USFIA Update: "bank accounts show apparently NO revenue" (since 2013), and more

Official SEC press release: SEC Halts $32 Million Scheme That Promised Riches From Amber Mining



LATimes is a day late in reporting the Fed raid and shutdown of USFIA/Gemcoin, but apparently they actually read the SEC filing against USFIA, and they got a few extra details than anyone else thus far.

Here's the relevant parts:

USFIA has raised about $32 million from investors since 2013, according to the complaint. Nearly $19 million of that came from foreign investors, with $5.7 million coming from checks mostly issued by domestic investors, it said. 

The company’s bank accounts show no apparent revenue over that period, the complaint said. Instead, recorded transactions show large withdrawals to purchase luxury automobiles, entertainment and travel, as well as several transactions with various companies controlled by Chen.

and earlier in the article, Steve Chen apparently knew the gig's up, because...

Earlier this month, according to the filing, Chen attempted to wire $7.5 million out of USFIA’s account at Bank of America to a Chinese bank after he was interviewed by the Arcadia Police Department about a separate case involving alleged death threats against disgruntled Gemcoin investors. 

And it seems the politicians have nothing else to say.

Scam Tactics: Two-Face, revisited

Previously MLMSkeptic has covered "two-face", i.e. present two separate distinctive personalities to different audiences, as an Herbalife tactic.  Tell government and Wall Street 72% of participants do NOT want income, while holding a convention cheering on those who did profit and entice those who haven't joined with prospects of income.

But there is an even simpler version of two-face... present someone NOT as who they are, by simply dressing them up as something else.

And there's an update later about how Gemcoin / USFIA is being condemned in Vietnam... but first...

Those of you who keep up with the USFIA / Gemcoin developments should recognize this guy (photo from May 29th 2015 USFIA event):

Live ammo shooting coach Security Guard Chang (Zhang, actually) Right 5, photo with fans

With a bit of help from the newspaper ChineseDailyUSA (owned by Sho Tay of Arcadia, BTW) we've determined the guard's surname is Zhang (yes, I misspelled it in the translation).

And with a different photo, where the guard is now... "international jewelry appraiser", was identified as John Zhang.

Life412.com / Professional Gem Appraiser John Zhang (Right 2), Company VP Leonard S. Johnson (Right 3)
international market president Alicia Gesier (Right 4)  and Toronto International Market President eric Wu (Right 7)

If you're wondering why did the translation differ... I'm just going with original material, man.

But recently I came across a different coverage of the same Toronto event...

torcn.com / USFIA VP Leonard S. Johnson announcing USFIA Currency Fund Gemcoin's formal release and introducing
Alliance Financial Group (AFG) background and its affiliate USFIA Currency Fund
the guy on the right is, according to placard: John Zhang, international jewelry appraiser

So we have his full name, "John Zhang", and a search at Bureau of Security and Investigative Services, who licenses security guards and investigators, and you get "ZHANG JOHN BAO PING" of West Covina, CA.

The logical conclusion is the "jewelry appraiser" and "security guard" are the same person: the security guard was dressed up as "jewelry appraiser" for the Toronto event, and possibly for the other events in various Chinatowns as well.

That is two-face, at its most basic: present one face, the guard face, to the locals, then at where people don't know you, you can be other people, like "appraiser".

And the Toronto event and its coverage belies the recent "denial" of USFIA, where they claimed they don't even operate Gemcoin.

Scam Tactic: Speak in Half-truths, or how Vemma is trying to create value out of bull****.

Speaking in half truths is the best way to scam. You sound as if you are telling the truth, esp. if that's all the truth you know. You can't be lying if you don't even know the other half, right?

That's why you should fact-check any PR claims, esp. those without any links for you to verify the claims, and if the evidence themselves need to be fact-checked.

Let's take one recent example, when a Vemma fan (what I'd refer to as a Vembot) posted basically a cut-n-paste PR speech "how dare you compare Verve to Red Bull". Okay, I made up that title, but that is accurate.  His words in blue, my comment will be in red.

For those trying to do a cost comparison with Red Bull, you are obviously missing the entire concept of Vemma.

Oh, I think we understand you all too well. It is you who don't understand Vemma... 

The clinically studied nutritional supplement Vemma cost about $2.00 per serving, if you purchased the stand alone Vemma product. 

But did you actually read the two "clinical studies"? (NOTE 1)

Verve has the same 2 ounces of Vemma, plus the components of the energy drink. Yes the price is about $2.80 a can, but $2.00 is the Vemma supplement. So the energy drink component is really only $.83.

You set your own prices. You can say it's worth $1000 if you'd like. There's nothing to compare it to. In fact, there's not even any proof that mangosteen has any benefit on the body. But more on that later. (NOTE 2)

You show me where red bull has 12 vitamins, 63 minerals, mangosteen, aloe vera and green tea. Show me where Red Bull paid 250000 to run full clinical studies to see exactly what happened in your blood after drinking it.

You show me what those "63 minerals" are, and what effect they have on the body. Show me how ECGC is not harmful to the body. Show me how two little studies in China, on self-reported results prove "what happened in blood". (NOTE 3 again)  

Until you can show me that trying to compare the to is like comparing a Ford Fiesta to a Ford Mustang. They are both Fords (energy drinks), but they are not the same thing and they dont cost the same thing.

Vemma is no-name energy drink with an unproven secret ingredient. The analogy is bull****. 

Now let's look at the footnotes...

FTC shuts down Vemma for being a $200 million pyramid scheme...

It brings me no joy to see this news, which was a surprise even to me... I expect action, but not this fast. 

But to summarize, Vemma's assets has been frozen and operation stopped based on temporary restraining order as issued by court based on lawsuit brought by the Federal Trade Commission.

Quoting AP / CNBC story:

The Federal Trade Commission said Wednesday that Vemma Nutrition has been temporarily shut down for operating a pyramid scheme that promised college students riches if they sold its nutritional drinks, but most ended up losing money. 

The consumer protection agency said that Vemma told recruits that they could make as much as $50,000 per week selling its nutritional beverage Vemma, energy drink Verge or protein shake Bod-e. An initial investment of $600 was paid for products and business tools and $150 in Vemma products had to be bought each month to receive bonuses. The FTC said Vemma provided little help on how to sell its products and instead rewarded them for recruiting more people. 

Vemma earned $200 million a year in 2013 and 2014, according to the FTC.
A representative from Vemma, which is based in Tempe, Arizona, did not immediately respond to a request for comment.

A full copy of the complaint and the 5 summary points are available at BehindMLM.com:

Count 1 – Vemma is an “illegal pyramid” scheme 

Defendants promote participation in Vemma, which has a compensation program based primarily on providing payments to participants for the recruitment of new participants, not on the retail sale of products or services. 

Defendants’ promotion of this type of scheme, often referred to as a pyramid scheme, constitutes a deceptive act or practice. 

Count 2 – Income Claims 

In numerous instances in connection with the advertising, marketing, promotion, offering for sale, or sale of the right to participate in the Vemma program, Defendants have represented … that consumers who become Vemma affiliates are likely to earn substantial income. 

In truth and fact … consumers who become Vemma affiliates are not likely to earn substantial income. 

Count 3 – Failure to Disclose 

In numerous instances … defendants have represented … that individuals have earned substantial income from participation in the Vemma program, and that any consumer who becomes a Vemma affiliate has the ability to earn substantial income. 

In numerous instances … Defendants have failed to disclose, or disclose adequately, that Vemma’s structure ensures that most consumers who become Vemma affiliates will not earn substantial income. 

This additional information would be material to consumers in deciding whether to participate in the Vemma program. 

Count 4 – Means and Instrumentalities 

By furnishing Vemma affiliates with promotional materials to be used in recruiting new participants that contain false and misleading representations, (Vemma) have provided the means and instrumentalities for the commission of deceptive acts and practices. 

Count 5 – Relief Defendant 

Relief Defendant Bethany Alkazin, has received … funds or other assets from (Vemma) that are traceable to funds obtained from (Vemma’s) customers through the deceptive acts or practices described herein. 

Relief Defendant will be unjustly enriched if she is not required to disgorge the funds or the value of the benefit she received as a result of (Vemma’s) deceptive acts or practices.

But what does this mean to you, the Vemma affiliate, other MLM participants, and so on? What will happen on the hearing on September 3rd?

Here's a few layman's speculations. Remember, I'm not a lawyer, and I have no insider information. (Lack of such, however, has not stopped various Vemma "leaders" from issuing feelings, such as "Vemma doesn't deserve to be shut down" "It's just a complaint, not a lawsuit" "The lawsuit is a joke", "FTC bit off more than it can chew" and so on)

But let's be realistic here... If you want people to lie to you and tell you everything will be alright, go read whatever verbiage your upline put out. You're here for some real analysis.

USFIA Update: If you or family or friend invested in Gemcoin, a US Reporter Would Like to Talk To You

Following comment was left on BehindMLM website, and the email address is verified.

Posted by: Carol Matlack
Jul 16th, 2015 at 10:16 pm  (Q)
Hello, I am a journalist with Bloomberg Businessweek magazine. I’ve been doing some research on USFIA and the Gemcoin, and I’m interested in speaking with investors and friends & families of investors, about their experience.
The moderator of this forum has kindly agreed to post my email address so you can contact me: cmatlack@bloomberg.net (This address will only be posted here for a week, so please make a note of it if you plan to contact me.) Thank you.

And just in case, here's Chinese version:

您好我是彭博商业周刊(Bloomberg Businessweek) 的记者。我一直在做关于USFIA和Gemcoin珍寶幣研究，而我想知道投资者和投资者家庭朋友的经验。本次论坛的主持人也欣然同意貼我的电邮地址，以便你可以与我联系：cmatlack@bloomberg.net（此地址将只被张贴在这里一个星期，所以请记下它，如果你打算与我联系。 ）谢谢。

I have no doubt some Gemcoin supporters will spam her account with promo material, about how nothing is wrong and a couple haters are spreading "lies" about Gemcoin. Good, show her why you tell the truth and everybody else ain't.

And if you are on the side of justice and truth, and you have some personal experience on Gemcoin (maybe you were in that "motorcade" that went to Quail Ranch?) let her know.

And as original comment stated, this will only stay up for ONE WEEK STARTING TODAY.

EDIT: And a shoutout to the SierraMadreTattler.blogspot.com, fellow blogger keeping track of the situation in Sierra Madre, neighbor of Arcadia! Thanks for the repost! I added the Chinese translation after you reposted it, sorry!

USFIA Update: Who are they trying to fool with these "screenshots"?

A few days ago, the "official" Facebook page of Gemcoin / USFIA posted this:

Facebook post by Gemcoin / USFIA official page

Can you see the problems? No?

The "Blockchain Wallet" is the first problem.  Blockchain never heard of Germcoin.

Second one requires a bit closer look.... Look carefully:

Getting the details of one of those pictures... See the problem yet? 

Do you see the problem yet? No? Let's go a little closer:

The title says: [unreadable Chinese] Gemcoin Wallet.pdf -- Adobe Reader

That's right, you're looking at a photo of PDF being displayed on a computer screen. In fact, if you open Adobe Reader XI now, you should see the SAME toolbar. Here, I'll even show you.

Screenshot of Adobe Reader toolbar / menu bar

They're showing off a PDF file and claiming it "proves" that their cryptocurrency blockchains are working?!?!?!

How stupid do they think people really are?

Related articles

• USFIA Update: What was USFIA doing before Gemcoin? Exactly the same thing... selling promises of amber
• USFIA Update: Turns out all both the Chinese name and the English name may have been stolen
• Update on WCM777: the more we dig, the more weird stuff we find
• Scam Tactics: Evolution of a Scam, from Proto-Share to Investment Fund to Cryptocurrency

Scam Psychology: How does a scam encourage people to adopt a lost cause?

When one questions scams and suspect schemes for as long as the MLMSkeptic did, one'd seen a lot of things, such as people claiming that they forgive ZeekRewards Ponzi even before we knew the full extent of damage (just under a billion dollars), how Paul "ZeekRewards" Burks told newspaper "don't blame me, I never told them to invest more than they can afford", and so on.

Jael Phelps of Westboro Baptist Church picketing Trinity Episcopal Church in Tulsa, Oklahoma
(Photo credit: Wikipedia)

However, some time the... fanaticism of certain fans of particular schemes rival that of the pro-life-crazies (who had assassinated doctors that performed abortions, for example, try reconciling that!), or perhaps those of Westboro Baptist Church (well-known crazies of the US). Others appear to be willing to "go down with the ship".

A recent example is Emgoldex, which just rebranded itself as Global InterGold, and some "diehard" Emgoldex fans, eager to defend their own stance on the scam, engaged in conspiracy theory with zero regard to logic.

I won't bore you with long history of Emgoldex. Suffice to say this European based Ponzi scheme had spread via help of the Internet, and nobody really knows where it's being ran out of (may have been Russia) but it was denounced as illegal all over the world, including the US (both state and Federal level), Malaysia, Philippines, even Dubai UAE where it allegedly was based out of.

Yet there are still backers who claimed that "you just don't understand Emgoldex", "you just don't understand MLM", "you are prejudiced against MLM", and so on and so forth. You can find many of them in the comments on this topic.  Some of them are certain of their righteous cause, others are somewhat doubtful but "hopeful" that they had made the right choices, even when facts started to stack against them.

USFIA Update: What was USFIA doing before Gemcoin? Exactly the same thing... selling promises of amber

Previously, we have established that the Arcadia based USFIA is the SAME "American Mining" scam that plagued China in 2014, and was destroyed in multiple raids in China as of June 2014. Its head in China, Ho Peng, was arrested in Hunan. The initial reporting agency, Changde police, even went to Thailand to arrest two that escaped there in November 2014.

USFIA had since published disclaimer that they never endorsed the company name being used for illegal purposes and basically disowned Ho Peng. 

But let us examine... Was USFIA doing anything different then vs. now? What was USFIA doing before 2015?

Here's the earliest mention of USFIA 美洲矿业... in California.

ChineseinLa.com classified ad in Chinese: American Mining needs gem commerce reps, dated 06-SEP-2013
They need reps to join US and Chinese markets, no requirements other than speak clearly and be nice

Note that they were looking for 加盟商 / Franchisee (30 of these), and 業務代表 / business rep.

Selling what? Gemstones? Or protoshares of whatever USFIA offers? Interesting, as we have no record of this.

What we *do* know is by March 2014, reps have indeed reached China, and is attracting official attention, because they do *not* have a direct sales license in China. So the reps all lied, claiming "it's coming soon". They attracted enough attention in Liaoning that local newspaper wrote an article on them, leading them to clear out overnight.

And this is their comp plan:

• Invest $1000, $2000, $5000, $10000, or $20000, get "merchandise" and "business center", plus $100 yearly "maintenance fee". 
• Get referral bonus (8% to 15% depending on how big the package your referral bought) 
• Get Leadership bonus (get referral bonus of your upline and downlines down 3 generations)
• Get Passive Monthly bonus (refer 1, get 1.75 shares, refer 2 get 2 shares)
• Management monthly bonus (if you got 2 downlines who brought in 300K each (10000 USD = 1 point, so 30 pts) you get 20000 that month, and it goes up from there. 
• Autoship bonus -- get a share of downline's purchases, if they maintain minimum of $100 per month, going down 12 generations
• Travel bonus and Car bonus

Let's keep this in mind while we check into a bit of history. 

First, let us examine the an old Chinese news on sina.com.cn, reposting news from Hunan Daily:

hunan.sina.com news of 12-NOV-2014, reporting arrest by Changde police
in Thailand regarding the USFIA "American Mining" scam

The part I highlighted in blue is:

据常德市公安局透露，2013年10月，黑龙江人陆巍加入陈力、所罗门杨等人在美国洛杉矶设立的传销组织“美洲矿业”，并成为其在中国地区的传销组织领导人之一。“美洲矿业”在北京、新疆、湖南等地以投资琥珀期权、原始股为名，大肆招募会员。他们将其所销售的劣质琥珀冒充多米尼加蓝珀欺骗会员，还多次以“美洲矿业”之名，在中国举办传销宣传聚会。

Which translates to:

According to Changde Ministry of Public Security, Mr. Lu Wei (from Heilongjiang) joined in October 2013 the pyramid sales organization "American Mining" (USFIA) established in US Los Angeles by Chen Li and Solomon Yang, and became one of pyramid sales leaders in the China region. "American Ming" (USFIA) recruited heavily in Beijing, Xinjiang, and Hunan using the promise of profit from investments in amber options as well as protostocks. They used bad quality amber to pass for Dominican blue amber and defrauded the members, and several times used "American Mining" (USFIA) name to hold pyramid sales promotion and recruitment meetings in China. 

Li Chen (i.e. Chen Li 陳力）is Steve Chen, head of USFIA, UCCA, AFG, and so on and so forth. 

Thus, there is absolutely NO DOUBT this is the same organization, same head, same company. Arcadia is a suburb of Los Angeles. In fact, some Spanish speakers are known to have mistaken John Wuo, then mayor of Arcadia, as "mayor of Los Angeles". Tsk tsk tsk, can't they even check Wikipedia?

USFIA posted an announcement dated June 2014 that Ho Peng was a rogue operator and the company disclaimed any and all relations with him. Then in late 2014 they launched Gemcoin, allegedly "backed by amber". 

Frankly, this already smells like "same wine, new bottle", but let's make absolutely sure... what was AFG / USFIA / WHATEVER doing BEFORE the crackdown in China? 

Here is an video found on Tudou (Chinese Youtube), believed to have been uploaded by a Spanish affiliate of USFIA back around February or March 2014, of their visit to AFG/USFIA HQ in Arcadia California. And they were speaking Spanish, not Chinese. As Chinese New Years decorations are still in display this can't be much later than March, and it was showing AFG, so this is before the introduction of Gemcoin. The video was then reuploaded to China's Tudou by a USFIA affiliate in China who added an overlay for his own website (no longer in service).

AFG / USFIA lobby, circa approx. March 2014. Note this is pre Gemcoin, and around Chinese New Years

And just for comparison, this is USFIA lobby now:

Seems they replaced the back sign to say AFG / Gemcoin, but kept some of those Chinese lanterns in the back. But there's no doubt it's the same desk, same lobby.

USFIA Update: Gemcoin ATMs (probably not) and warning in Spain about it being unlicensed investment

NOTE: Previous coverage on USFIA can be found here

MLMSkeptic has a special disdain for someone scamming their own kind in order to get ahead, which is pretty much every scammer out there, when the truth is often in plain view, albeit the view may have been distracted.

A certain Gemcoin promoter online claimed that Gemcoin ATMs , THOUSANDS of them, will soon be distributed around the world, so people can get cash through their Gemcoin account. As an example, they showed two ATMs allegedly with Gemcoin listed next to the typical ATM logos like VISA / MASTERCARD / AMEX and so on.

Screencap'ed from investgemcoin.com

As you can see, that's "Gemcoin" 2nd from the right on the top row, and here's a guy that looks like he's getting money from it.

So why is there a "Gemcoin" logo's bottom showing just above the ATMs?

Turns out, these two are probably the ONLY ATMs that display the Gemcoin logo... because they are installed at Gemcoin HQ, i.e. UCCA / USFIA / AFG / whatchamacallit in Arcadia. Don't believe me? Here's a different angle of the same ATMs, from a different Gemcoin promoter:

Then consider this shot from the FRONT of the lobby... at the reception desk

One must conclude that the two confirmed-to-exist (whether you can actually convert Gemcoins to cash is a different matter) alleged "Gemcoin" ATM are located in the main lobby of USFIA/AFG, as this is the SAME paneling used in both pictures.  Albeit it's not in public view, but around the back.

Frankly, other than banks, the ONLY other locations with ATMs, esp. these free-standing kinds, are local convenience stores. You know, something like this:

USFIA Update: Who is this security guard and was he also identified as gemstone appraiser?

Previously, we've identified the USFIA shindig in Arcadia, where Steve Chen threw a party for "USFIA Club Grand Opening", where he threw a party, then started up a motorcade  to visit his closed Quail Lodge golf course and promised this will be developed into a huge profitable enterprise. This was back on May 29, 2015. John Wuo was present.

Also present was this security guard, in no less than three photos.

Security guard, photo 1 of 3, hiding in background to left

Security guard photo 2, posing with fellow guards and motorcade control, far right

Security guard photo 3 of 3, posing with fans with thumbs up sign

Do we agree that these three shows the photo of the same guy? Taller than most Chinese, stocky.

USFIA Update: Was in China earlier than previous reported, but definitely originated in the US

Searching for signs of USFIA, known in China as  美洲矿业 (American Continental Mining Industries, or just 'American Mining' for now), yielded a couple more links.

The earliest mention of American Mining was not in China, but in the US. A poster "Harryyu" posted a wanted ad in Southern California about "seeking USFIA sales rep for gemstone mining" dated 06-SEP-2013.

The earliest mention in China was a forum post in February 9th, 2014, where Mr. Ho Peng 候鵬 (surname is "Ho") made a big presentation in Qingdao, Shangdong province, China. You are welcome to Google translate the link, but I'll give you the TL;DR version:  Ho held a big meeting in the local 5-star hotel called Le Meridien  ( 青岛万达艾美酒店)  where Mr. Ho presented to a packed house full of MLMers from all over China for two hours. Ho claimed he had been in various MLM things for two years, and made over 20 million RMB and this American Mining will be the biggest next thing, and he had already made millions in this one, and he guarantees this is a sure win. Ho kept talking about his "aunt" 姨媽 from Guizhou 貴州, who's a local fortune teller and told him he will make tens of millions. Everybody can believe this fortune.

Alleged insider claimed that Ho is the local Judas Goat and may be part owner. He was shifting money out of the country and already got a divorce to emigrate. He had to make "one last job" before disappearing from China. Another accused Ho Peng of swindling people using his aunt's name.

Ho Peng, in Macao 22-APR-2014, promoting USFIA

I won't bother translating the comp package, except to explain that if you buy in at packages of 2K, 5K, 10K, or 30K (RMB of course), you get either protostock, or actual amber, and you can trade the protostock with their platform.

Other news sources claimed that Ho Peng was doing the same schtick all over China, and claimed to be a standing member of UCCA. USFIA name was mentioned prominently. Here is Ho Peng doing his schtick in Macao in April 22, 2014. You can see USFIA and 美洲矿业 in the background. You can view the entire video here. Chrome users: Use incognito mode to bypass the "missing plugins" error.

Note that the video title is 美洲矿业中美政治协商促进会—侯鹏 which translates to "American Mining UCCA -- Ho Peng"

In a different copy of the video, Ho Peng got a different title: 美洲矿业中美政治协商促进会常务委员—侯鹏 which translated to "American Mining UCCA standing member -- Ho Peng"

And he apparently got an ID card from UCCA shown at the same event, vidcapped from a different video.

Back in the US, also on the ChineseInLA website, a user by the name of "Amber Dream" posted an ad copy under "China-US Commerce" topic on 20-FEB-2014.

Another forum post in China was made on March 8th, 2014 where similar allegations was mentioned and the meeting in Qingdao was again referenced, but this time with a promise that Ho will do a presentation in Beijing. It also mentioned that his biggest downline is a Mr. Wang  王軍 Wang Jun who also made millions.

The fortunes started to turn for USFIA in China around March 2014, as they are starting to attract the attention of the authorities all over China.

Scam Tactics: Evolution of a Scam, from Proto-Share to Investment Fund to Cryptocurrency

A scam, like a specie, must evolve in face of pressure, such as law enforcement, spreading information about how scammy it was, and so on. To this end, it will often adopt the following tactics:

• Language barrier -- spread to an area that speaks a very different language, like from US to Asia

• Jargon barrier -- adopt modern buzzwords and drop buzzwords out of favor 

• Obfuscation barrier -- have multiple company names, then intentionally mistranslate them to create even more confusion. 

Today, we will document one such scam, chronologically, including various names and translations, to show you how a scam evolved.

The scam went by various names. In China it is best known as American Continental Mining Industries 美洲矿业, but it's known elsewhere as USFIA

In November 2014, Chinese media covered that several scammers were extradited from Thailand that were scammers of something called 美洲矿业 that scammed people in Changde 常德, a city in Hunan province, China, as a part of International Fugitive Apprehension program known as "Operation Foxhunt 2014 獵狐2014". Changde police after receiving word that many downlines of the scam is traveling to Thailand for a special promo event, also travelled to Thailand and received cooperation from Thai police. Changde police then infiltrated the event on October 29th, 2014 in Thailand and filmed various promoters attending and speaking at the event, all talking about earn kaboodles of money without doing anything (if you invest now). After gathering the evidence, which was handed to Thai police, Thai police then made the arrests and handed two suspects over to Chinese police who brought them back to China. 

Just to break down the title:

美洲 -- American Continent
矿业 -- Mining Industry

So again, the name of the scam is American Continental Mining Industries 美洲矿业 Searching for this term on Chinese media yielded various newspaper reports, as well as Chinese affiliate promotional material. Another Chinese coverage stated:

今年5月13日，常德市民刘某来到公安机关报案，称将32500元作为会费缴纳给“美洲矿业”公司，参与所谓的琥珀期权、原始股的投资，但过了很长时间，没见任何回报，意识到受骗了。

(2014) May 13th, Mr. Liu of Changde reported he was victim of a scam. He handed 32500 RMB to "American Continental Mining Industries" to participate in supposedly Amber fund and proto-share investment. However, after a long time, there was no returns, and realized he had been scammed. 

接到报警后，常德市公安局立案调查。这个组织对外谎称由“中美政治协商促进会”创办，已获国家商务部的直销牌照，在山东、辽宁、浙江、广东、广西、云南、河南、湖南等10多个省份开展传销活动，还多次以“美洲矿业”之名在中国举办传销宣传聚会。

After receiving the report, Changde MinSec started its investigation. This (criminal) organization claimed to be started by a "China US Political Consultive Promotional Committee" and holds a Chinese "direct sales" license, and engaged in pyramid sales activities in Shandong, Liaoning, Zhejiang, Guangdong, Guangxi, Yunnan, Henan, Hunan, and various provinces, and many times using the name "American Continental Mining Industries" to hold several promotional meetings in China. 

截至2014年6月，该犯罪团伙在中国发展会员180余层级共8万余人，非法收取会费近10亿人民币。

Up to June 2014, this criminal group has developed over 180 levels of downlines of over 80000 members, and illegally solicited funds of nearly 1 billion RMB (~161 million USD)

This news item explained that 2 members, a Mr. Chen (陈某) and a Mr. Lu (陆某) left the country before the police swept up the organization and arrested 22 leaders. Mr. Lu apparently changed the organization name to American Continental Amber (美洲琥) and continue to "remote" manage from afar. As two were arrested in Thailand, we assume both were extradited back to China, but that's not the end of this scam.

Also keep in mind that the Chinese equivalent of Senate is called Chinese People's Political Consultive Conference 中国人民政治协商会议 and scam's parent organization (中美政治协商促进会) may have been picked to be a soundalike and official-sounding.

So here we have the following events:

2014 -- scam started as American Continental Mining Industries 美洲矿业

2013-2014: American Continental Mining Industries 美洲矿业 Searching for this term on Chinese media yielded various newspaper reports, as well as Chinese affiliate promotional material. Another Chinese coverage stated:

2014 June -- arrests in Changde, China related to 美洲矿业, leader escaped (to Thailand? US?) and renamed operation to American Continental Amber 美洲琥

2014 October -- arrests in Thailand in cooperation between Thai and Chinese police related to 美洲矿业, subjects extradited to China


From here, the scam went quiet in China... Because it was apparently relaunched in the US.

Can You Forgive Your Pastor Defrauding You Because He Said it's "Not Intentional"?

Imagine this scenario:

Your pastor is a man you trusted because you trusted people who are men of God. You've seen him save people from alcoholism. You know him to be a moral man that came from humble origins.

So when your pastor claimed that he's started a business where he needed money to make money, and promised a hefty return, you did not hesitate. Your pastor claimed the money will be invested in foreign currency, or perhaps commodities...

But after a few months, perhaps a year or so of paying out... There is no more payment. That's when the pastor admitted he wasted all of your money. And money of hundreds of other churchgoers and his other associates.

But he didn't mean it. It was "not intentional". He lost money too.

Can you forgive him? When your life savings are gone? When you will probably lose your house and declare bankruptcy?

For hundreds of people around the country, this is not imagination. It is absolutely real.

Welcome to the world of religious fraud.  We got two sob stories for you.

Is "Wake Up Now" heading for eternal slumber?

After that "This American Life" expose on Wake Up Now, it seems there's an internal revolt going on, and the company had ground to a halt, if you believe the postings from various WUN affiliates. Highlights include:

• Eric "Seemore Green" Turner claimed WUN owe him $300K and he hadn't been paid since August 2014.  (You'll recall Eric was heavily mentioned in the TAL episode)
• Another affiliate, Logan Shippy, uploaded an video claiming the company had "let you guys down", "burned so much trust with so many people", and he's not going down with the ship. 

Previous reports stated that WUN had lost 8 million in 2012 and 2013. 

Any one can be conned: 5 rules of recognizing a con

One of the most frustrating aspects of being a skeptic is the utter... "faith" a victim has in his/her ability to recognize a con, i.e. "it can't be a con... I'd know if it is a con"  usually followed by "I met the owner / officer / vendors and they are sincere and smart people, and answered my questions." then even more social proof ("_____ vouched for him/her/it").

Social proof can be faked, folks. In fact, here are 5 rules of recognizing a con. I've seen the 5 rules before, but never in a single place. This may be as well a time to mention them.


Rule #1: EVERYBODY can be conned.

Sure, people who are naive are considered gullible, but the exceptionally bright are also gullible. The moment you consider yourself immune to cons, you are vulnerable. The EASIEST victims to con are the ones who considered themselves too smart and too knowledgeable to be conned. They are too proud to admit they can be conned.

"I'm sorry I said you were proud. Just stop!" / (c) 2012 Kevin Spear

Is that you, too proud to look down?


Rule #2: You will probably be conned in your area of expertise

Yes, you'll be conned in what you know. Why? Because con-men target those who "know". Your mind, being familiar with the area, automatically fill in the details, and that saved the conmen work. Furthermore, you also feel invincible in your area of knowledge, further increasing your vulnerability. The really smart people know a lot of different things and know enough to be skeptical and cautious as they can't be experts in everything. Remember, most of Bernie Madoff's victims are other money managers who thought they knew what Madoff's doing.

I am an NMR expert. To save time, let's just assume that I am never wrong. (source: Zazzle.com)

Will you have faith in your knowledge of the field, and thus, not ask the questions?

BREAKING NEWS: India FINALLY moved against SpeakAsia Ponzi, SIX ARRESTED

Those in the US never heard much about SpeakAsia, because it was a hybrid pyramid/Ponzi scheme in India. And it ensnared a LOT of people and money back in 2011.  The current estimate was the SpeakAsia involved 2276 crore Rs (366.5 million USD) and 24 lakh (2.4 million) victims. 

The scheme had collapsed years before, and its head Manoj Kumar had fled the country and is believed to have died in a hospital in Singapore in January 2014. However, the wheels of justice turns slowly in India, and it was just announced that 6 arrests have been made involving this case in India on Feb 1, 2015. 

(A crore is 10 million, so you're looking a 22760 million, or 22.76 billion Rupees, roughly 366.5 million USD in today's exchange rate. And a lakh is 100000, so 24 lakh is 2.4 million)

SpeakAsia started operation in 2010, and claimed to be a 'survey organization' that were recruiting "panelists" for their opinion that can be sold to large companies for huge profit, but they need the panelists to put in money, usually explained as "tests and qualifications" and "e-newsletter subscription", and are encouraged to purchase "additional panels", up to 9.  "Panelists" are paid on the surveys they completed and on recruiting additional panelists. In fact, recruiting ONE panelist is worth 10 "reward points", while completing one week's survey only earns 7 reward points. This was clearly a pyramid/Ponzi hybrid scheme with the money cycled out to pay members who got in early. 

The scheme quickly spread from India into neighboring countries like Bangledesh, Malaysia, and so on. 

WSJ: T. LeMont Silver Blames Everyone But Himself for Being Sued as "Net Winner" in Zeek

Wall Street Journal article, published 2014-DEC-03 specifically named T. LeMont Silver, a Zeek "net winner" (i.e. he got more than he put in while others lost money), and serial Ponzi participant, as someone who admits he's an idiot, yet blames everybody except himself.

In the WSJ article SEC on Lookout for Web-Based Pyramid Schemes by Jean Eaglesham, it specifically named GoFunPlaces (and its parent eAdGear) as a scam shut down by the SEC.

At the end, Mr. T. LeMont Silver Sr. was mentioned by name, where the author wrote:

"Mr. Silver said he is a marketer with little knowledge of the business operations of the companies he promotes"

Yet he wants you to join him in making money.

Tsk, tsk, tsk...

BREAKING NEWS: Massachusetts filed civil fraud charges against Emgoldex "Team USA"

Massachusetts securities division (MSD) has filed civil fraud charges against "Emgoldex Team USA" and its four members of selling unregistered securities, pyramid scheme, and general public fraud. The lawsuit can be viewed here:

http://www.sec.state.ma.us/sct/current/sctemgoldex/EmGoldex-et-al-Complaint-Docket-No-2014-0056.pdf

If you promote an alleged scam, you can be targeted by your local regulators, regardless of whether you "own" the scam or not. "Emgoldex Team USA" and the four members are certainly not owners, but if that's what local authorities can get their hands on, then the local authorities will do so.

Thanks to BehindMLM and PatrickPretty for the headsup.

Related articles

• BREAKING NEWS: Massachussetts calls iFreeX "rebranded TelexFree fraud"
• BREAKING NEWS: Australia authorities sues Lyoness; alleges pyramid scheme and referral selling
• God and Ponzi: WTOL special report on local church leader's role in Profitable Sunrise pyramid scheme
• Scam Absurdities: Ian Driscoll of BannersBroker ponzi now pushing FlexKom. Leopard Still Can't Change His Spots.

BREAKING NEWS: Moolah goes bust, CEO missing with 1.5M worth of DogeCoins; other cryptocoin scams shut

According to _The Guardian_, Moolah, a cryptocurrency exchange that specialized in Dogecoin (and even sponsored a car in NASCAR racing series), headed by "Alex Green", had apparently gone bust and all the customer funds (believed to be 1.4 to 1.5 million pounds?) are gone.

Alex Green allegedly told everybody that he was previously named "Ryan Kennedy" after running several business into the ground, including Flirble (a web hosting service that ran only 2 months) and Lemon (a bitcoin mining firm that shut down in 2013), according to _The Guardian_.  And because this company is also done, he's taking the money and he's gonna run.

In July 2014 "Green" and his company Moolah bought a competitor "Mintpal" after Mintpal was hacked and lost $2M worth of bitcoins. However, nobody had even apparently saw "Green" in person outside of Moolah's offices.

News Update 07-SEP-2014: Herbalife problem in Norway; TelexFree Brazil Exposed; Zeek, TelexFree, and WCM ponzi updates

Remember folks, when you read "news", they better have a source, and it better be a reputable source (or links to a reputable source), and I do try to do that. If I don't, let me know and I'll fix it. If the sources you read don't cite sources... Well, maybe you shouldn't trust them.

I know I haven't updated this blog for a week, so here's some belated updates:

Herbalife Scandal in Norway; False Claims that former Norwegian PM joined Herbalife

Norwegian magazine Kapital broke the news that Gro Harlem Brundtland, former three-time Prime Minister of Norway and former director general of World Health Organization (WHO) was completely unaware that her name was used on the website "Herbashop Norway" where one of the replicated websites proudly claims "Welcome to Gro Harlem Brundtlands Herbashop! ... After only three months I had controlled my weight down and changed pant size from 42 to 36"

Screenshot of the said Herbashop Norway, courtesy of Kapital magazine
page has been since removed

The page had since been removed from the Herbashop website. However, there is no word on whether Brundtland will take further action against Herbalife or Herbashop, or whether Herbalife itself may take some sort of action against Herbashop, which is an independent operation based in Norway by affiliate Dan Ove Tuven. Herbalife has promised an investigation.

Norwegian news Dagbladet claims that several other Norwegian celebrities were also used in various claims regarding Herbalife products, probably without their permission.

In March 2014 Ray Liotta sued Nerium, when he found that Nerium affiliates claimed for months in late 2013 that Ray Liotta's skin condition improved due to use of Nerium products.

(First reported by BehindMLM)


Brazilian News Revealed Shell Companies Allegedly Used by TelexFree for Money Laundering

Coat of arms of Brazilian Federal Police
(Photo credit: Wikipedia)

Globo news in Brazil have published allegations from Brazilian Federal Police that they believe TelexFree has engaged in money laundering and concealment of assets through various shell corporations by using relatives of Carlos Costa, head of Ympactus, i.e. "TelexFree Brazil". At least two companies are registered to Carlos' daughter Leticia Costa: AgroFruta and Brasil Factoring, and their stocks are allegedly worth millions despite her only declaring income of 60K a year. It's also worth noting that Carlos' wife Jozelia is named as the biggest creditor in the original TelexFree US bankruptcy application.

Brazilian Federal Police suspect that money that was ordered frozen by Brazilian court back in 2013 may have been used illegally to fund these alleged shell companies in order to hide them from authorities. Many of the directors in these companies are TelexFree top promoters, said the police.

You can read the Globo report here in Portuguese