TelexFree….

Posted by ASDUpdates on August 15, 2018No Comments

SEC Obtains Final Judgment Ordering Pyramid Scheme Promoter to Pay Over $1 Million

Litigation Release No. 24235 / August 14, 2018

Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)

A promoter of a pyramid scheme targeting Latino communities has agreed to transfer assets valued at over $1 million in a related bankruptcy proceeding and admit his role in the scheme to settle charges brought by the Securities and Exchange Commission against him and nine other defendants.

The final judgment, entered on August 14, 2018 by a federal district court in Boston, Massachusetts, permanently enjoins Santiago De la Rosa from violating Section 5 of the Securities Act of 1933 and forbids De la Rosa from participating in a multi-level marketing scheme that solely or primarily derives its revenue from the recruitment of others. The judgment also orders De la Rosa to pay $1,092,013 in disgorgement and prejudgment interest, but that is deemed satisfied by an order requiring De la Rosa to transfer certain assets valued at $992,013 and pay $100,000 to settle an adversary action in a related bankruptcy case. In settling the SEC’s charges, De la Rosa admitted that he was a promoter of TelexFree, appearing at public events to recruit for TelexFree and in promotional videos that were posted on YouTube.

The SEC has previously obtained final judgments by consent against TelexFree’s co-owner and president and its CFOits international sales directora promoter of the pyramid scheme, and another promoter, who also was ordered to jail for civil contemptarising from his repeated violations of court orders.

The SEC’s litigation continues against TelexFree, its other co-owner, and the remaining promoter of the alleged TelexFree pyramid scheme.

TelexFree – Final Judgment against Randy Crosby

Posted by ASDUpdates on May 5, 2018No Comments

SEC Obtains Final Judgment Against Promoter of Pyramid Scheme Targeting Latino Community

Litigation Release No. 24124 / April 30, 2018

Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)

The Securities and Exchange Commission announced that it has obtained a final judgment in a fraud case against a promoter of a pyramid scheme targeting Latino communities.

The final judgment, entered on April 27, 2018 by a federal district court in Boston, Massachusetts, permanently enjoins Randy Crosby from violating Section 5 of the Securities Act of 1933 and imposes a conduct-based injunction. The judgment orders Crosby to pay $294,014 in disgorgement, but that is deemed satisfied by an order requiring Crosby to transfer certain assets to settle an adversary action against Crosby filed by Stephen Darr, the Chapter 11 Trustee of TelexFree LLC, TelexFree, Inc., and TelexFree Financial, Inc. in the bankruptcy case and through a payment plan. In settling the SEC’s charges, Crosby admitted that he was a promoter of TelexFree, appearing in promotional videos that were posted on YouTube and making daily marketing presentations.

The SEC has previously obtained final judgments by consent against TelexFree’s co-owner and president and its CFO, its international sales director and another promoter of TelexFree, who also was ordered to jail for civil contempt arising from his repeated violations of court orders.

The SEC’s litigation continues against TelexFree, its other co-owner, and the remaining promoters of the alleged TelexFree pyramid scheme.

Second Funds Distribution in Madoff Case

Posted by ASDUpdates on April 15, 2018No Comments
Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, April 12, 2018

Department of Justice Begins Second Distribution of Funds Recovered Through Asset Forfeiture Totaling $1.2 Billion to Compensate Victims of Bernard Madoff Fraud Scheme

The Department of Justice today announced that on April 12, the Madoff Victim Fund (MVF) began its second distribution of $504 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme, bringing the total distributed to over $1.2 billion.  These funds will be sent to over 21,000 victims across the globe. This distribution represents the second in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the BLMIS.  The MVF has received over 65,000 petitions from victims in 136 countries.

Attorney General Jeff Sessions, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement.

“In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle,” said Attorney General Sessions.  “Through the use of asset forfeiture, the Department of Justice has recovered over $4 billion of Mr. Madoff’s fraud, and we continue to work to compensate those he defrauded.  Last June, the Department approved more than 39,000 petitions for compensation.  Today, during National Crime Victims’ Rights Week, the Department returns more than a half-billion dollars to nearly 22,000 law-abiding people and organizations. We cannot undo the damage that Bernie Madoff has done, but today’s distribution will provide significant relief to many of the victims of one of the worst frauds of all time.”

“Bernie Madoff committed history’s largest Ponzi scheme,” said U.S. Attorney Berman.  “This Office prosecuted Madoff himself, and others who helped perpetrate his fraud, and continues to vigorously pursue money recoveries for his victims.  Today’s payment of more than $500 million is this Office’s second installment in a series of distributions that represent our ongoing commitment to find relief for victims of Madoff’s heinous crimes.”

For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients.  On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle.  On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered Madoff to forfeit $170.799 billion as part of Madoff’s sentence.

Of the approximately $4.05 billion that will be made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action.  The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of these crimes and the recovery of assets supporting the forfeiture in this case.  The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions.  Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com (link sends e-mail)

Topic(s):
Asset Forfeiture
Press Release Number:
18-447

DOJ Compensates Madoff Victims

Posted by ASDUpdates on November 10, 2017No Comments
Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, November 9, 2017

Department of Justice Compensates Victims of Bernard Madoff Fraud Scheme With Funds Recovered Through Asset Forfeiture

The Department of Justice today announced that on Nov. 9, the Madoff Victim Fund (MVF) began its initial distribution of $772.5 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme.  These funds will be sent to 24,631 victims across the globe. This distribution represents the first in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the BLMIS.  The MVF has received over 65,000 petitions from victims in 136 countries. 

These payments mark the single largest distribution of forfeited funds in the history of the Department’s victim compensation program.

Deputy Attorney General Rod J. Rosenstein, Acting U.S. Attorney Joon H. Kim for the Southern District of New York and Assistant Director in Charge William F. Sweeney Jr., of the FBI’s New York Field Division made the announcement.

“Thanks to civil asset forfeiture, the Department of Justice is announcing today the record-setting distribution of restitution to victims of Bernard Madoff’s notorious investment fraud scheme,” said Deputy Attorney General Rosenstein.  “We have recovered billions of dollars from third parties – not Mr. Madoff – and are now returning that money to tens of thousands of victims. This is the largest restoration of forfeited property in history.”

“Bernie Madoff committed one of history’s largest and most devastating frauds,” said Acting U.S. Attorney Kim.  “This Office not only prosecuted Madoff himself and others who helped perpetrate his fraud, but has remained committed to recovering money for his victims.  To date, this Office has recovered more than $9 billion for the innocent victims of Madoff’s fraud, and today’s distribution of $770 million, the single largest distribution of forfeited funds in the Department’s history is part of our ongoing commitment to not only prosecute criminals but also find relief for victims.”

“No amount of money in the world could ever reverse the catastrophic effects Madoff’s historic Ponzi scheme had on individuals and businesses alike,” Assistant Director in Charge Sweeney.   “But now, nearly a decade after this crime was exposed, it is our hope that victims will finally be able to see the light at the end of a long, dark tunnel.”

For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients.  On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle.  On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered Madoff to forfeit $170.799 billion as part of Madoff’s sentence.

Of the approximately $4.05 billion that will be made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action.  The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of these crimes and the recovery of assets supporting the forfeiture in this case.  The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions.  Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com(link sends e-mail).

Component(s): 

Press Release Number:
17-1265

Beware “Paid-to-Click” Scams

Posted by ASDUpdates on November 7, 2017No Comments
If only they told us before ASD, and other similar scams, came along.

11/07/2017 11:25 AM EST

The Securities and Exchange Commission is warning investors to beware online “paid-to-click” scams that promise an easy payday by merely purchasing a membership or an advertising product up front and then clicking on a certain number of online ads each day.

The SEC’s investor alert explains that these online advertising programs may have little to no revenues besides membership fees or sales of “ad packs” and may be nothing more than a Ponzi scheme.  The SEC filed an enforcement case that was unsealed last week in federal court in Florida, alleging that roughly 99 percent of the purported “profits” paid to earlier investors came directly from the buy-in fees collected from newer investors.  Meanwhile, according to the SEC’s complaint, the alleged perpetrator siphoned several million dollars out of investor funds to purchase a luxury home, automobiles, and private plane charters while also using the money to fund his other businesses.

According to the SEC’s investor alert, online advertising programs also can target those with something to advertise, promising to display a company’s ads on their network or guaranteeing traffic to a website by simply paying a membership fee or buying ad packs.

“Be skeptical if you are offered high returns for buying advertising products or clicking on online ads,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy.  “Some paid-to-click programs are actually Ponzi schemes.”

According to the SEC’s complaint filed against Miami-based Pedro Fort Berbel and his company Fort Marketing Group, they operated fraudulent internet advertising businesses under such names as Fort Ad Pays, The Business Shop, and MLM Shop.  They allegedly solicited investors through online posts and videos claiming they could share in the companies’ profits and earn investment returns as high as 120 percent by purchasing an ad pack for as little as a dollar and clicking on four banner ads per day.  The SEC alleges that Berbel and Fort Marketing Group raised more than $38 million from at least 150,000 investors.

“As alleged in our complaint, these companies had no viable source of revenue besides income from investor membership fees and the sale of ad packs, so this boiled down to an ad packs Ponzi scheme in which the promised investment returns to earlier investors were not possible without using funds from new investors,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The SEC’s complaint charges Berbel and Fort Marketing Group with violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Securities Exchange Act.  They’re also charged with selling investments that are not registered with the SEC as required under the federal securities laws.  The SEC encourages investors to check the backgrounds of people selling them investments.  A quick search on the SEC’s investor.gov website shows that Berbel and Fort Marketing Group are not registered to sell investments.

The SEC obtained a court-ordered asset freeze against Berbel and his companies.

The SEC’s investigation was conducted by Sajjad Matin, Cecilia Danger, and Margaret Vizzi of the Miami Regional Office and supervised by Jessica Weissman.  The SEC’s litigation will be led by Wilfredo Fernandez and Andrew Schiff.  The SEC appreciates the assistance of the Florida Office of Financial Regulation, Bureau of Financial Investigations.  The investor alert was prepared by M. Owen Donley III and Holly Pal in the SEC’s Office of Investor Education and Advocacy.

TelexFree: SEC Final Judgments Against Merrill and Craft

Posted by ASDUpdates on September 13, 2017No Comments

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23933 / September 12, 2017

Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)

SEC Obtains Final Judgments Against Officers of Pyramid Scheme Targeting Latino Community

The Securities and Exchange Commission announced that it has obtained final judgments in a fraud case against the co-owner and president and the CFO of a pyramid scheme targeting Latino communities.

The final judgments, entered on September 12, 2017 by consent by a federal district court in Boston, Massachusetts, permanently enjoin both James M. Merrill, of Ashland, Massachusetts, and Joseph H. Craft, of Kevil, Kentucky, from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, impose conduct-based injunctions on both men, a permanent officer-and-director bar on Merrill, and a five-year officer-and-director bar on Craft. Merrill’s final judgment deems his liability of approximately $3.6 million in disgorgement and prejudgment interest satisfied by the order of restitution in the related criminal case. Craft’s final judgment to pay $298,708 in disgorgement and prejudgment interest and a $50,000 penalty is deemed satisfied by the order requiring Craft to transfer certain assets to settle an adversary action against Craft and his business filed by Stephen Darr, the Chapter 11 Trustee of TelexFree LLC, TelexFree, Inc., and TelexFree Financial, Inc. in the bankruptcy case.

In settling the SEC’s charges, Craft admitted to preparing financial statements provided to telecommunications regulators, as well as a financial regulator, materially overstating the pyramid scheme’s income.

Merrill and Carlos N. Wanzeler, the other co-owner and treasurer of TelexFree – were previously charged criminally. Merrill pled guilty to the criminal charges and was sentenced to six years’ imprisonment. Wanzeler is a fugitive from justice. The SEC has previously obtained final judgments by consent against the international sales director and a promoter of TelexFree, who also was ordered to jail for civil contempt arising from his repeated violations of court orders.

The SEC’s litigation continues against TelexFree, Wanzeler, and the remaining promoters of the alleged TelexFree pyramid scheme.

 

https://www.sec.gov/litigation/litreleases/2017/lr23933.htm

Avoid Disaster Frauds

Posted by ASDUpdates on August 31, 2017No Comments
Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Wednesday, August 30, 2017

Tips on Avoiding Fraudulent Charitable Contribution Schemes

The National Center for Disaster Fraud reminds the public to be aware of and report any instances of alleged fraudulent activity related to relief operations and funding for victims. Unfortunately, criminals can exploit disasters, such as Hurricane Harvey, for their own gain by sending fraudulent communications through email or social media and by creating phony websites designed to solicit contributions.

Tips should be reported to the National Center for Disaster Fraud at (866) 720-5721. The line is staffed 24 hours a day, seven days a week. Additionally, e-mails can be sent to disaster@leo.gov(link sends e-mail), and information can be faxed to (225) 334-4707.

The U.S. Department of Justice established the National Center for Disaster Fraud to investigate, prosecute, and deter fraud in the wake of Hurricane Katrina, when billions of dollars in federal disaster relief poured into the Gulf Coast region. Its mission has expanded to include suspected fraud from any natural or manmade disaster. More than 30 federal, state, and local agencies participate in the National Center for Disaster Fraud, which allows the center to act as a centralized clearinghouse of information related to disaster relief fraud.

The public should remember to perform due diligence before giving contributions to anyone soliciting donations or individuals offering to provide assistance to those affected by the hurricane and tornadoes. Solicitations can originate from social media, e-mails, websites, door-to-door collections, flyers, mailings, telephone calls, and other similar methods.

Before making a donation of any kind, consumers should adhere to certain guidelines, including:

  • Do not respond to any unsolicited (spam) incoming e-mails, including clicking links contained within those messages, because they may contain computer viruses.
  • Be skeptical of individuals representing themselves as members of charitable organizations or officials asking for donations via e-mail or social networking sites.
  • Beware of organizations with copy-cat names similar to but not exactly the same as those of reputable charities.
  • Rather than follow a purported link to a website, verify the legitimacy of nonprofit organizations by utilizing various Internet-based resources that may assist in confirming the group’s existence and its nonprofit status.
  • Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.
  • To ensure contributions are received and used for intended purposes, make contributions directly to known organizations rather than relying on others to make the donation on your behalf.
  • Do not be pressured into making contributions; reputable charities do not use such tactics.
  • Be aware of whom you are dealing with when providing your personal and financial information. Providing such information may compromise your identity and make you vulnerable to identity theft.
  • Avoid cash donations if possible. Pay by credit card or write a check directly to the charity. Do not make checks payable to individuals.
  • Legitimate charities do not normally solicit donations via money transfer services. Most legitimate charities’ websites end in .org rather than .com.
Component(s):
Press Release Number:
17-953

TelexFree: Final Judgment Against Steven Labriola

Posted by ASDUpdates on July 17, 2017No Comments

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23880 / July 14, 2017

Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)

SEC Obtains Final Judgment Against Officer of Pyramid Scheme Targeting Latino Community

The Securities and Exchange Commission announced today that it has obtained a final judgment in a fraud case against the international sales director of a pyramid scheme targeting Latino communities.

The final judgment, entered on consent by a federal district court in Boston, Massachusetts, permanently enjoins Steven Labriola from violating Section 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, imposes a conduct-based injunction, and orders Labriola to pay approximately $25,000 in disgorgement and prejudgment interest. As part of the settlement, Labriola admitted that he was responsible for TelexFree’s relationships with its promoters, ran numerous training conferences, and that he was one of the main public faces of TelexFree, providing periodic “corporate updates” and appearing in other promotional videos that were posted on YouTube.

The SEC has previously obtained a final judgment by consent against a promoter of TelexFree, who also was ordered to jail for civil contemptarising from his repeated violations of court orders. Two other defendants in the SEC’s action – James M. Merrill, the co-owner and president of TelexFree, and Carlos N. Wanzeler, the co-owner and treasurer of TelexFree – were charged criminally. Merrill pled guilty to the criminal charges and was sentenced to six years’ imprisonment. Wanzeler is a fugitive from justice.

The SEC’s litigation continues against TelexFree, Merrill, Wanzeler, Joseph H. Craft, Telexfree’s CFO, and the remaining promoters of the alleged TelexFree pyramid scheme.

 

https://www.sec.gov/litigation/litreleases/2017/lr23880.htm