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Tag: U.S. Attorney Carmen M. Ortiz

  • DEVELOPING STORY: U.S. Attorney Carmen Ortiz ‘Has Been Recused’ From Prosecution Of TelexFree Figures James Merrill and Carlos Wanzeler

    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.
    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.

    2ND UPDATE 6:27 P.M. EDT U.S.A. A government filing dated July 1 — a Friday before the long Independence Day weekend — says U.S. Attorney Carmen Ortiz of the District of Massachusetts “has been recused” from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler.

    The document does not say why Ortiz no longer will oversee the cases against the alleged pyramid- and Ponzi-schemers. The recusal comes more than two years after Merrill and Wanzeler were charged criminally by prosecutors in Ortiz’s office and nearly 24 months after they were indicted.

    Ortiz, in May 2014, described the alleged fraud as “breathtaking.”

    At the time of this story, no media announcement about the recusal appears on the U.S. Attorney’s website.

    On Saturday (today), Ortiz’s office did not respond immediately to a request for comment.

    U.S. District Judge Timothy S. Hillman is presiding over the cases.

    Here is the text of the “NOTICE OF RECUSAL BY THE UNITED STATES ATTORNEY” dated yesterday (italics added):

    The United States respectfully notifies the Court that United States Attorney Carmen M. Ortiz has been recused from this matter. Pursuant to 28 U.S.C. § 515 and related delegations, an Associate Deputy Attorney General has directed and authorized First Assistant United States Attorney John T. McNeil to have the status, and perform all of the authorized functions, of a United States Attorney with respect to this case.

    Ortiz announced the appointment of McNeil as her first assistant on April 28, 2014. TelexFree declared bankruptcy just 15 days earlier, on April 13. The SEC moved against TelexFree on April 17, 2014.

    Section 3-2.170 of the U.S. Attorneys’ Manual says recusals are required “only where a conflict of interest exists or there is an appearance of a conflict of interest or loss of impartiality.”

    From the manual (italics added):

    A United States Attorney who becomes aware of circumstances that might necessitate a recusal of himself/herself or of the entire office, should promptly notify [the General Counsel’s Office of the Executive Office For United States Attorneys] at . . . to discuss whether a recusal is required. If recusal is appropriate, the USAO will submit a written recusal request memorandum to GCO. GCO will then coordinate the recusal action, obtain necessary approvals for the recusal, and assist the office in arranging for a transfer of responsibility to another office, including any designations of attorneys as a Special Attorney or Special Assistant to the Attorney General . . .

    Whatever TelexFree-related conflict exists, it appears only to affect Ortiz, given that her first assistant has been put in charge and the entire U.S. Attorney’s Office in Massachusetts has not been excluded from the prosecution.

    NOTE: Our thanks to the ASD Updates Blog.




  • TRAGIC REPORTS IN BRAZIL: TelexFree Prosecutor Found Dead

    UPDATED 1:22 P.M. ET U.S.A. There are reports in Brazil that a prosecutor who worked on a TelexFree action in that country has been found dead inside her apartment.

    She has been identified as Nicole Gonzales Colombo Arnoldi, 35, of the state of Acre. The government of Acre has issued a statement of sympathy (in Portuguese) on the death. Arnoldi died yesterday, according to the statement. No cause was listed, and TelexFree was not referenced in the statement.

    Brazil and the United States have shared information on the TelexFree case. The office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts did not respond immediately this morning to a request for comment on the tragic news from Brazil.

    Whether the United States would send a delegation to Brazil for funeral services was not immediately known.

    ac24horas.com is reporting (in Portuguese) that police are investigating the possibility of suicide by pistol, though no definitive conclusion has been reached.

    In Brazil, the TelexFree probe was conducted in an atmosphere that led to threats against judges and prosecutors. As the PP Blog reported in December 2013, there were disturbing reports in Brazilian media that someone with a Facebook account used it to claim falsely that a prosecutor involved in the local TelexFree pyramid-scheme probe had been murdered. The bogus report was supplemented by photos of a mutilated body purported to be that of the prosecutor.

    Investigators in Brazil treated the matter as an effort to intimidate the prosecutor, according to media accounts in Portuguese.

    TelexFree was a cross-border MLM fraud that generated more than $3 billion in economic activity, according to a report by the court-appointed bankruptcy trustee in the United States. Arnoldi’s death occurred just four days after a U.S. Bankruptcy judge ruled the “program” a Ponzi- and pyramid scheme.

    Chief Judge Melvin S. Hoffman of the District of Massachusetts made the ruling on Thanksgiving Eve in the United States.

    Giropb.com.br is reporting that Arnoldi recently was involved in the investigation of a lynching in the city of Bujari, Brazil.

    UPDATE 1:22 P.M. ET U.S.A. This photo of Arnoldi, via Twitter, is from @portal_serido, with credit to TV Globo.

    Also see: http://www.folhapolitica.org/2015/11/promotora-do-caso-telexfree-e.html

  • BRIEF: DFRF’s Daniel Fernandes Rojo Filho Indicted; Feds Establish Victims’ Page

    Arrested and jailed in July, alleged Ponzi schemer Dniel Fernandes Rojo Filho earlier was tooling around in this gold Lamborghini. From a YouTube video. Highlights by PP Blog.
    Arrested and jailed in July, alleged Ponzi schemer Daniel Fernandes Rojo Filho earlier was tooling around in this gold Lamborghini. From a YouTube video. Highlights by PP Blog.

    Federal criminal prosecutors in the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts have moved to stay discovery in the SEC’s civil case against DFRF Enterprises and alleged Ponzi- and pyramid-scheme operator Daniel Fernandes Rojo Filho.

    Initially charged in July 2015 via criminal complaint with wire fraud,  Filho was indicted by a grand jury on Aug. 5 and charged with three counts of wire fraud. Prosecutors have established a page here and are soliciting information from potential victims.

    In essence, criminal prosecutors are arguing that a stay is warranted as a means of assuring Filho does not use the relaxed discovery standards in the civil action to gain an unfair advantage in the criminal case.

    As of yesterday, Filho  did not have counsel in either the civil case or the criminal case, prosecutors said.

    They also thumb-nailed the criminal allegations. From prosecutors’ motion to intervene in the civil case (italics added):

    The investment pitch that Filho and others gave was, in sum and substance, as follows: By sending DFRF as little as $1,000—or as much as an individual wanted to invest—and becoming a DFRF “member,” potential investors could share in the large profits DFRF was generating through highly profitable gold-mining operations in Africa. Investor money would first be sent to a private bank in Switzerland, where the money would be “leveraged” or increased. DFRF would then invest “member” money in the gold-mining operations, resulting in even greater profits, of approximately, or up to, 15% per month. “Members’” investments would be 100% insured and they could get their principal investment returned anytime they wanted.

    According to the Indictment, many of the representations that Filho and others working at his direction made were false and misleading. For example, DFRF never transmitted any investor money to a private Swiss bank and never transmitted any investor money to gold-mining operations in Africa. The Indictment also alleges that Filho concealed his scheme in various ways, such as distributing debit cards, which “members” could purportedly use to withdraw funds, but which did not actually work. In Ponzi-scheme-like fashion, Filho also recycled money provided by some investors to pay other investors who were expecting their principal or returns thereon.

    Investigators have tied Filho to Sann Rodrigues, a figure in the TelexFree pyramid- and Ponzi case.

    Criminal prosecutors successfully intervened in the SEC’s civil case against TelexFree, believed to be one of the largest pyramid- and Ponzi schemes in U.S. history and to have gathered on the order of $1.8 billion through the firm’s MLM program.

    Though allegedly smaller than TelexFree with an estimated haul of about $23 million, DFRF allegedly targeted some of the same affinity groups targeted by TelexFree.

    NOTE: Our thanks to the ASD Updates Blog.

  • Accused Ponzi Suspect Daniel Fernandes Rojo Filho Arrested, But New Mystery Emerges: NFL Draft Pick Was Seen Driving Same Car

    Screen shot from YouTube video. Red highlights by PP Blog.
    Screen shot from YouTube video. Red highlights by PP Blog.

    2ND UPDATE 6:23 P.M. EDT U.S.A. Ponzi-scheme suspect Daniel Fernandes Rojo Filho of DFRF Enterprises has been arrested in Boca Raton, Fla. after an FBI investigation — but a new mystery is emerging on how he came into possession of a gold Lamborghini bearing Florida tag DJBU10.

    The extremely pricy automobile is shown in at least two online videos that display the tag number and name of Prestige Imports/Lamborghini Miami in the rear license-plate holder. Filho is driving the car in a video that appears on YouTube. (Shown below.)

    In a separate video that appears on Instagram, the car purportedly is being driven by Vic Beasley, the Georgia native and Clemson University (South Carolina) football standout who was the first-round pick of the Atlanta Falcons in this year’s NFL draft.

    Neither the dealership nor Beasley has been accused of wrongdoing, and the car may be a marketing prop for the dealership on Biscayne Boulevard North in Miami Beach. The PP Blog left messages for comment today at both the dealership and the office of Five Star Athlete Management, the Atlanta-based agency that represents Beasley.

    The Blog will include the comments if the calls are returned. The Blog also is awaiting the return of a call it made for comment to the office of U.S. Attorney Carmen Ortiz of the District of Massachusetts.

    Both of the videos appear to have been made by happenstance by individuals who have no DFRF ties and simply shot footage when the eye-popping Lamborghini appeared when they were nearby.

    The person who posted YouTube footage showing Filho in the car appears to be an automobile hobbyist and not to have recognized him at all. Separately, the person who shot the Instagram footage showing Beasley behind the wheel appears possibly to have recognized the football star, but the backdrop also is striking.

    In the Beasley video, the car is seen driving at a slow speed across across a grassy area that includes a fire hydrant and low curb, making a right turn onto a side road, drifting through a stop sign and then making another right turn onto a different highway. A sign that briefly appears in the video appears to read “NW 13th St.”

    There is a NW 13th Street in Miami, but the Blog could not conclusively determine that’s where the Instagram video was shot.

    There also is a discussion thread about Beasley and the Lamborghini at the website of TigerNet, which covers topics pertaining to Clemson athletics. The first post is dated Feb. 18, 2015, weeks prior to the April 30 NFL draft.  Another Feb. 18 post in the thread identifies the license number as DJBU10. Still another identifies it as a Florida tag.

    The PP Blog first observed Filho driving the car in this DFRF promotional video published May 8, 2015, on YouTube. The tag number, however, does not appear in the video.

    As noted above, an apparent car hobbyist with a YouTube account (HAW.Photography) encountered the exceptionally flashy ride while shooting footage in Boca Raton. The YouTube upload date of this video is April 4, 2015. The headline is “GOLD Lamborghini Aventador LP700-4 in Boca Raton, Florida.” Most of the video appears to have been shot on U.S. Route 1, which passes through Boca Raton.

    A female in the car shooting the video exclaims, “There’s another one!” Another female voice says, “A gold one!”

    At one point the Lamborghini makes a right turn into a car wash. The videographers appear to be in a different traffic lane, but eventually make it into the same parking lot. When the video resumes in the parking lot, Filho is seen stepping out of the driver’s side door of the Lamborghini. A woman exits the vehicle from the passenger’s side door.

    Whether either of the videos has evidentiary value in the Ponzi cases against Filho was not immediately clear. Federal prosecutors in Massachusetts described him yesterday as a fugitive who met arrest Tuesday while “coming out of a restaurant in Boca Raton.”

    Filho is a citizen of Brazil. Prosecutors said Filho had evaded “arrest for more than two weeks” before being caught. The FBI had been seeking his arrest since June 25.

    In a civil case against Filho announced by the SEC on July 2, the agency describes him as having spent $2.5 million to acquire “a fleet of luxury automobiles,” including a 2014 Rolls-Royce, a 2015 Lamborghini, a 2014 Lamborghini, a 2012 Ferrari, a 2006 Ferrari, a 2013 Mercedes, a 2014 Cadillac and a 2015 Cadillac.

    The SEC has linked Filho to Sann Rodrigues, a figure in the epic TelexFree pyramid- and Ponzi scheme case. TelexFree may have gathered as much as $1.8 billion. DFRF’s haul currently is estimated at $15 million.

    Officials at the SEC today Tweeted news of the Filho arrest.

  • URGENT >> BULLETIN >> MOVING: DFRF Enterprises’ Figure Daniel Fernandes Rojo Filho Wanted By FBI; Arrest Warrant Issued; Feds Conducting ‘Border Watch’

    breakingnews7210th Update 10 a.m. EDT July 14 U.S.A. Daniel Fernandes Rojo Filho, the alleged operator of the $15 million DFRF Enterprises LLC Ponzi- and pyramid scheme sued civilly by the SEC in late June, has been charged criminally with wire fraud and is wanted by the FBI. An arrest warrant has been issued.

    Court filings show that the FBI was conducting a parallel criminal probe while the SEC was conducting its civil probe. The FBI filed a criminal complaint under seal on June 25, about five days before the SEC filed its civil complaint under seal.

    The SEC announced its civil action on July 2. The complaint tied TelexFree Ponzi- and pyramid figure Sann Rodrigues to Filho. In terms of victims, TelexFree may be the largest Ponzi- and pyramid scheme in U.S. history. Having potentially gathered $1.8 billion, TelexFree may be among the largest Ponzi schemes of all time.

    Filho, like Rodrigues, is a citizen of Brazil. Both men have used addresses in Massachusetts and Florida.

    Federal prosecutors from the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts moved to unseal the criminal complaint on July 8. U.S. Magistrate Judge Jennifer C. Boal lifted the seal on the same day, making the wire-fraud complaint and arrest warrant against Filho a public record.

    In a July 10 filing, an SEC investigator said this (italics added):

    “I have had several conversations with an FBI agent involved in the investigation and the recently-filed criminal proceeding against defendant Filho. I have been informed that the FBI has been unable to execute the arrest warrant issued for defendant Filho in this matter and that the FBI currently considers defendant Filho a fugitive. (A process server retained by the Commission has made several unsuccessful attempts to serve Filho at his residence.) I have been informed that the FBI is actively searching for Filho and has initiated a border watch.”

    Filho is 47 and has an address in Orlando, Fla., according to an FBI affidavit. The SEC complaint gives his place of residence as Winter Garden, Fla., which Wikipedia says is 14 miles west of Orlando in Orange County.

    The FBI affidavit alleges the FBI has received complaints about him from multiple individuals and that Filho has at least two co-conspirators.

    At the same time, the affidavit alleges that DFRF opened “at least 19 bank accounts at different financial institutions” since 2014 and that Filho “is a signatory” on 17 of the 19 accounts.

    Much of the FBI information is similar to the SEC’s allegations against Filho.

    From the FBI affidavit (italics added):

    Among other things, FILHO and others acting at his direction falsely represented that DFRF owned and operated gold mines in Africa and South America, that any investors’ money was 100% insured, and investors could withdraw their principal investments at any time. FILHO never invested the money as promised; instead, FILHO used the money for other purposes, including his own personal and other business expenses.

    In its complaint last month, the SEC alleged that, “[s]ince June 2014, he has siphoned more than $6 million out of DFRF — approximately 40% of the total received from investors. This includes more than $1.8 million in cash withdrawals, approximately $1.8 million for personal expenses (including $500,000 for travel), and almost $2.5 million to acquire a fleet of luxury automobiles.”

    The SEC further alleged that Filho caused more than $310,000 to flow to Rodrigues. Rodrigues, who once claimed to have hauled $3 million out of TelexFree, is not referenced in the FBI affidavit.

    In December 2014, Filho issued a bad check for $10,000 to a DFRF investor, according to the FBI affidavit.

    NOTE: Our thanks to the ASD Updates Blog.

    See PP Blog follow-up story dated July 14 here. The story discusses Jeffrey A. Feldman, one of Filho’s co-defendants in the SEC case. Feldman has an address in Boca Raton, Fla.

    In 2010, the PP Blog reported that Filho was a figure in the alleged Evolution Market Group/Finanzas Forex fraud scheme in which money was traced to the narcotics trade.

  • Knife-Wielding Man Killed Near Boston Yesterday Planned ‘Violent Jihad’ And Random Police Killings, Feds Say

    One of the knives: Source: Boston Police Department.
    One of the knives: Source: Boston Police Department.

    At 5 a.m. yesterday — two hours before he died in the Boston neighborhood of Roslindale — Usaamah Abdullah Rahim called David Wright of the Boston-area community of Everett, according to an FBI affidavit from a member of Boston’s Joint Terrorism Task Force.

    Wright, 25, also is known as Dawud Sharif Wright and Dawud Sharif Abdul Khaliq, the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said.

    During the 5 a.m. call, according to the FBI affidavit, 26-year-old Rahim told Wright he was going to “go after” the “boys in blue” and that he “planned to randomly kill police officers in Massachusetts either yesterday (June 2) or today (June 3).”

    Here we’ll point out that, just a little more than two years ago, President Obama spoke at an interfaith service in Boston in the aftermath of the terrorist attack at the Boston Marathon. Obama noted that “doctors and nurses, police and firefighters and EMTs and Guardsmen” ran toward the explosions to treat the wounded.

    A little more than a year ago, while feting the Boston Red Sox at the White House for winning the 2013 World Series, Obama reminded the audience once again of the valor on display by police during the Marathon bombing. He noted that Officer Richard Donahue of the MBTA Transit Police was shot and nearly killed in a battle with the terrorists and was fighting back from his injuries.

    MBTA police noted that their colleague, Officer Sean Collier of the MIT Police Department, was killed by the terrorists.

    Despite the Marathon attacks against innocent human beings — and despite the fact the police are the thin blue line that protects society — Rahim apparently wanted to kill Boston-area cops. And Wright, according to the FBI affidavit, apparently had so little regard for the lives of police officers that he instructed Rahim to wipe his smartphone and computer to make sure the plan was not detected.

    Wright now has been charged with conspiracy to obstruct justice. A day earlier, in Roslindale at 7 a.m. outside a CVS pharmacy, Rahim allegedly approached cops and the FBI “while brandishing his weapon, and he was shot by law enforcement.”

    There are reports that Rahim worked at the store as a security guard.

    From federal prosecutors (italics added):

    As alleged in the complaint affidavit, Rahim, a 26-year-old private security officer, was planning to engage in a violent attack in the United States, and had purchased three military-style fighting knives and a sharpener in furtherance of this plan. In intercepted calls between Wright and Rahim, the men discussed a knife attack on an individual not named in the complaint, and suggested that the target was to be beheaded and have his/her head placed on his/her chest. According to the complaint, such beheadings are a tactic of some foreign terrorist organizations which use such killings in propaganda videos.

    The implication, of course, is that Rahim had been inspired by ISIS and/or the beheadings carried out by the terrorist group. America and other nations have been on guard for such gruesome aggression — and police are the first line of defense.

    Before shifting focus to police, Rahim had talked about “beheading” a person in another state.

    CNN is reporting tonight that the planned victim was conservative Blogger Pamela Geller.

    As CNN reported: “Geller drew national attention last month after an off-duty police officer working security thwarted an attack at her organization’s contest for Prophet Mohammed drawings in Garland, Texas. She’s president of the American Freedom Defense Initiative, which includes subsidiary programs Stop Islamization of America and Stop Islamization of Nations.”

    The probe also extends into Rhode Island, according to the FBI affidavit. That’s allegedly because Rahim met with Wright and an unidentified third person on a beach during “inclement weather.”  The date of the meeting was May 31, just days after Rahim had acquired three knives on Amazon.com and a device to sharpen them.

    Here’s how the affidavit describes the knives:

    • An Ontario Spec Plus Marine Raider Bowie fighting knife. “The Marine fighting knife Rahim purchased is 15 inches long when opened, contains a 9.75” blade, and weighs 22.4 ounces.”
    • A second Marine fighting knife.
    • An Ontario Knife SP6 Spec Plus Fighting Knife 8325. “The SP6 Spec Plus Fighting Knife Rahim purchased is 13 inches long and has an eight inch blade.”

    Shortly after the 7 a.m. 5 a.m. (June 6 edit) conversation yesterday with Wright, according to the affidavit, “Rahim was on a public street in the Boston area, when he was approached by Boston Police Officers and FBI special agents. [Rahim] took out one of the knives he had purchased from Amazon.com when he saw the officers and agents. One of the officers told [Rahim] to drop his weapon and [Rahim] responded, ‘you drop yours.’

    “[Rahim] then moved towards the officers while brandishing his weapon, and he was shot by law enforcement.”

    Rahim also called Wright on May 26. This from the affidavit (italics added):

    Later in the conversation, Wright told Rahim something was “like thinking with your head on your chest.” Both men then burst out laughing. Based upon my training, experience, and involvement in this investigation, I believe this is a reference to the practice of some foreign terrorist organizations to be head targets and place their heads on their chests in propaganda videos.”

    Also see Washington Post report.

  • In Response To Search Warrant In TelexFree Case, YouTube Delivers 45GB Of Data

    newtelexfreelogo2ND UPDATE 9:18 A.M. ET FEB. 13 U.S.A. On Oct. 16, 2014, Google was served a search warrant in the TelexFree criminal case against accused operators James Merrill and Carlos Wanzeler, according to joint court filings by federal prosecutors in the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Robert M. Goldstein, a defense attorney for Merrill.

    Merrill and Wanzeler are charged with wire fraud and wire-fraud conspiracy. U.S. prosecutors have called Wanzeler a fugitive now likely living in Brazil. With discovery involving incredible amounts of data and an avalanche of documents under way that both sides must sift though, no trial date has been set.

    The search warrant sought “a substantial amount of video content held by [Google’s] subsidiary, YouTube,” according to the joint interim status report by prosecutors and Goldstein docketed on Dec. 17. The lawyers noted that “Google reports that compliance will take several more weeks.”

    Precisely why the government sought the material is unclear, but promoters of MLM or network-marketing HYIP schemes frequently pitch their offerings on YouTube. Filings last week by Stephen B. Darr, the court-appointed trustee in the TelexFree bankruptcy case, assert that TelexFree had gathered as much as $1.8 billion in about two years and that the cross-border “program” may have involved 1 million or more people.

    Darr flat out called TelexFree a pyramid scheme.

    In another joint interim report docketed Monday, prosecutors said they recently received 45GB of material from Google under the search warrant. The corresponding number of hours of video contained within the production wasn’t specified.

    Prosecutors also said in the report that they’d received an unspecified amount of data from Hotmail and Apple that had been sought in a search warrant.

    This data involved email accounts, prosecutors said in the interim report. The names of the account-holders and the content of the emails were not revealed in the report.

    HYIP schemes often get pitched in emails from promoters. The government did not say why it had sought the material.

    Prosecutors did note that “[p]roduction of this material has been delayed by errors in the data as produced by the email providers.”

    Darr, the trustee, has turned over 75GB of data, according to the Feb. 9 report.

    Getting to the heart of an HYIP scheme that operated over the Internet is an exceptionally time-consuming task. Delays are almost inevitable and even can be caused by external events that affect resources. In the Feb. 9 filing, prosecutors noted that “paralegals and litigation technical support staff” in Ortiz’s office also are participating in the prosecution of the Boston Marathon bombing case, a mammoth undertaking.

    Absences or delays, however, are not unique to the prosecution side of the argument. A TelexFree defense attorney who has to sift through discovery material is involved in a trial in another state and could not attend a status conference that had been scheduled for today, according to the joint interim report.

    U.S. Magistrate Judge David H. Hennessy canceled today’s conference, setting April 13 as the next date the parties would meet. In his own report, Hennessy noted that discovery was proceeding in the case despite the enormous volume of material.

    And that volume only will grow, he wrote, pointing to a TelexFree criminal investigation in Brazil and assertions by U.S. prosecutors that they expect to receive “a large amount of material, both hardcopy and electronic, from the Brazilian government” in March.

    News of the conference delay was received on the same day publications in Brazil reported that an accounting firm (Ernst & Young) in that country had reported to the judiciary in Acre state that TelexFree (as Ympactus) had the characteristic of a pyramid scheme.

    TelexFree is the subject of both state and federal probes in Brazil.

    The Feb. 9 joint interim report in the United States notes that “the government anticipates receiving [data] in response to a search warrant submitted to the Court this week.”

    What was targeted in that search warrant was not revealed. Nor was the identity of the person or entity served with the warrant.

    The interim report also notes that the U.S. government is in possession of “[v]arious recordings made by undercover [Homeland Security Investigations] agents at TelexFree conference and in conversations with a TelexFree promoter.”

    Brazil-based TelexFree figure Carlos Costa appears to be the subject of a veiled reference in the Feb. 9 report, which describes an unnamed person in Brazil as “the third owner of TelexFree.”

    Authorities in Brazil have served “about nine” TelexFree-related search warrants in that country and have seized on the order of $450 million, according to the Feb. 9 report.

    NOTE: Our thanks to the ASD Updates Blog.

  • URGENT >> BULLETIN >> MOVING: SEC Enters TelexFree Nevada Bankruptcy Fray — Plus Confirmation That U.S. Attorney’s Office Part Of Probe

    breakingnews72URGENT >> BULLETIN >> MOVING: (Updated 6:24 P.M. EDT U.S.A.) The U.S. Securities and Exchange Commission has entered the TelexFree fray in Nevada Bankruptcy Court and has petitioned the judge to transfer the case to Bankruptcy Court in the Central District of Massachusetts, an area that is a potential TelexFree stronghold. The Central District covers communities such as Worcester, Ashland, Framingham, Holliston, Bellingham, Franklin and Medway.

    In a filing, the SEC also noted that the FBI and Department of Homeland Security are involved in a separate TelexFree probe led by the office of U.S. Attorney Carmen M. Ortiz. How long that probe has been under way was unclear in the filing.

    SEC lawyers asserted Massachusetts was the “nerve center” of TelexFree and that TelexFree’s “late Sunday” bankruptcy filing in Nevada on Oct. 13 was a “transparent attempt to avoid Massachusetts, where their ‘business’ and numerous witnesses are located and where various government agencies have been investigating their fraudulent conduct.”

    “[U]ntil [April 15], the U.S. Attorney’s Office was operating in secret,” the SEC advised a federal judge in Massachusetts last week, according to a transcript provided the Nevada Bankruptcy Court. “We couldn’t reveal ourselves without tipping things, so we had to wait until the search warrant was executed [on April 15.]”

    TelexFree nevertheless knew the regulators were coming and started moving money, the SEC said.

    One SEC investigator advised the Massachusetts judge who granted an asset freeze that he’d personally viewed “several hours” of TelexFree-related YouTube videos and performed transcription work before the SEC filed its fraud complaint last week, according to the transcript.

    “[T]here are plenty of examples of each of those people helping to promote the scheme and helping to explain how great it is, how much money you can make for virtually no effort, and without — they’re all active enough, these people — well [James] Merrill, [Carlos] Wanzeler, and [Steve] Labriola are officers, they certainly know this,” the SEC investigator advised the Massachusetts judge.

    The Massachusetts judge granted an asset freeze on April 16.

     

  • ‘Uniform’ Ponzi Swindler Richard Elkinson, 78, Sentenced To 102 Months In Federal Prison; 20-Year Scheme Collapsed After Arrest Of Bernard Madoff

    Richard Elkinson, the 78-year-old Ponzi swindler whose promissory notes scheme gathered $29 million over 20 years, has been sentenced to 102 months in federal prison.

    Elkinson resided in Framingham, Mass., and told investors he was in the business of providing uniforms to the government and other entities.

    But it was all a scam that lured investors with promises of outsize returns of between 9 percent and 15 percent in less than a year, federal prosecutors, the FBI and the SEC said.

    The scheme began to collapse in late 2008 after investors — motivated by the publicity the Bernard Madoff Ponzi began to receive  — “started seeking more information and documents about the uniform business,” the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said yesterday.

    Madoff, himself a senior swindler at the helm of a long-running Ponzi caper, was arrested on Dec. 11, 2008.

    Although Elkinson initially lulled investors in early 2009 with a variety of excuses about why he wasn’t making payments, he later fled Massachusetts. Elkinson was arrested at a Mississippi casino in January 2010. Investigators said they discovered evidence that the con man had an affinity for gambling and had conducted “a total of more than $3.7 million in currency transactions over $10,000” at Las Vegas casinos dating back to 1998.

     

  • Postal Inspectors, IRS Say Canadian Promoted ‘Series’ Of HYIP Frauds; Randi A. Bochinski Arrested In British Columbia, Faces U.S. Indictment

    Still promoting HYIP frauds on the Ponzi boards and elsewhere?

    A Canadian citizen was arrested in British Columbia June 3 and now has been indicted in the United States on charges of wire fraud, mail fraud and money-laundering, authorities said.

    Randi A. Bochinski, 46, of Kelowna, B.C., potentially faces decades in prison and huge fines if convicted.

    A company known as Carlant Holdings Ltd. was “among other schemes” Bochinski promoted, federal prosecutors said.

    The case was investigated by the U.S. Postal Inspection Service and the IRS Criminal Investigations Division, and will be prosecuted by the Economic Crimes Unit of U.S. Attorney Carmen M. Ortiz in Boston.

    Bochinski “promoted a series of high-yield investment programs, whereby he promised investors significant returns on their investments within a short amount of time,” prosecutors said.

    “[A]mong other schemes, Bochinski solicited investors to invest in” Carlant by stating “they would receive returns of 8-10 times their investment within 90 days,” prosecutors said, adding that neither the purported returns nor the purported payout timeline ever materialized.

    Investors were told their money would remain in an escrow account, but Bochinski “transferred the investments out of the escrow account without notifying the investors,” prosecutors said.

    “To date, only small portions of the initial investment have been returned to the investors, none of it was returned within 90 days, and the promised returns have been non-existent,” prosecutors said.

    Bochinski “also promoted several other fraudulent investments to investors throughout the country and used funds invested by newer investors to make payments to previous investors,” prosecutors said.