United States Attorney
District of Columbia
Friday, May 18, 2012
Florida Man Pleads Guilty in Washington, D.C., to Wire Fraud in Massive Internet-based Ponzi Scheme
Venture Raised More Than $110 Million From “Members”
Thomas A. Bowdoin Jr., also known as Andy Bowdoin, the founder and operator of a business known as AdSurf Daily Inc., pleaded guilty today to a federal charge of wire fraud stemming from a fraudulent Internet-based advertising scheme that generated more than $110 million from thousands of people across the United States and other countries.
The plea was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and James Glendinning, Assistant Special Agent in Charge of the Orlando Field Office of the U.S. Secret Service.
Bowdoin, 77, of Quincy, Fla., entered the plea this afternoon before Judge Rosemary M. Collyer in the U.S. District Court for the District of Columbia. No sentencing date was set. Under terms of the plea agreement, which were approved by the court, Bowdoin faces a maximum sentence of 78 months in prison and fines of up to $175,000. He remains free pending a hearing on June 12, 2012, to determine if he should be incarcerated pending his sentencing.
According to a statement of offense, signed by the government as well as the defendant, Bowdoin ran a Ponzi scheme disguised as an online advertising company. AdSurf Daily Inc., or ASD, drew in large numbers of investors by promising huge returns on their investment. Thousands of victims, many from the Washington, D.C. area, lost money through the scheme.
Bowdoin admitted that he operated ASD from September 2006 until August 2008, when agents from the Secret Service and the St. Cloud, Fla. IRS-Secret Service Task Force seized ASD’s assets and bank accounts under a court order.
The U.S. Attorney’s Office for the District of Columbia subsequently obtained civil forfeiture of $80 million in proceeds of Bowdoin’s schemes, including numerous bank accounts, real property, luxury vehicles and watercraft. The Department of Justice’s Asset Forfeiture and Money Laundering Section, the U.S. Secret Service and the U.S. Attorney’s Office for the District of Columbia established a program to return the fraudulently obtained money to victims. Approximately $55 million in forfeited assets has been returned to 8,400 victims.
“The Internet now allows swindlers to perpetrate fraud on a much larger scale than Charles Ponzi could have imagined 100 years ago,” said U.S. Attorney Machen. “Andy Bowdoin’s online Ponzi scheme took in $110 million from thousands of people across the United States and other countries. His guilty plea today is another milestone in our efforts to protect the public from being ripped off over the Internet. This case is a healthy reminder that the public should be skeptical when evaluating investment opportunities: If it sounds too good to be true, it probably is.”
“The Secret Service believes that building trusted partnerships between all levels of law enforcement is a proven successful model for combating criminal activity,” said Assistant Special Agent in Charge Glendinning of the Orlando Field Office. “Through this collaborative approach, our St. Cloud Internal Revenue Service-Secret Service Financial Crimes and Money Laundering Task Force was able to focus our resources to uncovering this fraudulent scheme and prevent additional victims.”
According to the government’s evidence, ASD operated on the Internet at various websites, including www.adsurfdaily.com, www.adcashgenerator.com, and www.lafuentedinero.com. Bowdoin heralded ASD as an “income opportunity,” and referred to himself as a “money magnet.” Bowdoin stated that it was his “goal ... to make 100,000 millionaires in 3 years.”
ASD’s business model promised members the opportunity to earn 125 percent (initially 150 percent) on each dollar paid into ASD, as long as the members viewed other members’ websites for a few minutes each day on ASD’s Internet page, commonly referred to as the ASD “rotator.” Bowdoin also promised members commissions for recruiting other members into the program.
While a small percentage of ASD members who invested early in the program could earn the extraordinary rates of return, the promised opportunity was illusory for the vast majority of ASD members. Indeed, due to the fact that ASD’s pyramid-style business model relied entirely on an ever increasing influx of new money to fund the debt owed to earlier members, the vast majority of members could never earn the promised rates of return, making the promised opportunity fraudulent. Key to the government’s case was that ASD did not generate any revenue from sales to customers outside the pyramid scheme.
During ASD’s operation, Bowdoin raised more than $110 million from over 96,000 members. Bowdoin paid out to members approximately $45 million to cover their investments and induce them to re-enroll in ASD’s program. Bowdoin spent more than $8 million to operate and promote ASD and more than $1 million for his own personal benefit or the benefit of his family. In 2008, alone, Bowdoin used ASD funds to purchase a lake house in Quincy, Fla., two luxury vehicles, a boat, two recreational watercrafts and other items of value.
In 2008, Bowdoin held several rallies across the country attended by thousands of ASD members and potential members, during which he promoted ASD’s business model and offered matching bonuses to induce further investment. During the rallies, an ASD employee informed audiences, at Bowdoin’s direction, that Bowdoin could be trusted because a criminal background check on Bowdoin only revealed a speeding ticket in North Carolina.
Bowdoin knew those representations were false. The truth was Bowdoin had been convicted of three securities-related felonies in Alabama in the 1990s and had been charged in Alabama in the 1990s in at least 13 other indictments alleging securities fraud, resulting in Bowdoin being forever barred from selling securities in Alabama. None of these disclosures were made to ASD members or potential members.
In addition, to further promote himself and ASD, Bowdoin directed an ASD employee at these rallies to inform ASD members and potential members that Bowdoin had been personally given a medal of distinction from President George W. Bush for his business achievements. In reality, Bowdoin purchased the medal of distinction from the National Republican Congressional Committee by donating $25,000 to the committee, using ASD members’ funds.
In announcing the guilty plea, U.S. Attorney Machen and Assistant Special Agent in Charge Glendinning praised the efforts of those who have investigated and prosecuted the case. They expressed appreciation to U.S. Secret Service's Orlando and Tallahassee Field Offices and the St. Cloud IRS-Secret Service Task Force for their work in the investigation. They also expressed special recognition to Secret Service Special Agents Roy Dotson, Thomas Campbell, and Nielsen “Scot” Cochran and St. Cloud IRS-Secret Service Task Force Agent Brian Watson.
U.S. Attorney Machen and Assistant Special Agent in Charge Glendinning also commended those who worked on the case from the U.S. Attorney’s Office, including Forensic Accountant Crystal Boodoo; Information Technology Specialist Kimberly Smith; Paralegals Anne Riopelle, Nicole Wattelet, Russ Crabtree, Tasha Harris, Shanna Hays, Sarah Reis and Taryn McLaughlin, and Legal Assistants Jessica McCormick and Krishawn Graham.
Finally, they praised the work of Assistant U.S. Attorney David Gorman and former Assistant U.S. Attorneys William Cowden and Vasu B. Muthyala, who investigated the case, and Assistant U.S. Attorneys Seth B. Waxman and Allison Barlotta, who investigated the matter and prepared the case for trial. They also expressed appreciation for the work done on the case by the Asset Forfeiture and Money Laundering Section of the U.S. Attorney’s Office.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit : www.stopfraud.gov .