DFRF Enterprises namedrop FBI & SEC to market scheme
Whenever I see an income opportunity attempt to instill confidence by proclaiming association with regulators or the hiring of former staff, alarm bells go off.
In my mind the only reason to resort to such tactics is to try and convince everyone what you’re doing it not illegal. What that is can be any number of things, but when we see the SEC namedropped, typically it’s to do with unregistered securities and Ponzi schemes.
A BehindMLM reader recently pointed me in the direction of a video from DFRF Enterprises. The video serves one purpose, that being to convince Chinese-speaking viewers that DFRF is not an illegal Ponzi scheme.
To achieve this goal, two Chinese-speaking investors are flanked by the CEO of DFRF, and a gentlemen who claims to be a former FBI agent.
The video is shot on potato quality (240p) and was uploaded to the “DFRF Enterprises Barsil” official YouTube channel on December 9th, 2014.
The screenshot below identifies those on camera:
The woman in red (right) seems to be running the show, with another video on the DFRF Enterprises channel identifying her simply as “Monita from Vancouver”. Another DFRF marketing video identifies her as “Monita Chan”, a “Canada Manager” of DFRF’s.
Monita and the other woman in the video are both DFRF investors, with the video aimed at prospective Chinese DFRF investors.
The man on the right is of particular interest. When Monita introduces him she mentions the FBI, Ponzi schemes and money games (Monita talks in Cantonese and I haven’t been able to get an accurate translation of what is said, any help is appreciated).
The woman in white introduces him again in Mandarin (around the 2:15 mark), as Darren Covar.
DFRF Enterprises marketing identifies Covar as a legal advisor to the company:
Covar is an attorney who runs The Law Offices of Darren P. Covar, P.A.
We are an international business, criminal, and immigration law firm committed to providing high-quality legal representation and personalized service.
Covar himself writes;
As a former Deputy Sheriff and Special Agent I also have a unique understanding of criminal law and have been recognized as an expert in this field.
Putting two and two together, I’m guessing Wanita introduces Covar as a former FBI special agent, who experience investigating Ponzi schemes and money games.
And that makes what Covar says in the video all the more alarming.
For those unfamiliar with the scheme, DFRF Enterprises accept minimum investment amounts of $10,000, on the promise of an advertised and indefinite 15% a month ROI.
This ROI is purpotedly generated via gold mining, but as far as DFRF Enterprises investors are concerned, all they do is pony up $10,000 or more and get paid.
Before we get into what Darren Covar says in the video, we’ll start off with the introduction from Daniel Filho (DFRF Enterprises’ CEO).
[5:06] The way we did it (the income opportunity) is not an ongoing investment, we’re not selling shares in the company and we are not selling a product.
Which means there are no direct links with the Securities and Exchanges Commission or Future Trading Commodities Association (CFTC).
How Filho makes these statements with a straight-face is a mystery, considering in another DFRF Enterprises video, Filho tells viewers they “can participate with a minimum deposit of $10,000″.
Whether Filho is aware of what an unregistered security is, is unclear. Meanwhile Darren Covar, supposedly a former FBI Agent with experience in Ponzi schemes, looks on as Filho speaks and nods approvingly.
[6:55] We are using a similar structure (as that) of American Express, not offering to become a customer, but it is a membership.
You become a member and as a member you participate, we share up to 15% of our monthly profit and the company keeps the rest.
Although it’s mostly fallen out of favor of late, Ponzi schemes claiming to be private member associations was common enough in the past.
These schemes usually present investors with lengthy agreements to sign, professing that everything is done in private, and as such regulatory agencies like the SEC have no jurisdiction over the company or any investments made.
Needless to say such stipulations and/or agreements are total hogwash.
Calling your Ponzi scheme a Private Member Association or any sort of derivative, does not legalize the use of newly invested funds to pay off existing investors.
Left unsaid by Filho is why, if DFRF Enterprises are able to generate monthly ROIs of up to 15%, they need $10,000 minimum deposits from investors to begin with.
At [8:38] Wanita addresses Darren Covar, asking him to “tell everybody why this is legal”.
[8:38] Yes, as you said before I used to be a special agent and I worked for the government.
So, being a former law enforcement officer, it’s very important for me that everything is done legally.
I have a history of investigating Ponzi schemes when I was a special agent. So I know what’s right and what’s wrong and I have a very strict compliance policy, to make sure that we’re doing everything right.
We’ve also utilized outside resources, such as going to the head of the SEC, the former head of the SEC, to work with us and view and make sure everything is done properly.
Holy shit. I have no idea how much DFRF Enterprises are paying Covar… but now we’ve got claims from a former FBI agent that the (former?) head of the SEC is also involved. Covar also tells viewers he’s working with “a former SEC attorney”.
Remember, this is a scheme that solicits $10,000 minimum investment on the promise of a 15% a month ROI. And they believe they are exempt from SEC registration because it is a private membership association.
Over the years I’ve seen a lot of claims made by people involved with questionable opportunities, but this clearly takes the cake.
But it doesn’t end there, Covar’s not finished…
[13:05] As a retired special agent, I’ve spent my career doing things the right way. And I promise I will continue doing the same things now.
Covar, using his status as a former FBI special agent and name-dropping the SEC, personally signs off on the legitimacy of DFRF Enterprises.
Filho then starts crapping on about phases, hundreds of millions of dollars and credit lines available to the business.
Again, why any of this is required when DFRF Enterprises is purportedly pumping out a legitimate monthly ROI of 15% is unclear.
At [20:19] into the broadcast, Wanita turns again to Darren Covar and asks,
Can you tell us the 15% interest, they get it back (the investors), is it legal?
DFRF, it is a membership program and then they share the dividend, whatever money they earn (as a) profit share.
So the profit share (is) every month 15%, from your experience and your knowledge, as a former attorney, is this legal?
It’s just like joining American Express, if I join and they want to give me a percentage, no problem?
[21:13] You’re absolutely right about that. The way Daniel has it set up is perfectly legal.
To which Wanita asks, “So nobody will go to jail?” and Covar replies, “No”.
Everybody at the table then proceeds to laugh.
What makes this behavior all the more absurd, is Daniel Filho’s followup explanation as to why people are depositing upwards of $10,000 with DFRF:
[23:40] The reason why it’s not an investment but is a membership, is because we have already funded the project. We are not raising money to operate anything.
The money that comes from members, just to be clear, members of the project, not the company, not selling stocks, we already have the money, we have the entire infrastructure and we are allowing people to participate in a deal that is 100% complete.
Not investing. Be part of something that is already done.
If DFRF’s gold projects are already paid for and fully funded, the hell do they need $10,000 investments from affiliates for?
Furthermore, whether “the project” is complete or not is irrelevant to the fact that an offer of unregistered securities is clearly being made here.
$10,000 or more of affiliate funds are invested, and Filho and DFRF Enterprises pay out a 15% a month ROI.
That’s the core of the business, that’s how they operate and more importantly, that’s what’s being marketed to the general public.
As I mentioned at the start of this article, this video went live in December of last year. Whether it was successful in getting members of the Chinese community, its intended target, to part with tens of thousands of dollars is unknown.
What we do know though is that a RICO lawsuit was filed in February of this year, alleging that DFRF Enterprises had failed to pay at least two investors the advertised 15% a month ROIs.
Two Massachusetts investors who filed $80,000 and $100,000 claim they never saw the advertised 15% a month ROI, because ‘DFRF’s business income was grossly inadequate to satisfy payments promised to members‘.
But um, I thought DFRF’s “projects” were all fully-funded and what not. Shouldn’t everybody be rolling in cash by now?
In response to what appears to be a lack of newly invested funds to pay out, Filho appeared in another video in March.
In the video, Filho touted a possible IPO float pending SEC approval.
To “raise additional capital” of course.
Remember, this is after Filho and his former FBI special agent attorney assured everyone that DFRF’s purported gold projects were all fully-funded and good to go.
I mean, there’s no possible way that all we’re looking at here is what happens when you take newly invested funds and pay off existing investors 15% a month.
What with Darren Covar’s whoring out his former employment with the FBI to profess the legitimacy of the scheme, the name-dropping the SEC to achieve the same, Filho having been previously busted for running a Ponzi scheme in 2009 and investors claiming they aren’t getting paid – that this isn’t going to end well is beyond that of an understatement.
Stay tuned for what I think might just be one of the more bizarre Ponzi takedowns we’ve seen yet.