SEC Discards Documents Regarding Matters Under Investigation (MUIs) According to Agency Policy

The big buzz this week is an article in Rolling Stone regarding the SEC’s policy of destroying documents related to Matters Under Investigation (MUIs) which do not result in any agency action being taken.

At first blush, it may appear to be some sort of cover up, and that’s exactly what Rolling Stone writer Matt Taibbi wants you to think. Under further scrutiny, however, it appears that nothing improper is being done. All smoke, and no fire.

Read moreSEC Discards Documents Regarding Matters Under Investigation (MUIs) According to Agency Policy

Debt and Defeat At the Bottom of the Sales Pyramid

Pink Truth

The Salt Lake Tribune
By Steven Oberbeck

Nicole Lopez’s desire to earn additional money for her family so she could be a stay-at-home mom led her to give multilevel marketing a try.

Yet like so many Utahns who get involved with such companies, her dream came to naught.

Although a few make millions and some comfortably less, for Lopez there was no freedom from work at the end of her MLM rainbow. There was no extra time with her son or additional cash to help out with the household bills. What she wound up with instead was debt and the realization that she had gotten involved in a business model she now believes relies upon deception for its survival.

Read moreDebt and Defeat At the Bottom of the Sales Pyramid

Daughter Turns in Mom in Tri Energy Ponzi Scheme

More than two years ago, I mentioned here a news story about a Ponzi scheme called Tri Energy Inc. The Securities and Exchange Commission first took action against the company in 2005:

The Securities and Exchange Commission yesterday obtained a temporary restraining order, an asset freeze, and other emergency relief, in a civil action filed against several individuals and entities alleged to be perpetrating an ongoing affinity fraud and Ponzi scheme. According to the Complaint, defendants have defrauded hundreds of investors of over $12 million by promising returns of 100% or more within 60 days. The Complaint alleges that defendants have been telling investors that these extraordinary profits were to be generated in part by helping an unnamed Saudi Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates. In reality, according to the Complaint, although some money has been paid out to investors, these funds appear to have come from new investor money, and substantial amounts of investor funds have been transferred to bank accounts controlled by the proposed defendants and relief defendants.

Read moreDaughter Turns in Mom in Tri Energy Ponzi Scheme

Commit One of the Largest Financial Crimes in History, Continue to Live in Your $7 Million Apartment

As our friend Bernard Madoff waits around for the wheels of justice to move in his “alleged” $50 billion Ponzi scheme… he’s been a busy boy.

No, he’s not sitting in jail, where a fraudster of his magnitude deserves to be. Instead, he was allowed to post a $10 million bond, and is nice and cozy in his $7 million Manhattan apartment. What a hardship!

Read moreCommit One of the Largest Financial Crimes in History, Continue to Live in Your $7 Million Apartment

Red Flags Apparent in Alleged Ponzi Scheme


Recent news of the alleged $50 billion Ponzi scheme perpetrated by investment advisor Bernard L. Madoff has done nothing to ease the fears of investors who have been annihilated by the stock market over the last couple of months.How does an investment opportunity go from being a legitimate investment vehicle to a pyramid scheme? In this case, it is alleged that Madoff invested the money of clients, but lost it and didn’t want to admit it. Instead of alerting investors to the losses, he used the money of new investors to pay “returns” to the original investors.

This is a classic Ponzi scheme, in which money is collected and spent or lost, and new marks must be recruited to “invest” new cash into the scheme. The pyramid grows, and requires continuously larger “investments” of new money in order to pay existing participants their phony returns. So long as the operator can continue to recruit marks and keep new money flowing in, the pyramid stays afloat.

How does a scheme like this grow to an estimated $50 billion in losses? It’s hard to imagine, but it is alleged that this operation was conducted in secret. Employees say the investment advisory business was run on a secured floor that was separate from the offices of the company’s core business of market making.

Read moreRed Flags Apparent in Alleged Ponzi Scheme

Bernard Madoff Ponzi Scheme Investor Losses: Recovery?

If you watch television, read the newspaper, or surf news sites, you’re sure to have hears about the $50 billion Ponzi scheme masterminded by Bernard Madoff.

The $50 billion in losses is merely an estimate. Some experts (like me) think that the actual losses will be much higher.

Stockbroker Fraud Blog discusses several options victims have for recovery:

  • Securities Industry Protection Corporation (SIPC) could provide up to $500,000 per account. (Although I think the customers of the “investment advisory” business which is allegedly where the Ponzi scheme occurred won’t qualify. Only regular brokerage accounts would qualify. And fraud doesn’t qualify either, only unauthorized trading or theft. It will be interesting to see how this one pans out.)

    Read moreBernard Madoff Ponzi Scheme Investor Losses: Recovery?

Why Do People Fall For These Scams?

I was just reading on TechCrunch about a scam called Bux.to that looks poised to fold. Members are complaining that they are not being paid the money they’ve earned. The site shows some comments from supposed members who say they’ve been paid, but it’s sketchy whether or not that’s real.

Bux.to is your typical Ponzi Scheme (or pyramid scheme, if you prefer). The scheme offers you one cent each time you watch a 30-second advertisement. You also get one cent each time someone you recruit into the scheme watches a 30-second advertisement.

Read moreWhy Do People Fall For These Scams?

CM Development: The Sales Pitch Was Great, But the Company Fell Apart

The Virginian-Pilot
By Matthew Jones and Meghan Hoyer

Invest in real estate. Make money. Improve neighborhoods.

That was the pitch, and it usually started with a ride.

Cary McEntee would be at the wheel, steering his black Cadillac Escalade through some of Hampton Roads’ poorest neighborhoods. His brother, Jacques, usually rode shotgun.

Read moreCM Development: The Sales Pitch Was Great, But the Company Fell Apart

Authorities Charge Head of MX Factors With Fraud

Another fraud busted by Barry Minkow, this one a pyramid scheme called MX Factors. The head of MX Factors was charged with federal crimes initially uncovered by Minkow and his Fraud Discovery Institute. Current target of an informal SEC investigation, Usana Health Sciences, hopes that Minkow has no credibility. It looks like they’re dead wrong. … Read more Authorities Charge Head of MX Factors With Fraud