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Tag: SEC

  • BULLETIN: SEC Says California Man Was Running THREE Ponzi Schemes — One Of Them Allegedly Duped Investors Into Believing They Were Funding FedEx Distribution Facility In Las Vegas

    BULLETIN: The SEC has gone to federal court in the Southern District of California, alleging that Steven L. Hamilton of Carlsbad was running three Ponzi schemes through three companies he set up “to solicit unsuspecting investors.”

    Hamilton is 42, the SEC said.

    One of the offers allegedly duped people into believing they were investing in a Las Vegas distribution center for FedEx, the famous courier company.

    “Hamilton, however, did not have an agreement with Federal Express to build a Federal Express facility in Las Vegas, Nevada, and did not have a signed lease with Federal Express,” the SEC charged. “Instead, Hamilton converted the investor funds to his own use.”

    Hamilton and his companies also duped investors into believing they were investing in real estate loans secured by deeds of trust or certificates of deposit.

    Charged with Hamilton were Verde Retirement LLC of San Diego, Verde FX Nevada LLC of San Diego and Covenant Capital Partners of Encinitas, Calif.

    “Hamilton used the money he raised from these three fraudulent offerings to pay his personal living expenses,” the SEC charged. “In order to perpetuate his scheme, and to make his purported investments appear successful, Hamilton also used a portion of the monies he raised to pay fictitious returns to investors when, in fact, his investments were non-existent and he was simply using investors’ monies to pay other investors.”

    The combined fraud schemes operated between 2007 and February 2011, raising at least $1.6 million from at least 23 investors, the SEC said.

    And Hamilton also touted certificates of deposit — while trading on the name of the government and engaging in website chicanery to sanitize the scheme, the SEC said.

    “Fliers for the Verde CDs, posted by Hamilton on the Verde website, advertised ‘fixed income accounts’ that ‘earn 5x more than a comparable term current bank CD,’” the SEC charged.

    Site visitors were told that capital was “protected by our highly conservative senior loans against high quality, income producing commercial real estate,” the SEC charged.

    “In a September 2010 iteration of the website, Verde represented that its fixed income accounts were ‘supported by the monthly interest payments’ Verde received from its portfolio of ‘well chosen, US Government Agency guaranteed (Fannie Mae Freddie Mac), conservative, senior loans,’” the SEC charged.

    At the same time, the website further assured  prospects “that the Verde mortgage portfolio was ‘backed 100% by the US Government Agencies, thus ensuring [investor] principal and income [were] safe,’” the SEC charged. “By November 2010, the website had been revised to eliminate references to a portfolio that included ‘FDIC insured CDs.’”

    Regulators and U.S. law enforcement long have warned that fraud schemes destroy confidence in legitimate capital markets and that the Internet has been used by hucksters to disguise criminality and create the appearance of legitimacy.

    Read the SEC complaint.

  • BIRTH OF A ‘SOVEREIGN’ VERB: Appeals Court Upholds Convictions In ‘False-Liens’ Case In Which Defendant Called Law ‘A[**] Wipe’ And Declared He’d ‘Lien . . . Down’ Even On Court-Appointed Defense Counsel; Co-Defendant Was Figure In SEC’s Gold Quest International Ponzi Case And Sought To File Bizarre Lawsuit Against Agency

    “I don’t want to see a lawyer. If you do, I’m going to lien him down fast.” — Gregory Allen Davis addressing U.S. Magistrate Judge Alice R. Senechal of North Dakota in a false-liens case that evolved from events in 2010 and earlier

    UPDATED 5:14 P.M. ET (U.S.A.)

    The word “lien” is a noun. But it seems quickly to have become a verb in the mind of Gregory Allen Davis, a reputed “sovereign citizen” accused in 2010 of filing false liens against U.S. District Judge Daniel Hovland of North Dakota and Lynn Jordheim, a federal prosecutor who once served as the acting U.S. Attorney for the state.

    Appearing before U.S. Magistrate Judge Alice R. Senechal to be arraigned on charges of filing false liens in the form of UCC Financing Statements against Hovland and Jordheim, Davis informed Senechal that he’d reject the appointment of defense counsel by the court, according to transcripts cited by the U.S. Court of Appeals for the Eighth Circuit. (PP Blog emphasis):

    “I don’t want to see a lawyer,” Davis barked to the judge. “If you do, I’m going to lien him down fast.”

    A Tortured History

    With the belligerent morphing of “lien” from noun to verb even as Davis claimed the judge had no jurisdiction over him and demanded she present her “oath of office,” thus began a new chapter in the already-bizarre sagas of Davis and fellow purported “sovereign citizen” Michael Howard Reed.

    Reed emerged as a figure in the May 2008 SEC Ponzi-scheme case against Gold-Quest International (GQI) after asserting he was the “attorney general” for an “Indian” tribe in North Dakota and trying to sue the agency for the staggering sum of $1.7 trillion.

    GQI operated from Las Vegas and touted a footprint in Panama. Reed’s apparent theory was that the enterprise, which was accused of hatching a Ponzi that had gathered nearly $30 million, was untouchable under U.S. law and that it enjoyed sovereignty that somehow was portable across multiple state lines in the United States. A federal judge in Nevada quickly put an end to that nonsensical argument — even as regulators in Canada also were preparing or pressing claims against GQI, which purportedly was operated by a “Lord.”

    Reed’s unsuccessful bid to intervene in the GQI case was hardly his only encounter with the federal judiciary and law-enforcement agencies.

    In rejecting various claims by Davis and Reed in the false-liens case and upholding the rulings of U.S. District Judge Charles B. Kornmann of South Dakota — who was sitting in special designation because the North Dakota federal judiciary had recused itself — the Eighth Circuit appeals panel started out by reciting some of the tortured litigation history surrounding the false-liens case. (Italics added):

    “Gregory Allen Davis and Michael Howard Reed irrationally believe that their membership in the Little Shell Nation, an unrecognized Indian tribe, means they are not United States citizens subject to the jurisdiction of the federal courts. This belief led them into serious trouble. First, Reed threatened North Dakota District Judge Ralph Erickson because he refused to dismiss federal drug charges against two other Little Shell members. Months later, when District Judge Daniel Hovland denied a motion to dismiss a firearm charge pending against Reed, Davis filed a Uniform Commercial Code (UCC) financing statement listing Judge Hovland and acting United States Attorney Lynn Jordheim as $3.4 million debtors and Davis as the secured party. After a three-day trial, a jury convicted Davis and Reed of conspiring to file and filing false liens against Judge Hovland and Jordheim in violation of 18 U.S.C. § 1521. The jury also convicted Reed of corruptly obstructing justice in violation of 18 U.S.C. § 1503(a), based on his earlier threats. On appeal, Davis argues that the evidence was insufficient to prove a violation of § 1521. Both Davis and Reed argue, for somewhat different reasons, that the district court violated their constitutional rights by allowing them to represent themselves at trial. We affirm.”

    Notwithstanding the fact Davis initially had claimed he’d “lien . . . down” even appointed defense counsel and personally defend the charge that he’d filed false liens against public officials, Davis subsequently permitted a lawyer appointed by the court as “standby counsel” to carry out duties such as arguing evidentiary issues, according to court records. Both Davis and Reed reserved their rights to argue the case-in-chief.

    “[T]hey provided opening statements, cross-examined the government’s witnesses, testified in their own defense, and offered a mountain of irrelevant documents relating to their claims of personal sovereignty,” according to Eighth Circuit.

    But after both men were convicted of filing false liens and conspiring to file them, they then claimed they should not have been permitted to act as their own counsel, a claim in stark contrast to the earlier insistence by Davis that he be permitted to exercise his Constitutional right to represent himself and that he’d file a lien against a defense attorney if one were appointed for him.

    Among other things, the Eighth Circuit upheld Kornmann’s conclusion that Davis “knowingly and voluntarily waived his right to counsel.” It made the same determination in rejecting Reed’s argument that the judge should not have permitted him to argue his own case.

    Reed claimed, among other things, that “he should not have been allowed to defend himself foolishly,” according to the Eighth Circuit.

    The Story Within The Story

    Also of note is that the federal law under which Davis and Reed were charged and convicted in North Dakota is the same law under which AdSurfDaily figure and purported “sovereign citizen” Kenneth Wayne Leaming was charged in November 2011 by an FBI terrorism task force in Washington state: Retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title.

    Leaming, 56, also has a “Little Shell” link, according to the Anti-Defamation League.

    In court filings, the FBI said Leaming filed bogus liens against a federal judge, three federal prosecutors and a special agent of the U.S. Secret Service — among other officials. In addition, he is charged with being a felon in possession of firearms, harboring two fugitives and uttering a bogus “Bonded Promissory Note” for $1 million. He is jailed near Seattle.

    But to Davis, the law against filing false liens against public officials is “ass wipe,” according to a citation in the Eighth Circuit decision upholding his conviction.

    “At trial, an FBI agent testified that, during a January 20 interview, Davis admitted to filing this lien, threatened to file more liens, and referred to the statute prohibiting false liens as “ass wipe,” the appeals panel recounted.

    Leaming, according to court filings in the false-liens cases against him, filed the liens in Washington state.

    Davis, though, chose to file liens in the District of Columbia — and he did so electronically, according to the Eighth Circuit.

    “Reed and Davis conducted a recorded telephone conversation on January 5, 2010, the day Judge Hovland issued an order denying Reed’s motion to dismiss the pending firearms charge,” the appeals panel recounted. “The two discussed placing UCC liens for $2.4 million in cash and $1 million in silver against federal entities. The next day, Davis electronically filed a Form UCC-1 financing statement with the Recorder of Deeds in Washington, D.C., listing as debtors, ‘1. U.S. District Court of North Dakota/Daniel Hovland,’ and ‘2. Acting United States Attorney, Lynn C. Jordheim.”

    The histories of both the Davis/Reed case and the emerging Leaming case lead to troubling questions about whether the Internet and the current state of U.S. and state procedures with respect to how liens are accepted and recorded in the public record have opened the doors for “sovereign citizens” to wage far-reaching revenge campaigns against public officials.

    This comes at potential expense to both taxpayers and the targeted public officials who at least briefly have to take time away from their public duties and put on the hat of a witness/crime victim.

    The Eighth Circuit ruling, for instance, points out that lien targets and federal officials “Hovland and Jordheim testified that they are not indebted to Davis” despite his assertion they owed him millions of dollars.

    “Davis chose a filing office whose public records would likely be searched by a party looking for adverse claims against the properties of Judge Hovland and Jordheim, such as prospective lenders, credit card issuers, and credit rating agencies,” the appeals panel found. “He also filed the facially suspect statement electronically and it became a public record without review.”

    And, as the appeals panel highlighted in a potentially ominous footnote, different results are possible in different jurisdictions. (PP Blog emphasis added):

    “Some States have amended UCC Article 9 to give filing officers discretion to refuse apparently fraudulent or unauthorized filings and to streamline procedures for the removal of fraudulent filings. See White & Summers, Uniform Commercial Code § 31-16 (6th ed. 2010). Absent such an amendment, the UCC grants little authority to refuse to accept fraudulent filings. See § 9-520(a) & cmt. 2.”

    See “The Lawless Ones” report by the Anti-Defamation League.

    Read the Feb. 9, 2012, ruling against Davis and Reed by a three-judge panel in the Eighth Circuit.

  • DISTURBING: JSS Tripler-Related Domain Listed In CONSOB Action Is Based In United States — But Suddenly Starts Redirecting To ‘JustBeenPaid’ Site In The Netherlands; Claim That ‘We’re Not Located In Any Unfriendly Political Jurisdictions’ Exposed As Rank Deception

    On Jan. 23, CONSOB, the Italian securities regulator, made public an action against promoters of JSS Tripler, a “program” that advertises an annualized return of 730 percent. The claim alone would be enough to make Bernard Madoff or Charles Ponzi himself blush.

    Or projectile-vomit.

    But if the CONSOB action were not trouble enough, one of the JSS Tripler-related domains listed in the agency’s action is hosted in Utah, according to domain records. The domain, which forms its root with a hyphen splitting the proper name of JSS Tripler — i.e., JSS-Tripler.com — continued to serve pages from Utah for several days after CONSOB’s Jan. 23 announcement. The domain, for instance, published daily updates on the number of days JSS Tripler itself purportedly had been in action.

    Among the graphics on the Utah-hosted landing page was an image of a JSS Tripler pitchwoman who appeared to be Asian in descent. Assuming the woman actually exists, her nationality remains a mystery. At a time uncertain between Feb. 2 and Feb. 3, however, the site stopped serving content and instead began to redirect to a JustBeenPaid subdomain styled “marketing” that is hosted in the Netherlands.

    Whether a U.S. resident or citizen of another country who reached across international borders applied the redirection is unclear. What is clear is that the United States could join Italy in exercising  jurisdiction over JSS Tripler and its promoters if it chose to do so. The site also is accessible through individual U.S. states, meaning regulators at the state level also could exercise jurisdiction.

    A state’s choice to exercise jurisdiction over the sale of unregistered securities is hardly unusual in the HYIP sphere. Florida, for example, exercised jurisdiction over AdSurfDaily and operator Andy Bowdoin. North Dakota exercised jurisdiction over Pathway to Prosperity and operator Nicholas Smirnow. Oregon exercised jurisdiction over an abomination known as “I Need Cash,” a cycler operated by Kristopher K. Keeney.

    JustBeenPaid and Frederick Mann, a murky figure who once claimed to be an ASD promoter, are the purported operators of JSS Tripler. The Netherlands subdomain shows an image of a man at the top of the page. That man is described on the site as “Louis Paquette, JBP Affiliate Sales & Marketing Director.”

    The redirection, which occurs in Utah, according to server data, is virtually immediate — meaning that the previous content and photo of the woman of Asian descent no longer load and that the traffic is switched to the Netherlands page that shows the purported image of Paquette.

    Among other things, this development raises questions about who caused the Utah server to redirect to the Netherlands domain and precisely why the change was made on the heels of the CONSOB action. Whether JustBeenPaid or JSS Tripler themselves had control over the Utah domain is unknown.

    At a minimum, though, the presence of the Utah domain may be evidence that JustBeenPaid/JSS Tripler not only sold unregistered securities to U.S. citizens, but did so from inside the United States with a U.S. promoter or a promoter from another country with access to the Utah server at the helm. And because the redirect to the JustBeenPaid subdomain in the Netherlands occurs from inside the United States, it exposes a JustBeenPaid/JSS Tripler lie that the “opportunity” protects itself and promoters from investigation and/or prosecution.

    Even if the redirection were not occurring in the United States, the CONSOB action destroys the myth that the “opportunity” is outside the reach of law enforcement.  So does the simple fact that any regulator in the world could take action against the “opportunity” and its promoters. Indeed,  the cross-border nature of the scheme puts investors in virtually all jurisdictions at risk. Individual promoters could be targeted for investigation/prosecution in multiple jurisdictions — and if actions such as those begin to occur, the access of Just BeenPaid/JSS Tripler to cash sources could dry up.

    A claim by a MoneyMakerGroup Ponzi-forum promoter that Just BeenPaid/JSS Tripler has paid out more than $10 million to investors may demonstrate the vast reach of the “opportunity” and its ability to tap funding sources while siphoning undisclosed sums for itself. Just BeenPaid/JSS Tripler may be no Madoff, but $10 million still is a massive sum, one that should raise eyebrows in the worldwide law-enforcement community.

    Content accessible from the Netherlands-based JustBeenPaid subdomain — marketing.justbeenpaid.com — raises other troubling concerns. This statement (next paragraph) appears at the bottom of a “login” page in the JustBeenPaid root domain. The statement is accessible through the “marketing” subdomain. (Indent/italics added):

    Secure Offshore Servers
    — Our servers are in a strategic location.
    We pay special attention to security.
    Our servers are organized so upgrading and expansion are very easy.

    Offshore Business
    — Our business operations are geographically decentralized.
    We don’t have any central office.
    We’re not located in any “unfriendly political jurisdictions.”

    As a practical matter, the mere fact the page is accessible through a redirect that occurs in the United States may destroy any claims that JustBeenPaid/JSS Tripler protects members against “unfriendly political jurisdictions.” Any transaction that occurred or occurs through the Utah domain necessarily involves wires in the United States.

    Regardless of the domain or email address through which business is conducted, any U.S.-based promoter of JustBeenPaid/JSS Tripler is using wires inside the United States, a situation that brings wire fraud into play — in addition to the securities issues.

    A more troubling question, perhaps, is why JustBeenPaid/JSS Tripler even would have the need to make such a claim if its international business is above-board. The same enterprise also claims to have a U.S. patent, a specious claim in the context of securities because the U.S. Patent and Trademark Office does not regulate the securities markets of the United States or any other country.

    Is JustBeenPaid/JSS Tripler The BCCI Of The HYIP World?

    In the early 1990s, a corrupt international banking enterprise known as Bank of Credit and Commerce International created a worldwide financial scandal. The bank perhaps was best known by its acronym — BCCI — and purportedly was designed to be “offshore everywhere.”

    JustBeenPaid/JSS Tripler is making the same sorts of claims associated with BCCI, a spectacularly bright red flag if ever there was one.

    But if that bright red flag were not enough, other content accessible through the “marketing” subdomain of JustBeenPaid sends signals that positively glow of danger. Indeed, a “Member Agreement” link accessible through the site includes this language. (Indent/italics added):

    6. I affirm that I am not an employee or official of any government agency, nor am I acting on behalf of or collecting information for or on behalf of any government agency.

    7. I affirm that I am not an employee, by contract or otherwise, of any media or research company, and I am not reading any of the JBP pages in order to collect information for someone else.

    Any political jurisdiction in any part of the world easily could construe those words as an invitation extended by JustBeenPaid/JSS Tripler to investors to join an international conspiracy engaging in organized crime and mass-marketing fraud.

    The same type of claim became an element of the Legisi HYIP prosecution in the United States. The Legisi prosecution, which ultimately involved the SEC, began as an undercover operation between the U.S. government and the state government of Michigan.

    Even more land mines emerge when one considers that JustBeenPaid/JSS Tripler  is being promoted on Ponzi boards such as MoneyMakerGroup and TalkGold, both of which are referenced in U.S. federal court files as places from which Ponzi schemes are promoted.

    Veteran forum and social-network hucksters are promoting JustBeenPaid/JSS Tripler, including promoters linked to the AdSurfDaily Ponzi scheme case in the United States and CONSOB’s earlier action involving Club Asteria, another Ponzi forum darling.

    Depending upon how the universe lines up, JustBeenPaid/JSS Tripler could find itself starving for cash in very short order. It is a program that is thumbing its nose at law enforcement across the globe — and its willfully blind promoters could find themselves named in individual actions just about anywhere.

    It is the very definition of an international financial conspiracy of the most dangerous sort, a sort of emerging BCCI of the HYIP world.

    BEFORE

    This is the top of the page at the JSS-Tripler.com domain as it existed on Jan. 30, 2012.

    AFTER

    This is the top of the "marketing" subdomain of JustBeenPaid.com as it exists today. Prospects who visit the Utah-based JSS-Tripler domain referenced in the "BEFORE" screen shot above now are redirected to the Netherlands-based "marketing" subdomain of JustBeenPaid. The switch occurs in Utah, according to server data.

  • In Wake Of CONSOB Action, Affiliate ‘Press Release’ Calls JSS Tripler Members ‘Investors’ EIGHT Times And Suggests U.S. Government Approves Purported ‘Program’ That Advertises Return Rate That Dwarfs Madoff

    You can’t make this stuff up . . .

    A week after CONSOB, the Italian securities regulator, announced it was opening a probe into the activities of JSS Tripler promoters amid claims the absurd “program” advertised returns that would make Bernard Madoff blush, a new “press release” ignores the CONSOB development, calls participants “investors” (eight times) and suggests the U.S. government has approved the JSS Tripler “program.”

    The issues in the Italian probe are whether JSS Tripler and promoters are selling unregistered securities as investment contracts unlawfully as part of a multilevel online scheme that offers preposterous returns that compute to an annualized rate of 730 percent — with compounding “bonuses” and two-tier downline commissions totaling 15 percent on top of the advertised returns.

    Madoff, jailed for 150 years in the aftermath of the collapse of his massive Ponzi scheme, generally offered annualized returns between 48 and 73 times lower than the advertised JSS Tripler returns.

    Dated today, the “press release” appears to have been issued by a JSS Tripler affiliate and is available through Google News. The release does not mention the week-old CONSOB probe. Nor does it identify either the affiliate or the purported company as individuals or entities authorized in any jurisdiction to sell securities.

    Moreover, the release does not seek to qualify customers in any way. The only apparent customer qualification is access to a bank or payment account to send money to JSS Tripler and wait for ludicrous profits in return.

    A Patent Absurdity

    “Thousands of high return programs on the internet have been created for people who want to work from home,” the release begins. “However, the majority of these fast money work home (sic) programs are not sustainable. Frederick Mann solved this problem with his recently US patented system JustBeenPaid! and its subprogram JSS Tripler.”

    “JustBeenPaid” (JBP), an exceptionally murky entity, is the purported operator of JSS Tripler. Frederick Mann, JBP’s purported operator, once advertised that he was a promoter for AdSurfDaily, which the U.S. Secret Service has described as an online Ponzi scheme involving at least $110 million.

    JBP itself is advertising a U.S. patent, a specious and hollow claim. Regardless of whether a patent exists as part of JBP’s purported software platform, the U.S. Patent and Trademark Office does not regulate securities markets or approve the issuance of securities.

    Those responsibilities rest with the world’s securities-regulatory bodies, including — for just two examples — CONSOB in Italy and the SEC in the United States. Virtually all developed countries have such regulatory bodies. In the United States and Canada, individual states and provinces also have regulatory responsibility over securities.

    Scams routinely make specious claims and divine a connection to government as a means of disarming doubting prospects. The relatively new “patent” claim in the context of JSS Tripler, however, could be a sign that the “program” is becoming increasingly desperate to raise cash and has dialed up its deception to achieve that end.

    The nationality of the press-release author was not immediately clear. But he is using a Google Gmail address and appears also to be presenting the release in U.S. English, based on the spelling of the word “program” (as opposed to the chiefly British  “programme”) and certain elements of punctuation associated with U.S. English.

    The release, which is accessible from the United States, has five embedded JustBeenPaid affiliate links, each of which rotates to a pitch page with a signup prompt page that asks investors to register using a Gmail address.

    Among the incongruities about JBP/JSS Tripler is that the purported opportunity continued to solicit customers to register with Gmail addresses — even after Google-owned YouTube deleted promos for the “opportunity” last year.

    One promoter on the MoneyMakerGroup Ponzi forum asserted that he could overcome the deletions because he exercised control over hundreds of YouTube accounts.

    “No sweat, I own over 500 Youtube accounts, so I’ll just keep making videos like normal, plus I can always use Viddler and Windows movie maker and facebook video as well,” MoneyMakerGroup poster “gtprosperity” claimed.

    Apparently oblivious to the CONSOB probe, the serious concerns about the unlawful sale of securities and the bizarre JBP/JSS Tripler developments over many months, the author of the news release asserts that the “program currently has over 125,000 members, and over 2,000 new investors join each day.

    “Investors can earn a 2 percent daily, with over 60 percent earned in a month,” the release claims. “Investors earn 2 percent daily on each position they purchase. New positions can be bought with money or earnings. Daily earnings can also be cashed out by sending them to one’s JSS account for withdrawal. Withdrawals take 24 hours to process.”

    “Work Home Fast Money Making System To Earn Extra Income Recently US Patented,” the release headline reads.

    A JPB/JSS Tripler claimed on the MoneyMakerGroup Ponzi forum yesterday that he planned to buy a “motor home” with his profits and travel the United States.

    Among the potential problems with the claim is that it likely demonstrates that JBP/JSS Tripler is selling unregistered securities as investment contacts to U.S. citizens — even as it is doing the same thing in Italy and other countries.

     

  • UPDATE: JSS Tripler Promoters On Ponzi Boards Scoff At CONSOB Action, React By Making ‘I Got Paid’ Posts; Like AdSurfDaily, Purported ‘Opportunity’ Calls Payouts ‘Rebates’ And Employs Confluence Of Payment Schemes

    “I dont care what the CONSOB or whatever says because I am not an Italian.” — TalkGold poster known as “WallStreetIsAPonzi,” Jan. 28, 2012

    Even as CONSOB, the Italian securities regulator, is publishing an announcement on its website that promoters of a bizarre HYIP known as JSS Tripler are under investigation amid preposterous claims that investors receive an annualized return of 730 percent, promoters on Ponzi forums such as MoneyMakerGroup and TalkGold are thumbing their noses at the news.

    JSS Tripler is an arm of “program” known as “JustBeenPaid” (JBP). Whether JBP plans to assist any of the companies or individuals identified in the CONSOB announcement in navigating the regulatory waters and preparing a defense in the weeks ahead is unclear.

    What is clear is that some JBP promoters are reacting to the news by posting fresh “I got paid” posts on the Ponzi boards, even as JBP continues to use its website to advertise returns of “2%+ per Day” and “60% per Month!”

    Visitors are advised they can “Increase Earnings with Daily Compounding” and glean affiliate “bonuses” totaling 15 percent over two tiers — on top of the annualized returns of 730 percent.

    In the AdSurfDaily Ponzi case in 2008, U.S. District Judge Rosemary Collyer described “a confluence [of ASD] payment schemes” very similar to the payment schemes purportedly in place at JBP. JBP, though, is advertising a return rate double that of ASD, whose operator, Andy Bowdoin, later was arrested on charges of wire fraud, securities fraud and selling unregistered securities.

    Bowdoin faces up to 125 years in federal prison and fines in the millions of dollars, if convicted on all counts.

    In her 2008 ruling in the ASD case in which she refused to release money seized by the U.S. Secret Service as part of an international Ponzi probe, Collyer noted that ASD called its payouts to members “rebates.”

    Separately, documents from Canadian investigators show that the word “rebates” was used in international scams, including Flat Electronic Data Interchange (FEDI) and the mysterious “Alpha Project.” At least one FEDI promoter is jailed in the United States, as is FEDI operator Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” who was convicted on charges of operating an investment-fraud scheme and financing terror.

    At MoneyMakerGroup yesterday — on the heels of the CONSOB news — a poster published seven purportedly recent payment proofs from JSS Tripler. Each of them used the word “rebate,” demonstrating that the purported opportunity also is using the same language as ASD and FEDI to describe payouts to members.

    The MoneyMakerGroup member said he planned to buy a “motor home” and “start traveling the US” with his JSS Tripler money.

    In the AdSurfDaily Ponzi case, several automobiles were seized as the alleged proceeds of a criminal scheme. A boat and marine equipment also were seized, along with computers and real estate valued at more than $1 million. All in all, the cash seizures to date in the ASD case total more than $80 million, including cash seized from individual promoters in at least four U.S. states.

    U.S. federal prosecutors say that ASD in part tried to mask its $110 million Ponzi scheme by calling its payments to members "rebates." JSS Tripler, an arm of a "program" known as "JustBeenPaid," also refers to its payouts to members as a "rebate," according to this post yesterday at the MoneyMakerGroup Ponzi forum.

    Although Frederick Mann, the purported operator of JBP/JSS Tripler, is described by supporters as a business genius and creator of a “masterpiece,” the program is using the same sort of language and bizarre presentations that drew the attention of law enforcement in the ASD and FEDI cases.

    Elsewhere on MoneyMakerGroup, a member described the CONSOB development as “NONSENSE!”

    Another member observed yesterday that JBP payouts came from an email address on a domain styled BigBooster.com. Why the payouts are associated with the BigBooster domain is unclear, but the BigBooster domain previously has been linked to the alleged ASD Ponzi scheme and Frederick Mann, the purported operator of JBP/JSS Tripler.

    Separately, the TalkGold forum deleted a link to a PP Blog report on the CONSOB action. In the ASD case, a forum known as “Surf’s Up” routinely deleted links to the PP Blog. ASD members who relied on the Blog for information were described on the forum as troublemakers, and posters willing to consider the government’s point of view were described as “rats,” “maggots” and “cockroaches.”

    ASD figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by the FBI in November 2011 on charges of filing bogus liens against at least five public officials involved in the ASD case, including a federal judge, three federal prosecutors and an active-duty agent of the U.S. Secret Service who did some of the early legwork in the case.

    The Secret Service employed undercover operatives in bringing the ASD prosecution.

    One MoneyMakerGroup poster yesterday suggested that the CONSOB action was “crap” and claimed outright that JSS Tripler had “paid out over 10 million bucks.”

    Whether the poster ever had seen the verified, audited books of JBP/JSS Tripler and other financial records such as bank and payment-processor statements to substantiate his claim is unclear. But even if the $10 million claim is true, the claimed sum was not broken down by recipient — and online scams are infamous for siphoning cash and concentrating it in the pockets of program sponsors and insiders.

    Promoters of fraud schemes often pass along company lies and deceptions to recruits and prospects, a situation that U.S. government agencies, including the Secret Service, the SEC and the CFTC,  have noted in prosecutions involving individual, commission-based promoters.

    The same MoneyMakerGroup promoter also ventured the CONSOB action came because “governments are not getting a cut of this revenue,” further asserting that  “the only reason they are starting to do probes and crap (sic) not because they care about protecting you from loosing (sic) your money.”

    ASD members made similar claims. Like JBP/JSS Tripler, ASD also was promoted on the Ponzi boards — as were at least three purported ASD clones, all of which have ceased to operate. The cost to investors is unknown.

    Like ASD, JSS Tripler also appears to have a clone — one that actually uses JSS Tripler’s name to form its own name. That “program,” known as JSS Triper 2 or T2, appears now to be changing its name to T2MoneyKlub. Regardless of the name, T2 also was hawked on the Ponzi boards and appears even to have given birth to itself on a Ponzi board as a result of a dispute with JBP/JSS Tripler.

    Federal prosecutors said ASD also changed its name, morphing from just plain AdSurfDaily into ASD Cash Generator. Court records suggest that changing names was part of ASD’s criminal plan and that the change occurred after the initial ASD Ponzi collapsed and after certain payment conduits began to come under government scrutiny.

    Among the MoneyMakerGroup posters who published “I got paid” posts for JBP/JSS Tripler yesterday was “10BucksUp” — his second such post since the CONSOB action became public.

    “10BuckUp” previously pushed Club Asteria, anotherPonzi-forum darling that came under CONSOB scrutiny. In addition to displaying no apparent respect for CONSOB, “10BucksUp” let it be known in September 2011 that he also was a pitchman for Cherry Shares, a collapsed program referenced in June by Canadian regulators.

    Cherry Shares also was a Ponzi-forum darling.

    Whether “10BucksUp” and other JBP/JSS Tripler promoters planned to tell their existing recruits and prospects about the fact CONSOB is targeting individual promoters in a 90-day suspension order related to the purported JBP/JSS Tripler program is unclear.

    Also unclear is whether JBP/JSS Tripler will inform existing participants and prospects about the CONSOB action.

    Members of any “opportunity” that purports to pay an absurd return always are at great risk. The risk becomes even greater if they are denied information about investigations. Promoters who do not disclose the presence of an investigation or simply rely on the company line (or lack thereof) potentially are at greater risk of prosecution as individual promoters.

    In the ASD case, for instance, federal prosecutors said the company was collecting money from new members and funneling it to original members affected by ASD’s first collapsed Ponzi — without informing new enlistees and prospects that their money was being used to prop up losers from the initial scheme and to help the second Ponzi gain a head of steam.

    The personal assets of a number of individual ASD promoters were targeted in forfeiture actions or affidavits, with the government seizing sums in several bank accounts in multiple U.S. states. These sums totaled in the hundreds of thousands of dollars, according to court records.

  • ALERT! On Heels Of SEC’s Complaint Against Alleged Latvian Hacker Accused Of Manipulating Stock Prices By Hijacking Brokerage Accounts, FINRA Warns Of Plots Targeting Email Accounts

    “Investors who suspect that their email account has been hacked should immediately notify their brokerage firm and other financial institutions, and anyone who suspects they have been defrauded should file a complaint with FINRA.” — Gerri Walsh, vice president for Investor Education, Financial Industry Regulatory Authority, Jan. 26, 2012

    The Financial Industry Regulatory Authority (FINRA) yesterday issued an alert and regulatory notice, saying that it “has received an increasing number of reports involving investor funds being stolen by fraudsters who first gain access to the investor’s email account and then email instructions to the firm to transfer money out of the brokerage account.”

    FINRA’s announcement occurred on the same day the SEC charged that a 34-year-old Latvian trader “broke into” customers’ brokerage accounts between June 2009 and August 2010 and made trades to manipulate the prices of stock he owned to create a personal windfall while causing losses to customers and broker-dealers.

    In just one 32-minute period on Oct. 26, 2009, Igors Nagaicevs “generated more $14,000 in illegal profits” by twice taking a position a NYSE-listed security, driving up the stock price by purchasing shares through a hacked account and then “liquidating his position at a profit.”

    All in all, Nagaicevs repeated his fraudulent scheme 159 times over 14 months, manipulating the prices of “104 different NYSE and Nasdaq securities” and pocketing more than $850,000 in illegal profits, the SEC charged.

    Nagaicevs, in effect, caused his hacking targets to lose at least $2 million while passing the bill for the losses to broker-dealer firms, which reimbursed the affected customers, according to the SEC complaint in federal court.

    FINRA did not reference Nagaicevs in its alert yesterday, but warned that email intrusions were on the rise.

    “In some instances, the perpetrators appear to have obtained customers’ brokerage information by accessing customers’ email accounts and searching contact lists or emails sent from the account,” FINRA cautioned in its regulatory notice.

    After breaching the email accounts, FINRA said, the scammers typically “email brokerage firms from customers’ personal email accounts with instructions to wire funds to an account, often overseas, controlled by the perpetrator.”

    Document forgeries may follow the initial email chicanery, FINRA said.

    “The instructions may be accompanied or followed by fraudulent letters of authorization also emailed from compromised email accounts. In some instances, firms have released funds after unsuccessfully attempting to verify emailed instructions by phone. In at least one case, the fraudulent email stressed the urgency of the requested transfer, pressuring the firm to release the funds before verifying the authenticity of the emailed instructions.”

    Read the FINRA Alert.

    Read a new alert from the FBI, the Financial Services Information Sharing and Analysis Center (FS-ISAC) and the Internet Crime Complaint Center (IC3) that warns that scammers are using devious email plots to siphon cash from “banks, broker/dealers, credit unions and other institutions.”

    NOTE: If you follow the criminal madness on the various Ponzi-scheme boards, you’ll notice that the new alert from the FBI, FS-ISAC and IC3 cites the type of scam-talk frequently seen on the huckster forums.

    An outtake from the alert (emphasis added):

    “The excuse is typically based on an illness or death in the family which prevents the account holder from conducting business as usual.”

  • BULLETIN: SEC Says St. Louis Man Went On ‘Spending Spree’ With Investors’ Money, Fleecing Them Of More Than $9 Million; Burton Douglas Morriss Charged With Fraud

    BULLETIN: The SEC has gone to federal court in Missouri and obtained an emergency asset freeze in a case that alleges a St. Louis man who operated private investment funds misappropriated more than $9 million from investors.

    Charged in the civil case is Burton Douglas Morriss, 49, and four companies: MIC VII LLC, Acartha Technology Partners LP, Acartha Group LLC and Gryphon Investments III LLC.

    Some of the money was steered to Morriss Holdings LLC, which is named a relief defendant for receiving ill-gotten gains, the SEC said.

    “It is fraud, pure and simple,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.

    Investors’ money was used by Morriss to make alimony payments, pay interest on personal loans and take “costly vacations, including an African safari,” the SEC charged.

    “Morriss attempted to hide his illegal transfers of investor funds by calling them ‘loans’ when in reality he had no intention of paying back the money and instead went on a spending spree,” Bustillo said.

    Read the SEC’s emergency complaint.

  • BULLETIN: Verdict Goes Against TD Bank In Case Linked To Scott Rothstein Ponzi; Jury Awards $67 Million; Victorious Attorney For Investors Also Is Court-Appointed Receiver In Fraud Case With AdSurfDaily Tie

    BULLETIN: A Florida jury found that TD Bank assisted now-disbarred and imprisoned attorney Scott Rothstein in his epic Ponzi scheme and has found the bank liable for $67 million in damages.

    Read a story in the Sun Sentinel about the federal-court verdict that went against TD Bank.

    The victorious attorney in the civil case is David S. Mandel, who represented the plaintiffs against the bank.

    If Mandel’s name seems familiar to PP Blog readers, it’s because he also is the court-appointed receiver in the Commodities Online LLC fraud case brought by the SEC last year.

    Separately, a company known as SSH2 Acquisitions Inc. had sued Commodities Online figure James C. Howard III on Sept. 15, 2010, alleging that Howard and others were running a massive Ponzi scheme into which SSH2 had plowed $39 million.

    Records in Nevada show that former AdSurfDaily member and “Surf’s Up” forum moderator Terralynn Hoy was a “director” of SSH2.

    Hoy has not been accused of wrongdoing.

    The private lawsuit against Howard and the others became notable because of the clashing images: Although SSH2 was complaining about the alleged Ponzi scheme directed at it by Howard and others, it was doing so in the months after Hoy had helped lead cheers on Surf’s Up for accused ASD Ponzi schemer Andy Bowdoin, who was implicated by the U.S. Secret Service in an alleged Ponzi scheme even larger than Howard’s alleged scheme. Hoy also was a moderator on a forum that supported AdViewGlobal, an autosurf that vanished mysteriously in June 2009.

    Now defunct, Surf’s Up was known for unapologetic, unabashed cheerleading for Bowdoin, whom federal prosecutors said had swindled investors in Alabama in a previous securities caper during the 1990s and took in at least $110 million through ASD. Clarence Busby, an alleged business partner of Bowdoin and the operator of the Golden Panda Ad Builder autosurf, swindled investors in three prime-bank schemes in the 1990s, according to the SEC.

    More than $14 million linked to Golden Panda was seized as part of the ASD case — and yet the cheerleading for autosurf schemes continued on Surf’s Up. The forum labeled ASD pro-se litigant Curtis Richmond a “hero” after he accused the judge and prosecutors of crimes in 2009.

  • SEC Names 3 Defendants In Alleged $16 Million Credit-Card ‘Merchant Portfolio’ Ponzi Scheme Targeted At Mormons; Records Show Schemes Within Schemes Dating Back Years

    EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme as opposed to shrimp, here is an entry: an alleged “merchant portfolio” Ponzi scheme.

    Ponzi and fraud schemes often use impressive-sounding terminology to separate people from their money. Schemes typically mushroom to consume millions of dollars when investors — who sometimes become commission-based promoters and effectively act as unregistered brokers and dealers — accept a firm’s extraordinary claims at face value, ignore red flags such as outsized returns or engage in willful blindness because choosing to see is bad for profits.

    In June 2010, the SEC charged Joseph A. Nelson, Anthony C. Zufelt, David Decker, Cache Decker and five companies “in connection with three related Ponzi schemes largely targeting the Mormon community.” The complaint was filed in Utah and alleges schemes within schemes dating back at least to 2005.

    As 2011 came to a close, the SEC named three additional defendants in a separate, Nelson-related complaint also filed in Utah. Named in the year-end complaint were Kevin J. Wilcox, Jennifer E. Thoennes and Eric R. Nelson.

    Eric Nelson is Joseph Nelson’s brother. He is accused of deceiving investors by creating “fictitious bank account statements reflecting balances in his brother’s accounts that were far in excess of the actual amounts in those accounts.”

    Wilcox and Thoennes are accused of solicitation fraud

    Joseph Nelson, Wilcox and Thoennes told investors “that Joseph Nelson and his companies were engaged in the business of purchasing ‘merchant portfolios’ of credit card processing accounts, holding them for a certain period of time, and then selling them for a profit to financial institutions, such as banks.”

    “Many” of the investors were “fellow members of the Church of Jesus Christ of Latter Day Saints” whom Joseph Nelson “identified and targeted through church connections and during church functions,” the SEC charged.

    But “Joseph Nelson and his companies never purchased or sold a single merchant portfolio,” the SEC charged.

    “The money invested with Joseph Nelson and his companies was instead used by Nelson to make incremental payments to investors in a Ponzi-scheme fashion, to pay his associates, including Wilcox and Thoennes, and to pay his own lavish personal expenses, as well as those of other family members,” the SEC charged.

    Affinity fraud is a major problem in Utah. In June 2010, the FBI said thousands of people in the state had been victimized by Ponzi schemes and cases of investment fraud that caused Utah residents to lose an estimated $1.4 billion.

    SEC Warns About Scams That Use Social-Media Sites To Fleece The Masses

    In a separate, unrelated action yesterday, the SEC charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn, a social-media site.

    Social media increasingly are being used to sanitize schemes and help them mushroom, a top SEC official said.

    “Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, co-chief of the SEC Enforcement Division’s Asset Management Unit.

    Charged in an SEC administrative action yesterday was Anthony Fields, 54, of Lyons, Ill.

    The agency alleged he “offered more than $500 billion in fictitious securities through various social media websites.”

    On LinkedIn, for example, he allegedly used “discussions to promote fictitious ‘bank guarantees’ and ‘medium-term notes.’”

    Read the SEC order against Fields, Anthony Fields & Associates and Platinum Securities Brokers. See this SEC Investor Alert on social-media fraud.

    Revisit this July 2010 PP Blog story on a FINRA warning about HYIPs and scams that use social media to proliferate. See this Nov. 2, 2011, PP Blog editorial on a threat by AdLandPro — a purported social-media site — to sue RealScam.com, an antifraud forum.

    Among other collapsed schemes, the alleged AdSurfDaily and Pathway To Prosperity Ponzi schemes were promoted on AdLandPro. A recent thread at AdLandPro is promoting OneX, which also is being promoted by ASD President Andy Bowdoin while he awaits trial on criminal charges of wire-fraud, securities fraud and selling unregistered securities.

    Among the screaming headlines in OneX-related content on AdLandPro is this one:

    “Are You in Deep Money Trouble? See Me at Once!”

     

  • BULLETIN: Steven Salutric, Illinois Man Accused By SEC Last Year Of Stealing From 96-Year-Old Nursing Home Patient With Dementia, Now Charged Criminally

    BULLETIN: Federal prosecutors in the Northern District of Illinois have charged Steven W. Salutric with wire fraud, the office of U.S. Attorney Patrick J. Fitzgerald said.

    Salutric, 53, of Carol Stream, initially was charged civilly by the SEC in January 2010, amid shocking allegations that, to keep his Ponzi and fraud scheme afloat, he stole $400,000 from a 96-year-old woman with dementia who resided in a nursing home.

    The U.S. Department of Labor later sued Salutric, alleging that he illegally withdrew “more than $1 million from five pension plan client accounts from 2005 through 2009” and “jeopardized the retirement security of many workers.”

    Fitzgerald’s office now says Salutric, who co-founded an investment-advisory firm known as Results One Financial LLC, “caused about 10 clients to lose more than $4.26 million.”

    Salutric’s scheme, which in part involved dipping into client’ custodial funds at Charles Schwab & Co Inc., operated between December 2002 and January 2010, prosecutors said.

    “Salutric allegedly fraudulently obtained more than $3 million from clients by preparing, forging clients’ signatures on, and faxing documents that falsely represented to Schwab that the clients wished to transfer funds from their Schwab accounts to bank accounts held by Salutric’s personal business associates and entities in which he had a financial interest,” prosecutors said. “Salutric allegedly used at least a portion of the clients’ funds to make Ponzi-type deposits to other clients’ accounts to conceal and prolong the scheme.”