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.

Scam Psychology: Naive Realism / Anecdotal Fallacy / Argument from Illusion

Illustration of Naive realism or Direct realism. (Photo credit: Wikipedia)

One of the most often used counter-arguments by a scheme participant against skepticism is the self-testimonial, as in "I have done this, so I know it works, and therefore the whole business works!"

Let us assume that they are not outright scammers for the moment (i.e. liar, liar, pants on fire)

What they don't realize is they are operating from "naive realism", i.e. they assumed that everything they experienced is real, when it is quite possible they've been defrauded (magic trick), and they then extrapolated from their limited (but realistic) experience to conclude that the whole business must be "real".  One version of such self-testimonial, and the most often used, is the "It paid me" argument, as in "this opportunity paid me, therefore it's not a scam".

Yet this is the most powerful of all arguments, even if it's false. TelexFree victims in and around Boston, Massachusetts told Boston Globe that pressure from friends and family, esp. when posing with new house, new car, new luxuries, etc. often prove to be impossible to resist, esp. by people with (naive) "unbridled enthusiasm". Quoting from the Boston Globe story:

...Fausto da Rocha said he probably lost $45,000, the proceeds of an insurance payment from an auto accident. He had initially resisted TelexFree, but after friends profited, he decided to join, hoping the investment would accelerate his recovery from bankruptcy a few years earlier and losing his house. Da Rocha, well known in the Brazilian community, said he recruited about 20 relatives and friends. 

“I feel guilty,” da Rocha said as tears clouded his eyes. “My career is gone. I’m going to clean houses with my wife. Cleaning houses is a good business.”

But the social cost is even greater. He had 20 relatives and friends he can never look in the eye again.

Sann Rodrigues, one of the "TelexFree 8" charged by SEC
as part of a scam, showing off his Ferraris and MB and mansion
in Florida in one of his videos (screencap from Vimeo)

News Update 27-MAY-2014: TelexFree losing more telecom license; Trustee to Take Over TelexFree? SEC explains where did the money go

Remember folks... Don't believe crap info passed along by ex-TelexFree affiliates but instead seek out real news websites for information. The TelexFree affiliates are prone to pass along mis-information that they believe are "good news" when they are not.

TelexFree under investigation in Oregon

In a recently filed memo, as found by PatrickPretty.com, Oregon joined Nevada and Minnesota in their slow-move to deny the TelexFree telecom license applications, which was previously started by Joe Isaacs of ISG Telecom when he was helping TelexFree. When the ruse by TelexFree was discovered, Joe Isaacs quickly sent letter explaining he was duped, and he's no longer involved, and all the numbers he filed for TelexFree may have been lies.

http://patrickpretty.com/2014/05/27/telexfree-faces-prospect-of-regulatory-probe-in-oregon/


Judge Signals Quick Approval for Trustee Takeover of TelexFree

(Wall Street Journal) In the first bankruptcy court session in Massachusetts, Judge Holman said he will appoint a trustee to take over the company from the existing management as soon as all the paperwork are in. All parties, including the SEC, US Trustee, DOJ, and TelexFree have no objection or approve of the trustee takeover.

http://online.wsj.com/news/articles/SB10001424052702303403604579588452063956192

Editor's note: This news was passed around by TelexFree affiliates as a "great victory". It is NOT a victory.

Facts are

• Trustee has not yet been appointed yet (soon)
• Appointment of trustee does NOT stop the criminal and civil investigation by DOJ and SEC
• Appointment of trustee does NOT stop the class action lawsuit
• Trustee takeover means EVERYBODY in the company is FIRED. It's be like a receiver (like the one for ZeekRewards) who, under supervision of the judge, can SUE people to see return of assets to pay the creditors (i.e. all of you who are owed money). 

Whoever told you that the bankruptcy has been "granted" is false, and obviously this does NOT prove or disprove that TelexFree is a pyramid scheme. Company is DEAD. 

For a look at what a bankruptcy trustee can do, look up "Irving Picard", who's the trustee for Bernie Madoff's ponzi scheme.