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Tag: Surfs Up

  • BULLETIN: Songkram Roy Shachaisere, Figure In AdSurfDaily Ponzi Story, Indicted With 8 Others In ‘One Of The Largest International Penny Stock Frauds In History’

    breakingnews72BULLETIN: Songkram Roy Shachaisere, a sidebar figure in the AdSurfDaily Ponzi scheme story, has been indicted with several others in what federal prosecutors in the Eastern District of New York are calling “one of the largest international penny stock frauds in history.”

    The probe “used wiretaps in the United States and undercover agents in foreign countries,” prosecutors said.

    Chillingly, prosecutors said some of the scammers impersonated IRS employees. Others joined forces to scam victims a second time by creating a “fake law firm.” Some of the money allegedly ended up in “an account maintained in Beirut, Lebanon.”

    Indeed, prosecutors said, some of the scammers branched off from the penny-story scheme to orchestrate a scheme “in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses,” the office of U.S. Attorney Loretta E. Lynch said.  “In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed.  To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.”

    “The criminals behind this scheme were shameless in heartlessly defrauding hundreds of victims out of their savings and retirement accounts for their own enrichment,” said James C. Spero, special agent in charge of Immigration and Customs Enforcement Homeland Security Investigations (HSI) in Buffalo.

    All in all, the scams netted at least $140 million and defrauded victims in 35 countries, prosecutors said.

    Fake news releases, bogus announcements about nonexistent ventures, bribes and fake posts on social-media sites were used to dupe the masses, prosecutors said.

    Shachaisere allegedly was involved in a massive pump-and-dump scheme. In 2010, according to the SEC, Sahachaisere fraudulently touted the stock of Praebius Communications. That’s the company ASD once conveniently announced was providing it a $200 million revenue infusion. ASD made the claim while awaiting a key ruling by the federal judge presiding over the ASD Ponzi case brought by the U.S. Secret Service in 2008.

    Even as critics were voicing concerns that ASD was advancing yet-another story that was too good to be true, members of the now-defunct Pro-ASD Surf’s Up forum were cheerleading ASD’s purported revenue infusion from Praebius.

    Some ASD members sprinted to forums to announce the news, but the information could not be verified. ASD later removed the announcement from its website.

    ASD’s name was not referenced in the SEC’s 2010 complaint against Shachaisere, and Praebius was not listed as a defendant in the case. Praebius was referenced in the case as a client that paid Sahachaisere and his company in stock “to provide investor relations services.”

    All in all, seven defendants were arrested today, with nine indicted. Before the bust, one of the defendants bragged, “We know enough to be subtle,” prosecutors said.

    Here is a list of the defendants:

    • Sandy Winick
      Citizenship: Canada
      Age: 55
      Bangkok, Thailand
    • Gregory Curry
      Citizenship: Canada
      Age: 63
      Bangkok, Thailand
    • Kolt Curry
      Citizenship: Canada
      Age: 38
      Ontario, Canada
    • Gregory Ellis
      Citizenship: Canada
      Age: 46
      Ontario, Canada
    • Gary Kershner
      Citizenship: United States
      Age: 72
      Tucson, Arizona
    • Joseph Manfredonia
      Citizenship: United States
      Age: 45
      Tom’s River, New Jersey
    • Cort Poyner
      Citizenship: United States
      Age: 44
      Boca Raton, Florida
    • Songkram Roy Shachaiser
      Citizenship: United States
      Age: 43
      Huntington Beach, California
    • William Seals
      Citizenship: United States
      Age: 51
      Fallbrook, California

    Here’s how prosecutors described the pump-and-dump scheme (italics added):

    As alleged in the indictment, defendants Sandy Winick, Gary Kershner, Joseph Manfredonia, Cort Poyner, Songkram Roy Shachaisere and William Seals orchestrated one of the largest international penny stock frauds in history. First, the defendants gained controlling interests of huge quantities of worthless stock in 11 public companies known in the industry as ‘file cabinet businesses’ – thinly traded companies with minimal assets and non-existent business operations, which in many cases were mere shell companies. They then ‘pumped up’ the share prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which included distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on social media sites and bribing stock promoters and brokers.

    And here’s how prosecutors described the advance-fee component of the scam (italics/bolding added):

    As the indictment alleges, defendants Winick, Gregory Curry, Kolt Curry and Gregory Ellis perpetrated a second scheme in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses. In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.

    To facilitate the scheme, the defendants established boiler rooms or call centers from which members of the conspiracy would solicit advance fees from the unsuspecting penny stock victims. The call centers were located in various locales around the world, including Canada, Thailand and the United Kingdom. Recently, the defendants began planning to open a new call center in Brooklyn, New York. Some of the victims were told that they either needed to pay the advance fee to remove restrictions that were placed upon their penny stock, which prevented the victims from selling their stock in the market, or to join investors in a pending or anticipated lawsuit to recover losses that they incurred while owning the penny stock. Victims were then told that the advance fees were needed to convert the warrants of their stocks to a saleable security. In several instances, the advance fee defendants even pretended to be IRS employees collecting a bogus advance tax from victim investors before they could unload their penny stocks. The victims were directed to send payment of the advance fees to banks around the world, including bank accounts in New York City. The fraud proceeds were then transferred through a funds transfer network, located in Getzville, New York, to an account maintained in Beirut, Lebanon. Ultimately, these defendants generated more than $20 million in fraudulently obtained advance fees.

    Defendant Kolt Curry described the Advance Fee Scheme in the following way over an intercepted wire communication: “I would say that 100 percent of these stocks are like uh pink uh… just dumps . . . . so … ya know they’re totally, they’re like, so a lot of these guys are dying . . . . to get rid of this crap. . . . The money is good, it’s easy. It’s easy money. Definitely easy money, and it’s good money.” In fact, while bragging about his prowess as a fraudster, defendant Kolt Curry further stated, “I had a guy send me a million dollars over one phone call . . . . He actually sent me almost two million dollars over the period of the hit . . . . I guess in the industry they coin it as a smash and grab.” As for the group’s recent plans to open a call center in Brooklyn, New York, defendant Kolt Curry said, “I tell you what man . . . hitting the Americans would be like taking money from a baby.”

    Lynch’s office thanked various U.S. agencies for their worked on the probe. She also thanked the Royal Canadian Mounted Police, Financial Crime Intelligence Unit in Vancouver and the Integrated Market Enforcement Team in Toronto, and the Serious Organized Crime Agency in the United Kingdom. Meanwhile, prosecutors said that significant assistance was also provided by the United States Embassies in Ottawa, Toronto, London, Bangkok and Beijing.

  • Zeekers Share Their Conspiracy Theories At Newspaper Site

    zeekmemdayThe Dispatch of Lexington, N.C., published a story June 7 to update readers on Zeek Rewards-related litigation — specifically the date of a hearing on a motion by certain Zeek members (alleged net winners) to dissolve the receivership. (See link to story/Comments below.) As of this morning, about 27 comments appear below the story. The comments appear to be from Zeek supporters. Zeek was based in Lexington.

    Zeek, the SEC said in August 2012, was a $600 million Ponzi- and pyramid fraud that duped investors into believing they were receiving a legitimate return averaging about 1.5 percent a day. Zeek’s business model was similar to AdSurfDaily, a Florida-based Ponzi scheme that collapsed in 2008. Federal prosecutors said ASD had gathered about $119 million.

    ASD became infamous not only for its purported payout of 1 percent a day, but also for the extremely strange behavior of some of its supporters. Curtis Richmond, one of the scheme’s cheerleaders, was a purported “sovereign” being once sued successfully under the federal racketeering statute for his role in various bizarre plots advanced by a purported “Indian” tribe in Utah known derisively as the “Arby’s Indians.” (The “tribe” once held a meeting in an Arby’s restaurant.) Among other things, the “tribe” issued arrest warrants for public officials and litigation opponents and used the address of a Utah doughnut shop as the address of its purported “Supreme Court.”

    Richmond accused the judge presiding over the ASD case of dozens of felonies, saying she was guilty of “TREASON.” Moreover, Richmond claimed the judge’s supervising judge was conspiring with the judge to deny ASD members justice. For these claims (and more), Richmond was accorded the title of “hero” on the “Surf’s Up” forum, an ASD cheerleading site set up after the U.S. Secret Service raided ASD in August 2008. Among the Surf’s Up faithful was Terralynn Hoy, who later presided over at least one conference call for Zeek. (See this PP Blog Comments thread from June 2012. Props to GlimDropper of RealScam.com.)

    Many highly peculiar narratives were advanced by ASD supporters. One of them held that the U.S. government took about $80 million seized in the ASD case and plowed it into a secret fund through which it almost immediately generated $1 billion in interest that the United States used to pay for black ops. Another held that all commerce is lawful as long as the parties agree that it is lawful, a position that would legalize slavery. Yet another held that the ASD judge was on the take and “brain dead” if she ruled against ASD. Still another held that undercover agents who joined ASD to get the lay of the land had a duty to inform ASD management.

    On Surf’s Up, an ASD supporter claimed that a “militia” should storm Washington with guns. Another claimed a federal prosecutor should be placed in a medieval torture rack. Beyond that, a purported “prayer” was circulated that called for federal prosecutors to be struck dead.

    Given that ASD operator Andy Bowdoin once described himself (from a stage in Las Vegas) as a Christian “money magnet” and later claimed that the Secret Service was “Satan” and compared the agency to the 9/11 terrorists who killed nearly 3,000 people in New York, Pennsylvania and Washington, it’s no surprise that it became next-to-impossible to keep track of all of the ASD conspiracy theories.

    What is surprising is that any number of Zeekers seem willing to buy into the same sort of mind-numbing mind-set.

    At The Dispatch site, apparent Zeek supporters are claiming that:

    • the “SEC messed us all up.”
    • the court-appointed receiver “should be on trial.”
    • “someone paid these guys off with MINIMAL evidence!”
    • “Gestapo/KGB/SS tactics” are being used against Zeek by people in the “Executive Branch.”
    • the government is “not allowing anyone to [grow] economically.”

    Friends, a 1.5-percent-a-day “program” pushed on well-known fraud forums such as TalkGold and MoneyMakerGroup is a scam. Period. The SEC acted in the best interest of Zeek investors — and in the best interest of the people of the United States who are sick and tired of seeing their country used as a playground for HYIP scammers or worse. The security condition created by “programs” such as Zeek, Profitable Sunrise, JSSTripler/JustBeenPaid and others is untenable.

    Kenneth D. Bell, the court-appointed receiver for Zeek, has been doing a commendable job amid extremely trying circumstances. (In terms of the number of victims, Zeek may be the largest Ponzi scheme in U.S. history.) Bell is a former federal prosecutor known for having once successfully prosecuted a Hezbollah terrorist cell operating in the United States. He was appointed by a federal judge who is a former Naval officer. Claiming Bell should be put on trial is pure idiocy. So is clinging to a belief that the government somehow has outlawed the growth of business in the United States.

    No one got “paid off” to do anything against Zeek — and the evidence that Zeek had an insurmountable mountain of unfunded liabilities and was paying members with money from other members is overwhelming.

    Claims about Gestapo, KGB and SS tactics also were made by ASD members. Dwight Owen Schweitzer, later of Zeek, sued the United States (with fellow ASD and Zeek member Todd Disner). Among other things, Schweitzer and Disner claimed they were “unaware of any remission payments having been made” through the government-sponsored restitution program — this despite the fact the government had returned tens of millions of dollars to ASD investors and had issued news releases repeatedly about the program.

    For good measure, Schweitzer and Disner also claimed that undercover agents who joined ASD “should have reported their own violations of the ASD terms of service” to ASD management. The pair made this bizarre claim long after ASD lost in the District Court and in the U.S. Court of Appeals. Amazingly, the claim also was made after prosecutors pointed out that some ASD members were recruiting for ASD even though they knew it was a Ponzi scheme and that Andy Bowdoin’s silent partner in ASD was his sponsor in the 12DailyPro Ponzi scheme broken up by the SEC in February 2006 — months before ASD launched and years before Zeek launched.

    So, if you’re inclined to call accused Ponzi schemer and Zeek operator Paul R. Burks a genius while ranting against the government, you are according that title to a man who appears to have learned nothing from the ASD and 12DailyPro (and Legisi and PhoenixSurf and CEP and Imperia Invest IBC) prosecutions. If you are unhappy that the government’s Zeek action froze money you were counting on — well, that’s understandable. At the same time, however, there is a good chance you don’t understand the context of your own unhappiness. Zeek and Burks are to blame, not the SEC and the receiver.

    If you joined another Zeek-like “program” after the SEC action, the best that can be said is that you are slow to learn. The worst is that you are a budding “Ken Russo,” perhaps the most intransigent Ponzi-board scammer in the Western Hemisphere. Zeek member “Ken Russo” sells people into Ponzi misery for a fee.

    Repeatedly.

    What ASD and Zeek both appeared to be was a bid to dupe investors into believing that, if 12DailyPro’s return of 12 percent a day for 12 days for thousands of members was impossible, the “smaller” daily returns of ASD (1 percent) and Zeek (1.5 percent) for between 90 and 150 days for hundreds of thousands of members somehow were more plausible.

    Read story and Comments thread in The Dispatch. While you’re doing so, remember that Zeek once auctioned sums of U.S. currency (while wrapping itself in the American flag) and told successful bidders they could pick up their cash via offshore payment processors that enable fraud schemes like JSSTripler/JustBeenPaid and its 2-percent-a-day “program” globally.

  • DUBIOUS MILESTONE: ‘Profitable Sunrise’ Website Has Been Offline For 10 Days; ‘All Is Good,’ Pitchman Tells Conference-Call Listeners; Wild, Unverified Claims Made On Facebook And Ponzi Boards That ‘Program’ Will Resurface As 4-Percent-A-Day Scheme

    From a Profitable Sunrise promo online.
    From a Profitable Sunrise promo online.

    UPDATED 11:33 A.M. EDT (APRIL 1, U.S.A.) On April 1, the PP Blog published a story that informs Profitable Sunrise participants on how to contact state and provincial securities regulators in the United States and Canada.

    That story is here.

    April 1 was the date the Profitable Sunrise “Long Haul” plan was supposed to pay out. That didn’t happen.

    Here, below, our March 25 post . . .

    Now the subject of Investor Alerts or cease-and-desist orders in at least 30 states and provinces in the United States and Canada, the Profitable Sunrise HYIP has passed a milestone of sorts: Its website has been offline for 10+ days.

    Despite the extended outage, wild, unverified reports have surfaced on Facebook and the Ponzi boards that Profitable Sunrise will resurface in Hong Kong, restarting with a 4-percent-a-day scheme.

    Even if Profitable Sunrise still has control over servers — and even if it relaunches with a 4-percent-a-day scheme — history cannot be taken off the table. Part of HYIP history includes the renaming and relaunching of schemes designed to give scammers access to new cash to sustain the Ponzi deception. The “trick” has been used so many times in HYIP Ponzi Land that it has become a virtual cliché.

    The AdSurfDaily Ponzi scheme appears to have operated under at least three different names, all the while positioning itself as a “Christian” enterprise. An HYIP scheme bizarrely known as Cash Tanker once was promoted on the pro-ASD “Surf’s Up” forum. Cash Tanker, which promised a Profitable Sunrise-like 2 percent a day and used an image of Jesus Christ in promos, later collapsed.

    On March 6, the PP Blog observed information in a nonEnglish, international forum that strongly suggested an ASD promoter had become a key pitchman for Profitable Sunrise. The information suggested that the ASD promoter had assembled a “group” that carried a purported balance of more than $18.8 million in Profitable Sunrise.

    ASD collapsed in 2008.

    Because Profitable Sunrise traded on Bible verse and images of Jesus Christ and was promoted by self-identified Christians, the scheme now has caused divisiveness in the Christian community. Among the key unanswered questions: Who would benefit from such  divisiveness and was Profitable Sunrise deliberately structured to turn Believers against each other?

    Cheerleading for the “program” continues. On a conference call last week, a Profitable Sunrise pitchman assured listeners that “all is good” with the enterprise. The claim appears to have been based on second- and third-hand reports that morphed into a purported “consensus” among leaders/members given to confirming their own biases.

    “Everyone agrees that the Easter gift from the [Profitable Sunrise] Long Haul [plan] is on,” the pitchman said. “It’ll be given on schedule.”

    One speaker on the same call claimed “[w]e can do what we want,” despite government warnings and even legal proceedings to the contrary.

    “[W]e’re not selling any securities and we’re free citizens,” the speaker intoned.

    Separately, a claim was made on the MoneyMakerGroup Ponzi forum that the Howey Test from a famous Supreme Court case in 1946 does not apply to Profitable Sunrise because the “Howey Test is for Private Real Estate Loans.”

    Like many things surrounding Profitable Sunrise, the claim about the purported inapplicability of the Howey Test is absurd. The Howey Test is a key test of what constitutes an investment contract. Profitable Sunrise itself positioned the “program” as an investment opportunity. Meanwhile, various members of the “program” — including ones who continue to support it — have written or spoken publicly about their “contracts” that purport to pay up to 2.7 percent interest a day through a plan bizarrely known as the “Long Haul.”

    After he was charged criminally in 2010 for his role in the ASD Ponzi scheme, ASD President Andy Bowdoin argued that the Howey Test did not apply to ASD, a purported “advertising” company that purported to pay 1 percent a day.

    Despite Bowdoin’s Howey argument, a federal judge ruled that “these alleged facts smack of an investment.”

    And, the judge ruled, “Based on the allegations set forth in the Indictment, the evidence already before the Court, and the government’s proffers of expected trial evidence, the Court finds that the allegations, if proven, would be sufficient to permit a jury to find that ASD members were investing.”

    Bowdoin later pleaded guilty to wire fraud. He was sentenced to 78 months in federal prison.

  • EDITORIAL: ‘Our Mentor Has Had To Take A Break Due To Legal Reasons,’ OneX Pitchman Claims About ASD’s Andy Bowdoin

    Purported "Mentor" Andy Bowdoin

    Back in 2008 — when the U.S. Secret Service raided Florida-based AdSurfDaily in a Ponzi probe and people who called ASD’s office were told God was on the company’s side — federal prosecutors alleged that ASD President Andy Bowdoin had “followers.”

    The meaning of “followers” largely was left to the imagination. Much of the mystery was taken away, however, when a now-defunct cheerleading forum for Bowdoin known as “Surf’s Up” served up impossibly tortured defenses for the ASD patriarch around the clock for more than a year.

    Although it’s hard to distill the peculiar essence of Surf’s Up in a single thought, this one at least approximates it: ASD = good; government = evil.

    One Surf’s Up member advanced the notion that Bowdoin’s problems could be solved by a “militia” storming Washington. Another opined that the interests of justice best would be served if the then-lead federal prosecutor were placed in a torture rack and ASD members drew straws to determine who got the honor of turning the wheel. Another ASD member — on the seventh anniversary of the 9/11 attacks — issued a “prayer” for the prosecutors to be struck dead.

    “Root them out of the land of the living!” the “prayer” petitioned. “Let evil slay them, and desolation be their lot!”

    For good measure, the “prayer” called for God to order “divine angelic prophetic assaults . . .” against the prosecution and evidence in the case, including the ASD database.

    Bowdoin himself removed some of the “followers” mystery when he compared a government raid designed to protect the financial interests of thousands of victims ensnared in an alleged $110 million Ponzi scheme to the 9/11 terrorist attacks that killed nearly 3,000 people. He further demonized the Secret Service and federal prosecutors by comparing them to “Satan.”

    Another part of the mystery perhaps was decloaked when Bowdoin’s son — in 2010 — asserted his father “is a man with no conscience” who’d used religion for years to fleece the masses.

    The government has filed at least three civil forfeiture actions related to ASD. Two of the cases have proceeded to final judgment, with ASD on the losing side. (A third civil forfeiture case remains pending. Elements of the third case are directed at certain specific ASD members who allegedly benefited from the fraudulent scheme, meaning that the members themselves may have significant legal exposure.)

    In both cases that have proceeded to final judgment, Bowdoin unsuccessfully appealed the losses to a higher court. He filed one of the appeals, despite the fact he’d never entered a defense in that specific case. The case he did not defend is one in which certain members of  Bowdoin’s family may have significant legal exposure.

    Separately, Bowdoin was named a defendant in a lawsuit by disaffected ASD members who accused him of racketeering. By December 2010, Bowdoin had been arrested on ASD-related charges of wire fraud, securities fraud and selling unregistered securities. Although his trial date is set for September, he faces a bond-review hearing on Friday. Prosecutors now say they’ve linked Bowdoin to at least two post-ASD frauds, including one known as “OneX.”

    Bowdoin began pitching OneX in October 2011, about 10 months after he was indicted in the ASD case.

    “I believe that God has brought us OneX to provide the necessary funds to win this case,” Bowdoin said last year.

    Both Bowdoin and supporters habitually use pronouns such as “us” and “we”when discussing ASD or matters pertaining to Bowdoin. The precise reason why remains unclear. So far, Bowdoin is the only ASD figure known to have been charged publicly for alleged misconduct directly tied to ASD, which the Secret Service described as a “criminal enterprise.”

    Bowdoin’s reference in his OneX sales pitch to “this case” was in the context of the ASD-related criminal case against him. He earlier blamed the loss of the ASD  civil cases on a “single, lone judge,”  prosecutors/agents who’d allegedly “crucified” him and earlier defense attorneys who’d allegedly railroaded him.

    Did we mention that some ASD members have accused a federal judge of “treason” and that purported “sovereign citizen” Kenneth Wayne Leaming — an ASD story mainstay — is jailed near Seattle on federal charges that he filed false liens against at least five public officials involved in the ASD case?

    Meanwhile, Christian Oesch, a Leaming colleague in a failed lawsuit against the government for alleged misdeeds in the ASD case, strangely has taken to calling himself a “transmitting utility” in response to a nonASD lawsuit in which he is named a defendant.

    Records in Washington state show that at least two companies that use the phrase “transmitting utility” in their names have a business tie to Leaming through an entity known as American-International Business Law Inc. Other records show that the phrase itself has been linked to the so-called sovereign-citizen movement. “Sovereign citizens” have an irrational belief that laws do not apply to them.

    When Leaming was arrested by an FBI terrorism task force in November 2011, he was found with two federal fugitives from Arkansas, according to court filings. Leaming also allegedly discussed a plan by which he’d serve John Roberts with a writ through the school his young children attended. That writ apparently was part of a scheme to file false liens against two U.S. prison officials for alleged misdeeds against a former Leaming business colleague serving time in a federal penitentiary.

    John Roberts is the Chief Justice of the United States.

    And yet Bowdoin — despite everything that has happened to date in the ASD case and its surrounding circus of the bizarre — still has followers.

    The PP Blog received information through a source last night that some of Bowdoin’s followers will continue on with OneX, despite the government’s recent assertion it is a “fraudulent scheme” and “pyramid” that is recycling money to members in ASD like fashion.

    An email circulating last night from Bowdoin’s OneX “team” strangely referenced Bowdoin without naming him. The email used the pronouns “our” and “we.”

    “As many have noticed our Mentor has had to take a break due to legal reasons,” the email read in part. “We had hoped for a breakthrough on the 8th, however it was postponed to later this month.”

    Bowdoin’s bond-review hearing originally had been scheduled for May 8. A federal judge later rescheduled it for May 18 — Friday.

    That Bowdoin — an accused felon with a felonious history — gets accorded the description of “Mentor” (with an uppercase “M”) hardly can be a source of comfort to the good men and women at the Department of Justice and the U.S. Secret Service. Agents and prosecutors alike must be scratching their heads today and wondering where it all will end.

    Here is the OneX email in its entirety (italics added):

    Ninja Success Team Updates

    Dear Team,

    As most know we have been going through some changes with the Ninja Success Team. As many have noticed our Mentor has had to take a break due to legal reasons. We had hoped for a breakthrough on the 8th, however it was postponed to later this month.

    I have gotten a lot of emails in the last week and I hope that my honesty has made you feel at ease and I hope that you will find patience until the challenge has been met.

    Another challenge that we are facing is the financing of the servers that everybody’s Lead Capture Page Systems, the 1xTraining Site, and the Ninja Back Office sit [sic]. Our Mentor has been paying this out of his own pocket for all time. Because of the legal challenges, we are left to finance ourselves.

    The management team has been tossing around a bunch of ideas, from donations to selling the lead packages. We have decided to ask for donations as well as to continue to sell the new ninja tools (which are getting awesome results).

    As we all know we are at a very big momentum right now and are at the downhill roll to making all of our business worth quite a bit of money and this is due to the working of our Ninja Success Team. In order to continue as one of the biggest, most successful teams of the OneX opportunity, I implore everybody to at least make a donation or purchase of the New Ninja Turbo tools available on the training site or the Ninja Back Office.

    Below is the link to make a donation or you can find on the menu part of the Training Site. A donation of $10 or $20/mon. would be extremely welcome.

    [Link deleted by PP Blog]

    I want to personally thank everybody as well for the patience they have shown during this challenge.

    Alan

    The Ninja Success Team

    If the government is right, it means that Bowdoin is pushing a pyramid scheme even as he awaits trial in a major Ponzi scheme case.

    And if purported email author and OneX pitchman “Alan” is right, then the Bowdoin “team” is getting “awesome results” from selling “tools” to drive traffic to a program the government says is a pyramid scheme.

    “Alan” apparently does not feel compelled to pull the plug on the Bowdoin “team” OneX promos even though the “Mentor” possibly faces severe bond restrictions or potentially even loss of his freedom owing to the pitches.

    What’s important to “Alan,” apparently, is that the “breakthrough” now is expected to come through on May 18 after a 10-day delay.

    Whether the judge conducting the bond-review hearing might have a differing notion on the meaning of the word “breakthrough” is a question that may be answered in the coming days.

    In any event, “followers” — a word used by the ASD prosecutors long ago — proved to be pretty much spot on. What no one knew at the time was that not even three forfeiture cases, a racketeering lawsuit, an arrest on serious criminal charges and Bowdoin’s own felonious history could deter some of those followers from seeing him as anything other than a mentor.

     

  • UPDATE: Judge Ordered Detention Of Kenneth Wayne Leaming To Continue After Initial Hearing; AdSurfDaily Figure And Purported ‘Sovereign Citizen’ Accused Of Filing Bogus Liens Against Bush Cabinet Secretary, Officials Involved In ASD Ponzi Case

    President Bush observes the 2006 swearing-in ceremony of incoming Transportation Secretary Mary Peters. Peters held the cabinet post between October 2006 and January 2009. Source: Wikipedia: White House photo by Paul Morse.

    UPDATED 5:42 P.M. ET (U.S.A.) Public officials involved in the AdSurfDaily Ponzi case were not the only targets of bogus liens filed by Kenneth Wayne Leaming, according to federal prosecutors in Seattle.

    Leaming, 55, also filed a lien against Mary Peters, the U.S. Secretary of Transportation under President George W. Bush during his second White House term, prosecutors said.

    In addition, prosecutors said Leaming filed liens against U.S. District Judge Rosemary Collyer; former U.S. Attorney Jeffrey A. Taylor; former assistant U.S. Attorney William Cowden; current assistant U.S. Attorney Vasu B. Muthyala; and Roy Dotson, a special agent of the U.S. Secret Service.

    Collyer is presiding over both the civil and criminal prosecutions connected to the ASD Ponzi case in the District of Columbia. The civil case, which led to the successful forfeiture of tens of millions of dollars in the personal bank accounts of ASD President Andy Bowdoin, was brought by Taylor’s office in August 2008.

    Cowden and Muthyala assisted in the prosecution against ASD-related assets, including more than $65.8 million in Bowdoin’s 10 bank accounts and more than $14 million in other bank accounts linked to Golden Panda Ad Builder, a companion autosurf.

    Dotson was a key investigator in the case, which was brought in part through the efforts of a Florida-based Task Force. Bowdoin was arrested in December 2010. He is free awaiting trial in the District of Columbia.

    Taylor was succeeded as U.S. Attorney by Ronald C. Machen Jr. Machen’s office was sued pro se earlier this month by ASD members Todd Disner and Dwight Owen Schweitzer of Miami. Disner, a cofounder of the Quiznos sandwich franchise,  and Schweitzer, a former attorney whose license was suspended in Connecticut,  asserted that prosecutors engaged in “character assassination” against Bowdoin and that the forfeiture case consisted of a “tissue of lies.” They also claimed Dotson’s affidavit that led to the seizure of Bowdoin’s assets was flawed and that 4th Amendment violations had occurred.

    Disner and Schweitzer also named Rust Consulting Inc., the government-approved claims administrator in the Ponzi case, a pro se lawsuit defendant. In September, Machen joined Assistant Attorney General Lanny Breuer in announcing that the government had returned $55 million to victims of the ASD Ponzi.

    Collyer ordered the forfeiture of Bowdoin’s assets in January 2010. Her rulings were upheld by the U.S. Court of Appeals. Bowdoin, 77, is using Facebook and a website known as “Andy’s Fundraising Army” to raise money for his criminal defense on charges of wire fraud, securities fraud and selling unregistered securities.

    Why Peters allegedly was targeted by Leaming was not immediately clear. But court records suggest the FBI is investigating Leaming ties to a Washington state group of “sovereign citizens” known as the “County Rangers.”

    Leaming was arrested on Tuesday. On Wednesday, he appeared before U.S. Magistrate Judge J. Richard Creatura in Tacoma. Creatura ordered Leaming’s detention to continue. The date of Leaming’s next court appearance was not immediately clear.

    Leaming, according to prosecutors, was found Tuesday with two federal fugitives from Arkansas who were indicted in February on federal charges related to an alleged envelope-stuffing scheme. Prosecutors identified the fugitives as Timothy Shawn Donavan and Sharon Jeannette Henningsen.

    Donavan and Henningsen have court histories that include declaring themselves “living breathing free” people to whom laws do not apply, according to records. Like Leaming, they are being held at the Sea Tac Federal Detention Center near Seattle.

    Leaming has been charged with retaliating against a Federal judge or Federal law enforcement officer by false claim or slander of title, an obstruction of justice statute.

    Among the government’s allegations against Bowdoin is that he falsely claimed to have received an important award for business acumen from President Bush in 2008. ASD members used Bush’s name in online promos, according to records.

    In July 2008 — as the Secret Service and the Task Force were investigating ASD — Bowdoin threatened to sue critics, according to court filings. After the seizure of his assets, he claimed the government’s action was the work of “Satan” and compared the seizure to the 9/11 terrorist attacks, which killed nearly 3,000 people in New York, Washington and Pennsylvania.

    Cowden, whose name was repeatedly misspelled as “Crowden” by pro se litigants in the forfeiture case, was derided as “Gomer Pyle” on the now-defunct, pro-ASD “Surf’s Up” forum. One ASD member opined that Cowden should be placed in a torture rack. Another said a “militia” should storm Washington. Still another issued a “prayer” that called for prosecutors to be struck dead.

    ASD critics were derided as “rats,” “maggots” and “cockroaches.”

    In December 2010, prosecutors linked ASD to E-Bullion, a defunct California payment processor operated by James Fayed. E-Bullion has been linked to several Ponzi schemes.

    Earlier this month, Fayed was formally sentenced to death for arranging the contract slaying of his estranged wife, Pamela Fayed.

    Pamela Fayed was slashed 13 times in a Greater Los Angeles parking garage in July 2008 while James Fayed sat on a bench within earshot of Pamela’s screams, according to records.

    At least one ASD member used E-Bullion to send money to ASD, according to federal court records. That member — former ASD “trainer” Erma Seabaugh of Missouri — was operating a purported “religious” nonprofit in Oregon and using ASD to promote a pyramid scheme, according to records.

     

  • BULLETIN: OH, FLORIDA! Receiver In Alleged Commodities Online LLC Ponzi Caper Says Scheme Operated Through Multiple Companies; James Clark Howard III, Louis N. Gallo III, George Saliba And Martin Vegas Sued For Combined Millions Of Dollars

    James Clark Howard III

    BULLETIN: David S. Mandel, the receiver in the alleged Commodities Online LLC Ponzi and fraud scheme, has sued four Florida residents and is demanding more than $9 million.

    Named defendants in U.S. District Court in the Southern District of Florida are James C. Howard III of Parkland; Louis N. Gallo III of Parkland; Martin Vegas of North Bay Village; and George Saliba, also known as George Saliva, of Parkland.

    “From January 26, 2010 until April 1, 2011, Howard and Gallo operated and controlled a Ponzi Scheme designed to defraud investors that allowed Howard, Gallo and their confederates to steal and misappropriate investor funds,” Mandel alleged in the lawsuit.

    “Howard and Gallo, in running the Ponzi Scheme, regularly made transfers of Commodities Online funds from one related entity to another with no business purpose other than to make the Ponzi Scheme more difficult to detect and assist in conveying the appearance of a profitable business to investors,” Mandel alleged.

    Howard controlled Florida firms known as Sutton Capital LLC and J&W Trading LLC, Mandel alleged. Meanwhile, Gallo controlled Florida firms known as Minjo Corp. and American Financial Solutions LLC, according to the lawsuit.

    Four “related entities involved in the inter-company transfers utilized in the Ponzi scheme” were identified by Mandel as:

    • SSH2 Acquisitions Inc, controlled by nondefendant Michael Palermo.
    • Rapallo Investment Group LLC, controlled by non-defendant Patricia Saa.
    • Minerales Mexiron LLC, a Florida firm controlled by defendant George Saliba.
    • Minerales Mexico Iron SACV Inc., another Florida company controlled by Saliba.

    Former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy is listed in Nevada records as a “director” of SSH2. She has not been accused of wrongdoing. SSH2 sued Howard and others in 2010, in a case that alleged it was a victim of a Ponzi scheme.

    On two dates in February 2010, Mandel alleged, Howard “wrongfully converted” more than $1.74 million my moving it from Commodities Online to Sutton Capital and JW Trading.

    In March 2010 and April 2010, according to Mandel, Howard caused Commodities Online to “lend” more than $320,000 to yet another entity: Pisces Trading Inc.

    “Howard thereafter directed Pisces Trading, Inc. to repay these loaned Commodities Online funds to his wholly owned and controlled entity, J&W Trading, thereby converting the Commodities Online funds to his own benefit and use,” Mandel alleged.

    From March 2010 to March 2011, “Gallo converted $413,143 of Commodities Online funds to his own use and benefit by causing net funds to be transferred to his wholly owned and controlled entity, American Financial,” Mandel alleged.

    Between May 2010 and March 2011, according to the lawsuit, “Gallo converted $1,767,870 of Commodities Online funds to his own use and benefit by causing net funds in that amount transferred to his wholly owned and controlled entity, Minjo.

    In March 2011, according to the lawsuit, Gallo also “converted $360,000 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Minerales Yacimientos y Reservas in Mexico, which the Receiver is advised is a fictitious company.”

    Still moving money in March 2011, Gallo “converted $226,200 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Terracerias y Pavimentos in Mexico” — plus the following sums and destinations:

    • $40,044 to Jorge Ortega Balderas in Mexico.
    • $700,000 to Diego Diaz Ceballos Torre in Mexico.
    • $625,000 to Grupo Minero Leecota in Mexico.
    • $150,000 to Franscisco Javier Ortiz Gonzalez in Mexico.

    In a separate filing, Mandel said that the process of determining whether Commodities Online had any iron holdings in Mexico had proven difficult, but that investigators now believe that there is “no recoverable iron ore in Mexico.”

    What happened to the money in Mexico is unclear. In April 2011, the SEC alleged that about $3.8 million funds linked to Commodities Online flowed to Mexico and the Netherlands as the agency was issuing subpoenas in the emerging fraud case in March 2011.

    The transfers were “extremely suspicious,” the agency said in April.

    “Howard, Gallo, and Vegas breached their fiduciary duty to Commodities Online and its investors by personally stealing and misappropriating Commodities Online funds, allowing coconspirators to steal and misappropriate those funds, and dissipating almost $3 million through imprudent transfers of Commodities Online funds to Mexico without adequate controls and documentation to insure the company’s assets and funds,” Mandel alleged in the lawsuit.

    Money continued to flow to Mexico even after Commodities Online retained attorney James Sallah in March 2011 and Sallah “counseled management of Commodities Online to discontinue all solicitations of new investor money, to freeze all existing company assets and otherwise cooperate with the Securities and Exchange Commission,” according to Mandel’s lawsuit.

    “Contrary to Mr. Sallah’s advice, defendants Howard, Gallo and Vegas, in disregard of their fiduciary duties to Commodities Online and its investors, continued to authorize wire transfers of Commodities Online funds to various accounts in Mexico where the funds became untraceable and defendants could re-divert the proceeds of the wire transfers to their personal use and benefit,” according to the lawsuit

    Vegas, according to Mandel, “converted $631,264 of Commodities Online funds to his personal use and benefit by causing those net funds to be paid out to him for no consideration.”

    Saliba, according to the lawsuit, “controlled” Minerales and Mexiron and “converted $2,089,368 of Commodities Online funds to his own use and benefit” between May 2010 and November 2010.

  • In Rejecting Tortured Legal Constructions, Judges Across America Now Point To Utah Case Involving AdSurfDaily Mainstay Curtis Richmond

    UPDATED 11:54 A.M. ET (U.S.A.) Curtis Richmond claimed the federal judge overseeing the AdSurfDaily civil-forfeiture case in the District of Columbia was among a group of “Co-Conspirators” that included two federal prosecutors and a court clerk.

    The judge, Richmond claimed, was violating her oath and conspiring with another judge to deny ASD members justice. Prosecutors, meanwhile, were helping the judge interfere with commerce, according to Richmond. The judge rejected Richmond’s arguments — but it didn’t stop other ASD pro se litigants from advancing similar arguments.

    For his bid to intervene in the ASD Ponzi case, Richmond was labeled a “hero” on both the pro-AdSurfDaily “Surf’s Up” forum (now defunct) and on a forum that championed the AdViewGlobal autosurf (now defunct). Among Richmond’s boosters was “Professor” Patrick Moriarty, a Missouri man who once started a purported nonprofit in the name of a man accused of murdering a woman in cold blood and shooting a police officer.

    Moriarty later was indicted for tax fraud. He pleaded guilty after prosecutors said they had “casino” records and intended to use them in the case against Moriarty, who advertised that he sold fake academic degrees on e-Bay as “gag gifts.”

    Prior to Moriarty’s indictment, members of the Surf’s Up forum joined with him in forming a purported Missouri nonprofit known as ASD Members International (ASDMI). ASDMI’s stated mission was to litigate against the government for its role in the ASD Ponzi case.

    Utah resident and ASD figure Christian Oesch — later to join with Washington state resident and ASD figure Kenneth Wayne Leaming in a failed 2010 bid to sue the United States for more than twice the U.S. Gross Domestic Product in 2009 — filed pro se pleadings in the ASD case that championed Richmond’s take on the law.

    But Curtis Richmond’s court forays now have been cited by various judges in various jurisdictions as reasons to reject tortured legal constructions. A federal judge in North Dakota, for example, cited this Utah case involving Richmond as a reason to reject tortured arguments advanced by Michael Howard Reed, a so-called “sovereign citizen” now serving two prison sentences for federal crimes.

    One of Reed’s crimes was filing false liens and threatening a federal judge; the other was possession of a firearm and ammunition by a fugitive from justice.

    Richmond, a Californian who advanced the notion in the 2006 Utah case that he enjoyed diplomatic immunity that extended to him from an “Indian” tribe, became a figure in the ASD case in 2008. The “tribe,” which a federal judge ruled a “sham,” came to be known derisively as the “Arby’s Indians” because it once conducted a meeting at an Arby’s restaurant.

    Reed, whose name surfaced in the 2008 SEC Ponzi case against Gold Quest International after he claimed to be the “attorney general” of an unrecognized tribe and asserted a claim against the agency for $1.7 trillion, asserted in a separate case that the government could not prosecute him because he was immune to U.S. law and had trademarked his name.

    Here is a verbatim section from one of Reed’s nonsensical pleadings in federal court in North Dakota. (Italics/identation added):

    “boa-kaa-konan-na-ishkawaanden=Michael-Howard-Reed=original-creditor-original-beneficiary: for MICHAEL-HOWARD-REED=original-debtor-trustee agent; Under the Penalties of Perjury Affirm that MICHAEL HOWARD REED©TM is a Fictional Entity . . .”

    Richmond’s Utah case was cited in the North Dakota case as a reason to reject Reed’s bizarre arguments.

    It also was cited in this Colorado case in which a U.S. Magistrate Judge rejected the tortured legal constructions of Christopher Douglas Wise. Among other things, Wise, a prisoner in the Colorado state system,  asserted that he was a “secured party creditor” who’d never lived in the “District of Columbia” — and that somehow this alleged fact set destroyed the jurisdiction of the Adams County District Court in which he was convicted of a crime.

    In a separate case in Florida, a federal magistrate judge pointed to Richmond’s Utah “Indian” pleadings as a reason to reject arguments advanced by Timothy Black, who was serving two life sentences for sex crimes involving children and tried to overturn his conviction in part by claiming he had copyrighted his name and by arguing he was not subject to Florida law.

    “Petitioner was found guilty by a jury and convicted of two counts of sexual battery on a person less than twelve years of age, and one count of lewd or lascivious molestation on a person less than twelve years of age,  and sentenced to two terms of life and one term of thirty years, to be served concurrently,” the judge noted.

    Here is a verbatim section from Black’s court claims. (Italics added):

    “Therefore the Third Party [Intervener] is the party who is injured by the action at large as he is incarcerated as surety for his collateral, Debtor TIMOTHY W BLACK© Ens Legis . . .”

     

  • INCREDIBLE: Month After Will Smith Debacle, Club Asteria Turns To Mahatma Gandhi To Drive Traffic — And Misspells Name Of Assassinated Champion Of Freedom While Turning Him Into A Pitchman; House Organ Also Includes Photo Of Richard Branson

    Last month, it was famed actor Will Smith. This month, it is Mahatma Gandhi, the civil-rights champion and beacon of freedom in India who was assassinated at a prayer meeting in 1948.

    After placing a “JOIN NOW” button under an image of Smith in its September house organ and later removing both the  image and a purported “interview” with Smith, Club Asteria has turned to Gandhi in its October issue.

    Although the promo features no image of Gandhi, it does include a quote attributed to him: “Be the change you want to see in the world.”

    The promo misspells the slain leader’s last name, and a “JOIN OUR MISSION” button appears directly below the quotation, which appears on Page 37 of the October house organ.

    Club Asteria became a darling of the Ponzi boards earlier this year before slashing payouts and later eliminating them. Promos for the firm were banned in Italy, and Club Asteria acknowledged its PayPal account had been suspended.

    The developments were blamed on members.

    Club Asteria and thousands of its members have traded on the name of the World Bank. The firm announced a cash crisis in June, comparing the situation to a run on the bank.

    A spread on Pages 26 and 27 of the October Club Asteria house organ features a photo of famed entrepreneur Richard Branson posing with a group of mostly younger people. An accompanying story asserts that a group of Club Asteria members conversed with Branson at an entrepreneurial event in Richmond, Va., “a few weeks ago.”

    “Both Richard Branson and Club Asteria share a common link and that link is GRATITUDE,” the story claimed.

    The story appears to have been written by a Club Asteria staffer. A “JOIN NOW” button appears on Page 27, though not directly below the image of Branson.

    Ponzi forum boosters such as “Ken Russo” repeatedly sang the praises of Club Asteria.

    The PP Blog reported yesterday that a separate program promoted on the Ponzi boards — Just Been Paid — was using images of Oprah Winfrey to drive traffic. JustBeenPaid also is using images of Warren Buffett.

    In 2008, a “program” with the bizarre name of Cash Tanker used images of Jesus Christ in sales pitches. Cash Tanker ultimately tanked.

    Many of the “programs” on the Ponzi boards — Club Asteria, Just Been Paid and AdSurfDaily, for instance — have or had promoters and members in common. Promo posts for Cash Tanker appeared on the now-defunct, pro-ASD “Surf’s Up” forum, and Club Asteria executive Hank Needham has been linked to promo for ASD.

    The October 2011 Club Asteria house organ, which includes the Gandhi quote and attached  sign-up button and the image of Branson with a sign-up button on the same page, also features a photo of Needham. A button below the Needham photo reads, “ABOUT COURAGE.”

     

     

  • MAJOR DEVELOPMENT: AdSurfDaily Remissions Payments Will Be 100 Cents On The Dollar; ‘Thousands’ Of Payments To Go Out; ‘Overwhelming Majority’ Of Claims Approved; Members React With Joy

    “Thousands” of AdSurfDaily Ponzi victims with approved claims will receive remissions payments of “100 percent” in the coming days, a source familiar with the process tells the PP Blog.

    It is quite rare “to have a remissions program that comes back with 100 percent,” the source said.

    The claims process was administered by Rust Consulting Inc. of Minnesota. The process was coordinated by the U.S. Department of Justice, the U.S. Secret Service and the office of U.S. Attorney Ronald C. Machen Jr. in the District of Columbia.

    After three long years waiting for the process to be finalized after two forfeiture appeals by ASD President Andy Bowdoin and attempted pro se interventions by dozens of members who claimed the government was the bad guy, ASD members who stuck with the process expressed joy.

    “YAYAYAYAY!” exclaimed one. Another characterized the news as “amazing.”

    A small percentage of ASD members who filed claims will not receive compensation because they failed to demonstrate a loss, the source said.

    An “overwhelming majority” of claims were granted, the source said. Court records show that about 11,000 people filed claims.

    Payments are expected to begin within 15 days. The money will be deposited electronically into the accounts of ASD members whose claims were granted.

    In 2008, Bowdoin compared the prosecutors in the case to “Satan.” Other ASD members described the U.S. Secret Service as “Nazis” and “goons.” A poster on the now-defunct Surf’s Up forum said that the lead prosecutor in the case should be placed in a medieval torture rack and that ASD members should draw straws to determine who received the honor of carrying out the torture.

    A federal judge was called “brain dead” if she did not agree with ASD’s side of the case, and a purported “prayer” was circulated among ASD members calling for the prosecutors to be struck dead. One prosecutor was described derisively as “Gomer Pyle,” and rumors were unleashed on the Surf’s Up forum that the government had admitted secretly that ASD was not a Ponzi scheme.

    Some ASD members encouraged others not to file for remissions. Those who ignored the advice and were able to demonstrate a loss now will receive back 100 cents on the dollar.

    Remissions payments will be made from funds seized by the U.S. Secret Service in the earliest days of the ASD probe more than three years ago.

    Bowdoin filed appeals in the forfeiture cases, but lost. He is now soliciting funds to pay for his criminal defense to charges of wire fraud, securities fraud and selling unregistered securities.

    Some ASD members ignored the seizure and a parallel criminal investigation. They immediately joined other autosurfs, HYIPs and cash-gifting programs, claiming they were excellent ways to make up their ASD losses.

    In a March 2009 letter to ASD members on the Surf’s Up forum, Bowdoin chided prosecutors and the Secret Service, claiming his pro se filings in the civil portion of the case “should really get their attention.”

    A month later — in April 2009 — prosecutors revealed in a final response to a series of pro se pleadings by Bowdoin that Bowdoin had signed a proffer letter in the case and acknowledged that the government’s material allegations were all true.

    Bowdoin acknowledged in his own court filings that he had given information against his interests and had met with prosecutors over a period of at least four days in late 2008 and early 2009. In January 2009, he abandoned the forfeiture cases, releasing his claims to the seized money “with prejudice.”

    By the end of February 2009, however, Bowdoin reentered the case as a pro se litigant, claiming later that his decision was driven by a “group” of ASD members. He did not identify members of the group.

    ASD is known to have so-called “sovereign citizens” in its ranks.

    Bowdoin has not referenced the proffer letter in his fundraising bid. Nor has he referenced a racketeering lawsuit filed against him in January 2009 by some members.

    It was not immediately clear how many members destroyed their chances to receive remissions after coming under the influence of various crackpot theories spun by certain ASD members. One of the theories held that all commerce is lawful if a contract exists. Another held that members should include notes on the claims forms that explained Bowdoin was conducting business lawfully.

    Another theory held that the government had invested approximately $80 million seized in the case, had earned a return in excess of  $1 billion — and that prosecutors were partying with the money. Still another held that a federal judge was conspiring with another federal judge to deny ASD justice and that at least one of the judges was guilty of 60 felonies.

    Yet another theory held that ASD members should not cooperate with investigators and should not file remissions forms.

  • WHEN PONZIS COLLIDE: Receiver’s Probe Into Commodities Online LLC ‘Severely Delayed And Impeded’ By ‘Noncooperation’; Federal Judge Orders James Clark Howard III And Sutton Capital LLC To Disgorge $1.45 Million; Firm That Listed AdSurfDaily Figure (And ‘Surf’s Up’ Mod) As ‘Director’ Sued Howard In 2010

    James Clark Howard III

    A federal judge in Florida has ordered a convicted narcotics and firearms felon who emerged as a central figure in a Ponzi scheme case after his release from prison to disgorge $1.45 million.

    The order, signed Aug. 23 by U.S. District Judge Patricia A. Seitz, applies to James Clark Howard III and Sutton Capital LLC.

    Howard, a co-managing member of Commodities Online LLC, “directed” that $1.3 million in investor funds from Commodities Online be wired to Sutton Capital, “his wholly owned limited liability company,” Seitz found.

    In the 1990s, Howard was sentenced to 57 months in federal prison on cocaine and weapons charges. He also was implicated last year in a separate fraud scheme targeting Haitian Americans.

    The SEC sued Commodities Online in March, alleging that the firm was selling unregistered securities and operating an international commodities fraud from South Florida.

    Seitz found that the $1.3 million transaction was recorded on the books of Commodities Online as a “loan” to Sutton, “even though no evidence has been found establishing a promissory note, interest rate or terms of repayment.”

    The $1.3 million transaction occurred on Feb. 9, 2010, Seitz found.

    On Feb. 18, 2010, Howard directed another $150,000 be transferred from Commodities Online to Sutton, Seitz found. She now has ordered Howard and Sutton to return the entire amount of $1.45 million from both transactions, saying they “remain in possession and control of these investor funds.”

    Separately, David S. Mandel, the court-appointed receiver in the Commodities Online case, said aspects of his investigation have been “severely delayed and impeded by the noncooperation of the majority of the former officers of the Defendants.”

    Although Commodities Online may own iron ore in Mexico, efforts to get at the truth have been hampered  “due to the current nature of business in Mexico, and in particular, the iron ore business, which at times can be unsafe, unreliable and uncertain,” Mandel said.

    In court filings, Mandel said that he has “received information that others have been purporting to act on the Defendants’ behalf in Mexico.” Mandel hired local counsel in Mexico, an attorney who is a citizen of Mexico and an international security firm to peel back layers of the onion and to protect receivership assets.

    A forensic accounting of Commodities Online and thousands of transactions is ongoing, Mandel said.

    One phase of the forensic accounting involved 9,500 transactions and 35 bank accounts “maintained at various financial institutions,” Mandel said.

    An updated analysis of records shows that Commodities Online gathered nearly $12 million from “insiders and related parties” between January 2010 and April 2011, and paid the insiders and related parties more than $20.2 million.

    All in all, the scheme gathered more than $35 million, according to the analysis.

    Howard was arrested by the Boca Raton Police Department in a separate scheme targeting Haitian Americans on March 5, 2010.

    About six months later — in September 2010 — he was sued by a Nevada company that listed former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy as a director.

    The Nevada company — SSH2 Acquisitions Inc. — alleged that Howard was part of a Ponzi scheme that also involved Patricia Saa, Sutton Capital LLC and Rapallo Investment Group LLC.

    Howard and the defendants, according to the lawsuit, told SSH2 it was trading in commodities and “would produce profits of 40% per month or more, while not risking any of the invested funds.”

    In its lawsuit, SSH2 alleged that its dealings with Howard and the others began in “early 2009” and continued through March 2010.

    If SSH2?s assertions against Howard and the others are true, it means the transactions occurred during a period in which Hoy, later to emerge as an SSH2 director, also was moderating cheerleading forums for ASD and the AdViewGlobal autosurf.

    Surf’s Up became infamous for deleting commentary unflattering to ASD President Andy Bowdoin and links members left to outside sources of information. The forum mysteriously vanished in January 2010, after cheerleading for Bowdoin and ASD nonstop for more than a year.

    AdViewGlobal, which collapsed in June 2010, purported to operate from Uruguay and enjoy protection from U.S. regulators because of a purported “private association” structure. ASD was implicated by the U.S. Secret Service in August 2008 in an alleged $110 million Ponzi scheme. Bowdoin was arrested on charges of wire fraud, securities fraud and selling unregistered securities in December 2010.

    Former moderators of Surf’s Up, which unabashedly cheered for Bowdoin and received ASD’s official endorsement in November 2008, just days after a key court ruling in a civil-forfeiture case went against Bowdoin and ASD, largely have been silent since the January 2010 disappearance of Surf’s Up.

    It is not known if individual ASD members also invested money with Howard. What is known is that many ASD members did not skip a beat after the Secret Service moved against ASD in August 2008. Within days, some ASD members were promoting other autosurf schemes, HYIP schemes and cash-gifting schemes, positioning them as a way ASD members could make up their ASD losses.

    Hoy has not been accused of wrongdoing. Court filings and other records suggest that Hoy could have been conducting business with firms (ASD, Sutton and Rapallo) and individuals (Bowdoin, Howard and Saa) who were running separate Ponzi schemes involving at least $149 million and perhaps more.

    SSH2, with Hoy as a director, alleged that it was scammed by Howard, Sutton and Saa, and plowed$39 million into their Ponzi. The firm accused the defendants of selling unregistered securities and causing at least $19 million in damages. It specifically accused Howard and the other defendants of not revealing that Howard was a convicted felon.

    As a Surf’s Up moderator, however, Hoy presided over a forum that overlooked or pooh-pooed matters pertaining to the alleged ASD Ponzi, ASD’s alleged sale of unregistered securities to thousands of people internationally and Andy Bowdoin’s previous encounters with law enforcement in fraud cases.

    In October 2008, at the conclusion of an evidentiary hearing, Surf’s Up held an online party for Bowdoin, who’d been charged with felonies in an Alabama securities caper in the 1990s and avoided jail by agreeing to make restitution to investors he defrauded. The party was conducted during an active criminal investigation into Bowdoin’s conduct at ASD.

    A federal prosecutor was derided as “Gomer Pyle” on Surf’s Up. He also was described as a “goon” and a person who should be made to suffer in a medieval torture rack. Critics were described as “rats” and “maggots.”

    The party was conducted despite the fact the Secret Service had alleged that one of Bowdoin’s business partners had been implicated by the SEC in the 1990s in three prime-bank schemes.

  • RECEIVER: ‘Insiders And Related Parties’ Of Commodities Online Took Out Twice What They Put In; Shuttered Florida Firm Had Office With ‘Boiler Room’; Winners Received ‘Fraudulent Transfers’

    James Clark Howard III: At the center of three Florida fraud investigations. (Photo source: Boca Raton Police Department,)

    The court-appointed receiver unraveling the affairs of a Florida firm accused by the SEC of operating a $27 million commodities fraud and selling unregistered securities says the company had “insiders and related parties” who took out twice what they put in.

    Clawback actions are anticipated against unspecified “targets” because the money they received constituted “fraudulent transfers,” receiver David S. Mandel advised a federal judge.

    Meanwhile, Mandel says Commodities Online shared office space with a law firm. On the second floor of the shared space was a “boiler room” with 12 cubicles, phone lines and computers.

    At the same time, Mandel says an early analysis of records shows that the company had at least five bank accounts, including accounts at Bank of America, Fifth Third Bank, JP Morgan Chase, PNC Bank and Wachovia.

    The insiders at Commodities Online put more than $5.36 million into the firm between Jan. 1, 2010, and April 1, 2011, and took out more than $10.84 million, according to the early analysis.

    “[T]he Receiver was able to identify potential targets who received fraudulent transfers under §726.101 of the Florida Statutes,” Mandel said. “In the upcoming weeks, the Receiver intends to send letters to each of these targets demanding the disgorgement of profits and the recovery of fraudulent transfers.”

    Although the firm operated only for about 16 months and allegedly told investors they would “earn 5% or more per month without price speculation,” Mandel’s preliminary analysis suggests more than $885,000 was allocated for “salaries” and more than $523,000 was allocated for “Legal and Professional” fees.

    The firm was not registered with the SEC, according to court filings. Mandel said a forensic analysis continues and that records, including computer records, are being scoured for clues.

    “Existing email from the Defendants has been downloaded and is being searched for potential transfers of funds or other related activity that may yield additional assets to be acquired for the receivership estate,” Mandel said.

    And, he noted, there are “preliminary indications” that Commodities Online “may own a substantial quantity of iron ore located in Mexico,”  but that ownership has not been verified.

    “The Receiver has retained Mexican counsel to attempt to determine if the Defendants do, in fact, own the iron ore, and if so, to take whatever steps are required to safeguard the ore for later sale or liquidation, for the benefit of the receivership estate,” Mandel said.

    At least two persons associated with Commodities Online have criminal records for offenses ranging from “narcotics and firearms felonies” to bank fraud and “transmitting a threat to injure,” according to the SEC.

    Although the SEC did not identify the individuals, records show that Commodities Online figures James Clark Howard III and Louis Gallo were charged with the offenses. Implicated in a drugs and weapons case, Howard was sentenced to 57 months in federal prison in the 1990s.

    Gallo was implicated bank-fraud and threats cases, and was on supervised release while the firm operated.

    Howard is at the center of at least three financial storms in Florida, including the SEC case against Commodities Online. Separately, private litigants — including SSH2 Acquisitions, a company that listed former AdSurfDaily (ASD) member and Surf’s Up Mod Terralynn Hoy as a director — alleged last year that Howard was part of a separate Ponzi scheme that gathered at least $39 million.

    Florida authorities charged him criminally in 2010 in a fraud scheme that allegedly targeted the Haitian American community.

    ASD was implicated by the U.S. Secret Service in an alleged $110 million Ponzi scheme. Hoy has not been accused of wrongdoing.

    See earlier story.