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This is the Reyes Affidavit.
STATE OF WASHINGTON
SILVIA REYES, being first duly sworn on oath, deposes and says:
1. IDENTITY OF AFFIANT AND INTRODUCTION
2. I hold a Bachelor of Arts degree in Accounting, and a Master of Business Administration degree in Finance. In 2001 I obtained, and hold in good standing to date, a certificate of Certified Public Accounting from the Washington State Board of Accountancy and a certificate of Certified Fraud Examiner from the American Association of Certified Fraud Examiners.
3. I learned the facts set forth in this affidavit by reviewing documents referenced herein, and from information obtained from other law enforcement officers, including, in particular, Federal Bureau of Investigation Special Agent Kenneth A. Schmutz, and United States Postal Inspector Joseph Stephenson.
4. Because this affidavit is submitted for the limited purpose of obtaining seizure warrants for the financial accounts and assets referenced herein, I have not included all details of every aspect of the investigation, but set forth only those facts I believe are necessary to establish cause for the issuance of the seizure warrants. Details of the facts summarized herein are set forth in the Application and Affidavit for Search Warrant of the residence and computers of Robert Alan Soloway, which is attached hereto and incorporated as if fully set forth herein. In addition, when I rely on statements made by others, such statements are set forth in substance and as pertinent facts.
H. SUMMARY OF THE CASE
By conducting their operations in this way, Soloway and NIM have committed violations of federal laws, including Title 18 U.S.C. Sections 1037(a)(2) and (a)(3) (Fraud in Connection with Electronic Mail), Title 18 U.S.C. Section 1341 (Mail Fraud), Title 18 U.S.C. Section 1343 (Wire Fraud), Title 18 U.S.C. Section 1028A (Aggravated ID Theft), and Title 18 U.S.C. Section 1956(a)(1)(A)(i) (Money Laundering).
H. PURPOSE OF THE AFFIDAVIT
6. This affidavit is made in support of seizure warrants for the following accounts and assets:
These accounts are subject to seizure and forfeiture to the United States pursuant to Title 18, United States Code, 981(a)(1)(C), as proceeds of wire fraud and mail fraud, offenses that constitute "specified unlawful activities," as that term is defined in Title 18, United States Code, Section 1956(c)(7).
7. These seizure warrants are sought on the grounds that there is probable cause to believe that the listed accounts and assets constitute or are derived from the proceeds of violations of Title 18 U.S.C. Section 1341 (Mail Fraud) and Title U.S.C. Section 1343 (Wire Fraud).
8. In addition there is probable cause to believe that Robert A Soloway has laundered the proceeds of these transactions in violation of Title 18, United States Code, Section 1956, and that they are therefore subject to civil forfeiture in accordance with Title 18, United States Code, Section 981 (a)(1)(A) as property involved in money laundering.
IV. SOLOWAY DOING BUSINESS AS NIM
10. NIM's California corporate registration has been suspended. NIM has lost all corporate rights and powers for failure to meet statutory filing requirements in either the California Secretary of State's Office or the California Franchise Tax Board.
11. Washington State law requires a foreign organization, being those formed in a state other then Washington, to submit an application for Certificate of Authority to do Business in Washington. The Washington State Secretary of State's Office has no record of receiving the statutorily required application or issuing a Certificate of Authority to do Business in Washington to NIM.
12. During my review of the financial transactions conducted by Soloway and NIM, I examined the control of the corporation, the adherence to corporate formalities, the use of the corporation's assets, and the ability to obligate the corporation. I found that Soloway was the sole shareholder of NIM, and he alone held ownership, financial, interest, and control of the corporate assets. In addition, I found that Soloway routinely commingled personal and corporate assets and liabilities.
13. Although the legal entity is no longer in good standing, and never obtained authorization to operate within Washington State, Soloway has continued to represent NIM as. a separate and distinct legal entity. Based on my knowledge, training, and experience I believe that the appearance of a corporation was maintained in an attempt to shield. Soloway from any liability resulting from the fraudulent activity in which Soloway is engaged. The information summarized herein will establish probable cause to seize the property of Robert Alan Soloway and Newport Internet Marketing as set forth below.
V. FINANCIAL INVESTIGATION
15. In addition, based on the deposits into accounts controlled by Soloway, and the source of payments on debts owed by Soloway, I determined that NIM is his primary source of income. I found no additional paychecks or other indications of earnings, no records on file with Washington State Employment Security, or any other 12 documentation normally found for wage earners.
16. The information given by Soloway in a deposition taken on October 26, 2005, supports my review and evaluation. In the October 26, 2005 deposition the following questions were asked of, and answered by Soloway:
Q: Can you give me your approximate dates of employment with NIM?
Q: And you began in approximately 1996?
Q: You stated that you were the sole employee of NIM?
Q: Are there any other officers or directors?
17. The information given by Soloway also supports my findings that he is sole shareholder fo NIM, and that he alone held ownership, financial interests, and control of the corporate assets and liabilities.
18. My financial, investigation also included a review of the bank account records of Soloway and NIM, as provided by the respective banks.
19. NIM's bank records obtained from WestAmerica Bank (formerly The Bank of the Redwoods) indicates that account # ****03285 was opened on January 4, 1999, and remains open with Soloway as the only individual with signature authority on the account.
20. Newport Internet Marketing's bank records obtained from Premierwest Bank indicate that account *****4139 was opened on May 2, 2003 and closed on May_ 28, 2004. Soloway was the only_ individual with signature authority on the account.
21. The records provided by the WestAmerica and Premierwest Bank identify, specific items deposited into the accounts. These deposit items include wire transfers, checks, money orders, and cash.
22. The individual items deposited into Premierwest Bank account **4139 consistently have comments on the memo lines stating, "Broadcast e-mail software," "E-mail marketing," and "Advertising," indicating that they represent payment for the sale of e-mail services offered by Newport Internet Marketing and proceeds from the sale of software.
23. The individual deposit items into Premierwest Bank account #****1234 consist primarily of disbursements from PayPal, an internet based money transmitter service. The deposit items into Premierwest Bank account #******2676 deposit items include disbursements from PayPal and individual checks that also have comments on the memo lines stating, "Broadcast e-mail software," "E-mail marketing," and "Advertising," indicating that they represent payment for the sale of e-mail services offered by Newport Internet Marketing and proceeds from the sale of software.
24. The WestAmerica Account # ****03285 primarily contained deposits from credit card merchants such as Novus, American Express, and Bankcard Services. I have reviewed the NIM websites detailed in the Affidavit in Support of Search Warrant, and have verified that the credit cards listed above are accepted forms of payment. I reviewed the merchant credit card applications provided by the various credit card companies and verified that NIM represented that these credit card payments were to be accepted by its internet-based business. In addition, I reviewed the individual transactions within a daily batch deposit from the credit card merchants and concluded that the merchant deposits were from customers who purchased product or services from NIM and paid via credit card.
25. From the bank records, investment ' account statements, and various financial documents described and referenced within this affidavit, I have determined that Soloway and NIM's fraud and spamming scheme, described fully in the Affidavit for Search Warrant, generated income in excess of $ 1.0 million from 2003 through 2006. Based on information available at this time, I have determined that the proceeds were deposited in the accounts held by Soloway and NIM as follows:
26. In addition to NIM bank records I have reviewed e-commerce accounts. These accounts allow payments and money transfers to be made through the Internet. E-commerce accounts serve as an electronic alternative to traditional paper methods such as checks and money orders.
27. The e-commerce accounts I reviewed include Google Merchant, epassporte.com, PayPal, and E-Bay records that were provided by the respective companies. I reviewed the account registration information for these accounts and noted that the accounts were registered to one or more of the following: Newport Internet Marking, NIM Corp, Robert A. Soloway, Bob Soloway, R. Soloway, and to e-mail accounts known to be used by Soloway with an address of 1200 Western Avenue Seattle, WA, as fully detailed in the Affidavit for Application of a Search Warrant.
28. The review of e-commerce accounts included PayPal accounts, which facilitates the transfer of funds between two parties. Between 2003 and 2006, Soloway opened eighteen PayPal Accounts, each registered to a separate e-mail address. Nine of these accounts were designated as business accounts and nine were designated as personal accounts.
29. I reviewed the transactions posted to the accounts and noted that the income funds included comments stating, "Broadcast e-mail software," "E-mail marketing," and "Advertising," indicating that the transactions represent payment for e-mail services sold by Newport Internet Marketing and proceeds from the sale of software.
30. From the PayPal records described in the paragraphs above; I have determined that the electronic mail spamming scheme described herein generated deposits in excess of $81,000 from 2003 through 2006 that were deposited in PayPal accounts. Based on information available at this time, I have determined that the proceeds were. deposited into the accounts as summarized below:
31. In addition to the funds received in relation to the spam scheme, the transaction comments also indicated that Soloway received funds related to the sale of personal goods. The volume and duplicative items indicate that Soloway's Ebay business included the sale of electronic goods such as video games, game consoles, and clothing.
32. In addition, I noted that in 2003 Soloway's account, registered to e-mail firstname.lastname@example.org, contained 270 payments to other individuals totaling approximately $61,573. The comments for these transactions include, "Mailing to million," "Mailing to 8 million," "Mailing Services," "Software Development," and "Resending". The payments and corresponding comments. indicate that Soloway paid individuals and businesses to send electronic mail on his-behalf.
33. I reviewed additional withdrawals and transfers out of the PayPal accounts. I noted that the funds were withdrawn from the Paypal accounts through checks, transfers to personal and business bank accounts, and through credit card payments made to cards held by Robert A Soloway. The transfer of funds between business and personal accounts in this manner further indicates that Soloway routinely disregarded the legal corporate entity that he had established, and indiscriminately commingled business and personal funds.
34. I have further reviewed the distributions made from Soloway's bank accounts and e-commerce accounts, and have identified payments made to businesses and individuals that supported and promoted the continued operation of the fraud and spamming schemes. These financial transactions represent the proceeds of violations of specified unlawful activities including, but not limited to violations of Title 18 U.S.C., Section 1341 (Mail Fraud), and Title 18, U.S.C. 1343 (Wire Fraud).
35. During the course of the scheme Soloway registered multiple internet domains and leased space on internet servers to continue the operation of his internet-based business. The payments made to these service providers were made to promote and carry on the specified unlawful activities, namely mail and wire fraud. The records that I have reviewed indicate that Soloway paid for these services with credit cards, through internet transactions.
36. I have identified the credit card payments made by Soloway and determined that the funds used to pay the credit card payments originated in whole or in part from accounts containing funds from the fraud and spamming activity in which Soloway was engaged; specifically, that the funds originated from the accounts for which I am now seeking seizure warrants based on this affidavit. Details of those payments include the following, regarding credit card payments made from 2004 - 2005:
Payments made from West America account 05703285:
37. I reviewed the transactions that posted between December 2003 and January 2007 to Soloway's American Express, Business Platinum Card ****1005. I identified the following transactions as payments posted for server hosting services, internet domain name registration, and debt collection. The role that these services played in the fraud and spam scheme is fully detailed in the Affidavit for Application of a Search Warrant. The individual transactions are summarized below:
38. I reviewed the transactions that posted between December 2005 and January 2007 to Soloway's JPMorgan Chase Bank Visa Credit Card ***5127. I identified the transactions below as payments posted for server hosting services, internet domain name registration, and related activities for purposes of promoting and carrying on the fraud and scheme.
39. I reviewed the transactions'that posted between December 2005 and January 2007 to Soloway's JPMorgan Chase Bank Visa Credit Card ***0918. I identified the transactions below as payments posted for server hosting services, internet domain name registration, and related activities for purposes of promoting and carrying on the fraud and spam scheme.
During the course of the scheme Soloway shipped his software product to consumers. I have identified payments for shipping services provided by FedEx, a commercial interstate carrier. The payments to FedEx were made primarily, by credit card. Each individual transaction potentially represents a violation of Title 18, United States Code, Section 1341 as fully detailed in the Affidavit for Application of a Search Warrant.
41. Between December 2003 and December 2006, Soloway shipped out approximately 2,760 shipments utilizing FedEx, totaling $53,857 as documented by individual transactions posted to Soloway's American Express, Business Platinum Card ****1005.
42. During the course of the scheme Soloway operated NIM from 1200 Western Avenue, Apartment E17, Seattle, WA, which is an apartment in Harbor Steps Apartments. Rent payments made to Harbor Steps Apartments allowed Soloway to promote and carry on the specified unlawful activity. The funds to pay the rent originated in whole or part from the fraud and spam activity. I have identified these payments, made primarily by checks and credit cards.
43. Between December 2005 and December 2006, Soloway initiated 27 rent payments totaling $35,283 to Harbor Steps through rentpayment.com. Soloway utilized an internet website, various credit cards and varied the amounts paid. Based on my training, knowledge, and experience, I know this activity is consistent with individuals trying to conceal or disguise the source or nature of their income. I have detailed below the 2006 rent payments made through rentpayment.com below:
44. In addition, I have identified payments to the storage unit companies. Shurgard and Public Storage. In a deposition given by Soloway on July 27, 2004 he stated that he utilized a storage unit to store business records and one to store personal property. I identified 10 payments made in 2006 on Soloway's JPMorgan Chase Bank Visa Credit Card ***5127; two payments to Shurgard totaling $269.19 and eight payments to Public Storage totaling $1,111.00.
Special Agent S. Reyes, Affiant
AFFIDAVIT subscribed and sworn to before me this 23rd day of May, 2007.
MARY ALICE THEILER
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