Saturday, June 1, 2013

BREAKING NEWS: Costa Rican President Chinchilla denies link to Liberty Reserve Attorney Portela

English: foto de laura chinchilla
English: foto de laura chinchilla
(Photo credit: Wikipedia)
TicoTimes reported that CR attorney Angie Portela, who listed on her LinkedIn Profile that she worked at Liberty Reserve (and was also company reg agent for several other front companies) as well as having worked with now Costa Rican president Chinchilla when she was a lawmaker. When queried, the president stated she recalled nobody by that name, and suggests this may be a bit of bogus resume entry.
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Herbalife-based "Cult" Exposed by Israeli newspaper Haaretz

taken by משתמש:Hmbr
taken by משתמש:Hmbr (Photo credit: Wikipedia)
This blog has been highlighting some negative aspects of the MLM world that many people don't want to talk about. Previously, we have covered several times how some MLM "leaders" uses (abuses?) cult tactics to recruit and keep members. The Israeli newspaper Haaretz published an expose on what a local Herbalife "leader" did to female members.
"I was a kid from Kiryat Ata (ed. note: a relatively poor town in Haifa, Israel). Today I’m Gaydamak’s neighbor (ed. note: Israeli rich family). Bibi’s neighbor (ed. note: probably Aryeh Bibi, Israeli politician). I live in Caesarea (ed.note: one of the most upscale neighborhoods in Israel). I drive a car that costs as much as a house. Anyone who listens to me will succeed the way I did. Put some money in. You don’t have any? Get a loan from the bank. Bring your discharge payment from the army. Don’t listen to your parents. They’re dream-stealers. They don’t want you to succeed because they didn’t succeed. All the people on the outside are miserable and unhappy. They make NIS 5,000. Only those who listen to me will achieve success. What’s up with your friends? Why aren’t they here? Friends that aren’t involved in this aren’t true friends. Erase them. If someone has the flu − don’t you stay away from them? It’s the same thing. This organization is your only family. You have no true friends. I care about you more than your parents do.”− Tzachi Gozali, in the mantra he delivers to members of his organization.
This is the sort of speech that Tzachi Gozali delivers to his GTEAM, his Herbalife downline, every time they meet and used for recruitment meetings, then they have a huge party, and if you're really serious, you can pay  NIS 17000 or 18000 and join as "supervisor". Don't have the money? They'll send a guy to shadow you to a bank make sure you get one (more than one bank if you have to). They take over full control of your life. You're supposed to cut ties with ANYONE who does not join the GTEAM / Herbalife. Outsiders are the "losers" in life, according to the GTEAM mantra, the dreamstealers. 

It's a cult. 

But there's more... 

Friday, May 31, 2013

HILARIOUS AND SAD: Ponzi scammers will even prey on family

Commodity Futures Trading Commission
Commodity Futures Trading Commission
(Photo credit: Wikipedia)
Ponzi schemers are such narcissistic personalities, they think the entire world owe them something, and EVERYBODY deserves to be cheated, even family and friends.

Recently, a Wisconsin man was sentenced to 3 years in prison plus a 5 million dollar fine (to repay his victims) after he earlier plead guilty to cheating everybody, including his family, into giving him money to do commodity trading, promising 25% of the profit he made (and he claimed he will make 25% a year). He was able to soak up 5.3 million dollars (300K from his family) through some fast talking.

Thursday, May 30, 2013

BREAKING NEWS: Norway announced WorldVentures is under investigation as possible pyramid scheme

The "Norway Gaming Board" government regulatory agency has issued a press release that stated that World Ventures, a "travel MLM", is suspected of being a pyramid scheme, and has issued request of information from the company regarding the member vs. affiliate ratio in order to determine its fate in Norway. The company has until June 4th to respond.

Those who track suspect schemes may recall that World Ventures is essentially a clone of the now defunct "TVI Express" scam out of India. TVI, or "Travel Ventures International", had travelled (no pun intended) all over the world, but has essentially unravelled when its head, Tarun Trikha was taken into custody earlier in India.  (in Norwegian)

Bad Argument: Imply There's a Conspiracy, Even If There Isn't One

English: I took this photo of my baby last sum...
Yawning Baby
(Photo credit: Wikipedia)
One of the most persistent arguments presented by defenders of a suspect scheme is the "conspiracy" argument, in that there is some sort of a conspiracy acting against them (the defenders), the company, or the entire industry (whether the company's really in it or not). Previously, we've discussed conspiracy arguments in [Conspiracy of Persecution] and [What I Accuse You Of Doesn't Apply to Myself]. We've also noted before the similarity between scam defense and pseudo-science (so much so, I called financial scam defense "pseudo-economics")

Now we have to document a new "bad argument"... Imply there is a conspiracy, when there wasn't one.

Australian newspaper Daily Telegraph just published a heart-breaking article about parents who lost their newborn child to whooping cough, and had been cyber-bullied ever since.

Because the baby's death is in direct contravention of what anti-vaccine folks preach, the anti-vaccine crowd in Australia, in the form of the deceptively named Australian Vaccine Network (which was ordered to change its name or be closed) decided to go after them by casting doubts on their daughter's death, cyber-bullying, accusing them of being stooges of big pharma, and so on and so forth.

Baby Dana's death is an "inconvenient death" to the anti-vaxxers. And they sought to discredit the parents through whatever ways they can, because the grieving parents chose to bring light upon a problem... that vaccinable diseases still kill in the modern world... when it does NOT have to.

Wednesday, May 29, 2013

Why Was Liberty Reserve Shut Down? Money Laundering is only half the story

Why was Liberty Reserve shut down? Money laundering was part of it. Indeed, 6 billion dollars moved is definitely something watching out for, but here's what you don't know... The authorities in Puerto Rico and the US gave the owner, Budovsky and his partners several changes to go legit. They could have easily gone legit by following KYC (know your customer) guidelines. Instead, they chose to defraud the investigators by setting up fake monitor portal for them as well as claiming the company is closed and moving out of the country while operating it through front companies.

AND they setup the company to be easily used by any one... including criminals, thieves, and terrorists.

You can find more details here:

RELATED NEWS: Mastermind behind $45 million global ATM heist, linked to Liberty Reserve, found shot dead in Dominican Republic

Liberty Reserve was in recent news when it was shut down before Memorial Day weekend. On Tuesday, 28-MAY-2013, it was revealed that it is indeed involved in much of money laundering. Specifically, a recent global-scale ATM heisit.

Elvis Rafael Rodriguez (left) and Emir Yasser Yeje (right)
flashing the money believed to have been stolen from
the ATMs in the US (courtesy Associated Press)
Two attacks, one in December 2012 and one in March 2013 were a new breed of coordinated financial fraud, where a flash mob of criminals in 27 countries, armed with stolen account numbers, which allowed them to generate fake ATM cards, was able to drained 45 million from two Middle Eastern banks through ATMs all over the world in a matter of hours through... outsourcing. Each group takes their own cut and sent the rest on through a series of electronic cut outs, and the largest cut out is Liberty Reserve, officials stated.

Seven people were already arrested in the US associated with this massive theft, though who is the true mastermind behind this is still unknown. Two of the associates was apparently brave enough to leave evidence of their criminal act, see right.

US head of the heist, Alberto Yusi Lajud-Pena, was shot dead in Dominican Republic in what is believed to be a gang dispute. 

How to Fake Being Infallible (and how to spot such fakes)

Derren Brown at the Garrick Theatre, June 2008
Derren Brown at the Garrick Theatre, June 2008 (Photo credit: Wikipedia)
Ever run into some guy who claims they invented a system that will do absolutely great in the stock market or foreign exchange market or commodities market or whatever market that involves trading, and he'll reveal the secrets to you for a price? You'll probably dismiss him as crackpot. He offers to sell you the secret, but only for 72 hours (3 days).

What if he mailed you a prediction, and next day, he turned out to be right?

And the next day?

And the next day?

Do you feel a need to buy his system now? As he's withdrawing his offer?

Don't. This is easily faked. And I'll explain why it's fake.

Tuesday, May 28, 2013

BREAKING NEWS: Confirmed Liberty Reserve Closed as $6 BILLION Money Laundering Operation

People who visit Liberty Reserve domain and all of the other domains related to Arthur Budovsky today will be greeted by a huge warning sign:

Or in text form "this domain name has been seized by the United States Global Illicit Financial Team"

URGENT UPDATE: At least 5 of the 7 principals have been arrested in a multi-nation operation.

Romance Scam Gang Out of Nigeria Busted

According to report out of Benin City, Nigeria, authorities have arrested 20 suspects who had banded together as a scam group targeting widows on various social networks using false identities and other scam tactics. Police raid confiscated 48 laptops, 20+ phones, 8 wireless modems, and one vehicle. When questioned, they confessed to primarily engaged in dating scams targeting foreign widows, and have them send money with promises of love and marriage.

This is a growing problem as seniors, especially widows, are starved for attention and some simply are too naive to realize that "On the internet, nobody knows if you're a dog" (or a scammer). At least one Australian pensioner was found dead in South Africa after traveling there to find her "true love". Another was stopped TWICE at the Australian airport trying to travel to Africa, which horrified her daughter and the police detectives working the fraud cases. 

BREAKING NEWS: Liberty Reserve head Arthur Budovsky may have obtained Puerto Rican Costa Rican citizenship fraudulently

According to TicoTimes, Puerto Rican Costa Rican officials stated that Arthur Budovsky married a Puerto Rican Costa Rican woman in 2008 to obtain PR citizenship, and formally renounced his US citizenship in 2011. However, Puerto Rican Costa Rican officials cannot find any evidence of Budovsky entering Puerto Rico Costa Rica prior to 2011.

This seem to suggest that the marriage may be a sham marriage solely as a business arrangement for Budovsky to obtain PR CR citizenship in order to get away from US law. Sham marriages are considered serious fraud and can lead to revocation of citizenship.

Monday, May 27, 2013

BREAKING NEWS: Amway India Chairman and 2 directors arrested in India for "financial irregularities"

Breaking news from India: Amway India Chairman and CEO William Pinckney and 2 directors have been arrested by Kerala, India police for financial irregularities.

Previously several Amway IBOs in India have reported to police in 2012, filing "FIRs" (initial crime complaints) prompting further investigations. Amway have cooperated fully with the investigation, according to their official statement, and the 3 people here have even been interviewed by police. They were asked to come down to the station for another chat, and was arrested and taken into custody when they arrived.

When MLM Meets Psychology, very bad things ensue

Amway Center
Amway, not always associated with ethics...
Amway Center (Photo credit: Wikipedia)
Those who read a lot of entries on this blog will note that a LOT of the entries involve psychology, such as cognitive bias, coercive persuasion, mental manipulation, and so on and so forth. It could almost be said that a psychologist would be the ultimate MLM salesperson, as he knows all the triggers to push in people. Fortunately, most psychologists have professional ethics code that would stop them from exploiting their... talent.

Or so I thought, until I came across this old case in California.

In 1999, a Dr. Tom Allison was found to have been severely negligent when he recruited a couple, the Brannans, whom he had been counseling for three years (one's dissociative, the other schizophrenic), into his Amway downline. Not only did they join as his downline, he also paid for quite a bit of their training and travel expenses to various events.  As a psychologist, these are indeed patient boundary violations and professional ethics violations. He apparently tried to argue that the trips were "therapeutic", and he only let them join because they needed money, never mind the fact that he stands to benefit from their sales of products.

His explanation was rejected. His license was revoked, then the revocation stayed, and he was given 5 years probation (on his California medical license). He was also fined $11500 for investigative expenses.

This sounds like the board was rather hard on him, but a different version of the story painted a dramatically different picture.

Sunday, May 26, 2013

BREAKING NEWS: 5 MORE Digital Currency Changers also went offline along with Liberty Reserve

According to Krebs on Security, 5 more Digital Currency Changers were taken offline (apparently seized by court order) along with Liberty Reserve as reported yesterday.

It is not known if additional arrests have been made around the world, but this may be indication that a press conference or news release will be made on Tuesday (this is Memorial Day weekend in the US) that US have executed a large takedown operation on various unlicensed e-Currency exchanges as major enablers of crime and cybercrime.

UPDATE: Further research on Internet shows that 5 more domains were likely ALSO ran by Arthur Budovsky. AsianaGold and others can be found referred to in various TalkGold and DreamMoney forum posts and linked right back to Gold-Age, ran by Budovsky himself.

Many doubters and denialists have surfaced insisting that this was a "hack attack" by whitehat hackers and blackhat hackers vowed revenge, while denying any sort of government involvement, in US or Puerto Rico. At least report, Shadowserver's homepage seems to be under DDOS attack.

Those denialists may want to watch this report from Puerto Rico's channel 7 news:

NOTE: Link is in Spanish, turn on closed captions, then translate to English (or whatever language you prefer)
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Bad Argument: Absence of Evidence / Argument from Ignorance

CSI: Crime Scene Investigation (season 2)
"Absence of Evidence is Not Evidence of Absence"
CSI: Crime Scene Investigation
(season 2) (Photo credit: Wikipedia)
When supporters of a suspicious scheme ran out of defenses for their particular scheme, they will often trot out the "absence of evidence" as somehow proving that their scheme was not a scam. There are several variations on this theme, such as:
  • The company was never charged with a crime! 
  • The company was never investigated!
  • The company only has insignificant number of complaints! 
  • and so on and so forth
This is the inverse of the bandwagon fallacy. In bandwagon fallacy, a large number of people believe in the idea and somehow this is construed as into "numbers make it true". The inverse is "lack of numbers makes it false". 

In critical thinking, this is known as "argument from ignorance", though it is often misunderstood or misinterpreted, because "ignorance" here means "absence of evidence to the contrary". 

Those who watch CSI or related shows may remember one of the crew say something to this effect:
Absence of evidence is not evidence of absence

Wikipedia gave the following example: imagine a person in a house with a tin roof. Upon hearing no rain on the roof, he declared it is NOT RAINING without looking out the window, even though it had been drizzling. Absence of evidence (sound of rain on tin roof) is not evidence of absence (of rain).

Or in case of CSI, just because you didn't find certain evidence of the suspect at the scene, doesn't mean he was NOT there. (There may be other types of evidence you didn't look for).

In the case of suspicious schemes, absence of record of wrongdoing does not prove there had been NO wrongdoing.