Traffic Monsoon Receiver files revealing declarations
Nothing yet official from the Traffic Monsoon preliminary injunction hearing. We’re monitoring the hearing and will publish an article as soon as we hear something (the hearing is ongoing as I type this).
In the meantime, yesterday the Traffic Monsoon Receiver filed two revealing declarations in court. They pertain to Traffic Monsoon’s inner business operations and communications the Receivership has had.
Below I’ve sorted out the main points of the declarations into relevant categories.
Peggy Hunt’s credentials
Abused and often ridiculed by disgruntled Traffic Monsoon affiliates, turns out Peggy Hunt appears qualified to serve as Traffic Monsoon’s Receiver.
As per her filed declarations;
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.
The affidavits received by the SEC are noted as being ‘substantively identical and have not been changed in any substantive way from the form provided on the affidavit website‘.
Promotion of Traffic Monsoon
Many people were solicited to join Traffic Monsoon through presentations that touted Traffic Monsoon as, among other things, a way to earn money, as a way to gain passive income, and as a way to build wealth.
These presentations were in the form of live seminars that were broadcast on YouTube, YouTube videos, websites and social media sites.
Numerous sites of this kind use the Traffic Monsoon logo.
Sites such as “trafficmonsooncalculator.org” use the Traffic Monsoon logo and tout an ability to “earn” thousands.
Posts made on social media sites typically discuss Traffic Monsoon as a way to earn money; as a way to become a “millionaire”; and on providing secrets to getting huge referrals (which earns a referral fee).
Comments to social media posts often include statements about investments.
It would appear that based on how Traffic Monsoon was promoted by some people, many others would have joined Traffic Monsoon believing they were investing funds with an expectation of making a profit.
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.
The UK registration states that Traffic Monsoon Global Limited’s initial shareholders were Aamir Raja, Toseef Ahmed Sharif and Taheer Sardar, all identified as residents of London.
Mr. Raja and Mr. Sardar were appointed as the initial directors of Traffic Monsoon Global Limited.
In February, 2016, Mr. Raja and Mr. Sadar were terminated as directors, and Mr. Scoville, who is noted as a U.S. citizen, was appointed as a director, with a correspondence address of Apartment 27, the Quays, Salford, England M50 3BB.
An Annual Return filed in the UK in February 2016, states that Mr. Scoville is now the sole director and shareholder of Traffic Monsoon Global Limited, that he is an American, and that the country he is “Usually Resident” in is America.
Another entity, Traffic Monsoon UK Limited, was also investigated.
Based on filings dated February 14, 2016, Traffic Monsoon UK Limited … was incorporated in the UK.
The UK registration information states that the director of this company is Naila Arshad.
The addresses used to incorporate Traffic Monsoon in the UK are virtual mailboxes owned by Taheer. The Receiver has thus far been unable to gain control of the addresses.
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.
When asked why Traffic Monsoon was incorporated in the UK , Scoville told the Receiver it was because ‘Allied Wallet required a UK entity to set up an account‘.
In a July 29th, 2016 interview with the Receiver, Scoville stated:
We had someone that was there with us who said “I’ve got a UK company, we can change it to Traffic Monsoon, and then we can use that registration so you can use Allied Wallet”.
So that’s Taheer and Amir, both of them are on that business registration, but technically they don’t own any of the company.
The Receiver also notes that Scoville claimed to have “registered” Traffic Monsoon in Dubai.
As of this time, I have not been able to verify whether a Dubai entity exists.
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.
The Receiver has asked Scoville for a copy of his passport but to date it hasn’t been turned over.
Traffic Monsoon’s physical business records
Mr. Scoville has informed me that he did not maintain independent account records for Traffic Monsoon.
Instead, all records are based on electronic transaction records maintained by banks, payment processors, and on the servers maintained for Traffic Monsoon.
I have requested a copy of Mr. Scoville’s personal computer which he says may have some Traffic Monsoon records.
To date, I have no received the computer.
Mr. Scoville filed taxes for himself with the Internal Revenue Service and the state of Utah.
His returns include the income of Traffic Monsoon, which is a pass through entity for tax purposes.
He reported more than $2 million of taxable income in 2015, which was derived from Traffic Monsoon, and his tax return worksheets state that he was a resident of Utah for the entire year of 2015.
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”.
During the negotiation of the Consulting Agreement, as base compensation, a monthly, flat retainer initially was discussed.
In the end, a (1.25%) percentage fee based on Traffic Monsoon gross revenues was agreed and Scoville proposed that to ensure accurate computation and payment, the fee generally should be paid directly by Traffic Monsoon’s payment processors pursuant to special segregated accounts.
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.
Presumably, these refunds would be paid back into the accounts of the Traffic Monsoon affiliates they had originated from.
Scoville declined to distribute funds as so denominated.
A bid to have PayPal release the funds as payments failed, so the attorneys commenced a strategy to take PayPal to court.
By March 2016 Scoville had yet to pay the consulting firms for their work.
While Spivak (an attorney) was visiting with Scoville in Utah, Scoville inquired about what Simons was doing to help build Traffic Monsoon and questioned why he should pay SIC.
Spivak explained that [sic] Simons was doing, but also reminded Scoville that Phase 1 (of the agreement) was about PayPal and due diligence, not building new business for Traffic Monsoon, that he (Spivak) was working very long hours, and that any inequality between (the firms) was a matter to be adjusted between (the firms), not by Traffic Monsoon.
Despite representing to Spivak that he agreed the firms need to be paid, Scoville ultimately did not set up the agreed upon accounts.
Emails sent to Simons Investment Company revealed Scoville wanted to pay the attorneys the firms had put him in contact with, but not the firms themselves.
On March 22nd, 2016 Scoville “went dark” and stopped taking calls from the attorney’s he’d agreed to pay.
called the local police to check on Scoville to make certain he was not injured.
The police reported that Scoville was at home. Apparently Scoville had simply chosen to ignore (the attorneys).
Scoville eventually got in contact and expressed anger at the consulting firms for ‘seeking payment for purportedly doing no work‘. That said, he ‘again confirmed he would pay‘ the attorneys for their work.
Despite these reassurances, Scoville then went back to ignoring the attorneys.
The consulting firms finally issued a written demand on April 4th, requesting Scoville honor the consulting agreement.
Scoville responded and confirmed payment ‘belatedly would be paid‘.
At this point Scoville abandoned the established strategy put forth to address the PayPal issue, and instead, via email, communicated he
expected Simons Investment Company and SMI Group LLC to cause PayPal to release the funds it was holding and generate “billions” in new revenues for Traffic Monsoon.
The complaint alleges this was well outside the defined scope within the consulting agreement.
Scoville later refused to pay anyone unless the PayPal funds were unfrozen. This was not in the consulting agreement.
Simons Investment Company and SMI Group LLC’s complaint accuses Scoville and Traffic Monsoon of seven counts, spanning breach of contract, breach of covenant of good faith and fair dealing, anticipatory breach of contract, declaratory relief, quantum meruit, unjust enrichment and accounting.
The lawsuit was settled on July 22nd, 2016. Scoville ended up paying SMI Group LLC $722,538 and $1.5 million into a trust account.
$3.35 million was transferred out of the US by Scoville in July 2016 and remains unaccounted for
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.
Stay tuned for an update on today’s preliminary injunction hearing…