Wall Street bail out

We have a copy of the draft bill which seeks to save the US and world financial system from a complete meltdown.

The document is over 100 pages and is currently being debated as we speak. Some believe that there should be no bail out of wall street without a bail out of main street.

There are many who believe that these companies should be allowed to fail rather than to be rescued by the Government, as its corporate greed which is to be partly blamed for this monumental mess.

See bill below.

http://i.cdn.turner.com/cnn/2008/images/09/28/ayo08c04_xml.pdf

Forex to Ponzi Part 4

Like many FOREX Schemes today, FOMAC was international. Roberts spread his wings to Costa Rica where he became a naturalised citizen and open operations there. In Costa Rica he operated under the company ?Three Amreicas Consutlants???.

There he partnered with a Costa Rican citizen. The scam brought in about 500 persons with over 20 person “investing” over ?? $500,000 most of the others had in over ??? $100,000 and about 50 have $50,000 or less….

Related

• Forex to Ponzi Part 1
• Forex to Ponzi Part 2

Sources:

• in spanish
• Google Translation

http://babelfish.yahoo.com/translate_url?doit=done&tt=url&intl=1&fr=bf-res&trurl=http%3A%2F%2Fwww.nacion.com%2Fln_ee%2F2007%2Fagosto%2F14%2Fsucesos1202994.html&lp=es_en&btnTrUrl=Translate

http://translation.langenberg.com/

Google’s Translation

http://translate.google.com/translate?u=http%3A%2F%2Fwww.nacion.com%2Fln_ee%2F2007%2Fagosto%2F14%2Fsucesos1202994.html&langpair=en%7Ces&hl=en&ie=ISO-8859-1&oe=ISO-8859-1&prev=%2Flanguage_tools

http://www.nacion.com/ln_ee/2007/agosto/14/sucesos1202994.html

The Story of Financial Plus Investments

In a story all to family, hundreds of people invested their life savings in a company that offered “big returns”. The result is they stood to lose it all as the company, Financial Plus Investments, seemingly disappeared.

The investors in this scheme wasted no time and reported the matter to the local authorities and the FBI. The FBI responded quickly action, caught up with the firm’s owner.

Once again a community of persons are targeted. In this case it is the spanish  community in California and Neighboring Mexico. 

Fox reporter Gina Silva follows up with this video report.

• Financial Plus Investments: Too Good to Be True?

Lou Pearlman and his 20+ year Ponzi explored (pt 2.)

In Part 2 of Lou Pearlman and his 20+ year Ponzi explored, we explore who Lou Pearlman conned and more of the methods used. 

Who was conned?

During the period, even the established financial institutions were  conned. Banks conned into loaning money or providing a lines of credit to the Lou Pearlman or one of his entities included,

• Bank of America
• Washington Mutual 
• Mercantile Bank
• Integra Bank N.A.,
• American Bank of St. Paul
• First International Bank & Trust,
• MB Financial Bank NA, 
• Northside Community Bank
• First National Bank & Trust 
• and HSBC Bank

Master of Fake

In order to facilitate the SCAM Lou Pearlman became the master of fake. Here is a list of some of the fictitious organisations and documents

• Fictious Airline Company
• Fake Branch of German Bank
• Fake South Florida Accounting Firm called Cohen & Siege
• Fake accounting firm called “S. Kaplan & Co.”
• False audited financial statments prepared by  the above companies
• Fake Tax Returns
• Fake Business Documents
• Tried to create a Fake German Bank Seal
• Using the signature of a deceased former associate to stall repayment bids

Interestingly the Herald Tribune reports the following describing the accounting firm:

Those included hiring an answering service to pose as a South Florida accounting firm, Cohen & Siegel, which endorsed Transcontinental’s finances.

In the long run he defrauded over US $300 million from 

• Investors 
• Major Banks 

The investors where carefully selected and were primarily from these groups

• family
• friends and 
• The elderly.

From one Scam to another

When Transcontinental Airlines Travel Services went bust,  Lou Pearlman then started another company call Employee Investment Savings Account, that promised higher returns than traditional investments. This scam lasted between 2003-2006. During that period it collected

• US $118 million collected, 
• US$43 million returned 
• US $38 million to himself & pearlman enterprises

Investors, reassured that their investment was not only FDIC insured ( Federal Deposit Insurance Corporation) but backed up further with supplemental coverage from AIG and Lloyds of London, consolidated their entire portfolios into the one security, many handing over millions of dollars. Even those that deposited far less, often gave up their entire life savings based on outright lies and document-backed deceptions. ****

Lou Pearlman was sentenced by Senior U.S. District Judge G. Kendall Sharp to 25 years’ imprisonment on charges of conspiracy to commit an offense against the United States, money laundering, and presenting or using a false claim in a bankruptcy proceeding.

How Lou Pearlman managed to fool so many is the reason why we must all be careful, think and check before you invest. At times we guilty of laughing at the stupidity of others but we should not. We should show them the folly of their ways, even in the face of ridicule and seek to educate them.  With the lessons learnt from each mistake we as a society will become more aware of the evil that is around and be careful not be ‘scammed’ ourselves.

Sources:

• Herald Tribune http://www.iht.com/articles/ap/2008/03/05/arts/People-Lou-Pearlman.php
• http://www.rollingstone.com/rockdaily/index.php/2007/10/04/lou-pearlmans-pervgate-the-most-disturbing-things-we-learned-about-the-boy-band-impresario/ –**
• http://www.sptimes.com/2007/06/03/Business/Unmasking_Lou_Pearlma.shtml***
• http://www.ripoffreport.com/reports/0/241/RipOff0241708.htm****

Related

• Lou Pearlman and his 20+ year Ponzi explored(pt 1)

Lou Pearlman and his 20+ year Ponzi explored

A few weeks ago we showcased the story about Lou Pearlman, the mastermind behind a long running PONZI.  How exactly did this PONZI work? The  court documents along with news reports reveal many interesting facts and twists. 

In 1981, Lou Pearlman conceived an idea and built it around two companies Transcontinental Airlines Travel Services sand Transcontinental Airlines, Inc. The company was to own and/or operated airplanes and offer travel agency services. To raise capital for the business Lou Pearlman decided to sell shares to investors who he sought out. 

For 20 years Lou Pearlman sold trancontinental shares convincing investors that company was worth millions, was doing well and was profitable. Here is a quote from press release of the Department of Justice, Middle District in Florida.

Pearlman represented to thousands of investors and several federally insured financial institutions that those two companies were successful companies in the airline business and that Pearlman’s ownership interest in those companies was worth millions of dollars. That was not true.

The reality was the company existed on paper only. Those companies had minimal employees, business operations, and revenue.  After 1999 it ceased to exist legally as Delaware officials voided its incorporation that year.

In turns out to the dismay of the Judge and observers, Transcontinental Airlines Travel Services did not own or lease one single plane. The shocked judge asked if nobody thought it prudent to check by visiting an airport.

Here is the answer to that question 

In fact, according to a childhood friend of Pearlman’s, the photos Pearlman used to market the airline featured models, not real planes: “You notice you can’t see the entire airplane. You can’t see the tail numbers. You know why? Because that’s where Lou was holding his fingers! It’s a model. It’s one I built for him.”**

See the photo here http://blogs.tampabay.com/money/2008/05/by-popular-requ.html

Pearlman lived large

The portly Pearlman loved the limelight, even recording a short video about his lifestyle, “Lou Pearlman Living Large,” which he often popped into the VCR in his opulent office when investors visited. It features a Lou-guided tour of his Mediterranean mansion outside Orlando in suburban Windemere, with boats and jet skis docked out back on Lake Butler. He shows off his fleet of luxury cars and diamond-studded Rolex watch with matching ring and cuff links that he claims are worth $425,000.***

In part 2 we will look at who was conned, more methods used and one scheme leads to another.

Sources:

• Herald Tribune http://www.iht.com/articles/ap/2008/03/05/arts/People-Lou-Pearlman.php
• http://www.rollingstone.com/rockdaily/index.php/2007/10/04/lou-pearlmans-pervgate-the-most-disturbing-things-we-learned-about-the-boy-band-impresario/ –**
• http://www.sptimes.com/2007/06/03/Business/Unmasking_Lou_Pearlma.shtml***
• http://www.ripoffreport.com/reports/0/241/RipOff0241708.htm****

First they ignore you, then they ridicule you,then they fight you and then you win. – Mahatma Gandi

Avoid Scams in online social networks

The British Columbia(BC) Fincancial Services Commision has developed a series of videos as part of their investor education Program. They hope that through education they can  to help BC investors avoid investment scams and make informed investment decisions. Here is one such video

For more excellent videos visit http://www.youtube.com/user/BCSCInvestRight

To visit their website http://www.investright.org/

Lou Pearlman and the 20 year Old Ponzi Scheme

“Lou Pearlman, the gregarious mastermind behind boy bands such as ‘N Sync and the Backstreet Boys, is now admitting his role in a different kind of choreography: a Ponzi scheme.”  This is an interesting story of a scam(ponzi) that lasted well over 20 years until it finally came tumbling down.

Read the full story on Fox: http://www.foxnews.com/story/0,2933,335102,00.html

Forex to Ponzi Part 2

Roberts claimed that the returns from Forex Trading was good. The interest paid to “investors” ranged between 4% to a high of 10%. In the USA, he even shared with them the historical data to prove it. Investors were asked to send money overseas to an investment account in Costa Rica, where he also had operations, but from time to time he used accounts in the USA, Switzerland and Belize.

 James Blackman Roberts , the man behind FOMAC International Inc. an alleged FOREX trading club that became a PONZI, eventually pleaded guilty. Here are more details.

A Heber Springs man who held himself out as an investor of other people’s money, leading to losses of more than $44 million, has pleaded guilty in federal court in Little Rock to a felony charge of wire fraud.

James Blackman Roberts, 70, admitted to U.S. District Judge Susan Webber Wright on Wednesday that he had devised and participated in a scheme to obtain money by false or fraudulent pretenses in connection with trading in foreign securities, said Jane Duke, U.S. attorney for the Eastern District of Arkansas.

Roberts, operating at times as FOMAC International Inc. and Consultores Las Tres Americas S.A., engaged in online buying and selling of currency.

Duke said Roberts would present investors with promotional material claiming an investment program would “give the small working-class depositor the opportunity to take advantage of the attractive high yields possible … and realize a steady monthly income to supplement his or her regular income or retirement income.”

He would later provide investors with false historical data reflecting monthly returns to investors ranging from 4 percent to 10 percent, and annual returns of 48 percent to 120 percent, Duke said.

She said Roberts instructed investors to wire money to a specific investment account in Costa Rica, but he also used accounts in the United States, Switzerland and Belize.

“Losses to the investors are estimated at this time in excess of $44 million,” Duke said.

Heber Springs man guilty in fraud case -From the Arkansas Democrat-Gazette

Look out for part 3 where we look at  the operations in Costa Rica.

Related:

• Forex to Ponzi Part 1