According to documents filed by Zeek Rewards receiver Ken Bell with the court, he intends to file lawsuit against both Kevin Grimes, head of "Grimes and Reese LLC", and Howard Kaplan, renowned tax expert, for legal malpractice in their role to prop up Zeek Rewards, as it is clearly a ponzi scheme. Receiver is seeking over 100 million in damages against each defendant.
According to Zeek receiver Ken Bell, both Grimes and Kaplan should have know that the business model as presented by Zeek cannot possibly to be true based on their own expertise in their own respective areas, yet both allowed their name be used in association with Zeek Rewards and its parent company, Rex Venture Group.
Grimes created a "compliance program" for Zeek affiliates i.e. what can be said and what cannot. One such "certificate of completion" is reproduced below, from court document filed back in 2012 as part of SEC complaint against Zeek.
Thursday, June 26, 2014
Wednesday, June 25, 2014
Scam Psychology: Did they really think they can get away with it? They sure did!
Sometimes, the actions of certain... perpetrators are puzzling, at least to people from the outside looking in. If they had not gone back for that one last thing, they may have gotten away scot free, but because they felt they can do it, they now face much much more trouble than if they had not.
One such incident, which had nothing to do with scam, was published at Jalopnik recently. Basically, a motorcyclist at Golden Gate Bridge did not like the camera crew from Channel 4 News there filming. So the guy made an illegal U-turn, went down the ONRAMP the wrong way, parked his bike, just to come have a "don't film me!" moment with the reporter. Which of course, only lead to even MORE filming. The entire sequence was caught by surveillance camera at the control center, who then summon Golden Gate Bridge Patrol, who detained the gentleman for questioning, and upon finding that the bike is UNREGISTERED, and the guy doesn't even have a motorcycle license (he has a car driver license) California Highway Patrol was summoned and the bike was towed and the guy have to find some other way home.
The guy seriously thought he can make illegal U-turn, drive the wrong way down on-ramp, and have no consequences? Nah.
Alleged crooks do things just as stupid, and sometimes, much worse.
Those who keep up with the Scamworld should recall that when TelexFree in Boston was raided by law enforcement on April 16th, 2014, the day after they tried to declare bankruptcy in Las Vegas (on the other side of the country). DURING THE RAID, their Chief Financial Officer Joe H. Craft tried to retrieve his bag containing his laptop and over 36 MILLION in cashier's checks, all of which are company money. When accosted by a Sheriff's Deputy, Craft claimed he was a bankruptcy consultant and all that is his personal property. He was ordered to hand over the bag, NOTHING leaves, and that's when the cashier's checks were discovered.
The guy seriously thought he can lie to law enforcement, and try to leave with over $36 million in cashier's checks, when there's a Federal and State police raid in progress?
Ah, but things can get worse. In at least two more cases, two potential idiots seriously thought they can get paid more when they may actually OWE money.
One such incident, which had nothing to do with scam, was published at Jalopnik recently. Basically, a motorcyclist at Golden Gate Bridge did not like the camera crew from Channel 4 News there filming. So the guy made an illegal U-turn, went down the ONRAMP the wrong way, parked his bike, just to come have a "don't film me!" moment with the reporter. Which of course, only lead to even MORE filming. The entire sequence was caught by surveillance camera at the control center, who then summon Golden Gate Bridge Patrol, who detained the gentleman for questioning, and upon finding that the bike is UNREGISTERED, and the guy doesn't even have a motorcycle license (he has a car driver license) California Highway Patrol was summoned and the bike was towed and the guy have to find some other way home.
The guy seriously thought he can make illegal U-turn, drive the wrong way down on-ramp, and have no consequences? Nah.
Alleged crooks do things just as stupid, and sometimes, much worse.
Those who keep up with the Scamworld should recall that when TelexFree in Boston was raided by law enforcement on April 16th, 2014, the day after they tried to declare bankruptcy in Las Vegas (on the other side of the country). DURING THE RAID, their Chief Financial Officer Joe H. Craft tried to retrieve his bag containing his laptop and over 36 MILLION in cashier's checks, all of which are company money. When accosted by a Sheriff's Deputy, Craft claimed he was a bankruptcy consultant and all that is his personal property. He was ordered to hand over the bag, NOTHING leaves, and that's when the cashier's checks were discovered.
The guy seriously thought he can lie to law enforcement, and try to leave with over $36 million in cashier's checks, when there's a Federal and State police raid in progress?
Ah, but things can get worse. In at least two more cases, two potential idiots seriously thought they can get paid more when they may actually OWE money.
Tuesday, June 17, 2014
News Update 17-JUN-2014: TelexFree James Merrill out on bail; TelexFree trustee subpoena everybody for info; TelexFree victims tell their stories to Boston Globe
| Hook, Line, Sinker (How I fell for a phishing scam) (Photo credit: ToastyKen) |
TelexFree co-owner James Merrill let out on bail
According to Boston Globe, TelexFree co-owner James Merrill was allowed out of jail when the judge decided the criteria for his bail is high enough, which includes:
- THREE houses for collateral, including 2 owned by him and one by his sister ($900000 bond)
- Wear a GPS tracker
- Not leave the state
- Give up his passport
- Must stay at home between 8PM and 8AM
Federal judge Tim Hillman ruled that unlike Merrill's partner Carlos Wanzeler, who had previously fled to Brazil (where he's originally from and still have relatives there), Merrill has deep ties to the Massachusetts community and really has nowhere to run outside of the US.
NOTE: Click through to see actual judge ruling in this bail hearing.
TelexFree trustee subpoenaed everybody for information
With little to go on how to administer the estate of TelexFree, the new bankruptcy trustee for TelexFree, Stephen Darr went for the fastest way: he subpoenaed all the different firms that advised TelexFree, which includes:
- PriceWaterhouseCoopers (former financial advisors)
- Alvarez and Marshal / William Runge (restructuring advisors)
- Kurtzman Carson Consultants (bankruptcy claims / noticing agent)
- Gordon Silver (TelexFree lawyers in Nevada)
- Greenberg Traurig (TelexFree lawyers in Massachusetts)
The subpoena demands any and all documents, emails, correspondences, phone (cellular or landline) records pertaining to TelexFree, affiliates, or subsidiaries, any and all financial accounts and related documents, any and all disbursement registers for every account, any documents relating to financial information, esp. those involving Global Payroll Gateway, International Payout Systems, Propay, etc. any and all tax documents, state or Federal, any and all internal financial statements, any and all properties and other assets including intellectual properties, any appraisal of such assets, any and all communications and other documents involving TelexFree or affiliates, creditors, and more.
Saturday, June 14, 2014
Scam Psychology: Naive Realism / Anecdotal Fallacy / Argument from Illusion
| Illustration of Naive realism or Direct realism. (Photo credit: Wikipedia) |
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.
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| 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) |
Friday, June 13, 2014
News update 13-JUN-2014 (Friday!): TelexFree Faith Sloan plays dumb and begs for money; Solavei goes Chapter 11 Bankruptcy;
Remember, folks, get your news from a trusted news source, like I do. I don't relay unconfirmed information, and neither should you.
Faith Sloan Plays Dumb and Begs Court to Release Money; SEC says "No Way"
Faith Sloan, one of the "TelexFree 8", has filed a motion on 10-JUN-2014 asking court to release about 18K to pay expenses such as lawyers, rent, and food.
However, this is specifically against the injunction that froze her money in the first place. SEC and the judge that issued the freeze has specifically stated that no "carveout" ( i.e. taking money from accounts that contains money that may be tainted by the fraud) will be allowed if the account owner does not declare his/her assets. Thus far, Faith Sloan has refused to declare her assets as she claimed doing so may incriminate herself (i.e. "plead the fifth").
SEC has also long documents that detailed her multiple violations of freeze order, including:
1) Paid $14854 to "Changes Worldwide" another suspect scheme on 24-APR-2014
2) Paid $3990 to "Changes Trading LLC", which is a part of Changes WorldWide, on 28-APR-2014
3) Wired $30000 to her attorney on 7-MAY-2014
4) Transferred her house deed to her mother on 12-MAY-2014
And here she comes asking the judge to release more money to pay rent... to her mother, whom she just gave her house to. AND another $18000 to her attorney.
Hahahahahaha.
Faith Sloan Plays Dumb and Begs Court to Release Money; SEC says "No Way"
Faith Sloan, one of the "TelexFree 8", has filed a motion on 10-JUN-2014 asking court to release about 18K to pay expenses such as lawyers, rent, and food.
However, this is specifically against the injunction that froze her money in the first place. SEC and the judge that issued the freeze has specifically stated that no "carveout" ( i.e. taking money from accounts that contains money that may be tainted by the fraud) will be allowed if the account owner does not declare his/her assets. Thus far, Faith Sloan has refused to declare her assets as she claimed doing so may incriminate herself (i.e. "plead the fifth").
SEC has also long documents that detailed her multiple violations of freeze order, including:
1) Paid $14854 to "Changes Worldwide" another suspect scheme on 24-APR-2014
2) Paid $3990 to "Changes Trading LLC", which is a part of Changes WorldWide, on 28-APR-2014
3) Wired $30000 to her attorney on 7-MAY-2014
4) Transferred her house deed to her mother on 12-MAY-2014
And here she comes asking the judge to release more money to pay rent... to her mother, whom she just gave her house to. AND another $18000 to her attorney.
Hahahahahaha.
Thursday, June 12, 2014
Quick Research: What is Eternyon and should you give them any money? (Probably not)
Occasionally MLMSkeptic was asked questions about a specific company. This is both such an investigation and an example about how I do such research. All this is done in about 30 minutes. (It took longer to write this blog post than to do the actual research)
Today's subject... Eternyon
So what the heck is Eternyon? They claim to be "advertising, technology, and e-commerce, using network marketing".
Frankly, their website looks like what some spammers built to catch people unaware, using only stock photos, like those fake universities.
Right now, there's no mention on who runs this business, or where they're located, on their own website. But it's clear it's aimed at Brazilian Americans, because it's in both Portuguese and English.
The wording in English is also quite... interesting. "Our Differential"? "Clients Benefits"? That looks as if it's written in Portuguese then ran through a translator.
It's allegedly centered in Worcester, Massachusetts... Where TelexFree was just closed not long ago by Feds.
You need to search online to find that Eternyon was allegedly founded by Wayne Howe and George Lima... Howe's allegedly a Massachusetts native, while George Lima was born in Rio de Janeiro but emigrated many decades ago. However, there are no official paperwork viewable by the public proving Wayne Howe and George Lima are indeed the founders or executives of Eternyon, other than words of people trying to recruit you into Eternyon.
Searching Eternyon.com WHOIS hit a "domain by proxy"... They don't want you to know who registered the company domain.
Eternyon refers to itself as "Eternyon LLC" but never stated where the business is registered. There is an "Eternyon" registered in Wyoming: 2014-000657722, first registered in 2014-JAN-24.
You can search Wyoming entity search here: https://wyobiz.wy.gov/business/filingsearch.aspx
However, this is NOT an LLC, but a "trade name", i.e. "dba - doing business as". And it was registered by yet ANOTHER LLC, at the same address:
Tech Products LLC
255 Park Ave Ste 1000
Worcester, MA 01609 USA
However, Tech Products LLC, which is also a Wyoming entity (2011-000603187), is marked as "inactive-dissolved".
So to make things clear, Eternyon is registered in Jan 2014 by an entity that went inactive merely 4 months later (May 2014). Its executives are unknown. Enternyon is just a name. The company is "inactive - dissolved".
What do we know about the address?
Today's subject... Eternyon
So what the heck is Eternyon? They claim to be "advertising, technology, and e-commerce, using network marketing".
Frankly, their website looks like what some spammers built to catch people unaware, using only stock photos, like those fake universities.
Right now, there's no mention on who runs this business, or where they're located, on their own website. But it's clear it's aimed at Brazilian Americans, because it's in both Portuguese and English.
The wording in English is also quite... interesting. "Our Differential"? "Clients Benefits"? That looks as if it's written in Portuguese then ran through a translator.
It's allegedly centered in Worcester, Massachusetts... Where TelexFree was just closed not long ago by Feds.
You need to search online to find that Eternyon was allegedly founded by Wayne Howe and George Lima... Howe's allegedly a Massachusetts native, while George Lima was born in Rio de Janeiro but emigrated many decades ago. However, there are no official paperwork viewable by the public proving Wayne Howe and George Lima are indeed the founders or executives of Eternyon, other than words of people trying to recruit you into Eternyon.
Searching Eternyon.com WHOIS hit a "domain by proxy"... They don't want you to know who registered the company domain.
Eternyon refers to itself as "Eternyon LLC" but never stated where the business is registered. There is an "Eternyon" registered in Wyoming: 2014-000657722, first registered in 2014-JAN-24.
You can search Wyoming entity search here: https://wyobiz.wy.gov/business/filingsearch.aspx
However, this is NOT an LLC, but a "trade name", i.e. "dba - doing business as". And it was registered by yet ANOTHER LLC, at the same address:
Tech Products LLC
255 Park Ave Ste 1000
Worcester, MA 01609 USA
However, Tech Products LLC, which is also a Wyoming entity (2011-000603187), is marked as "inactive-dissolved".
So to make things clear, Eternyon is registered in Jan 2014 by an entity that went inactive merely 4 months later (May 2014). Its executives are unknown. Enternyon is just a name. The company is "inactive - dissolved".
What do we know about the address?
Is Your Upline a Machiavellian? (i.e. Is S/he Exploiting You or Helping You?)
| Niccolo Machiavelli (Photo credit: Wikipedia) |
By default, any network marketing upline is a Machiavellian, because as long as you have joined (and bought a starter kit), your upline will have benefited. Whether you benefit from joining is completely irrelevant.
However, as in most cases, manipulation can be for good... or evil. Machiavelli himself was often portrayed as amoral manipulator, but that would be simplifying the issues too far into black and white. He was advocating the rulers to get things done, through manipulation if need be.
Think about it. Aren't modern laws trying to "push" you into behaving a certain way? Like the various "sin tax" on things like cigarettes and alcohol?
But in general governments don't enact laws to be evil. Scammers do. Let's assume for now we are talking about the EVIL machiavellians only.
Machiavellianism (manipulate others for one's own gain), along with Narcissism (extremely self-centered), and Psychopathy (have no empathy), are known as the "dark triad" of personality traits.
Origin of Machiavellianism in Scams
How do uplines "go bad"? Generally, it's because they were taught that way. Instead of learning how to sell (i.e marketing), they were taught "ass backwards" to emphasize the network instead. Apparently they were taught that as long as everybody they recruit (into the network) buy a 'starter kit' that counts as "sales".
But it's not sales. There were no sales to real customers. All sales are to affiliates / recruits.
And they will instill the SAME (and WRONG) attitude onto their downlines.
Chinese has a term for this: 層壓式傳銷 which literally means "level pressure style marketing", though commonly translated as "pyramid selling". The closest term in the West is "product-based pyramid scheme", where products are barely sold outside the network, but are mostly consumed within, but with money moving from the bottom up. At certain angles, this indeed resembles network marketing, but the key difference is in network marketing, the overall goal is to sell products to customers OUTSIDE the company. There are people outside, NOT affiliates, that are actively using the products, and people are selling to those customers. Product-based pyramid scheme, on the other hand, sells to its own affiliates, with little to no sales to outside customers. Some are known to claim to give away stocks or "points" that can be traded for stocks later... if you buy up a lot more products.
One such scheme in China went after the elderly, by telling them the company will do initial public offering (IPO) soon, must bring up sales figures, must look good, so IPO can go smoothly, and encouraged the affiliates / customers to buy up even more products (most of which are vastly overpriced) for the "virgin stocks" which supposedly can be traded for real stocks if IPO goes through. It never did, and the company was busted as pyramid selling. The seniors were manipulated into joining, with fraudulent product claims and income potentials, then with various manipulations to buy up even more stuff that they don't need. The same scenario was repeated last year, when another company was busted in Hong Kong, this time claiming that this US-based company is going to be very big if people buy up their "Internet Comm Suite" for 24000 HKD (about 3000 USD) a year to accumulate "points" to be traded for stock later, and company will buy back the stock for huge riches.
Both pyramid selling cases relied on people who have little understanding of IPO and stock market. But the same idea can be applied to almost any sort of potential profit. And it always involve the same 3 steps.
A machiavellian's "modus operandi" has 3 steps:
- Deception
- Manipulation
- Exploitation
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