Investigation: The unknown secret of the Fat Penguin CEO - involvement in multiple scams

Note: On October 7, 2023, Twitter user NFTshepard posted a message at 4:27 AM, revealing that the funds used by Luca Netz, the current CEO of the well-known NFT project Pudgy Penguins, to acquire Pudgy Penguins came from multiple runaway NFT projects. The article published on substack investigated the multiple runaway scams that Luca Netz was involved in before acquiring Pudgy Penguins.

But five hours later, Horlomite Research accused NFTshepard of stealing the results of Horlomite Research's four-month investigation. Horlomite Research also stated that a larger crypto project with a market value of billions of dollars will be exposed in the coming weeks.

Golden Finance 0xxz translated NFTshepard’s article for readers’ reference:

Luca Schnetzler, known online as Luca Netz, is the current CEO of Pudgy Penguins. With over 4,500 holders and over 190,000 ETH in secondary trading volume, Pudgy Penguins is one of the most popular NFT projects on the market today.

After Pudgy Penguins founder ColeThereum was revealed to be involved in airdrop operations and other unethical activities, Netz took over the project for 750 ETH and became CEO.

But few people know that Netz himself has some unknown secrets.

What follows are extensive findings from Netz’s history, which is filled with drop shipping, questionable marketing practices, alleged NFT absconding, and the controversial “free necklace scam,” all backed up by receipts and blockchain data.

Discover the dark details he doesn't want you to know.

Supreme Patty Free Necklace Scam

In 2018, influencer Supreme Patty sparked controversy with a promotion in which he offered high-quality “free” necklaces valued at $100 on his website, but at checkout, customers found themselves charged an unexpectedly high shipping fee of between $18 and $20 per item.

Additionally, delivery took weeks, sometimes even months, if anyone received it at all. Customers who did receive their orders discovered that their necklaces were actually cheap $1 AliExpress items shipped directly from China. Not worth the $100 they were advertised to be.

The internet was flooded with complaints. Dozens of complaints reached the Better Business Bureau, an organization that protects consumers from unfair, misleading advertising and sales practices. TheDailyBeast wrote an article titled "Instagram influencers fool their fans with 'free' products." Even Supreme Patty's Urban Dictionary entry still mentions it today: "He manipulated his young audience for monetary gain, even defrauding them through 'free jewelry' (dropshipping scam)."

Lewis Spears, a YouTuber with more than 500,000 subscribers, made an in-depth video titled "Supreme Patty's Free Necklace Scam." In the video, Spears explains how the free necklace scam works, calling it "one of the most despicable money-making tricks he's ever seen online." Another well-known YouTuber, NameBran, said, "Do I think I've been scammed? Absolutely." He called the items "absolute garbage" in a 2018 video. Others have made videos warning fans not to buy them.

The backlash was so great that it became known as the “free chain scam.”

The man behind the scam

But who are the people behind this whole scam? Payments are processed through a company called LA GOLD CARTEL LLC. This company operates a similar dropshipping website called lagoldcartel.com. Its brand ambassadors are Supreme Patty and Xavier Wulf.

Source: lagoldcartel.com

In a recent interview in 2023, Supreme Patty said that someone named "Luca" persuaded him to collaborate by sending a series of emails: "It had a completely different name at the time, and we did a few days of test operation, and it seemed that everything went well. So we eventually transitioned to my brand new website."

Netz often reminds his audience that he became a self-made millionaire through "influencer marketing," but steers clear of being accused of free necklace scams and the complaints and blowback that arise from these deceptive marketing practices.

However, business records confirm that Luca Schnetzler (Luca Netz) is the owner and founder of LA GOLD CARTEL LLC . This confirms that Netz is the person behind the scam.

With this information, it appears that Netz amassed his wealth through deceptive marketing of "free necklaces" to impressionable Supreme Patty fans who felt fooled after discovering they could have purchased the same item for $1 on AliExpress.

Dropshipping Courses and Day Trading

After the free necklace controversy, Netz began selling his dropshipping method through e-commerce courses. Prices ranged from $425 to $1,700. The courses were notable for their no-refund policy.

Source: netzcommerce.com

Meanwhile, Netz has seemingly become an authority on day trading during the crypto bull run of 2020. In the fourth quarter of 2020, he created the Netz Trades Discord, netztrades.com, and netztrades socials, and began selling access for $100 per month.

His website looks almost identical, using a similar template, name and slogan. It is advertised as "real profits by real traders". But it seems to lack verifiable profit and loss statements, exit signals and refund policies.

Luca Netz and Nick Von

His partner in these efforts is Nick Von Geijer, better known online as Nick Von. Von is the kind of guy who will scream into the camera at you to join his Discord and show off a $500,000 vehicle. As a result, he has been accused of being involved in various NFT scams.

More seriously, Von faces multiple charges of defrauding women through scams. One woman shared her horrific experience on a website called LAscammer. Another woman launched a GoFundMe campaign called "Sue Nick Von Geijer."

The connection between Netz and Von raises some questions, as Netz has publicly praised Von as one of his closest confidants. In fact, in an episode of his podcast, Free Game w/ Netz, Netz credits Von with giving him his "spiritual awakening."

Maybe Netz had a lengthy lapse of judgement? Who knows? Then again, no one is guilty of having a relationship with someone else. But given that Von is still an administrator of his Netz Trades Discord, which is still active today under the name Internet Accelerator, one might wonder if Netz and Von are still partners .

Project 1: Spooky Boys Country Club

After the transaction, Netz entered the world of NFTs. Coming to Spooky Boys Country Club (SBCC). This is an NFT project from 2021 that raised 779 ETH during the minting process.

Its founder, HolyGhostnft, seemed to disappear shortly after its launch, leaving investors feeling like they had entered a scam. In April 2022, RugPullFinder marked it as "confirmed to have run away."

To revive the project, SBCC investors formed a “Resurgence Team.” Netz, a prominent community member, was appointed to the board in August 2022.

What few people know is that before being ordained, Netz received millions of dollars in payments from SBCC long before the founder disappeared . Let’s delve deeper…

SBCC minting fund allocation, through its smart contract and payment wallet (0x843a97185de92a8fd214efa8e14bf67e97892342)

Blockchain data shows that lucanetz.eth received $702,000 on November 13, 2021, and then received another $51,500 on November 30, and another $454,000 on December 20, 2021. Netz received more than $1.2 million (277 ETH) directly from SBCC.

We also see that netztrades.eth, a wallet closely associated with Netz and named after his day trading Discord, also received $1 million from SBCC during the same period.

Taking into account the payments received by lucanetz.eth and netztrades.eth in the months before the founders allegedly ran away, the total amount is more than $2.2 million (516 ETH). In fact, among the top 10 wallets of lucanetz.eth and netztrades.eth, lucanetz.eth received the largest payments, followed by netztrades.eth:

SBCC payment distribution, source: Misttrack.io

To summarize briefly, the developers of SBCC, cowboylabs.eth, received a total payment of 173 ETH. This is a considerable discrepancy, despite their crucial role. If Netz was not an important part of the team, why did he receive the largest share? Why did Netz receive more than the founders?

Coincidentally, the Spooky Boys Country Club trademark was filed in the same year by the same law firm that filed the Netz Trades, Netz Commerce, and Netz trademark applications. Some SBCC investors suspected Netz was the founder, but he always denied it:

However, the Discord logs confirm that Netz was the second person to join the SBCC server, 14 days before the founder. This suggests that Netz played a key role from the beginning and was not just a member of the "revival team" who joined later.

Project 2: Cookies N' Kicks

Cookies n' Kicks (CNK) is a sneaker store located in Melrose, named by Eli Hayman. Netz is one of the partners. During the NFT craze, CNK decided to launch NFTs. They promised to provide a lifetime membership to CNK University, which includes online courses, seminars, podcasts, private Twitch events, 10% discounts in its store, and of course, an online game on the Metaverse.

CNK raised $718,633 from its minting. As it failed to deliver on its promises, allegations of a runaway scheme emerged. As with the free necklace scam, disillusioned investors with CNK created YouTube videos, posts, and tweets to expose the project.

“You [CNK] are a scam, you stole my money, and you ban anyone who comments on your handling of things in Discord” - @ObeyMr_1400, CNK investor

Some claim that the only reason CNK created NFTs in the first place was because they couldn’t pay the shippers.

CNK minting distribution source: smart contract and payment wallet ( 0xccfa6db439026cef29cc48bfd1a365b8afe1606a )

Netz distanced himself from CNK after facing criticism, arguing that he was only involved in the Melrose store and not the NFT. However, blockchain records show that lucanetz.eth and netztrades.eth received proceeds directly from the NFT series the day after minting. They received $92,245, $15,374, and $4,835 on February 10, 2022, and March 26, 2022, respectively.

CNK blockchain records exported from Etherscan.io

CNK is developed by cowboylabs.eth. Along with the SBCC and CNK projects, this is its second NFT project involved. So, you might be wondering, who is Cowboy Labs?

Project 3: DemiGodsUniverse

Cowboylabs.eth is the team behind DemiGodsNFT, aka DemiGodsUniverse (DG).

DG promised holders 30% of the sales of their upcoming comic book. They raised $1,117,716 through minting. Cowboy Labs received $134,372 of that. But the comic book was never published. Their website and Discord were offline, and their social media was inactive. Another runaway NFT…

DG investors say on social media that it has run away

How could a seemingly unknown project raise over a million dollars? Let’s look at their marketing tactics.

Fake Gary Vee Promotion

DG used Gary Vee’s image to imply that he was interested in or involved in their project. Dozens of accounts posted misleading Gary Vee content. No Jumper and Millionaire Mentor even posted “Is Gary Vee Tweeting About Demi Gods NFTs?” Millionaire Mentor received $22,395 for these ads. Coincidentally, he was also paid $35,082 for promoting SBCC.

Fake celebrity endorsements are often used in scams

The influencer who actually promoted the DG turned out to be Xavier Wulf, Netz’s former brand ambassador for LA GOLD CARTEL. Wulf promoted his custom DG the day before their casting. Then deleted it after a while.

Replies to deleted messages on the Netz Trades Discord show that DG was also promoting on Netz’s servers.

Fake BAYC gift

In December 2021, DG held a Bored Ape Yacht Club giveaway. Anyone had a chance to win Bored Ape #8085 . So who owned this Bored Ape at the time of the giveaway?

Source: instagram.com

Luca Netz owns Bored Ape #8085 . He bought it on August 11, 2022 for 55 ETH and has held it since then. On January 2, 2022, he sent it to 0xda9614. So maybe that's the lucky winner? It's doubtful:

• 0xda9614’s first transaction was $10,677 from lucanetz.eth

• The second transaction is to forward this money to netztrades.eth

In fact, the entire wallet history shows that 0xda9614 has only received ETH from lucanetz.eth and netztrades.eth. What happened next?

Source: opensea.io

After 0xda9614 received Bored Ape, it was forwarded to a wallet named Ckkelly. The wallet was sold on January 14, 2022, earning 76.95 ETH. After the sale, Ckkelly sent 21.97 ETH to DG's marketing wallet.

The sale netted Ckkelly 76.95 minus 21.97, which left Ckkelly with 55 ETH. Remember, Netz bought Bored Ape for 55 ETH. Coincidence? Let’s dig deeper into Ckkelly’s wallet:

• Ckkelly’s first NFT was minted by lucanetz.eth

• Ckkelly sends it to netztrades.eth, which sells it at a profit

• Ckkelly received yOOt#5147 airdropped by 0x746aCD, which was forwarded to lucanetz.eth

• Ckkelly was funded by 0x746aCD, which also funded the DG multi-signature

CCkkelly and 0xda9614’s wallets have never held DG’s NFTs, which is a requirement to win the BAYC giveaway. I can’t find any official announcement of the Bored Ape winners. So, do you think this BAYC giveaway looks legitimate?

To summarize: DG used Netz’s Bored Ape, was promoted by Netz’s former brand ambassador, signaled via Netz Trades Discord, and had the same developers as SBCC and CNK, two projects Netz was also deeply involved in, all three of which have been publicly accused of being scams. This brings us back to the original question: Who is Cowboy Labs?

Cowboy Labs

Cowboy Labs developers, including 0xLoMel and CowboyUly, made more than $950,000 from these so-called runaway projects, but you might know them as Lorenzo Melendez, now president of Pudgy Penguins, and Ulysses Atkeson, Pudgy Penguins’ chief blockchain officer.

Source: pudgypenguins.com

Netz brought them into Pudgy Penguins after taking over from ColeThereum. This is the fourth project that Netz and Cowboy Labs have been involved in.

DG’s original website listed LoMel as their developer, who later changed his name. CNK’s website only lists a developer named “Cowboy,” and an old version of the Cowboy Labs website mentioned SBCC, but it has also been deleted. Cowboy Labs, Melendez, and Atkeson’s LinkedIn do not mention these so-called runaway projects.

But their cowboylabs.eth wallet, payments, and deployments tie it all together:

Cowboy Labs payment source: Misttrack.io

It’s ironic that Pudgy Penguin founder ColeThereum, who has been accused of dropshipping, NFT cash-outs, and other unethical practices, has been replaced by someone with a seemingly more questionable past.

Netz’s past displays a series of misleading marketing tactics from Web 2 to Web 3, culminating in three separate NFT schemes that left investors with substantial losses — a pattern that raises ethical concerns about its financial success.

While one could argue that Netz accomplished more than ColeThereum, it is important to understand how Netz amassed his vast wealth through these questionable means, as well as the hurt and complaints he left behind.