This, however, did not deter the staunch supporters and investors of Pathway 2 Prosperity. Months later, the scam started to unravel and cracks in the scheme appeared as more complaints from investors about not being able to get their funds back increased. Unfortunately for these duped folks, they will probably never see their invested money again.

Today, Nick Smirnow is no where to be found, the website is offline and Nick is being hunted by the authorities. As of April 29, 2009 there is no question as to whether Pathway-2-Prosperity.com and Nick Smirnow was running a scam or not. It was.

Here is the full story from the Bracebridge Examiner.

Baysville man wanted for illegal investment scam
April 29, 2009 – by Laura MacLean

Police are on the hunt for a Baysville man who is wanted for an illegal investment scheme that he was operating as a pathway to his own personal prosperity.

According to Huntsville OPP Const. Lynda Cranney, at the beginning of April members of both the Muskoka Crime Unit and the OPP’s Asset Forfeiture Unit executed a search at 51-year-old Nicholas Smirnow’s home, located on Fairy Falls Road. The search resulted in the seizure of property and assets related to the large-scale investment scam. Through his online investment business, Pathway-2-Prosperity, also known as the P2P Network, which he had operated from 2007 to 2008, Smirnow made over $1 million in illegal profit, police said. Known as a high-yield investment program, the scam promised high rates of return over short periods of time.

At the beginning of December, a local victim of the scam was the first to be interviewed by police. Since then, a handful of other area residents have come forward.

Huntsville OPP detective Andy Muller told this newspaper that Smirnow had been living at his Baysville residence since 2005 with his wife Diana, who is wanted by police for defrauding the Ontario Disability Support Program of $55,000.

“Once we got that first call, it really started to snowball after that,” said Muller. Two more victims of the fraud, both from the United States, were identified through the national fraud call centre Phone Busters, he continued. “Things really skyrocketed in March when I posted information on financial forums in relation to my P2P scam investigation. That’s when the gates opened and I had about 30 inquiries a day about it. Once the police got involved, the Internet chatter really started to increase. Some investors don’t know what to believe and others are still waiting for their money and believe it’s not a scam. Some people invested $100 and some $50,000. We even have a few victims from the United Kingdom, South America … a guy even called me from Nigeria.”

Victimized investors who have come forward have lost a total of about three-quarters of a million dollars, he said.

Muller indicated that when Smirnow first started Pathway-2-Prosperity in early 2007, some investors were getting paid because money was rolling in. However, he said, when it comes to scams like this, it’s only a matter of time before “the whole system folds.”

He added that the scam is a prime example of a business operator getting greedy.

“He left the area prior to us being aware of the scam, but we know where he is. He’s in the Philippines and his wife is with him. His passport has been flagged by the federal government, so if he travels over a border and his passport gets swiped or scanned, we can track his movements. (Smirnow) knows the investigation is going on.”

The U.S. postal service in the state of Illinois has launched a criminal investigation into the scam. The Securities and Exchange Commission is also aware of the scam and is monitoring it.

In August of last year, the North Dakota Securities Department issued a cease and desist order for Pathway-2-Prosperity and declared it an illegal investment scheme. According to the department’s website, commissioner Karen Tyler announced that the department was actively investigating a Canadian-based Internet fraud scheme that was being promoted in several communities in North Dakota. The website stated that Pathway-2-Prosperity was “promising returns of 1.5 per cent to 2.67 per cent per day. An example hyped in its website of $100 invested in the 60 Day Plan would return over $260 in just two months.”

Smirnow is believed to be of Russian descent and is originally from the Niagara/Hamilton area.

Those who have been victimized by the Pathway-2-Prosperity scam are encouraged to call the Huntsville OPP detachment at 705-789-5551.

http://www.gravenhurstbanner.com/article/134551

It is also surprising to read that Nick’s own wife Diana is also wanted for “defrauding the Ontario Disability Support Program of $55,000″. I suppose crime runs in this family.

Good luck to those that have lost money in this scam in trying to recover your losses. To those that are still “cheerleading” this scam, don’t worry, the next big investment is right around the corner.

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According to the original litigation, Global Online Direct Inc. took in $45Million from at least 9000 investors. On October 6, 2008, the latest declaration from the Grassmueck Group, the court appointed receivership, only $1.5M is available to return to the investors from what has been recovered.

Now for the bad news, only investors that had invested at least $2000 are authorized to submit a claim. This would leave out at least 50-90% of the investors because when this program was online, the minimum investment to participate started at $150 and later raised to $500. Most people will usually go in with the minimimun to “test the waters”. Unfortunately, the majority of them will receive zilch from the recovery efforts.

This begs the question, does government intervention and meddling really for the protection and benefit of the investors? To rub it in, the biggest winners in this whole fiasco are the receivership, attorneys, accountants and various consultants hired by the government to provide “relief” to the bilked investors. How much was their windfall? Read the first “Notice of First Applications for Professional Fees and Expenses“.

Receiver :                    $124,558.00 + $ 6,158.67 in expenses
Receiver Counsel :        414,982.00 + 25,285.93 in expenses
Local Counsel :               26,754.00 + 1,876.14 in expenses
Receiver Accountant :  158,632.95 + 2,501.82 in expenses
Total:                 $724,926.95 + $30,322.56 in expenses

It appears that the investors got duped twice, once by Global Online Direct Inc. and then again by our own trusted government that are elected to serve and protect its citizens. If the distribution were to be fair and all the investors got something back, $1.5M/9000 that would be a pittance of $167.00 vs the $755,000.00 being paid to our SEC and government representatives.

One blaring question remains. Where is the rest of the missing $42,744,750.49? Our government went through great expense and can not seem to find it. It is as if the paper trail ended and the money went into thin air.

Our theory is that this money is probably safely hidden offshore somewhere just waiting for Global Online’s defendants to withdraw and spend once they come out of prison in a few years. This is a testament that to protect your hard earned money and wealth you will have to put some offshore. The scammers do it, why shouldn’t you?

What are the lessons to be learned from this experience for the small investor? If you are going to participate in risky investment programs, ones that falls in the gray area of SEC jurisdiction; make sure it is located offshore. If the SEC litigates and halts the program, you can kiss your investment good-bye. (This is not to say all offshore investments are legit either, one will have to do the same amount if not more due diligence and work within your country’s tax laws.)

Secondly, educate yourself on how to safe guard your wealth from the leeches and predators by going offshore. Global Online Direct has demonstrated clearly they know how to do this, after all $42 Million is still missing.

This whole experience has us wondering what if the SEC had practiced a bit of “laissez faire”? Would the 9000 investors have gotten more than what they are getting now, which is practically nothing? What if the intentions of Global Online Direct was really honest and attempting to make good on what they were promising? We will really never know.

One thing we do know for sure is our U.S. government doesn’t really have the best interest of small investors in mind. Just look at the current financial crisis. Literally overnight, investors were wiped out in the stocks of IndyMac (INDC), Freddie Mac (FRE), Fannie Mae (FNM), Lehman Brothers (LEHMQ), Washington Mutual (WAMUQ) and the list goes on. All from the actions of our elected officials and employees of the taxpayer at the Federal Reserve, Treasury, SEC and FDIC. If they had done their job of watching over the real crooks on Wall Street, we wouldn’t be in this mess. So much for serving and protecting the people.

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The last email sent out from Worldlpp.net was rather ominous. It was purporting to be from an employee of ITConsultinglive.com on behalf of Worldlpp because Conrad Addison was incapacitated as a result of a stroke. The employees of ITConsultingLive had now taken over the management and operations of Worldlpp.

No explanation was given as to what will happen to all the investor’s money and as to the future of Worldlpp. Investors are entitled to know as much since it is their money that funded and capitalized ITConsultingLive as one of the investments.

As of today ITConsultingLive.com is still online and apparently in business. The various sites that were under the Worldlpp portfolio are also online, however, no updates to investors as to the status for over six months. Vivamin.com, BidHire.com, BidSnarf.com, and StripLivePoker.com were all part of this Worldlpp investment project.

It should be noted that Conrad Addison is also a principal of TakeTheInternetBack.com and WorldAdGroup.com. Worldlpp was also involved in MegaBonusClub.com. The following question and answer is found in the FAQ of TakeTheInternetBack.com site.

Q: Okay, who are the principals and who is backing this?
A: How about 3 successful businessmen? Our backers are Winston Price, a retired hedge fund manager; Conrad Addison, a retired businessman currently active with internet programs, and J. Brian Bailey, a retired automotive consultant.

At the bottom of each of these sites, one can see the “Website development by IT Center” badge which corresponds to ITConsultingLive.com. Each site is also cross linking to the various sites that are all developed by ITConsultingLive.

So what does all this mean? We can only deduce that ITConsultingLive.com is alive, well and functioning. As an entity of Worldlpp they should be held accountable to its investors. Lack of communication and the shutdown of Worldlpp.net/.com only confirm that the investors have been left high and dry.

If Conrad Addison and the principals of ITConsultingLive.com are profiting from the use of investors’ funds and using the money to invest in other businesses like TakeTheInternetBack.com and the WorldAdGroup.com, they are committing fraud.

It is our opinion that the Worldlpp program was set up as an elaborate scam to steal monies from investors to finance their separate online ventures. As a public service, we are warning potential customers and clients to steer clear of any websites or businesses that are developed by IT Live aka ITConsultingLive.com. Stay away from any business that has Conrad Addison’s name attached and or an address of IT Center, 22811 Meridian Ave E., Suite B-19, Graham, Washington, 98338, USA.

There were several other websites being sold as an investment opportunity from Worldlpp that were being developed before the main site went offline. HotEuropeanCams.com and a supposedly payment processing portal in Romania called PlatiVirtuale.ro. Both never came into fruition, however, investors’ funds went with it.

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Two and a half years after the initial filing of the Civil Action, less than half of the alleged $22 million that was defrauded from investors has been recovered by the receivership and distributed to the claimants. Some interesting details and facts were found during the investigation and discovery of this case that should provide a lesson for any one looking into investing in HYIPs.

Securities and Exchange Commission v. David Tanner, individually and d/b/a Capital Enhancement Club, Rocky D. Spencer, Marroc Corp. and Richard P. Kringen, Defendants, and, Omnibus, LLC, Vectra Resources, LLC and Dynamic Environmental Solutions, Inc., Relief Defendants, Civil Action No. 05-4057-SAC

The information presented below is gathered from the public records and you can follow the timeline here.

David Tanner aka James Tucker are aliases for Scott Fraiser Klion, formerly of Copperas Cove, Texas and he is considered a recidivist securities law violator. Klion has been involved in at least three cases initiated by the Commission. Currently an expat living on St. Maartens where he fled to after being named as the primary defendant in SEC v. Scott Klion, d/b/a Cen-Tex Alchemy Guild, et al. No. 6:98-CV-186, USDC. Another civil case. Unless he gets charged and convicted via absenteeism and extradited, he will never set foot back on U.S. soil. Defrauded investors will never see justice done.

Rocky Spencer – served 5 years in prison for a conviction related to Instantgold back in 1994 for conspiracy to defraud the United States, money laundering, wire fraud and structuring transactions to evade reporting requirements. Yet after this conviction he gets involved with CEC. Once a criminal, always a criminal. Spencer and his mother, Margaret settled with the SEC regarding this complaint and is no longer being pursued, however, he still currently operates a number of online websites. Ask yourself if you can you trust this guy.

• http://www.instantgold.net (Instant Gold Exchange)
• http://www.igecard.com (IGE Card)
• http://www.progressivegoldcasino.com [offshore Internet gambling]
• http://www.ultimategoldgoldcasino.com [offshore Internet gambling]
• http://dwgcard.com (dwgcard)
• http://allmenformen.com (gay men’s forum)

Richard P. Kringen – was issued a cease and desist order by the Kansas State Securities Commision on December 16, 1994 for running a “prime bank” scam (Docket No. 95E042). At the age of 79, he gets involved with CEC. It goes to show that even senior citizens can be scammers too. In this case, he was ordered to disgorge $226,113.30 and $17,410.66 in interest for his share of ill gotten gains.

Margaret F. Spencer – is Rocky’s mother and resides at the same address as Rocky in Newport News, Virginia. During January and February of 2005, she received at least $68,000 of CEC investor funds for no apparent consideration.

Defendants, in furtherance of their scheme to defraud, made numerous misrepresentation and omissions of material facts including but not limited to all of these lies:

• That CEC generates returns from a secret trading program run by the United States Federal Reserve
• That CEC has been successful in this type of secret trading for the past 8.5 years.
• Monies invested in CEC are earning approximately 7% to 11% monthly (120% to 260% annually).
• Non-affiliated investors were made rich by CEC’s secret trading activity.
• Defendants fail to disclose to investors that their funds will not be used in a secret trading program, but rather will be misappropriated by Rocky Spencer and the other defendants then used to pay Ponzi-type payments to earlier investors.
• Defendants fail to disclose to investors that monies sent to Marroc are under the control of Rocky Spencer, a convicted felon and recidivist fraudster who, in 2002, filed for bankruptcy protection.
• Defendants fail to disclose that the Latvian bank to which they wire funds was designated by the United States Treasury Department as primary money laundering concern.

Let this be a lesson about “HYIPs” promising a high rate of return for your invested money. If in your due diligence, you find they want to stress anonymity – remember, it may be for a criminal reason. If you decide to throw in a significant amount of money, spend a few extra dollars to do a background check on the admin if you are lucky enough to get a name. Background checks are inexpensive and can end up preventing you from losing your hard earned money.

Take note that if an investment asks you to send money overseas to banks in Seychelles or Latvia you should be aware that these places are hotbeds for fraud and money laundering.

Bank counter deposits directly into a program offer no receipt or proof that it was your money that was deposited. This will make it difficult to make a claim to recover money once a fraud is committed.

Remember to do your due, unless you want some guy to be living the good life with your money on some tropical island, sipping cocktails.

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Withdrawals suspended Indefinitely
Withdrawals suspended Indefinitely
Due to The US Government Indictment Against E-GOLD Our payment Processor
ALL withdrawals are suspended Indefinitely.

All of our funds are locked in Egold and cannot Be accessed according to the US Government as Long as E-GOLD remains Under Investigation

We apologize for this But Is TOTALLY OUT OF OUR CONTROL

We will Keep you updated as we get word
Jun-11-2007 11:37:20 AM

Basically, Mr. Chris Hogan is using the recent troubles that e-gold had as an excuse not to return funds to the investors and covering up the real problem that he is facing. Frankly, we are surprised that his website is still up and running, but then again a criminal will keep on going as long as he can get away with it.

What Chris Hogan failed to mention on his website was that the Arkansas Securities Department had issued a Cease and Desist order on all his shenanigans since September 2006. Even with that order, Chris Hogan was still enticing investors to send him money for his “casino” venture all the way up to June 2007.

You can find the C&D order here, S-06-015-06-CD0

Here are some highlights of the order with our commentary.

STATE OF ARKANSAS
SECURITIES DEPARTMENT
IN THE MATTER OF
CHRISTOPHER A. HOGAN, CRUNKLAND
RECORDS, LTD., ROLFund.com,
and ALL PERSONS OR ENTITIES EMPLOYED
BY OR OTHERWISE AFFILIATED
WITH THEM No. S-06-015-06-CDOI
SUMMARY ORDER TO CEASE AND DESIST

The Arkansas Securities Department (the “Department”) has received information and has in its possession certain evidence which indicates that Chris Hogan, Crunkland Records, Ltd., ROLFund.com, and all persons or entities employed by or otherwise affiliated with them, either have already engaged in acts or are about to engage in acts that constitute violations of the provisions of the Arkansas Securities Act (the “Act”), codified at Ark. Code Ann. § 23-42-101, et seq.(RepI. 2000). This Order is entered pursuant to Ark. Code Ann. § 23-42-209 and the Arkansas Administrative Procedures Act, Ark. Code Ann. § 25-15-201, et seq.

FINDINGS OF FACT
1. Crunkland Records, Ltd. (“Crunkland”) is an Arkansas corporation incorporated on July 5, 2005 and is currently in good standing with a mailing address of 2322 Lakeview Drive, Heber Springs, AR 72543. The Arkansas Secretary of State’s web- site reflects Chris Hogan as registered agent for service of process.
2. Christopher A. Hogan, aka Chris Hogan, aka Chris “Big Poppa” Hogan, aka Chris A. Hogan (“Hogan”) is the President of Crunkland and a resident of Heber Springs, Arkansas. Hogan is the organizer of Crunkland and also claims to be a Universal Life Church minister..

(Wow, a Universal Life Church minister… well read on)

26. Respondents, Chris Hogan, Crunkland, and ROLFund omitted to provide risk factors, failed to state that the JVA interests in Crunkland and the “loans” to ROLFund were known to be securities, that Respondent Hogan was the subject of a Cease and Desist Order in Missouri for illegal sales of securities, and also failed to disclose that Respondent Hogan had served time in Arkansas in relation to a criminal conviction for theft of property, all of which was a material part of their sales and operated as a fraud on investors in violation of Ark. Code Ann. §23-42-507(2).

(Maybe he was reformed after his prison term and became a minister… we think not.)

As we will always say, do not believe all you hear or read on these too good to be true online investment sites. Do your due diligence. The world wide web is full of scams, but also full of information that can help you make better investment decisions. Those that researched into Chris Hogan and his businesses would have discovered the ASD cease and desist order after September 2006 and would have not lost any money.  A simple search on his name, businesses, addresses and SEC sites would have turned up this information.

What about those that have invested large sums of money? Recovery would be nearly impossible at this point, however, if you have the time and money to pursue legal actions, that is a possibility. Afterall, we do know the bank account, names and addresses of his so called businesses. If there are any assets to be recovered, it is there.

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Attached is the latest from the SEC website in regards to the Global Online Direct litigation.

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20183 / July 6, 2007
SEC v. Global Online Direct, Inc., Bryant E. Behrmann, and Larry “Buck” E. Hunter, Civil Action No 1:07-CV-0767 (N.D. Ga., filed April 5, 2007).

The Commission announced today that it has amended its previously filed complaint in the United States District Court for the Northern District of Georgia to add fraud charges against Global Online Direct, Inc. (Global), a Nevada corporation headquartered in Union, Oregon, and its principals, Bryant E. Behrmann (Behrmann), of Las Vegas, Nevada, and Larry “Buck” E. Hunter (Hunter), of La Grande, Oregon.

The Commission’s original complaint, filed on April 5, 2007, charged Global, Behrmann, and Hunter with conducting an unregistered offering of securities through the offer and sale of interests in Global’s “Secured Profit Inventory Program” (SPIP), in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. At the time the original complaint was filed, Global, Behrmann, and Hunter consented to, and the Court ordered, the appointment of Michael A. Grassmueck (“Grassmueck”) as an independent corporate monitor for Global.

On June 4, 2007, the Court issued, also with Defendants’ consent, an Order expanding Grassmueck’s authority to that of a Receiver for Global, and freezing the assets of Global, Behrmann, and Hunter. The Order requires the Receiver to perform an accounting of the offering and sale of securities by Global, which it termed loans, including the names of all investors and/or lenders, the principal amount invested with and/or loaned to Global by all investors, and the amounts paid by Global to any investors.

The Amended Complaint, which was filed on July 3, 2007, charges that, since at least October 2005, Global, Behrmann and Hunter have orchestrated a massive Ponzi scheme and conducted an unregistered offering of securities through Global’s SPIP. Global, Behrmann and Hunter solicited investors to “loan” Global funds for a term of one year in exchange for promised daily interest payments. Depending on the amount invested, Global promised effective annual returns of more than 1,800%. Global purported to generate revenue sufficient to pay investors their promised returns by pooling investor proceeds to purchase distressed inventory, which Global then claimed to resell through various online auction websites, including Ebay and Yahoo! Auctions, as well as through flea markets, street sales and retail storefronts. From October 2005 through March 2007, Global raised approximately $45 million from more than 9,000 investors.

The Amended Complaint further alleges that Global, Behrmann and Hunter failed to disclose to investors that Global’s purported business model was wholly incapable of generating the returns promised to investors, and that the vast majority of the returns paid to existing investors were in fact the proceeds invested by later investors – the key hallmark of a Ponzi scheme. Global, Behrmann, and Hunter also failed to disclose other material information to investors, including that: (a) as of March 2007, Global was more than $30 million in arrears in honoring investor withdrawal requests and owed investors approximately $265 million – an amount more than $250 million in excess of all assets of Global; (b) even though they had promised investors that their investments were “secured and backed by actual product inventories,” they had taken no steps to secure or tie any individual investment to any actual product inventory, and the total value of the inventory was only a tiny fraction of the investments purportedly secured; (c) Global maintained no effective bookkeeping or accounting systems, and thus were completely incapable of tracking or identifying the amounts invested by investors, the returns paid to investors, the cost of inventory purchased, and the proceeds generated through inventory sales; and (d) state cease-and-desist and injunctive orders for prior violations of securities laws had been entered against Global by the states of Pennsylvania and South Dakota, against Behrmann by the states of North Dakota, Pennsylvania and South Dakota, and against Hunter by the states of Idaho, Illinois, Minnesota, North Dakota, Oregon, Pennsylvania, South Dakota and Washington. Additionally, while representing to investors that Behrmann was an attorney and a former judge, Defendants failed to disclose that his law license had been suspended since 1999 for professional misconduct and that the Idaho Supreme Court had found Behrmann to have engaged in “conduct involving dishonesty, fraud, deceit or misrepresentation in course of his practice of law.”

The Amended Complaint further alleges that Global, Behrmann and Hunter violated the securities registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 (the Securities Act) and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Amended Complaint seeks preliminary and permanent injunctions, an accounting, an asset freeze, disgorgement of ill-gotten gains, prejudgment interest and civil penalties against Global, Behrmann and Hunter.

The litigation remains pending as to all parties.

SEC Complaint in this matter and Order Appointing Receiver

http://www.sec.gov/litigation/litreleases/2007/lr20183.htm

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