Prosecutors: Bowdoin Knew ASD Was Illegal Prior To Rallies That Collected Tens Of Millions Of Dollars
Andy Bowdoin knew AdSurfDaily was illegal in 2007, months before the company conducted rallies in major U.S. cities and collected tens of millions of dollars from members, according to court documents.
Instead of becoming legally compliant, Bowdoin introduced new layers of deception in 2008, prosecutors said.
Included in the deception was a video made in response to a survey of existing promoters. Survey results suggested new promoters and members weren’t joining ASD out of fear it was a Ponzi or pyramid scheme, prosecutors said.
Prosecutors made the assertions in a second forfeiture complaint seeking to seize other assets linked to ASD. The complaint, which has a different case number than the still-active August forfeiture complaint, was filed last month.
It cites multiple instances in which Bowdoin family members allegedly used ASD funds for personal purchases. The money was used to buy real estate, luxury automobiles, a boat, jet skis and trailers to haul the water equipment.
“In December 2007, more than six months before the government intervened, Mr. Bowdoin decided to tell an associate (a silent partner) in the ASD venture, whose share of ASD’s revenue Mr. Bowdoin had decided to reduce from 5% to 1%, that, ‘[I]f we can change the site and marketing plan before [the regulators] attack, everyone will be safe,’” prosecutors said.
“Mr. Bowdoin and several associates knew [in 2007] they were breaking the law operating ASD,” prosecutors said. “They knew that Mr. Bowdoin was lying to ASD participants in order to get more of their money — so that the ASD fraud could continue, and expand, to the point where its operators could start pulling out significantÂ income for operators, their friends, and family members,” prosecutors said.
Working with the survey producer and attorney Robert Garner, ASD produced a video featuring Bowdoin and Garner and placed the video on ASD’s website.
Rather than addressing prospects’ concerns by focusing on compliance or even hiring a compliance attorney, ASD instead used the video to trick members into believing all was well and that the company complied with all laws.
Prosecutors said that almost every assertion made in the video was false, including assertions that Garner and a team of lawyers had vetted ASD and determined it was operating legally and not a Ponzi scheme.
The video was created in response to the survey findings and was a ruse to disarm skeptical promoters and recruit more members, prosecutors said.
“ASD actually [employed] Garner to participate in a marketing video that ASD crafted to reassure hesitant prospects of ASD’s lawfulness, not for his expertise in ensuring ASD’s compliance with applicable laws,” prosecutors said.
“Messrs. Bowdoin and Garner said that ASD’s operations had been reviewed carefully by a team of legal experts to ensure compliance with all applicable laws,” prosecutors said.
“Messrs. Bowdoin and Garner knew the representations made in the video were material to prospective participants, made-up, and false,” prosecutors said. “The misrepresentations led to a significant expansion of investment in ASD and related auto-surf investment programs.”
In fact, prosecutors said, ASD didn’t hire compliance attorneys during the first 20 months of its existence, waiting until after it started to collect enormous sums at rallies to address compliance with federal securities laws and other laws.
Bowdoin told members throughout the first half of 2008 that ASD complied with all laws, despite the fact the company did not have a compliance attorney, prosecutors said.
ASD’s assets were seized in early August. At the time, attorneys hired to ensure its compliance had been involved with the company for only days, according to the complaint.
Prior to the hiring of the attorneys, ASD had deposited millions of dollars in banks and was sitting on a pile of undeposited checks, according to court filings. The U.S. Secret Service said at least $93.5 million was seized in the ASD probe.
Prosecutors said ASD had masked itself as an advertising company, but really was selling “unlawfully sold investment contracts — unregistered securites that were not exempt from registration.”
ASD collected tens of millions of dollars at rallies during the summer of 2008, engaging in multiple layers of deception to gather magnificent sums, according to court filings.
“ASD made up the daily revenue numbers that it published,” prosecutors said. “The revenue numbers were manufactured to deceive members into believing they could reasonably expect to receive an average daily return on their investment with ASD of about 1%. ASD’s operation was neither sustainable nor legal.”
Even as Bowdoin was professing to be wealthy, his only interest in creating easy wealth for other “good Christain people,” prosecutors said, “he still owed his ex-wife thousands of dollars from a previous failed venture.”
During a conference call last summer, Bowdoin told members he’d taken only about $50,000 out of ASD.
What he failed to mention, according to the December forfeiture complaint, was that family members were using ASD to make personal purchases totaling in the hundreds of thousands of dollars, including the retirement of a $157,000 mortgage.