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Tag: Wifredo A. Ferrer

  • UPDATE: Promoters May Be Lobbying TelexFree To Keep Ponzi Scheme Intact

    Some TelexFree members may be unhappy if the "program" changes its compensation plan. Source: Screen shot of Blog at Blogspot.com.
    Some TelexFree members may be unhappy if the “program” changes its compensation plan. Source: Screen shot of Blog at Blogspot.com.

    Updated 8:36 a.m. ET (Feb. 26, U.S.A.) Some TelexFree promoters may be lobbying the company and Brazil-based executive Carlos Costa to keep its original Ponzi scheme intact, according to a Blog post (in Portuguese) observed by the PP Blog this morning.

    BehindMLM.com reported on Feb. 19 that TelexFree may be in the process of changing its compensation plan. Details remain murky. It is common for fraud schemes that either know they are under scrutiny or sense they soon will be to change rules or make cosmetic tweaks to keep money coming in.

    After-the-fact changes, however, cannot unring bells of HYIP fraud that already have been rung. And the changes sometimes introduce new disguises designed to sustain a Ponzi deception.

    TelexFree, alleged in Brazil to be a pyramid scheme, has been under investigation in that country since at least June 2013. In the AdSurfDaily and Zeek Rewards Ponzi/pyramid cases in the United States, prosecutors said that both firms made cosmetic tweaks in bids to stay under the radar.

    Here is a Google translation from Portuguese to English of the Blog post that may signal that some TelexFree reps want the firm to cling to a Ponzi business model (italics added):

    Campaign advisers on social networks asking an unchanged Marketing Plan International Telexfree.

    And you, what do you think? Want to try the new plan Telexfree or would you change anything, because this plan is already excellent?

    Share if you do not want changes in Telexfree.

    Affiliates of online Ponzi schemes often claim their “program” is legal and excellent because it pays. But all successful Ponzi schemes pay. Bernard Madoff’s epic scheme “paid” — until it didn’t. And the Ponzi scheme of George Theodule aimed at Haitian immigrants also “paid” — until it didn’t.

    Theodule, 52, was sentenced yesterday to 150 months in federal prison.

    “George Louis Theodule defrauded his victims out of millions of their hard-earned dollars,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    “[Theodule] did so by taking advantage of people who trusted him because of their cultural affinity,” Ferrer said. “Such tactics are intolerable, especially given that some of his victims lost their entire life savings. This sentence should send a strong message to those who prey on the trust of others: you will get caught and justice will be served.”

    Also on the Blog reporting potential dissatisfaction with TelexFree changes was a post on something called CicloFAST, possibly an emerging “opportunity” of some sort. The CicloFAST website prominently displays a photo of a MasterCard.

    Like TelexFree, CicloFast styles the last four letters of its name in uppercase — i.e. FREE and FAST. It was not immediately clear if the firms had a business relationship.

    Some U.S.-based promoters of TelexFree claim that $15,125 sent to the company effectively will triple or quadruple in a year. Among the firm’s key pitchman is Sann Rodrigues, a former SEC defendant in a pyramid-scheme and affinity-fraud case.

    Rodrigues, a purported TelexFree millionaire, has been billed by the firm as a headliner at a planned TelexFree convention March 1 and 2 in Spain.

    Any change in the TelexFree compensation plan could lead to questions about why Rodrigues was permitted to make large sums of money under a plan that now needs to be changed and whether less-successful affiliates now will be hamstrung even tighter.

    Some TelexFree promoters have demonized the Brazilian  prosecutors who brought the pyramid case in the state of Acre. It is common for HYIP scams to pander to the rank-and-file and to marry the processes of demonization and envy.

  • BULLETIN: George Theodule, HYIP Ponzi Huckster Identified In 2008 By SEC, Arrested On Criminal Charges

    breakingnews72George Louis Theodule, identified by the SEC in a 2008 civil case as a multimillion-dollar Ponzi huckster and affinity fraudster largely targeting the Haitian community through so-called “investment clubs,” now has been arrested on criminal charges, federal prosecutors in the Southern District of Florida said.

    Investors were duped into believing Theodule’s HYIP “program” through entities known as Creative Capital Consortium LLC and A Creative Capital Concept$ LLC had been endorsed by a regulatory agency, the SEC said in December 2008

    The FBI and the Florida Office of Financial Regulation joined in the probe, prosecutors said.

    “This case provides an egregious example of someone exploiting the trust of members of their own community,” said OFR Commissioner Drew J. Breakspear.

    “Ponzi schemes, affinity fraud schemes, and high-yield investment fraud scams such as this pose a serious threat to people,” said U.S. Attorney Wifredo A. Ferrer.

    Theodule, formerly of Wellington, Fla., is 52. He has been charged with with multiple counts of wire fraud, securities fraud and money-laundering, prosecutors said.

    “This is a stark reminder that promises of large returns with little risk should immediately send up red flags and make investors run the other way,” said Michael B. Steinbach, special agent in charge of FBI’s Miami office..

     

  • UPDATE: AdSurfDaily-Like Weirdness Increasingly Creeps Into Lawsuit Against United States By ASD Pitchmen Dwight Owen Schweitzer And Todd Disner, Who Now Are Promoting Zeek Rewards

    Federal prosecutors went to court in the Southern District of Florida today, saying AdSurfDaily figures Todd Disner and Dwight Owen Schweitzer were confusing their November 2011 lawsuit against the government with two forfeiture actions filed in the District of Columbia by federal prosecutors and the U.S. Secret Service in the ASD Ponzi case.

    An assistant U.S. Attorney serving under U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida is serving as the attorney for the United States in the case because Disner and Schweitzer sued the government. Although the ASD Ponzi case was brought in the District of Columbia, Disner and Schweitzer sued the government in Florida. They later claimed that prosecutors had gone forum shopping in Washington to bring the Ponzi forfeiture case.

    Among other things, Disner and Schweitzer claim that undercover agents who joined ASD had a duty to identify themselves to ASD management and that the ASD Ponzi case is a “house of cards” despite ASD President Andy Bowdoin’s guilty plea and public acknowledgment he presided over a Ponzi scheme.

    In a puzzling motion stamped June 20 and entered on the docket of U.S. District Judge Cecilia M. Altonaga on June 21, Schweitzer and Disner claimed they had personally determined that a certificate of interested parties filed by the government in response to an order was “inadequate as a matter of law.”

    Disner and Schweitzer, according to Disner and Schweitzer, had a right to know the identities of any ASD participant who filed a claim for remissions in the ASD Ponzi case, how much money they put into ASD and how much was returned to them by the government through the remission claims process.

    Nonsense, the government said today.

    “The plaintiffs misapprehend the purpose and spirit of the court’s order requiring a certificate of interested parties,” the government said in its response to the Disner/Schweitzer motion. “The instant case is not a forfeiture case as the two forfeiture cases involving AdSurfDaily have already been resolved in the District of Columbia.

    “The certificate of interested parties is not some kind of alternative discovery vehicle collateral to the discovery provisions in the Federal Rules of Civil Procedure,” the government continued. “Rather, the certificate of interested parties in both the federal district and appellate courts is designed ‘to assist judges in making a determination of whether they have any interests in any of a party’s related corporate entities that would disqualify the judges from hearing the [appeal].’”

    Moreover, the government argued, Disner and Schweitzer “did not confer with the defense” as required by the local rules in the Southern District of Florida prior to filing the motion.

    As many as 11,000 parties filed remissions claims in the ASD case, according to federal court records.

    Disner and Schweitzer apparently want to know who all of them are and to ascertain “the financial interest of each[,] including those individuals, separately identified, who applied for remission and, as to each, stating whether the request was approved, approved in part, or denied.”

    The government, however, advised Altonaga that neither Disner nor Schweitzer have filed their own certificates of interested parties in the case.

    Separately, Altonaga today granted the government’s June 4 motion by default to stay discovery in the case, explaining that Disner and Schweitzer have “not filed an opposing memorandum of law to the Motion, nor have they sought an extension of time to do so.”

    Disner is a co-founder of the Quiznos sandwich franchise. Schweitzer is a former attorney now living in Miami whose license was suspended in Connecticut.

    Both men later became pitchmen for Zeek Rewards, an MLM firm whose business model closely resembles the ASD business model that ASD’s Bowdoin admitted was a Ponzi scheme. Bowdoin is jailed in the District of Columbia. A federal judge revoked his bond June 12 after prosecutors proffered evidence that he continued to promote fraud schemes after the U.S. Secret Service seized tens of millions of dollars in the ASD Ponzi case and after Bowdoin was arrested on Ponzi-scheme charges in December 2010.

    Bowdoin pleaded guilty in May to wire fraud in the ASD Ponzi case. His formal sentencing is set for August. He has been banned from multilevel marketing, Internet programs and mass marketing.

    Other ASD-Related News From The OneX Fraud Wing

    In other ASD-related news, a conference call cheerleading session for the purported “OneX” program was canceled tonight after a rah-rah session that had been scheduled for last Thursday also was canceled.

    Tonight’s cheerleading session was to be sponsored by a downline with ASD ties and was contemplated to be one that would build on the purportedly exciting announcement OneX said would be made last week to identify its new payment processor, a source told the PP Blog.

    But OneX apparently canceled the Thursday conference call and never identified a new payment processor, so there was nothing for the OneX downline with ASD ties to cheer about tonight.

    “It is not possible to move forward without the processor being in place,” the ASD downline group said, according to the source.

    But the group held out hope that OneX would announce its new payment processor tomorrow, according to the source.

    In April, federal prosecutors said OneX was a “fraudulent scheme” and “pyramid” that was operating in ASD-like fashion.

  • BULLETIN: FLORIDA — AGAIN: CFTC Says Civil, Criminal Charges Filed Against Miami Resident Oscar Hernandez In Alleged Commodity-Pool Ponzi Scheme In Which A Customer Was Check-Waving Cheerleader

    BULLETIN: Civil and criminal charges were filed in Florida today against Miami resident Oscar Hernandez, amid allegations he was operating a $3 million Ponzi scheme through Midway Trading Company LLC and Conquest Investment Group Inc., the CFTC said.

    The office of U.S. Attorney Wifredo A. Ferrer of the Southern District Of Florida said Hernandez has been charged criminally with fraud and conspiracy.

    In its complaint, the CFTC painted a picture of a noxious financial fraud that proliferated in part because a Hernandez customer led cheers for the scheme. The customer displayed copies of checks presented him by Hernandez, and the checks became a form of social proof that Hernandez was on the up-and-up, according to the complaint against Hernandez.

    The customer ultimately persuaded about eight others to invest with Hernandez, which caused at least $1 million more to flow to the Hernandez Ponzi, the CFTC alleged.

    The scheme operated between 2005 and 2009, netting more than $3 million. Hernandez and the firms “misappropriated approximately $1.8 million of participants’ funds for personal use, including car, mortgage, and credit card payments, and used misappropriated funds for so-called profit payments to participants,” the CFTC said.

    Investors were told Hernandez had developed a “special program” to trade futures and that annual returns of 180 percent were possible, the CFTC said.

    The CFTC, the FBI and federal prosecutors in the Southern District of Florida cooperated in the probe, the CFTC said.

    “By late 2008, Defendants made payments only intermittently, not monthly,” the CFTC charged. “Participants received their last payments in early 2009, and have not received a monthly payment or the return of their principal since that time.”

    Neither Hernandez nor the companies was registered with the CFTC “in any capacity,” the agency said.

    A Hernandez customer named Omar Aguilera began trading with Hernandez with $50,000 in 2005, according to the CFTC. By 2007, Aguilera and his wife upped their stake to $1 million with borrowed money.

    “Aguilera began to recommend the investments that Hernandez was making through Midway and Conquest to many of his friends and relatives, showing them copies of the checks he had received as proof of the profits he was earning,” the CFTC said. “Aguilera repeated what Hernandez had told him — that he would use any funds they invested for futures day trading, and that the investment carried no risk.”

    Over time, the scheme spread by word-of-mouth — to the point where “some participants invested without ever talking to Hernandez,” the CFTC said. “Early participants in the scheme received considerable ‘returns.’”

    But “the checks that Hernandez sent to Aguilera from the Midway and Conquest bank accounts were not profits from futures trading, but were funds that Hernandez had received from other participants and deposited in the Midway and Conquest bank accounts,” the CFTC charged. “Hernandez used only a portion of the funds he obtained from participants to trade futures in the Midway and Conquest trading accounts, losing approximately $1.3 million in the process, and used the remainder either to pay off obligations to other participants, or to pay for his own personal living expenses.”

    When the Ponzi collapsed, Hernandez told “a variety of false stories,” the CFTC said.

  • BULLETIN: Florida Attorney/CPA Lorn Leitman Sentenced To More Than 17 Years In Ponzi And Fraud Caper; Federal Judge Orders Upward Departure From Sentencing Guidelines, Saying Lawyer Targeted Elderly Investors, Friends And Military Members

    BULLETIN: A 61-year-old Florida attorney and CPA who targeted elderly investors, retirees, friends and members of the military in companion fraud schemes has been sentenced to 210 months in federal prison.

    Although sentencing guidelines suggested that Lorn Leitman would serve a maximum of 151 months, U.S. District Judge Marcia G. Cooke of the Southern District of Florida departed upward from the guidelines, effectively turning what might have been a sentence of 12-plus years into one of more than 17 years.

    Cooke departed from the guidelines after hearing a Leitman victim say “my dreams are dead,” according to the office of U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    “The court explained that the decision to sentence above the guidelines resulted from the defendant’s conduct preying upon his closest friends, fellow servicemen, the elderly and retirees, and noted that the defendant breached codes of conduct applicable to members of the Florida Bar and certified public accountants,” Ferrer’s office said.

    Leitman’s Ponzi scheme operated for a decade and involved an investment pitch for “phantom residential mortgages,” prosecutors said. A companion scheme in which members of the military were sucked into “predatory and usurious loans” also was part of Leitman’s fraud scheme, according to investigators.

    Ferrer has thrown down the gauntlet to scammers in the Miami region and fraudsters operating offshore while targeting U.S. residents. A special task force operating in the region is specifically targeting investment fraud.

    The Miami region has been plagued by fraud schemes, including the spectacular Ponzi caper involving more than $1 billion pulled off by now-disbarred attorney Scott Rothstein and a $935 million “grocery” Ponzi scheme orchestrated by Nevin Shapiro.

    In January 2010, U.S. Attorney General Eric Holder ventured to South Florida and issued a warning to scammers that the government was serious about putting them in jail.

    “To those who see the victimization of others as an avenue to wealth, take notice,” Holder warned a year and a half ago. “If you fabricate a financial statement, if you propagate an investment scheme, if you are complicit in an act of financial fraud, you are writing your ticket to jail.”

    Prosecutors in various districts across the United States have been targeting attorneys who provide cover to fraud schemes and help white-collar crime and hucksterism flourish.

  • URGENT >> BULLETIN >> MOVING: Paranoia-Maker: FBI Undercover Sting In Florida Leads To Criminal, Civil Charges Against 5 In Alleged Penny-Stock Capers; Agents Established ‘Phony’ Consulting Company

    URGENT >> BULLETIN >> MOVING: An undercover sting by the FBI in Florida has led to criminal and civil charges against five alleged penny-stock fraudsters in Florida, Texas, Nevada and California.

    The sting featured a phony “consulting” company created by the FBI, authorities said. News about the make-believe consultancy followed on the heels of news last month that U.S. investigators had created a “payment processor” as part of a different probe into illegal gambling.

    Charged criminally in today’s undercover cases were Brian Gibson, 63, of Coconut Creek, Fla; Donald W. Klein, 40, of Frisco, Texas; Douglas Newton, 66, of Rancho Mirage, Calif; Charles Fuentes, 66, of Dana Point, Calif; and Thomas Schroepfer, 54, of Las Vegas. Schroepfer also is known as Thomas Schroepfer Baetsen.

    The men and several companies also were charged civilly by the SEC in what the agency described as a coordinated law-enforcement assault against microcap hucksters.

    “Investors deserve better than secret investment strategies based on kickbacks and bribes,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

    The Miami region’s top federal prosecutor, meanwhile, said the cases evolved from the Southern District of Florida’s ongoing Securities and Investment Fraud Initiative, a task force aimed at criminals and fraudsters operating in the region.

    “The defendants charged today abused their knowledge of the capital markets hoping to misappropriate money held in pension fund and brokerage accounts to enrich themselves and their co-conspirators,” said Wifredo A. Ferrer.

    Undercover FBI agents posed as scammers and set up a phony “consulting” business as part of the probe, the SEC said.

    “The defendants charged today were intent on making profits for themselves while defrauding others,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.

    Newton, the SEC said, was chief executive officer of Real American Brands Inc., now known as Real American Capital Corp. He was accused of paying kickbacks to a “purported employee pension fund trustee” to buy more than 6.2 million shares of restricted Real American Brands stock.

    He further was accused of trying to conceal the kickbacks through a “consulting” firm.

    However, the trustee Newton believed to be corrupt actually was “a fictitious person,” the SEC said. Meanwhile, “the trustee’s business associate who helped arrange the deal was an undercover FBI agent,” and the consulting company was a “phony” one created by the FBI, the SEC added.

    Klein was the president and chief executive officer of KCM Holdings Corp. He is accused of engaging in two restricted stock transactions and one market transaction involving KCM Holdings’ stock.

    “Klein and the company paid kickbacks to an undercover FBI agent who portrayed himself as a business associate of a corrupt trustee of an employee pension fund, in exchange for the fund’s purchase of 2.5 million shares of restricted KCM Holdings stock,” the SEC said. “Klein attempted to conceal the kickbacks through a consulting agreement with a phony company that would receive the kickbacks. In another scheme, Klein bribed a purported corrupt stockbroker (actually an undercover FBI agent) to purchase KCM Holdings stock in the open market for brokerage clients with discretionary accounts.”

    Thomas Schroepfer was president and president of of SmokeFree Innotec Inc. He, too, got caught in the sting, the SEC said.

    For his part, Fuentes was a promoter of SmokeFree’s stock, and “paid kickbacks to an undercover FBI agent, posing as the business associate of a corrupt employee pension fund trustee, in exchange for the fund’s purchase of 400,000 shares of restricted SmokeFree stock,” the SEC said.

    Schroepfer, the SEC said, “attempted to conceal the kickbacks through a consulting agreement with a phony company created to receive the kickbacks.

    “In addition, SmokeFree issued shares of its stock to a cooperating witness for acting as a middleman in the scheme,” the SEC said.

    Gibson “created a now-defunct website, Roaringpennystocks.com, to promote shares of Xtreme Motorsports International Inc., as part of a planned pump-and-dump scheme,” the SEC charged.

    He is accused of touting Xtreme Motorsports “by blasting a series of e-mails to potential investors” and posting “false testimonials on the site from purported investors raving about their success in following the website’s stock picks,” the SEC said.

    In a separate case in Maryland last month, prosecutors announced that federal agents had created a “payment processor” to infiltrate illegal gambling operations.

    The name of the Feds’ “payment processor” was Linwood Payment Solutions — and its website now serves this message:

    “Linwood Payment Solutions is a Department of Homeland Security Undercover Business set up to identify and prosecute companies accepting and paying out funds for U.S. customers who gamble online illegally.”

    In response to a white-collar fraud epidemic involving huge sums of money and fraudsters and criminals operating both domestically and internationally, U.S. agencies, including the Secret Service, ICE and others, have been employing techniques once largely reserved for organized-crime probes.

  • FLORIDA — AGAIN: Miami Attorney Awaiting Sentencing In Ponzi Scheme Charged With Stealing From Employee Benefit Plan

    A Miami attorney awaiting sentencing in a Ponzi scheme case now has been accused of stealing from an employee benefit plan, federal prosecutors in the Southern District of Florida said.

    Lorn Leitman, 61, was charged with stealing from the South Florida Emergency Physicians P.A. Profit Sharing Plan. He faces up to 20 years in federal prison after pleading guilty to a mail-fraud offense in the Ponzi case, and now faces up to another five years on the theft charge, prosecutors said.

    The Ponzi scheme operated for 10 years, prosecutors said. The sentencing phase of the Ponzi case against Leitman was under way Monday when the new indictment on the theft charge was announced. The sentencing phase in the Ponzi case is scheduled to resume July 6.

    Leitman was indicted on the theft charge after an investigation by the U.S. Department of Labor.

    “This case reaffirms the Labor Department’s commitment to protect workers’ benefits by identifying criminal activity wherever and whenever it occurs,” said Isabel Colon, acting regional director of agency’s Employee Benefits Security Administration Atlanta Regional Office and the Miami District Office.

    In addition to being an attorney, Leitman also is a CPA, prosecutors said. The Florida Bar previously sanctioned Leitman for misconduct in a case in which it was alleged members of the military were targeted in a loan scheme that charged usurious interest rates.

    In 2007, the Florida Supreme Court ordered Leitman to attend Ethics School.

  • KABOOM! SEC, Feds Target Alleged Money-Laundering Operation In Costa Rica; 6 People From Various Countries Charged Criminally; 7 Charged Civilly In Coordinated Probe Of ‘Pump And Dump’ Schemes

    BULLETIN: Two days after Southern Florida’s top federal prosecutor warned that offshore fraudsters who targeted Americans had no safe haven, six people from various parts of the world who allegedly ran or contributed to a pump-and-dump scheme that used the services of a  money-laundering operation in Costa Rica have been charged criminally, authorities said.

    The SEC, meanwhile, charged seven people civilly. An attorney has been charged both criminally and civilly, the SEC said. The cases were brought in the Southern District of Florida, which has been a hotbed of financial crime.

    Defendants in the cases hail from Costa Rica, Great Britain, Canada, Israel and the United States, according to the SEC. The criminal charges include conspiracy to commit securities, mail and wire fraud; wire fraud; mail fraud; violating the securities regulation laws and obstruction of justice.

    Jonathan R. Curshen, a convicted felon awaiting sentencing in an earlier securities and bribery scheme, has been charged both criminally and civilly in the new case. Curshen, 46, a dual U.S. and British citizen and the one-time “honorary counsel” of St. Kitts-Nevis to Costa Rica, presided over a Costa Rican company known as Red Sea Management Ltd.

    Red Sea “effected fraudulent pump-and-dump schemes on behalf of its clients and laundered millions of dollars in illegal trading proceeds out of the United States to its clients overseas,” the SEC charged.

    Also charged criminally and civilly were attorney Michael S. Krome, 49, of Lake Grove, N.Y; Ariav “Eric” Weinbaum, 37, of an unspecified city in Israel; Yitzchak Zigdon, 47, of Tel Aviv; Ronny Morales Salazar, 39, of San Jose, Costa Rica; and Robert L. Weidenbaum, 44, of Coral Gables, Fla.

    Krome and Weidenbaum (as distinct from Weinbaum) are Americans.

    Weinbaum, according to records, has dual U.S. and Israeli citizenship. He previously lived in Boca Raton, Fla., but now is living in Israel, the SEC said. The SEC alleged that Weinbaum has a “network of operatives he uses to perpetrate pump-and-dump stock manipulations.”

    Zigdon is an “Israeli accountant and the business partner of Weinbaum,” the SEC said.

    David C. Ricci of San Jose, Costa Rica, was charged civilly, and already has settled with the SEC. Ricci is a citizen of Canada who was living in Costa Rica, according to the SEC charging documents.

    “This group of illicit stock promoters sought to hide their scheme behind offshore entities, but their misconduct was exposed by the excellent cooperation of law enforcement agencies here and abroad,” said Cheryl Scarboro, associate director in the SEC’s Division of Enforcement.

    On Feb. 16, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida warned offshore scammers and criminals that the United States would not tolerate crime aimed from abroad at its citizens.

    “International law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas,” Ferrer said.

    “Curshen directed Red Sea to open numerous nominee brokerage accounts with U.S. and Canadian broker-dealers to enable the firm to engage in coordinated manipulative trading and conceal its illegal activity,” the SEC charged, alleging that Ricci and Salazar had trading authority over the nominee accounts.

    The scheme for which the charges were brought centered on a “sham” company known as CO2 Tech Ltd., which purported to be in the business of reversing global warming, the SEC said.

    Purportedly based in London, the company claimed to have a relationship with Boeing, the aircraft-maker, and traded on the Pink Sheets.

    “There were no communications, correspondence or understandings between CO2 Tech and Boeing,” the SEC said flatly, alleging that CO2 Tech was a “sham” that had no “significant assets or operations.”

    Krome, the lawyer, “issued a fraudulent opinion letter” to enable Weinbaum and Zigdon to advance the scheme, and “Weinbaum hired Weidenbaum” to distribute false information through websites, spam e-mails and fax blasts, the SEC charged.

    “Weidenbaum enlisted a group of stock promoters who then executed illegal ‘matched orders’ with Red Sea’s nominee brokerage accounts in order to ‘jump-start’ the market and increase the price of the stock,” the SEC charged. “As a result of the false media campaign and the illegal matched orders, the market price of CO2 Tech stock increased 81 percent increase in one day and trading volume increased 1,573 percent.”

    Ricci and Salazar sold the stock through Red Sea, and the “coordinated misconduct enabled stock sales at artificially inflated prices for profits of more than $7 million at the expense of unsuspecting investors,” the SEC charged.

    Cooperating in the case were the U.S. Department of Justice, the FBI, and the U.S. Postal Inspection Service, FINRA, the Costa Rican Police, the British Columbia Securities Commission, the Israel Securities Authority, the United Kingdom Financial Services Authority and The City of London Police Department, the SEC said.

    In recent days, federal prosecutors also have filed charges against more than 100 people associated with Armenian Power, an international organized-crime group with ties to Russia and Armenia.

  • Southern Florida’s Top Federal Prosecutor Says Offshore Biz-Op Fraudsters Have No Safe Havens; United States Throws Down Gauntlet To Criminal Hucksters

    A top federal prosecutor said today that the United States would vigorously investigate and prosecute “business opportunity” fraudsters who target Americans.

    “This is true even if they operate from outside of the United States,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “International law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”

    Ferrer’s remarks came in response to guilty pleas entered by Silvio Carrano and Gregory Britt Fleming after an intense investigation by the U.S. Postal Inspection Service.

    And Ferrer’s words were backed up by the head of the civil division of the U.S. Department of Justice.

    The United States “will continue to aggressively prosecute those who defraud Americans in an effort to make a quick buck,” said Assistant Attorney General Tony West.

    Carrano and Fleming were among a group of defendants who tricked customers into believing the “opportunities” they presented were based entirely in the United States. The businesses actually were operating from Costa Rica and were criminal scams that resulted in multiple prosecutions against multiple people peddling everything from vending machines and coffee to greeting cards and bogus claims of assistance, prosecutors said.

    Customers paid thousands of dollars each to join the programs based on profitability lies and tales of financial success told by the schemers. Shills helped sell the schemes, prosecutors said.

    Carrano and Fleming pleaded guilty to conspiracy to commit mail and wire fraud for their roles in the schemes, which operated for months, prosecutors said.

    “After one company closed, the next opened,” prosecutors said, identifying the businesses as Apex Management Group Inc., USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Co.

    Also recently pleading guilty to conspiracy to commit mail and wire fraud was Donald Williams, who was sentenced to 78 months in federal prison. Co-defendant Patrick Williams, meanwhile, pleaded guilty to conspiracy to commit mail and wire fraud, 10 counts of mail fraud and three counts of wire fraud.

    Sentencing for Patrick Williams is scheduled for March 30. Sentencing for Carrano and Fleming is scheduled for April 20.

    Read the statement by Ferrer, West  and Henry Gutierrez, the top postal inspector in Miami.

  • Prisoner Who Ran Scam From Florida Jail Sentenced To 21 Years In Federal Prison; Willoughby Farr of West Palm Beach Operated ‘Cramming’ Scheme

    Willoughby Farr

    A Florida man who operated a long-distance billing scam from the West Palm Beach County Jail has been sentenced to 262 months in federal prison.

    Willoughby Farr, 46, used three Palm Beach companies to pull off the “cramming” scam in which consumers were billed for calls they did not make, prosecutors said. He also faces a $34.5 million judgment in a successful civil lawsuit filed by the FTC, which referred the case to the Justice Department. The U.S. Postal Inspection Service then conducted a criminal investigation that led to the prosecution of Farr on mail-fraud charges.

    “When the unscrupulous and the dishonest line their pockets with consumers’ hard-earned money, we will hold them accountable,” said Tony West, assistant attorney general for the Civil Division of the U.S. Department of Justice. “As this sentence demonstrates, the Justice Department has put a priority on protecting the public from fraudulent schemes. This case should also remind consumers to carefully review their telephone bills for unauthorized charges.”

    A top postal inspector said consumers need to be aware that fraudsters want their money.

    “Crammers like Farr are eager to post bogus charges to consumers’ accounts,” said Henry Gutierrez, inspector in charge. “The Postal Inspection Service will work tirelessly with its law enforcement partners to deter fraudulent use of the mails and to protect the American consumer.”

    Wifredo A. Ferrer, South Florida’s top federal prosecutor, said postal inspectors did a “superb job” of reverse-engineering the scheme.

    “[This] case demonstrates the effectiveness of cooperative law enforcement efforts, which can put an end to fraudulent schemes, and then bring wrongdoers to justice,” Ferrer said, giving a nod to both postal inspectors and the FTC.

  • BULLETIN: Yet Another Florida Ponzi Scheme; SEC Accuses Luis Felipe Perez Of Operating $40 Million Fraud Backed By Fake Diamonds And Bogus ‘Pawn Shops’

    EDITOR’S NOTE: Here’s one for your Bubba Blue notebook on the various ways to have a Ponzi scheme, as opposed to shrimp.

    UPDATED 5:50 P.M. EDT (U.S.A.) A Miami man has been charged by the SEC with gathering $40 million in a Ponzi scheme, pocketing $6 million for himself and telling investors they were helping him finance his Florida jewelry businesses and pawn shops in New York.

    Investors believed their money was safe because it was backed by the man’s jewelry operations, diamonds and life insurance, the SEC said.

    The trouble with the claims of Luis Felipe Perez, according to the SEC, was that he “had no dealings with pawn shops and never provided financing to them.”

    UPDATE 5:50 P.M: Perez also has been charged criminally by federal prosecutors with six counts of securities fraud, after a probe by the U.S. Secret Service and U.S. Immigration and Customs Enforcement, according to U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

    The criminal case is part of an ongoing series of actions by the interagency Financial Fraud Enforcement Task Force, which President Obama established in November 2009, according to Ferrer’s office.

    At the same time, the SEC said, two “purported” jewelry businesses owned by Perez — Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp. — “did not generate sufficient revenue to pay investors’ principal and interest payments.”

    Clients did not know that “his primary source of money to pay investor returns was from new investors,” the SEC said.

    Although Perez said his offering was backed by “diamonds” in a bank safety-deposit box, the purported diamonds in the box “were fake,” the SEC said.

    Meanwhile, investors’ funds were not protected by a life-insurance policy as Perez had claimed because he had “defaulted on the policy premium” and allowed it to lapse, the SEC said.

    “Perez created an aura of success around him to lure old and new acquaintances into investing substantial sums of money,” said John C. Mattimore, associate regional director of the SEC’s Miami Regional Office. “Behind the luster of diamonds and jewelry, Perez told outright lies and made promises he couldn’t possibly keep.”

    While investors were imagining “guaranteed annual returns of 18 percent to 120 percent through monthly interest payments,” the SEC said, Perez spent $3.2 million of their money on a home, $1 million on jewelry for himself and his wife, $400,000 to lease luxury cars, $300,000 on clothing for his wife, $300,000 for travel by private jet and $100,000 on artwork.

    In addition, Perez paid himself a salary of $250,000, gave away more than $1 million to family members and made $100,000 in political contributions, the SEC said.

    The scheme collapsed in June 2009, when Perez “was no longer able to recruit new investors,” the SEC said.

    Because the scheme largely targeted Hispanics, it also had an element of affinity fraud, the SEC said. About 35 investors were affected.

    The U.S. Secret Service, U.S. Immigration and Customs Enforcement and the Miami Police Department assisted in the probe, the SEC said.