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Tag: U.S. District Judge Rosemary Collyer

  • URGENT >> BULLETIN >> MOVING: Federal Judge Refuses To Toss Indictment Against AdSurfDaily President Andy Bowdoin; Ruling May Deal Crushing Blow To ‘Autosurf’ Trade; ‘These Alleged Facts Smack Of An Investment,’ Court Says

    Andy Bowdoin

    BULLETIN: U.S. District Judge Rosemary Collyer has rejected AdSurfDaily President Andy Bowdoin’s sweeping claim that the indictment against him should be dismissed because ASD met none of the three prongs of the “Howey Test” under federal securities laws and a Supreme Court precedent that determines what constitutes an “investment contract.”

    Collyer’s refusal to dismiss the indictment may deal a crushing blow to autosurf operators monitoring the ASD case from the murkiest corners of the Internet and hoping that the Howey Test somehow could provide a legal cover to line up suckers and steal millions of dollars from them.

    In a pointed, 15-page memo, Collyer walked through all of Bowdoin’s Howey challenges, concluding that a jury reasonably could find that ASD met all three prongs. Specifically, the judge ruled that a jury could find that ASD members were “investing,” that there was a “pooling of investment funds, shared profits, and shared losses” and that “ASD members were paid based on the efforts of others.”

    Citing evidence that some ASD members apparently refuse to believe exists despite the fact it is part of the public record of the case, Collyer ruled that part of ASD’s current defense was at odds with statements that appeared on ASD’s own website and in offering materials.

    “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,” Collyer ruled.

    Dozens of ASD members claimed in pro se court filings in 2009 — when the case was in civil court — that “NO EVIDENCE” existed against ASD.

    Collyer’s ruling also addressed the subject of payments to members, which ASD called “rebates.”

    “Contrary to Mr. Bowdoin’s characterization of the ASD business, ASD’s promise to pay back 125% of the value paid to ASD by an advertiser strongly indicates that the joining of ASD via the purchase of an ‘advertisement’ on the rotator in fact constituted an ‘investment for a financial return,” Collyer ruled.

    And, Collyer noted, “these alleged facts smack of an investment.

    “Indeed,” she continued, “the government proffers that Mr. Bowdoin awarded ad packages to employees in the way that an employer awards bonuses. It argues that Mr. Bowdoin and the employees of AS[D] treated the ‘ad packages’ as shares from which they could expect to earn returns.”

    Collyer cited passages allegedly spoken by Bowdoin himself in offering materials. Meanwhile, she rejected Bowdoin’s claim that the government’s assertion that he was selling “investment contracts” was unconstitutionally vague.

    “Mr. Bowdoin’s attack on the facial vagueness of the term ‘investment contract’ as a type of security covered by the Securities Act is without merit,” she ruled. She noted that, despite the fact Bowdoin had argued that ASD met none of the Howey prongs, “Bowdoin did not provide evidence through affidavits or otherwise as to how ASD actually operated — or any other basis — from which the Court could draw legal conclusions on whether ASD operations met the Howey test.”

    The prosecution, on the other hand, had supplied actual evidence, had entered it in the record of the case and provided a basis for the court to make preliminary determinations about what a jury potentially could find after considering the evidence, according to the ruling.

    Bowdoin’s own words from promos appeared in the ruling. Although he argued to Collyer earlier this year that money sent in by members did not constitute an investment, “[d]irect statements from ASD seemingly contradict this defense,” the judge ruled.

    Citing evidence entered by the government, Collyer pointed to a passage on ASD’s own website that said, “[a]dvertisers will be paid rebates until they receive 125% of their ad packages.”

    And Collyer noted there is both written and recorded evidence, including at least one email attributed to Bowdoin is which he allgedly wrote, “[l]et’s don’t [sic] use the words investment and returns. Instead, lets [sic] use ad sales and surfing commissions. The Attorney Generals in the U.S. don’t like for us to use these words in our program.”

    Prosecutors have argued for nearly three years that ASD engaged in wordplay to skirt securities laws and that Bowdoin was well aware that he was selling securities.

    Bowdoin’s “motion to dismiss the Indictment ignores the teaching of the Supreme Court — that courts should examine the substance, not form, of a transaction and evaluate its economic reality,” Collyer ruled.

    Read the ruling.

     

  • BULLETIN: Federal Judge Declines To Transfer AdSurfDaily Ponzi Case To Florida, Says Andy Bowdoin Will Be Tried On Criminal Charges In District Of Columbia

    Andy Bowdoin

    BULLETIN: Describing the AdSurfDaily Ponzi case as one with a “tortured history” now dating back years, U.S. District Judge Rosemary Collyer of the District of Columbia has refused to transfer the criminal case against ASD President Andy Bowdoin to Florida.

    Bowdoin, who lives in Florida, had argued for the transfer more than a month ago, citing his health problems, his wife’s health problems and inconvenience to witnesses as reasons to move the case.

    In a 16-page opinion, Collyer said no.

    “Mr. Bowdoin’s bald assertions of witness expense and inconvenience fail to counter the presumption that a criminal prosecution should be retained in the district where the indictment was returned, in this case, Washington, D.C.,” Collyer found Wednesday.

    And although Collyer expressed sympathy for various medical issues with which Bowdoin’s wife is contending, the case will remain in Washington, the judge ruled.

    Read Collyer’s 16-page opinion.

  • URGENT >> BULLETIN >> MOVING: Secret Service Has Seized More ASD Cash; Forfeiture Complaint Filed Today Against Bank Accounts Controlled By Erma ‘Web Room Lady’ Seabaugh And Robyn Lynn Stevenson

    Andy Bowdoin

    BULLETIN: UPDATED 6:27 A.M. ET (U.S.A., DEC. 18) The U.S. Secret Service and federal prosecutors have seized nearly $250,000  from two alleged ASD promoters and filed a new forfeiture complaint dated today.

    More than $153,000 has been seized from a bank account controlled by ASD promoter Erma Seabaugh, known as the “Web Room Lady.” Seabaugh was a purported ASD “trainer,” prosecutors said.

    She was accused in the complaint of accepting checks made out to ASD, depositing them into her bank account and transferring “ad packs” to her downline by using ASD’s internal system.

    Meanwhile, more than $96,000 has been seized from bank accounts controlled by ASD member Robyn Lynn Stevenson, who operated a company known as Robyn Lynn LLC and worked briefly for ASD itself, prosecutors said.

    At the same time, investigators seized nearly $500,000 from a bank account once controlled by ASD President Andy Bowdoin and nearly $50,000 from an account controlled by Golden Panda Ad Builder President Clarence Busby.

    Busby, prosecutors said, already has ceded the money to the government. The money was ceded in September 2008, about two months after an undercover agent had been invited by an ASD member to listen to Busby talk in July 2008, as Golden Panda was ramping up for its formal launch.

    The additional sum of nearly $500,000 ($496,505) seized from Bowdoin was a balance left in an account that once contained more than $31.6 million, prosecutors said. The lion’s share of the money in the account already has been declared forfeited, but agents worked out an agreement with Bank of America to permit about $500,000 to remain in the account on the date of the Aug. 1, 2008, seizure of Bowdoin’s assets.

    The buffer was necessary to permit checks already drawn on the account prior to the effective date of the seizure warrant to clear, prosecutors said.

    All in all, the forfeiture complaint filed today targeted $794,718 in illegal ASD proceeds, prosecutors said.

    The seizure of cash tied to Seabaugh and Stevenson traced its roots to the opening days of 2009, months after the seizure of the lion’s share of money from Bowdoin’s bank accounts, according to the complaint.

    On Feb. 26, 2009, U.S. District Judge Rosemary Collyer authorized the seizure of “up to” $213,693 in the name of “Carpe Diem or Erma Seabaugh,” prosecutors said. The seizure occurred one day after Bowdoin had signed a document in which he sought to reverse an earlier decision he made to submit to the forfeiture of tens of millions of dollars in his bank accounts, records show.

    When the Secret Service executed the warrant to seize the money from Seabaugh, only $153,097 was found in the account, according to the complaint.

    Between July 15 and July 30, 2008 — effectively the two week period leading up to the ASD seizure — Seabaugh received nine ASD checks totaling $203,993, prosecutors said.

    On July 25, 2008, just days before the seizure of Bowdoin’s bank accounts, Seabaugh deposited into her bank account seven checks made out to ASD totaling $9,700 prosecutors said.

    The checks came from “third parties,” and Seabaugh transferred a corresponding number of “ad packs” to the buyers by using ASD’s internal system, prosecutors said.

    “Based on these facts, it appears Ms. Seabaugh was selling her own investment ‘ad packs’ to clients and representing herself as ASD,” prosecutors said.

    Seabaugh had at least three ASD accounts and appeared to be using ASD’s “advertising” rotator  to sell other pyramid schemes, prosecutors said. All three of the accounts used a form of the “Carpe Diem” name, according to the complaint.

    One of Seabaugh’s ASD accounts was opened with a transfer of “ad packs” from La Fuente Dinero, yet-another autosurf scheme tied to ASD, prosecutors said.

    Noting that Seabaugh deposited no “new money” into the account, prosecutors said she withdrew $83,994 from the account via checks from ASD.

    Seabaugh recruited 48 ASD members, according to the complaint. She withdrew an additional $107,997 from another ASD account.

    Stevenson, meanwhile, made only one deposit with ASD — for $500 — and yet received $96,525, prosecutors said. The withdrawals came in the form of 17 checks issued by ASD between July 10 and July 25, 2008, just days before the seizure of ASD’s assets, according to records.

    The checks were deposited into two bank accounts that Stevenson opened July 31, 2008, one day before the seizure of Bowdoin’s bank accounts, according to records.

    Separately, Bowdoin pleaded not guilty today to criminal charges filed against him in U.S. District Court for the District of Columbia. Prosecutors said he was at the helm of a massive Ponzi scheme that gathered at least $110 million.

  • SPECIAL REPORT: Woman Blocked By Federal Judge From Filing Claim In ASD Case Notarized $9.2 Billion ‘Lien’ Against Hospital In Washington State; Kenneth Wayne Leaming Sought To Attach ‘All Tangible’ Property Of Franciscan Healthcare Facility

    Kenneth Wayne Leaming, also known as Kenneth Wayne.
    Kenneth Wayne Leaming, also known as Kenneth Wayne.

    UPDATED 8:03 A.M. ET (U.S.A., Nov. 23) A Washington state notary public stripped of her license last month notarized a purported “admiralty” lien for the colossal sum of $9.24 billion against Franciscan Heath Systems, the faith-based operator of St. Clare Hospital of Lakewood, Wash., according to records.

    The Franciscan tradition in Washington state traces its roots to 1891, when the Sisters of St. Francis of Philadelphia founded St. Joseph Hospital in Tacoma. St. Clare is a 106-bed facility that serves Lakewood, Spanaway, Steilacoom, DuPont, University Place and other communities in Pierce County, according to records.

    The purported lien, acknowledged with the seal of notary Tina M. Hall, was in favor of her business colleague, Kenneth Wayne Leaming, according to records in Pierce County.

    Both Hall and Leaming are listed as officers of American International Business Law Inc., a Spanaway company some members of Florida-based AdSurfDaily say is performing legal work on their behalf.

    U.S. District Judge Rosemary Collyer of the District of Columbia has blocked bids by both Hall and Leaming to file pleadings in the ASD case. Hall lost her notary license last month after notarizing a string of bizarre documents in Washington state. The nature of the documents she sought to file in the ASD case, which is being prosecuted in the District of Columbia, has not been disclosed publicly.

    Some ASD members have said they intended to pursue an admiralty claim against the government.

    Leaming, using the notary services of Hall, sought in June 2009 to attach “all tangible and intangible property” of the hospital, including its fixtures, furnishings, motor vehicles, bank accounts, passbooks, saving certificates, stock certificates, lines of credit, inventories, promissory notes, office equipment, educational equipment — and even its mineral and water rights, according to records.

    Hall’s license was revoked about 14 months later. The precise reason for the revocation — and whether the documents filed against the hospital played any role in the revocation decision — was not immediately clear.

    Other records show that Hall has filed similar documents on Leaming’s behalf in other cases. One of them was for $10 million against members of the City Council of Puyallap, Wash.

    Hall also notarized documents for other clients, including a filing styled an “Affidavit of Alternative Obligation” for $100 million against a bank dubbed an “agent” for the Internal Revenue Service.

    Such scorched-earth filings have been referred to in other cases as “paper terrorism,” a litigation approach that is designed to rattle the nerves of judges, prosecutors, attorneys and courtroom opponents. ASD member Curtis Richmond has been associated with such filings in a separate case in Utah. In the Utah case,  Richmond was among a group of litigants sued successfully for racketeering after a purported “Indian” tribe with which they were involved placed a bogus lien against a county prosecutor for $250 million.

    Leaming, who was accused in 2005 of the unauthorized practice of law in Washington state, was dubbed “Postmaster” in the bizarre filing against Franciscan Heath Systems, the hospital, Pierce County Court Commissioner Mark Gelman and others.

    Members of law enforcement were expressly warned in the notarized document not to attempt to “negate” Leaming’s wishes to attach the property of the hospital and others. Parties who attempted to interfere “shall be deemed outlaws and/or felons and shall be prosecuted,” according to the filing.

    If filing liens against a hospital that has the responsibility for tending to the needs of entire communities were not enough, Leaming also filed liens or claims against the Washington State Bar Association, members of the Practice of Law Board and others.

    These liens were styled “commercial liens” or “admiralty” claims or “international claims.” On Oct. 16, 2009, a judge ruled them null and void and ordered Leaming to pay the attorneys’ fees and court costs of his targets. The judge also imposed a $10,000 sanction against Leaming to be paid to the Washington State Bar Association’s Lawyer’s Fund for Client Protection.

    See earlier story about the revocation of Hall’s notary license for “professional misconduct.”

    See earlier story about ads listing Leaming as an attorney being pulled from prominent websites.

    See earlier story about threatening email received by some ASD members.

  • Affiliate Links Show That Surf’s Up Mod And ASD Members Hold High Positions In Upstart Surf: Things To Consider If You Are Tempted To Join AdPayDaily

    Alfred E. Neuman: From Wikipedia.

    Dear Readers,

    We have received a few inquiries about a new surfing program called AdPayDaily (APD). Our initial take is that the program is a dressed-up version of AdSurfDaily, AdViewGlobal, BizAdSplash and AdGateWorld and that the operators are persuaded they’ve found a word combination and legal structure that will neutralize critics and law enforcement should concerns about the sale of unregistered securities and a Ponzi and pyramid scheme be raised.

    AVG, BAS and AGW were positioned by former ASD members as offshore “clones” of ASD. APD, like ASD, appears to be operating in the domestic United States.

    In our view, APD’s presentation raises numerous red flags. At a minimum, it is starting out as an MLM absurdity, if not a potential monstrosity. To get a flavor of the absurdity, imagine that Walmart was clueless enough to start an autosurf and provide a corporate-approved greeter who says, “Welcome to Walmart Pay Daily. We count all the money out of sight in the back room at midnight to determine how much you get, and keep 50 percent of the cash for ourselves. Don’t worry. We have excellent lawyers, and we’ve instructed the money-counter not to rip you off.”

    That’s effectively what APD is saying.

    Another red flag is the fax number listed on a document APD refers to on its website as “Ad Pay Daily’s Conference Registration Form For July 30th and 31st 2010.” The fax number is listed online as a number used by a Kansas real-estate flipping company billed as National Flips. Like APD, the National Flips domain registration is hidden behind a proxy, although the website says this: “To learn how to become a Hard Money Lender and earn 30+% per annum, call [a telephone number] . . .”

    Meanwhile, the invitation for the APD conference that uses the National Flips fax number says this — not once, but twice: “Any person who does not provide photographic proof of identity will not be permitted to attend this event, so don’t forget your photo ID.”

    Why a photo ID would be required to attend a sales pitch for an advertising company is left to the imagination. Undercover Secret Service agents have been known to attend such functions, however.

    Virtually every autosurf that has come along has used strange approaches or applied language tweaks designed to skirt securities laws, disarm critics and sanitize the “opportunities” for prospects. Serial autosurf promoters are infamous for telling prospects that a particular surf has found the magic pill that makes everything legal. Historically they rely on the surf operators to provide a legal cover. When things go south, they claim no one can blame them for promoting the schemes. After all, they relied on the assertions of the operators that everything was above-board and legal. They have been disingenuous in the same way that Alfred E. Neuman, Mad magazine’s fictional mascot, was disingenuous.

    “What, me worry?”

    Worry, however, appears to be front-and-center at APD, which is preemptively denying in multiple places that it is a Ponzi scheme. This strikes us as a big red flag. There are others.

    ASD, Surf’s Up Members Become APD Players

    During its early research into APD, the PP Blog has determined that a number of members of the alleged AdSurfDaily autosurf Ponzi scheme have high positions in the APD venture. Some of the former ASD members hold more than one position in the top 80 positions in APD, including a former Surf’s Up Mod who appears to hold positions 76 and 77. It is possible that another Surf’s Up Mod also is high up in the pecking order of APD affiliates at No. 56.

    The Blog determined the names of APD promoters by researching the method by which APD creates affiliate links. At least one ASD member who made himself part of the ASD Ponzi litigation by submitting pro se pleadings holds positions 9 and 10 in APD, according to the affiliate links.

    Surf promoters are not fond of pointing out the pain of previous prosecutions of autosurfs and the time-consuming and expensive litigation involving both the government and court-appointed receivers that may occur when a surf collapses. It is not uncommon for millions of dollars to go missing in a surf.

    ASD’s Andy Bowdoin has told members that he has spent more than $1 million in his legal defense. Nothing (other than GIGO passed along by promoters) suggests Bowdoin was a man of means prior to the Secret Service raid on ASD’s headquarters in August 2008. His money for his defense appears to have come from ASD members. On a side note, Bowdoin tried to persuade members in September 2009 that the million dollars he dropped to keep himself out of prison was for their benefit. At the same time, he claimed his fight with the government was inspired by a former Miss America.

    ASD gathered at least $65.8 million. When the sum seized in the Golden Panda Ad Builder action, which is part of the ASD litigation, is factored in, the number surges to more than $80 million. That’s a big number, of course — one that shows why others want to start surfs and just tweak and tweak and tweak in search of the elusive magic pill.

    APD’s website was registered on Nov. 18, 2008. That’s just one day before U.S. District Judge Rosemary Collyer ruled that ASD had not demonstrated it was a lawful business and not a Ponzi scheme. APD’s domain-registration date also coincides with a string of registration dates by the so-called ASD clones:

    • Aug. 18, 2008: Domain name for AdGateWorld registered. (About two weeks after the ASD raid by the U.S. Secret Service, which is working in concert with the IRS and federal prosecutors.)
    • Sept. 22, 2008: Domain name for AdViewGlobal registered. (AVG had very close ties to ASD.)
    • Nov. 7, 2008: Domain name for BizAdSplash registered. (ASD and Golden Panda figure Clarence Busby purportedly was both the “chief consultant” and owner of BAS.)

    APD’s domain was registered just 11 days after the BAS domain was registered and only a couple of weeks before ASD declared that the now-defunct Surf’s Up forum was its official organ for ASD news. Surf’s Up became infamous for shilling for Bowdoin, fracturing the facts of the ASD wire-fraud and money-laundering case and misinforming members.

    Each of the surfs in the bullet points above failed spectacularly. Each of them blamed members for their problems. Each of them had promoters and members in common with ASD. Each of them also offered various “bonuses” to join — something APD is doing at the moment.