Quatloos!
A public educational website covering a wide variety of financial scams & fraudsincluding wacky "prime bank" frauds, exotic foreign currency scams, offshore investment frauds, tax scams, "Pure Trust" structures and more...
Quatloos!
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Tuesday, January 6, 2009
The Unlucky Lucky Madoff Investors
So you were lucky enough to receive money back from Bernie Madoff before his pyramid scheme collapsed? Think again.The usual process in pyramid scheme recoveries is for the court-appointed Receiver to obtain all the financial records of the scamster, including bank accounts. Then, disbursements are traced to each recipient, who receive a friendly letter telling that they must send all the money they received back to the Receiver, so that the Receiver can pool the moneys together for distribution to all victims. Oh, and by the way, if the moneys are not returned then the Receiver will either sue the victim or obtain an order to hold the victim in contempt of court.Upon receiving such a letter, the scam victim yells "Bloody Murder!" and immediately complains that they put more money into the scheme than they ever got back, and are still in the hole.The Receiver just doesn't care. The money is not that of the victim, the money is that of ALL victims. The Receiver's job is to husband all the remaining assets of the scheme into the pool, and the assets include those that were paid out of the "lucky" victims before the scheme collapsed.But what if the victim who received money doesn't have any ready cash on hand? Tough. The receiver can bring a lawsuit against the victim, obtain a judgment, and then liquidate the victim's other assets, such as houses, IRAs, etc., until the Receiver gets back all the money received from Madoff.Brutal? Yes, but necessary to protect all victims. It doesn't make any sense than an investor who received money from Madoff a month ago should be in a better position than one who didn't. The strong powers of the Receiver to claw money out of "lucky" investors is also why there is actually the possibility of some recovery by all victims. In the Reed Slatkin scam, for instance, victims received upwards of 40% of their original investments back. In the Cash-For-Titles scam of the late 1990s, victims received over 70% of their money back.Quatloos!Labels: bernie madoff, dating scam, financial scam, pyramid scheme, quatloos, receiver, reed slatkin, slatkin, victims fund, victims pool
posted by Jay @ 7:59 AM
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Saturday, January 3, 2009
Some Good Books...
Hello folks! For those of you who want something to read about con games in general and MLMs in particular, I can heartily recommend the following (all of whom I've read myself): Carter's account of her trip in and out of the Amway cult is probably the best no-nonsense financial analysis on how MLMs are just a way to go broke slowly. What's more, even the "top" folks in Amway, faced with a constant need to show their "wealth and success" with all kinds of expensive knickknacks, are often in worse financial shape than the suckers they fleece. You thought Amway (Quixtar) "diamonds" are wealthy? Guess again.  Nash's work is history, not financial advice, but -- quite apart from being inherently fascinating and containing many rare photos and documents -- shows how there's nothing new under the sun. The same scams that worked 100 years ago (and more) work now. There's a sucker born every minute, after all.  Fitzpartick's book is more philosophical in nature. It concentrates on how MLMs, their promises to the contrary notwithstanding, are ruinous to friendships, spirituality, and religion. MLMs, a "business opportunity for Christians"? Not really.  Scammers, con men, and MLMers (is there a difference?) do not come with a business card saying, "Hello, if you want to be scammed, call...". They try to hide their illegitimacy in many ways. Like Quatloos!, Henderson's book -- written with verve -- is extremely helpful for those who would like to recognize the warning signs that say "SCAM!" ahead of time. The chapter on MLMs is especially interesting. Labels: books
posted by Avital Pilpel @ 12:09 PM
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Friday, January 2, 2009
Cash Value Life Insurance -vs- Term Life Insurance
Question: PLEASE tell me your opinion about Whole Life / CV Life Insurance. I have seen [some idiot on TV] call cv policies ' terrible wastes of Money ' along with other Economic authorities. Of course there are the Career Life agents that say buy Whole Life as a ' Best Buy ' because the CV can become the foundation of a Retirement Plan , plus the death benefit . I am sooo Lost ,...and have been searching for the ' Truth ' for years !Many thanks in advance !-----------------------------------------Whole life is "the insurance agent's best friend" because whole life policies usually have a "commissionable premium" in the 70% range, as opposed to universal life policies that pay the agents in the 30% range. With a big policy, it can be a huge difference for the agent.For the owner, it can be a bid deal too. The problem with whole life is that it requires level funding. While sometimes this makes sense -- when the life insurance policy is part of some benefit plan requiring levelized funding, for instance -- it often doesn't make any sense at all for ordinary insurance purchases, where the owner doesn't know if he will really have the cash flow to fund the policy for whatever required period of time. So, universal life will almost always beat Whole in the "what is best for the client" competition.Having said that, both Whole and universal life usually makes more long-term sense than just buying Term, which gets more expensive as you get older and doesn't build up any cash value to cover future payments. Usually, the critics of cash value life insurance and pundits of term insurance can only point to the current-year premium advantage of Term, as opposed to the total long-term cost which favors universal life and Whole.But the bigger question is whether to buy life insurance at all. If your survivors will need life insurance, then buy it. If your estate will need life insurance to cover estate taxes, then buy it. Otherwise, you probably don't want to buy it.While life insurance is certainly an "investment" in the same sense that buying a piece of property is an investment, it has to be measured in the long-term against other investments, including the fact that the CV grows basically tax-free against the death-benefit cost that other investments do not have.Most of the time, the "other investments" will make more sense depending on a gazillion factors. There are a lot of really happy investors in equity-indexed annuities and life insurance right now, who have watched their friends and colleagues lose 30%+ while they will simply credit 0% for 2008. But equity-indexed strategies can be replicated outside of the life insurance or annuity context.So, the answer is -- which will NOT clear up your confusion -- that it "depends" on the gazillion circumstances. Those who use a shallow analysis and say never buy cash value life insurance are wrong, and those who say buy nothing but cash value life insurance are wrong. In other words, the sound-bite extremists on both sides are wrong. What will make sense for YOU will depend on YOUR particular circumstances and needs. Maybe you need it, maybe you don't. Maybe it will make sense for you, and maybe it will not. But this is why good financial planners are worth their weight in gold.Labels: cash value, life insurance, term life insurance, universal life insurance, whole life insurance
posted by Jay @ 5:31 AM
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Closed End Managed Buy/Sell Program Is A Scam
Question: Are closed end managed buy/sell programs legitimate? I've made introductions to parties claiming they can produce 30% gains per trade as the buyer is under contract to perform. I think it could be a scam.----------------------It is a scam of the type known as a pyramid scheme. The term buy/sell programs is a term often used by scam artists to try to impress investors into thinking they are putting money into a sophisticated hedge fund (many and possibly most hedge funds are scams in our opinion, but that's another matter entirely), where the fund can generate big returns without any risk of loss.In fact, the risk-reward correlation is as absolute as the earth-gravity correlation: You just can't get away from it. You cannot have big returns without big risks. Nobody can promise 30% gains per trade without extraordinary risk. But this is just a pyramid scheme where old investors are being paid with new investors' money, but no traders are actually occurring. Like the Bernie Madoff scam, they are just making up statements showing trades out of thin air. Run!Labels: bernie madoff, buy/sell program, dating scam, guaranteed investment, hyip, madoff, trading program
posted by Jay @ 5:21 AM
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Rent Scam Where Check Covers Rent In Full
Question: I have recently posted a home for rent on Craigslist and have received several requests from emails claiming to be out of the country and they are ready to rent sight unseen. When I insist they fill out an application they do not respond. Initially they were offering to mail me a check to cover rent in full. How does this scam work. I cannot figure out how they can be scamming when they are only asking for my name and address to mail me a check? Have you heard of this?------------------------------This is a variation of the Nigerian 4-1-9 scam. Here is what will happen: The renters will send you a cashier's check for the full amount, and may even overpay. Then, they will want you to wire-transfer some of the money back or remit their overpayment. You will wire them money, and only 30 days later find out that the cashier's check is bogus. You will then go to your bank to try to get the wire-transfer reversed, only to find out (1) the bank cannot do it and you, and not the bank, are responsible for your loss; and (2) authorities outside the U.S. don't care that you've been scammed.This is a very common scam, often run with the sale of automobiles. Same thing: Scammers send a cashier's check that overpays for your clunker, you wire the difference back, and then find out that the cashier's check is bogus.Anytime somebody outside the country offers you a payment for something, be very suspicious because it is more likely a scam than anything real.Labels: advance fee fraud, bogus cashier's check, rent scam
posted by Jay @ 5:12 AM
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Nigerian Date Wants Travel Money
Question: I sent a girl money to fly from logas to portland,and she told me that they wouldn't let her board the plane because she didn't have enough travel money,they told her she need 1200 doller's travel money to beable to board plane,is this true ??-----------------------This is another version of a dating scam a/k/a Nigerian dating scam a/k/a advance fee fraud. You are probably not even corresponding with a girl, but a 60-year old fat guy sitting in a cybercafe somewhere in Africa. If you send the $1,200 you'll be scammed instantly.Labels: dating scam, Nigerian 4-1-9 scam, Nigerian dating scam, Nigerian scam
posted by Jay @ 5:06 AM
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Reader Question About Dating Scam
READER QUESTION:Have you ever heard of a scam involving a dating site. Guy looking for lady. Story when contact is made that he in Africa prospecting diamonds. After a couple of week's diamonds found, guy coming home but has problem paying royalties on diamonds. Can lady send him money as he doesn't have enough with him?I am experiencing something like this now. Could be legit and I certainly am not sending anyone any money but if it's a scam I sure would like to know and that others are warned.Thanks-------------------------This is a common scam, known variously as a "dating scam" or a "Nigerian dating scam". It is a version of the Nigerian 4-1-9 scheme, which is technically known as "advance fee fraud".You've been corresponding with a scam artist, which might not even be a guy, but is very likely to be sitting in a warehouse in Nigeria spamming and scamming for people to fall for this scam. There are no diamonds, and no royalties to be paid on the diamonds -- they've just made this up to get your money.Unfortunately, there will be a number of suckers every DAY who fall for this scam, which is why running scams is the third largest business in Nigeria. Stay safe, and just refuse to deal with anybody in Africa, or anybody who wants your money.Labels: advance fee fraud, dating scam, Nigerian 4-1-9 scam, Nigerian dating scam, Nigerian scam
posted by Jay @ 4:53 AM
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Wednesday, December 31, 2008
UBS Depositors Looking To Bank For Protection
Clients of Swiss banking giant UBS are trying to get the bank to continue to hide their names from disclosure to tax authorities in the United States.UBS has been using the names of a few hundred UBS depositors (read: tax evaders) as a bargaining chip to avoid the bank's indictment in the U.S. for assisting with tax evasion. UBS claims, apparently with a straight face, that these depositors mislead the bank about whether they were correctly reporting their U.S. taxes. The depositors are claiming, apparently also with a straight face, that UBS mislead them into believing that UBS would report their taxes for them.In fact, both UBS and these depositors knew what was going on: The depositors were using UBS to commit tax evasion, and UBS was actively assisting them with it by setting up bogus corporations so that the accounts could be held in corporate, not individual, name.The IRS has estimated that UBS has assisted 17,000+ U.S. citizens to evade taxes. UBS has offered to turn over a few hundred names. But it is unlikely that the IRS will stop there, especially with an incoming Obama Administration that promises to be tough on offshore tax evasion.http://www.guardian.co.uk/business/2008/dec/28/ubs-bank-tax-evasion-caseLabels: swiss bank, swiss banking, tax evasion, UBS
posted by Jay @ 10:30 AM
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Saturday, December 27, 2008
Madoff Scheme Investors Will Have To Give Back Even If Less Than Original Investment
Some of the victims of the Madoff pyramid scheme are about to receive more bad news -- If they received any money back from Madoff, the Receiver will want it back.When a pyramid scheme collapses, the Court appoints a Receiver to husband and sequester all the assets of the scheme for the benefit of all investors. The Receiver will create a Victim's Fund, and all victims will receive a percentage of the Victim's Fund based on the size of their original investment.The assets of the scheme include payments that the scheme made to others, including payments back to investors. If a Madoff investor received anything back from Madoff -- even if it was less than their original investment -- they will have to give that amount of money back to the Receiver, to be pooled with any other money and assets that the Receiver can find, and then these investors will get their percentage of the Victim's Fund.If a Madoff investor refuses to pay the Receiver back, the Receiver can sue the investor and make the investor pay the costs and attorney fees of recovery, in addition to getting the money back. In some situations, the Court may also issue order to hold a recalcitrant investor in jail for contempt. "Resistance," as one might hear in a sci-fi B-movie, "is futile." It can also be very costly.Charities are not exempt from disgorgement. If a charity received money from Madoff, it had better be prepared to give the money back. Charities may have exemption from income taxes from the IRS, but charities have no special exemption at all from Receiver-ordered disgorgement of what amounts to criminal proceeds. This will hit a lot of charities hard at this time when the economy is sharply down and charitable inflows have slowed from a mighty river to a miserly trickle.Receivers and disgorgement are one of the more unpleasant things about pyramid schemes, and have the effect of re-victimizing the victims, sort of like having a rape victim testify at trial. But it is necessary to protect the rights of all investors, and not just those who received redemptions from Madoff.Labels: disgorgement, madoff, pyramid scheme, receiver, recovery, redemption, victim's fund
posted by Jay @ 9:27 AM
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Friday, December 26, 2008
The Madoff Scheme Isn't New -- Just Bigger
So people lost $50-plus billion to Bernie Madoff, so what? The only difference this time is that a few institutional investors, charities, and celebrities were caught up in this particular pyramid scheme.Every year, pyramid schemes divest literally thousands of people of their life savings and put seniors on the street. Whether the victims are attracted through internet chat rooms or because the scam artist hoodwinked the local pastor into arranging investments for the benefit of the church, at any given time there are probably hundreds of pyramid schemes running somewhere in the U.S., and thousands more throughout the world.Here at Quatloos! we have see and tracked many of these scams. For years, we tracked the Omega Trust & Trading scam, where people sent in $100 to buy "units" that were initially promised to give a $2,500 return, which eventually grew to where each unit was alleged to be worth $100,000. Indeed, even when the Omega scammers weren't paying off on the original scam, they ran a subsequent scam to sell "refund units", i.e., the units from other investors who had obtained refunds (although there were not any of these in actuality), and fleeced even more money out of their already-jilted investors.Perhaps what makes the Madoff scam is the reputation of the main crook. Most pyramid schemes are run by those with no real financial education, background, or experience. Clyde Hood, who ran the Omega scam by contrast, was simply a retired electrician in Mattoon, Illinois. Madoff was the chairman of the NASDAQ from 1990 to 1993 -- no pyramid schemer has ever had such stellar credentials.All the signs of a scam were there. The high but steady returns, the lack of transparency in how money was being made, and obscure auditors all raised red flags to those interested in knowing. And, indeed, it has since come out that there were at least one significant whistleblower, and maybe several.But at the end of the day, the investors who lost everything have their own stupidity to blame. Sure, it is always easy to "blame the victim" for not discovering a scam, but this isn't why these investors were stupid. The reason the Madoff investors who lost everything were stupid is that they did not diversify their investments. There is simply no reason why any sane person -- or charity -- would have more than a small part of their investment with an obscure hedge fund like Madoff's. By following even minimal diversification rules, there is absolutely no reason why any Madoff investor should have lost more than 10% of their portfolio.So why did investors throw caution to the wind and put everything with Madoff: Some combination of laziness and greed. These investors were getting a higher (albeit, paper) return with Madoff than on anything else they were investing in. So, instead of putting in the hard work to find other good investments, or accepting a lower return on their other investments for the sake of diversity, they instead put all their money with Madoff.Mark Twain once wrote, "put all your eggs into one basket, and then watch it mightily." It's that second part that the Madoff investors missed, and if they weren't going to watch their investments like a hawk, they should have put them into one basket.The way to avoid being scammed out of your portfolio is the same that it has always been: Diversify, diversify, and diversify. Decide how much is the most that you can lose on any particular investment, and then limit the investment to that percentage. It should be very rare that any particular investment, other than cash or government-backed bonds, should be more than 10% of a portfolio.And that's not any sophisticated financial strategy; that's just common sense.Talk about the Madoff scam on our new Madoff Scam discussion forum at http://quatloos.com/Q-Forum/viewforum.php?f=36Labels: diversified portfolio, fraud, madoff, pyramid scheme, quatloos, scam
posted by Jay @ 6:05 AM
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Monday, December 15, 2008
Welcome to Quatloos! Version 3.0
In the beginning and somewhere around 1997, there was an Oklahoma attorney (Yours Truly) who just happen to mention something on his legal website about offshore investment scams. The inquiries that the Oklahoma attorney received and his time in responding was driving him batty, so he decided to create a small website to give plain information on these scams in the hopes that people would leave him alone and not ask stupid questions, such as "Is that deal in Grenada where I can make a 40% weekly guaranteed return on my mone for real?"Thus begat Quatloos! Version 1.0. The first version was pretty bland, but after a few tries a pirate theme was adopted that persists to this day. The website became a niche favorite, and won some awards. The Oklahoma attorney was even invited to testify before Congress about schemes, scams, and cons.Just forward to 2002, and the questions and comments had gone from a few a day to a deluge. It was frankly impossible for any one person to keep up. Thus, a discussion forum was created where some folks could ask questions, and other folks could answer them. Scam artists even made it to the board to argue that was they were doing was legal, and sometimes even try to pitch their investments to others. A small army of volunteers arose to ridicule them. And, thus, Quatloos! Version 2.0 became popular as a discussion board.But now it is 2008, and the main Quatloos! board has fallen into disrepair for the simple reason that it is TOO BIG and has far too many pages to be manageable on anything like a day-to-day basis without the sizeable staff that our paltry non-profit organization totally lacks. Just figuring out where a single new .html page should go, and creating basic links to it, now takes a couple of hours.Therefore, be it resolved that the following changes will take place:(1) The existing Quatloos main pages will be moved into the background, into a section called Ye Olde Quatloos! These pages will stil be on the server for research and archival purposes.(2) Quatloos! main pages will convert to Blog pages, and volunteers will be sought to daily add stories and commentaries on various scams and related topics.(3) The Discussion boards will be expanded to include forums for specific large scams, for instance, the Madoff hedge fund/pyramid scheme will be given its own forum.As always, your comments are greatly welcomed to me at jayadkisson>[at]< gmail.comYour most humble and obedient servant,~ Jay
posted by Jay @ 6:40 PM
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Previous Posts
The Unlucky Lucky Madoff Investors
Some Good Books...
Cash Value Life Insurance -vs- Term Life Insurance...
Closed End Managed Buy/Sell Program Is A Scam
Rent Scam Where Check Covers Rent In Full
Nigerian Date Wants Travel Money
Reader Question About Dating Scam
UBS Depositors Looking To Bank For Protection
Madoff Scheme Investors Will Have To Give Back Eve...
The Madoff Scheme Isn't New -- Just Bigger
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© 2002-2008 by Financial & Tax Fraud Associates, Inc.. All rights reserved. No portion of this website may be reprinted in whole or in part without the express, written permission of Financial & Tax Fraud Associates, Inc. This site is http://www.quatloos.com. Legal issues should be faxed to (877) 698-0678. Our attorneys are Grobaty & Pitet LLP (http://grobatypitet.com) and Riser Adkisson LLP (http://risad.com).
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