are nothing less than members of an organized mob of habitual criminals who thrive by choosing to be willfully blind.

    But, incredibly, it gets even stranger . . .

    Zeek had members in common with AdSurfDaily and, like AdSurfDaily, told members that a purported “advertising” function was central to its business model.  Meanwhile, Zeek became popular in North Carolina, after the infamous Black Diamond Ponzi caper was exposed in that very state. (Among other things, the Back Diamond fraud led to criminal charges being filed against a bank.)

    Along those lines, Zeek (in May) began to show signs that it was experiencing banking problems after it had become popular in a region known to have served up another colossal mess, this one in nearby South Carolina. (The South Carolina mess was known as the “3 Hebrew Boys” scheme. It resulted in the longest Ponzi scheme sentences in the history of the South Carolina federal courts and, like AdSurfDaily and Zeek, served up a heaping helping of the bizarre, including claims by “sovereign citizens” that prosecutors had no authority over them.)

    Moreover, the Zeek scheme for which some “defenders” continue to cheer featured recruitment commissions on two levels (like AdSurfDaily) and an “RPP” payout (like ASD’s 1-percent-a-day “rebates”). Finally, the Zeek scheme came to the fore after the U.S. Secret Service described ASD as a “criminal enterprise” and after the Attorney General of the United States made a special public appearance in Florida — fertile recruitment grounds for schemes such as Zeek and the stomping grounds of Madoff and Rothstein — to announce that the Justice Department was serious about putting people in jail for ravaging the U.S. economy with their Ponzi schemes.

    “Palm Beach is, in many respects, ground zero for the $65 billion Ponzi scheme perpetrated by Bernard Madoff — the largest investor fraud case in our nation’s history,” Eric Holder said on Jan. 8, 2010, in southern Florida. “Before the house of cards Madoff built collapsed in 2008, before he was sentenced to 150 years in prison last June, before he became a notorious criminal on the cover of newspapers around the world, he was one of your neighbors.

    “His former home sits just north of us,” Holder continued. “An 8,700-square-foot mansion that’s worth . . . well, we’ll know what its worth once the U.S. Marshals Service auctions it off and the proceeds are distributed to Madoff’s victims.”

    Holder’s words are best viewed as a warning against willful blindness: Neither victim nor perpetrator be. There is unqualified pain and misery for both.

    Despite Holder’s appearance in Florida — despite his reference to Madoff’s “house of cards” — AdSurfDaily promoters Todd Disner and Dwight Owen Schweitzer later sued the United States, claiming that its Ponzi case against ASD was a “house of cards.” Naturally they made this claim even as they were promoting Zeek.

    And from what region were they promoting Zeek? Why, Southern Florida, of course, the same region Holder visited in 2010 to throw down the gauntlet against Ponzi schemers and their enablers.

    Amid the historical circumstances cited above, Zeek Rewards began to encounter some heat from the media and from its own members. Some of the members did not understand why things at Zeek appeared to be so circuitous and why they were being asked to use payment processors such as AlertPay and SolidTrustPay that had been associated with fraud scheme after fraud scheme operating online, including ASD.

    What to do if you’re Zeek?

    Well, according to Florida resident Robert Craddock, a self-described Zeek consultant, you hire, well, Robert Craddock — and you use Robert Craddock to go after Zeek critics such as K. Chang.

    The Most Important Story Of 2012

    In the PP Blog’s view, the most important story to appear on the Blog in 2012 is this one, titled, “Site Critical Of Zeek Goes Missing After HubPages Receives Trademark ‘Infringement’ Complaint Attributed To Rex Venture Group LLC — But North Carolina-Based Rex Not Listed As Trademark Owner; Florida Firm That IS Listed As Owner Says It Has ‘No Knowledge’ Of Complaint.”

    The story details efforts in July by Craddock to have K. Chang’s Zeek “Hub” at HubPages removed from the Internet just weeks before the SEC accused Zeek of being a $600 million Ponzi- and pyramid fraud. By early estimates, the alleged Zeek fraud was about five times larger than ASD in pure dollar volume ($600 million compared to $120 million) and perhaps 20 times larger in terms of the membership base (2 million compared to 100,000).

    Incredibly, Craddock went after K. Chang after Deputy Attorney James Cole, speaking in Mexico, said that international fraud schemes have been known to “bring frivolous libel cases against individuals who expose their criminal activities.” And Cole also pointed out that fraudsters have a means of “exploit[ing] legitimate actors” and may rely on shell companies and offshore bank accounts to launder criminal proceeds.

    If ever a company exploited legitimate actors, it was Zeek. Kenneth D. Bell, the court-appointed receiver, says there were approximately 840,000 Zeek losers who funded the ill-gotten gains of 77,000 winners. And Bell also says he has “obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    There can be no doubt that some of those winners are longtime residents of the woeful valley of willful blindness. Not only do they “play” HYIP Ponzis for profit, they now publicly announce their intent to keep their winnings. Zeek has exposed the epicenter of willful blindness, the criminal underworld of the Internet. It is easy enough to view Craddock’s efforts as a means of institutionalizing willful blindness, first by seeking to chill speech and, second, by scrubbing the web of information that encourages readers to be discriminating so they won’t be duped by a Ponzi fraudster.

    Bizarrely, it appears as though someone inside of Zeek believed it prudent to hire Craddock to go after K. Chang. If that weren’t enough, only days later Zeek used its Blog to plant the seed that unnamed “North Carolina Credit Unions” were committing slander against Zeek.

    After the SEC brought the Zeek Ponzi complaint in August, Craddock quickly went in to fundraising mode. As incredible as it sounds, ASD’s Todd Disner — also of Zeek — was on the line with him.

    What Craddock did was deplorable. It was as though he slept through the past four years of Ponzi history, all the cases that showcase the markers of fraud schemes and all the government warnings to be cautious. (Nongovernment/quasigovernment entities such as FINRA also publish such warnings, like this one on HYIP fraud schemes outlined by the PP Blog.)

    The FINRA warning was published in 2010, prior to Zeek but after the Legisi, Pathway To Prosperity and ASD schemes were exposed. Legisi operator Gregory McKnight potentially faces 15 years in federal prison. He was charged both civilly (SEC) and criminally (U.S. Secret Service) — and Legisi pitchmen Matthew John Gagnon also was charged civilly and criminally by the same agencies. The SEC called Gagnon a “threat to the investing public.”

    Any number of Zeek promoters pose a similar threat. They are at least equally willfully blind.

    It is clear that some Zeek promoters also were promoting JSSTripler/JustBeenPaid, the debacle-in-waiting purportedly organized by Frederick Mann, a former ASD promoter. JSS/JBP has morphed into “ProfitClicking” amid reports of the “retirement” of Mann. Now, ProfitClicking “defenders” are threatening lawsuits against critics.

    Naturally the stories advanced by ProfitClicking “defenders” are being improved by “defenders” of other obvious fraud schemes such as BannersBroker. A BannersBroker “defender” is over at RealScam.com — an antiscam site — suggesting that RealScam is a terrorist organization.

    My God.

    These claims are being made just days after Zeek figure Robert Craddock suggested he had contacts in law enforcement who were going to charge Blogger Troy Dooly with cyber harassment.

    It wouldn’t sell as fiction.

    Craddock’s bid to gag K. Chang easily was the most important story on the PP Blog in 2012. It’s the one that signaled that things are destined only to get crazier in MLM La-La Land and that the threat to U.S. national security only will grow.

     

     

  • Florida Man Who Hosts Zeek Calls Featuring Robert Craddock Was Winner In Botfly LLC Ponzi Scheme

    ponzinews1UPDATED 3:57 P.M. ET (U.S.A.) Gregory Baker, a Florida man who hosts calls featuring Robert Craddock in the aftermath of the SEC’s Ponzi-scheme case against Zeek Rewards, is listed as a winner in the Botfly LLC Ponzi scheme case, one of the Sunshine State’s ugliest fraud schemes.

    Prosecutors said that David Lewalski, Botfly’s now-imprisoned operator, tried to dupe investors into not cooperating with investigators and to coach investors on their testimony. The SEC last week accused Craddock of encouraging Zeek affiliates “not to cooperate” with Kenneth D. Bell, the court appointed receiver.

    No charges have been brought against Craddock.

    Court records show that Baker, who has used an address in the Tampa suburb of Valrico, was sued for his Botfly winnings by Michael E. Moecker, the court-appointed receiver in the Botfly case. Other records show that Baker presided over a now-defunct Florida entity known as Integrity Currency Traders LLC.

    Integrity was formed on March 15, 2010. Less than three weeks later — on April 1, 2010 — then-Florida Attorney General Bill McCollum alleged that Botfly was a massive Ponzi scheme that affected at least 550 investors, gathered tens of millions of dollars and got its name from “an insect whose larvae burrow under the skin of mammals and eat their flesh until they mature into an adult fly.”

    Bell asserted last week that he had “obtained information indicating that large sums of [Zeek] Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.” The receiver did not identify winners who may be hiding assets.

    Moecker sued Baker in December 2011, alleging that Baker had received $8,580 in ill-gotten gains from Botfly, a purported Forex company prosecutors said promised a return on “promissory notes” of 10 percent a month. Under the terms of a settlement with the receiver, Baker agreed on Jan. 31, 2012 — only weeks after being sued — to pay the Botfly receivership estate $7,722, according to court filings. The sum represented a discount of $858 from Baker’s alleged winnings.

    Zeek planted the seed that it provided a return of 1.5 percent a day.

    Whether Baker was a member of Zeek when he paid back his Botfly winnings is unclear. In August 2012, the SEC described Zeek as a $600 million Ponzi- and pyramid scheme that potentially had defrauded more than 1 million people. Baker now is listed on a website styled gofunplaces.info as a member of the “Top Team” and a leader of Go Fun Places, a nascent MLM program.

    Lewalski operated Botfly in part from the Florida home of his 82-year-old mother, according to prosecutors.

    After McCollum sued Lewalski/Botfly, Lewalski chartered a private Gulfstream IV jet at a cost of $172,744 to fly from the United States to Belgium, prosecutors said. He eventually became the target of a federal criminal probe and, in November 2011, was sentenced to 20 years in federal prison. Moecker, the receiver, sued Baker a month later.

    Lewalski became infamous for wretched conduct before, during and after the Botfly probe. He directed conspiracy theories at investigators, complaining about “recent ‘Orwellian’ totalitarian tactics” allegedly employed by U.S. investigators in Ponzi scheme cases. He described a female attorney working for the receiver as a “c[$%!]” and a “Nazi,” and further described a female investigator for the Florida Department of Law Enforcement (FDLE) as “nuts” and a “bitch” — all while seeking to obstruct the Botfly probe, according to prosecutors.

    After the SEC brought the Zeek Ponzi prosecution, Craddock dropped the name of McCollum in a conference call, describing the former Attorney General now in private practice at the SNR Denton law firm as a good friend. Craddock’s efforts to secure counsel through SNR Denton for a purportedly “protected” group of Zeek affiliates upset by the actions of the SEC and the appointment of a receiver in the Zeek case ultimately failed.

    On the line with Craddock in one of his Zeek-related conference calls was Todd Disner, a Zeek pitchman and a figure in the AdSurfDaily Ponzi scheme story. McCollum sued ASD in 2008. His office later provided the names of ASD victims to the Feds as part of remissions program by which ASD members received compensation as crime victims from proceeds seized by the U.S. Secret Service in 2008. In November 2011, Disner sued Rust Consulting Inc., the remissions administrator. A federal judge eventually tossed Disner’s claim against Rust. That claim was brought in the same case in which Disner sued the United States, alleging that ASD was a legitimate enterprise and that the government had violated his Constitutional rights by seizing ASD’s database and business records.

    A judge tossed Disner’s claims against the government, too. He is now appealing. Disner’s co-plaintiff in the case was fellow ASD and Zeek pitchman Dwight Owen Schweitzer, a former attorney whose license was suspended in Connecticut.

    On the line with Craddock in another Zeek conference call was T. LeMont Silver. Like ASD’s Andy Bowdoin, Silver was a pitchman for a scheme known as OneX. In April, about four months before the SEC’s Zeek action, federal prosecutors described OneX as a “fraudulent scheme” and pyramid that was recycling money in ASD-like fashion. ASD was a Ponzi scheme that gathered at least $119 million, according to prosecutors.

    Zeek appears not to have been Silver’s first encounter with an alleged Ponzi scheme. During the call with Craddock, Silver identified himself as a victim of a separate Ponzi scheme he did not name. He complained bitterly during the call about the purported lack of action by an unnamed receiver in the second scheme.

    Craddock has been leading a chorus of boos against the SEC and the receiver in the Zeek case, planting seeds of doubt that Zeek was a Ponzi scheme. Court filings suggest that Zeek winners potentially have tens of millions of dollars in clawback exposure in the Zeek case.

    When Baker was sued by the receiver in the Botfly case, the lawsuit effectively was filed on the same theory the Zeek receiver is using: that proceeds from a Ponzi scheme are ill-gotten gains. Whether Baker has exposure as a Zeek winner is unclear.

    What is clear is that Craddock says reporters are spreading misinformation about Zeek. In a call last week, Craddock said he intended to file a police report against Blogger Troy Dooly after hearing from Zeek members who complained about how Dooly is covering the Zeek fallout on his MLMHelpDesk Blog.

    Dooly once was a fan of Zeek and has acknowledged he was reimbursed for certain expenses by Zeek while covering Zeek. His reports on the scheme apparently have become too negative for Craddock, who once spoke positively of Dooly.

    “I am always looking for a new Epic Adventure, so this should be fun to experience,” Dooly said on his Blog on Friday, in response to Craddock’s claims that he’ll use police contacts against Dooly.

    As was the case when he dropped McCollum’s name while collecting funds to challenge the actions of the SEC and the receiver in the Zeek case, Craddock last week dropped the name of the Florida Department of Law Enforcement in his remarks about the police action he has planned against Dooly.

    Dooly, Craddock ventured, needed to be charged with cyber harassment and gotten “rid of” by law enforcement.

    Whether FDLE would take kindly to Craddock’s dropping of its name was not immediately clear.

    In the 2010 Botfly case, McCollum’s office said this (italics added):

    The order to freeze assets and the injunction were obtained yesterday after an investigation by a dedicated team in the Attorney General’s Office that works under the Florida Securities and Investor Protection Act, a new law championed last year by the Attorney General and bill sponsors Representative Tom Grady and Senator Garrett Richter. The law provides the Attorney General’s Office with greater authority to pursue investment and securities fraud.

  • Conference Call By Zeek Receiver Under Way [Call Ended At 6:03 P.M.]

    EDITOR’S NOTE: This post was updated at 2:48 p.m. on Dec. 20 to include this link to a recording of the receiver’s Dec. 17 call. The information below reflects the PP Blog’s original notes from the call on Dec. 17 . . .

    UPDATED 7:27 A.M. (DEC 18, U.S.A.) A conference call by Kenneth D. Bell, the court-appointed receiver in the Zeek Rewards Ponzi scheme case, is under way. (Call ended at 6:03 p.m., as noted below.) The call began at 5 p.m. ET (U.S.A).

    UPDATE 5:15 p.m. Bell, formerly a federal prosecutor, has said he knows what a Ponzi scheme is — and “this was one.” Somewhere between $500 million and $600 million was lost. The receivership estate has recovered about half of that. “We’re roughly half-way home, but that’s a huge gap,” Bell said.

    UPDATE 5:18 p.m. A claims form for victims should be ready by the end of January, Bell said. It’s doubtful that victims can be made 100 percent whole.

    UPDATE 5:21 p.m. There are some sad, Zeek-related stories of loss out there. Bell said he had emails from people who’d lost anywhere from $49 to $10,000.

    Some folks are worried they can’t establish their loss because they sent money to their sponsor, not Zeek parent Rex Venture Group, Bell said. A means of addressing such claims is being established.

    UPDATE 5:25 p.m. Bell said some people have questioned whether he is dragging out the receivership to drive up legal fees. He asked listeners to trust him, and he denied foot-dragging. His “goal is to be the most cost-effective receivership in history,” Bell said.

    UPDATE 5:33 p.m. Bell said he did not know if other people will be charged by authorities in connection with Zeek. (Zeek/Rex operator Paul R. Burks is the only person charged to date — civilly by the SEC.)

    He added that he’ll be prepared to prove Zeek was a Ponzi scheme as he pursues winners in clawback litigation. A motion by Zeek winners to appoint attorney Michael Quilling  examiner was “absurd,” he said. He did not reference Quilling by name.

    UPDATED 5:38 p.m. Bell also will oppose a motion by attorney Ira Lee Sorkin to dissolve the receivership. He did not mention Sorkin’s name. (Sorkin was Bernard Madoff’s defense attorney.)

    UPDATED 5:41 pm. Bell is contemplating an interim distribution to victims. More study needs to be done, but “I don’t see any reason to sit on $300 million,” he said. No timetable has been established for an interim distribution.

    UPDATED 5:44 p.m. Zeek’s database “is a real mess,” Bell said. He is studying a means by which victims could gain access to their back offices to gain access to information, but such a capability could be cost-prohibitive.

    UPDATED 5:48 p.m. Some Zeek members have poor records, but others have good records that are helping fill in  gaps in Zeek’s database. “We will try to help you establish your claim,” Bell said. The more records members can submit, the better.

    UPDATED 5:50 p.m. The plan is to treat all Zeek members equally. Distributions likely will occur all at once. No one has received money from the receivership to date.

    UPDATED 5:52 p.m. In the early days of the receivership, Bell said he received “tens of thousands” of emails.

    UPDATED 5:54 p.m. Bell will sell real estate and furnishings owned by Zeek, he said.

    UPDATED 5:58 p.m. There are “eight to 10” core members of the Zeek receivership team. At the moment, some of the lawyers are arguing with lawyers on the other side of the issues, Bell said.

    UPDATED 6 p.m. Bell said if Paul Burks still has Zeek receivership property, he’ll be treated as a winner. The case was not over simply because Burks paid a $4 million fine to the SEC, he said. It was not up to the receivership to determine if Burks would be charged criminally, Bell said.

    UPDATED 6:03 p.m. Call ended. Bell thanked those supporting his efforts and said he understood why some people would not.

    MISC NOTES AT 6:05 p.m. What happens to possible Zeek “ringleaders” is the responsibility of law enforcement, Bell said during the call.

    The current math, he said, looks something like this: 840,000 losers and 77,000 winners. “A lot” of people had more than one Zeek username, Bell said. Every dollar the receivership estate spends on court battles is a dollar that won’t go to victims, Bell said. Prudent choices have to be made when deciding how to fund the receivership estate in a cost-effective manner to maximize the distributions to victims, Bell said. There were “boxes and boxes” of cashier’s checks at Rex headquarters, Bell said.

    Those cashier’s checks were receivership property under the law, Bell said.

  • URGENT >> BULLETIN >> MOVING: Montana Fines ‘Funky Shark,’ Purported Upstart ‘Penny Auction’ Program; Operator Agrees to Pay $834,000 After Issuance Of Order

    breakingnews72URGENT >> BULLETIN >> MOVING: (UPDATED AT 12:49 P.M. ET U.S.A. TO DELETE EARLIER REFERENCE TO ‘CEASE AND DESIST’ ORDER AND TO PROVIDE LINK TO CONSENT AGREEMENT AND FINAL ORDER.)

    An upstart “penny auction” company known as “Funky Shark” effectively has been shut down after the state of Montana named it in an order and its alleged operator agreed to pay a $40,000 fine and to repay $834,000 to investors, the office of the Montana Commissioner of Securities and Insurance Monica J. Lindeen said this morning.

    Montana authorities identified Scott Wacker of Bozeman as Funky Shark’s operator, alleging that he and Funky Shark sold investment opportunities illegally.

    In September — after the shutdown by the SEC of the purported Zeek “penny auction” program — “Wacker began recruiting investors for his penny-auction website, FunkyShark.com,” Lindeen’s office said. “By the end of October, Wacker had raised over $1 million from investors across the world.”

    In a claim apt to cause unease among HYIP operators, Lindeen’s office said Wacker’s bank filed a “suspicious activity report.” Such reports typically are filed when a bank begins to suspect something untoward is occurring in a customer’s account.

    “The flurry of transactions in Wacker’s personal and business accounts led his bank to file a suspicious activity report, which was referred to Lindeen’s office,” Montana authorities said. “After reviewing the report, investigators suspected Funky Shark was a pyramid scheme and requested a restraining order to prevent additional investors from getting involved.”

    Wacker cooperated with Montana authorities and “posted a notice on Funky Shark’s website explaining that its investment program ‘may violate certain securities laws in the United States,’” Lindeen’s office said.

    Authorities described Funky Shark as a program teetering on collapse shortly after its launch.

    “In the two months it operated, Funky Shark paid nearly $378,000 in commissions to participants who recruited new members,” Lindeen’s office said. “Those commission payments left Funky Shark unable to repay all of its participants in full, so Wacker agreed to pay $270,000 out-of-pocket to make investors whole.”

    Lindeen said Funky Shark investors were lucky.

    “Mr. Wacker stepped up to the plate and repaid his investors,” she said. “Often when we handle these types of cases, there’s simply no money left to repay participants. But for a number of reasons, this case is unique. Mr. Wacker didn’t understand what he was getting into, and he has expressed his commitment to setting things right.”

    Some HYIPs are selling “founder’s memberships” to fill the coffers with cash prior to the “launch” of a “program.” That was the case with Funky Shark, Lindeen’s office said.

    “According to the Funky Shark website, members who pay a $24.95 fee can join a ‘rewards program’ and earn ‘passive income’ from new members they recruit,” Lindeen’s office said on Nov. 2. “For a non-refundable, $1,000 investment, members become ‘founders’ and get a share of each day’s auction profits and a bonus for every new founder they recruit.”

    Authorities noted that “[n]either Wacker nor Funky Shark were licensed to offer securities in Montana.”

    Here is the consent order.

  • BULLETIN: Zeek Receiver Says ‘Large Sums . . . May Have Been Transferred By Net Winners To Other Entities In Order To Hide Or Shelter Those Assets’

    breakingnews72BULLETIN: (UPDATED 2:34 P.M. ET U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi scheme case has advised a federal judge that he “has obtained information indicating that large sums of Receivership Assets may have been transferred by net winners to other entities in order to hide or shelter those assets.”

    The dramatic assertion by receiver Kenneth D. Bell that Zeek winners may have hidden cash appeared in a motion to Senior U.S. District Judge Graham C. Mullen to compel certain alleged Zeek “winners” to produce documents in advance of anticipated clawback actions.

    Bell’s move may send shudders across the HYIP sphere because it signals an effort to unmask bids by willfully blind hucksters and professional Ponzi players — known derisively as “pimps” — to benefit from serial scamming on a national and international scale. It is known, for instance, that some Zeek participants also pitched AdSurfDaily, which the U.S. Secret Service described in 2008 — at least two years before the launch of Zeek — as an international Ponzi scheme that had gathered tens of millions of dollars.

    ASD operator Andy Bowdoin pleaded guilty to wire fraud in May. In August, he was sentenced to 78 months in federal prison.

    HYIP schemes thrive in part because serial scammers race from scheme to scheme to scheme while turning blind eyes to obvious markers of fraud, including purported returns that dwarf the marketplace and are unusually consistent. Zeek planted the seed that it provided a daily return of between 1 percent and 2 percent. In August, the SEC said Zeek’s payout “consistently has averaged approximately 1.5% per day.”

    Zeek operator Paul R. Burks, the SEC charged, “unilaterally and arbitrarily” determined the daily dividend rate to give “investors the false impression that the business is profitable.”

    In 2009, the U.S. Secret Service effectively accused Bowdoin of doing the same thing. ASD purported to pay 1 percent a day. In August 2012, the Secret Service said it also was investigating Zeek. Court filings in the ASD case show that some members of ASD established entities through which to receive proceeds from ASD. One was described as a “ministry of giving,” for instance. Another was described as a nonprofit religious entity.

    The Secret Service described ASD as a “criminal enterprise” that directed tainted proceeds potentially to thousands and thousands of participants while scamming the very people it purported to be helping earn money through its 1-percent-a-day revenue-sharing “program.”

    Zeek also described itself as a revenue-sharing program and, like ASD, preemptively denied that anything untoward was occurring. Burks did not contest the SEC’s case against his firm, neither admitting nor denying wrongdoing. ASD’s Bowdoin eventually acknowledged that he was at the helm of a massive Ponzi scheme and that ASD had never operated lawfully from its inception in 2006 through it collapse in 2008.

    Bell also revealed in the filing that he had filed paperwork in “all” 94 U.S. federal court districts to inform judges and court officials that he was presiding over the receivership ordered by Mullen in August after the SEC described Zeek as a $600 million Ponzi- and pyramid scheme operated through Rex Venture Group LLC (RVG) and Burks. The move was designed to consolidate jurisdiction over clawback actions in a single place: Mullen’s courtroom in the Western District of North Carolina, the home base of Zeek.

    Among other things, Bell is seeking “All documents constituting or relating to any communication involving or related to RVG.”

    “The Receiver has asked for these documents to learn more about how the recipient was involved in Zeek, portrayed the scheme to others, solicited others, and otherwise conducted activities related to Zeek,” Bell said in court filings.

    Meanwhile, Bell is seeking “All documents constituting or related to any communication to any affiliate, vendor, customer or client of RVG related to RVG.” At the same time, he is seeking “Documents sufficient to show all user names, passwords, email addresses and accounts used . . . in connection with RVG.”

    That information is needed because many “individuals used multiple user names, and this information will clarify which user names a given net winner used,” Bell advised Mullen. “In addition, the account information will help to allow the Receiver to verify the financial figures calculated from RVG’s records.”

    Bell’s motion to compel specifically references Zeek affiliates Robert Craddock, David Sorrells, David Kettner and Mary Kettner as the recipients of subpoenas from the receivership. In October, Bell mailed a first wave of subpoenas to about 1,200 Zeek affiliates. He effectively is seeking the same information from them that he is seeking from Craddock, the Kettners and Sorrells.

    Craddock, the Kettners and Sorrells “have failed to produce any of the documents requested by the Receiver despite multiple requests,” Bell advised Mullen. “Therefore, the Receiver has filed a motion to compel production of a portion of the documents originally requested by the Receiver.”

    The Kettner and Sorrells potentially have nearly $2 million in combined clawback exposure, according to court filings. Craddock’s exposure is unclear. He has referred to himself as a Zeek “consultant.”

    One of the authorities Bell pointed to in advance of Zeek clawback actions and in his motion to compel the production of documents is a case involving Michael Quilling, an attorney for Craddock, the Kettners and Sorrells. Quilling himself has presided over SEC receiverships.

    Bell pointed out to Mullen that Quilling once sued the estate of a a deceased individual who’d received proceeds from the Frederick J. Gilliland Ponzi scheme in 2002. That lawsuit was filed on the same legal theory Bell is pursuing in the Zeek case: that recipients of fraudulent proceeds from a Ponzi scheme are not entitled to keep them.

    See post on ASDUpdates.