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URGENT >> BULLETIN >> MOVING: Massachusetts Charges 4 Alleged Promoters Of EmGoldEx Scheme, Saying ‘Program’ Was Fraud And That Hucksters Stacked Children In Downlines

URGENT >> BULLETIN >> MOVING: (14th Update 4:33 p.m. EDT U.S.A.) Massachusetts has charged promoters of the EmGoldEx MLM “program” with securities fraud and selling unregistered securities, alleging they “created a complex web entangling investors throughout the Commonwealth” in a “pyramid scheme” that offered “guaranteed returns of up to 1,105% for recruiting more individuals.”

The civil prosecution was brought by Commonwealth Secretary William Galvin and the Massachusetts Securities Division, which alleged that photos of children “getting paid” by the “program” were used as lures to drive dollars to the scam.

Children also were used to stack downlines so promoters could “reach the Pay Spot faster,” the state alleged.

And, the state alleged, “Investors in the EmGoldex Marketing Program are also able to purchase investment positions directly from other investors, rather than through EmGoldex, creating even greater risks for potential new investors.”

Similar allegations that members could bypass the “program” itself to purchase positions were made in the TelexFree case earlier this year, a circumstance that suggests multilayered criminality in MLM HYIP “programs.”

Named respondents are EmGoldEx Team USA Inc. of Andover, Mass.; Matthew Michael D’ Agati of Methuen, Mass.; Joseph Zingales of Methuen; James Vincent Piemonte of Methuen; and Jonathan Herman Seigler, formerly of Boston and now of New Hampshire.

D’ Agati, Zingales, Piemonte and Seigler are accused of recruiting “hundreds of investors into the scheme,” according to the 41 page complaint. MSD is asking for disgorgement and financial sanctions.

“Using multiple pooled bank accounts, Respondents have collected over $473,000 in Massachusetts for the EmGoldex Marketing Program,” the state alleged, further alleging that “over $282,659 has been wired to EmGoldex financial institutions overseas.”

The Massachusetts entity was a recruiting arm for EMGX FS Ltd., “an entity purportedly registered in the Seychelles, with a principal place of business located at Suite I, Second Floor, Sound and Vision House Francis Rachel Str. Victoria, Mahe Seychelles[.] EmGoldex maintains an internet website at www.emgoldex.com,” the state alleged.

Seychelles is a nation associated with money-laundering.

News that Massachusetts was investigating EmGoldEx broke on Aug. 8.

Like other HYIP schemes, EmGoldEx was positioned as a “Plan B.”

“Respondents even use the Team USA Homepage to pitch the EmGoldex Marketing Program as a retirement vehicle, noting that EmGoldex can create a “[p]Ian B to care for you and your family in the later years,” the state alleged. “Respondents further add that membership in the EmGoldex Marketing Program is a fully transferrable asset upon death, providing perpetual residual income for an investor’s family.”

Facebook and Twitter “at least” were used to drive recruiting, Massachusetts alleged.

One of the key prongs of the Massachusetts-based pitch was that even “children” could earn through EmGoldEx, the state alleged.

From the complaint (italics added):

148. The Team USA Homepage advertises the EmGoldex Marketing Program as a simple and relatively quick way to earn significant residual income.

149. Respondents also advertise on the Team USA Homepage that through the EmGoldex Marketing Program, even children are able to make significant profits, with little to no effort of their own.

150. In a section on the Team USA Homepage titled “Local Success Stories,” Respondents feature at least three photos of children, with one caption reading, “Paid $4000 in only 13 weeks! Yes, even your children can get paid!!”

151. The Team USA Homepage “Local Success Stories” section also includes photos of a number of other EmGoldex investors who are members of Team USA. Each photo is emblazoned on an American flag background, with the title “GOLDEN $4000 CLUB.”

152. The “successful” investors received their payouts by recruiting new investors into the EmGoldex Marketing Program, not through the sale of any purported product.”

Like earlier MLM scams such as TelexFree and WCM777, EmGoldEx picked up a local head of steam when the Massachusetts promoters hosted hotel pitchfests, Massachusetts alleged.

Some local events for EmGoldEx charged admission fees of $10 and $25, and a purported “boot camp” for EmGoldEx held on Saturdays and Sundays charged an admission fee of $79 and $99, the state alleged.

“According to marketing materials Team USA provided to the Division, Team USA represented EmGoldex as a ‘life changing opportunity’ for new investors. These advertising and marketing materials from Team USA are also adorned with pictures of gold bars, bags of cash and phrases such as ‘NOW YOU GET PAID,’” the state alleged.

The scheme also took advantage of the popular culture, Massachusetts alleged.

“For their part, according to documents that Team USA produced to the Division, D’ Agati and Zingales adopted speeches from popular movies, such as ‘Rocky’ and ‘Any Given Sunday.’”

Moreover, the state alleged, attendees of a launch event were told “the speakers . . . were ‘not bottom feeders,’ and included lawyers, millionaires, and other very successful business people.’”

Read the complaint.

Oct 22, 2014
URGENT >> BULLETIN >> MOVING: Massachusetts Issues Warning On ‘IFreeX’ Scheme; ‘iFreex Appears To Be Nothing More Than A Rebranded TelexFREE Fraud For Mobile Phones’

Massachusetts Commonwealth Secretary William Galvin.

URGENT >> BULLETIN >> MOVING: Massachusetts Commonwealth Secretary William Galvin has issued a warning on an emerging scheme known as “IFreeX.”

Like TelexFree before it, IFreeX is being pitched by two-time SEC pyramid-scheme defendant Sann Rodrigues and is being targeted at the Brazilian community.

Rodrigues also is known as Sanderley Rodrigues de Vasconcelos, and individuals already have filed complaints about his promotion of IFreeX, Galvin’s office said. The headline on a state news release is, “SECRETARY GALVIN WARNS OF NEW PHONE SCAM TARGETING BRAZILIAN COMMUNITY.”

This is the entire statement issued by the Massachusetts Securities Division a short time ago (italics/logo graphic added by PP Blog):

Secretary of the Commonwealth William F. Galvin today warned investors, especially persons in the Brazilian community, about iFreex, a phone service app promising lucrative returns with minimal effort. It appears to be much like TelexFREE, a scam that targeted the Brazilian and other minority communities.

According to complaints made to the Securities Division, Sanderley Rodrigues de Vasconcelos, also known as Sann Rodrigues, who was once a top TelexFREE promoter, is now promoting iFreex, enticing investors to pre-register with promises of a new iPhone.

On his Facebook page, Rodrigues, a former Revere resident, even claimed that iFreex would be the new TelexFREE. TelexFREE was charged by the Massachusetts Securities Division and the U.S. Securities and Exchange Commission earlier this year with fraud in operating a pyramid scheme. It is now in bankruptcy.

“iFreex appears to be nothing more than a rebranded TelexFREE fraud for mobile phones,” Secretary Galvin said. “Everyone, but especially those in the Brazilian and other immigrant communities that are the target of these pitches, need to be skeptical of any scheme that offers guaranteed returns with little or no effort. Unfortunately, we have seen an increase in these pyramid schemes in the past year.”

Rodrigues, who was charged by the SEC in the TelexFREE case, was charged in 2006 with a similar telecommunications scheme . . . and barred from securities dealings in Massachusetts. That scheme, too, targeted the Brazilian community.

iFreex appears to have many of the same characteristics as other pyramid schemes the Securities Division has recently brought actions against, including Wings, TelexFREE and WCM777.

While there is little information available about the iFreex operations, management, and headquarters, it is scheduled to go live in early November and is currently accepting preregistrations with the promise to investors of a new iPhone.

Those who have information about iFreex are encouraged to call the Securities Division at the toll-free 1-800-269-5428.

Sep 30, 2014
ANOTHER MLM PR DISASTER: Zhunrize, Alleged Worldwide Pyramid Scheme That Gathered $105 Million, Was Presented As A ‘Plan B’

From a Zhunrize slide as viewed through Open Office. Red highlight by PP Blog.

2ND UPDATE 5:25 P.M. EDT U.S.A. Purported “Plans B” are one of the core signatures of the the MLM HYIP sphere, which is known for incredibly toxic global frauds such as Zeek Rewards and AdSurfDaily. In 2009, an ASD reload scam known as AdViewGlobal was positioned as a “Plan B.”

The individual schemes of Zeek and ASD took in a combined sum of at least $969 million. AdViewGlobal appears to have disappeared with millions of dollars — after targeting ASD victims for a second time.

In 2012, Zeek and ASD figure Keith Laggos pushed the Lyoness “program” as a “Plan B.”

Laggos’ listeners were told that, if things went south at Zeek, Lyoness would be an excellent hedge through which $10,000 directed at the scheme might return “a quarter-million dollars.”

Lyoness is now under investigation in Australia, amid pyramid-scheme allegations.

“Plan B” also is known as “Don’t put all your eggs in one basket.” HYIP prospects often are told to join more than one scheme or to quickly get in another if something goes wrong with the current scheme, sometimes known as “Plan A.”

Plan B schemes typically are a means by which prospects are lured into a continuous cycle of MLM frauds. Zeek and OneX promoter T. LeMont Silver later went on to “Plan B” schemes such as GoFunPlaces/GoFunRewards and JubiMax/JubiRev. Those schemes cratered or encountered difficulties. Silver now is pushing the exceptionally murky BitClub Network “opportunity” as a Plan B.

MLM HYIP schemes may switch forms. They may appear as straight-line investment-fraud schemes such as Legisi, which collapsed after an SEC intervention in 2008. ASD was an “autosurf advertising” scheme that collapsed in 2008 after an intervention by the U.S. Secret Service. Zeek, a purported “penny auction” company, collapsed in 2012 after an SEC intervention.

WCM777, meanwhile, collapsed in March 2014 after interventions by the SEC and state-level securities regulators. WCM777 purportedly was a “cloud computing” company that allegedly gathered more than $80 million. In April 2014, another MLM HYIP scheme — TelexFree — collapsed. The SEC and the Massachusetts Securities Division said it was conducting a billion-dollar, cross-border securities swindle. TelexFree positioned itself as a “VOIP” company that also was in the apps, cellphone and credit-repair businesses.

The trend now appears to be to wrap traditional products such as cosmetics and diet shakes into murky and confusing schemes that pay recruitment commissions. No specific payout may be mentioned.

The SEC yesterday announced fraud charges against the Zhunrize MLM scheme, accusing it of selling unregistered securities and operating a massive international pyramid scheme.

The phrase “Plan B” even appears in promo material for Zhunrize. The material also references Plan A. Based on this information, it appears as though Zhunrize was touting itself as both a “Plan A” and “Plan B” scheme.

“Do you know anyone who would like to develop a plan ‘A’ Or plan ‘B’?” the Zhunrize promo queries.

In the promo, Zhunrize prospects are told they can earn “thousands each month by helping others to save time, gas, money and avoiding crowds.”

One of the problems in this bizarre sphere of MLM is that tainted money from earlier scams may flow into emerging scams, in effect making banks and payment vendors warehouses for a continuous stream of fraud proceeds that flow between and among pyramid schemes and Ponzi schemes.

Like Lyoness, Zhunrize is involved in the shopping-portal business. Like Zeek and other “programs,” Zhunrize also was positioned as a “profit-sharing” or “revenue-sharing” opportunity.

In court filings, Zeek receiver Kenneth D. Bell has suggested that MLM may have a problem with “serial” participants in fraud schemes who tout purported “revenue-sharing” plans.

Case files associated with various recent HYIP/revenue-sharing schemes put losses in the billions of dollars. Because some promoters simply move from one scam to another, they are eviscerating wealth on a global scale.

If someone pitches you on an MLM “Plan B,” run like the wind.

Sep 24, 2014
URGENT >> BULLETIN >> MOVING: SEC Calls Zhunrize MLM Company Worldwide ‘Pyramid Scheme’ That Gathered More Than $100 Million

URGENT >> BULLETIN >> MOVING: (8th Update 6:56 p.m. EDT U.S.A.) The SEC has gone to federal court in the Northern District of Georgia, alleging that the Atlanta-based “Zhunrize” MLM program is a pyramid scheme that operates globally and has gathered $105 million from 77,000 investors.

The Zhunrize “program” has been charged with fraud. It is at least the third MLM targeted by the SEC since March. The agency filed charges against WCM777 in March. In April, it filed charges against TelexFree.

Zhunrize CEO Jeff Pan, 52, of Suwanee, Ga., also has been charged with fraud, the SEC said. A federal judge has issued an asset-freeze order.

All three of the MLM schemes operated online and allegedly affected tens and tens of thousands of people.

Zhunrize has been operating since 2012, the same year the SEC took down the Zeek Rewards MLM scheme, alleging a fraud that had gathered hundreds of millions of dollars.

From a statement by the SEC on the Zhunrize case (italics added):

According to the Commission’s complaint, Zhunrize purports to be a legitimate multi-level marketing business by which members purchase online stores and then sell merchandise through them, while earning commissions on products purchased by their customers and through store sales to other members and hosting fees paid by those members. In fact, the company is operating as a pyramid scheme because its commission structure is based on the continual recruitment of new members, with the most lucrative returns dependent on the downline recruitment of other members through store sales irrespective of any product sales. To date, the company has taken in approximately $105 million from approximately 77,000 investors since 2012.

The Commission’s complaint further alleges that in its promotional materials, Zhunrize touts the ability to earn commissions from the sale of products, both through the owner’s store and through downstream owners’ stores. For example, a Zhunrize promotional video differentiates Zhunrize from other on-line multi-level marketing plans, claiming that Zhunrize has “sustainability.” According to the video, the Zhunrize “model will sustain itself because we will have millions more customers than distributors.” Later, the narrator in the video claims “we have the Vendor Relationships, the Logistics, the Payment Gateways to reach millions of new customers each month.”

The Commission’s complaint also alleges that Zhunrize does not disclose, however, that to date substantially all of its revenue has comes from the sale of memberships (referred to as stores) and the corresponding monthly internet hosting fees associated with operating those stores, rather than the sale of products. Indeed, both Pan and a Zhunrize vice-president testified that the company currently derives 80-90% of its revenue from selling online stores and the monthly internet hosting fees for them, as opposed to actual products from these stores. Thus, contrary to the representations to potential investors, Zhunrize is actually a fraudulent pyramid scheme.

Like other MLM schemes before it, Zhunrize appears to have traded on the names of famous companies outside the MLM realm. The PP Blog today, for instance, observed a promo for Zhunrize in Spanish that referenced an “online store” known as “ZHunCity” and dropped the names of Ebay, Amazon, Wal-Mart, Target and Best Buy.

It is common for fraud schemes to drop the names of famous companies as a means of sanitizing the purported MLM ‘opportunities.” Offering materials for WCM 777, which allegedly gathered tens of millions of dollars, dropped the names of hundreds of famous brands while also dropping the names of famous businesspeople and famous politicians.

WCM appears to have taken in on the order of $80 million, according to court records in the case. The Massachusetts Securities Division has alleged that TelexFree may have gathered more than $1.2 billion in a little better than two years. WCM77 made its $80 million haul in about one year.

TelexFree and WCM both engaged in affinity fraud by targeting specific population groups, according to court filings. There may be promos for Zhunrize in languages other than Spanish and English. The PP Blog observed a Zhunrize promo today that was simply labeled “Brazil,” which may mean Portuguese-speaking populations were targeted.

That was the case with both WCM777 and TelexFree.

Sep 23, 2014
BULLETIN: Government Of Colombia Investigates TelexFree, Ties

BULLETIN: The government of Colombia appears to be seizing assets linked to four Colombians with alleged ties to TelexFree, which authorities in the United States have described as a massive cross-border pyramid- and Ponzi scheme.

La Superintendencia de Sociedades, Colombia’s Superintendency of Companies, has published notices of the action. (See link to document (Spanish) below.)

At a 2013 TelexFree event in California, then-TelexFree President James Merrill suggested from the stage that the Colombian government “feared” network marketing.

The precise context of Merrill’s remark on Colombia made at the Newport Beach TelexFree confab last year was unclear. In an April 2014 pyramid- and Ponzi complaint against TelexFree, the U.S. Securities and Exchange Commission referenced comments made by Merrill and TelexFree figures Carlos Wanzeler and Steve Labriola at the Newport Beach event.

TelexFree’s presence in Newport Beach may create a tie to Zeek Rewards, another alleged massive pyramid- and Ponzi scheme that crossed national borders.

See the Colombian government’s document.

Also see story at Portafolio.co.

The WCM777 scam — another recent MLM HYIP “program” — led to a police raid in Peru. The PP Blog reported in March 2014 that there were promotional ties between WCM777 and TelexFree.

Brazilian federal police have conducted TelexFree-related raids, as have the U.S. Department of Homeland Security and the FBI in the United States.

The infamous D.M.G. Group (DMG) “program” in Colombia and other nations had ties to money-laundering and narcotics trafficking, with U.S. federal prosecutors saying hundreds of “subsidiary and affiliated companies” were established in a bid to cleanse dirty money.

In 2010, after DMG operator David Murcia had been extradited to the United States, U.S. prosecutors called DMG “a vehicle for a multi-level marketing scheme.”

Sep 10, 2014
T. LeMont Silver In Furious Name-Dropping Spree For BitClub Network; Veteran MLM Huckster Still Trails WCM777 Scam In Unofficial Record Book

3RD UPDATE 11:45 A.M. EDT U.S.A. Zeek Rewards clawback defendant T. LeMont Silver promised “training” to recruits of the emerging BitClub Network “program” — and the veteran HYIP huckster delivered by training his listeners to drop names.

Lots and lots of names.

Regardless, Silver might have to dial up his efforts if he hopes to become be the new standard-bearer in the category of name-dropping to sell a purported MLM/direct-sales “opportunity.” That record is held unofficially by the WCM777 “program,” which the SEC described in March as an international pyramid scheme.

But even longtime MLM huckster Phil Piccolo — known as the “one-man Internet crime wave” in part for the ceaseless dropping of names such as Oprah Winfrey, Donald Trump, Groupon, Walmart and Apple — must be shaking his head in begrudging awe at Silver’s recent efforts to foist the emerging BitClub Network brand on the consuming public.

After leading recruits to disaster in Zeek, Silver turned his attentions to the JubiMax/JubiRev and GoFunRewards/GoFunPlaces MLM disasters, supplementing his promos for “Plan B” HYIP schemes by dropping the names of MLM companies such as Herbalife, Amway, Avon, ViSalus and others.

With BitClub Network, Silver has put his name-dropping into overdrive, joining the likes of the scamming chieftains of WCM777, the collapsed pyramid scheme that traded on the names of Siemens, Goldman Sachs, the Denny’s restaurant chain and a series of hospitality companies with famous flags.

By the SEC’s count, WCM777 dropped on the order of 700 names to sanitize its bizarre pyramid scheme. (WCM777 also once featured a love letter to the disaffected affiliates in Peru it had drafted into a Ponzi- and pyramid scheme and subjected to police raids while also featuring what BehindMLM.com has described as a “Jesus Sword.”)

Distressingly, Silver assures his audience in a recent promo that “people from all across the globe” were listening to his webinar and to promos of other affiliates. The named countries included the Philippines, Russia “and all over Europe, Australia, Canada.”

The Silver promo session was titled, “Make Money With No List Featuring BitClub Network Webinar.”

Silver hasn’t topped 700 yet in the unofficial name-dropping calculus, but he’s off to a good start, essentially positioning BitClub Network as a company that will create profit opportunities for the same sort of visionaries who spotted the genius behind one-time emerging brands such as Google, AOL, Microsoft (Internet Explorer), Amazon.com, Apple’s iPhone, Apple’s iPod, Facebook, Twitter, YouTube, Blogger and more.

It’s all about “being at the right place at the right time,” Silver bleats. He even suggests in text that BitClub Network could be the next “email.”

As the video proceeds, Silver talks about Bitcoin, using slides to drop the names of Tiger Direct, the Sacramento Kings NBA franchise, Lord & Taylor, Dish Network, Expedia, Newegg and Gyft. He also works in the names of CVS Pharmacy, Sears, Target, Home Depot, Whole Foods Market and more.

Along the way, Silver also drops the names of California Gov. Jerry Brown, “China’s Central Bank Governor” and Gerogy Luntovsky, “deputy chairman of the bank of Russia,” according to text Silver displays.

From a promo for BitClub Network featuring T. LeMont Silver.

Sep 8, 2014
‘BitClub Network’ Now Reportedly Set To Launch On Sept. 10, Eve Of Anniversary Of 9/11 Attacks

The BitClub Network “program” — originally set to launch Sept 1, the 75th anniversary of the beginning of World War II — reportedly now will launch on Sept. 10.

That’s the eve of the 13th anniversary of the 9/11 terrorist attacks.

The Sept. 10 launch time is pegged for “2pm EST,” which possibly means the “program” is using Panama time. Panama, part of the Americas, does not use Eastern Daylight Time (EDT).

Some of the money from the Profitable Sunrise HYIP swindle last year went to an entity in Panama City, the SEC said last year. Other Profitable Sunrise money ended up in Australia and the Czech Republic, according to court filings.

Profitable Sunrise operated through a “mail drop” in England and had a “director” in Seychelles, according to court filings.

Zeek Rewards Ponzi- and pyramid-scheme figure T. LeMont Silver, an early adopter of BitClub Network who is promising a $600 sign-up bonus and “training” for the “program,” now is using a Seychelles address, according to an email pitch he sent last week.

Seychelles is a known money-laundering haven. Silver may be operating from the Dominican Republic after parachuting into the nation after the collapse of Zeek in 2012 and the later collapse of two other purported “revenue-sharing programs” he was pitching.

Those “programs,” which ended up suing each other amid allegations of fraud, were GoFunPlaces/GoFun Rewards and JubiMax/JubiRev. Silver described disaffected prospects as “low-hanging fruit.”

BitClub Network, which purportedly offers “shares” of “mining pools,” has a Bitcoin theme. The reported buy-in levels are $500, $1,000 and $2,000, with “Founders’” positions going for $3,599.

Whether Silver even knows precisely who is operating the BitClub Network “program” is unclear. Also unclear is why the “program” chose start dates that corresponded with the starting dates of World War II in Europe and the 9/11 terrorist attacks against the United States.

Are the dates merely coincidences?

Hitler’s Nazi Third Reich was hoped to last 1,000 years. BitClub Network, early bird MLM HYIPers say, will pay a daily dividend for 1,000 days.

HYIP schemes in general are exceptionally murky propositions, with narratives, descriptions and actions that may be designed as taunts against both prospects and regulators. Profitable Sunrise, for example, used images of Jesus Christ in promos and offered a purported “Long Haul” plan with a purported Easter gift to be paid out on April 1, 2013 — April Fool’s Day.

March 31 of that year was Easter Sunday.

WCM777 also used images of Jesus Christ. A follow-up scam used images of a golden pyramid.

John Neil Hirst was charged by the U.K. Serious Fraud Office in 2011 with running a Ponzi scheme that targeted British, French and Americans through a company registered in Panama and Seychelles.

A 2010 scam known as “Alpha Trade Group” that was promoted on well-known Ponzi-scheme forums purported to be registered in Panama and was using “various corporations and fictitious names registered in Florida” to pull off the scheme, according to court filings.

David F. Merrick of Traders International Return Network (TIRN) was charged in a 2009 Ponzi scheme that was operating in the United States while funneling money to Panama, Mexico, Malaysia, Switzerland and the Netherlands.

A 2014 online scheme known as Mutual Wealth might have operated through entities in Panama and the United Kingdom “and through Russian or Belarussian nationals,” the SEC said.

In August 2013, NEOMutual, a purported “crowdfunding” opportunity that claimed it used bitcoin and a series of offshore payment processors, further claimed to provide daily interest rates of 1.4 percent, 1.6 percent and 1.9 percent on sums between $20 and $250,000.

It was promoted alongside the bizarrely named “Cash Crop Cycler.” Among the provocative claims on the CashCropCycler website was that the “program” was interested in building “a network that ticks.”

A 2011 scam known as OneX used an image of a bomb in its logo.

Silver was a OneX pitchman, alongside Andy Bowdoin, the operator of the $119 million AdSurfDaily Ponzi scheme that he positioned as a “revenue-sharing” program.

At least one promo for Bitclub Network claims “All Countries” and prospects are accepted for “Legal Passive Income.”

“EARN PASSIVE for 1,000 Days,” the promo roars.

“No Ponzi,” it says.

Sep 5, 2014
UPDATE: BitClub Network Launch Said To Be Delayed; ‘Founders’ Positions Reportedly Sell For $3,599; Pitches Directed At ‘Leaders’; Prospects Asked To Wire Money; Purported ‘Opportunity’ May Have TelexFree-Like Cash-Transfer System

“These participants received uncontrolled cash deposits outside of the TelexFree system,” — Massachusetts Securities Division, Ponzi- and pyramid complaint against TelexFree, April 15, 2014.

EDITOR’S NOTE: For our earliest background on BitClub Network, see Aug. 30 report that references serial HYIP promoter T. LeMont Silver. Are you really sure you want to promote bitcoin-themed HYIPs alongside a man who parachuted into the Dominican Republic from Florida after the Zeek HYIP scam and now is using an address in Seychelles?

Read on for more early background on BitClub Network . . .

** ______________ **

As tomorrow is the 75th anniversary of the beginning of World War II, it’s easy enough to summon images of the late Winston Churchill asking the world to pay attention. The great man still is very much alive in the annals of history and in millions of hearts. We imagine him in 2014, contemplating BitClub Network as a gathering storm, perhaps a modern “riddle wrapped in a mystery inside an enigma.”

BitClub Network appears very much to be yet another nascent MLM/network marketing whack-a-mole “program,” a reload scheme rising to replace a “program” that has collapsed. The most recent major “program” to crumble into an alleged heap of Ponzi- and pyramid rubble was TelexFree — in April 2014.

Reload schemes keep cash flowing to factories of online crime and to the “leaders” who deliver human souls to them for the purposes of financial disembowelment. The more bodies disemboweled, the more the scammers-in-chief and their disingenuous and corrupt enablers make.

Our early analysis of BitClub Network, subject to amendment, is that it is casting its net to attract the greediest and greatest HYIP scammers on a cross-continent basis. The PP Blog observed information last night that suggested the brand of BitClub Network, which already is conducting business via wires that pass though the United States, also may be expanding in a region of Europe known for atrocities, including ethnic cleansing.

Among the core dangers of HYIP scams is that they deliver undeserved and potentially ruinous economic power to unknown persons or entities. The money could be used for any nefarious purpose under the sun.

For an unclear reason — headline scraping to drive people with an interest in politics to bitcoin-themed sites, perhaps? — one promo using the name of BitClub Network linked yesterday via Twitter to a site that featured a video commercial and the names of National Geographic and Michelin, the French tire-maker with a presence in the United States. The Twitter linkage occurred through a site curiously dubbed “Bitcoin Regime” with a “From” message of “Bitclub Russia.” A promo today linked via Twitter through Bitcoin Regime was playing a commercial for Schick, the Connecticut-based maker of razors. Some text surrounding the promos is in English. Other text appears to be in the language of Russian or Ukranian or Serbian.

“Bitclub Russia” appears also to have its own YouTube site. “Bitcoin Regime,” meanwhile, says “[t]his site was created out of passion and interest in the subject.” One of the headlines on the site reads, “Obama: No Strategy For ISIS.. (Oops, We Funded & Trained ISIS!).”

Another reads, “. . . because fuck fiat!” Yet another reads, “Let’s Talk Bitcoin: Buenos Aires & Bitcoin Embassy.” Still another, in Russian, reads, “Earn Bitcoins on a serious level 1 service! The most serious Bitcoin earnings!” — when Google’s translation tool from Russian to English is used.

Is it a scraping site of some sort that is drafting off the anticipated popularity of BitClub Network?

ISIS is the terrorist group that allegedly beheaded American journalist James Foley and also allegedly beheaded a Lebanese soldier.

Launch Timing

Head-scratchingly, the “Founders’” launch of the BitClub Network “program” had been set for Sept. 1, the 75th anniversary of the beginning of World War II. Whether that’s a coincidence is unclear. Sept. 1 also is Labor Day in the United States. Various HYIPs have targeted the world’s workers, offering false relief from the daily grind — not just a chicken in every pot, but a mansion, unlimited sums of cash and perhaps a fleet of high-end automobiles and maybe even a Ferrari (or two).

As is typical in HYIP scams, there was at least one report this morning circulating on Twitter that BitClub Network has experienced a launch delay. As also is typical in HYIP Ponzi Land, black comedy is in no short supply. Whether it’s accidental or intentional is unclear.

In any event, BitClub Network reportedly has a feature known as the “holding tank” — and this “holding tank” is being blamed for the launch delay.

“Hi Leaders,” a link from Twitter bizarrely begins, adding a second layer of black comedy. “Ok, I just heard that the programming of the holding tank feature is taking a bit longer than expected, so dont [sic] be dissapointed [sic] as it basically gives us more time to prepare our teams. :) So, it now looks like we [sic] gonna pre launch around wednesday [sic] or thursday [sic] 2pm EST [sic?] this coming week!”

Perhaps most distressing, though, is a murky claim that “Founders” still can wire $3,599 to get started, “holding tank” delay or not. This wire maneuver appears to be very similar to the way things were done at WCM777, alleged by the SEC earlier this year to be a massive international scam. It’s also highly reminiscent of Profitable Sunrise, which told the marks to wire money to the Czech Republic. Some of the money was seized in Hungary in a money-laundering probe.

Details of the BitClub Network wiring arrangement are not published and apparently are revealed only in private communications, another typical signature of an emerging HYIP scam. It’s also possible that people are disguising themselves as BitClub Network promoters to solicit and then steal wire transfers.

“If you want to do a wire you need to get back to me ASAP and I will sent [sic] you the details for that,” the link from Twitter coaches. “The advanatge [sic] of sending in a wire is that you lock your spot on top of the binairy [sic] before hundreds or probably thusands [sic] that will come in afer [sic] you at launch!”

Chronic typos and odd syntax often signal HYIP scammers are at work.

A separate link from Twitter, presumptively from a different early bird, says, “[Y]ou get paid right away on all referrals and can use those commissions to pay others in after they send you paypal [,] bank wire, or pazya etc.”

If this is true, it would reflect the money-moving mechanics of other HYIP scams that encourage “leaders” to gather money from prospects via bank wires and payment processors — and then to cherry-pick part of it or all of it to use as a recruitment lure. Such deals almost certainly would take place off the books of the “program” and can create layers and layers of black markets inside a larger black market — nesting dolls of crime, if you will.

The second link from Twitter continues (italics added):

I can’t stress enough the fact that you are at the top and at the very beginning of this incredible global program that will make everyone money every day, just for joining.

If you have done your homework you shoud [sic] know by now why this is and how it works, cause of the crypto currency mining :)

And if you refer others, well you”ll [sic] make a KILLING! read [sic] the income example on the payplan site, this will blow your mind!

This is BIG money you can make here, some of you will make already [sic] 7 figures by christmas [sic].

Naturally some American scammers appear already to be doing some of the bidding for BitClub Network. It’s as though Profitable Sunrise, a collapsed HYIP allegedly operated by a ghost and driven by willfully blind affiliates who conducted business by wire from the United States to Eastern Europe, never happened.

BitClub Network also may be a bit like TelexFree, another collapsed HYIP. After prospects are told they can only join by wire at this stage and later will have to join with bitcoin, the first link from Twitter goes on to suggest sponsors can perform back-office transactions and collect money directly from recruits.

Here’s how the first link from Twitter (described above) confusingly puts it (italics added):

OR……having your sponsor or upline paying for you with their commissions within their back office using the credit system after you have sent them the money!

Back-office transactions almost certainly contributed to the calamity at TelexFree, an alleged Ponzi- and pyramid scheme that may have gathered more than $1.2 billion in a little more than two years of Internet scamming. One of the issues at TelexFree was “cash deposits” alleged to be “uncontrolled.”

As noted above, one of the dangers of such systems is that they introduce the specter of a black-market economy and back-alley deals, making already-dangerous enterprises doubly dangerous. The results can be bizarre.

As things stand today, if BitClub Network were the movie “Casablanca,” Renault would be telling the troops to “round up the usual suspects.”

Any person who joins this program with a purported “holding tank” is a fool. Any person who pitches it to others amid these exceptionally murky circumstances is reckless beyond comparison.

Aug 31, 2014
BULLETIN: Receiver For WCM777 MLM ‘Program’ Says California Lobbying Firm Received $750,000

Ming Xu is called “DPMX” in this purported contract with a lobbying firm. Source: Federal court files. Red highlight by PP Blog.

BULLETIN: (7th update 6:59 p.m. EDT U.S.A.) The court-appointed receiver in the SEC’s WCM777 pyramid- and Ponzi-scheme case says she is seeking court approval to pursue claims against a California lobbying firm that allegedly received $750,000 from accused scammer Ming Xu and performed no work.

Some WCM777 MLM affiliates claimed $14,000 sent to the “program” returned $500,000 in 52 weeks.

Ming Xu also is known as Phil Ming Xu and Dr. Phil Ming Xu. The receiver, Krista Freitag, has shown a federal judge a document that purports to be a contract between Governmental Impact Inc. (GII) and Xu, who is described in apparent shorthand as “DPMX” in the contract.

James Dantona is listed on the contract as the president of GII. Under the contract terms, either party could terminate the agreement with 30 days’ notice and no refunds would be given Xu by GII.

“DPMX shall not be entitled to any refund for any reason,” the document allegedly specified. Given the nature of the allegations against Xu and WCM777, such an agreement could have deepened the Ponzi.

It is unclear whether Xu holds a doctorate, and there are claims Xu and enablers tried to plant the seed he was affiliated with Harvard, the famous Ivy League school. The receiver’s claim that Xu negotiated an advocacy contract dated Jan. 30 with GII just weeks after the WCM777 “program” got kicked out of Massachusetts and just days after it was issued a Desist and Refrain order in California adds another bizarre layer to an already-bizarre case.

Xu was photographed in 2013 with celebrities such as former Vice President Al Gore and Apple co-founder Steve Wozniak. He also purportedly was listed as a member of the Inauguration Committee of Los Angeles Mayor Eric Garcetti, son of the famed prosecutor Gil Garcetti.

Filings by Freitag suggest Xu, through the 2014 GII contract, was seeking to buy access to American politicians. It is not unusual for Ponzi schemers to seek to surround themselves with politicians and to use politicians and famous companies to create a veneer of legitimacy. WCM777 and its purported parent — World Capital Market Inc. — also claimed ties to scores of famous companies.

One of them — Siemens — specifically refuted WCM777’s claims in October 2013, during a period in which WCM was being pitched in California churches.

Some of the money Xu directed toward GII ended up at a company called ZHB International Corp. and was used to pay for the personal mortgage of ZHB’s Zayda Aberin, Freitag contends.

Through GII, Freitag contends, Xu sought help in “locating and securing legislators, obtaining access to such legislative leaders in California and Washington, D.C., and communicating and recommending advocacy strategies and effective public relations programs with the government.”

Xu’s plan appears to have backfired. After actions by Massachusetts and California, the SEC sued Xu, alleging he was at the helm of a massive international fraud.

Visit the receiver’s website. Read the receiver’s declaration.

Aug 21, 2014
BOSTON GLOBE: Massachusetts Now Investigating EmGoldEx

The EmGoldEx “program” describes gold as “money” and an ancient investment vehicle available in a “new splendor.”

If TelexFree, WCM777 and Wings Network were not enough, the office of Massachusetts Commonwealth Secretary William Galvin now is investigating the “EmGoldEx” program.

The Boston Globe broke the story this morning. Galvin leads the Massachusetts Securities Division.

From the Globe (italics added):

Secretary of State William F. Galvin’s office is investigating the Andover operation of Emgoldex Team USA Inc., a company that recruits investors to buy gold online and pays bonuses for referring friends and acquaintances.

The degree to which EmGoldEx has penetrated Massachusetts is unclear. “Gold” and other shiny-object schemes typically ride on the coattails of MLM HYIP recruiting scams. Narratives surrounding such schemes often are incongruous, if not downright wild, sometimes focusing on tales of spectacular profit opportunities in Europe and the Middle East and a chance to deal with purported royal families or upstream investors interested in elevating people out of poverty.

EmGoldEx purportedly operates from Dubai. Here is a verbatim snippet of the EmGoldEx narrative as it appears in challenged English: “To become a client of the Internet – shop, it is necessary to be registered and make an Order. In the Internet shop an account will be opened for you and the purchase price will be fixed for 24 hours.”

Hidden text on the page appears to be in Russian.

As part of the TelexFree probe in April, Galvin’s office alleged a Massachusetts entity had asserted that it bought “TelexFree packages, and all sorts of real estate within the U.S.A. or foreign countries.” Investigators further alleged that the enterprise asserted it was backed by “Dubai investors.”

Regulators in Quebec issued a warning on a “program” known as Karatbars International earlier this year. Other recent (or relatively recent) gold-themed “programs” that have been targeted by regulators include Gold Nugget Invest (HYIP/shiny-object scheme that collapsed in 2010 amid bizarre, companion claims INTERPOL was investigating the SEC); and Gold Quest International (HYIP with possible links to the “sovereign citizens movement” and operated in part by a purported “Lord”).

In October 2013, the office of North Carolina Secretary of State Elaine F. Marshall announced criminal charges against Rondell Scott Hedrick, 48, of Lexington, N.C.

Investigators linked Hedrick to an alleged “precious metals scam” that involved trawling for investor cash on Craigslist.

One investor, according to the state, wired Hedrick $5,000 after Hedrick had provided instructions and claimed he’d be leaving for Dubai soon and providing the investor a return of 200 percent.

Shiny-object scams are close cousins to prime-bank swindles, which produce equally wild narratives. (See Sept. 30, 2011, PP Blog story on the experience of U.S. Ponzi schemer Marian Morgan, who was arrested in Sri Lanka.)

Read June 2014 review of EmGoldEx on BehindMLM.com.

Galvin’s office is publishing a brochure on how to steer clear of pyramid schemes.

Aug 8, 2014
** CAUTION: Report Of Bogus TelexFree Site **

There is a report on social media this morning of a bogus TelexFree site that mirrors an old TelexFree site that existed when the company was actively soliciting business. The site creates the impression TelexFree has reopened.

TelexFree has not reopened.

It is Sunday. Federal prosecutors handing the TelexFree criminal case involving alleged fraudsters James Merrill and Carlos Wanzeler did not immediately respond to a request for comment.

The actual TelexFree site says the firm has suspended all business activity. The trustee in the TelexFree bankruptcy case has begun his investigation and announced in court filings that he is seeking court authority to issue subpoenas. (See documents 261-265 here. Link current as of today’s date.)

Because the report about the bogus site was made on social media and the intent of the poster is not known, extreme caution is warranted. Clicking on the link to the asserted hacking site through the social-media site potentially could have bad consequences. So could entering any information on forms at the site.

The social-media poster positioned the report as a warning hackers seeking to profit from the troubles at TelexFree could be at work. The site used the word “telexfree” as part of its URL.

Even if the social-media poster was being sincere in his warning and it proves true the site is bogus and designed for hacking, clicking on the link potentially could expose you to harm.

And if the site is not a hacking or phishing site, it leads to questions about why such a site that mirrors TelexFree’s “old” site exists to begin with. Could it be an old TelexFree affiliate’s site created with swiped code and designed to dupe prospects into believing they were dealing directly with the TelexFree corporate entity? Could it be an orphaned site of TelexFree itself?

The asserted hacking site uses the name of a male individual with an address in Chicago, according to a database search. The Registant Organization is listed as “telexfree.”

Some TelexFree affiliates are alleged to have accepted TelexFree payments directly, a circumstance the Massachusetts Securities Division said in April resulted in a condition in which “participants received uncontrolled cash deposits outside of the TelexFree system.”

The social-media poster who issued the warning appears to be pushing a “program” known as ViziNova that may be linked to the alleged $80 million WCM777 scam allegedly operated by Phil Ming Xu.

It is common for HYIP hucksters to be in multiple “programs” simultaneously. After “working” a “program” for months and cleaning up with it, the most disingenuous promoters then may turn on the “opportunity,” perhaps particularly if a regulatory action occurs or there is a sense one is imminent.

Such promoters then may try to port entire “teams” to a new scam.

Read a report on ViziNova at BehindMLM.com.

Jun 15, 2014