UPDATED 9:49 A.M. EDT (U.S.A.) A Dallas-based company and its president were charged in a sealed indictment in April 2008 with helping a Colombian cocaine operation launder money by providing debit cards that were used to convert drug proceeds to cash in Medellin.
The company — Virtual Money Inc. — once provided debit cards to AdSurfDaily Inc., a Florida company accused in August 2008 of money-laundering, wire fraud and operating an autosurf Ponzi scheme.
Prosecutors brought a forfeiture complaint for tens of millions of dollars in the ASD money-laundering case. A grand jury in the Virtual Money case has authorized forfeiture complaints totaling $7.12 million.
Prosecutors said that Virtual Money, known simply as VM, helped the Colombian drug operation offload at least $7.1 million in drug proceeds at automated teller machines in Medellin. Medellin once was home base of the infamous Medellin Cartel, operated by drug lord and terrorist Pablo Escobar. Escobar was killed by Colombia National Police in 1993.
Escobar was implicated in the assassination of Colombian presidential candidate Luis Carlos Galán and the bombing of Avianca Flight 203 over Colombia, which killed 110 people.
Autosurf promoters long have claimed that participation in illegal surf enterprises is harmless. The indictment against VM — and the allegations that it laundered money for a Colombian drug organization — demonstrates the dangers of participating in murky businesses in which participants have no way of knowing what is in the hearts and minds of other participants.
It was not immediately clear how long ASD used the VM debit card, which was heavily promoted in early 2007 when ASD said it was having cash-flow problems.
Two Colombian conspirators “directed their agents in the United States to provide proceeds of sales of controlled substances to agents of VIRTUAL MONEY, INC. to be sent to Colombia so the proceeds could be made available to the clients,” according to the indictment.
VM “stored value cards were used by the members of the conspiracy to make available at a Daviviendo Bank ATM in Medellin, Colombia the peso equivalent of US $2,430,810.24 in April 2006; US $2,437,023.53 in June 2006; and US $2,257,761.45 in August 2006,” prosecutors charged.
The VM indictment, which was brought in Connecticut after a two-year investigation by the Drug Enforcement Administration, was unsealed in September. It names 10 defendants, including VM President Robert Hodgins.
Debit cards with “stored value” have become an increasingly popular way for autosurfs to collect and distribute money.
In 2007, members of an ASD downline team hailed the VM debit card as one of the key advantages of ASD membership. The same downline team claimed that ASD provided “shelter” from the Federal Trade Commission and the Securities and Exchange Commission
The card “[c]an be used in over 210 countries and territories and growing!” a sales pitch by the downline group said. “Funds conversion to local currencies at local ATMs.”
VM’s website now directs either to a “Forbidden” error or a message that explains the company is not operational, depending on what URL visitors use.
“We have a dedicated team working around the clock to ensure that the advanced and trusted service that all Virtual Money Card Holders have been use to over the past years, will be back and available as soon as possible as we are currently updating our facilities and servers,” VM said in the message.
Australia has banned the sale of the VM card.