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Tag: U.S. Postal Inspection Service

STATS: High Interest Globally In Criminal Probe Involving Payza And Obopay

On Oct. 19, the PP Blog received traffic from 76 countries. This graphic reflects the Top 10 on that date and suggests high global interest in a criminal probe involving Payza and Obopay.

On the past four Mondays — Oct. 26, Nov. 2, Nov. 9 and Nov. 16 — the PP Blog averaged viewership from 32 countries, according to a compilation of data from Jetpack summarized by the Blog. These numbers are typical. On any given day, viewers from between 25 and 40 countries arrive here.

But on Oct. 19 — also a Monday and the day the Blog reported that a criminal investigation involving the Payza and Obopay payment processors was under way — the Blog’s viewership shot up to 76 countries. That’s nearly 40 percent of the nations in the world. Viewers from other countries followed Payza- and Obopay-related content in subsequent days, suggesting that people in an even higher percentage of the world’s nations are concerned about the probe.

As the Blog reported on Oct. 21, the targets of the investigation are unclear and much info has been redacted from public filings.

The Blog is reporting today that Payza’s name again has appeared in a filing by the court-appointed receiver in the 2012 Zeek Rewards’ Ponzi- and pyramid scheme case. The filing was dated yesterday and includes these lines (italics added):

The Receiver Team continues to investigate and pursue outstanding funds from Payza, Payment World, Solid Trust Pay, and Cyberprofit and is working with various government agencies and McGuireWoods Consulting in pursuit of these assets.

Millions of dollars tied to U.S.-based Zeek may be in Moldova, according to receiver Kenneth D. Bell. Moldova is a neighbor to Ukraine, a world hot spot described by the Financial Times as “war torn.”

Payza, its predecessor AlertPay and SolidTrustPay are Ponzi-forum darlings operating in an era of almost unimaginable cross-border fraud that frequently has an MLM or direct-sales component. The numbers are truly staggering — so high that agencies such as the U.S. Department of Homeland Security and the FBI have become involved in investigations.

Money moves across borders in a flash these days, including the borders of nations under terrorist threat. Perhaps especially in the HYIP sphere, the aims of the “program” operators and the identities of the recipients of the cash may be particularly murky.

Information filed by the U.S. Postal Inspection Service in the 2010 “Pathway To Prosperity” case alleges the P2P scheme spread to at least 120 countries, “all of the permanently inhabited continents of the world” and cost investors losses in 48 of the 50 U.S. states.

Though uncharged, AlertPay and SolidTrustPay both are referenced in the P2P case, as well as the AdSurfDaily case from 2008. Ponzi forums such as TalkGold and MoneyMakerGroup also are referenced in U.S. filings.

The office of U.S. Attorney Channing D. Phillips of the District of Columbia says it expects to release more information on the Obopay/Payza matter “shortly after” Jan. 22, 2016.

NOTE: Our thanks to the ASD Updates Blog.

Nov 17, 2015
Another ‘Ken Russo’ Disaster: Team Of Feds Hammers Alleged Operator Of ‘Program’ Pushed By Ponzi-Forum Legend

UPDATED 7:51 EDT U.S.A. Let’s start by giving you the roster of federal agencies involved in the investigations and prosecutions of William M. Apostelos, 54, and Connie M. Apostelos, 50, his wife:

(1.) The Office of U.S. Attorney Carter M. Stewart of the Southern District of Ohio. (2.) Internal Revenue Service Criminal Investigation. (3.) The FBI. (4.) The U.S. Postal Inspection Service. (5.) U.S. Department of Labor Office of Inspector General. (6.) U.S. Department of Labor Employee Benefits Security Administration.

In addition to the six federal agencies, the Ohio Department of Commerce Division of Securities joined in the probe that uncovered an alleged $70 million Ponzi scheme.

So, how does Ponzi-forum legend “Ken Russo” fit into all of this? Here we’ll turn to a Nov. 1, 2014, story at BehindMLM.com. The story quotes “Ken Russo” on yet-another scam he is pushing. (Italics added.)

I am very firm in my belief that this is the real deal and I get no sense whatsoever that any kind of scam is intended here. It is very seldom that we can find an opportunity as transparent and viable as the Genesis Acquisitions International, LLC. investment club.

It turned out that William Apostelos was linked to Genesis Acquisitions and a sorry cast of other companies, including WMA Enterprises LLC, Midwest Green Resources LLC and Roan Capital.

Connie Apostelos, also known as Connie Coleman, also operated and oversaw multiple companies in the Dayton area, including Coleman Capital Inc. and Silver Bridle Racing LLC, prosecutors said.

“These companies were allegedly operated through improper use of investor funds to William Apostelos’ companies,” Stewart’s office said.

From the statement (italics added):

William and Connie Apostelos are charged with one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud and 13 counts of wire fraud, each crimes punishable by up to 20 years in prison. They were also charged with two counts of money laundering, which each carry a potential 10-year prison sentence. They were also charged with one count of theft or embezzlement from employee benefit plan, which carries a maximum penalty of up to five years imprisonment. Finally, Connie Apostelos is charged separately with one count of making a false statement, which carries a maximum penalty of up to five years imprisonment.

See the PP Blog’s archive of story references to “Ken Russo,” perhaps the most prolific Ponzi pitchman on the planet.

Visit a recent “Ken Russo”-related thread at the RealScam.com antiscam forum for a “program” known as “MyBinaryProfits.”

Oct 30, 2015
United States Asks Canada To Extradite Nicholas Smirnow, Alleged Head Of ‘Pathway To Prosperity’ Ponzi Scheme

Nicholas Smirnow. From INTERPOL wanted notice.

UPDATED 7:41 P.M. EDT U.S.A. If the office of U.S. Attorney Stephen R. Wigginton of the Southern District of Illinois gets its way, Canada will turn over accused international Ponzi schemer Nicholas Smirnow to the United States.

Smirnow, whom INTERPOL says in a wanted notice is 57, was arrested at Toronto’s Pearson International Airport a little more than three months ago.

An “extradition request has been submitted to the government of Canada for the extradition of SMIRNOW to the United States,” according to a March 20 update to the Smirnow victims’ site maintained by Wigginton’s office.

Ontario Provincial Police notified Wigginton’s office of the Smirnow arrest in December, according to the victims’ site. U.S. federal prosecutors and the U.S. Postal Inspection Service accused Smirnow in 2010 of operating “Pathway To Prosperity,” a $70 million Ponzi-board swindle that flowed across six continents into 120 countries and affected tens of thousands of participants.

P2P, as the scheme was known in shorthand, allegedly created victims in 48 of the 50 U.S. states and in 18 of the 38 counties that comprise the Southern District of Illinois. The concentration in the district may suggest a major P2P promoter was operating in the area.

Many HYIP schemes offer promoters commissions to round up participants. Prosecutors have described the interest rates offered by P2P as absurd.

U.S. prosecutors said this in 2010 (italics added):

According to the complaint, investors were offered their choice of seven, fifteen, thirty, and sixty day “plans.” At the daily interest rates promised by SMIRNOW, a seven day plan supposedly produced an annual return of 546% and a sixty day plan supposedly was returning an annual return of 720%. Fifteen and thirty day plans supposedly returned equally spectacular rates of return. If an investor reinvested both his original investment and the supposed earnings that Pathway to Prosperity promised on a seven day program, for instance, at the daily interest rate quoted by SMIRNOW, the annual return would have been approximately 17,000%.

Smirnow initially slipped out of Canada to the Philippines, where he ended up in jail, according to court filings. Although the United States sought to extradite him from the Philippines nearly five years ago, the process reportedly was canceled, resulting in Smirnow eventually heading back to Canada.

U.S. filings from 2010 identified him as a resident of Baysville, Ontario. Precisely why the earlier process was canceled is unclear.

What is clear is that the United States has now asked Canada to turn him over.

Mar 24, 2015
URGENT >> BULLETIN >> MOVING: Nicholas Smirnow, Pathway To Prosperity HYIP Ponzi Figure, Arrested At Airport In Canada

Nicholas Smirnow. Source: INTERPOL Wanted notice.

URGENT >> BULLETIN >> MOVING: (6th update 9:35 p.m. ET U.S.A.) Nicholas Smirnow, still listed by INTERPOL as a person wanted by the United States in the alleged Pathway To Prosperity (P2P) HYIP Ponzi scheme that affected people in 120 countries, has been arrested at Toronto’s Pearson International Airport, Canadian media outlets are reporting.

U.S. federal prosecutors charged Smirnow, believed now to be 56 or 57, in 2010. He has been listed by INTERPOL since that time.

CTV News, via the Canadian Press, is reporting that U.S. authorities are aware of the arrest. Smirnow also has been charged with crimes in Canada.

P2P was an instance of international mass-marketing fraud, U.S. authorities said in 2010. Though large for its time in the 2008 to 2010 time frame after allegedly gathering more than $70 million and affecting 40,000 investors, P2P since has been eclipsed in dollar volume and victims count by other mass-marketing fraud schemes such as Zeek Rewards and TelexFree.

Professor James E. Byrne, an HYIP expert consulted by the U.S. government in the P2P case, said in 2010 that “the investment scheme described in the materials that I have reviewed are not legitimate but resemble and are classic instances of so-called high yield frauds and fraudulent pyramid schemes. The proposed returns are excessive for even the most risky legitimate investments and are simply preposterous for investments whose principal is supposedly guaranteed.”

From Byrne’s P2P analyis (italics added):

The funds are turned over to the investment and “earn” returns that range from 1.5% daily for a 7 day plan Plus the return of the initial investment to 2.67% daily for a 60 day plan or 160.2% plus the return of the initial investment. The weekly returns on the 7 day investment would amount to approximately 540% per year without taking into account the principal and the 60 day plan would return approximately 950% annualized.

Like many HYIP schemes before and after, P2P had a presence on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. Both forums are referenced in P2P-related court filings. TalkGold got a mention last week in the Liberty Reserve money-laundering case.

Like current schemes with a Ponzi-board presence such as “Achieve Community,” the P2P tentacles spread far and wide and sucked in vulnerable people such as senior citizens. From a PP Blog story on May 31, 2010 (italics/bolding added):

The scheme was almost unimaginably widespread, the U.S. Postal Inspection Service said in an affidavit.

“Financial records of payment processors utilized by P-2-P to collect investment funds from investors show that approximately 40,000 investors in 120 countries established accounts with P-2-P,” a postal inspector said. “Despite the fact that the investment was supposedly ‘guaranteed, investors lost approximately $70 million as a result of [Smirnow’s] actions.”

The probe began when the U.S. government received a referral from the Illinois Securities Department “concerning an elderly Southern District of Illinois resident who had made a substantial investment in P-2-P,” the postal inspector said in the affidavit.

“In addition to P-2-P’s own website, I discovered that P-2-P’s investment scheme was marketed on other websites, including High Yield Investment Program forums, which I was able to access directly through the internet,” the inspector said.

Before long, the inspector determined that the scheme cost investors losses in 48 of the 50 U.S. states, and 18 of the 38 counties that comprise the Southern District of Illinois, prosecutors said.

Such penetration in Illinois may suggest Smirnow had a promotional arm in the state. The complaint spells out a case against conspirators “known and unknown,” and the complaint notes that family members told other family members about the scheme.

“When P-2-P’s funds were depleted and when investors did not receive a return of their funds as they had been promised, [Smirnow] caused a posting on P-2-P’s private forum warning investors not to complain to payment processors about P-2-P’s failure to return their money or they would find themselves ‘on the outside looking in,’” prosecutors charged.

The postal inspector has spoken to “hundreds of P-2-P investors” during the course of the investigation, according to court filings.

“Hundreds [of people] sent me copies of printouts they had made of P-2-P’s website, postings that had been made on the P-2-P’s members forum, and internet sites touting high yield investment programs which contained postings related to P-2-P,” the postal inspector said.

With “Achieve Community,” promoters claim that $50 turns into $400 in three months or less. Participants are encouraged to roll over profits.

Achieve Community promoters have published extrapolations that show “earnings” in the tens of thousands, hundreds of thousands and even the millions of dollars.

Dec 16, 2014
REPORTS: Prosecutor In TelexFree Case Threatened With Death

There 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.

Jul 25, 2013
International Scammer Pleads Guilty In United States To Swindling Retirees In ‘Jamaican Lottery Scheme’; O’Brain J. Lynch Potentially Faces Decades In Federal Prison

“Investigators from [the Social Security Administration] discovered that hundreds of victims throughout the United States were losing their social security benefits and their life savings either because they believed that they had won ‘The Jamaican Lottery’ or because, as part of another telemarketing scheme, they revealed enough information about themselves that allowed the thieves to fraudulently divert their money.” — Office of U.S. Attorney James L. Santelle, Eastern District of Wisconsin, June 7, 2013

For O’Brain J. Lynch, senior citizens receiving retirement benefits from the Social Security Administration and other sources were the perfect targets of a criminal organization operating an international mass-marketing fraud scheme from Jamaica.

The scheme duped people into believing they had won “The Jamaican Lottery.” In reality, authorities said, it was an advance-fee scam designed to drain retirement accounts and to recruit cashers in the United States.

Lynch, 28, of of Montego Bay, Jamaica, now faces up to 20 years in federal prison after pleading guilty to wire fraud, the office of U.S. Attorney James L. Santelle of the Eastern District of Wisconsin said last week. The case was investigated by SSA, the U.S. Postal Inspection Service and Homeland Security Investigations (HSI).

“Americans have lost millions of dollars to criminals from countries around the world in foreign lottery scams, said Pete Zegarac, inspector in charge of the Chicago Division of the U.S. Postal Inspection Service. “When one family member is harmed by a foreign lottery scam, the impact is felt by all. Losses can be monumental, sometimes entire life savings are wiped out. ”

From a statement by prosecutors (italics added):

A Jamaican Lottery Scheme is a form of mass-marketing fraud committed via the internet, telemarketing, or mass mailings. Jamaican criminal organizations contact victims and identify themselves as lawyers, government officials, law enforcement agents, or lottery company officials. The potential victims are led to believe they won an international multi-million dollar lottery. The fraudulent telemarketers then inform the victims that in order to receive their winnings the victim needs to pay an advance fee. This fee is usually described as a tax, insurance payment, or customs duty that must be paid to release the winnings. The victims are instructed to send the funds via mail or wire transfer.

The scammers routinely involve victims to help facilitate the laundering of financial transactions by receiving and withdrawing funds from prepaid cards and receiving and sending wire transfers. In an attempt to conceal and layer the proceeds from the lottery scams, the scammers direct victims to send funds, knowingly and unknowingly, to other victims and associates of the scammers within the United States. These victims and co-conspirators then transfer the proceeds of this fraud to the scammers in Jamaica by wire transfers. The Jamaican criminal organizations have modified the lottery scam into other variations of telemarketing schemes to include redirecting individuals Social Security Administration (SSA) benefits, direct deposit, automatic debit, re-routing schemes and other identity theft schemes.

According to documents filed in court, in March 2012, the SSA learned that a social security recipient, from Glendale, Wisconsin, was receiving social security benefits in the name of other recipients and cashing in these benefits. Special Agents from the SSA – Office of Inspector General (OIG) discovered the recipient was sending this money to Jamaica because he believed he had won “The Jamaican Lottery.” He said he was contacted by an official from Global International who informed him that he won $2.5 million and two (2) Mercedes Benz vehicles in a sweepstakes. He was then advised that in order for him to collect the money and the cars, he had to pay taxes, customs duty, and other fees. He initially sent his own money to Jamaica, and, once he had depleted his own assets, he was directed, by telephone, to accept checks, Direct Express cards, and other cash value cards in the names of other people (who were also victims), cash them out and then send the money to Jamaica. As a result, numerous victims did not receive their social security benefits, and instead they were mailed to Jamaica. Investigators from SSA discovered that hundreds of victims throughout the United States were losing their social security benefits and their life savings either because they believed that they had won “The Jamaican Lottery” or because, as part of another telemarketing scheme, they revealed enough information about themselves that allowed the thieves to fraudulently divert their money.

Prosecutors said they believed Lynch was the first Jamaican national charged in the United States with this type of fraud.

“We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business,” said Gary Hartwig, special-agent-in charge of HSI’s Chicago Division.

The Journal Sentinel newspaper (Milwaukee) reported last week that Lynch also is known as “Jake Dinero.”

International mass-marketing fraud takes many forms. In 2010, the U.S. Postal Inspection Service alleged that the Pathway To Prosperity HYIP scheme gathered about $70 million and affected 40,000 investors in 120 countries. P2P was a Ponzi-board “program” that in part gained a head of steam on the TalkGold and MoneyMakerGroup fraud forums.

The alleged $600 million Zeek Rewards Ponzi- and pyramid scheme followed P2P as a favored “program” on the Ponzi boards, as did the alleged Profitable Sunrise HYIP scheme. Profitable Sunrise may have collected tens of millions of dollars, the SEC said in April 2013, after bringing fraud charges against Zeek Rewards in August 2012.

Reload scams have been targeted at both Zeek and Profitable Sunrise victims, authorities said.

On May 9, the PP Blog reported that an emerging scam that is seeking to tie itself to the Catholic Church is engaging in a spam campaign and seeking to lure Profitable Sunrise victims into a new trap. The scam is using the name of “ALL SAINTS CATHOLIC CHURCH LOAN FIRM” and many other names, some of which are published in the Comments thread in the story linked in the first sentence of this paragraph.

Jun 11, 2013
Letter Sent To Federal Judge In Washington State Contained Ricin, FBI Says; Matthew Ryan Buquet Arrested

The FBI has arrested Matthew Ryan Buquet, who appeared in federal court yesterday to face a charge he mailed a letter containing ricin toxin to a federal judge in Washington state.

Buquet is 37. The Associated Press, via Fox News, identified the intended recipient as U.S. District Judge Fred Van Sickle of the Eastern District of Washington. Van Sickle presides over cases in Spokane. He was appointed to the bench by President George H.W. Bush in 1991 and now serves as a senior judge. Prior to his appointment to the federal bench, Van Sickle was a state-court judge in Washington.

It was not immediately clear whether the FBI suspects a broader crime. Nor was it clear whether Van Sickle ever presided over a case in which Buquet had a role. Washington state is known to be the site of an investigation into the activities of purported “sovereign citizens.” The word “sovereign” does not appear in a statement by the FBI yesterday on the Buquet arrest, but purported “sovereigns” have been linked to cases of domestic terrorism and extremism in the United States.

“Our coordinated team acted swiftly to resolve a potentially dangerous situation and continues working tirelessly around-the-clock to investigate the origin of the letter and to address any remaining, potential risks,” said Laura M. Laughlin, special agent in charge of the FBI’s Seattle Division.

“The U.S. Postal Inspection Service quickly deployed resources dedicated to find those responsible for this suspicious mailing to ensure the safety of U.S. Postal Service employees and the American public,” said Bradley J. Kleinknecht, inspector in charge of the Seattle Division of the U.S. Postal Inspection Service.

The Spokane ricin investigation follows on the heels of an April incident in Mississippi allegedly involving ricin and the mails. President Obama, Sen. Roger Wicker, R-Miss., and a state judge in Mississippi allegedly were targets of the April letters.

News of Buquet’s arrest came during the same week federal prosecutors in the Western District of Washington alleged that AdSurfDaily Ponzi scheme figure and purported “sovereign citizen” Kenneth Wayne Leaming was channeling deceased cop-killer Christopher Dorner in the courtroom.

Leaming, 57, was convicted March 1 on charges of filing false liens against public officials involved in the ASD case, harboring two federal fugitives from Arkansas wanted in a separate multimillion-dollar fraud scheme and being a felon in possession of firearms. Based on their bizarre court pleadings, the Arkansas fugitives found with Leaming appear either to be “sovereigns” or people acting under the influence of “sovereigns.”

“Sovereign citizens,” known to network over the Internet, may have an irrational belief that laws do not apply to them and may draft others into “sovereign” schemes, sometimes for a fee. Though typically linked to financial crimes, some individuals linked to the purported “sovereign citizen” movement also have been involved in sex crimes. In November 2011, a Florida man listed as a registered sex offender was jailed after the allegedly filed a bogus lien against a judge.

In a separate case involving a purported “sovereign,” Bruce Chalmers Hicks was jailed in Florida last week. The Tampa Bay Times reported that Hicks served seven years in prison after his 2004 conviction for molesting a child under the age of 12.

MailOnline reported yesterday that Buquet “was listed as a sex offender following an ‘indecent liberties’ charge in 1998.”

The office of U.S. Attorney Jenny A. Durkan of the Western District of Washington prosecuted Leaming, the ASD figure and purported “sovereign.” Leaming now claims a federal judge owes him 208,000 ounces of fine silver. Durkan’s office recently has prosecuted other purported “sovereigns,” including David Russell Myrland.

In 2011, Myrland was sentenced to 40 months in federal prison for threatening the mayor of the Seattle suburb of Kirkland and other public officials. He later bizarrely claimed (apparently) that the government was engaging in a grammar conspiracy against him.

May 23, 2013
Paul Kevin Curtis Of Corinth, Miss., Under Arrest In Ricin Letters Probe, FBI Says

UPDATED 1:43 P.M. EDT U.S.A. (APRIL 25) The charges against Paul Kevin Curtis have been dropped and he has been released from custody. See this April 25 story by the AP via Yahoo News. Here, below, our earlier story . . .

The FBI has arrested Paul Kevin Curtis in the ricin letters probe, the agency said tonight.

Curtis, the FBI said, was arrested at his home in Corinth, Miss.

Corinth is a small city in Mississippi’s northeast.

Earlier today, the FBI said a letter sent to President Obama “preliminarily tested positive for ricin.”

Two other letters that preliminarily tested positive for ricin were sent to a U.S. senator and “a Mississippi justice official,” the FBI said.

One of the intended recipients was Sen. Roger Wicker, R-Miss.

Sen. Wicker.

“Gayle and I want to thank the men and women of the FBI and U.S. Capitol Police for their professionalism and decisive action in keeping our family and staff safe from harm,” Wicker said tonight in a statement. “My offices in Mississippi and Washington remain open for business to all Mississippians. We particularly want to thank the people of Mississippi for their thoughts and prayers during this time.”

Here is the FBI’s full statement this evening (italics added):

Today at approximately 5:15 p.m. CDT, FBI special agents arrested Paul Kevin Curtis, the individual believed to be responsible for the mailings of the three letters sent through the U.S. Postal Service which contained a granular substance that preliminarily tested positive for ricin. The letters were addressed to a U.S. senator, the White House, and a Mississippi justice official.

The individual was arrested at his residence in Corinth, Mississippi following an investigation conducted by FBI Joint Terrorism Task Forces in Memphis, Tennessee and Jackson, Mississippi; the U.S. Capitol Police; the U.S. Postal Inspection Service; and the U.S. Secret Service, aided by the following state and local agencies: the Lee County (Mississippi) Sheriff’s Office; the Prentiss County (Mississippi) Sheriff’s Office; the Corinth (Mississippi) Police Department; the Booneville (Mississippi) Police Department; the Tupelo (Mississippi) Police Department; the Mississippi National Guard 47th Civil Support Team; and the Mississippi Office of Homeland Security.

Apr 17, 2013
In Wake Of Profitable Sunrise Alert, British Columbia Issues 2 More Warnings Against HYIPs; Like Profitable Sunrise, Both ‘Programs’ Had Presence On TalkGold And MoneyMakerGroup Ponzi Forums

EDITOR’S NOTE: Thanks to PP Blog reader “Tony” for pointing us to the British Columbia Securities Commission (BCSC) warning against the Lucra Fund and Goldenarium HYIP schemes. Earlier this month, BCSC issued a warning on the Profitable Sunrise scheme.

The British Columbia Securities Commission has issued warnings on HYIP “programs” known as Lucra Fund and Goldenarium. BCSC’s move follows on the heels of its move earlier this month to issue a warning against Profitable Sunrise.

All three “programs” had a presence on well-known Ponzi scheme forums such as TalkGold and MoneyMakerGroup. The Zeek Rewards “program,” which the SEC in August 2012 described as a $600 million Ponzi- and pyramid scheme, also had a presence on the forums. So did many other collapsed schemes, including the $119 million AdSurfDaily Ponzi scheme, the $72 million Legisi Ponzi scheme and the alleged $70 million Pathway to Prosperity Ponzi scheme. P2P spead Ponzi misery to at least 120 countries, according to the U.S. Postal Inspection Service.

BCSC said it became aware of Lucra Fund on March 11 “after a BCSC staff member received a promotional e-mail.

“The sender of the e-mail wrote that Lucra Fund offered 5.5% daily returns, and promised a referral commission,” the agency said.

And, it noted, “[t]he Lucra Fund website stopped working soon afterwards.”

Among the talking points of Lucra Fund was that it employed “DDoS Protection By BlockDos,” according to a pitchman’s post at MoneyMakerGroup.

That appears to be the same firm that provided protection for Profitable Sunrise. The Profitable Sunrise website also has gone missing. (At the time of this post, the Profitable Sunrise website has been inaccessible for nine days.)

On March 19, BCSC said, the agency “became aware of what appears to be a BC-connected promotion of Goldenarium through Twitter. Similar to Profitable Sunrise, this high-yield investment promotion offered a minimum investment of $10 and high daily returns. It also offered a referral fee.

“The Goldenarium website no longer works, and people on numerous Facebook pages connected to the scheme are questioning whether the entity will reactivate its website,” BCSC said.

In August 2012, a pitchman on the DreamTeamMoney Ponzi forum described Goldenarium as “a company registered in England and Wales (United Kingdom) that “fulfills all the necessary requirements to provide a serious and highly reliable service to all our customers.
In order to accomplish that we not only strictly comply with both United Kingdom’s Law and International Law.”

Profitable Sunrise also described itself as based in the United Kingdom. It is now the subject of at least 30 Investor Alerts or cease-and-desist orders in the United States and Canada. The United Kingdom and New Zealand also have issued warnings against Profitable Sunrise.

Before its 2011 collapse, “Insectrio” used the logos of DreamTeamMoney, TalkGold and MoneyMakerGroup in sales pitches.

In August 2011, the PP Blog wrote about the collapse of a bizarre “program” known as Insectrio that advertised an “Egg” plan purported to pay 103 percent after one day, a “Larva” plan purported to pay 120 percent after five days and other plans advertised to pay even more. It was enabled by the offshore processors LibertyReserve and PerfectMoney, two of the processors used by Profitable Sunrise.

LibertyReserve and Perfect Money also are referenced in the SEC’s October 2010 fraud complaint against Imperia Invest IBC, a scheme that targeted deaf investors. Imperia also had a presence on the Ponzi boards.

Insectrio used the logos of DreamTeamMoney, TalkGold and MoneyMakerGroup in promos.

In July 2010, after the collapse of the P2P and Genius Funds HYIP schemes, the Financial Industry Regulatory Authority (FINRA) issued a warning about HYIP schemes, pointing out that they trade through social media.

FINRA specifically warned about websites that “Rank the latest programs and provide details of ‘payout options.’” At the same time, it warned about sites that “Allow web designers to buy ready-made HYIP templates and set up an ‘instant’ HYIP.” Meanwhile, it warned about sites that “Blog, chat and ‘teach’ about HYIPs.”

“Some HYIP ‘investors’ proffer strategies for maximizing profits and avoiding losses — everything from videos showing how to ‘make massive profits’ in HYIPs and ‘build a winning HYIP portfolio’ to an eBook on how to ‘ride the Ponzi’ and get in and out before a scheme collapses,” FINRA said.

“Other HYIP forums discuss how to enter ‘test spends,’ how to identify new HYIPs to maximize one’s chances of being an early stage payee and even how to check when a HYIP’s domain name expires so you can guess how long it might pay returns before shutting down,” FINRA noted.

Read BCSC’s March 22 Investor Alert against Lucra Fund and Goldenarium. (The document references the earlier warning against Profitable Sunrise.)

Mar 23, 2013
UPDATE: Nicholas Cox, Figure In North Carolina Fraud Scheme Operating Near Ground Zero For Zeek Rewards, Sentenced To Federal Prison

With the alleged $600 million Zeek Rewards Ponzi scheme dominating local headlines in North Carolina’s Piedmont Triad region, including the city of Lexington in Davidson County, an earlier, smaller fraud scheme operating in the region largely fell out of the news.

But the Integra Capital Management LLC Ponzi and fraud scheme operated by Nicholas Cox and Rodney Whitney is back in the headlines. Cox, 35, of Lexington, has been sentenced to three years in federal prison, followed by three years’ supervised release, for his role in Integra Capital’s $3.2 million commodities and Forex swindle.

Whitney, 50, from the nearby community of Archdale, pleaded guilty in January. He was sentenced to five years in federal prison.

The Integra Capital scam, which had a Ponzi component, operated between September 2006 and August 2009, the CFTC said in September 2010. Among other things, the fraud scheme was notable for destroying a myth: that “opportunities” that send out 1099 tax forms to investors could not possibly be operating a scam.

Cox and Whitney were charged both civilly and criminally. The CFTC led the civil probe; the U.S. Postal Inspection Service led the criminal investigation. Cox was arrested in May 2011 in Denton, N.C. Like Zeek’s home base of Lexington, Denton is in Davidson County.

During Zeek’s run, some promoters argued that the enterprise could not be a scam because it collected data to be used on tax forms. Promoters also argued that Zeek was above-board because it was registered as a corporation in North Carolina.

Records show, however, that Integra Capital also was registered as a North Carolina corporation — with business addresses in the Triad cities of High Point, Denton and Archdale. Neither Integra’s registration nor the issuance of tax forms proved to be proper barometers for investors to follow.

What matters in Ponzi and financial-fraud schemes is how the money moves within the sphere of the actual practices of a business, not whether a company is a registered entity that issues tax forms.

Citing court documents, the U.S. Department of Justice said that “Cox and Whitney obtained and misappropriated more than $3.2 million in investor funds and fabricated account statements and tax forms to conceal their fraud.”

In December 2012, Cox pleaded guilty to one count of conspiracy to commit mail fraud, five counts of mail fraud and one count of conspiracy to commit money laundering. Earlier, in March 2011, Whitney pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit money laundering.

“Cox and Whitney used the money invested by later investors to pay the monthly investment returns they had promised to earlier investors,” prosecutors said today.

And the Triad duo also bought real estate, funded other business ventures and purchased automobiles and other personal goods and services, prosecutors said.

In September 2012, the SEC said Lexington-based Zeek was a “classic” Ponzi scheme in which “[m]ost of ZeekRewards’ total revenues and the ‘net profits’ paid to investors” were “comprised of funds received from new investors.”

Feb 21, 2013
BULLETIN: Securities Fraudster/Ponzi Schemer Sentenced To 40 Years

BULLETIN: Jasen M. Snelling — who last month was sentenced to nearly 11 years in prison in a federal Ponzi-scheme case brought in Ohio — now has been sentenced in Indiana state court to 40 years.

The state case was brought after an investigation by the office of Indiana Secretary of State Connie Lawson. Snelling was accused of selling unregistered securities, theft and using victims’ money as his own. The scam involved entities known as CityFund Advisory and Dunhill Investment.

“While we are pleased with today’s sentencing, we will continue to aggressively pursue this case in criminal courts, civil courts or administrative proceedings, if necessary, in order to hold all those accountable who contributed to the financial losses and deep sorrow of these victims,” Lawson said in a statement today.

Snelling, a resident of Cincinnati, was prosecuted in Indiana by Franklin County Prosecutor Mel Wilhelm, Lawson said, adding that Indiana investors lost more than $3 million.

“This sentencing showcases cooperation between state and local officials,” Lawson said. “Securities fraud is a serious crime and by working together we can root out more fraud and abuse and stop these schemes before investors lose millions.”

After pleading guilty in June to federal charges, Snelling, 48, was sentenced in October to 131 months and ordered to pay $5.3 million in restitution. The scam created about 72 victims, federal prosecutors said.

“Consistent with a classic Ponzi scheme, early investors were paid interest or return of capital payments, which were not generated by investment earnings, but rather by monies solicited from later investors,” U.S. Attorney Carter M. Stewart of the Southern District of Ohio said at the time. “These payments served to lull the victims into a false sense of security and to prevent or delay the discovery of the fraudulent investment scheme.”

Snelling compounded matters by engaging in “obstruction” and tax crimes, federal prosecutors said.

And, they noted, “Snelling was ordered to forfeit a boat, trailer and real estate he owned in Michigan.”

The IRS and the U.S. Postal Inspection Service handled the federal probe.

Nov 13, 2012