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Tag: VM

  • UPDATE: Robert Hodgins Still Wanted By Interpol; Co-Defendant In Narcotics Probe With Link To AdSurfDaily Case Sentenced To Prison; Colombian Drug Business Used Same Debit Card As ASD

    Robert Hodgins of Dallas-based Virtual Money Inc. is wanted by Interpol in an international money-laundering case that allegedly involves proceeds from the sale of narcotics. Virtual Money Inc.'s name is referenced in the AdSurfDaily autosurf Ponzi scheme case brought by the U.S. Secret Service and the PhoenixSurf autosurf Ponzi scheme case brought by the Securities and Exchange Commission. The case against VM and Hodgins was brought by the U.S. Drug Enforcement Administration and the IRS. PHOTO SOURCE: Interpol.

    A Colombian national implicated in an international conspiracy to launder drug money has been sentenced to 45 months in prison, federal prosecutors announced.

    Meanwhile, another figure in the alleged scheme — Robert Hodgins, the operator of Dallas-based Virtual Money Inc. (VM) — remains at large, prosecutors said. Hodgins is wanted by Interpol on a warrant issued by a federal judge in Connecticut.

    Hodgins is Canadian by birth and lived in the Oklahoma City area of the United States, according to records.

    VM’s name is referenced in the forfeiture allegations in the AdSurfDaily autosurf Ponzi scheme case brought by the U.S. Secret Service in the District of Columbia in August 2008. It also is referenced in the PhoenixSurf Ponzi prosecution brought by the SEC in Los Angeles in July 2007.

    Juan Merlano Salazar, 36, of Medellin, Colombia, was sentenced to 45 months Aug. 9 by U.S. District Judge Mark R. Kravitz of the District of Connecticut. Salazar is among five defendants convicted so far in the money-laundering case, which allegedly involved the use of debit cards provided by VM to launder drug proceeds at ATMs in Colombia, according to court filings.

    Hodgins also is alleged to have accepted $100,000 to launder drug proceeds in the Dominican Republic.

    The Colombian narco business used “stored value cards” to enable drug proceeds to be withdrawn from banks in Medellin as Colombian pesos, prosecutors said.

    Medellin was home base to the late drug lord Pablo Escobar.

    In August 2009, the PP Blog reported that VM’s name appeared in advertising materials for ASD in 2007. Records suggest that Hodgins or a VM designate attended an ASD function in Orlando in November 2006, about a month after ASD began its rollout.

    This 2007 ad for ASD promoted the VM debit card.

    Some ASD members have said they observed large sums of cash and briefcases full of cashiers’ checks at ASD “rallies” in U.S. cities in the spring and summer of 2008, which led to questions about whether ASD was laundering money for a drug cartel and international criminals.

    If the allegations against VM and Hodgins are true, it means the company that provided the debit cards ASD used was in the business of laundering money for at least one international narco business.

    On Aug. 1, 2008, the U.S. Secret Service seized more than $80 million in the ASD case. The money allegedly was tied to at least three autosurfs: ASD, GoldenPandaAdBuilder and LaFuenteDinero.

    ASD, which had operated under at least one other name and perhaps as many as three or more, claimed in 2007 that one of the reasons it could not make payments to members was that $1 million had been stolen by “Russian” hackers.

    Prosecutors said ASD never filed a police report — not even to report the theft of a huge sum of money. ASD instead relaunched as ASD Cash Generator. By the summer of 2008, it was gathering tens of millions of dollars per week.

    One bank account in the name of ASD President Andy Bowdoin seized by the Secret Service contained more than $31 million, according to court filings. Another account in Bowdoin’s name contained more than $23 million. Bowdoin was referenced as the “Sole Proprietor” of the accounts.

    All in all, the Secret Service seized more than $65.8 million from 10 Bowdoin bank accounts, and more than $14 million from at least five bank accounts linked to Golden Panda, according to records.

  • UPDATE: 5 Convictions To Date In Money-Laundering Cases Involving Colombian Drug Operation That Used Same Debit Card As AdSurfDaily Autosurf

    Federal prosecutors have announced five convictions in an international money-laundering case involving drug proceeds and the use of “stored-value” debit cards. (See subhead below.)

    The cases were brought by the Drug Enforcement Administration in 2008 as a result of an undercover operation. The debit cards used in the transactions were provided by Virtual Money Inc., according to court records in Connecticut.

    Records show that Virtual Money, known simply as VM, was the same company that provided debit cards to AdSurfDaily and other autosurf companies. VM’s operator, Robert Hodgins, also was indicted in the drug-related cases and “is being sought by law enforcement,” federal prosecutors said.

    News about the convictions in Connecticut was announced about two weeks after FBI Director Robert Mueller III testified before Congress that “stored value devices” such as reloadable debit cards increasingly were being used to move criminal proceeds through a “shadow banking system” that endangered the United States.

    The PP Blog reported in August 2009 that VM’s name appeared in advertising materials for ASD in 2007. Research showed that VM also provided cards to other autosurfs and HYIPs, including the PhoenixSurf autosurf Ponzi scheme.

    Records suggest that Hodgins or a VM designate attended an ASD function in Orlando in November 2006, about a month after ASD began its rollout.

    During that same year, according to the DEA court filings unsealed in September 2008 after a two-year investigation, VM cards were used in Medellin, Colombia, to withdraw millions of dollars in drug proceeds at ATMs between April and August.

    The drug-related, money-laundering indictments against VM initially were filed under seal in April 2008 and then superseded under seal in June 2008. The documents were made public in September 2008, about a month after the federal seizure of tens of millions of dollars from the personal bank accounts of ASD President Andy Bowdoin, amid Ponzi scheme, wire-fraud, money-laundering and securities allegations in an autosurf case.

    Some ASD members said they observed large sums of cash at ASD “rallies” and suitcases full of cashier’s checks.

    After purportedly operating in the hole throughout much of its existence and allegedly experiencing an unreported theft of $1 million at the hands of “Russian” hackers, ASD suddenly  came into possession of tens of millions of dollars in the first half of 2008, leading to questions about whether it was serving as a front to launder proceeds from criminal organizations.

    References to VM appear in ASD advertising materials dating back to at least February 2007, and other ASD references to VM date back to the fall of 2006, when ASD was just getting off the ground.

    In March 2008, according to records, a DEA informant gave Hodgins $100,000 in undercover funds, saying an uncle needed drug money laundered in the Dominican Republic. Hodgins allegedly agreed to perform the service for a fee of 10 percent of the amount, and the DEA alleged it has audio and photographic evidence of the transaction.

    If the allegations are true, it means the DEA has audio and photographic evidence of the man who provided debit cards to ASD and other surf enterprises accepting money to participate in international drug transactions and international money-laundering.

    Convictions In Drug/Money-Laundering Cases

    On March 30, 13 days after Mueller testified before Congress on the dangers of stored-value devices, Juan Merlano Salazar, 35, of Medellin, Colombia, pleaded guilty in U.S. District Court in Connecticut to 11 counts of money-laundering and one count of conspiracy to commit money laundering.

    Merlano was named in the same indictment that charged VM’s Hodgins and the company itself. Merlano was extradited from Colombia in June 2009, a year after he, Hodgins, VM and seven other defendants were charged in the superseding indictment. Merlano has been detained since his extradition and faces sentencing in June.

    He faces a maximum penalty of 240 years in prison and a maximum fine of $6 million.

    Four other defendants also have pleaded guilty to date to “charges stemming from this conspiracy,” prosecutors said.

    Guilty pleas were entered by Francisco Dario Duque, 49, of Medellin, Colombia; Gonzalo Bueno, 72, of Brooklyn, New York; Juan Chavarriaga, 45, of Fort Lauderdale, Florida, and Jose Manotas, 46, of New York, New York.

    Each of the defendants is detained and awaiting sentencing, prosecutors said.

    “[T]he [drug]organization employed operatives in the United States and funneled millions of dollars in drug proceeds from the U.S. to Medellin, Colombia,” prosecutors said.  “The investigation, which utilized a variety of traditional and sophisticated investigative techniques, including court-authorized interception of international e-mail, disclosed that the money laundering organization used direct deposits of cash into third-party bank accounts, as well as payment of third-party debt obligations to move cash drug proceeds from the New York metropolitan area out of the country.

    “The organization also used ‘stored value cards,’ which function like debit cards and enabled cardholders to deposit U.S. dollars into accounts locally, to be withdrawn later from banks in Medellin as Colombian pesos,” prosecutors said.  “The Government has alleged that the scheme resulted in the laundering of more than $7 million in drug proceeds.”

    Hodgins was president and chief executive officer of VM, a Texas-based business.

    “Hodgins is being sought by law enforcement,” prosecutors said.

    In addition to the DEA, the case is being investigated by the Criminal Investigation Division of the IRS, prosecutors said.