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Tag: U.S. District Judge Nathaniel M. Gorton

SEC, Lawyer Clash Over Representation Of TelexFree Figure Sann Rodrigues; Lamborghini Once Owned By Accused DFRF Enterprises’ Ponzi Schemer Daniel Fernandes Rojo Filho Was Used To Pay Sann’s Legal Fees

Small world between accused scammers: In court filings, the SEC says it has traced the ownership of a 2008 Lamborghini owned by TelexFree figure Sann Rodrigues and determined the car once was owned by accused DFRF Enterprises’ Ponzi schemer Daniel Fernandes Rojo Filho. This, according to an SEC exhibit, was the check Filho used to purchase the vehicle and, apparently, a 2006 Ferrari. Source: Federal court files. Masking by PP Blog.

3RD UPDATE 9:36 AM EDT MARCH 17 U.S.A. This one features highly questionable dealings between an alleged MLM securities fraudster (TelexFree’s Sann Rodrigues) and an alleged Ponzi schemer (Daniel Fernandes Rojo Filho of DFRF Enterprises). Filho also has been linked to the alleged 2010 Finanzas Forex/Evolution Market Group Ponzi scheme, a Ponzi-board “program” that allegedly had ties to the narcotics trade.

Suffice to say, this developing story has a lot of moving parts. Here’s our distillation:

On March 14, the SEC alleged that Rodrigues — whose assets are frozen — had transferred two expensive cars to Florida attorney Robert Eckard. Eckard is representing Rodrigues in the SEC’s civil case against him and other TelexFree figures and also in the Justice Department’s criminal case against him for immigration fraud.

The transfers potentially created a conflict of interest for Eckard, given that Rodrigues currently is jailed for civil contempt for violating the asset freeze and has not purged that contempt, according to the SEC. Getting out of hock with the court will cost the huckster at least $334,000, perhaps more. Rodrigues claims he cannot pay and that the court should free him and put him on a payment plan.

U.S. District Judge Nathaniel M. Gorton of Massachusetts is hearing the case.

Why didn’t Rodrigues apply the two cars to purge the contempt?

Well, according to the SEC, the cars — a 2008 Lamborghini Gallardo and a 2012 Fisker Karma — were transferred to Eckard after the agency moved for contempt against Rodrigues in August 2015.

The SEC further suggested in its filings that Eckard paid far below book value for the cars. In the case of the used Lamborghini, the SEC said, the lawyer paid only $30,000 for a car that months earlier had sold for five times that sum.

Eckard paid only $20,000 for the Fisker Karma, which months earlier had sold for three times that sum, the SEC said. Fisker Karma is an electric luxury vehicle whose operator declared bankruptcy..

Reached by the PP Blog today, Eckard pointed to court filings in which he says Rodrigues — strapped for cash because of the freeze — paid him with cars, rather than cash. And, the lawyer contended, no conflict existed and the SEC had cleared the cars from the asset freeze.

Because Rodrigues paid with cars, not cash, it created an unusual situation with vehicle taxes, Eckard said. He added that he consulted with authorities in Pasco County and with the Florida Department of Revenue when transferring the cars to his name.

“I did not pay anything for the vehicle, but was required to put an amount down for tax purposes, since it was not a gift,” Eckard advised Gorton about the Lamborghini.

The Fisker Karma was accepted from Rodrigues as payment for legal fees and proved to be a lemon with bad electrical parts and bad tires, Eckard contended.

Eckard is moving to strike the SEC’s assertions from the court docket.

Both Rodrigues and Filho are Brazilian by birth and Florida residents. How they came together remains unclear.

The SEC linked Rodrigues to Filho last year.

NOTE: Our thanks to the ASD Updates Blog.

UPDATE 3:53 P.M. EDT U.S.A. MARCH 22: Looks as though Rodrigues will be released from jail, after coming up with a plan to purge the contempt. This matter is separate from the SEC’s securities-fraud case against him filed in April 2014.

Mar 16, 2016
URGENT >> BULLETIN >> MOVING: TelexFree Figure Sann Rodrigues Found In Contempt Of Court

Sann Rodrigues. From INTERPOL.

(4th Update 7:23 p.m. ET U.S.A.) TelexFree, IFreeX and DFRF Enterprises’ figure Sann Rodrigues has been found in contempt of court in the SEC’s Ponzi- and pyramid case against TelexFree and a federal judge in Massachusetts has threatened to jail him.

The SEC alleged Rodrigues, a recidivist securities offender, violated an asset freeze imposed in 2014. U.S. District Judge Nathaniel M. Gorton today agreed.

Gorton rejected defense arguments that Rodrigues, a Brazilian now accused of visa fraud in the United States, wasn’t skilled at English and didn’t understand the freeze order.

“His arguments are unconvincing,” Gorton ruled. “Rodrigues was subject to a very similar temporary restraining order and preliminary injunction in a 2006 civil enforcement action also brought by the SEC. Thus, however complex were the requirements of the orders in this case, they were not unfamiliar.”

The judge also rejected a contention by Rodrigues that he could not provide an accounting as ordered because providing the requested financial information would violate his Fifth Amendment right against self-incrimination. Gorton ruled that Rodrigues already had waived his right in dealings with the SEC

From the Dec. 18 order by Gorton (italics added):

Rodrigues argues that providing a full accounting of his assets and transactions would require him to disclose information that could incriminate him in several potential or actual criminal proceedings. Rodrigues is currently the subject of a criminal prosecution in a separate federal visa fraud case, U.S. V. Rodrigues (15-10227). He reports that he is also being investigated by the Massachusetts Attorney General with respect to another of his business ventures. In addition, he contends that he may still be under investigation for potential criminal charges related to the specific conduct that underlies this civil enforcement action.

Whether defendant has made a sufficient showing to invoke the Fifth Amendment is, however, irrelevant. Rodrigues waived his right against self-incrimination by consenting to the Order. . . . In that proceeding, Rodrigues explicitly agreed to provide the very information he is now claiming to be privileged . . . Defendant was represented by counsel, who negotiated the language of the order with the SEC. In exchange for agreeing to provide the required accountings, Rodrigues received a carve-out of his frozen assets to pay for his bail in the separate criminal visa fraud case.

By Jan. 15, Rodrigues must restore more than $334,000 removed in violation of the asset freeze, Gorton ruled. He also is required to “obtain the reconveyance” of real estate transferred in violation of the freeze or “remit funds equal to the market value thereof or provide the Court with a detailed plan as to how he will otherwise cure his contempt in relation to the transfer of those properties.”

Rodrigues violated the freeze by “removing cash from accounts or selling cars,” the judge found.

The penalty for not meeting the conditions of the order is bail revocation, Gorton ruled.

Rodrigues has become at least the second figure associated with a Ponzi-board “program” to be found in contempt this month.

Darryle Douglas, an alleged Zeek Rewards’ insider, was ordered arrested on Dec. 10. That order was issued by Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina. Whether Douglas has been taken into custody is unclear.

NOTE: Our thanks to the ASD Updates Blog.

Dec 21, 2015
TelexFree Members Blame MLM Debacle On ‘Media Disinformation’; Judge Presiding Over SEC Case Receives Doodles

Some TelexFree members sent doodles to the federal judge presiding over the SEC’s fraud case. Redaction by PP Blog.

(UPDATED 9:24 am EDT MAY 14 U.S.A.) The PP Blog previously has reported on campaigns by members to petition judges to “bail out” TelexFree and consider the purported upside of the “program,” which may be the largest combined Ponzi- and pyramid scheme in MLM HYIP history. (Campaigns referenced in this May 10, 2014, PP Blog editorial.)

The docket of U.S. District Judge Nathaniel M. Gorton of the District of Massachusetts now shows that members have written letters to the court in support of TelexFree. Gorton is presiding over the SEC’s civil case against TelexFree. The complaint was brought on an emergency basis on April 15. Assets of TelexFree and alleged managers and certain promoters have been frozen.

At least one TelexFree supporter contended in a letter to Gorton that he can “assure” the judge that “media disinformation” is responsible for the problems at TelexFree and that the company “revolutionized” MLM in a manner that “put out of extreme poverty thousands and thousands of people around the world, if not millions.”

TelexFree, according to the sender, was like a drop of “heaven for poor families.”

Some of the letters appear to be in Spanish, sent to the judge via fax. Some are handwritten. Some are typewritten. A few of them include doodles.

There are letters from the United States. There are letters from the Dominican Republic. Some of the letters appear to have used a shared template, which likely means TelexFree upline/downline groups organized the campaign.

In the 2008 AdSurfDaily case, shared litigation templates were used by certain members who appeared to be more interested in advancing conspiracy theories than understanding the facts of the case. Some of the letters/emails of “support” submitted by ASD in 2008 were used by the government to undermine ASD’s assertion it was not selling securities and was not a Ponzi scheme.

At least one TelexFree member asserted in a letter to Gorton that the “program” gave him an opportunity to earn money from TelexFree by posting ads on the Internet.

On Friday, it became known that the U.S. Department of Homeland Security was involved in an undercover probe of TelexFree that began at least by October 2013.

In a criminal complaint and affidavit filed in support of wire-fraud conspiracy charges against TelexFree figures James Merrill and Carlos Wanzeler, a DHS agent involved in the probe alleged an intelligence research specialist within DHS placed more than 700 ads for TelexFree online.

“The ads have resulted in no retail sales of TelexFree’s VOIP product,” the agent alleged.

And, the agent asserted, “the sites on which these ads were posted contained page after page after page of hundreds of nearly identical ads placed by various TelexFree promoters for the identical VOIP service.”

Zeek Rewards, an $850 million Ponzi- and pyramid scheme shut down by the SEC in 2012, also had an “advertising” component. So did ASD, a $119 million Ponzi scheme shut down by the U.S. Secret Service in 2008.

MLM HYIP schemes have defrauded billions of dollars from participants in recent years. The combined hauls of TelexFree, Zeek and ASD alone may exceed $2.169 billion. That’s nearly double the size of the epic Scott Rothstein Ponzi and racketeering scheme in Florida in 2009.

MLM HYIP swindles typically are aimed at vulnerable populations, with MLMers who have big email lists and experience in one fraud scheme after another scoring tremendous windfalls.

Our thanks to the ASD Updates Blog.

May 12, 2014
Federal Judge To Accused TelexFree Promoter: Sell Your Bimmers And Land Rover

Santiago De La Rosa at a TelexFree pitchfest. Source: YouTube.

(UPDATED 8:05 A.M. EDT U.S.A.) Alleged TelexFree promoter and securities fraudster Santiago De La Rosa has been ordered by the federal judge presiding over the U.S. Securities and Exchange Commission’s Ponzi- and pyramid case to sell two BMWs and a Land Rover Range Rover “back to the dealership” and to “repatriate all funds located outside the United States.”

De La Rosa resides in Massachusetts.

U.S. District Judge Nathaniel M. Gorton of the District of Massachusetts issued the order. The automobiles were described as a 2014 BMW X5 XDrive, a 2010 BMW X5 XDrive and a 2013 Land Rover Range Rover Sport HSE. Precise details of the models were not available. A quick pricing search suggests De La Rosa was captaining roughly $150,000 worth of high-end rides.

It was not immediately clear if De La Rosa, 42, was motivated by former TelexFree President James Merrill to acquire upscale cruisers. Merrill, 52, has publicly complained about corporate excess that squeezes the little guy, but has been photographed alongside a giant Hummer used in TelexFree promos.

There may be hundreds of thousands of victims of TelexFree’s excess, according to court filings.

TelexFree also had access to a “private jet,” a pitchman said in Boston two months ago.

News of Gorton’s order first appeared on BehindMLM.com, which also reported on the conditions imposed in an injunction against accused TelexFree promoter Randy N. Crosby of Georgia.

On April 15, the PP Blog reported that the office of Massachusetts Commonwealth Secretary William Galvin had uncovered a check with a memo line that read, “Cars for Extravaganza . . .” Galvin oversees the Massachusetts Securities Division (MSD).

MSD alleged the check was associated with more than $100,000 in TelexFree-related purchases at a Mercedes-Benz dealership in Orlando, Fla. TelexFree held an event in Orlando in May 2013. The firm filed for bankruptcy protection in Nevada on April 13, 2014.

Gorton was appointed to the federal bench by President George H.W. Bush in 1992.

Accused TelexFree promoter Sann Rodrigues captains a Ferrari.

May 1, 2014