Tag Archives: Ponzi scheme

Paradise Lost, Milton

Posted on by
No Gravatar

If we were only talking about the book, there would be little hardship involved. Unfortunately it could be used to label the latest Ponzi scheme in Canada as we read that Businessman missing as Dutch Canadians out millions.

At least 80 elderly Dutch Canadians trusted Harry Snoek Jr. with their life savings. But the money is gone. And so is Harry, possibly back in the Netherlands or maybe Qatar, leaving a trail of empty promises and despair in his wake.

By the latest tally of those who have come forward and who are trying in Ontario courts to recoup their losses, Snoek has absconded with more than $34 million. The total number of affected investors may be as high as 200.

Promissory notes and court documents obtained as part of a Toronto Star investigation, as well as interviews of investors and business partners, suggest Snoek ran a Ponzi scheme, where early investors are paid off from the contributions of later ones. The RCMP is looking into the case.

Troubling payment delays from Snoek started in 2007 with Snoek exploiting shared ties to motherland and church to ease anxieties and keep their money just a few months more, and then another few months more.

In a lawsuit filed in Brantford, a receiver was appointed who is combing through Snoek company files. The receiver may try to sell Snoek properties in Milton and spread the proceeds to investors. But it is believed that the land will fetch only a fraction of what Snoek owes.

Unfortunately paradise will not be regained.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , , , , ,

Taxes Add Insult To Injury For Ponzi Victims

Posted on by
No Gravatar

If you have income, then you must pay taxes. That is true even when that income may be only what a Ponzi schemer may have reported to you. That is unfortunately the situation in which the Montréal victims of Earl Jones now find themselves.

Apparently the Quebec tax authorities will try to lighten the tax burden on Jones’s victims even though many should have no tax burden since the income was illusory.

Victims of financial fraudster Earl Jones won’t have to pay taxes on investment income they didn’t actually earn, Quebec Revenue Minister Robert Dutil announced. Jones’s victims will also be able claim a deduction for lost revenues, Dutil said in a statement. “I sympathize with these people who are going through a deplorable situation, and I want to clarify this to help avoid all confusion for these victims,” he said.

When someone is in a precarious financial situation and unable to meet their obligations, the agency follows their case closely in line with the information available.

Some of the fraudster’s victims are finding at the federal level that things are moving more slowly and there are delays in getting some relief for taxes they paid on fictitious income.

Kevin Curran, a member of the Earl Jones Victims Organizing Committee, says the government told victims last summer to file adjusted tax returns for previous years stating that the fake income provided to them by Mr. Jones was erroneously reported, at which point they would receive tax refunds. Many of the more than 150 victims did so, but despite a promise to move swiftly, they are still waiting for their tax returns. Some of these people are struggling to afford daily living expenses. Furthermore, a handful of the victims that would qualify for increased government pensions cannot get them because their income is still wrongly pegged as being too high.

Last year in the United States, the Ponzi Scheme victims of Bernie Madoff received somewhat faster tax breaks although the public resentment about the support the troubled banks were getting may have created a more favorable climate for speedy action.

The Internal Revenue Service announced unprecedented tax relief for victims of Ponzi schemes, saying many of those affected could deduct up to 95% of their losses immediately. The move represents a significant relaxation of longstanding limits on tax relief for victims of investment scams. It reflects the pressure officials are feeling to help individuals who have been hurt in the current financial crisis, when public resentment is growing over the billions of dollars the government is directing into troubled banks and other big corporations.

Meanwhile it is good to see that vigorous action is being taken to prosecute those who perpetrated these dreadful schemes. The Feds are targeting Bernie Madoff’s brother and sons for Tax Fraud.

Last summer, prosecutors essentially made clear they wouldn’t go after Bernie’s wife, Ruth. But that’s not the case in regard to his brother, Peter, or his sons, Mark and Andrew. It is reported that federal tax-fraud prosecutors in Manhattan are pursuing cases against Bernard Madoff’s brother and sons.

To add to this sorry tale of woe, it now appears that there is a Bogus Web Site Reportedly Trying to Rip Off Madoff Victims

A bogus Web site is targeting victims of Bernard Madoff’s record Ponzi scheme in an apparent identity-theft scam, the Securities Investor Protection Corp warned today, The New York Post reported. The site claims that $1.3 billion in Madoff money was recently found hidden in Malaysia, and displays photos of huge stacks of cash allegedly stashed by the mega-crook. The so-called “International Securities Investor Protection Corporation” urges burned investors to submit claims by filling out an online form and mailing in a copy of “your most recent brokerage account statement.”

The site rips off design elements of the real SIPC site. The SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source.

One would hope that these poor victims have gone through enough to realize that once bitten requires them to be twice shy.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , , , ,

Seniors Fall For Ponzi Schemes

Posted on by
No Gravatar

Seniors often have financial concerns as they contemplate their future and their perhaps dwindling assets.  If they rely on Social Security and state pensions, even those are questioned by some who liken them to a Ponzi scheme. The older members who are drawing out now are being paid out of a fund that is being refilled by contributions from younger members who hope they will find there is something they can draw on in the distant future.

It is all very concerning and is made much more worrying by the deep recession that only slowly may be receding.  Many seniors will be worriedly scratching their heads on whether they will have enough to live on, particularly if they are in good health and may have a long life.

Couple that with the many cases of Financial Abuse of Elders that was covered in an earlier post, and you end up with concerned seniors who are not sure who to consult.  Some financial abuse cases are perpetrated by the seniors’ sons and daughters or by other family members.  Who then to turn to?  If a trusted friend suggests a mature person whom they have confidence in, then this may appear less thorny than having to involve the family in your financial matters.

If that mature person gains your trust and confidence, then it may be only a matter of time before they are suggesting ways of investing where you can get better returns than the low interest rates the banks presently offer on savings.  Once on the hook, you may soon find that your goose has been cooked (to mangle metaphors).

It is probable that there are many more Ponzi schemes than actually hit the headlines.  Bernard Madoff was of course the biggest in history, but others have caused equal misery to many seniors.  Last month, we all learned of Earl Jones, the Montreal Ponzi Schemer, who preyed on family members and friends and lived the high life as their savings disappeared.

Last week, here in Vancouver we read that B.C. Ponzi schemers were found guilty of fraud:

Four British Columbia residents, Hal (Mick) Allan McLeod, Kenneth Robert McMordie (aka Byrun Fox), Dianne Sharon Rosiek and David John Vaughan, were ruled guilty of fraud for violating securities laws by a B.C. Securities Commission panel. They lied to investors about how their money was being invested, what they could expect as a return, and the risk level of these investments.  Their Ponzi scheme cost some 800 investors more than $10 million US.

Today the news is that a $50 million Ponzi Scheme Is Alleged in Detroit.

A class action suit in Federal Court claims  that John Bravata and Richard Trabulsy masterminded BBC Equities and Bravata Financial Group, which stole $50 million from hundreds of people in a Ponzi scheme, . They are said to have promised 8 to 12 percent returns in a real estate scam, guaranteeing “safer returns than other investment options,” according to the complaint.  They began by soliciting family and friends for money, then began holding “free lunch” seminars each week to target senior citizens. Half of BBC’s money allegedly came from IRA accounts.

In all these cases, the seniors are likely to see only a fraction of their original holdings.  This is financial abuse of the very worst kind.  The only safeguard is to seek financial counsel and advice from only reputable and knowledgeable individuals who will not benefit in any way from the impartial advice they may give you.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , ,

Financial Abuse of Our Elders

Posted on by
No Gravatar

The shocking fraud perpetrated on unsuspecting seniors by Earl Jones of Montreal through his Ponzi Scheme is perhaps one of the worst examples of how vulnerable our elders are in these important matters.

There is a widely held view that financial abuse of our elders is reaching epidemic proportions.

Surprisingly the abusers are more often than not family members, friends, neighbors, and care givers. The recession is pushing more people to steal from their senior relatives. According to a report, “Broken Trust: Elders, Family, and Finances”, released by Metlife Mature Market Institute, seniors in the US are losing more than $2.6 billion every year through financial abuse.  The average victims are elderly women living alone. The sick and frail are more apt to be taken advantage of, and this applies even more to dementia patients. Some care takers in nursing homes are not above stealing from sick and demented patients.

Is Elder Financial Abuse the Crime of the 21st Century? That is certainly the opinion of Fred Joseph, president of the North American Securities Administrators Association.  He was quoted in a Washington Post article that focused on the link between the growing recession in the U.S. and the increase in elder financial abuse.  Though there may be debate about elder financial abuse as the ‘crime of the century’, there is no doubt that it is a mounting crisis in the U.S.

Financial abuse of elders can happen in a number of ways, according to the National Committee for the Prevention of Elder Abuse:

  • Forging an older person’s signature
  • Getting a senior to sign a deed, will, or power of attorney
  • Using property without permission.
  • Promising lifelong care in exchange for money or property – and not following through on the promise.
  • Using credit cards without authorization.
  • Engaging in confidence crimes (“cons’’) in which victims are scammed by gaining their trust.

They suggest that these red-flag warnings will help you spot financial abuse:

  • The senior is being encouraged to invest in unregistered securities or start-up companies
  • The investment is high-risk or speculative, such as rare metals or currency trading
  • The senior is asked to sign blank paperwork or to give discretionary authority over accounts to an adviser
  • The senior complains that an investment adviser won’t supply account statements
  • The senior makes out a check directly to the adviser or broker for the purchase of an investment

Here in Canada, earlier in the year, the Government launched a nation-wide advertising campaign called Elder Abuse – It’s Time To Face The Reality. The campaign launch on June 15, 2009 coincided with World Elder Abuse Awareness Day.  The Minister of State (Seniors), Marjory LeBreton confirmed that elder abuse cannot and will not be tolerated and that help is available.

There are a number of online resources on this subject

Here is an extract from the last resource:

What is the financial abuse of seniors?

Financial abuse refers to the misuse of a senior’s money, property or other assets by a relative or a person in a position of trust. A relative may be a spouse, sibling, or child, and a person in a position of trust may be a neighbour, home care worker, or staff person in a care facility. Financial abuse by strangers is not included in this fact sheet.

Some examples are:

  • Forcing or tricking a senior into selling his or her property
  • Stealing money or personal possessions
  • Forcing a senior’s signature on pension cheques or legal documents
  • Misusing a Power of Attorney
  • Pressuring a senior to provide services for no payment

Financial abuse is one type of elder abuse and it is sometimes referred to as material abuse. Financial abuse IS a crime. Often when seniors are financially exploited, they are subject to other forms of mistreatment, such as physical or psychological abuse or neglect.

How widespread is the problem?

As with other types of elder abuse, it is difficult to determine the extent to which seniors are being financially abused in Canada. This difficulty arises primarily from a failure to recognize or acknowledge that financial abuse is occurring.

Given the increasing incidence of such financial abuse of our elders, it is incumbent on us all to look out for our senior friends and family members to ensure that unwittingly they do not become victims of some smooth-talking fraudster.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , ,

Earl Jones, the Montreal Ponzi Schemer

Posted on by
No Gravatar

It may not be on the billions of dollars scale of Bernard Madoff but Earl Jones of Montreal seems to have turned from a ‘charming’ family man to an even greater ‘monster’ who allegedly defrauded 130 clients of between $50 million and $100 million.

Earl Jones seemed like the kind of guy you’d like as a friend. Those closest to him describe the financial planner as charming and fun, adored by children, devoted father to two daughters. He was generous, quick to pay for drinks, and could be counted on to show up at weddings, funerals and hospital bedsides.

In June, the monthly cheques he issued to his clients for decades stopped coming or bounced, and Jones, 67, stopped taking calls. Investors got a sick feeling in their stomach. They began to fear the generosity of a man known to many as Uncle Earl had been coming directly out of their life savings, and his appearance at funerals and weddings might not have been so selfless after all.

Authorities now say Jones may have orchestrated an elaborate Ponzi scheme that defrauded investors of between $50 million and $100 million, and who has vanished.

He was being sought on Cape Cod where he had been involved with the Living Independently Forever, Inc. facility, which offered supported independent living in condominium communities. Unfortunately clients who thought they had a few hundred thousand gaining interest face eviction from their retirement homes because they can’t pay the rent.

Like Madoff, Jones understood that his greatest accomplice was trust. Madoff earned the confidence of two of the most respected businessmen and philanthropists in his world early on and built on this trust. More disastrously, Jones targeted his family and his immediate circle of friends.

Whatever happened, it’s evident Jones was growing increasingly desperate in the last few years, and especially in the last month. At least five years ago he began convincing widows with paid-off homes to take out a new mortgage so he could invest the loan and get a higher return.

In June, the stories got more far-fetched, with Jones convincing people to remortgage their homes because Bunny Storey, widow of Grey Cup hero and NHL referee Red Storey, or others were desperate for cash and would repay with interest for a short-term loan. It was all lies.

There is nothing redeeming in this tragedy. The only hope is that the bilked widow will soon be a thing of the past as women are now more involved in the family finances. They are thus less likely to hand over their cash to a spouse – or a husbandly adviser who may be peddling a Ponzi scheme.

Related articles by Zemanta

Update
Earl Jones is arrested in his Montreal lawyer’s office.

Reblog this post [with Zemanta]

Technorati Tags: , , , ,

Ponzi Schemes in Ponzi States

Posted on by
No Gravatar

Is Florida a giant Ponzi scheme as Neil Macdonald of the CBC suggested?  Or is it perhaps that The United States is The Largest Ponzi Scheme in the World as Bill Bonner described.

Now Nouriel Roubini of Forbes confirms that view: it is The United States Of Ponzi.

Behold the Madoff in the mirror

Americans lived in a “Made-off” and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its over-leveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now collapsed in a heap.  When you put zero down on your home, and you thus have no equity in your home, your leverage is literally infinite and you are playing a Ponzi game.

If you are not sure exactly what constitutes a Ponzi scheme, here is how the Security and Exchange Commission (SEC) describes it

“Ponzi” Schemes

Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts.

Decades later, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.

As the SEC points out it is a type of Pyramid Scheme.

Pyramid Scheme

In the classic “pyramid” scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.

The fraudsters behind a pyramid scheme may go to great lengths to make the program look like a legitimate multi-level marketing program. But despite their claims to have legitimate products or services to sell, these fraudsters simply use money coming in from new recruits to pay off early stage investors.

The SEC chart below shows how pyramid schemes can become impossible to sustain.

SEC pyramid

You may ask how does all this relate to what has been happening in the United States of America.  In what sense is that a Ponzi Scheme?  Perhaps the image below can typify what is involved.

ponzi pyramid

The top part of the pyramid is what a company or individual has created in the past in assets.  Often starting with zero, a worthwhile pile has been created.  Everyone assumes that things will continue to grow in the future in the way they have in the past.  People borrow to create the even bigger future that is the base of the pyramid.  The lenders believe the promises and provide the funds to support the growth. 

However just like the Ponzi pyramid there is a limit to growth. The Past was solid, the Future is unknown. They are all dreaming in Technicolor.  Eventually it turns out their pyramid is build on a base of sand.  The whole edifice collapses.  Welcome to the world of Ponzi.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , , , ,

Ponzi Schemes, Madoff and More

Posted on by
No Gravatar

If you are looking for information on Ponzi schemes, I thoroughly recommend The Ultimate Guide to Ponzi Schemes.  It is the compilation of a great deal of research on Ponzi schemes with links to all the resources.

I found the following top ten list of Ponzi schemes from Business Pundit of particular interest:

  1. The Namesake: Charles Ponzi
  2. Madman Madoff: Bernie Madoff
  3. The Retiree Plunderer: Michael Eugene Kelly
  4. The Boy Band Bandit: Lou Pearlman
  5. The Biblical Bilker: Gerald Payne
  6. The Costa Rica Crooks: Enrique, Osvaldo and Freddy Villalobos
  7. The Lottery Uprising: The Albanian Government
  8. The Scientologist Snake: Reed Slatkin
  9. The Haiti Haters: various Haitians
  10. The Fraudulent Feminist: Sarah Howe

Bankling also has some interesting lists of Personal Finance Blogs that are worth a gander.

Financial Ramblings: 150+ Personal Finance Blogs: the Bankling list

WiseBread: Top 100+ Personal Finance Blogs – Sorted by Alexa Rank

Top personal finance blogs ranked by traffic (Alexa) updated daily.

the Dk report: Top 30 Financial Blogs

30 popular financial blogs from the Alexa universe excluding the huge financial behemoths.

PopTopRanks: Personal Finance

A directory of top sites listed by number of feed subscribers together with the sites’ most recent headlines.

reportonbusiness.com: Best of the Blogs

Five favourite investment blogs from the Globe.

Whether you are looking for Personal Finance items or more specifically Ponzi scheme information, you should certainly find it somewhere here.

Related articles by Zemanta
Reblog this post [with Zemanta]

Technorati Tags: , ,

Search the Internet for related articles:
Loading