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Tag: WCM

  • SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans

    A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.

    VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.

    A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.

    Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.

    “Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.

    The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.

    From the SEC’s ViziNova  complaint (italics added/light editing performed):

    Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.

    In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .

    Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.

    ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.

    Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.

    “There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”

    The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.

    Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.

    In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.

    Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.

    Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.




  • BULLETIN: CLAIM: Former CIA Operative Was Paid More Than $400,000 By Companies Linked To WCM Ponzi Scheme

    breakingnews72UPDATED 9:44 P.M. EDT MARCH 14 U.S.A. How strange were things in the universe of WCM777, an MLM “program” accused by the SEC last year of pulling off an $80 million, cross-border Ponzi swindle?

    Would you believe that a former CIA operative with two felony convictions ended up on the payroll?

    Robert Sensi, the former operative, received $403,000 from companies linked to WCM777, according to an amended lawsuit filed against Sensi in U.S. District Court for the Central District of California.

    WCM777 was operated by Ming Xu of Temple City, Calif. A forensic accounting has determined that the WCM777 entities used 77 domestic bank accounts and 23 foreign ones, according to filings by court-appointed receiver Krista L. Freitag.

    Sensi was paid six times through ToPacific Inc. and one time through World Capital Market Inc. between Jan 30 and March 25, 2014, according to court filings.

    Alleged paymnets to Robert Sensi from WCM777-related firms. Source: Screen shot from federal court filing.
    Alleged payments to Robert Sensi from WCM777-related firms. Source: Screen shot from federal court filing.

    Freitag is suing Sensi for return of the money.  She initially sued him for the return of $385,000 (excluding interest and costs) in November 2014, alleging that he claimed he “used to work” for the CIA and was hired by WCM777-related companies to address complaints about the program by authorities in Peru, Taiwan and Dubai.  She further alleged that Sensi was “well aware” that various WCM777-related business were engaged in a Ponzi scheme.

    Sensi responded to the November complaint on Feb. 9. He did not expressly deny Freitag’s claim that he had claimed to have worked for the CIA, but he did deny the allegations he’d been hired by the Xu entities to address the concerns about WCM777 in Peru, Taiwan and Dubai. He further denied he had knowledge of a Ponzi scheme.

    In his answer, Sensi admitted “services were rendered pertaining to Peru, Taiwan, and Dubai.”  But he did not describe the services. On March 12, Freitag filed an amended complaint, asserting in the filing that Sensi had received $403,000 from the WCM777 entities, not the $385,000 specified in the original complaint.

    Court records or published reports from the past two decades show that Sensi has been sentenced to prison twice — once for stealing millions of dollars from Kuwait Airways, a second time for a “Nigerian letters” scam in which a German businessman was swindled.

    Larry J. Kolb, an author and former CIA agent, has written extensively about Sensi, his ties to the CIA and further ties to Republican politicians and Republican political causes, including fundraising.

    Chapter 1 of “America at Night,” a 2007 book by Kolb, is available for free on Kolb’s website. The chapter references a meeting Kolb had in California with attorney “Vince Messina”  in May 2004.

    A snippet (italics added):

    Vince was late for lunch, and I wish he’d never shown up. But, then again, all indications are if Vince hadn’t sucked me back into the secret world, somebody else would’ve. So I don’t hold it against him. Vince Messina. Washington tax and immigration attorney, international dealmaker, bon vivant. Based on what I know of his background, he has to be as old as the hills. But somehow he doesn’t seem it. Bald on top, short dark hair on the sides, olive skin, smiles a lot, constantly on the move. Vince is on the up and up, but spends much of his time in strange lands working for mysterious clients.

    During the lunch meeting, Messina asked Kolb if he knew Sensi, a somewhat startling question, Kolb wrote.

    After Kolb answered yes, Messina called his nephew, Gary Messina, a U.S. Department of Homeland Security official, to enable Gary to listen in, Kolb wrote.

    Ten years later, in May 2014, Vincent Messina would become a relief defendant in the WCM777 Ponzi case. The SEC alleged that Messina was WCM’s asserted “general counsel” and had come into possession of $5 million from the fraud scheme.

    More than $941,000 of the $5 million went to International Market Ventures (IMV), a company operated by Gary Messina, according to court filings.

    U.S. District Judge John F. Walter declared the $5 million that flowed to Vincent Messina “ill gotten” and ordered it disgorged. IMV was held jointly liable with Vincent Messina for disgorgement of $941,505 of the $5 million sum.

     

     

  • SPECIAL REPORT: WCM777 Says Its U.S. Operations ‘Will Be On Hold Until Further Notice’ Because Its Securities Sales ‘Failed To Fully Comply With Laws And Regulations In United States’ — But Will The ‘WCM 777 Boston’ Band Play On In Houston? And What About The Highly Curious ‘Joseph Global Institute?’

    EDITOR’S NOTE: This story covers highly curious events associated with WCM777 and related entities or people. In this post you’ll find:

    • News on yesterday’s announcement by WCM that it had mothballed its U.S. operation that sells securities.
    • Questions about whether a WCM777 event scheduled over the next two days in Houston would occur or whether TelexFree, a company under investigation in Brazil amid pyramid-scheme allegations, could become the “opportunity” promoted at the Houston event.
    • News about confusion associated with a strange entity known as the Joseph Global Institute, purportedly operated by WCM777 executive Ming Xu. Ming Xu also is known as “Dr. Phil Ming Xu” and “Dr. Philip Ming.”  A website associated with the Joseph Global Institute appears to have preemptively declared the enterprise a university that confers graduate and postgraduate degrees, but is showing videos that appear to be owned by Liberty University in Lynchburg, Va. The Liberty videos have led to questions about whether Joseph Global potentially is duping visitors into believing the Liberty students who appear in the videos are Joseph Global Institute students or whether Joseph Global is a California branch of Liberty.
    • News about strange claims that WCM777 was “launching” an enterprise that actually launched long ago and became the center of an international media and diplomatic firestorm in 2012 over its reported ties to the controversial film, “The Innocence of Muslims.”

    ____________________________________

    UPDATED 6:56 P.M. ET (U.S.A.) WCM777 announced yesterday on its website that it was out of compliance with U.S. regulations and thus had put its U.S. securities operations “on hold.” Whether the purported “opportunity” whose affiliates claim can cause $14,000 to turn into $500,000 in 52 weeks had been notified by WCM777 to stop pitching U.S. prospects is far from clear.

    The news of the U.S. halt first was reported by BehindMLM.com.

    Left unsaid by WCM777 in its announcement was how the purported opportunity intends to address potential claims from untold scores of U.S. residents, including residents who attended pitchfests in hotels and churches and who might have purchased its securities. It is known from public records that Massachusetts purchasers were offered refunds. On Nov. 14, the state alleged WCM777 was selling unregistered securities.

    The WCM777 announcement did not address whether the “opportunity” had reported itself to the SEC. Nor did it say whether it had been contacted by the SEC. Until yesterday, the company never had directly addressed the Massachusetts allegations, hinting only that things had to change at WCM777.

    Another major concern: If WCM777 is selling unregistered securities, so is its stable of thousands of promoters, including those outside the United States who can solicit U.S. residents over the Internet. In theory, any U.S. -based promoter or international WCM777 promoter who continues to pitch the “opportunity” to U.S. residents could be charged under U.S. securities laws or the securities laws of the U.S. states. Whether WCM777 has the ability to block U.S. registrations is unclear.

    Will The WCM777 Band Play On In Houston?

    At the time of this PP Blog post, an apparent WCM777 affiliate site dubbed “Wcm777 Boston” on Facebook appeared not to know that WCM777 is closing shop in the United States. Nothing about WCM777’s announcement about its lack of compliance and the asserted halting of its U.S. securities operations appears on the Boston Facebook site. Indeed, at the time of this post, it was still promoting a WCM777 pitchfest set for tomorrow and Saturday at the  “Crown plaza northwest brookhollow.”

    “i just arrived in houston…. any question about the up coming meeting inbox me… dont lose this opportunity to learn about multi level marketing,” a post dated yesterday at the Boston Facebook site read. Meanwhile, a Nov. 1 post at the Boston Facebook site touting the purported daily payout of WCM777’s $1,999 plan reads, “U$32.00 DOLLARS EVERY DAY. NON STOP Daily Cash Flow NO Selling Required…coming soon, meeting in Houston, 11/22 and 11/23 . . .”

    Whether the WCM777 affiliate who runs the Wcm 777 Boston Facebook site will follow through with the plan to pitch WCM777 at the event — despite WCM777’s own confirmation it was operating illegally and was halting the sale of its own securities — is unclear. Continued sales of WCM777’s offerings could trigger even more scrutiny of the firm and its affiliates. Attendees at the Houston event who plowed any money into the WCM777 scheme all could become potential litigants against the Boston pitchman and WCM777 itself. If the Boston pitchman is aware or becomes aware of WCM777’s announcement before the Houston event and seeks to pitch something else, he may find himself addressing a confused and hostile crowd.

    The Wcm777 Boston Facebook site has associated itself with a street address in Boston, although the asserted phone number for the site uses an area code from a different region of Massachusetts. Whether the operator of the Facebook site had traveled from Boston (or elsewhere in Massachusetts or another state) to host the Houston event is unclear.

    Because the “Wcm777 Boston” Facebook site also references TelexFree in a Nov 10 post, attendees of the Houston event might find themselves getting pitched on that alleged pyramid scheme, too. TelexFree is under investigation in Brazil. The Nov. 10 post reads, “I do have a bunch guys in Houston area, my downlines on wcm777 and Telexfree, they will be more than happy to talk with you… Thank you again.” It is positioned alongside the logo of the National Football League.

    The Nov. 1 post that reproduces the NFL logo contends that two lucky prospects who attend the Nov. 22 and 23 WCM777 event in Houston will receive free tickets to “JACKSONVILLE VS HOUSTON.” The game is set for Sunday in Houston. Whether Ponzi or pyramid proceeds were used to pay for the tickets is unclear.

    wcm777boston

    Also unclear is precisely how the Boston affiliate is conducting business with WCM777 and recruits. Asked to provide payment proof, the Boston affiliate contended this in a Nov. 10 Facebook post: “I work with wcm for 3 Months and I had never need to transfers money my bank account because I use my credit to sign people up, if you not happy with screenshots unfortunately I don’t have deposits transfers to my bank account from wcm777…” (Unedited by PP Blog.)

    The post introduces the possibility that the Boston WCM affiliate somehow is paying recruits’ way into WCM777 and relying on reimbursement later, a common occurrence in HYIP scams. Whether that reimbursement would come from the prospects or the company is unclear. On Oct. 30, the PP Blog reported that a WCM777 affiliate on YouTube claimed, “I just had some[one] wire me from Mexico . . . $6,000 for three units. I’m signing up another person [in] [Florida?] for six units as well — excuse me, three units as well — another $6,000. And this is just going nuts.”

    The YouTube claim raises the specter that individual WCM777 promoters are accepting national and international wires from WCM777 recruits and somehow later transferring the money to WCM777. Such practices have been associated with cross-border securities scams, including the infamous Imperia Invest IBC scam in which the SEC accused a promoter of creating at least two business entities and using them to wire money to the Imperia scammers outside the United States.

    Making matters even stranger is the wording of WCM777’s announcement that it was halting its U.S. operations in the aftermath of a Nov. 14 consent order it entered into with the state of Massachusetts, which accused it of selling unregistered securities and benefiting from an affiliate’s targeting of the state’s Brazilian community. WCM777’s announcement is dated Nov. 20, six days after the order in Massachusetts. The announcement did not explain the delay in addressing the Massachusetts allegations. Nor did it explain why WCM777 hadn’t previously announced it was under investigation, only to claim later that “negotiations” went well — as though it were common knowledge that the firm was the subject of a securities investigation.

    Moreover, the timing suggests that WCM777 continued to benefit from the sale of unregistered securities across the United States even after the Nov. 14 order. Beyond that, it is far from clear whether WCM777 even has control over its U.S. affiliate base or affiliate bases elsewhere in the world. What is clear is that WCM777 is positioned as an opportunity for Christians to prosper.

    Here is WCM777’s Nov. 29 announcement in its entirety (italics added):

    WCM777 Response to Massachusetts Consent Order

    The negotiations between our lawyers and the Massachusetts’ Office of the Secretary went well. We have reached a settlement with Massachusetts.

    However, because the sale of securities failed to fully comply with laws and regulations in United States, our operations in the U.S. will be on hold until further notice; WCM Limited will continue operations. The company will implement new compliance procedures and register with the SEC before selling securities. Our customer service, IT support, and sales training are far from ideal. Especially in sales training, we don’t have a proper system set up. Some of the distributors have exaggerated the sales performance, which has led to complaints. The company system also needs to be further improved to ensure global legitimacy.

    Under the counsel of the lawyer, WCM777 has already registered in the state of California. We will soon re-enter the U.S. market. Also, WCM777 will hold the grand opening for Hong Kong office in Dubai this coming January. We will restore WCM777’s promise and move towards achieving our vision!

    Why WCM777 would hold a “grand opening” for a “Hong Kong” office in Dubai is unclear. Dubai is a city in the United Arab Emirates. Also unclear is how WCM777 intends to comply with securities regulations in all 50 U.S. states, plus federal territories and districts such as the District of Columbia (Washington, D.C.).

    Because virtually all developed nations regulate the sale of securities, WCM777 may face challenges across the globe. The scheme already is under investigation in Colombia, and there are reports that Peru has concerns.

    Affiliates, meanwhile, now have been officially blamed by WCM777 for exaggerating the offering and causing complaints, a classic corporate narrative in the HYIP world. While it is clearly true that affiliates have made outrageous claims that reflect their own lack of due diligence on the purported “opportunity,” it is equally true that WCM777 has advertised that a payment of $1,999 returns $3,200 in 100 days.

    Other Curious Issues

    An entity tied to WCM777’s purported operator Ming Xu — the Joseph Global Institute of Pasadena, Calif. — appears to be implying it operates a university that offers a “College of Engineering,” a “College of Health, ” a “College of Media Arts” and a “College of Business.” A website using the Joseph Global Institute name is accessible through a website that uses the famous name of “Harvard” as part of the URL.

    The site shows images of smiling, college-age students wearing graduation caps and holding what appear to be degrees. Other smiling students are shown studying in front of something that resembles a university hall. Visitors to the site are prompted to watch three videos, but there are no disclaimers or language that the action shown in the videos isn’t taking place at Joseph Global. All three videos appear to be owned by Liberty University, a large Christian university in Lynchburg, Va. Nothing on the Joseph Global Institute site, however, identifies the videos as belonging to Liberty and not to Joseph Global, a potential source of confusion.

    A text line below the videos on the Joseph Global site reads, “Want to see what we offer? Request a brochure here and get a tour of our school.”

    Why Joseph Global appears to be implying that it operates a university is unclear.

    Liberty University did not respond to a PP Blog request for comment about whether it was aware of the Joseph Global site.

    The strangest thing yet: A Nov. 18 Twitter post attributed to “Dr. Phil Ming Xu,” the purported operator of WCM777, says, “Launching The Way TV to transform nations & Joseph Global institute to train a group of Josephs to bless the world.”

    But The Way TV is something that launched years ago, through an entity known as Media for Christ. Media for Christ is based in Duarte, Calif. — and has a history that includes being at the center of an international firestorm.

    That firestorm centered on the inflammatory trailer of a film production known as “Innocence of Muslims,” which has been described as anti-Islamic and denigrating to the prophet Muhammad.

    Here’s how the Los Angeles Times put it on Sept. 13, 2012 (italics added):

    Joseph Nassralla Abdelmasih, the president of the Duarte-based charity Media for Christ, and Nakoula Basseley Nakoula, a convicted felon from Cerritos, emerged Thursday as forces behind “Innocence of Muslims.” An online trailer for the low-budget film incited violence in recent days across the Arab world.

    Nassralla later reportedly told the website AtlasShrugs2000 that he’d been duped by Nakoula into believing Nakoula was making a film about the persecution of Christians and he understood from Nakoula that the film was titled “Desert Warrior.”

    What was supposed to be a film about members of one faith persecuting members of another turned out to be something quite different: a film that portrayed Muhammad, a sacred figure, as a buffoon.

    Quoting Nassralla, AtlasShrugs2000 reported this on Sept. 17, 2012 (italics added):

    Nakoula needed a place to film. So I let him use my facility – that is all I did, and is the full extent of my involvement with this project. Nakoula used my facility for ten days. Media for Christ employees were given a vacation during that time, because Nakoula was using the facility and so there was no work for them. There was only one Media for Christ employee who remained, to answer phones for the ministry.

    I later discovered that Nakoula, using the name Sam Bacile, had gone to LA Films as producer of Desert Warrior, and used the name of my organization, Media for Christ, to obtain the permit he needed. He did so without my knowledge or permission.

    Now, the Twitter site under the name of WCM777 figure Dr. Phil Ming Xu is claiming it is “launching” The Way TV, something Nassralla already has launched. The Twitter site further claims the launch extends to the Joseph Global Institute, apparently the same entity that is advertising its operation of various “colleges” of higher education and showing website visitors videos of Liberty University students.

    A letter attributed to “Dr. Bruno Caporrimo” at the site references the city of Duarte, the home of The Way TV and Media for Christ, the Nassralla enterprises. Caporrimo is referred to elsewhere online as a former Mafia member who found God.

    Here is the opening of the letter, which is dated Nov. 16, 2013: (italics added):

    Dear Potential Student,

    My name is Dr. Bruno Caporrimo, Chancellor of Joseph Global Institute. At J.G.I. we have been training men and women for full time ministry, in a formal classroom experience as well as helping individuals gain a greater knowledge and understanding of the bible in order to fulfill the mandate of God’s calling in their lives. Our curriculum offers important bible doctrines in addition to the School’s emphasis on the practical side of ministry.

    It is our desire to see the world evangelized and we believe that if people are trained and equipped, from the standpoint of their local church and community, that this mandate from the Lord Jesus Christ of Nazareth can be effectively realized and fulfilled in our generation. We currently have students from 50 different churches and from more than 10 nations around the world enrolled in Joseph Global Institute. J.G.I. has equipped and discipled into full and part time church and para-church ministry, over 5,000 students and they have embarked on their personal calling to fulfill the one great Commission of Matthew 28:19.

    Whether you plan to study through our International headquarters & ‘Global Student Network’™ in Duarte, California, or through our Distance Learning and online Correspondence Courses™ we are sure that we have the tools and resources to launch and elevate your personal and ministerial calling SO THAT YOU CAN bear much fruit for the Lord Jesus Christ and to operate in faith, diligence and integrity for God’s Kingdom.

    In a YouTube video dated Sept. 8, 2012, Caporrimo and Ming Xu appear. Ming Xu is described as the “dean” of the school and says, “If you want to get involved with us . . . we have bachelor degree[s], we have master degree[s.]” Caporrimo refers to Ming Xu as “Dr. Phil.”

    The URL cited for the Joseph Global Institute in the video — TheJoseph.org — now rotates to a parked page for Sedo, a domain seller.

    Another website associated with the Joseph Global Institute — JosephGlobalInstitute.com — shows some students holding books and others receiving degrees at a graduation ceremony. The JosephGlobalInstitute.com site uses the same logo as the website that uses Harvard’s name in its URL. The logos are similar in appearance to the logo of the actual Harvard University.

    Also see coverage on the MLM Skeptic Blog about a purported Ming Xu entity known as the Harvard Global Institute.

  • Churches May Be At Risk From WCM777 ‘Program’; Congregants In Rialto, Calif., May Have Been Swept Into Bizarre Cross-Border Scheme; YouTube Pitchman Says Venture Will ‘Go Into Selling Shares, Pre-IPOs’; Craigslist Flags Ad In Atlanta; Siemens AG Says ‘No Form Of Cooperation Exists’ Between Itself ‘And The World Capital Market Company’

    wcm777Siemens AG, the German engineering and electronics conglomerate, has taken the unusual step of issuing an “official statement” on its public website that “no form of cooperation exists between Siemens and the World Capital Market company and its affiliated businesses.” The statement appeared yesterday and was announced on Twitter, after the multibillion-dollar firm had received repeated tweets inquiring about its purported ties to WCM and WCM-related web entities, including an MLM “program” known as WCM777.

    Among other things, WCM and its MLM affiliates have asserted that Siemens, beginning in 2012, assisted WCM in the development of cloud-computing products. Siemens, however, said it sold the business unit to which WCM and affiliates have referred in 2011.

    “The World Capital Market (WCM/WCM7/WCM777) company is not entitled to use the Siemens name or trademark,” Siemens said.

    It added, “In order to help other investors avoid making any investments based on false assumptions, we would urge you to pass on this information.”

    The WCM entities may be operating out of Hong Kong.

    Siemens did not say whether it had received any inquiries from law enforcement about the claims made by WCM and its apparent worldwide group of MLM promoters, some of whom have claimed WCM has business ties to other famous companies, perhaps particularly companies in the hospitality industry. News about the Siemens statement appeared on the MLM Skeptic antiscam Blog.

    Based on its research, the PP Blog is reporting today that text below a YouTube video dated Aug. 18, 2013, references Siemens as a technology supplier to the WCM777 MLM “program” and further claims that WCM has provided loans totaling in excess of $1 billion to nine jewels of American business, including at least two that trade on NASDAQ. One concern, a national restaurant chain, was said to have borrowed $908 million from WCM. Another concern, a convenience-store chain founded in Texas, was said to have borrowed $75 million. A famous American toy company that trades on NASDAQ and is an S&P 100 component was said to have borrowed $50 million.

    Five hotel chains with famous flags were said to have borrowed a cumulative sum in excess of $134 million. A famous soft-drink concern was said to have borrowed $60 million. The YouTube text pitch further asserts: “World Capital Market (WCM) is the parent company for WCM777. WCM is a private bank managing and lending money to over 700 institutions.”

    But if WCM is indeed a “private bank,” it’s apparently one that has no concerns about the privacy of its own borrowers if MLM money is to be made. WCM777 affiliates now are parading in Stepfordian fashion around the Internet and claiming not only to know the identities of WCM’s famous borrowers, but also to know precisely how much they borrowed.

    Assuming any of the purported deals actually exist and that anything about WCM is real, the precedent has been set for any future WCM customer to face repeated privacy invasions and repeated episodes of brand leeching as part of bids to legitimize an MLM “program.” Such incidents would be untenable for any enterprise that values its brand and marketplace reputation.

    In the video pitch, the WCM promoter suggested that prospects should ignore lower affiliate levels and buy in at $1,999 because the position would pay $3,200 in 100 days. He also suggested that reentry at the $1,999 level would cost only $20 out-of-pocket and that the position would continue to return $3,200 every 100 days.

    “Most people are coming in with three units, seven units, 15 units and above,” the narrator said.

    “I just had some[one] wire me from Mexico . . . $6,000 for three units,” the narrator said. “I’m signing up another person [in] [Florida?] for six units as well — excuse me, three units as well — another $6,000. And this is just going nuts.”

    A “kickoff meeting” was being held in Mexico for WCM777, the narrator said. (Based on the date of the video, this event might have been held in late August, perhaps on the same date as a companion event at a church in California. See below.)

    Each of WCM’s famous purported borrowers now may face undeserved embarrassment or a PR problem because an MLMer trying to sell the WCM777 “program” on YouTube is claiming that they borrowed a combined sum of more than $1 billion from the purported parent company of an enterprise now under investigation in Colombia, amid pyramid scheme allegations.

    What’s potentially worse is that the YouTube pitchmen claimed in a promo for WCM777 that he had “a presentation in Rialto, California, with a church of 500 people where the entire church is going to be there, Spanish church in Rialto.”

    He could not attend the kickoff event in Mexico because it conflicted with the church event in Rialto, the narrator said.

    Rialto is a Southeast California community of about 100,000 in San Bernardino County. In 2010, the PP Blog interviewed a 64-year-old woman from San Bernardino County. She’d been ripped off of $5,300 by the Noobing MLM scam operating online. The woman was deaf.

    Like similar schemes, WCM777 almost certainly will bring securities concerns into play. “Programs” such as Zeek Rewards, for example, have been accused by the SEC of securities fraud and selling unregistered securities. Based on the YouTube promoter’s claims that WCM is venturing “into selling shares” and “pre-IPOs,” those concerns may only become heightened.

    WCM also reportedly permits members to transfer money or the equivalent of money through an in-house system, which raises questions about whether it is setting the stage for money-laundering to occur. Colombia long has had problems with narcotics traffickers. Colombian MLMer David Murcia was extradited to the United States in 2010 to face charges that his D.M.G. Group of companies laundered narcotics cash in the United States. He later was sentenced to nine years in federal prison. Murcia also faces 30 years behind bars in Colombia.

    U.S. prosecutors pointedly called DMG “a vehicle for a multi-level marketing scheme.” Participants were told to buy prepaid debit cards that operated on a points system and would permit them to buy electronics and other merchandise at DMG retail stores and enable them to get back 100 percent of what they paid in and perhaps more.

    WCM777 also operates a points system and is tied to something called the “Kingdom Card” highlighted at a site known as 1And300.com.

    The PP Blog has observed at least one instance in which Craigslist pulled an ad for WCM in Atlanta. Ads in other American communities, including Dallas and Orange County, Calif., continue to appear.

    In addition to making a veiled reference to Siemens, the ad screams in all caps: “WHAT IF I TOLD YOU I CAN SHOW YOU A WAY TO TAKE SOME OF YOUR MONEY RIGHT NOW AND PUT IT TO WORK AS AN INVESTMENT AND TURN IT IN A FIRM PROFIT AMOUNT YOU CAN GET OVER AND OVER AGAIN EVERY 100 DAYS. NOT JUST MAKE MONEY WITH YOUR MONEY BUT ALSO HAVE NO SALES TO DO AND YOU WON’T HAVE NO NEED TO RECRUIT PEOPLE. . .?”

    WCM, according to the Dallas ad, stands for “WE CREATE MARKET.”

     

  • More Pension Funds Frozen In Westridge Capital Management Case; San Diego County Was Pulling Out Of Fund As University of Pittsburgh Was Increasing Stake

    Paul Greenwood.
    Paul Greenwood.

    Westridge Capital Management (WCM) and affiliate WG Trading appear to have been trolling for cash to sustain the deception until the bitter end. Even as one public retirement system was pulling out and demanding a return of invested funds, another one was increasing its stake.

    In January, just weeks before the firms were exposed as frauds, they asked the San Diego County Employees Retirement Association (SDCERA) to change its mind about pulling out,  SDCERA said.

    SDCERA said its fears were heightened in October 2008 when an analyst from Albourne Partners, an SDCERA consultant, “found [Paul] Greenwood to be uncooperative and evasive” during a due-diligence examination. The association had about $78 million in the fund, after having taken a $75 million redemption in October 2007.

    Greenwood and Stephen Walsh, two principals in the firms, were arrested by the FBI last week. They are accused of orchestrating a fraud involving hundreds of millions of dollars.

    “In addition to a general lack of operational transparency, Greenwood [in October 2008] refused to provide access to key references such as third party brokers,” SDCERA said. “SDCERA also followed up with WG Trading by requesting additional information, but was not provided with a sufficient response.”

    The association ended its contract with WG Trading on Dec. 31, 2008. Within days, WG Trading asked it to reconsider — after its earlier refusal to disclose information.

    “On January 8, 2009, WG Trading contacted SDCERA and requested their termination be reconsidered and offered to provide additional information, which SDCERA deemed insufficient,” SDCERA said.  “On January 15, 2009, the SDCERA Board of Trustees rejected WG Trading’s request to be reinstated, and approved staff’s decision to terminate WG Trading and demand a return of all monies invested.”

    SDCERA said it did not suspect fraud at the time, which might not be good news to the University of Pittsburgh. Only weeks after SDCERA’s termination, Pitt increased its stake in WCM by more than $21 million.

    More WCM Fallout

    More than $135 million in pension funds for North Dakota public retirees have been frozen as a result of the WCM fraud probe.

    The North Dakota State Investment Board has terminated its investment management relationship with WCM and WG Trading.

    Last week, the Iowa Public Employees’ Retirement System ended its contract with WCM. Iowa public retirees have $339 million at risk in the fund. The University of Pittsburgh and Carnegie Mellon University, with a combined $114 million in the fund, also have exposure. So does the SDCERA, which may have $78 million in exposure. The Sacramento County Employees’ Retirement System also has exposure.

  • BREAKING NEWS: IPERS Terminates Westridge Capital Management Contract; Says $339 Million May Be At Risk

    Paul Greenwood
    Paul Greenwood

    UPDATE 5:41 P.M. EST (U.S.A.) The Iowa Public Employees’ Retirement System (IPERS) has terminated its investment-management contract with Westridge Capital Management (WCM) of Santa Barbara, Calif.

    IPERS’ move comes on the heels of a lawsuit filed Friday by two Pennsylvania universities that sued WCM amid concerns that they potentially had lost $114 million in an investment scheme.

    Iowa public retirees have $339 million potentially at risk with WCM. The organization said the Securities and Exchange Commission and the Commodity Futures Trading Commission have opened investigations.

    Documents filed in the case suggest as many as 16 universities or public-employee pension funds used WCM as investment advisers. WCM’s name is cited, for example, in publications put out by pension funds in Pennsylvania, Iowa, North Dakota and California.

    WCM also was involved in litigation in Nebraska that ultimately made its way to the Nebraska Supreme Court. At issue in the Nebraska case was the prudence and legality of putting state assets at risk in highly speculative futures and commodities.

    Litigants claimed WCM effectively had lost more than $40 million investing funds for state pensioners, but the state was made whole when the fund showed a profit and the matter largely disappeared.

    WCM, its principals and various entities associated with the firm were named Friday in a federal lawsuit filed by Carnegie Mellon University and the University of Pittsburgh in Pennsylvania.

    The National Futures Association suspended two WCM principals — Paul Greenwood and Stephen Walsh — for stonewalling during an audit earlier this month. Auditors said they found what amounts to personal IOUs from Greenwood and Walsh for loans taken from the fund and placed with an investment arm Greenwood and Walsh control in Connecticut.

    Greenwood is the town supervisor of North Salem, N.Y., a Westchester County community on the Connecticut border.

    NFA’s auditors said the “note[s] receivable” [are] actually comprised of several individual notes, executed by Greenwood and Walsh over the years, each totaling millions of dollars.

    “These notes are almost identical in their terms and indicate that the respective ‘sum is representative of the general partner’s share of losses, withdrawals and payments,” NFA said.

    Auditors also said “the financial record indicates $8.2 million of the assets [are] ’employee advances.’”

    IPERS said WCM managed about 2 percent of the its portfolio. A spokesperson told the Des Moines Register that $339 million in pension funds — its entire WCM stake — had been frozen as a result of the federal probe. IPERS stressed that WCM held only a small part of the pension fund’s assets and that retirees payments are not at stake.

    “The U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission . . .  are now investigating WG Trading,” IPERS said. “These agencies cannot release information during an active investigation. Their involvement provides IPERS added protection as the commissions have the authority to act in ways that will protect investors.”

    Here’s what IPERS said it has done:

    • Terminated Westridge Capital Management’s contract.
    • Demanded the return of all IPERS’ assets, which had an estimated market value of $339 million on Jan. 31, 2009.
    • Filed a claim with the NFA for a release from the trading ban so holdings can be liquidated and IPERS’ assets returned.
    • Began aiding the Commodity Futures Trading Commission and the Securities and Exchange Commission in their investigations.

    “The IPERS Investment Board and staff continue to follow developments and will take further action, including legal action, if necessary to protect IPERS’ assets,” IPERS said.  “The Investment Board’s policy is to vigorously seek recovery of losses through legal action should losses occur because of fraud. However, IPERS cautions investigations are still underway, and there have been no findings against the company previously under contract to IPERS.”

    See this post from Saturday, which includes a link to the CMU/Pitt lawsuit. And see this post from Sunday.

  • Read The National Futures Association Report On Paul Greenwood And Stephen Walsh; Association Asserts Hundreds Of Millions Of Dollars Unaccounted For Amid Suspensions

    We’ve previously pointed out that, in recent times, some of the actions filed against financiers and fund managers — and the findings of investigators — have read like works of fiction. On Friday, for example, Irving Picard, the trustee in the Bernard Madoff case, asserted that Madoff appears not to have purchased securities for customers in at least 13 years.

    It’s an incredible assertion that suggests Madoff was running a virtually pure Ponzi: money in, money out, with no attempt even to try to make it work in a legitimate way.

    Now comes incredible assertions by the National Futures Association against Paul Greenwood and Stephen Walsh, who’ve been suspended from NFA for stonewalling on an audit.

    On Friday, Carnegie Mellon University and the University of Pittsburgh sued Greenwood, Walsh, Westridge Capital Management (WCM) and related entities for the return of $114 million feared lost in an investment swindle.

    At least 16 public entities invested with WCM, including universities and retirement funds for educators, police officers and firefighters. It is possible than $2 billion or more is at risk.

    CMU and Pitt sued in the aftermath of the NFA audit. NFA’s documentation of its attempts to audit Greenwood and Walsh — its recounting of the stonewalling and its partial findings based on what it what it was able to uncover despite the stonewalling — is yet another example of nonfiction that reads like fiction.

    Big money is involved here, and the facts are not all known. But NFA’s document can only be described as jaw-dropping. It really makes one wonder how many other shoes will drop and how many more times the public will be asked to suspend its disbelief before these almost unbelievable financial tales come to an end.

    Read NFA’s report on Greenwood and Walsh, including the sworn declaration of an NFA compliance director, Jennifer Sunu, who supervised the audit.

    See our earlier post.