Trafficmonsoon SEC Preliminary hearing – Part 1

This is an update on the Trafficmonsoon Preliminary hearing:

On Monday the 31st of October 2016, the Trafficmonsoon Receiver, Peggy Hunt, filed two declarations in court less than 24 hours before the 10am start time of the preliminary hearing between the SEC and Trafficmonsoon.

In her first declaration, she itemised her credentials with regards her suitability to be Receiver for TrafficMonsoon. This is an abstract of her credentials:

I have been a lawyer for 27 years. Outside of a one-year judicial clerkship for a Justice on the Connecticut Supreme Court immediately following my graduation from law school, my experience has focused on bankruptcy, insolvency and receivership law.

More relevant to this matter is that I have served on the Panel of Chapter 7 Trustees for the District of Utah since 2011.

In that post … I regularly represent fiduciaries, including bankruptcy trustees and equity receivers appointed in SEC civil enforcement actions in large cases involving Ponzi schemes and other types of securities fraud.”

 

Communication with Traffic Monsoon investors and victims

The Receivership has been manning a call center since August 8th and accepting written inquiries since late September.

As of October 20th, 2016, the Traffic Monsoon Receivership has received 1648 communications via the above platforms.

This includes 40 written complaints submitted to the FBI and 110 call reports provided by the City of London Police (through their fraud reporting hotline).

  • 1076 communications from Traffic Monsoon affiliates, a lot of whom wanted to know ‘if they would be getting their “revenue payout”‘.
  • 345 communications from Traffic Monsoon affiliates who identified themselves as investors, as having invested or made an investment, or who expected to earn or make money. A number of these investors wanted to know ‘when the website would be reinstated so that they could “start their business again”‘.
  • 147 communications from Traffic Monsoon affiliates who demanded the Traffic Monsoon website be reinstated.
  • 74 communications from affiliates who identified themselves as victims involved in a fraud or scheme and/or alleging fraud or misrepresentation.
  • 73 communications from affiliates who claimed they were “not investors”.
  •  57 communications from Traffic Monsoon affiliates who declared they ‘relied on Traffic Monsoon for income or to pay debt‘.
  • 43 communications from Traffic Monsoon affiliates who ‘stated they paid for but did not receive the services they expected or did not receive any services‘.
  • 38 communications from persons who ‘stated that “life savings” were paid or “savings” were paid to Traffic Monsoon by themselves or others‘.

Examples of communications provided by the Receivership span England, Australia and the US and detail losses of $5000 AUD to £12,000 GBP.

Sunil Patel and the Traffic Monsoon affidavits

The Traffic Monsoon affidavit portal, through which affiliates could access prepared affidavits to sign, is owned by Lukasz Galuszka.

Galuszka ‘appears to be a Polish resident’ and Traffic Monsoon affiliate.

The person who appears to be one of the most vocal persons referring relevant parties to the affidavit site is Sunil Patel, an individual who resides in the United Kingdom, who identifies himself as a “Triple Diamond Member” of Traffic Monsoon, and who administers a Facebook site called “Traffic Monsoon Sunil”.

Mr. Patel claimed to have made £400 a day from his Traffic Monsoon work.

I served a demand on Mr. Patel, a UK citizen, to provide me information about his involvement in Traffic Monsoon.

He wrote me back stating that he is a customer of Traffic Monsoon and does not know why I would be requesting information from him.

Traffic Monsoon’s corporate structure in the UK

The Traffic Monsoon website cited “Traffic Monsoon Global Limited” as a point of contact.

As per an investigation by the Receiver, Traffic Monsoon Global Limited was incorporated in the UK on December 18th, 2015.

I asked Mr. Scoville whether the Imperial location was a physical location where customers could go and interface with Traffic Monsoon, and he stated in response: “No, not really…”.

He stated that he was told by Mr. Raja that after PayPal froze funds, people would show up at this address because they wanted their money and to find out what was going on.

He paid Mr. Raja £6000 a month to handle dealing with these issues.

Mr. Scoville states:

I don’t really know how much all of this [is] true because somewhere around in here as well, I’ve come to believe Amir’s been lying to me especially because of the 6,000 pounds a month that I was paying to him for staff.

I just wasn’t sure whether or not staff were actually there, actually doing anything, if there was actually anything actually there because I would go in and they would say there’s nobody there.

So I really don’t know all the ins and outs of what’s actually been going on over there.

I checked into it a little bit myself. I went over there and apparently the person at the front desk didn’t know who I was, who asked to see the people that are working Traffic Monsoon, and they said that there’s nobody there.

So I don’t know all of the ins and outs of what’s going on there. I may have been scammed. I don’t know.

 

Charles Scoville appears to be in hiding

Mr. Scoville is a US citizen who currently resides in Utah.

Mr. Scoville has rented the Murray apartment for several years.

Shortly after being appointed, I went to the Murray apartment. It is a one-bedroom basement apartment.

In approximately May 2016, Mr. Scoville prepaid his rent on the Murray apartment for a year.

Mr. Scoville was present in Utah in May 2016 when he was questioned by the SEC.

Documents that I obtained in the Murray apartment show that Mr. Scoville was present in the apartment as late as June or July 2016.

On August 1, 2016, Mr. Scoville signed an agreement to renew the lease on the Murray apartment for one year.

I have informed Mr. Scoville that he can live in the Murray apartment and provided his counsel with the keys.

I asked him to inform me if he does not plan to return to the Murray apartment because if he does not plan to live there I would like to turn the apartment over to the landlord and recover the prepaid rent.

At this time, I do not believe Mr. Scoville is living in the Murray apartment.

Despite several requests, Mr. Scoville has not told me whether he plans to live there.

The Receiver notes that at the time the SEC filed its lawsuit against Traffic Monsoon,

Mr. Scoville was residing in a London flat that was leased by his girlfriend/wife.

Mr. Scoville did not know the address of the London flat. I am informed from his girlfriend/wife/ex-spouse that he no longer has access to that flat.

Traffic Monsoon was sued by a consulting firm (Scoville refused PayPal refunds in March/April 2016)

As an aside in the Receiver’s declaration, it is revealed that in February 2016 Traffic Monsoon was sued by the consulting firms Simons Investment Company and SMI Group LLC.

Simons Investment Group is based out of Colorado and run by Jordan Simons. SMI Group LLC is based out of Delaware and run by Kenin Spivak, Ted Maloney and Edward Swanson.

As per the complaint, it is for breach of contract and related claims of consulting firms Simons Investment Company and SMI Group LLC against Traffic Monsoon and Scoville for breach of a written, fully-executed consulting agreement, including their failure and refusal to pay compensation pursuant to that consulting agreement. In late January 2016, Simon Investment Company and SMI Group LLC were approached to “assist” Scoville after PayPal froze investor funds. After that was resolved, the firms were to “help grow Traffic Monsoon”.

Basically Scoville was to pay Simons Investment Company and SMI Group LLC 1.25% of affiliate funds invested into Traffic Monsoon. The firms would also receive 2.5% ‘of any amounts released by PayPal‘.

The narrative from Scoville regarding PayPal’s freeze of funds is that no matter what he did, PayPal refused to release Traffic Monsoon investor funds.

This is not true.

Attorneys working with Traffic Monsoon and Scoville, through the consulting agreement, developed a strategy around demonstrating that PayPal’s actions were not “reasonable” as required by its User Agreement with Traffic Monsoon.

This strategy saw

PayPal ultimately agree to release funds to Traffic Monsoon’s customers.

However, PayPal insisted that distributions of sums earned by affiliates be denominated as “refunds” when distributed.

Scoville declined to distribute funds as so denominated.

 

I discovered in June and July, 2016, $3.95 million was sent by Mr. Scoville via international wire transfers to an entity called EVP International from the Chase Bank accounts.

After several inquiries to Mr. Scoville about these transfers, Mr. Scoville’s counsel indicated that EVP International was just an intermediary for Payza, and that all of the wired funds went to Payza.

I requested that my accountants at Berkley Research Group analyze this issue using the financial records I have obtained from Chase Bank and Payza.

At this time, BRG has traced only $600,000 of the wire transfers into a Payza account during the time in question.

As noted in BRG’s analysis, the data received from Payza does not specifically identify the payee as “EVP International” … (however) these transactions appear to relate to the EVP International transactions identified in the Chase Bank accounts.

But, the majority of EVP International transactions have not been traced into a Payza account.

Thus, at least $3.35 million cannot be accounted for at this time.

I have informed Mr. Scoville’s counsel that until he explains where these funds are, I am not in a position to discuss providing him with a “living allowance”.

 

Ernie Ganz and Dave Barker’s call centers

Mr. Scoville said he made monthly payments for call centers operated by individuals located in Florida and North Carolina, Ernie Ganz and Dave Barker.

He stated that Ernie Ganz runs call centers in Florida and in the Philippines, and Dave Barker runs a call center in North Carolina.

Mr. Scoville said he paid a flat monthly fee of $42,000 to Mr. Ganz and $22,200 to Mr. Barker for the call center services.

When asked about the nature of the services provided by Mr. Ganz and Mr. Barker, Mr. Scoville stated the services related only to customer support and not sales.

I have served a subpoena on Mr. Ganz in Florida and have been contacted by his counsel, but I have not yet received the requested information.

 

2 thoughts on “Trafficmonsoon SEC Preliminary hearing – Part 1

  1. Payza has held my money back from me over several months now, after making 20 to 30 requests to send me my funds to my bank. Would like to get my money..

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