LV firm takes hit in Wisconsin

Alana Roberts

Thursday, July 1, 2004 | 10:57 a.m.

Almost a year after the Wisconsin Department of Justice seized more than $900,000 in funds from a Las Vegas network marketing company accused of running an illegal lottery, the company has agreed to pay a $10,000 fine and has forfeited the seized money.

Juan Colas, assistant attorney general of the Wisconsin Department of Justice, said Global Daily Pay pleaded no contest in Dane County Circuit Court to a criminal complaint of operating an illegal lottery. Operating an illegal lottery is a felony in Wisconsin.

Circuit Court Judge Daniel Moeser found the company guilty and the company settled with the Justice Department by agreeing to pay a maximum fine of $10,000. Company leaders also agreed not to do business in Wisconsin for five years, Colas said. He said the company also must exclude Wisconsin residents from the company's marketing efforts.

"They have to have some way for the person to affirm they are not a resident of Wisconsin. It has to be on the Web site," Colas said.

The settlement agreement was filed in Dane County Circuit Court on June 22.

Global Daily Pay is an Internet-based company that has enlisted about 30,000 independent contractors to market digital products such as e-books and e-libraries, Michael Taylor, a company spokesman said previously.

Taylor could not be reached for comment Wednesday afternoon. Neither of the company's attorneys Marie Stanton or Stephen Hurley, could be reached for comment this morning.

Colas said as a part of the resolution, the company agreed to forfeit the $943,668 in seized funds, which will be used by the Justice Department to make restitution to those independent contractors who invested in the company but didn't recruit others to invest.

"The theory behind that is by sponsoring other people they helped to further what the company has been convicted of as an illegal scheme," Colas said.

He said if there is anything left over from those funds, the rest will go back to the State of Wisconsin.

The Wisconsin Justice Department filed a civil asset forfeiture lawsuit against Global Daily Pay in August, while a criminal complaint against company President Richard Krawczyk and another criminal complaint against the company were both filed April 8.

All of the lawsuits were filed in Dane County Circuit Court.

The civil asset forfeiture lawsuit and the criminal complaint against Krawczyk were dismissed. The settlement precludes either side from suing the other, Colas said.

Colas said although the settlement has been reached, he isn't sure whether the company is yet able to do business through its Web site www.globaldailypay.com. The Web site has not yet been brought back online.

Previously Taylor said the company's leaders and about 170 of its independent contractors were planning to file lawsuits against the Justice Department, alleging Wisconsin officials committed unfair business practices, fraud, negligence, disruption of business and loss of revenue by seizing the $943,668 through a criminal search warrant in July without having filed a criminal lawsuit.

Criminal complaints weren't filed until April, while the civil asset forfeiture lawsuit was filed in August to preserve the Justice Department's seizure of the funds, Colas said.

Taylor said the company's leaders and its independent contractors have sent Wisconsin officials notice of claim letters informing them of their intent to sue. The notice of claim letters are a prerequisite of filing a lawsuit against a governmental agency in Wisconsin under that state's laws.

But Colas said no other lawsuits have been filed related to the case.

The company has not caught the attention of Nevada officials. Amanda Getzoff, a spokeswoman for the Nevada Consumer Affairs Division, said there are no complaints against the company. Charles Moore, securities administrator of the Nevada Secretary of State's Securities Division, which prosecutes pyramid schemes, said the company is not being investigated by his agency.