Ponzi Scheme?

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SansaStark
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Re: Ponzi Scheme?

Post by SansaStark »

Sandtrap wrote: Sun Apr 12, 2020 2:59 pm
This is a common cultural cue in dialogues in the "Middle East" IE: "Inshallah".
An observation.
j :happy
Observation is on point.
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3CT_Paddler
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Re: Ponzi Scheme?

Post by 3CT_Paddler »

SansaStark wrote: Sat Apr 11, 2020 8:01 pm Update:

Alright so I sat down with both parents, one who had misgivings about this since the beginning and the other who made the investments. And I learned a bit more information:

1) This is WAYYY bigger than I thought it was. This is not operating on a local level, or even a state level. This is on a national level (maybe international idk) and there are numerous religious leaders across state lines who have money invested including the entire jurisdiction covering a large portion of the United States.
2) The 1099 and quarterly statements show that the returns are sent under a corporation and there are two offices in separate states in the U.S. and one office overseas.
3) Clients receive a quarterly statement (which I reviewed) that details funds that have been invested, %gain, and earnings. The original investments are sent to the corporation via a bank authorization to make the withdrawal. There is 3 month "hedge period" before you start making earnings, after which the % gain is listed as 10%. You can actually retrieve earnings monthly, quarterly, semi-annually or on an annual basis. Or like I said earlier just reinvest the earnings back with the principal. There is a $50 transaction fee for getting the earnings.
4) Someone in our local church community had told my parent that they have been able to retrieve the total principal invested in a timely manner.
5) I asked about in what matter you would retrieve the principal and was told that it would be retrieved the same way is delivered, via a bank transfer.

As many of you mentioned, these things just don't add up. But I am in a quandary, and I feel like I have just opened Pandora's box. I did my due diligence and talked with the parents about how this is sounds like the Madoff scandal, and affinity fraud, and diversifying the portfolio and all that, and we talked intelligibly but I am unlikely to convince them. Whatever has been going has been going on for longer than just the last 5 years that my parent's have had investments in this corporation, investor, whatever you wanna call it and there are LOTS of people are tied up in this.
I would be careful... sounds like someone with a far reach. Look at the case of the whistleblower with Theranos... he was hounded and his grandfather was a board member.

FBI makes sense if it is across multiple states. Might make sense to reach out to a reporter that covers these types of cases.
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Sandtrap
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Re: Ponzi Scheme?

Post by Sandtrap »

SansaStark wrote: Sun Apr 12, 2020 3:10 pm
Sandtrap wrote: Sun Apr 12, 2020 2:59 pm
This is a common cultural cue in dialogues in the "Middle East" IE: "Inshallah".
An observation.
j :happy
Observation is on point.
Culturally, a difficult and awkward situation indeed.
j🌺
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NMBob
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Re: Ponzi Scheme?

Post by NMBob »

Arthur Digby Sellers wrote: Sat Apr 11, 2020 4:43 pm The federal agency that investigates foreign currency exchange commodity pool trading (which is what you describe) is the Commodity Futures Trading Commission (“CFTC”). Fraud is common in these types of investments, and the CFTC frequently brings enforcement action. Here is a link to a recent enforcement action: https://www.cftc.gov/PressRoom/PressReleases/8119-20

The individual your parents have invested money with may be required to register as a commodity pool operator. You can look to see if he is registered at this website: https://www.nfa.futures.org/basicnet/

If you wish to report what you know to the CFTC, directions to do so are available at this link: https://www.cftc.gov/complaint
good job, looks like good advice. CFTC has a page about this exactly, forex fraud, and asks it be reported to as linked by ADS's post.

https://www.cftc.gov/LearnAndProtect/Fr ... forex.html
alex_686
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Re: Ponzi Scheme?

Post by alex_686 »

SansaStark wrote: Sun Apr 12, 2020 2:54 pm I am copying and pasting the disclosure statement that is included in the fund management agreement. It looks like this contract covers it's bases...
Could you clarify a point. The disclosure reads like that they have a independent account at a commodity broker but have delegated trading authority to a 3rd party. If so, you should be able to see all of the trades that have been done and the exact positioning. This should give you greater clarity and insight.

Note, this is a legitimate method. It is also what Madoff. You should be able to investigate the broker and the strategy. Hopefully.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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cheese_breath
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Re: Ponzi Scheme?

Post by cheese_breath »

I'm curious about the 10% 'offer'. Is this 'offer' supposed to be a guarantee? Is there any paperwork substantiating this, or was it verbal? I just sort of scanned through the Risk Disclosure Statement and it seems pretty clear the depositor can lose everything.
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ByThePond
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Re: Ponzi Scheme?

Post by ByThePond »

michaeljc70 wrote: Sun Apr 12, 2020 2:58 pm
ByThePond wrote: Sun Apr 12, 2020 2:54 pm
michaeljc70 wrote: Sun Apr 12, 2020 2:35 pm

From the OP: "this investor has a team of approximately 100 "traders" working in a country overseas "

Of course, the guy could be lying about currency traders but if he is foreign chances are the money could easily wind up in a foreign country for "safe" keeping if it isn't partially there already. Any scammer smart enough to get his hands on all this money is probably not keeping most of it in a US bank.
The corporation mentioned upthread, incorporated in 2004, and three new corporations, incorporated in 2019, all are listed as having only one "key person". Six of the thirteen corporation headed by this individual were all located at the same residential address, the records show.
I don't see what that has to do with bank accounts and funds.
Probably not much. The post was intended to shed light on the purported "100 traders".
protagonist
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Re: Ponzi Scheme?

Post by protagonist »

Rosencrantz1 wrote: Sat Apr 11, 2020 3:52 pm
HomerJ wrote: Sat Apr 11, 2020 3:32 pm 99.9% chance this a Ponzi scheme.

There are no "guaranteed"10%-12% financial instruments.

Edit: 100% chance
+1 I would add the word "Period." at the end of this statement.

OP: I think you're absolutely correct in questioning this "investment".

Best of luck to you.
Somehow you have to convince your mom to get her money out immediately, or at least any of it that she can. You should also alert authorities about this. Perhaps start with Arthur Digby Sellers' advice above.

I hope this was not a huge portion of her portfolio that she invested.
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capitalG
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Re: Ponzi Scheme?

Post by capitalG »

SansaStark wrote: Sat Apr 11, 2020 8:01 pm As many of you mentioned, these things just don't add up. But I am in a quandary, and I feel like I have just opened Pandora's box. I did my due diligence and talked with the parents about how this is sounds like the Madoff scandal, and affinity fraud, and diversifying the portfolio and all that, and we talked intelligibly but I am unlikely to convince them. Whatever has been going has been going on for longer than just the last 5 years that my parent's have had investments in this corporation, investor, whatever you wanna call it and there are LOTS of people are tied up in this.
Perhaps a different angle to consider in your conversation with your parents. A few years ago, a close friend of mine approached me about investing in a scheme within his "church" (similar to what you describe, a nationwide religious sect community) - similar dynamics as what you describe, someone well-regarded within the community gave a guaranteed annual 7-10% return on your investments but very opaque with what was actually happening with the money, etc. I did not invest and warned my friend to also pull out - eventually he had a change of heart and was able to pull his funds out. Ultimately the scheme was exposed and a large number of community members lost their money in the process.

Point to consider sharing with your parents - the scandal tore this community apart, destroying many lifelong friendships and bonds, with many [innocent] people choosing to leave the community after that. The longer this scheme continues unreported, the bigger the damage will be on the community when it is finally exposed.

CapG
oldmotos
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Re: Ponzi Scheme?

Post by oldmotos »

We had a scam at our small town church approx. 20 years ago where a well known guy borrowed money from many of the members by offering 20% interest on a 6 month loan. He said it was to cover the expenses of a large real estate transaction he would make a bunch of money on. Several people got their money back by being very demanding when they realized something was wrong. Then he went bankrupt and no one else collected anything. No charges were filed as in the eyes of the law he just borrowed money without collateral and then the debts were wiped out by bankruptcy. The family moved out of town and many of those scammed were too embarrassed to talk about it. I would make an attempt to get some of the money back as they may be wanting to keep investors happy to keep the scam going.
SteadyOne
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Re: Ponzi Scheme?

Post by SteadyOne »

Those moneys are gone and you will never see them again. If you can get 10% back consider yourself lucky. Whatever it will mean to your parents, you and your relationships. But keep in mind that if your start asking questions, investigate, contact government, etc. you might be blamed by your parents and others for the loss. Something like, everything was going well, we were making tons of money until you came with your stupid questions and destroyed this great business. People do not like to admit that they were stupid and rather blame others. So, being discreet might be a reasonable way to proceed.
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alibaba123
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Re: Ponzi Scheme?

Post by alibaba123 »

If you think this is legitimate then I have some ocean front property for sale in Arizona that you might be interested in..
typical.investor
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Re: Ponzi Scheme?

Post by typical.investor »

SansaStark wrote: Sun Apr 12, 2020 9:00 am
9-5 Suited wrote: Sun Apr 12, 2020 8:28 am Unpopular idea incoming. Remember that money is fungible. So if your parents lose $300K they needed for retirement, they may try to get you and other family members to provide that $300K over time after they lose it all to this scam. That means by implication your money is at risk too if you intend to help them through old age.

I would be firm but kind and say if they lose money to this scam, unfortunately you won’t be able to provide them future financial support. Hooboy, talk about a tough conversation. But that’s how to protect yourself here. Most people will fear the impact on the relationship and be too afraid to say this. That’s your choice.
I wholeheartedly disagree. They supported me through school by giving me large portions of my tuition, and regardless of this predicament I had every intention of gifting that money back to them over time once I finish my training. If that means between myself and my sibling, helping them recover that money I will absolutely do that.

So many posters have mentioned that there could be clawbacks even if my parents could get there money back. Is there an investment that they could place any money they are able to retrieve that would be safe from such maneuvers if the government were to crack down on this scheme.
Clawback? They should get to keep their principal I believe. But get it out before it’s gone.
slimshady
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Re: Ponzi Scheme?

Post by slimshady »

SansaStark,

I did a bit of research on the company that was previously mentioned in this thread. If this information is correct and this is the particular company being referred to, the owner/managing agent has been active for 20+ years and has 13 companies affiliated with his namesake, 9 of which are dissolved. 4 currently exist, the most recent LLC being incorporated within the past year.

I am referencing a flowchart with multiple LLCs ( both financial and construction), several foundations and several churches in the southern US. Everything is literally pointing back to an individual with a foreign name, most likely mid eastern. Other names are listed in this flowchart, most names of similar background.

Interestingly enough Sandtrap made reference to a mid eastern cultural cue that was contained within an email that was distributed by the company.

Start digging deep.
Last edited by slimshady on Mon Apr 13, 2020 3:45 pm, edited 1 time in total.
wolf359
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Re: Ponzi Scheme?

Post by wolf359 »

TravelGeek wrote: Sat Apr 11, 2020 3:50 pm
SansaStark wrote: Sat Apr 11, 2020 3:40 pm
I completely agree with all that's been already said, but given my current position (I am the young daughter who hasn't dealt with an "real sum" of money) what can I use to leverage the conversation with this parent who is stubborn and has always controlled all finances of the household? Especially since he has had this investment with this guy for 5+ years and has already received $55,000?
Perhaps there is a documentary about the Madoff scam that you could watch with your parent?

E.g., https://www.pbs.org/video/frontline-the-madoff-affair/
This sounds a lot like the Madoff scandal. He also promised only 10-12% returns. What is abnormal is the consistency of returns.

He also had feeder funds that obtained the investors for him, by focusing on small closed groups like church groups, country clubs, etc. He also ripped off many people he had personal relationships with, including his friends and relatives.
Dave55
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Re: Ponzi Scheme?

Post by Dave55 »

This is an old play on unsophisticated and naive investors. About 20 years ago, I knew of a good number of folks either in my social network, or friends of friends that were being solicited by a person they trusted and knew well for a particular FOREX investment scheme. The trading was being done "offshore". Returns were "documented" at 90% a year. Well guess what? All of the people who "invested" lost everything they put in. Many lost their life savings, retirees and non retires alike.

Dave
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cheese_breath
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Re: Ponzi Scheme?

Post by cheese_breath »

slimshady wrote: Mon Apr 13, 2020 1:08 pm SansaStark,

I did a bit of research on the company that was previously mentioned in this thread. If this information is correct and this is the particular company being referred to, the owner/managing agent has been active for 20+ years and has 13 companies affiliated with his namesake, 9 of which are dissolved. 4 currently exist, the most recent LLC being incorporated within the past 2.5 years. ...
Wow, that nine dissolved looks really bad. This is typical of 'less than reputable' businesses. When their past starts catching up with them they just close down and reopen with a different name. If this doesn't give the parent second thoughts I don't know what will.
The surest way to know the future is when it becomes the past.
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ThereAreNoGurus
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Re: Ponzi Scheme?

Post by ThereAreNoGurus »

cheese_breath wrote: Mon Apr 13, 2020 1:25 pm
slimshady wrote: Mon Apr 13, 2020 1:08 pm SansaStark,

I did a bit of research on the company that was previously mentioned in this thread. If this information is correct and this is the particular company being referred to, the owner/managing agent has been active for 20+ years and has 13 companies affiliated with his namesake, 9 of which are dissolved. 4 currently exist, the most recent LLC being incorporated within the past 2.5 years. ...
Wow, that nine dissolved looks really bad. This is typical of 'less than reputable' businesses. When their past starts catching up with them they just close down and reopen with a different name. If this doesn't give the parent second thoughts I don't know what will.
Haha... they never should have had second thoughts... their first thought from the very beginning should have been, "Run!"

But it's a lot easier to deceive people than it is to undeceive them.... so sad.
Trade the news and you will lose.
slimshady
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Re: Ponzi Scheme?

Post by slimshady »

The “friend of a friend” who defrauded several of my friends used numerous LLCs as fronts while he was conducting his affairs.
This guy never did serious jail time....supposedly there was a period of probation and he was ordered to pay restitution to the victims via garnished pay checks. A few victims had received minuscule amounts of money.

He then went underground for several years and resurfaced a few years ago. According to some “google investigation”, he is once again on the radar with a different scam.
Last edited by slimshady on Tue Apr 14, 2020 9:16 am, edited 1 time in total.
OnTrack
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Re: Ponzi Scheme?

Post by OnTrack »

3CT_Paddler wrote: Sun Apr 12, 2020 3:33 pm
SansaStark wrote: Sat Apr 11, 2020 8:01 pm Update:

Alright so I sat down with both parents, one who had misgivings about this since the beginning and the other who made the investments. And I learned a bit more information:

1) This is WAYYY bigger than I thought it was. This is not operating on a local level, or even a state level. This is on a national level (maybe international idk) and there are numerous religious leaders across state lines who have money invested including the entire jurisdiction covering a large portion of the United States.
2) The 1099 and quarterly statements show that the returns are sent under a corporation and there are two offices in separate states in the U.S. and one office overseas.
3) Clients receive a quarterly statement (which I reviewed) that details funds that have been invested, %gain, and earnings. The original investments are sent to the corporation via a bank authorization to make the withdrawal. There is 3 month "hedge period" before you start making earnings, after which the % gain is listed as 10%. You can actually retrieve earnings monthly, quarterly, semi-annually or on an annual basis. Or like I said earlier just reinvest the earnings back with the principal. There is a $50 transaction fee for getting the earnings.
4) Someone in our local church community had told my parent that they have been able to retrieve the total principal invested in a timely manner.
5) I asked about in what matter you would retrieve the principal and was told that it would be retrieved the same way is delivered, via a bank transfer.

As many of you mentioned, these things just don't add up. But I am in a quandary, and I feel like I have just opened Pandora's box. I did my due diligence and talked with the parents about how this is sounds like the Madoff scandal, and affinity fraud, and diversifying the portfolio and all that, and we talked intelligibly but I am unlikely to convince them. Whatever has been going has been going on for longer than just the last 5 years that my parent's have had investments in this corporation, investor, whatever you wanna call it and there are LOTS of people are tied up in this.
I would be careful... sounds like someone with a far reach. Look at the case of the whistleblower with Theranos... he was hounded and his grandfather was a board member.

FBI makes sense if it is across multiple states. Might make sense to reach out to a reporter that covers these types of cases.
I think it would be a bad idea to get this in the press before law enforcement has had an opportunity to freeze any assets, if any. Once the person committing the fraud gets wind that he or she has been found out, he or she will for certain try to hide any remaining funds (again, if any). He or she may also try to flee the country and escape prosecution.

Please report to law enforcement immediately, without tipping off the person doing the fraud. That is the right thing to do, and probably the best chance of getting any thing back or of getting justice.
GibsonL6s
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Re: Ponzi Scheme?

Post by GibsonL6s »

Sadly, I saw a friend of a relative lose over 1 million including cashing out a lump sum pension.The scam was a local "investor" who supposedly bought underperforming businesses and turned them around and sold them for a profit. The return again were high but not astronomical. I remember asking him to name some of the businesses that were supposedly bought ands he could not, I advised him to call and ask for all his money back. Sadly like in Madoff, he was one of the people who "invested" a large part of his net worth and lost it all. Having worked in real estate my entire career I also saw many real estate, escrow and hard money loan frauds.
Pu239
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Re: Ponzi Scheme?

Post by Pu239 »

A free Intelius search locates the named principal of the company who lives in Florida and provides some basic information. A paid search might reveal more detail about his background, including criminal. It's an easy name to research - not too many of those around. It's really kinda scary that anyone can learn a lot about anyone else by simply paying a fee.
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot
fyre4ce
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Re: Ponzi Scheme?

Post by fyre4ce »

I'll echo the other hundred voices here and say this is very likely a fraud. Some Ponzi schemes start off legitimate and devolve into scams when the underlying investments under-perform.

I would try to withdraw all the money (principal plus returns) immediately. I'd probably make up/embellish a reason why I needed the money right away, maybe a family member with COVID-19-related financial demands. Affinity frauds are often able to maintain the appearance of legitimacy by promptly paying out withdrawals to individuals within the community, so word gets around that the fund is solvent. You could drop a hint about you/your parents' ties to the community in the request.

I wouldn't worry about concerns over clawbacks right now. It would be long time and many things would have to happen for this to become an issue.

After your parents get their money, I would report concerns to the FBI. I don't see a big value in reporting anonymously; you'll probably get a better response if you go in person.

Unfortunately, the biggest issue of all is one that many BH's struggle with - how to get family and friends to make better financial decisions. Do your best to convince them, and bring in family and friends if you can. If your parents (or rather one parent) refuse to make the withdrawal request, that limits your options. You could go to the fund manager yourself and threaten to report him if he doesn't liquidate your family's investments. This is a risky move I'd have to think more about before recommending. If you go to the authorities without your parents divesting, I worry they'll never see any of their money again.
IHateCasinos
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Re: Ponzi Scheme?

Post by IHateCasinos »

sergeant wrote: Sun Apr 12, 2020 12:29 pm I did a Google investigation of the previously mentioned company running this scheme. I'm guessing it all comes crashing down in the next few months. Website is atrocious and when you try to view it in English it throws you off. Way too many red flags in just a five minute internet search.

OP, do you have a brother? Your parents are much more likely to listen to him. Enlist a male relative to talk to your parents. I base this on country of origin and religious affiliation associated with the folks involved in this scheme, not on any of my own beliefs.
I agree that you need to recruit a another person to help your parents along with you. Very preferably male. sorry about that, and about their situation.
Get your parents out quietly, but it might not help.

FWIW, I got suckered by a "professional" Lawyer in Europe. I recognise the behaviour unfortunately. Mine was different, but I get the same gut feeling when reading your story.

M
MotoTrojan
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Re: Ponzi Scheme?

Post by MotoTrojan »

bberris wrote: Sun Apr 12, 2020 7:55 am
It's already too late for the money that has been "invested". If they withdraw it now (even assuming they get paid) the bankruptcy receiver will come after them to make sure everyone's losses are proportional.
Really? I would be surprised. Is there any differentiation between gains & principal?
OnTrack
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Re: Ponzi Scheme?

Post by OnTrack »

MotoTrojan wrote: Mon Apr 13, 2020 8:46 pm
bberris wrote: Sun Apr 12, 2020 7:55 am
It's already too late for the money that has been "invested". If they withdraw it now (even assuming they get paid) the bankruptcy receiver will come after them to make sure everyone's losses are proportional.
Really? I would be surprised. Is there any differentiation between gains & principal?
Based on the Wikipedia write up of the Madoff Ponzi scheme, it looks as though the clawbacks for the most part are targeted funds withdrawn that were in excess of funds deposited:
"Of the tens of thousands of claimants, about 1300 have been made whole: recovered to the extent of their initial investments."
"On April 23, 2009, Picard said he wouldn't seek to recover funds from "net losers" in the fraud, referring to those who lost more than they withdrew over time, but those investors must prove it."
"As of May 14, 2009, lawsuits to recover $10.1 billion in fictitious profits had been filed."
"In an interview in July 2010, Picard said that he could potentially end up suing about half of the estimated 2,000 individual investors who withdrew more from Madoff's funds than they had invested."
https://en.m.wikipedia.org/wiki/Recover ... _clawbacks
DonIce
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Re: Ponzi Scheme?

Post by DonIce »

Definitely a scam. Get your parents out if at all possible, and then report to the authorities immediately.

Even if you can't convince your parents to get their money out, you still should report the scam. There are hundreds more innocent naive people that may fall prey to it if no one reports it.
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bottlecap
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Re: Ponzi Scheme?

Post by bottlecap »

OP, I’m sorry for your situation. I haven’t chimed in because, as others have said, this is 100% a Ponzi scheme.

The only thing I can think of is to find a good summary of what goes on in one of these schemes and ask the victims to read it and see the similarities they see with what they are being told. Then ask them to withdraw, or at least not continue to contribute, any money.

Once this goes belly up, the money is essentially gone. There may be some assets, cars, boats, real estate, but the lion's share will have been spent on lavish lifestyles. If it goes belly-up soon, even any "principal" returned will have to be returned and redistributed to all victims evenly.

I was approached with a similar scam a few years after being introduced to the Bogleheads. I walked away. Perhaps I might not have if it weren’t for this outfit. Anyone finding this group is indeed lucky.

Good luck,

JT
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meowcat
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Re: Ponzi Scheme?

Post by meowcat »

fyre4ce wrote: Mon Apr 13, 2020 5:57 pm
I would try to withdraw all the money (principal plus returns) immediately. I'd probably make up/embellish a reason why I needed the money right away,
A legitimately run operation would never ask why you need the money, and you are under no obligation to tell them, it's none of their business. If they can return the OP's parents money, without question, there shouldn't be a problem. I don't think that's likely, though.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson
csmath
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Re: Ponzi Scheme?

Post by csmath »

meowcat wrote: Tue Apr 14, 2020 11:29 am
fyre4ce wrote: Mon Apr 13, 2020 5:57 pm
I would try to withdraw all the money (principal plus returns) immediately. I'd probably make up/embellish a reason why I needed the money right away,
A legitimately run operation would never ask why you need the money, and you are under no obligation to tell them, it's none of their business. If they can return the OP's parents money, without question, there shouldn't be a problem. I don't think that's likely, though.
This touches on an interesting point. Freely offering excuses why you want to pull money out of a con is a huge red flag to the con man. If they ask why you want it, then maybe hesitantly offer your excuse. And if they do ask for a rationale, it is yet another red flag as meowcat points out.
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Rob5TCP
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Re: Ponzi Scheme?

Post by Rob5TCP »

OnTrack wrote: Tue Apr 14, 2020 12:23 am
MotoTrojan wrote: Mon Apr 13, 2020 8:46 pm
bberris wrote: Sun Apr 12, 2020 7:55 am
It's already too late for the money that has been "invested". If they withdraw it now (even assuming they get paid) the bankruptcy receiver will come after them to make sure everyone's losses are proportional.
Really? I would be surprised. Is there any differentiation between gains & principal?
Based on the Wikipedia write up of the Madoff Ponzi scheme, it looks as though the clawbacks for the most part are targeted funds withdrawn that were in excess of funds deposited:
"Of the tens of thousands of claimants, about 1300 have been made whole: recovered to the extent of their initial investments."
"On April 23, 2009, Picard said he wouldn't seek to recover funds from "net losers" in the fraud, referring to those who lost more than they withdrew over time, but those investors must prove it."
"As of May 14, 2009, lawsuits to recover $10.1 billion in fictitious profits had been filed."
"In an interview in July 2010, Picard said that he could potentially end up suing about half of the estimated 2,000 individual investors who withdrew more from Madoff's funds than they had invested."
https://en.m.wikipedia.org/wiki/Recover ... _clawbacks
As of 12/2018 most of Madoff's victums have recovered at least a substantial portion of their initial investment. But, don't take this as an encouraging sign. Much of this sum came from one huge investor that made money and had deep pocket (billions).

https://www.bloomberg.com/graphics/2018 ... off-money/
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Re: Ponzi Scheme?

Post by Abe »

As others have said, this is most likely a scam. You don't want to let the investor or any one else know that you think it's a scam. If they know that you know then the gig is probably up. If I had $300k invested, I would try to withdraw my money, but I don't think I would try to withdraw all of it at one time. The investor (friend of a family friend) probably couldn't come up with all of it at one time anyway. I would ask for maybe $50k at first and if that worked maybe ask for a little bit more later until, hopefully, you parents can get all their money back. The sooner the better. It's worth a try. Good luck.
ETA: If the investor comes up with excuses as to why he can't come up with the money then you know for sure it's a scam.
Last edited by Abe on Wed Apr 15, 2020 11:22 am, edited 1 time in total.
Slow and steady wins the race.
KSActuary
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Re: Ponzi Scheme?

Post by KSActuary »

Pretty average currency fraud. Hey, and don't click those flashing links on the interwebz either. Same people, same place.
NotWhoYouThink
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Re: Ponzi Scheme?

Post by NotWhoYouThink »

Anyone want to take a poll on who thinks OP's parents will ask for their money back based on OP's concerns?

I'll go first.

No. Not now, not ever.

Which is why OP should just proceed to calling the FBI before more people dump more money into this.

If we were giving advice to OP's parents, "get your money out now" would be appropriate advice. But they don't need our advice, their trusted investment manager is making their money grow and they are happy with the situation.
Bob.Beeman
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Re: Ponzi Scheme?

Post by Bob.Beeman »

I once (1985 - 1988) had my children's college fund in Baptist Foundation of Arizona. Fortunately, I exited the organization soon enough that we didn't have any money clawed back, nor did we lose any money. Pure luck in my case.

Nearly all of the people you meet at religious organizations are great people. But not 100%. Beware!!

-Bob Beeman
michaeljc70
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Re: Ponzi Scheme?

Post by michaeljc70 »

NotWhoYouThink wrote: Tue Apr 14, 2020 12:35 pm Anyone want to take a poll on who thinks OP's parents will ask for their money back based on OP's concerns?

I'll go first.

No. Not now, not ever.

Which is why OP should just proceed to calling the FBI before more people dump more money into this.

If we were giving advice to OP's parents, "get your money out now" would be appropriate advice. But they don't need our advice, their trusted investment manager is making their money grow and they are happy with the situation.
I think you're right on the parents not doing anything. The OP though has only 2nd hand knowledge and no proof of anything to go to the FBI with other than a suspicion. In fact, the OP has parents that believe this is legitimate.
BV3273
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Re: Ponzi Scheme?

Post by BV3273 »

I agree.

I think the OP’s parents won’t make a move because it might cause them to lose their association with the church
NMBob
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Re: Ponzi Scheme?

Post by NMBob »

1) one ethical question would be, if they have actually already blown the money, then they will go out and steal from someone else to pay you...

2) as posted by ADS, an appropriate investigative agency is the CFTC who ask that suspicions of forex fraud be reported to them. So it seems he does not need proof but suspicions that line up with their forex fraud warning page. Also, all frauds that exist must thus have people who believe they are legitimate. That is how they work. And then still yet in this couple, one had suspicions from the outset.
https://www.cftc.gov/LearnAndProtect/Fr ... forex.html

3) yep, networking through a church is one of many CFTC listed possible warning signs.
BV3273
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Re: Ponzi Scheme?

Post by BV3273 »

NMBob wrote: Tue Apr 14, 2020 1:00 pm 1) one ethical question would be, if they have actually already blown the money, then they will go out and steal from someone else to pay you...

2) as posted by ADS, an appropriate investigative agency is the CFTC who ask that suspicions of forex fraud be reported to them. So it seems he does not need proof but suspicions that line up with their forex fraud warning page. Also, all frauds that exist must thus have people who believe they are legitimate. That is how they work. And then still yet in this couple, one had suspicions from the outset.
https://www.cftc.gov/LearnAndProtect/Fr ... forex.html

3) yep, networking through a church is one of many CFTC listed possible warning signs.
Based on every story I read in regards to fraud be it Bernie Madoff, Charles Ponzi, etc...it always starts out small and compounds from there. This could very well be the case.
NotWhoYouThink
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Re: Ponzi Scheme?

Post by NotWhoYouThink »

michaeljc70 wrote: Tue Apr 14, 2020 12:40 pm
NotWhoYouThink wrote: Tue Apr 14, 2020 12:35 pm Anyone want to take a poll on who thinks OP's parents will ask for their money back based on OP's concerns?

I'll go first.

No. Not now, not ever.

Which is why OP should just proceed to calling the FBI before more people dump more money into this.

If we were giving advice to OP's parents, "get your money out now" would be appropriate advice. But they don't need our advice, their trusted investment manager is making their money grow and they are happy with the situation.
I think you're right on the parents not doing anything. The OP though has only 2nd hand knowledge and no proof of anything to go to the FBI with other than a suspicion. In fact, the OP has parents that believe this is legitimate.
I agree that OP has no proof, but that's OK because OP is not a federal agent and doesn't need proof, or probable cause. OP has seen suspicious activity and can report that, along with all the other documentation mentioned up thread. That's it. OP doesn't have to do further investigation or gather more evidence, we pay taxes to the US Treasury to keep people in place to do all of that.
BalancedJCB19
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Re: Ponzi Scheme?

Post by BalancedJCB19 »

You basically just wrote a script for the next episode of American Greed. They love to get people in their church, immigrants, older people, etc. If I was a betting man, I'd put it all on Ponzi Scheme. I really hope your parents can get their money out. Good Luck, sorry they got caught up in this.
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Abe
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Re: Ponzi Scheme?

Post by Abe »

warning signs:

High investment returns with little or no risk. ...
Overly consistent returns. ...
Unregistered investments. ...
Unlicensed sellers. ...
Secretive and/or complex strategies. ...
Issues with paperwork. ...
Difficulty receiving payments.
Slow and steady wins the race.
Alex GR
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Re: Ponzi Scheme?

Post by Alex GR »

SansaStark,
As others have said, this could very well be a total loss, unfortunately.
However what surprises me is that nearly all posters think this is just a ponzi where he's just collecting money, generating fake account statements and paying old investors with new funds.
As far as I know, it's very possible for an experienced Forex trader to generate an average of 1% - 1.5% a month. Isn't there a chance that he is actually trading (or using a talented trader) making (for example) 15% a year, which allows him to pay 10% to the investors? It requires a unique skillset, a lot of dedication and very advanced algorithms, but there are people out there doing this.
With that strategy, suppose he has $20M AUM. That would give him a nice $1M per year profit with a 5% spread (paying investors 10% vs. making 15%).
While it's true that your parents should try to get out ASAP, I am just saying it is very possible to generate more than 10% per year in some type of active, hands-on business. There's a chance this guy sees more value in running a profitable operation and paying investors rather than scamming all these people and facing criminal charges.
I would slowly start withdrawing and see what happens.
alex_686
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Re: Ponzi Scheme?

Post by alex_686 »

Alex GR wrote: Tue Apr 14, 2020 3:46 pm As far as I know, it's very possible for an experienced Forex trader to generate an average of 1% - 1.5% a month. Isn't there a chance that he is actually trading (or using a talented trader) making (for example) 15% a year, which allows him to pay 10% to the investors? It requires a unique skillset, a lot of dedication and very advanced algorithms, but there are people out there doing this.
I have done risk management in this field professionally. It is next to impossible. See my earlier up-post. They could be using a passive strategy, this generates nice steady returns. However, that would blow up from time to time - like now. Or they could be using a active high-skill strategy, where one would expect very erratic returns.

The fee structure is odd, as it implies the client gets paid before the manager. This is a bad sign. You usually want the manager to be paid first to cover operations. Accountants, statement, compliance, etc. You know, the people that are supposed to ensure that there is no fraud going on. And the performance bonus is also odd. Kind of wish I had a full prospectus.

I am a little troubled that this is being pitched to retirees - though I honestly don't know their ability to take risks. I am assuming minimal.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
bugleheadd
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Re: Ponzi Scheme?

Post by bugleheadd »

If you are having difficulty getting your parents to withdraw some funds from the scam, tell them you know a trader who can guarantee 15%. Maybe they will do it then.

All joking aside, is the scammer's last name Madoff? You would think everyone would have heard of this type of scam by now.
TSR
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Re: Ponzi Scheme?

Post by TSR »

I haven't read all the comments, but I'll volunteer that as a criminal-defense attorney who has worked on cases like this, I agree that it's a scam but disagree a little on what you should do about it. "Ponzi" scheme" can be a little confusing. "Shell game" is often a better description for some who don't understand how they're being duped. There usually are actual investments involved, but the people doing it get drunk on their own talent and love to convince others how much they can make, so they start paying out more than they should and making up for it with new money. Because the margins between what's incoming and what's outgoing are not always that great, these people can do this for a LONG time, and the house of cards usually only falls when someone starts looking into it.

For that reason, I have to disagree with the "report this immediately" advice. If your main goal is to get your parents' money back, you want to do that before you report it. The thing about a money-machine like this is that when the gears stop turning, NOTHING comes out. Once FINRA or the SEC step in, there's no more money.* No one will be made whole, not even close. Your parents should quietly back out of this if they can, and then you should report it. I know how selfish that seems, but my goal in your situation would be to help my parents first. Then give FINRA a call.

Good luck. This is nuts.

*It is the experience of many criminal-defense lawyers I know that financial defendants are some of the most self-delusional we represent. One of the reasons, I believe, is this phenomenon of "This would have kept working if I'd just been able to keep going." That is, they believe that if someone hadn't stepped in, they would have made enough to make everyone whole, and it's really the regulators who were at fault. This is wrong, of course.

Edited to correct "ponzi" rather than "pyramid" scheme and make the distinction I intended a bit clearer.
Last edited by TSR on Tue Apr 14, 2020 5:33 pm, edited 1 time in total.
alex_686
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Re: Ponzi Scheme?

Post by alex_686 »

TSR wrote: Tue Apr 14, 2020 4:10 pm *It is the experience of many criminal-defense lawyers I know that financial defendants are some of the most self-delusional we represent. One of the reasons, I believe, is this phenomenon of "This would have kept working if I'd just been able to keep going." That is, they believe that if someone hadn't stepped in, they would have made enough to make everyone whole, and it's really the regulators who were at fault. This is wrong, of course.
My experience is slightly different. Most start off small. They have a trading loss or some other shortfall. I little extra trading for fudging to get them through. They win, and promise never to do it again - until next time. And they fall short, but more this time. By the time they are caught they are millions in the hole, exhausted, and are ready to go the jail.

Or we just might be catching them at different times. Must of the stuff I have first hand knowledge of is after the fact. I always got the impression that they were decent well meaning people. However, when you dig yourself into a hole you are supposed to stop and ask for help. I find it interesting that these people were not born evil or intended to do fraud, but through a series of small steps were committing big fraud.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Alex GR
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Re: Ponzi Scheme?

Post by Alex GR »

alex_686 wrote: Tue Apr 14, 2020 4:03 pm
Alex GR wrote: Tue Apr 14, 2020 3:46 pm As far as I know, it's very possible for an experienced Forex trader to generate an average of 1% - 1.5% a month. Isn't there a chance that he is actually trading (or using a talented trader) making (for example) 15% a year, which allows him to pay 10% to the investors? It requires a unique skillset, a lot of dedication and very advanced algorithms, but there are people out there doing this.
I have done risk management in this field professionally. It is next to impossible. See my earlier up-post. They could be using a passive strategy, this generates nice steady returns. However, that would blow up from time to time - like now. Or they could be using a active high-skill strategy, where one would expect very erratic returns.

The fee structure is odd, as it implies the client gets paid before the manager. This is a bad sign. You usually want the manager to be paid first to cover operations. Accountants, statement, compliance, etc. You know, the people that are supposed to ensure that there is no fraud going on. And the performance bonus is also odd. Kind of wish I had a full prospectus.

I am a little troubled that this is being pitched to retirees - though I honestly don't know their ability to take risks. I am assuming minimal.
Alex,
So are you saying all those candlesticks, moving averages (and other stuff that I'll never understand) don't really work? Not even for the most talented traders? You may be right, I dunno. I was more saying that it certainly is possible to make 10%+ per year in some type of active, hands-on business.
So while I am not naive by any means, the perpetrator may prefer to find ways to generate more than 10%/Yr and pay investors rather than running with the money and facing criminal charges.
alex_686
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Re: Ponzi Scheme?

Post by alex_686 »

Alex GR wrote: Tue Apr 14, 2020 4:38 pm So are you saying all those candlesticks, moving averages (and other stuff that I'll never understand) don't really work? Not even for the most talented traders? You may be right, I dunno. I was more saying that it certainly is possible to make 10%+ per year in some type of active, hands-on business.
So while I am not naive by any means, the perpetrator may prefer to find ways to generate more than 10%/Yr and pay investors rather than running with the money and facing criminal charges.
You certainly can make more than 10% a year in active trading. Of course! For 10 years? Maybe, but let us give the benefit of the doubt and say yes. But the typical pattern here is to make 20% in one month and -10% the next. You don't get a nice steady return.

On the flip side, there are some very nice carry trades out there that let you earn .5% a month. Nice and even. Actually, I used to sit besides some people who were on the other side of those trades, planning on losing .5% of every month. Because trades like this is a little like earthquake insurance. Months of steady insurance payments coming in, and then the big one this, hitting you with big losses.

Risk and return are linked. If they are generating high levels of return and it is a legitimate business there has to be some risk somewhere.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
NMBob
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Re: Ponzi Scheme?

Post by NMBob »

ponzi scheme - " His original scheme was based on the legitimate arbitrage of international reply coupons for postage stamps, but he soon began diverting new investors' money to make payments to earlier investors and to himself."
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