USFIA update: Who is Leonard S. Johnson and was he really invited to Dubai to speak about alternative currencies such as Gemcoin? (Hint: No)

One of the most interesting (yet ridiculous) HYIPs based out of the US is USFIA, i.e. "American Mining" 美洲矿业, which was apparently kicked out of China in 2014. USFIA claimed to be a part of AFG (Alliance Financial Group USA) and controlled by UCCA, headed by Mr. Steve Chen.

Leonard S. Johnson
as shown on aimcongress.com

One of the frequent faces for USFIA is Mr. Leonard S. Johnson, who were mentioned multiple times as a stand-in for the head of USFIA Steven Chen at various seminars in Chinese-heavy cities such as SF Bay Area, Toronto, and so on.

There are various posts touting him being "invited to Dubai in UAE to attend AIM Congress, a gathering of the world's top economists, investors, and money big shots, and to speak there."

Is this real, or merely someone embellishing the facts? Let's find out.

If you search for Leonard S. Johnson Dubai, you will come across this page under aimcongress.com:

Which appears to be legitimate, until you realize it never said anything about what he will be speaking about. Indeed, there's no listing for him to speak AT ALL under "Speakers and Partners' contribution"    Searching the website for Leonard brought up that exact profile page, and nothing more. He's not listed on any sort of itinerary, speaker schedule, and so on. He's certainly not in the "Conference Programme" which lists every event, or in the brochure either.

If we search for AFG, we find a listing for GEMCOIN even though the profile is for AFG and USFIA. Even the website link goes to AFGroupUS.com.

There are two more mentions of AFG besides Leonard's profile and Gemcoin page though.

Bad Argument: The Evil Twin Did it

When confronted with the news that their pet scheme may be a scam, victims of a scam react in various ways to deal with their cognitive dissonance, when two sets of facts collide as they can't both be true.

Some recoil in horror, realize they've been scammed, and quickly attempt to withdraw their money (which are usually stonewalled, leading to further desperation.)

Some are doubtful but vowed to stop taking their upline's word and do some honest research on their own

Some recoil and hide, denying that any "negativity" exists, and you should shut up because they don't want to hear about how they are wrong.

Some react with indignation and attempt to defend their scheme, but when they are armed with little more than PR material and fallacies like "I got paid so it's not a scam (to me)" they rarely have much success convincing anyone but themselves.

Some goes for "special pleading", i.e. come up with reasons why their scheme is the exception, not the rule, i.e. it fits all the definitions of a scam, but it's not a scam

Some go for a "no true Scotsman" gambit, claiming that the company itself is fine. It's only a few "rogue reps" that ruined things for everybody else.

Though recently, in span of a week or two, I saw a new variation on "no true Scotsman"... which I will call...

"The Evil Twin Did It!"  aka "They stole our name!"

Scammer Update: Sann Rodrigues (i.e. Sanderlay Rodrigues de Vasconcelos) posted bail for US crimes, rearrested for escaping from Brazil

Previously MLMSkeptic has covered the various scams pumped by noted scammer Sann Rodrigues, whose real name is Sanderlay Rodrigues de Vasconcelos. For those who haven't caught up, here's a quick summary:

• Universo FoneClub circa 2006, closed by SEC as Ponzi scheme
• Tried to restart FoneClub in Brazil, closed after a year
• TelexFree scam that was eventually shut down in 2014
• iFreeX (meeting raided by Brazilian police in Feb 2015)

Back in February 2014 MLMSkeptic did a profile on Sann Rodrigues, here's a bit of an update. 

In April 2014, TelexFree tried to declare bankruptcy, and was immediately raised by Homeland Security and Mass Department of Securities. Their CFO Joe Craft tried to leave with a laptop bag he claimed was personal property. It was searched and TENS OF MILLIONS in cashier's checks was found in the bag and the entire bag was held for evidence. SEC filed its case under seal to be opened upon raid. . 

After TelexFree went bust in April 2014, it appears that Sann Rodrigues was still traveling the world, still selling TelexFree, but is looking for another scam to promote, and he seem to be the first person EVER to promote iFreeX as of September 2014, which, based on the name, appears to be at least inspired by, if not an outright clone of TelexFree, as it claims to be a communications app to do voice and text chat, video talk, and video conference. (TelexFree was VOIP, which is voice chat)  There are many who suspect that Sann Rodrigues was the real founder of iFreeX (though the real founder had not been identified thus far). 

Within 1 month, Massachussetts, where TelexFree was based, issued a warning on iFreeX being a scam and a clone of TelexFree. Sann Rodrigues then apparently deleted all the iFreeX content from his Facebook timeline. (it is widely believed that he then started a new one somewhere that only posts in Portuguese, hidden from public view) 

In Feburary 2015, Brazilian Federal police special unit GAEP raided an iFreeX meeting headed by Sann Rodrigues. Rodrigues was invited downtown for a long chat, and apparently had his passport confiscated and told "don't leave the area". Apparently the Brazilians want to talk about his tax evasion. 

Scam Psychology: Know Just Enough to be Dangerous (to yourself and others)

Do you know just enough to be dangerous? You don't think so?

You are probably wrong, as scientists have LONG documented "Dunning-Kruger Effect". Basically, for a given skill, incompetent people will

• fail to recognize their own lack of skill
• fail to recognize genuine skill in others
• fail to recognize extremity of their inadequacy

Basically, you are so incompetent, you don't even recognize that you ARE incompetent. It's be like a person born and grew up near-sighted, that he thinks the world really is slightly blurry, and didn't even realize he needed glasses. 

This is related to, but is not the same as overconfidence effect, in that a person always thinks his confidence in his or her judgments is greater than the ACCURACY of those judgments. This is especially true when the confidence is high. People who were 100% sure of their answer in a certain test that turned out to be only 80% right are guilty of such overconfidence.

This is very common in scams, where the victims were recruited to be a co-conspirator, (i.e. to also recruit, for pyramid and Ponzi schemes, and/or to act as "anecdote witnesses", promoters, and so on), where the victim, overconfident in his or her skills to spot a scam (often armed with such myths as "we have a product, thus we can't be a pyramid scheme", or "I got paid, thus it can't be a scam"), failed to even realize s/he is not competent to even recognize his/her incompetence and failed to recognize proper advice from others.

The scammers are experts in making you believe you made the right decision(s) all along by give you the mushroom treatment, through "learned optimism", except they do it through lie and deceit.

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.

A Common Scam Defense: Similarity Between Homeopathy Advocacy and HYIP promotion

A frequent refrain among HYIP promotion are the following points:

• It's a conspiracy to destroy the alternative forms of income they don't want you to know
• You should be in control of your money, not limited to what "they" want you to know
• Various versions of _____ had been around since ______ and we do something like that

You can find this in almost every HYIP. If they were not outright stated, they were surely implied, or weasel worded like "new and profitable enterprise", often cloaked with buzzwords like cryptocurrency, penny auction, e-commerce, VOIP, and so on. 

We've seen the collapse of various scams using such cloaks. 

TVI Express, a huge international pyramid scheme that spanned several continents (India, Australia, US, most of Europe, several countries in Africa, China, Indonesia, Philippines...) claimed to be selling travel or travel club, and promoted itself as combining internet, e-commerce, working from home, and such. Little travel was provided. 

ZeekRewards, an international ponzi scheme was truly global with net winners (and victims) all over the world. It claimed to be earning huge profits through its penny auctions, but in reality it simply shifted money from last investors to the early joiners through facade of "profit sharing". It was shut down by Secret Service and forced into receivership.

Another scam was TelexFree, where owners claimed to be selling VOIP packages which lets you talk international voice calls over the Internet and avoid long distance phone fees (and for a while, they really did) but in reality is operating a Ponzi scheme based out of two separate countries: Brazil and the US, with investors form all over the world before it was shut down in Brazil, then the US, and even FBI and Homeland Security got involved in the raids.  It is estimated that company took in over 1 BILLION dollars from 1.9 million investors. 

In more recent news, UFUN out of Malaysia and Thailand enticed members to invest in its cryptocurrency UTOKEN, while claimed to be investing in various enterprises that will realize huge profit for its members. Thailand started a full crackdown weeks ago and had arrested more than a dozen high rankers, with wanted notices out for 200 more, with 300000 pages of evidence handed over to prosecutor's office recently, so there's obviously more to come. Its members were also arrested in Samoa and other places for fraud. 

They all implied that they are new ways to make money, that other people don't know or don't want you to know, and they can actually do what they promise. 

This sounds remarkably like homeopathy and alternative medicine advocacy to me, as they use the same arguments:

• It's a conspiracy of "mainstream medicine" to destroy "alternative medicine"
• You should be in control of your health, not have a limited vision forced upon you
• Various versions of alternative medicine had been around since _____

I'll leave the debunking of the homeopathy advocacy to Michael Vagg, while I tackle the HYIP promotion. 

Scam Tactic: Redefine Common Words / Doublespeak

The term doublespeak was introduced to the world by George Orwell's book "Nineteen Eighty-Four", where it was defined as "using language to introduce ambiguity and confusion to block out facts and aims that does not fit in the program." (slightly paraphrased)  It is no surprise that it is among the arsenal of the scammers.

One such example of doublespeak is the appropriation of the term "sharing" to mean promoting / selling, and "selling" as buying.

According to the Vemma promotional material updated in late 2013, members are no longer representing the brand as "brand ambassadors". Members are instead, "affiliates" in affiliate marketing where member affiliates refer customers to the company, and earn some commission for sales they brought in. And affiliates are encouraged to buy some products as "some to enjoy and some to share". There are special bonuses for those who buy large starter packs.  The following screencap is how it was explained on most Vemma affiliate sites:

Screen cap from a Vemma "affiliate" website explaining what you need to do to get paid: BUY STUFF FIRST!

Did you see the problem yet?

HINT: Your upline (who recruited you) gets commission for the stuff YOU buy, both the starter pack, and the monthly autoship.

Let that sink in for a moment.