OpTree

In some strange news out of Florida, a University of Miami Business School Graduate, Andres Pimstein, has just confessed to running a sort of multi level marketing or ‘ponzi’ scheme in which he promised investors returns of up to 18% percent. Pimstein, and his company, Bottom Line of South Florida, apparently made false promises to many investors and lured them into giving him money. Pimstein then paid new investors with money from original investors, a classic pyramid scheme.

Apparently, Pimstein used school facilities, and computers as well as recruited faculty, staff and students . According to Miami Dade Police, Pimstein had a joint bank account with the university’s director of contract admission and was using a conference room along with as many as three dozen current and former UM employees.

It is estimated that the scheme managed to bilk investors out of an estimated $30 million dollars. One investor who gave Pimstein over $3 million dollars became skeptical when he wasn’t getting paid and hired a private detective who then uncovered the scheme. The FBI is currently looking into the whole operation.

The university said that they are fully aware of the investigation and that although University funds are not involved, there are a few employees who lost money in the scheme.

Pimstein was apparently very convincing luring lawyers, accountants, and even retired law enforcement officials. According to several investors, Pimstein presented detailed flow charts and fake invoices to potential investors detailing the future operations of the company, The Bottom Line of South Florida. Pimstein told them that they would be selling perfumes and electronics to Ripley, a large department store in Chile and Peru. According to reports, Bottom Line has no relationship with Ripley. I’m sure the full story will come out as the FBI continues to probe into the matter.

Pimstein had no comment.

Popularity: 3% [?]

Repost: St. Louis Business Journal - by Kelsey Volkmann

Ana Temple wanted to make some extra cash to supplement her income as a finance and human resources director for an architectural firm.

So when a family friend told her about YourTravelBiz.com and how she could set up her own online travel agency, she jumped at the chance in April.

She paid nearly $500 to set up a Web site through Wood River, Ill.-based YTB International. The company told her she’d make 60 percent commission off every trip she booked.

But then she got her paycheck: $3 per airline ticket.

That’s when the company told her travel agents make 60 percent of what YTB makes, she said.

“I feel so deceived,” said Temple, a Copiague, N.Y., resident. “They told us people could retire off this and take free trips. It’s all a bunch of bull.”

On Monday, the California attorney general sued YTB, calling it a “gigantic pyramid scheme” that swindled an estimated $103 million out of as many as 200,000 people nationwide in 2007 alone. The majority of members make most of their money from recruiting new members, not from selling travel, so only a few see the promised profits, Attorney General Jerry Brown Jr. said.

More than 90 people over the past three years have complained about YourTravelBiz.com to the Better Business Bureau of eastern Missouri and southern Illinois.

YTB denies any wrongdoing.

Several YTB agents vigorously defended YTB at the company’s national convention in St. Louis this week, saying they had made money and received discounts on personal travel.

“That’s because they got thousands of suckers underneath them and they’re making money off us,” said Temple, 38.

When she tried to cancel, YTB refused, saying it was past the five-day cancellation period. But Temple said she didn’t receive her packet informing her of the cancellation policy until after the five- day period expired.

YTB denied this and she was still required to read the online terms and conditions before paying.

“They gave us so much false information,” she said. “Total, total lies.”

Popularity: 3% [?]

YourTravelBiz.com,- a subsidiary of YTB travel, has been sued by California Atty. Gen. Jerry Brown for $25 million in fines and restitution. Brown claims that the company is operating an illegal pyramid scheme, and has defrauded thousands out of money.

YourTravelBiz is an online travel company that uses independent distributors to sell its travel products through their own websites and travel agencies. There are two ways to make money through the company, commissions from travel sales and fees for recruiting others to participate in the business.

Brown claims that the business is “immensely profitable to a few individuals on top and a complete rip-off for most everyone else.” “Today’s lawsuit seeks to shut down the company’s unlawful operation before more people are exploited by the scam.”

Calls to YourTravelBiz.com have not been returned. The company has seen huge profits over the last few years. In 2007 they reported revenue of $141.3 million which is a 177% percent increase from the previous year.

In the suit, the L.A. Superior Court claims YourTravelBiz enticed thousands to pay large fees in excess of $1,000 with the promises that not only would they would become millionaires, but they would gain access to travel deals and bargains accessible only to professional travel agents. The suit goes on to claim that in 2007, consumers paid over $103 million to the Defendants for websites and in fees, but made only $13 million in travel commissions. An estimated 62% percent of YourTravelBiz participants did not earn a single dime in travel sales commissions in 2007.

This latest news cant be helping the company’s languishing stock. (OTCBB: YTBLA) which in the last year has seen its shares go from $7 to as low as $0.60 and now hovering at around $1.30. These types of swings are not positive for any company and even less to one that is being accused of fraud.

This is the first lawsuit filed against YTB or its subsidiaries, although there have been rumblings over the last two years from many unhappy former participants in the YTB program. We will give you updates on the case as it moves forward.

Popularity: 11% [?]

ASD Cash Generator - a network marketing company that buys and sells advertising packages, has apparently been shut down by the SEC.

According to the company, ASD is a “Gateway to Financial Independence.” The company makes money by charging customers fees each month to buy advertising packages that they can they resell. Members can also make money selling monthly memberships to new recruits. According to ASD, purchasers can earn rebates up to 100 percent of their ad cost, and can even earn an additional 25 percent by convincing others to purchase packages for resale as well.

Details of exactly what has gone down are still a bit fuzzy, but from what we can gather, the Florida based company was sued by the Florida’s attorney general, Bill McCollum. Just last week, the company was raided by the U.S. Secret Service and was shut down by the U.S. Attorney’s Office for the District of Columbia who claims that ASD was running a “massive internet based wire fraud scheme.

In the lawsuit filed in Florida, McCollum says that ASD and its President, Thomas Andy Bowdoin Jr, and employees, have conned and defrauded countless people out of money and McCollum is seeking civil damages as well as an injunction against the company, its president and employees to stop them from operating their deceptive business.

The Secret Service raided the ASD office last week and seized the Presidents home. The U.S. Attorney’s Office for the District of Columbia called the business a “Ponzi scheme, masked as an advertising company. Nobody has been officially charged with a crime just yet, but the investigation is ongoing and for the time being, the company is shut down. The official message on ASD’s website reads:

–Upon direction from the U.S. Attorney’s Office in the District of Columbia, ASD will not be able to move funds into company accounts, or out of them. We will work to resolve this problem, and return to normal operation, as soon as we are permitted to do so.
-ASD Management

Bowdoin has not been answering calls, but on a message on his answering machine it says that he will not be making any comments on advice of lawyers. While I do not fully understand the business, something does seem a bit off about the services they are offering, and the amount of money the company has been raking in, is almost unreal. Bowdoin has told officials that he expects sales of more than $100 million this year with ad sales over the first half of the year reaching $40 million. There are over 75,000 members in the ASD network.

Popularity: 8% [?]