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Tuesday, August 18, 2009

Is Ad Surf Daily really a ponzi scheme? CEO's experts say 'No'

The attorney representing Ad Surf Daily (ASD), an internet marketing company, says he has credible experts who have testified the company is not a 'ponzi scheme'.

Attorney Charles A. Murray of Bonita Springs, Florida represents ASD and its president, Andy Bowdoin. "Andy does not believe he did anything wrong," Murray said on Monday.

Last year the US Attorney's Office raided ASD's corporate headquarters in Quincy, Florida and quickly determined Bowdoin’s business model was indeed a 'ponzi scheme'. The government then seized $53M (fifty three million dollars) from several Bank of America accounts Bowdoin claims were designated to maintain ASD funds. Murray says Bowdoin "just wants to make sure all of the members get their money back."

US Department of Justice Senior Trial Attorney William R. Cowden maintains ASD is a ponzi because it can only stay in business if new paying members join the company. Many ASD members say that model is no different than other internet marketing companies such as Google's AdSense.

Making money with both companies seems relatively easy. Google pays people to simply display company ads on their websites. Companies pay Google to find these website owners who are willing to post the ads on their sites. Companies are charged a fee each time someone 'clicks' on the ad.

Google collects the fee and then pays the website owners a fraction of the profit. Unlike ASD, Google's program does not charge a fee to the website owners who wish to participate.

Murray hired three expert witnesses to examine ASD's business model and they contend it does not meet the definition of a ponzi scheme. Those experts include Keith Laggos, an author of a textbook on the Direct Sales Industry; Gerald Nehra a former Director of the Legal Division for Amway Corporation and Jerome Osteryoung who is a Professor of entrepreneurship and finance at Florida State University.

Osteryoung maintains ASD's model is effective because it only pays members a profit when they view an advertisement for a minimum of fifteen seconds. ASD "is much more valuable than the click per view for so much internet advertising (e.g. Google) which charges for each click no matter how brief the visit."

In a civil complaint filed by William R. Cowden in US District Court on August 5, 2008 he states, "in a Ponzi scheme, there is in fact no underlying profitable business to support the payments promoters say they will make to the investors/participants. Instead, unbeknownst to many of the participants, the promoters use the money obtained from a growing base of later investors/participants to pay so-called "profits" to earlier investors. Schemes that depend on growing the base of new participants to support payments to prior participants are also commonly referred to as pyramids."

Osteryoung says ASD is not a 'pyramid' because "a business that provides a vehicle for firms to advertise their products will be able to exist regardless if it attracts new members, as it is providing a much needed marketing tool."


Murray hopes his experts' testimonies will be considered by U.S. District Judge Rosemary Collyer who is presiding over the case. August 28th is the deadline for Judge Collyer to determine if the US Attorney General's case against ASD should move forward. At this point Murray is negotiating with the government and could reach a settlement before the upcoming deadline.

Mike Mason
Investigative Reporter

26 comments:

  1. Mike,

    When did they schedule a second evidentiary hearing? The first one didn't go too well, and Andy never showed up for it, after he demanded they have one. The last "experts" provided information that seemed to help the prosecution more than defense. Who are these new expert witnesses? We'd like to know if it was the same experts that were at the first hearing.

    Why would an attorney present any new evidence to a Judge outside of a scheduled hearing and/or when both sides are in negotiations for a settlement. Something sounds amiss here.

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  2. Mike, while you are investigating look into why ASD and Andy were moving all of the money outside the US into Canadian or Offshore payment companies and banks... right before the Feds froze the accounts. Ask yourself why the IRS was part of the team of agencies looking into Andy and the millions he had in his 10 personal accounts.

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  3. When Andy Bowdoin says he wants the members to have their money back - does he mean the money that they are legally entitled to? According to his ToS AND Federal Court Judge Rosemary Collyer it is of course 000$$s, as it all belongs to him. Or does he mean the money he got out of them through ASD?

    And if he means all the money they paid to him, is he including the milions he spirited out of the US to Canada, the Caribbean, South America, including Uruguay? Or does he mean just the monies that the Government were able to get hold of?

    Depending on the answer to that questions, the difference in funds available to members will be of the multi-million dollar level.

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  4. Mike, it's very interesting that one of these "Experts", Mr. Laggos, had problems with the law back in 2005. Usually one would like to have expert witnesses that have not been in trouble doing the things they are testifying that someone else didn't do:

    Previously, on July 22, 2005, the Court entered final judgments by consent against Defendants Brown, Converge and TeleWrx whereby, without admitting or denying liability, they are permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Brown is subject to a two-year penny stock bar.

    Additionally, on August 29, 2005, the Court entered a final judgment by consent against Keith B. Laggos, whereby, without admitting or denying liability, Laggos is permanently enjoined from violating Section 17(b) of the Securities Act. Additionally, the final judgment entered against Laggos provides for disgorgement of $11,989.87, plus prejudgment interest in the amount of $1,996.77, for a total of $13,986.64; the imposition of a civil penalty of $19,500; and a five-year penny stock bar.

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  5. Mike, thanks for looking into this unusual case before the courts. I have believed very strongly in the business plan of ASD from the day I joined (after 17 days of researching the feasibility of the model). My opinion of Jack Arons is not so favorable. He is a very bitter old man who is incapable of understanding the scope of internet advertising and the money that can be made in advertising. The shift from traditional advertising (TV, newspapers, etc.) to the internet has not only begun but is putting down it's roots and establishing itself as THE primary advertising media. New technology often meets with incredible resistance, and ASD is no exception.

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  6. Hmm. I dont think that the incredible resistance to new technology is the reason that the ASD business model has been shunned. It has more to do with its illegality and immorality.

    Owners of major advertising companies do not offer their advertisers the chance to become millionaires from earnings on their advertising investments, and certainly not at public rallies. They dont even offer that option for new business gained through their adverts!

    Funnily enough, the mainstream advertising and publishing industry, which is known for its innovative operations, has not turned to the ASD autosurf model to replace the earnings lost to the internet by the decline in the print industry earnings. They seem to be choosing content driven and social networking sites, rather than autosurfs. But maybe that is because the autosurf business models that have been dreamt up so far are illegal and are based primarily on ponzi models. When there is a legal and sustainable one, you can bet your boots that they will be the first to operate it.

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  7. Mike,
    Thanks for your time and investigation on ASD. There are many hopeful members who believed in Andy and his new advertising system. It added a much needed change to the current marketplace and rewarded people for their participation. The companies advertising were innovative and successful and without question expanded my knowledge of a variety of products from health care to automotive to web design and so much more I can't list them all. It was pretty obvious ASD was bound for success. Members were thrilled with the initial surf payments but also understood they wouldn't last forever. Their advertisements were being viewed and business was churning. It would have all worked out.

    The government used a reckless approach to investigate this situation and they have harmed many people in the process. With all of their resources, I believe a proper audit and analysis could have been performed at a much lesser expense to the members and taxpayers.

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  8. Mike,

    Nothing new? It's been 4 days since your last article. Worn out already? Imagine following for over a year, like many of us.

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  9. if ads was a ponzi then what is our ss system called. the young pay for the old and i have not heard if they have other streams of income coming in to sustain the program or is this a legal ponzi run by the goverment.

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  10. At this time, I don´t consider that Andy should claim any money back. He can not demonstrate how he would pay those high interests he promesed to pay forever in advertisings. A business based in money over money is evidently a Ponzi scheme. Remember Madoff´s Piramid. This is a lost war for Andy. So, Andy, you should let it go and colaborate with the attorney´s office to our money return to the investors (exmembers of ASD) as soon as possible.

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  11. Anonymous One (i believe we have several here), what innovative companies were advertising on ASD?? Having surfed for over a year, I never saw more than the same old MLM programmes and other "network marketing" schemes that are to be found on any free traffic exchange or free list or email advertising system, interspersed with a few real and product sites, but I have not heard of any confirmed reports from the latter that they received a marked increased in sales worth 1$ a click.

    Frankly, had the advertising results been genuinly good, the members would have been screaming to have the ad rotator started again to get the benefit of their thousands of dollars of advertising investments. It didnt happen. I wonder why? If I was owed thousands of dollars of good advertising I would not sit quietly or scream at the government.

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  12. We ARE asking for ASD to be allowed to continue.So yes it did happen. Alasycia, you wouldn't "sit quietly" and you would not "scream at the government" so what would you have done? You do realize how comical, and unrealistic it sounds when you say you participated in ASD for over a year, and now have spent your time calling it the scam of the century since the government stepped in. It makes no sense. On top of that when your not protesting YOUR former advertising venue ( how could you know that you did not receive the number of new clients from ASD to make it worthwhile? I for one advertised ONLY on ASD, and was doing great)you must be studying our laws pertaining to this matter because you have complete knowledge of our laws here in America in regards to this issue. ASD sold legitimate advertising to legitimate businesses, ASD did NOT guarantee rebates, ASD sold other things besides advertising space (website building, domain names are 2 of several examples), and ASD was audited by a branch of The United States Government in early 2008 and given the green light. These are facts, and yet here we sit arguing against lies. We will continue to "scream" at the government for this, because what they have done is wrong,period. Oh and so what if a commentator wishes to remain anonymous? Why do you have to be mean, every chance you get? What is your agenda? I love how you categorize every MLM a scheme. Because a few where schemes does not mean that they all are. We got THREE (3) expert saying ASD was not a ponzi scheme, and before you examine the facts you (patrick's people) attack! Yeah I said Patrick because the only people who are here denouncing ASD are from there! I am just waiting for lil round man to chime in. A dozen people (or so) going from site to site to belittle ASD and it's members, and no agenda? I believe that, like I believe in Santa! We have THOUSANDS demanding justice, and asking for ASD to be allowed to continue! Oh, and thanks for warning Mike that someone would attack his findings, as the naysayers are quickly doing. I LOVE IT!

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  13. Mike, for any 3 experts ASD can produce, the government (Prosecution) can likely produce twice as many to give opposing opinions. At the end of the day, it's the Judge who makes a ruling on who presents the best argument. She has already done so by saying that ASD failed to prove it was NOT a Ponzi in her Opinion following the Emergency Hearing that ASD asked for and was granted. I doubt there is anything Nehra can say to change her mine; he already testified and helped to make the prosecutions case. Most of these experts are testifying on information told to them, not from knowledge gleaned from research of documents or records.

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  14. You are absolutely right that, after a year of advertising in small way with ASD, I did not go after the undelivered advertising due to me. But thereagain, who wants their business associated with a company that is being prosecuted for money laundering, wire fraud and conspiracy? Not this gal. It was embarassing enough to have been part of the company for so long, when the truth about our Founder's background came to light. Being hopeless with math was bad enough, but to find out that the integrity that was so attractive about ASD was an invention.......that was the straw that broke the camel's back.

    The arguement that ASD sold legitimate advertising to legitimate businesses is an old one and not one that convinced Judge Collyer. Irrespective of My Space pages, there were many people who invested tens of thousands of dollars who didnt even have real businesses!

    ASD sold untargeted clicks at 1$ each, 10 or 20 times more expensive than can be bought else where. The only reason any one would pay such an inflated price is to get a return on their advertising investment. So people who bought ads were not principally customers doing so for the advertising service, but were investors looking for a return.

    Real businesses are not indeed schemes, and there are one or two well known MLMs like Mary Kaye, Tupperware etc who are better known for their products than their selling system, but the majority of MLMs, especially those promoted on the internet, do fall into the category of "schemes" because they lack a competative and viable `product or service and rely on their multi level comission selling system to make money, as ooposed to straight profit on product sales. Many of the products sold through this method online are those which cannot find a market in the stores, such as fuel saving products of dubious value and the now famous "jungle juice" of the day.

    Experts? Well so far one has not impressed the Judge with his research and impartiality, the other has a securities warning and the third is rumoured to be a member of ASD. They are paid experts,and, having read their reports, this has clearly affected their objectivity related to ASD.

    ASD has been an extraordinary experience for those of us who are interested in US and international commercial. And one thing is clear, there needs to be a radical change in legislation to bring it into line with the ever increasing phenomenen of cyber crime - the multi billion dollar "industry" which is one of the fastest growing in the world

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  15. So hear is a real question. If the govt. gets ownership of the members funds, do members receive any interest on the money that has been seized and held for over a year???

    Darrin Allen

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  16. Money seized in a civil forfeiture with charges of wire fraud, money laundering, conspiracy etc and that has been established as belonging to Andy Bowdoin and no one else, is not returnable to anyone.

    The Government have made an offer to those who they consider victims of this fraud, i.e. the ASD members, of their own volition, to make a restitution to them from the funnds seized. They are under no legal obligation to do so and appear to be doing so because of a moral obligation.

    I have no idea whether we will receive interest, but there is certainly not enough money in the pot to pay everyone 100% of the money they invested. The quantity available will depend on how much extra they can get back in claw backs from winners and the cost of the forensic accounting required to establish who is owed what.

    Unlike CEP etc, this is not an SEC case. The seizure was made by the Secret Service, so the DoJ, the IRS and heaven knows who else could be involved.

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  17. If Andy and the gov't both agree to take monies and give them back to people, JUST DO IT!

    There's no practical point in debating the legitimacy of ASD's model. If Andy wins, there'll be a run on ASD's funds to get money back and the company folds; if Andy loses, the company is permanently shut down and funds returned to people. Same end game.

    The only people who can benefit from winning the debate are Andy, the US gov't and lawyers. So, for the sake of getting money back, let's debate the subject of intentional wrong-doing separate from reimbursement of funds.

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  18. You people amaze me... One, Mike Mason must be in Andy's pocket or he must be a the most naive, ill-informed reporter on the planet..

    I have been in ASD since July 12, 2008, have spoke to Andy and his original lawyers, have held over 150 conference calls, had a website up since August 10, 2009, www.asdmba.com
    have identified every other scam Andy is in, have located hidden money, have communicated with Bii Cowden over 100 times andf my attorney and I spent 2 hours face to face with Cowden last November, We have produced and given the Feds so much crap on Andy, he should be in jail.

    We have inverstigators, REAL licensed investigators who have done work for us on Andy and Busby.. NO COMMENT FROM MASON..

    I have offered to share all the info with Mason repeatedly, there isnt a ASDMBA player out there that doesnt know the ASDMBA, and we havent heard a word from this great "reporter"

    You just dont get it... The FEDS do not have to give a PENNY back to anyone.. They dont have access to the ASD money, yet, and until all these idiots quit filing all these frivilous BS lawsuits, the Judge wont rule..

    The FEDS DO have Panda money, where is that reimbursement program, why arent the FEDS giving some of the Panda Members their monet back, no one was a winner there, Busby forfeited the money, cut a deal, walked with $3million plus, went offshore, started aniother scam, going today..

    All this information, all this evidence ALL OF THESE people offering personal testimony, and the inept Feds keep letting Andy and Busby walk around, lining their pockets, all the while, the ASD winners are spending, hiding or moving teir winnings..

    You must be kidding me, get your money back!!!

    Bob Guenther
    bob@jaffapartners.com
    214.587.3977

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  19. If the government can spend billions of dollars to bail out huge corporations from bankruptcy then why can't they let the average family support their income by joining a legal and legitimate business like ASD?? They should allow ASD to open business to the public again so people can have a chance to supplement their income during this economic recession.

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  20. I noticed the petitions to return confiscated money filed from ASD members. As an ASD member, is it necessary to file such a petition in order to receive any reimbursement of our funds?

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  21. Darrin,

    No it is not necessary to file such a petition. In fact those that do this just delay the return of funds to victims.

    In addition, one now risks sanctions and hefty fines for wasting the courts time and resources as Judge Collyer mentioned she has had enough of frivolous Pro Se filings.

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  22. Regarding petitions for refunds - the government says:

    The United States Department of Justice has posted an online form for ASD members who wish to recoup any money they lost while doing business with ASD. Members can fill out the form by going to the government's website:
    'www.usdoj.gov/usao/dc/Victim_Witness_Assistance/adsurfdaily.html'
    or contact the DOJ by emailing information to the Department at 'usadc.adsurfdaily@usdoj.gov'.

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  23. Appreciate your replies, Thanks.

    Darrin

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  24. We were devastated and extremely disappointed by the action of the US Attorney. Ad Surf Daily was a completely legitimate business. We were so excited about working and growing this business. It is imperative that our money be returned as it is definitely NOT the government's money. The money has not been lost or spent and ethically should be returned to those to whom it belongs. BB and CB

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  25. "AdSurfDaily was a completely legitimate business" Oh really? Federal Judge Rosemary Collyer says it was not. She went further and stated, in her judgement rejecting the the granting of ASD's Emergency Motion to return 2$ million, that ASD had NOT proved that it was not an illegal business and a ponzi.

    When a Federal Judge goes that far in her comments BEFORE a final Judgement, the writing is on the wall and it doesnt take a genius to figure out what her final judgement is going to be.

    All the pro se filings and non pro se filings by by promoters and Bowdoin are doing is to delay the restitution on money by the Government to the victim members of ASD. They dont seem very concerned about them. Their actions make a nonsense of Bowdoin's words of concern to his members.

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  26. If ASD is a Ponzi, then so is Google!

    Here is the Google Adsense business model in its simplest form.

    *Google agrees to pay website owner .05 for every person that clicks on a Google Ad that was placed on his site.(Like ASD)

    *Google is "sharing" .05, or 10% of the .50 that was fully paid for by another advertiser. Google is in great profit because they get to keep .45 of the "revenue",(like ASD Ad Revenue),

    *Google then shares revenue with the people who have websites and place Google Ads on them, (Like ASD Network Pays For Viewing Them Every Day),

    *Money Google generates in advertising revenue, makes the business profitable and growing, while advertisers are happy that they are getting visitors and selling product, (just like ASD)


    I rest my case.
    Sam

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