THE BIZOP NEWS

Montana Securities Claims ACN is a Pyramid

2010-08-04T05:14:56Z

Montana Securities Commissioner Lindeen takes action against ACN, Inc for alleged pyramid scheme

Montana Commissioner of Securities and Insurance Monica J. Lindeen announced the issuance of a Cease and Desist Order and Notice of Proposed Agency Action against ACN, Inc. for allegedly operating a "pyramid scheme."

The actions allege ACN lured hundreds of Montanans to join with deceptive claims that members could earn large sums of money through the recruitment of new participants and through the sale of phone services. Also named in the actions are Gregory Provenzano, Robert Stevanovski, Anthony Cupisz and Michael Cupisz, all officers and founders of ACN. ACN is located in North Carolina.

      "Pyramid schemes are immensely profitable to a few individuals at the top and a complete loss for almost everyone else," Commissioner Lindeen said. "The actions against ACN and its officers seek to shut down the company's alleged unlawful operation before more people lose their hard-earned money."

      The actions allege ACN operates an illegal pyramid scheme that only benefits members if and when they find enough new members to join the scheme. Once enrolled, members who join the program earn compensation for each new person they enlist.

The Company attracts new members by claiming "the bottom line in building your ACN business is that you are acquiring customers and sponsoring 'customer getters' in order to build a residual income for yourself."

The actions also allege that the only way an ACN participant can earn compensation is the recruitment of new participants to sell a phone service that is largely not available for use in Montana.

Participants are told that if they recruit two qualified team trainers who also then recruit two additional qualified team trainers and each participant acquires 20 customers to purchase a phone service, their income can be as much as $11,000 per month.

The Commissioner's Office found an overwhelming portion of revenues earned by ACN representatives was derived from participants who must personally buy a telephone service that does not work in many parts of Montana to become managers or recruit new participants into the program.

In 2008, ACN recruited 91 Montana participants who paid approximately $61,741.69 to be a part of the program. Only two of the participants made any money, with one participant making $696 and the other making $700.

In 2009, ACN recruited over 300 Montana participants who paid approximately $234,813.02 to be a part of the program. ACN's records indicate a mere $896.86 was paid out in compensation to these participants. ACN's records indicate participants are located throughout Montana.

Individuals and companies promoting a pyramid promotional scheme in Montana can be fined as much as $10,000 per violation."

ACN selling products that don't work?

Shocked, I am shocked.

What will Mr. Trump say at their next convention?

Why You Are Not A Bank

2010-08-04T01:02:20Z

From the FBI Press Release

"Peter C. Son, 38, of Danville, Calif., was sentenced Friday to 15 years in prison for conspiracy to commit wire fraud and conspiracy to commit money laundering, U.S. Attorney Joseph P. Russoniello said. Son was also sentenced to serve three years of supervised release following his prison term and ordered to pay restitution in an amount to be determined.

According to court documents, Son and his business partner Jin Chung were the owners of SNC Asset Management, Inc. and SNC Investments, Inc. (Companies), which were incorporated in 2003.

The Companies shared office space in Pleasanton, Calif., and on Wall Street in New York City. Son served as the Chief Executive Officer and Chung served as the Chief Financial Officer.

Son was initially charged on July 27, 2009 with one count of conspiracy to commit wire fraud and one count of conspiracy to engage in monetary transactions with the proceeds of wire fraud.

On April 9, 2010, Son pleaded guilty to both counts. In pleading guilty, Son admitted he falsely advertised that the Companies had a distinguished record and were highly successful in foreign exchange trading, when in fact records reflect that very little foreign exchange trading was done by either company.

Son also admitted that potential investors were falsely promised annual returns on their investments of between 24 and 36 percent a year. From the beginning, investors were strongly encouraged to reinvest their profits to avoid having to return funds to the customers.

Returns were paid out to only those investors who demanded that the accounts be closed or those who demanded monthly returns be paid instead of reinvested.

Court records reflect that from 2003 through October 2008, approximately 500 customers invested approximately $85 million in the Companies, receiving in return approximately $23 million, leaving investors with losses amounting to approximately $62 million.

Most of the investors were Koreans living in California and Korea."

I think that banks are pretty stupid in their ability to choose economic winners, and the housing crisis in the US confirms my view.

There is only one class of stupid investors: you and me.

So, when someone comes to you to ask you to invest in their proven trading method, you know that they cannot prove this works satisfactorily to the a bank - whom they could borrow money from much cheaper.

You know the bank may not be brighter, but they are brighter than you.

Someone smarter than you has passed on the opportunity, and you know what which makes you better able to assess this risk?

Oh yeah, I forgot - you don't know anything.

The New Cool e-Reader

2010-08-02T15:59:53Z

If I could import all my dead tree books into Kindle, I would buy this in a heart beat!

Ad Surf Daily and Andy Bowdoin

2010-07-20T00:50:24Z

Although ASD and its owner,Thomas Anderson Bowdoin, Jr. have lost their civil Forfeiture case, they continue to appeal the court's decision. At one time or another, Bowdoin told the members of ASD that he will fight for the money will everything he had.

Only problem was everything he had, he took from the members, including a condo, cars, personal watercraft, more cars, and an $800,000 building that was only really worth maybe $300K.

I bring this up mostly because the Appeals process is as silly and nonsensical as the Civil Forfeiture case, and they are asking for more time to file a case brief they have know was due for over a month! Idiots!!

Plus during the Civil case, Bowdoin and his co-conspirator family members started Ad View Global (AVG), which has also tanked; he may well also be involved in Ad Pay Daily, as the structure is virtually identical to ASD (although APD claims it is a new and wondrous business model).

This old con man cannot go to jail fast enough for most of the membership of ASD, and here is repeatedly stalls the legal process, spending hundreds of thousand of the money he stole to stay out of jail.

I hope he and his liver spots rot in prison and soon!!

MLM is Bullshit

2010-07-19T16:19:47Z

Shaprio indicted for Capitol Ponzi

2010-07-15T16:21:26Z

A federal grand jury indicted Nevin Shapiro, former owner and chief executive officer of Capitol Investments USA Inc. (Capitol), today for allegedly overseeing a $880 million Ponzi scheme linked to his purported wholesale grocery distribution business, U.S. Attorney Paul J. Fishman announced.

The indictment charges Shapiro, 41, of Miami Beach, Fla., with using Capitol to solicit hundreds of millions of dollars from individuals who believed they were investing in Shapiro's grocery distribution business.

The indictment alleges that Capitol had no active wholesale grocery business during the relevant time period, and that Shapiro used new investor funds to make principal and interest payments to existing investors, as well as to fund his own lavish lifestyle.

Shapiro was previously charged by complaint and surrendered to special agents of the FBI and the Internal Revenue Service (IRS) on April 21, 2010, in Newark. He has been in federal custody since that time.

The complaint charged Shapiro with one count each of securities fraud and money laundering; the indictment adds one count of conspiracy to commit securities and wire fraud, two counts of wire fraud, and one count of money laundering. The indictment also seeks forfeiture of any money or property identified as proceeds from the offenses.

According to the indictment and other documents filed in this case in federal court in Newark, from January 2005 through November 2009, Shapiro solicited investors from New Jersey and throughout the United States through Capitol, telling them that he would use their money to fund his wholesale grocery distribution business.

To induce those investors, Shapiro directed others to create and show to the investors documents fraudulently touting Capitol's profitability.

Those documents included: financial statements profit and loss figures that fraudulently represented that Capitol's wholesale grocery business was generating tens of millions of dollars in annual sales; personal and business tax returns for Shapiro and Capitol that also fraudulently reflected those sales; and numerous invoices fraudulently reflecting transactions between Capitol and other companies in the wholesale grocery business.

As a result of these solicitations, more than 60 victim investors, including some from New Jersey, sent more than $880 million to Shapiro and Capitol during this time period. Beginning in January 2009, Shapiro and Capitol failed to make required principal and interest payments to investors.

At the time, Shapiro told investors, among other things, that the payments were not being made because Capitol's vendors were late in making payments, that Capitol was suffering from cash flow problems and that Shapiro's accountant was on vacation.

Shapiro misappropriated approximately $35 million in investor funds for his personal use, including paying millions of dollars in debts resulting from illegal gambling on sporting events. Using investor money, he also spent more than $400,000 for floor seats to watch the Miami Heat professional basketball team; approximately $26,000 per month for mortgage payments on his residence in Miami Beach, recently appraised at approximately $5.3 million; approximately $7,250 per month for payments on a $1.5 million Riviera yacht; and approximately $4,700 per month for the lease of a Mercedes-Benz automobile.

Shapiro also used stolen funds to purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete, as well as to make $150,000 in donations to the athletic program of a university in the Miami area. As a result of a 10-year gift to the university, the Nevin Shapiro Student-Athlete Lounge at the university was named for the defendant.

Shapiro and Capitol were forced into bankruptcy in November 2009. At that time, they owed more than $100 million to victim investors.

Invention Promotion Swindlers Ordered to Pay $60 Million

2010-07-14T22:59:30Z

"The operators of an invention promotion business, which a judge called "one grand con game to take money away from consumers," have been ordered to pay $60 million for violating a 1998 court order.

"By changing the name of their company, these individuals thought they could continue to make false promises and take inventors' money, but they didn't get away with it," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection.

"This scam should also remind inventors to question the assurances of promotion firms. No one can guarantee an invention's commercial success."

Under the 1998 order, Julian Gumpel, Darrell Mormando, Michael Fleisher, and Greg Wilson were barred from misrepresenting the services they offered to amateur inventors, but they revived their scam under a new name, the Patent & Trademark Institute (PTI).

For a fee of $895 to $1,295, PTI promised to evaluate the marketability and patentability of inventors' ideas, but its evaluations were almost always positive and were not meaningful, according to the FTC.

For a fee of $5,000 to $45,000, PTI's clients were offered legal protection and assistance to obtain commercial licenses for their inventions. They also were told that PTI would help them earn substantial royalties from their inventions, but PTI did not help consumers license their inventions, and clients did not earn royalties.

In January 2007, the FTC charged the defendants with civil contempt and obtained a temporary asset freeze against PTI and its owner, Gumpel, and the appointment of a receiver over PTI.

In March, the FTC added Fleisher, Mormando, and Wilson as contempt defendants, alleging that they participated in the order violations as managers and salesmen.

On May 3, 2007, after a four-day hearing, U.S. District Court Judge Gerald Bruce Lee held the defendants in contempt, finding, among other things, that PTI failed to disclose to consumers that none of its clients had successfully marketed an invention. The judge concluded that consumers were defrauded of $61 million through "lies and misstatements."

On July 12, 2007, the court permanently banned Gumpel, Mormando, and Wilson from engaging, in any way, in the marketing of invention promotion services. The court did not enter a ban against Fleisher because he did not sign the original order, although the court found that he knew about it and was subject to it.

On August 27, 2007, the court entered an order holding PTI and Gumpel jointly liable for a $61 million judgment, and holding Fleisher, Mormando, and Wilson jointly and severally liable for the judgment to the extent of $59,682,958.

PTI operated through several corporate entities, including original defendants Azure Communications, Inc. and London Communications, Inc., and through United Licensing Corp., International Patent Advisors, Inc., Datatech Consulting, Inc., International Product Marketing, Inc., and Unicorp Consulting, Inc.

These companies also were held in contempt and ordered to pay $61 million."

I like reviewing the FTC cases, just to point out how little the consumer actually gets. For essentially ten years, these con criminal thumbed their noses at the FTC, violated a court order, and collected around $60 million.

They walk, do no jail time, and no consumer gets any meaningful redress. This is a perfect example of why there should be a private cause of action for a violation of section 5 of the FTC Act - trial lawyers would have a meaningful reason to get money out of these clowns.

Direct-Seller Arbonne out of Bankruptcy |

2010-07-06T12:33:32Z

Arbonne International LLC is getting a makeover. The Irvine-based direct seller of upscale makeup and other items is revamping products and working on new ones after emerging from bankruptcy reorganization earlier this year.

The company's formerly private equity-backed parent, Natural Products Inc. of Florida, went into bankruptcy in January amid heavy debt and a sales slowdown. Now cosmetics veteran Peter Matravers is revamping Arbonne products and working on new ones.

Chief Marketing Officer Adriana Lynch is freshening up packaging and logos. The moves come under Chief Executive Kay Napier, who's tasked with turning around Arbonne and growing its network of nearly 700,000 independent sellers.

Most are women, including stay-at-home moms and refugees from Corporate America who turn their personal networks into customers.

Money Mules

2010-06-28T23:45:25Z

At the request of the Federal Trade Commission, a federal court has halted an elaborate international scheme that used identity theft to place more than $10 million in bogus charges on consumers' credit and debit cards, pending a trial.

More than a million consumers were hit with one-time charges of $10 or less, and their payments were routed through dummy corporations in the United States to bank accounts in Eastern Europe and Central Asia.

The defendants, using phony company names resembling real companies, and information taken from identity theft victims in the United States, opened more than 100 merchant accounts with companies that process charges to consumers' credit and debit card accounts, according to the FTC complaint.

The FTC believes the defendants may have run credit checks on the identity theft victims first, to be sure they were creditworthy. The defendants also cloaked each fake merchant with a virtual office address near a real merchant's location, a phone number, a home phone number for the "owner," a Web site pretending to sell products, a toll-free number consumers could call, and a real company's tax number found on the Internet.

The FTC alleged that with spam e-mail, the defendants recruited at least 14 "money mules" - people in the United States they paid to form 16 dummy corporations, open associated bank accounts to receive the card payments, and transfer the money overseas.

The defendants used debit cards linked to these bank accounts to set up telephone service, virtual addresses, and Web sites that helped deceive the card processors, according to the complaint.

The "money mules" responded to spam e-mail pretending to seek a U.S. finance manager for an international financial services company.

The FTC has not determined how the defendants obtained the stolen identities or consumers' credit and debit account numbers. Consumers' payments were sent to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.

None of the consumers affected by the scam had contact with any of the defendants.

Most consumers either didn't notice the charges on their bills or didn't seek chargebacks because of the small amounts - charges ranged from 20 cents to $10.

Consumers who called the toll-free numbers that appeared on their bills either found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned.

The defendants are the 16 sham companies - API Trade LLC, ARA Auto Parts Trading LLC, Bend Transfer Services LLC, B-Texas European LLC, CBTC LLC, CMG Global LLC, Confident Incorporation, HDPL Trade LLC, Hometown Homebuyers LLC, IAS Group LLC, IHC Trade LLC, MZ Services LLC, New World Enterprizes LLC, Parts Imports LLC, SMI Imports LLC, SVT Services LLC - and one or more persons who are unknown to the agency at this time.

The FTC charged them with making unauthorized charges to consumers' credit cards in violation of Section 5 of the FTC Act.

The court froze the defendants' assets and ordered them to stop operating, pending final resolution of the case.

Mormon Ponzi Scheme

2010-06-25T18:30:41Z

On June 23, 2010, the Securities and Exchange Commission filed fraud and other charges against four individuals and five companies in connection with three related Ponzi schemes largely targeting the Mormon community.

The Commission obtained an emergency court order freezing assets and halting the scheme that was ongoing. The Commission also named five relief defendants.

The Commission's complaint, filed in the United States District Court for the District of Utah, alleges that from approximately June 2005 through January 2007, Anthony C. Zufelt ("Zufelt") and Joseph A. Nelson ("Nelson") raised at least $3.6 million by convincing at least 36 investors to invest in offerings by defendants Zufelt, Inc. and Silver Leaf Investments, Inc.

The complaint alleges that Zufelt and Nelson promised investment returns of up to 220% and fraudulently claimed that Zufelt ran a profitable credit card transaction processing business that was selling secure investments backed by a so-called "merchant portfolio" of credit card processing accounts.

According to the complaint, defendants David Decker and Cache Decker acted as promoters and helped Zufelt and Nelson solicit investors for these schemes.

The complaint further alleges that from approximately August 2005 to the present day, Nelson has separately solicited investors by fraudulently claiming that he buys and sells merchant portfolios for a profit through his companies, defendants JCN, Inc., JCN Capital, LLC, and JCN International, LLC.

To date, Nelson has raised at least $12 million from over 100 investors by promising investors that their investments were secure and that he would provide investment returns of up to 200% in a very short period of time.

According to the Commission's complaint, Zufelt, Nelson, David Decker and Cache Decker each solicited members of the Mormon community to invest in these schemes. The complaint further alleges that Zufelt, Nelson, David Decker and Cache Decker each encouraged and convinced potential investors to borrow against their homes in order to invest in these schemes.

Unbeknownst to investors in any of the three Ponzi schemes, as the complaint alleges, Zufelt and Nelson misused investors' funds to pay personal expenses, pay commissions and bonuses to associates, fund unrelated businesses, make gifts, and make payments to investors in order to perpetuate their schemes.

The complaint further alleges that both Zufelt and Nelson diverted investor funds to friends and family members, some of whom are named relief defendants in the Commission's complaint.

Energy Chews Vending Machine Fraud

2010-06-24T02:24:10Z

From Vending Times, the Energy Chews fraud.

Five men are accused of mail and wire fraud in connection with a "business opportunity" offer involving vending machines that dispensed energy balls, energy chews and energy shots.

On May 24, charges were brought separately by criminal information filings here against Richard Black, a/k/a "Richard Allen," a/k/a "Richard Houston," and Gary Luckner, a/k/a "Gary Michaels," as well as Trey Friedmann and Louis J. Gubitosa. On May 27, a criminal information was brought against Henry Melvin Hendrix.

The first criminal information filing charged that Black and Luckner operated American Vending Systems, National Vending Systems Inc. and Mad Dog Energy Products. Buzz Bites chocolate energy chews, popular in retail, were among the vendible products promoted by Mad Dog.

It also is charged that American Vending and National Vending used phony references to induce sales, and that one of the phony references was Black, who posed as a successful vending machine route operator under the names of "Richard Allen" and "Richard Houston."

Friedmann is alleged to have been a salesman at American Vending, and Gubitosa owned the company. Hendrix is charged with acting as a phony reference for American Vending. All are accused of making material misrepresentations to, and concealing material facts from, individuals who purchased the "business opportunity."

On June 8, Gubitosa pled guilty to conspiracy to commit mail fraud. His sentencing hearing is scheduled for Aug. 20, before Judge Lewis T. Babcock at the Byron G. Rogers United States Courthouse in Denver.

A change of plea hearing for Hendrix has been scheduled for Sept. 16, before Judge Marcia S. Krieger at the Alfred A. Arraj United States Courthouse in Denver.

A change of plea hearing for Friedmann has been scheduled for Sept. 17, before Judge David M. Ebel at the Rogers Courthouse.

Black and Luckner will appear before Judge Robert E. Blackburn at a hearing on Sept. 17 at the Arraj Courthouse. They are expected to plead guilty.

ANOTHER ENERGY CHEW CASE

Separately, the San Diego Superior Court in early April issued a permanent injunction against Utah's Independent Vending Concepts and The Financial Edge Inc., described as a foreign company. The judgment named Gary S. Mills and Rebecca W. Mills, IVC's officers, as the defendants. The company also was involved in a business opportunity offering vending machines that dispense energy chews.

The permanent injunction prohibits IVC and its principals from selling any products, equipment, supplies or services related to a "seller assisted marketing plan" that requires an initial payment of more than $500 in California. It also restricts the use of testimonials and potential earnings data when representing a SAMP without substantiating those claims. IVC also was ordered to pay $100,000, which was evenly split between California's Unfair Competition Fund and the attorneys' fees for the plaintiffs.

Yet Again, YTB

2010-06-18T15:44:50Z

From the Madison Record on the newest YTB Fraud lawsuit.

A group of multi-state plaintiffs filed a putative class action lawsuit against YTB International and its officers, charging the company is operating an illegal pyramid scheme.

The plaintiffs, who are from Illinois, Missouri, Georgia and Utah, allege that Wood River-based YTB offers no direct selling opportunity, only a never-ending chance to recruit others into the program.

Attorney Christian G. Montroy of Montroy Law Offices in East St. Louis and Jay L. Kanzler Jr. and Brian J. Massimino of Witzel, Kanzler, Dimmit, Kenney and Kanler on St. Louis will be representing the putative class.

In their complaint filed June 10 in Madison County Circuit Court, the plaintiffs claim that the YTB program -- based upon selling cheap online travel agencies to recruits, then allowing the new recruits to retrieve others to do the same thing while requiring them to maintain certain levels of monthly services -- is a fraud.

YTB has raked in hundreds of millions of dollars in revenue through the use of independent marketing representatives, who are the salespeople charged with recruiting others to buy the online travel agencies, the plaintiffs say. In fact, about 75 percent of the $162 million YTB earned in 2008 was derived from the independent marketing representatives, yet a majority of the representatives -- about 80 percent -- failed to earn a profit, according to the complaint.

Those people independent marketing representatives recruit to buy the online travel agencies are referred to as referring travel agents. To buy the online travel agencies, the referring travel agents are required to pay $450 up front, then to pay $50 each month to own and operate their online travel agency, the suit states.

YTB represents to its referring travel agents that the sale of online travel agencies is a business opportunity allowing them to become travel agents, the complaint says. However, plaintiffs claim they could not act as true travel agents -- they weren't allowed to sell travel packages, process payments for travel customers, issue travel tickets or other documents to customers or receive travel commissions. Instead, they acted as agents of travel agents, only referring travel customers to YTB.

"In their role as RTAs, Plaintiffs and their proposed class sold neither products nor services," the suit states.

YTB promised that referring travel agents could earn as much as 60 percent of the travel commissions YTB collected from travel vendors for the customers the referring travel agents referred. In addition, YTB paid the plaintiffs for their roles as independent marketing representatives -- referring people who purchased online travel agencies. The plaintiffs served as both referring travel agents and independent marketing representatives.

In their capacity as independent marketing representatives, the plaintiffs could receive a refund of the $450 they paid to start the program if they recruited three people to buy online travel agencies. If the plaintiffs recruited six people, they could be reimbursed for their monthly RTA fee for every month the online travel agency remained active, the complaint says.

Not only YTB was involved in the illegal pyramid scheme, the plaintiffs claim. For example, defendant J. Kim Sorenson, who is president of Indiana Corporation CCMP, provided YTB with marketing materials and a 130-foot replica of the Statue of Liberty for YTB's 2008 annual convention in St. Louis. Defendants Meridian Land -- owned by defendants Clay Winfield and Dr. Timothy Kaiser -- provided YTB with office space to perform their operations. The plaintiffs claim such defendants are also liable because they knowingly took part in activities that advanced the pyramid scheme.

Lead plaintiffs include Illinois residents John Stull, Randall Quick and LaShonda Stiff; Missouri residents Faye Morrison, Jeff and Polly Hartman, JPH Development and Courtney Speed; Georgia residents Kwame Thompson, Jorge Gonzalez and Nikky Shotwell; and Utah resident Grace Perry.

In their nine-count complaint, the plaintiffs are seeking actual and punitive damages of more than $900,000, plus an order prohibiting the defendants from continuing in their conduct and other relief the court deems just.

Madison County Circuit Court case number: 10-L-608.

Arrests in Business Opportunity Fraud Ventures

2010-06-17T20:44:40Z

Image by cliff1066™ via Flickr

Two U.S. citizens charged in connection with the operation of a series of fraudulent business opportunities were arrested today in Costa Rica following their indictment by a federal grand jury in Miami on March 9, the Justice Department and the U.S. Postal Inspection Service announced today.

Silvio Carrano and Patrick Williams were arrested based on charges that they and their co-conspirators purported to sell vending machine, beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses.

A third defendant, Donald Williams, was arrested in Houston on May 7, based on the same charges. Authorities are continuing to search for the fourth defendant, Gregory Britt Fleming, also named in the indictment. The charges in the indictment form part of the government's continued nationwide crackdown on business opportunity fraud.

Beginning in June 2004, Carrano, Patrick Williams, Donald Williams, Fleming and their coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in Apex Management Group Inc., USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-U Inc., Premier Cards Inc., The Coffee Man Inc. and Nation West Distribution Company.

According to the indictment, the business opportunities the defendants sold cost thousands of dollars each, and most purchasers paid at least $10,000.

Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.

The indictment alleges that the defendants, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States.

In reality, Carrano, Patrick Williams, Donald Williams and Fleming operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.

According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities.

Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser's area who would secure or had already secured high-traffic locations for the potential purchaser's merchandise stands.

Potential purchasers also were falsely told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers' success and in finding good locations.

The indictment alleges that the companies employed various types of sales representatives, including fronters, closers and references.

A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals.

References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities.

The indictment alleges that Carrano, aka Bob Orr, John Kirby, Paul Bently and Dave Jakovich, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a reference for Premier Cards, and a reference for Coffee Man. He was also listed on a corporate document as the treasurer of USA Beverages.

The indictment alleges that Patrick Williams, aka Bill Gardner, Peter Burns, David Price and Matt Skaggs, was a fronter for Apex, a locator and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a reference for Premier Cards, a reference for Coffee Man, and a fronter and reference for Nation West.

The indictment alleges that Donald Williams, using assumed names, was a fronter for USA Beverages, a fronter and reference Twin Peaks, a fronter and reference for Cards-R-Us, and a fronter and reference for Premier Cards.

The indictment alleges that Fleming, using assumed names, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, and a fronter and reference for Nation West.

"Business opportunity fraud is serious. It imposes significant financial hardship on innocent, hardworking victims," said Tony West, Assistant Attorney General for the Justice Department's Civil Division. "The Department of Justice will continue its push to prosecute those who defraud Americans to make a quick buck."

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States.

Apex was registered as a Florida corporation and rented office space in Ft. Lauderdale, Fla., while USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev.

Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver.

Nation West was registered as a Colorado corporation and also rented office space in Denver.

All four defendants were charged with conspiracy to commit mail and wire fraud, and with committing their offenses via telemarketing. In addition, Carrano was charged with 10 counts of mail fraud and three counts of wire fraud; Patrick Williams was charged with 10 counts of mail fraud and three counts of wire fraud; Donald Williams was charged with eight counts of mail fraud and three counts of wire fraud; and Fleming was charged with six counts of mail fraud and one count of wire fraud.

If convicted, Carrano, Patrick Williams, Donald Williams and Fleming face a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. They also face a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.

"This international and domestic investigation illuminates the Postal Inspection Service's resolve to protect the American public from business opportunity scams," said Henry Gutierrez, U. S. Postal Inspector in Charge in Miami.

The United States intends to seek the extradition of Carrano and Patrick Williams from Costa Rica.

Petrogas Overseas Trading Fraud

2010-06-09T01:52:07Z

Image via Wikipedia

On June 7, 2010, the Securities and Exchange Commission ("Commission") filed an emergency civil injunctive action to halt an ongoing religious affinity fraud orchestrated by Petrogas Overseas Trading, LP and its owner, Samuel O. LeMaire.

The Commission's complaint alleges that beginning in at least 2007 and continuing through the present, LeMaire and Petrogas raised at least $2.3 million by appealing to the Christian faith of potential investors.

The Commission alleges that LeMaire, a Nigerian citizen living in North Texas, held himself out as a minister and a "man of God" who planned to start a foundation to help needy children in Nigeria.

LeMaire proposed to fund this foundation, and also make money for investors, with profits earned from the sale of taker-loads of oil from Nigeria.

The Commission alleges that LeMaire told investors that he had connections to, and relationships within, the Nigerian oil industry, and promised investors anywhere from a 200% to a 1,000% return on their money.

Unfortunately, the Commission alleges, LeMaire used investor funds to finance his own lavish lifestyle and support friends and family in the U.S. and abroad.

In fact, for at least two years, the Commission alleges, LeMaire continued to raise funds while claiming that millions of dollars were sitting offshore waiting to be transferred to the U.S. and distributed to investors -- all of which was false.

Luis Felipe Perez Ponzi

2010-06-04T04:07:04Z

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The Securities and Exchange Commission today charged a Miami man for conducting a $40 million Ponzi scheme with funds primarily raised from investors in the local Hispanic community to purportedly support jewelry businesses and pawn shops.

The SEC alleges that Luis Felipe Perez arranged "no-risk" loan agreements with investors and promised to pay them guaranteed annual returns of 18 percent to 120 percent through monthly interest payments.

Perez falsely told investors that their investments were collateralized by diamonds, and even led some investors to believe they were beneficiaries on his life insurance policy without disclosing that the policy had lapsed.

Rather than financing his jewelry businesses, the SEC alleges that Perez misused new investor funds to pay prior investors, and he stole at least $6 million for lavish personal spending on limousines, extravagant dinners, bodyguards, and political contributions that helped bolster his image in the local community.

According to the SEC's complaint, filed in U.S. District Court for the Southern District of Florida, Perez began his scheme in 2006 when he began raising money from investors, many of them Hispanic, under the guise of investments in his purported jewelry businesses.

Perez was the president and sole owner of Lucky Star Diamonds Inc. and Luis Felipe Jewelry Design Corp., neither of which ever had any employees. Both companies have now ceased operations.

The SEC alleges that Perez boasted a successful track record of providing risk-free investments in order to befriend new investors through word-of-mouth from previous investors.

Among the misrepresentations made by Perez when convincing investors to loan him money: Perez told investors their money was also being used to finance pawn shops in New York from which he earned 5 to 10 percent returns per month that could be passed on to his investors.

Contrary to his representations, Perez had no dealings with pawn shops and never provided financing to them. Perez told some investors that diamonds from the pawn shops had specifically been set aside for them as collateral securing their investments.

In some instances, Perez placed them in a bank safety deposit box to which he and the investor had access. However, unbeknownst to investors, the diamonds were fake. Perez assured some investors that he added them as beneficiaries on his life insurance policy.

However, what investors didn't know is that he defaulted on his policy premiums and as a result the policy had lapsed.

The SEC alleges that Perez misused more than $6 million of investor money to fund his extravagant lifestyle.

Among his lavish personal purchases with investor funds were a $3.2 million home, $1 million worth of jewelry, and exotic vacations that cost him $200,000 a year. Perez also spent investor money to travel by private jet, buy expensive artwork, and make $100,000 in political contributions.

According to the SEC's complaint, Perez's scheme collapsed in June 2009 when he was no longer able to recruit new investors.