For starters, Zeek affiliates being approached by upline sponsors and email/website appeals to send in money “to defend Zeek Rewards and all of our independent businesses as per our legal rights of due process” might want to read this July 25 PP Blog post.
It’s about how wordplay was used to sanitize HYIP scams.
For additional background, Zeek affiliates might want to read this July 28 PP Blog post.
It’s about how purported Zeek “consultant” Robert Craddock sought to disable the Hub of Zeek critic “K. Chang.” Craddock now is part of the effort to raise funds to “defend” Zeek affiliates.
Zeek and untold thousands of its minions are known to have a tin ear for PR. That tin ear is on full display again today, with a “warning” from the leaders of the effort to “defend” Zeek from the SEC’s Aug. 17 allegations that it was a $600 million Ponzi and pyramid scheme not to contact the SNR Denton law firm.
“We have asked the firm to provide us the names of the individuals that are calling; we will refund your donation and will remove you from the group to be represented if you call. The law firm is only going to discuss the case with the 12 leaders and we will put out the information to the entire group on this site.”
“This site,” as it were, is this site, which calls itself ZTeamBiz.
ZTeamBiz, which calls itself a “professional organization,” says its has hired SNR Denton. The precise reason why is unclear, although ZTeamBiz says the “SEC has tried to make us all believe that Zeek Rewards was an ‘investment’ and a Ponzi scheme. All the pages that were submitted by the SEC indictment has all been one sided and what we believe to be a misrepresentation of the truth and facts of what Zeek Rewards was as a viable and legal business.”
And ZTeamBiz also accused the SEC of misleading a federal judge.
One of the persons on the ZTeamBiz squad — although it’s unclear if his presence is formal or informal — is Todd Disner. Disner is a former pitchman for the AdSurfDaily Ponzi scheme and, along with former attorney Dwight Owen Schweitzer, sued the government in November 2011. Disner and Schweitzer alleged that prosecutors and a U.S. Secret Service agent presented a “tissue of lies” to a federal judge when bringing the civil portion of the ASD Ponzi case in August 2008.
Disner and Schweitzer made that claim after ASD had lost the case in U.S. District Court and the U.S. Court of Appeals. Among other things, Disner and Schweitzer claimed the government had gone shopping for a friendly judge when it brought the forfeiture proceedings.
That judge allegedly was targeted with a false lien by Kenneth Wayne Leaming, who also targeted three federal prosecutors and a Secret Service agent with false liens, according to the FBI. Leaming was arrested by an FBI Terrorism Task Force in November 2011. He is a purported “sovereign citizen.” All five of the federal officials targeted in the alleged lien campaign have ties to the ASD case.
ASD President Andy Bowdoin pleaded guilty seven months later to a Ponzi-related charge of wire fraud. He is scheduled to be sentenced Wednesday.
Zeek is known to have members in common with ASD, which federal prosecutors have described as a $119 million Ponzi scheme that created at least 9,000 victims before its 2008 collapse amid allegations by the U.S. Secret Service of Ponzi fraud.
Like Zeek, ASD claimed it was not offering an investment program. And like Zeek, ASD planted the seed it offered a daily payout rate of 1 percent a day or more.
Like Zeek, ASD came under investigation by the U.S. Secret Service. The agency has referred to ASD as a “criminal enterprise,” with the U.S. Department of Justice calling ASD “insidious.”
Those descriptions apparently were not enough to dissuade investors from throwing money at Zeek, which has listed ASD members as “employees.”
On Aug, 4, Zeek itself blasted unspecified “North Carolina Credit Unions” for raising concerns about Zeek. Zeek warned members to toe the company line.
The SEC was in federal court 13 days later.
Zeek also is known to have members in common with JSS Tripler/JustBeenPaid, which appears now to have morphed into something called “ProfitClicking.” Both JSS/JBP and ProfitClicking may have ties to the sovereign-citizens movement.
A domain registered in the name of purported JSS/JBP operator Frederick Mann once linked to videos featuring Francis Schaeffer Cox, a purported sovereign citizen implicated in a murder plot against public officials in Alaska.
Because HYIP scams typically are promoted on Ponzi-scheme forums such as TalkGold and MoneyMakerGroup — and because Zeek, JSS/JBP, ProfitClicking and ASD all had a presence on those forums — questions have been raised about whether cash was circulating between and among various fraud schemes and placing U.S. banks in the position of possessing fraudulent proceeds.
A receiver has been appointed to marshal the assets of the alleged Zeek fraud.
Despite the appeal by ZTeamBiz for Zeek affiliates to send in money to “defend” themselves and the company, the interests of all Zeek affiliates almost certainly are not equivalent. Net “winners” almost certainly are at risk of clawback lawsuits from the receiver. Such court actions are used to enlarge the pool through which victims of a Ponzi fraud receive a disbursement designed to make them as whole as possible.
It’s often the case that victims never are made whole and receive disbursements of dimes or even pennies on the dollar. Such is the case to date for victims of the 2009 Trevor Cook Ponzi caper in Minnesota. That scheme was a form of affinity fraud targeted largely at people of faith, including senior citizens.
Post-Ponzi receiverships sometimes turn into an international paper chase because scammers hide money offshore. Reverse-engineering a Ponzi caper can take years. Even as Zeek receiver Kenneth D. Bell begins his duties, scammers on the Ponzi boards are planting the seed that the receivership cannot be trusted.
In the 2009 Mantria/Speed of Wealth Ponzi scheme case, which in part was pushed MLM-style, a federal judge issued a specific order not to interfere with the receiver.
UPDATED 2:32 P.M. EDT (U.S.A.) Confessed Ponzi schemer Andy Bowdoin of AdSurfDaily has asked U.S. District Judge Rosemary Collyer for mercy and for a sentence of “time served” and “home incarceration.”
Federal prosecutors have asked Collyer to sentence Bowdoin to 78 months, the maximum sentence under a plea agreement Bowdoin signed in May.
Bowdoin, 77, is scheduled to be sentenced Aug. 29 in an online Ponzi caper federal prosecutors now say gathered at least $119 million and created at least 9,000 victims. The ASD patriarch has been jailed since June. Collyer ordered him jailed after prosecutors produced evidence that Bowdoin continued to promote scams — including another 1-percent-a-day scam — after the U.S. Secret Service raided ASD in August 2008 and arrested Bowdoin on Ponzi-related charges in December 2010.
The other 1-percent-a-day scam was AdViewGlobal, which collapsed in 2009. Bowdoin also promoted “OneX,” which prosecutors described as an ASD-like pyramid scheme.
Bowdoin’s sentencing is expected to be closely watched by members of Zeek Rewards, which the SEC described Aug. 17 as a $600 million online Ponzi and pyramid scheme that potentially could affect more than 1 million participants. Zeek’s business model of suggesting a return of more than 1 percent a day was possible strongly resembled the ASD business model.
“As an initial matter, Mr. Bowdoin pleaded guilty to the instant offense [wire fraud] [and] stands before this Court accepting of its punishment,” Bowdoin’s attorneys wrote in a memo to Collyer. “The Defendant does not accept punishment bitterly, but understands that he has committed a crime and that he must be punished.”
Bowdoin, according to his lawyers, disputes a government analysis that pegs total ASD losses by investors at $75 million. The actual loss, the lawyers argued, was $19 million.
“Mr. Bowdoin does not make this objection to minimize his activities,” the lawyers argued. “He only wishes to put the extent of the harm caused by his activities in the appropriate context.”
But Bowdoin’s advancing age and declining health are factors the judge should consider when sentencing Bowdoin, whose wife also is sick, the attorneys argued.
Bowdoin is remorseful for his illegal conduct and has accepted responsibility for his crime, his attorneys argued to the judge.
Unlike many Ponzi scheme cases, the government was able to seize tens of millions of dollars of assets in the ASD case before they could be dissipated, according to court filings. In August 2008, the U.S. Secret Service seized about $80 million from 15 ASD-related bank accounts.
Other seizures occurred in December 2008 and December 2010, for much smaller amounts, according to court filings. Some of the later seizures involved the bank accounts of individual ASD members.
UPDATED 11:31 P.M. EDT (AUG. 26, U.S.A.) After the collapse of AdSurfDaily in 2008, there were at least four efforts to raise funds to “defend” the Ponzi enterprise and/or its participants. The PP Blog has received reports that at least one such effort is under way in the aftermath of the collapse last week of Zeek Rewards, which the SEC called a $600 million Ponzi- and pyramid scheme that had affected more than 1 million people. Zeek also is under investigation by the U.S. Secret Service and the office of North Carolina Attorney General Roy Cooper.
Zeek members who cling to a belief that the government somehow got it wrong perhaps can save themselves both money and heartache by looking at the history of the various ASD-related efforts to “defend” the multilevel marketing “program” after the U.S. Secret Service seized 15 bank accounts (and about $80 million) in ASD-related proceeds in August 2008.
Here are briefs on the various ASD-related “defense” efforts:
“Andy’s Fundraising Army”: This bizarre effort was the fourth and final of a series of failed ASD-related efforts. Started by accused ASD Ponzi schemer Thomas A. “Andy” Bowdoin himself last summer (with the purported help of ASD cheerleader Tari Steward), the effort immediately devolved into a symphony of the bizarre.
With Bowdoin effectively having been out of public view for nearly three years, the purported “army” teased potential contributors for days with a photo that showed Bowdoin smiling broadly and looking confident. Among other things, the teaser asserted there was “MORE GOOD NEWS” and plenty of reasons to help Bowdoin raise $500,000 to pay for his criminal defense.
It went on to assert that “A Recent Survey of ASD Members Proves that the Vast Majority of You Want to Join Andy’s Fundraising Army” and that “[P]er standard and accepted industry guidelines, public opinion surveying of 140 members of a large group of members that all share a common interest or purpose, of any size, even in the millions, will give an excellent cross section of the opinions and viewpoints of the entire group.”
But the “army” site did not describe the characteristics of the 140 ASD members purportedly sampled. Nor did it define what specific surveying “standard” it applied or define the source of the purported “industry guidelines.”
And what would a good, MLM-like approach to raise funds for an accused HYIP scammer (1 percent a day) be without a “prelaunch” phase? With the teaser in place, a placeholder website for “Andy’s Fundraising Army” promised a full launch to come, along with the exciting opportunity for ASD members to send funds to the man accused of defrauding them to the tune of $110 million.
But like a bad HYIP dream, the “army” website naturally missed its first advertised launch date. This was blamed on the need for more “testing,” reinforcing one of the HYIP world’s longstanding clichés. It then missed its second advertised launch date, explaining that “one last important system is being finalized.” With the first two launch dates missed, the site reported that it had set a “Final Revised Launch Date.”
During the evening of July 26, 2011, the launch finally occurred. Like many things ASD, it provided minute after minute of MLM infamy. Indeed, Bowdoin appeared in a fundraising video with symbols of American patriotism as the backdrop.
Among other things, Bowdoin — who in 2008 described himself as a Christian “money magnet” and advised ASD members after the Secret Service raid that “God” was on the company’s side and that “Satan” had infiltrated the government — claimed in the video that he’d been “crucified” by U.S. law enforcement.
He blamed the ASD-related losses in civil court on a federal judge, the prosecutors and his own former defense counsel. Bowdoin asked members to provide $500,000 to help him pay his new defense team.
It is believed he raised about $26,000 in the following weeks — but things continued to unfold like a bad HYIP dream. There was a report that a hurricane knocked the fundraising site offline, for instance. By January 2012, the site had lost its ability to collect money via PayPal. Federal prosecutors declined to comment on the development, which occurred after Bowdoin had become a pitchman for “OneX.”
In April 2012, prosecutors described OneX as a fraudulent scheme and pyramid. Bowdoin pleaded guilty to wire fraud the following month, admitting ASD was a Ponzi scheme. His fundraising website, which published purported “expert” opinions from attorney Gerald Nehra and consultant Keith Laggos that ASD was not a Ponzi scheme, remained online for weeks after the guilty plea.
The “Andy’s Army” site is now offline and is listed as an expired domain. In recent days, Bowdoin — as part of his plea agreement — has dropped his last remaining claim to cash seized in the ASD case. (A third ASD-related forfeiture complaint was filed by the government in December 2010. Bowdoin entered a claim.) He is scheduled to be sentenced Aug. 29.
Nehra’s law firm later became counsel for Zeek, according to Zeek. And Laggos became a purported “consultant.”
Todd Disner and Dwight Owen Schweitzer: Even as Bowdoin was rolling out his “army” website and repeatedly missing launch dates, ASD figures Todd Disner and Dwight Owen Schweitzer were advancing a plan to raise money to sue the government. An email attributed to Disner surfaced in July 2011 that introduced a pronoun mystery: “We plan to go after Akerman Senifit (sic) next,” the email read in part.
Akerman Senterfitt was the name of Bowdoin’s original defense law firm in the civil portion of the ASD case. In the earliest days of the case, ASD cheerleaders on the now-defunct “Surf’s Up” forum positioned the well-known firm as the “Perry Mason” firm; the government, meanwhile, was said to be represented by “Gomer Pyle.” A federal judge was described as “brain dead” if she ruled against ASD, and a federal prosecutor was described as an individual who deserved to be placed in a medieval torture rack.
Why Disner chose the pronoun “we” was never explained. The July 2011 email followed an April 2011 email attributed to Disner that included this declaration: “Let the games begin!”
During this period, Disner and Schweitzer were soliciting funds to sue the government. This effort began at an unclear point of time after November 2008, the month a federal judge issued a key court ruling against ASD while saying Nehra’s opinion could not be relied upon in part because it “relied solely on the written words contained in the Terms of Service without independent investigation or review of ASD’s business records to ascertain how ASD operates in fact before opining.” (Bolding added.)
If the judge’s ruling could be reduced to two words, it might read, “Gomer won.”
At an unclear point in time, both Disner and Schweitzer became reps for Zeek. They filed their ASD-related lawsuit in November 2011, claiming, among other things, that the government had presented a “tissue of lies” when bringing the August 2008 forfeiture case. As part of their apparent strategy, Disner and Schweitzer pointed to purported expert opinions of Nehra and Laggos. Disner and Schweitzer produced those opinions months after ASD had lost two civil-forfeiture cases in both U.S. District Court and the U.S. Court of Appeals.
Months later, Bowdoin himself put both Disner and Schweitzer in a box. In May 2012 — after Nehra and Laggos both had opined ASD was not a Ponzi scheme and after Disner and Schweitzer had sued the government — Bowdoin admitted that ASD was a Ponzi scheme.
Bob Guenther and ASDMBA: In 2008, ASD member Bob Guenther became the de facto head of an entity known as the ASD Members Business Association. The stated goal of ASDMBA was to raise funds to hire Dallas attorney Larry Friedman to represent ASD members’ interests in the case.
ASDMBA soon devolved into a circus, with Guenther using its website to promote a company that was developing an online game. Along the way, Friedman sued ASD critic Jack Arons, triggering a side drama that lasted for weeks and burying Arons in an avalanche of paperwork. (As a matter of pure PR, high-powered Friedman came out the loser for bringing out nukes against a web critic armed with a fly-swatter. The avalanche finally ended, with Arons, a Florida retiree who lives in a manufactured home, largely unscathed.) Guenther, meanwhile, refused to provide a reliable accounting of how the tens of thousands of dollars raised by ASDMBA was spent, according to members.
Guenther bizarrely dismissed his critics as “left wing liberal no balled people,” calling one an “ignorant mouthy broad.” He also claimed ASDMBA was instrumental in returning money to ASD victims, saying the group retrieved funds for retired and active-duty police officers in Texas and California, and for a high profile Dallas Cowboy’s executive.
Nothing in the public record suggests Guenther had any standing to perform any services on behalf of ASD members. It later emerged that Guenther was a convicted felon. Months after the 2008 formation of ASDMBA, in March 2009, Guenther was charged with two felony counts of aggravated harassment. Mesa, Arizona, police said Guenther repeatedly violated a court injunction for workplace harassment that prohibited him from nuisancing Cheyenne Mountain and Affiliates, the Arizona business that was developing the online game promoted on ASDMBA’s website.
Guenther later accepted a plea agreement in the harassment case. No jail time was ordered.
ASD Members International: This one was hatched by members of the pro-ASD “Surf’s Up” forum, which became Bowdoin’s official mouthpiece after the key court ruling went against ASD in November 2008. ASDMI was a purported nonprofit entity formed in Missouri. Its bizarre mission was to raise funds to litigate against the government even if the government was proceeding lawfully. In short, ASDMI planted the seed that prosecutors and investigators would be sued and/or charged with crimes.
It is believed that at least 168 people contributed money to ASDMI.
Included in the ASDMI braintrust was former Surf’s Up moderator Barb McIntyre, who enforced a “Poof Penalty” when ASD members left links on Surf’s Up to stories on the PP Blog.
But if there was an ASDMI “star,” it was “Professor” Patrick Moriarty, one of the most unusual characters in the entire ASD drama. Moriarty was an early advocate for Curtis Richmond, a purported “sovereign” being who advanced a theory that all commerce was lawful as long as the buyer and seller agreed to a contract. Among other things, it was a position that would have legalized slavery and human trafficking. Richmond went on to accuse a federal judge of “TREASON” and to accuse investigators of theft.
Richmond was hailed a “hero” on Surf’s Up, which never revealed that Richmond had been found in contempt of court for threatening federal judges and was part of a Utah “Indian” tribe a federal judge ruled a “complete sham.” (This is the “tribe” known derisively as the “Arby’s Indians” because it once held a meeting in an Arby’s restaurant in Utah. The purported “tribe” also had a purported “Supreme Court.” The address for the “Supreme Court” was the address of a doughnut shop. Richmond was sued successfully under the federal racketeering statute (RICO) by public officials in Utah targeted in a vexatious legal campaign by Richmond and other “tribe” members.)
Moriarty later was indicted on charges of tax evasion. He pleaded guilty, and was sentenced to federal prison.
NOTE TO ZEEK READERS: This document, which was filed by federal prosecutors in December 2008, is the second of three known forfeiture complaints filed against ASD-related assets. It is highly recommended reading.
The document was filed about four months after the original — and best-known ASD forfeiture complaint — was filed.
The ASD case started as a civil case with a parallel criminal investigation. Zeek-related litigation may follow the same track. Ponzi investigations take time. The December 2008 ASD forfeiture complaint shows that investigators continued to “follow the money” and to destroy ASD’s cover story after the original forfeiture complaint was filed.
It likely is true that the August 2008 complaint has received the most attention — no doubt because it laid out the core elements of the government’s case. But the December 2008 filing was tremendously damaging because it provided the first real inside glimpse into how ASD truly was operating.
"ProfitClicking" claims it has acquired JSS/JBP and that Frederick Mann has retired.
Just days ago Frederick Mann — the purported operator of the JSS Tripler/JustBeenPaid “program” — was hinting that his fraud scheme that advertised a return of 60 percent a month needed a new name because critics were being entirely too negative. Like the now defunct Zeek Rewards “program,” which last week was described by the SEC as a $600 million Ponzi and pyramid scheme that was selling unregistered securities as investment contracts, JSS/JBP had served up one public-relations disaster after another.
There was the little matter of an ad for JSS/JBP that appeared on a website known as Vatican Assassins, for instance. And there was “Ping,” a woman who’d claimed she had heart problems, was managing multiple JSS/JBP accounts, that her sister’s home was in trouble — and that JSS/JBP ignored her support tickets for weeks.
Mann speculated that the company could come under attack by American cruise missiles.
JSS/JBP found itself wrestling another PR flap in the past 24 hours, amid Ponzi-forum reports that Mann suddenly had “retired” and that the JSS/JBP “program” had been acquired and wrapped into an upstart autosurf known as ProfitClicking.
A quick analysis of the shell of the ProfitClicking website suggests that the emerging “opportunity” plans to be every bit as disingenuous as the five-alarm fraud scheme it apparently has swallowed. Ponzi-forum pretentiousness on places such as MoneyMakerGroup can be paraphrased as such:
I didn’t sign up for no stinkin’ autosurf. Where the hell is the money I gave the JSS/JBP scammers to see if I could profit from the scam?
Give these honest scammers a chance to see if they can pull off their new scam.
Be patient with the new scammers and don’t make too much noise. Remember, we have to pretend they’re not scammers and we’re not scammers to maximize the effectiveness of the scam.
Perhaps to make its “sovereign citizen” clientele feel at home, ProfitClicking has adopted all or part of the former JSS/JBP terms, which makes members affirm they are not with the “government.”
Like the collapsed AdViewGlobal autosurf Ponzi scheme that now has been linked to the collapsed AdSurfDaily Ponzi scheme, ProfitClicking is calling itself a “private association.”
Similar to the collapsed Zeek scheme, ProfitClicking says it has a “Legal Compliance Department.”
Like many online fraud schemes these days, ProfitClicking appears to have a plan to scam the public through social-networking sites such as Google +, Twitter and Facebook. And Profit Clicking says it is using at least two of the same offshore payment processors Zeek chose: Payza and SolidTrustPay.
Mann was a former pitchman for the ASD Ponzi scheme. Zeek and JSS/JBP are known to have members in common.
One graphic on the current landing page for ProfitClicking features a cartoon image of a bird. The bizarre headline is “Polly Wants A Profit.”
Naturally, there’s also a picture of a waterfront mansion.
The SEC has gone to federal court in Puerto Rico, alleging that Ricardo Bonilla Rojas was operating a $7 million Ponzi scheme targeted at evangelical Christians and factory workers.
Victims in the case hail from Puerto Rico, Florida, New York, and North Carolina, the agency said.
Rojas, 53, is a resident of Arecibo, Puerto Rico. He presided over a company known as Shadai Yire and duped investors by making them believe he was purchasing commodities, the SEC said.
But “Rojas never actually invested any money in commodities and instead used new contributions to repay earlier investors in classic Ponzi scheme fashion,” the SEC charged. “He stole $700,000 for himself.”
About 200 investors were affected by the scheme, which began “at least” in August 2005 and continued until February 2009, the SEC said.
Rojas also has been charged in a parallel criminal action by the U.S. Attorney’s Office for the District of Puerto Rico, the SEC said.
“Rojas targeted novice investors who were often evangelical Christians, and he touted a long history of successful trading in commodities,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “In reality, he was fleecing the flock.”
Elements of the SEC’s Rojas case are reminiscent of the alleged Commodities Online caper in Florida. The SEC sued to halt that scheme last year.
“Rojas hired some sales agents to help him solicit investors, and paid commissions based on a percentage of the investor funds they raised,” the SEC said. “Rojas and his sales agents pitched the investment opportunity to individuals as a risk-free way to earn high returns in a short period of time. Rojas also created phony account statements that were sent to investors to hide his misuse of investor money and lead them to believe their investments were growing.”
“On August 17, 2012, Judge Graham C. Mullen of the U.S. District Court for the Western District of North Carolina, Charlotte Division, entered an order appointing Kenneth D. Bell of McGuireWoods LLP as temporary receiver of ZeekRewards for the purposes of marshaling and preserving all assets of ZeekRewards and those assets (a) held or possessed by ZeekRewards; (b) held in constructive trust for ZeekRewards; and (c) fraudulently transferred by ZeekRewards.” — From a statement by the receiver
The website URL for the receiver appointed to handle the SEC’s Ponzi- and pyramid-scheme case against Zeek Rewards, Rex Venture Group LLC and Paul R. Burks is ZeekRewardsReceivership.com.
Kenneth D. Bell, a highly experienced attorney who has served both as a federal prosecutor and as defense counsel, is the receiver.
Bell rose to national prominence as a recipient of the U.S. Attorney General John Marshall Award for Trial of Litigation. He received that award from the U.S. Department of Justice after successfully prosecuting a Hezbollah terrorist cell operating in North Carolina.
The receivership website is not yet fully operational. Visit the site.
On Aug. 17, the SEC filed spectacular allegations of Ponzi- and pyramid-scheme fraud against Zeek Rewards, which claimed it was not selling securities and members were not making an investment. Zeek operator Paul R. Burks was charged with selling unregistered securities as investment contracts.
Zeek abused the power of the Internet and raised $600 million from more than 1 million participants, the SEC charged
In August 2008, the U.S. Secret Service filed similar allegations against AdSurfDaily, a company with a 1-percent-a-day “program” similar to Zeek. Like Zeek, ASD claimed it was not selling securities and members were not making an investment. ASD operator Andy Bowdoin was indicted in November 2010 on charges of selling unregistered securities, securities fraud and wire fraud.
Bowdoin later acknowledged he was presiding over a Ponzi scheme that had gathered at least $110 million.
On Aug. 16 — just one day before the SEC went to court to halt the operations of Zeek — a “program” known as JSS Tripler/JustBeenPaid was clinging to its Zeek- and ASD-like cover story that it was not selling securities and members were not making an investment. JSS/JBP effectively has advertised a return of 2 percent a day: 730 percent a year.
“I just want to know — in the amount of money that I do invest . . . use to buy positions, is that . . . the investment that I’m doing?” a caller quizzed Frederick Mann, JSS/JBP’s purported operator.
“Dale,” JSS/JBP’s female conference-call host, then sought to set the caller straight on the wordplay of JSS/JBP.
“Well, first of all, we’re not investing here. We’re purchasing and we’re repurchasing. So, you need to get that verbiage clear.”
The SEC moved against Zeek the very next day. The U.S. Secret Service also is investigating Zeek.
Mann was a former pitchman for ASD’s scheme. Any number of Zeek members also promoted JSS/JBP.
Bowdoin pleaded guilty to wire fraud in May 2012. He is scheduled to be sentenced Aug. 29.
Like Zeek, JSS/JBP says it has more than 1 million members. Like Legisi, another HYIP scam broken up by the SEC and the Secret Service, JSS/JBP makes members affirm they are not with the government.
Legisi operator Gregory McKnight pleaded guilty to wire fraud earlier this year. He faces sentencing Sept. 11.
UPDATED 4:06 P.M. EDT (U.S.A.) It happened after the collapse of AdSurfDaily in 2008 — and it’s happening now in the aftermath of the collapse of Zeek Rewards amid spectacular allegations by the SEC Friday of Ponzi and pyramid fraud.
The office of North Carolina Attorney General Roy Cooper issued a warning minutes ago about “reload scams” aimed at taking advantage of Zeek victims.
Here is the warning in its entirety (italics added):
Reload scams hit consumers when they’re down, offering to help them make back money they lost to a previous scam or bad business decision. These scams have been popular for years with telemarketing fraud rings but can also follow other types of fraud.
We’re now seeing reload scams seeking to recruit consumers who were members of Zeekler, a penny auction website headquartered in North Carolina that shut its doors last week and entered into a settlement with the U.S. Securities and Exchange Commission. The SEC determined that Zeekler was a Ponzi scheme, using money from later investors to pay back earlier investors until the scheme started running out of money. The Attorney General’s Office is continuing to investigate Zeekler.
Blogs, news releases online, and individuals leaving comments in articles about the Zeekler shut down are already touting opportunities “for those that are looking for something that can help them replace the income they were receiving from Zeek Rewards.” If you’ve been a part of a scheme such as Zeekler that collapsed, or if you lost money to another recent scam, don’t fall for a reload scam. Better to cut your losses than lose even more.
The exact phrase quoted by Cooper’s office in the paragraph above appears in a news release for something called TheMayDayReport.
The SEC called Zeek a $600 million Ponzi- and pyramid scheme that had affected more than 1 million investors. Cooper’s office opened a probe into Zeek in July, and the U.S. Secret Service also is investigating Zeek.
Over the weekend, the PP Blog received multiple spams aimed at Zeek threads. Purportedly from “Briant,” those spams promoted a “program” called Ultimate Power Profits. Like Zeek, Ultimate Power Profits has a presence on well-known Ponzi scheme forums such as MoneyMakerGroup.
Zeek’s former head cheerleader at MoneyMakerGroup — “mmgcjm” — also is the head cheerleader for Ultimate Power Profits at the forum.
On Friday — the same day of the Zeek collapse — an MLM “program” known as Vi-Tel Wireless (Vi-Tel) issued a news release to announce it was sponsoring a “Zeek Rescue Program.” Affiliates busied themselves heralding the purported rescue program across the web.
Vi-Tel called itself a “safe refuge.” Vi-Tel affiliates aimed sales pitches at websites carrying information on Zeek, leading to questions about whether reps were circling like vultures. It was remarkably awful PR.
In other post-Zeek news, an auction “program” known as Bidify now is offine. The company says it is trying to retool itself in the aftermath of the Zeek collapse.
Like Zeek prior to the collapse, Bidify denies it is an investment program.
Zeek, Rex Venture Group LLC and operator Paul Burks were charged Friday with selling unregistered securities as investment contracts.
URGENT >> BULLETIN >> MOVING: (UPDATED 6:25 P.M. EDT (U.S.A.) The SEC has filed an emergency action in federal court in Charlotte, N.C., that alleges Zeek Rewards is a $600 million Ponzi and pyramid scheme.
“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an associate director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
In its emergency filing, the SEC described Zeek as a classic Ponzi scheme. The agency charged that “approximately 98% of ZeekRewards’ total revenues, and correspondingly the purported share of ‘net profits’ paid to current investors, are comprised of funds received from new investors.”
Records show that the AdSurfDaily Ponzi scheme which, like Zeek, suggested that investors would receive a return on the order of 1 percent a day, also received only about 2 percent of its revenue from sources other than members. Zeek had members in common with ASD.
Zeek, the SEC alleged, “is teetering on collapse.”
Zeek CEO Paul R. Burks has been charged with selling unregistered securities as investment contracts, the SEC said. Burks presided over Rex Venture Group LLC, Zeek’s purported parent company. Rex Venture also has been charged. The SEC said it was aided in the probe by the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.
Burks’ program holds “approximately $225 million in investor funds in approximately 15 foreign and domestic financial institutions, and those funds are at risk of imminent dissipation and depletion,” the SEC charged, noting that the Ponzi potentially could affect more than 1 million people globally.
A federal judge has ordered an emergency asset freeze and a receiver will the appointed, the SEC said.
“Through the ZeekRewards program, Defendants offer affiliates several ways to earn money, two of which involve the offer and sale of securities in the form of investment contracts: the ““Retail Profit Pool” and the “Matrix,” the SEC charged.
And, the agency said, the “compounding” effect has created a condition under which 3 billion Zeek “Profit Points” are outstanding.
“Based on the ZeekRewards current outstanding Profit Point balance, the company would be obligated to pay out approximately $45 million per day if all Qualified Affiliates elected to receive their daily award in cash,” the agency charged.
Amid Zeek claims that it paid out 50 percent of its daily net and that its business model was “proprietary,” investigators discovered that Zeek delivered an unusually consistent return of about 1.5 percent a day.
“In fact, the dividend bears no relation to the company’s net profits,” the SEC charged. “Instead, 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.
Similar allegations were made in 2008 against ASD operator Andy Bowdoin.
Zeek’s fabled Zeekler “bids” were described by the SEC as smoke-and-mirrors. From the complaint (italics added):
Despite encouraging affiliates to purchase and give away VIP Bids to promote and drive traffic to the Zeekler penny auction website, Defendants fail to disclose that almost none of the VIP Bids given away by Qualified investors are actually used on the Zeekler penny auction website. Of approximately 10 billion VIP Bids purchased by or awarded to investors, less than one-quarter of one percent have been actually used in auctions on the Zeekler penny auction website. Thus, the VIP Bids do little or nothing to actually promote the retail business.
Zeek operator Burks, meanwhile, “has withdrawn approximately $11 million while operating Rex Venture and ZeekRewards, of which approximately $4 million remains in his possession, custody or control.
Burks “distributed approximately $1 million of the funds garnered from ZeekRewards to family members,” the SEC said.
Amid high drama and confusing website reports from Zeek yesterday, including the virtual abandonment of its office in Lexington, N.C., and petition drives by Zeek affiliates to demand the return of Zeek, it turns out that “Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver,” the SEC said.
The U.S. Secret Service also is investigating Zeek, as is the office of North Carolina Attorney General Roy Cooper.
BULLETIN: The SEC has gone to federal court in Atlanta, alleging that Hall of Fame football coach Jim Donnan and a business partner in Ohio conducted a massive Ponzi scheme that sucked in other coaches and caused one of Donnan’s trusting former players to invest $800,000.
The scheme began in 2007 and collapsed in 2010, the SEC charged. Donnan is a former coach of the University of Georgia and Marshall University. He once worked as a commentator for the ESPN television network.
Charged along with Donnan, 67, was Gregory Crabtree, 50. Crabtree was an officer of a West Virginia entity known as GLC Limited, promoted as a wholesale liquidation business that bought leftover merchandise and sold it to discount retailers. Donnan was a GLC pitchman.
GLC also was known as “Global Liquidation Center,” the SEC said.
Investors were promised “exorbitant rates of return ranging from 50 [percent] to 380 percent” in a scheme that fetched $80 million, the SEC charged.
But only about $12 million of the $80 million went toward merchandise purchases, with the rest used to make Ponzi payments “or stolen for other uses by Donnan and Crabtree,” the SEC charged.
“Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk,” said William P. Hicks, associate director of the SEC’s Atlanta Regional Office. “But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out.”
One of Donnan’s former players, the SEC charged, plowed $800,000 into the scheme after Donnan told him, “Your Daddy is going to take care of you” and “if you weren’t my son, I wouldn’t be doing this for you.”
Donnan resides in Athens, Ga. Crabtree is a resident of Proctorville, Ohio.
Donnan conned at least one investor by telling him, “[Y]ou can’t lose your money; it’s already pumping oil,” the SEC charged.
And the former coach and commentator took care of himself first, the SEC charged.
“Donnan invested approximately $5.8 million in the scheme but paid himself back approximately $13.2 million from GLC investor funds,” the SEC charged. “After the scheme collapsed, Donnan used a small percentage of his profits, less than $900,000, to pay other investors.”
It has been a busy week for the SEC. The agency said yesterday that it had gone to federal court in Denver to halt a $15.7 million Ponzi scheme.
Charged in that alleged caper were Michael J. Turnock, 68, of Denver and William P. Sullivan II, 45, of Highlands Ranch, Colo.
Turnock and Sullivan were running a promissory-notes scam through a company known as Bridge Premium Finance LLC, the SEC said.
On Monday, the SEC charged Ivan Wade Brown, 45, of Alpine, Utah, and two of his companies: Highland Residential LLC and Avanti Capital Partners LLC.
That case alleges a $27 million Ponzi scheme and promissory-notes scam.
Our assertion: Were he alive today and desperately needed cash, famed daredevil Karl Wallenda would find Zeek’s tightropes too dangerous to walk.
Purported MLM “expert” sent to woodshed: Zeek “consultant” and former SEC defendant Keith Laggos reportedly gets the Zeek boot after using phrases associated with the investment trade and after suggesting that gambling regulations could be used to derail the Zeek train in the near future.
Train wrecks and pom-poms: To his credit, MLMHelpDesk Blogger Troy Dooly reports the Laggos news and dubs an incendiary audio recording featuring Laggos into a Dooly-produced video. But known for his ability to find something “positive” in an MLM train wreck, Dooly goes on to suggest Laggos used Zeek-banned words because he was distracted and wasn’t concentrating. Dooly later declares that an examination into Zeek’s business practices by North Carolina Attorney General Roy Cooper is “exciting” news.
Only in Stepfordian MLM: Zeek cheerleading video with Dooly presented as centerpiece and Laggos presented as key answer man remains online, even after Zeek cans Laggos and Dooly questions the ethics of Laggos while at once making excuses for him.
Cluelessness: No guidance from Zeek on whether affiliates should avoid using the video when introducing Zeek.
More cluelessness: No guidance from Zeek on whether affiliates should continue to use marketing props published by Laggos’ Network Marketing Business Journal, a previous subject of gushing from Dooly.
Plan B: Laggos heralds Lyoness.
Stepfordian MLM vomit: Lyoness trades on name of former South Africa President Nelson Mandela, a recipient of the Nobel Peace Prize.
Why lots of people are fed up with Stepfordian MLM: As Lyoness uses an image of Mandela in a marketing campaign, AdSurfDaily’s Andy Bowdoin awaits sentencing in case in which ASD was accused of trading on the name of then-U.S. President George W. Bush to sanitize $110 million Ponzi scheme.
Whatever “works” is OK in Stepfordian MLM: As nascent penny-auction site and upstart Zeek competitor known as Bids That Give prepped for launch and positioned itself as a company that would aid charities for children, early promos traded on the name of the White House and Chelsea Clinton, the daughter of former President Bill Clinton and U.S. Secretary of State Hillary Clinton.
Oddities: Narc That Car/Data Network Affiliates/Phil Piccolo/Text Cash Network.
More . . .
** ______________________________ **
EDITOR’S NOTE: While performing a high-wire stunt in Puerto Rico in 1978, legendary daredevil Karl Wallenda fell to his death. He was 73, a risk-taker to the end.
UPDATED 11:39 P.M. EDT (AUG. 14, U.S.A.)
This is one of those “only in Stepfordian MLM” stories, a story that features not one, but two tightropes over a treacherously windy gorge Karl Wallenda would judge too dangerous to walk even if the daredevil business were in a sustained slump and he desperately needed cash. These are the tightropes over the Zeekler/Zeek Rewards Gorge, a man-made gulch in Lexington, N.C., potentially MLM’s next Quincy, Fla.
Quincy was the home of AdSurfDaily, a company that did an almost inconceivable amount of damage to MLM’s already-suffering reputation — first by creating an obvious, five-alarm Ponzi scheme and trying to disguise it as a “revenue-sharing” program and, later, by trying to “save” itself by comparing the U.S. Secret Service to “Satan” and the 9/11 terrorists.
Like the ASD story (and far too many MLM tales), the Zeek story is one that mixes the incongruous with the bizarre and only reinforces negative stereotypes about multilevel marketing.
Keith Laggos, a figurative tightrope-walker and purported MLM expert who once opined that AdSurfDaily’s 1-percent-a-day “program” was not a Ponzi scheme and later became a consultant whose image appeared repeatedly in a cheerleading video for the Zeek Rewards 1-percent-a-day-plus “program” after ASD was raided by the U.S. Secret Service in a Ponzi scheme case, is out, the company reportedly told Blogger Troy Dooly. (Link below.)
Laggos, though, appears not to have been fired for his ASD opinion. Indeed, Zeek may find comfort in that musing, which has been used by at least two ASD members (Todd Disner and Dwight Owen Schweitzer) who accused the U.S. government of presenting a “tissue of lies” to a federal judge when bringing the ASD Ponzi forfeiture case. Both of those ASD members also emerged as Zeek promoters. Curiously, the claim that the government had presented a “tissue of lies” was made longafter ASD had lost the case in both U.S. District Court and the U.S. Court of Appeals.
ASD and its apologists never were known for their impeccable timing. Neither was a 1-percent-a-day ASD knockoff known as AdViewGlobal (AVG), which incongruously announced a month after its February 2009 launch that its bank account had been “suspended” and that its CEO had resigned but would remain in the “accounting” department.
Two months later, AVG, which purported to operate from Uruguay while using U.S.-based Gmail to perform customer service, announced its banking problem had been solved by an offshore facilitator. AVG made this announcement on the same day the President of the United States announced a crackdown on offshore fraud. AVG was done weeks later. Before it exited the stage, it apparently thought it prudent to threaten to sue members who shared negative information and perhaps even have their Internet connections shut down.
Zeek is playing in this same bizarre field. Over the past couple of weeks, Dooly has ventured that Zeek might sue Randy Schroeder, an executive with the Mona Vie MLM company, for using words Zeek might find objectionable — “Ponzi” and “pyramid,” for example. And Dooly has suggested that a North Carolina credit union was risking a lawsuit from Zeek. Meanwhile, a Zeek critic known as “K. Chang” was informed by a purported Zeek “consultant” that Zeek might sue if its efforts to bring down “K. Chang’s’ site on HubPages.com failed.
Zeek now bizarrely claims that “all” criticism of Zeek has been unfair.
This claim was made just days after Zeek appears to have fired Laggos for casting his MLM line elsewhere while a Zeek “consultant” and while not sticking to the company line that Zeek does not constitute an investment opportunity. The other “program” is known as Lyoness, which Laggos has described as his “Plan B” and a “Plan B” for current Zeek members.
MLM ‘Mo’
To hear Laggos tell it on tape, the MLM business is the “momentum” business. One of the ways to maintain the momentum is to move certain banking operations offshore, say, to places such as Hong Kong. Laggos helped Zeek do that, according to Laggos. But Zeek might lose the mo and might not be far enough away to neutralize the regulators, he speculated.
No matter, Laggos ventured. There’s always another company with mo.
“Since last November, Zeekler has had the momentum,’ Laggos intoned in a recording now playing on Dooly’s Blog as part of a YouTube video and report on the sudden sacking of Laggos. “I believe they are going to lose the momentum shortly . . . The company now that’s gaining momentum — and I think it will be the momentum company over the next six months or a year — is Lyoness. And I’m suggesting that a lot of you guys consider Lyoness as your Plan B company now. Stay working with Zeekler. Keep promoting it. Don’t cross-sponsor it, but build a second income. Now, what’s nice about an ideal Plan B company is you would be able to work passively. Lyoness is that kind of company.”
In HYIP-speak, the word “passively” is code that tells participants that they won’t have to do much or anything at all to pile up cash (a/k/a “passive earnings”) by the boatload if they send in enough cash at the beginning of a scheme. Zeek is afraid of that word because it’s the type of word that can cause the SEC to come knocking. Lots of MLM scams that rely on willfully blind promoters to gain a head of steam use it in the early stages. When things get too hot, they try to take it off the table. The reason they try to take it off the table — sometimes by threatening affiliates — is it can lead to civil and criminal charges, seizures of bank accounts and investigations by multiple agencies.
Mixing the language of investments with references to Plan B didn’t do Zeek any favors, to be sure. Another thing that didn’t do Zeek any favors was Laggos’ reference to Zeek becoming the “momentum” company “last November.” In late September of 2011, the U.S. government released about $55 million in remissions payments to victims of the ASD Ponzi scheme.
This leads to questions such as these: How much of Zeek’s “momentum” was fueled by funds originally seized in the ASD Ponzi case and returned to victims in the form of remissions payments? How many ASD members turned around and plowed what effectively was their crime-victim compensation into Zeek, another 1-percent-a-day scheme? Why did Zeek promoters and former ASD members Disner and Schweitzer wait until November 2011 — the same month Laggos now says Zeek became the “momentum” company — to file their ASD-related lawsuit against the government and to present a federal judge an opinion from Laggos that ASD was not a Ponzi scheme?
“Plan B,” also known as “Don’t put all your eggs in one basket,” has a long and sordid history in HYIP Ponzi Land. AVG, for instance, was a de facto Plan B company set up after ASD, the Plan A company, got raided by the U.S. Secret Service on the Tuesday after the previous Friday’s seizure (Aug. 1, 2008) of ASD bank accounts. Lots of ASD members deluded themselves into believing that official company line that God was on ASD’s side. Some of ASD’s earliest post-seizure apologists told the troops that the seizure was a good thing because it would provide the government an opportunity to see how lawful and wholesome ASD truly was, that the government did not understand the business model and had made a monumental mistake.
The MLM vultures, though, had a slightly different take. In case the government didn’t see the ASD light, they speculated, ASD members could join other autosurfs, HYIPs and cash-gifting schemes. These Plan B schemes would enable ASD losses to be made up elsewhere. “Offshore” programs were positioned as the best.
Among the tips Laggos provided to listeners of the Lyoness conference call was this: “Don’t put no more than 70 percent back in [Zeek]. Take out 20 or 30 percent [on] a daily basis. [Unintelligible.] This would be a good place. But, by the same token, if you put $10,000 in Zeekler, if nothing happens over the next year, you’ll probably make $30,000 or $40,000, if that’s all you do without building the front end, the matrix . . . The same amount of money in Lyoness, you’re looking . . . and not doing anything else, without single sponsoring . . . you can probably make a quarter-million dollars.”
The threat to Zeek, according to Laggos, is the FTC and how U.S. gambling regulations could be applied to penny-auctions such as its Zeekler arm. His words on the tape suggest he is confident that Zeek has sufficient cover to ward off a Ponzi/securities investigation. But even as he’s suggesting Zeek has the securities angle covered, he’s using the language of investments.
We wonder: Can MLM really have sunk to these deplorable depths?
But it gets even worse.
Laggos then suggested Lyoness could be used as a hedge in case the FTC acted against Zeek.
“If I’m wrong about what’s gonna happen with the penny auctions — and if you look at my career, I haven’t been wrong often — then the worst-case scenario is we screwed up and we made two incomes . . . We’re making two great incomes with two great companies.”
Dooly, whom to date hasn’t found Zeek’s various claims altogether too much, now has decided that Laggos crossed the altogether-too-much line when he harrumphed for Lyoness and used certain words Zeek finds offensive.
While the featured speaker on the Lyoness call last month with Zeek members listening in, Laggos spoke about Zeek in “several” ways that were “way out of compliance,” Dooly ventured in his video report running on YouTube.
Laggos “talks about putting money into the game,” Dooly reports. “I mean, this is bad right here. You can’t put money in. OK? You either join the company and you’re buying memberships, you’re buying bids. But for Keith to be talking like this was an investment-type deal. This is just . . . and we all fall prey to this. But this is why you shouldn’t be doing public calls when you’re under fire and you’re not paying attention to what you say. And you can hear in Keith’s case — the phone [is] ringing, his assistant [is] coming in to talk to him, his mind is not in the game the way it should be. And that is just . . . it’s sad right now ’cause he’s no longer with [Zeek] . . .”
In short, according to Dooly, Laggos’ big sin was painting Zeek as an investment program in contravention of the Rules Of Zeek.
Not sticking to the script, however, is hardly an original sin within the Zeek sphere. In 2011, while speaking during a conference call to raise money for the Disner/Schweitzer ASD-related lawsuit against the government, Schweitzer, a one-time lawyer whose license was suspended in Connecticut, said he’d invested in ASD. Nevertheless, Disner and Schweitzer later presented a federal judge Laggos’ opinion that ASD was not a Ponzi scheme and that providing money to ASD did not constitute making an investment.
Nobel Peace Prize Used As MLM Stage Prop
Lyoness is an MLM company eager to let its participants and prospects know that it is building a school in the hometown of Nelson Mandela and that a Lyoness team recently was invited to the 1993 Nobel Peace Prize-winner’s home. It even publishes a picture to prove it and notes that a Mandela grandson is a Lyoness rep.
Back in the United States, meanwhile, former ASD President Andy Bowdoin will find out Aug. 29 how long he’ll spend in federal prison. Zeek’s business model and disclaimer language strongly resemble that of ASD, which the U.S. Secret Service described as a “criminal enterprise” that relied on linguistic sleight-of-hand to draft tens of thousands of people into an electronic Ponzi scheme. ASD traded on the name of then-U.S. President George W. Bush, in effect using the White House to sanitize a massive international fraud caper.
Welcome to the Highwire Wing of MLM.
While all of this is going on, a nascent penny-auction “program” and upstart Zeek competitor that claims it exists to elevate children out of poverty is getting ready to unleash itself on the consuming public.
That “program” is known as Bids That Give. One prelaunch promo claimed that a founding affiliate was an SEO expert once hired by a candidate for the U.S. Presidency. The first three minutes of the promo did not even reference Bids That Give. Instead, it dropped names linked to the White House, including the name of former First Daughter Chelsea Clinton and Doug Read, an adviser to two U.S. Presidents. For good measure, the promo dropped the name of NBC News anchor Lester Holt.
The most vomitous MLM “programs” are infamous for dropping names. It is typically the case that the individuals whose names are dropped have no affiliation whatsoever with the “program.” But name-dropping and brand leeching have proven to work time after time in MLM scheme after MLM scheme. (See screenshot.)
Did Mark Zuckerberg REALLY endorse JSS Tripler/JustBeenPaid. According to this Blog, the answer is yes. Facebook did not respond to a request for comment from the PP Blog last year on claims that Zuckerberg had endorsed JSS/JPB, which purports to provide a return of 60 percent a month.
MLM And Wordplay
In 2009, ASD’s Bowdoin was sued by some members of his own company under the federal racketeteering (RICO) statute. Looking at it another way, the ASD members came to believe that ASD was a criminal enterprise with a plan to expand while coming up with new and better ways to steal.
Because veteran MLM huckster Bowdoin also was a veteran securities swindler who’d been charged at the state level with fraud in at least three Alabama counties before launching Florida-based ASD in 2006, federal prosecutors said, Bowdoin tried to avoid the use of the language of investments as a means of keeping the 1-percent-a-day ASD scheme under the radar.
The linguistic cover Bowdoin chose — a cover the Feds stripped bare — was that ASD was an “advertising” company with a “revenue sharing” program, not an investment company selling “securities.”
Bowdoin tried to create additional cover by saying payouts were not guaranteed, according to federal court filings.
Now, four years after the ASD raid, Zeek is using the same type of disclaimer language and members are getting the same sort of instructions on what words to avoid.
Federal investigators became wise to this type of linguistic charade long ago. The charade was outlined in the 2010 criminal indictment against Bowdoin. The indictment quoted Bowdoin himself laying out the linguistic plot to hide the true nature of the 1-percent-a-day ASD program and keep the government at bay (italics added):
“[L]et’s don’t (sic) use the words investment and returns. Instead, lets (sic) use ad sales and surfing commissions. The Attorney Generals in the U.S. don’t like for us to use these words in our program.”
Wordplay to mask an investment scheme also was referenced repeatedly in the forfeiture complaints against more than $80 million in ASD-related bank accounts (italics added):
“The [undercover agent] asked her about investing with ASD. She immediately said, ‘Don’t call it investing, you know what I mean, we can get in trouble if we say that, we have to be careful.” — Source: Federal forfeiture complaint, Aug. 5, 2008.
Only In MLM La-La Land
To be sure, the departure from Zeek of Laggos is a big story. But it’s not the biggest story. The biggest story is that the Paul Burks-led company already was walking a tightrope when it hired the tightrope-walking Laggos and now has cut his rope, casting him into the gorge without informing the membership at large and without pulling the tightrope-walking promotional material that references Laggos or was produced by his publishing company.
Some of that promo material features tightrope-walking Dooly, who’s now questioning the ethics of tightrope-walking Laggos.
How strange is the latest PR disaster to rock Zeekland? So strange it almost defies description.
As noted above, news of the Laggos departure was delivered by Zeek-friendly Blogger Dooly. And the news was delivered even as images of Dooly appeared online as a centerpiece in the same cheerleading video that features images of Laggos as centerpieces. The video largely consists of still photos taken at a Zeek “Red Carpet Day” event in Clemmons, N.C., on June 13. Incredibly, the video continues to appear online, despite the sudden and unexpected departure of Laggos last month.
On Aug. 4, Zeek used its Blog to accuse unspecified “North Carolina Credit Unions” of slander for expressing concerns to customers about Zeek. The post implied Zeek members who didn’t toe the company line would be penalized. Such members were “violators” of company policy, the firm said.
But Zeek has not addresed the Laggos issue on its Blog. Nor has it provided any guidance on whether members should stop using the Zeek cheerleading video that features both Laggos and Dooly, along with Zeek staffers, executives and members who showed up at the June 13 event in Clemmons. The Laggos-produced written materials also are out there, with no guidance from Zeek about whether members should continue to use them or to rely on them in any way.
Like ASD, Zeek plants the seed that participants will earn a return that corresponds to an annual return in the hundreds of percent but insists it is not offering an investment. The office of North Carolina Attorney General Roy Cooper said last week that it had asked Zeek to produce “documents” as part of an “examination” of its business practices. Dooly described that development as “exciting.”
Zeek is making MLM look ridiculous. Troy Dooly is making it look sillier yet. He should not be “covering” a company that is trading off his credibility as an MLM advocate to sell itself. Dooly now is questioning the ethics of Laggos even as Dooly permits Zeek to use his image in marketing promos that also feature images of Laggos.
Prior to opining that ASD was not a Ponzi scheme — only to be one-upped later by Bowdoin, who said that it was when entering a guilty plea to wire fraud in May 2012 — Laggos agreed to settle a 2004 case with the SEC that alleged he issued laudatory press releases and a laudatory article for a company that later become the subject of a securities investigation without disclosing he was being compensated for touting the purported opportunity.
Laggos neither admitted nor denied the SEC’s allegations, which involved a company known as Converge Global Inc. and a subsidiary known as TeleWrx Inc. The future Zeek consultant settled the SEC case by disgorging nearly $12,000, paying interest of nearly $2,000, paying a civil fine of $19,500 and agreeing to a five-year penny-stock ban.
In April, Network Marketing Business Journal, which lists Laggos as its president, published a laudatory article on Zeek. Dooly memorialized the article’s publication by publishing a special Sunday story about it on Dooly’s MLMHelpDesk. He memorialized it further by producing a gushing video in which he described Laggos as “my good friend and mentor.”
“He is breaking a story here that I thought was amazing,” Dooly said of the NMBJ Zeek article, which gushed that Zeek has a 25 to 1 customer to rep ratio. The claim is important because, if true, it could take Ponzi and pyramid concerns out of play. Some Zeek critics doubt that it’s true.
In April, Dooly noted that NMBJ was one of his favorite publications and that he picked it up on that particular Sunday while relaxing near his pool over a cup of tea.
But now — less than four months after Dooly’s April 15 gushing story and video on NMBJ’s gushing story about Zeek and less than two months after images of both Dooly and Laggos appeared in the Zeek video in which Zeek gushed about itself — Laggos is out at Zeek.
“Breaking MLM News: Zeek Rewards Officially Parts Ways With Dr Keith Laggos After Recorded Call Goes Public,” Dooly advised readers in a headline.
The precise reasons for the departure of Laggos remain unclear. Also unclear is whether Laggos will retain a reported Zeek downline of about 4,500 members that he apparently was managing while at once being a paid Zeek consultant.
Produced by USHBB Inc., which once produced videos for the bizarre (and failed) Narc That Car license-plate recording scheme that claimed some affiliates were out-earning the President of the United States, the Zeek video heralding Laggos, Dooly and others shows Dooly mugging with Zeek executive Dawn Wright-Olivares and Laggos posing with Peter Mingils. The last names of both Laggos and Mingils are misspelled in the USHBB video.
Like Dooly, Mingils is a board member of the Association of Network Marketing Professionals. He’s also Zeek’s Training & Incentives Coordinator and is “rockin’ the Certified Trainers course curriculum,” according to Zeek.
Zeek, which at one time listed USHBB executive OH Brown as a Zeek employee, now says Brown is “banging out video after video.”
Some of the backstory surrounding the failed Narc That Car scheme is remarkably similar to the Zeek scheme. In addition to the presence of USHBB, Narc and Rex Venture LLC, Zeek’s purported parent company, both have scored the Better Business Bureau’s lowest rating: “F.”
Affiliates of both Narc and Zeek, meanwhile, have sought to turn attention away from the core issues surrounding both Narc and Zeek by suggesting that the BBB is a fraud.
But perhaps most compellingly, the now-failed Narc scheme once did at least part of its banking at NewBridge Bank, one of the banks that Zeek used before mysteriously announcing on Memorial Day that it was ending its relationship with NewBridge. Narc was based in Texas. How it ended up banking at NewBridge is unclear.
What is clear is that Narc was a pyramid scheme that planted the seed it existed to help the U.S. AMBER Alert system for locating abducted children and traded on imagery of the White House. Both the U.S. Department of Justice and the National Center For Missing and Exploited Children, which administers part of the AMBER Alert program, confirmed to the PP Blog more than two years ago that they had no affiliation with Narc.
A Narc Knockoff With Phil Piccolo As Background Player
Narc appears to have inspired a knockoff MLM scheme known as Data Network Affiliates, which was linked to longtime MLM huckster Phil Piccolo. In late 2011, DNA’s website — and the website of another a Piccolo-linked “program” known as OWOW — were used to drive traffic to an emerging MLM scheme known as TextCashNetwork (TCN).
In December 2011, the PP Blog reported that TCN had used the name of Rex Venture Group on its website in the context of a purported “ASSIGNMENT” clause. The Rex Venture reference later mysteriously went missing from the TCN site, a circumstance that could cause investigators to question Rex Venture about whether it was aware that its name appeared on the TCN site and whether it had any business relationship with TCN.
If this is modern MLM, MLM is in a lot of trouble. Karl Wallenda, who built a magical name in the daredevil business and made a career out of taking risks, wouldn’t do Zeek.
For starters, Zeek affiliates being approached by upline sponsors and email/website appeals to send in money “to defend Zeek Rewards and all of our independent businesses as per our legal rights of due process” might want to read this July 25 PP Blog post.
UPDATED 11:31 P.M. EDT (AUG. 26, U.S.A.) After the collapse of AdSurfDaily in 2008, there were at least four efforts to raise funds to “defend” the Ponzi enterprise and/or its participants. The PP Blog has received reports that at least one such effort is under way in the aftermath of the collapse last week of Zeek Rewards, which the SEC called a $600 million Ponzi- and pyramid scheme that had affected more than 1 million people. Zeek also is under investigation by the U.S. Secret Service and the office of North Carolina Attorney General Roy Cooper.
With Bowdoin effectively having been out of public view for nearly three years, the 
The SEC has gone to federal court in Puerto Rico, alleging that Ricardo Bonilla Rojas was operating a $7 million Ponzi scheme targeted at evangelical Christians and factory workers.
UPDATED 4:06 P.M. EDT (U.S.A.) It happened after the collapse of AdSurfDaily in 2008 — and it’s happening now in the aftermath of the collapse of Zeek Rewards amid spectacular allegations by the SEC Friday of Ponzi and pyramid fraud.
URGENT >> BULLETIN >> MOVING: (UPDATED 6:25 P.M. EDT (U.S.A.) The SEC has filed an emergency action in federal court in Charlotte, N.C., that alleges Zeek Rewards is a $600 million Ponzi and pyramid scheme.
