eAdGear: SEC Announces Final Judgments Entered

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23457 / February 1, 2016

Securities and Exchange Commission v. eAdGear, Inc., et al., Civil Action No. 14-cv-04294-RS (U.S. District Court for the Northern District of California)

The Securities and Exchange Commission announced that today, the Honorable Richard Seeborg of the United States District Court for the Northern District of California entered final judgments against defendants eAdGear Holdings Limited, eAdGear, Inc., Charles S. Wang, Francis Y. Yuen, Qian Cathy Zhang, and relief defendant Laurata Chan. The final judgments order the defendants and relief defendant to pay a total of $26,539,280 in disgorgement, penalties, and prejudgment interest.

The Commission’s complaint, filed on September 24, 2014, together with a request to the court for emergency relief, charged the defendants with operating an international pyramid scheme to fraudulently raise more than $129 million from investors, in violation of the federal securities laws. The complaint alleged that defendants used money from new eAdGear investors to pay earlier investors, as well as to repay a personal loan and purchase million-dollar homes for the individual defendants. The complaint further alleged that defendants perpetuated the scheme by making it appear as if eAdGear had real, paying customers when it lacked any substantive sources of revenues other than investments, and defendants further manipulated revenue distributions to investors to appear profitable. On September 25, 2014, Judge Seeborg granted the SEC’s request for an asset freeze and issued a temporary restraining order.

The defendants and relief defendant have consented, without admitting or denying the facts in the complaint, to the entry of final judgments against them. The final judgments permanently enjoin all defendants from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The final judgments also order eAdGear Holdings Limited and eAdGear, Inc. to disgorge $21,000,000 in ill-gotten gains, pay prejudgment interest of $640,000, and pay a civil penalty in the amount of $1,000,000; Wang and Zhang to disgorge $2,019,000 in ill-gotten gains and pay prejudgment interest of $61,280; Zhang to pay a civil penalty in the amount of $200,000; and Yuen and Chan to disgorge $1,571,000 in ill-gotten gains and pay prejudgment interest of $48,000. It also permanently bars Wang, Yuen, and Zhang from acting as officers or directors of any public company, and permanently enjoins them from directly or indirectly participating in the issuance, offer, or sale of any securities of any entity controlled by, or under joint control with any person named a defendant in this case or soliciting any person or entity to purchase or sell any security.

For additional information see Litigation Release No. 23120 (Oct. 28, 2014) and Press Release No. 2014-217 (Sept. 26, 2014).

 

http://www.sec.gov/litigation/litreleases/2016/lr23457.htm

DOJ Press Release: Liberty Reserve Founder Pleads Guilty!!!

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Friday, January 29, 2016

Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250 Million through His Digital Currency Business

The founder of Liberty Reserve, a virtual currency once used by cybercriminals around the world to launder the proceeds of their illegal activity, pleaded guilty today to running a massive money laundering enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York.

Arthur Budovsky, 42, pleaded guilty to one count of conspiring to commit money laundering before U.S. District Judge Denise L. Cote of the Southern District of New York.  He is scheduled to be sentenced on May 6, 2016.

“After a prior conviction for operating an unlicensed money transmitting business, Budovsky developed Liberty Reserve, which quickly became a premier service used by criminals around the world to launder their criminal proceeds,” said Assistant Attorney General Caldwell.  “As a result of this global investigation, however, Budovsky was returned to the United States to face justice once again.”

“Arthur Budovsky founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world,” said U.S. Attorney Bharara.  “The only liberty that Budovsky and Liberty Reserve promoted was the freedom to commit and profit from crime.  Thanks to this truly global investigation that included cooperation from 17 countries, Liberty Reserve has been shut down, and its founder Arthur Budovsky stands convicted in an American court of law, facing the loss of his own liberty.”

According to the indictment filed against Liberty Reserve, Budovsky and six co-defendants and Budovsky’s admissions at today’s hearing:

Budovsky specifically designed Liberty Reserve, which billed itself as the Internet’s “largest payment processor and money transfer system,” to help users conduct anonymous and untraceable illegal transactions and launder the proceeds of their crimes.  From its inception in or about 2006, Budovsky directed and supervised Liberty Reserve’s operations, finances and business strategy.  To grow the business and evade the scrutiny and reach of U.S. law enforcement, Budovsky emigrated to Costa Rica, where he and other defendants began operating Liberty Reserve, and in 2011, Budovsky renounced his U.S. citizenship and became a Costa Rican citizen.  Budovsky told U.S. immigration authorities that his company was developing a software that “might open him up to liability in the U.S.”

Liberty Reserve became one of the principal money-transmitting services used by cybercriminals around the world to amass, distribute, store and launder the proceeds of their illegal activity, including proceeds of investment fraud, credit card fraud, identity theft and computer hacking.  Before the U.S. government shut down Liberty Reserve in May 2013, it had more than 5 million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and had processed millions of transactions.  Budovsky admitted in his plea agreement to laundering more than $250 million in criminal proceeds.

*                      *                      *

Four co-defendants, Vladimir Kats, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev, have already pleaded guilty.  Marmilev and Chukharev were sentenced to five years and three years in prison, respectively.  Kats and El Amine await sentencing before Judge Cote.  Charges remain pending against Liberty Reserve and two individual defendants who are fugitives.

The U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations worked together in this case as part of the Global Illicit Financial Team.  The U.S. Secret Service’s New York Electronic Crimes Task Force assisted with the investigation.  The Judicial Investigation Organization in Costa Rica, Interpol, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.

Trial Attorney Kevin Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorneys Serrin Turner, Christine Magdo, Christian Everdell and Andrew Goldstein of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section provided substantial assistance.

16-113
Cyber Crime
Updated January 29, 2016

Andy Bowdoin Now in North Carolina FCI

It seems Andy Bowdoin is now located at the Butner Medium I FCI, with an even more infamous Ponzi scam artist, one Bernard Madoff.

Andy will be out in a little over 2 years, the Feds make you serve the full sentence.  I wonder if his loyal fans still send him brownies?

BowdoinBookingPhoto

Andy’s booking mugshot

 

THOMAS ANDERSON BOWDOIN
Register Number: 31387-016
Age: 81
Race: White
Sex: Male
Located at: Butner Medium I FCI
Release Date: 02/07/2018

Vemma: FTC Files Opposition to “Settlement Conference”

vemma-logoThe FTC has filed its opposition to a Motion by John Horanzy, a “named plaintiff in a purported class action” against Vemma, asking for a Court order for Vemma Nutrition Company and Yibing Wang and the Federal Trade Commission (“FTC”) “to appear at a settlement conference no later than June 3, 2016.”

“In his complaint, Horanzy contends that he was misled by Vemma’s claims concerning the bioavailability and effect of its products on human Creactive
proteins and immune system functions.”

Since filing the complaint in October 2014, Horanzy hasn’t fared very well in the class action (15-cv-298), filed an amended complaint and was met with a motion to dismiss which is still pending.  There have been no answers filed to the Complaint or Amended Complaint, no scheduling orders, no discovery begun or has the “class” been certified.

With no apparent action in this class action, Horanzy is asking to attend a settlement conference in the FTC’s action. The FTC goes on to claim that Horanzy has failed to provide any factual or legal basis for this request and does not cite any court rule, statute, or other authority in support of this request.

The FTC also states that Horanzy has failed to show that he has standing, as a non-party, to attend a settlement conference in the FTC’s action. The opposition filing concludes with:

He further fails to describe what rights, responsibilities, or remedies he believes he should be afforded as a non-party attendee to a settlement conference between a federal regulatory agency and a defendant. Given that his claims are wholly distinct from the FTC’s and that his position as a class representative is tenuous, Plaintiff objects to Horanzy’s Request as improper.

Conclusion
Because Horanzy has failed to provide any factual or legal basis in support of his Request, the Request should be denied.


The next day, we have this filing:

Defendants Vemma Nutrition Company, Vemma International Holdings, Inc., Benson K. Boreyko, and Tom Alkazin oppose the Request for an Order Directing the Parties and the Federal Trade Commission to Appear for a Settlement Conference filed by John Horanzy.

Defendants hereby join in (i) the Opposition to that request filed today by the Defendants in Case No. 2:15-cv-0298-PHX-JJT and (ii) the Opposition filed on January 22, 2016 in this action by the Federal Trade Commission.

TelexFree: Rodrigues to Remain Incarcerated in Florida

sann-rodrigues-top-telexfree-investor

We have new info on Sann Rodrigues and his stay in the “cross-bar hotel”.

Judge Nathaniel M. Gorton has issued an ELECTRONIC ORDER granting Motion for Clarification and granting the Motion to Allow Defendant to Remain Incarcerated in Florida:

“It is the intention of this Court that defendant be incarcerated in an appropriate penal facility in Florida until his contempt is purged or further notice of this Court.”

TelexFree: SEC Files Motion for Clarification of Terms of Incarceration

sec-logo

Plaintiff Securities and Exchange Commission (“the Commission” or “SEC”) files this Status Report and Motion for Clarification of Terms of Incarceration.

Yesterday, on January 20, 2016, Sanderley Rodrigues (“Rodrigues”) was arrested by the U.S. Marshals Service in Florida. After his arrest he appeared before Magistrate Judge Elizabeth Jenkins of the United States District Court for the Middle District of Florida (Tampa) regarding the terms of his incarceration. The court ordered him detained in the Pinellas County Jail in Florida pending a further hearing on Friday, January 22, 2016, at 2pm to determine whether he can travel to Massachusetts on bond or whether the U.S. Marshals Service must escort him to Massachusetts. The Commission seek clarification as to whether he needs to be transported to Massachusetts by the United States Marshals Service or whether he should remain incarcerated in Florida pending further order of this Court. If he needs to be detained in Massachusetts, the Commission seeks clarification as to whether he may travel on bond using a commercial carrier or whether he needs to be escorted by the U.S. Marshal Service.

SEC Press Release: Rodrigues Ordered to Jail

sec-logo

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23450 / January 20, 2016

Securities and Exchange Commission v. TelexFree, Inc. et al., Civil Action No. 1:14-cv-11858-NMG (United States District Court for the District of Massachusetts)

Securities and Exchange Commission v. Carlos Nataniel Wanzeler and James Matthew Merrill, Civil Action No. 14-MJ-4172-DHH (United States District Court for the District of Massachusetts)

Florida Resident Ordered to Jail Based On Violating Court Orders Obtained by the SEC

The Securities and Exchange Commission announced today that Sanderley Rodrigues de Vasconcelos (“Rodrigues”) of Davenport, Florida, who is charged with promoting a pyramid scheme, was ordered to jail for civil contempt arising from his repeated violations of court orders obtained by the Commission in its civil action filed in 2014 against Rodrigues.

On April 15, 2014, the Commission filed an emergency civil action against TelexFree, Inc., Rodrigues and several other defendants and obtained from the U.S. District Court in Boston certain preliminary relief, including an order freezing the assets of Rodrigues. On June 10, 2015, Rodrigues consented to a court order requiring him to provide an accounting listing all assets and transactions over $500. On August 12, 2015, the Commission asked the court to hold Rodrigues in contempt, alleging that Rodrigues had transferred or disposed of assets and had failed to provide the court-ordered accounting. On December 18, 2015, the judge in the SEC’s civil case held Rodrigues in contempt for violating the terms of the court’s orders by: 1) transferring $233,473 out of his bank accounts; 2) selling a Mercedes Benz CLS; 3) selling a Ferrari F340; 4) transferring three Florida condominiums; and 4) failing to provide the court-ordered accounting. The court ordered Rodrigues to return all assets that he had transferred or disposed of in violation of the asset freeze, with a deadline of January 15, 2016. The court further warned Rodrigues that, if he failed to do so, he would be incarcerated for the contempt. On January 15, 2016, the Commission notified the court that Rodrigues had failed to comply with the December 18, 2015 order. On January 15, 2016, the court ordered Rodrigues held in jail until such time as he complies with the court’s December 18, 2015, order.

In related proceedings, on November 25, 2015, the U.S. Bankruptcy Court in the District of Massachusetts ordered that the debtors in the TelexFree bankruptcy proceeding operated a Ponzi and pyramid scheme and are jointly and severally liable for the claims of victims.

The SEC’s investigation was conducted by Scott R. Stanley, James Fay, Mark Albers, John McCann, Frank Huntington and Kevin Kelcourse of the SEC’s Boston Regional Office. The SEC’s litigation is being led by Mr. Huntington and Deena Bernstein.

For further information, see Litigation Release Nos. 22974 (April 17, 2014)(SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants) and 22992 (May 13, 2014) (Criminal Charges Filed Against Two Principals of Massachusetts-Based Telexfree)

 

http://www.sec.gov/litigation/litreleases/2016/lr23450.htm

ProSun: Judge Issues Order for SEC to Show Cause

ProSunThis is the first activity on this Docket for months.


 

O R D E R
The above complaint was filed on April 4, 2013, on April 4, 2013 the Court granted plaintiff’s Motion for Temporary Restraining Order; on April 15, 2013 the Court granted plaintiff’s Motion for Preliminary Injunction; Clerk’s Entries of Default have been entered as to various defendants; on July 15, 2015 the Court directed the Clerk of Court to Receive Repatriated Funds. Since that date no further action has occurred; IS THEREFORE

ORDERED that the plaintiff show cause in writing within twenty (21) days why the case should not be dismissed. The Clerk is DIRECTED to submit the case to the Court for further action at the expiration of the 21 days.

SO ORDERED, this 19th day of January 2016.

TelexFree: Judge Denies One Motion, Grants Another, and Rodrigues Remanded into Custody

newtelexfreelogoNot hard to believe, Judge Gorton has denied Sann Rodrigues’ recent Motion to Stay Contempt Proceedings and Approve a Payment Plan. It might have something to do with this motion being filed a day before the Court’s ordered deadline to return a large sum of money he used after the Asset freeze. Rodrigues wanted to enter into a payment plan to repay this money, but without disclosing the length of time or monthly payments he proposed.  It was a waste of paper, actually.

 

And his lack of compliance with the Court’s Order has annoyed the judge greatly; this Order was entered on January 15th:

ORDER
This Court, by order entered December 18, 2015 (Docket No. 359), held the defendant, Sanderley Rodrigues de Vasconcelos, in contempt but deferred the imposition of sanctions to give him an opportunity to purge his contempt. Defendant, having failed to comply with the conditions of that order to restore assets dissipated in violation of the asset freeze imposed upon him by the temporary restraining order (Docket Nos. 13, 42 and 52) and preliminary injunction (Docket No. 89), is hereby remanded to the custody of the United States Marshals Service to be incarcerated until further order of the Court.

But, Judge Gorton did approve a Motion allowing Rodrigues to open a new bank account so he has some where to place all the money he plans on making with his motivational books and videos.  This account is not subject to the Injunction.

 

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