Tag: U.S. Secret Service

UPDATED 9:39 P.M. EDT (U.S.A.) A thread at the Pro-AdSurfDaily Surf’s Up forum went missing this morning after a days-long debate in which federal prosecutors were called “goons” and a member repeatedly insisted that a government attorney had acknowledged that ASD was not a Ponzi scheme.

The thread was titled “William Cowden Resigned.”

Various Surf’s Up posters have claimed for a more than a year that ASD prosecutor William Cowden, now in private practice, had said ASD was not a Ponzi scheme. The claim was made prior even to an evidentiary hearing held on Sept. 30 and Oct. 1 of last year, and has been made repeatedly since then.

On Oct. 10, 2008, nine days after the evidentiary hearing had concluded, for example, ASD mainstay Robert Fava circulated an email in which the claim was made. Fava’s email contained an analysis of the evidentiary hearing and post-hearing filings by attorneys from both sides by an ASD member named “Ken.”

“Everything really hinges on the fact that it was not a Ponzi and the AG has already admitted to the fact that it WAS NOT A PONZI,” Fava’s email quoted “Ken” as saying. Another section of the email noted that Judge Rosemary Collyer would have to be “brain dead or taking a payoff” if she ruled against ASD.

The claim appears to be part of a disinformation campaign to keep hope alive that the government does not believe in its own case and that the Ponzi elements could unravel at any moment, thus voiding the prosecution’s claim that ASD had engaged in wire-fraud and money laundering.

Some Surf’s Up members have asserted that, if the government can’t prove a Ponzi, then it cannot prove other crimes occurred inside ASD.

At the same time, some Surf’s Up posters have claimed prosecutors are guilty of an Unconstitutional money-grab and denying ASD due process. The claims have been made repeatedly, even though a federal judge reviewed search-warrant applications before approving them and issued warrants to “arrest” ASD’s assets — and even though ASD has argued its case in the forfeiture proceeding in court — a court open to the public and a court in which ASD members themselves attended the proceeding.

Despite the claim against Cowden, nothing in the record of the case suggests he ever said ASD was not a Ponzi scheme. In fact, the hearing on the Ponzi issues was held without objection from Cowden.

Then-prosecutor Cowden even cross-examined ASD’s expert witness — MLM attorney Gerald Nehra — who asserted ASD was not a Ponzi scheme.

Cowden cross-examined Nehra on Nehra’s opinion ASD was not a Ponzi scheme and on the subject of ASD’s “rebate” program. Cowden demonstrated in the courtroom — with Nehra on the witness stand — that ASD had said rebates “will” be paid until a customer received 125 percent of his or her ad spend — in other words, 25 percent more than the customer had paid ASD for “advertising.”

“Now,” Cowden asked Nehra, who was on the witness stand, “have you ever seen in the ASD rebate program the representation that [ASD] makes that rebates will (emphasis added) be paid up to a hundred and twenty-five percent, correct?”

“We have discussed that in the — ” Nehra answered.

“Is that correct?” Cowden asked, returning to his question about whether ASD had said rebates “will” be paid.

“Yes,” Nehra reponded, “I have seen that.”

“Mr. Nehra, yes or no answer, that’s what it says, rebates will be paid up to a hundred and twenty-five percent?” Cowden asked again, in a bid to solidify the answer for the record.

“It does say that, counselor,” Nehra answered.

“One hundred twenty-five percent is more money than you put in, right?” Cowden asked.

“Yes,” Nehra answered.

Months after the evidentiary hearing concluded, dozens of ASD pro se litigants filed templated court documents that accused the government of not producing “any EVIDENCE of alleged wrongdoing.”

The government, however, introduced evidence at the evidentiary hearing, including evidence upon which Nehra had been cross-examined by Cowden. The government also introduced video evidence and written evidence. The first government filing of evidence occurred on Aug. 5, 2008, and included eight separate exhibits.

Had Cowden or the government told a federal judge or ASD’s attorneys that ASD was not a Ponzi scheme — before the hearing or after — one of the key prongs of the government’s strategy in the case would have collapsed. There would have been no reason for Cowden to cross-examine Nehra on the Ponzi elements. Bowdoin’s attorneys would have had Cowden for lunch.

It does not seem even to have occurred to the ASD members making the claim about Cowden that, in the early hours after the hearing concluded, they also snickered about Cowden returning again and again to the subject of ASD paying a rebate of 125 percent. One of the key issues of the 125 percent promise was how ASD was funding the payouts. The prosecution always has argued that the payouts were made in classic Ponzi fashion, with money taken from new members to pay earlier members.

By snickering about Cowden’s consistent return to the 125 percent theme, the ASD members were disproving their own argument that Cowden had said ASD was not a Ponzi scheme.

Not only did the Ponzi theory not collapse, the government used information gleaned from the testimony at the evidentiary hearing in a second forfeiture complaint filed against ASD’s assets. The second complaint was filed more than two months after the Surf’s Up posters first asserted that Cowden had said ASD was not a Ponzi scheme — and Cowden signed the December complaint, arguing again that ASD had operated as a Ponzi.

“ASD operated as a ‘Ponzi’ operation whereby it took money from investors — it termed its investors ‘members’ and ‘advertisers’ — by promising its investors that it would pay to those investors 125% of their out-of-pocket investment,” argued Cowden in December, along with former U.S. Attorney Jeffrey Taylor and Assistant U.S. Attorney Vasu B. Muthyala.

The court filing was verified by Roy Dotson, a special agent for the U.S. Secret Service.

Cowden, Taylor and Dotson — at various times — became the subjects of a certified-mail campaign by ASD members to discredit them. They also became the subjects of a letter-writing campaign to Sen. Patrick Leahy in which the senders asked the U.S. Senate to investigate not an alleged $100 million Ponzi scheme, but the public servants who stopped the scheme before it could mushroom globally.

In the fall of 2008, Surf’s Up hinted that a secret weapon against the government soon would come into play. In October, ASD Members International (ASDMI) was formed. ASDMI’s founders consisted of Surf’s Up members.

“Professor” Patrick Moriarty was listed in Missouri records as the registered agent of the organization, which had registered as a nonprofit. Surf’s Up Mod Barb McIntyre was listed as Secretary.

ASDMI solicited money from ASD members to do battle with the government. The organization made the odd claim that it would litigate against the government even if the government was behaving legally.

If civil litigation did not work, ASDMI suggested, it would see about having the prosecutors charged with crimes.

Patrick Moriarty, a co-founder of ASDMI, instructed ASD visitors to his personal website to make checks and money orders for $50 payable to “P.M.G.Int.,” which stands for Pacific Ministry of Giving International, Curtis Richmond’s Utah-based entity.

Moriarty instructed participants in a mail campaign against the prosecutors and Secret Service to mail the checks and money orders to him in Missouri. The $50 fee would be used to defray the costs of notarization, “several certified mailings, typing, paper and other necessary administrative costs.”

ASDMI itself charged a $20 fee for its own version of presumptive litigation against the government.

Richmond, who said in court filings that Pacific Ministry of Giving International had lost $41,000 as a result of the government seizure of ASD’s funds, is associated with a Utah “Indian” tribe a federal judge in a separate case ruled a “complete sham.” At least two people who used the services of a sham “arbitration” panel connected to the tribe to litigate against the Internal Revenue Service or other creditors were convicted of federal crimes such as tax evasion and mail fraud and sentenced to prison.

Moriarty was a key participant in a certified-mail campaign involving the ASD prosecutors, asking ASD members to make checks and money orders payable to Richmond’s Pacific Ministry of Giving International, which is registered in Utah as a “Corporation – Sole” under “Religious Organizations.”

In March 2009, Moriarty was indicted in Missouri for alleged tax crimes that occurred between 2002 and 2006. In February 2009 — at Surf’s Up — he was positioned as the leader of a letter-writing campaign to Leahy

“Over 50 individual and notarized DEMAND[S] FOR LEGAL EVIDENCE were sent to Jeffrey Taylor, US Attorney; William Cowden, Assistant US Attorney; and Roy Dotson, Special Agent, US Secret Service,” Moriarty said in a letter to Leahy, D.-Vermont. “Not once did any of these three Government Servants respond.”

Leahy is chairman of the Senate Judiciary Committee.

“Innocent Americans have suffered and continue to suffer because of these incredulous and despicable acts” by prosecutors, Moriarty said.

Despite the August 2008 forfeiture complaint in which the U.S. Secret Service and federal prosecutors first made the Ponzi claim — and despite the fact ASD asked for a hearing to demonstrate it was not a Ponzi and that the prosecution did not object to the hearing — and despite the fact Cowden cross-examined Nehra on the Ponzi issues and that Nehra acknowledged on the stand that ASD said rebates “will” be paid up to 125 percent — some Surf’s Up members continue to argue that Cowden said ASD was not a Ponzi scheme.

Perhaps most striking of all is that the government, including Cowden, reasserted the Ponzi argument in the December complaint (filed 10 months ago tomorrow) — and some Surf’s Up members still are arguing that Cowden had said ASD was not a Ponzi scheme.

All of the court information contained in this post is in the public record of the case.

Judge Rosemary Collyer’s ruling that ASD had not demonstrated at the evidentiary hearing that it was a lawful business and not a Ponzi scheme — coincidentally, 11 months old tomorrow — is in the public record. The August 2008 filing in which the government reproduced the ASD Terms of Service showing the surf had said rebates “will” be paid up to 125 percent is in the public record. So are the initial eight exhibits of government evidence against ASD.

ASD was permitted to continue to sell advertising after the seizure of its assets, but chose not to do so. It is not illegal to sell advertising online. One of the key issues of the ASD case is how the company funded rebates — which generally are not illegal — but can become illegal if a company is skirting securities laws by purporting to be an “advertising” company when it actually is an unregistered issuer of securities sold as investment contracts.

But the securities allegation is just one of allegations against ASD. Prosecutors said the company was engaging in wire fraud and money-laundering. Meanwhile, private litigants have accused the company of racketeering.

ASD President Andy Bowdoin has never responded to the racketeering complaint, which was filed in Florida November 2008, in the immediate aftermath of Collyer’s ruling against the firm. The initial racketeering lawsuit was dismissed by the plaintiffs in Florida and refiled in U.S. District Court for the District of Columbia in January 2009, in the immediate aftermath of Bowdoin’s decision to submit to the government forfeiture.

Attorneys for the racketeering plaintiffs — consisting of three ASD members who seek class-action certification in the lawsuit against Bowdoin — referenced the AdViewGlobal (AVG) autosurf in a June filing, saying the surf was the next iteration of ASD and employed individuals who worked for ASD.

On Sept. 25, the government made a veiled reference to AVG in court filings.

Both ASD and AVG potentially face a ton of trouble in the coming weeks and months — but more than a year after the evidentiary hearing was held, some Surf’s Up posters continue to argue that the government itself, despite all the evidence to the contrary, had said ASD was not a Ponzi scheme.

At the same time, posts and entire threads continue to go “poof” at Surf’s Up, perhaps especially when other posters argue that the government just might have a legitimate point of view.