SEC Files Suit Against ‘Wings Network’ as “International Ponzi Scheme”

sec-logoU.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23209 / February 27, 2015

Securities and Exchange Commission v. Tropikgadget FZE, et al., Civil Action No. 1:15 cv 10543-IT (United States District Court for the District of Massachusetts)

SEC Charges Operators of International Pyramid Scheme Targeting Latino Communities

The Securities and Exchange Commission today announced that it filed charges against three company officers and 12 promoters behind an international pyramid scheme targeting Latino communities in the U.S. The agency also obtained a court order to freeze the assets of the company officers, promoters, and related parties.

In a complaint filed February 25, 2015 in federal court in Boston that was unsealed yesterday, the SEC alleges that the Portuguese companies – operating under the name Wings Network – claimed to run a multi-level marketing company that offered digital and mobile solutions to customers, including apps and cloud storage. However, Wings Network’s revenues actually came solely from selling memberships to investors, not from the sale of any products. The company relied upon the recruitment of new members, and commissions were paid to earlier investors with money received from later investors. The scheme raised at least $23.5 million from thousands of investors, including many in Brazilian and Dominican immigrant communities in Massachusetts.

According to the SEC’s complaint, the scheme was orchestrated by Wings Network officers Sergio Henrique Tanaka of São Paulo, Brazil and Davie, Fla., Carlos Luis da Silveira Barbosa of Lisbon, Portugal, and Claudio de Oliveira Pereira Campos of Lisbon, Portugal. After establishing a network of lead promoters, recruitment of new members surged through the use of social media such as Facebook and YouTube. The promoters used Facebook to publicize “business meetings” that took place at hotels and other locations in Connecticut, California, Florida, Massachusetts, Pennsylvania, Texas, Georgia, and Utah. The promoters also set up storefronts or “training centers” to lure investors into attending Wings Network presentations. For example, one promoter used a storefront in downtown Philadelphia to make presentations to prospective investors, and another promoter rented office space in Pompano Beach, Fla., and spread the word in the local Latino community to attract prospective investors to come in and hear presentations.

Several of the scheme’s promoters charged in the SEC’s complaint live in Marlborough, Mass., while others reside in Clinton, Mass., Sandy, Utah, Duluth, Ga., and Waco, Texas.

The SEC’s complaint alleges that the Portuguese entities and principals Tanaka, Barbosa and Campos violated antifraud provisions Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10-b-5 thereunder, and registration provisions Section 5(a) and 5(c) of the Securities Act, and that the promoter defendants violated Section 5(a) and 5(c) of the Securities Act.

The SEC’s investigation was conducted by Scott R. Stanley, Dawn Edick, John McCann, Deena Bernstein, and Amy Gwiazda of the SEC’s Boston Regional Office. The SEC’s litigation will be led by Ms. Bernstein.

The SEC appreciates the assistance of the Massachusetts Securities Division of the Massachusetts Secretary of the Commonwealth’s office, which previously filed its own action against Wings Network and other parties, as well as the Comissão do Mercado de Valores Mobiliários of Portugal and the Procuradoria-Geral da República of Portugal.

SEC Complaint

http://www.sec.gov/litigation/litreleases/2015/lr23209.htm

BehindMLM: TelexFree Creditors Named in Bankruptcy Case…..

Once again, OZ from BehindMLM.com has done his usual extraordinary job and has revealed some new information in the TelexFree Bankruptcy case.  The link to it is below.

 


TelexFree financial schedules filed (creditors named)

telexfree-logoAs part of the bankruptcy proceedings initiated by TelexFree’s owners, the company was required to file Schedules of Assets and Liabilities.

Owing the bankruptcy proceedings being initiated in order to dissolve Ponzi ROI liabilities and head off a civil and criminal investigation into the company, these schedules were never filed.

Receiving absolutely no assistance from TelexFree’s owners and due to complications arising from data seized by various agencies investigating the scam, it’s taken some time for the court-appointed Receiver to finally put together an accurate list of TelexFree’s creditors.

Here, for the first time, we get to see a list of not only affiliates who TelexFree owed money too, but also the third-party businesses who got involved with the scam and should have known better.

[Continue reading…]

Achieve Community: Kristine Johnson, Can You Say Criminal Investigation??

achieve-community-logoDefendant Kristine Johnson has filed two interesting Motions yesterday, one a Joint Motion requesting the authority to transfer funds, and the second a Joint Motion to Seal further filings so that Defendants Troy Barnes and Work With Troy Barnes, Inc. do not have access to them. It seems there may be trouble in paradise.

One very interesting revelation in the Transfer of Funds motion is this:

2. Contemporaneously with the civil proceedings in this case, Ms. Johnson is a target of a federal criminal investigation by the United States Attorney’s Office for the Western District of North Carolina.

This Motion goes on to say that these “criminal authorities” had approached Ms. Johnson’s attorneys regarding the voluntary transfer of over $800,000 associated to both the ongoing criminal and civil investigations.  Because these funds “derive directly or indirectly from any investor”, and are located in Hong Kong. Due to the Preliminary Injunction, Ms. Johnson cannot execute a voluntary transfer without violating the Preliminary Injunction.

Hence the Joint Motion from Ms. Johnson and the SEC to relax the injunction on a one time basis

to permit the funds transfer from the “ipayDNA.info” account, to which she has access, to a pre-arranged bank account located in the United States, such that authorities will be able to freeze and potentially seize the funds as part of their on-going criminal investigation.

Ms. Johnson shall not execute the transfer of funds from the ipayDNA account until such account has been established, and she has received the express written permission of undersigned counsel for the Securities and Exchange Commission to transfer the funds.

The second filing is this:

Because of the nature of the proceedings referenced in the parties Joint Motion for Authority, the parties’ interests, as well as that of other entities not party to the motion, at this time substantially outweighs the public’s interest in open proceedings. If not sealed, it is possible that the relief sought by the parties’ Joint Motion could be stymied by adverse interests.

Defendant Kristine Johnson and the SEC respectfully request that the Joint Motion and any subsequent order be restricted only to the filing parties – Defendant Johnson and the SEC – and the Court. Specifically, the parties request that Defendants Troy Barnes and Work With Troy Barnes, Inc., not have access.

These two filings are on the Files Website, Doc 28 and 29.

Achieve Community: Judge Orders Preliminary Injunction – Asset Freeze for Relief Defendant ‘Achieve International, LLC.’

Judge Blackburn issued the Order based on “good cause”, part of which was the SEC making a “prima facie case for each of the violations alleged in the Complaint and a strong likelihood that the SEC will prevail at trial on the merits.”

This Order is a virtual repeat of the other 2 Preliminary Injunction and Asset Freeze Orders already in place for Barnes and Johnson.

I have uploaded this Order onto the Files website.

Achieve Community: Order for Preliminary Injunction and Asset Freeze Issued for Work With Troy Barnes, Inc.

There was a scheduled Hearing today wherein the Defendants and Relief Defendant were “to show cause why the court should not enter a preliminary injunction and order preliminary relief against Defendants and Relief Defendant and to extend the temporary relief granted until a final adjudication on the merits.

Defendant Work With Troy Barnes, Inc. has not filed a response to the SEC’s motion for preliminary injunction, as ordered by the court. Nor did Defendant Work With Troy Barnes, Inc. appear at the show cause hearing on February 24, 2015, despite adequate notice of the proceeding.”

So, Judge Blackburn issued the following Order:

The matter before me is Plaintiff United States Securities and Exchange Commission Emergency Motion for an Order Granting an Ex Parte Asset Freeze, Temporary Restraining Order, and Other Emergency Relief [#4], filed February 12, 2015. The motion seeks an order (1) freezing funds and other assets of Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., and Relief Defendant Achieve International, LLC, wherever located, which are derived directly or  indirectly from any investor funds obtained by or on behalf of Defendants or Relief  Defendant in connection with the scheme alleged in the SEC’s Complaint; (2) prohibiting Defendants and Relief Defendant from the acceptance, deposit, or disbursement of additional funds from investors or potential investors; (3) enjoining Defendants from violations of the antifraud provisions of the federal securities laws; (4) requiring Defendants and Relief Defendant to provide an accounting of investor funds and other assets; (5) prohibiting the destruction or alteration of documents; (6) providing for expedited discovery; and (7) providing alternative service by the Commission. On February 12, 2015, the court issued a temporary restraining order against Defendants and Relief Defendant on those terms. (Asset Freeze, Temporary Restraining Order, and Order Granting Other Emergency Relief and Setting Preliminary Injunction Hearing [#10], filed February 12, 2015.)

———————

Based on the record, and Defendant Work With Troy Barnes, Inc.’s failure to show cause why the court should not enter a preliminary injunction and order preliminary relief, the court finds and concludes as follows:
1. That the court has jurisdiction over the subject matter of this action and over Defendant Work With Troy Barnes, Inc.;
2. That the SEC has made a sufficient and proper showing in support of the relief granted herein, as required by Section 20(b) of the Securities Act of 1933 (“Securities Act”) (codified at 15 U.S.C. § 77t(b)) and Section 21(d)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) (codified at 15 U.S.C. § 78u(d)(1)) by establishing a prima facie case for each of the violations alleged in the Complaint and a strong likelihood that the SEC will prevail at trial on the merits and that Defendant Work With Troy Barnes, Inc., directly or indirectly, has engaged in and, unless restrained and enjoined by order of this court, will continue to engage in acts, practices, and courses of business constituting violations of Section 17(a) of the Securities Act (codified at 15 U.S.C. §§ 77e and 77q(a)), Section 10(b) of the Exchange Act (codified at 15 U.S.C. §§ 78j(b) and 78o), and/or Exchange Act Rule 10b-5 thereunder (codified at 17 C.F.R. § 240.10b-5);
3. That there is good cause to believe that, unless restrained and enjoined by order of this court, Defendant Work With Troy Barnes, Inc. will dissipate, conceal, or transfer from the jurisdiction of this court assets that could be subject to an order directing disgorgement or the payment of civil money penalties in this action, and that unless restrained Defendant Work With Troy Barnes, Inc. will continue to accept funds from investors;
4. That there is good cause to believe that, unless restrained and enjoined by order of this court, Defendant Work With Troy Barnes, Inc. may alter or destroy documents relevant to this action;
5. That there is good cause to believe that an accounting is necessary to identify the source, location, and use of funds obtained from investors; and
6. That there is good cause to believe that expedited discovery and alternative means of service are warranted.

The rest of this Order repeats the myriad of restrictions placed on the two Defendants, you can read them all on the Files website.

Achieve Community: Preliminary Injunction and Asset Freeze Order Issued for Kristine Johnson

Issued today, we have a second Injunction and Asset Freeze issued in the Achieve case, which begins:

On February 12, 2015, Plaintiff United States Securities and Exchange Commission (“Commission” or “SEC”) filed an emergency motion for an ex parte Order: (1) freezing funds and other assets of Defendants Kristine L. Johnson, Troy Barnes, and Work With Troy Barnes, Inc., and Relief Defendant Achieve International, LLC, wherever located, which are derived directly or indirectly from any investor funds obtained by or on behalf of Defendants or Relief Defendant in connection with the scheme alleged in the SEC’s Complaint; (2) prohibiting Defendants and Relief Defendant from the acceptance, deposit, or disbursement of additional funds from investors or potential investors; (3) enjoining Defendants from violations of the antifraud provisions of the federal securities laws; (4) requiring Defendants and Relief Defendant to provide an accounting of investor funds and other assets; (5) prohibiting the destruction or alteration of documents; (6) providing for expedited discovery; and (7) providing alternative service by the Commission.

The rest of this Order follows the same general restrictions as were placed upon Barnes, so I will not repeat them.

Achieve Community: Kristine Johnson Will Not Follow Court Order; Invokes 5th Amendment

Filed today is this response to Paragraph 5 of the February 12, 2015 Asset Freeze, Temporary Restraining Order, and Order Granting Other Emergency Relief and Setting Preliminary Injunction Hearing (the Order). Through counsel, Ms. Johnson had this to say:

 Paragraph 5 of the Court’s February 12, 2015 Order requires Defendant Kristine L. Johnson, and others, to provide a sworn accounting of various matters relating to specified transactions and accounts at banks, financial institutions, or brokerage firms.

Ms. Johnson respectfully declines to provide the accounting required by the Court’s Order for to do so would violate Ms. Johnson’s privilege under the Fifth Amendment to the Constitution of the United States to not act as a witness against herself in any proceeding involving a fine, penalty, or forfeiture, which privilege Ms. Johnson now asserts.

While I do realize that this is her right, it does raise the question of why she will not answer simple questions; kinda makes her look guilty to outside observers.

But I have the feeling that the SEC and Mr. Heinke already know most of these answers.

Achieve Community: Troy A Barnes Will Invoke 5th Amendment if Deposed

In a Declaration filed today, Nicholas Heinke, Senior Trail Counsel for the Denver Regional Office of the achieve-community-logoSEC, stated that on February 17 he served a notice of deposition for both Troy Barnes and Kristine Johnson. These depositions were scheduled for the 20th and the 23rd, respectively.

In addition to the Notice of Deposition, Mr. Heinke issued a discovery request to both defendants and issued subpoenas to several financial institutions.

The Declaration goes on to say that on February 19th, Mr. Heinke was contacted by an attorney on behalf of Troy Barnes, and was informed that Barnes intended to invoke his 5th Amendment rights against self-incrimination to any questions concerning The Achieve Community, or other defendants. The attorney said that Barnes would send an email confirming this intention.

Below is the text body of that email, filed as an Exhibit:

I have received the notice of deposition set for tomorrow. I have consulted with an Attorney. And I understand I am the target of a criminal Investigation involving many of the same issues before the Securities and Exchanges commission.

If Deposed, I intend to take the Fifth Amendment in any and all ongoing investigations Including Kristine Johnson, Work With Troy Barnes Inc. And The Achieve International LLC.

Ms. Johnson’s attorney confirmed that she will also invoke her 5th Amendment privileges. Due to these revelations, Mr. Heinke informed both parties that they would not need to appear for these depositions.

Achieve Community: Judge Orders Preliminary Injunction and Asset Freeze for Barnes

Today, Judge Robert Blackburn signed an Order for Preliminary Injunctions, Asset Freeze and other Equitable Relief against Defendant Try Barnes. The Order makes the following points:

  • Pending trial or further Order of the Court, defendant Barnes, and everyone that may act in concert with him, are enjoined and restrained from offering any security by the use of any means of interstate communications, obtaining money by means of an untrue statement, or engaging in any deceitful or fraudulent transaction.
  • Pending trial or further Order of the Court, defendant Barnes, and everyone that may act in concert with him or who received actual notice, are enjoined and restrained from using interstate commerce, the mails, or any national securities exchange in connection with any purchase or sale of a security.
  • Pending trial or further Order of the Court, defendant Barnes is prohibited from accepting funds from investors for investment in any investment program.
  • Pending trial or further Order of the Court:
    • funds assets or other property of defendant Barnes, wherever located, are frozen.
    • shall hold and retain, and prevent dissipation of funds or assets or things of value
    • Any bank, financial or brokerage institution holding funds connected with the scheme alleged in SEC complaint shall hold and retain and prevent removal of any such funds or assets.
    • No person or entity, including defendant Barnes or any person acting on behalf of a creditor or claimant, shall take any action to interfere with the asset freeze
  • That, the Defendant Troy A. Barnes is prohibited from destroying or altering records.
  • Defendant Troy A. Barnes and his affiliates, agents, servants, employees, attorneys-in-fact, and those persons in active concert or participation with him who receive actual notice of this order by personal service or otherwise, and each of them, are hereby restrained from destroying, mutilating, concealing, altering, or disposing of any document relating in any manner to any transactions described in the SEC’s Complaint.
  • That service of this Order may be made by facsimile, mail, e-mail, delivery by
    commercial courier, or personally by any employee of the Securities and Exchange
    Commission who is not counsel of record in this matter, or special process server, or any other person.
  • That nothing in this Order alters or eliminates the provisions in the Court’s Asset Freeze, Temporary Restraining Order, and Order Granting Other Emergency Relief [#10], entered February 12, 2015, requiring Defendant Barnes to provide a sworn accounting, ordering expedited discovery, or providing for alternative means of service.
  • That the Court shall retain jurisdiction of this matter for all purposes.

I have uploaded the complete Order onto the Files website.

Zeek Rewards: Receiver Files Motion for Class Certification Notice

In the case entitled “Bell v Disner, et al” the Receiver has filed for Court approval on a Notice to send to all affiliates within the Class recently certified by Senior Judge Mullen.

The filing lists these individuals and entities as Defendants:

TODD DISNER, in his individual capacity and in his capacity as trustee for Kestrel Spendthrift Trust;
TRUDY GILMOND; TRUDY GILMOND, LLC; JERRY NAPIER; DARREN MILLER; RHONDA GATES; DAVID SORRELLS; INNOVATION MARKETING, LLC; AARON ANDREWS; SHARA ANDREWS; GLOBAL INTERNET FORMULA, INC.; T. LEMONT SILVER; KAREN SILVER; MICHAEL VAN LEEUWEN; DURANT BROCKETT; DAVID KETTNER; MARY KETTNER; P.A.W.S. CAPITAL MANAGEMENT LLC; LORI JEAN WEBER; and a Defendant Class of Net Winners in ZEEKREWARDS.COM

Here is a copy of the Proposed Order, ZeekDoc103-1.

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