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Tag: Zeek Rewards

As Was Case With DFRF Enterprises And Rojo Filho, YouTube Promos Played Role In Criminal Ponzi Prosecution Of The Achieve Community’s Troy Barnes

From a 2014 YouTube promo for The Achieve Community. Authorship is unclear.

Still promoting your securities scam on YouTube?

As the PP Blog reported on Oct. 3, YouTube promos for the alleged DFRF Enterprises’ Ponzi scheme were cited in two of three wire-fraud counts against accused operator Daniel Fernandes Rojo Filho. Filho, allegedly at the helm of a fraud that gathered tens of millions of dollars, has been in federal custody since his July 21 arrest in Boca Raton, Fla.

The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts is prosecuting the Filho criminal case, and the SEC simultaneously is prosecuting a civil case. The SEC has warned for years about securities scams spreading on social media.

It turns out that YouTube videos also are playing a role in the criminal prosecution for wire fraud and wire-fraud conspiracy of Troy Barnes of The Achieve Community — or TAC. That prosecution was announced Nov. 3 by the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

Among other things, the indictment against Barnes alleges that “YouTube communications” played a role in duping Achieve participants and therefore constituted part of a wire-fraud conspiracy.

Barnes, 53, resided in Riverview, Mich. He is free on bond, pending trial. In addition to the conspiracy count against him, Barnes also faces three counts of wire fraud for three transactions in 2014 involving the purchase of Achieve “positions” by victims, according to the indictment.

“By the time the scheme collapsed in February 2015, the conspirators had defrauded over 10,000 investors in the Charlotte-area and worldwide, and owed victim-investors at least $51 million in purported investment returns, yet only had available approximately $2.6 million,” prosecutors said. “According to court records, over the course of the scheme, Barnes used over $140,000 of the victims’ money for his own enrichment.”

Barnes co-conspirator was Kristi Johnson, 60, who resided in Aurora, Colo., prosecutors said. She has already pleaded guilty to wire-fraud conspiracy and is scheduled for sentencing Nov. 19, before U.S. District Judge Max O. Cogburn Jr.

Achieve offered a 700 percent ROI, according to the SEC and federal prosecutors. Barnes and Johnson also face a civil action by the SEC.

In December 2014, the PP Blog reported that Achieve boosters parroting each other were circulating a YouTube promo that read, “We are not investing in a stock or buying shares in a company. We are using our God given universal right to spend our money the way we want. We choose not to sell out to the banking system for their tiny little 1% annual return.”

Said Rose’s office on Tuesday: “According to court filings, as the scheme grew in size and scope, Barnes and his conspirators concealed the true nature of the scheme through multiple misrepresentations. According to court records, when the conspirators became concerned that the use of the term ‘investment’ would draw scrutiny from regulators, they instructed victim-investors that ‘We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.’”

Scammers from AdSurfDaily in 2008 tried the same tactic. It backfired, as it later would do with Achieve and other “programs,” including Zeek Rewards.

Among other things, Achieve claimed $50 turned into $400. The U.S. Secret Service brought the Achieve criminal case and the ASD prosecution. ASD was a 1-percent-a-day “program.”

The PP Blog’s Achieve coverage received a mention Nov. 3 in the Charlotte Observer. See the Blog’s archive of Achieve Community references.

UPDATE 7:22 P.M. ET U.S.A. Scheduled for sentencing Nov. 19, Kristi Johnson today asked the court for a sentencing delay. Specifics were filed under seal. This is from a motion on the public record (italics added):

1. Pursuant to Local Rule of Criminal Procedure 55.1, Ms. Johnson respectfully requests this Court to seal the Joint Motion to Continue Sentencing because it contains sensitive information regarding a criminal investigation.

2. Public dissemination of the Joint Motion to Continue Sentencing may interfere with the administration of justice. Therefore, there is good cause for the Court to seal said motion.

NOTE: Our thanks to the ASD Updates Blog.

Nov 5, 2015
In Separate Case, Zeek Figure Robert Craddock Sentenced To 6 Months In Federal Prison — Plus 15 Days At ‘Work Farm’ After Release

Uncharged in the Zeek Rewards’ case, Robert Craddock nevertheless has received prison time after pleading guilty to swindling more than $117,000 from the Deepwater Horizon oil-spill fund.

U.S. District Judge Gregory A. Presnell of the Middle District of Florida yesterday sentenced Craddock to two six-month terms in federal prison to be served concurrently, followed by three years’ supervised release. During his period of probation, Craddock additionally must serve 15 days at the “Brevard County Work Farm,” according to the docket of the case. (See 2013 News13 story on one of the purposes of the work farm.)

Presnell also ordered Craddock to make restitution of $117,700.

Craddock had asked for no jail time, BehindMLM.com reported Oct. 21.

Craddock had a storied history in Zeek, including a bid to silence Zeek critic K. Chang just weeks before the SEC and U.S. Secret Service moved against Zeek in 2012. After that, the SEC accused Craddock of trying to stifle the court-appointed receiver in the Zeek case.

At one point, Craddock participated in Zeek-related fundraising calls with Todd Disner, a figure in the AdSurfDaily Ponzi-scheme story. (Also see PP Blog guest column by Gregg Evans, from Aug. 29, 2012.)

The Secret Service led the investigation of the Deepwater Horizon matter involving Craddock.

NOTE: Our thanks to the ASD Updates Blog.

Oct 27, 2015
Sentencing Hearing Postponed For Zeek Rewards’ Executive Dawn-Wright Olivares

Dawn Wright-Olivares

Sentencing for Dawn Wright-Olivares, a former Zeek Rewards’ executive who pleaded guilty in February 2014 to investment-fraud conspiracy and tax-fraud conspiracy, has been postponed, the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said today.

Wright-Olivares, whose age was listed as 45 by federal prosecutors at the time of her guilty plea, was to have been sentenced yesterday at 2:30 pm EDT before U.S. District Judge Max O. Cogburn Jr., according to the government’s Victim/Witness site for the Zeek Ponzi- and pyramid case.

No new sentencing date has been scheduled for Wright-Olivares, prosecutors said.

Sentencing delays are not unusual in federal cases. The plea agreement for Wright-Olivares requires her to be a prosecution witness if called by the government in “any trial, hearing, or grand jury proceeding, including, but not limited to, testimony against any co-defendants, as the United States designates.”

Accused Zeek operator Paul R. Burks is not expected to go on trial until at least May of 2016.

Zeek’s alleged haul clocked in at about $897 million. In terms of the number of victims, it appears to one of the two largest Ponzi schemes in U.S. history, possibly trailing only the TelexFree MLM scheme.

Visit the website of the court-appointed receiver in the civil portion of the Zeek case. The latest update was posted Oct. 22.

Oct 27, 2015
MyAdvertisingPays Pulls Out Of America, Leaving U.S. Affiliates In The Lurch; Cross-Border Scheme Alleges Libel, Defamation

From PP Blog archives: On April 2, a video depicting President Obama as a fan of the MyAdvertisingPays “program” appeared on YouTube. An “Obama voice” was dubbed into the video, which also shows the Presidential Seal. Text below the video reads, “Mr. President speaks about the new advertising revolution.”

EDITORIAL: In April 2015, the PP Blog reported that a promo on YouTube put words in the mouth of President Obama and depicted him as a pitchman for MyAdvertisingPays, a cross-border scheme with promoters in common with the alleged Zeek Rewards and TelexFree Ponzi- and pyramid schemes.

“My AdvertisingPays pays its members every 20 minutes,” a mimicked voice of Obama said in the promo. “I highly recommend you to join MyAdvertisingPays.”

Like many things in network marketing, this was reckless beyond measure. MAPS, as it is known, is reminiscent of the AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. ASD, sued by some of its own members amid allegations of racketeering and described by the Secret Service as a “criminal enterprise,” thought it prudent to trade on the name of President George W. Bush to drive dollars to its $119 million scam.

It proved to be very imprudent for ASD to suggest a White House vetting and endorsement. The indictment against ASD operator Andy Bowdoin even referenced the bid to dupe members and prospects in this fashion . (Also see: “THE DAY ‘WINK-NOD’ DIED,” from the PP Blog on Dec. 2, 2010.)

MAPS Suddenly Says It Is Withdrawing From United States

After one or more MAPS’ promoters lifted footage of a Presidential address and used technology to put words in Obama’s mouth to help an MLM scheme spread its tentacles, it now has come to pass that MAPS — purportedly led by American Mike Deese of Mississippi via Anguilla, a British overseas territory — says it is pulling out of the United States.

In an announcement dated yesterday and titled “THE MOST IMPORTANT UPDATE EVER RELEASED,” MAPS more than hinted it is not wanted in America: “We are going to focus on the place where we are wanted and are making huge strides,” MAPS said.

That place is Europe, according to MAPS.

“The decision comes on the heels of a declining marketplace in the US for our company.,” MAPS said. “It simply isn’t profitable for us to remain engaged there. Over 90% of our business already comes from Europe, while we are catering to the US members by operating in US currency. It doesn’t make good business sense to continue operating in a place and expending valuable resources in a market that’s steadily declining.”

If MAPS is right — if it’s not wanted in America and if the U.S. market is steadily declining — we take this as good news that suggests MAPS perceives a serious threat from American law enforcement and class-action lawyers interested in suing under the federal RICO (racketeering) statute. Even so, it’s troubling that MAPS apparently sees a welcome mat for itself in Europe.

About 50,000 Spaniards reportedly got sucked into the TelexFree scheme. TelexFree pain, in fact, lingers across Europe and the world. It is possible that it affected 1 million people or more. MAPS currently brags that it has “209805+ Users.”

MAPS also is reminiscent of Banners Broker, another “advertising” program and a bizarre MLM “opportunity” ultimately described in Canada as a criminal enterprise. Among other things, Banners Broker thought it prudent to try to chill critics — like the Zeek Rewards, AdSurfDaily and AdViewGlobal schemes before it. (See Feb. 8, 2014, PP Blog story, “Banners Broker Cultists Rip Play From Zeek, AdSurfDaily, AdViewGlobal HYIP Scambook.”

Like the other “programs,” MAPS now is planting the seed it is lining up people to sue.

From the MAPS Oct. 15 announcement (italics added):

On a different note, it has come to our attention that there exist multiple internet-based avenues being used for defamatory and libelous speech against MAP. Through our research, we have found many, if not all, of these claims to be without merit and simply an attempt by certain individuals to exploit the MAP name in order to heighten the popularity of their own product. MAP has served demand letters upon those individuals who engage in defamatory and slanderous rhetoric, and in anticipation of litigation, has prepared complaints against all such individuals. MAP would like to emphasize and reassure you that their decision to cease operations in the United States is in no way connected to the aforementioned defamation and libel claims.

Oct 16, 2015
SHADES OF ZEEK: Prospective Class-Action Defendant Tells Judge TelexFree Was Operating A Tax Scam

In October 2014, federal prosecutors alleged that the Zeek Rewards MLM “program” shut down by the SEC two years earlier was in part a scam that caused “victim-investors to file inaccurate tax returns for phantom income they never actually received.”

Now, a year later, a member of the TelexFree MLM scheme shut down by the SEC and other agencies last year is telling a federal judge that it appears TelexFree engaged in accounting fraud that caused him to pay taxes on income he never actually received.

The claim was made in an Oct. 7 defense filing by Daniil Shoyfer, whom private plaintiffs want to make the lead defendant in a class-action case that effectively would sue Shoyfer and 20,000 other alleged TelexFree net winners believed to have collected money directly from recruits.

Unlike Zeek’s Paul Burks and Dawn Wright-Olivares, alleged TelexFree operators James Merrill and Carlos Wanzeler have not been charged criminally with tax offenses. But the assertion by Shoyfer gives rise to questions about whether they and others could be as the federal probe of the enterprise continues. Merrill and Wanzeler currently face charges of wire fraud.

Shoyfer, through attorneys from two Boston law firms, says U.S. District Judge Timothy S. Hillman should not permit the plaintiffs to amend the complaint to make him the class-representative. He further contends that “TelexFree has engaged in what appears to be fraudulent accounting practices intending to show that it paid Mr. Shoyfer in excess of $750,000 – however this is simply false.”

“Although TelexFree credited Mr. Shoyfer with large amounts to his TelexFree account, he never withdrew or had access to the vast majority of these funds,” he contended through counsel.

Shoyfer did not identify who might have helped TelexFree hatch a bogus accounting scheme. The SEC, in 2014, charged former TelexFree CFO Joseph H. Craft of Boonville, Ind., with securities fraud. Craft is an accountant. In its civil complaint, the SEC alleged Craft “has been the chief financial officer of other multi-level marketing companies” in addition to his work for TelexFree.

From Shoyfer’s argument (italics added/light editing performed):

Mr. Shoyfer worked with TelexFree from March of 2013 through April of 2014 . . . Over the course of those thirteen months, Mr. Shoyfer received a total of $122,000 from TelexFree . . . However, Shoyfer also spent many thousands of dollars in expenses in order to make this money from TelexFree . . . Mr. Shoyfer estimates that he paid nearly $60,000 to TelexFree in order to be a part of the MLM (including dozens of purchases of the $1,425 AdCentral Family packages, . . . plus other expenses . . . Contrary to the allegations in the proposed amended complaint, Shoyfer never earned $300,000 per week . . . Mr. Shoyfer cannot afford to be the class representative in this lawsuit: it would almost certainly bankrupt him (again), and it would work an immeasurable hardship on his wife, his daughter, his unborn daughter, his two sons, his father, his sister and others that depend on him.

The argument describes Shoyfer as a teenager when he fled the Soviet Union for America years ago with his mother to escape “persecution because of their Jewish heritage.”

Living in the United States, Shoyfer, now believed to be in his forties, eventually became a full-time occupational therapist who started a staffing business in that profession and also dabbled in MLM, according to the argument.

Shoyfer asserts that he believed TelexFree to be legitimate.

“Prior to TelexFree closing down and being charged with fraudulent acts, Mr. Shoyfer had no knowledge that TelexFree was engaged in any unlawful, unfair, or improper practices,” his lawyers argued. “To the contrary, Mr. Shoyfer relied upon the statements of TelexFree’s officers and legal representatives that TelexFree was a fully legitimate and legal enterprise . . . Mr. Shoyfer had no reason to believe otherwise (nor did he) until TelexFree and its officers were charged.”

More from the argument (italics added/light editing performed):

The defense costs Mr. Shoyfer would have to absorb as the named defendant for the putative defendant class would easily exceed the amounts he received from TelexFree and he, therefore, has no incentive to pay the defense costs of being the named defendant . . . If a defendant class is certified, Mr. Shoyfer intends to opt out of the class . . . Mr. Shoyfer has no interest in being lumped together with 20,000 or so other defendants, some of whom may have known more than he did about TelexFree’s activities and the purported pyramid scheme, and some of whom liked caused Mr. Shoyfer to suffer damages himself.

The argument further contends Shoyfer is a good son and sibling who sends between $200 and $300 each month to both his father in Russia and his sister in Lithuania. He also has paid support of about $2,000 a month since 2008 for two children from his first marriage. Shoyfer now has a child with his second wife, with another child on the way.

In June 2015, The PP Blog reported that Shoyfer also was promoting a scheme known as MyAdvertisingPays — or MAPS, for short. MAPS resembles the AdSurfDaily Ponzi scheme, a $119 million fraud uncovered by the U.S. Secret Service in 2008.

Kenneth D. Bell, the Zeek receiver, has raised questions about MLMers moving from one fraud scheme to another.

NOTE: Our thanks to the ASD Updates Blog.

Oct 14, 2015
URGENT >> BULLETIN >> MOVING: Zeek Receiver Sues MLM Attorney Gerald Nehra

URGENT >> BULLETIN >> MOVING: (7th Update 8:33 p.m. EDT U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi- and pyramid-scheme case has sued MLM attorney Gerald Nehra and his law firm and law partner.

Named defendants are Nehra as an individual and as a member of the Nehra and Waak law firm of Michigan, and Richard W. Waak. Like Nehra, Waak is named as an individual and as a member of the firm. The two lawyers’ individual professional LLCs also are named.

The 21-page complaint by Zeek receiver Kenneth D. Bell is dated Sept. 21 and alleges damages of at least $100 million. A section of the complaint quotes a July 22, 2012, email from Waak that reads, “I have primary responsibility for the Zeek Rewards account with our law firm.”

The SEC moved against Zeek a month later, in August 2012, alleging a massive Ponzi- and pyramid scheme. At least three Zeek executives, including alleged operator Paul R. Burks of North Carolina, later were charged criminally. Two of the executives — Dawn Wright-Olivares and her stepson Daniel Olivares — have pleaded guilty.

From the receiver’s complaint (italics added):

By virtue of their knowledge of [Zeek operator Rex Venture Group] and ZeekRewards and their legal expertise, Nehra and Waak knew or should have known that RVG was perpetrating an unlawful scheme which involved a pyramid scheme, an unregistered investment contract and a Ponzi scheme. Despite this knowledge, Nehra and Waak encouraged investors to participate in the scheme by knowingly allowing their names to be used in providing a false façade of legality and legitimacy and gave improper legal advice that allowed the scheme to continue far longer than it would have without the Defendants’ support. Nehra and Waak’s improper and negligent actions, which breached their fiduciary duties to RVG and assisted RVG’s Insiders to breach their fiduciary duties, caused significant damage to RVG.

Nehra and Waak also face the prospect of private litigation flowing from the alleged TelexFree Ponzi- and pyramid scheme.

In a complaint filed May 3, 2014, plaintiffs accused Nehra of counseling TelexFree “on methods to evade United States securities laws that were intended to offer, in part, protection from pyramid Ponzi schemes; all to enrich himself financially and serve his own selfish interests.”

He further was accused of encouraging unknowing TelexFree members to “participate in the evasion of federal and state securities laws.”

The Zeek receiver made similar claims against the lawyers.

“With their inside knowledge of multi-level marketing schemes and access to RVG’s Insiders, Nehra and Waak knew or should have known that insufficient income from the penny auction business was being made to pay the daily ‘profit share’ promised by ZeekRewards,” Bell alleged.

“The Defendants knew or should have known that the money used to fund ZeekRewards’ distributions to Affiliates came almost entirely from new participants rather than income from the Zeekler penny auctions. Further, based on their inside knowledge and access, Nehra and Waak knew or should have known that the alleged ‘profit percentage’ was nothing more than a number made up by Burks or one of the other Insiders. Rather than reflecting the typical variances that might be expected in a company’s profits, the alleged profits paid in ZeekRewards were remarkably consistent, falling nearly always between 1% and 2% on Monday through Thursday and between .5% and 1% on the weekends, Friday through Sunday.”

Nehra also was a figure in the 2008 AdSurfDaily Ponzi scheme story, opining that ASD was not a Ponzi scheme despite remarkably consistent returns. ASD operator Andy Bowdoin later pleaded guilty to wire fraud and acknowledged his company was a Ponzi scheme and never operated lawfully from its inception in 2006.

Like Bowdoin, Zeek’s Burks is accused of making up numbers to dupe participants. In TelexFree-related matters, class-action lawyers argued that “Attorney Nehra’s extensive experience in multi-level marketing, and particularly his involvement with the Ponzi schemes involving Ad SurfDaily and Zeek Rewards, armed him with the knowledge of what constitutes violations of United States securities law. Indeed, Attorney Nehra was well aware that the use of semantics and obscured phraseology to obfuscate securities laws fails to legitimize TelexFree’s illegal Pyramid Ponzi Scheme.”

Zeek receiver Bell accused Nehra and Waak of turning a “blind eye” to incredible claims by Zeek and of suggesting cosmetic changes to language instead of “recommending substantive changes that would make the program lawful.”

At least one alleged TelexFree promoter accused by the SEC last year of securities fraud has alleged she was duped by both the company and Nehra. That claim was made by veteran HYIP Ponzi pitchwoman Faith Sloan.

NOTE: Our thanks to the ASD Updates Blog.

Oct 9, 2015
FEDS: ‘Achieve Community’ Scam Raked Victims In More Than 140 Countries; Justice Department’s ‘Mega Victim Case Unit’ Called To Duty

Unlike the boffo web-based schemes of TelexFree, Zeek Rewards and AdSurfDaily, the “Achieve Community” scam in which participants were told they’d glean returns of 700 percent did not perform well (relatively speaking) at the MLM Pyramid/Ponzi Scheme Box Office.

Achieve’s haul topped out at about $6.8 million, with alleged unfunded liabilities in the range of $50 million.

What’s particularly alarming about U.S.-based Achieve is that, though small in dollar volume and victims’ count compared to its larger fraud kin, it still reached into more than 140 countries.

Federal prosecutors from the office of U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina now say Achieve created about 10,000 victims, “including more than 4,000 located outside the United States.”

The U.S. victims’ count also presented a logistical challenge — enough of one, at least, for the Justice Department to assign its “Mega Victim Case Unit” to the Achieve matter. The unit helped prosecutors contact U.S. victims.

As the PP Blog reported in July 2015, prosecutors established a web page for victims. Authorities now say “[a]pproximately 229 victims including 29 located in foreign countries have provided details of their victimization. . .”

When a federal crime is committed, prosecutors said, victims have “[t]he right to reasonable, accurate, and timely notice of any public court proceeding . . . involving the crime or of any release or escape of the accused,” and “[t]he right to be reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding.”

When a case with a large number of victims such as Achieve presents itself, it becomes a practical impossibility to contact each and every person who has been defrauded. Because of this, prosecutors have asked a judge to approve a plan that provides “notification to victims who reside in other countries through the internet by posting details about the case and relevant victim impact forms on the United States Attorney’s Office website.”

And there are other logistical challenges when victims of a U.S. crime hail from other countries, prosecutors said.

“Because each country has its own procedures and requirements for contacting persons located in its territory, contacting each foreign victim directly is not practical or advisable,” prosecutors said. “Due to sovereignty concerns, many countries limit or prohibit foreign government officials from directly contacting persons within that country’s borders. This case’s 4,000+ foreign based victims hail from over 140 different countries.”

So, Internet notice is the thing.

We’ll conclude this column with a question: If Achieve created a need for the Justice Department to bring in its “Mega Victim Case Unit,” what sort of need will the TelexFree case create? There may be on the order of 1 million victims in that scheme.

Watch for a special PP Blog editorial tomorrow.

Achieve’s Kristi Johnson is scheduled to be sentenced Nov. 19. Matters pertaining to her alleged colleague Troy Barnes appear to be unresolved.

NOTE: Our thanks to the ASD Updates Blog.

Oct 8, 2015
BULLETIN: Class-Action Proposed Against 20,000 Alleged TelexFree Winners — With MAPS Pitchman As Lead Defendant

BULLETIN: Class-action attorney Robert J. Bonsignore has asked a federal judge for permission to file a third amended consolidated complaint that effectively would sue at least 20,000 “net winners” in the TelexFree scheme shut down by the SEC last year.

The proposal would name alleged TelexFree promoter Daniil Shoyfer the lead class-action defendant, effectively making him the Todd Disner of TelexFree-related court actions. Disner is a Zeek Rewards figure sued by Zeek receiver Kenneth D. Bell in clawback actions aimed at more than 9,000 alleged winners in the Zeek scheme shuttered by the SEC in 2012.

Disner also promoted the AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008.

The PP Blog reported in June 2015 that Shoyfer also was promoting a scheme known as MyAdvertisingPays — or MAPS, for short.

If the judge approves the proposal by Bonsignore, it would appear to mark the first time alleged TelexFree winners have been targeted en masse for the return of their alleged winnings from a scheme the SEC has described as a massive pyramid- and Ponzi fraud. Up to $1.8 billion flowed through TelexFree, now in the hands of a court-appointed trustee who has called it a pyramid scheme.

Web records showed that Shoyfer also was promoting MAPS alongside MAPS colleagues such as U.K. hucksters Simon Stepsys and Shaun Smith.

Smith is alleged by the receiver in the Zeek Rewards Ponzi- and pyramid case to be one of the largest Zeek “winners” in the United Kingdom.

Bell, the Zeek receiver, has raised questions about MLMers moving from one fraud scheme to another.

Bonsignore’s proposed amended complaint on the TelexFree front may lead to similar questions. At a minimum, the development highlights the dangers of fraud schemes that spread at least in part though the Internet to involve hundreds of thousands of participants. Victims can pile up in extraordinary numbers, and a fraction of participants who emerge as winners can end up confronting lawsuits and expensive, emotionally draining litigation.

MAPS, a purported advertising scheme similar to AdSurfDaily, continues to operate.

NOTE: Our thanks to the ASD Updates Blog.

Sep 25, 2015
BULLETIN: ‘The DFRF Fraud Is Much Larger Than It First Appeared,’ SEC Tells Court

BULLETIN: (2nd Update 9:46 p.m. EDT U.S.A.) The SEC has gone to federal court in Boston, alleging that “the DFRF fraud is much larger than it first appeared.”

The agency also alleges that at least one DFRF investor told investigators that he first heard of DFRF in May or June 2014 from TelexFree Ponzi- and pyramid figure Sann Rodrigues, who attended the same church. If the information is correct, it would mean that Rodrigues had knowledge about DFRF within weeks of becoming a defendant in the SEC’s April 2014 action against TelexFree.

SEC investigators initially tied Rodrigues to DFRF and alleged operator Daniel Fernandes Rojo Filho in a complaint last month. New documents filed by the agency yesterday hint that other DFRF insiders also were involved in TelexFree.

Filho, described by federal prosecutors in Boston as a fugitive, was arrested July 21 in Boca Raton, Fla. on a DFRF-related charge of wire fraud. The FBI is leading the criminal investigation.

From an SEC investigator in a July 23 filing in the agency’s civil case against DFRF Enterprises, Filho, Wanderley M. Dalman of Revere, Mass.; Gaspar C. Jesus of Malden, Mass.; Eduardo N. Da Silva of Orlando, Fla.; Heriberto C. Perez Valdes of Miami; Jeffrey A. Feldman of Boca Raton; and Romildo Da Cunha of Brazil (italics and bolding added/light editing performed):

Another investor (hereafter “Investor B”) told me that he and his spouse invested a combined $61,000 in DFRF. He first heard about DFRF in May or June 2014 from Sanderley Rodrigues de Vasconcelos (“Rodrigues”). (Rodrigues is the subject of a 2007 consent judgment in a Commission enforcement action concerning the “Universo Foneclub” pyramid scheme and a defendant in the Commission’s pending action concerning the “TelexFree” pyramid scheme.) Investor B knew Rodrigues from his participation in TelexFree and as a fellow member of his church.

Rodrigues told Investor B that the minimum investment in DFRF was $50,000. Investor B decided not to invest at that time.

Investor B told me that in July or August 2014, defendants Dalman, Jesus and Silva approached him about investing in DFRF. He knew the three men through TelexFree, because when TelexFree was operating, he would meet with individuals involved in the company on a weekly basis at a hotel in Revere.

Dalman, Jesus and Silva told Investor B about DFRF, explaining that Investor B could earn up to 15% per month. They also told him that he could earn a 10% commission for referring others to DFRF.

Investor B told me that Dalman, Jesus and Silva invited him to meet with Filho at a hotel in Boston, Massachusetts in July or August 2014, which he did.

Investor B told me that, in September 2014, he and his spouse went to a meeting at DFRF’s offices at 60 State Street in Boston. Six to ten other potential investors attended this meeting, at which Dalman, Jesus and Silva spoke about DFRF. Filho later joined the meeting and gave a presentation about investing in DFRF. One of the other attendees asked Filho how DFRF could afford to pay 15% per month. Filho responded that he could take the investors’ money and grow it by a factor of six.

The Rodrigues tie to DFRF now brings the number of fraud schemes in which he has been involved at least to four: Universo, TelexFree, DFRF and IFreeX, described last year by Massachusetts investigators as a TelexFree reload scheme. By victims count, TelexFree may be the largest Ponzi/pyramid scheme in U.S. history, rivaled only by Zeek Rewards in 2012.

Rodrigues, a Brazilian, is not a U.S. citizen. He was arrested at a New Jersey airport in May 2015, upon his return from a trip to Israel. He was charged criminally with immigration fraud, amid allegations he lied to get a green card.

Like DFRF’s Filho, Rodrigues had addresses in Massachusetts and Florida. Filho also is a Brazilian.

Prosecution filings today in the criminal case against Filho assert that he is not a U.S. citizen. He has not been charged with an immigration crime and apparently has a driver’s license issued by a U.S. state, given that he has been seen driving a Lamborghini in Florida.

SEC: DFRF Fraud Numbers Rise

The SEC initially pegged DFRF last month as a fraud that had hauled about $15 million. But further investigation has led to higher numbers — in both total haul and the sum Filho is alleged to have siphoned.

Dealing with Filho first, who was alleged last month to have siphoned more than $6 million. From an SEC filing yesterday (italics added):

The documents we reviewed indicate that, since June 2014, Filho has taken more than $8.6 million from DFRF accounts for himself or his family: He has withdrawn more than $2.7 million in cash. He has used DFRF funds to pay more than $2.2 million of personal and family expenses. He has used DFRF funds to pay more than $2.5 million for luxury automobiles (a 2014 Rolls Royce, a 2015 Lamborghini, a 2014 Lamborghini, a 2013 Mercedes, a 2012 Ferrari, a 2006 Ferrari, a 2015 Cadillac, and a 2014 Cadillac) and automotive-related expenses. He has used DFRF funds to pay nearly $250,000 to members of his extended family. He has used DFRF funds to send more than $1.1 million to the IOLTA account of an attorney in Hollywood, Florida. On June 30, 2015, he used DFRF funds to wire more than $1.1 million to an entity in the Bahamas that is believed to be a law firm. Some of these figures are probably too low, because the documents we have received to date are insufficient to classify approximately $3.5 million of withdrawals from DFRF corporate accounts in June 2015.

Now, dealing with DFRF, alleged last month to have hauled $15 million. From an SEC filing yesterday (italics added/light editing performed):

The documents we reviewed indicate that, from June 2014 through June 2015, DFRF received approximately $22.8 million from more than 1,750 investors: The total may be slightly low, because the documents we have received to date are insufficient to classify approximately $160,000 of deposits to DFRF corporate accounts in June 2015.

The documents we reviewed indicate that none of the investors’ money has been used to conduct gold mining in Brazil and Mali, and that DFRF has received no proceeds from gold mining operations.

The documents we reviewed indicate that DFRF has received no proceeds from a line of credit with Platinum Swiss Trust and has had no banking transactions at all with that company.

The documents we reviewed indicate that DFRF has spent nothing on charitable activities in Africa or anywhere else.

The documents we reviewed indicate that, from June 2014 through June 2015, DFRF had no independent source of revenue except the money received from investors.

The documents we reviewed indicate that, from June 2014 through June 2015, DFRF paid approximately $1.94 million to approximately 250 likely investors for the return of investor principal or purported monthly payments.

Heriberto Valdes, who allegedly hauled $551,403 out of DFRF, has not been served the complaint, the SEC said.

“Valdes is the only defendant who has not been served and whose location is unknown,” the agency said.

Records suggest that Valdes, like Feldman, has a criminal record.

NOTE: Our thanks to the ASD Updates Blog.

Jul 24, 2015
Defense Attorney With Ties To Zeek Case Now Representing Kristi Johnson Of Achieve Community In Criminal Case

UPDATED 9:08 A.M. EDT JULY 21 U.S.A. Matthew G. Pruden, an attorney with the Tin Fulton Walker & Owen law firm, is a defense lawyer in the June 2015 criminal case against “Achieve Community” figure Kristine Louise Johnson (Kristi Johnson), according to the docket of the case.

North Carolina-based Tin Fulton Walker & Owen also is representing alleged Zeek Rewards’ operator Paul R. Burks in the criminal case against him brought by federal prosecutors in the Western District of North Carolina last year and in the civil case brought by the SEC in 2012. Pruden’s name appears on a Plainsite.org version the docket in the SEC’s civil case against Rex Venture Group LLC, the company through which Burks allegedly operated Zeek.

Achieve, like Zeek, is alleged to have been a pyramid- and Ponzi scheme. Pruden was appointed by the court to represent Johnson, who has pleaded guilty to a charge of wire-fraud conspiracy.

Though bizarrely dismissed by some Zeek cheerleaders as country bumpkins in the early days after the SEC brought its civil case, Tin Fulton Walker & Owen is a distinguished law firm. (Read GlimDropper of the RealScam.com antiscam forum, posting at Quatloos, covering a 2012 Robert Craddock barb against the firm.)

Among the firm’s most famous clients is Gen. David Petraeus, the former director of the Central Intelligence Agency who received probation and a fine after admitting “to the unauthorized removal and retention of classified information and lying to the FBI and CIA about his possession and handling of classified information.” (Jake Sussman, the Petraeus lawyer quoted in this April 23, 2015, AP story on the Petraeus sentence, also is a lawyer for Zeek’s Burks.)

Achieve’s Johnson pleaded guilty to wire-fraud conspiracy on June 30. She is free on bail. Though listed as a Colorado resident, she was charged criminally in the Western District of North Carolina — the same venue in which the criminal charges against Burks were filed.

It is known that Zeek and Achieve had members in common.

Whether the cases against Burks and Johnson raise any potential conflicts for Tin Fulton Walker & Owen was not immediately clear.

Certain documents that appear to be related to Johnson’s passport have been sealed in the criminal action against her. Certain documents in the Zeek case also are sealed.

Pruden assisted Johnson when she appeared in court last month and pleaded guilty, according to documents in the case.

NOTE: Our thanks to the ASD Updates Blog.

Jul 20, 2015
RECEIVER: ‘No Comment’ On Report Zeek Rewards’ Figure Darryle Douglas Involved In New Scheme Known As ‘AuctionAttics’

AuctionAttics logo.

UPDATED 10:04 A.M. EDT JULY 18 U.S.A. The Zeek Rewards’ receivership this morning told the PP Blog it had “no comment” on a report that alleged Zeek insider Darryle Douglas was involved in a new scheme known as “AuctionAttics.”

BehindMLM.com reported early yesterday that Douglas, who owes the Zeek estate $2.2 million plus postjudgment interest, was involved in the selling of shares in a purported “profit pool” offered by Auction Attics. The report led to immediate questions about whether Douglas, a Californian, was involved in another cross-border offering fraud and would market it to former Zeek members.

Zeek is alleged by the SEC and federal prosecutors in the Western District of North Carolina to have been a Ponzi scheme that gathered hundreds of millions of dollars. The SEC filed civil charges in August 2012. Prosecutors have filed criminal charges against alleged operator Paul R. Burks and former executives Dawn Wright-Olivares and Daniel Olivares, her stepson.

Wright-Olivares and Olivares entered guilty pleas to the criminal charges in February 2014. The criminal case against Burks is proceeding toward trial. Douglas was identified as a Zeek “insider” in a lawsuit filed by Zeek receiver Kenneth D. Bell in February 2014.

AuctionAttics appears to be an upstart MLM “program” pitched on social-media sites such as Facebook. The “program” appears to be in prelaunch phase and to have a dotcom website that uses graphics that resemble Post-it brand notes, a trademark owned by 3M.

A spokesperson for 3M did not immediately return a call by the PP Blog for comment on whether the company was concerned its trademark was being infringed by AuctionAttics.

In 2014, Bell raised concerns about some MLMers/network marketers moving from one fraud scheme to another. Bell raised those concerns again in a June 2015 article in Business North Carolina.

A snippet from the Business North Carolina story (italics added):

“Some of these folks had been engaged in this kind of thing before, and frankly, some of our largest winners re-engaged in similar schemes right away.”

Based on a victims’ count on the order of 800,000, Zeek likely is the largest or second-largest Ponzi scheme in U.S. history. (In the end, the TelexFree scheme shut down by the SEC and federal prosecutors last year may take the title, but the final numbers are unclear.)

Zeek was a purported “penny auction.” AuctionAttics appears to be using a similar theme, amid suggestions that its customers can be both bidders and sellers who will generate enormous personal profits either way.

The AuctionAttics website appears to be publishing testimonials attributed to people who were big winners, despite the fact the “program” appears not even to have launched.

One of the testimonials quotes “Maria” as saying, “I can earn much more selling on Auction Attics than i [sic] could anywhere else.” The “program” itself claims “Maria didn’t have a store front, she sold reconditioned cell phones exclusively on Auction Attics and earned up to 500% profit.”

Another “program” claim: “Micheal [sic?] and Brenda buys [sic] items, and then sells [sic] them on Auction Attics. They have the potential to earn $1,000’s weekly!”

“Micheal” and Brenda, meanwhile, are quoted as saying, “What a business, we love it.”

The images depicting them appear to be clipart.

An “opportunity” page on the site of AuctionAttics positions the “program” as the next Apple, Instagram and eBay. Namedropping is a common theme in MLM/network-marketing scams.

Among other things, the website of Auction Attics purports to sell “Cover Ads,” explaining them in this fashion:

“Cover ads are so called because they cover more than the original cost of your item even when it was new.”

In July 2014, according to court filings, Zeek’s Burks, Wright-Olivares and Olivares agreed to a $600 million civil consent judgment with the receivership “to be satisfied with substantially all of their assets.”

Burks settled with the SEC in 2012, and Wright-Olivares and Olivares settled in 2013.

Jul 13, 2015