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Tag: SEC

  • BULLETIN: Another Alleged Forex Ponzi Scheme — This One In Texas; CFTC Says Convicted Felon And Known Securities Swindler Ran New Scam By Trading In Accounts In Wife’s Name

    A Texas man with federal convictions two decades ago in Utah on charges of securities fraud, mail fraud, making false statements and conspiracy started a Forex Ponzi scheme in 2008 and stole at least $750,000 from investors, according to a CFTC complaint originally filed under seal earlier this month.

    U.S. District Judge Richard Schell of the Eastern District of Texas now has frozen the assets of Larry Benny Groover of Gunter, and the seal on the case has been lifted.

    Groover, 70, consented to a judgment in a 1986 registration and antifraud case brought by the SEC, and was the recipient of a five-year civil ban in 1987 from associating with a broker, dealer or investment adviser, the CFTC said.

    Criminal charges were brought against him in 1989, resulting in his 1991 conviction and a jail sentence of two years, the CFTC said.

    His wife, Joanne Groover, has been named a relief defendant in the new CFTC action, and the agency is seeking the return of what it described as ill-gotten gains.

    Like her husband, Joanne Groover never has been registered with the CFTC “in any capacity,” the CFTC said.

    The agency advised Schell that it believed Larry Groover “needed Mrs. Groover’s name” to open forex trading accounts because of his past encounters with regulators and his prison record.

    While on five years’ federal probation after his criminal conviction, Groover’s probation was revoked in 1997 for not making good on a $16,000 restitution order, the CFTC said. Federal records show he was released from prison in 1999.

    Investor funds were commingled with the personal funds of both Groover and his wife in Groover’s most recent scam, the CFTC charged.

    One of Groover’s customers formed a company and plowed $250,000 into the scheme, the CFTC alleged.

    On Aug. 21, 2008, Groover faxed the customer an account statement indicating that the customer’s funds had grown “5% monthly” over a sustained period and that the customer now had a balance of $393,378.09.

    “This account statement was completely false,” the CFTC charged. “In reality, in less than a month’s time, Groover lost nearly the full balance of the . . . account trading forex.”

    The CFTC charged in the complaint that the customers account actually had incurred “$211,505 in trading losses and $17,226 in fees.”

    Some it not “all” of Groover’s customers were not “eligible contract participants” because they lacked sufficient assets, the CFTC alleged.

  • SEC: 77-Year-Old Amish Man Ran $33 Million Fraud Scheme Targeted At Fellow Amish; Meanwhile, CFTC Says North Carolina Pastor And Colleague Ran Forex Ponzi Scheme

    UPDATED 2:50 P.M. ET (U.S.A.) A 77-year old Amish man in Sugarcreek, Ohio, ran a fraud scheme that gathered at least $33 million and affected 2,600 investors in 29 states, the SEC has alleged.

    Monroe L. Beachy’s long-running scheme mostly targeted fellow Amish, the agency charged. The scheme, which operated under the name of A&M Investments and began in 1986 during the Reagan administration, eventually got out of control and resulted in a June 2010 bankruptcy filing by Beachy.

    “Because Beachy’s offer and sale of investment contracts continued for such a long period of time, some members of the older generation of Amish investors recommended to their children that they invest with Beachy,” the SEC said. “Amish children did in fact purchase investment contracts from Beachy.”

    Investors opened accounts by hand-delivering money to Beachy or sending checks and cash in the mail.

    “At the time of the investment, Beachy did not give his investors any documents regarding the investment other than a handwritten receipt showing the amount invested,” the SEC alleged.

    Meanwhile, the CFTC has gone to federal court in North Carolina to accuse a church pastor and his business colleague of operating a Forex Ponzi scheme that used a business address at a UPS store.

    It was at least the second time since November that the CFTC has alleged that a pastor presided over a Forex Ponzi scheme.

    Charged in the North Carolina case were Timothy Bailey, the pastor of Mount Olive AME Zion Church in Monroe, and Michael Hudspeth of Statesville.

    Bailey and Hudspeth operated a company known as PMC Strategy LLC.

    While Hudspeth solicited funds for the scheme and interacted with customers, Bailey performed the trading as losses mounted, the CFTC charged.

    Neither man was registered with the CFTC in “any capacity,” the CFTC charged.

    The scheme began in 2008 and ultimately involved at least 22 investors while raising about $669,000, the CFTC charged. Hudspeth, Bailey and the firm “misappropriated” $129,000 of customer funds for their personal use, according to the CFTC.

    A federal judge has frozen their assets. The CFTC alleged the defendants concealed their losses and sent “false profit checks to customers.”

    “As recently as November 2010, the defendants were still soliciting funds from current and prospective customers, but since February 2010, they failed to make promised monthly customer payments and to honor customers’ redemption requests,” the CFTC charged.

    In November, the CFTC accused Rev. Ronald E. Satterfield, the now-former pastor of St. John’s Reformed Episcopal Church in Charleston, S.C., of operating a Forex Ponzi scheme from inside the historic church facility.

    Satterfield, 63, was arrested last month on criminal charges of bank fraud.

    Satterfield claimed he traded Forex between 3 a.m. and 6 a.m., went back to bed until 8 a.m., and then resumed trading until 10 a.m. or 11 a.m., according to court records.

    Mixing Forex trading with his ministry worked well, Satterfield wrote in a letter to a federal judge, because most church activities were in the afternoon or evening. And because Forex is a 24-hour activity, he advised the judge, he had the “ability to respond even in the morning hours if a pastoral need or commitment emerged.”

    Beachy, the alleged Amish fraudster, told his investors that he was purchasing “risk-free U.S. government securities,” the SEC charged.

    In reality, the SEC charged, Beachy plowed the money into junk bonds and made speculative investments in mutual funds and stocks.

    He settled the SEC case without admitting or denying the allegations. The agency said Beachy’s illegal investment-contract scheme ultimately put him upside down to the tune of $15 million and that his assets were under the control of a bankruptcy trustee.

    “During at least the last decade of Beachy’s scheme, based on the loss of investor principal, Beachy would not have had the ability to meet redemptions if there were a ‘run on the bank,’” the SEC said.

    “Beachy did not disclose his losses to investors,” the SEC said. Instead, he issued “fabricated statements” and “maintained the charade that the investors were making money.”

  • AN HYIP PARANOIA-MAKER: Undercover Agent Listens To Alleged Bankrupt Fraudster’s Pitch In ‘Hooters’; SEC Files Emergency Action Alleging Christopher Love Blackwell At Helm Of Massive Fraud Scheme

    EDITOR’S NOTE: This developing story on the alleged actions of accused securities schemer Christopher Love Blackwell is apt to cause paranoia among HYIP and prime-bank fraudsters, including criminals who populate online forums such as TalkGold and MoneyMakerGroup.

    It features the presence of a Department of Homeland Security (DHS) undercover operative who allegedly infiltrated Blackwell’s scheme and was so good at keeping his identity secret that Blackwell pitched him repeatedly over a period of months in a Hooters restaurant and bar as other agents worked to unmask the complex caper. The undercover agent eventually returned an “investment contract”  prepared by Blackwell and plunked down $1,000 of government money as a down payment on a purported $500,000 investment. Blackwell allegedly later contacted the undercover agent repeatedly via email and telephone to collect the outstanding “balance” of $499,000. Blackwell even left a voicemail on the agent’s phone, according to court filings.

    BULLETIN: The SEC has gone to federal court in Dallas and is seeking an emergency injunction to halt an alleged Ponzi scheme involving Christopher Love Blackwell of Euless, Texas, and Roswell, N.M., AV Bar Reg Inc. of Colleyville, Texas, and Millers A Game LLC of Chandler, Ariz.

    Blackwell, 31, and his companies initially came on the Feds’ radar screens last year when the U.S. Department of Homeland Security (DHS) was alerted that he was wiring large sums of money and conducting cash transactions that raised terrorism concerns, according to court records.

    In the end, the SEC dryly advised a federal judge, “it became clear to DHS that Blackwell was not a terrorist — just a thief.”

    Regardless, the SEC said, the fraud was ongoing and  Blackwell still appeared to be selling the scheme as recently as Jan. 19.

    DHS operatives kept Blackwell under surveillance, assembled documents, conducted interviews and “made video and audio recordings of meetings during which Blackwell offered investments to undercover agents,” the SEC said in court filings.

    Records show that Blackwell was on the receiving end of a default judgment of $24 million in a civil fraud case filed in July 2008 and sought Chapter 7 protection in U.S. Bankruptcy Court on Christmas Eve 2008.

    Despite the lawsuit, judgment and bankruptcy filing, Blackwell continued to operate what he described as a “Fixed Income Trading Program” that offered returns of up to 30 percent a month, according to the SEC.

    To pull off his Ponzi and fraud scheme, Blackwell bragged about his “academic pedigree,” falsely claiming to have Master’s and PhD degrees “from a prestigious university in Spain” and also falsely claiming once to have been employed by Goldman Sachs and the Bank of Madrid.

    In 2007, with the scheme unknown to law enforcement, Blackwell stole $750,000 from an investor. In 2008, according to court filings, he swindled $200,000 from another investor, returning $9,926 in bogus “profits” to the investor. This investor was introduced to Blackwell by “an intermediary who claimed to run a faith-based business and investment development firm,” according to the SEC complaint.

    The purported faith-based intermediary assured the investor that Blackwell’s program in “foreign bank instruments” was “totally safe,” the SEC alleged. Despite the assurance of the intermediary, Blackwell immediately began to distribute the $200,000 provided by the investor to other companies and people, including Blackwell’s former business partner and Blackwell’s father.

    By late 2008, according to the SEC, Blackwell was engineering a scheme to rip off a former football player for the Dallas Cowboys. The player had been introduced to Blackwell by another player, according to the complaint.

    Neither player was identified in the complaint. The former player, lured by the promise of safe returns from an experienced international trader, gave Blackwell $250,000 in the belief that he was purchasing an investment note from HSBC Bank, one of the largest financial firms in the world.

    Blackwell “never” purchased an HSBC note. Instead, according to the SEC, he instructed an attorney exercising control over the escrow account to which the former Cowboy had wired the funds to transfer nearly all of the $250,00 to a Phoenix company controlled by a friend of Blackwell.

    When confronted by the SEC, Blackwell allegedly told the agency that he had “earned” the money despite his assurances to the player that the sum would be used to purchase a safe bank note.

    Although Blackwell showed the former football player a document on HSBC letterhead as purported proof  he had purchased a bank note with the player’s money, “HSBC’s Security and Fraud Risk group has confirmed that the letter was fraudulent.

    “In other words,” the SEC said, “it was a forgery.”

    The former player appears to have been ripped off for the entire $250,000 investment, the SEC said.

  • TalkGold Ponzi And Criminals’ Forum Deletes ‘Sticky’ Thread On InstaForex; Firm Named Defendant In CFTC Sweep Used Payment Processor Whose Contact Person Is Referenced In International Money-Laundering And Narcotics Case

    The TalkGold Ponzi scheme and criminals’ forum has deleted a “sticky” thread reportedly paid for by InstaForex, a dubious company named a defendant in a registration sweep conducted by the U.S. Commodity Futures Trading Commission last month.

    The PP Blog reported two days ago that InstaForex was using TalkGold to promote a scheme by which participants who sent InstaForex at least 1,000  U.S. dollars could qualify to win a Lotus Elise valued at more than $50,000. Although sweepstakes that require a purchase are illegal in the United States, InstaForex bizarrely instructed investors that they could improve their odds of winning the car by opening up to 100 accounts each.

    Some of the InstaForex promoters used photographs of attractive women to promote the scheme. It was unclear whether the photos were actual pictures of the promoters or whether they were stage props designed to lure skeptical investors.

    Why any investor from any country would open a single account — let alone 100 accounts — with a firm that advertises on TalkGold was left to the imagination. TalkGold and similar sites such as MoneyMakerGroup are referenced in multiple filings in U.S. federal courts as places from which international Ponzi and fraud schemes are pushed.

    A separate ad for which InstaForex apparently paid TalkGold $95 remains operational on the forum. The ad shows an image of a red Lotus and claims the company is “THE BEST BROKER IN ASIA.” Directly below the ad is an ad for a company that claims to provide a return of 525 percent “After 1 Minute” and 9,860 percent “After 6 Hours.”

    Just four of the thousands of schemes pushed on TalkGold — Imperia Invest IBC, EMG/Finanzas Forex, Legisi and Pathway to Prosperity — created tens of thousands of victims globally while gathering hundreds of millions of dollars, according to court records.

    The precise time at which TalkGold deleted the paid “sticky” thread on InstaForex and the precise reason why the thread of at least 109 pages was deleted were unclear. Records suggest the thread was deleted in the past 24 hours. The once-massive thread now returns a “No Thread specified” error.

    Among other things, InstaForex advertised that it accepted payments through Perfect Money, a murky money-services business purportedly operating from Panama. Imperia Invest, which the SEC accused in October of stealing millions of dollars from thousands of participants, also used Perfect Money, according to court filings.

    Included among the Imperia Invest victims were thousands of Americans with hearing impairments, according to the SEC.

    Meanwhile, the name of Roger Alberto Santamaria del Cid — the purported contact person of Perfect Money — appears in federal court filings in the EMG/Finanzas Forex forfeiture case.

    A Florida-based task force that specializes in detecting and uncovering massive fraud schemes brought the EMG/Finanzas Forex case last year. Del Cid, Perfect Money’s purported contact person in Panama, is listed as EMG’s “Secretary” in court filings that allege that tens of millions of dollars seized in the probe were tied to the international narcotics trade.

    EMG/Finanzas Forex was so corrupt that some participants were told the only way they could get their money out was to recruit new investors, have the new investors pay them directly — and use the proceeds from the new investors to recover their initial outlays, according to court filings.

    The very first EMG post on the now-shuttered ASA Monitor Ponzi and criminals’ forum referenced yet-another widely promoted Ponzi scheme: 12DailyPro. The 12DailyPro case, brought by the SEC in February 2006, also is cited in the AdSurfDaily Ponzi prosecution brought by the U.S. Secret Service in August 2008. ASD also was promoted on TalkGold.

    Writing on ASA Monitor, an EMG/Finanzas Forex aficionado claimed to have learned the ropes from 12DailyPro.

    “I have been in internet business for 3 years now and in autosurf industry from 12dailypro,” the ASA poster began. He (or she) then proceeded to tell readers about how they could earn commissions by recruiting for EMG/Finanzas, which the Feds later described as an international menace with tentacles in Central America, South America and Europe.

    Court filings in the EMG/Finanzas case paint a picture of an incredibly elaborate maze of companies and bank accounts set up to confuse both investors and law enforcement. At least 59 bank accounts, 294 bars of gold and nine luxury vehicles were seized.

    The EMG allegations were explosive because they showcased the undeniable fact that people who promote programs such as HYIPs and autosurfs because such programs may pay “commissions” to recruit new members may be operating as fronts or conduits for international drug dealers and money-launderers.

  • SPECIAL REPORT: Forex Firms Named In CFTC Sweep Used Same Offshore Processor As Alleged Imperia Invest Fraud; Name Of Man Linked To ‘Perfect Money’ Appears In Ponzi Forfeiture Complaint In Which Feds Tied Cash To International Narcotics Trade

    InstaForex, a company accused by the CFTC last month of targeting U.S. customers to purchase unregistered offerings and paying through Perfect Money, says participants can win this Lotus — but they have to pay to play by depositing at least $1,000 USD. Sweepstakes that require a purchase by participants are illegal in the United States.

    SPECIAL REPORT: UPDATED 2:27 P.M. ET (U.S.A., FEB. 9) Federal court and web records show that at least three of the 14 purported Forex dealers named defendants in a major sweep of unregistered firms last month by the Commodity Futures Trading Commission advertised that they accepted funds from Perfect Money.

    Perfect Money is a murky money-services business purportedly based in Panama that allegedly was used by a company that defrauded thousands of deaf investors by promising Visa debit cards and returns of 1.2 percent per day, according to federal records. The name of a man purported to be Perfect Money’s contact person in Panama City is referenced in federal court filings that tie money from the alleged EMG/Finanzas Forex fraud scheme to an international narcotics probe that led to the seizure of at least 59 bank accounts in the United States and the companion seizure of 294 bars of gold and at least seven luxury vehicles.

    The number of purported Forex dealers that allegedly accepted Perfect Money and were named defendants in the CFTC sweep could be higher than three because not all of the defendants publicly disclosed the precise mechanisms by which they accepted payments from U.S. customers.

    According to court filings and web records, some of the companies also advertised that they accepted funds from Liberty Reserve, another murky offshore processor, and even PayPal. PayPal’s Acceptable Use Policy specifically bans the use of its services for “currency exchanges,” businesses that support Ponzi and pyramid schemes and businesses associated with “off-shore banking.”

    PayPal says it requires “pre-approval” for any businesses “selling stocks, bonds, securities, options, futures (forex) or an investment interest.” Whether any of the businesses named in the CFTC Forex complaints received approval from PayPal to either use its name in promos or use its services to collect money is unclear.

    Records show (see paragraph 17 of SEC complaint) that Perfect Money payments were accepted by Imperia Invest IBC, the mysterious offshore company accused by the SEC in October 2010 of pulling off a spectacular fraud that fleeced at least 14,000 people of millions of dollars. Included among the Imperia victims were thousands of Americans with hearing impairments, the SEC said.

    Imperia was promoted on Ponzi scheme and criminals’ forums such as TalkGold, which also promoted at least two of the companies named defendants in the CFTC’s Forex sweep. One of the companies — InstaTrade Corp., doing business as InstaForex — is advertising on TalkGold that participants will have a chance in the months ahead to win a Lotus Elise, a sports coupe that carries a price tag of more than $50,000.

    To win the expensive car, however, investors have to pay to play, according to InstaForex. Sweepstakes that require a purchase are illegal in the United States, according to the Federal Trade Commission.

    InstaForex investors can qualify to win the Lotus by replenishing “the real trading account in InstaForex Company with 1000 USD or more during [the] Campaign period,” the company says in stilted English.

    “Participant has a right to register in the Campaign more than 1 account and raise his/her chances for the victory,” InstaForex continues in stilted English. “However, in case contest administration detects more than 100 accounts registered by one person, it reserves the right to decrease the number of accounts till (sic) 100.”

    Meanwhile, the name of Roger Alberto Santamaria del Cid — the purported contact person of Perfect Money — appears in federal court filings in the EMG/Finanzas Forex forfeiture case. The EMG/Finanzas case was brought last year by a federal task force based in Florida and alleges that tens of millions of dollars seized in Arizona as part of the probe were linked to the international narcotics trade. (See Paragraph 10 of the federal affidavit for the reference to del Cid, who is identified as the “Secretary” of EMG. Del Cid is referenced in domain-registration data for PerfectMoney.com as the contact person for Perfect Money Finance Corp.)

    Elements of the prosecution against more than $100 million in assets linked to EMG/Finanzas were brought by members of the same task force that brought civil and criminal prosecutions against Florida-based AdSurfDaily. Some of the members of the task force have experience working with the U.S. Drug Enforcement Administration (DEA), the U.S. Secret Service, the IRS and other agencies to reverse-engineer fantastically complex financial crimes.

    At least one of the investigators, according to records, was instrumental in bringing the successful money-laundering conspiracy prosecution against the e-Gold payment processor in 2007. The e-Gold case was brought in U.S. District Court for the District of Columbia. It resulted in guilty pleas announced on July 21, 2008.

    About two weeks later, the U.S. Secret Service raided ASD’s headquarters in Quincy, Fla. Federal prosecutors later alleged ASD was operating a Ponzi scheme that had gathered at least $110 million — and had ceased using e-Gold “shortly after” the e-Gold indictments were announced in April 2007.

    Federal prosecutors also alleged that 12DailyPro and PhoenixSurf — two autosurfs charged by the SEC with operating Ponzi schemes — also had used e-Gold. In December 2010, prosecutors said that ASD also had the ability to accept money from e-Bullion, yet-another processor accused of accepting and distributing Ponzi funds from various schemes.

    James Fayed, the operator of e-Bullion, was accused of arranging the July 2008 murder of Pamela Fayed, his estranged wife and potential witness against him. Pamela Fayed’s body was found in a California parking garage  just days before the ASD raid in Florida.

    Erma Seabaugh, known among ASD members as the “Web Room Lady,” used E-Bullion in November 2007 to transfer $10,510 to ASD, according to a forfeiture complaint filed in December 2010.

    On Jan. 26, the CFTC sued 14 purported Forex companies simultaneously, alleging that they were unregistered entities that were illegally targeting  U.S. residents. At least three of the companies — ForInvest (Perfect Money reference appears online), InstaTrade Corp. (see Paragraph 21 of CFTC complaint for the Perfect Money reference) and Kingdom Forex Trading and Futures Ltd. (see Paragraph 17 of CFTC complaint for the Perfect Money reference) — accepted Perfect Money, according to records.

    Two of the complaints — InstaTrade and Kingdom Forex — were brought in the U.S. District Court for the District of Columbia, the same venue in which the e-Gold case was brought in 2007. The case against ForInvest was brought in U.S. District Court from the Northern District of Illinois.

    Perfect Money advertised a relationship with at least two of the defendants named in the CFTC cases: InstaForex and FXOpen, according to web records.

    On its website, Perfect Money advertised its relationship with InstaForex and FXOpen, two companies accused by the CFTC of targeting Americans with unregistered Forex offerings. The FXOpen website now appears to be blocked from loading in the United States. It was not immediately clear if the site will load in other parts of the world.

  • EDITORIAL: On Club Asteria, FxPowerPro And DisasterClub — And What The U.S. State Department Could Do To Contain The Danger Posed By The Talk Gold Ponzi And Criminals’ Forum And Others Of Its Ilk Worldwide

    Let’s start with the chaos in Egypt this week. Protesters have streamed into the streets to demand that President Hosni Mubarak step down after three decades of autocratic rule. The government initially reacted by shutting down the Internet. As tensions rose, protesters, activists and journalists covering the events were beaten. Some of the protesters were killed.

    When a government shuts down the Internet and starts chilling its people and journalists, it’s for a reason: It does not want the world to witness events, and it wants journalists to know they’ll pay a price for trying to report anything other than the government line to the masses. State-run TV beamed images of tranquility, not images of unrest. When the chaos became impossible to sanitize or ignore, the government blamed events on impure thinkers and their media lackeys, planting the seed that “foreign agendas” were at work.

    It was the cue the loyalists needed to start threatening journalists with death by beheading. Fearing for their safety, the journalists abandoned the immediate turf — but not the story. They started reporting from “undisclosed locations.” The word was still getting out, just not the pictures in the degree desired.

    The immediate events in Egypt, of course, are much more serious than, say, the immediate events at the TalkGold Ponzi scheme and criminals’ forum. Even so, some of the parallels are striking.

    The Egyptian government, for example, is trying to control the message. So is the TalkGold forum, which wants the Ponzi shills and criminals who’ve involved the worldwide masses in one catastrophic fraud scheme after another to know they have a safe haven. TalkGold also wants the critics to know the Mods regard them as naysayers and trolls who can be “banned” without notice, rather like the Mubarak regime regards those muckraking reporters and their “foreign agendas.”

    It won’t work at TalkGold for the same reason it won’t work in Egypt: People still have eyes and ears and the ability to be discerning. There may be only one Tahrir Square in central Cairo to control, but “undisclosed locations,” voices, cell phones, cameras and reporters’ pads and tape recorders are in plentiful supply. They can’t be controlled.

    Egypt’s bid to control the message has resulted in a catastrophic PR problem on top of a political crisis. Meanwhile, TalkGold’s ineptitude, ham-handedness and arrogance has set the stage for its own PR disaster. You can read about it on RealScam.com, which sides with the afflicted masses, not the people who’d afflict the masses.

    While state-run TV in Egypt is airbrushing the dangers of autocratic rule and beaming images of tranquility as the country’s inhabitants try to figure out how they’ll get by for yet-another year on the wages of poverty, TalkGold is airbrushing the economic and security dangers of viral criminality and seeking to tranquilize (and recruit) the masses by using flowery language and even flattery to tell them that opening an account with an offshore payment processor and sending money to any one of hundreds of schemes is their ticket out of the ranks of hopelessness.

    Poster “Ken Russo,” for example, would have the people of Egypt — and the poverty-stricken people of the United States and other countries  — know that the latest “program” he is promoting is one of the “best” he has ever seen.

    One of “Ken Russo’s” current favorites is Club Asteria, which claims to “care” and contends that its “100,000 PLUS MEMBERS CAN’T BE WRONG.” Meanwhile, Club Asteria further claims to “Empower our Members” and to “help expatriates and immigrants to become more successful in their personal and professional lives and enable them to send money home to their loved ones.”

    Tugging at heartstrings, Club Asteria further claims that “[t]hrough our philanthropic efforts we make an immediate difference for struggling individuals, families and communities by focusing on improving nutrition, housing, health care and education.”

    That performing legitimate due diligence on Club Asteria is virtually impossible doesn’t seem to compute with “Ken Russo” and other affiliates. The mere fact the “program” is being promoted on TalkGold is reason enough to avoid it. Any business the company generates from TalkGold likely is radioactive. Club Asteria, for example, could find itself in possession of money that has flowed from fraud scheme to fraud scheme. Even if Club Asteria were legitimate, the fact it is being promoted on TalkGold puts it at one of the principal intersections of crime and fraud.

    About the only good thing about the Internet being down in Egypt this week while its people took to the streets was that “Ken Russo” and his fellow promoters couldn’t sell Club Asteria and other highly questionable “programs” to the disaffected Egyptian masses. (On a side note, one of the companies named in a Forex lawsuit by the U.S. Commodity Futures Trading Commission(CFTC)  just days ago announced on TalkGold that the shutdown of the Internet in Egypt had disrupted its ability to interact with Egyptian clients and other clients in the region. A poster purporting to represent FXOpen — under an underlined  heading of “Arabic Live Chat Disruption” — noted that “[o]ur hopes and prayers go out to the Egyptian people.”)

    And even as the Egyptian government is inciting violence against journalists — to the degree that the U.S. Department of State issued a special statement on the matter — the TalkGold forum is banning posters who speak ill of Ponzi and fraud schemes that are gathering untold sums of money, channeling cash to some of the darkest corners of the Internet and keeping people in financial bondage.

    Here is an idea for the Department of State and Secretary Hillary Clinton: Warn Americans — and other peoples of the world — about sites such as TalkGold. Mention them at a Congressional hearing. Instruct U.S. diplomats the world over to inform their host governments about the security and economic dangers posed by TalkGold and a sea of similar sites. Tell elected officials that the State Department is serious about monitoring sites that are keeping people in human bondage by spreading financial misery globally. Define Talk Gold as a global pariah, an enterprise without a state that would be proud to claim it. Inform the world regularly that the only form of diplomacy on TalkGold is robbery without a gun.

    TalkGold has been named repeatedly in court filings that identify it as a place from which fraud schemes are openly pushed. The ink on recent CFTC lawsuits that identify two of TalkGold’s paid Forex advertisers as the purveyors of unregistered offerings targeted at U.S. citizens is barely dry, and yet the unabashed cheerleading continues.

    The alleged AdSurfDaily Ponzi scheme, which also was pushed from TalkGold, gathered at least $110 million. It caught the attention of the U.S. Secret Service and resulted in civil and criminal probes that could put people in prison for decades, and yet the unabashed cheerleading continues.

    All the autosurfs prominently touted on TalkGold are just recycled forms of ASD, which itself allegedly was a recycled form of 12DailyPro, which the SEC smashed five years ago this month.

    It’s the same thing with Pathway To Prosperity, yet-another alleged scheme promoted on TalkGold that gathered tens of millions of dollars and could put people in jail for decades. All of the HYIPs promoted on TalkGold are just recycled forms of Pathway to Prosperity, which was busted by the U.S. Postal Inspection Service, and Legisi, which was busted by the SEC after the U.S. Secret Service infiltrated its operations by using an undercover operative. The state of Michigan also used an undercover operative in the Legisi probe.

    The best way to deal with TalkGold and similar sites is to tell the world that they promote global criminality and rank illicit profits above human rights and common human decency.

    Like Egypt in its current state, TalkGold is not about freedom — financial or political. It is about the institutionalization of corruption. If TalkGold were an oncological hospital, its doctors would be cheerleading for the cancer to spread and its nurses would be rooting for the highest death rate because intervening to cure the disease and comfort the afflicted would be bad for institutional and personal profits.

    A purported Forex program known as FxPowerPro currently has a 20-page thread on TalkGold. Among other things, FxPowerPro is claiming that “YOUR STABILITY IS OUR PURPOSE.” Its website appears to come from an editable script kit used by hundreds of sites globally, and it says it will accept any sum between $5 and $20,000. FxPowerPro proudly displays a link the the TalkGold forum.

    A few days ago an eagle-eyed PP Blog reader passed along some information about yet-another incongruous program known as “Disaster Club.” Disaster Club appears to be a new wrinkle on cash-gifting schemes. It purports to arrange member-to-member “grants,” asking visitors if they’d like to turn a “One-Time $100 into $17,700.”

    Bizarrely, Disaster Club uses a presentation by which it names four hypothetical members: “Job,” and “Cain, Abel and Eve.”

    “After joining the Club you will receive the name of your assigned member, and each week on Monday you are to send a grant in the amount shown in the grant schedule directly to that assigned member,” Disaster Club says.

    “Should you join the Club between Tuesday and Sunday, send your grant as soon as you receive your assigned name, do not wait until Monday,” Disaster Club coaxes. “Every grant thereafter will be sent according to the Monday schedule. To create a cash explosion from your home three members will each be given your name to send their $100 grants to ($100 X 3 = $300) and each stage you will keep the stated amount shown from the amount you received from the 3 members $100 + $100 + $100 = $300 you keep $50. Then according to the grant schedule shown, you are to send your grant directly to the same member (Job), and the same three members (Cain, Abel and Eve) will each send their grants directly to you.”

    Disaster Club purports to be headquartered in Florida and claims to be a “club that allows like minded members to pool their resources together to help the hurting and homeless victims of any Disaster in any State, or even help others anywhere in the world.”

    The “opportunity” does not appear to have its own thread at TalkGold yet, but there are plenty of disasters already waiting there for its readers. Just don’t expect to get a warm reception if you have a “foreign agenda” — you know, like those muckraking enemies of the Mubarak regime in Egypt.

    Although it’s not likely you’ll be threatened with beheading at TalkGold, you might get deleted if you tangle with “Ken Russo” and others and challenge readers to use their heads for something other than a hat rack.

    There is nothing decent about Talk Gold and its cancer-spreading cousins worldwide. Only the broadest public-awareness campaign can succeed against the threats they pose to the governments of the world and billions of Internet users globally — and the U.S. State Department could make a difference by describing the criminal forums as places from which human rights are set up to be trampled 24/7/365.

    Any true diplomat from any country worldwide who spent so much as 15 minutes on TalkGold could see the danger to countries, governments and citizens worldwide. The world’s diplomatic corps are uniquely positioned to do something the world’s law-enforcement corps cannot do: be at all places at all times.

    A sustained effort by the world’s diplomats to identify and monitor the fraud sites — and openly share the information with the people of the world — could go a long way toward containing a plague that only will mushroom into a catastrophe if left alone.

  • BULLETIN: Florida — Again: Multiagency Probe Leads To Federal Criminal Charges Against 9 People In Interconnected Ponzi And Fraud Schemes

    BULLETIN: An investigation by the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and the Miami Police Department has led to criminal charges against nine defendants in three Florida fraud schemes that allegedly were interconnected.

    Seven of the defendants were indicted. Two others were charged via criminal information, and the investigation is ongoing. The probe demonstrates that, in an era of seemingly ceaseless white-collar crime, investigators are using leads uncovered in one case and following them to discover fraud schemes that perhaps would have gone undetected were it not for the discovery of an initial scheme.

    Charged with conspiracy to commit bank fraud connected to a Ponzi scheme were Maria Baksh, 50, of Hollywood; Juan Cardenas, 48, of Miami; Gabriel Cifuentes, 63, of Hialeah; Maureen Cifuentes, 35; of Hialeah, Lucia Garcia, 58, of Pembroke Pines; Roberto Hernandez, 66, of Miami; Maribel Roman, 47, of Hialeah; Reinaldo Roman Jr., 39, of Hialeah; and Roberto Rodriguez, 43, of Miami.

    The case is tied to the purported “jewelry” Ponzi scheme of Luis Felipe Perez, 38, of Fort Lauderdale. Lopez was charged both civilly (SEC) and criminally last year (Secret Service/ICE). He was sentenced to 10 years in federal prison after pleading guilty to securities fraud.

    Investigators said he pocketed $6 million from his Ponzi scheme, which gathered $40 million. Investors were told they were financing his purported jewelry business and pawn shops in New York, authorities said.

    Perez, investigators now say, recruited “many” of the new defendants and referred them to Berta Sanders, 61, of Miami Lakes. Sanders, a CPA, helped them secure $12 million in commercial lines of credit by preparing false tax returns and false income statements submitted to Wachovia Bank. Proceeds from the loans were diverted to the Perez Ponzi scheme.

    “When Perez’s Ponzi scheme ultimately collapsed in May 2009, most of the fraudulent loans obtained from Wachovia defaulted,” prosecutors said, noting that the scheme cost Wachovia $10 million.

    Sanders, who has pleaded guilty to conspiracy to commit bank fraud, is scheduled to be sentenced Feb. 22 by U.S. District Judge Paul C. Huck.

    Viewed as a whole, the case featured the Perez Ponzi scheme and a related bank-fraud scheme over which Sanders allegedly presided for a 10 percent cut of the bogus loans she engineered, prosecutors said.

    It also featured a conspiracy by which other defendants fleeced the bank by allowing Sanders to prepare fraudulent documents so they could get the money to plow into the Ponzi scheme, prosecutors said.

    The investigation was undertaken by elements of the Financial Fraud Enforcement Task Force.

    While investors were imagining “guaranteed annual returns of 18 percent to 120 percent through monthly interest payments,” the SEC said last year, Perez spent $3.2 million of their money on a home, $1 million on jewelry for himself and his wife, $400,000 to lease luxury cars, $300,000 on clothing for his wife, $300,000 for travel by private jet and $100,000 on artwork.

  • URGENT >> BULLETIN >> MOVING: Accused Fraudster Andy Bowdoin Enters Defense That Could Provide Legal Cover For Autosurf Ponzi Schemes If He Wins Case; ASD Operator Claims Business Model Stands Up To ‘Howey Test’ Scrutiny

    Andy Bowdoin

    BULLETIN: In an argument that almost certainly will give comfort to operators of some of the most corrupt and insidious businesses on the Internet, AdSurfDaily President Andy Bowdoin has advised a federal judge that his company and business practices are legitimate because they stand up to scrutiny when the “Howey Test” is applied.

    Bowdoin, 77, made the argument despite the fact the government claims that he signed a proffer letter at least two years ago in which he acknowledged ASD was operating illegally and that the prosecution’s material allegations were all true. In 2009, Bowdoin acknowledged in his own court filings that he had made statements against his interests over a period of at least four days in the hopes of avoiding a prison sentence by cooperating with investigators.

    But Bowdoin now says criminal charges of wire fraud, securities fraud and selling unregistered securities as investment contracts brought against him last year “must” be dismissed. It is believed that hundreds — if not thousands — of autosurfs are operating over the Internet at any given time.

    Separately, Bowdoin filed a motion to transfer the case to the Northern District of Florida’s Tallahassee Division from the District of Columbia, saying that trying the case in Florida was the fair and most cost-effective thing to do. The government is expected to oppose Bowdoin’s bid to move the case from Washington to Tallahassee.

    U.S. District Judge Rosemary Collyer, who was assigned the civil forfeiture case against Bowdoin’s assets after the U.S. Secret Service raided ASD in August 2008 and ordered $65.8 million found in Bowdoin’s personal bank accounts ceded to the government after nearly a year and a half of litigation, also was assigned the criminal case. Criminal charges against Bowdoin were announced in December 2010.

    Although Bowdoin previously claimed Collyer was biased against him and sought unsuccessfully to have her removed from the civil case, he has not raised the issue of bias so far in the criminal case. Instead, he petitioned Collyer for an order that would remove the case from her courtroom and put it in the hands of a federal judge in Florida, arguing that most of the witnesses in the case resided in Florida and that hearing the case in Collyer’s court would force unnecessary costs and transportation burdens on both Bowdoin and witnesses.

    An affidavit signed by Bowdoin requesting the transfer was filed yesterday. It appears to have been notarized by Judy Harris of Tallahassee, whom some ASD members said operated the AdViewGlobal (AVG) autosurf with her husband, George Harris. George Harris is the son of Bowdoin’s wife, Edna Faye Bowdoin, and a Tallahassee home owned by the Harrises was seized in an ASD-related forfeiture complaint filed in December 2008.

    Both George and Judy Harris benefited from the ASD Ponzi scheme because a $157,000 mortgage on their house was retired with Ponzi proceeds, prosecutors said in December 2008.

    The Harrises also received a car valued at nearly $30,000 from the scheme, and the car also was paid for with Ponzi proceeds, prosecutors said.

    Florida records show that Judy Harris has been a licensed notary since at least October 2008. Why she would notarize a document for Andy Bowdoin when she, her husband and her mother-in-law were alleged to have been a beneficiaries of the ASD Ponzi scheme was not immediately clear.

    AVG, which purported to be headquartered in Uruguay and launched after the seizure of assets linked to Bowdoin and the Harrises, suspended payouts to members in June 2009. The surf blamed members’ greed for its problems. The name of Judy Harris also appears in a document filed in April 2009 with the Florida Department of State that canceled the fictitious registration of AVG, which also was known as the AV Global Association.

    Andy Bowdoin’s New Argument

    Prosecutors have not responded to Bowdoin’s new assertion filed yesterday that ASD can stand up to Howey Test scrutiny. A blistering response is expected in the days ahead because a ruling in Bowdoin’s favor to dismiss the case or an outright win by Bowdoin at trial could have grave economic and security implications for the United States.

    Autosurfs operate in the darkest corners of the Internet, fueled by corrupt promoters and scammers who position them as legitimate  “advertising” businesses that share revenue with participants. Untold sums of money — believed to be in the billions of dollars — have disappeared in recent years, and prosecutors say the enterprises operate as virtually pure Ponzi schemes.

    Purveyors almost certainly would view any win by Bowdoin as a mandate that legalized Internet-based Ponzi schemes and created a virtual license to collect vast sums of money and simply pocket it by claiming member payouts, which ASD called “rebates,” were not guaranteed.

    “[N]o guarantee or promise of any profits, any specific level of rebate payouts, or return on an alleged ‘investment’ occurred during the AdSurfDaily operation,” Bowdoin claimed. He also asserted that the allegations against him were Constitutionally vague and that none of the four civil cases brought against autosurfs — 12DailyPro, PhoenixSurf, CEP Holdings and the forfeiture case against ASD’s assets filed in 2008 — has clarified the legal issues.

    “As none of these actions has proceeded to final judgment, no judicial opinion has yet clarified whether payment of membership fees by advertisers into auto-surf businesses constitute unregistered sales of ‘securities,’ as alleged by the government,” Bowdoin claimed.

    The criminal charges “must be dismissed because the ad-surf business model employed by AdSurfDaily, Inc. and [Bowdoin’s] related businesses, as alleged in the indictment, cannot constitute an SEC-regulated ‘investment contract’ security as defined under the three-prong test established” by Howey, Bowdoin argued.

    The Howey Test is a threshold securities test and litigation benchmark from the 1946 U.S. Supreme Court decision in S.E.C. v. W.J. Howey Co. The decision spoke to the issue of what constitutes an “investment contract.”

    Bowdoin now claims the entire case against him is fatally flawed because he never sold investment contracts as defined under Howey.

    “[T]he Howey test,” Bowdoin argued, “determines whether a particular instrument or transaction is a prohibited, unregistered ‘investment contract’ by searching for the presence of three factors: ‘(1) the investment of money (2) in a common enterprise (3) with an expectation of profits to be derived solely from the efforts of the promoter or a third party.”

    ASD did not meet any of the three prongs of the Howey Test, Bowdoin argued.

    It was not an investment because ASD was an advertising company, not an investment company through which participants placed money at risk in anticipation of profit, Bowdoin argued. Therefore, he asserted, ASD did not meet the first Howey prong.

    Meanwhile, Bowdoin argued that ASD did not meet the second prong because participants did not place their money in a “common pool” put at risk in expectation of a profit.

    “[T]here was no ‘common enterprise’ at work here,” Bowdoin argued.

    And because ASD members had to click on ads and view them to get paid, they performed “actual efforts,” taking the third prong of the Howey Test out of play, Bowdoin claimed.

    “Here, the payment of both rebates and referral commissions were directly tied to the actual efforts of the advertisers,” Bowdoin argued.

    Prosecutors, though, asserted in the ASD forfeiture case that ASD told investors that rebates “will” be paid until investors received back 100 percent of the money they plowed into the scheme, plus a profit of 25 percent.

    Gerald Nehra, an attorney and expert witness for ASD in the forfeiture case, conceded under cross examination in 2008 that the ASD Terms of Service specified that rebates “will” be paid.

    Bowdoin’s most recent arguments also put him with odds with dozens of ASD members who claimed in court filings that the government had no “evidence” and no “witnesses.”

    In his filings yesterday, Bowdoin said he believed that the “vast majority” of the prosecution’s witnesses resided in Florida. He said he planned to counter them with witnesses of his own — as many as 136 — including George and Judy Harris, Rob Cefail of InTouch Marketing of Clearwater, and Tari Steward, who also provided Clearwater-based marketing services.

    At least 56 of ASD’s witnesses were ASD employees, Bowdoin said. The document was notarized by Judy Harris.

  • ‘FRAUD CREEP’: The Two-Word Term That Explains How Crime Expands On The Internet To Affect Tens Of Thousands Of Victims At A Time

    EDITOR’S NOTE: Our definition of “fraud creep” — and suggestions on the context in which the term should be applied — appears lower in this story.

    First, some background . . .

    Investigators now are counting victims of massive, web-based fraud schemes tens of thousands at a time. Such scams pose both budgetary and logistical challenges to law enforcement, bankruptcy trustees and court-appointed receivers — and a single scam may take years to unravel. In recent court filings, federal prosecutors said they had amassed 500,000 pages of emails, 100,000 pages of banking records and 5,000 pages of other records as part of the AdSurfDaily Ponzi probe, which began in July 2008. The U.S. Secret Service raided ASD’s headquarters in August 2008.

    The ASD Ponzi scheme, which operated from Florida, may have defrauded 40,000 or more victims while gathering at least $110 million, prosecutors said.

    Meanwhile, in a civil case brought in Utah in October 2010, the SEC said Imperia Invest IBC defrauded more than 14,000 investors worldwide while gathering small sums that ultimately led to a haul of more than $7 million. Among the victims were thousands of deaf investors in the United States.

    Imperia claimed until late 2009 to be located in the Bahamas, but the Bahamian address was “fictitious,” the SEC said, adding that Imperia later claimed to be located in Vanuatu.

    But Imperia was “not registered to do business in Vanuatu and the address listed on its website appears also to be fictitious,” the SEC said.

    Despite the fact Imperia gathered money from thousands of Americans, “[n]either Imperia nor its securities are registered with the Securities and Exchange Commission,” the SEC said. “Imperia is not licensed or registered with the Commission, with any state, or with any Self Regulatory Organization.”

    In a separate civil case brought in Nevada last month, the FTC accused Utah resident Jeremy Johnson, I Works Inc. and other companies of orchestrating a massive, continuity-billing scheme that used 51 shell companies, maildrops and “straw-figures” as company officers “to keep the scam going.”

    The complaint names as defendants 10 individuals, 10 corporations and the 51 shell companies. Citing court documents, the Salt Lake Tribune reported that Johnson’s companies allegedly took in more than $350 million and ensnared 15,000 consumers a day at the height of the scheme.

    Customers were lured into purchasing “trial” memberships for “bogus government-grant and money-making schemes,” and then were “repeatedly” charged monthly fees “for these and other memberships that they never signed up for,” the FTC said.

    “[T]his scheme has caused hundreds of thousands of consumers to seek chargebacks — reversals of charges to their credit cards or debits to their banks accounts,” the FTC said.

    “The high number of chargebacks has landed the defendants in VISA’s and MasterCard’s chargeback monitoring programs, resulted in millions of dollars in fines for excessive chargebacks, and prevented the defendants from getting access to the credit card and debit card billing systems using their own names,” the FTC said.

    “To keep the scam going, the defendants tricked banks into giving them continued access to these billing systems by creating 51 shell companies with figurehead officers, and by providing the banks with phony ‘clean’ versions of their websites.”

    Like ASD’s Andy Bowdoin, Johnson denies wrongdoing.

    Making Sense Of It All

    Today the PP Blog offers a two-word term, contexts in which we believe the term applies and proposed definitions as a means of educating the public by describing a complex process of organized, international theft and reducing it to its essence. Understanding how online schemes proliferate — and the emotions they trade on and “scam signals” they send — may help consumers protect themselves from the fraudsters.

    fraud creep [frawd kreep]

    1. Principal definition: The tendency of a web-based financial crime undetected by law enforcement to expand across the Internet until it achieves critical mass, reaches the limits of a criminal organization’s ability to manage and forces investigators to respond. Such a crime may creep (advance slowly) to ultimately create thousands or even tens of thousands of victims globally.

    2. Associated definition: A criminal business model (fraud-creep enterprise) that includes a suggestion of exceptional earnings and generous recruiting commissions and the use of tailored messages that appeal to greed, envy, despair or anger. A fraud-creep enterprise also may be characterized by images of wholesome or enticing amenities designed to attract prospects to an illicit scheme whose purpose is hidden or undisclosed.

    3. Associated definition: A form of deceit (fraud-creep plan) employed by hucksters, particularly on the Internet, characterized by efforts to popularize an illicit pursuit by withholding critical information and demonizing market regulators. Profits are reaped by tapping into disillusionment and despair and creating a bogeyman or figure of blame to rationalize participation in a dubious or illegal enterprise. The bogeyman or figure of blame often may be the government, a branch of government, a law-enforcement or regulatory agency or government employee.

    4. Associated definition: A particular instance of such deceit in which an appeal is made to recruit holders of a particular political philosophy into a scam. Politicians and other public figures may be demonized in this form of fraud creep, which may include vicious name-calling or passive-aggressive slime. Images of success may be juxtaposed against images of people or entities cast as barriers to success. This form of fraud creep also may be accompanied by an effort to create marketplace sympathy and to sanitize and expand a fraud scheme by suggesting evil forces are seeking to prevent investors and eager entrepreneurs from creating wealth by erecting barriers or denying them access to the marketplace.

    5. Associated definition: One who practices fraud creep — i.e., a fraud creep.

    Usage example: As the economy struggles and mortgage foreclosures pile up, law-enforcement agencies nationwide are seeing more and more examples of fraud creep in which criminals succeeded in  making Internet scams go “viral” by luring thousands of prospects with images of amenities they’ll purportedly enjoy by registering for a program and sending money.

    Usage example: The ASD fraud-creep and Ponzi scheme gradually expanded to fleece more than 40,000 investors out of at least $110 million, investigators said, noting that participants were lured by the promise that they would be paid $5,000 if a family member or friend they recruited spent $50,000 on “advertising.”

    Usage example: Although Smith routinely bemoaned “Washington” while showing a video of himself behind the wheel of a Maserati parked outside a mansion in a driveway lined by exotic flowers as a groundskeeper toiled nearby, authorities say the investigation uncovered a classic case of fraud creep: Smith simply decided that registering with the SEC was for the “fools who don’t understand the Constitution.” The Maserati, authorities said, was a day rental — and Smith paid the groundskeeper $100 to let him film the driveway and mansion scenes on a Saturday morning when the owners were on the golf course.

    Usage example: The stage was set for fraud creep, authorities said, when the accused huckster — a recidivist who did not disclose his previous conviction for securities fraud in a $20 million scheme  — persuaded  unsophisticated investors that the FBI was forcing the best companies to move offshore and that the SEC and IRS were trying to destroy the middle class.

    Usage example: Authorities began to suspect fraud creep when Jones incongruously explained to investors that the United States was turning into both a “Nazi” and a “Socialist” state and making it impossible for honest “Main Street Capitalists to deliver the American Dream and do what the market does best: get poor people and illegals off Food Stamps and turn them into productive citizens.”  Although Jones, a U.S. resident, frequently talked about his “attorney” and the efforts he had undertaken to ensure his offshore company complied with all laws and regulations,  he refused to provide prospects the name of the attorney, claiming that a previous attorney had been hounded by callers who had sought to verify claims about the program.

    Usage example: Federal agents announced the arrest of yet-another alleged fraud creep today, saying the Florida man was either running or participating in multiple fraud-creep schemes, including autosurfs, HYIPs and penny-stock scams.

    Usage example: Fraud creeps on the fraud-creep forums were urging their marks not to file complaints with regulators or law enforcement — and not to contact the offshore payment processors that had processed all the Ponzi payments for the suddenly defunct HYIP. One forum fraud creep opined that the government would steal any remaining money. Another issued a dire warning that a receiver was sure to be appointed by the court and that the “greedy” receiver and “brain-dead” judge would conspire against the participants. Yet-another fraud creep ventured that the government would use the remaining fraud proceeds to help it finance its own Ponzi scheme: Social Security.

    Usage example: In court documents, federal authorities said fraud-creep forums such as TalkGold, MoneyMakerGroup and ASAMonitor were helping fraud creeps and fraud-creep schemes steal millions of dollars globally.

  • URGENT >> BULLETIN >> MOVING: New York Man Arrested After Threatening To Kill CFTC, SEC, NFA And FINRA Regulators; Vincent McCrudden Used Emails, Website To Terrorize Officials, Prosecutors Charge

    A New York man sued by the CFTC last month for registration violations has been arrested on criminal charges of threatening to kill 47 current or former market regulators, federal prosecutors said.

    Vincent P. McCrudden, 49, who recently had been living in Singapore, was arrested yesterday by the FBI at Newark Liberty International Airport after returning to the United States.

    The arrest occurred just five days after a gunman opened fire at an Arizona constituent event hosted by U.S. Rep. Gabrielle Giffords. Giffords was critically wounded in the attack. U.S. District Judge John Roll and five others were shot and killed.

    McCrudden was denied bail this afternoon in the alleged threats against regulators, some details of which U.S. Attorney Loretta E. Lynch of the Eastern District of New York released today.

    “In this day and age, there is no such thing as an idle threat,” said Lynch. “Those who threaten injury or worse to the lives of others will be promptly investigated and vigorously prosecuted.”

    On Sept. 30, prosecutors said, McCrudden sent an email to an employee of the National Futures Association (NFA) that made a death threat.

    “[I]t wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when,” the email read, prosecutors said. “And now, that question has been answered. You are going to die a painful death.”

    McCrudden also published an “Execution List” on his website. The list included the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC.  Included on the list were the names of the “the Chairperson of the SEC, the Chairman of the CFTC, a former Acting Chairman and Commissioner of the CFTC, the Chairman and CEO of FINRA, the former chief of Enforcement at FINRA, and other employees of the NFA and CFTC,” prosecutors said.

    “[T]hese people have got to go,” McCrudden wrote, prosecutors said. “And I need your help, there are just too many for me alone.”

    And McCrudden “posted a $100,000 reward on his website for personal information of several government officials and proof that those officials were punished,” prosecutors charged.

    On Dec. 16, according to the complaint, McCrudden sent a CFTC official an email with a subject line of, “You corrupt mother[*!&$$%]!”

    The email went on to inform the official that he was “first on my list.”

    McCrudden used the website to encourage others to “[g]o buy a gun” and take back the country. On the website, McCrudden wrote that he would lead by example, prosecutors said.

    A top FBI official said the threats were “especially troubling.”

    “Overt threats of the sort made by this defendant must be dealt with to the fullest extent of the law,” said Janice K. Fedarcyk, assistant director-in-charge of the FBI’s New York field office.

    “The threats were direct, extreme, and specific, vowing to kill securities regulators and encouraging others to do the same,” Fedarcyk said.  “The allegations, coming as they do during a period of national mourning in the wake of horrific violence done to public officials and others, are especially troubling.”

  • EDITORIAL: ASD By The Numbers: Why America And The World Should Be Shocked — And Why Serial Autosurf And HYIP Promoters Should Be Prosecuted

    ASD's Andy Bowdoin.

    UPDATED 12:04 P.M. ET (U.S.A.) In court filings this week in the AdSurfDaily autosurf Ponzi scheme case, federal prosecutors in the District of Columbia revealed a series of jaw-dropping numbers. The biggest of these is 500,000 — the number of pages of emails gleaned so far in the investigation, which began in July 2008.

    Because prosecutors put the qualifier “at least” on the already-staggering number, it is clear the number actually could increase. Each of the pages is subject to the discovery process, meaning that attorneys from both sides and perhaps the court itself faces the monumental challenge of sifting through at least half a million pages of scheme-related correspondence.

    Other big numbers in the alleged $110 million ASD Ponzi include 100,000, the number of pages of bank records, and 5,000, the number of pages of documents that emerged after the U.S. Secret Service searched ASD’s office in Quincy, Fla., and the home of company president Andy Bowdoin.

    To date, investigators have identified 40,000 potential ASD victims. This number also could grow because there is reason to believe that “there may be members who provided funds to ASD but whose information ASD did not enter into its database,” according to prosecutors.

    ASD’s database included information on 97,000 members. Some participants have claimed ASD actually had 120,000 members. Regardless of the final number that emerges, ASD created victims by the tens of thousands, including victims who do not live in the United States, prosecutors said.

    The import — and the danger of these numbers — is that ASD is only one autosurf. There may be hundreds if not thousands of autosurfs operating in the world at any one time, along with hundreds or thousands of HYIPs. Like other autosurfs and HYIPs, ASD was promoted on Ponzi forums such as TalkGold, MoneyMakerGroup and ASA Monitor. The Ponzi pitchmen love American money, and commission-grubbing American salespeople and serial promoters who play dumb to line their pockets at the expense of their fellow countrymen specialize in spreading the misery globally.

    In May, the PP Blog reported on criminal charges filed against Nicholas Smirnow, the alleged operator of the Pathway to Prosperity (P2P) Ponzi and HYIP scheme. The numbers that have emerged from that alleged scheme are equally stunning: $70 million fleeced from 40,000 victims in 120 countries from “all of the permanently inhabited continents of the world,” according to the U.S. Postal Inspection Service.

    The criminal complaint filed against Smirnow specifically references the TalkGold, MoneyMakerGroup and ASA Monitor Ponzi forums — the same forums from which ASD and countless other schemes have been promoted.

    Legisi, yet another alleged scheme pitched at the forums, also produced some big numbers. Among them are $72.6 million fleeced from at least 3,000 victims. Matthew Gagnon, one Legisi pitchman, netted $3.8 million alone from the scheme, according to the SEC.

    So, in just the three alleged schemes referenced in this column — ASD, P2P and Legisi — the numbers shape up like this: at least $252.6 million gathered from at least 83,000 victims. If the P2P and Legisi cases are shaping up like the ASD case from the standpoint of paper production, investigators, attorneys from both sides and the courts may have to go through more than a million pages of documents and corresponding bank records to make sense of it all.

    Meanwhile, the wink-nod, serial promoters continue to ply their trade on the Ponzi boards — all while the U.S. and world economies are trying to navigate the choppiest waters since the Great Depression. While the serial promoters are lining their pockets at the expense of Moms and Pops from virtually every corner of the earth, they are anticipating the danger signs consistent with the implosion of their currently favorite Ponzi — and they are preparing their next round of lies to protect their illicit profit pipeline and explain away the problems that inevitably will emerge.

    Some of the professional criminals will tell their marks that it is their duty to be patient when Ponzi payments slow down. They’ll add that problems affect all enterprises regardless of size, and that it’s not unusual for payment bottlenecks to occur. They’ll explain that it likely is a problem with software or the need to acquire a new server to accommodate traffic. After all, they’ll say, “growing pains” are something to celebrate because they signal the success of the enterprise.

    And the serial criminals also will talk about a doubting recruit’s duty to be loyal to the enterprise. After all, they’ll explain, the company is doing the right thing by acquiring the equipment and manpower needed to streamline operations and thus return to a normal payout schedule.

    While the professional Ponzi criminals are explaining all of this, investors will become further separated from their money before the final round of excuse-making begins. Investors will be cautioned not to contact the authorities and told not to contact the payment processors. After all, the serial pitchmen will explain, if the authorities seize the cash or if the payment processors freeze the accounts, no one will get paid.

    When the scheme ultimately collapses, some of the serial criminals will shrug their shoulders and feign surprise. They’ll explain why they had every reason to believe that this one was different, that they’d been assured by the Christian operator it was different. No matter, they’ll say, perhaps positioning themselves as people of faith. Recruits who invested more than they could afford to lose have only themselves to blame, they’ll claim. (This is if they call it “investing” at all; many serial criminals avoid that word like the plague. After all of these years and all of this Bible-thumping, they still apparently believe that it’s possible to skirt securities laws by avoiding the word “investment” and calling it something else.)

    Then they’ll unapologetically move on to the next scam. After all, they’ll explain, they have a right to make a living. Some of them will explain that the government, which refuses to see the beauty of the autosurf and HYIP models, is to blame. Along the way they’ll create some clone promoters, and the clones will multiply. The clones will add to the purported, pro-Bible (and antigovernment chorus) — and before long, investigators trying to reverse-engineer a single case will be sifting through 500,000 pages of emails, 100,000 pages of bank records and 5,000 pages of records created as the result of the execution of a search warrant or as a result of actual documents seized.

    Agents then will begin the mind-numbing and time-consuming process of identifying victims by the tens of thousands.

    Some of the victims will lose their homes because they borrowed against their equity to take advantage of “bonus” ad packs and to maximize their “earnings” through “compounding.” Others will have lost savings set aside to educate their children. Still others will have lost their life savings and money set aside for retirement.

    Many of the people who created all the pain will sprint back to the Ponzi forums — and the government will be left to clean up the colossal mess. The Ponzi pitchfest is in constant motion as property values decline in neighborhood after neighborhood, driven by the foreclosures glut. The Stepfords among the promoters will write their Congressman or Senator or perhaps the Inspector General at the Justice Department.

    They’ll more or less say that it would be in the interests of America if the Congressman or Senator or Inspector General would see fit to fire all the prosecutors and agents who made these unseemly events occur.

    And then they’ll gather up their lists of suckers and try to recruit them into yet-another MLM, autosurf or HYIP nightmare. This they will call “freedom.” Some of them will be angry. Some of them will write rambling diatribes on forums. Invective will be part of the diatribes. Some of them will call public officials “Nazis” and “Socialists,” perhaps even in the same fractured paragraph. Some of them even will try to sue the government or have the prosecutors and judges charged with crimes. They’ll talk about “treason” and high crimes against the Constitution.

    What they will never do is make any sense.

    It is impossible to imagine that any government agency has the resources to take down all of the corrupt MLMs, autosurfs and HYIPs. But one can imagine a systematic process by which the government identifies the serial promoters and plans a litigation strategy from which will emerge the “shot heard round the world” of corrupt online investment “opportunities.”

    That day cannot come soon enough — and the numbers demand it: more than $250 million gathered from victims of just the three alleged schemes referenced on this page, perhaps 1 million or more emails and other documents produced by the investigations, at least 83,000 victims from virtually all corners of the earth, an untold number of agents/investigators from multiple government entities forced to sift though monumental piles of evidence.

    It is clear that wealth is being drained by the billions. It is equally clear that vast sums of money have gone missing in the Age of Terrorism.

    Clearest of all, however, is that the corrupt MLMs, autosurfs and HYIPs cannot thrive without their greedy and dangerous promoters — and that highly public lawsuits and early morning raids designed to hold the wink-nod Ponzi pitchmen accountable would send an unmistakable message that pain is in your future if you promote these criminally toxic businesses. Serial promoters deserve the same treatment as mid-level drug dealers.

    No economy can thrive if a single case among thousands of potential cases is producing 500,000 pages of emails and creating 40,000 victims while consuming tens of millions of dollars — and if “shell companies,” the “shadow banking system” and wink-nod, serial promoters are driving the wanton criminality and letting the cancers metastasize globally.

    Here’s hoping such an operation aimed specifically at corrupt MLMs, autosurfs and HYIPs already is under way.