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Tag: Walt Wilkens

  • BULLETIN:’3 Hebrew Boys’ Sentenced To Prison Terms Totaling 84 Years; Case Has Bizarre Elements In Common With AdSurfDaily Litigation

    In a case that features elements remarkably similar to the AdSurfDaily litigation, a federal judge in South Carolina has sentenced three defendants in the “3 Hebrew Boys” fraud case to a combined total of 84 years in prison.

    Joseph Brunson, Tim McQueen and Tony Pough were jailed immediately after their convictions a year ago in an $82 million, foreign-currency fraud and Ponzi scheme case that traded on religion. The men, who called their business a debt-relief ministry, accused former U.S. Attorney Walt Wilkens of “treason” last year and of committing acts of war against them.

    The sentencing occurred today, with U.S. District Judge Margaret Seymour giving Pough 30 years and Brunson and McQueen 27 years each. The office of U.S. Attorney William N. Nettles of the District of South Carolina did not immediately return a call from the PP Blog for comment. The Associated Press first reported on the lengths of the sentences tonight, noting that the terms were “so harsh in part because the judge found they tried to obstruct justice at every turn.”

    Brunson, McQueen and Pough became known as “3 Hebrew Boys” after operating a website with the same name, which is based on a biblical story of believers who escaped a furnace by relying on their faith. The Ponzi scheme operated under the name Capital Consortium Group LLC.

    In 2007, the men filed a court document that described their investment program as an effort to free people from government “bondage” and referred to the investigation as “Satan’s handiwork.”

    A year later, in 2008, AdSurfDaily President Andy Bowdoin described the case against his purported Florida “advertising” firm as the work of “Satan,” comparing it to the 9/11 terrorist attacks.

    Bowdoin, 76, was indicted earlier this month on Ponzi scheme charges.

    The 3 Hebrew Boys’ operation sought to chill law enforcement, regulators and members of the media from scrutinizing operations, prosecutors said.

    In an approach similar to one used by the AdViewGlobal (AVG) autosurf, members were forced to agree to a confidentially clause that purportedly prohibited them from discussing the company outside the confines of meeting places. Participants were threatened with a $1 million penalty for sharing information.

    A court-appointed receiver published documents that listed an astonishing array of luxury purchases made by the 3 Hebrew Boys schemers with investors’ money. Among the items were a Gulf Stream jet, a Prevost Motorcoach and automobiles with famous names such as Mercedes, Lexus, BMW, Saab, Cadillac and Lincoln.

    In the “3 Hebrew Boys” case, Brunson filed documents that appear to have asserted immunity from prosecution on the grounds of purported sovereignty. The documents appear to have been designed to force Wilkens, then the U.S. Attorney, to default on a contact to which he never had agreed. The approach sometimes is referred to as “paper terrorism” or “mailbox arbitration.”

    A similar approach has been used by litigants in the ASD case.

    Screen shot: Joseph Brunson declared last year that then-U.S. Attorney Walt Wilkens was guilty of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.

    Brunson wrote in a court filing he described as a “Bill of Peace” that Wilkens had a duty to appear before a notary public and acknowledge Brunson’s assertion of sovereignty in “red ink.” The document demanded that Wilkens use his “Christian name” in his response to Brunson.

    A refusal by Wilkens to carry out the demands within three days, Brunson said, would result in a contractual agreement that Wilkens was “an enemy of One and the [U]nited States of America and the people, Constitution, and Government thereof.”

    Read Joseph Brunson’s purported “writ” in the “3 Hebrew Boys” case.

  • Federal Judge Dispatches U.S. Marshals To Arrest Convicted Ponzi Schemer; Michael Derrick Peninger Did Not Show Up At Sentencing Court In South Carolina

    UPDATED 5:45 P.M. EDT (U.S.A.) A federal judge has issued a bench warrant for Michael Derrick Peninger after Peninger did not show up for sentencing yesterday in a $7 million, Ponzi-scheme case in South Carolina.

    Peninger, 50, of Charleston, was convicted in October of eight counts of mail fraud and one count of making a false statement to an FBI agent, the CFTC said.

    The Post and Courier newspaper of Charleston is reporting that prosecutors argued last fall that Peninger should have been kept in jail upon conviction because he posed a flight risk.

    Peninger was released until his sentencing date after his 72-year-old mother appealed to U.S. District Judge P. Michael Duffy to permit her son to leave jail to assist with the care of her husband, who has Alzheimer’s disease.

    Duffy permitted Peninger to assist his mother and stepfather, ordering him to wear an ankle monitor. The judge now has dispatched the U.S. Marshals Service to locate and arrest Peninger, the Post and Courier is reporting.

    Just days ago a judgment of more than $3.9 million was placed against Peninger in a fraud case brought by the CFTC in 2008. The judgment was ordered by U.S. District Judge C. Weston Houck.

    Peninger was charged criminally in January 2009. Prosecutors said he operated three companies: Cooper River Group Inc., CSA Trading Group Inc., and Daniel Island Builders LLC.

    “[A]t least 20 investors provided Peninger and others with funds to invest on their behalf, but . . . Peninger and others misappropriated the money to pay personal expenses, to pay employees, to fund unauthorized business ventures, and to pay previous investors in a manner akin to a Ponzi scheme,” prosecutors said.

    Peninger faced a maximum penalty of nearly two decades in prison.

    South Carolina has had some unusual Ponzi cases, including the curious case of the “3 Hebrew Boys.”

    In that case, convicted Ponzi schemer Joseph B. Brunson of Hopkins declared himself “sovereign” and therefore immune from U.S. law. The claim was reminiscent of claims made by Curtis Richmond, a mainstay, pro se litigant in the AdSurfDaily Ponzi scheme case.

    In the 3 Hebrew Boys case, Brunson declared that former U.S. Attorney Walt Wilkens was guilty of treason, insurrection and conspiracy to overthrow the U.S. government in his successful efforts to prosecute Brunson.

    Richmond argued in the ASD case that U.S. District Judge Rosemary Collyer was guilty of treason.

  • News, Notes And Updates: Jailed And Disbarred, Former Massachusetts Attorney Who Fleeced 95-Year-Old Client Arrested On New Charges

    EDITOR’S NOTE: This post distills recent news and development on the fraud and Ponzi fronts.

    CHARGED: Six people — including a disbarred attorney already in prison — have been charged in Massacuusetts in an elaborate mortgage-fraud scheme.

    Bruce Namenson, the former lawyer, was charged with 18 counts of of larceny for arranging bogus loan closings, sham notarizations and pocketing fraudulent proceeds from real-estate deals.

    Namenson, 47, of Walpole, Mass., already was in prison when arrested on the mortgage-fraud charges. In an earlier case, he was convicted of operating a complex scam in which both clients and insurance companies were bilked.

    One of the victims in the insurance-fraud case was a 95-year-old man, Massachusetts Attorney General Martha Coakley said.

    In the insurance case, which involved victims young and old, Namenson defrauded the 95 year-old client out of a $20,000 bodily injury settlement check.

    “The client had been injured in a car accident, and instead of paying the client a portion of the settlement, Namenson forged the client’s signature on a settlement release and settlement check, kept the money, and repeatedly told the client that his case had never been settled,” Coakley’s office said in 2008.

    Namenson also fleeced an injured, 15-year-old client out of most of a $100,000 settlement, prosecutors said.

    Charged in the new case with Namenson were Joshua Brown, 29, of Brockton, Mass; Brian Frank, 32, of New Hartford, N.Y.; John Sweetland, 28, of Yorba Linda, Calif; Linda Defeo, 28, of Springfield, Mass; and Brian Arrington, 39, of Boston.

    Brown, Frank and Sweetland are real-estate investors, Coakley’s office said yesterday. Defeo and Arrington are mortgage brokers.

    The real-estate scheme fleeced banks and borrowers out of $12.5 million, and involved bogus appraisals, submissions of bogus loan documents and misrepresentations to virtually every party in transactions tied to 26 distressed properties, prosecutors said.

    Brown, Frank and Sweetland skimmed $2 million from corrupt transactions, Coakley’s office said. Defeo and Arrington arranged for bogus loans, and Namenson presided over corrupt closings and pocketed money that was supposed to pay for title insurance.

    INDICTED: If you’re a Forrest Gump fan, this case might be one to add to a Bubba Blue list of the various ways to have a Ponzi scheme, instead of the various ways to have shrimp.

    John D. Terzakis, 52, of Hinsdale, Ill., and Robert E. Estupinian, 47, of San Jose, Calif., have been indicted in California on 12 felony counts of wire fraud, money laundering, and conspiracy to commit wire fraud and money laundering.

    A company operated by Terzakis and  Estupinian — Vesta Strategies of San Jose — was a Ponzi scheme, U.S. Attorney Joseph P. Russoniello said. Terzakis was the majority owner of Vesta and controlled its business activities. Estupinian, was the chief executive officer and minority owner of Vesta until December 2007.

    The scheme, according to prosecutors, involved the business of being a “qualified intermediary” in tax-deferred, real-estate exchanges under section 1031 of the Internal Revenue Service Code.

    “In general, a Section 1031 exchange allows taxpayers to avoid paying tax on capital gains by depositing the proceeds from an investment real estate sale, that would otherwise qualify as a taxable capital gain, with a qualified intermediary for up to 180 days,” prosecutors said.  “Under Section 1031, if the taxpayer purchases another investment property within those 180 days, the proceeds from the first sale may be rolled over into the new investment without being taxed as capital gains.”

    Although Vesta promised to hold funds as a qualified intermediary, Terzakis and Estupinian “stole client funds for their own use” and and also “used new client deposits to pay redemptions owed to earlier clients,” prosecutors said.

    Terzakis was arrested in Illinois. He made an initial appearance before a judge, who placed him on home confinement with electronic monitoring, pending a second appearance Jan. 13. Estupinian was arrested in California. He also made an initial appearance before a judge, and was placed on home confinement with electronic monitoring secured by a $1 million bond. His next appearance is scheduled Jan. 20.

    CONVICTED: Oren Eugene Sullivan, 63, of Rock Hill, S.C., has pleaded guilty to mail fraud in a Ponzi scheme.

    U.S. Attorney Walt Wilkens said Sullivan admitted that he ran a Ponzi scheme between 1995 and 2008 in which he sold false investments to 35 different individuals or groups of investors.

    “Sullivan told clients that he was managing their investment accounts, and paid small dividends to his investors,” prosecutors said. “However, he was actually converting their invested money for his own use, and paying the dividends with money he received from new investors. Over the course of the scheme, Sullivan took in approximately $2.5 million from unwitting investors.”

  • SPECIAL REPORT: Convicted ‘3 Hebrew Boys’ Ponzi Figure Declares He Is ‘Sovereign’; Joseph Brunson Says Prosecutors Have No Authority Over Him

    Defining himself as “One,” a South Carolina man convicted Friday of operating an $82 million Ponzi scheme with two colleagues has filed a series of pleadings declaring himself “sovereign” and accusing a federal prosecutor of committing treason against the United States.

    The convicted schemer, Joseph B. Brunson of Hopkins, appears to trying to bolster his claim he is sovereign by constructing an argument that he is immune from prosecution because the United States is insolvent and has no jurisdiction over him. The pleadings were filed on the same day a jury found him guilty of mail fraud, money-laundering and transporting stolen goods and issued a special verdict for forfeiture of $82 million — the proceeds of the Ponzi scheme.

    Brunson is one of the so-called “3 Hebrew Boys” who operated a website with the same name. The name is taken from a biblical tale of believers who escaped a furnace by relying on their faith.

    Bond Revoked

    Upon the jury verdicts, prosecutors moved to revoke the bond of Brunson and co-defendants Tim McQueen and Tony Pough, asking a federal judge to jail them immediately, pending sentencing.

    Judge Margaret B. Seymour granted the request, pointing to a Brunson pleading that accused U.S. Attorney Walt Wilkins of treason.

    Screen shot: Joseph Brunson declares that U.S. Attorney is guility of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.
    Screen shot: Joseph Brunson declares that U.S. Attorney Walt Wilkens is guilty of treason, insurrection and conspiracy to overthow the U.S. government in his efforts to prosecute Brunson.

    ‘Pembina’ Tie

    Web references connect Brunson to The Little Shell Pembina Band of North America, a reputed splinter group of a legitimate tribe of Native Americans in Montana. WIS News 10, the news arm of a TV station in South Carolina, reported in 2007 that Brunson was stopped by police for driving with illegal tribal license plates while out on bond after being charged by state authorities in the “3 Hewbrew Boys” case.

    The splinter group is listed by the Anti-Defamation League (ADL) as an “active anti-government extremist group.”

    “Members of the group claim that they belong to a ‘sovereign’ Native American tribe and therefore are not subject to laws and regulations,” ADL reports.

    Activities of the splinter group range from “driving with bogus license plates to perpetrating insurance fraud schemes [and] tax evasion,” ADL reports.

    ADL notes that the Little Shell Band of Montana is a legitimate tribe, but is not recognized by the federal government. It has no connection to extremism or to the Little Shell Pembina Band of North America, according to ADL.

    Bizarre Filings In Securities Cases

    Brunson’s filings in the South Carolina case are similar to pro se pleadings in the alleged AdSurfDaily Ponzi scheme case in the District of Columbia. Filings in both cases have included wild arguments, using words directed at prosecutors or judges such as “treason” and “conspiracy” in bids to short-circuit the government’s efforts to prosecute Ponzi and securities cases.

    Screen shot: Joseph Brunson asserts his purpurted sovereignty in the '3 Hebrew Boys' Ponzi scheme case.
    Screen shot: Joseph Brunson asserts his purpurted sovereignty in the '3 Hebrew Boys' Ponzi scheme case.

    Curtis Richmond, a mainstay pro se litigant in the ASD case, has been associated in court filings with a version of the Pembina tribal name and the name of a separate Utah tribe a federal judge ruled a “complete sham.” The purported Utah tribe filed enormous financial judgments against prosecutors and members of law-enforcement, and was successfully sued under federal racketeering and mail-fraud statutes.

    Richmond was among a group of litigants ordered to pay more than $108,000 in damages and costs for their roles in harassing members of the Utah law-enforcement community with vexatious legal filings. In a separate case, Richmond was found guilty in California of contempt of court for harassing federal judges.

    Despite the RICO ruling that went against him and his contempt conviction, members of the AdSurfDaily autosurf and a closely associated surf known as AdViewGlobal hailed Richmond a “hero.”

    ASD is implicated in an alleged $100 million Ponzi scheme. Federal prosecutors are attempting to force the forfeiture of tens of millions of dollars in the case, which includes two other autosurfs: Golden Panda Ad Builder and LaFuenteDinero. “LaFuenteDinero” means the “fountain of money,” and the surf was the purported Spanish arm of ASD. Golden Panda was the purported Chinese arm.

    For more than a year — at least since May 2008 — various operators or participants in alleged Ponzi schemes have claimed to be immune from U.S. law because they were “sovereign” beings or members of a “sovereign” Indian tribe.

    Screen shot: Joseph Brunson he is 'One' and that U.S. Attorney Walt Wilkins is engaged in acts of war against 'One.'
    Screen shot: Joseph Brunson he is 'One' and that U.S. Attorney Walt Wilkins is engaged in acts of war against 'One.'

    The arguments have been both bizarre and implausible. Gold Quest International (GQI), an alleged multimillion Ponzi scheme operating out of Las Vegas, claimed Panamanian registration and immunity from U.S. law because it was associated with a North Dakota Indian tribe.

    Despite the claim GQI was immune from the law because of its purported tie to the Pembina tribe, one of the alleged operators the Ponzi scheme, John Jenkins, left a Nevada courtroom to go outside to plug a parking meter to avoid getting a ticket.

    GQI attempted unsuccessfully to sue the SEC for the spectacular sum of $1.7 trillion for bringing the prosecution. The company reportedly relied on the services of a nonattorney as its “attorney general” and a nonnotary as its notary public to certify documents.

    “You are in an imaginary world where you belong to an unrecognized Indian group,” a federal judge advised Robert Neilson Baker, the nonnotary notary.

    In the “3 Hewbrew Boys” case, Brunson filed documents that appear to have been designed to force Wilkens, the U.S. Attorney, to default on a contact to which he never had agreed. The approach sometimes is referred to as “paper terrorism” or “mailbox arbitation.”

    A similar approach was used by litigants in the ASD case.

    Brunson wrote in a court filing he described as a “Bill of Peace” last week that Wilkens had a duty to appear before a notary public and acknowledge Brunson’s assertion of sovereignty in “red ink.” The document demanded that Wilkens use his “Christian name” in his response to Brunson.

    A refusal by Wilkens’ to carry out the demands within three days, Brunson said, would result in a contractual agreement that Wilkens was “an enemy of One and the [U]nited States of America and the people, Constitution, and Government thereof.”

    Read Joseph Brunson’s purported “writ” in the “3 Hebrew Boys” case.

    Read Joseph Brunson’s claim U.S. Attorney Walt Wilkens is committing treason against the United States.

    Read the jury’s special verdict ordering the forfeiture of $82 million in the “3 Hebrew Boys” case.

    Read a statement by acting U.S. Attorney Jeffrey Sloman on Audie Watson, a Florida man found guilty of selling bogus memberships in a “Pembina” tribe for $1,500 to illegal aliens.