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Tag: U.S. Attorney Wifredo A. Ferrer

  • BULLETIN: In New ‘Advertising’ Ponzi-Scheme Takedown, SEC Points To YouTube Video Allegedly Used By Scammers To Drive Sales — And Feds File Criminal Charges

    Screen shot of YouTube video playing today on the SEC's website.
    Screen shot from YouTube video playing today on the SEC’s website.  Among other things, the video shows two men admiring a Cadillac, two women admiring a swimming pool situated at a tony home with a lake view, two other men admiring an exotic vehicle, testimonials from apparent investors  — and a smiling pitchman throughout. The video helped drive business to a Florida-based Ponzi scheme that gathered tens of millions of dollars, the SEC and federal prosecutors said.

    Updated 2:45 P.M. EDT (April 16, 2014) The SEC has sued the operators of an alleged Ponzi scheme in Florida — and federal prosecutors have filed criminal charges.

    In its announcement of the prosecution against Joseph Signore of West Palm Beach and Paul L. Schumack II of Pompano Beach, the SEC provided a link to a YouTube video used by the alleged scammers. Separately, the office of U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida said the scheme gathered about $70 million from investors nationwide.

    Schumack, according to the SEC’s civil complaint, solicited investors by touting his military credentials and a  passage from 1 Corinthians 10:31: “Whatever you do, do it all for the glory of God.”

    Financial records, however, showed that Schumack’s business entity “transferred approximately $4 million from its investor account to an unrelated account from which Schumack and others executed more than 100 cash withdrawals totaling around $4.8 million, which was 91 percent of the account balance,” the SEC said.

    Signore, Schumack’s colleague and sales agent, is a convicted thief, the SEC said.

    Signore, 49, and Schumack, 56, were arrested for their alleged actions in the Florida Ponzi scheme. They are charged with “conspiracy to commit mail and wire fraud, five counts of mail fraud each, and six counts of wire fraud,” Ferrer’s office said.

    The men were at the helm of companies known as JCS Enterprises Inc. (Signore) and T.B.T.I. Inc. (Schumack) that touted “virtual concierge machines” or VCMs, the SEC said. The agency long has warned that YouTube and other social-media sites have been used to push investment-fraud schemes.

    Perhaps to further drive home its point, the SEC today posted the YouTube video to its own website. In one scene, a man is seen polishing a Cadillac. Another man says, “What an amazing car! How can you afford this?”

    The first man replies, “My Virtual Concierge.”

    A similar scene in the video played out at at home that featured a swimming pool.

    “Your new pool is spectacular. How are you able to afford it?” a woman asks. Another woman replies, “My Virtual Concierge.”

    A smiling narrator then intones, “Do you want to make more money? Then it’s time you learn about owning a Virtual Concierge.”

    “Signore and Schumack touted VCMs as a revolutionary enterprise and fail-safe investment based on a stream of advertising revenue that would generate the guaranteed returns paid to investors,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.  “However, the advertising revenue was virtually non-existent and investors aren’t enjoying the riches touted on YouTube.”

    From the SEC’s statement (italics added):

    The SEC alleges that Joseph Signore of West Palm Beach, Paul L. Schumack II of Pompano Beach, and their respective companies JCS Enterprises Inc. and T.B.T.I. Inc. falsely promised hundreds of investors nationwide that their funds would be used to purchase ATM-like machines that businesses could use to advertise products and services via touch screen and printable tickets or coupons.  Investors supposedly needed to do nothing to earn returns on their investment in a VCM, which would purportedly be placed at such locations as hotels, airports, and stadiums where they would derive revenue from the businesses paying to advertise through them.  However, instead of advertising revenue serving as the driving force behind the returns paid to investors, the two men and their companies paid returns to earlier investors using money from newer investors.  Signore and Schumack also diverted millions of dollars in investor funds for their personal use and other unrelated expenses.

    The “majority” of investors stopped receiving payouts in January 2014, but “Signore and Schumack continued to solicit new investors while fabricating excuses to placate irate investors no longer receiving their returns,” the SEC said.

    In the run-up to the collapse and feeling heat from investors, the SEC alleged, Signore’s JCS claimed it was “investigating” Schumack’s T.B.T.I.

    “JCS issued a press release, which it posted on its website, indicating it was investigating the matter,” the SEC alleged. “In denying any wrongdoing, JCS placed the blame squarely on T.B.T.I., and claimed it had only an arms-length relationship with T.B.T.I. This was patently false.”

    Records showed that “Signore personally used investor funds, including diverting approximately $2,000,000 to himself, his wife and son,” the SEC alleged. “Signore also diverted approximately $90,000 to a business jointly operated by himself and his wife, and approximately $44,000 to Schumack personally.”

    A website known as ATMHospitality.com was among the sites used in the scheme, according to the SEC’s complaint. The site, which appears to be registered in the name of Schumack’s wife, now resolves to a page that displays a photo of a Bible, a cross and an infant.

    In December 2013 2003 [edited April 16, 2014] Signore, the “chairman and president” of JCS, filed for bankruptcy, the SEC said.

    Signore also has a criminal history, the SEC said.

    “On February 10, 2006, Signore was adjudicated guilty per a plea agreement to theft charges emanating from two separate indictments brought by the State of New Jersey,” the agency said.  “Signore first pled guilty to charges he failed to share the proceeds from the sale of an automobile with a charity to which he was legally obligated. Signore had to pay $11,475 in restitution to the National Multiple Sclerosis Society, as well as nominal amounts to other organizations, and fees. Signore also pled guilty to unlawfully obtaining vehicles owned by Sears Roebuck & Company, selling the vehicles, and retaining the proceeds for himself and his co-defendant. He was sentenced to four years’ probation, restitution of $47,850, and other nominal fines and fees.”

    In 2011, the SEC said, JCS was registered as a Delaware corporation.

    “JCS and its investment offerings are not registered with the Commission in any capacity,” the SEC said.

    T.B.T.I. was incorporated in Florida in 2001, the SEC said.

    Like JCS, “T.B.T.I. and its investment offerings are not registered with the Commission in any capacity,” the agency said.

    Investors in the VCM program could “could choose between an aggressive or passive option,” the SEC alleged.

    “The aggressive option burdened investors with responsibility, but allowed for greater returns,” the SEC continued. “The passive option left the investor with no responsibility, required no effort, and guaranteed them $300 monthly returns per VCM. The Defendants continuously and clearly stressed the passive option as the best choice for the investors.”

  • REPORTS: Prosecutor In TelexFree Case Threatened With Death

    cautionflagThere are reports in Brazilian media that a prosecutor in the state of Acre has received death threats over her role in the TelexFree investigation and is receiving police protection.

    TelexFree, which has a U.S. arm in Massachusetts, purports to be in the communications business. The MLM company is under investigation in multiple states in Brazil, amid pyramid-scheme concerns.

    Here is a link to a Google-translated version (from Portuguese to English) of one story in Brazil about the reported death threats.

    Here is a link to the original story not translated into English.

    Some Americans have claimed that a payment of $15,125 to TelexFree results in an income of at least $1,100 a week for a year.

    Death threats and threats in general are not unprecedented in the pyramid-scheme world. In the World Marketing Direct Selling (WMDS) and OneUniverseOnline (1UOL) cases brought in Massachusetts in 2005, accused schemer James Bunchan discussed a plot to murder a federal prosecutor and 12 witnesses. He was sentenced to 35 years in federal prison after being convicted of the pyramid charges and an additional 25 years after being convicted in the murder plot.

    The pyramid scheme was targeted at Cambodian-Americans who had little command of English.

    In other news, federal prosecutors in Miami today announced the arrests of Daniel Carrasco, 54, and Federico Martin Gioja, 45, both of Miramar, Fla. The men were accused of falsely trading on the name of the Univision television network, targeting Spanish-speaking prospects and using a “phone room in Argentina to extract money from consumers, using lies and extortion.”

    “These defendants specifically targeted Spanish-speaking victims, pretending to be affiliated with Univision, to sell their products from their phone room in Argentina, when in fact, they had absolutely no connection to Univision, and their companies did not deliver the products consumers ordered,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “We are committed to investigating and prosecuting such fraudsters, both domestic and international, whose schemes defraud consumers.”

    If the customers of Carrasco and Gioja complained, prosecutors said, the “Argentinian phone room telemarketers called and falsely threatened consumers with arrest, deportation or fines on their gas and electric bills.”

    The scheme was investigated by the U.S. Postal Inspection Service. Charges against the men include conspiracy, fraud and extortion.

  • 10 Individuals, Including 6 Pitchmen, Indicted In Alleged ‘Vendstar’ Bizop Scam That Fleeced Customers $10,000 At A Time, Prosecutors Say

    “Instead of becoming successful entrepreneurs, the individual investors become victims of fraud, often losing their life’s savings. In this way, business opportunity schemes tarnish the American Dream of success through hard work. We will help protect the investing public by prosecuting these cases aggressively.” —  U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida., Oct. 10, 2012

    Ten alleged bizop fraudsters, including six pitchmen from New York, have been indicted in the Southern District of Florida in a scam involving vending machines that fleeced investors $10,000 at a time, the Justice Department said.

    The case was brought after a probe by the U.S. Postal Inspection Service that reached into at least three states and involved a company known as Multivend LLC, which did business as Vendstar. A grand jury returned the indictment in Miami.

    Scammers gained a head of steam through newspaper and Internet ads, prosecutors said, alleging that purported “locating companies” assisted Vendstar in the scam.

    Despite the claim customers’ machines would be placed at quality locations, the scammers “generally placed consumers’ machines wherever they could as quickly as they could, often in businesses that had not consented to housing the machines and that soon demanded that the machines be removed,” prosecutors said.

    “The U.S. Postal Inspection Service will continue to work with our partners in law enforcement to ensure that the U.S. Postal Service isn’t used as a conduit to defrauding the American consumer,” said Tony Gomez, acting inspector in charge of the U.S. Postal Inspection Service in Miami.

    Here is the list of defendants:

    • Edward Morris “Ned” Weaver, 39, of Perrysburg, Ohio, the president and chief executive officer of Vendstar.
    • Lawrence A. Kaplan, 54, of Brooklyn, N.Y., the technical support manager for Vendstar.
    • Scott M. Doumas, 40, of East Setauket, N.Y., a salesman and sales manager at Vendstar.
    • Mark Benowitz, 65, of Holtsville, N.Y., a salesman at Vendstar.
    • Richard R. Goldberg, 40, of Bay Shore, N.Y. a salesman at Vendstar.
    • Richard Linick, 70, of Coram, N.Y., a salesman at Vendstar.
    • Paul E. Raia, 61, of Brookhaven, N.Y., a salesman at Vendstar.
    • Howard S. Strauss, 63, of Jericho, N.Y., a salesman at Vendstar.
    • Wallace W. DiRenzo, 67, of Cleveland, Ohio, who operated Nationwide Locating Company, which was based in North Palm Beach, Fla.
    • James P. Ellis, 42, of Northport, Ala., who operated Vending Dreams, Priority Placements, Clear Vision Marketing, Map Marketing and Secure Placement.

    From a Justice Department statement (italics added):

    Each of the defendants is charged with conspiracy to commit mail and wire fraud, and an enhanced penalty for telemarketing , which together provide for a maximum sentence of 10 years in prison. Weaver, Kaplan, Benowitz, Goldberg, Linick, Raia, Strauss and DiRenzo also are charged with mail fraud, and/or wire fraud, each of which carry a maximum of 20 years in prison.

  • ‘Before, During And After The Aforesaid Seizure’: Feds Charge Ponzi Schemer Scott Rothstein’s Wife, Her Attorney And Friend With Conspiracy To Obstruct Justice, Launder Money And Tamper With Witness In Alleged Plot To Conceal Assets

    “Those who assist others to conceal assets subject to forfeiture will be fully investigated and prosecuted. Together with the U.S. Attorney’s Office, we will continue to pursue forfeiture of all assets acquired with funds derived from Rothstein’s Ponzi scheme.” — José A. Gonzalez, special agent in charge of the IRS-Criminal Investigations Division, Sept. 6, 2012

    Saying criminal conduct occurred “before, during and after” the seizure of assets linked to Florida Ponzi schemer Scott Rothstein, federal prosecutors today announced that Rothstein’s wife, her attorney and friend have been charged in an alleged bid to conceal more than $1 million in jewelry.

    Two others also were charged.

    “The integrity of our system of justice is based on the truthfulness of every witness that participates in the process,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “When a witness lies under oath or conspires to obstruct justice, the integrity of our system of justice is undermined. The charges filed against these five individuals are proof of our office’s commitment to safeguard and protect the integrity of our legal system. Thanks to the continued dedication and commitment of our law enforcement partners and our prosecutors, these individuals will be brought to justice and the integrity in our system of justice restored.”

    Kimberly Wendell Rothstein, 38; Stacie Weisman, 49; and attorney Scott F. Saidel were charged with with conspiracy to commit money laundering, to obstruct justice and to tamper with a witness, prosecutors said.

    Among the allegations against Kim Rothstein, Weisman and Saidel is that they “sought to have Scott W. Rothstein testify falsely” in a civil proceeding after Scott Rothstein’s corrupt law firm imploded in 2009.

    Meanwhile, Eddy Marin, 50, and Patrick Daoud, 54, were indicted on charges of obstruction of justice and perjury, prosecutors said.

    The Sun Sentinel is reporting that Daoud is a jeweler in Fort Lauderdale, the city in which Scott Rothstein’s epic, $1.4 billion Ponzi fraud collapsed in 2009 and took the Rothstein Rosenfeldt Adler law firm with it. Scott Rothstein was sentenced to 50 years in federal prison.

    From a statement by prosecutors today (italics added):

    According to the charging documents, former Ft. Lauderdale attorney Scott W. Rothstein, who was the Chief Executive Officer and Chairman of the law firm of Rothstein, Rosenfeldt and Adler, P.A. (RRA), used the funds obtained from the operation of a Ponzi scheme to purchase tens of millions of dollars of real estate, vehicles, vessels, business interests, luxury watches, jewelry and sports memorabilia for himself, his wife, Kimberly Rothstein, and others.

    As part of his plea agreement, Scott W. Rothstein agreed to forfeit to the government all assets acquired with funds derived through the aforesaid Ponzi scheme. On November 9, 2009, agents of the Internal Revenue Service, Criminal Investigations, went to the Rothstein residence, where Kimberly Rothstein assisted the agents in retrieving what was believed to be all of the available cash, jewelry and luxury watches which had previously been purchased by Scott W. Rothstein with proceeds derived from the Ponzi scheme.

    In fact, before, during and after the aforesaid seizure by federal agents on November 9, 2009, Kimberly Rothstein, Stacie Weisman, and Scott F. Saidel knowingly took action to conceal certain items of jewelry, valued in excess of one million dollars for the purpose of preventing the government from exercising its authority to take such property into its lawful custody and control. Thereafter, Kimberly Rothstein and Stacie Weisman sold and attempted to sell a portion of this jewelry to and through various persons, including Eddy Marin and Patrick Daoud.

    The charging documents further allege that, in connection with civil proceedings instituted by the Trustee in bankruptcy for RRA, all of the defendants took steps to obstruct justice by concealing the true location of certain items of jewelry in order to prevent its availability for use in those proceedings. It is further alleged that Marin and Daoud committed perjury during depositions in connection with those proceedings, and that Kimberly Rothstein, Stacie Weisman and Scott F. Saidel sought to have Scott W. Rothstein testify falsely in connection with those proceedings.

  • FEDS: Florida Attorney Conspired With Ponzi Schemer Scott Rothstein To Run Electioneering, Check-Kiting And Tax Scams And Prop Up Cash-Gushing Law Firm

    Fort Lauderdale lawyer Steven N. Lippman conspired with now-disbarred attorney, convicted racketeer and Ponzi schemer Scott Rothstein to prop up the Rothstein, Rosenfeldt and Adler (RRA) law firm through electioneering, check-kiting and tax scams, federal prosecutors charged yesterday.

    A 70-attorney firm that employed about 150 staff members, RRA collapsed in the wake of Rothstein’s epic Ponzi caper, which operated from the disgraced firm and was exposed in 2009. The Miami region’s top federal prosecutor yesterday described the scheme as “mind-boggling.”

    “The breadth, scope, and sheer complexity of Rothstein’s $1.2 billion Ponzi scheme is mind-boggling,” said U.S. Attorney Wifredo A. Ferrer. “Its success depended, in no small part, on the complicity of his colleagues and associates, like Steven Lippman. Lippman, an attorney, is now the ninth person to face criminal charges in connection with this scheme. As this investigation continues, I am sure that more will follow.”

    Lippman, 49, of Plantation, now has been charged criminally with conspiracy to violate the Federal Election Campaign Act, to defraud a financial institution and to defraud the United States.

    The Alleged Electioneering Scam

    It was the desire of Rothstein and others to “dramatically increase the stature and political power of RRA on the federal, state, and local level by making substantial political contributions to political candidates,” prosecutors said.

    In line with that, Rothstein enlisted Lippman and others to donate to the 2008 U.S. Presidential campaign of Sen. John McCain “by agreeing that RRA unlawfully would provide them with the funds to make the political contributions,” prosecutors said.

    In one instance, prosecutors said, Lippman made a $67,800 contribution to McCain-Palin Victory 2008 — and received $77,500 back from RRA.

    Then- Alaska Gov. Sarah Palin was McCain’s Vice Presidential running mate on the Republican ticket in 2008. Neither she nor McCain has been accused of wrongdoing.

    But Rothstein, through RRA, was interested in elevating his profile and improving his influence with politicians and political campaigns, prosecutors said.

    The RRA check Lippman received “was fraudulently backdated to reflect that it was issued six days prior to the date of the actual contribution and the memo section of the check stated ‘bonus,” prosecutors said.

    Various donations to GOP causes were “bundled” through the RRA firm — and Rothstein emerged a delegate to the 2008 Republican National Convention. Rothstein, in the midst of operating a colossal Ponzi caper, also was appointed to Florida’s 4th District Judicial Nominating Committee, which has sway “as to which persons should be nominated to be state appellate judges,” prosecutors charged.

    The Alleged Check-Kiting Scam

    With the RRA facing financial pressures in 2006, prosecutors said, Rothstein enlisted Lippman into a check-kiting scheme that involved an account at Lippman’s former law firm. The account at the former firm remained opened because the firm was still winding down its business when Lippman joined RRA in 2005.

    Over time, prosecutors charged, Lippman issued checks from the former firm totaling more than $10.3 million. Those checks — “many” of which were written with insufficient funds in the account — were deposited into RRA accounts.

    Rothstein and Lippman played the “float” on the checks to prop up the RRA firm and to “unlawfully obtain beneficial financing for RRA” by making it appear as though RRA had higher bank balances.

    As was the case with the political donations, Lippman came out ahead by playing ball with Rothstein in the check-kiting scheme, according to the charging document. Although checks from the former Lippman firm routed through RRA totaled more then $10.3 million, Lippman deposited checks from RRA accounts totaling more than $10.6 million into the account of the former firm.

    The Alleged Tax Scam

    Lippman, prosecutors said, “defrauded the IRS by failing to report as income certain expense reimbursements and other reportable income he received from RRA.

    The tax scam, prosecutors said, featured an agreement between Rothstein and Lippman that “Lippman would be paid a base salary and be given an expense account for which he would be fraudulently reimbursed for personal expenditures disguised as deductible business expenses”

    Through the conspiracy, prosecutors charged, Lippman and RRA sought to “avoid paying additional federal income and employment taxes.”

    “In addition,” prosecutors charged, “Lippman was paid from both the operating account and the payroll account of RRA, but would only receive an IRS Form W-2 reflecting the moneys paid to him through the payroll account. Lippman would not report to the Internal Revenue Service the moneys paid to him by RRA for expenses.”

    “The charges against Steven Lippman show our resolve to unravel all the schemes in this complex financial fraud perpetrated by convicted Ponzi schemer Scott Rothstein and his co-conspirators,” said John V. Gillies, special agent in charge of the FBI’s Miami Office.

    The probe in ongoing, Gillies said.

    “It is disappointing that the number of people who chose wrong over right and participated with Rothstein in this massive fraud is at nine and rising,” he said.

    The investigative efforts of the IRS are being led by José A. Gonzalez, special agent in charge of the IRS-Criminal Investigation Unit in Miami.

  • BULLETIN: Feds Say Scott Rothstein IT Associates Created Fake Banking Website; Meanwhile, Attorney Authored Bogus Letter And Another Associate ‘Posed’ As Banker And Plaintiff In Nonexistent Cases

    BULLETIN: Four associates of jailed Ponzi schemer and disbarred attorney Scott Rothstein have been charged criminally by federal prosecutors in Florida with conspiracy to commit wire fraud. The new defendants include an attorney at Rothstein’s defunct Fort Lauderdale law firm, two IT employees of the firm and a Rothstein associate in the nightclub business.

    The charges came in the form of a criminal information, which suggests the defendants are cooperating in the probe and ultimately may plead guilty to avoid the risk of indictment on other charges.

    As has been the case with other Ponzi probes, the details emerging in the Rothstein case read like an impossible work of fiction — but prosecutors say the allegations are true.

    Among the mind-blowing claims:

    • Two IT employees — William Corte, 38, of Plantation, and Curtis Renie, 38, of Ft. Lauderdale — created a bogus web page by copying the legitimate page of TD Bank. “False account balances” were posted on the fraudulent page to make it appear as though Rothstein’s law firm, Rothstein Rosenfeldt and Adler (RRA), had between $300 million and $1.1 billion on deposit at the bank. “[N]o such funds were in the accounts. The false account balances were shown to investors to induce them to invest into the fraudulent investment scheme,” prosecutors said.
    • RRA attorney Howard Kusnick, 58, of Tamarac, wrote a bogus letter that claimed a case had been settled in favor of clients. In reality, prosecutors said, the clients’ funds had been used to prop up the scheme and make Ponzi payments to investors. “[N]o such litigation had been instituted and no such settlement existed,” prosecutors said.
    • Stephen Caputi, 53, of Lauderhill, sometimes posed as a “banker” in meetings with Rothstein clients, and also posed as a “plaintiff” in bogus cases if the need surfaced. Caputi, prosecutors said, posed as a TD Bank employee and handed out false information on account balances to dupes. In a separate meeting with separate dupes, he posed as the the beneficiary of a $10 million settlement agreement to raise “investors’ confidence” in a deal, prosecutors said. Caputi was Rothstein’s partner in a nightclub.

    “The house of cards supporting Scott Rothstein’s elaborate Ponzi scheme continues to crumble,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “As today’s charges confirm, we will follow all leads and continue to bring to justice those who helped Rothstein execute this billion dollar fraud and any other crimes that may have been committed through RAA. The investigation continues.”

     

  • KABOOM! More Bad News For Fraudsters: ‘FBI Undercover Operation’ Leads To Florida Fraud Busts; 20 Charged In Alleged Schemes, Including ‘CHiPs’ Actor

    An undercover sting conducted by the FBI has resulted in fraud charges being filed against 20 individuals or companies. The sting was centered in southern Florida. Among those charged was Larry Wilcox, one of the stars of the long-running television program “CHiPs” in which Wilcox played the role of a California police officer, the SEC said.

    Records suggest Wilcox agreed to become a government informant after becoming implicated in the probe.

    Wilcox, 63, of West Hills, Calif., was among a group charged both civilly and criminally. The case was brought after the FBI conducted an undercover probe into penny-stock schemes.

    “Securities fraud is an equal opportunity crime — it runs the gamut from very large to very small publicly traded companies,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    Ferrer noted that “even microcap companies are plagued by fraudsters who seek to manipulate the stock market to line their own pockets.”

    Separately, the SEC said the sting was conducted “in such a way that no investors suffered harm” — an announcement that could send shockwaves across the fraud universe because it demonstrates that investigators are infiltrating schemes and relying on informants to unmask the schemers.

    Wilcox, for example, believed he was doing business with a “corrupt trustee,” according to court filings. Records suggest that Wilcox entered a deal with the government in July in which he would cooperate in an ongoing probe.

    “These corrupt promoters meticulously planned their schemes down to the last detail, except for the possibility that they were walking into an undercover operation,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “This joint law enforcement effort is a stark warning to those who embark on securities fraud schemes that we may be listening and we may be watching.”

    Whether the SEC and FBI were performing similar stings in the corrupt worlds of HYIPs, autosurfs and 2×2 matrix cyclers as promoted on Ponzi forums was not immediately clear. The Justice Department, however, has made it clear in court filings that it is infiltrating criminal forums and is using undercover operatives.

    The U.S. Secret Service also has made it clear that it is using undercover operatives in its investigations of corrupt enterprises such as HYIPs, autosurfs and 2×2 matrix cyclers.

    Read the SEC’s statement:

    Read the statement of U.S. Attorney Ferrer and remarks from the FBI:

    Read a story about a Secret Service probe in which undercover operatives were used to infiltrate criminal forums: